A California federal district court recently granted in part the dismissal of certain federal and state privacy claims, including a California Consumer Privacy Act (“CCPA”) claim, in Hayden v. The Retail Equation, Inc., No. 8:20-cv-01203 (C.D. Cal.).  Plaintiffs in Hayden alleged that twelve retailers unlawfully shared customer data with a computer software firm, The Retail Equation (“TRE”), which in turn created “customer risk scores” to identify potentially fraudulent customer returns.  This customer risk score was alleged to include information about the customers’ purchase histories, information gleaned from social media, as well as personal information, including name, government identification card or passport information, address, sex, race, and date of birth.  TRE and the retailers sought dismissal of: (1) the Fair Credit Reporting Act (“FCRA”) claim; (2) the CCPA claim; (3) the California invasion of privacy claim; (4) the Unfair Competition Law (“UCL”) claim; and (5) unjust enrichment claim.  The Court dismissed all but the invasion of privacy claim.

First, as to the FCRA claim, the court held that the alleged activities did not meet the statutory definition of a “consumer report” under the FCRA.  Specifically, the court highlighted that the customer risk score does not bear on plaintiffs’ eligibility for credit, and the retailers are not issuing any credit to the plaintiffs by deferring any payment or debt.  The court reached this conclusion despite the fact that TRE describes itself as “consumer reporting agency” producing “consumer reports.” 

Second, the court dismissed the CCPA claim.  The Court held that disclosure of customers’ non-anonymized data was not the result of a failure to implement and maintain reasonable security measures, which would be actionable under the CCPA, but was rather a business decision to combat retail fraud.  In sum, the court found the CCPA inapplicable because plaintiffs did not allege that the retailers violated their duties as they relate to security procedures and practices, and, for the non-California plaintiffs, that the CCPA was only actionable as to California residents.

Third, the court declined to dismiss the invasion of privacy claim.  First, the court found that plaintiffs properly alleged a reasonable expectation of privacy.  Distinguishing it from routine commercial behavior, the court pointed to data collected from social media, and highlighted that this information is thereafter combined with transactional data to create individual profiles.  Second, the court concluded that the plaintiffs had properly alleged that the data collection was highly offensive, where plaintiffs had argued that risk score penalizes a consumer’s association or relationship with certain individuals based on the inclusion of social media information, and that, in any event, the resolution of this determination was better resolved beyond the pleading stage.

 Lastly, the court dismissed the UCL and unjust enrichment claims because there is an adequate remedy at law in light of the court’s ruling as to the invasion of privacy claim.  

Matthew Delgado

Matthew Delgado focuses on complex commercial litigation and class actions. He has experience with matters involving data privacy, antitrust, unfair competition, contract, and consumer protection. He also has experience with internal investigations.

Before joining the firm, Matthew clerked for the Honorable Yvonne Gonzalez…

Matthew Delgado focuses on complex commercial litigation and class actions. He has experience with matters involving data privacy, antitrust, unfair competition, contract, and consumer protection. He also has experience with internal investigations.

Before joining the firm, Matthew clerked for the Honorable Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California, and for the Honorable Timothy M. Burgess of the United States District Court for the District of Alaska. Matthew previously worked at a law firm in Southern California prior to clerking in California and Alaska.

Photo of Megan Rodgers Megan Rodgers

Megan Rodgers is a litigator who focuses her practice on high-stakes commercial disputes, with a particular focus on mass torts, class actions, advertising, privacy, product defect, and consumer protection matters.

Megan is called upon for her ability to navigate especially complex cases and…

Megan Rodgers is a litigator who focuses her practice on high-stakes commercial disputes, with a particular focus on mass torts, class actions, advertising, privacy, product defect, and consumer protection matters.

Megan is called upon for her ability to navigate especially complex cases and to successfully take cases from pre-trial through jury verdicts, and she was recently recognized by the Daily Journal in its “Top 40 Under 40” feature.

Photo of Kathryn Cahoy Kathryn Cahoy

Kate Cahoy uses her substantial class action experience to help clients develop strategic and innovative solutions to their most challenging litigation matters. She specializes in defending clients in complex, high-stakes class action disputes involving privacy, antitrust, and consumer protection claims and has achieved…

Kate Cahoy uses her substantial class action experience to help clients develop strategic and innovative solutions to their most challenging litigation matters. She specializes in defending clients in complex, high-stakes class action disputes involving privacy, antitrust, and consumer protection claims and has achieved significant victories for clients in the technology, entertainment, consumer product, and financial services industries. In addition, Kate has substantial experience litigating cases brought under California’s Section 17200 and other consumer protection, competition, and privacy laws, including the Sherman Act, California Consumer Privacy Act (CCPA), California Invasion of Privacy Act (CIPA), Wiretap Act, Stored Communications Act, Children’s Online Privacy Protection Act (COPPA), Video Privacy Protection Act (VPPA), and common law and constitutional rights of privacy, among others.