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Wireless service providers, including T Mobile, AT&T and Verizon They have faced a series of lawsuits in recent years from women who allege retail employees stole intimate images or videos from their phones while assisting them with in-store data transfers.
Cases are often dismissed when companies argue that they were unaware of employees' actions and are not liable because they acted outside the scope of their duties. But that could soon change after a recent court ruling, legal experts told CNBC.
Now, companies — not just store workers — could face liability in future litigation, potentially forcing them to address hiring, training and data security practices that victims say led to the breaches, experts said.
The latest lawsuit against AT&T was filed Monday in a California state court. A woman identified as Jane Doe alleged that a Los Angeles store employee stole nude images from her and distributed them in February after she upgraded her iPhone and he helped her transfer her data.
That case, brought by attorneys at the law firm CA Goldberg, now has a better chance of surviving and making it to trial after a court ruled in April against T-Mobile over a similar incident in Washington that was brought by the same firm. Judge Stanley Bastian, the judge overseeing the T-Mobile case, ruled it could go forward after the company asked that the suit be dismissed.
T-Mobile, like other carriers, had argued that it was unaware of the employee's actions and that he was acting outside the scope of his duties. However, the judge decided that the company could potentially be liable and ruled that the case should continue.
The ruling, described by the law firm as a “historic” decision, The lawsuit is the first of its kind against a mobile carrier accused of negligence for hiring employees who allegedly stole sensitive customer data, the firm said. It could affect the fate of future cases, including the suit filed against AT&T on Monday, legal experts said.
“This decision sets an important precedent and we intend to continue to try to hold phone companies accountable for situations like this, where their employees violate customers' privacy during phone exchanges or other in-store transactions,” said Laura Hecht-Felella of CA Goldberg, one of the lead attorneys behind the T-Mobile and AT&T cases. “There are many different ways they can try to prevent this from happening and it's clear that what they're currently doing is not adequate.”
Carrie Goldberg, the firm's founder, added that “the hope really isn't to attract more cases,” but to encourage companies to have better protections in place.
“That's what litigation does. It says you can be held liable for your negligence,” Goldberg said. “And presumably that will induce phone companies to innovate in their security and privacy protections for consumers in their stores.”
AT&T did not immediately respond to a request for comment. T-Mobile declined to comment.
Mounting accusations
In the case against AT&T, the woman filed a police report, which remains under investigation, according to the lawsuit.
According to the complaint, at least six other similar allegations have been made against AT&T in the past, either in civil lawsuits or police reports. The resolutions of those cases are unclear. The cases mirror at least a dozen others that allegedly occurred at other carriers, including T-Mobile and Verizon, according to news reports.
Goldberg says he suspects the cases that have been made public are “just the tip of the iceberg” and that there are likely more that customers never detected.
“We suspect that the phenomenon of cell phone shoplifting is larger than we can comprehend,” Goldberg said.
“As a society, we trust these cell phone providers with all of our most private information,” Goldberg said. “And there's really no limit to what their employees can steal from our phones and then share with the world.”
He added that his firm has received “case after case” in which customers claim that employees at phone stores stole their data. Goldberg said the problem affects all companies, making it an “industry-wide” concern.
Andrew Stengel, a New York attorney who specializes in cases involving nonconsensual disclosure of intimate images, better known as revenge porn, analyzed the T-Mobile Washington decision for CNBC. He said future cases, like the AT&T lawsuit, now have a better chance of surviving motions to dismiss and moving forward because attorneys will be able to point to that precedent in their arguments.
“This should make judges think twice or thrice before dismissing a lawsuit,” said Stengel, who has filed a similar suit against T-Mobile in the past but is not involved in the current litigation. “This should give judges not only food for thought, but also grounds for settlement.”
If lawsuits against wireless carriers related to the theft of intimate images are allowed to proceed, they will move into the discovery phase, which Stengel likened to the “crown jewels” of a legal case.
During discovery, defendants must turn over documents that are relevant to the case and that could reveal incriminating and compromising information.
“There could be information that the mobile phone companies have to disclose that would increase their liability in the future,” Stengel said. “If I were their attorney, I would be very concerned about that.”
Stengel cautioned that while Washington's decision may be “exciting,” it is not binding and judges in other jurisdictions can choose to ignore it.
Still, Goldberg hopes the decision will be “influential” and, she says, may prompt phone companies to make changes to prevent such abuses.
“We think that mobile carriers are going to be a lot less cavalier about what they can do without being caught,” Goldberg said. “If you're a company that's constantly hiring perverts who steal consumers' most intimate and private photos, then the blame lies with the company.”
