December 10, 2020 - This Week at the Ninth

This Week at the Ninth: Trans Fat and Stolen Emails

This week, we take a look at one Ninth Circuit decision addressing the difficult Article III issues that arise in certain types of consumer class actions, and another in which the Ninth Circuit examined the application of the Stored Communications Act to emails backed up on a private server.  

MCGEE v. S-L SNACKS NATIONAL
The Court holds that a plaintiff failed to plausibly allege Article III standing stemming from her purchase and consumption of popcorn containing artificial trans fats.

Panel:  Judges Tashima, Wardlaw, and Pratt (S.D. Iowa), with Judge Tashima writing the opinion.

Key highlight: “We agree with McGee that these injuries, e.g., damage to one’s vital organs and permanent degradation of one’s cognitive abilities, would be sufficient to satisfy Article III standing for her non-UCL claims.  We are not persuaded, however, that McGee has plausibly alleged that she suffered these injuries.”

Background:   The plaintiff, Jacquelyn McGee, had bought and eaten Pop Secret brand popcorn.  She then advanced a number of state-law claims against Pop Secret’s manufacturer, Diamond Foods, alleging that Pop Secret contained partially hydrogenated oil, or trans fat.  The district court dismissed her complaint for failure allege Article III injury in fact.

Result:  The Ninth Circuit affirmed.  The Court began its discussion with a footnote observing that Diamond Foods had “conceded that McGee had standing” in a Rule 28(j) letter filed shortly before argument.  Nevertheless, the Court noted, it was required to address this issue because it implicated the district court’s jurisdiction. 

And, in fact, the Court of Appeals agreed with the district court that McGee lacked standing.  First, the Court rejected McGee’s argument that she had suffered economic injury by being deprived of the “benefit of her bargain.”  As the Court explained, to plead such an injury, a plaintiff “must show that she did not receive a benefit for which she actually bargained.”  And McGee could not meet that standard: she had not pleaded that Diamond made any representations about Pop Secret’s safety, and in fact Pop Secret’s labeling had disclosed that it contained trans fat.

Second, the Ninth Circuit rejected McGee’s “overpayment” theory of economic injury, which was premised on the assertion that “Pop Secret is not fit for human consumption and has a value of $0.”  The Court recognized that it had previously held that “a plaintiff can satisfy the injury in fact requirement by showing that she paid more for a product than she otherwise would have due to a defendant’s false representations.”  But here, McGee did not actually allege any false representations—which distinguished Hawkins v. Kroger (the decision that had led Diamond Foods to concede standing), as there the plaintiff alleged that the defendant falsely represented its product contained no trans fats.  Assuming without deciding that this “overpayment” theory might apply in some non-misrepresentation cases, the Court nevertheless concluded that McGee had not properly pleaded that theory here, as she did not allege that Pop Secret either “contained a hidden defect” or was “worth objectively less than what she paid for it.”  The Court emphasized that Pop Secret’s label disclosed the presence of trans fats, and that the health consequences of such fats were generally known long before McGee made her purchases.

Finally, the Court rejected McGee’s contentions that she had or would suffer physical injury as the result of her consumption of Pop Secret.  While McGee alleged that eating this popcorn had inflamed her organs, degraded her cognitive abilities, and caused cholesterol and insulin issues, she “did not allege that she has undergone medical testing or examination to confirm that she suffers from these conditions or that they were caused by her consumption of Pop Secret.”  And, the Court held, none of the general medical studies on which she relied demonstrated that her consumption of popcorn would have necessarily caused such issues.  Similarly, the Court concluded, these studies failed to support McGee’s related argument that Pop Secret increased her risk for future physical injuries.  As Court held, “we are not persuaded that McGee has plausibly alleged that her limited consumption of Pop Secret placed her at substantial risk of disease.”

ANDREA CLARE V. KEVIN CLARE
The Court holds that a declaration describing an employer’s private email server did not require expert qualifications and created a genuine dispute of material fact as to whether the e-mails stored there were protected under the Stored Communications Act.

Panel: Judges Hawkins, Gilman (6th Cir.), and Callahan, with Judge Hawkins writing the opinion.

Key highlight: “Notwithstanding the complexities of the SCA and the greater complexities of modern technology,” the Court relied “on a straightforward premise: for an e-mail to be stored ‘for purposes of backup protection,’ there must be a second, backup copy of the message.”

Background: During their marriage, Kevin Clare regularly accessed Andrea Clare’s electronic devices to read her text messages and emails.  When the relationship began to deteriorate and she asked him to stop, Kevin allegedly used Andrea’s thumbprint as she slept to access her work email.  And even after Andrea moved out and switched phones, Kevin allegedly accessed more emails through a formally shared iPad and then used the information he gathered in divorce proceedings. 

Andrea sued, alleging that Kevin’s snooping had violated the Stored Communications Act. Kevin moved for summary judgment, arguing that there was insufficient evidence that the e-mails he accessed were in “backup” storage as defined by the SCA.  Andrea countered with a declaration from an employee of the IT company her employer had used that confirmed that Andrea’s devices had been accessed and described the private server that backed up her work emails.  But the district court disregarded the declaration because it didn’t explain the declarant’s expert qualifications or how he reached his conclusions.  Because Andrea had failed to show her emails were in “backup” storage under the SCA, the district court granted summary judgment for Kevin.

Result: The Ninth Circuit reversed. First, the Court held that the district court had abused its discretion by excluding the IT employee’s declaration because its description of the email backup system was based on personal knowledge and did not require any expert qualifications.  By way of analogy, the Court reasoned” “A plumber may not be qualified to describe the inner workings of a garbage disposal but can certainly observe the presence of such a unit in a particular customer’s sink.”  Because the IT employee was aware of the existence of the private email server, his declaration should not have been excluded. 

On that basis, the Court reversed the summary judgment ruling.  The SCA creates a private cause of action against anyone who “intentionally accesses without authorization a facility through which an electronic communication service is provided . . . and thereby obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in such system.”  As relevant here, “electronic storage” is defined as “any storage of such communication by an electronic communication service for purposes of backup protection of such communication.”  In a previous case, the Ninth Circuit had explained that electronic communications are stored “for purposes of backup protection” when the “obvious purpose” for storing it is to maintain a backup copy “in the event that the user needs to download it again.”  The excluded declaration “provides evidence of exactly that.”  Because Andrea and her employer stored her emails in case they needed to access them again, there remained “a genuine dispute of material fact with respect to whether the e-mails Kevin accessed are entitled to protection under … the SCA.”

Although the parties did not raise the issue, the Court also joined the Fourth Circuit in rejecting any distinction between “service copies”—emails accessed via the typical front-end user interface—and “storage copies”—emails accessed via the backup system itself.  The Court agreed with the Fourth Circuit that “[n]either the [SCA] nor its legislative history limits the scope of messages in ‘electronic storage’ under Subsection (B) to a single backup copy or type of backup copy.”  Accordingly, it was “immaterial that Kevin accessed Andrea’s e-mails via the same platform she uses.”  Finally, the Court declined to reach the question whether e-mail messages maintained only on a web-based platform can fall within the SCA’s protection of messages in backup storage.  Resolving that question was unnecessary (and infeasible) on these facts.