Hazel v. Prudential Financial, Inc.

Background

Plaintiffs Tyrone Hazel, Roxane Evans, Valerie Torres, and Rhonda Hyman alleged that Prudential Financial used ActiveProspect’s TrustedForm software on Prudential’s website. They said the software recorded keystrokes, mouse clicks, data entry, and other website activity while they entered personal and medical information to obtain life-insurance quotes. The plaintiffs alleged that they did not know ActiveProspect was collecting their information and had not consented to that monitoring.

The plaintiffs asserted claims under Section 631(a) of the California Invasion of Privacy Act, for invasion of privacy under the California Constitution, and under the California Unfair Competition Law. The defendants moved to dismiss all of the claims under Rule 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim.

California Invasion of Privacy Act

The defendants argued that the plaintiffs had not plausibly alleged that their communications were intercepted “in transit.” In this context, that means acquired while being transmitted, rather than after reaching electronic storage. The court held that the plaintiffs’ allegations were sufficiently specific: they alleged that TrustedForm collected information in real time, monitored webpage changes as users entered information, and recorded activity before the information was stored by Prudential.

The court declined to resolve that timing issue based solely on ActiveProspect’s patent and a forum article describing TrustedForm. Those documents did not conclusively establish whether the information was stored by Prudential before ActiveProspect collected it. The court stated that the question could be addressed at summary judgment, a later stage when the parties present evidence, rather than resolved on the pleadings.

The defendants also argued that ActiveProspect was not a third-party eavesdropper because it recorded information on Prudential’s behalf. The court rejected that argument. It focused instead on whether ActiveProspect could use the recording for other purposes and concluded that TrustedForm was not, as a matter of law, merely an extension of Prudential. The court therefore denied the motion as to the Section 631(a) claim.

California Constitutional Privacy Claim

To state a claim for invasion of privacy under the California Constitution, the plaintiffs had to allege a protected privacy interest, a reasonable expectation of privacy, and an intrusion serious enough to be highly offensive to a reasonable person.

The court found that the plaintiffs plausibly alleged the third element. They alleged that TrustedForm could begin monitoring before users had an opportunity to review Prudential’s privacy notice and that it collected sensitive information about medical conditions, treatment history, prescription medications, height, and weight. The court distinguished cases involving less personal commercial information and stated that it could not decide, as a matter of law, that collecting this health information would not be highly offensive. It also noted that the plaintiffs alleged they provided their health information to Prudential, not that they agreed to ActiveProspect’s undisclosed monitoring. The court denied the motion as to the invasion-of-privacy claim.

Unfair Competition Law Claim

The defendants argued that the plaintiffs lacked standing under California’s Unfair Competition Law. The court agreed. Unlike federal standing, which may be based on some intangible injuries, standing under this California law requires a plaintiff to show both an injury in fact and lost money or property caused by the alleged unfair competition.

The plaintiffs alleged that their data was valuable and that ActiveProspect made money from it. The court held that those allegations did not show that the plaintiffs personally lost money or property. It therefore dismissed the UCL claim.

Disposition

Judge Charles R. Breyer denied the defendants’ motion as to the plaintiffs’ Section 631 and invasion-of-privacy claims and granted the defendants’ motion as to the plaintiffs’ UCL claims. The opinion does not add a “with prejudice” or “without prejudice” qualification to the UCL dismissal.