(CN) — Facebook must face invasion-of-privacy claims among others after a Ninth Circuit panel revived claims in a Thursday ruling.
The three-judge panel found the plaintiffs sufficiently pleaded several claims that Facebook violated privacy laws by tracking users’ internet activity after they had logged out of their accounts.
“Plaintiffs have adequately alleged that Facebook’s tracking and collection practices would cause harm or a material risk of harm to their interest in controlling their personal information,” wrote Chief U.S. Circuit Judge Sidney Thomas in a 38-page unanimous opinion.
The case precedes the Cambridge Analytica scandal, as the original complaint was filed in 2012. The plaintiffs claim Facebook knowingly tracked users as they browsed the internet in order to compile a profile that the social networking company could sell to other companies and perfect targeted advertising techniques.
U.S. District Court Judge Edward Davila dismissed all the state and federal invasion-of-privacy claims in 2015, finding the plaintiffs did not have standing because they could not prove Facebook’s actions made them lose the opportunity to sell their information elsewhere.
This is a common rationalization for dismissal of invasion-of-privacy claims as it broadly relates to social networking companies which run that because people cannot sell their individual personal data on the open market they don’t suffer a “particularized harm” when a social media company sells it and therefore they lack standing to bring claims.
But the Ninth Circuit put a kibosh on that legal rationale Thursday, saying that just because someone didn’t incur financial harm as the result of an action doesn’t mean they can’t achieve standing.
“The ‘gist of the question of standing’ is whether the plaintiff has a sufficiently ‘personal stake in the outcome of the controversy,” Thomas wrote.
Furthermore, because Facebook was able to wring profits out of the personal information of its users, those users have standing to question the legal viability of those profits.
“Because California law recognizes a legal interest in unjustly earned profits, plaintiffs have adequately pleaded an entitlement to Facebook’s profits from users’ personal data,” Thomas wrote.
The ruling reflects an evolution in the American legal system as it relates to users’ ability to sue technology companies for using their personal information to collect revenue from advertisers.
A Facebook spokesperson said the company "believe(s) this case is without merit and we will defend ourselves vigorously against the allegations.”
It remains unclear whether the plaintiffs will eventually prevail on the merits of their claims, but the fact that they have standing clears a significant hurdle for them and other plaintiffs with similar claims against a roster of technology companies.
Davila had also ruled the plaintiffs failed to bring plausible claims under California statutes related to invasion of privacy and the federal Wire Tap Act.
But the panel overturned those findings as well, saying plaintiffs sufficiently alleged Facebook invaded their privacy because they have a reasonable expectation that the company was not tracking their internet activity when logged on or off.
“Plaintiffs have plausibly alleged that Facebook did not disclose that the cookies would continue to track users’ browsing history after they log out of the platform,” Thomas wrote. “Nor did it disclose the extent of information collected.”
Under California law, the standard for invasion of privacy not only requires the injured party to maintain a reasonable expectation of privacy but also has suffered intrusion that would be “highly offensive” to a reasonable person. The court did not opine as to whether such offense was present in the instant case, but said the pleadings were sufficient to move the case forward.
The ultimate question of whether Facebook’s tracking and collection practices could highly offend a reasonable individual is an issue that cannot be resolved at the pleading stage,” Thomas wrote. “Plaintiffs have identified sufficient facts to survive a motion to dismiss.”
The case will be remanded back to the lower court, where the parties could either settle or move past the motion to dismiss phase on to other procedures and possibly a trial.
Thomas was joined in the decision by U.S. Circuit Judge Milan Smith Jr. and U.S. District Judge Kathryn Vratil, sitting by designation from the District of Kansas.
Smith was appointed by George W. Bush, Thomas by Bill Clinton and Vratil by George H.W. Bush.Follow @@MatthewCRenda
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.