Ninth Circuit Privacy Law Decision Helpful For Defendants

According to an article by Seyfarth, hundreds of companies are being sued in California based on claims that navigating and interacting with their website, and their use of third-party service providers for marketing or analytics purposes, violate consumer privacy rights.

Defendants have been frustrated by the outcomes of these cases, but late in 2023, the Ninth Circuit upheld a dismissal based on a lack of personal jurisdiction over a web-based payment company. 

The claims alleged in Briskin v. Shopify, Inc. are like those being asserted against many retailers. They alleged violations of various privacy laws including the California Invasion of Privacy Act.

The plaintiff sued Shopify in California alleging that its collection, retention, and use of consumer data obtained from persons who made online purchases violated various California privacy and unfair competition laws.

The district court dismissed the complaint based on a lack of specific jurisdiction over the defendant. On appeal, the plaintiff stipulated that there was no general jurisdiction because Shopify was neither incorporated in California nor did it maintain a principal place of business there.

However, it argued that Shopify was subject to specific jurisdiction based on its contractual relationships with California merchants, its operation of one physical location in California, and knowledge that the state’s residents were subject to potential injury based on the allegations.

The Ninth Circuit noted that the defendant must either purposefully direct its activities toward the forum, or the claim must be one that arises out of the defendant’s forum-related activities in order for specific jurisdiction to exist.

The court ruled that although Shopify acted intentionally and caused harm it knew was likely to be suffered in the forum state, there was no conduct “expressly aimed at the forum state.” Therefore, there was no specific jurisdiction. 

Companies based elsewhere but operating an interactive website accessible to California residents should analyze their situation with an eye to a similar specific jurisdiction framework. This defense could be applicable in many cases.