NBA Video-Privacy Ruling Defies Class Action Dismissal Trend (1)

The Second Circuit’s ruling reinstating a proposed class action against the NBA under a 1980s federal video-privacy law likely bolstered cases in other courts and will encourage new complaints under the law.

The Oct. 15 ruling found that giving up personal information to receive a newsletter establishes a subscriber relationship under the Video Privacy Protection Act. That broadening of the statute could open the floodgates for new claims under the law and provide a lifeline to previously-dismissed VPPA cases centered on tracking pixel software created by Meta Platforms Inc. and Alphabet Inc.‘s Google, attorneys said.

The appellate ruling counters a growing trend over the past year of dismissals of VPPA cases invoking the law for digital services, which have surged in recent years.

There’s “no question” that “you’re going to see a lot more litigation now,” said Philip Yannella, partner at Blank Rome.

The decision represents a warning to organizations providing video content that they will have to grapple with how they track and share consumers’ viewing activity on their sites, multiple attorneys said.

“For every website operator that has either a restricted section on their website or has an email newsletter so people can sign up for and also have videos on their website, the game got a little more real,” said Sean Buckley, partner at Dykema Gossett PLLC.

Who’s a Subscriber?

The Video Privacy Protection Act was enacted in 1988 to protect the personal information of video tape rental customers. As brick-and-mortar video rental services became all but extinct, though, plaintiffs’ attorneys pivoted and began using the law to bring website-tracking lawsuits against online media companies.

At the heart of many of the cases is the question of who qualifies as a consumer under the statute’s definition, which covers any “renter, purchaser, or subscriber of goods or services from a video tape service provider.”

Cases had limited success in district courts when plaintiffs failed to prove a harm to their privacy or that they were subscribing to services related to video materials on a website. Courts determined plaintiffs didn’t qualify if there was no nexus between the subscription and the provision of video content, said Lucy Holmes Plovnick, partner at Mitchell Silberberg & Knupp LLP.

But in last week’s ruling from US Court of Appeals for the Second Circuit, Judge Beth Robinson said the VPPA’s definition of “subscriber of goods or services” isn’t limited to audio-visual offerings.

By trading personal information in return for access to the newsletter, the plaintiff in Salazar v. NBA became a subscriber of that newsletter, and the NBA must abide by the VPPA when he watches videos on the league’s website, the judge said.

Some privacy attorneys say the ruling could expand the scope of the statute to cover not only more consumers, but also more organizations that might not consider themselves to be video providers.

“If goods or services don’t have to have any relationship to the provision of the content, it doesn’t seem like there is a line,” Plovnick said.

But the ruling isn’t without limits, said Yannella. For instance, plaintiffs will still need to demonstrate some established relationship with the website, beyond just visiting it, to advance a claim.

The decision is already having a ripple effect. In a September ruling, Judge Paul Engelmayer of the US District for the Southern District of New York left the door open to revive a dismissed VPPA case against NBCUniversal Media LLC if the Second Circuit ruled in favor of Salazar. Engelmayer on Friday ordered parties to confer to “secure the expedited remand of the case” from the Second Circuit to the lower court “in light of the Circuit’s decision in Salazar.”

What’s Next?

The Second Circuit ruling was limited to threshold questions and didn’t address whether the NBA’s sharing of subscriber data with Meta through pixel tracking software was unlawful.

Whatever liability decisions may come, the Second Circuit’s ruling should push companies to re-evaluate their use of tracking software, whether it’s removing it from pages that contain videos or doing away with the code entirely, Buckley said.

Under the VPPA, organizations need to obtain informed, written consent of the consumer at the time “the disclosure is sought” to share their personally identifying information to third parties.

“They’ve got two choices, basically, with the statute—they either don’t use the pixel or they get consent from their consumer, right?” said Michael L. Murphy, of Bailey Glasser LLP who represents the plaintiff in Salazar v. NBA.

But no court has yet weighed in on what appropriate consent under the VPPA looks like for digital services, which creates an uncertain path to compliance.

One option would be “some sort of a pop-up banner” that would specifically disclose the use of Meta pixel and the potential sharing of users’ video viewing history, said Stacey Chuvaieva, associate at Mitchell Silberberg & Knupp.

There will likely continue to be disagreement over how courts define goods and services under the law, said Greenberg Glusker partner Ira Steinberg. For instance, California courts have often ruled in favor of defendants’ arguments that the law covers only a purchase of an audio-visual good or service.

“We’re starting to see a jurisdictional split,” said Steinberg.

Appeals pending in other circuits, including one by Salazar against Paramount Global in the Sixth Circuit, could add to the confusion. In the Seventh Circuit, judges questioned attorneys last month in a case against MeTV over what constitutes a subscriber—and didn’t reach a clear consensus.

If the Seventh or Sixth circuit disagree with the Second Circuit’s interpretation of the statute’s definitions, it could soon lead to a circuit split, privacy attorneys said.

“We now have Second, Sixth, and Seventh all looking at a very similar fact pattern, and it’s the same statute—but how will they interpret it?” Plovnick said.

The case is Salazar v. National Basketball Association, 2d Cir., No. 23-01147, vac’d and rem’d 10/15/24.