Including wireless providers T-Mobile, AT&T and Verizon The company has been hit with a series of lawsuits in recent years from women who claim that retail employees stole private images and videos from their phones while helping them transfer the data in stores.
Such lawsuits are typically dismissed by companies alleging they didn’t know about their employees’ actions and that they can’t be held liable because the employees were acting outside the scope of their jobs, but a recent court ruling means that could soon change, legal experts told CNBC.
Experts say companies, not just store employees, could now be held liable in lawsuits and may have to address the hiring, training and data safety practices that victims say led to the breaches.
The latest lawsuit against AT&T was filed in a California court on Monday, in which a woman calling herself “Jane Doe” claims that employees at a Los Angeles store stole and distributed nude photos of her after she upgraded her iPhone in February and helped her transfer her data.
The lawsuit, filed by lawyers at CA Goldberg LLP, is likely to survive and proceed to trial following an April ruling against T-Mobile in a similar case filed by the same law firm in Washington. Judge Stanley Bastian, who is presiding over T-Mobile’s case, ruled that the company could move forward after the company sought to have the lawsuit dismissed.
T-Mobile, like other phone companies, had argued that it was unaware of the employee’s actions and that he was acting outside the scope of his job, but the judge found the company could be liable and ruled that the lawsuit should go forward.
The ruling was described by the law firm as a “landmark” decision. The company said it’s the first lawsuit against a wireless carrier accused of negligent hiring of employees who allegedly stole sensitive customer data. Legal experts say the case could influence the course of future litigation, including one filed Monday against AT&T.
“This ruling sets an important precedent, and we will continue to hold cell phone companies accountable for situations where their employees violate customers’ privacy during trade-ins or other transactions in their stores,” said Laura Hecht Ferrera of CA Goldberg, lead counsel for both T-Mobile and the new AT&T lawsuit. “While there are a wide variety of ways companies try to stop this from happening, it’s clear that nothing they’re doing right now is enough.”
“What we really want is not to attract more lawsuits, but to encourage companies to put better safeguards in place,” added the company’s founder, Carrie Goldberg.
“That’s what litigation is about — if there’s negligence, there can be liability,” Goldberg said. “Maybe this will inspire phone companies to innovate on how they protect consumer safety and privacy in their stores.”
In response, an AT&T spokesperson condemned the incident.
“We were appalled to learn of the behavior allegedly exhibited by an employee of a third-party retailer,” a spokesperson told CNBC. “We hold the vendors who work for us to high standards and do not tolerate the behavior alleged here. The vendor has assured us that the employee allegedly involved no longer works for them, and they are working to resolve this matter with the customer.”
T-Mobile declined to comment.
Growing suspicions
In her lawsuit against AT&T, the woman filed a police report, which remains under investigation, according to the lawsuit.
At least six similar accusations have been filed against AT&T in previous civil lawsuits or police reports, according to the complaint. Verdicts in those cases are unclear. These cases are reportedly among at least a dozen others filed against other providers, including T-Mobile and Verizon.
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Goldberg said he believes the publicly-disclosed cases are “just the tip of the iceberg” and that there are likely many more cases that customers went unnoticed.
“We suspect the theft from cell phone stores is beyond our understanding,” Goldberg said.
“As a society, we entrust our most private information to cell phone companies,” Goldberg said, “and there’s virtually no limit to what their employees can steal from our phones and share with the world.”
Goldberg added that his company has been hit with “lawsuit after lawsuit” from customers who claim their data was stolen by employees at cellphone stores. He said the problem cuts across companies and is a concern “for the entire industry.”
Andrew Stengel, a New York lawyer who specializes in cases involving the non-consensual publication of intimate images, known as revenge porn, reviewed the T-Mobile Washington ruling on CNBC and said future cases like the AT&T one are more likely to survive motions to dismiss and move forward because lawyers can cite the precedent in their arguments.
“This ruling should make the judge think twice or three times before he throws out a case,” said Stengel, who has previously filed a similar lawsuit against T-Mobile but is not involved in the current case. “It should give the judge time to think, but also something to agree with.”
As lawsuits against wireless carriers related to the theft of private images move forward, they will move into discovery, which Stengel likened to the “biggest issue” in the case.
During discovery, defendants are required to produce documents that are relevant to the case and that may reveal information that supports their guilt or involvement.
“There is information that the cell phone companies would be required to disclose that could potentially increase their liability in the future,” Stengel said. “If I were their lawyer, I would be very concerned about that.”
Stengel warned that while the Washington ruling may be “inspiring,” it is not binding and judges in other jurisdictions could ignore it.
Still, Goldberg expects the decision to be “influential.” It could prompt phone companies to finally make changes to prevent such fraud, she said.
“We think that cell phone companies are going to be a lot less arrogant about what they can get away with,” Goldberg said. “If a company is constantly hiring perverts who are stealing consumers’ most private and intimate photos, that’s their fault.”
