Court allows suit alleging Allstate collected and sold consumer data to move forward, dismisses portion

A federal court won’t fully dismiss a case that alleges Allstate contracted with third-party apps to collect data on drivers, and then used it when creating consumer rates. 

The U.S. District Court for the Northern District of Illinois did agree to dismiss counts alleging harm for rates, if they were previously approved by a state’s governing body. However, any suits that include statutory damages will remain. 

The class action suit alleges that Allstate and, Arity, owned by Allstate, secretly collected and sold trillions of miles of consumers’ driving behavior data from mobile devices, in-car devices and vehicles to build “the world’s largest driving behavior database.” 

Allstate used the information to support its underwriting and coverage decisions and to profit from selling the data to third-parties, including other car insurance companies, the suit says. 

According to the suit, Allstate paid developers millions of dollars to integrate software development kits (SDKs) into their apps. The insurance company also gave the developers bonus incentives for increasing the size of their datasets. 

Third-party apps included Sirius XM, Routinely, Life360, GasBuddy, and Fuel Rewards, the suit alleges. 

Consumer phone data was used to justify increasing car insurance premiums, denying coverage, and dropping coverage, the suit claims. 

The data also was marketed as driving data to third parties as opposed to what the driving data really was, the suit claims. It adds that the data was tracking the movements of the person’s mobile phone. 

“Defendants had no way to reliably determine whether a person was driving at the time,” the suit says. 

For example, the suit says, the person could have been a passenger in a friend’s car or taxi, or on a bus. 

While the court did not agree with a majority of Allstate’s arguments in it’s motion to dismiss, it did partly side that some of the suits failed to allege harm. 

Allstate argued that the allegations that plaintiffs experienced a substantial increase in their premiums compared to the steady and regulatory increases they would otherwise expect. 

The insurance company pointed to a filed rate doctrine that says a rate filed with and approved by the governing regulatory agency is per se reasonable and cannot be the subject of a legal action against the private entity that filed it. 

The court agreed with Allstate regarding counts that focused on rate increases. 

“The plaintiffs, however, request other relief that does not implicate the field rate doctrine, including statutory damages,” the court opinion says. 

Allstate’s motion was granted for any counts discussed that don’t include statutory damages. 

The insurance company also argued that the Fair Credit Reporting Act preempted state laws mentioned in the suit. 

The opinion rejects that FCRA expressly preempts other state law claims because FCRA is referring to entities that furnish information to reporting agencies in the section Allstate addresses.

Plaintiffs in the suit allege Arity is a reporting agency, the opinion says. It adds that FCRA does not address the actions of reporting agencies in the section and that could be left up to further restrictions at the state level. 

Allstate also argued that wiretapping claims should be dismissed because the Federal Wiretap Act gives a party exception that says wiretapping is not unlawful for a person to intercept a communication in one of two circumstances. This includes where a person is party to the communication and where one of the parties to the communication has given prior consent. 

The insurance company argues that the plaintiffs  allege the apps consented to the purported disclosures via integration of the SDK. 

In response, the plaintiffs argued that the party exception does not apply because the interceptions were for the purpose of committing criminal or tortious act in violation of the constitution.

The court agreed with the plaintiff saying that a monetary motive does not foreclose the crime or tort exemption. 

The insurance company’s motion to dismiss also asked to introduce documents including user app agreements and mobile phone screenshots showing user registrations related to those apps. 

The court sided with the plaintiff that considering the defendant’s proposed exhibits at this time would be premature. 

An opinion from the court noted that the case had 38 different causes of actions and the legal nuances vary from claim to claim. For some of the claims, consent is an element of the claim and for others it is an affirmative defense, it says. 

Amended complaints are due March 20 and the defendants will have until April 17 to answer.

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