Rodriguez v. Sony Computer Entertainment America, LLC

Filing 79

ORDER by Judge Hamilton granting 64 Motion to Dismiss (pjhlc2, COURT STAFF) (Filed on 9/25/2012)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DANIEL RODRIGUEZ,
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Plaintiff,

No. C 11-4084 PJH

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v.

ORDER GRANTING MOTION
TO DISMISS

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For the Northern District of California

United States District Court

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SONY COMPUTER ENTERTAINMENT
AMERICA LLC, et al.,

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Defendants.
_______________________________/

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Defendants’ motion to dismiss plaintiff’s second amended class action complaint

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came on for hearing before this court on August 1, 2012. Plaintiff Daniel Rodriguez

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(“plaintiff”) appeared through his counsel, Rafey Balabanian and Ari Scharg. Defendants

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Sony Computer Entertainment America LLC (“SCEA”) and Sony Network Entertainment

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International LLC (“SNEI”) (collectively, “defendants”) appeared through their counsel,

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Michael Rhodes and Ray Sardo. Having read all the papers submitted and carefully

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considered the relevant legal authority, the court hereby GRANTS defendants’ motion as

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follows:

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BACKGROUND

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This case arises under the Video Privacy Protection Act (“VPPA”), 18 U.S.C. §

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2710(e), and is based on plaintiff’s allegations that defendants unlawfully retained and

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disclosed plaintiff’s personally identifiable information (“PII”), including movie and video

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game rental and purchase histories. The VPPA requires companies to keep such PII

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confidential, and further requires them to “destroy personally identifiable information as

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soon as practicable, but no later than one year after the date when the information no

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longer became necessary for the purpose for which it was collected.” Plaintiff alleges that

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defendants “systematically and intentionally violate the VPPA by indefinitely storing and

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maintaining” the customers’ PII beyond the time period set out in the statute, and further

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alleges that defendants unlawfully disclose the customers’ PII without permission.

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Plaintiff Rodriguez signed up for the PlayStation Network (“PSN”) service in or about

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February 2008. At the time, PSN was managed by SCEA. Rodriguez rented and

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purchased several movies between 2009 and 2011. Plaintiff claims that SCEA disclosed

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his rental and purchase histories to SNEI and SNEA1 without his consent, in violation of the

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VPPA. Plaintiff also alleges that, since September 2011, SNEI (who took over PSN
management from SCEA) continues to disclose customers’ PII to SCEA without consent.

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For the Northern District of California

United States District Court

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Plaintiff first filed suit on August 18, 2011, asserting a single cause of action under

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the VPPA. Defendants moved to dismiss the complaint on November 30, 2011. But before

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the motion was heard, plaintiff filed his first amended complaint on December 21, 2011,

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again asserting a single cause of action under the VPPA. On February 3, 2012,

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defendants moved to dismiss the first amended complaint, and that motion was heard by

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this court on April 18, 2012. At the hearing, plaintiff explained that his cause of action

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consisted of separate prongs for “retention” and “disclosure” of PII. Defendants noted that

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the Sixth and Seventh Circuits had both issued opinions relating to the scope of the VPPA,

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and that both had found that there is no private right of action with respect to the retention

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claim. See Sterk v. Redbox Automated Retail, LLC, 672 F.3d 535 (7th Cir. 2012); Daniel

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v. Cantrell, 375 F.3d 377 (6th Cir. 2004). The court adopted the reasoning of those courts,

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and dismissed plaintiff’s “retention” claims with prejudice. With respect to the disclosure

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claim, defendants argued that the allegedly improper disclosures actually fell within a VPPA

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carve-out, which allows disclosures made in the ordinary course of business, including

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transfer of ownership. The court agreed, and on this basis, dismissed plaintiff’s claims with

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“SNEA” refers to Sony Network Entertainment America, Inc., which was merged into
SNEI on September 30, 2011.
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respect to intra-Sony disclosures with prejudice, and granted leave to amend only as to any

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possible disclosure to non-Sony entities. In the first amended complaint, plaintiff did not

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specifically allege that any such outside disclosures had been made. Instead, his

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allegations were based only on the fact that defendants reserved the right to make such

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disclosures in their privacy policy.

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On May 16, 2012, plaintiff filed his second amended complaint (“SAC”), which is the

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subject of this motion. While plaintiff’s allegations still relate to the same PII-related actions

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taken by Sony, the complaint is now split into three causes of action. First, plaintiff re-

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asserts a “retention” claim under the VPPA. Second, plaintiff asserts a “disclosure” claim
under the VPPA, based on SCEA and SNEI’s disclosures to each other, and to SNEA.

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For the Northern District of California

United States District Court

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Plaintiff does not allege that any disclosures were made to non-Sony entities. Third,

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plaintiff asserts a breach of contract claim, arguing that “confidentiality of [] PII and timely

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destruction of same” was part of the benefit of the bargain between defendants and their

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customers, and that failure to meet those obligations constituted a material breach of

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contract. Plaintiff also splits the putative class into subclasses, based on whether their

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allegations stem from allegedly unlawful “retention” or “disclosure.”

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LEGAL STANDARD
A motion to dismiss under Rule 12(b)(6) tests for the legal sufficiency of the claims

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alleged in the complaint. Ileto v. Glock, Inc., 349 F.3d 1191, 1199-1200 (9th Cir. 2003).

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Review is limited to the contents of the complaint. Allarcom Pay Television, Ltd. v. Gen.

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Instrument Corp., 69 F.3d 381, 385 (9th Cir. 1995). To survive a motion to dismiss for

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failure to state a claim, a complaint generally must satisfy only the minimal notice pleading

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requirements of Federal Rule of Civil Procedure 8. Rule 8(a)(2) requires only that the

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complaint include a “short and plain statement of the claim showing that the pleader is

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entitled to relief.” Fed. R. Civ. P. 8(a)(2). Specific facts are unnecessary – the statement

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need only give the defendant “fair notice of the claim and the grounds upon which it rests.”

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Erickson v. Pardus, 551 U.S. 89, 93 (citing Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

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555 (2007)). All allegations of material fact are taken as true. Id. at 94. However, a
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plaintiff's obligation to provide the grounds of his entitlement to relief “requires more than

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labels and conclusions, and a formulaic recitation of the elements of a cause of action will

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not do.” Twombly, 550 U.S. at 555 (citations and quotations omitted). Rather, the

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allegations in the complaint “must be enough to raise a right to relief above the speculative

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level.” Id.

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A motion to dismiss should be granted if the complaint does not proffer enough facts

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to state a claim for relief that is plausible on its face. See id. at 558-59. “[W]here the

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well-pleaded facts do not permit the court to infer more than the mere possibility of

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misconduct, the complaint has alleged-but it has not ‘show[n]’-‘that the pleader is entitled to
relief.’” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009).

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For the Northern District of California

United States District Court

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DISCUSSION

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As an initial matter, the court notes that its previous order granting defendants’

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motion to dismiss clearly stated that “[t]o the extent plaintiff’s claim under the [VPPA] is

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premised on a claim for unlawful retention of plaintiff’s personally identifiable information

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(“PII”), the VPPA precludes claims premised solely on a defendant’s allegedly unauthorized

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‘retention’ of information.” See Dkt. 59 at 1 (emphasis added) (dismissing retention claim

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with prejudice). However, despite this dismissal, plaintiff’s retention-based claim has

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resurfaced in a variety of different packages. First, plaintiff re-alleges the exact same

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retention claim under the VPPA, but notes that he “reasserts such claim . . . for appeal

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purposes only.” Dkt. 63 at 18, n.7. Second, as part of the same cause of action, plaintiff

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seeks to enforce the same provision of the VPPA through a different procedural vehicle.

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Specifically, plaintiff alleges that 18 U.S.C. § 2707 (also referred to as the Stored

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Communications Act, or “SCA”) provides him with an independent means to seek damages

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for VPPA violations, separate and apart from the VPPA’s own damages provision. Finally,

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plaintiff’s third attempt to re-assert his retention claim is presented in the form of a breach

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of contract claim. Plaintiff argues that the terms of the VPPA were implicitly incorporated

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into a contract between the parties, and that defendants’ alleged retention of plaintiff’s PII

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constituted a breach of that contract. Importantly, both plaintiff’s SCA claim and breach of
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contract claim involve the same factual allegations as the already-dismissed VPPA claim,

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and both are premised on the same language from the VPPA2.

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Plaintiff’s SCA claim is based on the following language: “[any] person aggrieved by

which engaged in that violation such relief as may be appropriate.” 18 U.S.C. § 2707(a).

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Plaintiff notes that the VPPA is contained within the same chapter as the SCA, and thus

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argues that the SCA provides an alternate means of enforcing the VPPA’s ban on PII

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retention. Defendants concede that both provisions are contained within the same literal

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chapter, but point out that when the SCA was enacted, the VPPA did not yet exist. Thus,

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any reference to “this chapter” should only be read as a reference to the remainder of the

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For the Northern District of California

any violation of this chapter . . . may, in a civil action, recover from the person or entity . . .

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United States District Court

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SCA. Defendants also cite to the VPPA’s own civil liability provision, which they argue

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should trump the SCA’s provision.

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This court is not the first to consider the SCA’s applicability to the VPPA. In a case

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brought by the same plaintiffs’ counsel that represent plaintiff Rodriguez, the Northern

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District of Illinois faced the question presented here, and held that “[c]onsideration of the

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language of section 2707 in the context of the statute leads the Court to conclude that

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Congress did not intend for plaintiffs to be able to bring a VPPA retention claim under the

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SCA.” Sterk v. Redbox Automated Retail, LLC, 2012 WL 3006674, at *2 (N.D. Ill. July 23,

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2012). The court noted that “[w]hen Congress originally enacted the SCA . . . it could not

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have intended for the SCA’s authorization of civil suits to apply to the VPPA, because the

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VPPA did not yet exist” and further held that “[t]he fact that Congress included a provision

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in the VPPA authorizing civil suits suggests that it did not think that the SCA’s cause of

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action provision applied to the VPPA.” Id. The Sterk court then pointed to the Seventh

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Circuit’s opinion regarding plaintiffs’ VPPA claims, and concluded that “[i]f Congress, as the

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Seventh Circuit has determined, did not intend that plaintiffs have a cause of action for

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Specifically, the SCA and the breach of contract claims both seek to enforce the
retention-related provision of the VPPA, found at 18 U.S.C. § 2710(e) (also referred to as the
“Destruction of Old Records” provision).
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retention under the VPPA, then it is unlikely that it intended for plaintiffs to have a remedy

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under the more general and older SCA.” Id. at *3

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The court finds the reasoning of Sterk to be persuasive, and adopts it here. Plaintiff

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cannot be permitted to have a second bite at the VPPA apple, and his attempts to

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repackage his VPPA claim as an SCA claim are rejected. Thus, the court hereby

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DISMISSES plaintiff’s first cause of action for unlawful retention in full, and again, with

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prejudice.

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Plaintiff makes one more attempt to pursue his VPPA claim for unlawful retention.
Seeking a third bite of the VPPA apple, plaintiff asserts a breach of contract claim on behalf
of himself and two “unlawful retention” subclasses, alleging that he “entered into binding

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For the Northern District of California

United States District Court

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contracts for movie/video game rentals and purchases,” and that “the laws existing at the

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time and place of the making of a contract are incorporated into the contract.” See SAC at

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¶¶ 112-113. Specifically, plaintiff claims that defendants’ “failure to perform their

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contractual obligations imposed by the VPPA . . . constitutes a material breach” of contract.

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Id. at ¶ 115. In essence, plaintiff makes the same allegations here that he does in his first

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cause of action, but claims that defendants’ alleged violations of the VPPA also constitute

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breaches of contract. Critically, plaintiff does not point to any specific document as

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memorializing the supposed contract between the parties, and specifically refutes the

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suggestion that the PSN Terms of Service (“TOS”) served as the contract between the

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parties. See Dkt. 67 at 24 (“Plaintiff’s allegations of breach do not refer to, rely upon, or

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otherwise incorporate the PSN Privacy Policy and TOS documents”). Instead, plaintiff

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claims that “all the terms of the contract between Plaintiff and SCEA are alleged through

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the SAC and memorialized in the VPPA.” Id. Thus, plaintiff does not allege that the VPPA

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was expressly incorporated into any contract between the parties, but instead appears to

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be arguing that the VPPA itself created a contract between plaintiff and defendants. The

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court views this cause of action as another end-run around plaintiff’s already-dismissed

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VPPA claim. Having lost on the VPPA retention issue, plaintiff attempts to repackage the

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exact same claim related to the exact same conduct, first as an SCA claim, and now as a
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breach of contract claim. The Supreme Court has rejected similar attempts, holding that

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when a plaintiff has no right to sue under a federal statute, it cannot bring a breach of

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contract suit for the same conduct, alleging that the contract’s terms are the same as that

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of the statute. Astra v. Santa Clara County, 131 S.Ct. 1342, 1345 (2011). Because this

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court has already determined that “the VPPA precludes claims premised solely on a

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defendant’s allegedly unauthorized ‘retention’ of information,” it follows that Astra directly

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applies here. Plaintiff has no right to sue under the VPPA for alleged unlawful retention,

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and thus cannot bring the same substantive claim dressed in “breach of contract” clothing.

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Thus, plaintiff’s third cause of action is DISMISSED with prejudice.
Finally, plaintiff asserts one cause of action related to the alleged unlawful disclosure

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For the Northern District of California

United States District Court

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of PII. The court again refers back to its previous dismissal order, which granted leave to

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amend only “as to plaintiff’s claim for unlawful disclosure to DOE defendants.” Dkt. 59 at 2.

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Leave to amend was not granted as to claims that SCEA disclosed PII to SNEI. Id.

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However, plaintiff’s second cause of action still relies on allegations of intra-Sony

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disclosure, and does not allege that any disclosures were made to outside “Doe”

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defendants. Thus, plaintiff’s second cause of action fails to comply with the court’s prior

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dismissal order, and is hereby DISMISSED with prejudice for the reasons stated in the prior

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order and at both hearings.

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The Clerk shall close the file.

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IT IS SO ORDERED.

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Dated: September 25, 2012
______________________________
PHYLLIS J. HAMILTON
United States District Judge

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