In June 2019, Ms. Miracle-Pond and another plaintiff filed suit against Shutterfly, individually and on behalf of proposed class members, alleging that Shutterfly violated the Illinois Biometric Information Privacy Act by using facial-recognition technology to extract biometric identifiers for “tagging” individuals and by selling, leasing, trading, or otherwise profiting from the plaintiffs’ and proposed class members’ biometric identifiers.
In response to the lawsuit, Shutterfly filed a motion to compel arbitration. The plaintiffs filed a motion for curative measures related to Shutterfly’s September 2019 email to all users. In ruling on the motion to compel arbitration, the court first examined whether a valid arbitration agreement existed. In addition to Illinois’s general contract principles, the court examined factors specific to Internet agreements to determine if a valid arbitration agreement existed. Specifically, the court analyzed whether the: 1) web pages presented to the plaintiff adequately communicated all the terms and conditions of the agreement, and 2) circumstances supported the assumption that the plaintiff received reasonable notice of those terms.
The plaintiffs also claimed that Shutterfly was attempting to improperly apply the arbitration agreement on a retroactive basis, given Shutterfly’s September 2019 email to all of its users regarding arbitration of disputes. The court found that Shutterfly was not attempting retroactive application of the arbitration agreement, finding that the plaintiff accepted the agreement when she continued using Shutterfly after it introduced the arbitration agreement in 2015.
Ultimately, this case illustrates the importance of valid arbitration agreements. As discussed in prior Baker Sterchi blog posts, there has been a significant increase in litigation arising under the Illinois Biometric Information Privacy Act since 2019. This litigation is extremely risky for companies due to the manner in which courts have interpreted the Act’s standing requirement and the penalties imposed by the Act. If used properly, arbitration agreements give companies an opportunity to avoid the costs and uncertainty of litigating these claims in court. Therefore, if your company is named in a biometric lawsuit, it is imperative to determine if there are any grounds to require arbitration of the dispute. Additionally, to the extent companies that utilize biometric technology do not currently have arbitration agreements in place, they should consider implementing such an agreement.
The complete citation for this case is Miracle-Pond v. Shutterfly, Inc., 2020 U.S. Dist. Lexis 86083 (N.D. Ill. May 15, 2020).