Ji v. Naver Corporation

Background

Sydney Ji, June Abe, Lee Shubert, Kira Tomlinson, Ranela Sunga, and Stefanie Bonner filed a proposed class action against Naver Corporation, Naver Cloud Corporation, Naver Cloud America Inc., Snow Corporation, Snow Inc., Z Holdings Corporation, LINE Corporation, LINE Plus Corporation, and LINE Euro-Americas Corporation. The plaintiffs alleged that the LINE Messenger and B612 apps collected user and device information, facial biometric information, private messages, videos, URLs, and keywords without user consent. They asserted claims involving negligence, intrusion upon seclusion, California constitutional privacy, California’s Unfair Competition Law and False Advertising Law, the California Invasion of Privacy Act, the federal Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Illinois Biometric Information Privacy Act, and unjust enrichment.

Personal jurisdiction

Naver Corporation, Naver Cloud Corporation, and the foreign LINE defendants argued that the court lacked personal jurisdiction over them. The court applied the test for specific personal jurisdiction, which asks whether a defendant purposefully directed activities at California, whether the claims arose from or relate to those activities, and whether exercising jurisdiction would be reasonable.

The court held that the plaintiffs had not pleaded enough facts showing that Naver or Naver Cloud purposefully directed conduct at California. It also held that the plaintiffs had not shown that Z Holdings, LINE Corporation, or LINE Plus purposefully directed conduct at California. General worldwide promotion of LINE Messenger, activity outside Japan, employees in California, and connections to other entities did not establish the required California contacts for these claims. The court dismissed the complaint with leave to amend as to Naver and Naver Cloud and dismissed all claims against the foreign LINE defendants with leave to amend.

LINE Euro-Americas did not contest personal jurisdiction. The court addressed whether the complaint sufficiently connected that entity to the alleged injuries and found that the plaintiffs had alleged conduct by the LINE defendants as a group, without explaining LINE Euro-Americas’ specific role. The court dismissed the complaint with leave to amend as to LINE Euro-Americas on that basis.

Jurisdictional discovery

The plaintiffs alternatively requested discovery about personal jurisdiction. The court denied that request without prejudice to renewal if the plaintiffs could address the pleading shortcomings identified in the order, including group pleading. The court found that the jurisdictional allegations were too weak and unsupported to justify discovery at that stage.

Group pleading and standing

The court found that the complaint repeatedly referred to groups of defendants without identifying which entity took which alleged action. This did not give the defendants adequate notice of the claims against them. The court dismissed the complaint with leave to amend as to the Naver defendants and dismissed the complaint with leave to amend as to LINE Euro-Americas based on the lack of allegations identifying its role.

The court then discussed additional standing issues to help guide any amended complaint. Standing is the requirement that a plaintiff show a concrete injury connected to the defendant’s conduct and likely to be remedied by a court decision. The court held that the alleged collection and storage of facial biometric information was enough to support standing for the related privacy theories. But it stated that the alleged user and device identifiers were not adequately shown to be information capable of creating a privacy injury. It also found that the complaint did not adequately allege frequent or systematic battery depletion, significant data or electricity costs, actual access or misuse by the Chinese government or others, or a market-related loss in the value of personal information. The court said these problems would affect the Unfair Competition Law, False Advertising Law, negligence, and Computer Fraud and Abuse Act claims if they were repleaded.

The court also found that the allegations did not adequately connect Snow Corporation, Snow Inc., or Naver Cloud America to the alleged interception of communications for purposes of the California Invasion of Privacy Act and Electronic Communications Privacy Act claims. The court said the plaintiffs’ allegations about those entities’ involvement with B612 did not identify conduct fairly connected to injuries based on LINE Messenger message interception.

Failure to state a claim

The court found that the plaintiffs plausibly alleged a privacy interest in facial biometric information. However, allegations that LINE Messenger tracked videos watched, created, liked, or commented on within its timeline feature were not sufficient, as pleaded, to state claims for intrusion upon seclusion or invasion of privacy based on the other user information, videos, URLs, and keywords.

The court stated that the California Invasion of Privacy Act claim cited a provision requiring malicious conduct, but the complaint did not allege maliciousness. The plaintiffs argued that the citation was a drafting error and that they intended to rely on another provision. The court explained that the alternative provision requires intentional recording, which the complaint also did not allege. The court further stated that the Electronic Communications Privacy Act issue involving the ordinary-course-of-business exception required factual determinations that were not appropriate at this stage.

As to the Computer Fraud and Abuse Act claim, the court held that the provision pleaded concerns intentional unauthorized access to a computer or access exceeding authorization. It agreed with defendants that data collection and computer hacking are distinct and concluded that the claim, as pleaded, would be subject to dismissal for failure to state a claim even apart from the group-pleading problem.

Disposition

The court granted the motions to dismiss with leave to amend. It directed the plaintiffs to identify specifically which entity allegedly took each action and ordered that any amended complaint be filed no later than 28 days after the order. The order did not resolve every argument raised by the defendants.