A putative class action lawsuit against Men’s Journal LLC was recently dismissed for lack of standing. The suit was based on the fact that the Men’s Journal did not notify consumers about their California privacy rights, as required by the California “Shine the Light” statute. Under the statute, businesses must establish procedures to inform consumers about the businesses’ data sharing with third parties for direct marketing purposes and provide contact information for consumers that wish to review the types of information shared about them. Alternatively, businesses may comply by permitting consumers to simply opt out of all data sharing.

According to the complaint, the Men’s Journal failed to provide consumers with any of these options. In response to such alleged failure, this class action lawsuit was filed, citing injuries to the plaintiffs’ market value for their personal information, their right to have the information under the statute, and the loss of value in the magazine as this information was part of the subscription. The court disagreed with all three theories for injury, stating that the Shine the Light statute requires an injury as a result of a company’s failure to abide by the statute. The statute is not focused on the loss of market value in personal information and is instead focused on informing consumers about companies’ direct marketing practices. In determining that the plaintiffs were not injured, the court decided to dismiss the case without prejudice, leaving the plaintiffs room to amend and refile their complaint.

This case is a sign to all companies that collect personal information from California residents. Where information is shared for direct marketing purposes, companies must comply with the Shine the Light law. Failure to comply may result in hefty penalties as the statue provides for a $500 penalty per violation for negligent failure to follow the law and up to $3,000 per violation for willful, intentional, or reckless failure.

Arent Fox is continuing to monitor developments involving consumer protection laws. Please contact Anthony V. Lupo, Sarah Bruno, or Eva Pulliam with questions.