Kellman v. Spokeo, Inc.

Background

Spokeo operates a website that aggregates information about individuals. To advertise paid subscriptions, it uses partially redacted “teaser profiles.” The profiles may display names, ages, cities, partially redacted contact information, photographs, and references to additional information such as criminal records, arrests, felonies, employment history, family members, and court records. A user can purchase a subscription to view the full profile.

Aviva Kellman, Jason Fry, and Nicholas Newell alleged that Spokeo used their names and other identifying information in these teasers without consent. The complaint alleged that the teasers could associate the plaintiffs with potentially negative information, including arrests, felonies, and sex-offender records, even though each named plaintiff alleged that he or she had not committed a felony or was not a sex offender. The plaintiffs brought seven claims: California statutory and common-law publicity or appropriation claims, Indiana statutory and common-law claims, Ohio statutory and common-law claims, and a claim under California’s Unfair Competition Law. They sought to represent a nationwide class and Indiana and Ohio subclasses.

Spokeo moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Rule 12(b)(1) concerns the court’s subject-matter jurisdiction; Rule 12(b)(6) tests whether the complaint plausibly states a claim for relief. Spokeo also argued that the claims were barred by the First Amendment, the dormant Commerce Clause, and Section 230 of the Communications Decency Act.

Standing

The court held that the plaintiffs adequately alleged an injury sufficient for Article III standing. Article III standing requires an injury in fact, a connection between that injury and the challenged conduct, and a likelihood that a favorable decision will remedy the injury.

The court concluded that the alleged harms had close relationships to harms traditionally recognized by American law, including privacy violations, disclosure of private information, appropriation of a name or likeness, unjust enrichment, loss of control over commercial use of an identity, and emotional or mental harm. The court also rejected Spokeo’s argument that the plaintiffs needed to show that their identities had unusual commercial value or that they were celebrities.

Adequacy of the Ohio, Indiana, and California Claims

For the Ohio claim, the court held that Newell adequately alleged that his persona had commercial value. The court reasoned that users could search specifically for his name and that Spokeo’s use of his identity to encourage subscriptions plausibly implied some commercial value. The court also concluded that the teasers were used for advertising and marketing, not for news or public affairs, and therefore plausibly had a commercial purpose under Ohio law.

For the Indiana claims, the court applied the same reasoning to Fry’s alleged commercial value and commercial purpose. It declined to resolve the territorial question—whether the alleged violation occurred “within Indiana”—on the pleadings. Because online conduct and the Indiana statute’s territorial requirement raised unsettled issues, the court deferred that question until discovery. The court also concluded that the alleged use of Fry’s identity was not newsworthy and rejected Spokeo’s argument against his Indiana common-law appropriation claim.

For the California claims, the court deferred the choice-of-law question concerning whether California law could apply to a nationwide class. It stated that discovery could help determine facts relevant to that analysis and that the issue would be addressed at class certification. The court further held that the alleged use of the plaintiffs’ identities could plausibly constitute appropriation, was not necessarily incidental to Spokeo’s business, and was not connected to news, public affairs, or another public-interest matter.

California Unfair Competition Law Claim

The court held that the plaintiffs adequately alleged statutory standing under California’s Unfair Competition Law because they alleged economic injury, including that Spokeo profited from their likenesses without compensating them. The court also found the alleged conduct sufficient to support the statute’s “unfair” prong because Spokeo allegedly used nonconsensually obtained names, likenesses, and information—alongside potentially inaccurate negative information—to encourage paid subscriptions.

The court rejected Spokeo’s argument that the California Consumer Privacy Act immunized the conduct. In the court’s view, the cited provisions exempted publicly available data from certain notice and disclosure requirements but did not eliminate privacy tort claims or related unfair-competition claims. The court also rejected dismissal based on the requirement that equitable relief be unavailable when a plaintiff has an adequate legal remedy, explaining that the issue concerned obtaining relief rather than pleading the claim and that the extent of available remedies was not yet clear.

Communications Decency Act

The court rejected Spokeo’s claim to immunity under Section 230 of the Communications Decency Act. Section 230 generally protects an interactive computer service from being treated as the publisher or speaker of information supplied by another content provider. But the protection does not apply when the service is itself responsible, at least in part, for creating or developing the challenged content.

The complaint alleged that Spokeo actively collected information from other sources, curated it, and uploaded it in a new configuration for repurposed uses. It also alleged that Spokeo’s content was not generated by users. Accepting those allegations at the motion-to-dismiss stage, the court concluded that Spokeo could be responsible, at least in part, for creating or developing the material and therefore could not obtain dismissal based on Section 230 immunity.

Dormant Commerce Clause

The court rejected Spokeo’s dormant Commerce Clause argument. That constitutional doctrine limits state laws that discriminate against out-of-state commerce or impose an excessive burden on interstate commerce. The court found that Spokeo had not shown a sufficient burden. It characterized the need to comply with different states’ publicity laws as an incidental burden and found no showing that the burden was clearly excessive compared with the states’ interests in protecting residents’ rights in their personas.

First Amendment

The court concluded that the teasers were commercial speech. They were advertisements, referred to a specific product, and were published for Spokeo’s economic benefit. The court distinguished the teasers from broader informational services because the teasers were allegedly designed to induce users to enter a commercial transaction rather than to provide meaningful public information.

The court also rejected the First Amendment defense. It found that the teasers could be misleading because they placed individuals’ names next to references to possible felonies, arrests, and similar records. Even assuming the teasers were not misleading, the court held that the publicity and privacy laws directly advanced an important privacy interest through reasonably tailored means and did not violate the First Amendment.

Disposition

The court denied Spokeo’s motion to dismiss. The order did not decide whether Spokeo will ultimately be liable or whether the proposed class will be certified. The court’s ruling allowed the pleaded claims to proceed beyond the motion-to-dismiss stage.