Case: 1:21-cv-00135 Document #: 390 Filed: 07/25/22 Page 1 of 8 PageID #:8060
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`UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`Case No. 21-cv-0135
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`Judge Sharon Johnson Coleman
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`In re Clearview AI, Inc., Consumer Privacy
`Litigation,
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`MEMORANDUM OPINION AND ORDER
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`On February 14, 2022, the Court granted in part and denied in part the Clearview
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`defendants’ motion to dismiss brought pursuant to Federal Rules of Civil Procedure 12(b)(1) and
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`12(b)(6). Before the Court is defendants’ motion for reconsideration and clarification under Rule
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`54(b). For the following reasons, the Court, in its discretion, denies defendants’ motion for
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`reconsideration and grants the motion for clarification. The Court also denies defendants’ request
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`for oral argument on their motion because it is unnecessary.
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`Background
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`The Court presumes familiarity with its February 14, 2022 Memorandum, Opinion, and
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`Order, along with the Court’s other rulings in this multi-district litigation (“MDL”), including the
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`August 12, 2020 Memorandum, Opinion, and Order denying defendants Hoan Ton-That’s and
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`Richard Schwartz’s motion to dismiss brought pursuant to Rule 12(b)(2) for lack of personal
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`jurisdiction in the first-filed lawsuit in this MDL, Mutnick v. Clearview, 20-cv-0512. The Court also
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`presumes familiarity with its January 27, 2022 motion to dismiss ruling in relation to retail defendant
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`Macy’s and the March 18, 2022 ruling denying Macy’s motion to certify an interlocutory appeal
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`under 28 U.S.C. § 1292(b).
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`In their first amended consolidated class action complaint, plaintiffs allege the Clearview
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`defendants covertly scraped over three billion photographs of facial images from the internet and
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`then used artificial intelligence algorithms to scan the face geometry of each individual depicted to
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`Case: 1:21-cv-00135 Document #: 390 Filed: 07/25/22 Page 2 of 8 PageID #:8061
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`harvest the individuals’ unique biometric identifiers and corresponding biometric information.
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`Plaintiffs thus allege the Clearview defendants’ conduct violated their privacy rights and defendants’
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`use of their biometric information was without their knowledge and consent. The centerpiece of
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`this MDL and plaintiffs’ class action lawsuit is the Illinois Biometric Information Privacy Act, 740
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`ILCS 14/1, et seq. (“BIPA”).
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`Legal Standard
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`Because the Court’s February 14, 2022 ruling did not dispose of this case in its entirety, the
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`Court reviews defendants’ reconsideration motion under Rule 54(b), which allows the Court to
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`exercise its inherent authority to reconsider its interlocutory orders because such orders are “subject
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`to revision at any time before the entry of judgment adjudicating all the claims.” See Fed.R.Civ.P.
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`54(b); Terry v. Spencer, 888 F.3d 890, 893 (7th Cir. 2018). Rule 54(b) motions for reconsideration
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`serve the limited function of correcting manifest errors of law or fact. See Rothwell Cotton Co. v.
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`Rosenthal & Co., 827 F.2d 246, 251 (7th Cir. 1987). A manifest error of law is the “wholesale
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`disregard, misapplication, or failure to recognize controlling precedent.” Oto v. Metropolitan Life Ins.
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`Co., 224 F.3d 601, 606 (7th Cir. 2000) (citation omitted). “Such problems rarely arise and the
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`motion to reconsider should be equally rare.” Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d
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`1185, 1191 (7th Cir. 1990) (citation omitted).
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`Discussion
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`In the present motion, the Clearview defendants request the Court to reconsider the
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`following: (1) defendants Thomas Mulcaire (“Mulcaire”) and Rocky Mountain Data Analytics, LLC
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`(“Rocky Mountain”) waived their personal jurisdiction defenses; (2) Mulcaire and Rocky Mountain
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`waived the government-contractor exemption pursuant to 740 ILCS 14/25(e); (3) plaintiffs have
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`Article III standing to bring their state law claims in Counts 8-12 and 14; and (4) plaintiffs have
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`Article III standing to bring their BIPA Section 15(c) claims in Counts 3 and 4. Defendants also ask
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`the Court to clarify whether defendant Mulcaire was dismissed from this lawsuit.
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`Waiver
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`The Court starts with Mulcaire’s and Rocky Mountain’s waiver of their personal jurisdiction
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`defense. To give context, in their opening brief, the only time the Clearview defendants raised
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`Mulcaire’s and Rocky Mountain’s personal jurisdiction defense was in footnote #2, which stated:
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`Mulcaire and Rocky Mountain also should be dismissed because the Court lacks
`personal jurisdiction over them. For similar reasons previously discussed by
`Clearview, Mulcaire and Rocky Mountain did not purposefully avail themselves of
`Illinois to establish minimum contacts with the state. See Mutnick v. Clearview AI, Inc.,
`20-cv-512, ECF No. 46 at 6-12, ECF No. 70 at 9-16.
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`The citation to Mutnick and the cited briefs in footnote #2 support defendants’ unsuccessful attempt to
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`dismiss defendants Ton-That and Schwartz based on the lack of personal jurisdiction. Because the
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`cursory argument in footnote #2 was woefully inadequate, the Court concluded Mulcaire and Rocky
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`Mountain had waived their personal jurisdiction argument. See White v. United States, 8 F.4th 547, 552
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`(7th Cir. 2021) (“perfunctory and undeveloped arguments…are waived.”); Evergreen Square v.
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`Wisconsin Housing & Economic Dev. Auth., 848 F.3d 822, 829 (7th Cir. 2017) (“A party may waive an
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`argument by presenting it only in an undeveloped footnote.”).
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`Now, the Clearview defendants argue the Court’s conclusion was a “manifest error” because
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`they cited fifteen pages of briefing about personal jurisdiction in Mutnick. There is no question
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`those briefs discussed the legal authority supporting defendants’ Rule 12(b)(2) motion to dismiss
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`based on personal jurisdiction, but the factual focus was entirely on defendants Ton-That and
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`Schwartz. Indeed, Mulcaire and Rocky Mountain were not named defendants in Mutnick or Hall v.
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`CDW Government, LLC, 20-cv-0846. In any event, analyzing personal jurisdiction is a fact-specific
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`task, and the Clearview defendants did not provide the Court any factual reasons why Mulcaire and
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`Rocky Mountain did not have sufficient contacts with Illinois. Therefore, the Court did not commit
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`a manifest error in this respect. See Oto, 224 F.3d at 606 (“A ‘manifest error’ is not demonstrated by
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`the disappointment of the losing party.”).
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`Likewise, Mulcaire and Rocky Mountain waived their argument under the government-
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`contractor exemption to BIPA, 740 ILCS 14/25(e), because they made this argument for the first
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`time in their reply brief. In the present motion, defendants argue the only reason they made this
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`argument for the first time in reply was due to a Cook County Circuit Court decision issued after
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`they filed their motion to dismiss, namely, Thornley v. CDW-Government, LLC, 20 CH 04346 (Cir. Ct.
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`Cook Cty. June 25, 2021). Defendants contend this was the first time any court directly addressed
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`the government-contractor exemption under § 25(e). That may be, but the main reason why
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`arguments made for the first time in reply briefs are waived is because the opposing side has not had
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`the opportunity to address the issue. See White, 8 F.4th at 552-53. Defendants nonetheless contend
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`they put plaintiffs on notice of the state court Thornley decision in a February 2, 2022 supplemental
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`authority letter, but that letter discusses a Northern District of Illinois case and personal jurisdiction.
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`(R. 274, 2/2/22, letter). This argument fails.
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`Meanwhile, defendants contend “[s]ince the Court will eventually need to address Mr.
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`Mulcaire’s and RM’s government-contractor defense, it would be more economical to do so now.
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`The Court declines defendants’ invitation to address their argument at this juncture because neither
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`side has fully developed it. The Court thus denies this aspect of defendants’ reconsideration motion.
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`Article III Standing
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`Defendants also assert the Court committed a manifest error of law in concluding plaintiffs
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`had Article III standing to bring their state court claims in Counts 8, 9, 11, 12, and 14 because the
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`Court’s conclusion conflicts with TransUnion, LLC v. Ramirez, 141 S.Ct. 2190, 2200 (2021), and
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`Thornley v. Clearview, 984 F.3d 1241, 1246 (7th Cir. 2021). Defendants specifically argue plaintiffs do
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`not have Article III standing relying on Thornley where the Seventh Circuit concluded the plaintiffs
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`did not suffer any injury from defendant’s violation of § 15(c) except for statutory violations, and the
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`present plaintiffs’ allegations in the state court claims are “virtually identical” to the Thornley claims.
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`Defendants’ reliance on the Seventh Circuit’s decision in Thornley is misplaced because in that matter
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`the plaintiffs purposely brought bare BIPA claims with no allegations of injuries to avoid federal
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`court jurisdiction. Thornley, 984 F.3d at 1246; Thornley v. Clearview AI, Inc., No. 20-cv-3843, 2020 WL
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`6262356, at *2 (N.D. Ill. Oct. 23, 2020) (Coleman, J.) (“Plaintiffs purposely narrowed their claim to
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`the general prohibition of Clearview selling and profiting from plaintiffs’ biometric data and filed
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`their lawsuit in state court where such actions are allowed without the constraints of Article III
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`standing.”). Despite defendants’ argument to the contrary, class plaintiffs currently include
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`allegations of injury in their first amended consolidated class action complaint, including that
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`defendants’ nonconsensual taking and use of plaintiffs’ biometric information exposed them to
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`numerous imminent and impending injuries.
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`Moreover, defendants’ reliance on TransUnion for the proposition that a victim of a privacy
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`harm can only suffer an injury-in-fact for Article III standing if the victim’s information is
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`disseminated to a third-party is also unavailing. To clarify, in the context of the Fair Credit
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`Reporting Act (“FCRA”), the TransUnion Court concluded that certain class members whose credit
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`reports were not disseminated to third parties did not suffer a concrete injury-in-fact, keeping in
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`mind that “history and tradition offer a meaningful guide to the types of cases that Article III
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`empowers federal courts to consider.” Id. at 2204. As the TransUnion Court clarified, “with respect
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`to the concrete-harm requirement in particular, this Court’s opinion in Spokeo v. Robins indicated that
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`courts should assess whether the alleged injury to the plaintiff has a ‘close relationship’ to a harm
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`‘traditionally’ recognized as providing a basis for a lawsuit in American courts” and that this “inquiry
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`asks whether plaintiffs have identified a close historical or common-law analogue for their asserted
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`injury.” Id. In TransUnion, the Supreme Court analogized the FCRA violations to the tort of
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`defamation, which requires that the defamatory statement be published to a third party. Id. at 2209.
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`Accordingly, the TransUnion Court concluded that plaintiffs whose reports were not disseminated to
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`third parties did not allege a concrete injury-in-fact under the FCRA.
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`The Seventh Circuit has analogized BIPA violations to common law privacy torts, which are
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`different common law torts than defamation. See Fox v. Dakkota Integrated Sys., LLC, 980 F.3d 1146,
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`1153 (7th Cir. 2020); Bryant v. Compass Group USA, Inc., 958 F.3d 617, 627 (7th Cir. 2020). As the
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`Bryant court held: “Bryant was asserting a violation of her own rights—her fingerprints, her private
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`information—and that this is enough to show injury-in-fact without further tangible consequences.
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`This was no bare procedural violation; it was an invasion of her private domain, much like an act of
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`trespass would be.” Id. at 624. Therefore, defendants’ argument based on TransUnion is without
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`merit.
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`The remainder of defendants’ arguments concerning Article III standing and plaintiffs’ state
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`law claims were made for the first time in their reconsideration motion, and therefore, are waived.
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`See Baker v. Lindgren, 856 F.3d 498, 503 (7th Cir. 2017). Otherwise, defendants’ arguments
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`concerning “demonstratively false allegations” and plaintiffs’ lack of evidentiary support are best left
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`for summary judgment or trial.
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`Next, defendants maintain plaintiffs do not have Article III standing to bring their BIPA
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`Section 15(c) claims in Counts 3 and 4, although defendants admit that they did not move to dismiss
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`these claims in their motion to dismiss. Again, arguments raised for the first time in a motion for
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`reconsideration are waived.
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`Defendant Mulcaire
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`In addition, defendants seek clarification of a footnote in the Court’s February 14, 2022
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`ruling about defendant Mulcaire. The section of the ruling discussed whether Ton-That and
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`Schwartz could be liable for Clearview’s conduct under Delaware’s personal participation doctrine.
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`See Prairie Capital III, L.P. v. Double E Holding Corp., 132 A.3d 35, 60 (Del. Ch. 2015) (“As the human
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`through which the corporate principal acts, ‘[a] corporate officer can be held personally liable for the
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`torts he commits and cannot shield himself behind a corporation when he is a participant.”). The
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`footnote concerning Mulcaire stated: “Plaintiffs do not argue that Clearview’s General Counsel,
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`Thomas Mulcaire, personally participated in the privacy torts by directing, ordering, ratifying,
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`approving, or consenting to the tortious acts. Therefore, he is not individually liable for Clearview’s
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`actions.” The footnote, however, makes no mention of the personal participation doctrine in
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`relation to Mulcaire’s involvement with Rocky Mountain. Therefore, Mulcaire remains a defendant
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`to this lawsuit.
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`On a final note, the Court reminds the parties that motions for reconsideration do not
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`provide “a vehicle for rearguing previously rejected motions.” Oto, 224 F.3d at 606. As the Seventh
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`Circuit instructs, manifest errors of law or fact rarely arise and motions for reconsideration should
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`be equally as rare. See Bank of Waunakee, 906 F.2d at 1191. As courts in this district have repeatedly
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`reminded litigants, district courts’ opinions “are not intended as mere first drafts, subject to revision
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`and reconsideration at a litigant’s pleasure.” Ellenby Tech., Inc. v. Fireking Security Group, 533 F.Supp.3d
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`656, 660 (N.D. Ill. 2021) (citation omitted). With this in mind, before filing any further
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`reconsideration motions, the parties must first seek leave from the Court to do so.
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`Conclusion
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`The Court, in its discretion, denies defendants’ motion for reconsideration, but grants the
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`motion for clarification, namely, that Mulcaire remains a defendant to this lawsuit [307]. The Court
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`also denies defendants’ request for oral argument on their motion for reconsideration because it is
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`unnecessary [333]. Before filing any further reconsideration motions in this lawsuit, the parties must
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`first seek leave from the Court to do so.
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`IT IS SO ORDERED.
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`Date: 7/25/2022
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`Entered: _____________________________
` SHARON JOHNSON COLEMAN
` United States District Court Judge
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