Yordy v. Plimus, Inc et al

Filing 151

ORDER by Judge Thelton E. Henderson denying 142 Motion to Certify Class. (tehlc1, COURT STAFF) (Filed on 4/15/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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KIMBERLY YORDY,

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Plaintiff,

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v.
PLIMUS, INC,

Case No. 12-cv-00229-TEH
ORDER DENYING CLASS
CERTIFICATION

Defendant.

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This matter came before the Court on March 3, 2014, on Plaintiff’s renewed motion

United States District Court
Northern District of California

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for class certification. Having considered the arguments of the parties and the papers

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submitted, the Court now DENIES Plaintiff’s motion for the reasons set forth below.

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BACKGROUND
The Court has already outlined the relevant background in its October 29, 2013

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order denying Plaintiff’s original motion for class certification. In brief, however, Plaintiff

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Kimberly Yordy (“Yordy”) alleges that three Unlimited Download Websites, (“UDWs”)

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purported to offer bestselling media titles for a one-time fee, but in fact only provided

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content which was already available for free or provided illegal content that violated

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copyright laws. Yordy claims that the fraudulent marketing scheme behind these three

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UDWs was developed, encouraged and promoted by Defendant Plimus, Inc. (“Plimus”).

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Plimus denies any involvement in advertising and marketing, and claims it only processed

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payments for the UDWs.

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Yordy sues Plimus on behalf of herself and all others similarly situated for

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violations of California’s False Advertising Law, California Business and Professions

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Code sections 17500 et seq. (“FAL”); Consumers Legal Remedies Act, California Civil

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Code sections 1750, et seq. (“CLRA”); and Unfair Competition Law, California Business

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and Professions Code sections 17200 et seq. (“UCL”); as well as fraud in the inducement,

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fraud by omission, negligent misrepresentation, and breach of contract.
Yordy previously moved to certify a class of all those who paid to access a

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collection of nineteen UDWs. The Court denied that motion finding that Plaintiff had

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failed to meet Federal Rule of Civil Procedure Rule 23’s requirements of commonality,

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typicality, and adequacy. Plaintiff now moves to certify a much narrower class of only

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three UDWs, MyPadMedia.com, TheNovelNetwork.com, and the ReadingSite.com, which

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were all operated by a single company, MyPadMedia.

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LEGAL STANDARD
Federal Rule of Civil Procedure 23 governs class certification. Rule 23(a) requires

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United States District Court
Northern District of California

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that a party seeking certification demonstrate that:

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(1) the class is so numerous that joinder of all members is impracticable,

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(2) there are questions of law or fact common to the class,

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(3) the claims or defenses of the representative parties are typical of the claims or

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defenses of the class, and
(4) the representative parties will fairly and adequately protect the interests of the

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class.

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Fed. R. Civ. P. 23(a) (paragraph breaks added).

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While Rule 23(a) does not expressly require a class to be ascertainable, courts have

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read the rule to imply this additional requirement. In re TFT-LCD (Flat Panel) Antitrust

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Litig., 267 F.R.D. 291, 299 (N.D. Cal. 2010). A class is “ascertainable” if it can be

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described by a set of common characteristics sufficient to allow a member of that group to

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identify himself or herself as having a right to recover based on the class description.

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Hanni v. Am. Airlines, Inc., No. C-08-00732 CW, 2010 WL 289297, at *9 (N.D. Cal. Jan.

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15, 2010) (internal quotation marks omitted).

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A party seeking certification must also demonstrate that the suit falls into one of the

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categories of class actions set out within Rule 23(b). Zinser v. Accufix Research Inst., Inc.,

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253 F.3d 1180, 1186 (9th Cir. 2001). Yordy seeks certification under both subsections
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(b)(2) and (b)(3). Subsection (b)(2) requires that the defendant acted or failed to act on

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grounds generally applicable to the proposed class, “so that final injunctive relief or

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corresponding declaratory relief is appropriate.” Fed. R. Civ. P. 23(b)(2). Subsection

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(b)(3) requires that “questions of law or fact common to class members predominate over

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any questions affecting only individual members, and that a class action is superior to

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other available methods for fairly and efficiently adjudicating the controversy.” Fed. R.

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Civ. P. 23(b)(3).

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To determine whether a party seeking certification has met its burden of providing
facts to support certification, the court must conduct a “rigorous analysis.” Zinser, 253

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F.3d at 1186. Generally, the court is not to consider the merits of a plaintiff’s claims at

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United States District Court
Northern District of California

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this stage, but it may do so where class “considerations . . . are enmeshed in the factual and

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legal issues comprising the plaintiff’s cause of action.” Wal-Mart Stores, Inc. v. Dukes,

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131 S. Ct. 2541, 2551-52 (2011) (quotation marks omitted).

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DISCUSSION
Plimus does not dispute that Yordy meets Rule 23(a)’s numerosity requirement and

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its implied ascertainability requirement. The Court’s analysis therefore focuses on the next

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Rule 23(a) requirement – commonality.

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In order to satisfy commonality, a plaintiff’s “claims must depend upon a common

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contention” that is “of such a nature that it is capable of classwide resolution – which

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means that determination of its truth or falsity will resolve an issue that is central to the

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validity of each of the claims in one stroke.” Dukes, 131 S. Ct. at 2551. To support a

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finding of commonality, Yordy puts forth the following questions as common to the class

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and capable of being answered on a class-wide basis: (1) whether Plimus knew that the

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products offered by the UDWs were fraudulent, but failed to suspend the UDWs or

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demand changes; (2) whether Plimus is liable for facilitating and promoting the content of

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the UDWs; and (3) whether the class members suffered the same form of injury and are

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entitled to damages.
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Plimus responds that even if these questions are capable of classwide determination,

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the answers to these questions have no bearing on the “validity of each of [Plaintiff’s]

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claims” as required by Dukes, 131 S. Ct. at 255. Specifically, Plimus contends that the

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FAL, UCL, and CLRA all require that a defendant directly participate in the alleged

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unlawful activity, and that there is no vicarious liability under these statutes. Therefore,

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whether Plimus “facilitated” the UDWs or “knew” of their fraud does not resolve the

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question of its liability.

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Under the UCL, a defendant’s liability must be based on his “personal participation
in the unlawful practices” and “unbridled control” over the unlawful practices; vicarious
liability is insufficient. Emery v. Visa Int’l Serv. Ass’n, 95 Cal. App. 4th 952, 960 (2002).

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Northern District of California

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In Emery, for example, the court found that defendant Visa had not personally participated

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in the alleged wrong of soliciting participation in a foreign lottery, when its logo was used

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in the solicitation, and it accepted and processed credit card payments for the lottery. In

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Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, the Ninth Circuit upheld the district court’s

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dismissal of UCL claims against defendant Visa, holding that although Visa processed

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payments for websites that infringed copyrights, “[b]ecause ‘Visa itself played no part in

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preparing or sending any ‘statement’ that might be construed as untrue or misleading under

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the unfair business practices statutes,’ it could not be liable for unfair competition.” 494

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F.3d 788, 808-09 (9th Cir. 2007) (quoting Emery, 95 Cal. App. 4th at 964).

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Likewise, for an FAL claim, mere knowledge of the falsity of a third-party’s

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statements is insufficient to support direct liability or an aiding-and-abetting theory of

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liability, and the FAL includes “no duty to investigate the truth of statements made by

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others.” Emery, 95 Cal. App. 4th at 964; see also Perfect 10, Inc. v. Visa Int’l Serv. Ass’n,

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494 F.3d 788, 809 (9th Cir. 2007). In In re Jamster, plaintiffs claimed that Defendant T-

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Mobile violated the UCL, FAL, and CLRA because it “knew of complaints concerning

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deceptive advertising undertaken by” third-party Jamster to lure customers into a

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subscription service, but continued to charge those who were fraudulently induced to

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subscribe to Jamster’s services. In re Jamster Mktg. Litig., No. MDL 1751, 2009 WL
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1456632, at *8-9 (S.D. Cal. May 22, 2009). The court dismissed the plaintiffs’ claims,

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concluding “that T-Mobile knew of complaints concerning deceptive marketing [was]

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insufficient to show that [it] controlled, participated, approved, marketed or otherwise

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adopted [Jamster’s] advertising practices.” In re Jamster Mktg. Litig., 2009 WL 1456632,

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at *8. Similarly, many courts have held that CLRA liability also requires “personal

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participation” and “unbridled control.” See In re Jamster Mktg. Litig., No. MDL 1751,

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2009 WL 1456632, at *9; see also, Dorfman v. Nutramax Labs., Inc., No. 13-CV-0873,

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2013 WL 5353043, at *14 (S.D. Cal. Sept. 23, 2013) (holding that defendant Rite-Aid’s

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creation of deceptive packaging and repetition of false statements on their own website

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constituted personal participation in the false statements to support a CLRA claim).
Based on the legal standards applicable to Yordy’s UCL, FAL, and CLRA claims,

United States District Court
Northern District of California

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Yordy’s proposed common questions regarding Plimus’s “facilitation” of, “promotion” of,

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and “knowledge” of the UDWs are not central to Plimus’s liability. See Dukes, 131 S. Ct.

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at 255 (explaining that for a discrimination claim, reciting questions that are unrelated to

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liability such as “Do all of us plaintiffs indeed work for Wal–Mart? Do our managers have

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discretion over pay? Is that an unlawful employment practice? What remedies should we

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get?” is “insufficient to obtain class certification”). Yordy’s proposed common questions

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also do not resolve Plimus’s liability on Yordy’s common law claims. Common law fraud

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also requires more than mere knowledge of falsity or general facilitation. See Lazar v.

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Super. Ct., 12 Cal. 4th 631, 638 (1996) (describing the elements of common law fraud as

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(a) a misrepresentation (false representation, concealment, or nondisclosure); (b) scienter

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or knowledge of its falsity; (c) intent to induce reliance; (d) justifiable reliance; and (e)

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resulting damage). Thus, whether Plimus facilitated the websites’ activity, or promoted

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them to other marketers, or had knowledge of their fraud does not determine whether

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Plimus is liable for the violations Yordy alleges. These questions are therefore

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“insufficient to obtain class certification.” Dukes, 131 S. Ct. at 255.

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Looking beyond Yordy’s proposed common questions, the Court also considers the

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evidence Yordy offers to see if it may support certification. The Court is careful not to

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delve into the merits of the claims at issue here, and is mindful of the Supreme Court’s

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warning that “[m]erits questions may be considered to the extent—but only to the extent—

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that they are relevant to determining whether the Rule 23 prerequisites for class

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certification are satisfied.” Amgen Inc. v. Connecticut Ret. Plans & Trust Funds, 133 S.

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Ct. 1184, 1195 (2013). Adhering to that limitation, the Court concludes that Yordy offers

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no evidence that Plimus operated in similar manner with respect to all three websites such

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that its liability can be assessed as to all three websites together. Yordy only offers that
Plimus assigned MyPadMedia an account manager, Pl’s Ex. 30, and that it reformatted the

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United States District Court
Northern District of California

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payment processing pages of MyPadMedia’s three websites, Pl’s Ex. 31. Reformatting the

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payment processing pages of the UDWs, however, does not reflect how Plimus was

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involved in the advertising content of any of the UDWs on a common basis. Similarly, the

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assignment of a single account manager for MyPadMedia does not support Plimus’s class-

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wide involvement with advertising and promotions. Finally, Yordy’s claim that Plimus

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changed the content of MyPadMedia’s offer e-mails is belied by the record, which plainly

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describes the e-mails in question as “thank you” e-mails, sent to persons who had already

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purchased access to websites, not offer e-mails intended to solicit purchases. Pl.’s Ex. 31.

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As with Yordy’s previous motion for class certification, there is no evidence that Plimus’s

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involvement with the allegedly false advertising – the crux of the claims at issue here – is

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common across the UDWs.
As Yordy has failed to establish that there is a common contention that “is central to

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the validity of each of the claims” and that can be resolved across the class, she has failed

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to establish Rule 23(a)’s commonality requirement. See Dukes, 131 S. Ct. at 2551.

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Because commonality has not been met, the Court refrains from discussing Rule 23(a)’s

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other requirements of typicality and adequacy or Rule 23(b)’s requirements.

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CONCLUSION
For the foregoing reasons, Plaintiff’s renewed motion for class certification is
DENIED.

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IT IS SO ORDERED.

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Dated: 4/15/14

_____________________________________
THELTON E. HENDERSON
United States District Judge

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United States District Court
Northern District of California

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