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Opperman v. Path, Inc.

United States District Court, N.D. California

March 23, 2015

MARC OPPERMAN, et al., Plaintiffs,
v.
PATH, INC., et al., Defendants

For Marc Opperman, Claire Moses, Gentry Hoffman, Steve Dean, Alan Beueshasen, Greg Varner, Rachelle King, Guili Biondi, Jason Green, Nirali Mandaywala, Plaintiffs: Cari Ann Cohorn, LEAD ATTORNEY, Cohorn Law, San Francisco, CA; David M. Given, Nicholas A. Carlin, LEAD ATTORNEYS, Phillips Erlewine Given & Carlin LLP, San Francisco, CA; Jeffrey Scott Edwards, LEAD ATTORNEY, PRO HAC VICE, Edwards Law, Austin, TX; Carl F. Schwenker, PRO HAC VICE, Law Offices of Carl F. Schwenker, Austin, TX; Dirk M. Jordan, Austin, TX; Ivo Michael Labar, James Matthew Wagstaffe, Michael John von Loewenfeldt, Kerr & Wagstaffe LLP, San Francisco, CA.

For Judy Long, Alicia Medlock, Scott Medlock, Plaintiffs: Cari Ann Cohorn, LEAD ATTORNEY, Cohorn Law, San Francisco, CA; David M. Given, Nicholas A. Carlin, LEAD ATTORNEYS, Phillips Erlewine Given & Carlin LLP, San Francisco, CA; Jeffrey Scott Edwards, LEAD ATTORNEY, PRO HAC VICE, Edwards Law, Austin, TX; Carl F. Schwenker, PRO HAC VICE, Law Offices of Carl F. Schwenker, Austin, TX; Dirk M. Jordan, Austin, TX; Michael John von Loewenfeldt, Kerr & Wagstaffe LLP, San Francisco, CA.

For Maria Pirozzi, Plaintiff: David M. Given, Nicholas A. Carlin, LEAD ATTORNEYS, Phillips Erlewine Given & Carlin LLP, San Francisco, CA; James Matthew Wagstaffe, Michael John von Loewenfeldt, Kerr & Wagstaffe LLP, San Francisco, CA; Jennifer Sarnelli, Gardy & Notis, LLP, Englewood Cliffs, NJ.

For Oscar Hernandez, Plaintiff: Nicholas A. Carlin, LEAD ATTORNEY, David M. Given, Phillips Erlewine Given & Carlin LLP, San Francisco, CA; Brian Russell Strange, John Theodore Ceglia, Strange & Carpenter, Los Angeles, CA; Michael John von Loewenfeldt, Kerr & Wagstaffe LLP, San Francisco, CA.

For Francisco Espitia, Plaintiff: Nicholas A. Carlin, LEAD ATTORNEY, David M. Given, Phillips Erlewine Given & Carlin LLP, San Francisco, CA; Michael John von Loewenfeldt, Kerr & Wagstaffe LLP, San Francisco, CA.

For Haig Arabian, Steven Gutierrez, Plaintiffs: Nicholas A. Carlin, LEAD ATTORNEYS, Phillips Erlewine Given & Carlin LLP, San Francisco, CA; Brian Russell Strange, John Theodore Ceglia, Strange & Carpenter, Los Angeles, CA; John Theodore Ceglia, Strange & Carpenter, Los Angeles, CA; Michael John von Loewenfeldt, Kerr & Wagstaffe LLP, San Francisco, CA.

For Lauren Carter, Stephanie Cooley, Claire Hodgins, Judy Paul, Theda Sandiford, Plaintiffs: David M. Given, Nicholas A. Carlin, LEAD ATTORNEYS, Phillips Erlewine Given & Carlin LLP, San Francisco, CA; James Matthew Wagstaffe, Michael John von Loewenfeldt, Kerr & Wagstaffe LLP, San Francisco, CA.

For Path, Inc., Defendant: Gregory J. Casas, LEAD ATTORNEY, Greenberg Traurig, LLP, Houston, TX; Jedediah Wakefield, LEAD ATTORNEY, Kathleen Lu, Tyler Griffin Newby, Fenwick & West LLP, San Francisco, CA.

For Twitter, Inc., Defendant: Ryan T. Mrazik, Timothy L. Alger, LEAD ATTORNEYS, Perkins Coie LLP, Seattle, WA; Tanya Deniese Henderson, LEAD ATTORNEY, PRO HAC VICE, Perkins Coie LLP, Dallas, TX; Amanda J Beane, PRO HAC VICE, Perkins Coie LLP, Seattle, WA; Julie Erin Schwartz, Perkins Coie LLP, Palo Alto, CA.

For Apple Inc, Defendant: Alan D. Albright, LEAD ATTORNEY, Gray Cary Ware & Freidenrich LLP, Austin, TX; Clayton Cole James, Hogan Lovells U.S. LLP, Denver, CO; Jenny Qian Shen, Hogan Lovells U.S. LLP, Menlo Park, CA; Jessica Adler Black Livingston, PRO HAC VICE, Hogan Lovells U.S. LLP, Denver, CO; Jessica S. Ou; Gibson Dunn, Palo Alto, CA.

For Yelp! Inc., Foodspotting, Inc., Defendants: Michael Henry Page, LEAD ATTORNEY, Durie Tangri LLP, San Francisco, CA; Peter D. Kennedy, LEAD ATTORNEY, George & Donaldson, L.L.P., Austin, TX.

For Instagram, Inc., Defendant: Lori R. Mason, LEAD ATTORNEY, Cooley LLP, Palo Alto, CA; Mazda Kersey Antia, Michael G. Rhodes, LEAD ATTORNEYS, Cooley LLP, San Diego, CA.

For Foursquare Labs, Inc., Defendant: David Frank McDowell, LEAD ATTORNEY, Morrison & Foerster LLP, Los Angeles, CA.

For Gowalla Incorporated, Defendant: Harmeet K. Dhillon, LEAD ATTORNEY, Dhillon Law Group Inc., San Francisco, CA; Krista Lee Baughman, Dhillon Law Group Inc., San Francisco, CA.

For Rovio Mobile Oy, Defendant: Judith R. Nemsick, LEAD ATTORNEY, Christopher G. Kelly, PRO HAC VICE, Holland & Knight LLP, New York, NY; Shannon W. Bangle, LEAD ATTORNEY, Beatty, Bangle, Strama P.C., Austin, TX; Shelley Gershon Hurwitz, LEAD ATTORNEY, Holland & Knight LLP, Los Angeles, CA.

For ZeptoLab UK Limited also known as ZeptoLab, Defendant: Christine Lepera, Jeffrey M. Movit, PRO HAC VICE, Mitchell Silberberg & Knupp LLP, New York, NY; Valentine Antonavich Shalamitski, Mitchell Silberberg Knupp LLP, Los Angeles, CA.

For Chillingo Ltd., Defendant: Adam Hugh Sencenbaugh, Hal L. Sanders, Jr., LEAD ATTORNEYS, Haynes & Boone LLP, Austin, TX; Jui-Ting Anna Hsia, LEAD ATTORNEY, Katherine Robison, ZwillGen Law LLP, San Francisco, CA; Jacob Alan Sommer, ZwillGen PLLC, Washington, DC; Marc J. Zwillinger, PRO HAC VICE, Zwillinger Genetski LLP, Washington, DC.

For Electronic Arts Inc., Defendant: Adam Hugh Sencenbaugh, Hal L. Sanders, Jr., LEAD ATTORNEYS, Haynes and Boone LLP, Austin, TX; Jui-Ting Anna Hsia, LEAD ATTORNEY, Katherine Robison, ZwillGen Law LLP, San Francisco, CA; Jacob Alan Sommer, ZwillGen PLLC, Washington, DC; Katherine Robison, ZwillGen Law LLP, San Francisco, CA; Marc J. Zwillinger, PRO HAC VICE, Zwillinger Genetski LLP, Washington, DC.

For Kik Interactive, Inc., Defendant: Lori R. Mason, LEAD ATTORNEY, Cooley LLP, Palo Alto, CA; Mazda Kersey Antia, Michael G. Rhodes, LEAD ATTORNEYS, Cooley LLP, San Diego, CA; Christopher Brian Durbin, Cooley LLP, Seattle, WA.

For Instagram, LLC, Defendant: Matthew Dean Brown, LEAD ATTORNEY, Cooley LLP, San Francisco, CA; Mazda Kersey Antia, LEAD ATTORNEY, Cooley LLP, San Diego, CA.

ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS

JON S. TIGAR, United States District Judge.

Re: ECF Nos. 493, 495, 496, 497, 498, 499, 500, 501, 503

THIS ORDER RELATES TO ALL CASES

Before the Court are nine motions to dismiss Plaintiffs' Second Consolidated Amended Complaint (" SCAC" ) filed by Defendants Twitter, Inc.; Foodspotting, Inc. and Yelp! Inc.; Foursquare Labs, Inc.; Chillingo Ltd., Electronic Arts Inc., Rovio Mobile Oy, and ZeptoLab UK Limited; Gowalla Incorporated; Instagram, LLC; Kik Interactive, Inc.; Apple Inc.; and Path, Inc. ECF Nos. 493, 495, 497, 498, 499, 500, 501, 503. For the reasons set forth below, the Court will grant the Motions in part and deny them in part.

I. BACKGROUND[1]

A. Factual History

This is a putative class action challenging conduct by Apple and various developers of applications for Apple devices (" App Defendants" ). SCAC, ECF No. 478, ¶ 1. Plaintiffs allege that, during the class period (July 10, 2008 through February 2012), they owned one or more of the three Apple products at issue here--the iPhone, iPad, and/or iPod touch (collectively, " iDevices" ). Id., ¶ 2. Plaintiffs allege that Apple engaged in a mass marketing campaign, whereby it " consciously and continuously misrepresented its iDevices as secure, and that the personal information contained on iDevices--including, specifically, address books, could not be taken without their owners' consent." Id., ¶ 3.

1. The " Contacts" App

Each iDevice comes pre-loaded with a " Contacts" mobile software application (or " App" ), which iDevice owners may use as an address book to input and store the following information about the owner's contacts:

(1) first and last name and phonetic spelling of each, (2) nickname, (3) company, job title and department, (4) address(es), (5) phone number(s), (6) e-mail address(es), (7) instant messenger contact, (8) photo, (9) birthday, (10) related people, (11) homepage, (12) notes, (13), ringtone, and (14) text tone.

Id., ¶ 54, 55. The " information in the Contacts App is among the most private and personal of such information a user maintains on an iDevice. The address book data reflects the connections, associations, and relationships that are unique to the owner of the iDevice." Id., ¶ 56. Further, the information stored therein " is highly personal and private," and " is not shared, is not publicly available, is not publicly accessible, and is not ordinarily obtainable by a third party unless the owner physically relinquishes custody of his or her iDevice to another individual." Id.

2. Apps' Use of Contact Information

According to Plaintiffs, and notwithstanding Apple's representations about the security of its iDevices, Apple knew that the devices permitted the App Defendants' Apps " to secretly upload, store, and in some cases disseminate [Plaintiffs'] personal and private address books as stored in the 'Contacts' App from the iDevices without [Plaintiffs'] knowledge or consent." Id., ¶ 2. In fact, Plaintiffs allege, Apple provided its " assistance and cooperation" to the App Defendants in accessing and misusing iDevice owners' address-book information. Id. And despite Apple's " unique knowledge that its iDevices were not as secure as represented," Apple " consistently and deliberately failed to reveal its products' security flaws to consumers . . . ." Id., ¶ 4. Because of " Apple's conduct, Plaintiffs and millions of other people purchased iDevices reasonably believing that they were secure when, in fact, they are not, and then downloaded Apps, including the Apps manufactured by App Defendants, and suffered the unexpected and unauthorized theft of their personal data." Id. Plaintiffs allege that they would not have paid as much for their iDevices had they known of the devices' security flaws. Id., ¶ ¶ 142, 148, 154, 161, 168, 174, 180, 186, 192, 197, 203, 210, 216, 223, 230.

3. The App Store and App Development

Apple offers Apps solely through its App Store, which Apple launched in July 2008. Id., ¶ 39. " Apple has exclusive control over what Apps are available in the App Store, and the iDevices are designed to only accept software downloads from the App Store . . . ." Id. According to Plaintiffs, " [t]he App Store and the availability of numerous Apps to perform different functions are key parts of Apple's marketing strategy and the popularity of the iDevices." Id. ¶ 40.

In order to offer an App through the App store, " a third-party developer must be registered as an 'Apple Developer,' agree to the iOS Developer Program License Agreement with Apple, and pay a $99 yearly registration fee." Id., ¶ 44. To further control the Apps offered through its store, " Apple provides third-party developers with review guidelines, and conducts a review of all applications submitted for inclusion in the App Store for compliance with these documents." Id. In addition, Apple provides a host of tools, as well as support services and guidelines to third-party developers who are licensed to provide Apps through the App Store. Id., ¶ ¶ 44, 45, 49, 53. The result of these circumstances, according to Plaintiffs, is that " all iDevice Apps were built, in part, by Apple." Id., ¶ 46.

Apple's guidelines provide that " Apps 'cannot transmit data about a user without obtaining the user's prior permission and providing the user with access to information about how and where the data will be used.'" Id., ¶ 47. And " Apple has sole discretion over the App approval process and may reject any App at any time and for any reason," including a violation of the terms and conditions of the licensing agreement, providing Apple with inaccurate information, or if Apple learns the App " violates, misappropriates, or infringes the rights of a third party." Id.

Plaintiffs further contend that,

[d]espite Apple's public statements that it protects its iDevice owners' privacy, Apple's App Developer Program tutorials and developer sites (which Apple does not make available to consumers) teach App developers just the opposite--how to code and build Apps that non-consensually access, use and upload the mobile address books maintained on Apple iDevices--precisely what these App Defendants' identified Apps did. As App developers, the App Defendants were exposed to and aware of these tutorials and developer sites and, on information and belief, their personnel utilized them to build the identified Apps.

Id., ¶ 52. In particular, Plaintiffs allege that Apple's iOS Human Interface Guidelines include the following statements:

Get information from iOS, when appropriate. People store lots of information on their devices. When it makes sense, don't force people to give you information that you can easily find for yourself, such as their contacts or calendar information.
It's often said that people spend no more than a minute or two evaluating a new app. . . . Avoid displaying an About window or a splash screen. In general, try to avoid providing any type of startup experience that prevents people from using your application immediately. Delay a login requirement for [as] long as possible. Ideally, users should be able to navigate through much of your app and understand what they can do with it before logging in.
If possible, avoid requiring users to indicate their agreement to your [end-user license agreement] when they first start your application. Without an agreement displayed, users can enjoy your application without delay.

Id., ¶ 88 (emphases omitted).

B. Procedural History

This action began as several class actions filed both in California and Texas.[2] The four actions were consolidated here, where Plaintiffs filed their Consolidated Amended Complaint (" CAC" ), ECF No. 362, on September 3, 2013.

Defendants filed several motions to dismiss the CAC, and on May 14, 2014, the Court granted the motions in part. ECF No. 471. The Court dismissed Plaintiffs' false and misleading advertising, consumer legal remedies/misrepresentation, deceit, Unfair Competition Law (" UCL" ), and conversion claims, which Plaintiffs continue to assert in their SCAC, and also dismissed several other claims, which Plaintiffs no longer assert. Id. The Court also denied the motions to dismiss Plaintiff's invasion of privacy (intrusion upon seclusion) claim. Id.

Plaintiffs then filed their SCAC. In the SCAC, Plaintiffs allege conversion and invasion of privacy (intrusion upon seclusion) claims against all Defendants[3], and the following claims against only Apple: (1) violation of California's False and Misleading Advertising Law (" FAL" ), Business and Professions Code § 17500, et seq.; (2) violation of California's Consumer Legal Remedies Act (" CLRA" ), Civil Code § 1750, et seq.; (3) deceit, California Civil Code § 1709, et seq.; and (4) violation of California's UCL, Business and Professions Code § 17200, et seq. ECF No. 478, ¶ ¶ 243-323. Plaintiffs request certification of a class; an injunction prohibiting Defendants from continuing the challenged conduct; actual, compensatory, statutory, presumed, punitive, and/or exemplary damages; declaratory relief; restitution; the imposition on Defendants of constructive trusts; and fees, costs, and interest. Id. at 78-79.

In August 2014, Defendants filed these motions to dismiss. See ECF Nos. 493, 495, 497, 498, 499, 500, 501, 503. All of the motions challenge all claims alleged against each defendant, except that Path does not challenge the invasion of privacy (intrusion upon seclusion) claim alleged against it. Id.

II. JURISDICTION

This Court has jurisdiction over this case under the Class Action Fairness Act of 2005 because the amount in controversy exceeds $5 million, exclusive of interest and costs, there are 100 or more class members, and the parties are minimally diverse. 28 U.S.C. § 1332(d).

III. LEGAL STANDARD

A complaint may be dismissed for lack of jurisdiction under Federal Rule of Civil Procedure 12(b)(1). In resolving a challenge to the adequacy of the jurisdictional allegations in a complaint, a court assumes that the allegations in the complaint are true, and draws all reasonable inferences in the plaintiff's favor. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004) (citations omitted). If, viewing the allegations in the light most favorable to plaintiff, the Court finds that a plaintiff's claim does not meet the Article III case-or-controversy requirement, and therefore that the plaintiff does not have standing to bring the claim, the Court must dismiss the claim for lack of jurisdiction. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101-04, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).

A court may also dismiss a complaint or claims asserted therein pursuant to Federal Rule of Civil Procedure 12(b)(6). The court should grant a motion to dismiss for failure to state a claim under Rule 12(b)(6) if the complaint does not proffer " enough facts to state a claim to relief that is plausible on its face." Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (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." Id. In considering a motion to dismiss, the court accepts the material facts alleged in the complaint, together with all reasonable inferences to be drawn from those facts, as true. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). But " the tenet that a court must accept a complaint's allegations as true is inapplicable to threadbare recitals of a cause of action's elements, supported by mere conclusory statements." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The Court will dismiss a claim when it is not based on a cognizable legal theory or the plaintiff has not pleaded sufficient facts to support that theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

In addition, fraud-based claims are subject to a heightened pleading standard under Fed.R.Civ.P. 9(b). This heightened standard applies when evaluating a Rule 12(b)(6) motion to dismiss. Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). Fraud allegations must be specific enough to give the defendant notice of the particular misconduct alleged to constitute the fraud so that the defendant may defend against the charge. Id. In general, allegations sounding in fraud must contain " an account of the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Swartz v. KPMG LLP, 476 F.3d 756, 765 (9th Cir. 2007). On the other hand, " [m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed. R. Civ. Pro. 9(b). Similarly, facts that are within the defendants' sole knowledge may be pleaded generally. Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989).

If a court dismisses the complaint or a claim alleged therein, it must grant leave to amend unless amendment would be futile. Lucas v. Dep't of Corrections, 66 F.3d 245, 248 (9th Cir. 1995). But where a court has previously granted a plaintiff leave to amend, the court's discretion to deny leave to amend and dismiss a claim with prejudice is " particularly broad." See Salameh v. Tarsadia Hotel, 726 F.3d 1124, 1133 (9th Cir. 2013), cert. denied, 134 S.Ct. 1322, 188 L.Ed.2d 306 (2014). When a plaintiff has been granted leave to amend, but has failed to cure the deficiencies identified in an earlier complaint, a district court may find that the plaintiff has no additional facts or theories to plead, and may therefore dismiss with prejudice. Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 1007 (9th Cir. 2009) (citations omitted).

IV. APPLE'S MOTION TO DISMISS


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