Plaintiffs’ Bar Takes Another Bite at the TRE Apple

06/30/2023

We are seeing a new wave of litigation against retailers that use or have used The Retail Equation (“TRE”) technology – this time in New Hampshire. Before we jump into the lawsuit, it is important to understand the business of the non-retailer defendant, TRE. According to its website, TRE is a software and analytics company that helps retail companies detect and prevent potentially fraudulent transactions. It does this by creating an ID number for individual consumers using a unique signifier provided by the consumer such as a credit card number, or driver’s license, then analyzing their transactions (sales, exchanges, returns… etc). When the software detects suspicious consumer behavior, it flags the transaction, thereby alerting the retailer to suspicious activity. TRE has been used by retailers to detect fraudulent returns.

Early Days of TRE Litigation

The first litigation against retailers and TRE came in 2020, when plaintiffs, represented by Ahdoot & Woolfson, PC, and Abington Cole + Ellery filed a class action against 13 retailers and TRE in the Central District of California. The complaint alleged that retailers using TRE’s software gave rise to liability under several laws including: FCRA, CCPA, and various state and federal privacy laws. Last May, CDCA generally disagreed and dismissed all but the invasion of privacy claims. This did not discourage plaintiffs. They appealed to the 9th Cir, which rejected to rehear the case. This year, plaintiffs filed their Third Amended Complaint, which retailers and TRE are continuing to fight.

Why New Hampshire??

Earlier this month, plaintiffs, (this time represented by Douglas, Leonard & Garvey, P.C., and Bursor & Fisher P.A.) filed a wave of cookie cutter complaints in New Hampshire against retailers. Why New Hampshire, you might ask? New Hampshire provided plaintiffs with a different statutory hook – and, of course, the opportunity for statutory damages.

Specifically, in 2021, section IX of NH’s Driver Privacy Act took effect creating a private right of action which states:

A person is guilty of a misdemeanor if such person knowingly discloses information from a department record to a person known by such person to be an unauthorized person; knowingly makes a false representation to obtain information from a department record; or knowingly uses such information for any use other than the use authorized by the department. In addition, any professional or business license issued by this state and held by such person may, upon conviction and at the discretion of the court, be revoked permanently or suspended. Each such unauthorized disclosure, unauthorized use or false representation shall be considered a separate offense.
A person is guilty of a class B felony if, in the course of business, such person knowingly sells, rents, offers, or exposes for sale motor vehicle records to another person in violation of this section.

The Act authorizes statutory penalties for the greater of actual damages or liquidated damages of $2500 per violation.

The complaints rely on legislative history to argue that the purpose of the Act was to protect residents from issues such as stalking, targeted marketing, discrimination, creating and selling address databases – none of which they allege retailers do. Instead, plaintiffs argue injury as an “encroach[ment] upon [their] privacy rights,” in doing so they forego actual damages and opt for liquidated damages.

We will continue to monitor this new wave and update members with important developments. Contact us if you think we can help.