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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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California

United States District Court

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CHRISTALEE ABREU, individually and
on behalf of all others similarly situated,
Plaintiff,

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No. C 12-00412 WHA

ORDER DENYING
MOTION TO REMAND
AND VACATING HEARING

v.

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SLIDE, INC., a Delaware corporation, and
GOOGLE INC., a Delaware corporation,

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Defendants.

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/

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INTRODUCTION

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Plaintiff moves to remand this putative class action to Santa Clara County Superior

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Court. Because this order finds defendants have successfully shown the amount in controversy

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exceeds five million dollars, plaintiff’s motion is DENIED.

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STATEMENT
This putative class action concerns virtual pets and real money. Defendant Slide, Inc.

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created an internet-based video game entitled SuperPoke! Pets (SPP), which defendant Google,

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Inc. later acquired. SPP provided a platform for users to adopt and care for virtual pets. Users

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created virtual pets with free basic access to the SPP application, and were then able to name,

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interact with and clothe their virtual pets as well as customize the pets’ virtual habitats. Users

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could also obtain virtual goods for their pets and pet habitats with virtual coins earned through

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play. Virtual goods could then be displayed within the pet habitats.

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A premium form of virtual currency, aptly called “gold,” allowed users to obtain

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premium virtual goods. “Gold” could not be earned by play, however, but was purchased

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by users via their debit, credit or PayPal accounts. Virtual goods could also be transferred

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between SPP users and a “robust secondary market” to buy and sell “used” virtual items

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developed. The online exchange of virtual goods was facilitated by SPP through seller

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registration. Beginning in 2010, SPP also offered subscription-only access to premium game

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For the Northern District of California

United States District Court

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content (VIP status) (Hur Decl. Exh. 1 (Compl.) ¶¶ 15–21).
According to the complaint, SPP was designed to induce users to purchase “gold” and

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VIP status. The vast majority of items, features and content could be obtained only with “gold.”

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Defendants also manipulated the value of virtual goods by limiting and then “restocking” items:

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[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!’

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Plaintiff alleges her own spending on the game, since she began playing in 2009, exceeded
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$1,000 (id. at ¶¶ 17–19, 49–50).
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In June 2011, defendants announced the discontinuation of the “gold” purchasing
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program. Users were notified that, at the end of that month, no premium items would be
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available and the value of “gold” in users’ accounts would disappear. No refunds were offered.
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Defendants assured users that support for the SPP site would continue, and promised they had
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“no plans to shut the site down.” Defendants also informed users that no new VIP status
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subscriptions would be accepted after July 1, 2011, but that users with pre-dated subscriptions
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would enjoy continued access to the premium content area “for life” (id. at ¶¶ 33–38).
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But in August 2011, defendants announced SPP would be terminated within six months,
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and that SPP users would lose online access to their virtual pets and goods. In September 2011,
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defendants confirmed SPP would be taken offline in March 2012. The value of users’ virtual

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goods was accordingly scheduled to vanish (id. at ¶¶ 43–47).

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Plaintiff filed this action in Santa Clara County Superior Court in December 2011

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seeking to represent two classes of thousands of similarly situated individuals: “(1) All persons

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in the United States who have one or more registered [SPP] accounts and have purchased virtual

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gold or in-game items from SPP-certified resellers; (2) all persons in the United States who have

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purchased one or more months of the [] Vip Status program.” The complaint alleges violations

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of California Civil Code Sections 1670.5, 1668, 1750 et. seq. and 17200 et. seq, fraud by

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inducement and unjust enrichment. In addition to declaratory and injunctive relief, the
complaint seeks restitution for monies unjustly received, actual and punitive damages and

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For the Northern District of California

United States District Court

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interest, as well as reasonable costs and attorney’s fees (id. at ¶¶ 54–55, (b)–(I)). While no

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specific class period is identified, the complaint seeks to recover the full value of users’ in-game

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purchases of both money and virtual goods, as well as “other investments” allegedly lost as a

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result of the game’s termination (id. at ¶¶ 47–48).

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Defendants removed this action here in January 2012. In its notice of removal,

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defendants alleged federal jurisdiction pursuant to the Class Action Fairness Act, 28 U.S.C.

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Section 1336(d). Plaintiff now moves to remand this action on the sole ground that the CAFA

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amount in controversy requirement has not been met.

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ANALYSIS
The CAFA vests district courts with “original jurisdiction of any civil action in which,

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inter alia, the amount in controversy exceeds the sum or value of $5,000,000, exclusive of

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interest and costs,” and in which the aggregate number of proposed plaintiffs is 100 or greater,

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and any member of the plaintiff class is a citizen of a state different from any defendant.

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28 U.S.C. § 1332(d)(2). Plaintiff does not dispute that: (1) This is a class action as defined by

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the CAFA; (2) this lawsuit concerns over 100 persons; and (3) there exists minimal diversity as

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required by the CAFA (Br. 5). This order thus need only consider whether the amount

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in controversy requirement has been met.

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The amount in controversy is merely an estimate of the total amount in dispute, not

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a prospective assessment of defendant’s liability. Lewis v. Verizon Commc’ns., Inc., 627 F.3d

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395, 397 (9th Cir. 2010). Where, as here, the complaint does not allege the amount of damages

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sought, the removing defendant must show that the amount in controversy exceeds five million

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dollars. Under this burden, the defendant must make a showing that it is “more likely than not”

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that the amount in controversy satisfies the federal diversity jurisdictional amount requirement.

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See Abrego Abrego v. The Dow Chem. Co., et al., 443 F.3d 676, 683 (9th Cir. 2006). A district

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court may consider whether it is “facially apparent” from the complaint that the jurisdictional

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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

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For the Northern District of California

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an affidavit showing the amount in dispute meets or exceeds five million dollars is sufficient

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to satisfy a defendant’s evidentiary burden. Lewis, 627 F.3d at 397.

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Defendants appended to their notice of removal several third-party website postings

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showing SPP as among the “top 25 MySpace games” for various months in 2011. MySpace

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is a social networking site. One of the postings states that SPP had over 7.1 million total users

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on MySpace (Dkt. No. 7, Exh. E). Defendants submit with their opposition a declaration

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of Libor Michalek, an engineering director at Google. Libor Michalek was a co-founder and

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chief technology officer of Slide, Inc., prior to Google’s acquisition thereof. The Michalek

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Declaration states (Michalek Decl. ¶¶ 1–2):

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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

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the amount in controversy exceeds five million dollars. Plaintiff’s complaint seeks to recover

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the actual value of SPP users’ “investments and property” in “gold” and virtual goods as well

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as money spent on VIP status subscriptions. The complaint alleges users spent “hundreds

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or even thousands of dollars on the game” (Compl. ¶¶ 96, 108, 115, 127). Thus plaintiff has put
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at issue the full amount of user spending on SPP. The Michalek declaration shows user spending

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exceeded the jurisdictional amount on just one portion of the game (“gold” purchases), and

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in just the nine months preceding the game’s termination. According to the complaint, user

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purchases of “gold” and premium virtual goods began well before October 2010 (id. at ¶¶ 21,

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Plaintiff faults defendants for failing to produce actual business records to show the

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amount of damages. Defendants are not required, however, to prove plaintiff’s damages

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allegations. They need only show that the amount put at issue by plaintiff exceeds the

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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

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For the Northern District of California

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actual amount in controversy here” (Br. 7). Plaintiff, however, nowhere suggests that class

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recovery would be less than five million dollars. Defendants have made a showing that it is

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more likely than not the amount users spent on SPP “gold” — only a portion of the damages

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sought by plaintiff’s complaint — well exceeds this amount.

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Plaintiff also contends that defendants “rely upon a mischaracterization of [p]laintiff’s

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allegations to conclude that there are at least 2000 individuals in each of the two putative

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[c]lasses” and provides “no evidentiary proof to suggest that those figures are accurate” (Br. 1).

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The Michalek declaration states that 9,221 users purchased “gold” in a single month. Because

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the existence of 100 or more class members has been conceded, this order need not determine

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the actual number of potential claimants, but rather whether the jurisdictional amount has been

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sufficiently shown. It has.

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In her reply, plaintiff argues that the Michalek declaration addresses only what user’s

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spent on “gold” and does not take into account the total amount of “refunds, chargebacks and

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any other value returned to class members” to determine the amount of money actually retained

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by defendants. But no allegation was made that refunds were ever issued to users. Plaintiff now

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states that “it was not until July 2011 that defendants ceased offering cash refunds to SPP users

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for purchases of virtual gold” (emphasis added), and that “common sense dictates that prior

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to that time . . . SPP users requested and received refunds for such purposes.” The complaint,
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however, alleges only that “defendants did not offer to refund the cash value of gold that was not

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spent through SPP prior to [July 2011],” not that refunds suddenly ceased. Defendants’ refusal

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to offer refunds in July 2011 does not support the otherwise unsubstantiated claim that refunds

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were offered prior to that time. In fact, the opposite inference could be equally drawn: “Gold”

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was non-refundable. Plaintiff’s argument thus does not controvert the showing made by

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defendants.

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Defendants have here provided evidence that a mere portion of the alleged damages well

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exceeds the jurisdictional requirement. According to the complaint, recovery is also sought for

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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

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For the Northern District of California

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shown by defendants’ affidavit. Moreover, plaintiff has not stated any intention to limit recovery

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to less than five million dollars. See Lewis, 627 F.3d at 397. The complaint plainly states that

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plaintiff’s own spending on SPP exceeded $1,000, and that thousands of persons comprise the

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two classes of similarly situated individuals (Compl. ¶¶ 50, 55). This order finds that defendants

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have met their burden of showing that the amount placed into dispute by plaintiff’s complaint

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exceeds five million dollars.

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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.

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IT IS SO ORDERED.

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Dated: April 3, 2012.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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