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Faegin v. Livingsocial, Inc.

United States District Court, S.D. California

March 16, 2015

TROY FAEGIN, an individual on behalf of himself, and ANA MARQUEZ, an individual on behalf of herself, Plaintiffs,
v.
LIVINGSOCIAL, INC., a Delaware corporation authorized to do business in the state of California, DEONTEE' HICKERSON, and individual, DAVID THORNTON, an individual, and TIFFANY HARRIS, and individual, Defendants.

ORDER

WILLIAM Q. HAYES, District Judge.

The matter before the Court is the Motion to Dismiss First Amended Complaint Against LivingSocial, Inc. filed by Defendant LivingSocial, Inc. (ECF No. 17).

I. Background

On February 2, 2014, Plaintiffs Troy Faegin, and Ana Marquez initiated this action by filing the Complaint against Defendants LivingSocial, Inc. ("LivingSocial"), Deontee' Hickerson, and David Thornton. (ECF No. 1). On June 17, 2014, Plaintiff filed the First Amended Complaint ("FAC"), which is the operative complaint, adding Tiffany Harris as a defendant. (ECF No. 7).

On July 9, 2014, Defendant LivingSocial filed a Motion to Compel Arbitration. (ECF No. 10). On October 15, 2014, the Court issued an Order denying Defendant LivingSocial's Motion to Compel Arbitration. (ECF No. 15).

On October 27, 2014, Defendant LivingSocial filed the Motion to Dismiss First Amended Complaint Against LivingSocial, Inc. (ECF No. 17). On November 24, 2014, Plaintiffs filed an opposition. (ECF No. 18). On December 1, 2014, Defendant LivingSocial filed a reply. (ECF No. 20).

II. Allegations of the FAC

Plaintiffs Ana Marquez and Troy Feagin are business partners and joint owners of A.T. Your Service Cleaning and Janitorial. A.T. Your Service Cleaning and Janitorial is a partnership whose main place of business is in San Diego County. A.T. Your Service Cleaning advertises and does business in San Diego County. A.T. Your Service Cleaning and Janitorial "is a cleaning service...." (ECF No. 7 at 5).

Defendant LivingSocial is a "strategic business marketing partner, creating online promotions, ' in other words, a marketplace that partners with vendors to advertise and offer deals and discounts to potential customers." Id. at 3.

Defendants Deontee' Hickerson, David Thornton, and Tiffany Harris are business partners and joint owners of At Your Service Housekeeping. At Your Service Housekeeping is a partnership that is also referred to as "AYS Housekeeping Services, " "At Your Service Housekeeping Company, " and "At Your Service Housekeeping Services." Id. at 4. According to its website, At Your Service Housekeeping "is a cleaning service, catering to both residences and businesses." Id. At Your Service Housekeeping advertises and operates in San Diego County.

From March 2012 through April 2012, Plaintiffs partnered with Defendant LivingSocial to advertise At Your Service Cleaning and Janitorial in San Diego County.

From May 2012 until July 2012, Defendants Hickerson and Thornton, "by and through At Your Service [Housekeeping], partnered with" Defendant LivingSocial to advertise At Your Services Housekeeping's cleaning services in San Diego County. Id. at 5. "Defendants Hickerson, Harris, and Thornton, by and through At Your Service [Housekeeping], unlawfully doing business in California, failed almost uniformly to fulfill and honor vouchers purchased on [D]efendant LivingSocial's website." Id. "Defendants Hickerson, Harris, and Thornton's chosen name, At Your Service Housekeeping, ' was and is similar to Plaintiffs' business name, and consumers were foreseeably caused to be confused about the identity of the Plaintiff and At Your Service [Housekeeping], and continue to be confused." Id.

"The vouchers sold by [D]efendant LivingSocial failed to contain a phone number for At Your Service [Housekeeping], causing customers to search for the phone numbers online and to confuse and associate Plaintiffs with At Your Service [Housekeeping]." Id. at 6. "The false advertising and fraudulent activity of the Defendants diverted consumers expecting to be serviced by Plaintiffs away from Plaintiff, resulting in a loss of business, revenue, and reputation." Id. "The conduct of Defendants Hickerson, Harris, and Thornton, by and through At Your Service [Housekeeping], and LivingSocial caused confused consumers, disappointed and irritated that Defendants Hickerson and Thornton, by and through At Your Service [Housekeeping], failed to honor their vouchers, to issue and write unwarranted negative reviews of Plaintiffs' services on popular review websites such as Yelp, Google, Facebook, etc." Id. "Because of the conduct of Defendants and the resulting negative reviews, Plaintiffs have suffered a loss of business, revenue, and reputation." Id.

The FAC asserts the following claims for relief: (1) mark infringement in violation of California Business and Professional Code § 14200 et seq. ("California mark infringement") (against Defendants LivingSocial, Hickerson, and Thornton); (2) willful mark infringement in violation of California Business and Professional Code § 14200 et seq. ("California willful mark infringement") (against Defendants LivingSocial, Hickerson, and Thornton); (3) false advertising in violation of 15 U.S.C. § 1051 et seq. ("Lanham Act false advertising") (against Defendants LivingSocial, Hickerson, and Thornton); (4) mark infringement in violation of 15 U.S.C. § 1051 et seq. ("Lanham Act mark infringement") (against Defendants LivingSocial, Hickerson, and Thornton); (5) false advertising in violation of California Business and Professional Code § 17500 et seq. ("California false advertising") (against Defendants Hickerson and Thornton); (6) false advertising in violation of California Business and Professional Code § 17500 et seq. ("California false advertising") (against Defendants LivingSocial, Hickerson, and Thornton); (7) fraud (against Defendants Hickerson and Thornton); and (8) unfair business practices in violation of California Business and Professional Code § 17200 et seq. ("violation of the UCL") (against all Defendants).

III. Discussion

Defendant LivingSocial moves to dismiss all claims in the FAC asserted against it. Defendant LivingSocial moves to dismiss Plaintiffs' first, second, sixth, and eighth claims for California mark infringement, California willful mark infringement, California false advertising, and violation of UCL, respectively, on the ground that it is entitled to immunity under the Communications Decency Act ("CDA"), 47 U.S.C. section 230(c)(1). Defendant LivingSocial moves to dismiss Plaintiffs' third and fourth claims for Lanham Act false advertising and Lanham Act mark infringement, respectively, to the extent that they seek any relief other than injunctive relief, on the ground that Defendant LivingSocial is entitled to the Lanham Act's safe harbor provision for online advertisers. Defendant LivingSocial moves to dismiss Plaintiffs' second claim for California willful mark infringement on the ground that Plaintiffs have failed to sufficiently plead willfulness. Defendant LivingSocial moves to dismiss Plaintiffs' fourth claim for Lanham Act mark infringement on the ground that the Lanham Act does not recognize "niche or localized geographic fame." (ECF No. 17-1 at 16). Defendant LivingSocial moves to dismiss Plaintiffs' eighth claim for violation of the UCL on the ground that Plaintiffs have failed to plead sufficient facts to support it. Plaintiffs oppose dismissal on all grounds raised by Defendant LivingSocial and request leave to amend should the Court grant Defendant LivingSocial's Motion to Dismiss.

A. 12(b)(6) Standard

Federal Rule of Civil Procedure 12(b)(6) permits dismissal for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). Federal Rule of Civil Procedure 8(a) provides that "[a] pleading that states a claim for relief must contain... a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

"[A] plaintiff's obligation to provide the grounds' of his entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Fed.R.Civ.P. 8(a)). "To survive 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 Twombly, 550 U.S. at 570). "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." Id. (citation omitted). "[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. (citation omitted). "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. at 679. "In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief." Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations and citation omitted).

B. CDA Immunity (First, Second, Sixth, and Eighth Claims)

Defendant LivingSocial contends that the Communications Decency Act ("CDA") provides broad immunity to providers of interactive computer services from liability for allegedly improper and illegal content created by third parties. Defendant LivingSocial contends that it is undisputed that LivingSocial did not play any role in helping the co-Defendants adopt and begin using the name At Your Service Housekeeping, the source and basis of Plaintiffs' causes of action. Defendant LivingSocial contends that Plaintiffs allege that At Your Service Housekeeping is the "chosen name" of Defendants Hickerson, Thornton, and Harris. Defendant LivingSocial contends that "[b]ut for the co-Defendants' choice of that business name, none of Plaintiffs' claims would exist so, as a matter of law, LivingSocial cannot be liable for merely promoting and running advertisements for the co-Defendants' business." (ECF No. 17-1 at 13).

Plaintiffs contend that LivingSocial does not qualify as an interactive computer service provider. Plaintiffs contend that "merely operating a web site does not qualify Defendant LivingSocial as an interactive computer service." (ECF No. 18 at 15). Plaintiffs contend that the CDA does not provide immunity in this case because Defendant LivingSocial is an information content provider, even if the Court were to determine that LivingSocial is an interactive computer service. Plaintiffs contend that Defendant LivingSocial does not ...


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