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In Re Google Phone Litigation

August 2, 2012

IN RE GOOGLE PHONE LITIGATION


United States District Court For the Northern District of California

ORDER GRANTING MOTION TO DISMISS WITH LEAVE TO AMEND

(Re: Docket No. 113)

Pending before the court is Defendant Google Inc.'s ("Google") and Defendant HTC Corp.'s 18 ("HTC") motion to dismiss Plaintiff Mary McKinney's ("McKinney") and Plaintiff Nathan 19 Nabors' ("Nabors") Consolidated Amended Complaint ("CAC"). The court previously found it 20 appropriate to take the motion under submission without oral argument. See Civil L.R. 7-1(b). 21 Based on the papers submitted, the court GRANTS Defendants' motion to dismiss with leave to 22 amend. 23

I.BACKGROUND

On September 30, 2011, Plaintiffs brought a class action against Defendants on behalf of 25 themselves and a class of all consumers (the "Class") who purchased the Nexus One mobile device 26 (the "Google Phone") manufactured and marketed by Google and HTC, alleging the failure of the 27 Google Phone to maintain connectivity to a wireless network. CAC ¶ 1, Docket No. 110. 28

The Google Phone was an advanced mobile cellular phone that operated using the Android 2 Mobile Technology Platform and included various features, such as a video and audio player, and 3 an Internet device which provided email and Internet access on the 3G network. Id. ¶ 23. The "3G" 4 technology features faster peak data transfer rates over previous networks of up to 7.2 megabytes 5 per second, which, according to Plaintiffs, is especially important to "smart phone" users who 6 employ their devices to run and store applications, send and receive email, download and play 7 media, and share pictures and information via social networking systems. Id. ¶ 36. 8

Google is a Delaware corporation that develops, brands, promotes, markets, distributes and/or 9 sells the Google Phone throughout the United States. Id. ¶ 18. HTC is a Taiwanese corporation that 10 designed and manufactured the Google Phone. Id. ¶ 19. Non-Defendant T-Mobile, a third party that 11 served as Plaintiffs' wireless carrier, is an American subsidiary of Germany-based Deutsche 12 Telekom, and provides wireless voice and data communications services to subscribers in the U.S. 13 Id. ¶ 20. 14

McKinney, a Pennsylvania resident, purchased her Google Phone on or about January 9, 2010, 15 through the Google website. Id. ¶ 6. Specifically, McKinney alleges that 3G service on her phone is 16 "sporadic and inconsistent." Id. ¶ 478. McKinney further alleges that a T-Mobile sales 17 representative explicitly told her that the Google Phone had 3G speed, and that the phone was 18 "essential for web surfing and email." Id. ¶ 33. 19

Nabors, a Florida resident, purchased his Google Phone through the Google website, 20 google.com/phone. Id. ¶ 14. Nabors alleges he missed numerous calls, experienced a high volume 21 of "dropped" calls and the Google phone did not function properly. Id. ¶ 61. 22

Plaintiffs contend that Google made representations regarding the Google Phone's capabilities 23 to the public through multiple points of contact, including internet, print, television and radio 24 advertising. Id. ¶ 30. According to Plaintiffs, this included the information Defendants presented to 25 Plaintiffs and the Class on the website Google set up to sell its phone Id. However, also according 26 to Plaintiffs, Google's promotional materials have been removed from that address and HTC has 27 allegedly done the same. Id. ¶ 31. 28

Plaintiffs contend that these alleged representations by T-Mobile and Google consistently 2 presented the Google Phone as a true "3G" device that would offer superior upload and download 3 speeds, and a device that would be worth the premium Plaintiffs and the Class would pay both for 4 their devices, and the more expensive service plans that would be needed to support their devices. 5

Id. ¶ 34. 6

Plaintiffs also contend that Defendants consistently advertised the Google Phone, working in 7 tandem with a mobile network, as providing 3G transfer rates. Id. ¶ 43. If, however, 3G 8 connectivity was unavailable, the phone and data operations could still be used, but at what 9

Plaintiffs believed to be a "substantially lower" data transfer rate than the 3G level that was 10 allegedly advertised. Id. ¶ 46. Plaintiffs claim that, contrary to Defendants' assertions, Plaintiffs and other members of the Class experience connectivity on the 3G wireless network only a fraction of the time they are connected to the T-Mobile 3G wireless network, or receive no 3G connectivity 13 at all for a significant portion of the time. Id. ¶ 47. Further, according to Plaintiffs, the alleged lack 14 of 3G connectivity caused Plaintiffs and other members of the Class to experience a significant 15 number of dropped calls when the Google Phone cannot locate an available 3G network 16 connection. Id. Finally, Plaintiffs allege Defendants failed to warn Plaintiffs and Class members of 17 the limitations associated with using the Google Phone to its internal understanding that the T-18 Mobile 3G network was not designed to provide consistent connectivity to its 3G network for 19 Google Phone users. Id. ¶ 52. 20

As a result, Plaintiffs contend that they were injured in response to representations, advertising 21 or other promotional materials that were prepared and approved by Defendants and disseminated 22 on the face of the product or through assertions that contained the representations regarding the 23 Google Phone. Id. ¶ 65. Had the true facts been disclosed, Plaintiffs claim they would not have 24 purchased the Google Phone at the prices and under the terms and conditions to which they were 25 and are subjected. Id. 26

On August 31, 2010, Nabors filed an action in this court, Case No. 10-3897. See Class Action 27 Compl., Case No. 10-3897, Docket No. 1. On January 10, 2011, Nabors filed his First Amended 28 Complaint. See Am. Compl., Case No. 10-3897, Docket No. 21. On August 30, 2011, the court granted Defendants' motion to dismiss Nabors' First Amended Complaint. See Order, Case No. 2 10-3897, Docket No. 48. 3

On January 29, 2010, McKinney filed an action in state court. See Notice of Removal, Docket 4 No. 1, ¶ 1. On March 22, 2010, Defendants removed that action to this court, Case No. 10-1177. 5

See Notice of Removal. On June 11, 2010, McKinney filed her First Amended Complaint. See 6 First Am. Compl., Docket No. 26. On November 16, 2010, Judge Ware granted Google and HTC's 7 motion to dismiss McKinney's First Amended Complaint. See Order, Docket No. 73. On 8 December 3, 2010, McKinney filed her Second Amended Complaint. See Second Am. Compl., 9 Docket No. 75. On August 30, 2011, this court granted Defendants' motion to dismiss McKinney's 10 Second Amended Complaint. See Order, Docket No. 106.

On September 15, 2011, the court consolidated Nabors' and McKinney's cases. See Order, Docket No. 108. On September 30, 2011, Plaintiffs filed the CAC alleging three causes of action: 13 (1) Breach of Implied Warranty; (2) Violation of Consumers Legal Remedies Act, California Civil 14 Code § 1760, et seq.; and (3) Unlawful and Unfair Business Practices in Violation of California 15 Business & Professions Code § 17200, et seq. See CAC. 16

II.LEGAL STANDARDS

"Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable 18 legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. 19 Center, 521 F.3d 1097, 1104 (9th Cir. 2008). For purposes of a motion to dismiss, "all allegations 20 of material fact are taken as true and construed in the light most favorable to the nonmoving party." 21 Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-338 (9th Cir. 1996). The court, however, is not 22 required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or 23 unreasonable inferences. See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 24 2001). A formulaic recitation of a cause of action with conclusory allegations is not sufficient; a 25 plaintiff must plead facts showing that a violation is plausible, not just possible. Ashcroft v. Iqbal, 26 129 S.Ct. 1937, 1949 (2009) (internal citations omitted).

On a motion to dismiss, the court's review is limited to the face of the complaint and matters 28 judicially noticeable. MGIC Indem. Corp. v. Weisman, 803 F.2d 500, 504 (9th Cir. 1986); N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). However, under the "incorporation 2 by reference" doctrine, the court also may consider documents whose contents are alleged in a 3 complaint and whose authenticity no party questions, but which are not physically attached to the 4 [plaintiff's] pleading. In re Silicon Graphics, Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999). 5

Leave to amend should be granted unless it is clear that the complaint's deficiencies cannot be 6 cured by amendment. Lucas v. Dep't of Corr., 66 F.3d 245, 248 (9th Cir. 1995). 7

III.DISCUSSION

A.Breach of Implied Warranty of ...


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