in Re Certified Question (Deacon v. Pandora)

Citations: 499 Mich. 477; 885 N.W.2d 628Docket: Docket 151104

Court: Michigan Supreme Court; July 6, 2016; Michigan; State Supreme Court

Original Court Document: View Document

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The Michigan Supreme Court addressed a certified question from the United States Court of Appeals for the Ninth Circuit regarding whether Peter Deacon, a Pandora Media, Inc. listener, could be considered a "customer" under the Preservation of Personal Privacy Act (PPPA). Deacon alleged that Pandora violated the PPPA by disclosing his music preferences. The court, in a unanimous opinion authored by Justice Markman, clarified that the PPPA defines a customer as someone who "rents" or "borrows" sound recordings. The court emphasized that "rent" implies a payment, and since Deacon did not pay for his use of Pandora, he could not be classified as a customer. Furthermore, the term "borrow" suggests an obligation to return the borrowed item, which also did not apply in this case. Therefore, the court concluded that Deacon had not established a valid claim against Pandora for violating the PPPA.

Deacon did not qualify as a borrower under the Preservation of Personal Privacy Act (PPPA) because there was no promise, either implied or expressed, to return the sound recording to Pandora. The service provided by Pandora involved merely delivering sound recordings to listeners, thus Deacon did not engage in renting or borrowing, which are necessary conditions to be considered a customer under the PPPA. The Supreme Court, addressing a certified question from the Ninth Circuit, answered negatively regarding whether Deacon had sufficiently alleged a claim against Pandora. Chief Justice Young concurred, emphasizing his belief that the Supreme Court should respond to certified questions from federal courts only when the Michigan legal issue is debatable and pivotal to the federal case. The question of whether Deacon was a customer under the PPPA was both determinative and contested, requiring interpretation of a statute applied to modern technology. The majority opinion adhered to the plain meaning of the PPPA’s provisions.

MCR 7.305(B)(1) allows federal, state appellate, or tribal courts to certify questions to the Michigan Supreme Court when Michigan law may provide a resolution and there is no controlling precedent. This rule was renumbered to MCR 7.308(A)(2) with minor wording changes effective September 1, 2015. The Michigan Supreme Court has agreed to answer a certified question from the Ninth Circuit regarding whether a plaintiff qualifies as a "customer" under the Michigan Video Rental Privacy Act (PPPA) due to renting or borrowing sound recordings. The court concluded that the plaintiff does not fit this definition. 

The defendant, a Delaware corporation operating the music-streaming service Pandora, allows users to create customized radio stations based on music preferences. Users can skip songs but cannot select specific tracks or save them. The service is free, with an option for a paid version without ads. The plaintiff, a Michigan resident, filed suit in federal court in September 2011, alleging that Pandora publicly disclosed listener profile pages containing music preferences and integrated these profiles with Facebook, resulting in unauthorized sharing of sensitive information. He claimed violations of the PPPA and the Michigan Consumer Protection Act (MCPA), seeking relief for himself and a class of affected Michigan residents. The federal district court dismissed his claims, and the plaintiff appealed, leading to the certification of the question to the Michigan Supreme Court.

The court reviews statutory interpretation issues de novo, aiming to reflect legislative intent primarily through the statute's plain language, with terms understood in their common meaning. When statutory language is clear, it is presumed that the Legislature intended that meaning.

The PPPA aims to protect personal privacy regarding the purchase, rental, or borrowing of certain materials and establishes penalties for violations. Amendments to the act were made by 2016 PA 92, effective July 31, 2016, but these do not impact the current analysis. The PPPA, specifically MCL 445.1712, prohibits the disclosure of customer information related to the purchase, rental, or borrowing of materials, unless allowed by law. A 'customer' is defined under MCL 445.1711(a) as someone who engages in these activities. MCL 445.1715 provides a civil remedy for violations, allowing customers to sue for actual damages or $5,000, along with costs and attorney fees. The act includes exceptions to the disclosure prohibition, but none are applicable in this case.

The court concludes that the plaintiff does not qualify as a 'customer' because he did not rent or borrow a sound recording, thus rendering further elements of the PPPA claim unnecessary to evaluate. The terms 'rent' and 'borrow' are not defined in the PPPA, necessitating the use of lay dictionaries from the time of enactment (1988) for interpretation. The definition of 'rent' indicates that a payment must be made to constitute a rental transaction, meaning the plaintiff failed to meet this criterion.

The term 'rent' implies a payment exchange, but there is no evidence that the plaintiff paid an optional fee for the commercial-free version of Pandora or otherwise compensated the defendant for sound recordings. Consequently, the plaintiff does not qualify as someone who 'rents' a sound recording. Similarly, the definition of 'borrow' involves a promise to return the borrowed item or its equivalent. The plaintiff did not make any such promise regarding the sound recording, as the streaming service only facilitated the delivery of recordings without a corresponding return. Therefore, the plaintiff is not considered to have 'borrowed' a sound recording. Under MCL 445.1711(a), a 'customer' must either 'rent' or 'borrow' a sound recording, and since the plaintiff did neither, he does not meet the definition of a 'customer' under the PPPA. The court notes that while digital transmission may not require a return of materials, the conclusion is based on the specific language of the PPPA, and any concerns about its implications should be directed to the Legislature. The opinion also includes a concurrence expressing reservations about the constitutionality of responding to certified questions from federal courts, emphasizing that such responses should be limited to essential and debatable Michigan legal issues.

The Ninth Circuit is reviewing whether the plaintiff qualifies as a 'customer' under the Preservation of Personal Privacy Act (PPPA) and whether the act allows for claims regarding the rental or borrowing of sound recordings. This determination is crucial for the federal case at hand and is a contested issue between the parties. The majority opinion asserts that it has adhered to the plain meaning of the relevant PPPA statutes, MCL 445.1711 and MCL 445.1712. However, the complexity of this case contrasts with a previous case, Certified Question, where statutory interpretation was straightforward and undisputed. The current case involves interpreting a statute that deals with technologies that did not exist at the time of its enactment, indicating a nuanced legal question. Consequently, the Court has decided that it is appropriate to provide guidance to the federal court on this matter.