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Lin v. Crain Communications Inc.

United States District Court, E.D. Michigan, Southern Division

January 16, 2020

GARY LIN, individually and on behalf of all others similarly situated, Plaintiff,
v.
CRAIN COMMUNICATIONS INC., Defendant.

          Anthony P. Patti Mag.Judge

          ORDER DENYING DEFENDANT'S MOTION TO DISMISS [ECF NO. 10]

          VICTORIA A. ROBERTS UNITED STATES DISTRICT JUDGE.

         I. INTRODUCTION

         Plaintiff Gary Lin (“Lin”) filed this class action complaint alleging that Defendant Crain Communication, Inc. (“Crain”) violated Michigan's Personal Privacy Protection Act, M.C.L. § 445.1712 (“PPPA”), and was unjustly enriched by disclosing sensitive and statutorily protected information to third parties.

         Lin alleges that Crain disclosed Personal Reading Information (“PRI”) to data mining companies in violation of the PPPA. [ECF No. 6, PageID.60, ¶ 9]. Lin also contends that Crain sold “highly detailed customer lists, ” including sensitive information, about him and others to interested third parties. [ECF No. 6, PageID.68, ¶ 28].

         For the reasons stated below, the Court DENIES Crain's motion to dismiss.

         II. BACKGROUND

         A. Procedural Background

         On June 25, 2019, Lin filed this putative class action on behalf of himself and others who allegedly had their PRI disclosed to third parties by Crain without consent. Crain moves to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(6) and 12(b)(1).

         B. Factual Background

         Crain is a multi-industry publishing conglomerate. It is incorporated in Delaware and maintains its corporate headquarters and principal place of business in Detroit, Michigan. [ECF No. 6, PageID.66, ¶ 14]. In Michigan, Crain publishes and sells several nationally-circulated publications, including Autoweek. [ECF No. 6, PageID.80, ¶ 61-62].

         According to Lin, Crain maintains a vast digital database comprised of customers' PRI, which includes “subscriber's full name, home address, and the title of the Crain publication(s) to which he or she subscribes.” [ECF No. 6, PageID.60, ¶ 9]. Lin says Crain discloses this PRI to data aggregators and appenders who then supplement it with intimate and highly-detailed demographic and personal information about customers, including subscriber ages, genders, incomes, the names of their employers, and the industries in which they work, etc. [ECF No. 6, PageID.74, ¶ 44]. Lin alleges that Crain allows almost any organization to rent a customer list that contains numerous categories of detailed customer information. [ECF No. 6, PageID.60, ¶ 11]. According to Lin, Crain never requires an individual to read or agree to any terms of service, privacy policy, or information-sharing policy, and fails to obtain any consent from - or provide effective notice to - its subscribers before disclosing their PRI. [ECF No. 6, PageID.76, ¶ 50].

         Lin is a citizen of Virginia; he subscribes to Crain's magazine. [ECF No. 6, PageID.59, ¶ 7]. Lin says Crain did at least these three things in violation of the PPPA: (1) disclosed mailing lists containing Lin's PRI to data aggregators and data appenders, who then supplemented the mailing lists with additional sensitive information from their own databases, before sending the mailing lists back to Crain; (2) disclosed mailing lists containing Lin's PRI to data cooperatives, which in turn gave Crain access to their own mailing list databases; and (3) rented and/or exchanged its mailing lists containing Lin's PRI-enhanced with additional information from data aggregators and appenders-to third parties. [ECF No. 6, PageID.82, ¶ 70-73].

         Lin paid for his subscriptions. He says he ascribed value to the privacy of his PRI, and its sale and disclosure caused him to receive less value than he had paid for in his subscription costs. Lin says he would not have been willing to purchase subscriptions at the full price charged, if at all, had Crain adequately informed him of its disclosure practices. [ECF No. 6, PageID.84, ¶ 86]. Moreover, Crain's disclosure of Lin's PRI to third parties caused an influx of junk mail and marketing calls. [ECF No. 6, PageID.61, ¶ 13].

         C. Michigan PPPA

         In 1988, Michigan enacted the PPPA shortly after the enactment of the federal Video Privacy Protection Act (“VPPA”), 18 U.S.C. § 2710. Congress passed the VPPA to “preserve personal privacy with respect to rental, purchase, or delivery of video tapes or similar audio-visual materials, ” S. Rep. No. 100-599, at 1 (1988), reprinted in 1988 U.S.C.C.A.N. 4342-1.

         Like the VPPA, Michigan's bill aims to “preserve personal privacy with respect to the purchase, rental, or borrowing” of written materials, sound recordings, and video recordings. 1988 Mich. Pub. Acts No. 378 at p. 1559. The PPPA addresses many concerns related to an “unwarranted invasion of privacy.” House Legislative Analysis, Privacy: Sales, Rentals of Videos, Etc., H.B. 5331, (Jan. 20, 1989) (“Many in Michigan also believe that one's choice in videos, records, and books is nobody's business but one's own, and suggest the enactment of a statute to explicitly protect a consumer's privacy in buying and borrowing such items”).

         In 2016, the Michigan legislature amended the PPPA. Mich. Comp. Laws § 445.1711 et seq.). However, the Court reviews the PPPA prior to its 2016 amendment because Crain's alleged wrongful disclosures preceded the amended statute's enactment. The subsequent amendments do not apply retroactively to claims that accrued prior to its effective date. Coulter-Owens v. Time Inc., 695 Fed.Appx. 117, 121 (6th Cir. 2017) (“The new PPPA does not contain any express statement of intended retroactivity … and given the extensive substantive changes … it cannot be viewed as merely a “clarifying” amendment intended for retroactive application.”)

         The PPPA, prior to its amendment, prohibited persons “engaged in the business of selling at retail, renting, or lending books or other written materials, sound recordings, or video recordings” from disclosing material “to any person, other than the customer, a record or information concerning the purchase, lease, rental, or borrowing of those materials by a customer that indicates the identity of the customer.” PPPA § 2. A “record or information” could be disclosed only in circumstances listed in Section Three of the PPPA. Prior to the amendment, those exceptions included disclosure “[w]ith the written permission of the customer”; “[p]ursuant to a court order” or “a search warrant”; “[t]o the extent reasonably necessary to collect payment for the materials”; and for the “exclusive purpose of marketing goods and services ...


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