Gross v. Madison Square Garden Entertainment Corp.

Background

Madison Square Garden Entertainment Corp. moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss the plaintiffs’ second amended complaint for failure to state a claim. Magistrate Judge James L. Cott recommended granting the motion as to Counts Two and Three and denying it as to Count One. MSG objected to the recommendation concerning Count One. The plaintiffs did not object.

The opinion states that the plaintiffs alleged MSG used facial-recognition technology and shared customers’ biometric data with a third-party vendor to identify and exclude attorneys employed by firms involved in litigation against MSG. The plaintiffs argued that this program increased MSG’s profits by deterring lawsuits and reducing litigation expenses.

Court’s Analysis

Count One alleged a violation of Section 22-1202(b) of the New York City Biometric Identifier Information Protection Code. That provision makes it unlawful to sell, lease, trade, share for something of value, or otherwise profit from a transaction involving biometric-identifier information.

The court held that Section 22-1202(b) does not prohibit a company from receiving any benefit that is indirectly connected to biometric-data sharing. Instead, the statute addresses profit from the transaction itself. The second amended complaint did not allege that MSG profited from the biometric-data transactions. According to the court, the alleged profits came from MSG’s broader program, which was advanced by biometric-data sharing. The court stated that this use of biometric data was like any other tool for which a company pays a vendor, and that treating the company’s resulting benefit as a profit from the purchase would not make common sense.

The court also concluded that the plaintiffs’ interpretation would conflict with Section 22-1202(a), which permits the collection and sharing of biometric data for commercial purposes if the public is warned. Treating any benefit as a prohibited profit would, in the court’s view, effectively prohibit useful commercial biometric-data sharing and make Section 22-1202(a) meaningless.

The court acknowledged that MSG’s use of biometric data might be objectionable, but held that the conduct alleged did not violate Section 22-1202(b). Count One therefore failed to state a claim.

Disposition

The court dismissed Counts Two and Three substantially for the reasons stated by Magistrate Judge Cott. It dismissed Count One for the reasons explained in the opinion. MSG’s motion to dismiss was granted in all respects, and the Clerk was directed to close the case. The opinion does not provide the reasoning for Counts Two and Three beyond its reference to the magistrate judge’s report and recommendation.