Freeza et al v. Google, Inc.

Filing 43

Order by Hon. Ronald M. Whyte granting 37 Motion to Dismiss (rmwlc1, COURT STAFF) (Filed on 4/22/2013)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION 11 12 13 14 15 CASE NO. 5:12-cv-00237-RMW RACHEL FREZZA and MAURO RODRIGUEZ, on their own behalf and all others similarly situated, ORDER GRANTING DEFENDANT'S MOTION TO DISMISS PLAINTIFFS' FIRST AMENDED COMPLAINT Plaintiff, v. [Re: Dkt. No. 37] 16 17 GOOGLE INC., Defendant. 18 19 I. INTRODUCTION 20 21 22 23 Defendant Google Inc. ("Google") moves to dismiss plaintiffs Rachel Frezza and Mauro Rodriguez's First Amended Complaint ("FAC") for failure to state a claim for breach of contract, breach of implied contract and violation of California's unfair competition laws. Having 24 considered the papers submitted by the parties, the arguments of counsel, and for the reasons set 25 26 forth below, this court grants Google's motion to dismiss the breach of contract claims and unfair 27 competition claims with one final leave to amend and dismisses the breach of implied contract 28 claims with prejudice. ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / -1- 1 II. BACKGROUND 2 3 This lawsuit relates to a promotional offer for a service, now discontinued, called Google Tags ("Tags") provided by Google to merchants around 2010. FAC ¶ 10-11, Dkt. No. 36. Tags 4 was an online feature designed to enhance the appeal of and promote the distinctive aspects of a 5 6 business on the Web. Id. ¶ 1, 11. A business listing with Tags was made to stand out from others 7 through the use of a bright yellow "tag" icon that appeared next to the listing in Google search 8 results. Id. ¶ 17. Accompanying this tag was additional information about the business, such as 9 promotions, photos, videos, menus, or a link to the business's website. Id. 10 11 In order to introduce Google Tags to a wider pool of merchants, Google began a promotion offering a trial period of the service in July 2010. Id. ¶ 19. Plaintiffs allege that at all 12 13 14 relevant times, Google conveyed the message to potential customers that they could try the Tags program for 30 days at no charge. Id. ¶ 20. As evidence, plaintiffs provide in the FAC a blog 15 posting from July 2010 in which Google stated that it was "offering every business across the 16 country the chance to try Google Tags free for 30 days!" and which described the promotion as a 17 "free trial . . .with no strings attached." Id. ¶ 21. The blog further stated that "[y]ou can cancel 18 before your trial is over and never pay a dime." Id. In order to start the 30 day trial, the blog 19 directed the users: "To start your free 30 day trial today, please visit our signup page or check out 20 21 the help center for more details." Id. A January 29, 2011 posting on Google Business Services 22 makes similar representations, and contained a link to "learn more." Id. ¶ 23. Plaintiffs allege 23 that their credit cards were nevertheless charged fees for using Tags within the "free" 30-day trial 24 period. Id. ¶ 26. When plaintiffs contacted Google's customer service department, they were told 25 that the trial offer consisted of a free 30-day trial period with respect to the use of Tags for only 26 one business location, as opposed to free use of Tags for all locations during the 30-day period 27 and, as a result, if a user utilized Tags on more than one business location during the trial period, 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / -2- 1 Google charged them $25 for each additional location. Id. In addition, plaintiffs contend that 2 Google retained Plaintiffs' credit card information even after Google abolished the Tags service in 3 April 2011. Id. ¶ 30. 4 Plaintiffs filed an original complaint alleging: (1) breach of contract, (2) unjust 5 6 enrichment, (3) violation of the California Consumers Legal Remedies Act ("CCLRA"), (4) 7 breach of implied contract, and (5) violation of the California Customer Records Act ("CCRA"). 8 Google moved to dismiss the complaint for failure to state a claim. See First MTD, Dkt. No. 7. 9 On November 20, 2012, the court granted Google's motion and dismissed counts 2 (unjust 10 11 enrichment), 3 (violation of the CLRA), and 5 (violation of the CCRA) with prejudice; and counts 1 (breach of contract) and 4 (implied contract) with leave to amend. 12 Plaintiffs then filed an amended complaint, the FAC, reasserting the claims against 13 14 Google for breach of contract (Count I) and breach of implied contract (Count III), and asserting 15 new claims against Google for violation of California's unfair competition laws, California 16 Business & Professions Code § 17200, et seq. ("UCL"). FAC ¶¶ 52-88. Google moves to 17 dismiss all counts in the FAC. Def.'s Mot. 1-2, Dkt. No. 37. 18 III. ANALYSIS 19 A. Breach of Contract 20 In the Order on the first motion to dismiss, the court dismissed plaintiffs' breach of 21 22 contract claims and granted leave to amend "to quote the pertinent language of the contract they 23 assert or at least the substance of what they were told which was reasonably susceptible of the 24 interpretation that the first thirty days of any Tag for which they signed up in the promotion 25 period was free." First MTD Order 4, Dkt. No. 31. Instead of quoting any "terms and 26 conditions" of the contract at the time plaintiffs entered their credit card information (when the 27 contract was allegedly formed, see FAC ¶ 54), the FAC incorporates the text of blog postings and 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / -3- 1 marketing materials describing the "free trial" and directing consumers to "visit [the] signup 2 page" or "check out the help center." Id. ¶¶ 21-24. According to plaintiffs, these promotions 3 constituted the terms of the offer, and Google breached the contract by subsequently charging 4 them for the use of Tags. Id. ¶¶ 53-54. 5 Google moves to dismiss the breach of contract claim on the basis that the alleged 6 7 promotional materials do not contain the terms and conditions of the contract. See Def.'s Mot. 4- 8 7. Instead, Google argues that those who accepted the trial offers of Tags were bound by written 9 terms and conditions that clearly stated that the promotional credit was for "$25.00, per listing, 10 per month." Id. at 6. Finally, Google argues that even if the promotional materials formed the 11 basis of the contract, plaintiffs have not alleged that they had seen those specific "exemplars" and 12 13 an offeree cannot assent to an offer unless he is aware of it. Id. at 7. In California, "[t]he standard elements of a claim for breach of contract are: '(1) the 14 15 contract, (2) plaintiff's performance or excuse for nonperformance, (3) defendant's breach, and (4) 16 damage to plaintiff therefrom.'" Wall Street Network, Ltd. v. New York Times Co., 164 Cal. App. 17 4th 1171, 1178 (2008) (quoting Regan Roofing Co. v. Superior Court 24 Cal. App. 4th 425, 434– 18 435 (1994)). 1 "Where a party relies in his complaint upon a contract in writing, and it 19 affirmatively appears that all the terms of the contract are not set forth in haec verba, nor stated in 20 21 their legal effect, but that a portion which may be material has been omitted, the complaint is 22 insufficient." Gilmore v. Lycoming Fire Ins. Co., 55 Cal. 123, 124 (1880); 1 Lane Goldstein Trial 23 Technique § 3:12 (3d ed.) ("A complaint which does not identify the contract and the facts 24 25 26 27 1 It appears that plaintiffs bring the breach of contract claim under California law. See FAC ¶ 60. Because the parties have not addressed the choice of law issue, the court does not rule on what laws should ultimately govern the contract claims in this case. However, it is unlikely to affect the final disposition of the issue. 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / -4- 1 constituting a breach of the contract is insufficient to maintain a claim for breach of contract."). 2 "To plead the legal effect of a contract, plaintiffs must 'allege the substance of its relevant terms. 3 This is more difficult [than pleading the precise language], for it requires a careful analysis of the 4 instrument, comprehensiveness in statement, and avoidance of legal conclusions.'" Parrish v. 5 6 7 Nat'l Football League Players Ass'n, 534 F. Supp. 2d 1081, 1094 (2007) (quoting McKell v. Washington Mutual, Inc., 142 Cal. App. 4th 1457, 1489 (2006)). It is a well-established rule that an advertisement generally does not constitute an offer. 8 9 See Restatement (Second) of Contracts § 26 cmt. b (1979) ("Advertisements of goods by display, 10 sign, handbill, newspaper, radio or television are not ordinarily intended or understood as offers 11 to sell."); 1 Arthur Linton Corbin & Joseph M. Perillo, Corbin on Contracts § 2.4, at 116–17 (rev. 12 13 14 ed. 1993) ("It is quite possible to make a definite and operative offer to buy or sell goods by advertisement, in a newspaper, by a handbill, a catalog or circular or on a placard in a store 15 window. It is not customary to do this, however; and the presumption is the other way.") 16 (emphasis added)). "The operative question under California law, therefore, is simply 'whether 17 the advertiser, in clear and positive terms, promised to render performance in exchange for 18 something requested by the advertiser, and whether the recipient of the advertisement reasonably 19 might have concluded that by acting in accordance with the request a contract would be formed.'" 20 21 Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d 777, 787 (9th Cir. 2012). In Sateriale, the court 22 recognized that, in those cases where the offer is accepted by rendering a performance rather than 23 providing a promise, an advertisement could form the basis of a unilateral contract if a party 24 renders the performance. See id. 25 26 In this case, plaintiffs contend that Google's promotional materials formed a binding offer. However, these promotional materials directed the plaintiffs to a signup page or a help page to 27 learn more about the promotion. FAC ¶ 21 ("To start your 30 day trial period today, please visit 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / -5- 1 our signup page or check out the help center for more details." (emphasis added)). No reasonable 2 person would understand visiting the "signup page" or the "help center" as being the performance 3 sought in return for the offer of 30 days of free Tags. That the promotional materials were not 4 contemplated to constitute an offer is clear from the undisputed fact that they made no mention of 5 6 the requirement to provide credit card information. Even the plaintiffs acknowledge that "[i]n 7 order to commence enrollment in the Google Tags program . . . Google required the customers to 8 first provide a credit card (and associated information, including credit card expiration date)." 9 FAC ¶ 29. Indeed, the FAC alleges that the contract was formed at the time of enrollment. FAC 10 ¶ 54 ("Each time Plaintiffs and the other members of the Tags Trial Period Class enrolled in the 11 Tags trial period, a contract was formed."). Since the terms and conditions of the contract were 12 13 14 presented at the time of enrollment, and not through the promotional materials, plaintiffs must present the contractual terms agreed upon at the time of enrollment in order to survive Google's 15 motion to dismiss. Because such terms are missing, plaintiffs have neither provided the entire 16 contract verbatim nor adequately stated its complete legal effect, and thus, plaintiffs again fail to 17 plead the existence of a contract. See Parrish, 534 F. Supp. 2d at 1095 (explaining that plaintiffs 18 cannot rely on statements that "were not part of any contracts" to alleged the terms of the 19 contract). 20 Although "'[a]ll allegations of material fact are taken as true and construed in the light 21 22 most favorable to the moving party' . . . [t]he court is not obligated to accept every conclusory 23 allegation as true." In re Easysaver Rewards Litig., 737 F. Supp. 2d 1159, 1166 (S.D. Cal. 2010). 24 Rather, it "will examine whether conclusory allegations follow from the description of facts as 25 alleged." Holden v. Hagopian, 978 F.2d 1115, 1121 (9th Cir. 1992) (quoting Brian Clewer, Inc. 26 v. Pan American World Airways, Inc., 674 F. Supp. 782, 785 (C.D. Cal. 1986)). The undisputed 27 facts indicate that the promotional materials did not constitute binding offers. In order to properly 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / -6- 1 plead a breach of contract the plaintiffs must present the material terms and conditions of the 2 contract in writing or in substance, and they have failed to do so twice. Nevertheless, the court 3 dismisses plaintiffs' breach of contract claims with once final chance to amend. 2 4 B. Breach of Implied Contract 5 The court originally dismissed with leave to amend plaintiffs' implied contract claim for 6 7 failing to show that Google was contractually bound by the Data Security Standards (DSS) rules 8 promulgated by the "payment card industry" ("PCI"). The FAC includes allegations that, when 9 plaintiffs provided their credit card information to Google, they entered into an implied contract 10 with Google that it would abide by the DSS rules relating to retention and deletion of personal 11 data. See FAC ¶¶ 31-34, 82. Plaintiffs' allegations still fail to connect the dots to establish the 12 13 14 existence of an implied contract. For example, plaintiffs allege that Visa is a member of the PCI, that Visa contractually obligates merchants to comply with "various [unspecified] security 15 standards," and that Google accepts Visa credit cards, but fail to allege that Visa obligated Google 16 to abide by the DSS rules for these particular transactions, that plaintiffs even paid with Visa 17 credit cards, or that any alternative credit provider otherwise would have contractually bound 18 Google to abide by the DSS rules. 19 Even assuming, however, that Google was bound by the DSS rules with respect to these 20 21 22 transactions, the court still dismisses plaintiffs' breach of implied contract claims for failure to satisfy the injury in fact requirement to support Article III standing. Speculative or hypothetical 23 24 25 26 2 Since the plaintiffs failed to allege the material terms of the contract that Google allegedly breached, the court need not and does not address whether the written terms and conditions provided by Google are admissible or whether they formed the operative contract. For the same reason, the court does not the reach Google's argument that plaintiffs may not have seen the promotional materials cited in the FAC. 27 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / -7- 1 injury is not sufficient to confer Article III standing. Lujan v. Defenders of Wildlife, 504 U.S. 2 555, 560 (1992) ("[A]n injury in fact [must be] actual or imminent, not conjectural or 3 hypothetical." (quotation omitted)). While in some instances "the injury in fact requirement can 4 be satisfied by a threat of future harm or by an act which harms the plaintiff only by increasing 5 6 the risk of future harm," Krottner v. Starbucks Corp., 628 F.3d 1139, 1143 (9th Cir. 2010) (where 7 plaintiffs alleged publication and theft of their personal data) (quoting Pisciotta v. Old Nat'l 8 Bancorp, 499 F.3d 629, 634 (7th Cir. 2007)), courts that have dealt with factually analogous cases 9 have held that unauthorized collection of personal information, in the absence of disclosure, does 10 not create an economic loss sufficient to create an injury in fact. See, e.g., Low v. LinkedIn Corp., 11 2011 WL 5509848, *6 (N.D. Cal. Nov. 11, 2011) (holding that, unlike in Krottner, where there 12 13 14 are no allegations that highly sensitive personal data has been stolen or exposed to the public, plaintiff fails to allege injury in fact); see also In re Google, Inc. Privacy Policy Litigation, 2012 15 WL 6738343, *6 (N.D. Cal. Dec. 28, 2012) (dismissing plaintiffs' claims based on Google's 16 policy of retaining personal information for lack of Article III standing); In re Doubleclick, Inc., 17 Privacy Litig., 154 F. Supp. 2d 497, 525 (S.D.N.Y. 2001) (holding that unauthorized collection of 18 personal information by a third-party is not "economic loss"); In re JetBlue Airways Corp., 19 Privacy Litig., 379 F. Supp. 2d 299, 327 (E.D.N.Y. 2005) (explaining that airline's disclosure of 20 21 passenger data to third party in violation of airline's privacy policy had no compensable value). 22 Plaintiffs' reliance on In re Facebook Privacy Litigation, 791 F. Supp. 2d 705 (N.D. Cal. 23 2011), is misplaced because that case involved disclosure of personal information as opposed to 24 retention. See id. at 708. Unlike the present case, In re Facebook involved transfer of personal 25 information to third-party advertisers without the user's consent. Id. ("Plaintiffs allege that 26 Defendant intentionally and knowingly transmitted personal information about Plaintiffs to third- 27 party advertisers without Plaintiffs' consent."). Plaintiffs' reliance on Doe 1 v. AOL, LLC, 719 F. 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / -8- 1 Supp. 2d 1102 (N.D. Cal. 2010), is similarly misplaced. Doe involved allegations that the 2 internet service provider had collected and disclosed members' undeniably sensitive information. 3 See id. at 1109 ("Although AOL pulled the database [containing personal information] from its 4 website, the confidential information already had been posted on a number of public websites."). 5 6 In these cases, the plaintiffs were exposed to increased risk of future harm proximately caused by 7 defendants' actual publication or disclosure of personal information. Here, on the other hand, 8 there is no allegation that Google inappropriately disclosed the credit card information. 9 Accordingly, plaintiff's breach of implied contract claim is dismissed for failure to allege an 10 11 injury in fact. Because the plaintiffs have twice failed to allege injury in fact, the court dismisses this claim with prejudice. 12 C. 13 UCL Claims Plaintiffs' FAC also contains new claims under California's UCL. FAC ¶ 64-79. 14 15 Plaintiffs allege that Google's representations made in the promotional materials constituted 16 "unlawful," "fraudulent," or "unfair" business acts or practices. Id. ¶ 66. Google moves to 17 dismiss, arguing first that plaintiffs are precluded from asserting claims under California's UCL 18 because they are North Carolina citizens who were allegedly injured in North Carolina. In the 19 alternative, Google asserts that even if California laws applied, plaintiffs have not adequately 20 21 plead fraud-based UCL claims because they have failed to satisfy the heightened pleading 22 requirement of Federal Rule of Civil Procedure 9(b) by stating "precisely the time, place, and 23 nature of the misleading statements, misrepresentations, and specific acts of fraud." Reply 9, Dkt. 24 No. 41 (quoting Kaplan v. Rose, 49 F.3d 1363, 1370 (9th Cir. 1994)). Google also points out that 25 plaintiffs failed to allege that they have seen the allegedly misleading advertisements. Id. at 1. 26 Similarly, Google contends that the FAC does not adequately plead "unlawful" and "unfair" 27 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / -9- 1 business practices because it does not state what laws were broken or explain why Google's 2 practice was unfair. Id. at 11-12. 3 1. Mazza v. American Honda Motor Co. 4 Defendants argue, relying on Mazza v. American Honda Motor Co., 666 F.3d 581 (9th 5 6 Cir. 2012), that the North Carolina plaintiffs cannot avail themselves of California's consumer 7 protection laws. In Mazza, the plaintiffs had successfully sought certification of a nationwide 8 class, but the Ninth Circuit concluded that applying California law to non-residents who 9 purchased their products outside of California was unwarranted. Id. at 591-94. In Mazza, the 10 11 defendant Honda was headquartered in California and the allegedly fraudulent misrepresentations emanated from California, but the transactions (car purchases or leases) that directly caused the 12 13 14 injury took place out of state with respect to the majority of the class members. Id. at 590. Despite the significant contacts with California, the Ninth Circuit held that "each class member's 15 consumer protection claim should be governed by the consumer protection laws of the 16 jurisdiction in which the transaction took place." Id. at 594 (emphasis added). As in Mazza, the 17 defendant in this case, Google, is headquartered in California, and the allegedly fraudulent 18 representations originated from California, but the transactions at the center of the dispute 19 (enrollment in Tags) occurred in the plaintiffs' state of North Carolina. FAC ¶¶ 10-11. The 20 21 22 factual analogy makes Mazza's application of the choice-of-law rule to the facts of this case, not only relevant but controlling. Plaintiffs attempt to distinguish Ninth Circuit's clear guidance on this issue by arguing that 23 24 Mazza involved a motion for class certification, not a motion to dismiss. See Opp'n 16. But the 25 principle articulated in Mazza applies generally and is instructive even when addressing a motion 26 to dismiss. See Granfield v. NVIDIA Corp., 2012 WL 2847575, *3 (N.D. Cal. July 11, 2012) 27 (recognizing that out-of-state plaintiffs injured outside of California cannot bring UCL claims); 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / - 10 - 1 Waller v. Hewlett-Packard Co., 2012 WL 1987397, *1 (S.D. Cal. June 4, 2012) ("[U]nder Mazza 2 v. American Honda Motor Co., non-California residents can't avail themselves of California's 3 consumer protection laws."); Horvath v. LG Elecs. Mobile Comm. U.S.A., 2012 WL 2861160, *3- 4 4 (S.D. Cal Feb. 13, 2012) (same). Applying the Mazza principles and California's choice-of-law 5 6 analysis to the facts of this case, it is readily apparent that plaintiffs' UCL claims are precluded. 2. 7 Choice-of-Law Analysis 8 California's choice-of-law rules require a three-step governmental interest test to 9 determine which state's laws should apply. Wershba v. Apple Computer, Inc., 91 Cal. App. 4th 10 11 224, 241-42 (2001). The court must first determine whether the law of the other state is materially different from California law. Mazza, 666 F.3d at 590. Second, if there is a difference, 12 13 14 15 the court determines whether the other state has an interest in having its law applied. Id. at 59192. Third, if the other state has an interest, the court determines which state's interest would be most impaired if its policy were subordinated to the law of another state. Id. at 593. 16 a. 17 18 Material differences Although neither North Carolina nor California requires scienter on part of defendant to plead a fraud-based violation of the consumer protection laws (as opposed to common law fraud, 19 which requires scienter), see In re Tobacco II Cases, 46 Cal. 4th 298, 326 (2009) and Stetser v. 20 21 TAP Pharm. Prods., 165 N.C. App. 1, 20-21 (2004), material differences nonetheless exist 22 between the two states' consumer protection laws. As in Mazza, the court finds the difference in 23 available remedy under California law and North Carolina law to be a "material" difference for 24 the purpose of the choice-of-law analysis. See Mazza, 666 F.3d at 591 (finding differences in 25 remedies between California and other states to be material). Unlike under the UCL, where a 26 plaintiff can only recover restitution and injunctive relief for fraud based claims, see Cal. Bus. & 27 Prof. Code § 17203 and Korea Supply v. Lockheed Martin Corp., 63 P.3d 937, 943 (Cal. 2003), 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / - 11 - 1 North Carolina provides mandatory treble damages and permits attorneys' fees upon a finding of 2 willfulness, N.C. Gen. Stat. §§ 75-1.1, 75-16 (mandatory treble damages), 75-16.1 (attorney's 3 4 fees). This court concludes that this difference in remedy is not trivial or wholly immaterial. Accord Schwartz v. Lights of Am., 2012 WL 4497398, *6 (C.D. Cal. Aug. 31, 2012). 3 5 Plaintiffs argue that further discovery is necessary to conclude whether the material 6 7 differences between the two state laws matter in this case. Plaintiffs rely on Forcellati v. 8 Hylands, Inc., 876 F. Supp. 2d 1155 (C.D. Cal. 2012), to support their contention. In Forcellati, 9 the court concluded that the mere reliance on Mazza, without "even discuss[ing] the differences 10 between the consumer protection laws" of the states, is insufficient to support a dismissal. Id. at 11 1160. But Forcellati never suggested suggest that fact discovery is required to confirm material 12 13 14 differences in the law between the state laws. Contrary to plaintiffs' contention, courts that have considered this issue have decided against deferring the choice of law decision until discovery. 15 See, e.g., Rikos v. Procter & Gamble Co., 2012 WL 641946, *5 (S.D. Ohio Feb. 28, 2012) 16 (rejecting plaintiff's request for further discovery on this issue and noting "whether the California 17 statutes may constitutionally apply to non-resident class members who purchased [the product] in 18 19 20 21 22 23 24 25 26 27 3 Google also argues that there is a difference between California and North Carolina law with respect to the necessity of showing reliance, asserting that California law requires a showing of reliance to establish UCL claims, whereas North Carolina law generally does not. See Stetser, 165 N.C. App. at 21 and Cullen v. Valley Forge Life Ins., 161 N.C. App. 570, 580 (2003) ("[O]ur Courts have clearly held that actual deception is not an element necessary under N.C. Gen.Stat. § 75-1.1 to support an unfair or deceptive practices claim . . . . Accordingly, actual reliance is not a factor." (citations omitted)). However, under North Carolina jurisprudence, actual reliance must be shown to establish proximate causation where "an unfair or deceptive practice claim is based upon an alleged misrepresentation by the defendant." Bumpers v. Comm. Bank. of N. Va., 718 S.E.2d 408, 413 (N.C. App. 2011) (quoting Tucker v. Boulevard at Piper Glen, LLC, 150 N.C. App. 150, 154 (2002). Thus, there is no material difference between the two states' laws in a case such as this where the unfair competition is based on allegedly false and misleading statements. Also similar to North Carolina's law, no reliance is required to prove violations of the UCL based on "unlawful" or "unfair" conduct. See Medrazo v. Honda of N. Hollywood, 205 Cal. App. 4th 1, 12 (2012) ("[A]n actual reliance requirement does not apply to UCL actions that are not based upon a fraud theory."). Thus, the significant material difference here is the available remedy. 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / - 12 - 1 their home states is a largely legal determination."); Route v. Mead Johnson Nutrition Co., 2013 2 WL 658251, *8-9 (C.D. Cal. Feb. 21, 2013) (rejecting plaintiff's request to defer ruling on this 3 issue until the class certification stage because the matter is sufficiently obvious from the 4 pleadings); see also Hull v. Viega, Inc., 2013 WL 759376, *5 (D. Kan. Feb. 27, 2013) (declining 5 6 to postpone decisions until the class certification stage where "many of the Rule 12(b) issues 7 raised by Defendants appear to be curable by amending the Complaint"). Likewise, here, the 8 court need not wait to decide whether material differences exist between the two states' laws, and 9 as discussed above, concludes that they do, at least with respect to remedies. 10 b. 11 North Carolina's interest The court also finds that North Carolina has an interest in applying its own law. As the 12 13 14 Mazza court explained, "each foreign state has an interest in applying its law to transactions within its borders," which means that, "if California law were applied to [a nationwide class], 15 foreign states would be impaired in their ability to calibrate liability to foster commerce." 666 16 F.3d at 593. This is consistent with the "principle of federalism that each State may make its own 17 reasoned judgment about what conduct is permitted or proscribed within its borders." Id. at 591 18 (quoting State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 422 (2003)). Likewise, 19 North Carolina has an interest in being able to delineate the appropriate standard of liability and 20 21 22 the scope of recovery based on its understanding of the balance between the interests of individuals and corporate entities operating within its territory. c. 23 24 25 26 Comparing the interests The court further concludes that North Carolina's interests would be more impaired than California's if the other state's law were applied. "[T]the place of the wrong" has the predominant interest in regulating the conduct at issue. Hernandez v. Burger, 102 Cal. App. 3d 795, 801-02 27 (1980), cited with approval by Abogados v. AT&T, Inc., 223 F.3d 932, 935 (9th Cir. 2000). The 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / - 13 - 1 "place of the wrong" is the state where the last event necessary to make the actor liable occurred. 2 Mazza, 666 F.3d at 593 (citing Zinn v. Ex–Cell–O Corp., 148 Cal. App. 2d 56, 80 n.6 (1957) 3 (concluding in a fraud case that the place of the wrong was the state where the misrepresentations 4 were communicated to the plaintiffs, not the state where the intention to misrepresent was formed 5 6 or where the misrepresented acts took place)). As in Mazza, the last events necessary for 7 liability—the communication of the advertisements to the plaintiffs and their reliance thereon in 8 signing up for the trial period—took place in North Carolina, not in California. Hence, North 9 Carolina has a strong interest in the application of its laws to transactions at issue. "Conversely, 10 California's interest in applying its law to residents of foreign states is attenuated." Mazza, 666 11 F.3d at 594. Applying California's choice-of-law rules to the facts of this case, the court 12 13 14 15 concludes that the North Carolina plaintiffs' consumer protection claims should be governed by the North Carolina consumer protection laws. The court therefore dismisses plaintiffs' UCL claims for a final opportunity to amend. 16 3. 17 18 Sufficiency of Pleadings Google also argues that the UCL claims must be dismissed for failing to adequately allege any false or misleading statement or any unlawful or unfair activity. Because the court dismisses 19 the claims based on the choice of law analysis, the court does not address these arguments here. 20 IV. ORDER 21 For the foregoing reasons, the court dismisses plaintiffs' breach of contract claim and 22 23 unfair competition claims with leave for a final opportunity to amend and dismisses plaintiffs' 24 breach of implied contract claim with prejudice. 25 26 Dated: April 22, 2013 Ronald M. Whyte United States District Court Judge 27 28 ORDER GRANTING MOT. TO DISMISS FAC CASE NO. C-12-00237-RMW sG/ALG / - 14 -

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