Several class action complaints filed in recent months take a novel approach regarding the requirements for website privacy policies under California's "Shine the Light" law. The complaints, all substantially identical and filed by the same counsel, allege technical violations of the Shine the Light law by large website operators such as MSN, CBS Interactive, and Conde Nast.

The Shine the Light law, Cal. Civil Code § 1798.83, is intended to provide California residents with information about how companies share personal information for direct marketing purposes.  The statute applies to companies with more than 20 employees who hold personal information on California residents -- anything from an email address to medical information to the kind of product the customer purchased -- and share it with third parties for the third parties' marketing purposes. "Third parties" for this purpose appear to include any separate legal entities, even other members of the same "corporate family." Penalties for non-compliance run from $500 to $3,000 per violation, making it an attractive target for class action lawyers.

Companies covered by the statute can satisfy the disclosure requirements in the statute in two ways. They can either provide those who inquire with a list of the names and addresses of third parties with whom they share information for direct marketing purposes, along with the categories of information shared, or they can describe a cost-free method for opting out of any such disclosures in their privacy policy.

The statute also requires that a company pick at least one of three options to explain the company's chosen disclosure method to consumers, one of which is through the website's privacy policy.  These suits allege that the website disclosures are inadequate.  Based on the way the complaints are written, it is entirely possible that each operator is in compliance with the law, but proving that will require evidence regarding its training or internal processes.  As a result, those arguments are unlikely to be available on a motion to dismiss, potentially prolonging the litigation. The statute itself is not a model of clarity, and these appear to be the first lawsuits filed on behalf of consumers that will require judicial interpretation.

Contact counsel if you would like to discuss your current compliance with the Shine the Light law or how you might avoid a similar lawsuit.

© 2012 Perkins Coie LLP