Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 1 of 74
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`
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF WASHINGTON
`SEATTLE DIVISION
`
`
`FRANCIS GIMBEL, JR., Derivatively on
`Behalf of AMAZON.COM, INC.,
`
`Plaintiff,
`
`v.
`
`JEFFREY P. BEZOS, ANDREW R. JASSY,
`BRIAN T. OLSAVSKY, DAVID H. CLARK,
`SHELLEY L. REYNOLDS, ADAM N.
`SELIPSKY, DAVID ZAPOLSKY, KEITH B.
`ALEXANDER, EDITH W. COOPER, JAMIE
`S. GORELICK, DANIEL P.
`HUTTENLOCHER, JUDITH A. MCGRATH,
`INDRA K. NOOYI, JONATHAN J.
`RUBINSTEIN, PATRICIA Q. STONESIFER,
`WENDELL P. WEEKS, TOM A. ALBERG,
`ROSALIND BREWER, THOMAS O.
`RYDER, and NATE SUTTON,
`
`Defendants,
`
`– and –
`
`AMAZON.COM, INC., a Delaware
`Corporation,
`
`
`
`
`
`Nominal Defendant.
`
`
`
`Civil Action No.
`
`VERIFIED STOCKHOLDER DERIVATIVE
`COMPLAINT
`
`DEMAND FOR JURY TRIAL
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`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 2 of 74
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`Plaintiff Francis Gimbel, Jr. (“Plaintiff”), by and through undersigned counsel, submits this
`Verified Stockholder Derivative Complaint for breach of fiduciary duties, corporate waste, and
`unjust enrichment. Plaintiff alleges the following based on personal knowledge, and as to all other
`matters outside Plaintiff’s personal knowledge, upon information and belief based on the
`investigation of undersigned counsel, which includes, without limitation: (i) review and analysis
`of public filings with the United States Securities and Exchange Commission (“SEC”); (ii) review
`and analysis of court filings in (a) the related securities class action lawsuit filed against
`Amazon.com, Inc. (“Amazon” or the “Company”) and certain of its executive officers captioned
`Joyce v. Amazon, Inc. et al., No. 2:22-cv-617 (W.D. Wash.) (the “Securities Class Action”);
`(b) consumer class action lawsuits alleging violations of, inter alia, the Illinois Biometric
`Information Privacy Act, 740 ILCS 14/1 et seq. (“BIPA”), and other state privacy laws
`(collectively, the “Consumer Class Actions”);1 and (c) District of Columbia v. Amazon.com, Inc.,
`No. 2021 CA 001775 (D.C. Sup. Ct.), and In re Amazon.com, Inc. eBook Antitrust Litigation, No.
`1:21-cv-351-GHW-DCF (collectively, the “Antitrust Actions”); and (iii) review and analysis of
`press releases, news reports, analyst reports, industry reports, investor conference call transcripts
`
`
`1 Specifically, the Consumer Class Actions include: Cooper v. Amazon.com Inc. et al., No.
`1:21CV04633 (N.D. Ill.); Ragsdale v. Amazon Web Services, Inc., No. 1:20CV00560 (N.D. Ill.);
`Redd v. Amazon.com, Inc. et al., No. 1:20CV06485 (N.D. Ill.); Hryniewicki v. Amazon Web
`Services, Inc., No. 1:19CV07569 (N.D. Ill.); Hogan v. Amazon.com Inc., No. 2:21CV00905 (W.D.
`Wash.); McGoveran v. Amazon Web Services, Inc. et al., No. 3:20CV00031 (S.D. Ill.); Vance v.
`Amazon.com, Inc., No. 2:20CV1084 (W.D. Wash.); Flores v. Amazon.com Inc. et al., No.
`2:21CV00873 (W.D. Wash.); Flores v. Amazon.com Inc. et al., No. 1:21CV04064 (N.D. Ill.);
`Wilcosky v. Amazon.Com, Inc. et al., No. 1:19CV05061 (N.D. Ill.); Mayhall v. Amazon Web
`Services Inc. et al., No. 2:21CV01473 (W.D. Wash.); Reid v. Amazon.com Inc. et al., No.
`1:21CV06010 (N.D. Ill.); Schaeffer v. Amazon.com, Inc. et al., No. 3:21CV01080 (S.D. Ill.);
`McGoveran v. Amazon Web Services, Inc. et al., No. 1:20CV01399 (D. Del.); Svoboda v.
`Amazon.com Inc. et al., No. 1:21CV05336 (N.D. Ill.); and Dorian v. Amazon Web Services, Inc.,
`No. 2:22-cv-00269 (W.D. Wash.).
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`VERIFIED STOCKHOLDERDERIVATIVE COMPL. - 2
`
`HERMAN JONES LLP
`15113 Washington Ave. NE
`Bainbridge Island, WA 98110
`206.819.0821
`
`
`
`

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`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 3 of 74
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`
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`and slides, and other information available in the public domain.
`INTRODUCTION2
`I.
`This is a stockholder derivative action brought on behalf of and for the benefit of
`1.
`Amazon, against certain of its current and former officers and directors (the “Individual
`Defendants,” defined herein), seeking to remedy their breaches of fiduciary duties, waste of
`corporate assets, and unjust enrichment, which have caused substantial economic and reputational
`harm to the Company.
`Amazon is a leading multinational technology company, specializing in e-
`2.
`commerce, cloud-based servicing, streaming and artificial intelligence. According to its public
`filings, Amazon “seek[s] to be Earth’s most customer-centric company.” Amazon was founded in
`1994 and is headquartered in Seattle, Washington. Its common stock trades on the NASDAQ
`under the ticker symbol “AMZN.”
`Throughout the relevant period, the Individual Defendants breached their fiduciary
`3.
`duties owed to the Company by knowingly and/or recklessly causing the Company to store the
`biometric information of its employees, users, and its cloud-based clients’ users, including minors,
`without informing them of these practices and without securing users’ written consent, and to fail
`to develop a written policy available to the public that set a retention schedule and guidelines for
`users to permanently destroy biometric identifiers when the initial purpose for collection was
`satisfied in direct violation of BIPA and other states’ privacy laws.
`The Individual Defendants further breached their fiduciary duties and violated the
`4.
`law by causing the Company to engage in various anticompetitive practices against third party
`sellers (“TPSs”), including (i) causing the online retailer to enter into contracts with TPSs that had
`
`
`2 All emphasis herein is added unless otherwise stated.
`
`VERIFIED STOCKHOLDERDERIVATIVE COMPL. - 3
`
`
`
`HERMAN JONES LLP
`15113 Washington Ave. NE
`Bainbridge Island, WA 98110
`206.819.0821
`
`

`

`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 4 of 74
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`the effect of inflating prices for consumers through policies that guaranteed Amazon a minimum
`profit on each item sold, while simultaneously discouraging TPSs from offering their products at
`lower prices through other retailers; and (ii) giving Amazon private-label products preference over
`those of its competitors using TPSs’s non-public data.
`Finally, the Individual Defendants also misled the investing public in the
`5.
`Company’s SEC filings and other public statements regarding Amazon’s business and compliance
`with applicable laws and regulations, as detailed further below.
`As a result of their misconduct and unbeknownst to the investing public, the
`6.
`Individual Defendants exposed Amazon to heightened risks of increased regulatory scrutiny,
`government investigations and enforcement actions, and legal exposure otherwise, and Amazon’s
`revenues were, at least in part, the product of impermissible and illegal conduct, and were thus
`unsustainable at all relevant times.
`In addition, as a result of the Individual Defendants’ breaches of fiduciary duties
`7.
`detailed herein, the Company has suffered significant damages, including being named as a
`defendant in the Securities Class Action, Consumer Class Actions, and Antitrust Actions, as well
`as becoming the subject of a criminal investigation (“Criminal Investigation”) by the U.S.
`Department of Justice (“DOJ”) and a government probe into Amazon’s public disclosures
`regarding its business practices by the SEC (“SEC Probe”), and the Company continues to be
`subjected to mounting damages by failing to redress the harms complained of herein.
`The Individual Defendants face a substantial likelihood of liability to the Company
`8.
`for their misconduct, including, among other things: (i) directly participating in the improper
`schemes and misconduct described herein; (ii) affirmatively making, allowing to be made, and/or
`failing to correct improper statements in SEC filings and other public disclosures relating to the
`Company’s business and operations, internal controls, legal proceedings, legal compliance, and
`
`VERIFIED STOCKHOLDERDERIVATIVE COMPL. - 4
`
`HERMAN JONES LLP
`15113 Washington Ave. NE
`Bainbridge Island, WA 98110
`206.819.0821
`
`
`
`

`

`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 5 of 74
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`risks (including financial, operational, legal, regulatory, and enforcement risks); (iii) failing to
`maintain an adequate system of oversight, accounting controls and procedures, disclosure controls,
`and other internal controls, which were necessary to prevent or correct violations of the law and
`improper statements made on the Company’s behalf; (iv) failing to ensure the Company’s
`compliance with relevant legal and regulatory requirements, including, but not limited to,
`requirements imposed under biometric privacy laws and antitrust laws, as well as state and federal
`securities laws; and (v) ignoring red flags indicating inadequate internal controls over compliance
`with biometric privacy laws and antitrust laws, as well as state and federal securities laws, and
`indicating violations the same.
`Due to the Amazon Board of Directors’ (the “Board”) knowledge of illegal conduct
`9.
`and involvement in the wrongdoing, its blatant failure to act (including to stop or correct violations
`of the law), its members’ lack of independence, and the substantial likelihood of liability its
`members face, any demand upon the Board to rectify this wrongdoing would be a wasteful, useless,
`and futile act. Accordingly, Plaintiff properly brings this action to remedy the harm to Amazon
`caused by Defendants’ faithless actions and inaction.
`JURISDICTION AND VENUE
`II.
`This Court has jurisdiction under 28 U.S.C. § 1332. Complete diversity among the
`10.
`parties exists and the amount in controversy exceeds $75,000, exclusive of interest and costs.
`This Court has jurisdiction over each named Defendant.
`11.
`12.
`Additionally, this Court has specific jurisdiction over each named Defendant herein
`because each Defendant is either a corporation that conducts business in and maintains operations
`in this District, or is an individual who has sufficient minimum contacts with this District so as to
`render the exercise of jurisdiction by the District Court permissible under traditional notions of
`fair play and substantial justice.
`
`VERIFIED STOCKHOLDERDERIVATIVE COMPL. - 5
`
`HERMAN JONES LLP
`15113 Washington Ave. NE
`Bainbridge Island, WA 98110
`206.819.0821
`
`
`
`

`

`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 6 of 74
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`
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`Venue is proper in this Court pursuant to 28 U.S.C. § 1391 because: (i) Amazon
`13.
`maintains executive offices in this District; (ii) one or more of the Defendants either resides in or
`maintains executive offices in this District; (iii) a substantial portion of the transactions and wrongs
`complained of herein, including the Defendants' primary participation in the wrongful acts detailed
`herein, and aiding and abetting and conspiracy in violation of fiduciary duties owed to Amazon
`occurred in this District; and (iv) Defendants have received substantial compensation in this
`District by doing business here and engaging in numerous activities that had an effect in this
`District.
`III. THE PARTIES
`Plaintiff
`A.
`
`Plaintiff was an Amazon stockholder at the time of wrongdoing complained of, has
`14.
`continuously been a stockholder since that time, and is a current Amazon stockholder.
`Plaintiff is a citizen of the State of Pennsylvania.
`15.
`B.
`Nominal Defendant
`
`Nominal Defendant Amazon is a publicly traded Delaware corporation with its
`16.
`principal executive offices located at 410 Terry Avenue North, Seattle, Washington.
`The Company’s common stock trades on the NASDAQ under the ticker symbol
`17.
`“AMZN.” Amazon has over 508 million shares of common stock outstanding.
`Defendants
`C.
`
`Defendant Jeffrey P. Bezos (“Bezos”) is the founder and Executive Chair of
`18.
`Amazon’s Board of Directors. Throughout the relevant period, Amazon has paid Defendant Bezos
`the following compensation:
`
`Year
`
`Salary
`
`Stock
`Awards
`
`All Other
`Compensation
`
`Total
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`VERIFIED STOCKHOLDERDERIVATIVE COMPL. - 6
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`HERMAN JONES LLP
`15113 Washington Ave. NE
`Bainbridge Island, WA 98110
`206.819.0821
`
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`

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`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 7 of 74
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`
`
`2021
`2020
`2019
`2018
`
`$81,840
`$81,840
`$81,840
`$81,840
`
`-
`-
`-
`-
`
`$1,600,000
`$1,600,000
`$1,600,000
`$1,600,000
`
`$1,681,840
`$1,681,840
`$1,681,840
`$1,681,840
`
`Upon information and belief, Defendant Bezos is a citizen of the State of
`
`19.
`Washington.
`Defendant Andrew R. Jassy (“Jassy”) is the President and Chief Executive Officer
`20.
`of Amazon and also serves on its Board of Directors. He founded Amazon Web Services and
`served as CEO of from April 2016 to July 2021.
`Throughout the relevant period, Amazon has paid Defendant Jassy the following
`21.
`compensation:
`
`Year
`2021
`2020
`2019
`2018
`
`Salary
`$175,000
`$175,000
`$175,000
`$175,000
`
`All Other
`Stock
`Compensation
`Awards
`$211,933,520 $592,649
`$35,639,068
`$34,381
`-
`$173,809
`$19,466,434
`$91,232
`
`Total
`$212,701,169
`$35,848,449
`$348,809
`$9,732,666
`
`Upon information and belief, Defendant Jassy is a citizen of the State of
`
`22.
`Washington.
`Defendant Brian T. Olsavsky (“Olsavsky”) is the Senior Vice President and Chief
`23.
`Financial Officer of Amazon. Throughout the relevant period, Amazon has paid Defendant
`Olsavsky the following compensation:
`
`Year
`
`Salary
`
`Stock
`Awards
`
`All Other
`Compensation
`
`Total
`
`VERIFIED STOCKHOLDERDERIVATIVE COMPL. - 7
`
`HERMAN JONES LLP
`15113 Washington Ave. NE
`Bainbridge Island, WA 98110
`206.819.0821
`
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`

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`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 8 of 74
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`2021
`2020
`2019
`2018
`
`$160,000
`$160,000
`$160,000
`$160,000
`
`-
`$17,010,985
`-
`$6,770,149
`
`$3,200
`$3,200
`$3,200
`$3,200
`
`$163,200
`$17,174,185
`$163,200
`$6,933,349
`
`Upon information and belief, Defendant Olsavsky is a citizen of the State of
`
`24.
`Washington.
`Defendant David H. Clark (“Clark”) is the Chief Executive Officer of Worldwide
`25.
`Consumer. On June 3, 2022, Clark abruptly announced his resignation from Amazon, effective
`July 1, 2022. Throughout the relevant period, Amazon has paid Defendant Clark the following
`compensation:
`
`Year
`2021
`2020
`
`Salary
`$175,000
`$160,000
`
`Stock
`Awards
`$55,589,120
`$46,121,888
`
`All Other
`Compensation
`$310,451
`$6,783
`
`Total
`$56,074,571
`$46,288,671
`
`Upon information and belief, Defendant Clark is a citizen of the State of Texas.
`26.
`Defendant Shelley L. Reynolds (“Reynolds”) is Amazon’s Vice President,
`27.
`Worldwide Controller and Principal Accounting Officer. Upon information and belief, Defendant
`Reynolds is a citizen of the State of Washington.
`Defendant Adam N. Selipsky (“Selipsky”) is the Chief Executive Officer of
`28.
`Amazon Web Services. Throughout the relevant period, Amazon has paid Defendant Selipsky the
`following compensation:
`
`Year
`2021
`I
`
`Salary
`$109,722
`I
`
`Stock
`Awards
`$81,294,756
`
`All Other
`Compensation
`$49,045
`
`Total
`$81,453,523
`
`VERIFIED STOCKHOLDERDERIVATIVE COMPL. - 8
`
`HERMAN JONES LLP
`15113 Washington Ave. NE
`Bainbridge Island, WA 98110
`206.819.0821
`
`
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`

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`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 9 of 74
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`Upon information and belief, Defendant Selipsky is a citizen of the State of
`
`29.
`Washington.
`Defendant David Zapolsky (“Zapolsky”) is Amazon’s Vice President, General
`30.
`Counsel and Secretary. Throughout the relevant period, Amazon has paid Defendant Zapolsky the
`following compensation:
`
`All Other
`Stock
`Total
`Compensation
`Awards
`Salary
`Year
`$163,200
`$3,200
`-
`$160,000
`2021
`$17,174,185
`$3,200
`$17,010,985
`$160,000
`2020
`Upon information and belief, Defendant Zapolsky is a citizen of the State of
`31.
`Washington.
`Defendant Keith B. Alexander (“Alexander”) has served a director of the Company
`32.
`since September 2020. In addition, he also serves as a member of the Audit Committee. Amazon
`compensated Defendant Alexander at least $934,297 in Stock Awards in 2020. Upon information
`and belief, Defendant Alexander is a citizen of the State of Michigan.
`Defendant Edith W. Cooper (“Cooper”) has served as a director of the Company
`33.
`since September 2021. In addition, she also serves as a member of the Leadership Development
`and Compensation Committee. Amazon compensated Defendant Cooper at least $958,171 in
`Stock Awards in 2021. Upon information and belief, Defendant Cooper is a citizen of the State of
`Connecticut.
`Defendant Jamie S. Gorelick (“Gorelick”) has served as a director of the Company
`34.
`since February 2012. In addition, she also serves as Chair of the Nominating and Corporate
`Governance Committee. Amazon compensated Defendant Gorelick at least $938,533 in Stock
`Awards in 2020 and $952,741 in Stock Awards in 2018. Upon information and belief, Defendant
`Gorelick is a citizen of State of Maryland.
`
`VERIFIED STOCKHOLDERDERIVATIVE COMPL. - 9
`
`HERMAN JONES LLP
`15113 Washington Ave. NE
`Bainbridge Island, WA 98110
`206.819.0821
`
`
`
`

`

`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 10 of 74
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`Defendant Daniel P. Huttenlocher (“Huttenlocher”) has served as a director of the
`35.
`Company since September 2016. In addition, he also serves as a member of the Leadership
`Development and Compensation Committee. Amazon compensated Defendant Huttenlocher at
`least $951,489 in Stock Awards in 2019. Upon information and belief, Defendant Huttenlocher is
`a citizen of the State of New York.
`Defendant Judith A. McGrath (“McGrath”) has served as a director of the Company
`36.
`since July 2014. In addition, she also serves as Chair of the Leadership Development and
`Compensation Committee. Amazon compensated Defendant McGrath at least $934,297 in Stock
`Awards in 2020. Upon information and belief, Defendant McGrath is a citizen of the State of
`California.
`Defendant Indra K. Nooyi (“Nooyi”) has served as a director of the Company since
`37.
`February 2019. In addition, she also serves as Chair of the Audit Committee. Amazon
`compensated Defendant Nooyi at least $901,729 in Stock Awards in 2019. Upon information and
`belief, Defendant Nooyi is a citizen of the State of Connecticut.
`Defendant Jonathan J. Rubinstein (“Rubinstein”) has served as a director of the
`38.
`Company since December 2010. In addition, he also serves as Lead Director and as a member of
`the Nominating and Corporate Governance Committee. Amazon compensated Defendant
`Rubinstein at least $951,489 in Stock Awards in 2019. Upon information and belief, Defendant
`Rubinstein is a citizen of the State of California.
`Defendant Patricia Q. Stonesifer (“Stonesifer”) has served as a director of the
`39.
`Company since February 1997. In addition, she also serves as a member of the Nominating and
`Corporate Governance Committee. Amazon compensated Defendant Stonesifer at least $951,489
`in Stock Awards in 2019. Upon information and belief, Defendant Stonesifer is a citizen of the
`District of Columbia.
`
`VERIFIED STOCKHOLDERDERIVATIVE COMPL. - 10
`
`HERMAN JONES LLP
`15113 Washington Ave. NE
`Bainbridge Island, WA 98110
`206.819.0821
`
`
`
`

`

`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 11 of 74
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`Defendant Wendell P. Weeks (“Weeks”) has served as a director of the Company
`40.
`since February 2016. In addition, he also serves as a member of the Audit Committee. Amazon
`compensated Defendant Weeks at least $929,992 in Stock Awards in 2019 and at least $999,026
`in Stock Awards in 2021. Upon information and belief, Defendant Weeks is a citizen of the State
`of New York.
`Defendant Tom A. Alberg (“Alberg”) served as a director of the Company from
`41.
`June 1996 until May 2019. In addition, he also served as a member of the Audit Committee. Upon
`information and belief, Defendant Alberg is a citizen of State of Washington.
`Defendant Rosalind Brewer (“Brewer”) served as a director of the Company from
`42.
`February 2019 until February 16, 2021. Amazon compensated Defendant Brewer at least
`$929,992 in Stock Awards in 2019. Upon information and belief, Defendant Brewer is a citizen
`of the State of Washington.
`Defendant Thomas O. Ryder (“Ryder”) served as a director of the Company from
`43.
`November 2002 until December 31, 2021. In addition, he served as a member of the Leadership
`Development and Compensation Committee and as Chair of the Audit Committee. Amazon
`compensated Defendant Ryder at least $951,489 in Stock Awards in 2019. Upon information and
`belief, Defendant Ryder is a citizen of the State of Washington.
`Defendant Nate Sutton (“Sutton”) served as Amazon’s Associate General Counsel
`44.
`at all relevant times. Upon information and belief, Defendant Sutton is a citizen of the State of
`Washington.
`Collectively, Defendants Bezos, Jassy, Olsavsky, Clark, Reynolds, Selipsky,
`45.
`Sutton, and Zapolsky are referred to herein as the “Officer Defendants.”
`Collectively, Defendants Bezos, Jassy, Alexander, Cooper, Gorelick, Huttenlocher,
`46.
`McGrath, Nooyi, Rubinstein, Stonesifer, Weeks, Alberg, Brewer, and Ryder are referred to herein
`
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`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 12 of 74
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`as the “Director Defendants.”
`Collectively, Defendants Alexander, Nooyi, Weeks, Alberg, and Ryder are referred
`47.
`to herein as the “Audit Committee Defendants.”
`Collectively, Defendants Gorelick, Rubinstein, and Stonesifer are referred to herein
`48.
`as the “Nominating and Corporate Governance Committee Defendants.”
`Collectively, Defendants Cooper, Huttenlocher, McGrath, and Ryder are referred
`49.
`to herein as the “Leadership Development and Compensation Committee Defendants.”
`Collectively Defendants Bezos, Jassy, Olsavsky, Clark, Reynolds, Selipsky,
`50.
`Zapolsky, Alexander, Cooper, Gorelick, Huttenlocher, McGrath, Nooyi, Rubinstein, Stonesifer,
`Weeks, Alberg, Brewer, Ryder, and Sutton are referred to herein as the “Individual Defendants.”
`Collectively Defendants Bezos, Jassy, Alexander, Cooper, Gorelick, Huttenlocher,
`51.
`McGrath, Nooyi, Rubinstein, Stonesifer, and Weeks are referred to herein as the “Demand Board.”
`
`IV.
`
`THE INDIVIDUAL DEFENDANTS’ MISCONDUCT
`Company Background: Amazon Is the Dominant Online Marketplace
`A.
`in the United States
`
`Founded in 1994, Amazon is now one of the world’s largest, most ubiquitous
`52.
`companies, as well as the world’s largest retailer outside of China. It is the second largest private
`employer in the United States and provides products and services including online retail, smart
`home devices, cloud computing, and media streaming—including its own film and television
`content. Originally an online book retailer, Amazon quickly expanded into music and videos, and
`eventually electronics, toys, and other products prior to 2000. Presently, nearly any physical or
`digital product imaginable can be purchased on Amazon worldwide.
`Amazon accounts for between 50-70% of total sales through online marketplaces.
`53.
`The marketplace shares of the next two largest online marketplaces—Walmart.com and eBay—
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`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 13 of 74
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`are in the single digits, by comparison. Millions of TPSs sell through Amazon’s online
`marketplace, whereas for example, only 110,000 TPSs sell on Walmart.com. Amazon is the
`dominant online marketplace.
`Biometrics and Facial Recognition Technology
`B.
`
`Further expanding on its retail business, Amazon launched its cloud-computing
`54.
`subsidiary, Amazon Web Services (“AWS”), in 2002. AWS provides a range of services to
`business and individuals including web hosting, storage, distributed computing, and analytics.
`Amazon is now the largest cloud computing service provider in the world. As part of the more
`than 200 services provided to its customers, AWS regularly receives, processes, and stores
`personal information of various individuals that provide this information to its customers.
`In 2014, Amazon began its foray into being an active presence in its customers’
`55.
`homes with its Alexa virtual assistant. Amazon’s Alexa is now found on countless devices in
`millions of households, including on smartphones, televisions, speakers, as well as in Amazon’s
`Echo products. As part of its services, Amazon’s Alexa recognizes and stores details related to
`voice patterns and makes and stores recordings of its interactions with users. Biometrics is the
`technical term for measurements used to identify people’s unique physical characteristics.
`Examples of biometric identifiers include an individual’s DNA, fingerprints, irises or retinas,
`voiceprints, and facial geometry. The uniqueness and potential permanence of biometric
`identifiers present an advantage for businesses to accurately identify and distinguish individuals.
`Businesses presently use biometrics in a wide variety of applications, including data collection.
`One technological application of biometrics is facial recognition software. Facial
`56.
`recognition software uses biometrics to map facial features from a photograph or video. In
`particular, the software uses an algorithm that calculates a unique digital representation of the face
`based on the geometric relationship of a person's facial features (such as the distance between their
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`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 14 of 74
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`
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`eyes, ears, and nose), creating a face signature or map. The software then compares the
`information with a database of known faces to find a match.
`Facial recognition technology has been in use for many decades and is one of the
`57.
`most widely used biometrics. Facial recognition technology uses the layout of facial features and
`their distance from one another for identification against a “gallery” of faces with similar
`characteristics. These characteristics can be derived from either a still or video images. Using
`statistics, facial recognition algorithms can measure the differences between the face being
`searched and the enrolled faces in a gallery. The smaller the difference, the more likely those faces
`match.
`
`Facial recognition technology is primarily used for three different types of
`58.
`applications: first, facial recognition technology can anonymously characterize faces. This allows
`for counting unique faces presented to the sensor over a period of time (sometimes called a “people
`counter”). Other functions include estimating the age, gender, ethnic origin, and even body mass
`index of each unique face thus encountered, usually for marketing purposes. Second, facial
`recognition technology can verify a face against a known image. For example, this would allow
`for confirmation that a face presented at a border checkpoint matches the digital face embedded in
`a document. It also allows for access control, such as at the entrance of a building with a known
`and restricted population. This function is typically called “verification.” Third, facial recognition
`technology allows for identification of a face against a number of known faces within a database.
`For example, this allows for the technology to see if a criminal or terrorist in a surveillance video
`matches any mug shot photos of people previously arrested or convicted. This function is typically
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`206.819.0821
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`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 15 of 74
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`called “identification.”3
`Facial recognition technology has improved over the past decade. Lower costs and
`59.
`increased accuracy have allowed companies like Amazon to deploy increasingly sophisticated
`facial recognition software in their applications—but it also has raised serious privacy concerns.
`Biometrics present significant potential privacy threats to the individual if they are
`60.
`compromised, such as a heightened risk for identity theft. While biometrics have been touted as a
`way to improve security and potentially limit fraud, the use of biometrics raise grave concerns
`about potential constant and surreptitious surveillance of individuals by the government and
`private entities. Additionally, if a person’s biometric data is compromised, the harm could be
`irreparable because this data would remain compromised. While other types of theft, such as
`compromising of bank accounts or credit card numbers, can be mitigated by obtaining new account
`information, people cannot obtain new biometric data facial bone structure or DNA. Additionally,
`significant privacy concerns surround the use of biometric data. These concerns include
`employers’ ability to discover protected health information; ambiguous standards concerning
`when biometric information can be shared, including with law enforcement; and multimodal big
`data storage, in which multiple images and various types of biometrics are stored in a database for
`widespread use.
`Due to the growing concern over the use of biometrics and facial recognition
`61.
`technology, state laws, including in Illinois and Texas, prohibit commercial entities from capturing
`an individual’s biometric identifier without his or her consent. Both states also require businesses
`to protect biometrics using a reasonable standard of care that is the same as, or more protective
`
`3
`https://www.ibia.org/biometrics-and-identity/biometric-
`IBIA,
`Biometrics.”
`“Face
`technologies/face. Accessed 1 Apr. 2022.
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`

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`Case 2:22-cv-00811-JCC Document 1 Filed 06/09/22 Page 16 of 74
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`than, that used for other confidential or sensitive information. They also prohibit selling or
`disclosing a biometric without consent, with certain exceptions, such as for law enforcement
`purposes. In addition, at least 19 states restrict using, disclosing or sharing biometric data by either
`public or private entities, or require security measures, such as encrypting or properly destroying
`records with biometrics. And at least 20 states have enacted legislation to protect the personal
`biometric information of students or minors.
`The Illinois Biometric Information Privacy Act
`C.
`
`In 2008, the Illinois General Assembly enacted the Illinois BIPA to enhance the
`62.
`state's "limited State law regulating the collection, use, safeguarding, and storage of biometrics[.]"
`740 Ill. Comp. Stat. § 14/5(e). BIPA defines a "biometric identifier" as including a "scan of hand
`or face geometry." 740 Il