Yahoo must face email spying class action - U.S. judge

By Jonathan Stempel

(Reuters) - A U.S. judge ordered Yahoo Inc (YHOO.O) to face a nationwide class-action lawsuit accusing it of illegally intercepting the content of emails sent to Yahoo Mail subscribers from non-Yahoo Mail accounts, and using the information to boost advertising revenue.

In a decision late Tuesday night, U.S. District Judge Lucy Koh in San Jose, California said people who sent emails to or received emails from Yahoo Mail subscribers since Oct. 2, 2011 may sue as a group under the federal Stored Communications Act for alleged privacy violations.

She also said a class of non-Yahoo Mail subscribers in California since Oct. 2, 2012 may sue as a group under that state's Invasion of Privacy Act.

Holders of non-Yahoo Mail accounts accused Yahoo of copying and then analysing their emails, including keywords and attachments, with a goal of creating "targeted advertising" for its estimated 275 million Yahoo Mail subscribers, in addition to detecting spam and malware.

They sought an injunction barring the alleged interceptions, as well as damages. Yahoo in 2014 generated 79 percent of its revenue from search and display advertising.

A class action can make it easier to obtain larger damages and more sweeping remedies at lower cost. The plaintiffs estimated that the nationwide class of non-Yahoo Mail subscribers has more than 1 million members.

Rebecca Neufeld, a Yahoo spokeswoman, said the Sunnyvale, California-based company cannot comment on active litigation.

Koh rejected Yahoo's arguments that some plaintiffs consented to its activity by emailing Yahoo subscribers even after learning how it used the information, and that the alleged injuries were too disparate to justify class certification.

She distinguished the case from her March 2014 refusal to certify a similar class action against Google Inc (GOOGL.O) on behalf of Gmail and non-Gmail subscribers because it was hard to determine which users consented to Google's activity.

"Yahoo may have to, as a practical matter, adjust its scanning practices on an individual basis," Koh wrote. "That

does not, however, change the fact that plaintiffs seek uniform relief from a common policy that Yahoo applies to all class members."

Daniel Girard, a lawyer for the plaintiffs, declined to comment.

The case is In re: Yahoo Mail Litigation, U.S. District Court, Northern District of California, No. 13-04980.

(Reporting by Jonathan Stempel in New York; Editing by Christian Plumb)