FTC's Jan. 9 Consent Order Is Cited in Opposition to X-Mode's Motion to Dismiss

Numerous class actions challenging the “secret collection and monetization” of cellphone geolocation data have survived motions to dismiss and Norma Egan’s should as well, said the plaintiff's opposition Friday (docket 1:23-cv-11651) in U.S. District Court for Massachusetts in Boston to X-Mode Social's motion to dismiss her first amended privacy complaint.

Egan sued X-Mode Dec. 1 for allegedly violating state law by acquiring and tracking consumers’ “precise geolocation data" and other data through the use of its XDK spyware and then profiting from the data by selling it to others without obtaining consent (see 2312040052).

Time-stamped location data “provides an intimate window into a person’s life, revealing not only his particular movements, but through them his familial, political, professional, religious, and sexual associations,” said the opposition, citing Carpenter v. U.S.

The motion noted the FTC entered a consent order Jan. 9 prohibiting X-Mode and its successor, Outlogic, from sharing or selling sensitive location data. In its first settlement with a data broker involving the collection and sale of sensitive location information, the FTC charged that X-Mode and Outlogic “failed to put in place reasonable and appropriate safeguards on the use of such information by third parties." X-Mode transferred most of its operation to Outlogic in 2021.

“Geolocation data can reveal not just where a person lives and whom they spend time with but also, for example, which medical treatments they seek and where they worship,” said FTC Chair Lina Khan. The FTC concluded that X-Mode’s practices “violate the FTC Act’s prohibition against unfair and deceptive practices,” said the motion. The FTC also said X-Mode “failed to ensure that users of its own apps ..., as well as third party apps that used the X-Mode [XDK] were fully informed about how their location data would be used,” said Egan’s opposition.

X-Mode pays mobile app companies to integrate its XDK software into mobile apps, collects users' geolocation data when they are using the third-party app and then aggregates and sells the data “to whoever wants it,” the filing said. Egan downloaded a third-party app in January 2021, and X-Mode packaged and sold her geolocation data to third parties, thus invading her privacy, it said.

X-Mode seeks dismissal on several grounds, “each of which lacks merit,” the opposition said. The defendant seeks dismissal for lack of personal jurisdiction and improper venue, but the court has personal jurisdiction over X-Mode because it actively tracked Egan’s location in Massachusetts and sold her geolocation data to third parties, “creating sufficient minimum contacts” with the state, the filing said. The venue is proper for similar reasons, it said.

On X-Mode’s assertion that Egan lacks standing to bring her claims, the plaintiff said courts analyzing “identical standing challenges regarding identical conduct” have found plaintiffs have standing based on invasion of privacy violations “and thus may seek disgorgement of profits related to sales of the geolocation data to third parties,” the opposition said, citing Greenley v Kochava.

Many courts have rejected X-Mode’s “slew of arguments” for dismissal under Rule 12(b)(6), the motion said. Egan has standing to pursue her claim for unjust enrichment because the “deprivation of a legally protected interest in unjustly earned profits can constitute injury in fact for purposes of Article III standing,” said the opposition, citing Murphy v. Kochava. Egan alleges X-Mode has been “unjustly enriched” in retaining revenues derived from the sale of her geolocation data, it said. Egan also has standing under the Massachusetts Unfair and Deceptive Business Practices Act due to X-Mode’s invasion of her privacy by tracking her location and associated Mobile Advertising ID, and selling that data to third parties, it said.

The defendant’s request to transfer the action to U.S. District Court for Eastern Virginia is inappropriate because the Massachusetts court has jurisdiction over X-Mode and is proper, said the opposition. X-Mode failed to carry its burden to establish that transfer is appropriate under 28 U.S.C. Section 1404(a), it said.