Time Inc Sued Over Divulging Subscriber Data To Data Miners Without Consent

Michigan is one of the only states with such a law, but as search for privacy and state tax revenues grows, others may follow.

It is also worth noting that one obscure judicial circuit in East Texas dominates the national debate over intellectual property rights so Michigan, with 10 million residents and many corporate headquarters, could be even more powerful. JL

Jeremy Barr reports in Advertising Age:

The suit alleges that personal information was divulged to unnamed third-party, data-mining companies without the consent required under Michigan state law. The Michigan law has national implications, because any media company that has customers in Michigan can face costly class action lawsuits. Even if a fraction of those (10 million) residents are customers of a media company, that company could face tens of millions of dollars in damages in a class action
Time Inc. has until Apr. 26 to respond to a lawsuit seeking class-action status filed in Michigan in February by People magazine subscriber Carolyn Perlin.
The suit alleges that Ms. Perlin's personal information was divulged to unnamed third-party, data-mining companies without the consent required under Michigan state law."Had she known that Time would disclose her Personal Reading Information to third parties without her permission, Perlin would not have purchased her subscription," the suit says. "Thus, Perlin has suffered concrete economic harm in the form of the monies paid to Time in exchange for the magazine subscription."
Ms. Perlin proposed to sue on behalf of all Michigan residents who have directly purchased a subscription to a Time Inc. publication.
Over the last few years, several cases have been filed against magazine publishers using Michigan's Preservation of Personal Privacy Act, which expands on the federal Video Rental Privacy Act.
"The VRPA prohibits companies like Time from disclosing -- without written permission -- any information that specifically identifies a person as having purchased written materials, such as magazines," according to the Perlin complaint.
Several of those cases have been settled. In early February, a judge approved a plan for publisher Meredith to pay $7.5 million to settle a class-action lawsuit tied to the VRPA. Meredith, as part of the settlement, agreed to refrain from disclosing information about Michigan subscribers to third-party companies for four years "without the prior express written consent of the affected subscribers."
Rodale, another industry heavyweight, has a pending, $4.5-million settlement over a subscriber-privacy case in Michigan. Bauer similarly settled a case in 2014, for $775,000.
There are subscriber-privacy cases pending against Hearst, Forbes Media and Mansueto Ventures, publisher of Inc. and Fast Company magazines. (Hearst representatives did not respond to a request for comment, and Forbes and Mansueto representatives declined comment.)
"We intend to fight this lawsuit," a Time Inc. spokeswoman told Ad Age.
Time Inc. recently prevailed in another, similar case, Rose Coulter-Owens v. Time Inc., on summary judgement, the spokeswoman pointed out.Mr. Scharg, whose team also represents the plaintiffs in Rose Coulter-Owens v. Time Inc., said the cases are different because Ms. Perlin bought her subscription directly from Time Inc. rather than through a third party.
The judge in Rose Coulter-Owens v. Time Inc., when dismissing the case in February, said the state's privacy protections apply only to direct, retailer-to-customer subscription sales, suggesting that the third-party subscription seller would be considered the retailer in that instance.
"This one alleviates that concern," Mr. Scharg said. "It's a direct purchase." (His team is also appealing the judge's decision in Coulter-Owens.)
A judge, in certifying the class in Coulter-Owens ("All Michigan residents who between March 31, 2009 and November 15, 2013 purchased a subscription to TIME, Fortune, or Real Simple magazines through any website other than Time.com, Fortune.com, and RealSimple.com"), concluded that subscriber information was being shared with third-party companies. Mr. Scharg said he expects a similar determination to be made in the Perlin case.
Specifically, in the July 2015 certification order, the judge said that "all of defendant's subscriber information — including people who purchase a subscription from one of defendant's third party agents — is sent by defendant to Acxiom Corporation ('Acxiom'), a 'marketing database vendor,' on a weekly or bi-weekly basis." Marketing intelligence company Wiland was also mentioned in the order.
Time Inc., in response, said at the time that Acxiom "has some limited access to subscriber information for the purposes of managing and performing technical troubleshooting related to the subscriber database, to assist Time in fulling list rental orders, and to append data to assist in marketing to customers." (Acxiom declined to comment on any potential involvement in the Perlin case.)Asked about the genesis of the lawsuits, Mr. Scharg said his legal team discovered that magazine subscriber information was being passed on to third-party companies when it investigated data-mining more broadly. His team has been interviewing a number of magazine subscribers in Michigan.
It's not yet clear whether the cases lodged and settled in Michigan could spread around the country, though Jeff Kosseff, an attorney and professor of cybersecurity law and policy at the United States Naval Academy, said "the Michigan law is an outlier," and called it a "relic" of an earlier era of jurisprudence.
"I haven't heard of any significant efforts for other states or the federal government to adopt similar legislation," he continued. "That said, the Michigan law has national implications, because any media company that has customers in Michigan can face costly class action lawsuits under this statute. Michigan has nearly 10 million residents, so even if a fraction of those residents are customers of a media company, that company could face tens of millions of dollars in potential damages in a class action lawsuit. "
The Perlin suit seeks "actual damages or $5,000.00, whichever is greater, per Class member."
"I'd be shocked if there are any national media companies that are not paying attention to the Michigan law," Mr. Kosseff said. "The potential for significant damages is tremendous."
Asked whether a settlement was likely, Mr. Scharg said "that's up to Time." He added: "We look forward to presenting the case to a jury, and I hope that we have the opportunity to."