Arndt v. Gov't Emps. Ins. Co.

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TIMOTHY ARNDT, individually and on behalf of all others similarly situated, Plaintiff v. GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant.

Civ. No. MJM-23-2842

United States District Court, D. Maryland

September 26, 2024

MEMORANDUM

MATTHEW J. MADDOX, UNITED STATES DISTRICT JUDGE

Plaintiff Timothy Arndt (“Plaintiff”) filed this putative class action against defendant Government Employees Insurance Company (“GEICO” or “Defendant”) for allegedly tracking Plaintiff's and proposed class members' electronic activity on Defendant's website. See ECF No. 1 (Compl.). Specifically, Plaintiff asserts claims for violation of the Pennsylvania Wiretap and Electronic Surveillance Control Act (“PWESCA”) 18 Pa. C.S. § 5701, et seq. (Count I); Invasion of Privacy - Pennsylvania Intrusion Upon Seclusion (Count II); and violation of the Maryland Wiretapping and Electronic Surveillance Act (“MWESA”), Md. Code Ann., Cts & Jud. Proc. § 10-401, et seq. (Count III).

This matter is before the Court on Defendant's Motion to Dismiss (ECF No. 15). The motion is fully briefed and ripe for disposition. No hearing is necessary. See Loc. R. 105.6 (D. Md. 2023). For the reasons stated below, the Court will GRANT the motion, and the Complaint will be dismissed without prejudice.

I. BACKGROUND

Defendant is an insurance provider organized in Nebraska with its corporate headquarters in Maryland. Compl. ¶ 20. Defendant's website allows customers to shop for auto insurance by filling out online forms. Id. ¶¶ 25, 27. In or around January 2023, Plaintiff visited Defendant's website from Pennsylvania. Id. ¶¶ 26, 29. Plaintiff filled out an auto insurance quote form, which required him to input “personalized and sensitive information,” including his social security number, contact information, vehicle and insurance information, marital status and spousal information, and gender identity. Id. ¶¶ 27-28, 46. Plaintiff was unaware, however, that the information he provided on Defendant's website-as well as the mouse clicks, keystrokes, and copy and paste actions-was collected by a third-party “Session Replay” software that intercepts users' electronic communications on Defendant's website. Id. ¶¶ 2-3, 30-31.

Defendant utilizes Session Replay software on its website through a third-party provider, Quantum Metric. Id. Quantum Metric collects data such as “mouse movements, keystrokes and clicks, search terms, content viewed, and personal information inputted by the website visitor ....” Id. ¶ 9. “The purported use of session replay technology is to monitor and discover broken website features.” Id. ¶ 10. Plaintiff alleges, however, that the data collection “far exceeds the stated purpose and [users'] reasonable expectations ....” Id. Plaintiff alleges that his collected information was sent to Quantum Metric's servers. Id. ¶¶ 30-31.

Defendant factually disputes Plaintiff's allegations. Defendant submits the declaration of Christopher Jones, a Senior Director of Design at GEICO. Jones Decl. (ECF No. 15-2) ¶ 1. Jones avers that he is “the business owner for GEICO's service agreement with Quantum Metric.” Id. Jones states that “all personally identifying information (‘PII') was encrypted and pseudonymized before transmission to Quantum Metric.” Id. ¶ 5. He states that, while Quantum Metric captures user interactions including “clicks, scrolling, mouse movement, and masked keystrokes[,]” the “end user's session is identified using a random number, and any PII typed by an end user is encrypted on that end user's client device before reaching Quantum Metric.” Id. ¶ 7. Further, “Quantum Metric also deploys a default ‘do not capture' setting on GEICO's website, which automatically blocks the capture of any sensitive data (e.g. social security numbers, payment information, etc.).” Id. ¶ 11. Regarding other, non-sensitive PII, Quantum Metric pseudonymizes data “on the end user's client device before transmission to Quantum Metric's servers.” Id. ¶ 12 (emphasis omitted).

Plaintiff filed suit in this Court on October 19, 2023. Defendant filed its Motion to Dismiss (ECF No. 15), to which Plaintiff responded (ECF No. 18), and Defendant replied (ECF No. 19). Defendant and Plaintiff each filed a notice of supplemental authority (ECF Nos. 21, 22), which this Court considered in rendering this decision.

II. LEGAL STANDARD

A. Rule 12(b)(6)

A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure constitutes an assertion by a defendant that, even if the facts alleged by a plaintiff are true, the complaint fails as a matter of law “to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). For a complaint to survive a 12(b)(6) motion to dismiss, a plaintiff must plead enough factual allegations “to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

When considering a motion to dismiss, a court must take the factual allegations in the complaint as true and draw all reasonable inferences in favor of the plaintiff. King v. Rubenstein, 825 F.3d 206, 212 (4th Cir. 2016). But “a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action's elements will not do.” Twombly, 550 U.S. at 555 (cleaned up). A complaint must contain factual allegations sufficient “to raise a right to relief above the speculative level.” Id. “[T]ender[ing] ‘naked assertion[s]' devoid of ‘further factual enhancement'” does not suffice. Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557) (third alteration in Iqbal).

B. Rule 12(b)(1)

A defendant may move to dismiss a complaint for lack of subject matter jurisdiction under Rule 12(b)(1). See Barnett v. United States, 193 F.Supp.3d 515, 518 (D. Md. 2016). “The plaintiff bears the burden of proving, by a preponderance of evidence, the existence of subject matter jurisdiction.” Mayor & City Council of Balt. v. Trump, 416 F.Supp.3d 452, 479 (D. Md. 2019). “A challenge to subject matter jurisdiction under Rule 12(b)(1) may proceed in one of two ways: either a facial challenge . . . or a factual challenge.” Id. (citations omitted) (internal quotations omitted). A facial challenge asserts “that the allegations pleaded in the complaint are insufficient to establish subject matter jurisdiction.” Id. A defendant's facial challenge “will be evaluated in accordance with the procedural protections afforded under Rule 12(b)(6), which is to say that the facts alleged in the Complaint will be taken as true ....” In re Jones v. Md. Dept. of Pub. Safety, No. 1:21-cv-01889-JRR, 2024 WL 493269 at *3 (D. Md. Feb. 8, 2024).

A factual challenge, on the other hand, asserts “that the jurisdictional allegations of the complaint are not true.” Trump, 416 F.Supp.3d at 479 (cleaned up) (quoting Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009)). In a factual challenge, the court “is entitled to decide disputed issues of fact with respect to subject matter jurisdiction.... In that circumstance, the court may regard the pleadings as mere evidence on the issue and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Id. (internal quotation marks and citations omitted); see also U.S. ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 348 (4th Cir. 2009) (court may consider evidence outside the pleadings, such as affidavits). However, “[i]f the jurisdictional facts are so intertwined with the facts upon which the ultimate issues on the merits must be resolved, . . . the entire factual dispute is appropriately resolved only by a proceeding on the merits ....” Id. (internal quotation marks omitted) (quoting Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982)).

III. DISCUSSION

A. Relevant Law

The three-count Complaint asserts causes of action under MWESA, PWESCA, and intrusion upon seclusion under Pennsylvania law. Under the MWESA:

(a) Any person whose wire, oral, or electronic communication is intercepted, disclosed, or used in violation of this subtitle shall have a civil cause of action against any person who intercepts, discloses, or uses, or procures any other person to intercept, disclose, or use the communications, and be entitled to recover from any person:

(1) Actual damages but not less than liquidated damages computed at the rate of $100 a day for each day of violation or $1,000, whichever is higher;

(2) Punitive damages; and

(3) A reasonable attorney's fee and other litigation costs reasonably incurred.

Md. Code Ann., Cts. & Jud. Proc. § 10-410.^[1]

PWESCA states that “[a]ny person whose wire, electronic or oral communication is intercepted, disclosed or used in violation of this chapter shall have a civil cause of action against any person who intercepts, discloses or uses or procures any other person to intercept, disclose or use, such communication.” 18 Pa. Cons. Stat. § 5725(a) (2024). To establish a PWESCA violation, a plaintiff must show:

(1) that [the claimant] engaged in a communication; (2) that he possessed an expectation that the communication would not be intercepted; (3) that his expectation was justifiable under the circumstances; and (4) that the defendant attempted to, or successfully intercepted the communication, or encouraged another to do so.

Kelly v. Carlisle, 622 F.3d 248, 257 (3d Cir. 2010) (quoting Agnew v. Dupler, 553 Pa. 33, 717 A.2d 519 522 (Pa. 1998)); see also Popa v. Harriet Carter Gifts, Inc., 52 F.4th 121, 130 (3rd Cir. 2022) (...