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Crocs, Adidas Named in ‘Illegal’ Spy-Game Lawsuits

Are Crocs and Adidas playing spy games? That’s what new legal action purports.

A class action lawsuit featuring a principal plaintiff likened to civil rights icon Rosa Parks in an 11-page court document filed in a San Diego Superior Court, accuses shoemaker Crocs of violating the California Invasion of Privacy Act.

Separately another class action suit filed also in November by the same attorney but with a different principal plaintiff accuses German sportswear brand Adidas of violating the same anti-wiretapping legislation.

The term ‘wiretapping’ often calls to mind the practice of listening in surreptitiously on phone calls, but in both cases brought by Pacific Trial Attorneys founder Scott Ferrell, the allegation isn’t that his clients’ calls were recorded, but that their typed chats with customer service at Crocs and Adidas were monitored by a third party and used for financial gain.

The suit alleges all of this is done without consumer consent.

“Unlike most companies, Defendant ignores CIPA. Instead, Defendant both wiretaps the conversations of all website visitors and allows a third party to eavesdrop on the conversations in real time during transmission,” Ferrell writes in Miguel Esparza, et al vs. Crocs. “Defendant’s wiretapping and eavesdropping are not incidental to the act of facilitating e-commerce, nor are they undertaken in the ordinary course of business. To the contrary, Defendant’s actions violate both industry norms and the legitimate expectations of consumers.”

In the case of Miguel Licea on behalf of all affected Californians vs. Adidas, Ferrell also charges that the Nike rival “deployed keystroke-monitoring software.”

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“Defendant’s actions amount to the digital equivalent of looking over consumers’ shoulders, reading consumers’ journals, and eavesdropping on their conversations,” the attorney wrote. “[This] conduct is not only illegal, it is offensive.”

Esparza is described in the Crocs filing as a “tester,” who “works to ensure that companies abide by the privacy obligations imposed by California law,” but who also had “genuine interest in the goods and service offered” by Crocs.

Ferrell said that “testers” like Esparza are commonly plaintiffs in CIPA cases, and in a footnote, the attorney labeled Parks, famous for refusing to give up her seat to a white man in protest of Jim Crow laws, a “tester,” too.

“… she voluntarily subjected herself to an illegal practice to obtain standing to challenge the practice in Court,” the attorney wrote.

 Ferrell, who on his firm’s website boasts nearly $500 million in judgments won, said he does not comment on ongoing cases when asked how he can prove any of the plaintiffs chats with customer service were shared with a third party. But in the court documents, he names two companies—Salesforce and Kayako—that he alleges receive the data.

“[They] use a software device or contrivance to secretly intercept (during transmission and in real time, eavesdrop upon, and store transcripts of Defendant’s chat communications with unsuspecting website visitors—even when such conversations are private and deeply personal,” Ferrell writes. “Defendant neither informed visitors of this conduct nor obtained their consent to these intrusions.”

In both cases, plaintiffs are asking for unstated statutory and punitive damages, along with legal fees.

Neither Crocs nor Adidas responded immediately to requests for comment, but in a comment related to another class action lawsuit related to complaints that Crocs shoes shrink in heat and water without consumer warning, a Crocs spokesperson responded, “While we are not at liberty to speak to specific details of ongoing litigation, we do not believe that the allegations in this suit have any merit.”

The California Invasion of Privacy Act was enacted in 1967, long before the advent of the Internet. It places liability on: “Every person who intentionally and without the consent of all parties to a confidential communication, by means of any electronic amplifying or recording device, eavesdrops upon or records the confidential communication… [and] any communication carried on in circumstances as may reasonably indicate that any party to the communication desires it to be confined to the parties thereto.”

Businesses commonly record any and all phone calls for quality assurance and similar purposes, but the lawsuit alleges the defendants use the information for financial gain and without consent.

The 9th Circuit Court of Appeals held in May of 2022 that CIPA does indeed apply to internet communications. Urban Outfitters similarly ran afoul of telephonic communications rules and is also facing a class-action lawsuit as a result.

Siding with the plaintiff in Javier vs. Assurance IQ, the court “requires prior consent of all parties to a recorded communication, not retroactive consent,” according to a blog post from the law firm Klein, Moynihan, Turco.

Adidas has also been listed as a defendant in a lawsuit involving the NFT company Yuga Labs, for its part in allegedly inflating the cryptocurrency of the Bored Ape Yacht Club non-fungible tokens. Adidas is named among almost 100 celebrity defendants, including Jimmy Fallon, Paris Hilton, Justin Bieber, Snoop Dogg, Madonna and Stephen Curry, who are listed as accomplices by virtue of their promotion of the product at issue.