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Kevin Sterk and Jiah Chung, Individually and On Behalf of All v. Redbox Automated Retail

August 19, 2011

KEVIN STERK AND JIAH CHUNG, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
REDBOX AUTOMATED RETAIL, LLC, D/B/A REDBOX, DEFENDANT.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:

MEMORANDUM OPINION AND ORDER

Blake Boesky and Kevin Sterk filed suit on behalf of a putative class against Redbox Automated Retail, LLC for violations of a provision of the Video Privacy Protection Act (VPPA), specifically 18 U.S.C. § 2710(e). Redbox moved to dismiss the complaint for failure to state a claim.

After the Court had set a briefing schedule on Redbox's motion to dismiss, plaintiffs filed an amended complaint in which they dropped Boesky as a plaintiff and replaced him with Jiah Chung. The amended complaint includes a claim for violation of 18 U.S.C. § 2710(e) that is, for all practical purposes, identical to the claim in the prior version of the complaint. The amended complaint also includes a new claim under a separate provision of the VPPA, 18 U.S.C. § 2710(b).

Redbox moved to dismiss the amended complaint, including the new VPPA claim. All parties agreed that the amended complaint made no material changes to the claim under subsection 2710(e). For this reason, the Court directed the parties to proceed with briefing on Redbox's original motion to dismiss and put on hold further briefing regarding the claim under subsection 2710(b).

For the reasons stated below, the Court denies Redbox's motion to dismiss plaintiffs' claim under 18 U.S.C. § 2710(e).

Facts

In deciding a motion to dismiss, the Court accepts the facts alleged in the plaintiff's complaint as true and draws reasonable inferences in plaintiff's favor. E.g., Parish v. City of Elkhart, 614 F.3d 677, 679 (7th Cir. 2010). The following facts are taken from the amended complaint.

Redbox rents digital video discs (DVDs) directly to consumers through more than 30,000 automated, self-service kiosks located throughout the United States. A customer pays for the rental by swiping a credit or debit card at the kiosk and manually entering a zip code. The typical charge for a rental is $1 or $2. The customer is required to return the DVD to a Redbox kiosk by 9 p.m. the following day. If the customer fails to do so, Redbox charges an additional rental fee for each day the DVD is not returned. If a customer does not return a DVD within twenty-five days of the rental date, Redbox charges the customer's credit or debit card the cost of the DVD, and at that point the customer owns the DVD. Plaintiffs also allege that Redbox does not provide refunds for charges over ninety days old.

According to the complaint, Redbox maintains a digital record system that stores its customers' credit or debit card information, billing address, and video programming viewing histories. This includes, according to plaintiffs, information regarding "every DVD that the customer has ever rented or purchased from Redbox, as well as information which identifies the customer as having requested or obtained specific video materials or services." Am. Compl. ¶32.

Plaintiffs allege that at the time relevant to this suit, Redbox did not obtain its customers' consent to retain their "personally identifiable information" (i.e., billing and viewing history information). They allege that although Redbox modified its kiosks to display a link to a "terms of use and privacy policy" after the suit was filed, prior to that time "there were (a) no disclosures whatsoever on the kiosks, or (b) disclosures that were intentionally buried so that customers would not see them, let alone consent to their terms." Id. ¶ 27.

According to plaintiffs, Redbox stores and maintains its customers' personally identifiable information "for an indefinite period of time." Id. ¶ 31. They allege that because DVD transactions by Redbox customers are necessarily completed within twenty-five days of the rental date, and because the company does not provide refunds for charges that are over ninety days old, Redbox's retention of such information for more than ninety days violates the VPPA. Id. ¶ 33.

Plaintiffs allege that Sterk used a Redbox kiosk to rent DVDs on February 22, 2010 and that he returned these DVDs on February 24, 2010. Plaintiffs allege that even though this transaction was completed more than one year ago, Redbox continues to store and maintain Sterk's billing information and video viewing history. Chung rented a DVD from a Redbox kiosk on November 27, 2009 and returned it in timely fashion. She likewise alleges that although the transaction was completed more than one year ago, Redbox continues to store and maintain her billing information and video viewing history.

As indicated earlier, plaintiffs allege that Redbox's retention of their information violates the VPPA, specifically 18 U.S.C. § 2710(e). In its motion to dismiss, Redbox argues that no private right of action exists for a violation of subsection 2710(e) and that even if there is a private right of action, plaintiffs have failed to state a claim for violation of the statutory provision.

Applicable Statute

Because the parties' arguments concerning the private right of action issue involve the wording and structure of section 2710, the Court quotes that section in full:

§ 2710. Wrongful disclosure of video tape rental or sale records

(a) Definitions.--For purposes of this section--

(1) the term "consumer" means any renter, purchaser, or subscriber of goods or services from a video tape service provider;

(2) the term "ordinary course of business" means only debt collection activities, order fulfillment, request processing, and the transfer of ownership;

(3) the term "personally identifiable information" includes information which identifies a person as having requested or obtained specific video materials or services from a video tape service provider; and

(4) the term "video tape service provider" means any person, engaged in the business, in or affecting interstate or foreign commerce, of rental, sale, or delivery of prerecorded video cassette tapes or similar audio visual materials, or any person or other entity to whom a disclosure is made under subparagraph (D) or (E) of subsection (b)(2), but only with respect to the information contained in the disclosure.

(b) Video tape rental and sale records.--(1) A video tape service provider who knowingly discloses, to any person, personally identifiable information concerning any consumer of such provider shall be liable to the aggrieved person for the relief provided in subsection (d).

(2) A video tape service provider may disclose personally identifiable information concerning any consumer--

(A) to the consumer; (B) to any person with the informed, written consent of the consumer given at the time the disclosure is sought;

(C) to a law enforcement agency pursuant to a warrant issued under the Federal Rules of Criminal Procedure, an equivalent State warrant, a grand jury subpoena, or a court order;

(D) to any person if the disclosure is solely of the names and addresses of consumers and if--

(i) the video tape service provider has provided the consumer with the opportunity, in a clear and conspicuous manner, ...


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