Becker et al v. Skype Inc.

Filing 68

ORDER granting 38 Motion to Dismiss; finding as moot 58 Motion to Dismiss; denying 62 Motion for Administrative Relief signed by Judge Edward J. Davila on February 10, 2014. (ejdlc4S, COURT STAFF) (Filed on 2/10/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
For the Northern District of California

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CANTON BECKER, JOSEPHINE ASPLUND, )
and DARRIN WESLEY, individually and on
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behalf of all others similarly situated,
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Plaintiffs,
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v.
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SKYPE INC., a Delaware Corporation,
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MICROSOFT CORPORATION, and
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DOES 1-20.
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Defendants.

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Case No.: 5:12-CV-06477-EJD
ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS PLANTIFF
CANTON BECKER

[Re: Docket No. 38]

Presently before the Court is Defendants Skype Inc. and Microsoft Corporation’s

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(collectively, “Defendants”) Motion to Dismiss Plaintiff Canton Becker (“Plaintiff”) from the

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instant action pursuant to subsections (b)(1) and (b)(6) of Federal Rule of Civil Procedure 12. See

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Docket Item No. 38. The Court found this matter suitable for decision without oral argument

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pursuant to Civil Local Rule 7-1(b) and previously vacated the hearing. Having thoroughly

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reviewed the parties’ briefing and for the following reasons the Court GRANTS Defendants’

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Motion.

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I.

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Background
Skype provides both free and fee-based telephone services through an Internet connection.

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See Docket Item No. 30 (Second Amended Class Action Complaint for Damages, “SAC”).

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Plaintiff Becker opened a free Skype account in 2005. Id. In October 2006 he purchased a three1
Case No.: 5:12-CV-06477-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFF CANTON BECKER

month subscription for a fee-based “Skype Online Number” in order to communicate with clients

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of his graphic design business while traveling. Id. At the end of the subscription period, he did not

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renew the Online Number and service ended. Id. On five occasions through 2011, Plaintiff

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purchased additional three-month subscriptions that he let lapse at the end of their terms. Id. Each

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time he initiated service, he saw a notice that gave the option to permit Skype to auto-renew his

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subscription at the end of the three-month period but did not select it. Id. On August 13, 2012

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Plaintiff purchased another three-month Online Number subscription. Id. On November 10, 2012

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he noticed he had been charged $18 for an additional three-month subscription despite not having

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requested it. Id. Plaintiff spent two hours that day attempting to secure a refund from Skype, which

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United States District Court
For the Northern District of California

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later that day agreed to refund the full amount. Plaintiff received his refund on November 16, 2012.

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Id.

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On November 19, 2012, Plaintiff filed a Class Action Complaint for Damages along with

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Josephine Asplund and Darrin Wesley in Santa Clara County Superior Court. See Docket Item No.

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1, Ex. 1. Plaintiffs filed an Amended Complaint on December 19, 2012. Id. Two days later, on

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December 21, 2012, Defendants removed the action to this Court pursuant to the Class Action

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Fairness Act. See Docket Item No. 1 (Notice of Removal). Defendants filed a Motion to Dismiss

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Plaintiffs’ Second, Fifth, and Sixth Claims on January 28, 2013 (Docket Item No. 14), which

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ultimately was fully briefed, as well as a separate Motion to Dismiss for Lack of Jurisdiction on

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April 10, 2013 (Docket Item No. 26), which was not. Plaintiffs filed a Second Amended Complaint

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on April 24, 2013, which, upon filing, became the operative complaint in this matter. See Docket

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Item No. 30. Defendants filed the instant Motion to Dismiss for Lack of Jurisdiction on May 9,

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2013. See Docket Item No. 38.

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II.

Legal Standard
A Rule 12(b)(1) motion challenges the federal court’s subject matter jurisdiction and may

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be either facial or factual. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). A facial 12(b)(1)

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motion involves an inquiry confined to the allegations in the complaint, whereas a factual 12(b)(1)

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motion permits the court to look beyond the complaint to extrinsic evidence. Id. When a defendant

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makes a facial challenge, all material allegations in the complaint are assumed true and the court
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Case No.: 5:12-CV-06477-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFF CANTON BECKER

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must determine whether lack of federal jurisdiction appears from the face of the complaint

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itself. Thornhill Publ’g Co. v. General Tel. Elec., 594 F.2d 730, 733 (9th Cir. 1979). “A party

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invoking the federal court’s jurisdiction has the burden of proving the actual existence of subject

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matter jurisdiction.” Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir. 1996).

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III.

Discussion
Defendants present two grounds on which they argue the Court should dismiss Plaintiff

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Becker. First, they argue Plaintiff’s Complaint fails to allege an actual case or controversy as

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required to establish this Court’s subject matter jurisdiction. Second, Defendants argue that even if

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Plaintiff has established subject matter jurisdiction, his pleadings fail to state claims for which

United States District Court
For the Northern District of California

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relief may be granted under the Unfair Competition Law (“UCL”), Consumer Legal Remedies Act

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(“CLRA”), or the California Business and Professions Code (“B&P Code”). Because the Court

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finds that Defendants’ subject matter jurisdiction argument is dispositive, it will only address that

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ground.

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A. Plaintiff Has Not Alleged Injury in Fact
Article III, section 2 of the Constitution limits the jurisdiction of federal courts to actual

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cases or controversies. In order to satisfy the standing requirements of Article III, “a plaintiff must

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show (1) it has suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or

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imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action

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of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be

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redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–561 (1992).

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The parties agree that Plaintiff received a full refund of the allegedly unauthorized $18 service

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renewal fee. Two issues remain in dispute. First, whether Skype’s failure to pay Plaintiff interest on

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that refund or to compensate him for his time spent procuring it constitutes actual injury. Second,

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whether Plaintiff has sufficiently demonstrated risk of imminent injury due to Skype’s ongoing

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business practices, and therefore his standing to sue for injunctive relief.

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Defendants cite several decisions in which plaintiffs who received a full refund prior to

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filing suit were found to lack standing. See Gonzales v. Comcast Corp., Case No. 10-CV-01010,

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2012 WL 10621 (E.D. Cal. Jan. 3, 2012); Demmick v. Cellco P’Ship, Case No. 06-2163, 2007 WL
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Case No.: 5:12-CV-06477-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFF CANTON BECKER

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789040 (D. N.J. March 13, 2007); Arabian Am. Oil Co. v. Scarfone, 713 F. Supp. 1420 (M.D. Fla.

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1989), aff’d, 939 F.2d 1472 (11th Cir. 1991). Plaintiff contends that, notwithstanding these cases,

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his full refund was an inadequate remedy because he also should have been reimbursed for the two

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hours he spent communicating with Skype in order to get it. Plaintiff cites no authority for the

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proposition that personal time spent procuring a refund must be compensated. Rather, he argues

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that he should be compensated for wages he presumably lost while on the phone with Skype. That

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Plaintiff has identified a specific monetary value for his efforts—$85 per hour—does not render his

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injury sufficiently concrete. Lujan v. Defenders, 504 U.S. at 560 (explaining that Article III injury

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requires a plaintiff to demonstrate harm that is “‘concrete’…not conjectural or hypothetical”). That

United States District Court
For the Northern District of California

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amount is meaningless if he cannot allege actual loss of work, which he has not. Plaintiff’s SAC

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says only that he “could have instead billed out [the] time” he spent contacting Skype. See Docket

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Item No. 1, Ex. 3 ¶44. This same conditional phrasing is repeated in his Opposition. See Docket

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No. 39. Beyond these vague suggestions of lost opportunity, Plaintiff provides no allegations

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relating to any specific work he set aside or was forced to forgo in order to pursue his refund.

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It is on this point that the Southern California Housing Rights Center case cited by both

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parties is most relevant. S. Cal. Hous. Rights Ctr. v. Los Feliz Towers Homeowners Ass’n, 426 F.

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Supp. 2d 1061 (C.D. Cal. 2005). That decision did not necessarily hinge on whether the plaintiff

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was an organization or an individual. Nor did its holding suggest that parties are automatically

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entitled to compensation when their attention and resources are directed to one issue instead of

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another. Rather, the central consideration was the concrete nature and scale of the Housing Rights

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Center’s alleged injury. The court determined that the organization had standing because it

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“present[ed] evidence of actual injury based on loss of financial resources in investigating [the]

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claim.” Id. at 1069. Plaintiff’s pleadings, in contrast, include nothing to indicate actual loss of

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business during the time he was pursuing his refund. Moreover, while the Southern California

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Housing Rights Center plaintiffs alleged substantial and extended dedication of staff time, Plaintiff

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Becker claims a loss of only two hours on a Saturday. Plaintiff provides no authority suggesting

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that the Court may consider the opportunity cost of pursuing a refund sufficient to constitute actual

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injury absent any allegations that Plaintiff actually lost billable work.
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Case No.: 5:12-CV-06477-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFF CANTON BECKER

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Plaintiff also fails to cite any precedent or statutory authority to support his argument that

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he is entitled to interest on his refund, let alone that the loss of that interest constitutes sufficient

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injury to establish standing. Plaintiff contacted Skype on November 10 and Skype agreed to refund

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the $18 that day. See Docket No. 39. It took six days for the funds to return to Plaintiff’s bank

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account. Id. Defendants estimate that interest, if owed, would be in the range of 1.5-3.55 cents. See

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Docket No. 38. Faced with a comparable scenario, the court in Gonzales found that estimated

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damages of 0.5 cents to $1.64 were too speculative and de minimus to convey standing. Gonzales,

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2012 WL 10621 at *7. Even assuming a legal entitlement to interest, the de minimus amount

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alleged lost is similarly inadequate to establish Article III standing in this case.

United States District Court
For the Northern District of California

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B. Plaintiff Cannot Show a Likelihood of Future Injury
Besides failing to establish an Article III injury, which is required to convey subject matter

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jurisdiction over each of his claims, Plaintiff has also failed to establish the threat of imminent

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injury, which is required in order to grant his requested injunctive relief. To establish standing on

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this basis, a plaintiff must demonstrate that he is “realistically threatened by a repetition of the

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violation.” Gest v. Bradbury, 443 F.3d 1177, 1181 (9th Cir.2006). A mere assertion of the intention

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to do something in the future is not sufficient to confer standing, as “[s]uch ‘some day’

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intentions—without any description of concrete plans, or indeed any specification of when the

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some day will be…” In re Intel Laptop Battery Litig., Case No. 09-CV-02889, 2011 WL 7290487

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(N.D. Cal. Apr. 7, 2011) (quoting Summers v. Earth Island Institute, 555 U.S. 488, 495 (2009)).

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Plaintiff argues that because he continues to purchase Skype Online Numbers and plans to

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do so in the future, he is at risk of future harm. Having already been subject to the contested auto-

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renew policy, spoken to Skype about it, and received a refund for the first auto-renew applied to his

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account, Plaintiff simply cannot reasonably argue that he stands to be fooled again in the future. As

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other courts have well recognized, “[i]f a plaintiff has knowledge of a defendant’s practices, that

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plaintiff cannot have standing to seek injunctive relief to redress injuries caused by those practices,

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because the plaintiff’s knowledge precludes him from showing a likelihood of being injured in the

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future by those practices.” In re Intel Laptop Battery Litig., 2011 WL 7290487 at *2 (quoting

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Laster v. T–Mobile USA, Inc., Case No. 05-CV-1167, 2009 WL 4842801, at *3–4 (S.D. Cal.
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Case No.: 5:12-CV-06477-EJD
ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS PLAINTIFF CANTON BECKER