In Re Carrier Iq, Inc., Consumer Privacy Litigation
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Case3:12-md-02330-EMC Document339 Filed01/21/15 Page1 of 96 1 2 3 4 5 UNITED STATES DISTRICT COURT 6 NORTHERN DISTRICT OF CALIFORNIA 7 8 IN RE No. C-12-md-2330 EMC 9 CARRIER IQ, INC., CONSUMER PRIVACY LITIGATION. ORDER GRANTING IN PART AND 10 DENYING IN PART DEFENDANTS’ ___________________________________/ MOTION TO DISMISS SECOND 11 CONSOLIDATED AMENDED COMPLAINT 12 (Docket No. 304) 13 14 I. INTRODUCTION 15 Plaintiffs in this multidistrict litigation – eighteen (18) individuals from thirteen different 16 states – have filed a second consolidated amended complaint (“SCAC” or “Complaint”) against For the Northern District of California 17 Defendant Carrier IQ, Inc. and a number of manufacturers of mobile devices. The Complaint alleges 18 that Defendants have violated the Federal Wiretap Act as well as a number of state’s privacy and United States District Court 19 consumer protection statutes through the creation and use of Carrier IQ’s software on Plaintiffs’ 20 mobile devices. Plaintiffs allege that Carrier IQ designed, and the Device Manufacturers Defendants 21 embedded, the Carrier IQ Software on their mobile devices and, once embedded, this software 22 surreptitiously intercepted personal data and communications and transmitted this data to Carrier IQ 23 and its customers. Pending before the Court is Defendants’1 joint motion to dismiss the SCAC in its 24 entirety. For the reasons that follow, the Court GRANTS in part and DENIES in part Defendants’ 25 joint motion, and will afford Plaintiffs leave to file a third consolidated amended complaint. 26 1 27 Originally, all the Defendants moved to dismiss the SCAC. After the hearing on the motions to dismiss, Carrier IQ, Inc. reached a settlement with Plaintiffs and subsequently withdrew 28 their motion to dismiss. See Docket Nos. 322, 334. The remaining Defendants are referred to either as “Defendants” or as “Device Manufacturers” throughout this order. Case3:12-md-02330-EMC Document339 Filed01/21/15 Page2 of 96 1 II. FACTUAL & PROCEDURAL BACKGROUND 2 A. Plaintiffs 3 There are 18 plaintiffs in this action, from 13 different states. Below is a chart that identifies 4 the Plaintiff, the state in which each resided during the relevant period, and which mobile device 5 each Plaintiff had with the Carrier IQ Software installed: 6 Plaintiff State Device 7 Patrick Kenny Arizona Samsung Galaxy S 4G HTC Touch 8 Daniel Pipkin California Samsung Galaxy SII 4G LTE 9 Jennifer Patrick California Motorola Bravo 10 Dao Phong California HTC EVO 11 Ryan McKeen Connecticut Samsung Epic Touch 4G 12 Leron Levy Florida Samsung Moment 13 Matthew Hiles Iowa LG Marquee 14 Luke Szulczewski Illinois HTC EVO 4G Michael Allan Kentucky HTC EVO 4G 15 Gary Cribbs Maryland Samsung Galaxy S2 16 Shawn Grisham Mississippi Samsung Epic 4G For the Northern District of California 17 Bobby Cline Michigan2 LG LS670 Optimus S 18 United States District Court Mark Laning Texas Pantech P5000 19 Clarissa Portales Texas HTC EVO 20 Douglas White Texas Huawei Ascend II m865 21 Eric Thomas Texas Samsung Replenish Brian Sandstrom Washington3 HTC EVO 22 Colleen Fischer Wisconsin LG LS670 Optimus S 23 24 25 2 26 Mr. Cline resides in New Hampshire, but the SCAC alleges that “at pertinent times to this matter, he resided in Oakland County, Michigan.” SCAC ¶ 19. Accordingly, for purposes of this 27 order, Mr. Cline will be treated as a resident of Michigan. 3 28 Mr. Sandstrom is a resident of California, but the SCAC alleges that “at pertinent times to this matter, he resided in Seattle, Washington.” SCAC ¶ 24. 2 Case3:12-md-02330-EMC Document339 Filed01/21/15 Page3 of 96 1 In describing each Plaintiff, the SCAC provides that “[u]pon information and belief, [the 2 Plaintiff’s] mobile device came with the Carrier IQ Software and implementing or porting software 3 pre-installed. In addition to using his devices to make phone calls, [the Plaintiff] has used it for web 4 browsing and text messaging, including accessing, inputting, and transmitting personal, private, 5 confidential, and sensitive information. [The Plaintiff] would not have purchased his mobile device 6 had he known that the Carrier IQ Software and related implementing or porting software was 7 installed and operating on his device, and taxing his device’s battery, processor, and memory, as 8 alleged herein.” See SCAC ¶¶ 8-25. 9 B. Defendants 10 The remaining defendants in this action are a number of mobile device manufacturers. 11 Plaintiffs allege that Carrier IQ is the “designer, author, programmer, and vendor” of the IQ Agent 12 software and provided the mobile device manufacturers the “guide or template” needed for the 13 “related implementing or porting software known as the CIQ Interface.” Id. ¶ 26. The IQ Agent and 14 CIQ Interface software forms the basis of Plaintiffs’ claims, as described infra. 15 The remaining Defendants are: (1) HTC America, Inc. and HTC Corporation (collectively 16 “HTC”); (2) Huawei Device USA, Inc. (“Huawei”), (3) LG Electronics MobileComm U.S.A., Inc. For the Northern District of California 17 and LG Electronics, Inc. (collectively “LG”); (4) Motorola Mobility LLC (“Motorola”); (5) Pantech 18 Wireless, Inc. (“Pantech”); (6) Samsung Telecommunications America, Inc. and Samsung United States District Court 19 Electronics Co., Ltd. (collectively “Samsung”). Each Defendant is alleged to have installed the 20 Carrier IQ Software and CIQ Interface software on at least some of their mobile device models. 21 C. Asserted Causes of Action 22 The SCAC alleges five causes of action: 23 • Count 1: Violation of the Federal Wiretap Act (18 U.S.C. § 2551) 24 • Count 2: Violation of State Privacy Laws: Plaintiffs assert their claims on behalf of all residents of the United States under Cal. Penal Code § 502 and on behalf of 25 citizens of the following 35 states under those states’ respective privacy laws: Arizona, California, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, 26 Iowa, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oregon, 27 Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. 28 3 Case3:12-md-02330-EMC Document339 Filed01/21/15 Page4 of 96 1 • Count 3: Violation of State Consumer Protection Acts: Asserted on behalf of residents of the following 21 states under those states’ respective consumer protection 2 statutes: Arkansas, California, Connecticut, Delaware, Florida, Hawaii, Kansas, Maryland, Michigan, Missouri, Nevada, New Hampshire, New Jersey, Oklahoma, 3 Rhode Island, South Carolina, South Dakota, Texas, Vermont, Washington, and West Virginia. 4 • Count 4: Violation of the Magnuson-Moss Warranty Act (15 U.S.C. § 2301- 5 2312): Asserted on behalf of the residents of the following 34 states (and the District of Columbia): Alaska, Arkansas, California, Colorado, Delaware, District of 6 Columbia, Hawaii, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New 7 Hampshire, New Jersey, New Mexico, North Dakota, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Texas, Utah, Virginia, Washington, 8 West Virginia, and Wyoming. 9 • Count 5: Violation of the Implied Warranty of Merchantability: asserted on behalf of residents of the states enumerated under Count 4. 10 11 D. Carrier IQ Software Background 12 Carrier IQ “designed, authored, programmed, and caused the installation and activation of 13 the Carrier IQ Software, including the so-called IQ Agent, on the devices at issue in this case.” Id. ¶ 14 62. It also “designed, authored, and provided guides to the Device Manufacturers for designing, 15 authoring, programming, installing, and activating the CIQ Interface in deployments” through the 16 “embedded” method of installation. Id. For the Northern District of California 17 Carrier IQ represents that its software is a “network diagnostics tool” for cell phone service 18 providers. Id. ¶ 40. It is alleged that in reality, the software collects, and transfers, sensitive United States District Court 19 personal data off of a user’s mobile device. See id. ¶¶ 1-2. Specifically, the CIQ Interface software 20 is alleged to be a “wrapping or porting layer of code designed to see recognize and intercept a host 21 of data and content, including SMS text message content and URLs containing search terms, user 22 names, and passwords . and to send that material down to the IQ Agent further processing and 23 possible transmittals.” Id. ¶ 63. The SCAC alleges that the Device Manufacturers “design and 24 program” the CIQ Interface (with Carrier IQ’s aid) and then install the CIQ Interface and IQ Agent 25 software on their mobile devices. Id. Once installed, the software “operates in the background,” 26 such that the typical user has no idea that it is running and cannot turn it off. Id. ¶ 64.4 Users are 27 4 28 It is alleged that even users with advanced technical skills can only remove the Carrier IQ Software by “rooting” their devices and voiding the warranties of their devices. Id. ¶ 64. 4 Case3:12-md-02330-EMC Document339 Filed01/21/15 Page5 of 96 1 never given the choice of opting into or out of the Carrier IQ Software’s functionality. Id. Because 2 it is always running, the Plaintiffs allege that it “taxes the device’s battery power, processor 3 functions, and system memory.” Id. 4 Plaintiffs allege that the data intercepted by the Carrier IQ Software includes the following: 5 (1) URLs (including those which contain query strings with embedded information such as search 6 terms, user names, passwords, and GPS-based geo-location information); (2) GPS-location 7 information; (3) SMS text messages; (4) telephone numbers dialed and received; (5) the user’s 8 keypad presses/keystrokes; and (6) application purchases and uses. Id. ¶ 65. This information is 9 intercepted as part of the Carrier IQ Software’s “calls” on the device operating system for “metrics.” 10 Id.