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

July 23, 2012

KEVIN STERK AND JIAH CHUNG, INDIVIDUALLY, AND ON BEHALF OF A CLASS OF SIMILARLY SITUATED INDIVIDUALS, PLAINTIFFS,
v.
REDBOX AUTOMATED RETAIL, LLC DEFENDANTS.



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

MEMORANDUM OPINION AND ORDER

Kevin Sterk and Jiah Chung have sued Redbox Automated Retail, LLC for violations of the Video Privacy Protection Act (VPPA) and breach of contract. They seek to represent a class of similarly situated individuals. Redbox has moved to dismiss plaintiffs' second amended complaint. For the reasons stated below, the Court grants Redbox's motion in part and denies it in part.

Background

Redbox rents digital video discs (DVDs) to consumers through more than 30,000 automated, self-service kiosks located throughout the United States. Plaintiffs allege that they were customers of Redbox and that it unlawfully retained and disclosed their private information in violation of the VPPA. 18 U.S.C. § 2710(b) & (e). The VPPA generally prohibits persons in the business of renting and selling video tapes and similar media from disclosing information about what videos their customers have purchased and from retaining that information longer than necessary. Id.

Redbox moved to dismiss plaintiffs' claim for unlawful retention, arguing that the VPPA did not provide a private right of action. The Court concluded that subsection 2710(c) authorized a private right of action for violations of subsection 2710(e). Sterk v. Redbox Automated Retail, LLC, 806 F. Supp. 2d 1059, 1069 (N.D. Ill. 2011). The Court certified the question to the Seventh Circuit for interlocutory appeal. The Seventh Circuit accepted the appeal and reversed. Sterk v. Redbox Automated Retail, LLC, 672 F.3d 535, 537 (7th Cir. 2012). It held that subsection 2710(c) did not authorize a private right of action for unlawful retention of personal information in violation of subsection 2710(e). Id. at 538--39.

On remand, plaintiffs sought to amend their complaint to include claims that Redbox violated subsection 2710(e) and for breach of contract. Plaintiffs argued that they could bring a claim for violation of subsection 2710(e) via the Stored Communications Act (SCA). See 18 U.S.C. § 2707. Redbox contended, among other things, that the amended complaint was futile because the SCA requires a showing of actual damages and the breach of contract claim could not survive without the SCA claim. The Court rejected these arguments and allowed plaintiffs to amend their complaint. Sterk v. Redbox Automated Retail, LLC, 11 C 1729, 2012 WL 1419071 (N.D. Ill. Apr. 24, 2012).

Following amendment, Redbox moved to dismiss, asserting additional arguments regarding the sufficiency of the amended complaint. These arguments were available to Redbox when it opposed the motion to amend, but it did not assert them. The Court will nonetheless consider Redbox's arguments, though it notes that the way Redbox chose to proceed has led to unnecessary delay and added expense.

Discussion

A plaintiff "has stated a claim only if it has alleged enough facts to render the claim facially plausible, not just conceivable." Fednav Int'l Ltd. v. Cont'l Ins. Co., 624 F.3d 834, 837 (7th Cir. 2010). "When analyzing the sufficiency of a complaint, [the Court] construe[s] it in the light most favorable to the nonmoving party, accept[s] well-pleaded facts as true, and draw[s] all inferences in the nonmoving party's favor." Id.

Redbox contends that plaintiffs' retention claim fails because the SCA does not give a private right of action to enforce the VPPA; their breach of contract claim fails; they lack standing; and they did not sufficiently plead their disclosure claim. Redbox also argues that if the Court does not dismiss plaintiffs' claims, it should certify the matter to the Seventh Circuit for interlocutory appeal.

A. Private right of action under the SCA

Plaintiffs assert a claim under the SCA against Redbox for its unlawful retention of their private informationin violation of the VPPA. See 18 U.S.C. § 2707. Section 2707 of the SCA states that any . . . person aggrieved by any violation of this chapter in which the conduct constituting the violation is engaged in with a knowing or intentional state of mind may, in a civil action, recover from the person or entity, other than the United States, which engaged in that violation such relief as may be appropriate.

Id. § 2707(a). The VPPA, including the retention provision that plaintiffs assert Redbox violated, is located in the same chapter of the United States Code as the SCA's remedy provision. Id. §§ 2707(a) & 2710(e). Plaintiffs therefore contend that section 2707's authorization of a civil suit by anyone aggrieved "by any violation of this chapter" includes persons who claim unlawful retention under subsection 2710(e). Redbox contends that the SCA's authorization of a civil action does not apply to violations of the VPPA.

The Seventh Circuit has explained that statutory interpretation must start, of course, with the words that Congress employed. We shall give the words of a statute their ordinary meaning unless the context counsels otherwise. If the plain wording of the statute is clear, our work is at an end. However, in interpreting the wording of a statute, we must consider not only the words of the statute, but also the statute's structure: Context, not just literal text, will often lead a court to Congress's intent in respect to a particular statute. Similarly, we must take into account the relationship of the statute to other provisions of the code. Congress does not legislate in a vacuum. We must assume that Congress is cognizant of other statutory provisions and expects its new enactments to work in harmony with existing provisions.

Ortega v. Holder, 592 F.3d 738, 743 (7th Cir. 2010) (citations and internal quotation marks omitted); see Sterk, 672 F.3d at 538 (interpreting the phrase "any act of a person in violation of this section" more narrowly than the plain language might suggest, because of the context and the placement of the phrase in the section). In addition, "[a]t the time a statute is enacted, it may have a range of plausible meanings. Over time, however, subsequent acts can shape or focus those meanings." FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 143 (2000).

Consideration of the language of section 2707 in the context of the statute leads the Court to conclude that Congress did not intend for plaintiffs to be able to bring a VPPA retention claim under the SCA. When Congress originally enacted the SCA in 1986 as part of the Electronic Communications Privacy Act (ECPA), it could not have intended for the SCA's authorization of civil suits to apply to the VPPA, because the VPPA did not yet exist. Electronic Communications Privacy Act of 1986, Pub. L. No. 99-508 tit. II, 100 Stat. 1848. Congress enacted the VPPA two years later. Video Privacy Protection Act of 1988, Pub. L. No. 100-618, 102 Stat. 3195. The VPPA included its own provision authorizing civil actions. 18 U.S.C. § 2710(c). The fact that Congress included a provision in the VPPA authorizing civil suits suggests that it did not think that the SCA's cause of action provision applied to the VPPA.

Furthermore, when the VPPA was added to the chapter containing the SCA, it was placed in a section following the remedy provision of the SCA, even though all of the substantive provisions of the SCA to which that statute's remedy provision might otherwise apply precede the remedy provision. 18 U.S.C. §§ 2707 & 2710. Plaintiffs note that Congress placed the VPPA after section 2707, which provides civil remedies for "any violation of this chapter," and before section 2711, which defines terms "[a]s used in this chapter." Id. §§ 2707 & 2711. They contend that the VPPA's placement between two sections that define their scope by reference to the entire chapter containing the SCA and VPPA indicates that Congress intended the SCA's cause of action provision to apply to the VPPA. Logically, however, the remedy provision of the SCA applies only to the portions of the chapter that precede it. Sterk, 672 F.3d at 538.

Additionally, if section 2707 were to apply to the VPPA, there would be two separate civil action provisions that applied to the VPPA -- the SCA's provision, subsection 2707(a), and the VPPA's own provision, subsection 2710(c). Even though each provides for a different amount of statutory damages, interpreting the SCA provision to apply to the VPPA would render each provision somewhat superfluous or insignificant. "It is a cardinal principle of statutory construction that a statute ought, upon the whole, to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant." TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001); accord Corley v. United States, 556 U.S. 303, 313--14 (2009) (refusing to interpret general language in statute in a way that rendered more specific language superfluous). Furthermore, "[w]hen Congress crafts particular remedies for particular wrongs, the presumption is that these are exclusive remedies and that such limitations as they may embody are not to be circumvented by extending a more generally worded statute over the subject of the more specific one." McDonnell v. Cisneros, 84 F.3d 256, 261 (7th Cir. 1996) (fact that claims would be barred by sovereign immunity under Federal Tort Claims Act was a reason not to allow the same claims under Title VII). Because plaintiffs cannot bring their VPPA claim under the VPPA itself, the principle stated in McDonnell suggests that they should not be able to bring it under the SCA.

In addition, "[a] specific statute takes precedence over a more general statute, and a later enacted statute may limit the scope of an earlier statute." Bhd. of Maint. of Way Emps. v. CSX Transp., Inc., 478 F.3d 814, 817 (7th Cir. 2007). If Congress, as the Seventh Circuit has determined, did not intend that plaintiffs have a cause of action for retention under the VPPA, then it is unlikely that it intended for plaintiffs to have a remedy under the more general and older SCA. Brown v. Gov't Servs. Admin., 425 U.S. 820, 832--33 (1976) ("It would require the ...


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