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Ingalls v. Spotify USA, Inc.

United States District Court, N.D. California

July 17, 2017

GREGORY INGALLS and TONY HONG, individually and on behalf of all others similarly situated, Plaintiffs,
v.
SPOTIFY USA, INC., a Delaware corporation, and DOES 1-10, inclusive, Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

          WILLIAM ALSUP UNITED STATES DISTRICT JUDGE

         INTRODUCTION

         In this unfair competition suit alleging violations of California's Automatic Renewal Law (“ARL”), defendant moves for summary judgment. Plaintiff opposes.

         STATEMENT

         Spotify provides both free and paid online music streaming services. The paid services are offered on a monthly subscription basis, and automatically renew each month unless the subscriber cancels. To encourage new members to sign up for the paid service, Spotify offers a free 30-day trial. After the trial expires, customers are automatically charged the full amount, $9.99, for the next month, and every month thereafter if they do not cancel.

         Plaintiff Gregory Ingalls signed up to use the free version of Spotify's music streaming service in November 2012. In June 2013, Ingalls registered for a 30-day free trial of the premium service (Ingalls Dep. 102:3-17). In order to register for this plan, Spotify's website directed him to log in to his existing Spotify account, and once he had done so, to choose a method of payment. Text on the screen on which he chose his method of payment explained “[i]f you don't wish to continue enjoying Spotify Premium after your trial, simply cancel before the trial ends and no charges will apply” (Whitehead Decl. ¶¶ 7-8).[1]

         After selecting a payment method, Ingalls was directed to another page on which he was required to enter his payment information. Immediately above a “confirm payment” button on that page, text read:

If you do not cancel your subscription before the end of the free trial the credit card you provide will automatically be charged the Spotify Premium subscription fee of U.S. $9.99 (plus applicable taxes) per month, until you cancel. You can cancel at any time by logging into your Spotify account and follow the cancellation instructions. No refunds or credits for partial monthly subscription period. For complete terms and conditions, please see our Terms of service.

         This text was set apart from the rest of the screen in a yellow-hued box (id. ¶ 7). There was no separate mechanism on this page (for example, a check box) by which Ingalls could consent to the terms of the free trial (Dkt. 25-3 at 6).[2]

         At deposition, Ingalls admitted that, had he read the disclosure, he would have understood it (Ingalls Dep. 114:22-116:7), but that he “must not have” read it (id. 116:15-20). He testified that the contrast of the larger and more brightly-colored confirm payment button drew attention away from the disclosure, and so he might have “skimmed past it” (id 120:3-19).

         After Ingalls confirmed his Spotify free-trial sign-up, the website displayed a receipt on the screen (Whitehead Decl. ¶ 8). Spotify also sent Ingalls an email receipt, which contained a link to Spotify's 30-day free trial terms and conditions (Ingalls Dep. 128:12-18; Commerson Decl. Exh. 8).

         For the first two weeks of the free trial, Ingalls used Spotify premium between three and eight hours per day, but he stopped using it after those two weeks (Ingalls Dep. 131:10-132:14). Ingalls did not, however, cancel the service, and so was charged $9.99 each month from the expiration of his trial until three months later when he eventually discovered the charges on his credit card bill and cancelled (id. 77:19-21; 176:17-23).

         Based on the foregoing, Ingalls alleges that Spotify failed to comply with California's Automatic Renewal Law (“ARL”) in three ways. First, it allegedly failed to present automatic renewal terms in a clear and conspicuous manner in visual proximity to the request for consent to the offer as required by Section 17602(a)(1) of the California Business and Professions Code.[3] Second, it allegedly failed to obtain consumers' affirmative consent for automatic renewal as required by Section 17602(a)(2). Third, it allegedly failed to provide an acknowledgment that included its automatic renewal terms in a manner capable of being retained by the consumer as required by Section 17602(a)(3). Ingalls brings these claims both directly under the ARL and as a violation of the unlawful prong of Section 17200. He argues that he is entitled to both monetary and injunctive relief.

         ANALYSIS

         Summary judgment is proper when the pleadings and the evidence in the record “show that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law.” FRCP 56(a). A dispute is genuine only if there is sufficient evidence for a reasonable fact-finder to find for the non-moving party, and material only if the fact may affect the outcome of the case. Once the moving party has made a threshold showing, the burden shifts to the nonmoving party to prove the existence of a triable issue. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986). In this analysis, all reasonable inferences must be drawn in the light most favorable to Ingalls. See Johnson v. Rancho Santiago Cmty. Coll. Dist., 623 F.3d 1011, 1018 (9th Cir. 2010).

         Spotify moves for summary judgment on three grounds: (1) the ARL confers no private right of action, so Ingalls' ARL claim fails as a matter of law; (2) Ingalls lacks both Article III and statutory standing because he suffered no injury, and even if he did, the injury was not caused by ARL violations; and (3) Ingalls lacks standing to seek injunctive relief. Each is analyzed in turn.

         1. Private Right of Action Under The ARL.

         The parties dispute whether there is a private right of action arising directly under the ARL. The section of the ARL dealing with remedies states that “a violation of this article shall not be a crime. However, all available civil remedies that apply to a violation of this article may be employed.” Cal. Bus. & Prof. Code Section 17604. In other words, criminal liability (under state law) is expressly precluded under Section 17604, but parties can redress violations of the ARL by suing under one of the sections of Article 9 that provides a civil remedy.

         The ARL itself does not provide a civil remedy. Nothing in its language or legislative history suggests otherwise. See Johnson v. Pluralsight, LLC, __F.Supp.3d __, 2017 WL 661953 (E.D. Cal. Feb. 17, 2017) (Judge Morrison England, Jr.); Roz v. Nestle Waters N. Am., Inc., No. 2:16-cv-04418-SVM-JEM, 2017 WL 132853 (C.D. Cal. Jan. 11, 2017) ...


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