Judge Edward Chen, Northern District of California
Judge Edward Chen, Northern District of California (Hillary Jones-Mixon)

SAN FRANCISCO — U.S. District Judge Edward Chen has refused to allow software company Carrier IQ and a group of cellphone makers sweep an enormous privacy class action into arbitration.

Plaintiffs sued Carrier IQ and manufacturers, including Samsung and HTC, over the installation of Carrier IQ’s tracking software on their phones. The defendants tried to make use of contracts containing arbitration clauses that consumers signed with their carriers to drive the case out of district court.

To make their case for arbitration, the defendants invoked the doctrine of equitable estoppel, arguing plaintiffs cannot use a contract to bring claims and then distance themselves from an unfavorable part of the agreement. But in a 24-page order issued Friday, Chen found the plaintiffs’ claims stood independent of their contracts with their carriers.

“Instead, they are based on statutory rights not dependent upon the terms of those contracts,” he wrote. “Equitable estoppel does not apply in such circumstances.”

Represented by Pearson Simon & Warshaw and Hagens Berman Sobol Shapiro, plaintiffs claim the use of Carrier IQ’s software to track user information without consent violated federal and state wiretap laws. The software was installed by the cellphone manufacturers at the request of carriers. In re Carrier IQ Consumer Privacy Litigation, 12-2330, asserts claims under the Electronic Communications Privacy Act, which allows for statutory damages of up to $10,000 per violation.

A bunch of defense lawyers have rallied to fend off the claims, with Fenwick & West representing Carrier IQ, Munger, Tolles & Olson for HTC America, Covington & Burling for Huawei Devices USA, Greenberg Traurig for LG Electronics MobileComm U.S.A., and Skadden, Arps, Slate, Meagher & Flom for Samsung Telecommunications America. Carrier IQ lawyer Rodger Cole and HTC lawyer Rosemarie Ring did not immediately respond to requests for comment.

In 2011, a blogger posted a video illustrating how Carrier IQ software logged keystrokes and other data, touching off a flurry of litigation. The cases were consolidated in the U.S. District Court for the Northern District of California in 2012, but they have yet to reach the motion to dismiss threshold. Plaintiffs lawyer Bruce Simon said Chen’s order allows the case to finally move forward.

“It definitely clears the way to get into the real meat and the substance of the case,” he said.

Plaintiffs lawyers plan to carry out discovery to explore what transmissions app developers and other third parties received from Carrier IQ, Simon said. The plaintiffs have already received limited discovery from Google, he noted.

Hagens Berman partner Robert Lopez told Chen at a hearing on the motion to compel arbitration in March that the plaintiffs suspect that Carrier IQ intercepted messages to sell targeted ads, much like Google does with its Gmail service.

Contact the reporter at jlove@alm.com.