Andino v. Apple, Inc. ( 2021 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 DAVID ANDINO, individually No. 2:20-cv-01628-JAM-AC and on behalf of all others 12 similarly situated, 13 Plaintiff, ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S 14 v. MOTION TO DISMISS 15 APPLE, INC., a California Company, 16 Defendant. 17 18 I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND1 19 Apple Inc. (“Defendant”) is one of the world’s largest 20 computer and phone manufacturers and retailers. First Am. Compl. 21 (“FAC”) ¶ 1, ECF No. 11. Apple’s iTunes application allows 22 consumers to “Rent” or “Buy” movies, television shows, music and 23 other content. Id. ¶¶ 1, 2. If the consumer desires to “Rent” a 24 movie, Apple advertises that for a fee of around $5.99, the 25 consumer will have access to the movie for 30 days and then for 26 27 1 This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was 28 scheduled for February 23, 2021. 1 48 hours after the consumer first starts to watch it. Id. ¶ 3. 2 For a higher fee of around $19.99, Apple offers consumers the 3 option to “Buy” the content. Id. ¶ 4. When a consumer opts to 4 “Buy” the content, it then appears in their “Purchased” folder. 5 Id. ¶ 13. 6 David Andino (“Plaintiff”) argues this labeling is deceptive 7 as the use of a “Buy” button and representation that content has 8 been “Purchased” leads consumers to believe their access cannot 9 be revoked. Id. ¶ 15. Plaintiff alleges this is untrue as Apple 10 reserves the right to terminate the consumers’ access and use of 11 content at any time, and in fact, has done so on numerous 12 occasions. Id. ¶ 16. Plaintiff claims he would not have 13 purchased the content or would not have paid as much, if he had 14 known that his access and use could be terminated at any time. 15 Id. ¶ 25. Accordingly, Plaintiff filed a class action complaint 16 on behalf of himself and those similarly situated, for violations 17 of (1) California’s Consumers Legal Remedies Act (“CLRA”); 18 (2) California’s False Advertising Law (“FAL”); and 19 (3) California’s Unfair Competition Law (“UCL”). ECF No. 1. After 20 the complaint was amended to add a fourth claim for Unjust 21 Enrichment, ECF No. 11 (“FAC”), Apple brought this Motion to 22 Dismiss. Def.’s Mot. to Dismiss (“Mot.”), ECF No. 16. Plaintiff 23 opposed the Motion. Opp’n, ECF No. 19. Apple replied. Reply, 24 ECF No. 20. For the reasons set forth below, the Court GRANTS in 25 part and DENIES in part Apple’s Motion to Dismiss. 26 II. OPINION 27 A. Legal Standard 28 A defendant may move to dismiss for lack of subject matter 1 jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of 2 Civil Procedure. Fed. R. Civ. P. 12(b)(1). If the plaintiff 3 lacks standing under Article III of the United States 4 Constitution then the court lacks subject-matter jurisdiction, 5 and the case must be dismissed. See Maya v. Centex Corp., 658 6 F.3d 1060, 1067 (9th Cir. 2011). Once a party has moved to 7 dismiss for lack of subject-matter jurisdiction under Rule 8 12(b)(1), the opposing party bears the burden of establishing 9 the court’s jurisdiction. See Kokkonen v. Guardian Life Ins. 10 Co., 511 U.S. 375, 377 (1994). 11 A Rule 12(b)(6) motion challenges the complaint as not 12 alleging sufficient facts to state a claim for relief. Fed. R. 13 Civ. P. 12(b)(6). “To survive a motion to dismiss [under 14 12(b)(6)], a complaint must contain sufficient factual matter, 15 accepted as true, to state a claim for relief that is plausible 16 on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 17 (internal quotation marks and citation omitted). While 18 “detailed factual allegations” are unnecessary, the complaint 19 must allege more than “[t]hreadbare recitals of the elements of 20 a cause of action, supported by mere conclusory statements.” 21 Id. “In sum, for a complaint to survive a motion to dismiss, 22 the non-conclusory ‘factual content,’ and reasonable inferences 23 from that content, must be plausibly suggestive of a claim 24 entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 25 572 F.3d 962, 969 (9th Cir. 2009). 26 B. Article III Standing 27 Article III of the Constitution limits the jurisdiction of 28 federal courts to actual “Cases” and “Controversies.” U.S. 1 Const. art. III, § 2. “One element of the case-or-controversy 2 requirement is that plaintiffs must establish that they have 3 standing to sue.” Clapper v. Amnesty Int’l USA, 568 U.S. 398, 4 408 (2013) (internal quotation marks and citation omitted). To 5 establish standing “a plaintiff must show (1) [they have] 6 suffered an injury in fact that is (a) concrete and 7 particularized and (b) actual or imminent, not conjectural or 8 hypothetical; (2) the injury is fairly traceable to the 9 challenged action of the defendant and (3) it is likely, as 10 opposed to merely speculative, that the injury will be redressed 11 by a favorable decision.” Friends of the Earth, Inc. v. Laidlaw 12 Envtl. Serv. Inc., 528 U.S. 167, 180-81 (2000). 13 The parties dispute whether Plaintiff has alleged an injury 14 in fact. Apple argues that Plaintiff’s alleged injury — which 15 it describes as the possibility that the purchased content may 16 one day disappear — is not concrete but rather speculative. 17 Mot. at 6-9. This, however, as Plaintiff points out, 18 misconstrues the injury. Plaintiff responds that his injury is 19 not that he may one day lose access to his content. Opp’n at 7. 20 Rather the injury Plaintiff asserts, is that he spent money 21 purchasing the content that he wouldn’t have otherwise as a 22 result of Apple’s misrepresentation. Id. This occurred at the 23 time of purchase. 24 To establish standing, Plaintiff need only allege an 25 economic injury in fact. See Reid v. Johnson & Johnson, 780 26 F.3d 952, 958 (9th Cir. 2015)(explaining that California’s 27 standing requirements for the UCL, FAL, and CLRA only require 28 “an economic injury-in-fact, which demands no more than the 1 corresponding requirement under Article III of the 2 Constitution.”) “In a false advertising case, plaintiffs meet 3 this requirement if they show that, by relying on a 4 misrepresentation on a product label, they ‘paid more for a 5 product than they otherwise would have paid, or bought it when 6 they otherwise would not have done so.’” Id. (quoting Hinojos 7 v. Kohl’s Corp., 718 F.3d 1098, 1104 n. 3, 1108 (9th Cir. 2013)) 8 (also citing POM Wonderful LLC v. Coca-Cola Co., 573 U.S. 102, 9 108 (2014) for the proposition that “[a] consumer who is 10 hoodwinked into purchasing a disappointing product may well have 11 an injury-in-fact cognizable under Article III”). 12 In Reid, the Ninth Circuit found that plaintiff had 13 undoubtedly satisfied this requirement “as he alleged that he 14 would not have been willing to pay as much as he did for 15 Benecol, if anything, if he had not been misled by McNeil’s 16 misrepresentations about Benecol’s health effects.” 780 F.3d at 17 958. Similarly, Plaintiff alleges here that he would not have 18 been willing to pay as much for the content, if anything, if he 19 had not been misled by Apple’s misrepresentations about his 20 ability to indefinitely access that content. See FAC ¶¶ 23-25, 21 55-58, 68-71. Thus, the injury Plaintiff alleges is not, as 22 Apple contends, that he may someday lose access to his purchased 23 content. Rather, the injury is that at the time of purchase, he 24 paid either too much for the product or spent money he would not 25 have but for the misrepresentation. This economic injury is 26 concrete and actual, not speculative as Apple contends, 27 satisfying the injury in fact requirement of Article III. See 28 Reid v. Johnson & Johnson, 780 F.3d 952, 958 (9th Cir. 2015). 1 For the same reasons, the Court finds Plaintiff has also met the 2 statutory standing requirements for the UCL, FAL, and CLRA. Id. 3 (explaining that California’s standing requirements for the UCL, 4 FAL, and CLRA only require “an economic injury-in-fact, which 5 demands no more than the corresponding requirement under Article 6 III of the Constitution.”) 7 Further, in Davidson v. Kimberly-Clark Corporation, the 8 Ninth Circuit held that “[a] consumer’s inability to rely on a 9 representation made on a package, even if the consumer knows or 10 believes the same representation was false in the past, is an 11 ongoing injury” sufficient to confer standing to seek injunctive 12 relief. 889 F.3d 956, 961 (9th Cir. 2018). In so holding the 13 Ninth Circuit rejected the argument that “plaintiffs who are 14 already aware of the deceptive nature of an advertisement are 15 not likely to be misled into buying the relevant product in the 16 future and therefore, are not capable of being harmed again in 17 the same way.” Id. at 968 (internal quotation marks and 18 citation omitted). The Court noted “[k]knowledge that the 19 advertisement or label was false in the past does not equate to 20 knowledge that it will remain false in the future.” Id. at 969. 21 “In some cases, the threat of future harm may be the consumer’s 22 plausible allegations that she will be unable to rely on the 23 product’s advertising or labeling in the future, and so will not 24 purchase the product although she would like to. In other 25 cases, the threat of future harm may be the consumer’s plausible 26 allegations that she might purchase the product in the future, 27 despite the fact it was once marred by false advertising or 28 labeling, as she may reasonably, but incorrectly, assume the 1 product was improved.” Id. at 969-70. 2 Apple argues that Plaintiff has not alleged a valid future 3 threatened injury under Davidson as he neither alleges “he 4 stopped buying Digital Content, nor does he allege any changes 5 to the iTunes Store that ‘reasonably’ cause him to ‘assume’ that 6 the Digital Content has ‘improved.’” Def.’s Mot. at 10. But 7 the Court does not read Davidson so narrowly. Rather, it seems 8 clear from Davidson that a plaintiff’s allegation that they will 9 not be able to rely on a product’s advertising or labeling is 10 sufficient to demonstrate a future threatened injury, conferring 11 standing to seek injunctive relief. See Davidson, 889 F.3d at 12 971-72 (“Davidson faces the similar injury of being unable to 13 rely on Kimberly-Clark’s representations of its product in 14 deciding whether or not she should purchase the product in the 15 future.”) 16 Here, Plaintiff has alleged just that. Plaintiff claims he 17 will not be able to rely on Apple’s purchase option to know 18 whether the content will be available indefinitely or not. FAC 19 ¶¶ 59, 72, 90; see also Opp’n at 8. This is a threatened injury 20 that is certainly impending, establishing Article III standing 21 to assert a claim for injunctive relief. See Davidson, 889 F.3d 22 at 972. 23 Because Plaintiff has alleged an economic injury and a 24 threatened future injury, the Court finds Plaintiff has 25 demonstrated standing sufficient to overcome this motion to 26 dismiss. Accordingly, Apple’s 12(b)(1) Motion to Dismiss for 27 lack of standing and 12(b)(6) Motion to Dismiss for lack of 28 statutory standing are DENIED. 1 C. Rule 9(b) 2 Rule 9(b) provides that: “[i]n alleging fraud or mistake, a 3 party must state with particularity the circumstances 4 constituting fraud or mistake. Malice, intent, knowledge, and 5 other conditions of a person’s mind may be alleged generally.” 6 Fed. R. Civ. P. 9(b). Claims alleging violations of the FAL, 7 CLRA, and UCL that are based on fraudulent conduct must satisfy 8 Rule 9(b). See Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 9 (9th Cir. 2009). This requires that the plaintiff plead the 10 “who, what, when, where, why, and how, of the conduct charged.” 11 Id. at 1126. “[I]n a deceptive advertising case, Rule 9(b) 12 requires that the plaintiff or plaintiffs identify specific 13 advertisements and promotional materials; allege when the 14 plaintiff or plaintiffs were exposed to the materials; and 15 explain how such materials were false or misleading.” Janney v. 16 Mills, 944 F.Supp.2d 806, 815 (N.D. Cal. 2013). 17 Here, Plaintiff has identified specific promotional 18 materials. Specifically, he alleges that consumers are given 19 the option to “Buy” digital content in a variety of ways via a 20 smart phone, computer or tablet, through the iTunes app or on 21 Apple TV. FAC ¶ 2. Plaintiff then includes a representative 22 sample of this option on the iTunes Store, including a picture 23 of the options for “Sonic The Hedgehog”; “Westworld, Season 3”; 24 and “Bridges Live: Madison Square Garden”. See id. at 2-3. 25 Plaintiff has also explained how such materials are false or 26 misleading as he notes that reasonable consumers expect “buying” 27 the content means access cannot be revoked. Id. ¶ 15. However, 28 he explains how this is untrue as Apple reserves the right 1 terminate the consumers’ access and use at any time. Id. ¶¶ 16, 2 17. And while Apple contends Plaintiff has not alleged he 3 bought a movie or acted on the “Buy” representation, he has. 4 See id. ¶ 25 (“Had Plaintiff and Class members known the truth, 5 they would not have bought the Digital Content from Defendant or 6 would have paid substantially less for it.”) (emphasis added); 7 see also id. ¶ 53 (“Defendant has violated the CLRA by 8 representing that the Digital Content it sold to Plaintiff and 9 the Class had been ‘purchased’”) (emphasis added); id. ¶ 58 10 (“Plaintiff and the Class members paid for Digital Content they 11 thought they were purchasing”) (emphasis added). 12 Thus, the only remaining question is whether Plaintiff has 13 sufficiently pled the “when.” While Plaintiff does not specify 14 exactly when he or the other class members were exposed to these 15 representations, the class consists of those who purchased 16 content from August 13, 2016 through class certification and 17 trial. Id. ¶ 32. The Court finds this allegation is 18 sufficient. See In Re ConAgra Foods Inc., 908 F.Supp.2d 1090, 19 1100 (C.D. Cal. 2012) (finding Rule 9(b) was satisfied where 20 plaintiffs alleged that the representation appeared on product 21 labeling throughout the class period); see also United States v. 22 United Healthcare Insurance Company, 848 F.3d 1161, 1180 (9th 23 Cir. 2016) (“a complaint need not allege a precise time frame, 24 describe in detail a single specific transaction or identify the 25 precise method used to carry out the fraud” to comply with 26 Rule(9)(b))(internal quotation marks and citation omitted). 27 Plaintiff need not plead the exact date(s) he made his purchases 28 to provide Apple with adequate notice to defend the charges as 1 this is a class action and Apple will have to defend the 2 representations made throughout the class period anyway. See 3 Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009) 4 (noting one of the purposes of Rule 9(b) is to provide 5 defendants with adequate notice to allow them to defend the 6 charge); see also Bly-Magee v. California, 236 F.3d 2014, 2019 7 (9th Cir. 2001) (“To comply with Rule 9(b), allegations of fraud 8 must be specific enough to give defendants notice of the 9 particular misconduct which is alleged to constitute the fraud 10 charged so that they can defend against the charge and not just 11 deny that they have done anything wrong.”) (internal quotation 12 marks and citation omitted). Plaintiff has pled his claims with 13 enough specificity to satisfy Rule 9(b). 14 D. Reasonable Consumer 15 California’s UCL prohibits “any unlawful, unfair or 16 fraudulent business act or practice and unfair, deceptive, 17 untrue or misleading advertising.” Cal. Bus. & Prof. Code 18 § 17200. California’s FAL prohibits any “untrue or misleading” 19 advertising. Id. § 17500. And California’s CLRA prohibits 20 “unfair methods of competition and unfair or deceptive acts or 21 practices.” Cal. Civ. Code § 1770(a). Under the UCL, FAL, and 22 CLRA, conduct is deceptive or misleading if it is likely to 23 deceive a “reasonable consumer.” Williams v. Gerber Products 24 Co., 552 F.3d 934, 938 (9th Cir. 2008). “Under the reasonable 25 consumer standard, [plaintiffs] must show that members of the 26 public are likely to be deceived.” Id. (internal quotation 27 marks and citations omitted). The threshold for this 28 “reasonable consumer” standard is higher than a “mere 1 possibility” that the label “might conceivably be misunderstood 2 by some few consumers viewing it in an unreasonably manner.” 3 Lavie v. Procter & Gamble Co., 105 Cal. App. 4th 496, 508 4 (2003). Instead, the reasonable consumer standard necessitates 5 a likelihood “that a significant portion of the general 6 consuming public or of targeted consumers, acting reasonably in 7 the circumstances, could be misled.” Id. California courts 8 “have recognized that whether a business practice is deceptive 9 will usually be a question of fact not appropriate for decision 10 on demurrer.” Williams, 552 F.3d at 938. Only in rare 11 situations is granting a motion to dismiss on this basis 12 appropriate. Id. at 939. 13 Apple argues that Plaintiff has failed to state a claim 14 because he mischaracterizes the “Buy” and “Purchased” language 15 and views it in an unreasonable manner. Mot. at 11. Apple 16 contends that “[n]o reasonable consumer would believe” that 17 purchased content would remain on the iTunes platform 18 indefinitely. Id. at 12. But in common usage, the term “buy” 19 means to acquire possession over something. Buy Definition, 20 merriam-webster.com, https://www.merriam- 21 webster.com/dictionary/buy (13 April 2021). It seems plausible, 22 at least at the motion to dismiss stage, that reasonable 23 consumers would expect their access couldn’t be revoked. See 24 Williams, 552 F.3d at 939 (noting that only in a rare situation 25 will granting a motion to dismiss based on whether a business 26 practice is deceptive be appropriate). Apple also argues that 27 because a user can download purchased content for full and 28 irrevocable access, the “Buy” and “Purchased” language is 1 accurate. But the Court cannot consider such factual 2 contentions at the motion to dismiss stage. See Lee v. City of 3 Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) (explaining 4 “factual challenges to a plaintiff’s complaint have no bearing 5 on the legal sufficiency of the allegations under Rule 6 12(b)(6).”) 7 E. Equitable Restitution Claims 8 Lastly, Apple contends that under Sonner v. Premier 9 Nutrition Corp, 971 F.3d 834 (9th Cir. 2020), Plaintiff’s claims 10 for equitable restitution under the CLRA, FAL, UCL, and unjust 11 enrichment must be dismissed as Plaintiff has failed to 12 establish the requested CLRA damages are inadequate. Def.’s 13 Mot. at 14. Plaintiff appears to concede this point and in fact 14 explicitly withdraws his unjust enrichment claim based on this 15 precedent. See Opp’n at 14 n 4; Opp’n at 14 (arguing that 16 Sonner does not prevent Plaintiff’s injunctive relief but saying 17 nothing about his claims for equitable restitution). 18 In Sonner, the plaintiff brought suit under California’s 19 UCL and CLRA. 971 F.3d at 838. Shortly before trial the 20 plaintiff amended her complaint to seek only restitution and 21 equitable relief. Id. The Ninth Circuit held that a plaintiff 22 “must establish that she lacks an adequate remedy at law before 23 securing equitable restitution for past harm under the UCL and 24 CLRA.” Id. at 844. Because plaintiff had failed to establish 25 she lacked an adequate remedy at law, the Court found dismissal 26 of the equitable restitution claims was warranted. Id. 27 Here Plaintiff has not even attempted to explain why or how 28 the requested CLRA damages are an inadequate remedy justifying 1 restitution damages. See Opp’n at 14; see generally FAC. 2 Accordingly, the Court GRANTS Defendant’s motion to dismiss 3 Plaintiff’s claims for equitable restitution under the UCL, FAL, 4 and CLRA. See e.g. Resnick v. Hyundai Motor Am., Inc., CV 16- 5 00593-BRO (P JWx), 2017 WL 1531192 at *22 (C.D. Cal. Apr. 13, 6 2017) (“Failure to oppose and argument raised in a motion to 7 dismiss constitutes waiver of that argument.”) The Court also 8 GRANTS Defendant’s motion to dismiss Plaintiff’s unjust 9 enrichment claim. 10 The Court however agrees with Plaintiff that Sonner does 11 not warrant dismissal of his request for injunctive relief. 12 Money damages are an inadequate remedy for future harm, as they 13 will not prevent Defendant from continuing the allegedly 14 deceptive practice. See Zeiger v. WETPET LLC, No. 3:17-CV- 15 04056-WHO, 2021 WL 756109, at *21 (N.D. Cal. Feb. 26, 2021) 16 (noting that even assuming Sonner applies to injunctive relief 17 the plaintiff had shown monetary damages were an inadequate 18 remedy because damages compensate for past purchases where an 19 injunction ensures that one can rely on a defendant’s 20 representations in the future); FAC ¶ 58 (“If the Court does not 21 restrain Defendant from engaging in these practices in the 22 future, Plaintiff and the Class members will be harmed in that 23 they will continue to believe they are purchasing Digital 24 Content for viewing and/or listening indefinitely, when in fact, 25 the Digital Content can be made unavailable at any time.”) 26 III. ORDER 27 For the reasons set forth above, the Court GRANTS in part 28 and DENIES in part Defendant’s Motion to Dismiss. Defendant’s ene nnn en en IIE III, EE IR ESO 1 Motion to Dismiss Plaintiff’s unjust enrichment claim is GRANTED 2 WITH PREJUDICE. Defendant’s Motion to Dismiss Plaintiff’s 3 equitable claims for restitution under the UCL, FAL, and CLRA is 4 also GRANTED WITH PREJUDICE. The remainder of Defendant’s Motion 5 to Dismiss is DENIED. Defendant’s Answer to the FAC is due twenty 6 (20) days from the date of this Order. 7 IT IS SO ORDERED. 8 Dated: April 19, 2021 kA 10 teiren staves odermacr 7008 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14