Hi CIPAWorld! The Baroness here with an update on another ActiveProspect case (not Javier), although it’s not the most favorable news. Let’s dive into the details.

So what happened?

To provide some context, Prudential is an online platform where users can obtain life insurance quotes. When users enter their information and click “Continue, I Agree,” it signifies that they have acknowledged Prudential’s Privacy Notice, which they can review by clicking a link on the same page.

Prudential partners with ActiveProspect to provide software for its website. As I’m sure you know, ActiveProspect makes a software product called “TrustedForm,” a “lead certification product,” aiding businesses in verifying user interactions with websites and documenting user consent.

During the period from March 2022 to January 2023, individuals Tyrone Hazel, Roxane Evans, Valerie Torres, and Rhonda Hyman visited Prudential’s website and provided the required information to obtain life insurance quotes. However, the plaintiffs allege that they were unaware their information was being “intercepted” by ActiveProspect while filling out the webform on Prudential’s website.

As a result, the plaintiffs initiated suit and brought claims for violations of Section 631 of CIPA, invasion of privacy under the California Constitution and the California Unfair Competition Law.

The defendants brought forth two arguments challenging the plaintiffs CIPA claim. First, they argue the plaintiffs failed to plausibly plead that their communications were intercepted “in transit.” Second, they argue that the plaintiffs failed to plausibly plead that ActiveProspect was a third-party eavesdropper.

As to the first argument, the defendants relied on two documents—ActiveProspect’s TrustedForm patent and an article on ActiveProspect’s community forum to argue the communications were not intercepted “in transit.” The Court found neither persuasive.

As to the patent, the court found that the statements made on the patent cut against its arguments. Specifically, the patent stated that Figure 1 “illustrates a simplified block diagram of a communication system that may be utilized according to an embodiment of the present disclosure.” Because of the word “may” in the patent, the court found “it cannot be relied upon to show that, as a matter of law, a user’s information is always stored with the lead generator before it is transferred on to the verification server.

Similarly, the forum article relied upon by the defendants the court found unpersuasive. The forum article specifically stated that Trusted Form “records” a user’s “interact[ions] with the webpage” such as when they “enter text into fields, change drop-downs, click on buttons, or move[ ] the mouse,” and the “lead generator” (i.e., Prudential) “can control when TrustedForm … begins recording a consumer’s interaction with a web page.”

Ultimately, the court found that neither of these documents contradicted the plaintiffs’ allegations.

Defendants also argued that ActiveProspect was not a third-party eavesdropper (an argument we are all familiar with from the Javier decision). But the court, in reliance on Javier, found that ActiveProspect’s software is more akin to an eavesdropping friend than a tape recorder… But it’s just not.

In regard to the invasion of privacy claim, the defendants argued that the intrusion was not serious as to amount to an egregious breach of social norms. However, the court, basically punted making any sort of definitive decision here stating that this “is not typically a question that should be resolved at the pleadings stage.”

Lastly, to bring a UCL claim, a plaintiff must have UCL standing. “To demonstrate UCL standing, a plaintiff ‘must establish that they (1) suffered an injury in fact and (2) lost money or property as a result of the unfair competition.’” Birdsong v. Apple, Inc., 590 F.3d 955, 959 (9th Cir. 2009) (citing Cal. Bus. & Prof. Code § 17204) (emphasis added).

The plaintiffs argued that because ActiveProspect made money off their data, their data is a valuable commodity. But the Court stated “just because Plaintiffs’ data is valuable in the abstract, and because ActiveProspect might have made money from it, does not mean that Plaintiffs have “lost money or property” as a result.” At least there was a silver lining here.

Accordingly, the Court denied the defendant’s motion as to Plaintiff’s Section 631 and invasion of privacy claim and grants the defendant’s motion as to Plaintiff’s UCL claim.

Tyrone Hazel, et al. v. Prudential Financial, Inc., et al., No. 22-CV-07465-CRB, 2023 WL 3933073, at *6 (N.D. Cal. June 9, 2023).