World Without Privacy 4

Session IV: Enough About Me: Why Privacy is About Power, Not Consent or Harm

Lisa M. Austin, Associate Professor, University of Toronto Faculty of Law

Consent is often seen as the heart and soul of models of privacy protection. These regulate personal information, not private information (information about you). A very large amount of info is potentially regulated by these kinds of regimes, and the dominant idea is that it’s up to you to figure out how much you want to share.  If you think privacy is complex, contextual, varying among people, this looks incredibly promising because we don’t predefine what private is.  “Self-determination” or self-management models.

We should be very skeptical of these models.  Standard problems: people can’t read policies, don’t read them. But her problems are deeper/more structural. Cautionary tales from Canada.  Pay attention because one might think Canadian privacy law is comprehensive and strong.  Our legislation covers public sector and increasingly the private sector as well; privacy commissioners are dedicated regulators; easy to make complaints; not just procedural but substantive—consent doesn’t matter, you can only collect info for reasonable purposes.  Situated in broad constitutional framework including a right to privacy, which rejects the third-party doctrine. Reasonable expectation of privacy standard is normative, not descriptive.

Problems: First, designed to regulate relationship between individual and a service.  Certain model of fair and appropriate in that info flow. But internet companies are intermediaries—they mediate multiple relationships, including interpersonal: platforms for interaction, deeply bound up with their own business practices.  Second, collect so much information about us that they’ve become treasure troves for state agencies.  Those things affect the structure of privacy.

If you see the benefits of consent based model as individual self-management, that reflects very individual, subjective view of privacy. But implemented as law that invokes two pressures: other competing interests.  It can’t just be up to the individual to do what’s best for her—law enforcement/national security push back, as well as business interests. No matter how implemented, you find various places where that balancing is in play—proportionality analysis, objective standard. Pressure is to move away from individual self-determination.

Also, people who have to obtain consent are now under obligations—they need to seek out information about the user’s consent. If the collection involves really private information, maybe it has to be opt in; less private, maybe implied consent works. Once that categorization is occurring, we’re not doing individualized subjective preferences any more. Retreat to ideas of privacy as sensitive information occurs, narrowing the scope of what we’re protecting. Retreat to accounts of social/reasonable expectations of privacy, but very different from the constitutional version.  Social norms instead of normatively reasonable expectations. Both work to undercut the promise of this type of privacy law.

Recent privacy decision about FB: should you be able to opt out of targeted ads?  Initially targeted marketing was considered a secondary use, and required another consent.  If true in retail context, why not in FB context?  Answer: no!  Accepted that FB’s business model was based on ad revenue, and business interests had to be balanced with privacy.

Defaults make a huge difference. The charge made was that they should be more restrictive than FB sets, which would then force people to think harder about their privacy settings.  Privacy commissioner rejected this too.  Why? Commissioner said, people join FB to share information. The idea that it can’t be deeply sensitive because you’re there to share information—privacy as secrecy, sensitive information.  Also influenced by expectations of FB users that this was reasonable within the community—but no discussion of how this was a shift from general cultural expectations formed independent of something like FB to descriptive account of expectations of FB users within an architecture that was formulated based on the business model. Intermediaries participate in shaping social norms but are not noticed to be doing so.

Multiple courts have upheld warrantless access to subscriber info. Usually about child porn, which makes courts reluctant to touch this. But also they say that the legislation creates carveouts so that they don’t violate statute when sharing information with law enforcement without consent. Could say, re: the carveouts: Not up to ISP to vet the credentials of LEO/whether they need a warrant.  Could still have separate inquiry into whether warrant was required.  State might still need a warrant under Canadian law because the third-party doctrine isn’t part of Canadian law. But instead: courts say that the legislation permits sharing, thus you have a diminished expectation of privacy. And the contracts with subscribers vaguely, buried deep, have a clause that say that they can share info with law enforcement, diminishing reasonable expectation of privacy. Terms imposed by company in standard form contract now alter relationship between individual and state, and the courts keep saying this.

To think that consent mediates all this is mistaken, not just for regular problems of reading the forms but because consent as a concept facilitates broad collection of info and easy access by law enforcement in a disturbing way.

What to do? Analytic framework: privacy is no longer that helpful; lost analytic rigor.  There are two lessons from privacy’s roots in trespass that are underappreciated and that could be reappropriated/revised. (1) The “power to” view: trespass is not an injury based tort.  Always looking for the harm of privacy violations leads to trouble—so diffuse, balanced against very pressing concerns.  When we can’t find specific harms, we discount it.  Property law is often not about protecting people from injury but about giving people powers to do what they couldn’t otherwise do—e.g., transfer property after death.  Law as facilitative, not just obligations/remedies for injuries. 

What’s the legal architecture we need to facilitate privacy? What do we think privacy norms allow us to do?  Audience norms of tact: pretending not to notice something that we do.  That could help us think about FB’s obligations beyond securing consent—it too could be required to exercise tact.

(2) Public context—early search and seizure cases are trespass cases.  Some accounts of trajectory of privacy say that we went from protecting property to protecting more.  But early trespass cases aren’t merely upholding private property; they were about concerns over arbitrary exercise of state authority/rule of law. Explicit focus on rule of law can be helpful in getting us off focus on individual (consenting or not) to the surveilling party—who’s exercising power and how can we constrain it so it’s exercised in an accountable/transparent matter. That’s the central Q, not a side show. That helps explain what’s wrong with the standard form contracts nobody reads. We each have roles in holding each other and the state accountable.

In earlier privacy debates there was a lot of debate about practical obscurity—records on you held in paper file cabinet are different because they’re harder to access and link to other information.  Paperless = loss of practical obscurity.  (Pseudonymity is one way of restoring that, at least as against other individuals!) Similar phenomenon going on with law enforcement. Police require cooperation of community in so much; you need trust. We all know what happens when a community stops trusting the police.  RCMP built trust with community and got tips that led to apprehension of people who planned terrorist attack.  That requires responsible action by law enforcement.  We all exercise judgment about when to act (call in the police) or not. This plays a role in practical constraints on police action. When info is no longer held in community, but by an intermediary with different rules about sharing, we need to think about what accountability looks like.

Growing scholarship in rule of law: not just about constraining state authority, but also about constraining private actors.  Is rule of law consistent with administrative state? Information law is another major shift in the nature of the state, and we need more than privacy to think about it.  Consider other legal vocabularies about the nature of law.

Moderator:      Tanya Cooper, Assistant Professor of Clinical Legal Instruction and Director of Domestic Violence Law Clinic, The University of Alabama

The poor have no power over their privacy. We see this in family law, disproportionately affecting racial minorities. Example: child welfare/dependency courts where children are adjudicated abused/neglected. Families routinely invaded by state actors/agencies, lawyers, judges. Their information is collected and used against them. No meaningful consent/ability to opt out because the countervailing interest is protection of children. Irony: these courts are closed to the public. They use privacy as an umbrella term for confidentiality—mask a wide array of abuses against due process and families are routinely separated forever.  So she likes thinking not about consent but about power.  So what to do?  How would we apply your concepts about power? 

Austin: one possibility: disclose facts without personal details. Program in Canada to train judges to voluntarily redact information in their judgments, because they throw in all sorts of unnecessary details.  Get them to reflect on what they can and should put in the judgments as explanation for the reasoning versus what should be left out, like a house address.

Sarat: was there a golden age for consent, when it was meaningful?  Likes idea of obligations imposed on intermediaries; empirically, on what basis would you believe that society as a whole would endorse this view of affirmative obligations.  The way in which US citizens think about these problems is almost entirely about consent, even when the consent wasn’t meaningful. 

A: there was no golden age.  Looked at privacy commission findings over a number of years about consent.  Striking result: every example was basically resolved on the logic of business interest—reasonable purpose got interpreted as reasonable business interest, and then consent was implied; consent didn’t do any work.  Need more normative discussion to have any bite.

Sarat: if I was a consent advocate, I’d say we need to get away from implied consent.

A: has philosophical concerns.  What does it mean to consent to give up privacy, if privacy is about consent?  What are you consenting to give up?  There must still be some independent concept of what it is that you’re giving up when you consent.

In Canadian human rights law, we impose affirmative obligations to reasonably accommodate religious views, disabilities, etc. up to the point of hardship.  Completely accepted now, with lots of debate over what reasonable accommodation/hardship means, but the basic principle is now grounded.  People accept the ethical settlement.  Unthinkable to build a new building that wasn’t wheelchair accessible/build curbs without curb cuts.  Positive obligations around privacy could also be built into infrastructure—a building code for privacy.

Sarat: draw on analogies in American law to obligations that prisons have to prisons: social relationships they create based on dependency; remove the effective capacity to opt out.
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World Without Privacy 3

Session III: Four Privacy Myths

Neil Richards, Professor of Law, Washington University

(1)   Privacy is dead.

1970: Newsweek cover story: Is privacy dead?  People have been declaring privacy dead for a while.  Privacy law is booming, as is debate on appropriate collection, use, and disclosure of information.  Privacy still exists: no cameras in bathroom (and expectation is so deep that we feel no need to disclose that there are no cameras in the bathroom).  Need for rules regulating what happens after info captured is all the more important. HIPAA/FCRA govern use of information.  Transparency makes consumer credit work for consumers as well as agencies.  Trade secret law is a law of privacy. Data brokers like being able to operate in private and resist calls for transparency.  Facebook is an enemy of privacy but likes its own: Richards visited and was required to sign an NDA saying he couldn’t describe anything that happened during his visit; tried that with a press conference too.  FB believes in privacy for itself, as does the NSA.

The content of the rules is more important than ever, and we need to decide what rules to have before it’s too late.

(2)   People don’t care about privacy

If people didn’t care, would you know who Edward Snowden was? Pew study shows people do care—when they can figure it out, they use adblockers, Tor, pseudonyms, give false info.  Privacy paradox: the idea that we say we like privacy but just go ahead and sell our info.  Dan Solove: the failure of privacy self-management.  FB provides “tools” to control privacy, but they’re too hard to use.  Even privacy experts aren’t good at this—there are too many of them to control.  If you read all the privacy notices you encounter in a day you’d need 76 workdays.  Putting burden on users to read, adjust, tweak, opt out does not work—choices and time are limited.

(3)   Young people don’t care about privacy

Actually, they do. They see the benefits of connecting. They care about the immediate privacy threats to them, which is not the NSA, and not even FB. It’s their parents and teachers.  FB activity is declining because old people are now there.  It’s not that FB is uncool.  It’s that when your parents are on FB you watch what you do.  Privacy purges upon college graduation: pictures of everything they’d taken shouldn’t be on their timelines any more.  Also, like older people, young people face limited privacy choices—you have to go where the people are; having less money gives them more limited choices.  Reverse privacy paradox: if we don’t care about privacy, why do we talk about it so much?  Privacy is the shorthand for anxiety about radical transformations in info tech we’re witnessing and how those affect our lives.

(4)   If you’ve got nothing to hide you’ve got nothing to fear.

Posner said: privacy is just a right to conceal discreditable facts about ourselves: fraud on the market for humanity.  But we all have something to hide.  Not just toilet activities or private parts.  Tyler Clementi killed himself after his sexual activities were secretly recorded and shared. 

People behave differently when they believe they’re under surveillance, or even behaving in front of a picture of eyes. Is the solution for all of us to watch each other? No. Privacy in social space allows us to figure out who we are, play with identity as Tushnet discussed.

Privacy has power effects: information can be power over.  NSA collecting information on people viewed as pro-radical Islam, creating a chart of the porn they liked, planning to threaten disclosure to silence them.  FBI did the exactly the same thing to MLK Jr., believing him a Communist agent.

Target knows you’re pregnant: the intent wasn’t to be creepy; it was to get power, here commercial power.

(5)   Privacy is bad for business

User data is valuable.  If this is just a transaction, we’re paying for FB without dollars, and that’s misleading.  Is privacy a tax on profitability?  Well, is having to pay wages to your employees a tax on profitability?  It’s a cost/input.  Privacy is ultimately good for businesses, which depend on trust.  Trust/confidentiality can garner a competitive advantage.

How we frame/talk about privacy matters.  Free services, Big Brother, oil, death of privacy matters for diagnosis and solutions.

Moderator:      Fred Vars, Associate Professor of Law, The University of Alabama

Qs: is that what we really mean when we say privacy is dead? Don’t we mean that the scope of available info about individuals is much greater, even if rules still exist?  Would a more satisfactory response to the myth be that the percentage of total information that’s private is smaller but not because privacy is dying but rather than the amount of public information has skyrocketed?

Richards: goes to discourse.  Labeling and framing: when it ceases to be private, information does not necessarily become public.  A lot of baggage comes with the term “public.”  Info is shifting from the superprivate state to the less superprivate, but that doesn’t mean it’s all out there and unregulable.  Managing flows becomes more important. 

Sarat: Contrast Haggerty’s point: privacy for excretory functions remains.  But the social domain has dramatically shifted.  Just because it’s not fully public doesn’t mean it’s private (against the gov’t, advertisers, etc.).

Real point of disagreement is whether rules still matter a lot.  Haggerty says no.  You say yes.

Slippage between language of secrecy and privacy—privacy is even more a matter of power.

Richards: as a sociologist, the goal is to explain and describe and diagnose complex social phenomena.  As lawyers, our job is to fix things and talk about rules and prescriptions.  Haggerty is right about the mean shift from relatively private to relatively public, and the risk that it will become dangerously public.  Also agrees that legal rules/privacy rules can end up becoming problems themselves, making it easier to give up privacy—FISA court gives stamp of democratic approval.  But sometimes legal rules have unintended effects, and even fail; his departure is the hope that we can have good rules that actually work and don’t become privacy theater.

Q: seems like the only people who really care about privacy are those who want to live off the grid—no phone, no connection to public services.  Tech is too pervasive for privacy to exist. Security breach at Target = no privacy.

Richards: we continue to use credit cards because the benefits outweigh the costs, but the costs are still there. Humans are wired to be intellectually lazy, and existing concepts are easily blurred. Need better encryption, among other things. But clients still care about confidences—they want their information kept private.  (We act as if the NSA isn’t listening, I would say!)  Regulation can prevent certain uses. Cultivate ethical sensibility among info tech engineers. When doctors started to be able to cure, we had ethical regulations about their responsibilities; when lawyers could change legal status, they developed ethics; software engineering needs constraints too, through professional ethic of utilizing great power.

My Q is about the last myth: Silicon Valley libertarianism; why doesn’t market reasoning completely dispose of your responses—we’ve bargained/there’s consent; minimum wage laws are bad; if privacy is good for business we will adopt it precisely to that extent, and no more.

Richards: My audience is not so much the Randians as the non-true believers, as well as consumers.  There are different kinds of privacy/rules. Some are at times flatly opposed to profitability.  “You may not have a free service” would make things less profitable. Other protections allowing users real control, or regulating the way ads delivered, or regulating how information is safeguarded, are essential. Even where there are actual tradeoffs, by looking at the rules in the broader context you can see the complexity of the problem and that we’re looking for decisions about when we’re allowing information to flow unimpeded.  Less concerned with rules that come out of the ethical conversation than about having a conversation about what ethical rules would be, as we did about what the rules for workplace safety should be.

Austin: to what extent is privacy a real live analytic tool any more? Yes, we need rules, but does it make a difference to call them privacy rules as opposed to information rules?  Confidentiality won’t get us very far; it’s narrow. 

A: doesn’t like term privacy. We need to work on the intermediate concepts. People keep looking for the harm rather than figuring out rules. He has tried to pick some concepts and start from there: informational privacy/privacy in the formation of beliefs and political commitments—the goal is to defend kinds of information rules. In security, we may want to rely on economics—our interest in credit card security is more in not losing money. In surveillance, we need to look at balance between political liberty, public safety, and risks of corruption from unreviewable security apparatuses.  Just not privacy as secrets or on/off binaries.
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OTW participates in Copyright Week

Here we are talking about fair use!

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A world without privacy 2

Rebecca Tushnet, The Yes Men and the Women Men Don’t See

I begin with a claim that is likely to be demoralizing, but also reveals some interesting features of privacy: In practice, Americans and many other Westerners care more about privacy as against their neighbors than they do about privacy as against their governments.  It’s in this context that I want to talk about pseudonymity, its abuses, and its promises.

 
Pseudonymity is connected to privacy because a pseudonym allows people to separate and manage their self-presentation to other people, which is something that “privacy” is often defined as doing as well.  First Amendment discourse around anonymity understandably treats identity as binary: a person is legally identified or they are anonymous.  Pseudonyms are just another form of anonymity, with the occasional mention in discussions of anonymity of the potential signalling effects of a persistent identity that allows the speaker to build credibility over time.  TM and right of publicity law have more clearly thought through the potential harms, and the potential benefits, of claiming an identity that you don’t have.
 
I talked about Violentacrez as the dark side:  The story shows how pseudonymity can support male privilege: the condition of being looked at can do great harm to women, while the ability to not be seen provides great benefits to men.  (It also highlights that pseudonymity is almost always relative—the government, and often anyone with a sufficient interest in investigating, can generally dig up enough information to connect an online identity with a legal identity.  But most people most of the time nonetheless act as if their pseudonyms are separate.) The story also illustrates that many times, anonymous/pseudonymous harassers can dish it out but they can’t take it—their harassment targets specific people, often women, and tries to deny their targets the privacy and dignity that the harassers claim exclusively for themselves.
 
But is there anything else to pseudonymity?
 
Talk about two legal cases along with the story I borrowed for my title to attempt to identify the potential benefits of pseudonymity.  First, the Yes Men: When a fake “Koch Industries” website and press release appeared in 2010, purporting to announce a decision by Koch to stop funding organizations that deny climate change, news organizations quickly recognized the hoax, but also reported on it.  A federal court rejected both Koch’s arguments for de-pseudonymizing the creators and Koch’s claims for their liability under trademark and related laws.  The court ruled that defendants’ use of the Koch trademark was therefore not a commercial use made “in connection with goods or services,” as required to trigger trademark liability.  
 
My second story: Recently, a court found that a rapper performing as Ricky Ross, who adopted a well-known criminal’s name and persona as a drug dealer, didn’t violate the criminal’s right of publicity because the new music the rapper created in that persona was creative and valuable in itself.   Using the persona as a cloak and creating new expression, like a kid playing dress-up and inventing new adventures (or even retelling old ones), led to First Amendment protection. 
My third story: The Women Men Don’t See is the title of an award-winning science fiction story by James Tiptree Jr., a pseudonym for Alice Sheldon.   It is an account, from a male perspective, of two ordinary women—denigrated as unattractive by the narrator—who decide to leave the planet with aliens.   In this context, not being seen, being invisible, and being misread as a man are all forms of defensive power—not power over others, but protection from the exercise of power by men.  Pseudonymity is a way of participating instead of opting out, but still remaining unseen. 
 
These three experiences of pseudonymity, legal and cultural, suggest ways in which pseudonymity can cushion against the exercise of social power. While Tiptree’s female characters opted out, Tiptree did not, and like the Yes Men was able to engage in a biting critique of existing arrangements.  Pseudonymity is a kind of control over discourse about one’s self, even if it’s vulnerable to a focused investigation; separating identities by contexts remains valuable even in a pervasively surveilled society.
 
I discussed Google+’s “real name” policy and its flaws, along with the reasons people gave to use pseudonyms, e.g., “I’ve been stalked. I’m a rape survivor. I am a government employee that is prohibited from using my IRL [name in real life].”  Not having to know or care about the good reasons that other people might present different identities in different situations is a privilege of power. 
 
There are many nonabusive forms of expression that a person might reasonably want to avoid exposing to a family member, friend, or potential employer.   Moreover, the empirical evidence on real name policies as deterrents of misbehavior is unpromising. 
 
So there’s a justification of pseudonymity as protective, especially for women.  Is there a story of pseudonymity as a positive good, liberating in some way?  Yes.
 
Creative media fandom—communities in which people create fan fiction and other new, noncommercial works based on existing books, television shows, movies, and the like—offers many such spaces where people who identify as women (and, more broadly, people who don’t identify as straight men) are the default. In media fandom, participation is also pseudonymous by default.  Writing fan fiction under a pseudonym provides protection from the culturally devalued status of being a media fan, and specifically creates a distinct persona that can be sexually explicit.  Someone who writes sexually explicit fiction may not want that to be the first thing a next-door neighbor discovers about her.  At the same time, she is likely to want her erotica-writing identity to be persistent, so that it can accrue the benefits of reputation, and this will constrain her behavior within the community she’s using the identity in.  Reputation and legal names are not the same, and efforts directed at the latter attempting to influence the former won’t get the desired results. 
 
Like the rapper Rick Ross, fans use pseudonyms as part of a creative purpose.  Media fans choose names that announce their fannish interests and allegiances.  Indeed, fans sometimes use pseudonyms for explicit role-playing purposes: pretending to be a favorite character or celebrity (depending on whether the role-play involves fictional characters or “real” people ).   Within fandom communities, these representations appear as just another kind of pseudonym that supports creative play, not as impersonations designed to be believed.
 
And the pseudonymous norm is enforced against other community members: people who publicly connect a fan’s pseudonym with her legal or “wallet” name face social sanctions from other fans.  
But, one might ask, are these practices confined to fringe groups?  After all, most people don’t roleplay online.  The web commenting service Disqus, which allows websites to run comment sections, analyzed its database of hundreds of millions of comments, and concluded that “pseudonyms drive communities.”  Pseudonymous users contributed 61% of total comments, commenting 6.5 times more frequently than anonymous users and 4.7 times more frequently than Facebook users nominally using “real” names.  Moreover, pseudonymous comments were “liked” and replied to more often than comments from anonymous or Facebook commenters, which indicated that these comments supported engagement and interaction.   The numbers from the blogs Disqus tracked suggest that fannish communities are examples, not exceptions. 
 
t’s unsurprising that law finds pleasure rather embarrassing, and hard to value as against other objectives (truth, avoiding defamation, and so on), but it’s still important to discuss both the positive and the defensive sides of pseudonymity, so that we can move beyond the binary of ‘if you’ve got nothing to hide, you’ve got nothing to fear.’
 
Pseudonyms can strengthen communities, not just individuals. Like revolutionary cells—specifically, like the Founding Fathers taking on names derived from antiquity to signal a common commitment to classical ideals in the Federalist Papers—media fans adopt identities that define and distinguish them, though often only to those in the know.  It’s this communitarian, associative aspect that has been least acknowledged in much of the legal literature addressing pseudonymity.  While anonymity isolates people from each other, or at best dissolves them into an undifferentiated crowd, pseudonymity has the potential to do exactly the opposite.
 
In First Amendment discourse, the defensive role of anonymity and pseudonymity has had pride of place: most cases are about whether it’s legitimate to force someone to expose her legal name, given the risks she might run in doing so.  But the trademark and right of publicity cases also have something to tell us about the “freedom to” conferred by pseudonymity as well: the expressive and associative functions of a new name.  The rapper Rick Ross and James Tiptree, Jr. have hundreds of thousands of online counterparts.  Separated, persistent identities are a way for people to create themselves, and to create new works of art, taking advantage of the power that comes from being unseen or partially seen. 
 
A final lesson from online behaviors surrounding pseudonymity is that, in some sense, many people refuse to recognize the possibility of a world without privacy.  At the very least, it seems as if citizens online are engaging in a kind of reasoning familiar to students of fetishism: I know very well that I’m not truly anonymous (and not truly Justin Bieber’s vampire wife), but all the same …   Denial is not necessarily pathological; in a surveillance state it might be a tool for psychological survival, which doesn’t make it a positive but at least ought to be understandable.) So I don’t entirely agree with Professor Haggerty’s claims about the modern lived experience of privacy, though we may agree on some of the implications.  It’s in this play of fantasy and pretense that some important truths, and some powerful art, can emerge.

Moderator:      Paul Horwitz, Gordon Rosen Professor of Law, University of Alabama

Pseudonymity produces important constraints, especially in thick communities.  Legal community often not very good with play, pleasure, experimentation.

Blogging experience offers some uneasiness, however.

Thick ties and thin ties. Starting with play, experimentation—is it as easy to distinguish between pseudonymity and anonymity.  Some people want to play at a different stable identity online, with continuity and community. To the extent that you’re at the risk of being bound online by thick ties, may be benefits to regularly changing a pseudonym or speaking anonymously—a form of role play too.  A life without baggage.  Debate on law blogs: a number of people claming to be law profs wanted to be able to comment without getting things right or wrong—anonymity can be theorized in positive terms too.

Experimentation and role identity.  Emphasis in paper on communities that involve thick ties, social norms, enforcement—subject to constraints, pseudonym cultures. Some online spaces are more public enclaves.  More room for norms in those spaces?  Maybe not norms in favor of real names.  In public spaces there are a substantial number of useful constraining norms—protest, but don’t set the garbage can on fire.  Online, we might see some of the bad behavior produced without that.

In defense of constraint by one’s real world identity/role: law school encourages production of role identity—pervasive acculturation.  Can shape one’s life broadly, not just work life.  Can constrain wrongly in some cases—if people assume you can’t be professional and also gay or interested in sexual variety. But there’s also value to forming a role identity and treating it as a genuine constraint and attempting to live that with integrity. Play or alternative self-creation may be inconsistent with that. Especially relevant in thin-tie places about nature of rhetoric. Can a law professor use a pseudonym to play with the truth, or play with not getting things right? Can a member of the bar use a pseudonym to play with incivility, directed at vulnerable groups or elsewhere, that might otherwise produce disciplining?

Vonnegut quote: We are what we pretend to be, so we must be careful about what we pretend to be: we can play at bad identities.  Public space v. private space.

RT: excellent points. Re sock puppets: good and bad.  Tumblr v. livejournal v. FB—though Disqus results are promising.  Which will be seen as normative/default/unmarked v. which is unusual?  Power as the important variable.

Haggerty: long tradition of pen names for political or commercial purposes.  Isn’t there continuity?

RT: Yes! Though TM’s expansion has made a difference.

Sarat: pseudonymity in which there is normal deception: everyone knows I’m not Spock, because community is defined by play, and I’ll be judged by how I play my role.  Dangers are less great because there’s acknowledgement up front.  But what if I play Paul Horwitz?  I could derive great pleasure from that.  This might be an easy case of reputational harm.  But is harm the most important dimension?

RT: need to know the positive benefits as well as the defensive ones, and respect ability to sort from context.

Austin: pseudonymity as driving connection.  Say more about making strong distinction between anonymity and pseudonymity as connecting people.  Allen Westin’s book Privacy and Freedom: phenomenon of the stranger—you can have a conversation with someone who doesn’t know anything about you and be confident you won’t see them again—people feel free to say the most intimate things.  Can be a “freedom to” moment too.

RT: agree!

Neil Richards: we hear a lot about revenge porn, need some bulk to the other side, especially for the persistent identity.  Analogies from trademark to public debate need fleshing out—should we ask more about why do we protect falsehoods in other areas/political speech?  What should be the limits?

RT: yes, what is default/background v. what is foreground is really important—could learn a lot from starting with lack of protection for false commercial speech and asking why politics is different.

Q: dark sides of lack of responsibility?

RT:  The link between pseudonymity and bad behavior is not that strong on either side.  Be clear that consequences are differential: some people don’t get consequences for being linked with what they said, others do.  Again, people are willing to say amazing stuff on FB.  When we presume people are terrible without constraints of identifiabilty, we give a particular account of personhood that isn’t true for everyone.
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A World Without Privacy?

A World Without Privacy? What Can/Should Law Do?

University of Alabama School of Law

Dr. Austin Sarat

Justice Hugo L. Black Visiting Senior Faculty Scholar, The University of Alabama School of Law and William Nelson Cromwell Professor of Jurisprudence and Political Science and Director of Mellon Project on Student-Faculty Research, Amherst College

If privacy is the right to be left alone, threats come from discrete actions—warrantless search. 

Catharine MacKinnon criticized the idea of privacy for its inattention to power. If privacy is protection from intrusion by gov’t, think about what happens in the space we label autonomous/free.  Power does not disappear simply because something is labeled private.  Today: privacy in relationship to autonomy, freedom, architecture of our social lives, and power.

Session I

Privacy: Observations from a Fifth Columnist

Kevin Haggerty, Professor of Sociology, University of Alberta

Moderator:      Montré Carodine, Associate Professor of Law, The University of Alabama

Haggerty: not a lawyer, not in a law school.  Sociologist/criminologist/interested in broad historical trends of privacy, power, surveillance.  Effectiveness of the privacy infrastructure in ability to constrain the expansion of surveillance. 

Surveillance: more than cameras. Data collection/visualizing practices.  Searches, facial recognition technologies, data mining.  Lots of people have talked about limitations that constrain particular surveillance technologies—he wants to consider the entire privacy infrastructure.  On average, does it work?

Lived experience of privacy has been declining for a century (though this is empirically hard to evaluate)—can look at it qualitatively/quantitatively.  Legal definitions of privacy are definitions of privacy violation, not privacy itself, and these are different things. Imagine an extreme exhibitionist who deliberately exposes every act and speaks every thought, recording on camera.  No legal privacy violation, but her lived experience—data known to others—would be nonexistent.

Privacy serves as a vital check on authoritarian forms of rule/governance.  These are inherent possibilities in any modern advanced Western nation.  Our ability to remain opaque/unknown helps insulate us from extremes of institutional/organized repression.  Unprecedented intensification of info capabilities of organizations carries with it stark possibilities for oppression.

Discursively we couldn’t do without the concept of privacy—it’s a concept that citizens, politicians, lawyers, journalists couldn’t do without as opposition to the concept of surveillance.  It’s also institutionally successful—a whole series of organizations that take as their mandate the need to protect privacy—privacy officers, advocacy organizations; state sponsored organizations in Canada.  We’ve never had more expansive privacy laws—but we’ve also never had more expansion of surveillance across every institutional realm—education, science, warfare.  Increasingly central to governance.

US dealings with privacy tend to be more legalistic than other countries.  Violation = go to court, versus administrative solution/privacy commissioner. But there are problems with this—slow, conservative, disproportionately able to be used by powerful interests. Groups aligned with greater surveillance tend to be powerful corporate/state actors.  Even in court there are all kinds of limits.

Concerns about privacy tend to be more future oriented than pressing needs to increase profits, security, efficiency—always wrongfooted.  No one wants to increase the realistic possibilities of terrorist attacks, but all kinds of issues are now framed as security issues—securitization—to insulate policy choices from criticism.  (Securitization as increased/transfer of risk despite claims to limit it—I love the resonance with financial happenings.)  Behind the curtain you often see abuses of power/the desires of powerful interests, not real security.

Canadian regulations: due process, not trying to curtail surveillance but to allow it while mitigating worst excesses. Bar is not particulaly high for many of these rules. Not just that they can’t control expansion, but actually empower surveillance by providing mechanism and legitimization for the expansion.  Traffic rules: getting a license, obeying signs are not meant to stop traffic, but to create a system of vehicle flow. Likewise the structures around privacy.  In fact, there’s really low compliance with regulations—having them doesn’t mean they work.  Example: do not call, where people just offshored and ignored the regulations.  Privacy advocates are constantly betting against the house. May have short term victories, but will ultimately lose.  The odds are never in their favor.  Especially now that informational capitalism has arrived on the scene.

Analogy: the enclosure movement in England that took away commoners’ usufruct rights in land.  Big data wants as much data as possible and mine it for unanticipated connections.  Thus, lobbying to change law so that collectors don’t have to specify uses in advance.  Strategic use of privacy principles, particularly concerning consent. Consent has become a vehicle for allowing collection of data with gloss of legitimacy.  “Data is oil of the new economy.” This should give you pause given our demonstrated inability to control institutional access to our other natural resources.

Potential counterargument: privacy is still robust.  There is no way to measure this.  But I’ve spent decades studying trends; we see the same thing but may perceive it differently. Expansion of surveillance is all around us, in the 500 terabytes of info into Facebook every day, 1 billion phone calls and emails collected by NSA every day, surveillance cameras now using facial recognition, satellites, and drones. Perhaps each can be justified.  But that’s not his point. Each one reduces lived reality of privacy by degrees.

Too sweeping?  There have been some important victories he wouldn’t want eliminated, but should also step back from nitty gritty. Big picture: series of surveillance surges.  New tech expands surveillance; courts/administrators typically beat it back some but end result is expansion, cumulatively drifting in only one direction. 

Resistance and change is important (he’s a Foucauldian), but capitalist organizations have demonstrated remarkable ability to secure the conditions of production. 

You don’t have to believe in black helicopters to see the dangers of allowing organizations access to the minutia of our behavior. This is dangerous.  Surveillance society that will be inherited by leaders in the future—we don’t know what they’ll do with that or what groups they’ll target. Already seeing this with China.  Totalitarian regimes of 20thcentury relied on laughably rudimentary surveillance structures.

What is the alternative?  There’s still value in diagnosis. Mitigate the rote way in which we say “let’s create more privacy laws/infrastructure.”

Carodine: African-American experience of police able to walk through their homes, question them.  Invasion of privacy is one of the harms of oppression as well as one of the ways in which oppression is carried out. 

Haggerty: Think about different surveillance dossiers/profiles. We’re now all under surveillance, but for different purposes and using different technologies. Surveillance can be useful or oppressive. Depending who you are, poor people are scrutinized differently—rich people are profiled financially.  Children: what kind of privacy are they allowed?  Rich opportunity to identify types of profiles.

Sarat: terminological questions.  Talk more about fear.  What happens if we replace every mention of surveillance with transparency?  Jane Jacobs, Death and Life of Great American Cities: image of urban life driven by people on front porch, living under the gaze of others.  Normatively desirable to her—versus definition of people relatively free from interpersonal or institutional scutiny in the paper.  This most liberal imagining of what makes life good conflicts with Jacobs’ definition of what made a good life—talk about this?  We should crave a space of freedom v. enriched forms of community.

Haggerty: Fear drives politics. Worries about alarmism, but thinks this is a concern. Inherent in these structures is something very disconcerting, and democratic traditions will not save us if/when things go wrong.  The concern is not just that there will be law-violating patdown, but the massive empowerment of institutions’ ability to collect info and know populations individually and in aggregate. 

Jacobs overlooked the oppressiveness of small communities—solidarity but also suppressive of divergence. Don’t be too romantic about small town communities (though that’s different from Jacobs’ cities in some important ways, including the ability to be private/unknown in public).

Sarat: transparency can be a way of describing surveillance—things become clear that weren’t otherwise clear, such as Amazon’s tracking.  But on the other side: interested in transparency of campaign contributions.  You worry about asymmetries in transparency—there’s nothing wrong in the transparency itself. 

Haggerty: asymmetries of visibility are key.  Would also call it the politics of visibility. Power matters a tremendous amount in terms of what groups get to insulate themselves from scrutiny for what purposes. He’d favor more knowledge of what the NSA is doing—not opposed to transparency at all levels. Rise of urbanization transformed everything: politics, race relations, how people found partners, how they found jobs.  Surveillance is likewise transforming everything.

Q: tried to get legislature to prohibit sale of raw judicial information (information that wasn’t included in cases that went to trial) to commercial entities, and got nowhere. It’s not just information, but control of uses.

Haggerty: that’s a case study—when we have X information, what can people do with it/how can that be controlled? We don’t do well restricting access to info but do think about how it can be used.  Big data is about finding unpredictable golden nuggets that might be useful and we worry about restricting them—e.g., finding best type of secondhand car (turns out it’s orange).  Don’t know why/don’t care, just interested in correlation.

Q: reasonable expectations as degrading over time—maybe people are valuing privacy less over time.

Lisa Austin: it’s always context—you have different overlapping contexts of being known to certain people. Is privacy really shrinking in that light?

Haggerty: yes.  Because one metric is whether you’re free from scrutiny. There are societies where you’re almost completely known by your groups, others less so. What you’re talking about is privacy as subjective violation—the subjective sense in which I believe that this info should be shared with X people and not with Y.  This is a problem of definitions of privacy violation, which are incredibly subjective and vary across time.  Privacy as objective, quantifiable thing in terms of the amount of information that can be known about people versus privacy as subjective (this is when I feel info has been shared inappropriately). (Hm, but then I don’t understand the claim he’s making about the change in privacy as lived experience. I thought the lived experience was at least subjective in the sense of affecting subjectivity, if not consciously so.)

Exploitative and inappropriate use is a consequence of getting as much information about people as possible—manipulation to sell as much as possible. This makes fair info exchanges impossible.
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Transformative work of the day

An Evening with William Shatner Asterisk.  H/T FC.

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"stable," "traditional" and "family-based" are puffing descriptions of housing development

Kelly v. Beazer Homes USA, Inc., — Fed.Appx. —-, 2014 WL 107961 (9th Cir. Jan. 13, 2014)

Plaintiffs bought homes from defendants; the court of appeals affirmed the dismissal of their various fraudulent concealment etc. claims based on the condition of the overall development.  “While a seller’s duty to disclose may extend to known nuisances on neighboring properties, California courts have never suggested that a seller must disclose the financial condition of neighbors to a prospective buyer. As the district court cogently observed, ‘an indebted neighbor’ is not akin ‘to one who creates a noxious nuisance on his or her property.’”  Also, defendants’ references to the “stable,” “traditional,” and “family-based” character of the developments were too vague to be actionable.  The other challenged representations were either qualified by express disclaimers, promises from the plaintiffs to the builders, or vague expressions of defendants’ “desires.”  Any reliance was unjustifiable as a matter of law.  This also doomed the statutory UCL claims.
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economic loss doctrine doesn’t appply to consumer protection claims

Hackel v. National Feeds, Inc., 2014 WL 108552, No. 12–cv–642 (W.D. Wis. Jan. 10, 2014)

Just a quick reminder: the economic loss doctrine is a limit on traditional common law torts, not on statutory consumer protection claims, much as defendants would like it to be otherwise.  Here, the district court reiterates a Wisconsin Supreme Court case explaining:

The legislature has plainly chosen in § 100.18 to provide protection and remedies for false advertising that do not exist at common law. The underpinnings of the economic loss doctrine—protecting parties’ freedom to allocate economic risk by contract, encouraging the purchaser to assume, allocate, or insure against that risk, and maintaining the fundamental distinction between tort and contract law are either irrelevant to, or inconsistent with, that legislative choice.

Kailin v. Armstrong, 2002 WI App 70, ¶¶ 42–43, 252 Wis.2d 676, 643 N .W.2d 132.
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court rules that Pom Wonderful precludes claims that supplement is unsafe etc.

ThermoLife Intern., LLC v. Gaspari Nutrition, Inc., No. CV–11–01056, 2014 WL 99017 (D. Ariz. Jan. 10, 2014)

This dispute has been around for a while. The court’s introduction gives you a sense of the case: “The briefs and statements of facts alone come to 735 pages. With attachments, the paper reaches 35 inches and 84 pounds. But at the bottom of the 735 pages, 35 inches, and 84 pounds, there is no lawsuit.”

TLI (and president Kramer) and GNI (and president Gaspari) compete to sell bodybuilding-related supplements.  TLI sued GNI mostly for false advertising, alleging that GNI falsely marketed its Novedex XT, Halodrol Liquigels, Halodrol MT, and SuperPump 250 as “safe,” “natural,” “DSHEA-compliant,” and “legal.”  (DSHEA is the federal law that (barely) regulates supplements.)  GNI counterclaimed with similar causes of action, alleging among other things that TLI disparaged GNI’s products.

The court first kicked out a number of expert reports.  For example, TLI’s consumer survey went because it essentially asked past GNI purchasers whether they’d have changed their minds if they’d known that GNI falsely advertised its products as ‘Natural,’ ‘Legal,’ ‘DSHEA-compliant’ and ‘Safe.’ The respondents weren’t shown to be representative, and the questions were “worded to obtain a response favorable to TLI,” such as asking respondents “how important is it that the supplement contains ingredients that are legal?” and then offering them the answers “Very important; I would never purchase a supplement I knew contained an illegal drug”; “Somewhat important; I would prefer to purchase a supplement that did not contain an illegal drug;” and “Not important; in purchasing a supplement, I do not consider whether the product might contain an illegal drug.” The survey didn’t ask about the effects of “natural” etc. claims on supplement purchase intentions; it didn’t control for how respondents’ satisfaction levels with their purchases influenced their responses regardless of the ads.  So even if the sample had been representative, it wouldn’t have been relevant to the materiality of the challenged claims.

An expert report on whether GNI’s supplements were DSHEA-compliant and safe also went, because the expert opined on whether the results of studies were sufficient to substantiate a safety claim rather than on the key issue of the falsity of the safety claim itself; DSHEA doesn’t require the kind of substantiation he said should be required.  (If properly characterized as an establishment claim, a safety claim could be disproven by showing that the evidence didn’t support the claim.) The court concluded the testimony about insufficient evidence wouldn’t aid the jury, which “likely would be confused and easily misled without a standard for determining what is ‘safe.””

Similar fates awaited TLI’s market share and damages experts, GNI’s counterclaim damages expert, and GNI’s legal expert (offered to give legal testimony on the legal meanings of the relevant terms), the last because experts aren’t allowed to testify about law.

Turning to the merits: Novedex XT and the Halodrol products were sold as supplements to increase testosterone levels, while SuperPump 250 was “a preworkout dietary supplement to assist in the development of lean body mass.” Neither Halodrol MT nor SuperPump 250 has been the subject of a recall.  However, TLI questioned GNI’s ability to obtain turkesterone, an ingredient of SuperPump 250, claiming to have an exclusive agreement for its sale in the US.  It also challenged GNI’s claim that an ingredient in Halodrol MT was 95% pure. 

In early 2010, the FDA announced that a third-party retailer was conducting a voluntary nationwide recall of 17 supplements, including Novedex XT and Halodrol Liquigels, sold during several months in 2009.  The FDA was concerned that the products might contain ingredients appropriately classified as steroids. The retailer stated that it couldn’t independently confirm the FDA’s concerns, but it was undertaking a voluntary recall out of an abundance of caution.  As the FDA’s press release said, steroids can cause harmful effects, including acute liver injury, shrinkage of the testes, male infertility, adverse effects on blood lipid levels, and increased risk of heart attack, stroke, and death.  The FDA later announced that GNI was conducting a voluntary recall of Novedex XT, after being informed by the FDA that an ingredient didn’t meet the definition of a dietary ingredient and thus violated the FDCA.  The press release also described unpleasant potential adverse side effects from the ingredient. 

Many of the allegedly false ads came from posts on the bulletin board of bodybuilding.com, e.g., Kramer called Gaspari “a joke in this industry peddling protein from his garage.” (Gaspari said in an interview that he began selling product out of his car and used his mother’s garage and basement as his warehouse and office.)  Kramer also posted that “Gaspari was a joke in this industry,” “knows nothing about supplements,” and “would be a personal trainer at 24 Hour Fitness” without another party. TLI, posting under the name “Truth Speaker,” posted lab test results from GNI’s Vasotropin. The post title was “GASPARI selling SAW DUST? ? ?” and the post stated that “independent lab test results” indicated that each tablet of Vasotropin contained an ineffective amount of ingredient: “A dose that will do NOTHING for anyone expecting a pump but may make Gayspari [sic ] and the scammers that work for him rich and you a sucker!” GNI alleged that the post falsely suggests that this ingredient was the key ingredient in Vasotropin.

Out of this hot mess, the court first analyzed TLI’s claims that GNI falsely represented its products as legal, DSHEA-compliant, naturally occurring, safe/“the safest,” and containing particular ingredients.  First, the DSHEA bars private enforcement, so the court refused to determine whether the products were “legal,” “DSHEA-compliant,” “naturally occurring,” and/or “safe” when the FDA hadn’t made such a determination.  (This analysis is a pretty unusual extension of Pom Wonderful and any appeal is likely to be influenced by the outcome of that case in the Supreme Court; the long-suffering judge may not be done.)  Under the DSHEA, the burden is on the FDA to prove a supplement adulterated, so a supplement can’t be “unsafe, not DSHEA compliant, and/or illegal” unless the FDA proves it adulterated.  Judicial determination of these claims would usurp the FDA’s authority.  Plus, a layperson’s statements purporting to interpret a statute or regulation are opinion, not factual claims.  Thus, GNI’s statements about safety (!), DSHEA compliance, and legality were not false when made.  (I think the court’s annoyance with the litigants has led it to reason too broadly—safety can be assessed without the FDA’s ruling, and given the DSHEA’s allowed-by-default rule, a ruling that the product was unsafe would not conflict with the FDA’s authorization of the product, since none has occurred, as it might in the case of prescription drugs.)

The court also kicked out challenges to GNI’s ads that Novedex XT “is the safest way to naturally cause positive anabolic effect,” is a “natural vehicle,” contains “naturally occurring anti-aromatase inhibiting compounds,” and “has been shown to increase natural production.” The parties disputed whether the ingredient could be considered “natural” or “naturally occurring” because the ingredient can be synthesized from naturally occurring material.  (If it could only be synthesized, and doesn’t occur in nature, I’m not sure how it could be considered natural by any definition, but ok.)  But the court held that it didn’t have a standard for determining what was “natural” or “naturally occurring,” and with no FDA determination, the statements were just opinions.  (I would think that consumer perception would provide the appropriate standard, though there doesn’t seem to be any expert evidence left here.)  TLI didn’t meet its burden of showing the falsity of the other challenged claims.  And because of the expert exclusions, it didn’t show materiality either.  Nor did it show damage—it didn’t show that, but for the false advertising, consumers would have chosen TLI’s products, as opposed to those of numerous competitors.

Along the way the court rejected arguments that the statute of limitations and laches barred TLI’s claims, since the evidence showed that TLI might have had suspicions about various ingredients, but not enough knowledge to bar its claims as a matter of law.

GNI counterclaimed based on TLI’s disparagement of GNI products on internet message boards, similar to the false advertising arguments it made in this case: GNI products lacked claimed ingredients; they were ineffective; Gaspari was a “joke” who knew nothing about supplements and a “counterfeiter”; GNI used expired ingredients; the recalled GNI products were “spiked” with illegal steroids; this case would put GNI out of business; etc.  “[E]ven when read in context, the statements allegedly made by or on behalf of TLI are … opinions, predictions, or not false.”  Plus, GNI’s own arguments that comments on message boards weren’t commercial advertising or promotion applied to the statements it was challenging too.  Without damages evidence, its claims had to fail.
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trademark licensing and apparent agency

Pullman v. Alpha Media Publishing, Inc., No. 12–CV–1924, 2013 WL 1290409 (S.D.N.Y. Jan. 11, 2013) (magistrate judge)

Another old one coughed up by Westlaw.  Interesting to me because of Maxim’s litigation based on its desire to license its brand in many fields; licensors love to rake in the money, but they hate being held responsible for what licensees do.  Pullman sued the publisher of Maxim Magazine for common-law fraud and violation of the New Jersey Consumer Fraud Act for misrepresenting to her that it owned the Maxim Bungalows when it wasn’t.  Pullman alleged that she bought timeshares in reliance on this belief, and suffered damage when the project went bankrupt as part of an alleged Ponzi scheme.  The magistrate judge recommended dismissal of the claims against two named individuals (officers/etc. of one of the corporate defendants), but would find the basic claims against the corporate defendants both plausible and pled with sufficient particularity.

According to the complaint, Pullman was a longtime timeshare purchaser. She was solicited to invest in a new Maxim Bungalow project, and was told that Maxim was an “owner” and “large” investor in the Maxim Bungalows.  She saw a video that would lead a reasonable viewer to believe that Maxim was an owner, and received a book of draft beneficial interest documents that didn’t disclose that Maxim was not an owner and had only licensed its trademark to the actual owners.  The book did state that the project could be renamed by the company that was “creating the Condominium Regime.”  

She had several discussions with Roger Walser, her Maxim Bungalowas sales rep, who told her that the investment was safe and other things that reinforced the idea that Maxim was an owner, such as telling her of “Maxim’s desire, as an owner to capitalize on the world renowned Maxim name to ‘fill the resort with the Maxim readership.’” Walser reassured Pullman that any renaming of the Maxim Bungalows would still include the word “Maxim,” and that the only way Maxim would remove the Maxim name was if it sold “[its] interest in the Maxim Bungalows[,] which would require the approval of the Homeowners’ Association.”  Walser represented himself to her as an employee of a group (here the Elliotts) that had just obtained a major sales agreement with Maxim Magazine making them the exclusive sales agents of the Maxim Bungalows.”  This led her to believe that Walser “had authority to sell Maxim Bungalows on behalf of Maxim.” The Elliotts were resort developers charged with “the construction and management of the Maxim Bungalows project,” and a license agreement to use the Maxim trademark in connection with the Maxim Bungalows.  Another person told her that a company called Ocean Palms, as a “joint Maxim–Elliott Company,” was an owner of the Maxim Bungalows.  Pullman signed on because “she felt secure investing alongside ‘Maxim,’ a large media company which would take every step possible to ensure that [its] ‘valuable’ name was protected including, at minimum, a thorough investigation of the Elliotts.”

Pullman further investigated Maxim’s connection to the Maxim Bungalows and visited webpages linked from the maxim.com website that contained information about the project.  The Maxim website and linked pages didn’t provide the licensing agreement or disclose that Maxim was just a passive trademark licensor. None of the brochures she’d been provided disclosed Maxim’s true role.  Because she didn’t find any contrary information, she finalized her purchase (a six-figure sum).

The magistrate judge concluded that she’d sufficiently pled fraud, which requires “(1) a material misrepresentation of a presently existing or past fact; (2) knowledge or belief by the defendant of its falsity; (3) an intention that the other person rely on it; (4) reasonable reliance thereon by the other person; and (5) resulting damages.”  

Alpha Media, Maxim’s publisher, argued that she couldn’t attribute the fraudulent statements to it and that it had no duty to disclose its role as trademark licensor.  Alpha Media argued that the individuals who allegedly claimed that Maxim was an owner weren’t connected to Maxim and that it didn’t produce the ads/brochures/etc. Pullman saw.  But Pullman pled sufficient connections between Maxim and the fraudulent misrepresentations to survive a motion to dismiss.  Taking her allegations as true, she alleged an agency relationship between Maxim and Walser, and Maxim and the Ocean Palms realtor.  Plus, other evidence made her belief more plausible, such as the links from maxim.com to the Maxim Bungalows webpages and the fact that nothing in the many ads/documents she saw said that Maxim wasn’t an owner. 

In the alternative, she sufficiently alleged an apparent agency theory.  The indicia of authority on which she relied originated from Maxim, including the “exclusive sales agent” agreement and the ad materials bearing Maxim’s marks.  Numerous cases hold that a jury can find apparent agency through authorized use of prominently displayed insignia. (Citing Gizzi v. Texaco, Inc., 437 F.2d 308 (3d Cir. 1971) (appearance of authority could be created by putative principal’s insignia and slogan prominently displayed on putative agent’s service station, and putative principal’s nationwide advertising campaign); Mayflower Transit, LLC v. Prince, 314 F. Supp. 2d 362 (D.N.J.2004) (putative principal’s logo was on truck that picked up goods and boxes in which goods were placed, and party met with person who identified himself as putative principal’s sales manager); In re NorVergence, Inc., 384 B.R. 315, 368 (Bankr. D.N.J. 2008) (plaintiff alleged that putative principal knowingly allowed putative agent to utilize the principal’s logo on agent’s brochures, among other facts); Mercer v. Weyerhaeuser Co., 735 A.2d 576 (N.J. Super. Ct. App. Div. 1999) ((1) involvement of putative principal was important to plaintiff’s purchase decisions; (2) when plaintiff saw putative agent’s advertisement it always had putative principal’s name and logo with it; and (3) plaintiff was told by agent’s salesman that agent was division of principal).

Defendants argued that Pullman couldn’t have relied on a licensing agreement she didn’t know about at the time she bought.  (Um, because she thought that Maxim was an owner?  Isn’t that how apparent authority always works—there’s some kind of relationship and then a misrepresentation of its nature/quality?)  But there was other evidence of Maxim’s apparent authority, which she encountered before she bought.

Now, on to the substance of the fraud claims.  Pullman’s allegation of reliance wasn’t unreasonable as a matter of law.  Defendants argued that reliance was unreasonable because the purchase contract was with an unrelated company.  But the Ocean Palms realtor told her that Ocean Palms was jointly owned by Maxim, making Pullman’s belief that Maxim was connected to the contract reasonable.  They argued that Pullman’s reliance was unreasonable because she was an experienced timeshare investor who would not believe that Walser could contractually bind non-parties. “But Pullman’s belief is rendered considerably more reasonable because Walser said that he worked as an agent of Maxim, his authority seemed corroborated by the promotional video, and every other person with some sort of apparent authority to discuss the Maxim Bungalows stated Maxim was an owner.”  Finally, they argued that Pullman was unreasonable because she knew that Alpha Media was a trademark licensor who could terminate the license.   But “her argument is that she also thought it was more. She pleads she knew there was risk involved in her purchase; her argument is that she decided the risk was manageable because of her belief that Maxim, as an owner, was backing the project with the value it had invested in its brand.”  This was reasonable.

Duty to disclose: such a duty doesn’t exist unless disclosure is necessary to make a previous statement true or the parties share a special relationship.  But here the alleged fraud was misrepresentation, not mere silence.

Alpha Media argued that Pullman’s alleged reliance wasn’t reasonable because there was no allegation that it had information that would have helped her.  But the fact that Maxim wasn’t actually an owner would plainly have caused Pullman to rethink her purchase.  Though she pled that she expected Maxim to investigate the Elliotts thoroughly and do everything in its power to protect its name, the problem wasn’t Maxim’s failure to investigate, it was that she thought that Maxim was an owner. 

Alpha Media also argued that Pullman admitted in other proceedings that she knew that the investment risks were obvious.  Her earlier statements that she knew that timeshare investment was risky didn’t contradict her theory here, but rather fit into her theory of the case. She pled that she’d had prior positive experiences with timeshares from major brands, and that here Maxim’s brand status caused her to take the risk and invest.  Also, Pullman previously stated that she knew defendants could “one day” terminate the use of their name, but she “never dreamed that ‘one day’ could be before [her] purchase check even cleared the bank in July of 2007.” Again, this wasn’t a contradiction, given her allegations about what she’d been told about Maxim’s ability to remove its name.

Then Alpha Media argued that relying on the promotional video and book wasn’t reasonable. Maxim’s name wasn’t mentioned in the video until the 8 minute mark—but it also included a nearly 5-minute highlight of the Maxim media empire to illustrate the promotional power of the brand, and described the key relationship as a partnership, without disclosing that it meant “licensing arrangement.”  This was a factual dispute, and the claim was still plausible. Selected language from the draft agreement establishing the timeshare rules also suggested that it would be easier to change the name than Pullman thought, but she didn’t “have the benefit of specific lines highlighted and offset when examining a more than 300-page document.”  The judge didn’t think it was appropriate to decide that it would’ve been more reasonable to rely on select statements in this agreement than on direct assurances from a purported agent.

For similar reasons, the NJCFA claim survived.  (The judge found sufficient connections to New Jersey even though Pullman was solicited and viewed the relevant timeshare materials in the Dominican Republic.)  Here, the court rejected Alpha Media’s argument that it was unreasonable for Pullman to rely on the draft agreement because it was labeled “draft” and unreasonable to rely on the webpages linked from maxim.com “without following up with anyone.”  To the contrary, “Pullman was not looking at either of these items in a vacuum. Rather, it was the consistent portrayal of the Maxim Bungalows as Maxim’s property—from sales representatives to marketing materials—that made her reliance reasonable. Pullman does not need to exhaust every conceived avenue of inquiry for her complaint to survive a motion to dismiss.”
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