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Standing Issues Could Still Derail Google Cookie Placement Litigation

In a decision almost a year in the making, the Third Circuit’s recent opinion in In re Google Inc. Cookie Placement Privacy Litig. (3d Cir. Nov. 10, 2015),  (“Google”), reversed a trial court order dismissing a lawsuit alleging that Google and other internet advertising companies circumvented cookie-blocking technology in Safari and Internet Explorer web browsers.  In doing so, the panel rejected a standing argument advanced by defendants that is identical to an issue currently pending before the Supreme Court.  A defense-favorable ruling on that issue by the Supreme Court could require a second look at the question of standing in Google.

In Google, plaintiffs allege that defendants exploited loopholes in the browsers’ cookie-blocking features to place cookies on plaintiffs’ computers that tracked plaintiffs’ web-browsing activities.  Defendants then used that tracking information to place targeted advertisements on web pages that plaintiffs visited.  Plaintiffs claimed that the use of such cookies violated federal and state law.  The trial court rejected defendants’ argument that the plaintiffs lacked standing, but dismissed all of their claims for failure to state a claim upon which relief may be granted.

On appeal, the Third Circuit affirmed dismissal of plaintiffs’ federal claims under the Wiretap Act, 18 U.S.C. § 2510, et seq., the Stored Communications Act, 18 U.S.C. § 2701, and the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, and its dismissal of California statutory claims.  However, the panel vacated dismissal of plaintiffs’ privacy claims under the California Constitution and California tort law.  The court’s reasoning centered on the broad privacy protections afforded under California constitutional and common law and the allegedly surreptitious nature of defendants’ conduct.   California recognizes a common law claim for invasion of privacy where (i) a defendant intentionally intrudes into a place, conversation, or matter as to which the plaintiff has a reasonable expectation of privacy; and (ii) the intrusion occurs in a manner highly offensive to a reasonable person.   See Hernandez v. Hillsides, Inc., 211 P.3d 1063 (Cal. 2009).  This principle is consonant with the California Constitution, which expressly guarantees a right to privacy.  Plaintiffs alleged that defendants’ use of the cookies was contrary to representations made by defendant Google that the Safari and Internet Explorer cookie-blocking features would prevent the use of cookies to track users’ web-browsing activity.  The court found that making such allegedly deceptive representations would create an expectation of privacy and render the resulting invasion of privacy highly offensive to the user.  Therefore, the court concluded that plaintiffs’ allegations stated a claim for violation of invasion of privacy in violation of the California Constitution and California common law.

Significantly, the Third Circuit also considered and rejected defendants’ argument that plaintiffs had suffered no losses as a result of the alleged wrongdoing and, therefore, lacked standing to bring suit under Article III, § 2 of the United States Constitution.  The court disagreed with defendants’ position that pecuniary loss was required to establish the existence of injury, finding that the alleged invasion of statutorily-created rights (such as under the California Constitution) is sufficient to establish actionable injury. The court goes on to state that placement of unwanted cookies on plaintiffs’ personal computers also constituted actionable injury.  The court, however, does not address the potential impact of the impending decision in Spokeo v. Robins, No. 13-1339, in which the Supreme Court will decide whether standing exists where there has been a violation of a legal right without any concrete harm flowing from that violation.  A decision by the Supreme Court in Spokeo that conditions standing on some form of concrete harm independent of an invasion of a legally-protected interest could overrule the Third Circuit’s decision in Google or, at a minimum, provide a ground for reargument of defendants’ standing objection.  Spokeo was argued on November 2, 2015.  The decision in Spokeo will issue before the conclusion of the current Supreme Court term, likely with the first three months of 2016.

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Kevin M. McGinty

Member / Co-chair, Class Action Practice

Kevin is a member of the firm's Health Care Enforcement Defense Group and has significant experience representing health care–related entities in a variety of litigation matters, including contract, regulatory, False Claims Act and class action lawsuits. Kevin's health care industry clients have included pharmacies, PBMs, hospitals, clinical laboratories, diagnostic imaging providers, pharmaceutical companies and managed care organizations.