Court filing
Transcript of Videoconference Proceedings — Brooks v. Thomson Reuters Corporation (Dkt. 205, N.D. Cal. No. 3:21-cv-01418)
Filed April 20, 2023 in Brooks v. Thomson Reuters Corporation; one of 127 filings from this case.
Record facts
| Court | U.S. District Court for the Northern District of California |
|---|---|
| Filed | 2023-04-20 |
U.S. District Court for the Northern District of California · No. 3:21-cv-01418-EMC · Doc. 205 · 2023-04-20 · Docket on CourtListener
Full text
Pages 1 - 63
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
Before The Honorable Edward M. Chen, Judge
CAT BROOKS and RASHEED
)
SHABAZZ, individually and on
)
behalf of all others similarly )
situated,
)
)
Plaintiffs, )
)
VS. ) NO. C 21-01418 EMC
)
THOMSON REUTERS CORPORATION, )
)
Defendant.
)
)
San Francisco, California
Thursday, April 20, 2023
TRANSCRIPT OF VIDEOCONFERENCE PROCEEDINGS
APPEARANCES: (via videoconference)
For Plaintiffs:
GIBBS LAW GROUP, LLP
1111 Broadway - Suite 2100
Oakland, California 94607
BY: ANDRE M. MURA, ATTORNEY AT LAW
EZEKIEL WALD, ATTORNEY AT LAW
HANNE JENSEN, ATTORNEY AT LAW
COHEN MILSTEIN SELLERS & TOLL PLLC
1100 New York Avenue NW - Suite 500
Washington, D.C. 20005
BY: KARINA G. PUTTIEVA, ATTORNEY AT LAW
(APPEARANCE CONTINUED ON THE FOLLOWING PAGE)
REPORTED BY: Marla F. Knox, CSR No. 14421, RPR, CRR, RMR
United States District Court - Official Reporter
Case 3:21-cv-01418-EMC Document 205 Filed 05/12/23 Page 1 of 64
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APPEARANCES: (via videoconference, continued)
For Defendant:
PERKINS COIE LLP
1201 Third Avenue - Suite 4900
Seattle, Washington 98101
BY: SUSAN D. FAHRINGER, ATTORNEY AT LAW
NICOLA C. MENALDO, ATTORNEY AT LAW
TYLER S. ROBERTS, ATTORNEY AT LAW
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Thursday - May 20, 2023
9:35 a.m.
P R O C E E D I N G S
---000---
THE CLERK: The Court will now be hearing Brooks, et
al. versus Thomson Reuters Corporation, case number 21-1418.
Counsel, please state your appearance for the record
beginning with the Plaintiff.
MR. MURA: Good morning, Your Honor, Andre Mura for
the Plaintiffs.
THE COURT: All right. Thank you, Mr. Mura.
MR. WALD: Good morning, Your Honor, Ezekiel Wald for
the Plaintiffs.
THE COURT: All right. Good morning, Mr. Wald.
MS. JENSEN: Good morning, Your Honor, Hanne Jensen
for the Plaintiffs.
THE COURT: Thank you, Ms. Jensen.
MS. PUTTIEVA: Good morning, Your Honor, Karina
Puttieva for the Plaintiffs.
THE COURT: All right. Thank you, Ms. Puttieva.
MS. FAHRINGER: Good morning, Your Honor, Susan
Fahringer, Perkins Coie, on behalf of Thomson Reuters.
With the Court's permission, I will be addressing the
class certification motion with the exception of the issues
relating to damages methodology and the Daubert motions
relating to FSG, which will be handled by my colleague Tyler
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Roberts.
THE COURT: All right. Thank you. Good morning,
Mr. Roberts.
MR. ROBERTS: Good morning, Your Honor.
MS. MENALDO: Good morning, Your Honor, Nicola Menaldo
also on behalf of Thomson Reuters. I will be handling any
issues relating to Thomson Reuters' motion to exclude the
testimony of Professor Turow and Plaintiff's motion to exclude
the testimony of Professor Bambauer and Dr. Kivetz.
THE COURT: All right. Thank you. So let's address
the class certification motion first. I, frankly, don't see a
standing -- a serious standing problem here.
I mean, the information, at least as alleged, that is I
gathered, as we have talked about before is extensive; and the
right to control information is something that's deeply rooted
historically in the right to privacy. There is a historic
common law analogue and concerning the California jurisprudence
on this in the Hill NCAA case talks about it and other cases
have talked about it and that applies whether or not -- and in
this case there's an allegation that this personal information
is commercialized and disseminated as a commercial product.
So it's not just gathered and put in a vault and stuck in
a basement somewhere. The whole purpose of this is to make
this available to subscribers.
So, I guess I will let Defendants respond if there's
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something that I have missed; but, frankly, I don't see what
the standing issue is here.
MS. FAHRINGER: I'm so happy to respond. Thank you,
Your Honor, I would be delighted to.
THE COURT: Okay.
MS. FAHRINGER: So let me start by highlighting, by
noting something, that actually differentiates this case from
every case cited by the Plaintiffs for Article III standing.
The Plaintiffs here say that Thomson Reuters should have
asked them for consent before it collected any information
about them. That's -- that's the argument. That's the
concrete injury that they are relying on and that because it
didn't, Thomson Reuters caused them to lose control of that
information. That's the theory here.
So what we are talking about here is collecting
information about people. What we are not talking about is
collecting information from people.
For example, Thomson Reuters -- or rather, Plaintiffs
don't say that Thomson Reuters deceived them into giving it
information. It didn't place a tracking device or an app on
their devices to secretly gather information from them.
The Plaintiffs admit -- in fact, they emphasize -- that
there is no direct connection between the parties at all. And
by "direct connection," I don't just mean privity of contract.
I mean some sort of connection directly between the parties
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beyond just having information about the person.
I'm talking about deception, secret spying, fraud, duress,
coercion, taking information from the Plaintiffs. And this
feature, the absence of any direct connection between the
parties, that distinguishes this case from every other case
cited by either party where Article III standing has been found
or where a UCL class or an unjust enrichment class has been
certified because in every one of those cases, there was a
direct connection between the parties.
Now, we are not saying that a direct connection is
necessary, but it is a common thread throughout every last one
of those cases.
So, without that, we are going to have to look even harder
to see whether the Plaintiffs suffered a concrete injury and to
see whether Thomson Reuters' conduct is unfair or unjust. And
there are two claims they have left.
And to do that, we are going to need to look at evidence
that's going to differ by class member; and that's going to
make it very hard to answer the central questions in this case
in one stroke for all or even most class members.
And by our reading, at least looking at all the cases
cited by either party, if the Court were to certify a UCL or an
unjust enrichment class or to, frankly, find Article III
standing based on this theory of injury, this privacy theory of
injury, it's going to be the first Court to do so.
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THE COURT: Now let me ask you: You are suggesting
impliedly that aggregation of information if it doesn't come
directly from the subject is not -- does not state a privacy
claim.
MS. FAHRINGER: Not necessarily. That's the tricky
part.
THE COURT: Well, would you admit that aggregation
can?
MS. FAHRINGER: It depends.
THE COURT: On what?
MS. FAHRINGER: It depends. It depends on the classic
privacy considerations because privacy is an absolute. It's
going to depend. It's going to depend on --
THE COURT: All right. So something of this scale,
which is, at least as alleged -- you know, cradle to grave
sweeping. It's not one little piece of information like a
license plate entering a town or that kind of thing -- this, at
least as alleged, this is a great deal of aggregation.
And so if -- once you admit that aggregation without the
actual invasion -- going into someone's home or stealing their
bank accounts -- can constitute an invasion of privacy, which
is not a hard pill to swallow, why -- why isn't there enough
here?
MS. FAHRINGER: Yeah, let me address that. Number
one, we are past the allegations. We are well past the
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allegations. What we are looking about now -- looking at now
is the actual information actually in this product that's
actually accessed by customers under various circumstances, and
that's most -- that's set forth in -- I think best in the
declaration of Kevin Appold where he talks about what's really
available and to whom and under what circumstances.
And the reason I keep saying it depends is because the
privacy interest that needs to be mapped to here is invasion of
privacy. And we agree.
And invasion of privacy typically requires some sort of
dissemination or disclosure; but either way, even as to
collection, it's going to depend on the information, the
sensitivity of the information, the volume of the information
and when we get to this stage for this motion, we look at the
individual Plaintiffs, the individual class members; and we
also for purposes of determining, you know, UCL and unjust
enrichment standing with respect to a privacy injury when we
later talk about predominance and common issues, this becomes a
really important point because without the common thread that
actually does tie every case together -- this common thread of
a direct connection -- it's just a lot harder to find actual
commonality, to find Article III concrete injury.
And let me walk through the cases that the Plaintiffs
cited in the Article III standing discussion because they
illustrate this point.
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THE COURT: More than the cases, I'm actually
interested -- you are suggesting that well, maybe not so much
information is collected here. It's -- I don't know if you
would call it de minimus but not enough to breach the privacy
threshold.
MS. FAHRINGER: Yeah.
THE COURT: And so, I would like to hear the
counter-response before you go on from the Plaintiff.
What is it here -- what tells the Court that at this
juncture there's enough information to find that the
aggregation is egregious enough to constitute -- without the
actual invading and relationship and going into somebody's
house or going into their bank account, why the aggregation
aspect of this from third-party records, et cetera, et cetera
is enough?
MR. MURA: Yes, Your Honor. Well, we have put in
evidence showing that this is comprehensive cradle to graves
dossiers on Californians. It contained billions of data points
aggregated from public and non-public sources. We are talking
about social security numbers, criminal court records,
real-time booking information, utility and DMV records,
personal information about an individual's family and
associates.
Just the representative sample of the CLEAR report is 26
pages long with 40 categories of records. We also have in the
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record the CLEAR reports of the named Plaintiffs.
So I think it's very -- it's very evident that this is a
comprehensive cradle to grave dossier that includes so much
information about individuals.
This Court addressed both California law and U.S. Supreme
Court law recognizing that compiling disparate pieces of
information into a single dossier, even if those individual
pieces of information are publicly available, constitutes a
significant invasion of privacy.
So the arguments that Ms. Fahringer is making about how
this is not an invasion of privacy have already been rejected
by the Court at the motion to dismiss stage. The Court even
recognized that the mere fact that some of Plaintiffs' personal
information may come from publicly available sources doesn't
diminish the significant harm Plaintiffs suffer from the sale
of the compiled information.
That is a unique injury directly traceable to Thomson
Reuters' conduct. I didn't hear a single case that Thomson
Reuters cited in making these broad and sweeping statements
about Article III; but if the Court just looks at In Re:
Facebook Internet Tracking Litigation from the Ninth Circuit,
the Ninth Circuit held that Plaintiffs suffer two distinct
concrete injuries, both privacy based and economic, when a
Defendant unjustly enriches itself by collecting and selling
Plaintiffs' personal information without consent.
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That decision entirely resolves the Article III standing
question here. There's no causation --
THE COURT: That case didn't involve just aggregation
of public available data, did it?
MS. HAN: I think it was a mix, Your Honor; but I
think if you look at the privacy cases that we have cited in
Hill, and the Court itself cited at the motion to dismiss
stage, there is a CLEAR significant invasion of privacy even
from collection of disparate pieces of information that are
publicly available and compiling it into a single dossier.
That's very different, and I don't believe Ms. Fahringer
is accurately describing the facts and what isn't CLEAR, but
that a merits dispute.
And then the question for the Court at the class
certification stage is whether there's a core merits question
that can be resolved class wide and there is. That question is
whether Thomson Reuters non-consensual collection and
dissemination of class members' personal information is unfair
and whether that conduct unjustly resulted in Thomson Reuters
retaining the benefit.
That is an entirely classwide inquiry relying exclusively
on facts on the class. It is based on Thomson Reuters business
model, which is uniform. It is collection, selling of personal
information without a data subject's consent is a uniform
practice throughout the class and it uniformly does not seek
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any Californians' consent to do so.
THE COURT: All right. Let me -- let me put standing
aside for a moment and ask Ms. Fahringer this point: Your
argument that this is not enough; this is a unique situation;
no case has found the mere aggregation sufficient or if it
does, you know, it has got to be an extreme circumstance, why
isn't that a merits question that can be decided in one sweep
and it's common to everyone? I mean, it would be to your
advantage for your client to get a class certified and to get
an order from the Court or a judgment that says this ain't
enough --
MS. FAHRINGER: Here is why --
THE COURT: -- you lose?
MS. FAHRINGER: Yeah, here is why it's difficult --
first, I do want to address the framework issue because it
seems like it's not a big deal to lack a direct connection. I
want to deal with that -- and the reason it matters so much
here is because the privacy theory of injury isn't just any
theory. The theory of injury here is loss of control.
And the -- all the cases cited by Plaintiffs, a few of
them are loss of control cases. That particular theory, that
makes a lot of sense when you have got a direct connection,
when you took information from the Plaintiffs, as Facebook did
in the referrer header cases, in all of the cases. That theory
makes sense.
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In fact, In Re: Facebook, the internet -- the referrer
header case, there is a trespass to chattels claim because of
that relationship.
If you have got a lost control theory here, which the
Plaintiffs do, then -- and what you are talking about is
information about people, what the Plaintiffs are saying is you
should have asked first but you can't even look up their name
or their address. That's by extension what they are saying in
a no direct relationship case. I mean, that makes sense where
you are taking information from someone, sure, you can ask them
for --
THE COURT: But you acknowledge that there are some --
there's some point for aggregation alone without taking
information under a direct relationship can constitute a
violation. And if the idea -- and it is obvious. If the
subject says, "Hey, that's okay with me," that's okay.
If they don't say, "Okay with me," that's the control.
It's not the control of every single piece of data. It is the
aggregation and then what happens in -- with it.
So go back to my question. Why if you win, you win on the
merits, why isn't this a classwide common question?
MS. FAHRINGER: Unfortunately, the claims we are left
with, it just begs the question -- the claims we are left with
are the Plaintiffs -- I don't understand why but these
Plaintiffs don't have an invasion of privacy claim. They have
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a UCL claim, and they have an unjust enrichment claim. That's
what we have got in this case.
And the question that you just outlined, it begs the
question of whether the conduct is unfair under the UCL or
unjust.
THE COURT: Why isn't that -- why can't that be
resolved classwide? Your arguments are meritorious. This is
unprecedented. It's not like Facebook; taking information
without consent; using it, et cetera, et cetera. This is
garnering information. It is in the public. You may have to
pay for it but it is publicly available information. No
privacy invasion. It's not an unfair business practice,
whichever test you use under 17200. Why isn't that -- it's the
same conduct. It's the same practice.
MS. FAHRINGER: Because --
THE COURT: Why isn't that a classwide matter?
MS. FAHRINGER: Because you can't analyze it in a
vacuum without applying the tests you need to apply. And let's
start with unjust enrichment -- let's just leave UCL aside for
the moment -- unjust enrichment.
The Ninth Circuit in Doe versus Wal-Mart ruled that you
need a direct relationship. It can't be too attenuated to
support an unjust enrichment claim. So you need a relationship
which we do not have here, period.
Number two --
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THE COURT: Okay. So if you are right, you win.
That's a classwide determination.
MS. FAHRINGER: Well, and so then the reason that you
can't stop at just -- you can't just look at the Thomson
Reuters' side of the equation. You have to look at both sides.
Why? And you can't look at the hypothetical Plaintiff. You
can't do an academic exercise. You need to look -- you must
look -- well, we must look at the circumstances as between the
parties.
And the information available on this platform differs for
everyone. The access differs for everyone. The amount that's
disclosed differs depending on circumstances.
THE COURT: All right. Well, let me ask you something
specific. Mr. Mura says there's evidence that social security
numbers and criminal records are part of the CLEAR report. Is
that true and is that true for everyone or only some people?
MS. FAHRINGER: Let's look at miss -- that -- okay.
That -- the answer is depends. It is true for some people and
the people who can see it are only the people -- are only law
enforcement, the people who already have access to the exact
same records.
Let's take a look at Ms. Brooks' report just as an
illustration. The version -- so the way this platform works,
it has -- it is a public records database essentially with a
lot of public records.
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The Fahringer declaration Exhibit A9 is the version of
Ms. Brooks' report that is -- that was obtained by her
investigator before filing the suit to support the lawsuit.
That's Fahringer Exhibit A9.
In discovery Thomson Reuters produced the version --
Thomson Reuters produced sort of as a report everything that
could be available in CLEAR. And bear in mind that we are not
talking about -- let me back up a step. The Plaintiffs are not
talking about disclosure, and they are not talking about taking
information from people. They are just talking about
aggregating information.
So looking at even the omnibus Andre Mura declaration,
Exhibit 73 -- that's Ms. Brooks omnibus CLEAR profile -- what
we see there is most of the information is based on public
records. She admits she is a public figure, so there's a lot
of it. It -- in fact, the exhibit includes a whole lot of
pages but all but 15 of those pages are the results of an
internet search for the words "cat" and "brooks."
So there are articles about a horse named Rose Colored Cat
and an owner named Brooks. There -- that's what the bulk of
the report is about.
And then when you look at the actual report for this
actual human being, all of these reports are going to vary; and
they are going to vary -- you know, some people might have no
information in CLEAR or very little information in CLEAR, you
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know, a deed. Other reports like Ms. Brooks' will be lengthy
for whatever reasons.
So, anyway, let me also point out that typically for
privacy injury, disclosure matters. And so what we do next is
we look at what was the disclosure here? Was there a search?
Was there even a search conducted for information related to
Ms. Brooks? And the answer is: Yep, there was, three in the
past six years.
Guess what? Three CLEAR customers searched for
information about her. Only three. One of them generated a
report, and she testified that she's not saying any of the
customers lacked the legal authority to review whatever
information they looked at.
And she also testified that nothing happened to her as a
result other than her belief that she lost control of her
information. Same is true for Mr. Shabazz.
But Ms. Brooks is a very extensive report and even then we
are talking about information that is largely public record.
And when you see information that is the sort of information
that the court has pointed out -- for example, booking
records -- bear in mind, that that's not disclosed to anyone.
The only people who have access to that information are people
who already have access to that information; namely, law
enforcement.
So that's the -- that's what's going on. And the reason
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that I keep hammering on -- you know, I -- I -- the reality is
these particular claims, you know, don't permit us to look at
this in a vacuum. They require us to look at this not in an
academic hypothetical sense but person-by-person.
THE COURT: All right. So let me ask Mr. Mura to
respond to two points. One is that the amount of information
is going to vary from person to person. Some may be more --
more intrusive than others, more -- you know, that the
information you gathered may be either more or less accessible
through other means -- readily through other means than for
some other than for others.
And two, doesn't it matter whether there was an actual
disclosure. If the class includes everyone who is in the
database but includes those where there has never been a search
request and the information has never been disseminated, aren't
they in a different position and wouldn't, for instance, the
balancing test for unfair practices under 17200, wouldn't that
vary depending on whether or not, for instance, there has been
a disclosure?
MR. MURA: Your Honor, let me take the first question,
the balancing test wouldn't -- wouldn't be any different
because the focus is on TR's conduct towards the class; and
that's sweeping in as much as data as it can from everyone and
without consent.
And if I can refer you -- some of this information is
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under seal, so I'm a bit hamstrung in citing exactly all the
information. We detail it at pages 3 and 4 -- basically
pages 3 to 5 of our brief with record citations, but it is a
substantial amount of information that's collected from all
Californians. There are millions of searches happening.
So I don't agree with Ms. Fahringer that this is -- that
there's no harm here and that it differs based on each
Californian.
If you just look at the representative report, it's
representative because it includes the information that's
typically available in CLEAR reports. And Thomson Reuters buys
the information that populates those CLEAR reports pursuant to
subscriptions.
So it's not buying an individual's information. It is
buying wholesale records from the DMV, from utilities, from
different customers; and it's populating those reports. So
there's substantial information for all Californians; but,
again, if Thomson Reuters is going to make merits arguments
about the degree of harm, that's not a reason to deny class
certification because the focus here for the balancing test is
on Thomson Reuters' conduct; and that's its conduct of making
commercially available --
THE COURT: Well, but the balancing test has to take
into account how injurious, what the downside is; and you have
articulated at least a theory of privacy; but the argument is
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in actuality if you look -- if one were to, you know, I don't
know, do a sampling of a hundred different reports, you may see
some are more intrusive and have more volume than others; and
that might inform -- you know, the ones that have the lightest
amount of information, the balance might not tip so heavily on
their side.
MR. MURA: Well, Thomson Reuters' defense to the
utility of their product, that society has benefited from
having everyone's information in CLEAR and that allowing
consent would allow individuals to then opt out. It would make
it more difficult for these customers to search. And so that
is a classwide defense of utility.
We also have the tethering test which doesn't require any
balancing whatsoever. And so under the tethering test, we
certainly would have class certification even despite all of
Ms. Fahringer's arguments because the question there is much
more straightforward.
And we also have a UCL injunction here, and it's seeking
to stop Thomson Reuters from making available this information
for sale.
THE COURT: Well, but you have to establish the
predicate violation. The injunction is just to remedy. So you
have got to either win on a balancing test, a tethering test,
an unlawful test, you know, whatever.
MS. HAN: That's right. The tethering test here is
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straightforward. I mean, it looks to California statutes,
California regulations, which the Court already recognized at
the motion to dismiss stage. There are many ample examples of
the California legislature protecting Plaintiffs' personal
information from being disseminated online without consent.
And so the question is whether Thomson Reuters making
available this information is comparable to a violation of law,
and that is a straightforward question that doesn't require any
balancing.
Even on the balancing test, when you look at the harm, the
harm is classwide from not requesting consent before making
available so much information that's consistent with California
privacy cases.
And then the utility of the practice, if you just look at
Thomson Reuters' arguments about the utility of the challenged
conduct, which is Thomson Reuters' non-consensual collection
and sale of Californians' data, that doesn't turn on whether a
CLEAR customer's particular use of any particular Californian's
information is good or bad or what the information is.
I mean, the test asks about both the harm to the public
from the business practice, whether that's greater than the
utility of the practice. And this Court and many others have
found that when there is a uniform business practice, as there
is here, that that poses a question that can be resolved
classwide, that balancing test.
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THE COURT: What -- when you say under the tethering
test of unfair, where you have a situation is not just taking
somebody's information out of their own hands but aggregating,
what is the -- what is your main tethered statute that you
assert?
MR. MURA: We have cited the California Constitution,
the CCPA, the -- I believe those are our main -- I disagree
with Ms. Fahringer to the extent she said there isn't an
invasion of privacy claim. We have tethered to California's
public policy which does protect against such invasions of
privacy.
THE COURT: But, for instance, the NCAA case -- I'm
familiar with that case since I litigated that case -- you
know, that was mandatory drug testing. That was extracting
urine from people and doing an analysis. That wasn't
aggregation of data.
What's a good -- is there -- have you cited, I don't
remember seeing it, a California constitutional case that
involves strictly aggregation of publicly available data?
MR. MURA: Well, I do think we cited the ballot
materials that were enacted as part of the California
Constitution. At least Professor Turow talks about this in his
report, and the animating force of those laws was to protect
the right to control and the right to be left alone. And both
of those are implicated here.
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And we have also cited -- I mean, just if you look at
California policy involving the CCPA, there -- you know,
Californians are provided an opportunity to control their
information and decide whether it's made available.
I mean, Thomson Reuters by law is required to allow
certain opt out rights. We have a long discussion about
whether we think Thomson Reuters is complying with that law.
And so all of that is going to go to the merits. All of
that is going to be a decision that can be reached classwide
because Thomson Reuters' conduct in all of these respects is
uniform towards class.
THE COURT: So what about the dissemination, the
second half of the question, whether or not -- not everybody
has had their information disseminated and requested. Doesn't
that create differences?
MR. MURA: No, Your Honor, because the class includes
everyone for whom Thomson Reuters makes available the
information. And so everyone's information -- and we have
testimony from this from Mr. Fox -- but pretty much California
is well covered in CLEAR, so were the categories of information
that we have been discussing; and so and there are millions of
searches happening.
So I do agree that everyone's information is susceptible
to being made available, and there are searches being run all
the time.
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And so for purposes of injunctive relief, it is entirely
inappropriate to enjoin Thomson Reuters from its uniform
practice of making available all of this information to its
customers.
THE COURT: Well, that raises a different question,
whether -- if there were an injunction in this case, whether it
would prohibit even the collection of information or just the
dissemination of information; but in terms of classwide damage
and the application of the balancing test, et cetera, et
cetera, if it's been -- if you are one of those persons in the
class who has had information collected, which seems to be a
lot of people, but only 10 percent have actually had their
information shared with anybody else -- it is still locked up
on the server -- are they not in a different position than
those who had information disseminated to others?
MR. MURA: Not in the sense of injury. If there's a
difference in terms of damages, that's not a reason to not
certify the class; and we think Ninth Circuit law is very CLEAR
on that. We don't think there's any real difference. We think
a pro rata distribution of Thomson Reuters --
THE COURT: I think the argument is -- before we get
to damages -- and, that is, there may not be a privacy
violation. If Thomson Reuters never sold this stuff, they just
collected it -- I don't know, for historical purposes or
whatever -- they never sold, never made it available, seems
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like your case might be different.
MR. MURA: Well, but I think that is counter-factual,
Your Honor, because it is making available all of this
information.
THE COURT: No, no. But my point is: If that's the
only act they did, that might result in one -- one outcome.
What I'm suggesting is that if that makes a difference, then
doesn't it make a difference whether your information has been
disseminated or not? If it has not been disseminated, you
don't suffer the same harm as one where it has been given to
third parties. It's disclosure that's an important part of it.
MR. MURA: I think disclosure to the extent that it
matters for the degree of harm, but I don't think it matters in
terms of establishing a harm that's classwide because the
information is being made available for everyone.
So, yes, there might be additional harms that exist for
downstream harms; but the harm that we are focused on is the
lack of consents and everyone's information is being made
available.
So I do think on this record and the -- the evidence that
we have put forward, there is uniformity across the class in
terms of -- in terms of that consideration.
THE COURT: Do we have any idea what percentage of
those -- of the names in CLEAR have been subject to requests
and dissemination? Is it most of them? Some of them? Do we
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have any idea?
MS. FAHRINGER: Your Honor, that --
THE COURT: I'm --
MS. FAHRINGER: Oh, I'm sorry.
THE COURT: Do you know, Mr. Mura?
MR. MURA: I don't know off the top of my head,
Your Honor.
THE COURT: All right. You were going to say
something, Ms. Fahringer.
MS. FAHRINGER: Yes, I was. I was going to say: How
do we answer that question? Because we are not talking about
taking information from people. We are talking about
information about people, street address, that sort of thing.
So --
THE COURT: No, no.
MS. FAHRINGER: -- I don't know the answer.
THE COURT: Yeah. My question was simpler. How many
searches -- of the people in the database, what percentage of
them have had -- like the named Plaintiff here -- somebody
request, make a search? Is it most or all?
MS. FAHRINGER: Good question. I think all we have
got right now is the fact that over six years this public
figure, who is Ms. Brooks who ran for mayor of Oakland, over
six years there were only three searches for her.
THE COURT: You would -- your client would know how
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many searches. People pay for these searches, right? They
would know how many.
MS. FAHRINGER: Yeah, there are a lot -- I'm sorry. I
don't mean to be difficult, but we have to frame the question
in a way that it's answerable.
And so how many queries are made per day? A whole lot.
How many are made for California residents? Can't tell. You
know I think "a lot" is the only answer I can give.
But if I may, may I just show some illustrations of why
this is an important question and why it's a difficult
question, and also I want to speak to the tethering test
because that -- I think captures some of the issues we are
talking about.
THE COURT: Okay.
MS. FAHRINGER: Let me give specific examples of
people in CLEAR, just a couple of them. Let's take -- so let's
start with the balancing test. We balance the harm against the
utility of CLEAR. It's not correct to say we are only talking
about social utility. We are talking about utility to people
because this product is used for -- to prevent identity theft.
It's used for all sorts of very, very socially beneficial
reasons for particular class members. Preventing fraud,
identity theft, solving crime, making sure that government
benefits get to the right address, things like that. That's
how courts and public defenders and others actually use this
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product.
So let's just take a few examples. Say we have got a
victim of identity theft with very scant information in the
database -- footnote, it is not actually a database but
whatever -- a very scant information through the platform.
The only time the platform is used as to that person is to
prevent somebody who stole their identity from opening an
account at a bank. That's the only time this platform is used
as to them. Is that unfair?
THE COURT: And who is the user in that circumstance?
MS. FAHRINGER: The only customers who can use this
product are companies and government entities, government
agencies. No individuals can use this product. Just official
customers.
And you can see that because we gave the Court a list of
all -- all current customers of CLEAR. They are public
defenders. They are courts. They are banks, law enforcement,
anyone who needs to try to find a correct address for someone,
you know, government agencies, health and social services,
child protective services. That's the customer base. The
customer base is --
THE COURT: So, I'm just trying to understand. I
should ask a more specific question. You have a case of credit
card fraud. You say the benefits of making sure no further
fraud -- is it the bank then that engages the services of
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Reuters? Who queries?
MS. FAHRINGER: It would be the bank. It would be the
person who is checking -- the person who is approving a loan.
The account would be held by the entity; that is the bank. And
that person could go do the research on their own, but it's
faster and the loan gets approved faster if they have got a
product that allows them to say this person in front of me is
actually who they say they are. That is actually how this
product is used.
THE COURT: Do you know if it is common then for the
bank to get consent from the proposed lender and say, "Well we
are going to do" -- because usually you have to tell them it's
okay to run a --
MS. FAHRINGER: Yeah, typically, I would imagine. I
mean, that's what I do when the bank -- you have to sign all
sorts of forms that say, "Yeah, you can look me up." I mean, I
want you to look me up. You know, I don't -- bear in mind, the
fraudster would have given their consent.
Let me take a real life example. San Bernardino shooter.
This is in actual use of this platform. You know, this was
long ago at least for some people, not for me. I remember it
vividly. But there was a San Bernardino shooter and this
Sporten (phonetic) declaration explains that she was in law
enforcement at the time and other sources had given an address
for the guy who was suspected -- who was associated with the
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event, the San Bernardino shooting. The only platform that got
them the right address was CLEAR and then because of that,
police cars rushed to the address and they were able to
actually stop the vehicle with the guy in it on the way to kill
more people. That's how this platform is actually used.
And no, they are not going to go ask for his permission
before they do that. And is that unfair under the UCL? Does
it violate his privacy? Does it violate the tethering test?
No.
And that's why you can't look at this in the abstract.
You have to look at it in specific examples especially when the
core -- the core feature of this case is privacy, which is
classically context dependent and classically accommodates
other social policies and depends on the setting and
typically -- and typically requires one of two things, neither
of which is the contention here -- one thing it requires -- and
I will emphasize every single UCL case we are talking about,
every single unjust enrichment case requires taking from
because asking for consent does not make sense if you don't
have that construct because ask first doesn't make -- because a
loss of control theory doesn't make sense if you don't have
that construct, number one.
Number two, the Court is one hundred percent right that
dissemination matters. And beyond that, it's not just
dissemination. It's what is the information? Who was it
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disclosed to? Under what circumstances? Those are the classic
privacy considerations that --
THE COURT: I guess I go back to the same question,
what you have just argued is the utility of this, whether it is
by banks, whether it is by law enforcement in an urgent
situation; and that informs the calculus under the unfair test,
but that -- why isn't that an issue that is decided with one
stroke?
Either -- either there is a lot of utility -- because I
don't think anybody is arguing well, we are going to judge each
one -- whether the shooter in San Bernardino rights were
violated as opposed to the person who is applying for a loan.
MS. FAHRINGER: Yeah.
THE COURT: It is a -- so, you know, all the arguments
on the merits and then the counter-arguments, which I'm sure
Mr. Mura has -- he has already made -- those all seem to me
classwide arguments. You either win or lose.
MS. FAHRINGER: Yeah, because you can't -- this claim,
UCL does not let you look at this in the abstract. We have to
look at the person. We have to look at the Plaintiff.
THE COURT: Right. Not in the abstract. You can look
at examples. I mean, you can look at -- when you assess
utility, I would imagine your trial, your side of the brief,
will give all these examples of why there is utility generally
to this product and why you can't stifle this product because
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there's going to be true societal costs. And Mr. Mura may come
up with other examples of why no, there are huge costs to this
thing that's not worth the benefits, et cetera; but these are
all -- it is not in a vacuum but it is in the aggregate.
MS. FAHRINGER: Uh-huh, yeah, a couple things. One
is -- and I will just reiterate that what we have got is the
damages claim is just for unjust enrichment the disgorgement
theory is just that one claim. The UCL is just for injunctive
relief. That's where we are today. That's after the motion to
dismiss. We've just got unjust enrichment for disgorgement,
just that. And the Ninth Circuit says under Doe v. Wal-Mart no
dice, you can't do that.
And I would be happy to go into great detail about why
class certification is inappropriate about -- you know, with
respect to the unjust enrichment class.
The Court asked about UCL claim injunctive relief, that's
what we are left with, 23(b)(2) certification. And I just -- I
don't think that we are in a situation where we have got enough
clarity about the injunction. The injunction is going to need
to be tethered to the violation of the UCL. It's going to need
to be narrowly -- we are going to have an injunction that --
that maps to the UCL and that maps to the class.
And it's -- there's just so much variation in the class.
I'm going to give you another example. I hope I'm not too
tiring with these examples, but let me give you one more, which
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is we have got, say -- just for the sake of argument, let's
just assume Florida's Unfair Competition law is different for
conflict of laws purposes.
You have got a Florida resident. They grow up in Florida.
They live in California for a year during class period. The
information in CLEAR has to do with their Florida residency.
They move back to Florida and that's where we are. They are in
the class.
So would an injunction that says you can't collect
information about that person, you can't make it available for
sale, how does that work? Does that mean that you can't --
that Florida -- who wants that person, their resident, to be
able to get government benefits, to be able to be investigated
for crime, to be -- Florida wants that for its residents. So
how is it going to work?
Is Thomson Reuters going to have -- because they were in
the class and they -- their information was made available in
CLEAR during the class period, does Thomson Reuters -- for the
injunction does Thompson Reuters now need to go ask them for
their consent before anyone can search for their information
now?
The hypotheticals are endless, and that's -- that's why we
have to get rigorous, rigorous about the analysis under the UCL
and the balancing test and the tethering test in order to
undertake the analysis that we are required to do.
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And I'm going to -- as I mentioned the tethering test, I
have just got to emphasize that the right to privacy and the
statutes that Mr. Mura described -- and I will just go over the
CCPA as one example. Guess what? That statute has to do with
taking information from people not about people. That's the
nature of the CCPA.
There's no private right of action. But that's what's
going on with the CCP and the California Constitutional Right
for Privacy, the classic intrusion upon seclusion, privacy
invasion, all of those, they are triggered when we have either
got something like "you took it from me. You shouldn't have
done that. You intruded on my privacy" or "you disclosed it.
You told somebody about it. You forced me to take a urine
test. That's wrong. You can't do that to me. That invades my
privacy."
We are one hundred percent behind that, but to say that
you can't even collect information about people, connect that
information, relate it to each other, this is one -- this is an
activity I do every day. Everyone does this every day.
THE COURT: But you have admitted there may be some
limit to that?
MS. FAHRINGER: Well --
THE COURT: Not the mere act of collecting
information, putting two and two; but putting 1,000 plus 1,000
together may be a little different than adding 1 and 1.
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MS. FAHRINGER: Well, no court has said that yet, not
in the context -- we just haven't -- we don't have it in In Re:
Facebook tracking. This would be the first Court to say that
absent disclosure, absent taking from that direct relationship,
be kind of thing, absent that, this looks like a privacy
invasion. That's really -- that would be anomalous, and I
think Transunion would have been a different case if that was,
in fact, a privacy right.
THE COURT: All right. But again, that's a
categorical argument. You are making a categorical argument
that there is no precedent for gathering information without
taking information and having it actionable under California
law, which you might win, you might lose. But it seems to
me --
MS. FAHRINGER: Yeah.
THE COURT: -- it's not individually fact dependent.
It's --
MS. FAHRINGER: It is. I'm sorry. I didn't mean to
interrupt. Did I?
THE COURT: Well, I don't see why it is because if
your rule of law is correct, then why does it matter whether --
you know, what particular piece of information because none of
it was taken from. That's your key. That's your --
MS. FAHRINGER: Oh, I see. So you are -- so the
thought is that well, if we can say this isn't a violation, as
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long as you are not taking from, as long as you are not
disclosing -- I mean, I think I'm not understanding your
question, Your Honor.
THE COURT: Well, that's what you have been arguing.
MS. FAHRINGER: No, no.
THE COURT: If you don't take from, there's no
violation of California law.
MS. FAHRINGER: This is where we are not connecting.
I'm not saying that it's necessary to have that -- to have that
connection, and I'm not saying it is necessary to have
disclosure.
What I am saying is that it is the collection -- the
to/from relationship -- happens to be the common thread between
all the Article III standing cases and all the certification of
UCL classes and all the certification of unjust enrichment
classes. All of them require that.
I'm not saying you need it necessarily. I'm saying that
if you don't have it, you are going to have to look more
deeply. And what you are going to look at is going to vary.
It is going to vary by class member and even for the same class
member, over time, depending on what customer searched,
depending on whether that search, it's going to -- for each of
those situations, you are going to have to look more deeply.
And that's why what we are left with is no common issues,
not with this set of claims, not with this theory of injury.
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No common issues, no predominance, not a -- not a situation
that lends --
THE COURT: Well, the variances -- tell me -- just
articulate so I understand --
MS. FAHRINGER: Yeah.
THE COURT: -- absent the taking from, what are the
factors that would inform whether or not a cause of action lies
under the various privacy and business practice laws?
MS. FAHRINGER: Sure. So for -- I will focus -- let
me focus first on unjust enrichment because we are going to
deal with unjust enrichment with respect to the disgorgement
theory.
So we start with the elements of the claims. Again, I
will emphasize the Doe versus Wal-Mart case, which is kind of
very, very similar to this one. It's -- and the Ninth Circuit
ruled there that there's no unjust enrichment where the
relationship is too attenuated between the parties.
THE COURT: Right. And that's a classwide --
MS. FAHRINGER: Yeah.
THE COURT: Yeah.
MS. FAHRINGER: Here is what you need to look at: So,
it's not enough to show that Thomson Reuters received a
benefit. It has to have done so under circumstances as between
the parties such as fraud, coercion or duress but make it
inequitable; to obtain the benefit without paying for it.
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That's the test. That's the famous test.
The Court -- the Rejoice! Coffee Company restates that
test. So the circumstances between the parties, whether they
are similar to fraud, coercion or duress will drive the
resolution of the claim. That's Florey Institute of
Neuroscience, we cited it in our brief. Common thread, of
course, is the direct connection. That's the Doe case.
Where there isn't a direction connection, we need to look
even more closely at the circumstances between the parties, not
ignore the requirement entirely.
And every one of the -- there are very, very few class
certifications of unjust enrichment classes, and they are
typically like deceptive advertising, you know, sort of
ancillary claims towards deceptive fraud case, a deceptive
advertising case.
So on top of that, an unjust enrichment claim can't
frustrate a public policy. That's an additional layer on top
of the standard elements. That's the First National Savings
Bank case, the Tarlison case.
And so this is a classic example of a claim that isn't
suited to class treatment because those need to be looked at as
between the parties. And case after case after case says that.
And that --
THE COURT: Why -- that's where I question you because
many of your arguments are "here is an example of why it is so
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important. It is valuable for law enforcement. It is valuable
for bank fraud. It is valuable for this situation."
Why shouldn't -- why can't that be looked at in the
aggregate? That is, this practice of, you know, collecting
information, is it sufficiently -- is this an unjust use?
And you would argue that absolutely not because look at,
we have saved lives, we have saved people, we have facilitated
loans, we have done all this. Why can't that be decided in the
aggregate as a class? That's why I'm --
MS. FAHRINGER: Because it won't drive the full
resolution of the claims because it is only decided if it is
answered in one direction because if that's not enough, then
you still might have no unjust enrichment because of the
circumstances between the parties, the San Bernardino shooter,
things like that.
And so it's like that is -- there's no doubt that it
matters; that there are great, great social utility benefits to
this product. We are not saying ignore them. We are saying
they are part of the equation, and they are part of the steps
that need to be taken; and there are a lot of them in order to
resolve the claim in either direction.
That's -- that's the problem that we are faced with. So
circumstances do differ based on things like, for a particular
person, what information isn't CLEAR? Is it the -- and let me
just emphasize that the Plaintiffs kind of seem to know this
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when they drafted the complaint and the first amended complaint
and their -- and their motion, for that matter, because all of
those were chock-full of specific illustrations of specific
information that might be available in CLEAR as to any
particular class member, that might be disclosed, that might be
shared, not necessarily -- wouldn't necessarily be shared. It
depends.
And so the question -- I mean, I'm struggling too candidly
because there are -- it's so seductive. It's so -- especially
for these incredibly important issues, it's so alluring to want
to resolve them in an abstract way, in sort of a hypothetical
way that is not driven by real people, real class members who
are going to be directly impacted by whatever decision the
Court makes. That's -- these two claims don't let us do that.
THE COURT: All right. Let me hear from, Mr. Mura,
your response to several things. One is the depth of the
information, how much uniformity is there that you can
demonstrate in terms of the depth of information and the
breadth of information that is collected because Mr. Fahringer
is suggesting "Well, for some people we might get this, we
might not get that;" and there's so much variation that there's
not enough here to a substantial invasion privacy.
MR. MURA: Yes, Your Honor, that's entirely wrong
because the way in which Thomson Reuters' business model works
is that it collects as much information from as many people as
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possible from as many sources and makes them available to its
many paying customers.
And if you just look again, I pointed to a representative
sample of CLEAR report. There is no dispute that that's a
representative sample. It's 26 pages long. It has forty
category of records. You are going to find those records for
Californians because of the way in which Thomson Reuters goes
out and buys information that it makes available through CLEAR.
It's through subscription based plans. It buys the
information from a variety of sources. So many of those
sources are listed there.
Ms. Fahringer was very selective in her description of the
use of the CLEAR and its customers, but they are much broader
than the examples that she is cherry-picking; and all of that
information is available for Californians.
And so if you -- and we also did talk about the amount of
searches. I think that's on page 4 and 5 of our brief,
Your Honor. We talked about how customers may search for
single individuals. They may also run batch searches, which
are very large searches of individuals at once. And we talk
about the substantial -- about the search following there
through CLEAR. And we give 2020 as an example.
And so that's Exhibits 30 and Exhibit 26 and Exhibit 29,
which all discuss the high-level of searches that are being
done every single day.
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And so there isn't any real difference in terms of the
making available of Californians' information here. And I
totally disagree with Ms. Fahringer that there isn't a direct
connection here. Plaintiffs' information is the product, and
the misappropriation of that information is a common injury.
Thomson Reuters simply doesn't ask for consent. If it
thinks CLEAR is so beneficial, it would ask for consent but it
doesn't ask for consent. Ultimately, that's a merits question.
I mean, this uniform practice is going to be an issue
that's going to be decided classwide. And all of the defenses
that Ms. Fahringer is talking about are due to unjust
enrichment or the UCL. For example, she talked about how an
unjust enrichment claim can frustrate a public policy. I mean,
that's a classwide defense. If Ms. Fahringer wants to make
that argument, she can make it.
THE COURT: All right. What about -- I understand
that point. What about -- there may be situations if you look
at it individually, the unjust enrichment or unfair practice
may -- that calculus may run in a different direction. The
example is the San Bernardino shooter. Would he have a claim
because they ran the search to find out his true address?
MR. MURA: Well, even that, Your Honor, I mean, the
argument that Ms. Fahringer is making is that society is better
off when CLEAR has everyone's information in it because we are
taking about the --
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THE COURT: Well, no, she's --
MR. MURA: -- harm to the general public.
THE COURT: She is --
MR. MURA: What is the harm to the general public?
THE COURT: Hold on.
MR. MURA: Sorry, Your Honor.
THE COURT: You are making two arguments. One is the
categorical one, which I agree with you is -- can be decided
categorically. She is also saying even if she loses that
argument and you win, there are still individual instances
where there is no unjust enrichment like the San Bernardino
shooting. Even if they don't -- they can't justify all of
their practices because of the San Bernardino situation and the
fraud situation. And there's no good excuse because, like
banks can get consent. There's no reason why you can't get
consent absent exigent circumstances.
Let's say she loses that, her client still has an argument
that there are still individual circumstances where if you are
looking at unjust enrichment, there's a good argument that
there is no unjust enrichment because we are an exigent
circumstance where you can't get consent and the utility is
tremendous, et cetera, et cetera.
So if you admit that there may be some situations, does
that defeat class certification?
MR. MURA: I don't think I'm admitting that there are
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those situations, Your Honor. I think the question is you are
balancing the harm to the public versus the utility of that
practice.
If Thomson Reuters wants to come forward with individual
examples of where society was benefited or an individual was
benefited, then that would be balanced against the harm to the
public. I still don't think the question is whether Thomson
Reuters non-consensual collection and sale of that data
outweighs the utility of that practice. It's that practice
that must be balanced against the harm.
Thomson Reuters really wants to focus on "Well, yes, we
took your information, we collected it, we aggregated it, we
sold it, we didn't get your consent; but we should be excused
from that privacy violation because at the end a customer used
it for good.
And that's not how California privacy law or any privacy
law is understood. I mean, privacy law recognizes the failure
to obtain consent as an independent harm even if there aren't
consequences later on downstream.
So I don't think that's even a defense either under the
UCL test or under unjust enrichment; but if Ms. Fahringer wants
to come up with examples such as that, it's going to have to be
balanced against the general practice of Thomson Reuters
collecting and aggregating and selling information without
consent, and that's going to be something that can be decided
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classwide.
THE COURT: So you are saying that those examples,
however many San Bernardino type examples she comes up with,
that just gets thrown into the aggregate calculus. There's no
carve-out.
MR. MURA: Yes. And when they talk about those
examples, they talk about those as indirect benefits to
society. They talk about those benefits as indirect benefits
to society; that society is safer because if you allow people
to -- as Ms. Fahringer said earlier, if you allow people to
agree to have a consent model, then CLEAR isn't going to work.
It's not going to to allow the investigation of everyone at a
moment's notice.
And so that's their -- their argument for why this is
beneficial to society, societal wide. And that's an argument
that should be made classwide.
(Pause in proceedings.)
THE COURT: How about the example about the Florida
resident who lives into California for six months, gets into
the CLEAR database and then moves back to Florida and Florida
wants to use it. Why should that -- somebody like that, a
transient person, be included in the class at least as you have
defined it?
MR. MURA: Well, the way we have defined the class is
to focus on California. I mean, the UCL reaches any unlawful
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business practice committed in California. We have defined the
class to be limited to individuals who both resided in the
State of California and whose information Thomson Reuters made
available for sale through CLEAR.
So there's always a connection under our class definition
to California. And I think an injunction that stops Thomson
Reuters from collecting information from Californians without
consent, I think that would perfectly cover California. It is
consistent with the reach of the UCL. There is no permissible
extraterritorial there.
I mean, we have endeavored to draft our class definition
to be closely tied and to provide the nexus required to
California.
THE COURT: So, you are saying that there's not an
extra territorial application because the injunction, if there
were an injunction, would run to Reuters based in California or
what?
MR. MURA: It would run to Reuters with respect to
their practices in California. I mean --
THE COURT: Well, how do you define that? So somebody
who lived in California for a year and then they are back in
Florida and the Florida authorities want to get access to
CLEAR, would this -- would any injunction apply?
MR. MURA: Well, the injunction would apply to Thomson
Reuters not providing Californians' information. Thomson
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Reuters has a significant amount of information, as you can
imagine, about every single individual. So if someone is no
longer a Californian then and they are in Florida, then the
injunction might not lie against them. If the injunction
involves the leading data relating to Californians, that might
be different; but the injunction here, as the Court recognized
at the motion to dismiss stage, would be enjoining Thomson
Reuters from making Californians personal information available
for sale on the CLEAR platform without their consent.
I mean, that is an indivisible remedy that would provide
relief to each member of the class. So if someone is no longer
a Californian and a Floridian, maybe that's different. We are
talking about Californians' personal information for sale on
the CLEAR platform.
THE COURT: Well, when you say maybe that's different,
the definition of class has to be precise. You can't say maybe
that's different. Right now your proposed definition is anyone
during the limitations period who resided in California and
whose information was made available. So somebody who resided
here for a short period of time and no longer here would be
included.
MR. MURA: Well, they would be included and they might
be entitled to the injunctive relief of having the information
that related to them deleted if it hasn't been deleted; but the
injunction would lie to protect people who are residents of
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California when their information was taken from them through
CLEAR.
Again, I mean, if there needs to be a narrowing of the
class so that it's even more tightly tied to the fact that
Californians have to be presently in California or residents in
California, I think that can be easily accomplished.
I mean, the argument that Ms. Fahringer is making is not a
reason to deny class certification. The Ninth Circuit is very
CLEAR in Olean that any overbreadth in the class definition is
not a basis to deny class certification. It is simply a reason
to more narrowly define the class.
If the Court has any concerns -- I mean, I don't think
there is any concern here in the way in which the class
definition is worded. We would certainly be open to providing
an alternate definition if the Court has any concerns.
THE COURT: All right. Let me go back to,
Ms. Fahringer -- I know we are skipping around -- but
Rule 23(a) looks at commonality. And as you know, that's a
fairly low threshold. Maybe a little higher when you get to
predominance and maybe that's where your argument really lies.
But it seems to me that there is an argument that when
somebody is challenging a practice, even though that practice
may have varying results and may be justifiable in some ways
but not others, you know, that doesn't preclude class
certification.
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So, for instance, if you challenge a height requirement
for joining the fire department, as they used to have, which
excluded people of my ancestry disproportionally and people of
your gender disproportionally. Just because a lot of people
got through -- they were 5'9 or 5'10 -- doesn't mean that
there's not a class action. Just because some people, you
know, weren't affected the same way doesn't preclude the larger
question of whether this practice -- you are challenging a
practice. Is it a fair practice? Just because there's
exceptions doesn't mean that you can't look at it.
It may be the exceptions prove that there is no disparate
impact; therefore, it's not a big deal. Or this is really a
good idea; it has got a lot of utility to it, et cetera.
When you are challenging a practice, a -- a uniform
practice -- I mean, what the practice is, at least as alleged,
is uniform. The results may be different because sometimes you
don't get certain amount of -- you know, there is different
depths of information. If you query the same sources and you
aggregate them and the goal is to come up with as much detail
as you can, if the challenge is the practice, I fail to see why
there aren't common questions sufficient for class
certification purpose.
MS. FAHRINGER: Yeah, couple things. For the Court's
rigorous analysis because this has become such a unique case
with these two -- frankly, I mean, they are quite equitable,
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quite context dependent claims; unjust enrichment and unfair
competition. We are going to have to analyze this rigorously
claim-by-claim relief-by-relief to see whether there's
commonality.
So I think that the Court was -- was raising this issue
primarily with respect to injunctive relief or that's my guess.
And I think where we are right now is that as presented, we
have got an injunction that is way too sweeping and too vague
and a class that is way too gigantic.
And I'm just going to emphasize that by saying I think the
first sentence of Wal-Mart v. Dukes said that it was addressing
one of the largest classes ever, something like that; and that
was 1.5 people. In this case for injunctive relief we are
talking about tension upon tens of millions of people who
aren't -- many of whom aren't even California residents
anymore.
So we are talking about an injunction that is highly
abstract, and we are talking about injunction under the UCL,
which requires lost money or property among other things to
show entitlement to relief, not the impact of relief.
So that's a strange beast. That is a very strange beast.
And what you have got is like how is that -- and this is why we
keep going back to these specific examples because UCL requires
balancing harm to the class member. Harm to the public is
wrong. That is not the test. It's to the class member. Maybe
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the class member benefits from social utility as well.
But it's to the class member. That's the test against the
utility of the conduct across everything, socially to the class
member, et cetera. Tethering test, classically tethered to one
of the most context dependent policies there is, which is
privacy.
THE COURT: Let me ask you: You say the UCL requires
a balancing of harm on an individual basis.
MS. FAHRINGER: Yeah.
THE COURT: That almost defies any kind of classwide
relief in just about anything, whether it's a labeling -- false
labeling of cereal, which we see a lot of those cases; whether
it's a -- bank charges, you know, unlawful charge.
There's going to be situations where somebody said: "Oh,
yeah, I did read that disclosure even though it was in .2 font,
I read it."
That doesn't defeat or I don't care if it is truly not
made of vanilla extract. That has never in my experience said:
Oh, well, we have every individual -- we cannot have class
relief.
MS. FAHRINGER: Right. That's true. I agree. When
you have got that direct connection case, you have that
relationship case, things get a whole lot easier. That's
why -- that's the thing is what the Plaintiffs have done here
is they have taken the tethers off. Typically you have a
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direct relationship. The Defendant lied or they deceived or
they have got -- I mean, every single UCL --
THE COURT: That seems to go to the merits. Whether
there is this direct connection or not, may go to the merits;
that is, maybe you can't have a cause of action for mere
aggregation without taking data.
Maybe all these cases like NCAA, you know, and all those
cases and Article 1, Section 1 of the California Constitution
don't apply to this aggregation; but I mean, that's -- I don't
understand why the mode of analysis changes. It may be that in
the aggregate you have a different outcome; but I don't know
why the mode of analysis said suddenly you have got to go to
individualized if you don't have the tether, if you don't have
the direct connection. I'm not sure. This seems to me a
non-sequitur.
MS. FAHRINGER: And the reason it isn't is because it
is not a merits question since Wal-Mart. It's -- what we have
got to do is look at what the evidence is going to need to be
in order to have a conversation, in order to make a decision
about resolving that UCL claim. What's the evidence going to
be? Does it differ? And is the answer going to be different
depending on who the class member is?
That's what we are looking at. Is it a central question
or not. And what we have got here is the -- is we are
taking -- we can't decide whether it is unfair under the UCL,
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without looking a little more deeply, at stuff that's going to
have to vairy by class member.
Sure. Some of it is going to be the same. This goes back
to the point of, yeah, for one answer maybe it can be resolved
classwide. If the answer is sorry, Mr. Mura, sorry, Plaintiffs
there's no UC -- there's no unjust -- under no circumstances
are you going to be able to have a UCL claim because there's
just -- we need a direct connection, fine. But if the answer
is the other way and it says, "Thomson Reuters, you know, there
could be some circumstances, direct connection isn't required,"
then we are going to have to ask so many questions in order to
figure out whether there is a claim for unjust enrichment. And
that's why --
THE COURT: Well, there may be questions but there may
be many questions in the aggregate. And you have got to --
MS. FAHRINGER: Well, but --
THE COURT: The Plaintiff has to show an awfully high
level of aggregation, for instance, not just asking for
somebody's telephone number or showing a Mapquest view of their
house or something; but at some point that threshold may be
past; but, again, it's not CLEAR to me why that is not an
aggregated answer.
MS. FAHRINGER: And I think the answer is just that
this is -- you know, this is a situation where it actually --
if one of the class members were before the Court, just one of
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them, saying to the Court this is an unfair practice, you would
look at the sort of things that the Plaintiffs alleged in their
first complaint and the second complaint and in the motion; you
would look at the facts; you would look at what was the
information available in CLEAR; what was the practice; was the
information disclosed, all of those things. And those
questions are going to be based on different evidence.
Sure, absolutely some of the information -- some of the
evidence is going to be the same, but some of the important
evidence is going to be different; and that's why we have a
problem with this.
For injunctive relief we have got the most vague
injunction. It's not narrowly tailored. We can't tell whether
it's going to be appropriate for this class as a whole. For
this try the Plaintiffs have not gotten where they need to go
to show that these tens upon tens of millions of people -- some
of whom are not even in California, some of whose information
about them didn't even come from California. Thomson Reuters
is not a California company -- that they are entitled to UCL
relief?
That's just not -- we just aren't there. We just don't
have a -- we don't have a rigorously thought out scenario where
the Court is in a position to say that's okay. Not at this
point.
THE COURT: All right. Let me -- time is running out
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here. I want to give you a chance to -- if you want to add
something to your papers with respect to the Daubert motions, I
think they are pretty comprehensive; but I will allow each side
to take your pick and highlight something.
First, with respect to Reuters' motions as to the
Plaintiffs' experts I will give you three minutes to discuss
that one. Tell me which one you would like to talk about.
MS. FAHRINGER: I think Mr. Roberts should have the
opportunity to speak, Your Honor.
THE COURT: Good, okay.
MR. ROBERTS: Good morning, Your Honor. Let me
address the Daubert motion related to Dr. Lloyd, the damages
expert.
THE COURT: Okay.
MR. ROBERTS: The most serious issue with Dr. Lloyd's
opinion is that it's totally inconsistent with California law.
The proper measure of disgorgement in California is the
net profit attributable to the alleged wrong. Dr. Lloyd admits
that he didn't even attempt to calculate that. He calculated
gross profit instead of net profit, and he didn't even attempt
to isolate only the profit attributable to the alleged wrong
because Plaintiffs didn't ask him to do so. And because he
conducted the entirely incorrect inquiry, his testimony is
irrelevant and inadmissible.
THE COURT: When you say "the attribution" -- I
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understand the gross profit because I guess he looked at sort
of what we might call incremental marginal expenses and no
attempt to allocate fixed expenses; correct?
MR. ROBERTS: Correct.
THE COURT: But the allocation point is with respect
to the revenues attributable to the challenged practice and
others or what's the allocation?
MR. ROBERTS: Well, so what the law is is they are
entitled to only the profit that's attributable to their
information being in CLEAR, but there is a bunch of other
features of CLEAR that they don't challenge that contributed to
the profit.
That's the organization of the data, the user interface,
the fact that the data is searchable, Thomson Reuters' brand
recognition. And he made no attempt to account for those
aspects of the product.
Now, I will direct you to the Oracle and Google case we
cited and the MGM case. So there courts rejected the exact
arguments Plaintiffs made here.
In the Oracle case Oracle alleged that Google copied some
of their code and incorporated it into the Android code and
that without the Oracle code, you couldn't have had Android.
They said so we get all the profit. And Judge Alsup said, "No,
that's not the law. You have to allocate the portion that's
attributable to your code and the portion that's attributable
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Case 3:21-cv-01418-EMC Document 205 Filed 05/12/23 Page 56 of 64
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to Google's code." And he excluded their expert's opinion that
was going to say that a hundred percent was attributable to the
Oracle code because he made no effort to attempt to isolate
that.
And the MGM case was similar -- that's in the copyright
context. We cited that because that's kind of the seminal case
in this area -- similar case there. MGM copied a play and made
a movie out of it and didn't play the playwright, and the
playwright said, "Hey, well, without my story, you couldn't
have had a movie so we get a hundred percent of the profits."
THE COURT: I understand those cases. You see that in
copyright. You see that in patent infringements. There are
many components to a phone, Android, et cetera.
But here, this is -- my understanding is that he took the
revenue from CLEAR itself. I mean, it is -- whether maybe
CLEAR was enhanced because given who stood behind it, Reuters,
et cetera, et cetera; but it is the product itself. It is not
a component of a product.
So why does there need to be an allocation or at least why
can't he argue that there shouldn't be an allocation -- and you
can argue to the contrary -- but at least to survive Daubert?
MR. ROBERTS: Well, on that point he admits he didn't
even look into it. So he didn't argue there shouldn't be an
allocation, and he didn't make a conclusion about this.
He testified in his deposition that he wasn't asked to
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look into this. And so the second point is not an option
because it didn't happen; but on the first point, what those
cases stand for is -- you have to look at whether the
Defendants' allegedly wrongful conduct generated the profit and
what portions were generated from other features of the
product.
So take the movie example where the play is copied, they
said, "Well, without the story, you wouldn't have had a movie
so we get it all." That's what they are saying here. They are
saying without the information, you wouldn't have had a product
so we get it all. And that's not how it works.
In all of those cases they say, "Well, let's think about
why people wanted to use CLEAR and why they paid for it." A
big piece of that is the user interface. A big piece of that
is the organization of the data.
If Thomson Reuters just took these public records that are
already available elsewhere and just put them on a website --
there's no search bar; there's no organization; there's no user
interface -- people wouldn't use it.
It's the same reason that people refer Westlaw versus
LexisNexis or just going on PACER. The features other than the
information are what drive most of the profit, and he didn't
even attempt to account for that.
So we agree that if he offers an opinion, we can offer
another opinion and then argue about it; but he didn't even
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Case 3:21-cv-01418-EMC Document 205 Filed 05/12/23 Page 58 of 64
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meet his burden of offering an opinion on that. And so because
he didn't comply with California law, his testimony is
inadmissible.
THE COURT: All right. Let me get a quick response.
MR. WALD: Thank you, Your Honor. I think Your Honor
asked a question that is key to this question of accounting for
the platform and the features. And that is: Isn't the data
here the product? Isn't all of the revenue that Plaintiffs are
starting with the revenue specifically from CLEAR?
And answer to that is yes. Based on Thomson Reuters'
business records, the revenues here are attributable to the
data. None of those revenues would have been received if there
wasn't data to search.
THE COURT: What about the idea that that value,
though, was enhanced through some application of IP, the
organization, the presentation? I mean, if you just collected
the data, it wouldn't have been worth much but it was through
their know-how that enhanced the data beyond the value of
the -- the raw value -- the value of raw data?
MR. WALD: Well, Your Honor, we think the restatement
here is CLEAR; that the question of attribution is not a
question of sole causation.
The restatement says in the attribution inquiry you are
looking for profits that are attributable to the wrongful
conduct. And here, the wrongful conduct is collecting and
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Case 3:21-cv-01418-EMC Document 205 Filed 05/12/23 Page 59 of 64
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making available Californians' information without consent.
And none of the profits that Mr. Roberts describes would have
been realized absent that conduct.
Therefore, all of those profits are properly attributable
under the CLEAR and specific guidance of the restatement
looking specifically at section 51 comments F and E and cases
applying the restatement. It's CLEAR that California law does
not require this -- this sole causation question that they are
importing to this inquiry.
So, here all of the profits -- all of the profits from
CLEAR that Mr. Lloyd evaluated and considered -- and I think it
is a mischaracterization to say that he did not look at
evidence of these other features. He concluded that all of the
revenues here are attributable to Thomson Reuters' unjust
conduct of making available data.
Now, there might be enhancements that come down the line
but that's not the question that the restatement asks in
determining which revenues are properly attributable to the
wrongful conduct; and it's not a Daubert challenge to say,
"Well, in our opinion we would have considered some of these
additional factors."
So, Your Honor, I think that's what we would say with
respect to the platform's features. And if I can just touch
for a moment on the net versus gross issue, I think this is
similar, Your Honor.
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Case 3:21-cv-01418-EMC Document 205 Filed 05/12/23 Page 60 of 64
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Lloyd did calculate net profits according to the guidance
in the restatement. What the restatement says is under a
disgorgement analysis you disgorge money gained because of the
wrongdoing -- that's the point that we were just discussing --
and you deduct the marginal costs that were specifically
incurred because of those ill gotten gains in order to produce
those ill gotten gains but you do not deduct costs that would
have been incurred anyway.
THE COURT: All right. I get it. So let me move on.
I'm going to give now the Plaintiffs a chance to choose which
of your challenges you want to talk about, which one.
MS. JENSEN: Thank you, Your Honor. We will address
Professor Bambauer's opinion. Plaintiffs seek to exclude
Professor Bambauer because she essentially opines that
Professor Turow's view is extreme just for testifying that
California recognizes a strong right to control.
But Professor Bambauer shouldn't be permitted to offer a
made-for-litigation opinion that contradicts everything that
she has said elsewhere.
She repeatedly has stated that California privacy policy
essentially vests individuals with a property right and views
them as the ultimate authority on the use of their information,
but those opinions are completely absent from her report.
Even when experts make a mistake and do not consider
material contradictory information, courts have found that as a
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Case 3:21-cv-01418-EMC Document 205 Filed 05/12/23 Page 61 of 64
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reason to exclude the testimony. Her report is ultimately
unreliable and irrelevant to the issues in this case, which are
governed by California law, when she doesn't talk about
California policy whatsoever.
THE COURT: All right. Response.
MS. MENALDO: Your Honor, Professor Bambauer's opinion
doesn't relate to what California law says or doesn't say about
whether privacy is a property right.
First of all, that wasn't the subject of Professor Turow's
report. And second of all, Professor Bambauer's report
essentially lays out in detail what the academic literature
says about what privacy is, and she shows that Professor
Turow's view -- his espoused view that privacy is absolutest,
that you cannot consider any other factors, simply goes against
weight of all of the authority under, you know, academic
literature around privacy.
This question about what Professor Bambauer's views are as
to California law are just inapposite to the conversation. And
Plaintiffs want to sort of paint Professor Bambauer as hiding
her views when there's nothing that could be more wrong.
The fact that she has been asked to testify before
Congress to weigh in on what model legislation about privacy
should look like is evidence that she -- she is well regarded
in her field and more than qualified to offer the opinion that
she did, which is that Professor Turow's opinion is not in line
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Case 3:21-cv-01418-EMC Document 205 Filed 05/12/23 Page 62 of 64
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or in step with what privacy literature says, either now or
previously, about how -- what factors to consider.
So Plaintiffs' arguments simply don't line up with the
Daubert requirements, and they don't actually speak to the
content of her report.
THE COURT: All right. Thank you. That's helpful. I
will take the matter under submission. If for some reason I
feel that we need supplemental papers or further thoughts, I
will order that; but at this point I have got plenty here and I
will take the matter under submission. So thank you.
MR. MURA: Thank you, Your Honor.
MS. FAHRINGER: Thank you, Your Honor.
MR. ROBERTS: Thank you.
THE CLERK: This calendar is concluded.
(Proceedings adjourned at 11:00 a.m.)
---oOo---
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Case 3:21-cv-01418-EMC Document 205 Filed 05/12/23 Page 63 of 64
CERTIFICATE OF REPORTER
I certify that the foregoing is a correct transcript
from the record of proceedings in the above-entitled matter.
DATE: Friday, May 5, 2023
_________________________________________
Marla F. Knox, CSR No. 14421, RPR, CRR, RMR
United States District Court - Official Reporter
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