Yahoo Ordered to Face Group Privacy Suit Over Scanned E-Mail

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Yahoo! Inc. lost a bid to block a lawsuit alleging wiretapping violations in its scanning of e-mail from going ahead as a group case on behalf of millions of Internet users.

U.S. District Judge Lucy H. Koh in San Jose, California, granted class-action status to non-subscribers of Yahoo’s e-mail service who claim the company mines data from their messaging for advertising purposes. Three-quarters of Yahoo’s 2013 revenue came from advertising, according to the suit, which seeks to block the interceptions and not monetary damages.

Koh refused last year to let a similar complaint against Google Inc. advance as a group case, which would have allowed plaintiffs to pool resources and put greater pressure on Google to settle. Cases challenging the legality of companies mining e-mails for information are testing how wiretap laws written in the landline-phone era apply to the use of troves of data generated when people send e-mails and surf online.

Koh on Tuesday ruled that Yahoo must face claims by a nationwide group of e-mail users alleging violations of federal wiretap law as well as allegations by a class of California residents citing the state’s anti-wiretapping and eavesdropping law.

The plaintiffs allege Yahoo copies the entirety of e-mails to and from its subscribers, then extracts photos, keywords, links and attachments and classifies the messages to create targeted advertising for Yahoo Mail subscribers.

Yahoo’s Argument

Yahoo argued that once non-subscribers discovered their e-mails to and from subscribers were being intercepted and used by the company, they agreed to that practice by continuing to exchange messages.

Koh wrote that she and other judges have rejected that argument as “overly narrow in the consumer protection context.” She concluded the e-mail users established a “real and immediate threat of repeated injury.”

Sara Gorman, a spokeswoman for Sunnyvale, California-based Yahoo, didn’t immediately respond to an e-mail seeking comment on the ruling.

The case is Holland v. Yahoo! Inc., 13-cv-04980, U.S. District Court, Northern District of California (San Jose).

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