Clerkin et al v. Mylife.com Inc. et al

Filing 80

AMENDED ORDER re 79 GRANTING DEFENDANT GORALLS RULE 12(B)(2) 39 MOTION TO DISMISS, GRANTING IN PART AND DENYING IN PART DEFENDANTS RULE 12(B)(6) 42 MOTION TO DISMISS AND GRANTING IN PART PLAINTIFFS 47 MOTION TO APPOINT INTERIM CLASS COUNSEL. **CASE NO. CORRECTED ON PAGE 18 IS THE ONLY CHANGE (HIGHLIGHTED ON ORDER)**. ***CONSOLIDATING CASES C-11-2353-CW and C-11-3073-CW. ALL FUTURE FILING SHALL BE FILED IN THIS CASE C-11-527-CW*** Signed by Judge CLAUDIA WILKEN on 8/16/2011. (ndr, COURT STAFF) (Filed on 8/16/2011) Modified on 8/16/2011 (cp, COURT STAFF).

1

IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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4
5

JOHN CLERKIN and VERONICA MENDEZ,
individually and on behalf of all
others similarly situated,

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7
8
9
United States District Court
For the Northern District of California

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No. C 11-00527 CW

Plaintiffs,
v.
MYLIFE.COM, INC.; JEFFREY TINSLEY;
RACHEL GLASER; W. DWIGHT GORALL;
ARMEN AVEDISSIAN; MICHAEL SOH; SHARYN
ELES; and OAK INVESTMENT PARTNERS,
Defendants.

11

/

12
13
14

AMENDED ORDER
GRANTING
DEFENDANT
GORALL’S RULE
12(B)(2) MOTION
TO DISMISS,
GRANTING IN PART
AND DENYING IN
PART DEFENDANTS’
RULE 12(B)(6)
MOTION TO DISMISS
AND GRANTING IN
PART PLAINTIFFS’
MOTION TO APPOINT
INTERIM CLASS
COUNSEL
(Docket Nos. 39,
42 and 47)

15
16

Defendant W. Dwight Gorall moves to dismiss Plaintiffs John

17

Clerkin and Veronica Mendez’s claims against him for lack of

18

personal jurisdiction.

19

Jeffrey Tinsley; Rachel Glaser; Armen Avedissian; Michael Soh;

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Sharyn Eles; and Oak Investment Partners move to dismiss

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Plaintiffs’ action for failure to state a claim.

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these motions and move to appoint their counsel as interim class

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counsel.

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Plaintiffs’ motion.

25

Having considered oral argument and the papers submitted by the

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parties, the Court GRANTS Gorall’s Rule 12(b)(2) motion to dismiss,

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GRANTS in part Defendants’ Rule 12(b)(6) motion to dismiss and

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DENIES it in part and GRANTS in part Plaintiffs’ motion to appoint

Gorall and Defendants MyLife.com, Inc.;

Plaintiffs oppose

Non-parties Cynthia McCrary and Cody Brock oppose
The motions were heard on June 9, 2011.

1

their counsel as interim class counsel.

2

BACKGROUND

3
4
5

The following allegations are contained in Plaintiffs’
complaint.
MyLife.com, Inc., operates mylife.com, an Internet website.

6

MyLife presents those who sign up for its service with “a list of

7

fake names of people supposedly ‘searching for you.’”

8

To show that the website-generated lists are false, Plaintiffs

9

point to a testimonial posted on the Internet by an individual who

Compl. ¶ 1.

United States District Court
For the Northern District of California

10

registered on the website as “sfsf sdgfsdgs.”

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website then returned a result, indicating that seven people were

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looking for “sfsf sdgfsdgs.”

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individual’s Internet testimonial stating that, irrespective of the

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zip code entered, the website indicated that “Grovia Paxton” was

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residing in that zip code area and was looking for the individual.

16

Id. at 3:11-17.

17

Id.

Id. at 3:4.

The

Plaintiffs cite another

In mid-2010, Clerkin began receiving emails from MyLife,

18

stating that people were searching for him on the website.

19

about September 25, 2010, Clerkin signed up for MyLife “at $21.95

20

for one month.”

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realized “that no one he knew was looking for him.”

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discovered that he had been charged $155.40.

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full refund.

24

balance.

25

Compl. ¶ 7.

On or

After using the website, Clerkin
Id.

He then

Clerkin requested a

However, MyLife refunded only $104.55 and kept the

In early 2010, Mendez received an email from MyLife stating

26

that someone was searching for her.

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discovered “that no one she knew was actually searching for her.”

28

2

Like Clerkin, she subsequently

1

Compl. ¶ 8.

2

was charged $60.00.

3

requested a refund, MyLife refused to return any money.

Mendez signed up for a $5.00 “trial subscription,” but
Id.

When she canceled the service and

4

The individual Defendants hold the following positions:

5

Tinsley is MyLife’s founder, chairperson and chief executive

6

officer; Glaser is MyLife’s chief operating and financial officer;

7

Gorall, a Florida resident, is MyLife’s Vice President of Emerging

8

Business; Avedissian is a MyLife employee who develops business

9

strategies; Soh is MyLife’s Senior Vice President for Marketing;

United States District Court
For the Northern District of California

10

and Eles is MyLife’s Vice President of Marketing Operations.

11

Glaser, Gorall, Avedissian, Soh and Eles “conspired with MyLife,

12

Mr. Tinsley, and others to perpetrate” the alleged fraudulent

13

scheme.

14

Compl. ¶¶ 11-15.

Oak Investment Partners, a venture capital firm, provided $25

15

million to MyLife.

16

and others to perpetrate” the alleged fraudulent scheme.

17

¶ 16.

18

It, too, “conspired with MyLife, Mr. Tinsley,
Compl.

Plaintiffs bring the following claims against Defendants:

19

(1) common count for money had and received; (2) violation of

20

California’s Consumer Legal Remedies Act (CLRA), Cal. Civ. Code

21

§§ 1750, et seq.; (3) violation of the fraud prong of California’s

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Unfair Competition Law (UCL), Cal. Bus. & Prof. Code §§ 17200, et

23

seq.; (4) violation of the UCL’s unlawful prong; (5) violation of

24

the UCL’s unfair prong; and (6) unjust enrichment and common law

25

restitution.

26

Plaintiffs contend that the individual Defendants and Oak

27

Investment Partners should be held liable for MyLife’s conduct

28

3

1

because “each of them personally performed acts” giving rise to the

2

first through fifth causes of action.

3

89.

4

and conspired with MyLife and the other Defendants, and furnished

5

the means to accomplish the alleged misconduct, all of which also

6

supports liability against them.

7

superior liability against Tinsley, Glaser and Gorall for

8

Avedissian’s, Soh’s and Eles’s conduct.

9

contend that Tinsley and Glaser can be held personally liable for

Compl. ¶¶ 33, 47, 63, 76 and

Plaintiffs also argue that each Defendant aided and abetted

Plaintiffs seek respondeat

Finally, Plaintiffs

United States District Court
For the Northern District of California

10

the conduct of MyLife and other Defendants based on an agency

11

theory.

12
13
14

DISCUSSION
I.

Gorall’s Rule 12(b)(2) Motion to Dismiss
Under Rule 12(b)(2) of the Federal Rules of Civil Procedure, a

15

defendant may move to dismiss for lack of personal jurisdiction.

16

The plaintiff then bears the burden of demonstrating that the court

17

has jurisdiction.

18

F.3d 797, 800 (9th Cir. 2004).

19

demonstrate facts that if true would support jurisdiction over the

20

defendant.”

21

Uncontroverted allegations in the complaint must be taken as true.

22

AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir.

23

1996).

24

allegations if they are contradicted by affidavit.

25

v. Systems Technology Assocs., Inc., 557 F.2d 1280, 1284 (9th Cir.

26

1977).

27

conflicts in the evidence must be resolved in the plaintiff's

28

Schwarzenegger v. Fred Martin Motor Co., 374
The plaintiff “need only

Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995).

However, the court may not assume the truth of such
Data Disc, Inc.

If the plaintiff also submits admissible evidence,

4

1
2

favor.

AT&T, 94 F.3d at 588.

There are two independent limitations on a court’s power to

3

exercise personal jurisdiction over a non-resident defendant: the

4

applicable state personal jurisdiction rule and constitutional

5

principles of due process.

6

(9th Cir. 1990); Data Disc, Inc., 557 F.2d at 1286.

7

jurisdictional statute is co-extensive with federal due process

8

requirements; therefore, jurisdictional inquiries under state law

9

and federal due process standards merge into one analysis.

United States District Court
For the Northern District of California

10
11

Sher v. Johnson, 911 F.2d 1357, 1361
California’s

Rano v.

Sipa Press, Inc., 987 F.2d 580, 587 (9th Cir. 1993).
The exercise of jurisdiction over a non-resident defendant

12

violates the protections created by the due process clause unless

13

the defendant has “minimum contacts” with the forum state so that

14

the exercise of jurisdiction “does not offend traditional notions

15

of fair play and substantial justice.”

16

Washington, 326 U.S. 310, 316 (1945).

Int’l Shoe Co. v.

17

A.

18

General jurisdiction exists when a defendant maintains

19

“continuous and systematic” contacts with the forum state even if

20

the cause of action has no relation to those contacts.

21

Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,

22

414 (1984).

23

“fairly high.”

24

not count in the minimum contacts calculus.

25

Rudzewicz, 471 U.S. 462, 475 (1985).

26

evaluating the extent of contacts include whether the defendant

27

makes sales, solicits or engages in business, designates an agent

28

General Jurisdiction

The standard for establishing general jurisdiction is
Id.

Random, fortuitous or attenuated contacts do

5

Burger King v.

Factors considered in

1

for service of process, holds a license, or is incorporated in the

2

forum state.

3

F.3d 1082, 1086 (9th Cir. 2000).

4

Bancroft & Masters, Inc. v. Augusta Nat’l, Inc., 223

Plaintiffs plead only that Gorall has aided and abetted

5

MyLife’s alleged misconduct and worked with other Defendants to

6

perpetrate the alleged fraud.

7

action taken by Gorall.

8

offer no factual background, are not sufficient to support general

9

jurisdiction over Gorall.

They do not allege any particular

Plaintiffs’ unadorned allegations, which

United States District Court
For the Northern District of California

10

B.

11

A court has specific jurisdiction over a defendant when the

Specific Jurisdiction

12

cause of action arises out of or relates to the defendant's

13

activities within the forum.

14

The “minimum contacts” required to assert specific jurisdiction are

15

analyzed using a three-prong test: (1) the non-resident defendant

16

must purposefully direct its activities towards, or consummate some

17

transaction with, the forum or a resident thereof, or perform some

18

act by which it purposefully avails itself of the privilege of

19

conducting activities in the forum, thereby invoking the benefits

20

and protections of its laws; (2) the claim must be one which arises

21

out of or results from the defendant’s forum-related activities;

22

and (3) the exercise of jurisdiction must be reasonable.

23

Lake, 817 F.2d 1416, 1421 (9th Cir. 1987).

24

conditions is required for asserting jurisdiction.

25

Am. v. Marina Salina Cruz, 649 F.2d 1266, 1270 (9th Cir. 1981).

26

Plaintiffs argue that Gorall purposefully directed his

Data Disc, Inc., 557 F.2d at 1286.

27
28

6

Lake v.

Each of these
Ins. Co. of N.

1

activities toward California residents.1

2

to demonstrate purposeful direction, the defendant must “allegedly

3

have (1) committed an intentional act, (2) expressly aimed at the

4

forum state, (3) causing harm that the defendant knows is likely to

5

be suffered in the forum state.”

6

(quoting Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1111 (9th

7

Cir. 2002)).

8
9

For a defendant’s conduct

Schwarzenegger, 374 F.3d at 802

As noted above, Plaintiffs make only broad, general
allegations against Gorall.

Without more, the fiduciary shield

United States District Court
For the Northern District of California

10

doctrine applies to him.

11

association with a corporation that causes injury in the forum

12

state is not sufficient in itself to permit that forum to assert

13

jurisdiction over the person.”

Davis v. Metro Prods., Inc., 885

14

F.2d 515, 520 (9th Cir. 1989).

The doctrine is subject to two

15

exceptions: “(1) where the corporation is the agent or alter ego of

16

the individual defendant; or (2) by virtue of the individual’s

17

control of, and direct participation in the alleged activities.”

18

Wolf Designs, Inc. v. DHR & Co., 322 F. Supp. 2d 1065, 1072 (C.D.

19

Cal. 2004) (citations omitted).

20

MyLife is the alter ego of Gorall, and their averments do not

21

afford any insight into how Gorall controlled or directly

22

participated in the alleged fraudulent scheme.

Under this doctrine, “a person’s mere

Plaintiffs do not allege that

Plaintiffs’

23
1

24
25
26
27
28

In a heading, Plaintiffs contend that Gorall purposefully
availed himself of the privilege of conducting activities in
California. However, the purposeful availment analysis generally
pertains to contract claims. See Schwarzenegger, 374 F.3d at 802
(“A purposeful availment analysis is most often used in suits
sounding in contract. A purposeful direction analysis, on the
other hand, is most often used in suits sounding in tort.”).
Plaintiffs have not alleged that Gorall entered into a contract.
7

1

pleadings do not support specific jurisdiction over Gorall.

2

Accordingly, Plaintiffs’ claims against Gorall are dismissed

3

without leave to amend for lack of personal jurisdiction.

4

Plaintiffs seek to conduct jurisdictional discovery, they do not

5

justify their request and it is denied.

6

No. 498, United Food & Commercial Workers v. SDC Inv., Inc., 788

7

F.2d 535, 540 (9th Cir. 1986) (concluding that plaintiffs’ belief

8

that discovery will reveal additional contacts is not sufficient to

9

justify granting jurisdictional discovery).

Although

See Butcher’s Union Local

If, in the course of

United States District Court
For the Northern District of California

10

otherwise permissible discovery in this case, Plaintiffs learn of

11

information that would support specific personal jurisdiction over

12

Gorall, they may promptly move for leave to amend to add him as a

13

Defendant.

14

II.

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Defendants’ Rule 12(b)(6) Motion to Dismiss
A complaint must contain a “short and plain statement of the

16

claim showing that the pleader is entitled to relief.”

17

Civ. P. 8(a).

18

claim is appropriate only when the complaint does not give the

19

defendant fair notice of a legally cognizable claim and the grounds

20

on which it rests.

21

(2007).

22

state a claim, the court will take all material allegations as true

23

and construe them in the light most favorable to the plaintiff.

24

Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).

25

However, this principle is inapplicable to legal conclusions;

26

“threadbare recitals of the elements of a cause of action,

27

supported by mere conclusory statements,” are not taken as true.

28

Fed. R.

Dismissal under Rule 12(b)(6) for failure to state a

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

In considering whether the complaint is sufficient to

8

NL

1

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949-50 (2009) (citing Twombly,

2

550 U.S. at 555).

3

When granting a motion to dismiss, the court is generally

4

required to grant the plaintiff leave to amend, even if no request

5

to amend the pleading was made, unless amendment would be futile.

6

Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911

7

F.2d 242, 246-47 (9th Cir. 1990).

8

would be futile, the court examines whether the complaint could be

9

amended to cure the defect requiring dismissal “without

In determining whether amendment

United States District Court
For the Northern District of California

10

contradicting any of the allegations of [the] original complaint.”

11

Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990).

12

Leave to amend should be liberally granted, but an amended

13

complaint cannot allege facts inconsistent with the challenged

14

pleading.

15

A.

Id. at 296-97.
Plaintiffs’ Claims Against the Individual Defendants and
Oak Investment Partners

16
Plaintiffs base their claims against the individual Defendants
17
and Oak Investment Partners on allegations that these Defendants
18
performed acts that facilitated MyLife’s alleged misconduct,
19
conspired with each other to advance the challenged scheme and
20
“furnished the means” to accomplish any alleged wrongdoing.
21
Further, Plaintiffs seek to hold Tinsley, Glaser and Gorall on
22
respondeat superior grounds, asserting that they authorized and
23
directed their subordinates to engage in misconduct.
24
These general allegations are not sufficient to state claims
25
against the individual Defendants or Oak Investment Partners.
26
Plaintiffs’ complaint does not explain what these Defendants did to
27
28

9

1

participate in the alleged scheme.

2

Plaintiffs allege that these Defendants personally performed acts,

3

they do not identify any particular conduct.2

4

sufficient “if it tenders ‘naked assertion[s]’ devoid of ‘further

5

factual enhancement.’”

6

U.S. at 557).

7

For instance, although

A complaint is not

129 S. Ct. at 1949 (quoting Twombly, 550

Accordingly, Plaintiffs’ claims against the individual

8

Defendants and Oak Investment Partners are dismissed.

9

are granted leave to amend to allege the acts each Defendant

United States District Court
For the Northern District of California

10

Plaintiffs

performed to advance the alleged fraudulent scheme.

11

B.

12

The CLRA imposes liability for “unfair methods of competition

13

and unfair or deceptive acts or practices undertaken by any person

14

in a transaction intended to result or which results in the sale or

15

lease of goods or services to any consumer.”

16

§ 1770(a).

17

Plaintiffs’ CLRA Claim Against MyLife

Cal. Civ. Code

Plaintiffs acknowledge that their CLRA claim is based on fraud

18

and that they must satisfy the heightened pleading requirements of

19

Federal Rule of Civil Procedure 9.

20

mistake, the circumstances constituting fraud or mistake shall be

21

stated with particularity.”

22

allegations must be “specific enough to give defendants notice of

23

the particular misconduct which is alleged to constitute the fraud

24

charged so that they can defend against the charge and not just

25

deny that they have done anything wrong.”

“In all averments of fraud or

Fed. R. Civ. Proc. 9(b).

The

Semegen v. Weidner, 780

26
2

27
28

Indeed, it is not clear how Oak Investment Partners, an
entity, could “personally perform” an action.
10

1

F.2d 727, 731 (9th Cir. 1985).

2

nature of the alleged fraudulent activities are sufficient, id. at

3

735, provided the plaintiff sets forth “what is false or misleading

4

about a statement, and why it is false.”

5

Secs. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994).

6

averred generally, simply by saying that it existed.

7

see Fed. R. Civ. Proc. 9(b) (“Malice, intent, knowledge, and other

8

condition of mind of a person may be averred generally.”).

9

Statements of the time, place and

In re GlenFed, Inc.,
Scienter may be
Id. at 1547;

Plaintiffs contend that their CLRA claim has two bases:

United States District Court
For the Northern District of California

10

(1) MyLife’s representations in its email solicitations to

11

Plaintiffs that “someone” was looking for them and (2) MyLife’s

12

billing practices.

13

1.

14

The Court considers each in turn.

Email Solicitations

The gravamen of Plaintiffs’ complaint about MyLife’s email

15

solicitations is that the emails represented that someone was

16

searching for Plaintiffs, even though no one was.

17

purportedly received such emails in early to mid-2010.

18

that the website produces “a list of fake names” for those who sign

19

up.

20

the Internet recounting tests of the mylife.com website suggesting

21

that these names are fake.

Plaintiffs
They plead

As noted above, Plaintiffs cite several testimonials posted on

22

Plaintiffs’ allegations, which must be taken as true, satisfy

23

their pleading burden under Rule 9 and, if proved, could show that

24

MyLife violated the CLRA.3

Their allegations suggest that MyLife’s

25
3

26
27
28

Specifically, MyLife’s alleged actions could be found to
fall within the following categories of conduct proscribed the
CLRA,
11

1

statement that people were looking for them was false or deceptive.

2

Defendants argue that Plaintiffs’ inability to recognize the names

3

of the people looking for them does not demonstrate that its emails

4

were false or deceptive.

5

plead that the names of the people purportedly looking for them are

6

fictitious and they allege a sufficient factual basis to support

7

this assertion.

8
9

This is beside the point.

Plaintiffs

Defendants contend that Plaintiffs have failed to plead any
damage based on the alleged misrepresentations.

This is incorrect.

United States District Court
For the Northern District of California

10

Plaintiffs allege that, based on MyLife’s refusal to offer a full

11

refund, Clerkin effectively paid $50.85.

12

any portion of the $60.00 Mendez paid.

13

reflect Plaintiffs’ damages.

14

not plead that they did not receive value from their use of the

15

site.

16

website presented lists of fake names and provided information “of

17

no conceivable value to anyone.”

18

they did not receive value from their subscriptions.

19

MyLife declined to refund

These alleged amounts

Defendants contend that Plaintiffs do

This argument is also unavailing.

Plaintiffs aver that the

Compl. ¶ 1.

This suggests that

Accordingly, Defendants’ motion to dismiss Plaintiffs’ CLRA

20

claim against MyLife, to the extent it is based on the email

21

solicitations, must be denied.

22
23
24
25
26
27
28

(3) Misrepresenting the affiliation, connection, or
association with . . . another. . . .
(5) Representing that . . . services have . . . uses
[and] benefits . . . which they do not have . . . .
(9) Advertising . . . services with intent not to sell
them as advertised.
Cal. Civ. Code § 1770.
12

1

2.

2

Billing Practices

Plaintiffs contend that MyLife’s billing practices violated

3

the CLRA.

4

$21.95 for one month” but was billed $155.40.

5

also allege that Mendez signed up for a “trial subscription . . .

6

for $5.00” but was charged $60.00.

7

most favorable to Plaintiffs, these allegations state a CLRA claim.

8

The averments suggest that, based on MyLife’s representations,

9

Plaintiffs signed up for a particular subscription, but that MyLife

United States District Court
For the Northern District of California

10

Id. ¶ 8.

Compl. ¶ 7.

They

Viewed in the light

billed for another.

11
12

They allege that Clerkin signed up for services “at

Accordingly, Plaintiffs’ CLRA claim against MyLife will not be
dismissed in any respect.

13

C.

14

California’s UCL prohibits any “unlawful, unfair or fraudulent

Plaintiffs’ UCL Claims Against MyLife

15

business act or practice.”

16

UCL incorporates other laws and treats violations of those laws as

17

unlawful business practices independently actionable under state

18

law.

19

(9th Cir. 2000).

20

law may serve as the basis for a UCL claim.

Saunders v. Superior

21

Court, 27 Cal. App. 4th 832, 838-39 (1994).

In addition, a

22

business practice may be “unfair or fraudulent in violation of the

23

UCL even if the practice does not violate any law.”

24

Scripps Health, 30 Cal. 4th 798, 827 (2003).

Cal. Bus. & Prof. Code § 17200.

The

Chabner v. United Omaha Life Ins. Co., 225 F.3d 1042, 1048
Violation of almost any federal, state or local

Olszewski v.

25

To assert standing under the UCL, plaintiffs must allege that

26

they “suffered an injury in fact” and “lost money or property as a

27

result of the unfair competition.”

28

13

Cal. Bus. & Prof. Code § 17204.

1

The purpose of section 17204 is to “eliminate standing for those

2

who have not engaged in any business dealings with would-be

3

defendants.”

4

(2011).

Kwikset Corp. v. Superior Court, 51 Cal. 4th 310, 317

5

Plaintiffs’ allegations support standing under the UCL.

6

plead facts suggesting that MyLife deceived them through its email

7

solicitations and representations about its billing practices and

8

that they lost money as a result.

9

supporting their CLRA claim against MyLife likewise support their

Further, Plaintiffs’ allegations

10
United States District Court
For the Northern District of California

They

claims against MyLife under the UCL’s unlawful and fraudulent

11

prongs.

12

their claim against MyLife under the UCL’s unfair prong.

Below, the Court considers whether Plaintiffs have stated

13

In Cel-Tech Communications, Inc. v. Los Angeles Cellular

14

Telephone Company, 20 Cal. 4th 163 (1999), the California Supreme

15

Court enunciated the elements of a UCL claim brought by competitors

16

under the UCL’s unfair prong.

17

appeal have reached varying conclusions as to the elements

18

consumers must plead and prove to prevail under the UCL’s unfair

19

prong.

20

718, 735-736 (9th Cir. 2007); Drum v. San Fernando Valley Bar

21

Ass’n, 182 Cal. App. 4th 247, 256 (2010).

22

used.

23

must allege a “violation or incipient violation of any statutory or

24

regulatory provision, or any significant harm to competition.”

25

Under the second test, a consumer is required to plead that a

26

defendant’s conduct “is immoral, unethical, oppressive,

27

unscrupulous or substantially injurious to consumers” and

28

Since then, California courts of

See, e.g., Lozano v. AT&T Wireless Servs., Inc., 504 F.3d

Drum, 182 Cal. App. 4th at 256.

14

Three tests have been

Under one test, a consumer

Id.

1

demonstrate how “the utility of the defendant’s conduct” is not

2

outweighed by “the gravity of the harm to the alleged victim.”

3

(citation and internal quotation marks omitted).

4

which is based on the Federal Trade Commission’s definition of

5

unfair business practices, requires that “(1) the consumer injury

6

must be substantial; (2) the injury must not be outweighed by any

7

countervailing benefits to consumers or competition; and (3) it

8

must be an injury that consumers themselves could not reasonably

9

have avoided.”

United States District Court
For the Northern District of California

10
11

Id.

The third test,

Id. at 257 (citation and internal quotation marks

omitted).
Under any of these tests, Plaintiffs allege sufficient facts

12

to support their claim against MyLife under the UCL’s unfair prong.

13

Defendants do not dispute that, if Plaintiffs are able to state a

14

CLRA claim, they satisfy the first test stated above.

15

allegations also satisfy the second test because they have alleged

16

misconduct without utility that outweighs injury to consumers.

17

Finally, Plaintiffs allege facts indicating that they have lost

18

money based on MyLife’s alleged misconduct, that they did not

19

benefit from this alleged misconduct and that, based on MyLife’s

20

purported deception, they could not reasonably have avoided the

21

injury.

22
23
24

Plaintiffs’

Accordingly, Plaintiffs’ claims against MyLife under the
unlawful, unfair and fraud prongs of the UCL are cognizable.
D.

Plaintiffs’ Claim Against MyLife for Money Had and
Received

25
A claim under the common count for money had and received is
26
stated if it is alleged that “the defendant is indebted to the
27
28

15

1

plaintiff in a certain sum for money had and received by the

2

defendant for the use of the plaintiff.”

3

Cal. App. 4th 1611, 1623 (1994) (citation and internal quotation

4

marks omitted).

5

viability of Plaintiffs’ other claims.

6

stated CLRA and UCL claims based on MyLife’s alleged email

7

solicitations, their common count against MyLife for money had and

8

received is cognizable.

9
United States District Court
For the Northern District of California

10

E.

Schultz v. Harney, 27

Defendants contend that this claim rests on the
Because Plaintiffs have

Unjust Enrichment and Restitution

California courts appear to be split as to whether there is an

11

independent cause of action for unjust enrichment.

12

Hewlett-Packard Co., 582 F. Supp. 2d 1261, 1270-71 (C.D. Cal. 2007)

13

(applying California law).

14

not a cause of action, or even a remedy, but rather a general

15

principle, underlying various legal doctrines and remedies.

16

McBride v. Boughton, 123 Cal. App. 4th 379, 387 (2004).

17

McBride, the court construed a “purported” unjust enrichment claim

18

as a cause of action seeking restitution.

19

two potential bases for a cause of action seeking restitution:

20

(1) an alternative to breach of contract damages when the parties

21

had a contract which was procured by fraud or is unenforceable for

22

some reason; and (2) where the defendant obtained a benefit from

23

the plaintiff by fraud, duress, conversion, or similar conduct and

24

the plaintiff chooses not to sue in tort but to seek restitution on

25

a quasi-contract theory.

26

implies a contract, or quasi-contract, without regard to the

27

parties’ intent, to avoid unjust enrichment.

28

Baggett v.

One view is that unjust enrichment is

Id. at 388.

16

Id.

In

There are at least

In the latter case, the law

Id.

1

Another view is that a cause of action for unjust enrichment

2

exists and its elements are receipt of a benefit and unjust

3

retention of the benefit at the expense of another.

4

SeoulBank, 77 Cal. App. 4th 723, 726 (2000); First Nationwide Sav.

5

v. Perry, 11 Cal. App. 4th 1657, 1662-63 (1992).

6

Lectrodryer v.

Even under McBride’s more stringent view, Plaintiffs state an

7

unjust enrichment claim.

8

adequately that MyLife obtained money from them based on deceptive

9

email soliciations.

As already explained, they have alleged

Thus, Plaintiffs’ unjust enrichment claim

United States District Court
For the Northern District of California

10

against MyLife is cognizable.

11

III. Plaintiffs’ Motion to Appoint Their Counsel as Interim Lead
Counsel

12
Federal Rule of Civil Procedure 23(g)(3) permits a court to
13
“designate interim counsel to act on behalf of a putative class
14
before determining whether to certify the action as a class
15
action.”

Plaintiffs ask the Court to appoint their counsel, Bursor

16
& Fisher P.A., as interim lead class counsel.

As noted above,

17
McCrary and Brock, who are not parties to this action, oppose
18
Plaintiffs’ motion.

They ask the Court to deny Plaintiffs’ motion

19
as premature or, in the alternative, to appoint their counsel as
20
interim co-lead class counsel.

McCrary is the plaintiff in McCrary

21
v. MyLife.com, Inc., Case No. C 11-2353 CW (N.D. Cal.), and Brock
22
is the plaintiff in Brock v. MyLife.com, Inc., Case No. C 11-3073
23
CW (N.D. Cal.).
24
Plaintiffs’ action will go forward.

Having considered the

25
parties’ submissions, the Court appoints Plaintiffs’ counsel and
26
McCrary and Brock’s counsel as co-interim class counsel.
27
28

17

1
2

CONCLUSION
For the foregoing reasons, the Court GRANTS without prejudice
Gorall’s Rule 12(b)(2) motion to dismiss for lack of personal

4

jurisdiction (Docket No. 39), GRANTS in part Defendants’ Rule

5

12(b)(6) motion to dismiss and DENIES it in part (Docket No. 42)

6

and GRANTS in part Plaintiffs’ motion to appoint their counsel as

7

interim class counsel (Docket No. 47).

8

otherwise permissible discovery in this case, Plaintiffs learn of

9

information that would support specific personal jurisdiction over

10
United States District Court
For the Northern District of California

3

Gorall, they may promptly move for leave to amend to add him as a

11

Defendant.

12

and Oak Investment Partners are dismissed for failure to state a

13

claim.

14

supporting personal liability against these Defendants.

15

Defendants’ Rule 12(b)(6) motion to dismiss is denied in all other

16

respects.

17

If, in the course of

Plaintiffs’ claims against the individual Defendants

Plaintiffs are granted leave to amend to plead facts

This case, along with McCrary and Brock, shall proceed as a

18

consolidated action.

19

0527 case, the lowest numbered of the three lawsuits.

20

shall close the files on the 11-2353 and 11-3073 cases.

21

All future filings shall be filed in the 11The Clerk

Defendants MyLife.com and Oak Investment Partners’ motions

22

concerning Plaintiffs’ Consolidated Amended Class Action complaint

23

are set to be heard on September 1, 2011 at 2:00 p.m.

24
25

IT IS SO ORDERED.
Dated:

8/16/2011
CLAUDIA WILKEN
United States District Judge

26
27
28

18