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I.B. v. Facebook, Inc.

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

March 10, 2015

I.B., by and through his guardian ad litem GLYNNIS BOHANNON, et al., Plaintiffs,
v.
FACEBOOK, INC., Defendant

For Glynnis Bohannon, individually and on behalf of her minor Child I.B. and on behalf of all others similarly situated, J. W., by and through his guardian ad litem Steven Wright, Julie Wright, individually and on behalf of all others similarly situated, Plaintiffs: John R. Parker, Jr., LEAD ATTORNEY, Curtis Brooks Cutter, Kershaw, Cutter & Ratinoff, LLP, Sacramento, CA; Daniel B. Edelman, PRO HAC VICE, Katz, Marshall and Banks LLP, Washington, DC.

For I. B., by and through his guardian ad litem Glynnis Bohannon, Plaintiff: John R. Parker, Jr., LEAD ATTORNEY, Curtis Brooks Cutter, Kershaw, Cutter & Ratinoff, LLP, Sacramento, CA; Benjamin Gordon Edelman, PRO HAC VICE, Attorney of the Law, Brookline, MA; Daniel B. Edelman, PRO HAC VICE, Katz, Marshall and Banks LLP, Washington, DC.

For Facebook, Inc., Defendant: Whitty Somvichian, LEAD ATTORNEY, Benjamin Hansel Kleine, Kristine Anne Forderer, Michael G. Rhodes, Cooley LLP, San Francisco, CA.

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR CLASS CERTIFICATION

[Re: ECF 82]

BETH LABSON FREEMAN, United States District Judge.

As teenagers' use of online social media has become ubiquitous, juvenile behaviors that previously occurred offline have migrated onto the Internet. One such behavior -- a minor spending a parent's money without permission -- gives rise to this case.

Defendant Facebook, like many Internet companies, permits its users, including minors, to make purchases through its website. The named minor Plaintiffs in this case, I.B. and J.W., both spent a parent's money without permission over Facebook, in slightly different ways: I.B. asked his mother for $20 to make purchases in a game called " Ninja Saga," but then spent more than he was permitted; while J.W. took his parent's debit card without permission and began making purchases. As parents across the United States know all too well, such situations are not unique to purchases made over the Internet.

Now, these two minors seek to invoke the protections of century-old protections enshrined in California law, which recognize that minors will occasionally use their lack of judgment to enter into contractual relationships and later assert the right to walk away from the contract. The named Plaintiffs contend that Facebook's policy of representing that purchases made through its website are final, or otherwise non-refundable, violates Section 6701(c) of the California Family Code, which states that a contract is void if the minor " make[s] a contract relating to any personal property not in the immediate control of the minor." In the alternative, the named Plaintiffs contend that Facebook's policy violates Family Code Section 6710, which permits a minor to disaffirm any contract " before majority or within a reasonable time afterwards."

I.B. and J.W., each through a parent as guardian ad litem, presently move the Court to certify the following class and subclass under Federal Rule of Civil Procedure 23(b)(2):

All Facebook users who are or were minor children according to Facebook's own records for the four years preceding the date on which the original complaint was filed through the date on which a class is certified (" the Minor Class" ). Within the Minor Class is a subclass of Minors from whose Facebook accounts Facebook Credits were purchased. (" the Minor Purchasing Subclass" ).

Third Amended Complaint (" TAC" ) ¶ 36.

The parties appeared for oral argument on December 18, 2014. The Court then requested supplemental briefing on the question of whether it could certify a nationwide class of minors pursuant to the California Family Code, which the parties provided on January 9, 2015. Having reviewed the briefing and oral argument of the parties, and for the reasons outlined below, the Court GRANTS IN PART AND DENIES IN PART Plaintiffs' motion for class certification.

I. BACKGROUND

A. Factual Background and Class Allegations

In October 2011, Plaintiff I.B., a minor, asked his mother Glynnis Bohannon for permission to spend $20 on his Facebook account to purchase Facebook Credits to use in a game called Ninja Saga.[1] I.B. gave his mother $20, and used her Wells Fargo MasterCard to purchase Facebook Credits. I.B. claims he was unaware that Facebook would store this credit card information, and thereafter continued to make in-game purchases in Ninja Saga. I.B. believed these purchases were being made with virtual currency, and that his mother's credit card was not being charged for these purchases. Glynnis Bohannon's card was ultimately charged several hundred dollars. Ms. Bohannon sought a refund from Facebook, but was not provided one until after this action was filed. See TAC ¶ 28; Second Amended Compl., ECF 18 at ¶ 28 (" Since being served with the initial complaint in this action, Facebook has apparently provided a 'courtesy' refund to Ms. Bohannon." ). I.B. is a resident of Arizona. TAC ¶ 8.

In December 2011, Plaintiff J.W., a minor, took his parents' debit card without their permission and began to make a series of charges on Facebook through the use of Facebook Credits. These charges totaled over $1,000. Unlike I.B., J.W. did not have his parents' initial permission to make charges on Facebook. Upon learning of J.W.'s actions, his father, Steven Wright, contacted Facebook to dispute the charges and request a refund. In this interaction with Facebook, Mr. Wright stated that neither he nor his wife had authorized the use of their debit card. Facebook provided Mr. Wright with a partial refund of $59.90, despite a Facebook representative telling him that he had " refunded the charges to your funding instrument." TAC ¶ 33. At the time the TAC was filed, the Wrights had not been refunded the remaining $999.30 spent by J.W. without their permission. See TAC ¶ ¶ 31-33. J.W. is a resident of California. TAC ¶ 9.

Both Plaintiffs contend that Facebook misinforms its users, including minors, that " all sales are final." TAC ¶ 4; see also Parker Decl. Exh. B. at 1 (stating under " Payment Terms," revised on June 3, 2009, that " [p]urchases of credits are non-refundable" ); Parker Decl. Exh. D at 32:4-16 (testimony by Bill Richardson stating that, as of 2012, Facebook's refund policies for individuals between 13 and 17 were the same as its policies for adults, but that policies for minors under 13 were different). Plaintiffs contend that under its policies, Facebook " routinely refuses requests by children and their parents and legal guardians to provide refunds for transactions that are subject to disaffirmance under California law." TAC ¶ 16.

Plaintiffs seek declaratory relief under 28 U.S.C. § 2201, requesting a determination by the Court that purchases made by minors through their Facebook accounts are void or voidable. See TAC ¶ 68. Plaintiffs also seek individualized restitution. See TAC at p. 20.

B. Procedural Background

Plaintiffs first filed this putative class action on April 17, 2012. The case has been subject to several rounds of motions to dismiss. Prior orders by Judge Claudia Wilken, to whom this case was assigned prior to being reassigned to the undersigned, eliminated a number of claims that the Plaintiffs sought to assert -- notably, dismissing all claims by the parents of the minor children, and dismissing all of the minor children's claims except those brought pursuant to Family Code Sections 6701(c) and 6710. See ECF 44, 58. Defendant ultimately answered Plaintiffs' TAC on January 20, 2014. See ECF 62. This motion for class certification followed.[2]

II. LEGAL STANDARD

Recognizing that " [t]he class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only," Federal Rule of Civil Procedure 23 demands that two requirements be met before a court certifies a class. Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1432, 185 L.Ed.2d 515 (2013).

A party must first meet the requirements of Rule 23(a), which demands that the party " prove that there are in fact sufficiently numerous parties, common questions of law or fact, typicality of claims or defenses, and adequacy of representation." Behrend at 1432. If a party meets Rule 23(a)'s requirements, the proposed class must also satisfy at least one of the requirements of Rule 23(b). Here, Plaintiffs invoke Rule 23(b)(2), which demands that " the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole."

The party seeking class certification bears the burden of showing affirmative compliance with Rule 23. See, e.g., Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551, 180 L.Ed.2d 374 (2011). A court's analysis of class certification " may entail some overlap with the merits of the plaintiff's underlying claim[s]," Amgen Inc. v. Conn. Ret. Plans & Trust Funds, 133 S.Ct. 1184, 1194, 185 L.Ed.2d 308 (2013), though the merits can be considered only to the extent they are " relevant to determining whether the Rule 23 prerequisites to class certification are satisfied." Id. at 1195. Within Rule 23's framework, the district court maintains broad discretion over whether to certify a class or subclass. See, e.g., Zinser v. Accufix Research Institute, Inc., 253 F.3d 1180, 1186 (9th Cir. 2001).

III. DISCUSSION

A. Preliminary Issues

Before reaching the question of whether a class should be certified under Rule 23, the Court is faced with three preliminary issues: (1) whether sections 6701(c) and 6710 of the California Family Code may be invoked by minors who reside outside of California; (2) whether the named Plaintiffs have standing to bring suit for injunctive relief; and (3) the extent to which Judge Wilken's orders on Defendant's two motions to dismiss limit the circumstances in which Plaintiffs can seek disaffirmance -- Defendant contends the orders limit Plaintiffs to seek disaffirmance only where the minor purchaser used money outside of his or her control, while Plaintiffs contend that they may assert claims for disaffirmance of any purchase made by a minor over his or her Facebook account. The Court deals with each of these issues in turn.

1. The Extraterritorial Applicability of Sections 6701 and 6710

At the class certification hearing, the Court raised the issue whether Sections 6701 and 6710 could be invoked by minors, including named Plaintiff I.B., who are not residents of California, and requested further briefing. See ECF 123 at 40.

In California, state statutes are presumed not to have extraterritorial effect. See, e.g., N. Alaska Salmon Co. v. Pillsbury, 174 Cal. 1, 4-6, 162 P. 93 (1916). This presumption can be rebutted where " a contrary intent is clearly expressed or reasonably to be inferred from the language of the act or from its purpose, subject-matter, or history." Cotter v. Lyft, 60 F.Supp.3d 1059, 2014 WL 3884416, at *2 (N.D. Cal. Aug. 7, 2014) (citing Pillsbury, 174 Cal. 1, 4, 162 P. 93). A number of courts have confronted this extraterritoriality question in the context of the California Labor Code and the UCL, and have determined that laws passed to protect California workers do not apply to ...


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