Third Circuit Lets Google Give Cookies to Kids

Rarely does whether a child has a cookie rise to the level of a federal question.  However, on June 27, 2016, in In re Nickelodeon Consumer Privacy Litigation, No. 15-1441, a panel of the Third Circuit Court of Appeals substantially affirmed the dismissal of a multi-district, class-action lawsuit against Viacom and Google alleging that the defendants unlawfully used internet site-tracking cookies to target advertisements at children who watched videos and played games at Nickelodeon’s website.  This decision substantially relied on a November 2015 decision from the same court, finding Google not liable under federal privacy laws for bypassing cookie-blockers on Apple’s Safari and Microsoft’s Internet Explorer web browsers.  The Nickelodeon Court did permit plaintiffs’ claim against Viacom for invasion of privacy under New Jersey law to proceed.

The plaintiff class—children under the age of 13—alleged that Viacom and Google tracked their web-browsing and video-watching habits by installing cookies on their computers through Viacom websites like Nick.com, and shared this information with Google.  Plaintiffs also alleged that Google used the cookies it installed to track users across any website on which Google displays ads.  Plaintiffs alleged that Viacom’s and Google’s conduct violated federal laws such as the Wiretap Act, the Stored Communications Act, and the Video Privacy Protection Act (VPPA), and also brought state statutory and common law claims.

After finding that the plaintiffs had standing, the Court dismissed plaintiffs’ Wiretap Act, Stored Communications Act, and state statutory claims based on the Court’s previous Google decision.  The Court also dismissed plaintiff’s claim for violation of the VPPA, holding the VPPA: (i) only prohibits the disclosure, not the receipt, of personally identifying information relating to viewers’ consumption of video-related services; and (ii) only prohibits the disclosure of information that would allow an ordinary person to identify a specific individual’s video-watching behavior, not disclosures of IP addresses, as occurred in Nickelodeon.  The Court revived one count against Viacom and remanded the case to the district court, finding that a reasonable jury could find Viacom liable for invasion of privacy, based on Viacom’s representation on Nick.com that it did not collect or share any personal information about its visitors.

For more information on internet privacy law or the implications of In re Nickelodeon, please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com.

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Third Circuit Blows Whistle on Suit Challenging Super Bowl Ticket Lottery

A panel of the Third Circuit Court of Appeals has affirmed the dismissal of a class-action lawsuit that sought to challenge the method by which the National Football League distributed tickets to last year’s Super Bowl XLVIII, held at MetLife Stadium in the New Jersey Meadowlands. In finding that the plaintiffs lacked standing to sue in federal court, the panel’s opinion in Finkelman v. NFL, No. 15-1435, serves as a warning to plaintiffs, appellants, and district courts alike that a party’s standing must be addressed before a court can reach the merits of that party’s claims.

The named plaintiffs relied on an obscure and rarely litigated provision of the New Jersey Consumer Fraud Act called the “Ticket Law,” which generally prohibits event organizers from withholding more than 5% of tickets from sale to the general public. The Ticket Law was meant to prevent event organizers from favoring privileged insiders to the detriment of the general public. According to the complaint, approximately 99% of all tickets to Super Bowl XLVIII went to NFL teams or other League insiders like broadcast networks or media sponsors and only 1% of tickets were made available for purchase by the general public through a lottery system. Neither of the two named plaintiffs entered the NFL’s ticket lottery: one named plaintiff, Josh Finkelman, purchased tickets in the resale market at an alleged $1,200 mark-up, and the other, Ben Hoch-Parker, decided not to purchase any tickets when faced with the high ticket prices on the resale market.

The District Court found that Finkelman (but not Hoch-Parker) had standing to bring the suit, but then dismissed the complaint on its merits, reasoning that the Ticket Law only applied to tickets that are intended for release to the general public – i.e., the 1% – all of which were released.

The Third Circuit agreed that Hoch-Parker’s failure to buy any Super Bowl tickets deprived him of Article III standing, but vacated the District Court’s judgment on the merits, concluding that Finkelman too lacked standing because he never entered the Super Bowl ticket lottery. Thus, the Third Circuit held, Finkelman could not claim that his inability to obtain face-price Super Bowl tickets was traceable to the NFL’s conduct.

“Many of us have felt the disappointment of wanting to attend a concert or athletic event only to discover that the event has sold out,” the Finkelman opinion laments, but “Article III requires more.” In other words, as in the NFL, with Article III standing, there is a difference between being “hurt” and being “injured.”

For more information on federal Article III standing or the implications of Finkelman v. NFL, please contact Kathleen Barnett Einhorn, Esq., Director of the firm’s Complex Commercial Litigation Group at keinhorn@genovaburns.com, or Jennifer Borek, Esq., a Partner in the Complex Commercial Litigation Group at jborek@genovaburns.com

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Public’s Interest in Records of Police Shooting Trumps OPRA’s Ongoing Investigation Exception

The public’s right to access government documents garnered additional support in New Jersey last week when a state trial court ruled that law enforcement records related to the police shooting of a black man who allegedly rammed officers with his vehicle must be immediately released in unredacted form to the public.

The Open Public Records Act, N.J.S.A. 47:1A-1 et seq. (“OPRA”), generally allows members of the public to inspect government records upon request. However, there are many specific categories of documents to which the government does not have to grant public access. These categories fall outside of OPRA’s definition of the term “government records,” and include records pertaining to an ongoing investigation by a public agency if disclosure of the records is “detrimental to the public interest.”

The records at issue here concern the fatal shooting of a black, 23-year-old Newark resident, who was shot by police when he allegedly struck a police car with his SUV after police had surrounded his vehicle to conclude a four-minute police pursuit. The Attorney General’s Office initiated an investigation into the shooting that day, and issued a press release. Within days of the shooting, North Jersey Media Group (“NJMG”) filed OPRA requests with the New Jersey State Police, the Bergen County Police, and the local police departments of Lyndhurst, North Arlington, and Rutherford, seeking records such as use-of-force reports, arrest reports, and various audio and video recordings. The police departments, citing the Attorney General’s investigation among other reasons, either refused to produce the records or produced redacted records after a delay.

Ruling on a complaint filed by NJMG seeking release of the records under OPRA and the common law, the court held, among other things, that the police departments’ refusal to produce the records at issue disregarded the statutorily-defined duties and public policy of OPRA.

Notably, the court made clear that the ongoing-investigation exemption under OPRA, which requires that disclosure be detrimental to the public interest, did not apply in light of the heightened need for public access to information related to police interaction with the public after highly publicized incidents in Ferguson (MO), Staten Island, and Brooklyn. Additionally the court ruled that the police departments had a common law obligation to disclose the records, and that the departments had waived the right to produce redacted records by failing to seek judicial review to determine whether they could withhold or redact the records in the first instance.

For more information on OPRA, please contact Kathleen Barnett Einhorn, Director of the Complex Commercial Litigation Practice Group, at KEinhorn@genovaburns.com.

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Section One’s Shining Moment: A new antitrust lawsuit threatens the NCAA

This year, the term “March Madness” meant more than basketball tournaments to the National Collegiate Athletic Association, its conferences and member schools.  On March 17, 2014, a group of college basketball and football players filed a federal class-action lawsuit in New Jersey against the NCAA and its five “power” conferences (the Southeastern, Big Ten, Pacific-12, Atlantic Coast, and Big 12).  The suit, Jenkins v. NCAA, alleges violations of Section 1 of the Sherman Antitrust Act, and seeks to remove the cap on compensation that colleges and universities can provide to their Division I basketball and Football Bowl Subdivision players.  The rules targeted by the suit also allow the NCAA to deny athletic eligibility to individual players, and to sanction or boycott its member schools who do not comply with the NCAA’s rules regarding athlete compensation.

The Jenkins plaintiffs assert that these rules are really a price-fixing and boycotting scheme that violates the Sherman Act, which broadly prohibits competing business entities from entering into agreements – “horizontal agreements” – that restrain trade.  The Supreme Court has declared horizontal maximum price-fixing to be per se illegal under Section 1, meaning the practice will be deemed illegal without further inquiry into its reasonableness or its beneficial effects.  Group boycotts have also been found per se illegal by the Supreme Court under Section 1, but only when the boycotting entities have market power; otherwise courts will apply the “rule of reason” approach which permits inquiry into the purpose of the boycott and its effects on competition.

The NCAA is no stranger to antitrust allegations under Section 1.  In a seminal case, the Supreme Court in NCAA v. Board of Regents, 468 U.S. 85 (1984), held that the NCAA’s then-current television plan, which limited the number of times college football teams could appear on television each season, violated Section 1.  And two pending Section-1-based class-actions against the NCAA have already garnered significant publicity.  The first case, filed in 2009 by former UCLA basketball star and former New Jersey Net Ed O’Bannon, confines its arguments to compensation derived from the use of players’ names, likenesses and images by broadcasters.  The second case, filed weeks ago by former University of West Virginia running back Shawne Alston, confines its arguments to the NCAA rules that cap the value of full athletic scholarships below the full cost of attendance.  The Jenkins case generally makes the same arguments and allegations as the O’Bannon and Alston suits, but does not seek monetary damages on behalf of the entire class, and seeks to invalidate the overall limit on compensation for athletes (unlike those prior suits).

Jenkins may be the most direct legal challenge to the NCAA’s amateurism model yet, but it faces significant obstacles.  Most importantly, although the Supreme Court invalidated the NCAA’s television plan in Board of Regents, the Court also stated that some horizontal restraints on competition, including requirements that athletes attend classes and remain unpaid,  were “essential” to the availability of the NCAA’s product – intercollegiate athletic competitions.  Therefore, the Court held that the rule of reason, instead of the per se rule, should be used to evaluate the NCAA’s policies.  Employing the rule of reason, multiple federal courts applying Section 1 have upheld NCAA policies regarding individual and institutional sanctions.

The Jenkins plaintiffs will likely have to argue that the Supreme Court’s statement regarding the essentiality of not paying players was dicta that does not bind lower courts, and that the ever-increasing amount of money flowing into big-time college football and basketball justifies a thorough evaluation of whether caps on athlete compensation support or undermine competition in big-time college sports.  The O’Bannon plaintiffs used similar arguments to successfully avoid dismissal of their claims last November, and even to partially prevail on summary judgment in April of this year – two rulings on which the plaintiffs in Jenkins will heavily rely.  However, questions regarding what rules the NCAA can promulgate in the name of promoting amateur athletics are very real, and likely cannot be answered by simply pointing to escalating coaches’ salaries, valuable broadcast contracts and licensing agreements, or even the recent National Labor Relations Board ruling that football players at Northwestern University qualify as university employees and can unionize.

The NCAA may be the favorite in its matchup against the players in this newest case.  But in litigation, as in March Madness, anything can happen.

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The First Rule of Bieber Parties: Can You Talk About Bieber Parties?

Although 2014 has thrust Justin Bieber into the legal spotlight for a variety of reasons, the most interesting Beiber-related legal question surrounds a party he threw at his California home in November, 2013. While the party was probably memorable for the guests who attended, the conditions placed on their attendance is what is most remarkable. Guests and workers at the party were required to sign a non-disclosure agreement (the “Bieber Contract”) in which they agreed not to text, tweet, record, or even talk about what they witnessed at the party. Any breach of those obligations would be punishable by a $3 million fine. The Bieber Contract was meant to protect the privacy of Bieber and his associates. But would such a contract be enforceable under New Jersey law?

Probably, but without the $3 million penalty, which New Jersey courts would likely find to be “unconscionable” – so one-sided or unjust that it “shocks the conscience.” In determining unconscionability, New Jersey courts tend to focus on two factors: unfairness in the formation of the contract; and unfairness or one-sidedness in the terms of the contract. New Jersey allows the defense of unconscionability to succeed based on a strong showing of one factor, even if the other factor is only marginally present.

Here, there is a strong argument for non-enforcement of the penalty in the Bieber Contract, due to its unconscionability. First, we should note that the Bieber Contract is a “contract of adhesion.” Adhesion contracts differ from other contracts in that they are typically presented on a take-it-or-leave-it basis, in a standardized form, and without the opportunity for the “adhering” party to negotiate its terms. It can be argued that at the time of execution, the Bieber Contract was thrust upon potential attendees, who likely did not have an opportunity to consult with legal counsel before signing, and likely received it in a setting that was not conducive to reasoned thought regarding the waiver of substantial legal rights or the undertaking of substantial legal obligations. Adhesion contracts necessarily involve indicia of unfairness in their formation.

Substantively, the Bieber Contract subjects even the most innocuous tweet to a $3 million fine. Although parties to a contract are generally free to set forth the amount to which either party will be entitled if the other party breaches, such a “liquidated damages” provision must be set at an amount that is reasonable in light of the anticipated or actual loss caused by the breach and the difficulty proving loss. A provision fixing unreasonably large liquidated damages is in reality a penalty and unenforceable. Because it would be difficult for Beiber to prove that $3 million dollars fairly represents his damages from one tweet, conversation or photo, this liquidated damages provision would be stricken.

However, New Jersey law permits courts to sever unconscionable provisions from otherwise enforceable contracts. Therefore, the fact that the $3 million liquidated damages provision may be unconscionable will not necessarily render the rest of the Bieber Contract unenforceable. Indeed, the subject matter of the Bieber Contract does not otherwise present obstacles to the contract’s enforceability. Parties are free to contract away their right to freedom of speech under the First Amendment, and their rights to “works made for hire.”

Without the $3 million fine, the Bieber Contract is little more than an agreement holding the signer generally liable for damages that he or she causes by the unauthorized publication of information about Bieber and his associates. Bieber hardly needed a contract to so bind his party guests and workers; any person, Bieber-Contract-signer or not, would be liable under the law for any damage they inflict on others for invasion of privacy, absent some affirmative defense.

While there certainly may be lots of juicy questions you may want to ask those who attended or worked at Bieber’s party, don’t ask whether they got more than they bargained for. We can assure you that they did.

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