Courts Should Have Jurisdiction over Foreign Companies Collecting Data on Local Residents, EFF Tells Appeals Court

This post was written by EFF legal intern Danya Hajjaji. 

Corporations should not be able to collect data from a state’s residents while evading the jurisdiction of that state’s courts, EFF and the UC Berkeley Center for Consumer Law and Economic Justice explained in a friend-of-the-court brief to the Ninth Circuit Court of Appeals. 

The case, Briskin v. Shopify, stems from a California resident’s privacy claims against Shopify, Inc. and its subsidiaries, out-of-state companies that process payments for third party ecommerce companies (collectively “Shopify”). The plaintiff alleged that Shopify secretly collected data on the plaintiff and other California consumers while purchasing apparel from an online California-based retailer. Shopify also allegedly tracked the users’ browsing activities across all ecommerce sites that used Shopify’s services. Shopify allegedly compiled that information into comprehensive user profiles, complete with financial “risk scores” that companies could use to block users’ future purchases.  

The Ninth Circuit initially dismissed the lawsuit for lack of personal jurisdiction and ruled that Shopify, an out-of-state defendant, did not have enough contacts with California to be fairly sued in California. 

Personal jurisdiction is designed to protect defendants’ due process rights by ensuring that they cannot be hailed into court in jurisdictions that they have little connection to. In the internet context, the Ninth Circuit has previously held that operating a website, plus evidence that the defendant did “something more” to target a jurisdiction, is sufficient for personal jurisdiction.  

The Ninth Circuit originally dismissed Briskin on the grounds that the plaintiff failed to show the defendant did “something more.” It held that violating all users’ privacy was not enough; Shopify would have needed to do something to target Californians in particular.  

The Ninth Circuit granted rehearing en banc, and requested additional briefing on the personal jurisdiction rule that should govern online conduct. 

EFF and the Center for Consumer Law and Economic Justice argued that courts in California can fairly hold out-of-state corporations accountable for privacy violations that involve collecting vast amounts of personal data directly from consumers inside California and using that data to build profiles based in part on their location. To obtain personal data from California consumers, corporations must usually form additional contacts with California as well—including signing contracts within the state and creating California-specific data policies. In our view, Shopify is subject to personal jurisdiction in California because Shopify’s allegedly extensive data collection operations targeted Californians. That it also allegedly collected information from users in other states should not prevent California plaintiffs from having their day in court in their home state.   

In helping the Ninth Circuit develop a sensible test for personal jurisdiction in data privacy cases, EFF hopes to empower plaintiffs to preserve their online privacy rights in their forum of choice without sacrificing existing jurisdictional protections for internet publishers.  

EFF has long worked to ensure that consumer data privacy laws balance rights to privacy and free expression. We hope the Ninth Circuit will adopt our guidelines in structuring a privacy-specific personal jurisdiction rule that is commonsense and constitutionally sound.