Wallen v. Consumer Reports, Inc.

Background

James Wallen, Royce Lader, Rita Fahrner, LeeAnn Biddix, Frank Highsmith, Jerry Hill, Helen Kassamanian, and Ernest Branigh brought a proposed class action against Consumer Reports, Inc. They alleged that Consumer Reports rented, exchanged, sold, or licensed information about its magazine subscribers to third parties for profit. The information allegedly included subscribers’ names, the publications they subscribed to, and their home addresses. The third parties allegedly combined that information with other data and returned the resulting subscriber lists to Consumer Reports.

The plaintiffs claimed that this practice violated right-of-publicity or misappropriation statutes in Alabama, California, Hawaii, Indiana, Nevada, Ohio, and Washington. They alleged that Consumer Reports did not obtain subscribers’ consent before disclosing their names and identities.

Motion to dismiss

Consumer Reports moved to dismiss the amended complaint under Rule 12(b)(6), which allows dismissal when a complaint does not adequately state a legally valid claim. The court accepted the complaint’s well-pleaded factual allegations as true for purposes of deciding the motion, but it did not accept bare legal conclusions without supporting facts.

Consumer Reports argued that the alleged disclosures were not a prohibited commercial use because the subscribers’ names were not used to sell or endorse another product, were not used on or in a separate product, did not implicate a property right in the subscribers’ identities, and were never used publicly.

Court’s reasoning

The court rejected the first three arguments. It held that the allegations plausibly showed that the subscribers’ names appeared on or in subscriber lists that Consumer Reports sold or rented. The statutes did not require the names to appear on or in a separate product, and the plaintiffs plausibly alleged an infringement of property rights in their identities without having to show that their names had a demonstrable economic value.

The court agreed, however, that the plaintiffs had not plausibly alleged the required public use. It interpreted the right of publicity and related misappropriation laws as addressing the wrongful public commercial use of a person’s name or identity. The plaintiffs alleged that the information was disclosed to companies that purchased, rented, or exchanged the subscriber lists, but they did not allege that the lists were publicly available or that members of the general public could identify whose information appeared on them before purchasing a list.

The court distinguished situations in which the public can search for a particular person’s information. It concluded that treating the limited disclosure of the lists to purchasing third parties as public use would turn the right-of-publicity laws into broad data-privacy laws.

Disposition

The court held that the plaintiffs had not stated a claim under any of the seven asserted misappropriation statutes. The court granted Consumer Reports’ motion to dismiss and instructed the Clerk to terminate the motion and close the case. The opinion does not state that the motion was granted with or without prejudice.