ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS THE MASTER CONSOLIDATED COMPLAINT AND DENYING DEFENDANT'S MOTION TO STRIKE
[Re Docket No. 76]
RONALD M. WHYTE, District Judge.
Defendant AT & T Mobility LLC ("ATTM") moves to dismiss the master consolidated complaint ("MCC"). On March 25, 2011, the court held a hearing to consider defendant's motion. Having considered the papers submitted by the parties and the arguments of counsel, and for the reasons set forth below, the court grants in part and denies in part ATTM's motion to dismiss and denies ATTM's motion to strike.
Plaintiffs Adam Weisblatt ("Weisblatt"), Joe Hanna ("Hanna"), David Turk ("Turk"), and Colette Osetek ("Osetek") (collectively "plaintiffs") allege that defendants ATTM and Apple Inc. ("Apple") perpetrated a classic "bait and switch" fraud scheme in connection with the sale of 3G capable iPads
A. iPad 3G
On or around April 30, 2010, Apple began selling 3G-enabled iPads, with ATTM as the exclusive 3G data provider. Id. ¶ 25. The 3G-enabled iPads were priced approximately $130 higher than the equivalent Wifi iPad models without 3G capability. Id. ¶ 26. Between April 30, 2010 and June 7, 2010, ATTM offered two 3G data plan options: (1) 250 MB of data for $14.99 per month, with additional data available in 250 MB increments for an added charge; or (2) unlimited 3G data for $29.99 per month. Id. ¶¶ 30, 32. Plaintiffs claim that ATTM and Apple made representations that customers would be able to sign up for, and change, their data plans each month as their data needs demanded, including upgrading or switching in and out
Id. ¶ 30. Apple's website also advertised to prospective 3G-enabled iPad customers that they could "choose the amount of data per month . . . 250 MB or unlimited" and "decide whether to turn off 3G or upgrade to the unlimited plan." Id. ¶ 30, Exh. C. Likewise, ATTM posted similar content on its website:
Id. ¶ 35, Exh. B. In sum, plaintiffs allege that:
Id. ¶ 39.
Plaintiffs further allege that defendants continued to promote their flexible and unlimited data plan options up to June 2, 2010, when defendants announced that as of June 7, 2010 they would no longer provide an unlimited data option.
Plaintiff Weisblatt, a New York resident, purchased a 3G-enabled iPad at an Apple store in New York on April 30, 2010. Id. ¶¶ 11, 53, 55. On May 2, 2010, Weisblatt activated 3G service for his iPad. Id. ¶ 49. Plaintiff Hanna, a California resident, purchased a 3G-enabled iPad on April 30, 2010 at a Best Buy store in California. Id. ¶¶ 12, 61. Hanna has not activated a 3G data plan for his iPad and appears to have generally been either home or in another place where he has had WiFi access. Id. ¶ 64. Hanna claims to have "anticipated using the unlimited data plan in some months and not in others." Id. On April 30, 2010, plaintiff Turk, a Washington resident, purchased two 3G-enabled iPads at an Apple store in Washington. Id. ¶¶ 13, 68. On May 18, 2010, Turk purchased a third 3G-enabled iPad. Id. ¶ 69. All three of Turk's iPads were activated for 3G service. Id. ¶¶ 72, 74. In fact, Mr. Turk signed up for unlimited data plans for two of his iPads on June 20, 2010 because, as a result of defendants' June 7, 2010 policy change, he believed that this was his only chance to obtain an unlimited 3G data plan. Finally, plaintiff Osetek, a Massachusetts resident, purchased a 3G-enabled iPad at an Apple store in Braintree, Massachusetts on April 30, 2010. Id. ¶¶ 14, 78. On May 7, 2010, Osetek signed up for the unlimited 3G data plan. Id. ¶ 81.
All four named plaintiffs claim that they purchased 3G-enabled iPads believing that they would have the flexibility of switching in and out of an unlimited data plan based upon their monthly needs. Id. ¶¶ 57, 64, 74, 81. Plaintiff also allege that had they known that defendants would pull the flexible unlimited data option, they would not have purchased 3G-enabled iPads. Id. ¶¶ 59, 66, 76, 83.
Plaintiffs assert seven claims against defendants: (1) intentional misrepresentation; (2) false promise/fraud; (3) negligent misrepresentation; (4) violation of California's Consumer Legal Remedies Act ("CLRA"), Cal. Civ.Code. §§ 1750 et seq.; (5) violation of California's unfair competition law ("UCL"), Cal. Bus. & Prof.Code §§ 17200 et seq.; (6) violation of California's false advertising law ("FAL"), Cal. Bus. & Prof.Code §§ 17500 et seq.; and (7) unjust enrichment. Id. ¶¶ 93-175. Plaintiffs bring this action on behalf of all customers in the United States who purchased iPad 3Gs prior to the June 7, 2010 data plan change.
Defendant ATTM now moves to dismiss all claims against it as well as strike plaintiff Osetek's claims against it.
A motion to dismiss for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) tests the legal sufficiency of the claims in the complaint. To survive a motion to
A. Rule 9(b)
ATTM contends that all the claims in the MCC fail because plaintiffs allegations do not satisfy Fed.R.Civ.P. 9(b). Under Rule 9(b), all "[a]verments of fraud must be accompanied by the who, what, when, where, and how of the misconduct charged." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir.2003) (quotation omitted). Moreover, Rule 9(b) requires plaintiffs to "state the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentation." Edwards v. Marin Park, Inc., 356 F.3d 1058, 1066 (9th Cir.2004). In Kearns v. Ford Motor Co., the Ninth Circuit specifically held that Rule 9(b) requires all "averments of fraud" to be pled with particularity "irrespective of whether the substantive law at issue is state or federal," and even where "fraud is not an essential element of a claim." 567 F.3d 1120, 1124-25 (9th Cir.2009). Rule 9(b)'s heightened pleading standards apply to CLRA and UCL claims as well because those claims are "grounded in fraud" or "sound in fraud." Id. For the same reason, courts have also applied Rule 9(b) to claims under California's FAL. See, e.g., Herrington v. Johnson & Johnson Consumer Co., Inc., 2010 WL 3448531, at *7 (N.D.Cal. Sept. 1, 2010).
ATTM argues that a single screenshot from its website is not enough to satisfy the particularity requirements of Rule 9(b). But plaintiffs do not rely on ATTM's affirmative statements alone. Rather, plaintiffs allege that ATTM's statements were misleading to customers in the absence of omitted information. The court finds that the specific information that ATTM allegedly concealed—that it would almost immediately be canceling the unlimited plan and denying customers flexible access to such a plan, and that this was its intention all along—is sufficiently set forth in the MCC.
ATTM further argues that plaintiffs fail to specify "when" the allegedly fraudulent misrepresentations were made. Insofar as plaintiffs allege that omissions are part of the fraud, a specific "when" does not exist. But plaintiffs do allege that ATTM made affirmative misrepresentation throughout the period between January 2010 and June 7, 2010. MCC ¶¶ 35, 36, 41. The screenshot from ATTM's website is an example. Also, plaintiffs allege that they saw ATTM's misrepresentations on the dates they made their iPad 3G purchases. At the same time, plaintiffs allege that ATTM knew about and benefitted from the statements on Apple's website. MCC ¶ 27, Ex. B, G. Moreover, it is plausible that additional details regarding their specific conduct will be revealed through discovery. Indeed, "the requirement of specificity is relaxed when the allegations indicate that `the defendant must necessarily possess full information concerning the facts of the controversy'" or "when the facts lie more in the knowledge of the opposite party." Tarmann v. State Farm Mut. Auto. Ins. Co., 2 Cal.App.4th 153, 2 Cal.Rptr.2d 861, 863 (1991) (quoting Turner v. Milstein, 103 Cal.App.2d 651, 230 P.2d 25 (1951)).
ATTM also contends that plaintiffs fail to plead falsity with particularity. However, the MCC alleges that defendants' statements were false when made because they led customers to believe that they would have flexible access to ATTM's unlimited
ATTM further argues that plaintiffs do not plead reliance. ATTM is mistaken. Plaintiffs repeatedly allege that both Apple's and ATTM's statements were material to them and had they known that there would be no flexible unlimited data plan, they would not have purchased their iPad 3Gs. MCC ¶¶ 59, 66, 76, 83. Significantly, plaintiffs claim that ATTM was aware of Apple's alleged misrepresentations, but did nothing to counter the statements, and even endorsed them. Id. ¶ 30, Exh. G. In sum, plaintiffs' allegations meet the requirements of Rule 9(b).
B. Standing of Non-California Plaintiffs Under CLRA, UCL and FAL
ATTM argues that plaintiffs Weisblatt, Turk, and Osetek lack standing to assert claims under California's consumer protection laws. As ATTM points out, "California law embodies a presumption against the extraterritorial application of its statutes." Churchill Village, L.L.C v. General Elec. Co., 169 F.Supp.2d 1119, 1126 (N.D.Cal.2000). Moreover, ATTM's choice-of-law provision in its Terms of Service selects the law of each consumer's respective home state. Dkt. No. 25-2 at 15. Plaintiffs cannot bypass the choice-of-law provision because they fail to adequately explain how California's interest is greater than each consumer's respective home state. Even more to the point, plaintiffs do not contend that the application of the laws of their home states would violate a fundamental policy of California. See General Signal Corp. v. MCI Telecommunications Corp., 66 F.3d 1500, 1506 (9th Cir.1995) (holding that the application of New York law to fraud claims did not violate California public policy, even if New York law required fraud to be established by clear and convincing evidence while California only required a showing by a preponderance of the evidence). Furthermore, plaintiffs' arguments that the choice-of-law provision is procedurally unconscionable or unfairly hinders a multi-state class action are unconvincing. See Wash. Mut. Bank, F.A. v. Super. Ct., 24 Cal.4th 906, 918, 103 Cal.Rptr.2d 320, 15 P.3d 1071 (2001) (holding that a choice of law provision may not be disregarded "merely because it may hinder the prosecution of multi-state or nationwide class action or [exclude] nonresident consumers from a California-based class action"). Accordingly, the CLRA, UCL, and FAL claims are dismissed without prejudice as to Weisblatt, Turk and Osetek because they are non-California residents who purchased their iPad and data plans outside of California and agreed to ATTM's choice-of-law provision.
C. Restitution Under UCL and FAL
ATTM contends that plaintiffs have failed to allege a proper basis for restitution under the UCL and FAL. The UCL and FAL "limit standing to individuals who suffer losses . . . that are eligible for restitution." Buckland v. Threshold Enters.,
The court also agrees with ATTM that the MCC does not show how plaintiffs are entitled to restitution for excess data plan charges incurred after the unlimited data plan was replaced. Indeed, no plaintiff actually alleges actually incurring excess data charges. For this reason, each plaintiffs' UCL and FAL claims against ATTM are dismissed without prejudice.
D. CLRA Affidavit and Notice Requirements
The CLRA requires that "[i]n any action [under the CLRA], concurrently with the filing of the complaint, the plaintiff shall file an affidavit stating facts showing that the action has been commenced in a county described in this section as a proper place for the trial of the action." Cal. Civ.Code § 1780(d). If "a plaintiff fails to file the affidavit required by this section, the court shall, upon its own motion or upon motion of any party, dismiss the action without prejudice." Id. Accordingly, the CLRA claims are dismissed without prejudice as to all plaintiffs because they did not file the required affidavits. See In re Sony Grand Wega KDF-E A10/A20 Series Rear Projection HDTV Television Litig., 758 F.Supp.2d 1077, 1093-94 (S.D.Cal.2010) (dismissing CLRA claim in a consolidated class action complaint because plaintiffs failed to provide the required affidavit).
Under the CLRA, a plaintiff must also provide a company with thirty days notice of the specific alleged CLRA violation by certified registered mail before filing a CLRA claim for damages. Cal. Civ.Code § 1782(a). Federal courts have required "[s]trict adherence to the statute's notice provision . . . to accomplish the [CLRA's] goals of expeditious remediation before litigation." Laster v. T-Mobile USA, Inc., 407 F.Supp.2d 1181 (S.D.Cal. 2005). In this case, plaintiff Osetek sent a notice of violation solely to Apple, and not to ATTM. MCC ¶ 150. Accordingly, Osetek's CLRA claim is dismissed without prejudice for this reason also.
E. Unjust Enrichment
ATTM contends that none of the plaintiffs can assert a claim for unjust enrichment under the applicable state laws. With respect to plaintiff Hanna, courts have repeatedly held that "there is no cause of action in California for unjust enrichment." Melchior v. New Line Prods., Inc., 106 Cal.App.4th 779, 794, 131 Cal.Rptr.2d 347 (2003). Moreover, plaintiffs can not assert unjust enrichment claims that are merely duplicative of statutory or tort claims. See, e.g., Rosal v. First Federal Bank of Ca., 671 F.Supp.2d 1111, 1133 (N.D.Cal.2009); Crigger v. Fahnestock & Co., Inc., 2003 WL 22170607, at *12 (S.D.N.Y. Sept. 8, 2003); Meeco Mfg. Co., Inc. v. True Value Co., 2007 WL 1051259, at *3 (W.D.Wa. April 4, 2007); Fox v. F & J Gattozzi Corp., 41 Mass.App.Ct. 581, 589, 672 N.E.2d 547 (1996). Therefore, plaintiffs' unjust enrichment claim is dismissed with prejudice.
F. Weisblatt's Negligent Misrepresentation Claim
Under New York Law, "there is no action for negligent misrepresentation
G. Motion to Strike
ATTM also moves the court to strike plaintiff Osetek's claims against it. According to ATTM, plaintiff Osetek made an omission that she has no claims against ATTM. In her opposition to relate cases, Osetek noted that the "representations, transactions and events that concern ATTM . . . have no bearing on [her] claims for relief," and that her action "does not involve ATTM." Dkt. No. 48 at 2, 3. Nothing in this statement constitutes a waiver of claims against ATTM. The mere fact that Osetek first chose to limit her claims to defendant Apple does not bar Osetek from now asserting claims against ATTM.
Moreover, Osetek was not required to obtain leave from the court before adding claims against ATTM in the MCC. The MCC is superseding document. In the stipulation to allow the MCC, the parties agreed that "the Weisblatt, Logan, and Osetek actions arise from the same circumstances and allegations, and involve common questions of law and fact." Dkt. No. 66 at 2. ATTM was certainly on notice that Osetek could bring claims against it. In any event, ATTM has not demonstrated any prejudice that would justify striking Osetek's claims. Accordingly, ATTM's motion to strike is denied.
For the foregoing reasons, the court denies ATTM's motion to strike. The court grants the motion to dismiss as follows:
Plaintiffs are given twenty days leave to amend.