Court Can Proceed Privacy Case vs. Google

SAN FRANCISCO — In a major legal setback for Google, a federal appeals court here said on Tuesday that a lawsuit accusing the Internet giant of illegal wiretapping could proceed Privacy Case vs. Google.

The ruling, which comes at a moment when online privacy is being hotly debated, has its origins in a much-publicized Google initiative, Street View, which tried to map the inhabited world.

In addition to photographs, Street View vehicles secretly collected e-mail, passwords, images and other personal information from unencrypted home computer networks.

The scooping of data brought outrage and investigations in at least a dozen countries when it was first revealed in Germany in 2010. It also prompted a handful of lawsuits by United States citizens who said Google had violated their privacy and was illegally wiretapping them. Those suits were condensed into one case, which was heard by a California court.

Google tried to get the case dismissed, saying the Wi-Fi communications it captured were “readily accessible to the general public” and therefore not a violation of federal wiretapping laws. The lower court rejected that argument, and on Tuesday the Court of Appeals for the Ninth Circuit did too.

“This is an important opinion for privacy rights,” said Kathryn E. Barnett of Lieff Cabraser Heimann & Bernstein, one of the law firms working for the plaintiffs. “It says that when you are in your home, you have a right to privacy in your communications. Someone just can’t drive by and seize them.”

The unanimous, 35-page decision by a three-judge panel found little merit in Google’s legal maneuverings, stating at one critical point that the company was basically inventing meanings in an effort to declare its actions legal.

The court wrote that Google’s proposed definition of “radio communication” was “in tension with how Congress — and virtually everyone else — uses the phrase.” Radio communication is not covered by the wiretapping law.

“We are disappointed in the Ninth Circuit’s decision and are considering our next step,” said Niki Fenwick, a spokeswoman for Privacy Case vs. Google . The company can ask the entire appeals court to rule on the case, an effort that could be fairly characterized as a long shot. Otherwise, the case will go back to the lower court for trial.

The first thing the lawyers for the 22 plaintiffs would like to do, Ms. Barnett said, is to get the case certified as a class-action suit.

If the case does become a class action, millions could join. The potential penalties might, in theory, be large enough that even Google would notice. The plaintiffs are asking for $10,000 each along with unspecified punitive damages.

“In the past, Google has been able to buy its way out of privacy violations with penalties that are mere pocket change,” said John Simpson of Consumer Watchdog, which is a co-counsel in the case. “This suit has the potential for meaningful damages.”

Along with other tech companies, Google is already under a spotlight for its relationship to the government. Google is seeking permission from the secret Foreign Intelligence Surveillance Court to be more transparent about the types of national security requests it receives.

The secrecy now in place, Google said this week, “undermines the basic freedoms that are at the heart of a democratic society.”

In the Street View case, however, Google was frequently accused of a lack of transparency itself, without any national security considerations at stake. It initially denied that any data had been collected in Street View, then denied regulators the opportunity to look at what was gathered.

The company said a rogue engineer was at fault for inadvertently scooping up the data, but a Federal Communications Commission investigation said he was merely unsupervised.

As the public relations crisis deepened, Google executives apologized. But Ms. Barnett said: “I don’t think Google was sorry until they were investigated. We would love for them to accept responsibility for what they did — real responsibility.”

Regulators have frequently pursued Google on privacy issues. Last March, Google settled a Street View case brought by 38 state attorneys general. It was fined $7 million and it promised to aggressively monitor its employees on privacy issues.

Marc Rotenberg of the Electronic Privacy Information Center, which filed a brief supporting the plaintiffs in the Street View case before the Ninth Circuit, called Tuesday’s ruling “a landmark decision.”

“The court made clear that federal Privacy Case vs. Google law applies to residential Wi-Fi networks,” he said. “Users should be protected when a company tries to capture private data that travels between their laptops and their printer in their home.”

The ruling, written by Judge Jay Bybee, took sharp issue with Privacy Case vs. Google  contention that data transmitted over a Wi-Fi network was not protected by federal wiretapping laws because it was an electronic “radio communication.”

“In common parlance, watching a television show does not entail ‘radio communication,’ ” Judge Bybee wrote. “Nor does sending an e-mail or viewing a bank statement while connected to a Wi-Fi network.”

Neither did the court think much of Google’s argument that unencrypted data sent over a Wi-Fi network is “readily accessible to the general public” because both the hardware and software needed to intercept and decode the data are widely available.

People can easily buy technology to log every keystroke on someone’s computer, the court noted, but that did not make those keystrokes “readily accessible to the general public.”