Ji v. Naver Corporation

Background

The court considered second-round motions to dismiss filed by the NAVER/SNOW defendants and the LINE defendants. The First Amended Complaint asserted 11 causes of action: intrusion upon seclusion; violation of the California Constitution’s privacy right; California Unfair Competition Law and False Advertising Law claims; California Invasion of Privacy Act and Electronic Communications Privacy Act claims; a Computer Fraud and Abuse Act claim; Illinois Biometric Information Privacy Act claims; larceny or receipt of stolen property; conversion; and restitution or unjust enrichment.

The court also granted plaintiffs’ motion for leave to file a statement of recent decision.

Personal jurisdiction and jurisdictional discovery

The court denied without prejudice the defendants’ motions to dismiss for lack of personal jurisdiction. It found that the amended allegations were sufficient to warrant discovery concerning jurisdiction. The court granted plaintiffs’ request for jurisdictional discovery and directed the parties to propose its scope and length, with the court stating that approximately 45 days would likely be sufficient.

Group pleading

The court rejected the defendants’ argument that the amended complaint improperly treated the defendants as an undifferentiated group. The court found that the complaint separately identified the allegations supporting each cause of action by groups of defendants and gave each defendant notice of the claims asserted against it.

Article III standing

Article III standing is the requirement that a plaintiff show a concrete injury fairly connected to the defendant’s conduct and likely to be remedied by a court decision.

The court dismissed without leave to amend claims based on alleged privacy harm from the collection of user and device identifiers. It found that the allegations did not show that this technical or app-usage information invaded a reasonable expectation of privacy or would be highly offensive to a reasonable person.

The court denied dismissal of claims based on alleged collection and storage of biometric information. It also denied dismissal of claims based on harm to mobile devices and alleged diminution in the value of personal data. The court found that plaintiffs had plausibly alleged injury under those theories.

The court dismissed without leave to amend claims based on the risk of identity theft. It found that plaintiffs had not alleged that their information had actually been taken by the Chinese government or another entity, and therefore had not shown the concrete harm required for standing.

The court denied dismissal of Plaintiff Shubert’s and the Illinois subclass’s standing challenges under sections 15(a) and 15(c) of the Illinois Biometric Information Privacy Act. The court found that the allegations of unlawful retention and economic injury from defendants’ alleged profits from biometric information were sufficient at this stage.

The court found that plaintiffs adequately connected their alleged injuries to the NAVER and LINE defendants’ conduct, but not to the SNOW defendants. It dismissed plaintiffs’ claims against the SNOW defendants with leave to amend and denied the motion to dismiss as to the remaining defendants.

Failure to state a claim

A motion under Federal Rule of Civil Procedure 12(b)(6) tests whether the complaint alleges enough facts, accepted as true at this stage, to support a legally recognized claim.

For the intrusion-upon-seclusion and California constitutional privacy claims, the court denied dismissal to the extent the claims were based on alleged interception of actual video content. It dismissed without leave to amend claims based on collection of data about content, such as which videos users watched, created, liked, or commented on. The court also found that the allegations concerning facial biometric information stated a plausible privacy claim.

The court denied the defendants’ motions to dismiss the California Unfair Competition Law and False Advertising Law claims. It found that plaintiffs plausibly alleged economic injury, including loss of the benefit of their bargain and diminished value of their personal data.

The court denied dismissal of the California Invasion of Privacy Act claim. It found that plaintiffs adequately alleged that defendants intercepted and recorded communications transmitted through the LINE Messenger application. The court also denied dismissal of the Electronic Communications Privacy Act claim because plaintiffs adequately alleged interception of actual video content while messages were in transit.

The court dismissed the Computer Fraud and Abuse Act claim with leave to amend. It found that plaintiffs had not plausibly alleged the required amount of damage to computers or networks. The alleged diminution in the value of data did not satisfy that requirement, and the complaint did not explain how battery drain could amount to at least $5,000 in annual damages.

For the Illinois biometric-information claims, the court dismissed the section 15(b) claim with leave to amend because plaintiffs had not adequately alleged that defendants could identify Plaintiff Shubert and Illinois subclass members using the collected biometric data. The court denied dismissal of the section 15(a) and section 15(b) claims based on inadequate disclosures, finding that the complaint gave defendants sufficient notice. The court also denied dismissal of the section 15(e) claim, finding that plaintiffs adequately alleged that defendants’ handling of biometric information fell below minimum industry standards.

The court denied dismissal of the unjust-enrichment claim. It found that plaintiffs adequately alleged that defendants profited from their information while the information’s value to plaintiffs was diminished.

The court dismissed the larceny claim with leave to amend because the complaint did not include sufficient factual allegations supporting that cause of action in the section devoted to larceny. The court also dismissed the conversion claim with leave to amend because plaintiffs had not adequately alleged that defendants converted the data through a wrongful act or disposition of property rights.

Disposition and next steps

The court granted in part and denied in part the defendants’ motions to dismiss. Plaintiffs could amend existing claims for which the court granted leave, but could not add new parties or causes of action without permission. The amended complaint was due within 28 days of the order. The court also ordered the parties to address the scope and length of jurisdictional discovery, directed them to submit a joint case-management statement, and set a telephonic case-management conference for November 14, 2023, at 2:00 p.m.