Spying Claims Bounce Off Smartphone Makers

SAN FRANCISCO (CN) - A federal judge has dumped the bulk of a sprawling class action accusing smartphone makers of installing software that spies on customers, logs keystrokes and other data, sends information to telecom providers and drains batteries - in violation of federal and state wiretap laws.

Carrier IQ and various telecoms were hit in 2011 with a raft of class actions alleging that it used a device called IQRD to access smartphones while hiding its presence and subverting standard operating system functions or other applications.

A consolidated amended class action in San Francisco federal court alleges violations of the Federal Wiretap Act, the Computer Fraud and Abuse Act, and the Stored Communications Act, as well as multiple federal and state-law warranty and consumer-protection claims.

Carrier IQ agreed in principle to settle the class action this past November, leaving smartphone makers HTC, Huawei, LG and Samsung on the hook.

The manufacturers moved to dismiss the action this past summer, arguing that consumers had failed to show that information had been illegally acquired and that the smartphone makers had only installed Carrier IQ on the phones and sold them.

In a 96-page ruling issued Jan. 21, U.S. District Judge Edward Chen agreed that none of the manufacturers - save HTC - had ever received customers' text messages or data from Internet searches. And in HTC's case, receipt of text messages through an error-reporting tool on Android operating systems was not intentional as required to prove federal wiretap law violations, the judge said.

Instead, the plaintiffs only showed that smartphone makers provided a conduit through which cellular providers and Carrier IQ could intercept data - by making the phones.

"Plaintiffs have failed to cite any case that would support the imposition of Wiretap Act liability on a party who merely provided a means through which a third party subsequently intercepts communications," Chen wrote. "To the contrary, authority has consistently rejected such a theory of liability."

Chen also dismissed most of the state-law eavesdropping and data-protection claims, but afforded the plaintiffs another chance to make their case with more specificity. And he declined to address the issue of standing - with claims brought under 35 state laws by named plaintiffs from 13 different states - until the group brings forth more plaintiffs from states not currently represented.

"The court has reservations of subjecting the device manufacturers to the expense and burden of nationwide discovery without plaintiffs first securing actual plaintiffs who clearly have standing and are willing and able to assert claims under these state laws," Chen wrote.

Plaintiffs have until March 23 to find new representatives and file a third amended complaint, the judge concluded.

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