Cynicism and Personal Data

I don’t think I’m giving away any trade secrets by stating that a healthy majority of attorneys approach life with a hearty helping of cynicism.  All it really takes to instill cynicism is that first time you present a finely crafted motion to suppress (or opposition to a change of venue, or any other kind of motion, really) to a judge, a motion so meticulously researched and supported by the facts and the law that there is no way you can possibly lose this hearing, and have that judge summarily deny the motion by saying “You’re right, counselor, but I’m denying your motion.”  (Concomitantly, this is also why you will rarely get a straight answer out of an attorney.)

So it is with this (un)healthy dose of cynicism that I read the Ars Technica article on the sale of RadioShack’s assets in bankruptcy with an air of “whattasurprise.”  In other words, it hardly surprised me that the contracts and promises about customers’ personal data not being sold to third parties amounted to not much at all.  In March, the States of Texas and Tennessee filed objections to RadioShack’s plans to sell off its assets, which includes customer data on approximately 117 million individuals. At the time, even AT&T got into the mix, by saying that the data in question isn’t even RadioShack’s to sell; instead, it should be considered AT&T’s data based on agreements and contracts between the two companies.  The case is In re RadioShack Corporation, et al., No. 15-10197-BLS (Bankr. D. Del. 2015).

Fascinating stuff, really, when you think about it.

The story popped back up today because Apple got involved (and if Apple sneezes…) by filing an objection that is largely similar to AT&T’s: RadioShack promised not to sell this data in exchange for the right to sell iPhones and iPads.

This all sounds good, right? States and corporations are trying to protect customer data, after all! And, after all, AT&T’s settlement agreement with RadioShack filed on April 1, 2015 appears to have protected the customer data associated with AT&T interests. So why so cynical?

Well, right off the bat, the very fact that these objections have been necessary shows that RadioShack was trying to sell off the consumer data, in contravention of the promises and privacy statements it promulgated.

Second, as the State of Texas notes in a response it filed on April 27, 2015, even while RadioShack claims in its own filings that it will work with the Ombudsman appointed in the case, it still is very keen on selling off some data.  According to footnote 2 of document 1919, the State of Texas says:

Exhibit A [of Document 1916] confirms that the Debtors have approximately 117 million records in their Customer Database; however they are apparently seeking to sell a smaller subset of those records (8.5 million email addresses and 65 million customer name and address files) and it is unclear what the Debtors intend to do with the remaining 52 million records–e.g., whether the Debtors will continue to market and seek to sell that data in the future or whether it will be destroyed at the appropriate time.

On April 30, 2015, the Bankruptcy Court issued an order that outlined how the bidding process would unfold (document 1981). In short, Verizon and AT&T data is being carved out based on agreements negotiated between those entities and RadioShack. All other data, however?  It went to mediation yesterday. Maybe. That is, “The Mediation will occur if (i) the Debtors select a Successful Bidder for any customer data/personally identifiable information and (ii) the Successful Bidder agrees to be present for the Mediation.”  If the Successful Bidder didn’t agree to attend the mediation, then depositions of RadioShack and the Successful Bidder could occur from May 13 through May 18.  The Ombudsman is also supposed to file a report on May 18, 2015.  Additionally, “Through a notice of filing, the Debtors will provide an updated description of the transaction data offered from sale that will include either (a) a list of the transaction data fields or (b) a 2-3 sentence summary of the transaction data that includes the categories of data that a typical person would find of interest.”  There’s a lot going on in this Order.