SAN FRANCISCO — When Edelson PC, the Chicago-based plaintiffs firm, opened an office in San Francisco a little more than a year ago, it set the privacy defense bar abuzz.
Though small, the firm’s focus on privacy actions had made it a thorn in tech’s side, leading the New York Times to declare founder Jay Edelson “if not the most hated person in Silicon Valley, very close to it.”For lawyers who defend Valley companies against privacy suits, there was one obvious conclusion: the Edelson thorn was about to become just a bit more painful.
But according to interviews and a review of the firm’s activity in its first year on the West Coast, having Edelson as a neighbor hasn’t moved the dial much on privacy litigation. The firm filed 13 suits in state and federal courts in Northern California in 2015 and 11 in 2016, the firm’s first full year in-state. Those numbers are roughly double the firm’s activity in previous years but hardly a drag on the digital economy.
Moreover, the firm has had mixed luck in its first round of cases, dropping a suit against Twitter Inc. earlier this year and seeing another booted to a court in Alabama. Overall, consumer privacy suits have struggled to gain traction in the courts.
Longer term, Edelson knows its success may depend on its ability to penetrate the Bay Area’s clubby plaintiffs bar, a notoriously tough market for outsiders to crack.
“We’ve always had a lot of suits in the Bay Area,” said Edelson partner Rafey Balabanian, who heads the firm’s five-lawyer office in San Francisco. “It’s a different thing altogether to do that as a part of the legal community.”
So far, Edelson’s West Coast office has been a laboratory for novel privacy theories and lawsuits targeting new technologies. As an example of the sort of litigation the firm has pioneered, Balabanian pointed to a suit filed against the Golden State Warriors over its mobile app for Android devices. In August, Edelson lawyers sued the Bay Area’s hometown NBA team and its business partners, claiming that the Warriors’ Android app accesses fans’ phone microphones and records conversations without authorization. The suit leveraged the findings of the firm’s in-house forensic lab back in Chicago.
Balabanian said the litigation, pending before U.S. District Judge Jeffrey White in Oakland, is the type of suit that sets the firm apart. “We like to bring what we think of as proprietary cases and because of that we tend to work alone,” he said.
Even the firm’s detractors admit that Edelson’s arrival in the Bay Area is something of a milestone. “If nothing else, it signifies that the Northern District of California has become a key venue for privacy and data use class action litigation,” said Cooley’s Michael Rhodes, a frequent courtroom foe of the firm.
Edelson, which has 23 lawyers firmwide, expanded into the Bay Area in November 2015 by moving two partners from Chicago and then rounding out its junior ranks with law school and lateral hires.
It’s a departure from the strategy employed by some other out-of-town plaintiffs firms, such as Hausfeld LLP and Hagens Berman Sobol Shapiro, which brought on established Bay Area lawyers.
Part of the motivation behind the firm’s move, Balabanian said, was to raise the profile of the firm in the local legal community, knowing that it, in turn, could bolster its prospects for leadership assignments in cases where there’s competition for top posts.
The firm won a contested leadership fight in 2011 in a case against Netflix Inc. in the Northern District. But Edelson has more recently lost out on bids to lead two high-profile privacy MDLs that were routed to the Bay Area. For data breach litigation against Anthem, U.S. District Judge Lucy Koh chose Altshuler Berzon and Cohen Milstein Sellers & Toll over a large field that included a joint bid from Edelson and Grant & Eisenhoffer. And now-retired U.S. District Judge Ronald Whyte chose the local coalition of Cotchett Pitre & McCarthy, Girard Gibbs and Pritzker Levine to lead litigation against Lenovo over adware pre-installed on consumer laptops that allegedly compromised their security. Whyte chose the group over a joint bid from Edelson and Robbins Geller Rudman & Dowd despite the fact that Cotchett lawyers lifted nine paragraphs in their complaint verbatim from the initial suit filed by Edelson.
“We pitch for those cases, not to be arrogant or anything, but because we think we’d do them better than the other firms pitching for them,” Balabanian said. “You don’t see us pitching to lead environmental class actions or securities class actions because we don’t know what we’re doing in that regard.”
A year-plus into its tenure on the West Coast, Edelson plans to sit out the pitch for the leadership spot in suits targeting Yahoo Inc. over its massive data breach, litigation that’s bound to be one of the closest-watched and highest-profile data-breach cases to date. Balabanian said that such cases, that follow news reports of massive data breaches and involve thousands of suits, haven’t yielded the sorts of payouts to consumers that the firm often seeks.
Not, Balabanian insists, that Edelson is entirely motivated by profits.
“We like making money but we also want to affect positive change in the law. And we have done that,” Balabanian said. “Certainly we think we’ve raised a ton of awareness surrounding these issues, which is not insignificant.”
Edelson’s calling card remains consumer privacy class actions that accuse companies of violating laws which carry stiff statutory penalties, triggering exposure to billions of dollars in potential damages. Since Edelson has reached eight-figure settlements but has yet to try a case, some in the tech world see the firm’s work as a tax on innovation that verges on a shakedown.
But Balabanian says that those critiques present a “far too simplistic view” and fails to give Edelson credit for the sorts of changes in practices and disclosure it has achieved through injunctive relief.
“It’s not a situation where we’re trying to put these companies out of business or we’re trying to get them to change their product lines or anything like that,” Balabanian said. “It’s just give consumers informed consent about the information that you’re taking from them.”Jillisa Bronfman, a privacy specialist at UC-Hastings College of the Law who has hosted Jay Edelson as a guest speaker in one of her classes, said that the firm seems to be keeping its eye on privacy cases that the Federal Trade Commission is pursuing on behalf of consumers targeting businesses with unfair and deceptive marketing practices related to promises about data security. Since the FTC has limited resources, Bronfman said it makes sense that a “more mission-driven” firm such as Edelson would focus on bringing cases on behalf of consumers. “They absolutely are looking at those cases and jumping into that space,” Bronfman said.
Litigating on the frontier of privacy law makes setbacks par for the course. In August Edelson harnessed a newly passed Alabama state law to sue Twitter and Hey Inc., the maker of a controversial app, claiming that the app uses names and profile pictures scraped from Twitter without users’ authorization. Edelson agreed to drop the suit and refile in Alabama state court after U.S. District Judge William Alsup in San Francisco indicated that it had failed to establish federal court jurisdiction in the case.
The firm also walked away earlier this year from another suit against Twitter that accused the social media site of scanning the contents of direct messages without users’ consent. Balabanian said the firm agreed to drop the suit after it learned from Twitter that the technology didn’t work the way the suit described. “We’re not a firm who is looking to file something that is wrong on the facts and yet they feel like they should still get something out of it. That’s offensive,” he said. “It does happen where you’re wrong. [In those cases,] you should shake that opponents hand and walk away.”
On the flip side, Balabanian said, the firm has shown it has staying power when it counts.
Last year on the firm’s home turf in U.S. District Court for the Northern District of Illinois, Edelson reached a settlement on the eve of trial in a more traditional robo-calling case against telemarketing companies and Caribbean Cruise Line which ranks among the largest ever reached in a Telephone Consumer Protection Act case. “We did something that most plaintiffs lawyers aren’t willing to do which is push the case to the absolute limit,” Balabanian said. “We got a class certified. We defeated summary judgment. We got partial summary judgment.” The aggregate dollar amount of the settlement could go as high as $76 million and the payout to individual plaintiffs is expected to be about $500.
Balabanian said that on the back of that and other settlements Edelson recorded its best year yet revenue-wise in 2016, but that’s not how the firm measures success. He said the firm wants to lead the charge away from privacy cases that settle with large classes and little cash that result in proceeds going to cy pres.
He said the settlements the firm worked on this year “were significant results because we think it changes the privacy landscape,” he said. “The truth is that we like privacy cases that give people money back.”
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