Circle Click Media LLC v. Regus Management Group LLC

          ORDER GRANTING DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT DOCKET NO. 393

          EDWARD M. CHEN United States District Judge

         I. INTRODUCTION

         Plaintiffs Circle Click Media, LLC and CTNY Insurance Group filed the instant putative class action against Defendants Regus Management Group, LLC, Regus Business Centre LLC, Regus PLC, and HQ Global Workplaces LLC (collectively, Regus). Docket No. 65 (Second Amended Complaint) (SAC). Regus is in the business of leasing fully equipped commercial office space using an Office Service Agreement (OSA). See SAC at ¶¶ 34-41. The OSA identifies the office location, lease term, initial payment amount, and monthly payment amount. Id. at ¶ 23; e.g., Docket No. 346 (Aalaei Dec.), Exh. 1. Plaintiffs allege that the actual monthly payment amount (as stated in Regus's monthly invoices) exceed the monthly amount stated on the OSA because Regus charges mandatory fees that are not adequately disclosed until after the lease is signed. Based on these allegations, Plaintiffs brought claims for: (1) violations of California Business & Professions Code section 17200 (Unfair Competition Law) (UCL); (2) violations of California Business & Professions Code section 17500 (California False Advertising Law) (FAL), and (3) unjust enrichment.

         Regus now moves for partial summary judgment as to whether Circle Click^[1] may seek injunctive relief under the UCL, and whether Circle Click could seek an injunction against Regus on behalf of anyone other than itself Docket No. 393 (Mot.). Regus's motion for partial summary judgment came on for hearing before the Court on June 30, 2016. For the reasons stated below, the Court GRANTS Regus's motion for summary judgment.

         II. BACKGROUND

         In July 2015, Regus moved to dismiss Plaintiffs' claims for lack of standing under Article III. Docket No. 271. Regus argued that Plaintiffs lacked standing to seek injunctive relief on behalf of themselves and the putative classes because there was no threat of future harm, as both Plaintiffs had shown that they did not plan to rent office space from Regus in the future. Id. at 14. Plaintiffs did not dispute this or otherwise suggest that they intended to rent office space from Regus, but instead argued that the fact that the plaintiffs are aware of the false and misleading nature of the advertisements did not preclude injunctive relief under Article III. Docket No. 295 at 24. In so arguing, Plaintiffs relied on Henderson v. Gruma Corp., in which the district court had rejected an argument that a plaintiff lacks standing to seek injunctive relief where a plaintiff was now aware of the misleading label, as to otherwise hold would be to preclude federal courts from enjoining false advertising under California consumer protection laws. CV 10-04173 AHM (AJWx), 2011 U.S. Dist. LEXIS 41077, at *19-20 (CD. Cal. Apr. 11, 2011). In denying Regus's motion to dismiss, Judge Conti agreed with the Henderson decision's reasoning and found that Plaintiffs met the requirements for standing and could seek injunctive relief Docket No. 335 (Conti Ord.) at 14.

         Plaintiffs in turn moved for class certification, seeking certification of a California class and a New York class. Docket No. 238. In the same order denying Regus's motion to dismiss, Judge Conti denied Plaintiffs' motion for class certification without prejudice, finding problems with typicality and predominance. Conti Ord. at 21-33.

         Plaintiffs then brought a renewed motion for class certification before this Court. Docket No. 345. On March 11, 2016, the Court denied the motion, finding that in addition to a potential ascertainability problem, Plaintiffs could not show predominance. Docket No. 374 (Cert. Ord.) at 12, 17. The Court subsequently denied Plaintiffs' motion for leave to file a motion for reconsideration of the Court's order denying class certification. Docket No. 395 (Recons. Ord.) at 5, 7.

         III. DISCUSSION

         A. Standard of Review

         The Court shall grant a motion for summary judgment “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. Proc. 56(a). An issue of fact is genuine only if there is sufficient evidence for a reasonable jury to find for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). “The mere existence of a scintilla of evidence in support of the [non-moving party]'s position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-moving party].” Id. at 252. At the same time, “all reasonable inferences must be drawn in favor of the non-movant.” John v. City of El Monte, 515 F.3d 936, 941 (9th Cir. 2008).

         The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the non-moving party has the ultimate burden of proof, the moving party may prevail on a motion for summary judgment by pointing to the non-moving party's failure “to make a showing sufficient to establish the existence of an element essential to that party's case.” Id. at 322.

         B. Article III Standing to Seek Injunctive Relief

         In general, Article III standing requires the party invoking federal jurisdiction to show that it has “suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant, and that the injury fairly can be traced to the challenged action and is likely to be redressed by a favorable decision.” Valley Forge Christian Coll. v. Ams. United for Separation of Church & State, 454 U.S. 464, 472 (1982) (internal citations and quotations omitted). Where a plaintiff is seeking injunctive relief, the plaintiff “must demonstrate that they are realistically threatened by a repetition of the violation.” Gest v. Bradbury, 443 F.3d 1177, 1181 (9th Cir. 2006) (internal quotation omitted); see also Chapman v. Pier 1 Imports (U.S.), Inc., 631 F.3d 939, 946 (9th Cir. 2011) (“to establish standing to pursue injunctive relief . . . [the] plaintiff must demonstrate a real and immediate threat of repeated injury in the future”) (internal quotation omitted).

         Here, Regus argues that Circle Click lacks Article III standing to seek an injunction under the UCL because Circle Click no longer has a contractual relationship with Regus. Mot. at 5. Plaintiffs did not respond substantively to the argument, but instead contend that because Judge Conti previously decided the issue in favor of Plaintiffs, Regus is bringing an improper motion for reconsideration.^[2] Docket No. 397 (Opp.) at 3. At the hearing, Plaintiffs argued that it would be unfair to decide the standing issue without allowing Plaintiffs to brief the issue.

         The Court finds that it is appropriate to decide the standing issue without further briefing. Standing is a matter of subject matter jurisdiction, which affects the Court's ability to review Plaintiffs' injunction claims. See Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1121 (9th Cir. 2010) (“The Article III case or controversy requirement limits federal courts' subject matter jurisdiction by requiring, inter alia, that plaintiffs have standing and that claims be 'ripe' for adjudication”); see also Breeden v. Kirkpatrick & Lockhart LLP (In re Bennett Funding Grp., Inc.), 336 F.3d 94, 102 (2d Cir. 2003) (rejecting argument that “the district court could not dismiss on standing grounds after denying a Rule 12(b) motion on the same ground” because “[d]enial of the motion to dismiss on standing grounds does not preclude later consideration on summary judgment or indeed at trial as standing is an aspect of subject matter jurisdiction”). Standing under Article III can be raised at any time, even sua sponte because of the jurisdictional nature of the question. City of Los Angeles v. Cnty. of Kern, 581 F.3d 841, 845 (9th Cir. 2009) (explaining that Article III standing is a jurisdictional limit that “cannot be waived by any party, and there is no question that a court can, and indeed must, resolve any doubts about this constitutional issue sua sponte”).

         Further, Plaintiffs had ample opportunity to brief the issue, whether in their opposition papers or their motion to file supplemental briefing; instead of responding on the merits, Plaintiffs doubled down on their position that Regus's motion was an improper motion for reconsideration, and never addressed the substance of the argument. Plaintiffs made this decision despite being put on notice that the standing issue would be raised in the instant motion for summary judgment; during the March 24, 2016 status conference, the Court observed that “[t]here may be a standing issue as well, ” which Regus stated it would brief. Docket No. 392 (March 24, 2016 Trans.) at 18:4-6. In short, the ...