Zoom’s Lack of Security Leads to Consumer and Shareholder Class Actions

COVID-19 has restructured the way people conduct their daily activities, and perhaps most notably, the way people communicate with each other. Zoom Communications Inc. (“Zoom”), a communications company offering video-telephonic services, has been at the forefront of providing a means for society to stay connected during these hard times. As a result, Zoom’s stock price skyrocketed, more than doubling since January 2020. However, significant weaknesses in Zoom’s security measures has resulted in extreme invasions of users’ privacy, and unsurprisingly, class actions brought by disgruntled consumers and shareholders.

On May 13, 2020, members of the Saint Paulus Lutheran Church filed a putative class action against Zoom in the United States District Court for the Northern District of California, alleging that Zoom’s lack of security allowed a hacker to breach the congregation’s password-protected video conferencing, displaying illegal pornographical images onto the users’ screens. The plaintiffs seek to represent all persons in the United States who used Zoom’s services. A copy of the Saint Paulus Lutheran Church’s class action complaint can be found here. The church’s complaint follows a similar class action brought by Stacey Simins, the owner of a Texas dance studio. Ms. Simins alleges that, despite paying for a Zoom license, Zoom failed to live up to the description of the security features advertised on its website. As a result, intruders allegedly joined Ms. Simins’ dance lessons and harassed her students. As with the Saint Paulus Lutheran Church action, Ms. Simins’ putative class action seeks to represent all persons in the United States who have used Zoom’s services. A copy of Ms. Simins’ complaint, filed in the Northern District of California, can be found here.

Two of Zoom’s shareholders have also brought a putative class action against the company, alleging that Zoom overstated its security measures, such as failing to maintain proper end-to-end encryption for Zoom’s video communication services despite advertising this feature to the public. The actions, both filed in the United States District Court for the Northern District of California, are Drieu v. Zoom Video Communications, Inc., Case No. 20-cv-02353-JD, and Brams v. Zoom Video Communications, Inc. (No. 20-cv-02396-JD). As of May 26, 2020, these actions have been consolidated under the stylized caption In re Zoom Securities Litigation, Case No. 20-cv-02353-JD. The Drieu and Brams complaints can be found here and here, respectively.