General Motors faces two-dozen lawsuits over sharing data with insurers
The class actions allege General Motors is gathering data about drivers without their consent and sending it to insurance companies, which raises their rates.
General Motors Co. is facing around two-dozen class action lawsuits that allege the company gathered data about drivers without their consent, then sent it to insurance companies, which resulted in rate increases.
The lawsuits, which Law.com Radar flagged, specifically targeted GM, its subsidiary OnStar, and data broker LexisNexis Risk Solutions Inc. The legal actions alleged that the defendants provided driver reports to insurance companies.
“We’ve got many, many calls from customers who are very concerned about their data being transmitted to auto insurance companies,” said E. Powell Miller of Miller Law in Rochester, Michigan, who has filed at least three cases. “There’s a lot of outrage about their private driving information ending up in an insurance company’s possession and resulting in higher automobile insurance rates.”
Miller has handled numerous auto defect cases across the country, such as the Chrysler Pacifica plug-in hybrid electric vehicle fires. But with the advent of smart cars, Powell said, the GM cases about telematics systems in vehicles are a bit different.
“The two primary things I do right now have been data breach cases and automotive defect cases,” he said. “It marries the two areas that I’ve spent a significant amount of my time on the last four to five years.”
The GM lawsuits, brought by drivers whose insurance premiums skyrocketed, primarily allege violations of the Fair Credit Reporting Act and consumer fraud and privacy statutes in several states.
GM’s lead defense counsel, David Balser, of King & Spalding in Atlanta, declined to comment. But, on April 24, GM announced that it would discontinue OnStar’s Smart Driver and terminated its partnerships with LexisNexis and another data broker, Verisk Analytics Inc., “based on consumer feedback.” GM also added former Fanatics Chief Privacy Officer Alisa Bergman as its new chief trust and privacy officer as of April 29.
LexisNexis Risk Solutions lawyer Ronald Raether of Troutman Pepper Hamilton Sanders in Irvine, California, did not respond to a request for comment, nor did Jasmeet Ahuja, a partner at Hogan Lovells in Philadelphia, for Verisk, which is based in Jersey City, New Jersey, and named in four lawsuits.
One lawsuit named Kia America Inc. Edward Chang, an Irvine partner at Jones Day, did not respond to a request for comment from Kia. But in a May 6 filing before the U.S. Judicial Panel on Multidistrict Litigation, Kia resisted combining the single case against it with the GM lawsuits.
Kia also hinted at an arbitration defense, stating that the Kia Connect terms of service include an arbitration provision and class action waiver.
“While GM suggests an arbitration defense too,” Chang wrote, “the question of arbitration and class-action waivers necessarily implicates different facts concerning the language of the unique agreements and circumstances surrounding the relevant plaintiffs’ consent to arbitration.”
‘Smartphones on Wheels’
The collection of driver data got the attention of Congress earlier this year when U.S. Sen. Edward Markey, D-Massachusetts, urged the Federal Trade Commission to investigate data privacy practices of automakers in a Feb. 27 letter.
“As cars have become smartphones on wheels, automakers have gained access to huge troves of valuable consumer data,” he wrote. “Although this personal information can be useful to ensure the vehicle is operating safely or to communicate with emergency responders after a crash, it can also be a lucrative source of revenue for automakers.”
Lawsuits, the first of which was filed on March 13, followed an article in the New York Times about automakers surreptitiously collecting driver data from internet-connected vehicles. Firms such as Morgan & Morgan, Keller Rohrback, Tycko & Zavareei and Aylstock, Witkin, Kreis & Overholtz have filed class actions on behalf of millions of GM consumers.
GM began collecting data on drivers, according to the lawsuits, through its OnStar Smart Driver service on Chevrolet, Buick, GMC and Cadillac vehicles. The data includes actions such as a driver’s braking habits and average speeds.
But the lawsuits contend that the data is out of context. One lawsuit insists that GM’s disclosures of the data collection are “a byzantine maze of terms of service, privacy policies, and application license agreements” that don’t adequately explain to consumers that their driving habits would be sold to insurance companies and that, despite its claims that drivers must opt in to the program, enrollment is automatic.
The cases are now before the U.S. Judicial Panel on Multidistrict Litigation, which will hear arguments on May 30 in Salt Lake City, Utah, on whether to coordinate them into multidistrict litigation and, if so, where they should be. Lawyers are divided over the venue, insisting the cases should be in California, Georgia, Michigan, New York or Pennsylvania.
GM and OnStar favor Michigan, where they are based, while LexisNexis plans to argue for Georgia, where it has headquarters in Alpharetta. Verisk has argued to send the cases to New York.
GM and some of the plaintiffs lawyers insisted that Kia should not be part of any multidistrict litigation docket. Powell said the focus is solely on GM.
“There’s no question that’s where we’re getting the complaints,” he said. “It appears to be very widespread and pervasive.”