A Business Guide to the California Invasion of Privacy Act
I. What is the California Invasion of Privacy Act?
The California Invasion of Privacy Act, also referred to as “CIPA,” is a 1960s era law that outlaws eavesdropping on telephone calls.
II. Why is an Old Law in the News Today?
A handful of law firms in California are seeking to make money by a strained interpretation of CIPA to make money. They threaten businesses with a lawsuit unless they pay money. These law firms interpret this law intended to cover eavesdropping with landline telephone technology to Internet technology commonly used in industry. For instance, some firms claim that using systems provided in the mass market to collect website analytics obtained form tech giants such as Meta, TikTok, and LinkedIn violate CIPA. These firms have sent out hundreds if not thousands of threatening letters to businesses using industry-standard Internet tools.
III. Are Law Firms Suing Businesses for CIPA Violations?
Yes. The firms threatening suit are following up their threats with an increasing number of suits.
IV. Are the Law Firms Suing Based on CIPA Having Success in Court?
Yes, limited success. Law firms threatening suits based on CIPA have avoided dismissal of their cases at an early stage in many cases. Others have not. Nonetheless, it is too early to know if these law firms have prevailed in a trial.
A. Why is Early Dismissal of CIPA Cases Important?
Lawyers defending CIPA cases for businesses seek early dismissal to avoid the cost of defending a lawsuit through trial. Many businesses would find it difficult to pay for a defense through the end of the case. They may settle a weak case against them and pay an individual money simply because they cannot afford a long battle in a court case. If these businesses can obtain a court order dismissing the case, they can end the case and not have to pay more in legal fees to try the case.
B. Does “Dismissal” Always Mean the Case is Over?
Unfortunately, no. There are two kinds of “dismissal.” One kind of dismissal is “with prejudice,” which means the case is truly over. Courts, however, often hesitate to dismiss a case with prejudice if judges see a possibility for a plaintiff to have a viable case if the plaintiff can amend the plaintiff’s complaint. The other kind of dismissal is called “without prejudice,” which means the plaintiff can try again to pursue the suit by amending the original complaint. Nonetheless, usually if the plaintiff has tried a number of times to amend the complaint without success, a judge will dismiss an amended complaint with prejudice, cutting off the possibility of a new amendment, under the view that any more tries would be futile.
C. Are There Defenses that a Business Can Use to Seek Early Dismissal?
Yes. Some defenses are based on what the complaint says (or doesn’t say) about the plaintiff’s use of the defendant business’s website or other technology. Other defenses are based on interpreting the text in CIPA and saying that the text in CIPA doesn’t apply to the defendant’s technology. Yet other defenses are based on the bad fit between CIPA’s text and the kinds of privacy harms claimed by the plaintiff, under the view that CIPA should not be interpreted to apply to the defendant’s business. For example, California has a comprehensive privacy law, the California Consumer Privacy Act (CCPA), which is likely a much better fit with whatever injury the plaintiff claims. There are many other potential defenses available in addition to the ones described here.
V. Should My Business Settle or Fight a CIPA Claim?
Each business will need to decide for itself the best approach to take towards a threat or actual suit based on the California Invasion of Privacy Act. Our law firm can advise businesses about the pros and cons of early settlement or defending the case. Every business has unique circumstances to weigh in making this decision. There is no “one size fits all” approach that a business should take.
VI. Conclusion
Misuse of the California Invasion of Privacy Act is a threat to all California businesses, large or small. Your business can take steps to reduce the risk of being targeted for a lawsuit. Also, our law firm can defend you if you have been threatened or already sued.
If your business received a lawsuit threat about the California Invasion of Privacy Act or want to find out more about the California Invasion of Privacy Act, please contact Stephen Wu, (408) 573-5700.