A federal appeals panel has ruled Ancestry.com must face a class action genetic information privacy lawsuit, filed on behalf of children, because the company’s user agreements their parents signed doesn’t force the children’s allegations into arbitration.
U.S. District Judge David Dugan ruled in favor of parents who, on behalf of their children, alleged Ancestry violated privacy rights when it disclosed DNA test kit information during a corporate acquisition. Ancestry challenged that ruling before the U.S. Seventh Circuit Court of Appeals, which affirmed Dugan’s opinion.
Court records show people who buy a DNA kit from Ancestry must agree to the company’s terms and conditions. Although that agreement stipulates only adults can purchase a kit, children age 13 and older can use the service through a parent-managed account. Class members allegedly bought the kits between 2016 and 2019.
Although the service terms included a dispute resolution provision that bound the parties to arbitration and waived the right to class action, “the terms did not require the plaintiffs to read them,” Brennan wrote. “Plaintiffs allege they did not, and also that they did not create Ancestry accounts. Nor did plaintiffs ever access their guardians’ accounts, receive their DNA test results, or interact with Ancestry’s website in any way before filing suit.”
Blackstone bought Ancestry in 2020, leading to the lawsuit alleging violation of the Illinois Genetic Information Privacy Act because Ancestry allegedly disclosed the DNA information to Blackstone without obtaining written consent.
On appeal, Ancestry argued parents agreed to the terms on behalf of their children and that such children are “closely related” parties or third-party beneficiaries, as well as arguing direct beneficiaries cannot avoid an arbitration provision.
“Plaintiffs are not express parties to the terms,” Brennan wrote. “As shown in the use of ‘you’ throughout the terms, the only parties to the agreement are the signatory and Ancestry. The terms also say they ‘are personal’ to the signatory, who ‘may not … assign or transfer any … rights and obligations’ established by them.”
Regarding whether the children are bound to the terms as beneficiaries or relatives, Brennan said Ancestry “mounts these arguments from shaky legal ground” because Illinois law strongly presumes against conferring the benefits of a contract on a third party. In order to prevail on this argument, the panel explained, Ancestry’s contract would’ve needed to include language expressly stating the intent to directly benefit children of parents who signed the agreements.
Instead, the terms specifically exclude third-party beneficiaries, and Ancestry cited earlier decisions that don’t apply because they involved either a corporate entity legally indistinguishable from the individual contract signee or a non-signing party that was “deeply involved in the negotiation of the contractual terms.”
Acknowledging the “special relationship” between plaintiffs and guardians, Brennan said the law doesn’t “join their identities, as can be the case with parent and subsidiary corporations. Further, neither plaintiffs nor their guardians negotiated the terms. Indeed, there is no evidence plaintiffs even knew the terms.”
Brennan pointed to a 2021 U.S. Seventh Circuit opinion, Sosa v. Onfido, in which three other judges ruled a software company couldn’t escape Illinois Biometric Information Protection Act litigation by claiming to be a third-party beneficiary to the contract between customers and the online marketplace that used Onfido’s technology. Although the language in Ancestry’s terms “are slightly more specific,” Brennan wrote, the contracts have no language stipulating a direct benefit for children such as the plaintiffs.
The panel further rejected arguments the children directly benefitted from its DNA analysis, and therefore can’t avoid arbitration, agreeing with the class that the “benefit” of saliva studies “is theoretical, speculative and unrealized.” The plaintiffs didn’t allege they viewed the genetic analysis results, a claim Ancestry didn’t contest.
Ultimately, Brennan said, the children aren’t seeking to enforce the contractual terms against Ancestry, but seeking to press their claims the company violated state law.
“A provision in the terms designating minor children whose guardians activate a DNA test kit on their behalf as Ancestry users or parties to the terms could lead to a different result,” Brennan wrote. “Even if Ancestry’s future terms include such language, the terms here do not. The limits of Illinois law cannot be stretched to make up for that omission.”
Ancestry did not respond to a request for comment.