James v. Allstate Insurance Company

Background

Conrad James brought a putative class action against Allstate Insurance Company and Heap, a software service provider. He alleged that, while he was in California and using a computer and mobile phone to seek an insurance quote on Allstate’s website, his keystrokes, mouse clicks, and other electronic communications were recorded in real time and sent to Heap. The alleged information included his email address, ZIP code, age, height, weight, use of prescription medications, tobacco use, and other personally identifiable and personal health information. James alleged that he did not know Heap was recording the information and did not consent to sharing it with Heap.

James asserted claims under the California Invasion of Privacy Act, including California Penal Code sections 631 and 632.7, California’s Unfair Competition Law, and the California Constitution’s right to privacy. The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not adequately state a legal claim. The court granted the motions after oral argument.

Section 631

The court explained that section 631(a) describes separate types of prohibited conduct. James alleged that Heap was directly liable under the first and second clauses and that Allstate was liable under the provision concerning aiding, agreeing with, employing, or conspiring with another person.

The court rejected the section 631 claim under the first clause because that clause’s text concerns an unauthorized connection with a telegraph or telephone wire, line, cable, or instrument. The court held that the alleged recording of communications made through a computer or smartphone while using Allstate’s website did not fall within that clause. The court also stated that Allstate could not be treated as a third-party eavesdropper because James intended to communicate with Allstate.

The court separately rejected the claim under the second clause. Even assuming James plausibly alleged that Heap could use the recording for its own purposes, he did not plausibly allege that Heap read, attempted to read, or learned the contents or meaning of the communications while they were in transit. The allegations described Heap as recording and storing the data on its servers, which the court found insufficient. The court dismissed James’s section 631(a) claim in its entirety.

Section 632.7

Section 632.7 concerns intercepting, receiving, and intentionally recording communications transmitted between specified types of telephones, including cellular, landline, and cordless telephones. The court held that James alleged internet communications between his device and Allstate’s website, not communications between the types of telephones covered by the statute. The court therefore granted the defendants’ motions to dismiss the section 632.7 claim.

California constitutional privacy claim

The court stated that a California constitutional privacy claim requires allegations of a legally protected privacy interest, a reasonable expectation of privacy, and an intrusion sufficiently serious to be highly offensive under social norms.

The court held that James adequately alleged a legally protected informational privacy interest in his personal and health information. It also held that he adequately alleged a reasonable expectation of privacy because he claimed the information was intercepted in real time and disclosed to Heap without his consent. The court declined to rely on Allstate’s privacy policy at the pleading stage to defeat those allegations, noting that James alleged the policy did not disclose that a third party would capture his information.

The court nevertheless held that James did not allege conduct that was highly offensive as a matter of law. James voluntarily provided the information to Allstate while seeking an insurance quote, and he alleged no use by Heap beyond storing the information for Allstate to retrieve. The court therefore granted the defendants’ motions to dismiss the California constitutional privacy claim.

Unfair Competition Law claim

The court held that James lacked statutory standing to seek relief under California’s Unfair Competition Law. A plaintiff must allege an economic injury involving loss of money or property caused by the challenged business practice. James alleged that Allstate and Heap benefited financially from using Heap’s software and service, but the court found that this did not show that James personally lost money or property. The court dismissed the Unfair Competition Law claim for lack of statutory standing.

Disposition

Judge Jacquelyn Scott Corley granted the defendants’ motions to dismiss. The supplied conclusion states that the motions were granted “with leave to another deadline,” but the text ends before specifying what that leave permitted or the applicable deadline. The order disposed of Docket Nos. 37 and 38.