Sterk v. Redbox Automated Retail, LLC
| Citation | 770 F.3d 618 |
| Decision Date | 23 October 2014 |
| Docket Number | No. 13–3037.,13–3037. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
| Parties | Kevin STERK and Jiah Chung, Plaintiffs–Appellants, v. REDBOX AUTOMATED RETAIL, LLC, Defendant–Appellee. |
OPINION TEXT STARTS HERE
Ari Jonathan Scharg, Attorney, Edelson P.C., Chicago, IL, for Plaintiffs–Appellants.
Natalie Spears, Attorney, Dentons US LLP, Chicago, IL, for Defendant–Appellee.
Before FLAUM, MANION, and KANNE, Circuit Judges.
Redbox Automated Retail, LLC out-sources its customer service operations to Stream Global Services, which fields Redbox customer inquiries through a customer service call center. To enable Stream to perform this function, Redbox provides Stream with access to its customer database, the disclosure of which Kevin Sterk and Jiah Chung allege violates the Video Privacy Protection Act, 18 U.S.C. § 2710. The district court granted summary judgment in Redbox's favor, concluding that Redbox's actions fall within the statutory exception for disclosures in the ordinary course of business—more precisely, disclosures incident to “request processing.” We agree, and therefore affirm the district court's decision.
Redbox operates automated self-service kiosks—typically located at grocery stores, convenience stores, or drug stores—at which customers rent DVDs and Blu-ray discs with a debit or credit card for a daily rental fee. Although Redbox owns and operates the machines, the company out-sources certain “back office” functions to various service providers, including Stream. Stream provides customer service to Redbox users when, for example, a customer encounters technical problems at a kiosk and requires help from a live person. In such an event, the Redbox customer can call the phone number listed on the machine to speak to a customer service representative to troubleshoot the issue. If resolution of the customer's issue requires accessing that customer's video rental history—for instance, if a Redbox kiosk charges the customer's credit card, but fails to dispense the selected movie—that call center representative (a Stream employee) will do so.
So that Stream can perform Redbox's customer service functions, Redbox has granted Stream access to the database in which Redbox stores relevant customer information. To enable customer service representatives to perform their jobs capably, Stream trains its employees on how to use the database to access the information necessary to respond to customer inquiries. Plaintiffs object both to Stream's ability to access customer rental histories when prompted by a customer call and Stream's use of customer records during the course of employee training exercises. In plaintiffs' view, Redbox's disclosure of customer information to Stream for these purposes violates the Video Privacy Protection Act (“VPPA”).
Enacted in 1988 in response to the Washington City Paper's publication of then-Supreme Court nominee Robert Bork's video rental history (a DC-area video store provided it to a reporter), S.Rep. No. 100–599, at 5 (1988), reprinted in 1988 U.S.C.C.A.N. 4342, the VPPA prohibits “video tape service provider[s]” like Redbox from “disclos[ing], to any person, personally identifiable information concerning any consumer of such provider.” 18 U.S.C. § 2710(b)(1). Personally identifiable information (“PII”) “includes information which identifies a person as having requested or obtained specific video materials or services from a video tape service provider.” Id. § 2710(a)(3). But the VPPA provides several exceptions to the disclosure prohibition, allowing disclosure of a consumer's video rental history when the consumer has provided written consent, when the party seeking disclosure has obtained a warrant or court order, or (relevant to this case) when the disclosure is incident to the video tape service provider's ordinary course of business. Id. § 2710(b)(2). The statute instructs that “ ‘ordinary course of business' means only debt collection activities, order fulfillment, request processing, and the transfer of ownership.” Id. § 2710(a)(2).
Plaintiffs Kevin Sterk and Jiah Chung are Redbox users who contend that Redbox's disclosure of their PII to Stream is not incident to Redbox's ordinary course of business. Initially, Sterk filed this lawsuit without Chung, alleging in his original complaint only that Redbox violated the VPPA's “destruction of old records” provision, which requires video tape service providers to destroy PII “as soon as practicable, but no later than one year from the date the information is no longer necessary for the purpose for which it was collected and there are no pending requests or orders for access to such information.” 18 U.S.C. § 2710(e). After Sterk's case was consolidated with a similar suit, Redbox moved to dismiss Sterk's complaint, arguing that the VPPA does not provide a private right of action for mere “information retention.” Sterk then filed an amended complaint, which Chung joined, adding the unlawful disclosure claim at issue here. Redbox again moved to dismiss. The district court denied the motion but certified for interlocutory appeal the issue of whether the VPPA's private right of action extended to improper retention claims. We took up the issue and reversed the district court, holding that the VPPA does not provide a damages remedy for a retention claim, and so plaintiffs could only seek injunctive relief from Redbox for its alleged failure to timely destroy their information. See Sterk v. Redbox Automated Retail, LLC, 672 F.3d 535, 538–39 (7th Cir.2012).
While the interlocutory appeal on the retention issue was pending, discovery regarding the disclosure claims proceeded. Fact discovery commenced on December 21, 2011, and originally was set to close on April 6, 2012. Over Redbox's opposition, plaintiffs moved to extend discovery by a month, and the district court obliged. During this discovery period, we issued our opinion on the retention issue, and the district court granted plaintiffs leave to file another amended complaint. After denying in part and granting in part Redbox's renewed motion to dismiss the retention claims, the district court reopened discovery as to both the disclosure and retention claims for an additional period of time. During discovery, Redbox produced over a thousand pages of documents in response to forty-eight document requests; responded to forty-two interrogatories; and produced witnesses for three depositions, including two Rule 30(b)(6) witnesses. In the end, Redbox produced information concerning every vendor to which Redbox discloses customer information—including the precise information shared to each—and plaintiffs successfully obtained third-party discovery from Stream. Against that backdrop, Redbox moved for summary judgment.
Plaintiffs objected to Redbox's summary judgment motion as premature, arguing (pursuant to Federal Rule of Civil Procedure 56(d)) that they needed more discovery in order to adequately respond to Redbox's arguments. Despite their contention, plaintiffs pointed to just two issues concerning which they desired more discovery: (1) information regarding the “technical” method by which “Stream queries Redbox's database,” and (2) information relating to whether Stream accesses all, or just a portion, of Redbox's customer records. The district court denied plaintiffs' request for additional discovery and granted summary judgment as to all counts in Redbox's favor. As to plaintiffs' improper disclosure claim (the only claim at issue in this appeal), the district court concluded that Redbox's disclosure of its customers' PII to Stream constitutes “request processing” and thus falls within the VPPA's “ordinary course of business” exception. Plaintiffs appeal the summary judgment decision, as well as the district court's refusal to permit additional discovery before ruling. Plaintiffs also complain that the district court overlooked a footnote in their opposition brief concerning Iron Mountain, a vendor with which Redbox stores backup tapes of its data. Though victorious below, Redbox takes issue with the district court's standing analysis.
We review the issue of standing de novo. Sierra Club v. Franklin Cnty. Power of Ill., LLC, 546 F.3d 918, 925 (7th Cir.2008). We also review the district court's summary judgment ruling de novo, construing all facts and drawing all reasonable inferences in the light most favorable to plaintiffs (the non-moving party). Mullin v. Temco Mach., Inc., 732 F.3d 772, 776 (7th Cir.2013). The district court's denial of plaintiffs' Rule 56(d) motion for additionaldiscovery is reviewed for an abuse of discretion. Davis v. G.N. Mortg. Corp., 396 F.3d 869, 885 (7th Cir.2005).
Redbox argues that plaintiffs lack standing because they did not suffer an injury in fact when Redbox disclosed their PII to Stream. “[T]he irreducible constitutional minimum of standing contains three elements.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). First, a plaintiff must have suffered an injury in fact—that is, “an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.” Id. (internal citations and quotation marks omitted). Next, that injury must be fairly traceable to the challenged action of the defendant— i.e., there must be a causal connection between the injury and the conduct. Id. Finally, it must be likely that the injury will be redressed by a favorable decision. Id. at 561, 112 S.Ct. 2130. Here, there is no doubt that plaintiffs have alleged an “invasion of a legally protected interest,” which this suit would remedy if successful. See Hays v. City of Urbana, Ill., 104 F.3d 102, 103 (7th Cir.1997) (). Plaintiffs have demonstrated that Redbox, in...
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