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Expensify, Inc. v. White

United States District Court, N.D. California

October 18, 2019

EXPENSIFY, INC., Plaintiff,
EDDIE WHITE, Defendant.


          Phyllis J. Hamilton, United States District Judge.

         Defendants Eddie White's (“defendant White”) and Matt Koleslar's (“defendant Koleslar”) (collectively, “defendants”) motion to dismiss plaintiff Expensify, Inc's (“plaintiff”) complaint for declaratory relief came on for hearing before this court on September 18, 2019. Plaintiff appeared through its counsel, Steven Carlson and Kevin Pasquinelli. Defendants appeared through their counsel, Kevin Tucker. Having read the papers filed by the parties and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby GRANTS defendants' motion to dismiss with prejudice for the following reasons.


         On April 8, 2019, plaintiff filed this action for declaratory relief under Title 28 U.S.C. § 2201 against defendants. Dkt. 1 (“Compl.”). In it, plaintiff requests that the court make three legal determinations concerning the compliance of its website and mobile applications with certain requirements under the Americans with Disabilities Act (“ADA”), California Unruh Act (the “Unruh Act”), and Pennsylvania's Human Relations Act (“PHRA”). Those requests include the following:

• Plaintiff's website and mobile applications are not places of public accommodation within the meaning of the ADA and therefore do not violate the ADA, Compl. ¶ 30;
• Plaintiff's website and mobile applications are not places of public accommodation within the meaning of the Unruh Act, plaintiff has not intentionally discriminated in its website, and therefore, plaintiff does not violate the Unruh Act, id. ¶ 36; and
• Defendants have not exhausted their administrative remedies against plaintiff before Pennsylvania's administrative Human Rights Commission (the “PHRC”) and therefore any claim under the PHRA in this court is not ripe, id. ¶ 40.

         Further detail of the complaint's relevant allegations, as well as post-filing events, is further detailed below.

         A. The Complaint's Allegations

         Plaintiff is a Delaware corporation “with principal places of business in San Francisco, California and Portland, Oregon.” Compl. ¶ 7. Plaintiff alleged personal jurisdiction as to defendant White given his California residency, id. ¶ 4, and defendant Koleslar on grounds that he purposefully conducted activities in California, id. ¶ 5.

         In its complaint, plaintiff alleges that defendants asserted that plaintiff violates the ADA, the Unruh Act, and the PHRA by failing to accommodate the needs of the visually impaired via its website and mobile applications. Compl. ¶ 2. Citing case law, plaintiff explains how such purported assertions by defendants would not constitute legally cognizable claims in California. Id. ¶¶ 2, 18-25. Plaintiff's basic positions are threefold:

(1) Plaintiff's website services do not qualify as a place of public accommodation (bringing it within the purview of the ADA's requirements) because controlling Ninth Circuit authority has ruled that a business operated website qualifies as a place of public accommodation only if the allegedly discriminatory conduct has a nexus to the goods and services offered at a physical location, id. ¶¶ 11, 18;
(2) In their prelitigation communications, defendants failed to assert any facts showing the intentional discrimination necessary to state a claim under the Unruh Act, id. ¶ 23; and
(3) There has been no exhaustion of the administrative remedies necessary to initiate a claim under the PHRA, id. ¶ 24.

         With respect to its compliance with the ADA, plaintiff expressly acknowledges that “[c]ircuit courts are split on whether websites, and associated mobile applications which access those websites, constitute a place of public accommodation as requirement by the ADA.” Compl. ¶ 18. Later revealed in the parties' prelitigation communications, various courts in Pennsylvania, New Hampshire, and Massachusetts take a position on this issue contrary to that adopted by the Ninth Circuit.

         At the heart of the initial jurisdictional inquiry in this matter are those same prelitigation communications. Prior to plaintiff's initiation of this action, the parties exchanged four relevant sets of written communications concerning the subject matter of plaintiff's requests. Those communications include the following:

(1) a February 27, 2019 letter from defense counsel to plaintiff, Compl., Ex. 2;
(2) a March 18, 2019 letter from plaintiff's counsel to defendants, Compl., Ex. 3; Dkt. 22-2, Ex. 3;
(3) a March 23, 2019 email from defense counsel to plaintiff, Compl. ¶ 17; Dkt. 22-2, Ex. 4; and
(4) an early April 2019 email string between counsel, Dkt. 22-2, Ex. 5.

         A detailed description of key statements made in each of these communications appears in the analysis sections below.

         B. Relevant Post-Complaint Events

         On May 15, 2019, about a month after plaintiff filed its complaint, defendants sent plaintiff a letter purportedly confirming that they waived their respective rights to sue plaintiff regarding whether its website/mobile applications violate the ADA, Unruh Act, or PHRA. Dkt. 22-1 ¶ 7; Dkt. 22-2, Ex. 6. On June 19, 2019, defendants both executed a “Release and Waiver of Claims” (the “waiver”) containing a Covenant Not to Sue (the “covenant”) detailing substantially the same guarantee as that detailed in their May 15, 2019 letter. Dkt. 22-1 ¶ 3; Dkt. 22-2, Ex. 2. The exact language of the waivers is further discussed in the analysis section below.

         On July 25, 2019, White and Koleslar filed this motion to dismiss. Dkt. 22. Prior to its briefing, on August 21, 2019, the parties entered a stipulation of voluntary dismissal of defendant Koleslar without prejudice. Dkt. 28. Remaining defendant White premises his motion to dismiss on a lack of federal subject matter jurisdiction for want of a justiciable controversy.[1]


         A. Legal Standard

         A federal court may dismiss an action under Federal Rule of Civil Procedure 12(b)(1) for lack of federal subject matter jurisdiction. Fed. R. Pro. 12(b)(1). “Article III of the United States Constitution limits the jurisdiction of the federal courts to ‘cases' and ‘controversies, '” Bayer v. Neiman Marcus Group, Inc., 861 F.3d 853, 861 (9th Cir. 2017) (citation omitted), and the Declaratory Judgment Act applies only in “a case of actual controversy, ” 28 U.S.C. § 2201. To determine the existence of a cognizable controversy within the meaning of the Declaratory Judgment Act, courts must determine “whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 272 (1941). In the Ninth Circuit, “if the defendant's actions cause the plaintiff to have a ‘real and reasonable apprehension that he will be subject to liability,' the plaintiff has presented a justiciable case or controversy.” Spokane Indian Tribe v. United States, 972 F.2d 1090, 1092 (9th Cir. 1992) (citation omitted). Because “[a] federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears, ” the burden to prove its existence “rests on the party asserting federal subject matter jurisdiction.” Pac. Bell Internet Servs. v. Recording Indus. Ass'n of Am., Inc., 2003 WL 22862662, at *3 (N.D. Cal. Nov. 26, 2003).

         A federal court loses its authority to rule on the legal questions presented in a declaratory action if events following its commencement render it moot. Arizonans for Official English v. Arizona, 520 U.S. 43, 67 (1997) (“An actual controversy must be extant at all stages of review, not merely at the time the complaint is filed.”). “A case is moot when the issues presented are no longer ‘live' or the parties lack a legally cognizable interest in the outcome.” City of Erie v. Pap's A.M., 529 U.S. 277, 287 (2000). To determine whether an action has been rendered moot, courts in the Ninth Circuit examine whether ...

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