## Facts

- Multiple consumer class actions were centralized in an MDL concerning diagnostic software (“Carrier IQ Software”) installed on smartphones and tablets.
- Plaintiffs (18 consumers from 13 states) alleged the software was embedded on devices without their knowledge and captured sensitive information, including location data, keystrokes, and message content.
- Plaintiffs alleged captured information could be transmitted from devices to third parties, including at least one manufacturer and other entities associated with the operating system.
- The operative pleading was the Second Consolidated Amended Complaint (SCAC), asserting federal claims (including the Wiretap Act, Stored Communications Act, and CFAA) and numerous state privacy, wiretap, consumer-protection, and warranty claims, including Magnuson–Moss claims tied to implied warranty theories.
- Carrier IQ settled and withdrew its dismissal motion; multiple device manufacturers moved to dismiss the SCAC under Rule 12(b)(6).

## Issues

1. Whether plaintiffs plausibly alleged injury-in-fact and statutory standing, including whether they could assert state-law claims under the laws of states where no named plaintiff resided or purchased a device.
2. Whether allegations plausibly stated a Federal Wiretap Act claim by pleading interception of electronic communications contemporaneous with transmission and each manufacturer’s intentional interception or procurement.
3. Whether the SCAC sufficiently pleaded claims under various state privacy and consumer-protection statutes based on undisclosed collection and transmission of personal information.
4. Whether plaintiffs stated implied warranty of merchantability claims, and derivative Magnuson–Moss claims, based on alleged privacy-invasive software and device impairment.

## Decision

- The court granted the manufacturers’ motion to dismiss in part and denied it in part, with leave to amend.
- The court found plaintiffs sufficiently alleged concrete injury for standing on certain theories, including diminished device performance and related economic harm.
- The court dismissed state-law claims asserted under the laws of states where no named plaintiff lived or bought a device for lack of standing to press those claims.
- On the Wiretap Act, the court accepted at the pleading stage that the software could qualify as an intercepting “device” and that interception could be contemporaneous, but dismissed Wiretap Act claims against manufacturers for failure to plead the manufacturers’ intentional interception (or intentional procurement) with sufficient factual support.
- The court allowed some state privacy and consumer-protection claims to proceed while dismissing others based on statute-specific pleading deficiencies.
- The court partially dismissed implied warranty and Magnuson–Moss theories, while permitting certain warranty allegations to proceed or be repleaded depending on privity and the connection between the alleged defect and merchantability under applicable state law.

## Legal Principles

- Article III injury may be plausibly alleged through economic harm such as diminished performance/value or overpayment for products marketed without disclosure of an alleged defect.
- A plaintiff must establish standing for each claim asserted; named plaintiffs generally cannot seek relief under the laws of states where none of them suffered the relevant purchase or residence connection.
- Wiretap Act liability requires (1) interception of an electronic communication contemporaneous with transmission and (2) intentional conduct attributable to each defendant; embedding third-party software, without well-pleaded facts showing intent to intercept or procure interception, is insufficient.
- State privacy and consumer-protection claims require statute-specific allegations, including (where applicable) concrete harm, reliance, or the type of intrusion the statute targets.
- Implied warranty of merchantability is not necessarily limited to bare functionality; allegations that undisclosed, privacy-invasive software impairs ordinary expected use may support a theory, subject to state-law limits such as privity and adequately pleading the defect-to-unmerchantability link.

## Conclusion

The court permitted parts of the MDL complaint to proceed based on plausible economic injury and certain state-law theories, but narrowed the case by dismissing extraterritorial state-law claims for lack of standing and requiring more specific allegations of each manufacturer’s intentional conduct for Wiretap Act liability, while allowing amendment to cure identified pleading deficiencies.


In re Carrier IQ, Inc. Consumer Privacy Litig., 78 F. Supp. 3d 1051 (N.D. Cal. 2015)