Henson et al v. Turn, Inc.

Filing 92

ORDER by Judge Jeffrey S. White GRANTING 79 Motion to Dismiss With Leave to Amend. (jswlc2S, COURT STAFF) (Filed on 12/17/2018)

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IN THE UNITED STATES DISTRICT COURT

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For the Northern District of California

United States District Court

FOR THE NORTHERN DISTRICT OF CALIFORNIA
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ANTHONY HENSON and WILLIAM
CINTRON,

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Plaintiffs,

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No. C 15-01497 JSW

ORDER GRANTING MOTION TO
DISMISS WITH LEAVE TO AMEND

v.
TURN, INC.,
Defendant.
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This matter comes before the Court upon consideration of the motion to dismiss the

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complaint filed by Defendant Turn, Inc. (“Turn”). The Court has considered the parties’ papers,

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relevant legal authority, the record in this case, and it HEREBY GRANTS Turn’s motion.

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BACKGROUND
Plaintiffs are residents of New York and subscribers of Verizon’s mobile cellular and data

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service for use with Internet-enabled smartphones. (Complaint (“Compl.” at ¶¶ 16, 17.) Defendant

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Turn operates as an online advertising clearinghouse for online companies to general targeted

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advertising programs. (Id. ¶ 19.) Verizon partnered with Turn to implement such a targeted

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advertising program that uses Verizon’s Unique Identifier Header (“UIDH”) to help online

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advertisers deliver relevant advertisement to subscribers based upon the usage data from their

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mobile devices. The UIDH is a device-specific anonymous identifier that Verizon adds to Internet

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requests transmitted over its wireless network.

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Verizon provides to its partners, including Turn, information about the market segments

campaigns to the specific audiences they are intended to reach. As Plaintiffs contend, the allure of

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online advertising lies in its ability to deliver targeted advertising, catered to the individual web

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traffic patterns of the individual subscriber. (Id. ¶¶ 25-27.) The tracking of online users’

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information is achieved by use of “cookies” – pieces of text files stored in the browser that contain

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information that can be used to recognize the user across multiple visits and application. (Id. ¶ 27;

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For the Northern District of California

associated with the UIDHs for subscribers, which the partners then use to direct advertising

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United States District Court

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see also Reply at 1 n.1.)

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However, as the technology developed to track users’ Internet traffic information for the

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purpose of delivering targeted advertisements, and in light of widespread privacy concerns, major

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web browsers created features to allow users to delete the tracking cookies from their web sessions.

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(Id. ¶ 30.) Plaintiffs allege that Turn violated users’ reasonable expectations of privacy by creating

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zombie cookies which monitored their behavior surreptitiously and that users could not detect, delete

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or block. (Id. ¶¶ 34-35.) Based on these allegations, Plaintiffs filed this putative class action suit for

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violation of New York General Business Law section 349 for “deceptive acts or practices in the

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conduct of any business, trade or commerce” and for trespass to chattels. (Id. ¶¶ 75-83; 84-93.)

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Turn originally filed a motion to dismiss, or in the alternative to stay, this action to compel

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arbitration based on their status as a non-signatory to the agreements between the subscriber

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plaintiffs and their service provider, Verizon. The Court granted the motion compelling arbitration

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but its decision was reversed on appeal. Upon remand to this Court, Turn now moves to dismiss

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action on the merits.

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The Court shall address other, relevant facts in the remainder of this order.

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ANALYSIS
A.

Legal Standard on Motion to Dismiss.
A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the

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pleadings fail to state a claim upon which relief can be granted. The Court’s “inquiry is limited to

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the allegations in the complaint, which are accepted as true and construed in the light most favorable

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to the plaintiff.” Lazy Y Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).

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Even under the liberal pleading standard of Federal Rule of Civil Procedure 8(a)(2), “a plaintiff’s

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obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and

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conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell
Atlantic Corporation v. Twombly, 550 U.S. 544, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265,

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For the Northern District of California

United States District Court

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286 (1986)).

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Pursuant to Twombly, a plaintiff must not merely allege conduct that is conceivable but must

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instead allege “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. “A

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claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw

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the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,

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556 U.S. __, 129 S. Ct. 1937, 1949 (2009) (citing Twombly, 550 U.S. at 556). If the allegations are

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insufficient to state a claim, a court should grant leave to amend, unless amendment would be futile.

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See, e.g., Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990); Cook, Perkiss & Liehe, Inc.

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v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 246-47 (9th Cir. 1990).

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As a general rule, “a district court may not consider any material beyond the pleadings in

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ruling on a Rule 12(b)(6) motion.” Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994), overruled

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on other grounds, Galbraith v. County of Santa Clara, 307 F.3d 1119 (9th Cir. 2002) (citation

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omitted). However, documents subject to judicial notice may be considered on a motion to dismiss.

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In doing so, the Court does not convert a motion to dismiss to one for summary judgment. See Mack

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v. South Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir.1986), overruled on other grounds by

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Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104 (1991).

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B.

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Request for Judicial Notice.
In the course of their briefing on the motion to dismiss, Plaintiffs make a request that this

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Court take judicial notice of the Federal Trade Commission (“FTC”) decision and order regarding

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this conduct, complaint and consent decree and order. These are matters of public record. However,

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Plaintiffs seeks to introduce these documents for the truth of the matters asserted therein. As Turn

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expressly represented in the course of the FTC procedure, it “neither admits nor denies any of the

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allegations in the Complaint, except as specifically stated in this Decision and Order.” (Request for

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Judicial Notice (“RJN”), Dkt. No. 82, Ex. A at 1.) The Consent Decree explicitly states that it “does

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not constitute either an adjudication on the merits or a factual or legal finding regarding any
compliance or noncompliance with the requirements of the Communications Laws.” (RJN Ex. C at

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For the Northern District of California

United States District Court

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¶ 29.) In addition, the Court may not take judicial notice of settlement evidence to support the

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“validity . . . of a disputed claim,” as such evidence is inadmissible under Federal Rule of Evidence

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408. Accordingly, the Court DENIES Plaintiffs’ request to take judicial notice of the FTC

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proceedings documents.

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C.

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Motion to Dismiss New York General Business Law Section 349 Claim.
Section 349(a) of the New York General Business Law declares as unlawful “[d]eceptive

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acts and practices in the conduct of any business, trade or commerce or in the furnishing of any

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service in this state.” N.Y. Gen. Bus. Law § 349(a). There exists a private right of action for “any

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person who has been injured by reason of any violation of this section.” N.Y. Gen. Bus. Law §

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349(h). To state a claim under this section, a plaintiff must prove that “(1) the challenged act or

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practice was consumer-oriented, (2) it was deceptive or misleading in a material way, and (3) the

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plaintiff has been injured by reason thereof.” Mount v. PulsePoint, Inc., 2016 WL 5080131, *10

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(S.D. N.Y. Aug. 17, 2016) (citing Oswego Laborers’ Local 214 Pension Fund v. Marine Midland

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Bank, N.A., 85 N.Y. 2d 20, 25 (1995)). There is no dispute here that the conduct here was directed

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at consumers; Turn disputes that Plaintiffs have stated a claim that there was any deceptive act or

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that they suffered any injury.

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Deceptive Act.

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The New York courts have adopted an “objective definition of deceptive acts and practices,

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whether representations or omissions, limited to those likely to mislead a reasonable consumer

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acting reasonably under the circumstances.” Oswego, 85 N.Y. 2d at 26. This provision only

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prohibits deceptive business practices targeted at consumers, not all business practices that

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consumers may find improper. See Schelessinger v. Valspar Corp., 21 N.Y.3d 166, 172 (2013)

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(“Section 349 does not grant a private remedy for every improper or illegal business practice, but

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only for conduct that tends to deceive consumers.”).

constitute deceptive conduct because a reasonable consumer would know that deleting old cookies

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For the Northern District of California

Turn argues that its conduct, while perhaps not pleasing to the plaintiff consumers, does not

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United States District Court

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does not block the reoccurrence of new cookies with the same information as the old, deleted ones.

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(See Reply at 3, citing Pelman v. McDonald’s Corp., 237 F. Supp. 2d 512, 529 (S.D.N.Y. 2003)

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(holding that omissions were not deceptive if “a consumer could . . . reasonably obtain such

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information” from sources other than defendants).) Turns contends that “a reasonable consumer has

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no basis to assume, as a general matter, that a company will not or cannot use identifiers embedded

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in web traffic to uniquely recognize users.” Reply at 4 n.4.

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The Court finds Plaintiffs’ contention sufficient, at least at the pleading phase, that the

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allegations that Plaintiffs were unaware, and reasonably unaware, that their deleting of old cookies

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did not block the return of the same cookies carrying the same detailed information. The question of

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whether the failure to disclose the nature of how the cookies work to defeat the deletion would

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mislead a reasonable consumer is sufficient to withstand the motion to dismiss. See, e.g., Fero v.

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Excellus Heath Plan, Inc., 236 F. Supp. 3d 735, 776 (W.D.N.Y. 2017) (“Defendants’ failure to

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disclose the purportedly inadequate security measures would mislead a reasonable consumer. At

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least at the pleading stage, these allegations are sufficient.”); see also Quinn v. Walgreen Co., 958 F.

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Supp. 2d 533, 544 (S.D.N.Y. 2013) (holding that the inquiry focused on whether a reasonable

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consumer would have been misled by certain conduct is typically an “issue of fact the Court cannot

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resolve on a motion to dismiss.”).

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Injury.

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To successfully allege a claim under Section 349, however, Plaintiffs must also identify a

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cognizable injury. To establish a claim, Plaintiffs must identify a “connection between the

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misrepresentation and any harm from, or failure of, the product.” Small v. Lorillard Tobacco Co,,

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720 N.E.2d 892, 898 (N.Y. 1999).

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Plaintiffs allege that “[a]s a result of Turn’s deceptive acts and practices, Plaintiffs and Class

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members were injured and damaged in that they suffered a loss of privacy through tracking and

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collection of their personal and private information; were denied use of the privacy controls and

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settings on their mobile devices, including the ability to clear or delete third-party tracking cookies
and browsing history; had their devices persistently infected with zombie cookies they could not

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For the Northern District of California

United States District Court

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delete or remove; and had their personal and confidential information used by Turn for its own

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commercial gain without the consumers’ knowledge or consent.” (Compl. ¶ 82.)

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State courts in New York have held that “similar invasion-of-privacy allegations do not meet

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the [General Business Law]’s injury requirement.” Cohen v. Casper Sleep, Inc., 2018 WL 3392877,

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at *8 (S.D.N.Y. July 12, 2018) (gathering cases); see also, e.g., Smith v. Chase Manhattan Bank,

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U.S.A., N.A., 741 N.Y.S.2d 100, 102 (N.Y. App. Div. 2002) (affirming dismissal of Section 349

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claim where the harm at issue “is that class members were merely offered products and services

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which they were free to decline. This does not qualify as actual harm.”). Allegations that

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“surreptitiously collecting [browsing history] information was a ‘violation of [plaintiff’s] statutorily

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protected privacy rights’ were inadequate” to state the requisite harm. Cohen, 2018 WL 3392877, at

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*8 (citing PulsePoint, 2016 WL 5080131, at *11).

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Plaintiffs contend that this Court should follow the decision in Bose v. Interclick, Inc. in

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which the court found that a mere collection of personal information, and thus an invasion of

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privacy, could constitute an injury cognizable under Section 349. 2011 WL 434517, at *8-9

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(S.D.N.Y. Aug. 17, 2011) (citing two cases in which privacy claims presented were linked to

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confidential financial and medical information to find collection of personal data constituted

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sufficient injury). This Court finds persuasive the distinction between confidential, individually

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identifiable information, such as medical records or social security numbers, as opposed to
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anonymized data. See Cohen, 2018 WL 3392877, at *8. Here, Plaintiffs merely plead that Turn

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collects data that is anonymous and fails to link the data to specific persons. Because Plaintiffs have

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not alleged that their data is confidential and readily recognizable and identifiable as belonging to

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any particular person, the Court finds that they have failed to state a cognizable injury. See Cohen,

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2018 WL 3392877, at *8.

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Accordingly, the Court GRANTS Turn’s motion to dismiss Plaintiffs’ claim for violation of

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New York General Business Law section 349. Plaintiffs are given leave to amend to state, if they

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can, that the invasion of their privacy and collection of their data can be identified as belonging to

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any specific person, in order to state a cognizable claim for injury under this provision.

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United States District Court

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D.

Motion to Dismiss Trespass to Chattels Claim.
Finally, Turn moves to dismiss Plaintiffs’ second claim for relief for trespass to chattels. “A

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trespass to chattels occurs when a party intentionally, and without justification or consent, physically

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interferes with the use and enjoyment of personal property in another’s possession, and thereby

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harms that personal property.” In re JetBlue Airways Corp. Litig., 379 F. Supp. 2d 299, 327

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(E.D.N.Y. 2005). “[O]ne who intentionally interferes with another’s chattel is liable only if the

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interference results in harm to the owner’s materially valuable interest in the physical condition,

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quality, or value of the chattel, of if the owner is deprived of the use of the chattel, or if the owner is

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deprived of the use of the chattel for a substantial time.” School of Visual Arts v. Kuprewicz, 771

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N.Y.S.2d 804, 807-08 (N.Y. Sup. Ct. 2003) (citations omitted).

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With regard to the claimed harm to personal property, Plaintiffs summarily allege that Turn’s

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conduct impaired the condition, quality, and value of Plaintiffs’ mobile devices, causing them “real

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and substantial damage.” (Compl. ¶ 92.) However, there is no allegation that the placement of the

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cookies had any noticeable effect on the performance of the devices. See Del Veccho v.

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Amazon.com, Inc., 2012 WL 1997697, at *5 (W.D. Wash. June 1, 2012) (“It is a matter of common

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understanding that cookies are minute in size and thus incapable of noticeably affecting the

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performance of modern computers.”). The Court finds no authority for the position that the

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deprivation of the use of security features, similar to the efficacy of third-party cookie blocker, is

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sufficient to state a claim for cognizable deprivation of the use of chattel. See also PulsePoint, 2016
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WL 5080113, at *10 (dismissing trespass to chattels claim where plaintiffs had contended that the

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deprivation of the third-party cookie blocker feature constituted the harm). “Many harmless

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electronic intrusions could potentially be recast as deprivations of a particular feature of an

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application meant to keep the electronic communication out. . . . We think such a holding would

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upset the principle that no action for trespass lies for harmless intermeddlings with chattel.” Id.

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Because the Court finds there is no support for the allegation of harm to Plaintiffs’ personal

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property, the Court GRANTS Turn’s motion to dismiss the claim for trespass to chattels. However,

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Plaintiffs are given leave to amend to state, again if they can, that the placement of the cookies

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caused substantial degradation to the functioning of their devices.

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CONCLUSION
Based on the foregoing, the Court GRANTS Turn’s motion to dismiss the complaint with

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leave to amend. Plaintiffs shall file and serve an amended complaint or a statement that no such

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amended complaint shall be filed within twenty days of the date of this Order, and Turn shall file its

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response within twenty days thereafter.

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IT IS SO ORDERED.
Dated: December 17, 2018
JEFFREY S. WHITE
UNITED STATES DISTRICT JUDGE

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