Shopify must face data privacy lawsuit in US

A US appeals court has revived a proposed data privacy class action against Shopify (SHOP.TO), a decision that could make it easier for American courts to assert jurisdiction over internet-based platforms.

In a 10-1 decision, the 9th US Circuit Court of Appeals in San Francisco said the Canadian e-commerce company can be sued in California for collecting personal identifying data from people who make purchases on websites of retailers from that state.

Brandon Briskin, a California resident, said Shopify installed tracking software known as cookies on his iPhone without his consent when he bought athletic wear from the retailer I Am Becoming, and used his data to create a profile it could sell to other merchants.

Shopify said it should not be sued in California because it operates nationwide and did not aim its conduct toward that state. The Ottawa-based company said Briskin could sue in Delaware, New York or Canada.

A lower court judge and a three-judge 9th Circuit panel had agreed the case should be dismissed, but the full appeals court said Shopify “expressly aimed” its conduct toward California.

“Shopify deliberately reached out … by knowingly installing tracking software onto unsuspecting Californians’ phones so that it could later sell the data it obtained, in a manner that was neither random, isolated, or fortuitous,” Circuit Judge Kim McLane Wardlaw wrote for the majority.

A representative from Shopify stated that this decision "undermines fundamental aspects of how the internet functions," and forces e-commerce business owners into far-off courthouses irrespective of their location. It remains uncertain what actions Shopify will take next legally.

Matt McCrary, a lawyer for Briskin, said the court bolstered accountability for internet-based companies by rejecting the argument that “a company is jurisdictionally ‘nowhere’ because it does business ‘everywhere.'”

A bipartisan group of 30 states plus Washington, D.C., sided with Briskin. They said they needed an ability to enforce their own consumer protection laws against companies that avail themselves of local marketplaces through the internet.

The U.S. Chamber of Commerce backed Shopify, stating that extensive regulatory power could adversely affect backend service providers whose software has global usage.

Judge Consuelo Callahan disagreed with the decision, arguing against the "wandering cookie guideline" as it "unjustifiably creates judicial authority based on where the plaintiff happens to be."

The 9th Circuit includes nine western US states, Guam and the Northern Mariana Islands.

The case is Briskin v Shopify, Inc. et al, 9th US Circuit Court of Appeals, No. 22-15815.

Provided by SyndiGate Media Inc. ( Syndigate.info ).