Shopify Must Face California Privacy Lawsuit

Shopify must face a class-action privacy lawsuit in California, a US appeals court said on Monday, reviving a case that had been shelved by a lower court.

The case could open other multinational internet firms to lawsuits under specific US state laws.

The 9th US Circuit Court of Appeals in San Francisco found in a 10-1 ruling that Ottawa-based Shopify could be sued for collecting personal data from people who make purchases on websites of retailers from that state.

Jurisdictional dispute

The case was brought by California resident Brandon Briskin, who said Shopify installed tracking software on his iPhone after he made a purchase from athletic clothing seller I Am Becoming, also based in California, using his data to create a profile that could be sold to other merchants.

Shopify said it could not be sued in California as it operated nationwide, and that legal action could only be brought in Delaware, New York or Canada.

The case was dismissed by a lower court and a three-judge 9th Circuit panel, but the full appeals court said Shopify’s business had been “expressly aimed” at California.

The ruling said Shopify “deliberately reached out” and “knowingly” installed tracking software on Californian users’ phones so that it could sell the data.

The behaviour was “neither random, isolated, or fortuitous”, wrote Circuit Judge Kim McLane Wardlaw for the majority.

A lawyer for Briskin said the ruling rejected Shopify’s argument that it was “jurisdictionally nowhere” and made internet-based companies more accountable.

A group of 30 states and Washington, DC sided with Briskin, saying they needed to be able to enforce state consumer protection laws against companies operating in their markets.

Worldwide services

But the US Chamber of Commerce supported Shopify, saying broad jurisdiction would harm service providers such as Shopify whose services are used worldwide.

Circuit Judge Consuelo Callahan, writing a dissenting opinion, said the ruling “impermissibly manufactures jurisdiction wherever the plaintiff goes”.

Shopify provides e-commerce services for a number of retailers and last November moved into the AI field in a deal with Perplexity AI, which sees it powering a shopping feature within the AI-powered search engine.