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Neil Smith, Individually and On Behalf of A v. Microsoft Corporation

July 20, 2012

NEIL SMITH, INDIVIDUALLY AND ON BEHALF OF A
CLASS OF SIMILARLY SITUATED INDIVIDUALS, PLAINTIFF,
v.
MICROSOFT CORPORATION, A WASHINGTON CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Honorable Janis L. SammartinoUnited States District Judge

ORDER: DENYING MOTION TO DISMISS (ECF No. 6)

Presently before the Court is Defendant Microsoft Corporation's (Microsoft) motion to dismiss Plaintiff Neil Smith's (Smith) Complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of standing. (MTD, ECF No. 6.) Also before the Court are Smith's response in opposition (Opp'n, ECF No. 8), and Microsoft's reply (Reply, ECF No. 9).*fn1 Having considered the parties' arguments and the law, the Court DENIES Microsoft's motion.

BACKGROUND*fn2

Smith, a resident of Illinois, brought this putative class action against Microsoft, a Washington corporation, for sending unauthorized text messages promoting Microsoft's new Xbox video game console to cellular telephones in violation of the Telephone Consumer Protection Act of 1991 (TCPA or Act), 47 U.S.C. § 227. Smith received one such message on or about September 12, 2008. The "from" field of the message identified SMS short code "88202." The body of the text message read:

FREE XBOX GAMES CONTENT! HTTP://XBOX.MOBI/SM1. PERSONALIZE YOUR PHONE WITH RINGTONES, WALLPAPER, TRAILERS AND GAME UPDATES. TO OPT-OUT REPLY END.

Microsoft and its agents apparently used one or more short codes to transmit this and other similar text messages to thousands of consumers' cellular telephones en masse without the prior express consent of those individuals, including Smith, in violation of 47 U.S.C. § 227(b)(1)(A)(iii).

Smith brings this claim on behalf of himself and a class of others similarly situated, defining the class as "all persons in the United States and its Territories who received one or more unauthorized text message advertisements on behalf of Microsoft." Allegedly, some members of the class suffered actual damages by having to pay their respective wireless carriers a fee for the receipt of the text message. Although omitting information about his own wireless plan, Smith states that "consumers frequently have to pay their cell phone service providers for the receipt of such wireless spam." Further, Microsoft has caused all members of the class to suffer actual "harm and damages" by subjecting them to "the aggravation that necessarily accompanies wireless spam." Consequently, Smith seeks an injunction requiring Microsoft to cease "all wireless spam activities" and an award of actual and statutory damages to the class members, together with costs and attorneys' fees. Smith requests a minimum of $500.00 for each violation of the Act, up to treble damages.

LEGAL STANDARD

Federal courts are courts of limited jurisdiction, and as such have an obligation to dismiss claims for which they lack subject-matter jurisdiction. Demarest v. United States, 718 F.2d 964, 965 (9th Cir. 1983). Because the issue of standing pertains to the subject-matter jurisdiction of a federal court, motions raising lack of standing are properly brought under Federal Rule of Civil Procedure 12(b)(1). White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). The plaintiff bears the burden of establishing he has standing to bring the claims asserted. Takhar v. Kessler, 76 F.3d 995, 1000 (9th Cir. 1996); see also In re Dynamic Random Access Memory (DRAM) Antitrust Litig., 546 F.3d 981, 984 (9th Cir. 2008) ("The party asserting jurisdiction bears the burden of establishing subject matter jurisdiction on a motion to dismiss for lack of subject matter jurisdiction.").

Rule 12(b)(1) motions may challenge jurisdiction facially or factually. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). "In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction." Id. Microsoft's challenge is facial because it disputes whether Smith's alleged harm is sufficiently particularized to confer Article III standing. Microsoft does not rely upon extrinsic evidence, but instead relies only on the pleadings. See Morrison v. Amway Corp., 323 F.3d 920, 924 n. 5 (11th Cir. 2003) (identifying a factual attack where the jurisdictional challenge "relied on extrinsic evidence and did not assert lack of subject matter jurisdiction solely on the basis of the pleadings"). To adjudicate this facial challenge, the Court will assume the truth of Plaintiff's factual allegations, and draw all reasonable inferences in favor of Plaintiff. Whisnant v. United States, 400 F.3d 1177, 1179 (9th Cir. 2005); Safe Air for Everyone, 373 F.3d at 1039.

ANALYSIS

1. Article III Standing

It is axiomatic that under Article III of the United States Constitution, a federal court may only adjudicate an action if it constitutes a justiciable "case" or a "controversy" that has real consequences for the parties. Raines v. Byrd, 521 U.S. 881, 818 (1997); Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). One of the baseline requirements for justiciability in federal court is that the plaintiff have standing to assert the claims brought. Id.; see also DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 (2006) ("Article III standing enforces the Constitution's case-or controversy requirement") (citations omitted). As the sole*fn3 proposed class representative, Smith has the burden of showing that Article III standing exists here. Ellis v. Costco Wholesale Corp., 657 F.3d 970, 978 (9th Cir. 2011).

The essence of the standing inquiry is to determine whether the party seeking to invoke the Court's jurisdiction has "alleged such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court so largely depends." Baker v. Carr, 369 U.S. 186, 204 (1962). Three elements form the core, essential, or unchanging ...


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