Frank v Gaos 586 US (2019) the US Supreme Court remands settlement in privacy case to lower court, issue of damage again causes concern

March 25, 2019 |

The issue of measuring damages and establishing the threshold loss  in the United States jurisprudence has retarded the development of the tort of privacy.  It is a common basis for applications to strike out claims.  In Australia, with breach of confidence actions, the threshold is emotional distress rather than psychiatric injury since the Victorian Court of Appeal decision of Giller v Procopets.  The awards in that and subsequent actions have been disappointing parsimonious relative to the intrusion but with time, if the United Kingdom jurisprudence is any guide, the courts should develop an appreciation of the loss associated with these types of breaches.

In Frank v Gaos the nub of the claim related to Google’s disclosure of search histories to third parties without consent, a practice that could violate privacy laws.  The court described the complaint as:

Paloma Gaos challenged Google’s use of referrer headers. She filed a complaint in Federal District Court on behalf of herself and a putative class of people who conducted a Google search and clicked on any of the resulting links within a certain time period. Gaos alleged thatGoogle’s transmission of users’ search terms in referrer headers violated the Stored Communications Act, 18 U. S. C. §2701 et seq. The SCA prohibits “a person orentity providing an electronic communication service tothe public” from “knowingly divulg[ing] to any person or entity the contents of a communication while in electronicstorage by that service.” §2702(a)(1). The Act also creates a private right of action that entitles any “person aggrieved by any violation” to “recover from the person or entity, other than the United States, which engaged inthat violation such relief as may be appropriate.” §2707(a). Gaos also asserted several state law claims.

The Court remitted a settlement to a lower court to determine whether the settlement of $5 million cy pres settlement, which distributes all or a part of the monetary relief to public-interest or charitable recipients instead of the named plaintiffs, was was “fair, reasonable and adequate”. The settlement afforded the members of the class a very minimal settlement in the vicinity of 10c per person for

The stumbling block for the approval was the Supreme Court’s 2016 decision of Spokeo v Robins which found a plaintiff in federal court cannot establish standing to sue simply by alleging a violation of a federal statute.  A plaintiff must identify some cognizable real-world harm. And in the privacy litigation the courts have framed loss as economic loss.  Establishing a causal connection between the act and the economic loss has been difficult and the majority of cases raise issues of distress, humiliation and psychiatric loss (much less common).

What is fascinating about the decision is Clarence Thomas’ dissent. He found that the key first question went to standing.  He stated:

By allegingthe violation of “private dut[ies] owed personally” to them “ ‘as individuals,’” Spokeo, supra, at ___, ___ (opinion of THOMAS, J.) (slip op., at 7, 2), the plaintiffs established standing.

Whether the claim then gave rise to a meaningful award was a separate question.  Unfortunately he was the sole dissent which means that the more narrow threshold of Spokeo applies.  That said Thomas is the most conservative justice and if he sees benefit in adopting a more permissive test than that is for the good.

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