Hearst Argues Consumers Lack Standing In Data-Sharing Suit (Law360)

By Megan Stride

Hearst Communications Inc. asked a California federal court Friday to dismiss a consumer's putative class action alleging the publishing behemoth violated the state's Shine the Light law by failing to make data-sharing practice disclosures, saying the plaintiff misread the law and has no standing.

In a memorandum to support its motion, Hearst argued that the suit Melissa Miller launched against it in January and the handful of similar suits her attorneys have launched against other defendants are all based on a "gross misreading" of the California law, which the defendant asserts does not prohibit or regulate a business's information-sharing practices.

"Likely seizing on the dearth of case law on the statute, plaintiff advances a nonsensical interpretation of the law to manufacture two causes of action on behalf of a purported statewide class seeking exorbitant damages, despite failing to allege she suffered any harm," the memo said.

In her complaint, Miller describes the Shine the Light law, which the state legislature passed in 2003, as a statute that empowers consumers to "shine the light" on companies' data sharing methods by requiring businesses to establish a procedure that allows for customers to receive an explanation of how their personal information is disclosed to third parties.

Miller said she provided her full name, email address and other personal information when signing up for a subscription to Hearst's Cosmopolitan magazine and claims that even though Hearst shares information about its subscribers with third parties for direct marketing purposes, the company intentionally keeps its users in the dark on those practices by failing to make required Shine the Light disclosures on its websites.

In Friday's memo, however, Hearst asserted that Miller failed to state any cause of action in her complaint.

The complaint does not allege that Hearst failed to respond to any customer request or provided an incomplete, inaccurate or untimely response to a request, Hearst argued, adding that Miller also does not claim that she or anyone else made any customer request or that Hearst failed to provide a way for her to opt out of any information sharing.

Hearst told the court that Miller's claim relies on the "untenable" legal theory that a company's failure to expressly reference the Shine the Light law on its website violates that statute.

That premise misreads the law, Hearst said, adding that Shine the Light only provides remedies for the failure to properly respond to customer inquiries about a business' data-sharing practices and does not mandate that a business discuss the statute on its website.

The defendant argued that Miller lacks standing for her Shine the Light claim because she never alleged she made a request about the company's data-sharing practices or showed she was affected by Hearst's conduct.

She also failed to allege sufficient facts to show that Hearst does not disclose how to make an inquiry using one of the other options — through employee training or place-of-business notice — besides website disclosure that are available under the statute or that Hearst did not adopt a policy of allowing customers to choose whether their data was shared or not, the defendant argued.

Miller also failed to allege that she suffered any damage, Hearst said, adding that her allegation that the company diluted the value of her personal information falls flat because she failed to show that her personal information has value or that there was a connection between the alleged misconduct and that value.

Hearst also said Miller's Unfair Competition Law claim fails because she has not alleged unlawful, unfair or fraudulent conduct and has not lost money or property. The company also said the complaint should be nixed because Hearst's terms of use contains a forum selection clause requiring that her suit be brought in New York.

Steven L. Woodrow of Edelson McGuire LLC, who represents the plaintiff, said Monday that he believes Miller's case has merit.

"The legislature has decided that California consumers are to receive specific privacy protections, and companies like Hearst need to start honoring that," Woodrow said.

Miller is represented by Ari J. Scharg, Megan Pekala, Sean Patrick Reis and Steven L. Woodrow of Edelson McGuire LLC.

Hearst is represented by Michelle C. Doolin of Cooley LLP.

The case is Melissa Miller v. Hearst Communications Inc., case number 2:12-cv-00733, in the U.S. District Court for the Central District of California.

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Related Contacts
Michelle Doolin Partner, San Diego