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Law Firm Technology Directors? Yes.

The Value of Law Firm Technology Directors with Sam McAllister

In this episode we talk about the advantages of having technology and software development capabilities inside your law firm. Can you imagine? And we’re not just talking about someone who is adept at unjamming the printer.

While the legal tech industry offers myriad high-quality solutions (some of my best friends are technology solutions), there are times when a litigator just wants that one thing that the tech doesn’t do. Or, working with the tech has such a long learning curve that the attorney won’t embrace it, that is, if he or she even tries it.

There are also service enhancements attorneys would like to offer clients – capabilities that set the firm apart, that demonstrate the firm has the client’s best interests at heart and that the firm is even (gasp!) innovative.

Litigators want to get an edge at trial. They want to be able to collaborate smoothly with clients. They want clients to get answers to important questions quickly. Focusing on customer experience is not just for retailers anymore.

Joining me to talk about how one law firm benefits from having its own in-house technology developer is Sam McAllister, Director of Litigation Technology at Lightfoot Franklin & White in Birmingham, Alabama.

Sam works on creative solutions for the firm’s litigation defense teams in the categories of communications, workflows, automation, multimedia, task efficiency, jury selection, information organization, and courtroom visualization, and more. The results come in the form of proprietary software, custom platforms, and apps. Many make the firm more efficient, cost-effective, and better equipped to collaborate with clients. Some have the effect of wowing clients, too.

It’s no wonder Sam found himself on the Fastcase 50, a unique award that celebrates innovative professionals in the legal field. Sam, they said, exemplifies the “build-your-own spirit” of the award.

He is the leader of the firm’s Case Clarity Group, which provides “highly-developed technology to clients throughout the duration of a case, e-discovery collaboration with Lightfoot lawyers, and adaptive evidence models to make complex ideas simple.” And – I like this part – “ask any lawyer who knows him – Sam does what it takes to help you win a case and is known for bringing calm to the most intense of trials.” (I can think of some work groups that would benefit from a position I just made up – Director of Calm. I mean, a cat can only do so much.) Sam received his B.S. in computer science from Auburn University. Speaking of cats – Go Tigers!

I hope you enjoy the episode. If so, give us a rating!

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This podcast is the audio companion to the Journal on Emerging Issues in Litigation. The Journal is a collaborative project between HB Litigation Conferences and the Fastcase legal research family, which includes Full Court Press, Law Street Media, and Docket Alarm. The podcast itself is a joint effort between HB and our friends at Law Street Media. If you have comments or wish to participate in one our projects please drop me a note at Editor@LitigationConferences.com.

(actual size)

Tom Hagy
Litigation Enthusiast and
Host of the Emerging Litigation Podcast
Home Page
LinkedIn

Sam McAllisterLightfoot Franklin & White

Sam works on creative solutions for the firm’s litigation defense teams in the categories of communications, workflows, automation, multimedia, task efficiency, jury selection, information organization, and courtroom visualization, and more.

The results come in the form of proprietary software, custom platforms, and apps. Many make the firm more efficient, cost-effective, and better equipped to collaborate with clients. Some have the effect of wowing clients, too.

June 6, 2023
Digital Health Care Companies, Beware: Federal Agencies Are Tracking Your Use of Online Tracking Technologies

The Authors

Patricia MarkusNelson Mullins

Patricia A. Markus (trish.markus@nelsonmullins.com) represents health care providers and health technology companies across the country on wide-ranging regulatory compliance, reimbursement, licensure, and operational matters, with a special focus on issues surrounding health information privacy, security, and technology.

Shane DuerNelson Mullins

Shane Duer (shane.duer@nelsonmullins.com) focuses his practice on healthcare regulatory and corporate matters, with an emphasis on data privacy, cyber security, and information management concerns within and beyond the health care industry.

Emerging Litigation PodcastProduced by HB Litigation and Law Street Media

Interviews with leading attorneys and other subject matter experts on new twists in the law and how the law is responding to new twists in the world.

Digital Health Care Companies, Beware

Federal Agencies Are Tracking Your Use of Online Tracking Technologies.

Abstract: Health care industry stakeholders have regularly used online tracking technologies to help improve patient experience. However, growing scrutiny by the Office for Civil Rights, which enforces the Health Insurance Portability and Accountability Act of 1996 (HIPAA), requires covered entities and business associates to proceed cautiously in their use of such technologies. In addition, recent enforcement actions by the Federal Trade Commission make clear that a wide range of digital health companies, whether or not regulated by HIPAA, must tread carefully when collecting and disclosing personal information related to health, especially where consumers’ location data is to be used for a company’s advertising purposes, as they may be held accountable for failing to maintain the privacy and security of individuals’ protected and individually identifiable health information.

The increasing number of lawsuits and news articles regarding use of these technologies demonstrates that third-party technology tracking vendors who receive PHI often are not operating under Business Associate Agreements (BAAs). The vendors in most instances disavow any need to collect PHI and accordingly instruct users to avoid sending PHI or other personally identifiable information. Under HIPAA, covered entities and business associates generally may not disclose PHI to third parties for health care operations purposes, unless such disclosure is to a business associate pursuant to a BAA, or the disclosure is made pursuant to an individual’s HIPAA-compliant authorization.

Not only does sharing PHI through third-party tracking technologies without individuals’ authorizations violate HIPAA, but the FTC has asserted in two recent enforcement actions that the collection and sharing of individuals’ IIHI through these technologies without individuals’ “affirmative express consent” constitutes unfair and deceptive trade practices.

Download the article now!

June 1, 2023
Big Tech’s Race to Develop Superior Artificial Intelligence Technology

Big Tech’s Race to Develop Superior Artificial Intelligence Technology

Will A.I. Compromise Free Enterprise, Disclosure and Security?

“Robots Typing” generated by ChatGPT

America’s Big Five tech companies – Amazon, Apple, Facebook, Google and Microsoft – are racing to develop technology they claim will change the world — again. The tech Goliaths have more than 33,000 researchers at their disposal to create artificial intelligence (A.I.) technology with an obvious and perpetual prize: revenue.

It’s the talk of the world. NBC Nightly News recently predicted the impacts that A.I. will have on society in the coming years. A.I. tech was also the center of attention at the 2023 Davos Economic Summit. Prominent tech leaders such as Elon Musk and the CEO of OpenAI, Sam Altman, heralded that A.I. will improve virtually everyone’s lives, but with some risks involved.

Andrew Perlman, dean of Suffolk University Law School, says there is nothing “future” about it. In The Implications of ChatGPT for Legal Services and Society, he wrote, “The disruptions from AI’s rapid development are no longer in the distant future. They have arrived …” And for the legal industry, he said, “ChatGPT may portend an even more momentous shift than the advent of the internet.”

Just one legal application out there today is the use of A.I. technology (GPT-3) by Docket Alarm, a popular court docket search service. Docket Alarm allows users to see A.I.-generated summaries of filings without even opening them. Michael Sander, VP of analytics with Docket Alarm owner Fastcase, told legal technology enthusiast Bob Ambrogi that the feature is experimental and should be relied upon with some healthy caution. [Disclosure: HB collaborates with Fastcase in creating litigation content, e.g., the Journal of Emerging Issues in Litigation and the Emerging Litigation Podcast.]

As non-attorney and comic book hero Spiderman famously said, “With great power comes great responsibility.” But will the tech companies (or their algorithms) take responsibility for the rush of legal issues certain to continue from an unregulated A.I. Wild West? Critics say this automated technology has already damaged democratic discourse. A.I.-generated content is easily observed on Twitter and other platforms — flooding the digital town square of public opinion.

An unregulated A.I. race creates myriad legal issues that our lawmakers and our Constitution seem ill-equipped to address — at least quickly. Legal issues to which A.I. will, critics fear, play a role include degradation of free speech and public discourse, increased monopolization, greater economic inequality, and the mass proliferation of copyright infringement.

Damage to Discourse and Democracy

FDR photo courtesy of the Library of Congress

Technology and democracy have historically gone hand in hand, from typesetters allowing printers to produce newspapers and magazines, to famous radio fireside chats with President Roosevelt. A healthy democracy relies on input from its citizens as well as unhindered First Amendment rights for the citizens who utilize technologies to disseminate messages, so long as they do not promote violence or undermine security.

Since 2015, A.I. has increasingly influenced the democratic process in both the United States and abroad. Chatbots — an A.I. technology designed to automate text via algorithms to respond to people’s messages. Bots have been used to repost, repopulate, and generate social media posts on Twitter and other social media sites. Misinformation abounds.

A popular bot is ChatGPT developed by OpenAI, which we used to augment this article. [Editor’s Note: See the photo at the top and writing examples in the sidebar. The rest was drafted by a human being. Or so he claims.]

In a November 2022 op-ed published in Scientific American by A.I. expert Gary Marcus, OpenAI’s ChatGPT was deemed to “sound authoritative, even when it’s wrong, which makes it a perfect tool for mass-producing misinformation.” A Stanford University analytical research paper co-sponsored by the school’s sociology and psychology departments explains that messages generated by ChatGPT are just as capable of persuading readers as human writers are.

A.I. has also been developed to write text for news stories. Blogger Jacob Bergdahl experimented in July 2021 with OpenAI’s GPT-3 bot to generate comical fake news stories about how President Biden’s favorite food was pizza with ice cream on top, how Sweden’s prime minister rode a pig, and the European Union’s investment in onion farms. (Again, those are made up!) Bergdahl said, “I don’t know about you, but I’m equal parts impressed and terrified at how convincingly the algorithm explained these ridiculous topics. To reiterate: I only entered the first sentence of each story, and I didn’t edit the AI’s output in the slightest.”

A.I. has recently been employed to manipulate images, generating a startlingly realistic image of Donald Trump being dramatically arrested in front of a Manhattan federal courthouse in March. Belgian-based journalist Eliot Higgins believes he has since been banned from the image generating platform, Midjourney. The image was on Bellingcat, Higgins’ investigative journalism site. He shared it on Twitter where it went viral; it was shared by millions social media users.

Critics say the challenges to democracy are exacerbated by the Big Five’s hold on the technology.

Monopolization and Free Enterprise Limitations

Text-based A.I. tools are already widely used by mid-sized companies to large corporations, particularly in the form of chatbots. Tech companies like Outreach.io promotes chatbot services to streamline customer service, reduce costs, and reduce labor needs. However many executives are, “proceeding with caution given the limitations of ChatGPT” according to a Wall Street Journal article published this January. Chatbots through ChatGPT and eventually through more advanced A.I. language systems may even convince most customers into believing they are interacting with human beings. The WSJ further reports that, “[w]hile many chatbots are trained to deliver a version of “I don’t know” to requests they cannot compute, ChatGPT, for example, is more likely to spout off a response with complete confidence—even if the information is wrong.”

“[G]enerative A.I. risks turbocharging fraud. It may not be ready to replace professional writers, but it can already do a vastly better job of crafting a seemingly authentic message than your average con artist — equipping scammers to generate content quickly and cheaply. — FTC Chair Lina Khan, May 3, 2023, New York Times

Data security company Cyberhaven recently performed an audit of its employees using OpenAI’s ChatGPT to determine if sensitive company data was being passed on to the chatbot service. Their audit revealed as much as 11% of the content pasted into ChatGPT contained sensitive company data. Cyberhaven, which offers data security software to a variety of companies, observed that a growing number of their clients had employees utilizing ChatGPT. “Despite some companies blocking ChatGPT, its use in the workplace is growing rapidly,” wrote Cyberhaven’s Cameron Coles.

A.I. developers have also implemented their own chatbots or partnered with A.I. companies to optimize online search engines with the technologies. Google uses an A.I. tool called Bard. Microsoft, through its search engine Bing, recently implemented ChatGPT. A report by Public Citizen explains that an “A.I.-generated answer means the search engine becomes less a tool for finding unique and original sources of information and more a tool for synthesizing those original sources into a secondary source.” Microsoft started incorporating ads into its Bing search chatbot which means it will likely drive more online traffic away from an original information source and channel the traffic more to the answer provided by the A.I. service.

Publishers have also sounded the alarm about chatbots and A.I.-generated search engines. Publishers rely on users finding their content through search engines and worry that A.I. tools will drive traffic away from their sites. A.I. search engine results also further threaten small to mid-sized businesses and their economic prospects. OpenAI states on its website that it is developing plug-ins that will allow its latest model of ChatGPT to perform automated actions online for customers such as booking flights, ordering groceries, and shopping.

As the report by Public Citizen notes, “A.I. tools as intermediaries is another way tech corporations can insert themselves into supply chains and charge commissions that raise prices for consumers, while siphoning money away from small and local businesses.”

A.I. potentially sets up large businesses for claims of monopolization and unfair business practices, some forecast.

“While the technology is moving swiftly, we already can see several risks. The expanding adoption of A.I. risks further locking in the market dominance of large incumbent technology firms. A handful of powerful businesses control the necessary raw materials that start-ups and other companies rely on to develop and deploy A.I. tools. This includes cloud services and computing power, as well as vast stores of data.” — FTC Chair Lina Khan, May 3, 2023, New York Times

What is more, this technology has been widely predicted to cause greater economic inequality than exists today.

Economic Inequality

The Big Five and their whopping 33,000 doctoral A.I. researchers clearly indicate their intentions – to generate more corporate wealth. According to a March 27, 2023 article written by the Washington Post, nearly 70% of A.I. Ph.Ds. opt to work for the corporate sector whereas, 20 years ago, that number was roughly 20%. This metric indicates that the vast majority of A.I. tools and technology being developed are not for academia or truly life-improving purposes, but for corporations to render them more machine-like and more easily generate and manipulate money.

OpenAI CEO Sam Altman wrote a manifesto in 2021 predicting that the widespread deployment of A.I. would lead to most people being worse off than they are today. Altman painted an ominous picture of the world to come, decrying how “in the next five years, computer programs that can think will read legal documents and give medical advice. In the next decade, they will do assembly-line work and maybe even become companions. And in the decades after that, they will do practically everything, including making new scientific discoveries that will expand our concept of everything.”

Altman also argued that A.I. will “create phenomenal wealth,” and “if we get this right…can improve the standard of living for people more than we ever have before.” OpenAI conducted their own research into this topic in 2023 and published a paper indicating that approximately 80% of the U.S. workforce could have least 10% of their tasks affected by the introduction of GPTs (generative pre-trained transformers), while roughly 19% of the workforce could have as much as 50% of their tasks automated. The extent of unregulated image, text, and even voice manipulation by GPTs has the potential to create many copyright issues, especially for professional artists, musicians, and actors.

Copyright Infringement

Public Citizen reported that artists and writers have had the content they produced and published online used without their consent to train A.I. tools to produce derivative art. Cartoonist Sarah Anderson’s artwork was turned into neo-Nazi memes by far-right political activists. Voice actors have similarly been impacted by non-consensual use of their voices with the use of A.I. tech.

Vice News reported on Feb. 7, 2023, that voice actors were increasingly subjected to contracts containing language that gives away their rights to use of their A.I.-generated voices. (Demonstrating the high-wire act that online media is, Vice itself is reportedly headed to bankruptcy.)

Tim Friedlander, President and founder of the National Association of Voice Actors said clauses “are very prevalent right now” that sign rights to an actor’s voice over to publishers. “[M]any voice actors may have signed a contract without realizing language like this had been added. We are also finding clauses in contracts for non-synthetic voice jobs that give away the rights to use an actor’s voice for synthetic voice training or creation without any additional compensation or approval. Some actors are being told they cannot be hired without agreeing to these clauses.” Actor Emma Watson’s voice was recently used without her consent for a reading of Mein Kamph, according to Vice News.

U.K.-based Getty Images has launched a lawsuit in federal court in Delaware against Stability A.I., alleging that the company copied 12 million images without permission to train its A.I. tools. Stability A.I. has responded to the complaint, arguing that their use of the images falls under the Fair Use Act 17 U.S.C. § 107 and does not constitute copyright infringement. Legal analysts believe that Getty Images has a stronger case than an individual artist would have given the blatant use of millions of its images.

Proposed Public Solutions

Media attention surrounding A.I. tools and technology is accelerating. The Biden Administration acknowledged that policymaking was woefully lagging in mitigating potential harms stemming from the widespread deployment of A.I. In response, the Biden Administration published a “Blueprint for an A.I. Bill of Rights” in October 2022.

This blueprint is intended to serve as a broad guide for the federal government’s deployment of A.I. and model of best practices for society at-large.

There are five principles outlined in the guidance document:

1) Americans should be protected from unsafe or ineffective systems.

2) Americans should not face discrimination by algorithms.

3) Americans should be protected from abusive data practices and have agency over how data about them is used.

4) Americans should know when, how and why automated systems are being used to make decisions that affect them.

5) Americans should have the choice to opt out of automated customer service and have access to a person who can help troubleshoot problems.

Critics of the blueprint argue that while the White House did seek input from the Big Five’s lobbyists, the guide “is essentially a white paper with no enforcement authority against Big Tech.” Some in the corporate world have already contested that, saying ,“even [the] unenforceable guidelines could stifle innovation.”

U.S. Representative Ted Lieu (D-Calif.), who has a background in computer science, is advocating for the creation of a federal agency dedicated to regulating A.I. technologies. Lieu argues that Congress needs to implement the creation of this new agency to “ensure that the development and deployment of A.I. is done in a way that is safe, ethical, and respects the rights and privacy of all Americans, and that the benefits of A.I. are widely distributed and the risks are minimized.”

As the Big Five and other contributing A.I. companies continue their race to develop the newest and best A.I. technologies, people worldwide remain at risk for potential nonconsensual data collection, unwarranted marketing solicitation, and nonconsensual use of personal information, pictures, published text, and videos. This report highlights but a portion of the foreseeable legal issues arising in the unregulated Wild West of A.I. technology.

[Editor’s Note: Would it be petty to point out that in the photo of Robots Typing some appear not to have heads? But, then, maybe their brains and eyeballs are located elsewhere. 😊 ]

Tom Hagy edited and contributed to this article.

By Hunter SchmitzGuest Writer

Hunter Schmitz is a freelance legal writer and paralegal with Focus on Property Law and Civil Litigation.

How A.I. Can Benefit Society

By ChatGPT

Artificial intelligence has the potential to benefit society in a multitude of ways. One of the most significant areas of impact is in automation, where AI can perform repetitive and tedious tasks more efficiently and accurately than humans. This can lead to cost savings and increased productivity, freeing up people’s time to focus on more creative and strategic endeavors. Additionally, AI can help in areas such as healthcare by improving diagnostics and developing personalized treatment plans. It can also be used in education to provide personalized learning experiences and in environmental conservation to monitor and protect wildlife and natural resources. AI can also assist in disaster response and relief efforts by analyzing data and predicting outcomes. Overall, artificial intelligence has the potential to improve many aspects of society, from healthcare to education to the environment, and beyond.

Can ChatGPT Really Pass the Bar?

By ChatGPT

As an AI language model, I do not have the ability to pass a bar exam or attend law school in the traditional sense. While I have been trained on a vast amount of legal information, including case law, statutes, and legal principles, I am not a licensed attorney and cannot provide legal advice or representation. However, I can assist in answering legal questions and providing information about legal topics. It is important to note that relying solely on information provided by an AI language model is not a substitute for seeking the advice of a licensed attorney.

What is This Article About?

By ChatGPT

The article discusses the race among America’s Big Five tech companies – Amazon, Apple, Facebook, Google, and Microsoft – to develop artificial intelligence (AI) technology that they claim will change the world. The author raises concerns about the legal issues that may arise from an unregulated AI race, including degradation of free speech and public discourse, increased monopolization, greater economic inequality, and copyright infringement. The article also discusses how AI has already influenced the democratic process by being used to spread misinformation and generate fake news stories. The article further argues that the almost exclusive development of AI technology by the Big Five could lead to monopolization and limitations on free enterprise.

May 11, 2023
Intellectual Property Trial Team Diversity with Tara Trask

Intellectual Property Trial Team Diversity with Tara Trask

Diversity and inclusion initiatives aren’t just valuable for checking off compliance boxes and writing marketing copy. Those benefits are a distant second and third to the genuine value team diversity has on the success of a company or a project. That also means law firms and trials.

A recent article published by the American Bar Association Tort and Insurance Practice Section hailed diversity of perspectives for how they improve a team’s ability to resolve legal issues, innovate solutions, and introduce factors homogeneous teams may miss.

The National Association for Law Placement reported that women and people of color are making great progress at major law firms. Nearly half of associates are women and, based on summer associate statistics, women are expected to break the 50% as early as this year or next. Black associates made impressive gains, but there remains room for improvement. At the partner level, however, Black and Latinx women and men remain stuck in the low single digits.

In this episode we drill down even further to examine trial teams in the intellectual property arena. I was thrilled to speak with Tara Trask, one of the nation’s leading experts on IP trials and juries, having directly worked on or observed more of these proceedings than just about anyone. Tara has championed research on this topic as part of her work and presentations for the American Intellectual Property Law Association. The diversity spark lit up for Tara when she and her panelists enjoyed an enthusiastic reaction to an AIPLA conference session she moderated titled, “Perspectives on Diversity: Views on Trial Teams From the Bench, The Boardroom, and the Jury Box.”

Listen to Tara’s insights based on analysis of her own cases, analysis of related studies, and expanded fact-gathering she is leading in collaboration with the association.

BREAKING NEWS! This episode kicks off a series of guest-hosted sessions for which Tara will take the mic to interview professionals from her impressive network on legal team diversity.

Now You Can Watch the Podcast

WATCH IT NOW

This podcast is the audio companion to the Journal on Emerging Issues in Litigation. The Journal is a collaborative project between HB Litigation Conferences and the Fastcase legal research family, which includes Full Court Press, Law Street Media, and Docket Alarm. The podcast itself is a joint effort between HB and our friends at Law Street Media. If you have comments or wish to participate in one our projects please drop me a note at Editor@LitigationConferences.com.

Tom Hagy
Litigation Enthusiast and
Host of the Emerging Litigation Podcast
Home Page
LinkedIn

Loved hearing what Tara said about this subject matter?

Explore more content from Tara!

Podcast: Jury Selection in the Age of Conspiracy Theories and Distrust with Tara Trask

Podcast: Lawyers for Good with Tara Trask and Jason Flom

Tara TraskTrask Consulting

Tara Trask is the President of Trask Consulting, a boutique litigation strategy, jury research, and trial consulting firm with offices in San Francisco, Houston, and New York. She focuses on civil litigation with an emphasis on complex commercial litigation, including intellectual property, antitrust, securities, breach of contract, and fraud.

She has assisted both plaintiffs and defendants in cases involving products liability, insurance, and oil and gas. Tara has extensive experience in assisting institutions and individuals in matters involving regulatory enforcement and white-collar defense, as well. She has been involved in more than 500 jury trials.

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May 9, 2023
Persuasion as Direct and Honest Trial Advocacy with Jack Siegal

Persuasion as Direct and Honest Advocacy with Jack Siegal

The relevance to jury trials and jury persuasion is obvious. According to studies cited in a 2019 article in Business Insider, people develop first impressions of you “even before you open your mouth.” That means your mere appearance “affects how trustworthy, promiscuous, and powerful people think you are.”

It’s the trustworthy part that attorneys need to pay attention to. Regardless of the strength of their case or whether the law is on their side, an attorney still must be persuasive. And, unless the audience – whether it is a judge, a panel of judges, a regulatory body, or a jury – sees you as credible, the rest will likely not matter. But what makes an attorney, or anyone for that matter, credible? Is this something you’re born with or is it something you can develop over time? Is it true, as some studies suggest, that you can change some first impressions by making some changes in how you present yourself, or are you just stuck with a less than trustworthy vibe? Interested in upping your jury persuasion game?

A Good Place to Start

Listen to my interview with attorney Jack I. Siegal, a partner with Fox Rothschild LLP in Boston. Jack believes we can all make positive adjustments in the nuanced practice of achieving credibility.

This podcast is the audio companion to the Journal on Emerging Issues in Litigation. The Journal is a collaborative project between HB Litigation Conferences and the Fastcase legal research family, which includes Full Court Press, Law Street Media, and Docket Alarm. The podcast itself is a joint effort between HB and our friends at Law Street Media. If you have comments or wish to participate in one our projects please drop me a note at Editor@LitigationConferences.com.

P.S. Toward the end I could barely manager my ADHD and took the conversation into a chat that ranged from TikTok clips of the attorneys in the Amber Heard/ Johnny Depp trial, somewhat on point, to discussion of great drumming, which would take some crafty knots to tie that in. Jack, being good natured and a good sport, went right along with me. Also, that’s me on the bongos.

(actual size)

Tom Hagy
Litigation Enthusiast and
Host of the Emerging Litigation Podcast
Home Page
LinkedIn

Jack SiegalFox Rothschild LLP

Jack is a seasoned trial lawyer with experience spanning 20 years experience, during which he has tried cases in several jurisdictions. He also provides transactional counseling for executive compensation agreements, mergers, and other matters. Jack focuses on complex commercial disputes, government investigations and white-collar defense, regulatory proceedings, and compliance across a wide range of industries, including financial, healthcare, high-technology, and government contracting. Education: Santa Clara University School of Law, J.D., magna cum laude; Santa Clara University, B.A., Greek and Latin, magna cum laude, Phi Beta Kappa; University of Virginia, Graduate Study, Classics and Classical Languages, Literature, and Linguistics.

May 6, 2023
“Years of Deception” Behind Consumer Privacy Violations Alleged
Mental Health Platform’s Data Sharing Practices Challenged.
- BetterHelp allegedly shared personal identifiable info with third parties.
- FTC files administrative complaint asserting “years of deception.”
- Days later, two class actions were filed in the Northern District of California.
Photo by Nik Shuliahin 💛💙 on Unsplash

Online mental health company BetterHelp, Inc. is facing allegations on two fronts for allegedly sharing personal identifiable information with third parties and breaching consumer privacy.

The Federal Trade Commission (“FTC”) initiated an administrative complaint against the California-based online mental health company on March 2, 2023, after what they call years of deceptive practices and blatant denial of a media report published by Jezebel in February 2020. The article cited evidence that BetterHelp shares sensitive patient information and email account information with third parties such as Facebook, Snapchat, Criteo, and Pinterest.

Days after the FTC filed its complaint, consumers filed two class actions in the Northern District of California’s San Jose Division (C.M. v. BetterHelp, Inc., March 7, 2023, 5:23-cv-01033 and Jane Doe v. BetterHelp, Inc., March 11, 2023, 5:23-cv-01096). Both consumer privacy lawsuits state that their facts are largely supported by experts in the field of data privacy.

BetterHelp is a Delaware corporation with its principal office or place of business in Mountain View, Calif. On its website the company claims it is the “world’s largest therapy platform” with more than 25,000 licensed therapists available. BetterHelp operates generalized mental health therapy services and operates specialized therapy services for members of the LGBTQ community, members of the Christian Faith, Spanish-speaking clients, and teen counseling with parental consent. BetterHelp founder Alon Matas stated in a Medium article published Oct. 8, 2018, that, “One of our core missions is to destigmatize mental health. We firmly believe that nobody should ever feel ashamed or embarrassed to reach out for help.”

Explosive Growth

The FTC complaint states that BetterHelp’s website and app “has seen explosive growth over the last few years,” adding more than 118,000 U.S. users in 2018, 158,000 in 2019, and 641,000 in 2020. BetterHelp required new users between August 2017 to December 2020 to fill out mandatory questionnaires. These intake questionnaires reportedly ask a user’s age, marital status, whether they’ve been in therapy before, how they rate their sleeping and eating habits, employment status, and whether they are experiencing overwhelming emotions such as sadness, grief, and depression, and whether they have suicidal ideation.

BetterHelp repeatedly assured users filling out these questionnaires that their email addresses and information would be “kept strictly private” and “never shared, sold or disclosed to anyone.” However, FTC said its investigation revealed that the company used clandestine tactics to share health information of more than 7 million users with Facebook, Snapchat, Criteo, and Pinterest.

The FTC has filed a proposed order that would require BetterHelp to pay $7.8 million as compensation to users who signed up for BetterHelp’s services between Aug. 1, 2017 and Dec. 31, 2020. The compensation is intended to recoup costs patients paid to BetterHelp. The average patient paid an average $60 – $90 per week for these counseling services. The proposed order would also prohibit BetterHelp from sharing consumers’ health data for advertising, sharing their personal information for re-targeting, or serving ads to consumers who had visited the company’s website or app. The FTC is pushing for BetterHelp to accept a settlement where the company agrees to limit their data sharing in the future and the company would be directed to contact affected consumers about the case and must also direct third parties such as Facebook or Pinterest to delete consumers’ health and other personal data shared with them.

Consumer Privacy Investigative Report

During the Covid-19 pandemic, Jezebel gathered information on how BetterHelp handles its users’ data by having Jezebel employees sign up for therapeutic services and monitoring the kinds of information BetterHelp was collecting and sending to third parties. When presented with the findings, BetterHelp said their methods were “standard and that they far exceed all applicable, regulatory, ethical and legal requirements.” Jezebel reported that BetterHelp slipped data to dozens of third parties, monitored their behavior online, and signaled to companies like Facebook, Google, Snapchat, and Pinterest that the applicants were considering BetterHelp services.

The FTC’s investigation followed the investigative report. The Commission states that in December 2020 BetterHelp changed its privacy statement to say, “Rest assured – your health information will stay private between you and your counselor” which was in use until September 2021. Upon notice of the FTC’s investigation and public pressure from consumers, the company changed its privacy statement again in October 2021 to say that it does disclose visitors’ IP addresses and other personal identifiers for advertising, and offered visitors an opportunity to out of these disclosures. Users did not have the option to opt out prior to October 2021.

The FTC describes two methods that BetterHelp used to send information to Facebook.
- In the first, the company compiled visitors’ and users’ email addresses which they then uploaded to Facebook to match the individuals with their Facebook user accounts for the purposes of targeting them and others like them with advertisements.
- Secondly, between 2013 and December 2020, Better Help shared visitors’ and users’ email address, their IP address, and records known as “events” to Facebook. These events automatically tracked when each visitor or user on the main website or affiliate websites answered certain questions on the intake questionnaire or when they enrolled in a certain service. BetterHelp automatically disclosed these events to Facebook through what are known as web beacons that were placed on every website they operated.
With two consumer privacy class actions looming and the FTC’s administrative complaint, BetterHelp faces significant pressure to make serious changes.

By Hunter SchmitzGuest Writer

Hunter Schmitz is a freelance legal writer and paralegal with Focus on Property Law and Civil Litigation.
May 2, 2023
Litigation Funding Battle Over Litigation Control
Sysco and Burford Capital Butting Heads Over Litigation Control.
- Food giant claims funder is interfering with antitrust litigation.
- Funder says its client is settling for too little.
- Public dustups over litigation funding are rare.
Photo by Richard Lee on Unsplash

Leading litigation funder Burford Capital LLC and food distribution giant Sysco Corp. are locking horns over the control and use of litigation funds. Burford says Sysco is settling Burford-funded antitrust litigation for amounts that deny the financial company optimal return on its investment. Sysco says the funder has overstepped its bounds and interfered with Sysco’s litigation oversight.

Sysco received $140 million from Burford in part to fund price-fixing lawsuits against poultry, pork and beef producers – complex multidistrict litigation involving hundreds of plaintiffs, dozens of defendants, and related criminal suits brought by the Department of Justice (DOJ). So far, settlements of private antitrust litigation have reached into the hundreds of millions, and DOJ has levied more than $100 million in fines.

Burford, which gets a share of any settlements in the antitrust litigation, says Sysco is settling for too little.

Sysco has sued companies associated with Burford – Glaz LLC, Posen Investments LP, and Kenosha Investments LP – claiming they are meddling in Sysco’s settlement efforts. Glaz, Posen, and Kenosha are all companies which have Burford Capital Limited as the only direct or indirect partner. All three are controlled by Burford and Burford operates as the sole funder of their respective litigation efforts.

Sysco also criticized its attorneys at Boies Schiller Flexner, whom, they say, allegedly spoke with Burford representatives without Sysco’s knowledge.

Sysco says the firm gave into Burford’s demands, an accusation the firm vehemently denies. Meanwhile, Burford has obtained an arbitration ruling blocking Sysco from finalizing any of the price-fixing settlements against the meat producers. Sysco has moved to overturn that order, saying it “violates several of the most fundamental public policies underlying our judicial system, including party control over litigation.” Burford claims Sysco gave it veto power over settlements, but only after the food distributor violated the terms of the investment deal.

This high-stakes kerfuffle raises issues around the role litigation funders play in the cases they fund – a subject critics have hammered on since the inception of the industry. While ethics rules forbid interference by lenders, Sysco and Burford clearly disagree on whether the funder veered out of its lane. Whatever the result, it’s unusual to see disputes between funders, litigants, and counsel fought in broad daylight like this.

According to Custom Market Insights, the global litigation funding market was $12.2 billion in 2021 and is expected to reach $25.8 billion by 2030. In addition to London-based Burford, it lists key market players as Parabellum Capital, Bentham Capital, Juridica Investments, Woodsford Litigation Funding Ltd., and others.

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April 26, 2023
Alleged Hair Product Injuries Impact Women of Color
L’Oréal Among Defendants in Litigation Over Hair Products.
- Dozens of hair straightener cases allege higher incidence of cancers and other diseases.
- Plaintiffs in dry shampoo litigation say products contain benzene.
- Seven companies control the U.S. hair product industry.
Photo by Giorgio Trovato on Unsplash

L’Oréal has been hit hard in recent hair care litigation related to straighteners, relaxants, and dry shampoos. L’Oréal was named a defendant in nearly sixty complaints alleging that straightening products manufactured by the beauty giant have caused cancer in its consumers. L’Oréal has also been named a defendant in a proposed class-action for its Redken dry shampoo that allegedly contains the carcinogen benzene. Other large industry players such as Johnson and Johnson and Unilever have also been accused of selling dry shampoos with dangerous levels of benzene.

Straighteners and Relaxers Litigation

Dozens of cases have been consolidated in multidistrict litigation against L’Oréal for its potentially cancerous hair straighteners and relaxers. Mitchell v. L’Oréal USA Inc. is a typical case. It was filed by Missourian Jennifer Mitchell, a black woman, after her diagnosis of uterine cancer which she claims was caused by endocrine disrupting chemicals (EDCs) in L’Oréal’s hair straighteners and relaxers. Jennifer Mitchell was diagnosed with her cancer on August 10, 2018.

“Ms. Mitchell was first exposed to EDCs and/or phthalate-based products around 2000, at or around the age of 10, when she began using Defendants’ Product.” She used the products as instructed for 22 years, leaving the chemicals in her hair for long periods of time. At the age of 28, she was diagnosed with uterine cancer despite the cancer not being in her family history. As a result of her cancer diagnosis, Ms. Mitchell had to undergo a full hysterectomy, causing her emotional and physical pain, and rendering her unable to have children.

The complaint details a long history of marketing harmful hair relaxers and straighteners to black women to combat their natural hair texture and meet a Eurocentric white beauty standard.

The filed complaint consisted of fifteen counts ranging from strict liability failure to warn and negligence to medical monitoring. The products included in the complaint were Motions, Dark & Lovely, Olive Oil Relaxer, and Organic Root Stimulator.

Ms. Mitchell’s evidence supports her claims that the products allegedly caused her cancer due to EDCs. Health issues linked to EDCs include uterine cancer, breast cancer, uterine fibroids, endometriosis, and preterm delivery, amongst others. “On October 17, 2022, a study led by the National Institutes of Health (NIH) reported findings that women who frequently used chemical hair straightening or hair relaxer products were more than twice as likely to develop uterine cancer as women who did not use such products.

Ms. Mitchell’s case was consolidated with dozens of other cases against L’Oréal and other defendants in Chicago federal court as In re: Hair Relaxer Marketing, Sales Practices, and Products Liability Litigation. The consolidation was opposed on December 7, 2022, by L’Oréal USA, Inc., L’Oréal USA Products, Inc., SoftSheen-Carson LLC, and SoftSheen-Carson (W.I.), Inc., collectively known as “the L’Oréal defendants.”

In the L’Oréal defendants’ response to the motion for consolidation, the company first outlined its issues with the frequently referenced NIH study that catalyzed the filing of many of the plaintiffs’ lawsuits. For example, L’Oréal stated that the study “did not collect information on specific brands or ingredients used by the participants,” and that “all of the women in the NIH Study had sisters who had been diagnosed with breast cancer.” L’Oréal also argued that none of the plaintiffs’ cases were similar enough to consolidate. The plaintiffs’ cases differed in products used, timespans, named defendants, and injuries.

Further, L’Oréal argued that if consolidation had to happen, then the case should use the Southern District of New York as a forum, where fifteen of the matters were pending, and where the company has its headquarters. The defendant also disagreed with the Chicago judge that the case would be assigned to—The Honorable Mary M. Rowland—claiming she lacked multidistrict litigation (MDL) experience.

Despite L’Oréal’s best efforts, its motion was fruitless. Cases in “Schedule A” of the MDL (MDL No. 3060) were consolidated on February 6, 2023. Cases from California, New York, Georgia, and Illinois, including Ms. Mitchell’s case, were assigned to The Honorable Mary M. Rowland in the Northern District of Illinois. Since the original transfer, many other actions have been added to the MDL.

Dry Shampoo Litigation

In addition to allegations that its relaxing and straightening hair products cause cancer, L’Oréal is also currently facing accusations of using benzene, a well-known carcinogen, in its dry shampoo products. Other big-names that have been appearing in dry-shampoo complaints include Johnson and Johnson (J&J)’s OGX brand and Unilever’s Dove, Nexxus, Suave, Tigi and Tresemmé brands.

What Is Benzene?

Benzene is a chemical compound that can be both naturally and man-produced. Its harm to human health has been at the heart of many instances of litigation. Benzene, “a component of crude oil, gasoline, and cigarette smoke,” has been determined to be unsafe for human exposure in any quantity greater than zero. Government bodies such as the Food and Drug Administration (FDA), the Environmental Protection Agency, the Department of Health and Human Services, and the World Health Organization have spoken out against the dangers of benzene, and have attempted to limit its exposure to the public.

Valisure’s Report

On October 31, 2022, Valisure released a Citizen Petition on Benzene in Dry Shampoo Products, which prompted the wave of dry shampoo litigation hitting the U.S. court system. The company claims to have tested 148 batches of dry shampoo from 34 different brands and found that 70% of its samples contained benzene in varying amounts.

Pictured Above: Valisure Table 6. Overview of first spray analyses by brand. In some cases, two bottles from the same lot were analyzed and these duplicate lots are grouped by a black outline around the two values.

The petition itself requested a recall of the products Valisure found to be contaminated with benzene, that the Commissioner of the FDA establish better procedures for informing the public of their exposure to dangerous substances in cosmetics, amongst other requests.

Hirsch v. L’Oréal USA, Inc.: The Complaint

In a complaint filed on November 22, 2022, Plaintiff Eileen Hirsch and others similarly situated brought suit against L’Oréal USA, Inc. for its Redken brand dry shampoo products. The class action lawsuit alleges that the product line contains benzene, a carcinogen with evidence linking it to causing cancers such as leukemia, amongst other illnesses. Benzene was not a listed ingredient in the products. Yet, the independent study performed by Valisure found that the product contained as much as 7.55 parts per million (“ppm”) of benzene.

Ms. Hirsch, a Chicago resident, purchased multiple canisters of the Redken dry shampoo from a salon in the area. The complaint alleges that she was harmed in two separate ways: “First, Ms. Hirsch purchased adulterated and misbranded products that were illegally sold to her, and therefore worthless. Second, Ms. Hirsch was deceived by Defendant’s representations and omissions regarding the presence of benzene in the Products.” Other class members are also individuals who have purchased Redken dry shampoo.

Defendant’s Motion to Dismiss

Defendant L’Oréal did its best to get the case dismissed in a motion filed on February 7, 2023. In its Motion to Dismiss, L’Oréal gave several reasons for the complaint’s deficiency, including that the plaintiffs lacked standing to bring the claim and that the claims are preempted. Further, L’Oréal argues that the independent Valisure study relied upon by the plaintiff is insufficient to support the claims, stating that “Valisure . . . [is an] untrustworthy laboratory that has been censured by the [FDA] and federal judges alike.”

Plaintiffs responded to L’Oréal’s Motion to Dismiss, stating that the case was simple, standing had been correctly established, and the defendant’s allegations of insufficient Valisure testing were premature. L’Oréal has replied to the plaintiffs’ motion, but the court has not yet ruled on the Motion to Dismiss, determining the fate of the case.

Looking Forward

Those following the concert of haircare litigation should watch closely to see which product lines are tapped next and why. L’Oréal may be one of the more popular defendants, but that does not mean there aren’t other offenders.

Most beauty products known to average consumers are owned by one of seven large companies—J&J, L’Oréal, Eéste Lauder, Unilever, Procter and Gamble, Shiseido, and Coty. For better or for worse, these corporate identities pioneer most of the research and manufacturing that goes into the creation of the world’s fashion, beauty, and hygiene products. That means when these companies use carcinogens, they can likely be found in a mind-boggling number of items behind your own bathroom mirror, leading to mass injury and extremely complex litigation.

By Victoria Kline

Victoria is a third-year student at the University of Miami School of Law, Juris Doctorate Candidate 2023, Law Review Staff Editor, and soon-to-be associate at Jones Day.
April 26, 2023
Electronic Fund Transfer Fraud with Brad Rustin

Electronic Fund Transfer Fraud with Brad Rustin

Grifters, scammers, con artists

Sen. Elizabeth Warren, who championed the creation of Consumer Financial Protection Bureau (CFPB), calls the Zelle digital payments network a “preferred tool for grifters like romance scammers, cryptocurrency con artists, and those who prowl social media sites advertising concert tickets and purebred puppies — only to disappear with buyers’ cash after they pay.”

18 million Americans defrauded

Scams and fraud committed via the Zelle platform and other peer-to-peer services are surging. According to one lawsuit 18 million Americans were defrauded by schemes perpetrated via apps like Zelle in 2020. Some 1,500 member banks and credit unions participate in the Zelle service. People sent $490 billion via the app in 2021.

But Zelle owner, Early Warning, and its consortium comprising Bank of America, Truist, Capital One, JPMorgan Chase, PNC Bank, U.S. Bank, and Wells Fargo, have refused to refund customers for most of their losses. Sen. Warren issued a report that the claims for fraud received by just four banks will likely exceed $255 million by the end of 2022 – a $165 million increase over 2020. The senator and consumers say Zelle is violating federal consumer protection law.

What is fraud?

The heart of the problem is this: banks and consumers do not agree on the definition of “fraud.”

For clarity on issues surrounding the Electronic Fund Transfer Act (EFTA) and its implementing regulation—Regulation E—listen to my interview with fintech attorney Brad Rustin of Nelson Mullins.

In addition to chairing the firm’s Financial Services Regulatory Practice, Brad counsels financial institutions in regulatory matters, including strategic agreements, product development, and operational compliance. Brad is a Certified Anti-Money Laundering Specialist and a Certified Regulatory Compliance Manager. He received his JD, magna cum laude, from the University of South Carolina School of Law and his BA in Political Science and History, cum laude, from Furman University. Brad is also the FinTech advisor on the Editorial Advisory Board of the Journal on Emerging Issues in Litigation.

*******

This podcast is the audio companion to the Journal on Emerging Issues in Litigation. The Journal is a collaborative project between HB Litigation Conferences and the Fastcase legal research family, which includes Full Court Press, Law Street Media, and Docket Alarm. The podcast itself is a joint effort between HB and our friends at Law Street Media. If you have comments or wish to participate in one our projects please drop me a note at Editor@LitigationConferences.com.

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Tom Hagy
Litigation Enthusiast and
Host of the Emerging Litigation Podcast
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Brad RustinNelson Mullins

Brad Rustin chairs the firm’s Financial Services Regulatory Practice.

He began his career as a litigator focusing on consumer financial services litigation and defense of regulatory claims against chartered and non-chartered financial institutions, finance entities, and money services business. In the wake of the fiscal crisis, he began working with financial institutions, state-licensed lenders money transmitters, non-traditional lenders, check cashers, and mortgage brokers on issues of regulatory compliance.

Brad is a Certified Anti-Money Laundering Specialist (CAMS) by ACAMS and a Certified Regulatory Compliance Manager (CRCM) by the American Bankers Association. He also serves as an expert witness of matters relating to financial regulations and compliance.

He received his JD, magna cum laude, from the University of South Carolina School of Law and his BA in Political Science and History, cum laude, from Furman University. Brad is also the FinTech advisor on the Editorial Advisory Board of the Journal on Emerging Issues in Litigation.

April 26, 2023
Pixel Litigation the Latest Craze in Privacy Law

Meta, Google Face Barrage of Pixel Lawsuits in Digital Privacy War

Photo by Amal S on Unsplash

META PLATFORMS INC. AND GOOGLE are currently facing nearly 70 lawsuits involving large companies and some hospital systems or individual health care providers utilizing Pixel tracking tools embedded on their websites and applications. Sensitive private data such as financial information gathered from filing tax returns online or patient healthcare information stored on patient portals is being actively tracked and sent to Meta and Google for both analytical and advertising purposes.

Tracking pixels are a 1×1 Pixel graphic that serves as a snippet of code used for tracking user behavior, site conversions, web traffic, and other metrics generated from a site’s server. In 2018, Meta told Congress that there were more than 2 million Pixels across the web, which at the time, was one of the largest data-harvesting operations most internet users had ever seen. Meta makes their Pixel code freely available to anyone and any business – thus the amount of Pixel tracking has exponentially grown since Meta testified before Congress. The analytical information that companies gleam from Pixel tracking is paying off and is featured on everything from fast food companies such as Chick-Fil-A, media companies like iHeart Radio, and even tax-filing websites such as Tax Slayer or TaxAct.

Pixel Tax Data

On November 22, 2022, theverge.com co-published a report with The Markup, revealing that Pixel tracking tools located on several renown American tax-filing websites were sending individual tax filers’ contact and financial information to Meta and Google. From January to July 2022, The Markup tracked websites’ use of the Pixel as part of the Pixel Hunt in partnership with Mozilla Rally. Participants of the Pixel Hunt installed a browser extension that provided The Markup with a copy of all data shared with Meta through the Pixel. H&R Block, Tax Slayer, and Tax Act utilized Pixels on their websites and applications that sent financial data to Meta according to the data-driven report.

TaxAct’s Pixel sent some of their users’ tax data to Facebook, including their filing status, adjusted gross income, and the amount of their tax return, if applicable. TaxAct says it has about “three million consumer and professional users”. The Pixel Hunt also revealed that TaxAct’s embedded Pixels were sending data to Google Analytics as well. The Pixel Hunt also revealed that Tax Slayer, H&R Block, and Intuit were also sending specific types of data to Meta and Google.

The audit on Tax Slayer revealed that their embedded Pixel was gathering and sharing information such as phone numbers, the name of the user filling out the tax forms, and names of any dependent added to the return.

An audit on Intuit, America’s largest online filing software, revealed that the company did employ a Pixel but did not send financial information to Meta, but instead sent usernames and information about the last time a device signed into the Intuit account. Whereas the audit into H&R Block revealed that information was being gathered and shared on filers’ health savings account usage as well as dependents’ college tuition grants and expenses.

Tax filing is estimated to be an $11 billion industry in the United States with nearly 150 million individual returns filed electronically in 2021 according to this article. Free tax filing preparation and filing options do exist, but it’s limited to people making $73,000 or less and tends to be difficult to use.

Utilizing the Pixel during their tracking, The Markup found that the Internal Revenue Service directs taxpayers attempting to file for free to some of these tax filing websites with embedded Pixels. TaxAct and Tax Slayer are part of an agreement known as the Free File Alliance. TurboTax (“Intuit”) and H&R Block had participated in this program in the past. Several days after this report was published, a class action lawsuit was filed against Meta in the Northern District of California, John Doe and Jane Doe v. Meta Platforms Inc., et al., 3:22-cv-07557.

Pixel Healthcare and Patient Data

Pixels are also utilized by some healthcare systems and individual medical providers in the United States. In another lawsuit regarding Pixel litigation against Meta in the Northern District of California, Jane Doe v. Meta Platforms Inc., et al., 3:22-cv-04293-AGT, the plaintiff alleges that at least 664 hospital systems or medical provider websites have sent data to Meta via its Pixel tracking tools. The plaintiff argues that this tracking of her private health information is in violation of the Health Insurance Portability and Accountability Act (“HIPAA”)

HIPAA protects the privacy of individually identifiable health information by allowing only certain uses and disclosures of health data, such as for research purposes – but only if this data can’t be linked back to a particular patient. Currently under HIPAA, releasing data that is not properly de-identified could be considered a breach of HIPAA.

Recently on January 30, 2023, a class-action lawsuit was filed in the Tenth Judicial District of Louisiana regarding a local health care provider, Willis-Knighton Medical Center using Pixel tracking tools to send sensitive patient health data to Meta. The plaintiff in Jacqueline Horton, individually and on behalf of others similarly situated v. Willis-Knighton Medical Center, 93767-B, brought action against Willis-Knighton Medical Center for ‘exposing highly sensitive personal information to third parties without their knowledge or consent.’ The Louisiana case differs from California’s because California is one of the handful of states that has passed a statute related to video privacy and consumer protection.

In Jane Doe v. Meta Platforms Inc., the website allegedly shared information related to scheduling appointments with a doctor and reviewing test results. The California suit is seeking damages paid to consumers under the Video Privacy Protection Act (“VPPA”) 18 U.S.C. § 2710. This case was also brought under the California Confidentiality of Medical Information Act, that allows for damages of $1,000.00 per violation. In addition, the California court could potentially force hospital systems named in the suit to clearly disclose that their website uses Pixels to share data with Meta. The Plaintiff is also asking the judge to order that Meta delete sensitive health information that could be used to generate specific ads. This case will highlight misunderstandings of how HIPAA protects health information that’s in the hands of health care providers, insurers or any other entity currently subject to existing HIPAA provisions.

Origins of Pixel Litigation Lawsuits

The VPPA regulates the disclosure of information about consumers’ consumption of video content and imposes prescriptive requirements to obtain consumers’ consent to such disclosure(s). The law was originally enacted in 1988, a year after a journalist published Supreme Court Justice Robert H. Bork’s video rental history during his nominee process in 1987. The rental history contained no salacious details however and Congress quickly acted to pass the VPPA. The act reads:

The VPPA prohibits a person or business that rents, sells, or delivers prerecorded “video cassette tapes or similar audio visual materials” from “knowingly disclos[ing], to any person, personally identifiable information concerning any consumer of such provider . . . .,” absent informed, written consent as defined by the VPPA. 18 U.S.C. § 2710(a)(3). If liability is found, the VPPA allows consumers to seek the following remedies – (1) statutory damages in the amount of $2,500 per violation, (2) punitive damages, and (3) recovery of attorneys’ fees. 18 U.S.C. § 2710(c).

The VPPA was originally enacted to address the concept of a video tape service provider (“VTSP”). This was associated with traditional video rental stories and was rarely invoked as of lately. As online video services became more prevalent, the VPPA began to create legal barriers to major businesses and marketing opportunities for them. Prior to Congress amending the VPPA in 2013, the law created a strange legal paradigm: An organization’s business model involving the provisions to consumers, either on a standalone basis or as part of its broader online platform of online video content (such as a social media company), makes the organization qualify as a VTSP.

Congress amended the VPPA in 2013 to provide that disclosure of consumer data to third parties is not wrongful if the consumer elects to give ‘informed, written consent in a form that is distinct and separate from any form setting forth other legal or financial obligations of the consumer at the time the disclosure is sought, or in advance for set period of up to two years.

Under the amendment, the VPPA does provide a number exceptions that permit information being disclosed to third parties. Remarkably, one of those exceptions allows the sharing of information about the user ‘to any person if the disclosure is solely of the names and addresses of consumers and if: (i) the VTSP has provided the consumer with the opportunity, in a clear and conspicuous manner, to prohibit such disclosure; and (ii) the disclosure does not identify the title, description, or subject matter of any videos or other audio-visual material; however, the subject matter of such materials may be disclosed if the disclosure is for the exclusive use of marketing goods and services directly to the consumer.’

These exceptions allow the VPPA to permit the disclosure of the name and address of the user together with the identify of the VTSP and subject matter of the video content so long as the intended purpose is for direct marketing. The VPPA has since been challenged in several distinguishable cases decided in 2015 primarily on the grounds of violation of privacy.

Recent Developments in Pixel Litigation

The VPPA has come under consumer and legal scrutiny in recent years. Several important legal rulings have largely curtailed individual and collective efforts to declare violations under the VPPA. In Ellis v. Cartoon Network Inc., 803 F.3d 1251 (11th Cir. 2015), it was opinioned that, Consumers who use free mobile applications do not quality as ‘subscribers’ under the VPPA. The Ninth Circuit Court also opinioned two cases in 2015 regarding exceptions to the VPPA.

In Rodriguez v. Sony Computer Entm’t Am., LLC, 801 F.3d 1049 (9th Cir. 2015), an intra-corporate disclosure of personal information does not violate the VPPA. Then it was also decided by the 9th Circuit Court in another 2015 opinion Mollett v. Netflix Inc. 795 F.3d 1062 (9th Cir. 2015) that VTSPs cannot be held liable under the VPPA for circumstances where subscribers’ personal information was displayed on devices, such as televisions, that could potentially be viewed by third parties. This Court said that ‘viewing of such devices was beyond the companies’ control.’

These recent rulings narrowed the scope of the VPPA and helped provide definitions for the outdated video-store era law. Civil lawsuits across the nation related to Pixel litigation continues to barrage the integrity of the VPPA.

IHEARTMEDIA, Inc. is facing a lawsuit for allegations of violations of the VPPA in the Middle District of Florida Gloria Talley, individually and on behalf of herself and all others similarly situated v. IHEARTMEDIA, Inc., 8:32-cv-00215. Similarly the popular chicken chain, Chick-Fil-A is facing a similar class action lawsuit in the Northern District of California in Keith Carroll, individually and on behalf of all others similarly situated v. Chick-Fil-A, Inc., 3:23-cv-00314.

As lawsuits continue to mount against Meta and Google, the integrity of the VPPA is thrown into question. It is likely that one of the pending actions across the nation will eventually land the law itself into further judicial review, or if Congress acts, could create an entirely new blanket law altogether to help address the rapid interference and sharing of consumer data.

By Hunter SchmitzGuest Writer

Hunter Schmitz is a freelance writer and paralegal with Focus on Property Law and Civil Litigation.

April 7, 2023