Vizio Can't Dodge Claims Its TVs Spy on Viewers

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For the second time this year, Vizio has failed in a bid to undercut a proposed class action lawsuit targeting the way its Internet-connected Smart TVs collect and disseminate information about viewers. In fact, thanks to a decision from a California federal judge Tuesday, the legal action seems to be growing in magnitude.

Vizio has acknowledged that until recently, its Smart TVs automatically collected information. In February, the company came to a $2.2 million settlement with the FTC to resolve an investigation into this. Vizio pledged it would henceforth obtain affirmative express consent when it wishes to collect and share data about the habits of its customer base.

Nevertheless, Vizio has maintained that data collected isn't paired with personally identifiable information. In California, suing consumers are challenging this assessment in a wide-ranging privacy lawsuit. The judge rejected a motion to dismiss in March, and perhaps disconcerting, Vizio alleged in its own lawsuit over the failed $2 billion merger with LeEco that the Chinese had used the pretense of an acquisition to steal information about customers.

The March decision had one significant welcome development for Vizio. At the time, although the company couldn't escape claims for violating the Video Privacy Protection Act, a state privacy law, and unjust enrichment, Vizio did manage to convince U.S. District Court judge Josephine Staton to dismiss a claim that it had wiretapped consumers.

After the complaint was amended to try again on the allegation that Vizio had illegally intercepted the content of communications, Vizio again demanded dismissal.

This time, Staton sees enough in the pleadings to allow the claim to survive.

Vizio argued that a user's viewing history does not constitute "content" while the plaintiffs pointed to a patent allowing Vizio to take samples of programming actually being displayed on TV into a centralized fingerprint matching server.

"When watching a program through a connected device or streaming service, the 'intended message conveyed by the communication' is the program that the consumer is watching," writes the judge in yesterday's decision (read in full here). "Thus, Plaintiffs plausibly allege that the intercepted data extends beyond metadata to 'samples' of the actual content displayed on a consumer’s screen."

The judge also agrees over Vizio's opposition to allow the plaintiffs to include in its allegations how Vizio allegedly combines data from Smart TVs with information obtained from apps, smart phones and other Vizio products.

Additionally, Vizio fails in a bid to use mandatory arbitration agreements to doom the class action — at least, at this juncture. 

Vizio told Staton that in 2015 and 2016, its Smart TV purchasers accepted arbitration to resolve disputes, but the judge decides she can't simply take judicial notice of website printouts and a declaration.

"The website printouts Vizio has supplied are not even exact duplicates of its Limited Warranty and Terms of Service, and no discovery has taken place about the how these agreements were presented to Smart TV purchasers, whether Vizio’s arbitration agreements differed over time, and what fraction of class members may be bound," she writes.

The judge determines that such issues are better adjudicated on a motion for class certification.

Finally, Vizio attempted to use the consent decree with the FTC to dismiss a demand for injunctive relief. The manufacturer argued that its agreement with the government to modify its practices mooted the demand.

"Because the plaintiff was not a party to the consent agreement, it would have no recourse if the defendant shirked its promises and the state agency failed to enforce the agreement," writes the judge, and after reviewing case law on the topic, adds, "Applying the voluntary cessation framework, the Court concludes that Vizio has not yet satisfied its 'formidable burden' of demonstrating that 'subsequent events make it absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.' Vizio has not submitted a declaration or other evidence affirming that it has halted its data-collection practices; the only document before the Court is its consent decree with the FTC."