October 05, 2012
Judge Dismisses Claims Against Pandora for Violating Michigan’s Version of the VPPA – Deacon v. Pandora Media
[Post by Venkat Balasubramani]
Deacon v. Pandora Media, Inc., 2012 WL 4497796 (N.D. Cal.; Sept. 28, 2012)
The plaintiffs sued Pandora for improperly disclosing their “listening history” and related information (bookmarked tracks, stations, recent activity, and bookmarked artists). Plaintiffs alleged that Pandora disclosed this information in violation of Michigan’s version of the federal Video Privacy Protection Act (VPPA) to other Pandora users, non-subscribers, and finally through Facebook integration to their Facebook friends. Judge Armstrong of the Northern District dismisses the lawsuit. Although the dismissal is without prejudice, the judge sends a signal that this lawsuit is probably dead.
Standing: Pandora argued that plaintiffs lacked standing. The court says a violation of a statutory right is sufficient to confer standing, and statutes may confer standing without the showing of actual damages. Here, the language of the statute says that anyone whose information is disclosed in violation of the statute can bring a claim for actual damages or $5000, whichever is greater. So there’s no standing problem.
Statutory violation: The key question was whether Pandora engaged in “selling . . . , renting, or lending . . . sound recordings.”
The court looks to the dictionary definition of the term “renting” and says it means: the payment of consideration in exchange for “use” of something. Here, Pandora selects the song, streams the song, and deletes the song after it’s streamed. Plaintiffs don’t “use” the song in the conventional sense of the term. The court also looks to Pandora’s terms of service which say that users can’t do anything with the song (edit, change, store, or alter it in any way). Additionally, listeners have to listen to it through Pandora.com or a Pandora-supported device.
The court comes to a similar conclusion with respect to the term “lend” (to allow for temporary use of something “on the condition that the thing . . . be returned”). Each song is placed temporarily in the user’s hard drive and there’s nothing returned to Pandora after the song is played. Once the song is over, “the song file is deleted from the subscriber’s computer by Pandora.” The user doesn’t "return" the song.
The plaintiffs’ claims with respect to the disclosure of sales also fails. Pandora doesn’t sell any songs to users—it provides links where people can click through and buy songs. There also were insufficient allegations that Pandora even disclosed any items purchased by plaintiffs, whether through the referral links or otherwise.
Copyright law: Pandora also made the creative argument that copyright owners had the exclusive right to distribute the songs and transfer ownership by sale, transfer, lease (etc.). Here, Pandora obtained a license to stream the songs and the license was limited to a public performance license. Pandora did not have the right to do anything more with the underlying content and thus could not grant any of these rights to users. The court likes this argument.
CPA.The court also dismisses claims under the Michigan Consumer Protection Act, saying that a class-based complaint requires an allegation of actual damages under Michigan case law.
While the VPPA only covers “video cassette tapes or similar audio visual materials,” states have added their own protections to the mix. California, for example, enacted the Reader Privacy Protection Act. (See Eric’s post on that statute and its possible breadth here.) There’s an argument to be made that music should be treated differently from books and videotapes because books and videotapes typically provide more insight into a person’s intellectual direction and shouldn’t be disclosed to third parties without consent. In any event, the Michigan statute covers “sound recordings” so music obviously comes within this definition.
There is of course a big question about whether the Michigan statute (which was enacted more than 20 years ago) was even intended to apply to services such as Pandora. The answer has to be no, but the court gets to this result by analyzing the text of the statute with copyright licensing concepts overlaid on top. In contrast, the Hulu decision from a couple of weeks ago denied Hulu’s motion to dismiss. The differences in text between the VPPA and the Michigan statute probably accounts for this variation. The VPPA defines consumers as anyone who “rents, purchases, or subscribes,” and defines a provider as anyone engaged in the business of “rental, sale, or delivery” of videos or similar audio visual materials.
Pandora also raised a consent argument based on its terms of service. The court doesn't rely on this argument, and it's unclear if the Michigan statute's exception for written consent applies to online terms. This is an ongoing battle in the VPPA realm. See the testimony of Prof. McGeveran with respect to the consent provisions of the VPPA: "Testimony of William McGeveran".
These cases are good illustrations of the fact that these statutes should all be revisited to account for changes in delivery and distribution of information online. Minor changes in the texts of both statutes arguably account for the differing results, but the drafting choices were just happenstance, at least as they related to streaming services. Eric made this point more bluntly in recent posts about the Cloud Computing Act of 2012 and California's effort to protect social media accounts: legislatures bake technological assumptions into their drafting. These assumptions don't age well; yet legislators keep making the same mistakes.
(Declan/cnet) Pandora Defeats Privacy Suit Over Facebook Integration
Did California Unintentionally (?) Impose New Statutory Duties on Every Blogger? A Post on the Newly Enacted California Reader Privacy Act
[image credit: Shutterstock]