LaRussa v. Twitter Inc.

Filing 47

LaRussa v. Twitter Inc.

Doc. 4

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G. HOPKINS GUY, III (State Bar No. 124811) I. NEEL CHATTERJEE (State Bar No. 173985) MONTE COOPER (State Bar No. 196746) THERESA A. SUTTON (State Bar No. 211857) ORRICK, HERRINGTON & SUTCLIFFE LLP 1000 Marsh Road Menlo Park, CA 94025 Telephone: [phone] Facsimile: 650-614-7401 Attorneys for Plaintiff The Facebook, Inc. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

THE FACEBOOK, INC., Plaint iff, v. CONNECTU LLC, PACIFIC NORTHWEST SOFTWARE and WINSTON WILLIAMS, Defendants.

Case No. 5:07-CV-01389-RS FACEBOOK'S OPPOSITION TO CONNECTU LLC'S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM PURSUANT TO FED. R. CIV. P. 12(b)(6) Date: Time: Dept: Judge: May 2, 2007 9:30 A.M. 4 Honorable Richard Seeborg

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FACEBOOK'S OPPOSITION TO MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) CASE NO. 5:07-CV-01389-RS

Dockets.Justia.com

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. I. II.

TABLE OF CONTENTS Page INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 FACTUAL BACKGROUND .......................................................................................... 2 A. The Parties ........................................................................................................... 2 B. The Lawsuit ......................................................................................................... 2 C. Facts Supporting Claims ...................................................................................... 4 1. Facebook Limits Access to its Website and Use of Information Available on its Website ........................................................................... 4 2. ConnectU's Unauthorized Access and Copying of Information.................5 ARGUMENT .................................................................................................................. 6 A. Legal Standard ..................................................................................................... 6 B. The Superior Court's Order Overruling ConnectU's Demurrer Remains in Force And, Therefore, Prohibits ConnectU From Raising The Same Arguments in This Court......................................................................................7 C. Facebook Has Stated A Claim Under California Penal Code Section 502(C) ................................................................................................................. 8 1. The FAC states a claim under at least California Penal Code Section 502(c)(2), 502(c)(6), and 502(c)(7) .............................................. 8 2. ConnectU's Argument That The Type Of Information Stolen Dictates Whether A Violation of Section 502(c) Occurred Is Wrong.........9 D. ConnectU's Motion To Dismiss Facebook's Common Law Misappropriation And Unfair Competition Causes Of Action Is Without Merit .................................................................................................................. 10 1. Facebook Has Stated A Claim For Common Law Misappropriation and Unfair Competition .......................................................................... 10 2. Facebook's Claim For Common Law Misappropriation Is Not Preempted By Copyright Law.................................................................10 3. ConnectU Waived Its Right To Assert Federal Preemption.....................12 E. ConnectU's Motion To Dismiss Facebook's Business & Professions Code Sections 17429.4 and 17538.45 Claims Is Without Merit ................................... 12 1. The CAN-SPAM Act Does Not Preempt Business & Professions Code Sections 17529.4 and 17538.45 ..................................................... 13 2. Section 17529.4 Falls Outside The Scope of the Preemption Clause of the CAN-SPAM Act...........................................................................14 3. The CAN-SPAM Act Does Not Preempt Statutes That Related to False And Deceptive Activity ................................................................. 15 4. Facebook Has Standing to Assert a Claim Pursuant to Bus. & Prof. Code Sections 17529.4 and 17538.45 ..................................................... 16 F. ConnectU's Motion To Dismiss Facebook's CAN-SPAM Act Claim Is Without Merit .................................................................................................... 17 -iF A C E B O O K ' S O P P O S I T I O N T O M O T I O N T O DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) CASE NO. 5:07-CV-01389-RS

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IV. 1.

TABLE OF CONTENTS (continued) Page Facebook Has Stated a Claim For Violation Of The CAN-SPAM Act ......................................................................................................... 17 2. Facebook Has Standing Under The CAN-SPAM Act ............................. 18 CONCLUSION ............................................................................................................. 19

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F A C E B O O K ' S O P P O S I T I O N T O M O T I O N T O DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) CASE NO. 5:07-CV-01389-RS

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TABLE OF AUTHORITIES Page Cipollone v. Liggett Group, 505 U.S. 504 ................................................................................. 13 Conley v. Gibson, 355 U.S. 41 (1957) ......................................................................................... 6 Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242 (9th Cir. 1990) ................................................................................................. 7 FMC Corp. v. Holliday, 498 U.S. 52 (U.S. 1990)......................................................................13 Falkowski v. Imation Corp., 309 F.3d 1123 (9th Cir. 2002), citing Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002) ...................................................... 6 Feist Pub'lns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991) ................................................ 12 Free Speech Coalition, Inc. v. Shurtleff, 2007 U.S. Dist. LEXIS 21556 (D. Utah 2007).............13 Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers Local No. 70 of Alameda County, 415 U.S. 423 (1974)...................................................................................7 Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 591, 592 (U.S. 2001).........................................13 Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996)............................................................................13 NL Indus., Inc. v. Kaplan, 792 F.2d 896 (9th Cir. 1986) .............................................................. 6 Piekarski v. Home Owners Sav. Bank, F.S.B., 759 F. Supp. 542 (D. Minn. 1991)........................7 Pollstar v. Gigmania Ltd., 170 F. Supp. 2d 974 (E.D. Cal. 2000) .............................................. 12 Reddy v. Litton Indus., Inc., 912 F.2d 291 (9th Cir. 1990) ........................................................... 7 Samara Bros. v. Wal-Mart Stores, 165 F.3d 120 (2d Cir. 1998) rev'd on other grounds, 529 U.S. 205 (2000)...........................11 Samura v. Kaiser Foundation Health Plan Inc., 715 F. Supp. 970 (N.D. Cal 1989)...................12 Sprietsma v. Mercury Marine, 537 U.S. 51 (2002) .................................................................... 14 Summit Mach. Tool Mfg. Corp. v. Victor CNC Sys., 7 F.3d 1434 (9th Cir. 1993).......................12 White Buffalo Ventures, LLC, v. Univ. of Tex., 420 F.3d 366.....................................................13

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F A C E B O O K ' S O P P O S I T I O N T O M O T I O N T O DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) CASE NO. 5:07-CV-01389-RS

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TABLE OF AUTHORITIES (continued) Page STATE CASES Balboa Ins. Co. v. Trans Global Equities, 218 Cal. App. 3d 1327 (1990) .................................. 10 Gordon v. Impulse Marketing Group, Inc., 2005 WL. 1619847 (E.D. Wash., July 11, 2005)..................................................................15 Paralyzed Veterans of America v. McPherson, 2006 WL. 3462780...........................................10 U.S. Golf Assn. v. Arroyo Software Corp., 69 Cal. App. 4th 607 (1999) .................................... 10 FEDERAL STATUTES 15 U.S.C. § 7701(12) ................................................................................................................ 13 15 U.S.C. § 7701(a)(11) ............................................................................................................ 13 U.S.C. § 7702(11) ..................................................................................................................... 18 15 U.S.C. § 7704.......................................................................................................................17 15 U.S.C. § 7704(a)(1) .............................................................................................................. 17 15 U.S.C. § 7704(a)(1)(A)........................................................................................................17 15 U.S.C. § 7706(g) .................................................................................................................. 18 15 U.S.C. § 7707(b) ...................................................................................................... 13, 15, 16 15 U.S.C. § 7707(b)(1)........................................................................................................ 14, 15 15 U.S.C. § 7707(b)(1) (2006)...................................................................................................13 15 U.S.C. § 7707(b)(2)..............................................................................................................15 15 U.S.C. Section 7707 ....................................................................................................... 14, 16 17 U.S.C. § 102(a) .................................................................................................................... 11 17 U.S.C. § 103.........................................................................................................................12 17 U.S.C. 301, House Report No. 94-1476.......................................................................... 11, 13 28 U.S.C. § 1331.........................................................................................................................4 28 U.S.C. 1446(b) ..................................................................................................................... 12 28 U.S.C. § 1450.........................................................................................................................7 Fed. R. Civ. P. 8(a)..................................................................................................................1, 6 - iv F A C E B O O K ' S O P P O S I T I O N T O M O T I O N T O DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) CASE NO. 5:07-CV-01389-RS

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TABLE OF AUTHORITIES (continued) Page Fed. R. Civ. P. 8(e)......................................................................................................................6 Fed. R. Civ. P. 12(b)(6)....................................................................................................... 1, 4, 7 47 U.S.C. 231(e)(4)...................................................................................................................18 STATE STATUTES Cal. Bus. & Prof. Code § 17529.1(e) ......................................................................................... 17 Cal. Bus. & Prof. Code § 17529.4 ........................................................................... 14, 15, 16, 17 Cal. Bus. & Prof. Code § 17529.4(a) ......................................................................................... 16 Cal. Bus. & Prof. Code § 17529.9 ............................................................................................. 16 Cal. Bus. & Prof. Code § 17538.45(c) ....................................................................................... 16 Cal. Bus. & Prof. Code § 17538.45(f)(3)(B) .............................................................................. 16 Cal. Penal Code § 502 ................................................................................................................. 9 Cal. Penal Code. § 502(a)............................................................................................................9 Cal. Penal Code § 502(b)(6) ........................................................................................................ 9 Cal. Penal Code § 502(c)..................................................................................................... 7, 8, 9 Cal. Penal Code § 502(c)(2) ................................................................................................ 3, 8, 9

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I.

INTRODUCTION This is a case about a company and a number of individuals who hacked into a

website, extracted millio ns of bits of data (including email addresses) and then used the purloined data for their own financial gain. Facebook, Inc.'s complaint states numerous claims related to the unlawful actions taken by defendants. ConnectU LLC's motion to dismiss Facebook's First Amended Complaint should be denied. The Santa Clara Superior Court overruled a demurrer in which ConnectU raised many of the same arguments. Other arguments, such as preemption of Facebook's common law misappropriation claim, were not raised at all in the earlier proceedings, constituting a waiver on the merits. Facebook's claim is not preempted. The First Amended Complaint makes the short and plain statement of a claim required under Rule 8(a). The well-pleaded facts state that the defendants conspired to circumvent the security of the popular www.facebook.com website in order to steal millions of email addresses of website users, as well as other proprietary information. In so doing, ConnectU and the others used deceitful practices such as using false user accounts and illicit software programs. These actions vio lated Facebook's Terms of Service. The misappropriated email accounts were then used by ConnectU to spam millions of Facebook users, sometimes using false email addresses, to attempt to have them join a competitive website, www.ConnectU.com. As to the newly added claims, ConnectU's challenges to the claims under California Business and Professions Code Sections 17529.4 and 17538.45, and the CAN-SPAM Act, 15 U.S.C. Section 7701, et seq., also are without merit. Facebook has set out facts identifying the deceptive manner in which ConnectU obtained email accounts from the Facebook website and then spammed Facebook users. Facebook has standing under each of these statutes to bring claims against ConnectU. Moreover, the California statutes are not preempted by the CAN-SPAM Act, as ConnectU argues. ConnectU's motion should be denied. /// ///

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II.

FACTUAL BACKGROUND1 A. The Parties

Facebook, Inc., headquartered in Palo Alto, California, developed and operates one of the most popular online "social networks" on the Internet, www.facebook.com, in which college students and alumni interact with one another based upon existing friendships, collegiate allegiances, and common interests. First Amended Complaint ("FAC"), ¶¶7, 8. ConnectU LLC, now a defunct Delaware Limited Liability Company, operates a largely unsuccessful co mpet ing website called www.connectu.com. Id., ¶ 2. ConnectU LLC has apparently been merged into ConnectU, Inc., a Connecticut corporation. Id. ConnectU hired defendant Pacific Northwest Software ("PNS") to develop a program designed to breach Facebook's security mechanisms and steal user and course data. Id., ¶ 3. Williams was an employee of PNS and, according to both ConnectU and PNS, developed the program ConnectU used to steal data from Facebook. Id., ¶ 4. B. The Lawsuit

In mid-2004 and early-2005, defendants ConnectU, its founders Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra, as well as PNS and Williams unlawfully accessed Facebook's website by using false user accounts and developing software programs to breach Facebook's securit y mechanisms. Id., ¶¶ 17, 18, 29, 53, 57. These actions vio lated Facebook's Terms of Service. Id., ¶¶ 9, 12, 17, 22, 27, 29, 35, 48, 54. After gaining access, defendants extracted upwards of 3,000,000 email addresses belonging to Facebook users, as well as course listings for particular colleges that Facebook had diligently collected and processed. Id., ¶¶ 17, 18, 19, 41; Docket No. 35, Ex. B, 148:20-149:1. After stealing Facebook information, ConnectU then sent unsolicited email, sometimes using false email accounts, to Facebook users inviting them to join ConnectU, a competing website. Id., ¶¶ 22, 42, 43, 47, 52. Facebook filed a complaint on August 17, 2005 related to these actions. Facebook sought,
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ConnectU asserts a number of allegations related to its view that this action is retaliatory. Motion to Dismiss at 1-2. Facebook disagrees with ConnectU's characterization. Rather than provide the details of issues not relevant to this motion, Facebook will discuss the motion itself and why Facebook has stated a claim.
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by its complaint, damages based on California common law misappropriation and violations of California Penal Code Section 502(c). ConnectU filed a Demurrer asserting that Facebook failed to state a claim for which relief could be granted. See October 25, 2005 Demurrer. ConnectU did not argue preemption in challenging the complaint. Four other defendants moved to quash on the basis of lack of personal jurisdiction. See October 25, 2005 Mot. to Quash. As a result, the State Court permitted jurisdictional discovery over the defendants' vigorous objections, including granting two different motions to compel. See, e.g., November 21, 2005 Order Granting Facebook's Ex Parte Application to Compel Depositions Related to Personal Jurisdiction. As a result of those motions to compel, ConnectU admitted that its principals, PNS, and Williams did, in fact, extract email addresses and course information from Facebook by various means such as misrepresenting the identity of users and developing a program designed to circumvent the security of the website, and then spammed Facebook users. See September 15, 2006, Decl. of Theresa Sutton in Supp. of Opp'n to Mot. to Stay, Ex. I, 25:13-28:19; and Docket No. 35, Ex. B, 148:20-149:1. However, ConnectU contends that these actions all were permissible. Mot. to Dismiss, 1:21-24. The State Court by Order dated June 2, 2006, overruled ConnectU's Demurrer implicitly finding that Facebook had adequately pled claims for relief under California's common law misappropriation theory and Penal Code Section 502(c) -- two of the claims at issue here. See June 2, 2006 Order re Demurrer of Defendant ConnectU LLC. The Court also held that it lacked personal jurisdiction over the other defendants, and sustained the motion to quash. Id. Because the case was at issue, ConnectU answered the complaint and, in its Second Affirmative Defense, assigned fault for the acts to unspecified third parties. See June 12, 2006, Answer. During the course of discovery, Facebook uncovered significant facts showing that PNS and Williams were complicit in ConnectU's wrongdoing. See January 23, 2007, Mot. for Leave to File First Amended Comp. Facebook filed a motion for leave to amend its complaint to add PNS and Williams as parties and allege additional causes of action. Id. Although ConnectU again objected, the State Court granted Facebook's motion and, on February 23, 2007, Facebook filed its FAC adding two new parties and several new claims, including violations of California
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Business and Professions Code Sections 17529.4 and 17538.45, and the CAN-SPAM Act, 15 U.S.C. Section 7701, et seq. In response, ConnectU filed a Notice of Removal based on Federal Question jurisdiction, 28 U.S.C. § 1331, which PNS and Williams later joined. Docket Nos. 1, 21, 22. On March 21, 2007, ConnectU filed a Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6). Docket No. 25. PNS and Williams separately filed a joint Motion to Dismiss for lack of personal jurisdiction. Docket No. 23. In its Motion to Dismiss, ConnectU challenges the sufficiency of Facebook's pleading for all but two claims for relief. Notably, ConnectU challenges -- for the second time -- Facebook's identical claims under Penal Code Section 502(c) and California's common law misappropriation doctrine, despite the State Court's having overruled its previous Demurrer. ConnectU resurrects numerous arguments made in the earlier proceedings. C. Facts Supporting Claims 1. Facebook Limits Access to its Website and Use of Information Available on its Website

Facebook actively protects the nature of access to its computers and computer systems, as well as the use of information provided on its website. Id. ¶¶ 9-13. In order to legally access user profiles and other specific information on Facebook's website, one must register and thereby agree to Facebook's Terms of Use and its Privacy Policy. Id. ¶ 9. During all relevant times herein, ConnectU was aware of these policies. Id. ConnectU has a very similar policy for those using its competing website. See www.connectu.com. By registering, and becoming a Facebook member, the user gains personal access to other profiles within his or her University (i.e., to profiles of other students and alumni), as well as to the profiles of friends at other Universities that have explicitly granted such user access. Id. ¶ 10. The Terms of Use and the Privacy Policy have, at all times since the launch of Facebook's website, prohibited all commercial use and access to data and communications therein, except as explicitly authorized by Facebook. Id. ¶ 11. From at least January 2005 until June 27, 2005, the Terms of Use provided as follows (aside, on information and belief, from non-substantive -4FACEBOOK'S OPPOSITION TO MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) CASE NO. 5:07-CV-01389-RS

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modifications): The Web site is for the personal use of individual Members only and may not be used in connection with any commercial endeavors. Organizations, companies, and/or businesses may not become Members and should not use the Service or the Web site for any purpose. Illegal and/or unauthorized uses of the Web site, including collecting email addresses or other contact information of members by electronic or other means for the purpose of sending unsolicited email and unauthorized framing of or linking to the Web site will be investigated, and appropriate legal action will be taken, including without limitation, civil, criminal, and injunctive redress." Id., ¶ 12. In addition, it provided that: You may not engage in advertising to, or solicitation of, other Members to buy or sell any products or services through the Service. You may not transmit any chain letters or junk email to other members. Although Facebook cannot monitor the conduct of its members off the Web site, it is also a violation of these rules to use any information obtained from the Service in order to harass, abuse, or harm another person, or in order to advertise to, solicit, or sell to any member without their prior consent. Id. Lastly, it affirmed: Facebook owns and retains all proprietary rights in the Web site and the Service. The Web site contains the copyrighted material, trademarks, and other proprietary informat ion of Facebook, and its licensors. Except for that information which is in the public domain or for which you have been given written permission, you may not copy, modify, publish, transmit, distribute, perform, display, or sell any such proprietary informat ion. I d. Facebook also restricts access to and always has used its best efforts to keep confidential its aggregate customer lists and other proprietary user and system information, from unauthorized uses and parties. Id. ¶ 13. Facebook has generally expended substantial effort, money and time in developing the informational components of its web site, as well as its aggregate customer base. Id. ¶ 14. The data on the Facebook's computers, computers systems, and computer networks is highly valuable. Id. 2. ConnectU's Unauthorized Access and Copying of Information

ConnectU gained unauthorized access to Facebook's website on numerous occasions, and has taken extensive amounts of data from Facebook. Id. ¶ 18. The misappropriated data includes a large amount of user information, including email addresses and other personal information. Id.
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Such user information (i) cannot properly be viewed by any other user outside the user's Universit y or acknowledged friendship network (see id. ¶ 10) or (ii) be taken for any outside commercial purpose. See, e.g., id. ¶ 11; see also id. ¶ 18. ConnectU took this personal information without the benefit of a prior commercial relationship with such users. See id. ¶¶ 18, 22. Other types of data taken by ConnectU and its collaborators were "customer lists, web site components, network, and other information." Id. ¶ 33. At various times, ConnectU distributed emails to Facebook members and otherwise sought to solicit Facebook's members, including the solicitation of members with whom ConnectU had no prior or direct relationship with, in an effort to lure them to ConnectU. Id. ¶¶ 18, 22. ConnectU used the email addresses that had been gathered by and/or for ConnectU through Defendants' unauthorized access to and unauthorized appropriations from Facebook's data, computers, computer systems, and computer networks. Id. ¶ 18. III. ARGUMENT A. Legal Standard

A motion to dismiss for failure to state a claim must be denied unless it is "clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Falkowski v. Imation Corp., 309 F.3d 1123, 1132 (9th Cir. 2002), citing Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002). All material allegations in a complaint should be taken as true and construed in the light most favorable to the plaintiff. NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). A complaint need only contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a). "Each averment of a pleading shall be simple, concise, and direct. No technical forms of pleading or motions are required." Fed. R. Civ. P. 8(e). These rules "do not require a claimant to set out in detail the facts upon which he bases his claim. To the contrary, all the Rules require is `a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds on which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). When granting a motion to dismiss, a court is generally required to grant a plaintiff
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leave to amend, even if no request to amend the pleading was made, unless amendment would be futile. Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 246-47 (9th Cir. 1990). In determining whether amendment would be futile, a court examines whether the FAC could be amended to cure the defect requiring dismissal "without contradicting any of the allegations of [the] original complaint." Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990). Leave to amend should be liberally granted. Id. at 296-97. B. The Superior Court's Order Overruling ConnectU's Demurrer Remains in Force And, Therefore, Prohibits ConnectU From Raising The Same Arguments in This Court

ConnectU argues that Facebook's claims under Cal. Penal Code 502(c) and common law misappropriation should be dismissed. It makes these arguments without informing the Court that it previously sought to have these claims dismissed after the original complaint was filed in this action. See October 25, 2005, Demurrer. The Superior Court overruled ConnectU's demurrer, but ConnectU does not explain why the State Court's Order should be ignored. See June 2, 2006, Order Overruling Demurrer. The entry of that Order precludes granting the Rule 12(b)(6) motion on the same grounds asserted in the California Superior Court, or on grounds that could have been raised in the demurrer. "All injunctions, orders, and other proceedings had in [an] action prior to its removal shall remain in full force and effect until dissolved or modified by the District Court." 28 U.S.C. § 1450; see also Granny Goose Foods, Inc. v. Bhd. of Teamsters & Auto Truck Drivers Local No. 70 of Alameda County, 415 U.S. 423, 435-436 (1974). While "Federal courts have the right to reexamine the issues decided by the state courts, ... it is their policy not to do so absent cogent reasons or exceptional circumstances." Moore's Federal Practice § 134.22[3][c][i](2206). ConnectU offers no reason or exceptional circumstances to compel this Court to revisit the extant Order Re ConnectU's Demurrer on these grounds. Indeed, ConnectU does not even inform the Court of the fact of the earlier June 2, 2006 Order, or that it previously raised identical arguments in the Superior Court. Under these circumstances, the "[F]ederal court must treat all state court rulings as if they had occurred in federal court." Piekarski v. Home Owners Sav. Bank, F.S.B., 759 F. Supp. 542,
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544 (D. Minn. 1991). Inasmuch as the state court already agreed the Penal Code Section 502(c) and common law misappropriation claims are viable, ConnectU's motion to dismiss these two causes of action should be denied. C. Facebook Has Stated A Claim Under California Penal Code Section 502(C)

To the extent the Court is willing to reconsider the California Superior Court's June 2, 2006 Order, it is sufficient to note that Facebook has adequately stated a claim under Penal Code Section 502. 1. The FAC states a claim under at least California Penal Code Section 502(c)(2), 502(c)(6), and 502(c)(7)

Penal Code Section 502 permits a civil cause of action by a party suffering damage or loss by reason of a violation of any sub-section of Penal Code Section 502(c) against the violator of that Section. Penal Code Section 502(c) enumerates nine different actionable violations, each of which constitutes a public offense and also subjects the violator to civil liability. In relevant part, Section 502(c) reads that any person who does any of the following is liable under Section 502(c): · Knowingly accesses and without permission takes, copies, or makes use of any data from a computer, computer system, or computer network, or takes or copies any supporting documentation, whether existing or residing internal or external to a computer, computer system or computer network [(c)(2)] Knowingly and without permission provides or assists in providing a means of accessing a computer, computer system, or computer network in violation of this section [(c)(6)] Knowingly and without permission accesses or causes to be accessed any computer, computer system, or computer network [(c)(7)].

·

·

The FAC alleges that ConnectU violated each of these provisions. FAC ¶¶ 17-25, 28-30. The FAC details the terms of use that govern each Facebook member's use of the website and the limitations imposed thereon -- i.e., it describes what behavior is permitted and what is not.2 Id.
2

ConnectU incorrectly argues that the FAC does not adequately allege ConnectU's access was "without permission." Mot. to Dismiss, 7:17-18. To the extent ConnectU seeks to draw a distinction between the words "without permission" and "unauthorized," its argument must be rejected. Indeed, the definition of "permission" is "authorization." Roget's New MillenniumTM Thesaurus, First Edition (v 1.3.1). Lexico Publishing Group, LLC, <Thesaurus.com http://thesaurus.reference.com/browse/permission>. The FAC repeatedly alleges that ConnectU
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¶¶ 11, 12. Specifically, the Terms of Use prohibit unauthorized access, which is defined to include "co llect ing email addresses or other contact information of members by electronic or other means ... ." Id., ¶ 12. The FAC alleges that ConnectU "hired Pacific Northwest Software and Winston Williams to write software to gain unauthorized access to Facebook's website and misappropriate information," and that ConnectU took "extensive amounts of proprietary data from Facebook, including but not limited to user data such as email addresses ... ." Id., ¶¶ 17, 18. The fact that ConnectU resorted to hiring a software developer to enable it to gain access to Facebook's servers and extract data, indicates that its actions were "knowing." Moreover, Facebook alleges that ConnectU "willfully and maliciously engaged in [said] unauthorized access" and appropriation. FAC ¶ 19. Facebook has adequately stated a claim for violation of Penal Code Section 502(c). 2. ConnectU's Argument That The Type Of Information Stolen Dictates Whether A Violation of Section 502(c) Occurred Is Wrong

ConnectU cites to cases that have nothing to do with California Penal Code Section 502(c) to argue that Facebook must show that the misappropriated information was subject to an expectation of privacy or was proprietary. Penal Code 502(c) has no requirement of secrecy or privacy and does not require that the stolen information be proprietary. Cal. Penal Code § 502. Rather, Section 502(c) was enacted to protect "businesses... from tampering, interference, damage, and unauthorized access to lawfully created computer data and computer systems." Cal. Penal Code. § 502(a). Notably, "data" is defined as "a representation of information, knowledge, facts, concepts, computer software, computer programs or instructions." Cal. Penal Code § 502(b)(6). Nothing in this definition requires that the wrongly accessed information be private or proprietary. In any event, Facebook is a secure website that is only accessible by password. Uses of the website contents are limited by the Terms of Use. Such protections easily establish that any user would have an expectation of privacy, and that Facebook has a proprietary interest in its website.

gained unauthorized access and describes the type of access that is unauthorized. FAC ¶¶ 12, 17, 18, 19, 20, 22.
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D.

ConnectU's Motion To Dismiss Facebook's Common Law Misappropriation And Unfair Competition Causes Of Action Is Without Merit 1. Facebook Has Stated A Claim For Common Law Misappropriation and Unfair Competition

To state a claim for relief from ConnectU's misappropriation of Facebook information, Facebook need only allege that (a) it invested substantial time, skill, or money in developing its property; (b) ConnectU appropriated and used its property at little or no cost to ConnectU; (c) ConnectU's appropriation and use of Facebook's property was without its authorization or consent; and (d) Facebook has been injured by ConnectU's conduct. Balboa Ins. Co. v. Trans Global Equities, 218 Cal. App. 3d 1327, 1342 (1990). ConnectU does not dispute that Facebook's FAC meets these criteria. Instead, ConnectU complains that Facebook does not go beyond the basic notice pleading of Rule 8(a) and supply "facts to support" its allegations. ConnectU's Mot. to Dismiss, 11:9-12. Contrary to ConnectU's assertions, the FAC describes 1) the extensive effort to develop the informational components of Facebook's websites (FAC ¶ 14, 21, 33, ), 2) ConnectU's extraction and use of the information at little or no cost to itself (id., ¶¶ 17-19, 34) and 3) injury suffered by Facebook (id., ¶¶ 20, 21, 23, 34, 35). ConnectU argues that these detailed allegat ions are conclusory. ConnectU relies on Paralyzed Veterans of America v. McPherson, 2006 WL 3462780, *4 for the proposition that "conclusory allegations of law and unwarranted inferences will not defeat a motion to dismiss for failure to state a claim." ConnectU does not explain how Facebook's detailed factual allegations are "conclusory allegations of law" or "unwarranted inferences." They are not. see, e.g.,, FAC ¶¶ 16-19, 20-23, 33-35. As a result, Paralyzed Veterans is inapposite, and ConnectU's reliance thereon should be ignored. 2. Facebook's Claim For Common Law Misappropriation Is Not Preempted By Copyright Law

ConnectU alleges that Facebook's claim for common law misappropriation of raw data is preempted by the Copyright Act. ConnectU is wrong. Common law misappropriation "is normally invoked in an effort to protect something of value not otherwise covered by patent or copyright law." U.S. Golf Assn. v. Arroyo Software Corp., 69 Cal. App. 4th 607, 618 (1999). - 10 FACEBOOK'S OPPOSITION TO MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) CASE NO. 5:07-CV-01389-RS

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"The intention of section 301 is to preempt and abolish any rights under the common law or statutes of a State that are equivalent to copyright and that extend to works coming within the scope of the Federal copyright law." 17 U.S.C. § 301, House Report No. 94­1476. Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. 17 U.S.C. § 102(a). None of the information Facebook alleges was stolen and misused by ConnectU is "an original work of authorship fixed in any tangible medium of expression," and, therefore, cannot be protected by Copyright law. Facebook's misappropriation claim arises from ConnectU's repeated invasion into Facebook's computer systems to steal Facebook raw data, such as email addresses, personal profile data, and college course information. FAC ¶¶ 17, 18, 33. Data, in and of itself, is not expression and is not the result of "authorship." It is not of the nature and quality that copyright law seeks to protect it. It is a wholly different subject matter. Facebook also has pled an "extra element." To decide whether a misappropriation claim is preempted, the Court must employ an "extra element" test: If an "extra element" is "required instead of or in addition to the acts of reproduction, performance, distribution or display, in order to constitute a state-created cause of action, then the right does not lie `within the general scope of copyright,' and there is no preemption. Samara Bros. v. Wal-Mart Stores, 165 F.3d 120, 131 (2d Cir. 1998) rev'd on other grounds, 529 U.S. 205 (2000). The "extra element" is evidenced by ConnectU's misappropriation accomplished through breaches of Facebook's Terms of Use, computer trespass, and deceit. FAC ¶¶ 17, 18, 19, 22, 24, 35. Indeed, "intentional deception constitutes an extra element not required in copyright infringement claims." Samara Bros., Inc., 165 F.3d at 131. The FAC alleges that "aggregate customer lists and other proprietary user and system information," "user data such as email addresses and other data collected and/or created by Facebook," as well as "commercially valuable customer lists, web site components, network, and other information specified in this complaint" have been misappropriated through deceit and in violation of the Terms of Use. FAC ¶¶ 13, 17-18, 33-34. Thus, the "extra element" necessary to
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preclude preemption is adequately pled, and Facebook's claim for relief is not preempted. See Summit Mach. Tool Mfg. Corp. v. Victor CNC Sys., 7 F.3d 1434, 1441 (9th Cir. 1993); see also Pollstar v. Gigmania Ltd., 170 F. Supp. 2d 974, 979-80 (E.D. Cal. 2000) (misappropriation of "hot news," including false concert information, added "extra element" to prevent application of copyright preemption). Moreover, even if the "extra element" were not present in Facebook's misappropriation claim, a copyright cannot be obtained in data compilations such as customer lists and facts stored in a database. See 17 U.S.C. § 103 (laying out law governing copyright protection for compilations and derivative works); see also Feist Pub'lns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 344 (1991) (holding copying of telephone directory did not infringe upon copyright because facts are not copyrightable). As a result, Facebook's claim for relief, based on the facts alleged, cannot be preempted by the Copyright Act. 17 U.S.C. § 301 3. ConnectU Waived Its Right To Assert Federal Preemption

ConnectU is barred from raising federal copyright preemption because it failed to do so in response to the original complaint. Facebook's current common law misappropriation claim is identical to that alleged in the original August 17, 2005 complaint. ConnectU had 30 days to remove this action after it was served with the original complaint. See 28 U.S.C. 1446(b). It did not do so. As a result, it waived its right to remove. Samura v. Kaiser Foundation Health Plan Inc., 715 F. Supp. 970, 972 (N.D. Cal 1989) ("Changes to a complaint that create a new basis for removal do not undo the original waiver. `If a case is removable from the outset, it must be removed within the initial thirty-day period specified by § 1446(b); subsequent events do not make it `more removable' or `again removable'") (citations omitted.) E. ConnectU's Motion To Dismiss Facebook's Business & Professions Code Sections 17429.4 and 17538.45 Claims Is Without Merit3

ConnectU argues that Facebook cannot assert claims under California Business & Professions Code §§ 17529.4 and 17538.45 are preempted by the federal CAN-SPAM Act, 15 U.S.C. § 7707(b)(1) (2006). See Mot. to Dismiss, 12-14. This argument fails because the CAN3

Facebook notes that notice to the state attorney general may be required under Cal. L.R. 3-8(d). - 12 FACEBOOK'S OPPOSITION TO MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) CASE NO. 5:07-CV-01389-RS

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SPAM Act specifically exempts from any preemption argument for activities such as those alleged in Facebook's FAC. 1. The CAN-SPAM Act Does Not Preempt Business & Professions Code Sections 17529.4 and 17538.45

Generally, Courts apply a presumption against preemption of state law. Cipollone v. Liggett Group, 505 U.S. 504, 517; see also Medtronic, Inc. v. Lohr, 518 U.S. 470, 484 (1996). This presumption is applicable to 15 U.S.C. § 7707(b). White Buffalo Ventures, LLC, v. Univ. of Tex., 420 F.3d 366, 370-73. If Congress' intent to preempt a particular category of regulation is ambiguous, such regulations are not preempted. Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 591, 592 (U.S. 2001); see also FMC Corp. v. Holliday, 498 U.S. 52, 67 (U.S. 1990) ("When there is ambiguity in a statutory provision preempting state law, we should apply a strong presumption against the invalidation of well-settled, generally applicable state rules."). Courts have recognized that the CAN-SPAM Act's preemption is very limited in scope and allows for state regulation of unsolicited email which builds off the common foundation of Federal law. See Free Speech Coalition, Inc. v. Shurtleff, 2007 U.S. Dist. LEXIS 21556 (D. Utah 2007). Even the Federal CAN-SPAM Act itself acknowledges that "[t]he problems associated with the rapid growth and abuse of unsolicited commercial electronic mail cannot be solved by Federal legislation alone... ." 15 U.S.C. § 7701(12); see also 15 U.S.C. § 7701(a)(11) (ident ifying problems of inconsistent state laws). The narrow field of preemption is limited by the language used by the CAN-SPAM Act itself. See Cipollone, 505 U.S. at 519 (a court "must construe these provisions in light of the presumption against the pre-emption of state police power regulations. This presumption reinforces the appropriateness of a narrow reading" of the state law.) Specifically, 15 U.S.C. § 7701(b) indicates, "[t]his chapter supersedes any statute, regulation, or rule... ." (emphasis added). The use of the term "supersedes" means that it replaces preexisting laws, but does not replace laws created contemporaneously or thereafter. This language is quite different from other preemption statutes. For example, 17 U.S.C. Section 301, the provision in the Copyright statute governing preemption says: - 13 FACEBOOK'S OPPOSITION TO MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) CASE NO. 5:07-CV-01389-RS

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On or after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright...are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State. (emphasis added). The Copyright preemption language ensures that the preemption is not just replacing previous law but also preempts prospectively by use of the word "thereafter." Congress made no such statement about prospective preemption with respect to the CAN-SPAM Act. As a result, California Business and Professions Code Section 17529.4 cannot be preempted, as it was enacted contemporaneously with the CAN-SPAM Act. 2. Section 17529.4 Falls Outside The Scope Of The Preemption Clause of The CAN-SPAM Act

ConnectU argues that the CAN-SPAM Act expressly preempts California Business and Professions Code Section 17529.4 This argument fails because California Business and Professions Code Section 17549.4 primarily regulates the collection of email addresses, not their use. The CAN-SPAM Act supersedes any state statute that expressly regulates the use of email to send commercial messages: This Act supersedes any statute, regulation, or rule of a State or political subdivision of a State that expressly regulates the use of electronic mail to send commercial messages, except to the extent that any such statute, regulation, or rule prohibits falsity or deception in any portion of a commercial electronic mail message or information attached thereto. 15 U.S.C. § 7707(b)(1) (emphasis added). In determining the scope of preemption, the Court must look to the plain wording of the clause which "necessarily contains the best evidence of Congress's preemptive intent." Sprietsma v. Mercury Marine, 537 U.S. 51, 62-63 (2002). The plain wording of 15 U.S.C. Section 7707 provides that the CAN-SPAM Act supersedes only those state statutes regulating "the use of electronic mail to send co mmercial messages." (emphasis added.) The act triggering violation of California Business and Professions Code Section 17549.4, however, is the "collection" of electronic mail addresses with the intent to use the collected electronic mail to send unsolicited commercial e-mail advertisements to or from a California email address: (a) It is unlawful for any person or entity to collect electronic mail
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addresses posted on the Internet if the purpose of the collection is for the electronic mail addresses to be used to do either of the following: (1) Initiate or advertise in an unsolicited commercial e-mail advertisement from California, or advertise in an unsolicited commercial e-mail advertisement sent from California. (2) Initiate or advertise in an unsolicited commercial e-mail advertisement to a California electronic mail address, or advertise in an unsolicited commercial e-mail advertisement sent to California electronic mail address. Cal. Bus. & Prof. Code § 17529.4. (Emphasis added.) Alt hough the statute describes the types of uses one must intend, a violation thereof only occurs when the intent to use the email is coupled with the collection of them. Actual use of the emails is not required to violate the Act. Therefore, 17529.4 is not expressly preempted by the CAN-SPAM Act. 3. The CAN-SPAM Act Does Not Preempt Statutes That Related to False And Deceptive Activity

The CAN-SPAM Act also is limited in that it does not apply to certain types of state laws, such as those which prohibit "falsity or deception in any portion of a commercial electronic mail message or information attached thereto," 15 U.S.C. § 7707(b), or state laws associated with trespass, contract, tort, fraud or computer crime. 15 U.S.C. § 7707(b)(2). See Gordon v. Impulse Marketing Group, Inc., 2005 WL 1619847 (E.D. Wash., July 11, 2005). Facebook's claims pursuant to California Business & Professions Code §§ 17529.4 and 17538.45 fall within the these specific exceptions so as not to be preempted -- particularly when the presumption against preemption itself is considered. Neither section is preempted to the extent that it proscribes "fals it y or deception in any portion of a commercial electronic mail message or information attached thereto." That proscription necessarily includes the origin of the message. 15 U.S.C. § 7707(b)(1). California Business & Professions Code § 17538.45 cannot be preempted. Section 17538.45 expressly prohibits deception or fraud employed to circumvent Terms of Use employed an electronic mail service provider such as Facebook, and includes the following provision: No individual, corporation, or other entity shall use or cause to be
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used, by initiating an unsolicited electronic mail advertisement, an electronic mail service provider's equipment located in this state in violation of the electronic mail service provider's policy prohibiting or restricting the use of its equipment to deliver unsolicited electronic mail advertisements to its registers users. Cal. Bus. & Prof. Code § 17538.45(c) (emphasis added). The California legislature added provisions designed to encourage the use of Terms of Service such as those used by Facebook, underscoring that this is a statute specifically contemplated not to be preempted by 15 U.S.C. § 7707 and because it is based in contract and fraud. See Cal. Bus. & Prof. Code § 17538.45(f)(3)(B). Moreover, California Business and Professions Code § 17538.45 was amended in 2004 by S.B. 186, the same law that created Section 17529.4, and hence also should be subject to the savings clause in Section 17529.9 to the extent it is necessary to enforce the exception to preemption for fraudulent or deceptive acts set forth in 15 U.S.C. § 7707(b). Facebook alleges that ConnectU developed software to circumvent the security of the website, thus violating the explicit Terms of Use employed by Facebook, in order to gain unauthorized access to www.facebook.com. See FAC ¶¶ 9-20. ConnectU then used email addresses it collected from its illegal and unauthorized entry into the Facebook website to spam Facebook users for the purpose of having them join ConnectU, Facebook's competitor. See FAC ¶¶ 16, 21-25, 40-50. Because this activity is deceptive, violates a contract, and is premised on trespass, the claim based on Business & Professions Code § 17529.4(a) cannot be preempted because the application of the statute is subject to a savings clause that permits it to remain enforceable to the extent the statute "can be given effect without the invalid ... application." Cal. Bus. & Prof. Code § 17529.9. 4. Facebook Has Standing to Assert a Claim Pursuant to Bus. & Prof. Code Sections 17529.4 and 17538.45

ConnectU's faulty challenge to Facebook's standing to bring claims for relief under Business and Professions Code Sections 17429.4 and 17538.45 boils down to the idea that Facebook has not properly alleged that it is an "electronic mail service provider." This action is about the defendants' theft of close to 3,000,000 email addresses and other data from the Facebook website. - 16 FACEBOOK'S OPPOSITION TO MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) CASE NO. 5:07-CV-01389-RS

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Facebook has standing. ConnectU concludes that because Facebook "does not allege that it operates its own email servers" it therefore is not an intermediary. Nothing in Section 17529.4 or 17538.45 requires such an averment. Facebook is an "electronic mail service provider" as defined in Section 17529.1(h). Cal. Bus. & Prof. Code § 17529.1(e) ("`Electronic mail service provider' means any person, including an Internet service provider, that is an intermediary in sending or receiving electronic mail or that provides to end users of the electronic mail service the ability to send or receive electronic mail"). In the FAC Facebook alleges that it is "an interactive computer service which enables social networking amongst present and former university students." FAC ¶ 7. It is "interactive" because it enables its the transmission of electronic messages between members. Facebook further alleges that its Terms of Use expressly prohibit its users from transmitting "any chain letters or junk email to other members" and from "collecting email addresses or other contact information of members by electronic or other means for the purpose of sending unsolicited email ... ." Id., ¶ 12. Thus, Facebook is an "intermediary in sending or receiving electronic mail." Indeed, it was this intermediary role that allowed ConnectU to extract the millions of email addresses. Id., ¶¶ 17, 18, 42, 47. F. ConnectU's Motion To Dismiss Facebook's CAN-SPAM Act Claim Is Without Merit 1. Facebook Has Stated a Claim For Violation Of The CAN-SPAM Act

ConnectU incorrectly argues that Congress made illegal six types of commercial email and that Facebook was required to allege a violation of at least one of them to bring a claim under the CAN-SPAM Act. Mot. to Dismiss, 16:9-16. As an internet service provider, Facebook is entitled to seek damages based on violations of 15 U.S.C. § 7704. Section 7704 prohibits the transmission of false or misleading transmission information. In order to state a claim under the CAN-SPAM Act, Facebook need only allege that the emails sent by ConnectU contained "materially false or materially misleading" header information. 15 U.S.C. § 7704(a)(1). For purposes of this provision, header information is false or misleading if "an originating electronic mail address, domain name, or Internet Protocol address the access to which for purposes of initiating the message was obtained by means of false or fraudulent pretenses or representations." - 17 FACEBOOK'S OPPOSITION TO MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) CASE NO. 5:07-CV-01389-RS

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15 U.S.C. § 7704(a)(1)(A). Facebook's FAC satisfies this requirement. Facebook alleged that ConnectU "distributed e-mails to members of Facebook and otherwise sought to solicit Facebook's members, including the solicitation of members with whom ConnectU had no prior or direct relationship with." FAC ¶ 22. Facebook further alleged that "ConnectU used the email addresses that had been gathered by and/or for ConnectU through Defendants' unauthorized access to and unauthorized appropriations from Facebook's ... computers, computer systems, and computer networks." Id. Notably, Defendants' unauthorized access was accomplished by developing a computer program specifically designed to circumvent Facebook's security measures and mine its site for email addresses. Id., ¶¶ 4, 17. By engaging in the activity alleged in the FAC i.e., gaining unauthorized access to Facebook's website and data, ConnectU initiated electronic mail to Facebook users that contained false and/or misleading transmission information. 2. Facebook Has Standing Under The CAN-SPAM Act

Facebook has standing to sue under the CAN-SPAM Act. Any provider of an "Internet Access Service" has standing to proceed with a claim under the statute. 15 U.S.C. § 7706(g). The term "Internet Access Service" is given the definition afforded in the section 231(e)(4) of the Communications Act of 1934 (47 U.S.C. 231(e)(4)). 15 U.S.C. § 7702(11). The relevant portion of the Communications Act defines "Internet Access Service" as "a service that enables users to access content, information, electronic mail, or other services offered over the Internet, and may also include access to proprietary content, information, and other services as part of a package of services offered to consumers. Such term does not include telecommunications services." Facebook enables social networking amongst its registered users via its website. FAC ¶¶ 7-10. As part of its social networking service Facebook enables its registered users to access services and content through the Facebook website over the Internet, including the ability to access the profiles of other users, and the ability send electronic mail messages to other registered users. FAC ¶¶ 7 ­ 12. This is precisely the type of service defined in 47 U.S.C. 231(e)(4). /// ///
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IV.

CONCLUSION For the reasons set forth herein, ConnectU's motion to dismiss should be denied.

Dated: April 11, 2007

ORRICK, HERRINGTON & SUTCLIFFE LLP

/s/ I. Neel Chatterjee /s/ I. Neel Chatterjee Attorneys for Plaintiff THE FACEBOOK, INC.

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FACEBOOK'S OPPOSITION TO MOTION TO DISMISS PURSUANT TO FED. R. CIV. P. 12(B)(6) CASE NO. 5:07-CV-01389-RS