Yesterday, in Salazar v. National Basketball Association, the Second Circuit Court of Appeals reversed a district court’s dismissal of a putative class action under the Video Privacy Protection Act (VPPA), offering an interpretation of the VPPA’s definition of “consumer” that differs from how the majority of courts have used that term.
The decision is the latest interpretation of a 1988 statute that, until recently, was relatively unknown and rarely used in consumer class actions. But the plaintiffs’ bar has increasingly turned to older statutes to challenge the use of business and analytical tools on modern consumer-facing websites, and the VPPA has been a key weapon in this effort. Several hundred VPPA putative class actions have been filed in the past few years, and many companies have been threatened with “mass arbitration” demands using the VPPA as well.
Until yesterday’s decision, courts across the country have construed the statute narrowly, given that the VPPA limits its definition of “consumer” to a “renter, purchaser, or subscriber of goods or services from a video tape service provider.”1 Based on that definition, courts have dismissed claims brought by plaintiffs who purchased, rented, or subscribed to services unrelated to the video materials on a website and likewise have dismissed claims brought by free-newsletter subscribers based on the finding that such subscribers were not “consumers.” Sidley has been involved in a number of these cases, including a dismissal secured on behalf of The Container Store.2
In Salazar, the Second Circuit reached a different result, overturning the district court’s dismissal based on the specific allegations the consumer pleaded regarding videos he viewed on NBA.com, which he alleged offers a broad selection of video content, and the digital NBA newsletter he subscribed to on NBA.com, which he claimed provides exclusive video content to subscribers. The court found that the phrase “goods or services” in the definition of “consumer” was not limited to audiovisual goods or services so long as audiovisual content was part of the “provider’s book of business.” The court found that an online newsletter could be a “good or service” if the plaintiff otherwise satisfied the statutory prerequisites under the VPPA. And based on the allegations offered by Salazar that he had signed up for the digital newsletter to watch videos on the website and allegedly had provided his personal information as part of that exchange, the Second Circuit found that he had sufficiently alleged that he was a “subscriber” for the purposes of the VPPA’s “consumer” definition.
Although this decision may lead to new VPPA lawsuits in other cases involving consumer newsletter subscriptions, it is important to note that the Second Circuit was careful to state that its ruling was “narrow” and limited to Salazar’s specific subscriber allegations. The Second Circuit likewise noted that on remand, the district court would need to consider the defendant’s other bases for dismissal. This decision should have limited applicability to the VPPA class actions filed against many retail and consumer-facing websites where video materials are offered only for marketing purposes and/or are not part of the company’s book of business — in these cases, the defendant should not be considered a “video tape service provider” under the statute. Nonetheless, companies should continue to follow best practices for their online terms of use, disclosures, and privacy policies as case law in this area continues to develop.
118 U.S.C. § 2710(a)(1).
2https://www.sidley.com/en/newslanding/newsannouncements/2024/01/sidley-achieves-dismissal-with-prejudice-for-the-container-store
