United States District Court, E.D. California
DARREN HANDY, individually and on behalf of all others similarly situated, Plaintiff,
LOGMEIN, INC., Defendant.
ORDER GRANTING IN PART DEFENDANT'S MOTION TO DISMISS
JENNIFER L. THURSTON, Magistrate Judge.
Defendant LogMeIn, Inc. seeks dismissal of the Amended Complaint filed by Plaintiff Darren Handy pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. 32.) In particular, Defendant argues Plaintiff has failed to meet the heightened pleading standard for fraud claims and has failed to state a claim. Plaintiff opposes dismissal, arguing the factual allegations are sufficient. (Doc. 36.) The Court heard the oral arguments of the parties at a hearing on April 14, 2014. Because the Court finds Plaintiff has stated claims but has failed to provide sufficient factual detail to state all of the claims he identifies, Defendant's motion is GRANTED IN PART.
Plaintiff initiated this action by filing a complaint for himself and others similarly situated, seeking to challenge "Defendant's misleading business practices that caused Plaintiff damages." (Doc. 1 at 2, ¶ 1.) Plaintiff filed a First Amended Complaint on February 17, 2015. (Doc. 19.) Defendants filed a motion to dismiss on March 10, 2014, asserting Plaintiff "fails to satisfy Federal Rule of Civil Procedure 9(b)'s heightened pleading standard" for his claims. (Doc. 32 at 2.) Defendant contends the complaint should be dismissed without leave to amend, arguing Plaintiff cannot allege facts sufficient to cure the defects of the complaint.
II. Factual Allegations
Plaintiff alleges he purchased an application called Ignition from Defendant for $29.99 on April 4, 2010. (Doc. 19 at 3, ¶ 14.) According to Plaintiff, Ignition was advertised by Defendant as "[o]ne app to control all your information, " manage files, expand an iPad's possibilities, and "to be more productive." ( Id. at 4, ¶¶ 18-21.) Plaintiff alleges the advertising explained: "With one touch, you can directly control all of your computers from your iPad or iPhone. It's anywhere, anytime access to everything on your PC or Mac - all your files, applications and desktops - right at your fingertips." ( Id., ¶ 18.)
Plaintiff asserts that when he purchased Ignition, he "relied upon this representation that this fee would permit Plaintiff to use Defendant's app uninterrupted and for the foreseeable future." (Doc. 19 at 4, ¶ 15.) His reliance was "based upon the fact that Defendant did not warn Plaintiff, nor consumers similarly situated, that further fees may apply to ensure uninterrupted usage of Defendant's app, or that Defendant's app may, at a later time, be rendered obsolete by Defendant's own affirmative business practices." ( Id. at 3-4, ¶ 15.) Plaintiff alleges, "Had Defendant warned Plaintiff that additional fees may apply, Plaintiff would have reconsidered Plaintiff's purchase of Defendant's app." ( Id. at 4, ¶ 16.) Plaintiff alleges the failure to disclose the potential of additional fees "unfairly induced Plaintiff's purchase of Defendant's app." ( Id. at 4, ¶ 17.)
According to Plaintiff, "Following years of benefiting from Defendant's marketing, Defendant abruptly informed consumers on January 21, 2014 that consumers would no longer be able to utilize Ignition for the functions which consumers previously paid $29.99 as consideration thereto." (Doc. 19 at 5, ¶ 22.) Plaintiff alleges Defendant posted a message on its website, stating that beginning in January, the company would "gradually migrate users of LogMeIn-branded remote access offerings and Ignition-branded remote access offerings to a single, premium access product." ( Id., ¶ 24.) Plaintiff asserts that customers who "desired to continue using Ignition are required to purchase an account-level subscription of LogMeIn Pro, " which ranges in an annual cost from $99.00 for an individual to $449.00 for small businesses. ( Id., ¶ 23.) In addition, Plaintiff asserts he was informed that "[t]o continue using remote access, [he] would need to purchase an account-level subscription of LogMeIn Pro." ( Id., ¶ 26.)
Plaintiff alleges that after the notice was posted on the website, he received a message from Defendant stating:
You no longer have access to your computers.
In order to continue using remote access, you'll need to purchase an account subscription of LogMeIn Pro. But you can still take advantage of discounted introductory pricing, with packages starting at $49/year for two computers.
(Doc. 19 at 6, ¶ 28.) Plaintiff asserts he "was misled by Defendant into believing that the Ignition App, which he paid $29.99 for, had been shut down, and would no longer allow him remote access to his desktop at his office." ( Id., ¶ 29.) Because he believed "Defendant's statements that remote access would no longer be available to Plaintiff, " he "incurred additional expenses, including travel expenses, cost of fuel, and additional commuting time to and from his physical office, and also lost value stemming from his discontinuation of use of a product he had already paid $29.99 for." ( Id., ¶ 30.) Plaintiff asserts Defendant's messages to customers were "part of a widespread and systemic ruse to unfairly, fraudulently and unlawfully induce said consumers into purchasing paid subscription services rather than continue using the already purchased, free and clear, Ignition app services." ( Id., ¶ 32.)
Further, Plaintiff asserts he received a message from Defendant on July 17, 2014, which stated: "While your existing Ignition app will continue to work as it always has, it will no longer receive updates and bug fixes. However, you may switch to the new LogMeIn for iOS/Android app at any time. It's free to download and will work with a Pro account." (Doc. 19 at 7, ¶ 33.) According to Plaintiff, "Because regular updates and bug fixes are a necessary component of the continued use of any smart phone application, Plaintiff and other consumers' Ignition apps were rendered obsolete by Defendant's decision, forcing them to either discontinue using the services for which they already previously paid, or subscribe to a LogMeIn Pro subscription account, at additional costs." ( Id., ¶ 34.) He asserts, "As of August 19, 2014, Plaintiff reasonably believed that he could no longer utilize Defendant's app without paying the undisclosed fee now required by Defendant." ( Id. at 7-8, ¶ 39.)
Plaintiff contends that, "[r]egardless whether Defendant's representations to Plaintiff were true or untrue, such statements had a tendency to mislead Plaintiff and other similarly situated consumers, who relied upon such representations and either ceased use of the app." (Doc. 19 at 7, ¶ 37.) He asserts Defendant "improperly induced thousands of other consumers to either discontinue usage of [the] app or pay a substantial yearly fee." ( Id. at 8, ¶ 41.) Based upon these factual allegations, Plaintiff asserts Defendant is liable for violations of California Business and Professions Code §§ 17200 and 17500, which prohibit false advertising and unfair, unlawful, and fraudulent business practices. ( See Doc. 19 at 10-14.)
In response, Defendant filed the motion to dismiss now pending before the Court, seeking dismissal of all of Plaintiff's claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. (Doc. 32.)
III. Legal Standards for a Motion to Dismiss
A Rule 12(b)(6) motion "tests the legal sufficiency of a claim." Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal under Rule 12(b)(6) is appropriate when "the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). Thus, under Rule 12(b)(6), "review is ...