In Re FACEBOOK INTERNET TRACKING LITIGATION
Filing
168
REPLY (re #162 MOTION to Dismiss Plaintiffs Third Amended Consolidated Class Action Complaint ) filed byFacebook Inc.. (Brown, Matthew) (Filed on 10/27/2017)
Case 5:12-md-02314-EJD Document 168 Filed 10/27/17 Page 1 of 21
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COOLEY LLP
MICHAEL G. RHODES (116127)
(rhodesmg@cooley.com)
MATTHEW D. BROWN (196972)
(brownmd@cooley.com)
KYLE C. WONG (224021)
(kwong@cooley.com)
101 California Street, 5th Floor
San Francisco, CA 94111-5800
Telephone:
(415) 693-2000
Facsimile:
(415) 693-2222
Attorneys for Defendant
FACEBOOK, INC.
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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA
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SAN JOSE DIVISION
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In re: Facebook Internet Tracking Litigation
Case No. 5:12-md-02314 EJD
DEFENDANT FACEBOOK, INC.’S REPLY IN
SUPPORT OF ITS MOTION TO DISMISS
THIRD AMENDED CONSOLIDATED
COMPLAINT
Date:
Time:
Courtroom:
Judge:
Trial Date:
November 16, 2017
9:00 a.m.
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Hon. Edward J. Davila
None Set
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COOLEY LLP
ATTORNEYS AT LAW
SAN FRANCISCO
DEF. FACEBOOK’S REPLY ISO MOTION TO DISMISS
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TABLE OF CONTENTS
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Page
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I.
INTRODUCTION .............................................................................................................. 1
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II.
ARGUMENT ...................................................................................................................... 1
A.
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Plaintiffs Fail to State a Claim for Breach of Contract (Count I) ........................... 1
1.
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The SRR does not incorporate the statements Plaintiffs claim ................... 2
a.
Facebook’s contract with its users does not reference or
guide the reader to the help center pages at issue ........................... 2
b.
Facebook’s Help Center pages are not “known or easily
available to the parties” ................................................................... 4
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2.
3.
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B.
Even if the Help Center was incorporated into the contract, the
conduct alleged does not breach the incorporated terms ............................ 5
Plaintiffs fail to plead damages ................................................................... 7
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Plaintiffs Fail to State a Claim for Breach of the Implied Covenant of Good
Faith and Fair Dealing (Count II) ........................................................................... 9
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1.
Plaintiffs do not show they were deprived of the benefit of the
bargain ......................................................................................................... 9
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2.
Alleging a willful breach does not state an implied-covenant claim ........ 10
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3.
Plaintiffs’ other allegations seek to impose requirements not in the
contract ...................................................................................................... 10
4.
Plaintiffs have not shown damages ........................................................... 11
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C.
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Plaintiffs’ New Contractual Claims and Claims On Behalf of New
Plaintiffs Do Not “Relate Back” and Are Therefore Barred By the Statute
of Limitations ........................................................................................................ 11
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1.
Plaintiffs’ allegations that Facebook breached contractual
obligations entered-into after Class Period I do not relate back ............... 11
2.
Plaintiffs’ additional Class Period II plaintiffs do not relate back ............ 13
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a.
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III.
Plaintiffs cannot allege tolling for delayed discovery ................... 13
b.
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Class Period II plaintiffs do not relate back .................................. 14
CONCLUSION ................................................................................................................. 15
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TABLE OF AUTHORITIES
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Page(s)
Cases
Allen v. Similasan Corp.,
96 F. Supp. 3d 1063 (S.D. Cal. 2015) .......................................................................................14
Angeles v. U.S. Airways, Inc.,
2013 WL 622032 (N.D. Cal. Feb. 19, 2013) ..............................................................................7
In re Anthem, Inc. Data Breach Litig.,
2016 WL 3029783 (N.D. Cal. May 27, 2016) ........................................................................4, 5
Architectural Res. Grp., Inc. v. HKS, Inc.,
2013 WL 568921 (N.D. Cal. Feb. 13, 2013) ............................................................................10
Bernson v. Browning-Ferris Indus.,
7 Cal. 4th 926 (1994) ................................................................................................................13
Careau & Co. v. Sec. Pac. Bus. Credit, Inc.,
222 Cal. App. 3d 1371 (1990)...............................................................................................9, 10
Cariaga v. Local No. 1184 Laborers Int’l Union of N. Am.,
154 F.3d 1072 (9th Cir. 1998).................................................................................................3, 4
Carlsson v. McGraw-Hill Cos.,
2010 WL 3036487 (N.D. Cal. July 30, 2010) .............................................................................2
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ATTORNEYS AT LAW
SAN FRANCISCO
Chan v. Drexel Burnham Lambert Inc.,
178 Cal. App. 3d 632 (1986).......................................................................................................3
Darringer v. Intuitive Surgical, Inc.,
2015 WL 4623935 (N.D. Cal. Aug. 3, 2015)............................................................................13
Dunkel v. eBay Inc.,
2014 WL 1117886 (N.D. Cal. Mar. 19, 2014) …… ...................................................................2
In re eBay Litig.,
2012 WL 3945524 (N.D. Cal. Sept. 10, 2012) ...........................................................................8
Ericson v. Playgirl, Inc.,
73 Cal. App. 3d 850 (1977).........................................................................................................9
Exxon Mobil Corp. v. Tredegar Corp.,
891 F. Supp. 2d 559 (S.D.N.Y. 2012) .........................................................................................8
In re Facebook Privacy Litigation,
192 F. Supp. 3d 1053 (N.D. Cal. 2016) ......................................................................................8
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Fisher v. Biozone Pharmaceuticals, Inc.,
2017 WL 1097198 (N.D. Cal. Mar. 23, 2017) ............................................................................8
Fox v. Ethicon Endo-Surgery, Inc.,
35 Cal.4th 797 (Cal. 2005) ........................................................................................................13
Gautier v. Gen. Tel. Co.,
234 Cal. App. 2d 302 (1965).......................................................................................................7
Gilbert St. Developers, LLC v. La Quinta Homes, LLC,
174 Cal. App. 4th 1185 (2009) .................................................................................................12
In re Google, Inc. Privacy Policy Litig.,
2013 WL 6248499 (N.D. Cal. Dec. 3, 2013) ..............................................................................7
Guidotti v. Global Client Sols., LLC,
2017 WL 1528693 (D.N.J. Apr. 26, 2017) .................................................................................2
Job v. Simply Wireless, Inc.,
160 F. Supp. 3d 891 (E.D. Va. 2015)..........................................................................................8
Kashmiri v. Regents of Univ. of Cal.,
156 Cal. App. 4th 809 (2007) .....................................................................................................5
Lakeland Tours, LLC v. Bauman,
2014 WL 12570970 (S.D. Cal. Feb. 11, 2014) .........................................................................10
Low v. LinkedIn Corp.,
900 F. Supp. 2d 1010 (N.D. Cal. 2012) ..................................................................................7, 8
Mitsui Mfrs. Bank v. Super. Ct.,
212 Cal. App. 3d 726 (1989).....................................................................................................10
Newland N. Am. Foods, Inc. v. Zentis N. Am. Operating, LLC,
2013 WL 1870652 (N.D. Ind. May 3, 2013) ..............................................................................8
Noll v. eBay, Inc.,
282 F.R.D. 462 (N.D. Cal. 2012) ................................................................................................5
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Oja v. U.S. Army Corps of Engineers,
440 F.3d 1122 (9th Cir. 2006)...................................................................................................12
Opperman v. Path, Inc.,
84 F. Supp. 3d 962 (N.D. Cal. 2015) ..........................................................................................8
Shaw v. Regents of Univ. of Cal.,
58 Cal. App. 4th 44 (1997) .........................................................................................................4
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SAN FRANCISCO
Smolinski v. Oppenheimer,
2012 WL 2885175 (N.D. Ill. July 11, 2012) ...............................................................................8
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Svenson v. Google Inc.,
65 F. Supp. 3d 717 (N.D. Cal. 2014) ....................................................................................8, 10
Sweet v. Johnson,
169 Cal. App. 2d 630 (1959).......................................................................................................9
In re Syntex Corp. Sec. Litig.,
95 F.3d 922 (9th Cir. 1996).......................................................................................................14
Troyk v. Farmers Grp., Inc.,
171 Cal. App. 4th 1305 (2009) ...............................................................................................2, 4
Walpole v. Prefab Mfg. Co.,
103 Cal. App. 2d 472 (1951).......................................................................................................7
Ward v. Nat’l Entm’t Collectibles Ass’n,
2012 WL 12885073 (C.D. Cal. Oct. 29, 2012) .......................................................................7, 8
Willner v. Manpower Inc.,
2014 WL 2939732 (N.D. Cal. June 30, 2014) ..........................................................................14
Woods v. Google Inc.,
2011 WL 3501403 (N.D. Cal. Aug. 10, 2011)............................................................................4
In re Yahoo! Inc.,
2017 WL 3727318 (N.D. Cal. Aug. 30, 2017)......................................................................6, 11
In re Zynga Privacy Litig.,
2011 WL 7479170 (N.D. Cal. June 15, 2011) ............................................................................8
Statutes
Cal. Civ. Code § 1643 .......................................................................................................................5
Other Authorities
Cal. Rule of Ct. 8.1115 .................................................................................................................2, 3
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I.
INTRODUCTION
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Plaintiffs’ Opposition (“Opposition” or “Opp.”) to Facebook’s Motion to Dismiss
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(“Motion” or “Mot.”) demonstrates why Plaintiffs’ Third Amended Consolidated Class Action
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Complaint (“TAC”) should meet the same fate as their first and second amended complaints. Only
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two claims—breach of contract and breach of the implied covenant of good faith and fair dealing—
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remain. But despite the Court’s directive that Plaintiffs identify the alleged contractual statements
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at issue, and where or when those statements appeared, Plaintiffs have again failed to do so. Instead,
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they attempt to mask this failure by suggesting the entire Facebook Help Center, consisting of
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hundreds of constantly changing pages, is incorporated into the Facebook user agreement, even
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though that agreement suggests nothing of the sort. Moreover, Plaintiffs fail to identify any
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statement that would amount to an agreement not to engage in the conduct alleged. Plaintiffs cannot
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cure this failure by alleging a breach of the implied covenant of good faith and fair dealing.
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In addition, after nearly seven years of litigation and three different bites at the apple (and
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after the Court has twice dismissed numerous claims for lack of standing), Plaintiffs still fail to
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articulate how they have been damaged by any of the conduct about which they complain.
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Plaintiffs’ suggestion that they are entitled to litigate claims based solely on a nebulous assertion
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of “non-monetary privacy damage” is contrary to law and should not be permitted.
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Finally, Plaintiffs’ belated attempt to expand their class definition to add new contract
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claims that they chose not to bring when they initiated this litigation is barred by the statute of
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limitations. For these reasons and those that follow, the TAC should be dismissed with prejudice.
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II.
ARGUMENT
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A.
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The Court dismissed Plaintiffs’ Second Amended Complaint (“SAC”) for failure to identify
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the specific terms Plaintiffs claimed Facebook breached and for failing to explain how those terms
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were incorporated into the SRR. (Order, ECF No. 148 at 13-14.) The TAC does not cure these
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defects (Mot. at 7) and the Opposition fares no better. The latter gives a list of “examples” of the
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terms allegedly at issue, citing over a dozen exhibits to the TAC (Opp. 10-11), but only alludes
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vaguely to some of the language Plaintiffs rely on in each exhibit, and again fails to show this
COOLEY LLP
ATTORNEYS AT LAW
SAN FRANCISCO
Plaintiffs Fail to State a Claim for Breach of Contract (Count I)
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language was incorporated into the SRR.
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1.
The SRR does not incorporate the statements Plaintiffs claim.
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The Opposition points to fifteen Help Center pages that supposedly serve as the bases for
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Plaintiffs’ claim. As Facebook demonstrated in its Motion, these pages cannot form the basis of a
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breach-of-contract claim because they are not part of the agreement between Facebook and its
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users. (Mot. at 8-12.) The Opposition’s attempts to establish the contrary lack merit.1
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a.
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Facebook’s contract with its users does not reference or guide
the reader to the Help Center pages at issue.
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Plaintiffs do not dispute that under California law, a contract may incorporate an outside
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document only if the contract makes a “clear and unequivocal” reference to the document. E.g.,
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Troyk v. Farmers Grp., Inc., 171 Cal. App. 4th 1305, 1331 (2009). The Opposition claims that the
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SRRs incorporate the Privacy Policy, which in turn incorporates the Help Center pages at issue.2
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To support this “chain incorporation” theory, Plaintiffs repeatedly assert that the Privacy Policy
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links “directly” to “the Help Center pages.”3 (Opp. at 6; id. at 7 n.7; id. at 8 n.8.) That is simply
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false. As Plaintiffs well know, the Privacy Policy does not reference or link to any of the Help
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Center pages Plaintiffs rely on. Instead it links to a handful of other, unrelated Help Center pages
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Plaintiffs argue that incorporation is not properly adjudicated on the pleadings (Opp. at 7), but
their cases are inapposite. For example, in Guidotti v. Global Client Sols., LLC, 2017 WL 1528693,
at *2 (D.N.J. Apr. 26, 2017), the court noted that if the question of incorporation is based on the
construction of the contract’s terms, as is the case here, it is a question of law. The court
distinguished the “unique” circumstances in that case, where the jury had been asked to decide if
the plaintiff assented to certain terms through her conduct. Id. at *1-2. And Carlsson v. McGrawHill Cos., 2010 WL 3036487, at *4 (N.D. Cal. July 30, 2010) had nothing to do with incorporation;
it found factual questions remained about the parties’ “acts and conduct” after the contract was
executed. Moreover, incorporation is regularly determined at the pleadings stage. E.g., Dunkel v.
eBay Inc., 2014 WL 1117886, at *4 (N.D. Cal. Mar. 19, 2014) (Davila, J.).
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Plaintiffs argue that this kind of chain incorporation is permissible, but improperly refer the court
to a single unpublished and uncitable case (Opp. at 6). See Cal. Rule of Ct. 8.1115(a). In any event,
this approach to chain incorporation is inappropriate here because each Help Center page itself
links to multiple other pages, such as the Facebook “About” and “Careers” pages. (E.g.,
https://www.facebook.com/help/1573156092981768?helpref=popular_topics.) Plaintiffs’ theory
would mean that the SRR incorporates this indefinite web of pages. That is untenable.
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The Opposition repeats the false claim that Facebook uses a “layered” contract that starts with the
SRR and ends with the Help Center. (E.g., Opp. at 7.) But as the TAC itself makes clear, Facebook
stated that its Privacy Policy is organized using a layered approach, not that its SRR or Privacy
Policy is made up of layers of documents beyond the agreement or policy itself. (TAC ¶ 42.)
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not attached to the TAC. In fact, despite the Court’s instruction to do so (Order at 13-14), neither
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the TAC nor the Opposition ever clarify how many clicks it would take (if it is even possible) to
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get from the SRR (or the Privacy Policy) to the Help Center pages at issue. As such, Plaintiffs have
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not come close to pleading incorporation of the relevant Help Center pages. (Mot. at 9-10.)
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The Opposition employs a few tactics to dodge this fatal defect. First, it characterizes the
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various Help Center pages as “provisions” in a single Help Center “document.” (Opp. at 5-6.)
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Plaintiffs then claim it is “a mainstay of Internet contract law [] that customers are often
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contractually bound to individual provisions … even when the hyperlink only links to the broader
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document.” (Id. (emphasis added).) But this argument does not hold water. The Help Center
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pages are not “provisions” in a “broader document” incorporated into the SRR; instead, the Help
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Center is made up of hundreds of individual documents on varying topics. Indeed, Plaintiffs have
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attached each of the Help Center pages at issue as separate exhibits to the TAC. Plaintiffs’ “single
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document” approach does not comport with reality.
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Next, Plaintiffs seem to argue that even if the Help Center is hundreds of discrete
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documents, they are all incorporated into the SRR because the Privacy Policy links to a few
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individual Help Center pages not at issue. Specifically, Plaintiffs state “the TAC demonstrates
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clearly how that [sic] the Help Center generally (not just specific pages) are incorporated into the
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SRR.” (Opp. at 6.) But Plaintiffs do not cite the TAC in support of this brazen assertion.
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Nor do Plaintiffs provide authority holding that a large collection of discrete documents are
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incorporated into a contract merely because a small subset of those documents is referenced by the
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contract. Nor could they, as this would not be incorporation by reference, but incorporation by
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association to a referenced document, which contradicts controlling case law. All of the cases cited
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by both parties agree on one point: A contract only incorporates an outside document if the contract
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clearly and unequivocally references that particular document. See, e.g., Cariaga v. Local No.
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1184 Laborers Int’l Union of N. Am., 154 F.3d 1072, 1074-75 (9th Cir. 1998) (rejecting
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incorporation where a contract provision contained a “general reference” to terms and conditions,
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but did not identify the specific documents at issue); Chan v. Drexel Burnham Lambert Inc., 178
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Cal. App. 3d 632, 644 (1986) (effective incorporation “requires the incorporating document to refer
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to the incorporated document with particularity”); In re Anthem, Inc. Data Breach Litig., 2016 WL
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3029783, at *8 (N.D. Cal. May 27, 2016) (same). And for good reason. If a contract could
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incorporate terms from a document by merely referencing some other, allegedly associated
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document, parties could easily misunderstand what terms constitute the contract. As Plaintiffs’
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own cases show, California’s law on incorporation is designed to avoid this kind of contract-by-
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surprise by limiting incorporation to only those instances where the contract “clearly and
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unequivocal[ly]” references the incorporated document and “guides” to that specific document.
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E.g., Shaw v. Regents of Univ. of Cal., 58 Cal. App. 4th 44, 54 (1997); see also Cariaga, 154 F.3d
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at 1074-75. Plaintiffs’ theory of mass incorporation by association would eviscerate that doctrine.4
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b.
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Facebook’s Help Center pages are not “known or easily available
to the parties”
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Not only must a document be referenced by a contract to be incorporated, it also must be
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“known or easily available.” E.g., Troyk, 171 Cal. App. 4th at 1331. “[K]nown or easily available”
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means that in addition to being “clear and unequivocally” referenced in the contract, the referenced
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document must also be definable and discrete. See Woods v. Google Inc., 2011 WL 3501403, *3-
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4 (N.D. Cal. Aug. 10, 2011) (rejecting incorporation where a website Help Center was not “known
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or easily available”). Were it otherwise, parties would not know the precise contours of their
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agreements. Id. Notably, Woods rejected incorporation of a website help center—one that, like
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Facebook’s here, is comprised of at least hundreds of individual webpages. (See Mot. at 10-11.)
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Remarkably, the Opposition does not even mention Woods, let alone distinguish it.
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The Opposition instead focuses on an entirely unrelated point: whether users can easily find
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content on the Facebook Help Center. Plaintiffs point to a statement Facebook allegedly made to
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The Opposition effectively abandons the allegation that Facebook breached a promise in the Data
Use Policy (“DUP”). Facebook argued in its Motion that the versions of the SRR at issue do not
reference or mention the DUP at all. (Mot. at 11-12.) The Opposition does not rebut Facebook’s
arguments; instead Plaintiffs only allege in passing that: “The SRR incorporates the Privacy Policy
(later, the Data Use Policy) by textual reference.” (Opp. at 2.) But the versions of the SRR at
issue do not incorporate the DUP “by textual reference” or otherwise. In a footnote, Plaintiffs
define the “Privacy Policy” to refer both to the document of that title and the DUP, which Plaintiffs
assert is a later “iteration.” But merely referring to the documents by the same name in briefing
does not make them the same document for purposes of incorporation.
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Congress that users can locate content on the Help Center “quickly and easily.” (Opp. at 8.) But
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Woods did not consider whether Google users would have trouble finding content on the Google
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Help Center, but rather whether the Help Center could cleanly be incorporated into a contract—
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that is whether it was a fixed, discrete set of terms. Plaintiffs intentionally misconstrue this
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argument because they cannot distinguish Woods and its reasoning.5
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Adopting Plaintiffs’ theory of incorporation would lead to absurd results and mire the courts
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and contracting parties in endless disputes. To start, it is not clear where the Help Center ends—
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for example, some pages in the Help Center link to the related “Help Community” where users can
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ask questions and receive answers both from Facebook staff and other users.6 Would this changing
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content, some of which is user-generated, bind the parties to the SRR? Help Center pages are also
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frequently added, updated, and deleted. Would each of these events require new assent from users
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(before Facebook could, for example, change the method for resetting passwords or updating
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profile pictures)? These would be absurd results and the Court should reject Plaintiffs’ approach.
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See Kashmiri v. Regents of Univ. of Cal., 156 Cal. App. 4th 809, 842 (2007) (“The interpretation
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of a contract must be fair and reasonable, not leading to absurd conclusions.” (quotations and
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citation omitted)); Cal. Civ. Code § 1643 (“A contract must receive such an interpretation as will
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make it lawful, operative, definite, reasonable, and capable of being carried into effect, if it can be
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done without violating the intention of the parties.” (emphasis added)).7
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2.
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Even if the Help Center was incorporated into the contract, the conduct
alleged does not breach the incorporated terms.
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The Opposition identifies fifteen “example” Help Center pages that contain language that
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Facebook allegedly breached. But even putting aside that these pages are not part of the contract,
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none of these Help Center pages would contractually prohibit the alleged conduct.
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Plaintiffs also cite Anthem, 2016 WL 3029783 and Noll v. eBay, Inc., 282 F.R.D. 462, 467 (N.D.
Cal. 2012). (Opp. at 9.) But neither of these decisions concerned the incorporation of an entire
website help center or addressed the issues raised in Woods and in the Motion.
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https://www.facebook.com/help/community.
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Plaintiffs claim that the SRR should be interpreted against the drafter. (Opp. at 7.) But the cases
they cite make clear that this principle only applies where there is an ambiguity in the contract—
there is none here. And none of these cases considered incorporation by reference.
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The Help Center pages found in Exhibits I, L, M, and N were not active during the
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relevant time period. Four of the Help Center pages at issue were not even active during the
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relevant time period. To hide this fact, the TAC, in defiance of the Court’s order, is silent about
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when each Help Center page became effective. (Mot. at 14.) But the Opposition concedes that the
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Help Center pages were not effective before the date printed on each Help Center page exhibit.
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(Opp. at 4.) The Help Center pages found at Exhibits I, L and N are dated September 27, 2011,
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and Exhibit M is dated September 28, 2011. But Plaintiffs alleged in the FAC and SAC that
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Facebook “fixed” the alleged conduct by September 26, 2011 (FAC ¶ 19; SAC ¶ 4), before any of
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these four pages went live. Plaintiffs’ attempt to “solve” this problem by simply extending the
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class period indefinitely must be rejected for the reasons set forth below. (See Section C.2, infra.)
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The Help Center pages found in Exhibits J, K, O-S, and NN-PP do not prohibit the
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alleged conduct. None of the other Help Center pages on which Plaintiffs rely prohibit the alleged
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conduct. Facebook’s Motion demonstrated this point (Mot. at 12-14), but Plaintiffs have ignored
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those arguments entirely. Instead, the Opposition inexplicably argues that the language found in
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these Help Center pages was misleading or incomplete as if it was arguing the propriety of a fraud
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claim. For example, Plaintiffs claim Exhibit J should have included a more detailed disclosure and
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that Exhibits O, P, and Q were misleading or confusing. Plaintiffs even pincite case law regarding
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the pleading standard for fraud claims. (Opp. at 11 (citing In re Yahoo! Inc., 2017 WL 3727318,
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at *29 (N.D. Cal. Aug. 30, 2017)).) But Plaintiffs’ fraud claims were already dismissed with
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prejudice. The truth is these Help Center pages do not come close to contractually prohibiting the
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alleged conduct. The Motion already addressed most of these pages without any rebuttal in the
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Opposition. (Mot. at 12-14.)
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Facebook did not admit to breaching the contract.
Finally, Plaintiffs claim that
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Facebook “admitted” to breaching the contract. (Opp. at 9.) But the emails and press releases cited
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by Plaintiffs offer no support for this assertion. (Id.) For example, the Opposition claims: “If no
26
contrary promise existed, Facebook would not have admitted . . . that it would ‘be fixing that
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[tracking] today.’” (Id. (bracket in original).) But Facebook makes statements all the time about
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its services for reasons unrelated to alleged contract liability.
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3.
Plaintiffs fail to plead damages.
2
Facebook’s Motion demonstrated that where the pleadings do not establish ascertainable
3
and cognizable contract damages, California law and Rule 8 mandate dismissal. (Mot. at 15
4
(collecting authorities).) In response, Plaintiffs defend only two of their damages theories, but
5
neither overcomes the pleading deficiencies here.8
6
“Non-monetary privacy damages.” Plaintiffs fail to engage with the cases cited in
7
Facebook’s Motion, and instead claim, without citation, that “non-monetary privacy damages” are
8
ascertainable under California law. (Opp. at 12.) But they make no effort to distinguish their
9
asserted damages from the types of non-monetary harm that California courts have repeatedly held
10
are not ascertainable in contract claims. See, e.g., Gautier v. Gen. Tel. Co., 234 Cal. App. 2d 302,
11
306 (1965) (emotional distress damages not “clearly ascertainable”); Walpole v. Prefab Mfg. Co.,
12
103 Cal. App. 2d 472, 489 (1951) (plaintiff not entitled to contract damages for injury to name,
13
character, or personal reputation); see also In re Google, Inc. Privacy Policy Litig., 2013 WL
14
6248499, at *6 (N.D. Cal. Dec. 3, 2013) (commingling personal identification information did not
15
constitute contract injury under California law).
16
Even were such damages proper under California law, Plaintiffs’ conclusory damage
17
allegations do not satisfy their burden under Rule 8.9 They have not provided any basis for
18
concluding that Facebook’s alleged breach affected them in any way, beyond the mere knowledge
19
that Facebook may have retained information about websites they visited. 10 Courts in this district
20
have repeatedly held that allegations of conclusory contract damages that lack any facially plausible
21
basis as to how damages or monetary loss could be assessed are insufficient under Rule 8. See Low
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Plaintiffs do not dispute that unjust enrichment is not a cognizable measure of damages under
California contract law (Mot. at 16) and therefore concede the issue. See Angeles v. U.S. Airways,
Inc., 2013 WL 622032, at *4 (N.D. Cal. Feb. 19, 2013) (arguments not opposed are conceded).
9
Even if they did, compliance with Rule 8 does not suffice where the alleged damages are not
cognizable under California law, as Plaintiffs’ own cases demonstrate. See Ward v. Nat’l Entm’t
Collectibles Ass’n, 2012 WL 12885073, at *6 (C.D. Cal. Oct. 29, 2012) (dismissing claim despite
satisfying Rule 8 because California does not recognize emotional distress damages for fraud).
10
Plaintiffs note that the jury determines “the amount which will compensate the party aggrieved
for all the detriment proximately caused thereby, or which, in the ordinary course of things, would
be likely to result therefrom.” (Opp. at 12.) This precisely illustrates the problem. Plaintiffs’ TAC
does not contain any basis for determining whether Plaintiffs suffered any detriment.
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DEF. FACEBOOK’S REPLY ISO MOTION TO DISMISS
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v. LinkedIn Corp., 900 F. Supp. 2d 1010, 1029 (N.D. Cal. 2012) (conclusory allegation of contract
2
damages did not satisfy Rule 8 where plaintiffs alleged unauthorized collection of personal
3
information); In re Zynga Privacy Litig., 2011 WL 7479170, at *2-3 (N.D. Cal. June 15, 2011)
4
(same); Svenson v. Google Inc., 65 F. Supp. 3d 717, 724-25 (N.D. Cal. 2014) (dismissing breach-
5
of-contract claim where plaintiff failed to plead a cognizable basis for damages). Plaintiffs’
6
citations to tort cases where courts determined that plaintiffs plausibly pled emotional distress and
7
tortious interference damages,11 or contract cases concerning allegations of quantifiable monetary
8
damages where a factual basis for calculating damages was facially obvious,12 are inapposite.
9
Nominal damages. Claiming nominal damages cannot cure this deficiency, as Facebook
10
demonstrated in its Motion. (Mot. at 16-18.) Plaintiffs mainly rely on In re Facebook Privacy
11
Litigation, 192 F. Supp. 3d 1053 (N.D. Cal. 2016),13 but that case is not persuasive precedent here
12
for the reasons detailed in Facebook’s Motion. (Mot. at 17-18.) Further, numerous cases have held
13
that nominal damages are only available where plaintiffs can first show ascertainable damages.
14
E.g., In re eBay Litig., 2012 WL 3945524, at *5 (N.D. Cal. Sept. 10, 2012) (availability of nominal
15
damages does not eliminate the need to show actual damages for breach of contract in California);
16
accord Opperman v. Path, Inc., 84 F. Supp. 3d 962, 990–91 (N.D. Cal. 2015) (“Section 3360 sets
17
forth the rule that a plaintiff who has suffered an injury, but whose damages are speculative, is
18
entitled to nominal damages.”). Moreover, the California cases principally relied on by In re
19
Facebook Privacy Litigation dealt with situations where plaintiffs lacked adequate proof of the
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Smolinski v. Oppenheimer, 2012 WL 2885175, at *3 (N.D. Ill. July 11, 2012) (plausibly alleged
emotional distress damages in Fair Debt Collections Practices Act action); Newland N. Am. Foods,
Inc. v. Zentis N. Am. Operating, LLC, 2013 WL 1870652, at *4 (N.D. Ind. May 3, 2013) (plausibly
alleged tortious interference damages under Indiana law); cf. Ward, 2012 WL 12885073, at *6
(Rule 8 did not bar conclusory emotional distress damages for fraud but claim was nevertheless
noncognizable under California law).
12
Exxon Mobil Corp. v. Tredegar Corp., 891 F. Supp. 2d 559, 566-67 (S.D.N.Y. 2012) (Plaintiffs
provided “a factual basis” for damages and the court concluded that there was a basis for inferring
monetary injury); Job v. Simply Wireless, Inc., 160 F. Supp. 3d 891, 900 & n.10 (E.D. Va. 2015)
(breach of contract for failure to make installment payments stated claim despite lack of specificity
regarding the amount of damages).
13
Plaintiffs cite Fisher v. Biozone Pharmaceuticals, Inc., 2017 WL 1097198 (N.D. Cal. Mar. 23,
2017) (Opp. at 13), which merely quoted dicta from In re Facebook Privacy Litigation in
considering the impact of plaintiffs’ failure to plead damages on a preliminary injunction request.
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amount, rather than the existence, of damages. See, e.g., Sweet v. Johnson, 169 Cal. App. 2d 630,
2
632 (1959) (where plaintiffs failed to prove the amount of damages at trial, nominal damages were
3
appropriate); Ericson v. Playgirl, Inc., 73 Cal. App. 3d 850, 859 (1977) (same).14
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B.
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Plaintiffs Fail to State a Claim for Breach of the Implied Covenant of Good
Faith and Fair Dealing (Count II).
6
Plaintiffs concede that their implied-covenant claim must allege more than a mere contract
7
breach to survive a motion to dismiss. (Opp. at 14.) See Careau & Co. v. Sec. Pac. Bus. Credit,
8
Inc., 222 Cal. App. 3d 1371, 1395 (1990). But their flawed attempt to identify a non-duplicative
9
basis for their claim fails, as it misinterprets applicable case law and seeks to impose obligations
10
on Facebook not found in the contract.
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1.
Plaintiffs do not show they were deprived of the benefit of the bargain.
12
Plaintiffs do not identify any manner in which Facebook deprived them of the benefit of the
13
bargain that is not duplicative of their breach-of-contract claim. The implied covenant is “a
14
supplement to the express contractual covenants, to prevent a contracting party from engaging in
15
conduct which (while not technically transgressing the express covenants) frustrates the other
16
party’s rights to the benefits of the contract.” Plaintiffs’ Opposition merely cites to identical
17
transgressions of the alleged express covenants, demonstrating that this claim is duplicative.
18
(Compare Opp. at 17 (citing TAC ¶¶ 6, 60, 62, 64-67) with Opp. at 4 (citing TAC ¶¶ 60, 62-67).)
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Merely recasting these same contractual breaches as depriving Plaintiffs of “contractual privacy
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benefit[s]” or “benefit of the bargain” (Opp. at 17, 13) does not change this result.
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Nor do Plaintiffs’ references to Facebook’s “discretionary power over contractual
22
administration” (id. at 18) and the general statement in the SRR that “[y]our privacy is very
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important to us” (id. at 17) give rise to an implied-covenant claim. User privacy is and always has
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been very important to Facebook. But nothing in that statement gives rise to an actionable contract
25
claim, nor does anything in the TAC allege otherwise. And Plaintiffs do not explain what
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Moreover, many of the California cases awarding nominal damages have also done so after trial
where the nominal damages award averted the inequitable result of defendants becoming the de
facto prevailing party and being awarded attorneys’ fees. E.g., Sweet, 169 Cal. App. 2d at 632.
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“discretionary power over contractual administration” is, where it is found in the contract, or how
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it establishes a claim for breach of the implied covenant.
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2.
Alleging a willful breach does not state an implied-covenant claim.
4
Plaintiffs argue that they have stated an implied-covenant claim because they have alleged
5
Facebook’s conduct was “conscious and deliberate.” (Opp. at 14.) But a breach-of-contract claim
6
is not transformed into an implied-covenant claim just by alleging a breach is willful. Instead, case
7
law is clear that an implied-covenant claim is duplicative when plaintiffs, “relying on the same
8
alleged acts, simply seek the same damages or other relief.” Careau, 222 Cal. App. 3d at 1395.15
9
Plaintiffs cite no cases to the contrary. And numerous cases have dismissed implied-covenant
10
claims as duplicative even where willful conduct in breaching a contract was alleged. See, e.g.,
11
Svenson v. Google Inc., 65 F. Supp. 3d 717, 726 (N.D. Cal. 2014) (dismissing implied-covenant
12
claim as duplicative despite allegations of bad-faith conduct); Lakeland Tours, LLC v. Bauman,
13
2014 WL 12570970, at *10 (S.D. Cal. Feb. 11, 2014) (same). Here, Plaintiffs rely on the same
14
allegations of willful breach with respect to both their breach-of-contract and implied-covenant
15
claims. (See, e.g., TAC ¶¶ 6, 80, 83, 149.)
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3.
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Plaintiffs’ other allegations seek to impose requirements not in the
contract.
Plaintiffs’ final argument is that Facebook breached the implied-covenant by failing to
disclose what information it retained about users. But Plaintiffs cannot import a tort standard for
misleading disclosure into their contract claim, as their Opposition attempts to do. Plaintiffs
concede that an implied-covenant claim “must rest upon the existence of some specific contractual
obligation”16 (Opp. at 15), but fail to cite a single provision of the contract that imposes this
15
Architectural Res. Grp., Inc. v. HKS, Inc., 2013 WL 568921, at *6 (N.D. Cal. Feb. 13, 2013) did
not consider whether the breach-of-contract and breach-of-implied-covenant claims were
duplicative, as it dismissed both for failure to state a claim. Plaintiffs cite Mitsui Mfrs. Bank v.
Super. Ct., 212 Cal. App. 3d 726 (1989), for factors that allegedly support recognition of an
implied-covenant claim. But Plaintiffs quotation is of factors that might take a contract outside of
the ordinary commercial context and potentially lead to recovery in tort. And Mitsui ultimately
granted summary judgment for defendant on an implied-covenant claim seeking tort damages.
16
Plaintiffs misread Facebook’s Motion, suggesting that Facebook wrongly imposed an obligation
on Plaintiffs to identify obligations not in the contract to support their implied-covenant claim.
(Opp. at 15.) To the contrary, Facebook stated that Plaintiffs’ allegations of extra-contractual
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CASE NO. 5:12-MD-02314 EJD
Case 5:12-md-02314-EJD Document 168 Filed 10/27/17 Page 16 of 21
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obligation. Instead, they suggest that a duty arises automatically because Facebook has exclusive
2
knowledge of its conduct, citing In re Yahoo!, 2017 WL 3727318, at *29. But In re Yahoo!
3
considered disclosure obligations in the context of a claim of fraud under California’s unfair
4
competition law and is therefore inapposite.17 As Facebook’s authority makes clear, a failure to
5
disclose can only lead to contractual liability where the contract imposes an obligation to disclose.
6
(Mot. at 20 (citing cases).) Plaintiffs’ Opposition does not locate this obligation in the SRR.
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4.
Plaintiffs have not shown damages.
Plaintiffs argue again, as they do for their breach-of-contract claim, that they “plausibly
allege the fact of damages.” (Opp. at 19.) For reasons articulated above, that argument fails.
C.
Plaintiffs’ New Contractual Claims and Claims On Behalf of New Plaintiffs Do
Not “Relate Back” and Are Therefore Barred By the Statute of Limitations.
Facebook’s Motion demonstrated that Plaintiffs’ new contract claims post-dating
allegations in prior complaints do not satisfy the standard for relation-back of new claims under
Rule 15(c)(1)(B), and the new class of plaintiffs do not satisfy the standard for relation-back of new
plaintiffs under Rule 15(c)(1)(C) (as derived from the Syntex factors), and thus both are barred by
the statute of limitations. (Mot. at 21-25.) Nothing in Plaintiffs’ Opposition alters this analysis.
1.
Plaintiffs’ allegations that Facebook breached contractual obligations
entered-into after Class Period I18 do not relate back.
Case law is clear that an amended complaint that asserts breaches of new contracts not
previously alleged in prior complaints do not relate back under Rule 15(c)(1)(B). (Mot. at 22-23
(collecting authorities).) Instead of distinguishing this precedent, Plaintiffs mischaracterize the new
contract allegations in the TAC as simply “new evidence,” the addition of which they claim is
permissible under Rule 15(c)(1)(B). (Opp. at 22-23.) But that is contradicted by the allegations in
the TAC. The TAC alleges that these newly identified Help Center pages are part of the contract
promises could not support a claim for breach of the implied covenant. (Mot. at 19-20.)
17
Plaintiffs’ discussion of materiality for “failure to disclose” arises out of the tort standard, which
is not applicable here.
18
Class Period I relates to the class period ending September 26, 2011 asserted in the FAC and
SAC. Class Period II relates to the period from September 27, 2011 to “a later date to be determined
upon the completion of discovery” (TAC ¶ 132), the TAC’s proposed extension of the class period.
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CASE NO. 5:12-MD-02314 EJD
Case 5:12-md-02314-EJD Document 168 Filed 10/27/17 Page 17 of 21
1
between the parties. (TAC ¶¶ 61, 62, 65.)19
2
Alternatively, Plaintiffs argue that even if they have alleged new contract claims, these
3
contracts relate back to earlier contracts because the new contractual provisions are similar to ones
4
asserted in prior complaints. (Opp. at 23.) But similarities do not satisfy the relation-back doctrine,
5
as Facebook’s Motion demonstrates. (See Mot. at 23.) Plaintiffs only address one case cited by
6
Facebook, grossly mischaracterizing Oja v. U.S. Army Corps of Engineers, 440 F.3d 1122, 1134
7
(9th Cir. 2006), by suggesting that the court rejected allegations in the new complaint because the
8
prior complaint was untimely. (Opp. at 23-24.) To the contrary, the Oja court performed the
9
relation-back analysis and held that “[t]he fact that the language in the two disclosures is identical
10
is inapposite because Oja’s claims under the Privacy Act are based on the acts of disclosure
11
themselves, each of which is distinct in time and place, if not substance.” Oja, 440 F.3d at 1134.
12
Similarly, here, because the new Help Center pages that went live after the close of Class Period I
13
are distinct in time, place, and substance, it is irrelevant that the newly alleged contract provisions
14
are “similar” to those alleged in the SAC. Nor can the newly alleged contractual obligations be
15
construed as part of the overall contract alleged in the SAC as Plaintiffs admit that these new
16
provisions only became effective as of the date printed on them (Opp. at 4)—September 27 and 28,
17
2011 (Exs. I, L, N, and M)—whereas the latest-in-time SRR contract alleged in Plaintiffs’ SAC is
18
dated April 26, 2011 (Ex. D). See Gilbert St. Developers, LLC v. La Quinta Homes, LLC, 174 Cal.
19
App. 4th 1185, 1193-94 (2009) (a later drafted document was not part of an earlier dated contract).
20
Facebook’s Motion also demonstrated that relation-back with respect to new contract
21
allegations is improper because it had no notice of claims based on the new contracts. (Mot. at 23.)
22
Plaintiffs’ contention that Facebook has known of the “gravamen” of those claims since the SAC
23
was filed (Opp. at 24) fails. Plaintiffs offer no support for their contention that notice of Plaintiffs’
24
allegations of breach of one contract as to a certain class of plaintiffs should be considered
25
equivalent to notice of breach of a separate contract as to a different class of plaintiffs. Indeed, the
26
authority cited by Facebook is explicitly to the contrary. (Mot. at 23.)
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Moreover, the Help Center pages that were in effect after Class Period I cannot serve as evidence
of Facebook’s breach of different Help Center “terms” that were in effect earlier.
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Case 5:12-md-02314-EJD Document 168 Filed 10/27/17 Page 18 of 21
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2.
Plaintiffs’ additional Class Period II plaintiffs do not relate back.
2
Plaintiffs offer two arguments in support of the TAC’s addition of Class Period II
3
plaintiffs—first, that the statute of limitations should be tolled for delayed discovery, and second,
4
that the new class of plaintiffs relates back. Both arguments fail.
5
a.
Plaintiffs cannot allege tolling for delayed discovery.
6
The TAC and earlier complaints do not support Plaintiffs’ claim that they did not discover
7
their cause of action with respect to new class members until April 2014. (Opp. at 20.) Plaintiffs
8
bear the burden of showing in their complaint that the delayed-discovery rule applies; Plaintiffs’
9
failure to do that in the TAC dooms their argument. Darringer v. Intuitive Surgical, Inc., 2015 WL
10
4623935, at *4 (N.D. Cal. Aug. 3, 2015) (dismissing time-barred claim where complaint failed to
11
allege sufficient facts supporting equitable tolling under the delayed-discovery rule).
12
Additionally, Plaintiffs’ FAC directly contradicts their belated assertion in their Opposition
13
that they discovered their cause of action in April 2014. Plaintiffs claim that at the time of their
14
initial complaint in May 2012, they “only had evidence of Facebook’s breaches through September
15
25, 2011” and did not discover that the problem may have continued past that date until they
16
obtained discovery in 2014 concerning the alleged use of the datr cookie post-logout. (Id. at 20.)
17
But Plaintiffs’ FAC establishes that Plaintiffs knew this information since the inception of this
18
litigation. (See FAC ¶ 83 (Facebook “tracked logged out users with its datr tracking cookie alone,
19
without the need for an additional Facebook cookie containing a Facebook user ID”); id. ¶ 15
20
(Facebook used the datr cookie at least as late as October 10, 2011).) Thus Plaintiffs’ own words
21
establish that they suspected the basis for the enlarged class period at least by May 17, 2012.20 Fox
22
v. Ethicon Endo-Surgery, Inc., 35 Cal.4th 797, 807 (Cal. 2005) (a cause of action accrues when a
23
plaintiff “has reason at least to suspect a factual basis for its elements” (citation omitted)). The
24
analysis does not change because Plaintiffs received information in discovery that they claim
25
supports previous allegations about the datr cookie. See Bernson v. Browning-Ferris Indus., 7 Cal.
26
4th 926, 932 (1994) (“Aggrieved parties generally need not know the exact manner in which their
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20
Plaintiffs’ suggestion that this information was added as soon as they learned of it is further
belied by the fact that their November 29, 2015 SAC did not include these expanded allegations.
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CASE NO. 5:12-MD-02314 EJD
Case 5:12-md-02314-EJD Document 168 Filed 10/27/17 Page 19 of 21
1
injuries were effected” for their cause of action to accrue. (citation omitted)). Accordingly, the
2
claims of new class members are time-barred unless they relate back to Plaintiffs’ SAC.
3
b.
Class Period II plaintiffs do not relate back.
4
Plaintiffs further argue that even if the limitations period did expire prior to the filing of the
5
TAC, they can add new Class Period II Plaintiffs because they meet the three-factor Syntex test.
6
(Opp. at 20); see In re Syntex Corp. Sec. Litig., 95 F.3d 922, 935 (9th Cir. 1996) (setting forth three-
7
factor test for the addition of new plaintiffs through extension of the class period). They do not.
8
First, Plaintiffs do not and cannot cite a single line from the SAC to demonstrate how “the original
9
complaint gave Facebook adequate notice of the claims of the newly proposed plaintiffs,” as the
10
first prong of Syntex requires. Instead, Plaintiffs claim that “Facebook knew that the original
11
proposed class period ended on the date Plaintiffs incorrectly understood the offending conduct had
12
ended.” (Opp. at 21.) But to the extent that this jumbled argument focuses on their speculation
13
about what Facebook may have known,21 it misreads Syntex. Syntex requires Plaintiffs to identify
14
allegations in their prior complaint sufficient to put Facebook on notice that additional individuals
15
would bring claims. See Willner v. Manpower Inc., 2014 WL 2939732, at *4 (N.D. Cal. June 30,
16
2014) (that defendant may have known additional individuals had claims was irrelevant because
17
“the limited class definition in the prior complaints” could not have put defendant on notice that
18
additional individuals would be a part of the action). Similarly, as shown in its Motion, based on
19
the limited class definition in the prior complaints, Facebook could not have known that Plaintiffs
20
would seek to assert claims on behalf of newly identified Class Period II plaintiffs.22 (Mot. at 24.)
21
Plaintiffs argue that the second Syntex prong requiring an “identity of interests” with the
22
original class members is met because the Class Period I plaintiffs and Class Period II plaintiffs
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Plaintiffs’ speculation is incorrect. Since Plaintiffs have known of the facts underlying their
Class Period II allegations since this case began—and indeed Plaintiffs’ FAC was filed with insight
from more than thirty initial complaints drafted by other law firms— Facebook had no reason to
suspect that Plaintiffs’ limitation of their class was a mistake rather than a tactical decision.
22
Plaintiffs cite Allen v. Similasan Corp., 96 F. Supp. 3d 1063, 1069 (S.D. Cal. 2015) in support of
their argument that Facebook had notice. But in Allen, the court held that defendants were on notice
of additional named plaintiffs who had previously been putative class members. As the individuals
Plaintiffs seek to add here were not within the class defined in the SAC, Allen is inapplicable.
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CASE NO. 5:12-MD-02314 EJD
Case 5:12-md-02314-EJD Document 168 Filed 10/27/17 Page 20 of 21
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allege the same conduct, and allege contract language that is “functionally the same.” (Opp. at 21-
2
22.) But Plaintiffs provide no support for their argument and fail to address any of Facebook’s
3
authority demonstrating that differences between the circumstances and statements relied on by
4
different groups of plaintiffs controvert an “identity of interests.” (Mot. at 24.) Indeed, both the
5
conduct and contractual statements alleged by Plaintiffs differ between Class Periods I and II. First,
6
in Class Period I, Plaintiffs allege that user ID cookies were not cleared after a user logged out;
7
however, Plaintiffs admit that this issue was resolved at the inception of Class Period II. (TAC ¶¶
8
7-8, 105.) Second, the allegedly controlling terms are different for Class Period I and II members.
9
Specifically, Class Period I plaintiffs rely on statements in the DUP and Help Center such as
10
“[Facebook] receives . . . ‘technical information’ . . . [that] lets us know that you are logged into
11
Facebook” (TAC ¶ 63), and “[i]f you are logged into Facebook, we also see your user ID number
12
and email address” (TAC ¶ 64) that Plaintiffs do not allege were explicitly contravened. Class
13
Period II plaintiffs point to different statements, both in substance and kind, found only in the Help
14
Center that do relate to the conduct Plaintiffs allege: “[w]hen you log out of Facebook, we remove
15
the cookies that identify your particular account[.]” (TAC ¶ 62.) Because Plaintiffs allege different
16
conduct by Facebook, different contractual provisions, and different legal theories for Class Period
17
I and Class Period II plaintiffs, the new plaintiffs do not share an “identity of interests.”23
18
Finally, Plaintiffs fail to analyze the third element of Syntex—prejudice—instead arguing
19
that they need not analyze this element because the “identity of interests” prong is met. (Opp. at
20
22.) As Class Period II plaintiffs do not share an identity of interests, as explained above, Plaintiffs
21
cannot rely on this theory to show that no prejudice will result. As Facebook argued in its Motion,
22
the addition of Class Period II plaintiffs undoubtedly will prejudice Facebook by belatedly
23
changing the scope of discovery and the issues being litigated more than six years after the events
24
precipitating this litigation. (Mot. at 25.) Plaintiffs have offered no response to these arguments.
25
III.
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CONCLUSION
For these reasons, Court should grant Facebook’s Motion to Dismiss with prejudice.
23
For the same reason, the claims of Class Period I and Class Period II plaintiffs are unlikely to be
proven by the same kind of evidence, as Plaintiffs suggest. (Opp. at 23.)
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DEF. FACEBOOK’S REPLY ISO MOTION TO DISMISS
CASE NO. 5:12-MD-02314 EJD
Case 5:12-md-02314-EJD Document 168 Filed 10/27/17 Page 21 of 21
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Dated: October 27, 2017
COOLEY LLP
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/s/ Matthew D. Brown
Matthew D. Brown
Attorneys for Defendant
FACEBOOK, INC.
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DEF. FACEBOOK’S REPLY ISO MOTION TO DISMISS
CASE NO. 5:12-MD-02314 EJD
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