Williams v. What If Holdings, LLC

Background

Loretta Williams brought a putative class action against What If Holdings, LLC, and ActiveProspect, Inc. She alleged that TrustedForm, software made by ActiveProspect and used on certain pages of What If’s website, recorded her interactions with those webpages. Her original complaint asserted claims under the wiretapping provision of the California Invasion of Privacy Act (CIPA), California’s Unfair Competition Law, and the California Constitution’s privacy protections.

A prior order granted the defendants’ motions to dismiss all claims. As described in this order, the earlier ruling found that TrustedForm, as deployed in the alleged circumstances, functioned more like a recording device than an eavesdropping device. The earlier order also concluded that ActiveProspect was not acting as a third party for purposes of a CIPA claim under California Penal Code section 631(a), based on the facts alleged.

Motion to Amend

Williams moved under Federal Rule of Civil Procedure 15(a)(2) for leave to file a first amended class-action complaint. The proposed amendment retained the CIPA and California Constitution claims. It added descriptive information about TrustedForm, including statements by ActiveProspect’s chief executive officer from a podcast, language from ActiveProspect’s patent, and an article discussing privacy threats posed by website-recording software.

Court’s Analysis

Rule 15(a)(2) generally calls for permission to amend when justice requires it, but amendment may be denied as futile. Amendment is futile when no proposed change would allow the complaint to survive dismissal as a matter of law.

The court found that the proposed additions did not address the defects in the original complaint. The patent language explained technically how website interactions were recorded and how recordings were retrieved, but that information was consistent with the earlier finding that TrustedForm functioned as a recording device. The chief executive’s description of ActiveProspect as an “independent third party” did not change the court’s prior conclusion that ActiveProspect was not a third party for purposes of the CIPA wiretapping claim under the facts alleged. The privacy article was also insufficient because it did not provide factual allegations showing the violations claimed by Williams.

The court emphasized that the proposed amended complaint added no facts about the actual alleged violations or about how the software’s operation during Williams’s interaction with the What If website supported her claims. The court also found that a separate order cited as supplemental authority did not change this analysis. The court explained that its prior ruling had not required Williams to allege use of recorded data; instead, it had determined that the absence of allegations beyond mere recording meant the alleged software operated as a recorder rather than an eavesdropper.

Disposition

Judge William Alsup held that the proposed amendment was futile and denied Williams’s motion for leave to file a first amended complaint. The court vacated the February 16, 2023 hearing and stated that judgment would be entered accordingly.