Netflix, Sony Confront Video Privacy on Appeal

The contentious and failed confirmation hearings of Robert Bork to a spot on the U.S. Supreme Court in 1987 are still prompting legal squabbles – just ask the 9th Circuit Court of Appeals.

Two arguments heard Friday examined how to deal with violations of the Video Privacy Protection Act, which was passed by Congress in the wake of reporters publishing a list of Bork’s video rentals.

The law subjects companies to a $2,500 in damages if it discloses rental information “outside the ordinary course of business,” in addition the companies are expected to destroy the information no more than a year after it ceases being used.

On Friday, the appeals court heard an appeal seeking to reinstate a class action against Netflix for exposing consumers “recently watched” lists to any visitor who may come over to watch movies at the consumer’s house or who may spy the watch list on a laptop in a public place.

The second case, against Sony, claims a right to sue the company for alleged failure to destroy the consumer watchlists within the specified period, leaving consumers viewing habits vulnerable to hackers.

In the Netflix case, Judge Richard Tallman asked why a consumer couldn’t just ask a visitor to wait in the hall while the movie is qued up, so the “recently viewed” list can be hidden.

“Do we really have to put on blindfolds?” asked plaintiffs’ lawyer Rachelle Rickert.

“Why punish Netflix for a consumer’s carelessness,” Tallman responded.

Rickert said the consumer has no choice, the view lists appear on the screen without any option to avoid it.

Tallman added, “We have to look at the intent of Congress.  This was passed in response to the Bork hearings.  The media got Bork’s video viewing list.”

Netflix attorney Keith Eagleton said the district court, which dismissed the lawsuit, got it right.

“The theory they allege is not a violation under the VPPA,” he said.

He acknowledged Netflix could probably change the display on screen showing recently watched movies, but said the company has 50 million subscribers who don’t seem to have a problem with it.

In the Sony case, the plaintiffs argue another important aspect of the VPPA is a requirement to destroy the watch lists in 30 days or no more than a year after they are used as intended.

The panel questioned whether the statute even provided a private right of action for violations.

Tallman noted that a 7th Circuit decision by Judge Richard Posner went against the plaintiffs.

Plaintiff attorney Roger Pearlstat said Sony must destroy the lists in 30 days, barring a court order or other reason to keep them longer, to prevent accidental exposure by a rogue employee or a hacker.  “Sony has been hacked, including Sony Playstation the subject of the appeal here,” he said.

Judge Johnnie Rawlinson said, “The only problem I have is whether there is a private right of action embedded in the statute.”

Pearstat read a section of the law stating “a person aggrieved by this section may bring a private right of action,” saying, “that includes the retention section.”

But Judge Ronald Dearie pointed out there are other courts that disagree, citing the Posner case.

In addition, Rawlinson said there was nothing simple about the statute, nor was it precisely written and Congress amended the law to add the retention limits later.

Sony attorney Michael Rhoades argued the law is unfortunately ambiguous.

He urged the court to follow the 7th Circuit and retain the “internal logic” of the legislation.

Cases:  Mollett v. Netflix Inc, No. 12-17045  and Rodriguez v. Sony Computer Entertainment, No. 12-17391

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