C.M. v. BetterHelp, Inc.

Background

The consolidated putative class actions arose after the Federal Trade Commission announced an investigation into BetterHelp, Inc.’s business practices and entered a consent decree. BetterHelp operates online counseling websites and apps that match users with therapists and facilitate counseling. The complaint alleges that BetterHelp disclosed the email addresses of thousands of customers and prospective customers to third parties for advertising and the third parties’ own purposes, revealing that those people were seeking or receiving mental-health treatment. The complaint also alleges that BetterHelp made privacy assurances but allowed tracking technology to transmit user information.

BetterHelp moved to dismiss the consolidated complaint. It argued that the complaint improperly treated ordinary use of third-party tracking technology as unlawful, that its privacy policy disclosed its practices, and that the alleged conduct did not cause actionable harm. The court stated that not all of the 15 claims were adequately pleaded, but that BetterHelp’s position that no viable claim existed was not tenable at the pleading stage.

Standing and requested relief

The court dismissed the claims for injunctive and declaratory relief because the plaintiffs did not show a sufficient likelihood that BetterHelp would again harm them in a similar way. Allegations that third parties continued using previously collected information did not establish a sufficient risk of future harm from BetterHelp. The plaintiffs were allowed to amend if they could in good faith allege a right or duty requiring BetterHelp to control third parties’ conduct and facts showing ongoing or future harm despite the Federal Trade Commission’s injunction or other relief.

The court also dismissed the claims under California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act because the plaintiffs alleged that their economic injury consisted of the taking and unauthorized dissemination of personal information. The court held that this theory did not establish the required economic injury for statutory standing. Plaintiffs were allowed to amend to assert another basis for economic injury. The court also noted that an amended Consumers Legal Remedies Act claim should address the requirement for a pre-suit demand.

Privacy claims

The common-law invasion-of-privacy claim and the California constitutional privacy claim were analyzed together. The court held that disclosing private information without consent or authority can invade privacy even if the defendant originally obtained the information lawfully. The allegations that BetterHelp collected information about customers’ and prospective customers’ interest in counseling or therapy, assured them it would not be shared, and then shared it were sufficient at the pleading stage to support an intrusion that could be highly offensive or egregious.

The California constitutional privacy claim was dismissed only to the extent it sought injunctive relief. The court did not dismiss that claim at this stage on the grounds that damages were unavailable or that the claim duplicated the common-law claim.

The court dismissed the claim under California’s Confidentiality of Medical Information Act. It held that BetterHelp did not fall within the healthcare-provider definitions identified by the plaintiffs, including because the relevant definition for a mental-health digital service became effective after the alleged conduct. Plaintiffs could amend if they had a good-faith basis for facts placing BetterHelp within a statutory definition.

Electronic communications and data-disclosure statutes

The California Invasion of Privacy Act claim survived. Although BetterHelp argued that it could not be liable for third parties’ conduct and that the statute did not apply to internet communications or communications not intercepted while in transit, the court found those arguments insufficient at the pleading stage. The court also declined to decide at this stage whether the statute could apply to non-California plaintiffs because the claim would survive for the California subclass.

The Electronic Communications Privacy Act claim also survived. The court recognized that the Act generally permits interception when one party to the communication consents, and reasoned that BetterHelp’s deployment of tracking technology could constitute its consent. But the court found the complaint sufficient at this stage to invoke the crime-tort exception, because BetterHelp allegedly disclosed sensitive mental-health-related information in violation of federal health-privacy law.

The California Consumer Privacy Act claim survived. The court held that the statute’s private right of action can cover a disclosure of unencrypted and unredacted personal information caused by a business’s failure to maintain reasonable security procedures and practices. The complaint plausibly alleged that BetterHelp’s affirmative decision to allow tracking software, given the nature of the information, was not an appropriate security practice.

The court dismissed the California Computer Data Access and Fraud Act claim with leave to amend. It held that the alleged conduct could not be treated as a violation of a statute directed at intentional computer intrusion, including computer hacking, based on the allegations then presented. The court permitted amendment only if the plaintiffs could identify a factual and legal basis for applying the statute.

Other claims

The breach-of-confidence claim was dismissed with leave to amend because the alleged facts did not involve the type of confidential novel idea traditionally protected by that common-law claim.

The court found that the breach-of-contract allegations were not specific or clear enough about how the contracts were formed, what confidentiality promises became contractual terms, and what facts showed a breach. Any amended contract claims were required to identify those facts specifically and concisely. The court also stated that the negligence claim was uncertain because the relationship appeared to have arisen in contract; any amended negligence claim was required to identify facts supporting non-economic damages.

The court did not require the plaintiffs to choose between unjust enrichment and express-contract claims at this stage, although those theories might ultimately be incompatible.

Disposition

The court dismissed the consolidated complaint to the extent described above and granted the plaintiffs permission to amend. The order was titled an order granting in part and denying in part BetterHelp’s motion to dismiss. An amended complaint could be filed within 20 days of the order.