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Perkins v. LinkedIn Corp.

United States District Court, N.D. California, San Jose Division

June 12, 2014

PAUL PERKINS, et. al., Plaintiffs,
v.
LINKEDIN CORPORATION, Defendant

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For Paul Perkins, Plaintiff: Larry C. Russ, LEAD ATTORNEY, Russ August & Kabat, Los Angeles, CA; Daniel Paul Hipskind, Irell and Manella LLP, Los Angeles, CA; Dorian Seawind Berger, Russ, August, and Kabat, Los Angeles, CA; Larry Craig Russ, Russ August Kabat, Los Angeles, CA.

For Pennie Sempell, Erin Eggers, Ann Brandwein, Plaintiffs: Larry C. Russ, LEAD ATTORNEY, Daniel Paul Hipskind, Russ August & Kabat, Los Angeles, CA; Dorian Seawind Berger, Russ, August, and Kabat, Los Angeles, CA; Larry Craig Russ, Russ August Kabat, Los Angeles, CA.

For Jake Kushner, Nicole Crosby, Natalie Richstone, Plaintiffs: Dorian Seawind Berger, Russ, August, and Kabat, Los Angeles, CA.

For LinkedIn Corporation, Defendant: Jerome Cary Roth, Munger Tolles & Olson LLP, San Francisco, CA; Rosemarie Theresa Ring, Esq., Munger, Tolles & Olson LLP, San Francisco, CA.

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ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS WITH LEAVE TO AMEND

LUCY H. KOH, United States District Judge

Paul Perkins, Pennie Sempell, Ann Brandwein, Erin Eggers, Clare Connaughton, Jake Kushner, Natalie Richstone, Nicole Crosby, and Leslie Wall, on behalf of themselves and a putative class (" Plaintiffs" ), bring the instant action against LinkedIn Corporation (" Defendant" or " LinkedIn" ). See ECF No. 7. The gravamen of Plaintiffs' complaint is that Defendant, the operator of a popular social networking website, violated several state and federal laws by harvesting email addresses from the contact lists of email accounts associated with Plaintiffs' LinkedIn accounts and by sending repeated invitations to join LinkedIn to the harvested email addresses. See id. ¶ 2. Defendant filed a Motion to Dismiss the operative complaint, the First Amended Complaint (" FAC" ). See ECF No. 17. The Motion is fully briefed, see ECF Nos. 24, 30, and the Court held a hearing on the Motion, see ECF No. 44 (" Tr." ). Having considered the briefing, applicable law, and the oral arguments presented at the hearing, the Court GRANTS IN PART and DENIES IN PART Defendant's Motion. The Court also grants Plaintiffs leave to amend the FAC to cure deficiencies identified in this Order.

I. BACKGROUND

A. Factual Allegations

LinkedIn is a social networking website geared toward professional networking with more than 200 million users. ECF No. 7 ¶ ¶ 22-23. Users, who maintain resume-like profiles, utilize LinkedIn to view each other's profiles and to exchange messages. This case centers around one portion of the process that a user must complete to sign up for a LinkedIn account. Specifically, Plaintiffs, nine LinkedIn users who seek to represent a nationwide class of LinkedIn users, allege that during the sign-up process, Defendant harvests the email addresses of Plaintiffs' contacts.

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The Court begins by describing the sign-up process that is challenged. The Court then turns to the internal policies that LinkedIn allegedly violates through this sign-up process and user complaints about the process. The Court then concludes this section with a description of the harm that the challenged process allegedly inflicts on Plaintiffs.

When a new member signs up for LinkedIn, the website prompts her to provide her first name, last name, email address, and a password. Id., Fig. 1 (which is below). Below the prompts for this information is a button titled " Join LinkedIn," adjacent to which is an asterisk. Id. The asterisk points to a line at the bottom of a page that states that " [b]y joining LinkedIn, you agree to LinkedIn's User Agreement, Privacy Policy, and Cookie Policy." Id. ¶ 26.

After a user clicks the " Join LinkedIn" button, she is directed to a second page, which states " let's start creating your professional profile." Id., Fig. 2 (which is below). This page asks the user to provide LinkedIn with her country of residence, ZIP code, employment status, job title, and industry. Id. Below these fields is a button titled " Create my profile." Id.

A user who clicks the " Create my profile" button is directed to a page that states " Grow your network on LinkedIn." Id., Fig. 3 (which is below). On this page, the user is told to " Get started by adding your email address," under which the field

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for " Your email" is pre-populated with the user's email address, which the user already provided to LinkedIn on the first screen, which is Figure 1. Id. ¶ 30. The " Grow your network on LinkedIn" page has a button for " Continue" under the pre-populated email field. Id., Fig. 3 (which is below). Under the " Continue" button is a statement that reads " We will not store your password or email anyone without your permission." Id. Further, under that statement is an option to " Skip this step." Id.

A user who clicks " Continue" and who used an email address from Google's Gmail system is led to a screen from Google Accounts.[1] See id., Fig. 4 (which is below). This page states that " Linkedin.com is asking for some information from your Google Account" and then lists the user's email address. Id. The page then contains two bullet points. The first bullet point states " Email address" and contains the email address of the user. Id. The second bullet point states " Google Contacts." Id. The user then has the option of choosing between " Allow" and " No thanks," and the buttons for each are equally sized and are equally prominent. Id.

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A user who chooses " Allow" then proceeds to a screen titled " Connect with people you know on LinkedIn." [2] See ECF No. 18-2, Ex. F (which is labeled as Figure 5 below). This page contains a list of the users' contacts who are already on LinkedIn titled " people you know on LinkedIn." Id. LinkedIn provides this list by matching the users' contacts' email addresses, which LinkedIn has collected from Google, against LinkedIn's own membership database, which contains email addresses that LinkedIn users utilized to register for LinkedIn accounts. The page contains images and job titles of email contacts of the user who have a LinkedIn account, with check boxes next to their names. Id. The boxes are all checked by default. Id. The user can then choose between two options: " Add Connection(s)" or " Skip this step." Id.

After the page containing contacts who already have a LinkedIn account, the user is directed to a page titled " Why not invite

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some people?" [3] Id., Fig. 5 (which is labeled as Figure 6 below). Below the heading on this page is the following statement: " Stay in touch with your contacts who aren't on LinkedIn yet. Invite them to connect with you." Id. Below that statement is a list of the user's email contacts (names and email addresses) who are not already registered on LinkedIn. Id. There is a checkbox next to each, and the " Select All" box is checked by default. Id. While only the first ten appear, there is a scroll bar, indicating that additional entries lay below. Id. Furthermore, next to the " Select All" box is a statement of the total number of contacts selected. Id. The screenshot in the FAC, for example, states " 1132 Selected." Id. At the bottom of the page, the user could choose between " Add to Network" or " Skip this step." Id.

If a user chooses the " Add to Network" option, LinkedIn sends an email to all of the email addresses affiliated with the checked boxes. Id. ¶ 44. The emails, to which Plaintiffs refer in the FAC as " endorsement emails," come from the user's name via LinkedIn and contain the following text: " I'd like to add you to my professional network." Id., Fig. 7 (which is below).[4] This text is followed by a signature line that contains the LinkedIn user's name. Id. Below this is a button that says " Accept." Id. If one week after receiving an endorsement email, the recipient has not joined LinkedIn, LinkedIn sends a follow-up email with the same message. Id. ¶ 46. If after a second week, the recipient of the endorsement email still has not

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joined LinkedIn, LinkedIn sends a third email with the same message. Id. In the FAC, Plaintiffs alleged that " [e]ach of the reminder emails contain the LinkedIn member's name and likeness so as to give the recipient the impression that the LinkedIn member is endorsing LinkedIn and asking the recipient to join LinkedIn's social network." Id. ¶ 41. However, at the hearing on the instant Motion, Plaintiffs clarified that only users' names--not likenesses--appeared in the endorsement emails. Tr. 26:13-14.

Plaintiffs allege that once this process has been set into motion, it is nearly impossible to stop LinkedIn from sending the reminder endorsement emails. Specifically, Plaintiffs allege that " [t]he only way a LinkedIn user can stop the two follow-up endorsement emails (assuming the user found out about the initial emails in the first place) from going out to the email addresses harvested from that user's external email account is for the user to individually open up each invitation from within his or her LinkedIn account (which LinkedIn has intentionally made difficult to find within the user's account) and click a button that allows the user to withdraw that single invitation." Id. ¶ 50. Plaintiffs allege that there is no mechanism by which users can withdraw all endorsement emails at once. Id. Accordingly, Plaintiffs allege that it would take hours to prevent LinkedIn from sending the repeated endorsement emails to the hundreds or thousands of contacts a user may have. Id. Plaintiffs further allege that LinkedIn does not take prompt remedial action when users contact LinkedIn regarding stopping the endorsement emails. Id.

Plaintiffs allege that Defendant's harvesting of email addresses and sending of endorsement emails is contrary to several of Defendant's own policies. More specifically, in the FAC, Plaintiffs point to the following LinkedIn statements, to which Plaintiffs contend the harvesting and emailing practices are contrary:

o LinkedIn's statement on the screen on which it seeks a user's email address to trigger the identification of existing contacts on LinkedIn or invitation of further contacts: " We will not store your password or email anyone without your permission." Id. ¶ ¶ 47, 48; see also id., Fig. 3.
o LinkedIn's statements in blog posts that " we are committed to putting our members first. This means being open about how we use and protect the data that you entrust with us as a LinkedIn member" ; " Ensuring more privacy and control over your personal data remains our highest priority" ; and " Ensuring you more clarity and consistency and control

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over your personal data continues to be our highest priority." Id. ¶ 47.
o A LinkedIn blog post titled " How to Report Abusive Behavior on LinkedIn," in which LinkedIn states that examples of abusive behavior in violation of LinkedIn's terms of service include " examples such as not using a real name/person as the profile owner, falsifying info, creating fake profiles, trying to use someone else's account, massively inviting people they don't know, and using the data in a way not authorized or intended by LinkedIn's Terms of Service. This behavior, though infrequent, strikes at the very root of a trusted professional network. We take these violations very seriously and will not tolerate this behavior." Id. [5]
o Two sentences from LinkedIn's Privacy Policy: (1) " You decide how much or how little you wish to communicate to individuals or groups" and (2) " We do not rent, sell, or otherwise provide your personally identifiable information to third parties without your consent unless compelled by law." Id. ¶ 48.

Plaintiffs also point to a number of postings by users on LinkedIn's Help Center pages complaining about the harvesting and endorsement email processes to contend that LinkedIn knew about flaws in its process but nevertheless took no action. See id. ¶ ¶ 31, 33, 36, 41, 49, 50, 58. In an extended message thread on LinkedIn's Help Center, one user described LinkedIn's process as " deceptive, misleading and purposely vague," while another stated that she was " extremely upset at the repercussions" of LinkedIn's " hacking." Id. ¶ 31. Another user on that message board thread states " LinkedIn should stop the spammy practices of sending out invitations to people's address book without their explicit request to do so." Id. ¶ 41. Yet another user states: " at this point I'm finding LinkedIn more of a problem in terms of hurting my reputation rather than helping it. What's more the invitations are NOT people in my address book. They are people I don't know. I find this entire issue extremely unprofessional on LI's part. You would think with all these members with the same problem LI would respond with a fix." Id. ¶ 50.

In the FAC, Plaintiffs set forth a number of theories regarding how LinkedIn's sign up process allegedly injures Plaintiffs. First, Plaintiffs allege the endorsement emails are valuable to LinkedIn. Specifically, Plaintiffs note that attracting new members to LinkedIn is integral to LinkedIn's business model (as LinkedIn actively advertises its size), and that endorsement emails are a critical component of attracting these new members. Id. ¶ ¶ 51-54. Plaintiffs quote Reid Hoffman, the co-founder and Chairman of LinkedIn, who stated " it's the connection with the individual that I think leads to the growth rate." Id. ¶ 35. Plaintiffs suggest that in the absence of the endorsement email program, LinkedIn would have to pay for email addresses to advertise and promote LinkedIn's services. Id. ¶ 57. Second, Plaintiffs note that LinkedIn charges its users $10 to send a LinkedIn message (known as InMail) to LinkedIn users to whom the sender is not connected. Id. ¶ 55. Plaintiffs rely on this to suggest that " [t]he email addresses that LinkedIn takes from its users and uses to promote its

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service (using the name of the LinkedIn user) have value to a user." Id. Third, Plaintiffs note that the increased membership that results from the endorsement emails further benefits LinkedIn by expanding the market to which LinkedIn can advertise its Premium Membership program, which costs $39.95 to $49.95 per month. Id. ¶ 56.

B. Procedural History

Plaintiffs filed a class action complaint on September 17, 2013. See ECF No. 1. On October 2, 2013, Plaintiffs amended their complaint and filed the FAC that is the subject of the instant Motion. See ECF No. 7. The FAC contains five causes of action: (1) violation of California's common law right of publicity; (2) violation of California's Unfair Competition Law (" UCL" ), Cal. Bus. & Prof. Code § 17200; (3) violation of the Stored Communications Act (" SCA" ), 18 U.S.C. § 2701; (4) violation of the Wiretap Act, 18 U.S.C. § 2511; and (5) violation of California's Comprehensive Data Access and Fraud Act (" Section 502" ), Cal. Penal Code § 502. See id.

On December 6, 2013, Defendant filed a Motion to Dismiss and an accompanying Request for Judicial Notice. See ECF Nos. 17-18. On January 13, 2014, Plaintiffs filed an Opposition and an accompanying Request for Judicial Notice. See ECF Nos. 24-25. On January 31, 2014, Defendant filed a Reply. See ECF No. 30. The Court held a hearing on April 10, 2014. See Tr.

While the instant Motion to Dismiss was pending, the parties had a discovery dispute regarding taking the deposition of Mr. Hoffman, LinkedIn co-founder and Chairman. Specifically, the parties vigorously disputed in their Requests for Judicial Notice, whether certain quotes of Mr. Hoffman in the FAC and in the Opposition to the instant Motion had been taken out of context. Accordingly, Plaintiffs sought a deposition of Mr. Hoffman. The parties submitted a Discovery Dispute Joint Report to Magistrate Judge Lloyd wherein LinkedIn sought a protective order under the apex doctrine (which requires a showing of particular knowledge and exhaustion of alternative means before officials of the highest level of corporate management can be deposed under some circumstances) to prevent the deposition of Mr. Hoffman. See ECF No. 34. Judge Lloyd ordered the parties to further meet and confer because Judge Lloyd found that the parties' discussion described in the Joint Report was inadequate. See ECF No. 35. After this further meet and confer, the parties reached a stipulation. See ECF No. 36. Pursuant to the stipulation, LinkedIn agreed not to dispute the authenticity or accuracy of the quotes of Mr. Hoffman in the FAC and the ...


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