Allstate Insurance office
CHICAGO — A federal judge won’t fully end a class action accusing Allstate of using modern technology to surreptitiously track clients and use that information to allegedly adjust their insurance rates.
In an opinion filed March 3, U.S. District Judge Jeremy Daniel said a group of Allstate auto insurance customers accused the carrier of cooperating with AllCorp, which owns three Arity subsidiaries, in using a software development kit that tracked customers’ movements and phone usage. Among the applications in question is Allstate’s Drivewise, which like the other technology would only function properly on phones with location information enabled.
The lawsuit was first filed in Chicago federal court, but was quickly followed by other complaints, all of which were consolidated before Judge Daniel in Chicago.
The complaint alleged defendants had real-time access to driver data such as “geolocation, route history, driving schedule, fuel or charging levels, phone usage, hard braking events, hard acceleration events, tailgating, time spent idle, speeds over 80 miles per hour, vehicle speed, average speed, late night driving (and) driver attention” even when the phone owner was a passenger in another vehicle, and further claimed Allstate sold information to other insurers.
The plaintiffs have asserted the class action could include as many as 45 million other Allstate customers.
Daniel said the complaint as amended includes 39 claims under federal laws and those of 20 states. As a threshold matter he declined to accept as evidence a collection of user agreements that Allstate and Arity implied could subvert the merits of the complaint. He noted the plaintiffs contested with agreements were in effect on which dates and raised doubts about whether each named plaintiff formally adopted the terms.
He further said the complaint can survive the dismissal motion because it contains sufficient details for its allegations of fraudulent conduct and adequate evidence to support a claim for relief. These include claims that the companies integrated the data kit into their own app and third-party apps, after which the technology “siphons, collects and diverts in real time substantial amounts of data concerning users.” Daniel also said the plaintiffs survived a motion to dismiss with regards to pleading about their lack of consent to what they claim the software accomplished.
“The complaint provides several examples of apps and the warnings they provided,” Daniel wrote. “The Life360 app requested permission to access users’ location and motion sensor data to support the app’s functions, and it also warned, ‘your location data will be used in accordance with our Privacy Policy and your preferences which may include sharing with third parties for purposes such as research, tailored advertising, and analytics.’
"Similarly, the Fuel Rewards app requested location information ‘to help find the best gas prices near you’ and warned that ‘we will also share or disclose your location with third parties, including or business partners as described in our privacy policy, to provide you with personalized offers.’ Read in the plaintiffs’ favor, these warnings represented that the plaintiffs’ data would be used for only operational, marketing, and advertising purposes, not for adjusting their insurance premiums.
"And because the court is not considering the privacy policies referenced in these warnings, the question of whether those policies provided adequate notice is an issue for summary judgment.”
Daniel partially sided with the companies regarding damages, agreeing the complaint doesn’t contain allegations about premiums before or after they claim the companies illegally used their data. He agreed plaintiffs can’t sue under state laws in jurisdictions where Allstate had to file rate requests with a regulatory agency, as that would be an improper challenge to a settled ruling on calculations. But the judge did refuse to dismiss any claims that carry the potential of statutory damages.
There also was a split ruling with respect to whether the Fair Credit Reporting Act pre-empted the lawsuit. Daniel said he would only dismiss on those grounds the claims against Arity regarding plaintiffs’ consent to furnish certain information given Arity’s status as a consumer reporting agency. He then rejected the argument the FCRA expressly pre-empts other state law claims specifically because the plaintiffs allege Arity was a reporting agency.
Daniel wouldn’t dismiss a claim under the Federal Wiretap Act, saying although the third-party app developers consented to intercepting communications, which usually creates an exception barring such claims, the complaint overcame that burden by alleging the interceptions were “for the purpose of committing (a) criminal or tortious act” in violation of state or federal laws. While the defendants maintained any motive was above-board business aimed at profits, Daniel said intent doesn't determine whether conduct was illegal.
The defendants further argued the complaint doesn’t adequately plead illegal wiretapping. But, while Daniel did agree most of the challenged information was automatically generated data and not user-created “content," the judge said the complaint still alleged transmission of things like browser information and user IDs. The judge also declined to make a distinction between the software receiving the information and the corporations ending up with the data.
Daniel declined to dismiss analogous state wiretapping law claims and wouldn’t let Arity escape a claim it willfully reported wrong information about driving behavior. He noted the complaint includes “the allegation that the defendants ‘collected and reported data as reflecting an individual’s driving behavior even when the individual was riding as a passenger in a motor vehicle, or even riding a roller coaster.’"
But the judge said such assertions are "not conclusory."
"... The allegation that reports purported to reflect individuals’ driving behavior — but omitted the important context that they were not driving — certainly falls within the definition of ‘misleading.’ And it is not difficult to see how this could negatively impact an auto-insurer’s decision-making. For these reasons, the complaint sufficiently alleges an inaccuracy,” the judge said.
He also said the drivers adequately alleged harm by claiming inexplicable “coverage losses, coverage denials or rate increases.”
Complaint amendments are due by March 20 and the defendants have to file their response to the complaint by April 17.
The plaintiffs are represented by attorneys from the firms of Morgan & Morgan, of Tampa, Florida; the Clifford Law Offices of, Chicago; Milberg Coleman Bryson Phillips Grossman, of Chicago; Ahdoot & Wolfson, of Burbank, California; Bleichmar Fonti & Auld, of Oakland, California; Tycko & Zavareei, of Oakland, California; Girard Sharp, of San Francisco; Bursor & Fisher, of New York; Cafferty Clobes Meriwether & Sprengel, of Chicago; Keller Rohrback, of Seattle; Kopelowitz Ostro, of Fort Lauderdale, Florida; Cotchett Pitre & McCarthy, of Seattle; and Tousley Brain Stephens, of Seattle.
Allstate and other defendants are represented by attorneys David A. Gordon, H. Javier Kordi, Liamarie M. Quinde and Ian M. Ross, of the firm of Sidley Austin LLP, of Chicago and Miami.
