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Digital advertising companies now face a new privacy risk. In Baker v. Index Exchange Inc., U.S. District Judge Matthew F. Kennelly potentially created a new species of privacy litigation based on the federal wiretap laws. The controversial decision concluded that automated AdTech processes can trigger severe liabilities under the Electronic Communications Privacy Act (ECPA).
Shifting Ground: Deconstructing the AdTech Consent DefenseA Supply-Side Platform (SSP) is an advertising technology (AdTech) software platform that helps digital publishers and media owners automatically package, manage and sell their available advertising space (inventory). In the programmatic advertising ecosystem, the SSP acts as the automated "sales agent" for the website or app owner, connecting them to a massive marketplace of potential advertisers to ensure ad space is filled at the highest possible price. This is accomplished through the use of tracking scripts on websites, which enable the lightning-fast targeting and bidding process. The interaction of these scripts with the bidding process is big business that touches upon wide swaths of how the internet functions. Plaintiffs' lawyers have sometimes alleged that the underlying tracking scripts on the websites constituted violations of federal wiretap law, with little success. The ECPA generally prohibits the interception of wire, oral or electronic communications, but permits recording where at least one party to the communication consents (single-party consent) under federal law. However, the statute’s crime-tort exception removes that protection and permits a lawsuit for money damages if the interception is made for the purpose of committing a criminal or tortious act—meaning consent does not legitimize recordings undertaken for unlawful ends. For years, SSPs relied on the one-party consent defense. Under that defense, if a partner website consented to integrate the SSPs' tracking scripts, the data collection was entirely lawful. Judge Kennelly's decision in Baker disrupts this defense entirely. Judge Kennelly ruled that even if a publisher consents to data tracking, that consent is completely voided if it is transferring bulk user metrics to a foreign “covered person” in violation of the Department of Justice's Bulk Sensitive Data (BSD) regulations. These are new and untested regulations regarding international data transfers. However, by classifying a BSD violation as a tortious act, the court unlocked the ECPA's crime/tort exception. This ruling gives plaintiffs a tool to dismantle standard defenses to these claims and could lead to an avalanche of litigation.Navigating the New Frontier of Privacy DefenseAs tech platforms face this aggressive intersection of data-privacy laws and federal regulatory frameworks, the baseline for corporate defense has changed. Navigating the ECPA in this new frontier requires moving past standard civil litigation strategies. Defending these complex cases requires a specialized, investigative cross-examination of the underlying technology and the regulatory environment. Against that backdrop, there will be a decisive advantage where litigators have experience with both the federal wiretap laws and with privacy litigation. Civil litigators should apply a prosecutor's skills at deconstructing how government regulations, like the BSD rules, are applied in enforcement actions. By applying a prosecutorial lens to a civil complaint, a defense team can aggressively challenge whether a plaintiff's allegations of regulatory violations actually cross the threshold from speculative to plausible. In other words, thinking like a prosecutor is the path to winning.The Prosecutor's Edge in Tech Litigation:- Cross Border Investigation: This ECPA and BSD theory rests on international data sharing, which implicates a rare skill set to fully explore: cross-border technical internal investigations. White collar prosecutors in areas such as cyber crimes, money laundering, and Foreign Corrupt Practice Act (FCPA) cases have developed these particular skills.
- Deconstructing Intent: Parsing granular details of data routing to challenge "knowing" or "intentional" statutory violations.
- Defeating Vicarious Liability Claims: Attacking weak links between the actions of U.S.-based employees and foreign corporate entities.
- Regulatory Technicality: Isolating the strict boundaries of executive orders to prove a platform falls outside the targeted scope.
Looking Ahead: Win the Next Case NowTo be clear, the court's reasoning in Baker is deeply flawed and wrongly decided. It does not appear rational to treat these untested data sharing regulations as the predicate for either a crime or a tort under the ECPA. However, the reality is that the decision stands. AdTech companies cannot afford to wait for an appellate correction. Winning the next case requires immediate, proactive planning. Platforms must audit their real-time bidding protocols, map their data integration chains and build airtight factual records before litigation hits. By structuring data transactions to clearly fall outside the reach of federal bulk-data boundaries, companies can position themselves to win the next motion to dismiss. #AdTech #DataPrivacy #PrivacyLitigation #ECPA #CybersecurityLaw #ClassActionDefense #RegulatoryCompliance
As tech platforms face this aggressive intersection of data-privacy laws and federal regulatory frameworks, the baseline for corporate defense has changed. Navigating the ECPA in this new frontier requires moving past standard civil litigation strategies.
Defending these complex cases requires a specialized, investigative cross-examination of the underlying technology and the regulatory environment. Against that backdrop, there will be a decisive advantage where litigators have experience with both the federal wiretap laws and with privacy litigation. Civil litigators should apply a prosecutor's skills at deconstructing how government regulations, like the BSD rules, are applied in enforcement actions. By applying a prosecutorial lens to a civil complaint, a defense team can aggressively challenge whether a plaintiff's allegations of regulatory violations actually cross the threshold from speculative to plausible. In other words, thinking like a prosecutor is the path to winning.
The Prosecutor's Edge in Tech Litigation:- Cross Border Investigation: This ECPA and BSD theory rests on international data sharing, which implicates a rare skill set to fully explore: cross-border technical internal investigations. White collar prosecutors in areas such as cyber crimes, money laundering, and Foreign Corrupt Practice Act (FCPA) cases have developed these particular skills.
- Deconstructing Intent: Parsing granular details of data routing to challenge "knowing" or "intentional" statutory violations.
- Defeating Vicarious Liability Claims: Attacking weak links between the actions of U.S.-based employees and foreign corporate entities.
- Regulatory Technicality: Isolating the strict boundaries of executive orders to prove a platform falls outside the targeted scope.
Looking Ahead: Win the Next Case NowTo be clear, the court's reasoning in Baker is deeply flawed and wrongly decided. It does not appear rational to treat these untested data sharing regulations as the predicate for either a crime or a tort under the ECPA. However, the reality is that the decision stands. AdTech companies cannot afford to wait for an appellate correction. Winning the next case requires immediate, proactive planning. Platforms must audit their real-time bidding protocols, map their data integration chains and build airtight factual records before litigation hits. By structuring data transactions to clearly fall outside the reach of federal bulk-data boundaries, companies can position themselves to win the next motion to dismiss. #AdTech #DataPrivacy #PrivacyLitigation #ECPA #CybersecurityLaw #ClassActionDefense #RegulatoryCompliance
- Cross Border Investigation: This ECPA and BSD theory rests on international data sharing, which implicates a rare skill set to fully explore: cross-border technical internal investigations. White collar prosecutors in areas such as cyber crimes, money laundering, and Foreign Corrupt Practice Act (FCPA) cases have developed these particular skills.
- Deconstructing Intent: Parsing granular details of data routing to challenge "knowing" or "intentional" statutory violations.
- Defeating Vicarious Liability Claims: Attacking weak links between the actions of U.S.-based employees and foreign corporate entities.
- Regulatory Technicality: Isolating the strict boundaries of executive orders to prove a platform falls outside the targeted scope.
To be clear, the court's reasoning in Baker is deeply flawed and wrongly decided. It does not appear rational to treat these untested data sharing regulations as the predicate for either a crime or a tort under the ECPA. However, the reality is that the decision stands. AdTech companies cannot afford to wait for an appellate correction. Winning the next case requires immediate, proactive planning.
Platforms must audit their real-time bidding protocols, map their data integration chains and build airtight factual records before litigation hits. By structuring data transactions to clearly fall outside the reach of federal bulk-data boundaries, companies can position themselves to win the next motion to dismiss.
#AdTech #DataPrivacy #PrivacyLitigation #ECPA #CybersecurityLaw #ClassActionDefense #RegulatoryCompliance
