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Oscar Hernandez,Individually and On Behalf of A Class of Similarly Situated Individuals v. Path

October 17, 2012

OSCAR HERNANDEZ,INDIVIDUALLY AND ON BEHALF OF A CLASS OF SIMILARLY SITUATED INDIVIDUALS,
PLAINTIFFS,
v.
PATH,INC., DEFENDANT.



The opinion of the court was delivered by: Yvonne Gonzalez Rogers United States District Court Judge

ORDER GRANTING IN PART MOTION TO DISMISS WITH LEAVE TO AMEND

Plaintiff Oscar Hernandez brings this putative class action against Defendant Path, Inc. ("Path") alleging that after putative class members downloaded Path's "App" to their mobile 17 devices, that Path accessed the putative class members' mobile devices and uploaded to its servers 18 the class members' personally identifiable information, including the address book stored on the 19 mobile devices, and shared this information with advertisers. Plaintiff's First Amended Complaint 20 ("FAC") alleges ten claims: (1) Violations of the Electronic Communications Privacy Act, 18 21 U.S.C. § 2510 et seq.; (2) Violations of the Stored Communications Act, 18 U.S.C. § 2701 et seq.; 22 (3) Violations of the California Computer Crime Law, California Penal Code § 502; (4) Violations 23 of California's Invasion of Privacy Act, California Penal Code § 630 et seq.; and state law claims for 24 (5) Violations of the California Unfair Competition Law, California Business and Professions Code 25 § 17200 et seq.; (6) Invasion of Privacy and Seclusion and Public Disclosure of Private Facts; (7) 26 Negligence; (8) Conversion; (9) Trespass to Personal Property/ Chattel; and (10) Unjust Enrichment. 27 Defendant Path moves to dismiss Counts III through X for lack of subject matter jurisdiction on the grounds that Plaintiff has not alleged Article III standing; and moves to dismiss all claims pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted. The Court heard oral argument on July 31, 2012.

Having carefully considered the papers submitted, the pleadings in this action, and the oral 4 argument of counsel, for the reasons set forth below, the Court hereby GRANTS IN PART the Motion 5 to Dismiss WITH LEAVE TO AMEND.

I.BACKGROUND

Path operates a social networking-enabled photo sharing and messaging service for wireless 8 mobile devices. Plaintiff seeks to represent a class of users that downloaded the Path App to their 9 mobile device. When the users downloaded the Path App, Path accessed, uploaded and stored data from the users' Contact Address Books.*fn1 According to the FAC, the Path App also installed tracking 11 software onto the users' mobile devices that enabled Path to track user interactions on social 12 networking websites, including geo-tagging GPS coordinates within digital content, such as 13 photographs and videos. Plaintiff further alleges that Path is storing this information on its servers 14 without encryption, which presents a security risk.

II.STANDING

Because standing is a threshold jurisdictional question, the Court will address that issue first. 17 See Steel Company v. Citizens for a Better Environment, 523 U.S. 83, 94, 102 (1998). 18 To establish Article III standing, a plaintiff must satisfy three elements: (1) "the plaintiff must 19 have suffered an injury in fact-an invasion of a legally protected interest which is (a) concrete and 20 particularized and (b) actual or imminent, not conjectural or hypothetical"; (2) "there must be a 21 causal connection between the injury and the conduct complained of"; and (3) "it must be likely, as 22 opposed to merely speculative, that the injury will be redressed by a favorable decision." Lujan v. 23 Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (internal quotation marks, citations and footnote 24 omitted).

Plaintiff identifies three injuries to establish Article III standing: (1) diminished mobile device resources, such as storage, battery life, and bandwidth; (2) increased, unexpected, and 3 unreasonable risk to the security of sensitive personal information; and (3) future costs to remove 4 embedded code from media files uploaded through the Path App. 5 (1) The specific harm caused by diminished resources of which Plaintiff complains is de 6 minimus: depletion of "two to three seconds of battery capacity." (FAC ¶ 122.)*fn2 7 (2) The hypothetical threat of future harm due to a security risk to Plaintiff's personal 8 information is insufficient to confer Article III standing. Krottner v. Starbucks Corp., 628 F.3d 1139, 9 1141-43 (9th Cir. 2010). 10

(3) Although Plaintiff has not alleged that he spent time or money removing the Path App 11 and associated tracking files, the harm alleged is not hypothetical. According to the FAC, the Path 12 App installed tracking software onto Plaintiff's mobile device, Plaintiff wants to remove the tracking 13 software, and alleges that he would need to pay a trained technician as much as $12,250.00*fn3 to do so. 14 (See FAC ¶ 73). Thus, Plaintiff has sufficiently alleged that he has suffered an actual injury as a 15 result of Path's actions.

Based on the foregoing analysis, the Court DENIES this basis for the Motion to Dismiss.

III.RULE 12(b)(6) ANALYSIS

A.LEGAL STANDARD

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged in the complaint. Ileto v. Glock, Inc., 349 F.3d 1191, 1199-1200 (9th Cir. 2003). All allegations of material fact are taken as true. Johnson v. Lucent Techs., Inc., 653 F.3d 1000, 1010 (9th Cir. 2011). To withstand a motion to dismiss, "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)).

1.Requests for Judicial Notice.

Although review is generally limited to the contents of the complaint and documents 5 attached thereto, Allarcom Pay Television. Ltd. v. Gen. Instrument Corp., 69 F.3d 381, 385 (9th Cir. 6 1995), the Court may also consider a matter that is properly the subject of judicial notice. Lee v. City 7 of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001). Under Federal Rule of Evidence 201, a court 8 may take judicial notice of a fact not subject to reasonable dispute because it is generally known 9 within the trial court's territorial jurisdiction, or can be accurately and readily determined from 10 sources whose accuracy cannot reasonably be questioned. Fed. R. Evid. 201(b).

11 Defendant has requested the Court take judicial notice of a patent application, the Path App's 12 pages on the iPhone App Store and Google Play store, the Apple App Store and Google Play 13 marketplace webpages, screenshots of the Path user-interface, and notices provided by the iOS and 14 Android OS. The Court will take judicial notice of the patent application because it is "capable of 15 accurate and ready determination by resort to sources whose accuracy cannot reasonably be 16 questioned." However, the screenshots and webpages are not subject to judicial notice; information 17 contained on the screenshots, websites, and Path's privacy policy are not from sources whose 18 accuracy cannot reasonably be questioned, nor are they facts generally known within the territorial 19 jurisdiction of this Court. See Fed. R. Evid. 201(b). 20 2.Incorporation by Reference.

21 Under the incorporation by reference doctrine, if "the plaintiff's claim depends on the 22 contents of a document, the defendant attaches the document to its motion to dismiss, and the parties 23 do not dispute the authenticity of the document, even though the plaintiff does not explicitly allege 24 the contents of that document in the complaint," the Court may consider the document without 25 converting the motion to dismiss into a motion for summary judgment. Knievel v. ESPN, 393 F.3d 26 1068, 1076 (9th Cir. 2005). The Court considers Path's Privacy Policy, which was in place and 27 publicly available during the relevant class period (see Van Horn Dec. Ex. 1, Dkt. No. 16-2) to be incorporated by reference into the FAC because Plaintiff references the privacy policy and Plaintiff's claims are based on how Path discloses information to users. See Knieval, supra, 393 F.3d at 1076.

The Court does not consider the remaining documents to be incorporated by reference in the FAC. Although referenced by the FAC, Plaintiff's claims do not depend on the contents of the referenced documents.

B.ANALYSIS OF PLAINTIFF'S CLAIMS

Path argues Counts I and II fail to state a claim and that even if this Court had subject matter jurisdiction over Counts III through X, each should be dismissed for failure to state a claim. The 8 Court analyzes the sufficiency of the allegations of each Count below. 9 1.Count I -- Federal Wiretap Act: 18 U.S.C. § 2511(1).

The Electronic Communications Privacy Act, commonly known as the Federal 11 Wiretap Act, prohibits "intentionally intercepts, endeavors to intercept, or procures any other person 12 to intercept or endeavor to intercept, any wire, oral, or electronic communication." 18 U.S.C. § United 13 2511. According to the FAC, Path intercepted and procured Plaintiff's and the Class Members' 14 electronic communications, which included procuring users' contact address books, and intercepting 15 interactions between users and their contacts online from their Mobile Devices. (FAC ¶ 141.) 16 The FAC fails to allege that Defendant intercepted any communication contemporaneous 17 with its transmission. Although Path allegedly transmitted the Class Members' Contact Address 18 Books from the Class Members' mobile devices to Path's servers, Path did not "intercept" a 19 "communication" to do so. Likewise, Plaintiff ...


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