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Mahlum v. Adobe Systems Inc.

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

January 8, 2015

SCOTTY MAHLUM, individually and on behalf of all others similarly situated, Plaintiff,


LUCY H. KOH, District Judge.

Scotty Mahlum ("Plaintiff") brings this action against defendant Adobe Systems, Inc. ("Adobe"). Plaintiff alleges that Adobe committed violations of the California Civil Code and Business and Professions Code. Before the Court is Adobe's motion to dismiss. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court GRANTS Adobe's motion to dismiss, for the reasons stated below.


A. Factual Background

Adobe is a multinational software maker headquartered in San Jose, California. Among its offerings, the company provides a subscription-based service for customers to use some of Adobe's more popular software programs. ECF No. 1 ("Compl."), ¶ 2. Consumers can purchase annual subscriptions to certain individual software programs, such as Adobe Photoshop, for $9.99 per month. Id. ¶ 17. Alternatively, a consumer can purchase an annual subscription to what the company terms its Adobe Creative Cloud "complete plan" ("Creative Cloud"), which grants the subscriber access to a suite of software programs, for $49.99 per month. Id. The annual subscription to the complete plan contains an early termination fee provision ("Creative Cloud ETF" or "ETF"). Id. ¶ 20. The Creative Cloud ETF provides: "We'd hate to see you go, but if you cancel within the first 30 days, we'll give you a full refund. Otherwise, you'll be billed 50% of your remaining contract obligations." Id.

Plaintiff is a resident of Sacramento, California. Id. ¶ 8. In or around October 2013, Plaintiff purchased a subscription to the Creative Cloud. Id. In or around March 2014, Plaintiff cancelled his subscription and paid the 50 percent cancellation fee. Id.

B. Procedural Background

On June 27, 2014, Plaintiff filed the instant lawsuit in this Court. See Compl. Plaintiff alleges that Adobe's 50 percent cancellation fee violates California Civil Code § 1671(d) because it is an unlawful liquidate damages provision, and therefore is void and unenforceable. Id. ¶¶ 32-34. Plaintiff also contends that because the Creative Cloud ETF is void under § 1671(d), it is an unconscionable contract provision prohibited by California Consumer's Legal Remedies Act, Civil Code §§ 1750, et seq. Id. ¶¶ 41-43. Finally, Plaintiff contends, based on the foregoing allegations, that Adobe committed unlawful and unfair business practices in violation of California Business and Professions Code §§ 17200, et seq. Id. ¶¶ 48-58. Plaintiff seeks certification of a proposed nationwide class "of all current and former consumer subscribers of Defendant's Creative Cloud or individual programs within Creative Cloud... who are subject to, were charged, and/or paid an ETF or other fee related to cancellation of service."[1] Id. ¶ 26.

On September 18, 2014, Adobe filed the instant motion to dismiss, seeking dismissal of all of Plaintiff's claims. ECF No. 13 ("Mot."). Adobe also filed a request for judicial notice. ECF Nos. 14 & 14-1. Plaintiff filed an opposition to Adobe's motion to dismiss on November 4, 2014. ECF No. 18 ("Opp'n"). Plaintiff also filed a request for judicial notice. ECF No. 19. Adobe filed a reply in support of its motion on December 2, 2014. ECF No. 20 ("Reply").


A. Motion to Dismiss

Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss an action for failure to allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted). For purposes of ruling on a Rule 12(b)(6) motion, the Court "accept[s] factual allegations in the complaint as true and construe[s] the pleadings in the light most favorable to the nonmoving party." Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008).

Nonetheless, the Court is not required to "assume the truth of legal conclusions merely because they are cast in the form of factual allegations.'" Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (quoting W. Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981)). Mere "conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss." Adams v. Johnson, 355 F.3d 1179, 1183 (9th Cir. 2004); accord Iqbal, 556 U.S. at 678. Furthermore, "a plaintiff may plead [him]self out of court'" if he "plead[s] facts which establish that he cannot ...

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