Abreu v. Slide, Inc. et al

Filing 32

ORDER DENYING MOTION TO REMAND AND VACATING HEARING by Hon. William Alsup denying 17 Motion to Remand.(whalc2, COURT STAFF) (Filed on 4/3/2012)

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1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 11 For the Northern District of California United States District Court 10 CHRISTALEE ABREU, individually and on behalf of all others similarly situated, Plaintiff, 12 13 No. C 12-00412 WHA ORDER DENYING MOTION TO REMAND AND VACATING HEARING v. 14 SLIDE, INC., a Delaware corporation, and GOOGLE INC., a Delaware corporation, 15 Defendants. 16 / 17 INTRODUCTION 18 Plaintiff moves to remand this putative class action to Santa Clara County Superior 19 Court. Because this order finds defendants have successfully shown the amount in controversy 20 exceeds five million dollars, plaintiff’s motion is DENIED. 21 22 STATEMENT This putative class action concerns virtual pets and real money. Defendant Slide, Inc. 23 created an internet-based video game entitled SuperPoke! Pets (SPP), which defendant Google, 24 Inc. later acquired. SPP provided a platform for users to adopt and care for virtual pets. Users 25 created virtual pets with free basic access to the SPP application, and were then able to name, 26 27 28 1 interact with and clothe their virtual pets as well as customize the pets’ virtual habitats. Users 2 could also obtain virtual goods for their pets and pet habitats with virtual coins earned through 3 play. Virtual goods could then be displayed within the pet habitats. 4 A premium form of virtual currency, aptly called “gold,” allowed users to obtain 5 premium virtual goods. “Gold” could not be earned by play, however, but was purchased 6 by users via their debit, credit or PayPal accounts. Virtual goods could also be transferred 7 between SPP users and a “robust secondary market” to buy and sell “used” virtual items 8 developed. The online exchange of virtual goods was facilitated by SPP through seller 9 registration. Beginning in 2010, SPP also offered subscription-only access to premium game 11 For the Northern District of California United States District Court 10 content (VIP status) (Hur Decl. Exh. 1 (Compl.) ¶¶ 15–21). According to the complaint, SPP was designed to induce users to purchase “gold” and 12 VIP status. The vast majority of items, features and content could be obtained only with “gold.” 13 Defendants also manipulated the value of virtual goods by limiting and then “restocking” items: 14 [W]hile a large quantity of 5,500 virtual hot dogs would be worth relatively little on an individual basis, a limited quantity of 10 virtual stuffed animals would be seen as rarer and, consequently, more desirable . . . and worth much more. Defendants highlighted the limited quantities of rare items to encourage sales, by stating, for example: ‘Get them now, they will run out!’ 15 16 17 Plaintiff alleges her own spending on the game, since she began playing in 2009, exceeded 18 $1,000 (id. at ¶¶ 17–19, 49–50). 19 In June 2011, defendants announced the discontinuation of the “gold” purchasing 20 program. Users were notified that, at the end of that month, no premium items would be 21 available and the value of “gold” in users’ accounts would disappear. No refunds were offered. 22 Defendants assured users that support for the SPP site would continue, and promised they had 23 “no plans to shut the site down.” Defendants also informed users that no new VIP status 24 subscriptions would be accepted after July 1, 2011, but that users with pre-dated subscriptions 25 would enjoy continued access to the premium content area “for life” (id. at ¶¶ 33–38). 26 But in August 2011, defendants announced SPP would be terminated within six months, 27 and that SPP users would lose online access to their virtual pets and goods. In September 2011, 28 2 1 defendants confirmed SPP would be taken offline in March 2012. The value of users’ virtual 2 goods was accordingly scheduled to vanish (id. at ¶¶ 43–47). 3 Plaintiff filed this action in Santa Clara County Superior Court in December 2011 4 seeking to represent two classes of thousands of similarly situated individuals: “(1) All persons 5 in the United States who have one or more registered [SPP] accounts and have purchased virtual 6 gold or in-game items from SPP-certified resellers; (2) all persons in the United States who have 7 purchased one or more months of the [] Vip Status program.” The complaint alleges violations 8 of California Civil Code Sections 1670.5, 1668, 1750 et. seq. and 17200 et. seq, fraud by 9 inducement and unjust enrichment. In addition to declaratory and injunctive relief, the complaint seeks restitution for monies unjustly received, actual and punitive damages and 11 For the Northern District of California United States District Court 10 interest, as well as reasonable costs and attorney’s fees (id. at ¶¶ 54–55, (b)–(I)). While no 12 specific class period is identified, the complaint seeks to recover the full value of users’ in-game 13 purchases of both money and virtual goods, as well as “other investments” allegedly lost as a 14 result of the game’s termination (id. at ¶¶ 47–48). 15 Defendants removed this action here in January 2012. In its notice of removal, 16 defendants alleged federal jurisdiction pursuant to the Class Action Fairness Act, 28 U.S.C. 17 Section 1336(d). Plaintiff now moves to remand this action on the sole ground that the CAFA 18 amount in controversy requirement has not been met. 19 20 ANALYSIS The CAFA vests district courts with “original jurisdiction of any civil action in which, 21 inter alia, the amount in controversy exceeds the sum or value of $5,000,000, exclusive of 22 interest and costs,” and in which the aggregate number of proposed plaintiffs is 100 or greater, 23 and any member of the plaintiff class is a citizen of a state different from any defendant. 24 28 U.S.C. § 1332(d)(2). Plaintiff does not dispute that: (1) This is a class action as defined by 25 the CAFA; (2) this lawsuit concerns over 100 persons; and (3) there exists minimal diversity as 26 required by the CAFA (Br. 5). This order thus need only consider whether the amount 27 in controversy requirement has been met. 28 3 1 The amount in controversy is merely an estimate of the total amount in dispute, not 2 a prospective assessment of defendant’s liability. Lewis v. Verizon Commc’ns., Inc., 627 F.3d 3 395, 397 (9th Cir. 2010). Where, as here, the complaint does not allege the amount of damages 4 sought, the removing defendant must show that the amount in controversy exceeds five million 5 dollars. Under this burden, the defendant must make a showing that it is “more likely than not” 6 that the amount in controversy satisfies the federal diversity jurisdictional amount requirement. 7 See Abrego Abrego v. The Dow Chem. Co., et al., 443 F.3d 676, 683 (9th Cir. 2006). A district 8 court may consider whether it is “facially apparent” from the complaint that the jurisdictional 9 amount is in controversy. If not, the court may consider post-removal evidence to determine whether the jurisdictional requirements have been met. Our court of appeals has held that 11 For the Northern District of California United States District Court 10 an affidavit showing the amount in dispute meets or exceeds five million dollars is sufficient 12 to satisfy a defendant’s evidentiary burden. Lewis, 627 F.3d at 397. 13 Defendants appended to their notice of removal several third-party website postings 14 showing SPP as among the “top 25 MySpace games” for various months in 2011. MySpace 15 is a social networking site. One of the postings states that SPP had over 7.1 million total users 16 on MySpace (Dkt. No. 7, Exh. E). Defendants submit with their opposition a declaration 17 of Libor Michalek, an engineering director at Google. Libor Michalek was a co-founder and 18 chief technology officer of Slide, Inc., prior to Google’s acquisition thereof. The Michalek 19 Declaration states (Michalek Decl. ¶¶ 1–2): 20 21 22 23 24 Google maintains an electronic database of recorded transactions for [SPP]. This database includes information relating to all purchases of virtual currency (called “gold”) made by users of the game . . . I obtained information from this electronic database relating to the purchases of virtual currency . . . [SPP] users spent approximately $6,116,000 on purchases of “gold” from October 2010 through June 2011. Defendants’ submissions, coupled with the allegations in the complaint, plainly show 25 the amount in controversy exceeds five million dollars. Plaintiff’s complaint seeks to recover 26 the actual value of SPP users’ “investments and property” in “gold” and virtual goods as well 27 as money spent on VIP status subscriptions. The complaint alleges users spent “hundreds 28 or even thousands of dollars on the game” (Compl. ¶¶ 96, 108, 115, 127). Thus plaintiff has put 4 1 at issue the full amount of user spending on SPP. The Michalek declaration shows user spending 2 exceeded the jurisdictional amount on just one portion of the game (“gold” purchases), and 3 in just the nine months preceding the game’s termination. According to the complaint, user 4 purchases of “gold” and premium virtual goods began well before October 2010 (id. at ¶¶ 21, 5 24). 6 Plaintiff faults defendants for failing to produce actual business records to show the 7 amount of damages. Defendants are not required, however, to prove plaintiff’s damages 8 allegations. They need only show that the amount put at issue by plaintiff exceeds the 9 jurisdictional amount. Plaintiff argues that, “without the benefits of defendants’ records regarding the actual amounts spent by SPP users . . . [the Court] ha[s] no way to determine the 11 For the Northern District of California United States District Court 10 actual amount in controversy here” (Br. 7). Plaintiff, however, nowhere suggests that class 12 recovery would be less than five million dollars. Defendants have made a showing that it is 13 more likely than not the amount users spent on SPP “gold” — only a portion of the damages 14 sought by plaintiff’s complaint — well exceeds this amount. 15 Plaintiff also contends that defendants “rely upon a mischaracterization of [p]laintiff’s 16 allegations to conclude that there are at least 2000 individuals in each of the two putative 17 [c]lasses” and provides “no evidentiary proof to suggest that those figures are accurate” (Br. 1). 18 The Michalek declaration states that 9,221 users purchased “gold” in a single month. Because 19 the existence of 100 or more class members has been conceded, this order need not determine 20 the actual number of potential claimants, but rather whether the jurisdictional amount has been 21 sufficiently shown. It has. 22 In her reply, plaintiff argues that the Michalek declaration addresses only what user’s 23 spent on “gold” and does not take into account the total amount of “refunds, chargebacks and 24 any other value returned to class members” to determine the amount of money actually retained 25 by defendants. But no allegation was made that refunds were ever issued to users. Plaintiff now 26 states that “it was not until July 2011 that defendants ceased offering cash refunds to SPP users 27 for purchases of virtual gold” (emphasis added), and that “common sense dictates that prior 28 to that time . . . SPP users requested and received refunds for such purposes.” The complaint, 5 1 however, alleges only that “defendants did not offer to refund the cash value of gold that was not 2 spent through SPP prior to [July 2011],” not that refunds suddenly ceased. Defendants’ refusal 3 to offer refunds in July 2011 does not support the otherwise unsubstantiated claim that refunds 4 were offered prior to that time. In fact, the opposite inference could be equally drawn: “Gold” 5 was non-refundable. Plaintiff’s argument thus does not controvert the showing made by 6 defendants. 7 Defendants have here provided evidence that a mere portion of the alleged damages well 8 exceeds the jurisdictional requirement. According to the complaint, recovery is also sought for 9 VIP status subscription charges. In addition, the Court may also consider attorneys fees and punitive damages, both of which are sought and would increase the amount of potential damages 11 For the Northern District of California United States District Court 10 shown by defendants’ affidavit. Moreover, plaintiff has not stated any intention to limit recovery 12 to less than five million dollars. See Lewis, 627 F.3d at 397. The complaint plainly states that 13 plaintiff’s own spending on SPP exceeded $1,000, and that thousands of persons comprise the 14 two classes of similarly situated individuals (Compl. ¶¶ 50, 55). This order finds that defendants 15 have met their burden of showing that the amount placed into dispute by plaintiff’s complaint 16 exceeds five million dollars. 17 18 19 CONCLUSION For the foregoing reasons, plaintiff’s motion to remand this action to Santa Clara County Superior Court is DENIED. The hearing scheduled for April 5, 2012, is VACATED. 20 21 IT IS SO ORDERED. 22 23 Dated: April 3, 2012. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 24 25 26 27 28 6