Imber-Gluck v. Google Inc.

Filing 39

ORDER by Judge Ronald M. Whyte granting in part and denying in part 20 Motion to Dismiss (rmwlc1, COURT STAFF) (Filed on 7/21/2014)

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UNITED STATES DISTRICT COURT
United States District Court
For the Northern District of California

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NORTHERN DISTRICT OF CALIFORNIA
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SAN JOSE DIVISION
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ILANA IMBER-GLUCK, on Behalf of Herself
and All Others Similarly Situated,
Plaintiff,

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v.

Case No. 5:14-CV-01070-RMW
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT
GOOGLE, INC.’S MOTION TO
DISMISS

GOOGLE, INC., a Delaware Corporation.
[Re: Docket No. 20]
Defendant.

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Google, Inc. (“Google”), a Delaware corporation with its headquarters and principal place of

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business in California, is a leading seller of software applications (“Apps”) users can download onto

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their mobile computing devices. See Plaintiff’s Class Action Complaint (“Compl.”), Dkt. No. 1,

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¶¶ 2-3. Plaintiff Ilana Imber-Gluck brings the instant class action complaint “on behalf of herself

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and other parents and guardians whose minor children: (a) downloaded from [Google] a free or

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modestly priced [App]; and (b) then incurred charges for in-game-related voidable purchases that

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the minor was induced by Google to make, without the parents’ and guardians’ knowledge or

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authorization.” Id. at ¶ 1.
Case No. 5:14-CV-01070-RMW

-1ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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Pursuant to Federal Rule of Civil Procedure 12(b)(6), Google moves to dismiss plaintiff’s

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class action complaint. Motion to Dismiss (“MTD”), Dkt. No. 20. The court GRANTS in part and

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DENIES in part Google’s motion to dismiss.

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I. FACTUAL AND PROCEDURAL BACKGROUND

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Plaintiff alleges the following:

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Google operates a digital distribution platform known as “Google Play” that permits users to

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browse and download applications developed for the Android operating system. Compl. ¶¶ 2-3.

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Apps, which are often games, are available through Google Play either free-of-charge or for a fee.

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Id. Many of these gaming Apps are designed to allow purchases of what Google refers to as “In-

United States District Court
For the Northern District of California

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App Purchases” or “In-App Content,” i.e., virtual supplies, cash, and content, which are designed to

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be used within the game itself (“Game Currency”). Id. at ¶ 3.

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Prior to the purchase of content from Google Play, a user must establish a Google Play

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account. Compl. ¶ 18. Opening an account requires, among other things, creating a username and

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password, providing certain contact and personal information, and agreeing to Google’s Terms of

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Service (“Terms of Service”). 1 Id. In order to purchase content from Google Play, one typically

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supplies Google with a credit or debit card number or PayPal account through Google’s “Google

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Wallet” function. Id. For each digital purchase, users who specify a credit, debit, or PayPal payment

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will have Google automatically draw funds from the account holder’s specified credit or debit card

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or PayPal account. Id.

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The purchase of an App or any Game Currency is a transaction completed directly between

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Google and the consumer. Compl. ¶ 17. Immediately prior to the purchase of content from Google

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Play, Google requires the account holder to enter her password. Id. at ¶ 19. Once the password is

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entered, the user is permitted to make subsequent purchases through her Google Play account for up

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to 30 minutes without reentering the password. Id.

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In or around February 2012, plaintiff established a Google Play account utilizing her debit
card and placed it on file to make future purchases of Google Play downloads and applications.

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The complaint refers to the Terms of Service as “Terms and Conditions.” See, e.g., Compl. ¶¶ 18,
38.
Case No. 5:14-CV-01070-RMW

-2ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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Compl. ¶10. In February 2014, plaintiff downloaded the App Marvel Run Jump Smash (“Run Jump

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Smash”) onto her Samsung Galaxy Tab 2 10.1. Id. Within 30 minutes of permitting the download,

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one of plaintiff’s minor sons made subsequent In-App Purchases of virtual content without

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plaintiff’s authorization. Id. Plaintiff received an email notification that her Google Play account

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had been charged $65.95 for the purchased virtual content. Id.

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On March 6, 2014, plaintiff filed a class action complaint, individually and on behalf of all

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others similarly situated, seeking monetary, declaratory, and equitable relief under California’s

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contract laws, Consumers Legal Remedies Act, Business and Professions Code § 17200, et seq.,

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and/or for unjust enrichment. Compl. ¶ 5. The complaint asserts claims for: (1) declaratory

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For the Northern District of California

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judgment pursuant to 28 U.S.C. § 2201, et seq.; (2) violation of the California Consumers Legal

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Remedies Act; (3) violation of California’s Unfair Competition Law; (4) unjust

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enrichment/restitution; and (5) breach of the duty of good faith and fair dealing. See Compl. In

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response, Google filed the instant motion to dismiss. See MTD.

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II. ANALYSIS
A. Motions to Dismiss and Leave to Amend
To survive a motion to dismiss pursuant to Rule 12(b)(6), a complaint must make “factual

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allegations [that are sufficient] to raise a right to relief above a speculative level.” Bell Atlantic

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Corp. v. Twombly, 550 U.S. 544, 555 (2007). On a motion to dismiss, a court must take all of the

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factual allegations in a complaint as true, but the court need not accept as true “[t]hreadbare recitals

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of the elements of a cause of action,” or legal conclusions presented as facts. Ashcroft v. Iqbal, 556

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U.S. 662, 678 (2009). A trial court may also dismiss a claim sua sponte under Rule 12(b)(6) if it

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determines a claimant clearly cannot win relief. Omar v. Sea-Land Service, Inc., 813 F.2d 986, 991

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(9th Cir. 1987).

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When an allegation involves fraud pursuant to Rule 9(b), a heightened pleading standard

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applies and a party must state with particularity the circumstances constituting fraud or mistake.

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Fed. R. Civ. P. 9(b). A motion to dismiss a complaint or claim grounded in fraud under Rule 9(b)

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for failure to plead with particularity is the functional equivalent of a motion to dismiss under Rule

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12(b)(6) for failure to state a claim. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 (9th Cir.
Case No. 5:14-CV-01070-RMW

-3ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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2003). “If dismissal is granted under either Rule 12(b)(6) or 9(b), leave to amend should be allowed

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unless the pleading could not possibly be cured by the allegation of other facts.” In re Apple In-App

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Purchase Litig., 855 F. Supp. 2d 1030, 1040 (N.D. Cal. 2012) (citing Lopez v. Smith, 203 F.3d

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1122, 1130 (9th Cir. 2000) and Vess, 317 F.3d at 1108).

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B. Declaratory Judgment

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Plaintiff seeks a declaratory judgment by this court pursuant to 28 U.S.C. § 2201, et seq.
that:
(a) this action may proceed and be maintained as a class action; (b) the
contracts between [d]efendant and the [c]lass members relating to the
purchase of Game Currency are voidable at the option of the respective
[c]lass members on behalf of their minor children; (c) if the [c]lass
members elect to void the contracts, they will be entitled to restitution; (d)
an award of reasonable attorneys’ fees and costs of suit to [p]laintiff and
the [c]lass is appropriate; and (e) such other and further relief as is
necessary and just may be appropriate as well.

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United States District Court
For the Northern District of California

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Compl. ¶ 50. Plaintiff’s declaratory judgment claim rests on plaintiff’s allegations that each

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purchase of Game Currency is a contract between Google and minor children, which parents can

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disaffirm. Google moves to dismiss plaintiff’s declaratory judgment claim on two alternative

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grounds: (1) if the contracts are with plaintiff’s minor child, plaintiff does not have standing to

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disaffirm the contracts; and (2) that the contracts in question are with plaintiff and not plaintiff’s

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minor child.

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1. Standing of Plaintiff to Disaffirm the Contracts of a Minor Child

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Plaintiff alleges California Family Code § 6710 provides that the contract of a minor is

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voidable by disaffirmance by the minor or a parent or guardian on behalf of a minor. Compl. ¶¶ 46-

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49. Google argues that if any contracts were made with plaintiff’s minor child, as plaintiff alleges,

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this claim should be dismissed as a matter of law because plaintiff does not have standing to

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disaffirm the contracts of her minor child as she did not sue on behalf of her minor child. MTD 3-5.

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Plaintiff acknowledges that under California Family Code § 6710, the contract of a minor

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may only be disaffirmed by the minor, but argues that § 6710 only refers to which party in the

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transaction can disaffirm, averring “it would be untenable to require the minors (some younger than

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Case No. 5:14-CV-01070-RMW

-4ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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four years old) to knowingly express disaffirmance.” MTD 6-7 (citing Apple In-App Purchase

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Litig., 855 F. Supp. 2d at 1036 n.4). However, plaintiff is incorrect in both her assumption that

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§ 6710 requires the minor to “knowingly express disaffirmance” and that such a requirement would

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undermine the utility of § 6710. Id. at 7. As Google points out, express disaffirmance by the minor

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himself or herself is not required because a legal representative of the minor may bring the case on

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the minor’s behalf. Google, Inc.’s Reply in Support of MTD (“Reply”), Dkt. No. 24, at 1.
The power to disaffirm a minor’s contract does not extend to the minor’s parents. See I.B. ex

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rel. Fife v. Facebook, Inc., 905 F. Supp. 2d 989, 1004-05 (N.D. Cal. 2012) (dismissing the claims of

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plaintiffs who did not bring their claims on behalf of their minor children). Because plaintiff did not

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United States District Court
For the Northern District of California

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bring suit on behalf of her minor child, she does not have standing to disaffirm any contracts made

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by her minor child.

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2. Contracts between Google and Minor Child

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Plaintiff has sufficiently alleged that each In-App Purchase constituted a contract with her

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minor son. Plaintiff’s theory is that Google made an offer, in the form of all Game Currency Google

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presented for sale. Compl. ¶ 42. Plaintiff’s minor son accepted that offer through his purchase of

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Game Currency from Google. Id. at ¶ 43.

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Google argues that plaintiff’s declaratory judgment claim should be dismissed as a matter of

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law because all purchases made on the plaintiff’s account are governed by the Terms of Service, a

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contract between Google and Plaintiff. MTD 5-6. If, as Google argues, the contract is not with a

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minor, then the contract is not voidable under California Family Code § 6710. Google further

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contends that, as all purchases were “made through [p]laintiff’s device, using [p]laintiff’s Google

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Play account, and were billed to [p]laintiff,” the Terms of Service control, which make plaintiff

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responsible for all transactions on her account. Id. at 5; see also Schmidtlein Decl. Ex. B (Dkt. No.

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20-1), at 2.

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Plaintiff responds that the Terms of Service do not control because the contracts at issue are

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the individual purchases of Game Currency by the minor, not the creation of plaintiff’s Google Play

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account. Plaintiff’s Opposition to MTD (“Opp.”), Dkt. No. 23, at 4. Plaintiff argues that even if the

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Case No. 5:14-CV-01070-RMW

-5ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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Terms of Service do control the contracts, the terms are ambiguous and thus subject to

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interpretation. Id. at 5.

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Under California law, “courts may not dismiss on the pleadings when one party claims that

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extrinsic evidence renders the contract ambiguous. The case must proceed beyond the pleadings so

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that the court may consider the evidence.” A. Kemp Fisheries, Inc. v. Castle & Cooke, Inc., 852 F.2d

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493, 497 n.2 (9th Cir. 1988). However, if “the court decides that the contract is not reasonably

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susceptible to more than one interpretation, the court can reject the assertion of ambiguity.” Skilstaf,

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Inc. v. CVS Caremark Corp., 669 F.3d 1005, 1115 (9th Cir. 2012).

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Plaintiff alleges that the term “authorized” is ambiguous and seeks to introduce extrinsic

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For the Northern District of California

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evidence as to whether the Terms of Service apply to contracts generated from unauthorized use of

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accounts. Id. Google counters that no extrinsic evidence is required to determine that the Terms of

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Service define the contract as between the plaintiff and Google. See Reply 4. Moreover, the term

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“authorized” does not appear in the relevant sections of the Terms of Service, and plaintiff does not

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allege that any other terms in the Terms of Service are ambiguous.

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In sum, plaintiff’s pleading is deficient in two regards. If the alleged contracts at issue are

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between plaintiff’s minor child and Google, then plaintiff does not have standing to void the

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contracts on behalf of her child. She would have to sue in a representative capacity. If the contracts

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are instead between plaintiff and Google, plaintiff has not alleged any terms actually present in the

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Terms of Service which might render the Terms of Service ambiguous or suggest that plaintiff is not

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liable for the allegedly unauthorized purchases by her minor sons. Therefore, the court GRANTS

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Google’s motion to dismiss plaintiff’s declaratory judgment claim, with leave to amend.

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C. CLRA Claim

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Plaintiff alleges Google violated the Consumers Legal Remedies Act (“CLRA”) by

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concealing the ability to use real-world currency to purchase Game Currency in gaming Apps

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labelled as “free,” with the intent of inducing minors to purchase said Game Currency. Compl. ¶ 54.

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In so doing, plaintiff alleges Google has violated: (1) Cal. Civ. Code § 1770(a)(5), by “representing

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that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or

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qualities that they do not have”; (2) Cal. Civ. Code § 1770(a)(7), by “representing that goods or
Case No. 5:14-CV-01070-RMW

-6ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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services are of a particular standard, quality, or grade . . . if they are of another”; and (3) Cal. Civ.

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Code § 1770(a)(14), by “representing that a transaction confers or involves rights, remedies, or

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obligations which it does not have or involve, or which are prohibited by law.” Cal. Civ. Code

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§ 1770 (emphasis added); see also Compl. ¶ 54. Plaintiff further alleges Google had a duty to

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disclose material facts about the Game Currency offered in Apps it “marketed, advertised, and

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promoted to children as ‘free.’” Id. at ¶ 56.

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Google argues plaintiff’s CLRA claim is procedurally defective due to a failure to fulfill the

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heightened pleading requirements of Rule 9(b), which require that “in allegations of fraud or

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mistake, a party must state with particularity the circumstances constituting fraud or mistake” and

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For the Northern District of California

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that “[m]alice, intent, knowledge, and other conditions of a person’s mind may be alleged

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generally.” MTD 11; see also Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009)

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(stating that Rule 9(b) always applies to claims of violation of the CLRA). Plaintiff argues that she

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has sufficiently alleged CLRA claims under Rule 9(b). Opp. 11.

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A duty to disclose arises under the CLRA in four cases: “(1) when the defendant is in a

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fiduciary relationship with the plaintiff; (2) when the defendant has the exclusive knowledge of

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material facts not known to the plaintiff; (3) when the defendant actively conceals a material fact

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from the plaintiff; and (4) when the defendant makes partial representations but also suppresses

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some material fact.” Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1142 (9th Cir. 2012) (quoting

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Falk v. General Motors Corp., 496 F. Supp. 2d 1088, 1095 (N.D. Cal. 2007)). A non-disclosed fact

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is material when the plaintiff can show that, had the fact been disclosed, the plaintiff would have

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been “aware of it and behaved differently.” Id. (quoting Mirkin v. Wasserman, 5 Cal. 4th 1082, 1093

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(1997)).

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Plaintiff has sufficiently alleged that Google had a duty to disclose material facts about the

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Game Currency in the “games it marketed, advertised, and promoted to children as ‘free.’” Compl.

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¶ 56. Plaintiff has further specifically alleged the misrepresentations she was exposed to and the

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resulting harm. Plaintiff pled specific facts that Google “actively advertis[ed], market[ed], and

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promot[ed] certain gaming Apps as ‘free.’” Id. at ¶ 69. Plaintiff has also alleged she was charged

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money after Game Currency was purchased without her authorization. Id. at ¶ 10.
Case No. 5:14-CV-01070-RMW

-7ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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Google argues plaintiff has not sufficiently alleged a claim for relief because “she fails to

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identify a single game that she downloaded that was ‘free.’” MTD 12. In support, Google argues

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Run Jump Smash costs $0.99, attaching a printout of the Google Play page for the App. See

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Schmidtlein Decl. Ex. A (Dkt. No. 20-1). However, as plaintiff correctly points out, a district court

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generally “may not consider any material beyond the pleadings in ruling on a 12(b)(6) motion to

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dismiss for failure to state a claim.” Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001).

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Nonetheless, plaintiff alleges she downloaded Run Jump Smash and “[i]n the 30 minutes

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after [she] permitted the download, a subsequent purchase was made in the Run Jump Smash game

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without her authorization.” Compl. ¶ 10. Plaintiff further alleges she “was given no indication by

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For the Northern District of California

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Google that [she was] approving anything more than a single ninety-nine-cent ($0.99) transaction.”

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Id. at ¶ 26. Because plaintiff did not authorize a purchase after the download, but did authorize a

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$0.99 purchase as part of the transaction, her allegation only makes sense if the purchase of the App

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was for $0.99. Additionally, plaintiff argues her usage of the term “free” was merely for brevity, and

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that a nominal cost, in all cases $0.99, was included in the term. Opp. 12.

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The parties’ dispute over the price of the App notwithstanding, it is clear from the complaint

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as a whole that “free” includes both free and nominally valued App purchases, such as those that

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cost $0.99. See, e.g., Compl. ¶ 1 (“free or moderately priced application”); Id. at ¶ 22 (“free or cost

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a nominal charge”); Id. at ¶ 28 (“free or inexpensive (e.g. $0.99)”). Plaintiff sufficiently alleges that

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she purchased a free or nominally priced App. See id. at ¶ 10 (alleging plaintiff downloaded Run

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Jump Smash); id. at ¶ 26 (alleging plaintiff was given no indication she was approving more than

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$0.99).

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However, plaintiff has failed to sufficiently allege that she relied upon Google’s

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misrepresentation or that she would have behaved differently had she been aware of it. While

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plaintiff alleges she was charged $65.95 without her authorization and that Google gave her no

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indication that she was approving anything more than a $0.99 purchase, she fails to explicitly allege

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that she was unaware of either the 30-minute password duration or the ability to make In-App

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Purchases. Compl. ¶¶ 10, 26.

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Case No. 5:14-CV-01070-RMW

-8ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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Plaintiff has also not sufficiently alleged materiality because she has not alleged that she

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would have acted differently, had she been aware of the ability to make purchases without

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reentering her password. It seems clear from plaintiff’s complaint and opposition to the motion to

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dismiss that plaintiff could allege facts sufficient to show reliance and materiality. Therefore, the

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court GRANTS Google’s motion to dismiss plaintiff’s CLRA claim, with leave to amend.

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D. Unfair Competition Law Claim

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Plaintiff alleges Google violated California’s Unfair Competition Law, Business &

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Professions Code § 17200, et seq. (“UCL”), through “unlawful,” “unfair,” and “fraudulent” business

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acts or practices and “unfair, deceptive or misleading” advertising. Compl. ¶¶ 62-74. The UCL

United States District Court
For the Northern District of California

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“prohibits acts of ‘unfair competition’ defined as: (1) unlawful business acts or practices; (2) unfair

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business acts or practices; (3) fraudulent business acts or practices; and (4) unfair, deceptive or

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misleading advertising.” Apple In-App Purchase Litig., 855 F. Supp. 2d at 1040. Rule 9(b)’s

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heightened pleading requirements apply to UCL “unfair” and “unlawful” business act or practice

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claims which are dependent upon allegations of fraudulent omissions and misrepresentations. Id. at

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1039; see also Kearns., 567 F.3d at 1126-27; In re Facebook PPC Adver. Litig., 2010 WL 3341062,

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at *9 (N.D. Cal. Aug. 25, 2010).

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Here, plaintiff’s “unfair” and “unlawful” business practice claims are dependent upon

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allegations that Google made fraudulent misrepresentations and omissions regarding Google’s free

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and nominally priced Apps, and therefore Rule 9(b)’s pleading requirements apply.

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1. Unlawful Business Acts or Practices

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A business’s violations of law are actionable “unlawful” business acts or practices under the

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UCL. Apple In-App Purchase Litig., 855 F. Supp. 2d at 1040 n. 7 (citing In re Actimmune

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Marketing Litig., 2009 WL 3740648, at *15 (N.D. Cal. Nov. 6, 2009)). To state a claim for unlawful

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business acts or practices under the UCL, “it is not necessary that plaintiffs allege violation of the

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predicate laws with particularity; they must at a minimum, however, identify the statutory or

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regulatory provisions that defendants allegedly violated.” Id. (quoting Actimmune, 2009 WL

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3740648, at *15).

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Case No. 5:14-CV-01070-RMW

-9ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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Plaintiff alleges Google committed an unlawful business act or practice in violation of the

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UCL when Google violated the CLRA. Compl. ¶ 68. Plaintiff does not allege any other statutory

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violation by Google as predicate to a claim for unlawful business acts or practices under the UCL.

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As previously discussed in the analysis of plaintiff’s CLRA claim, plaintiff has not sufficiently

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alleged that Google has committed a CLRA violation. Because plaintiff has not sufficiently

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identified a statutory or regulatory provision that Google allegedly violated, plaintiff has failed to

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state a claim for “unlawful” business acts or practices under the UCL.

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2. Unfair Business Acts or Practices

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Under the UCL, “[a business] act or practice is unfair if the consumer injury is substantial, is

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For the Northern District of California

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not outweighed by any countervailing benefit to consumers or to competition, and is not an injury

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the consumers themselves could reasonably have avoided.” Apple In-App Purchase Litig., 855 F.

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Supp. 2d at 1040 (quoting Tietsworth v. Sears, Roebuck and Co., 2009 WL 3320486, at *7 (N.D.

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Cal. Oct. 13, 2009)). For the purpose of alleging an “unfair” business act or practice, demonstrating

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“aggregate harm on consumers is sufficient to show substantial injury.” F.T.C. v. Inc21.com Corp.,

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688 F. Supp. 2d 927, 939 (N.D. Cal. 2010).

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Plaintiff alleges she and class have suffered substantial harm in the aggregate by incurring

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Google Play charges that they did not explicitly authorize. Compl. ¶¶ 10, 72. Plaintiff also contends

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she could not have reasonably avoided the injury as she “was given no indication by Google that

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[she] was approving anything more than a single ninety-nine cent ($0.99) transaction” and that she

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was deceived by Google’s practices. Id. at ¶¶ 26, 71. However, plaintiff does not allege that the

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harm of Google’s purported unfair business act outweighs any countervailing benefit to consumers

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or to competition. Therefore, plaintiff has failed to sufficiently allege that Google has committed an

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“unfair” business practice or act under the UCL.

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3. Fraudulent Business Acts or Practices

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To state a claim for “fraudulent” business acts or practices under the UCL, “plaintiffs must

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allege with specificity that defendant’s alleged misrepresentations: (1) were relied upon by the

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named plaintiffs; (2) were material; (3) influenced the named plaintiffs’ decision to purchase the

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product; and (4) were likely to deceive members of the public.” Apple In-App Purchase Litig., 855
Case No. 5:14-CV-01070-RMW

- 10 ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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F. Supp. 2d at 1041 (citing Tietsworth, 2009 WL3320486, at *8). The sufficiency of a plaintiff’s

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UCL fraud claim may be analyzed together with the plaintiff’s CLRA claim. Id. (citing Kowalsky v.

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Hewlett-Packard Co., 2011 WL 3501715 (N.D. Cal. Aug. 10, 2011)).

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As discussed above, plaintiff has not pled specific facts to support a claim for violation of

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the CLRA. Plaintiff has alleged that Google’s business acts or practices were likely to deceive the

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public. Compl. ¶¶ 69, 71. However, plaintiff has failed to allege Google’s misrepresentations were

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relied upon by plaintiff, were material, and influenced plaintiff’s decision to purchase the product.

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Therefore, plaintiff has failed to sufficiently allege that Google has committed “fraudulent” business

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acts or practices under the UCL.

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For the Northern District of California

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4. Unfair, Deceptive or Misleading Advertising

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To state a claim for “unfair, deceptive or misleading” advertising under the UCL, “a plaintiff

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need merely allege that members of the public are likely to be deceived by defendants’ conduct.”

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Apple In-App Purchase Litig., 855 F. Supp. 2d at 1040 n. 10 (quoting Actimmune, 2009 WL

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3740648, at *7).

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Plaintiff alleges Google actively advertised, marketed and promoted certain gaming Apps as

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“free” with the intent to lure minors to purchase Game Currency in a manner likely to deceive the

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public. Compl. ¶ 69. Plaintiff alleges Google’s deceptive practices have deceived and/or are likely

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to deceive members of the public. Id. at ¶ 71. Plaintiff has sufficiently alleged that Google has

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committed “unfair, deceptive or misleading” advertising under the UCL.

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In sum, taking all factual allegations in the complaint as true, plaintiff has sufficiently pled a

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claim for “unfair competition” under the UCL through “unfair, deceptive or misleading”

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advertising. Plaintiff has failed to plead claims for “unfair competition” under the UCL through

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allegations of violations of “unlawful,” “unfair,” and “fraudulent” business acts or practices.

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The court GRANTS Google’s motion to dismiss Plaintiff’s UCL claim for violations of

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“unlawful,” “unfair,” and “fraudulent” business acts or practices with leave to amend. The court

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DENIES Google’s motion to dismiss plaintiff’s UCL claim for violations of “unfair, deceptive or

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misleading” advertising.

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Case No. 5:14-CV-01070-RMW

- 11 ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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E. Unjust Enrichment and Restitution

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Plaintiff alleges that Google has been unjustly enriched at the expense of plaintiff and class

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by collecting money Google is not entitled to. Compl. ¶ 79. Plaintiff further alleges that she and the

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class are entitled to recover from Google all amounts wrongfully collected and improperly retained

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by Google, plus interest. Id. at ¶ 80.

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Google argues that the Ninth Circuit has held that “unjust enrichment ‘does not describe a

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theory of recovery’ under California law.” MTD 7 (quoting In re Sony PS3 “Other OS” Litigation,

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551 F. App’x 916, 923 (9th Cir. 2014)). Rather than a theory of recovery, Google argues that unjust

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enrichment is a principle “underlying various legal doctrines and remedies.” Id. (citing Donohue v.

United States District Court
For the Northern District of California

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Apple, Inc., 871 F. Supp. 2d 913, 932 (N.D. Cal. 2012)).
Plaintiff argues in response that recent Ninth Circuit precedent runs contrary to Google’s

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argument. Opp. 7. The most recent Ninth Circuit decision on the subject incorporates unjust

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enrichment as an independent claim. See Berger v. Home Depot USA, Inc., 741 F.3d 1061, 1070

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(9th Cir. 2014) (providing the elements of unjust enrichment as the “receipt of a benefit and unjust

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retention of the benefit at the expense of another”) (quoting Lectrodryer v. SeoulBank, 77 Cal. App.

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4th 723, 726 (Cal. Ct. App. 2000); see also Apple In-App Purchase Litig., 855 F. Supp. 2d at 1042

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(permitting a claim for unjust enrichment under similar circumstances); Ellsworth v. U.S. Bank,

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N.A., 908 F. Supp. 2d 1063, 1088 (N.D. Cal. 2012) (holding plaintiff could proceed with unjust

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enrichment claim at the motion to dismiss stage).

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Google’s argument that the court should ignore Berger is unpersuasive. Reply 7. While

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Google is correct that the issue in that case was class certification, the Ninth Circuit first discussed

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unjust enrichment as a claim before determining that the plaintiff’s claim for unjust enrichment was

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not susceptible to class treatment in that specific case. Berger, 741 F.3d at 1070. Other recent cases

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also point to unjust enrichment as a cause of action in California. See Gabriel v. Alaska Elec.

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Pension Fund, No. 12-35458, 2014 WL 2535469, at *8 (9th Cir. June 6, 2014) (noting that “the

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remedy of surcharge is available against the fiduciary ‘for benefits it gained through unjust

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enrichment’” (quoting Skinner v. Northrop Grumman Retirement Plan B, 673 F.3d 1162, 1167 (9th

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Cir. 2012)) ; E.J. Franks Construction, Inc. v. Sohota, F066327, 2014 WL 2526978, at *1 (Cal. Ct.
Case No. 5:14-CV-01070-RMW

- 12 ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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App. June 5, 2014) (allowing plaintiff to bring unjust enrichment claims to trial); People v. Sarpas,

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255 Cal. Rptr. 3d 25, 47 (2014) (holding “plaintiffs had ‘stated a valid cause of action for unjust

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enrichment’” (quoting Hirsch v. Bank of America, 107 Cal. App. 4th 708, 722 (2003)).

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Google’s suggestion that the court follow an unpublished, non-precedential report is

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similarly unpersuasive. Even permitting that Berger did not expressly hold that California law

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recognizes an unjust enrichment cause of action, the factually analogous In re Apple In-App

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Purchase Litigation allowed the plaintiffs to proceed with an unjust enrichment claim at the motion

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to dismiss stage. Apple In-App Purchase Litig., 855 F. Supp. 2d at 1042. Therefore, the court

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DENIES Google’s motion to dismiss plaintiff’s claim for unjust enrichment.

United States District Court
For the Northern District of California

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F. Breach of Duty of Good Faith and Fair Dealing

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Plaintiff alleges Google breached its contractual duty of good faith and fair dealing with

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plaintiff and class. Compl. ¶¶ 82-89. Plaintiff specifically alleges Google engaged in conduct apart

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from its agreement 2 with plaintiff and class, without good faith, “for the purpose of depriving

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plaintiff and . . . class of rights and benefits under the contract, to wit, a sales transaction for an item

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the consumer intended to purchase.” Id. at ¶¶ 85, 87 (emphasis in original). Google argues

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plaintiff’s claim fails as a matter of law because under California law the implied covenant cannot

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be used to negate an express term of the parties’ contract to which plaintiff agreed. MTD 9-10.

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Google also argues plaintiff’s claim fails because the implied covenant cannot be used to impose

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additional terms and duties to a contract – i.e. imposing that a consumer’s “inten[t] to purchase” is a

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condition precedent to engaging in an enforceable sales transaction with Google. Id. at 10-11

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Every contract in the state of California contains an implied covenant of good faith and fair

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dealing that neither party will injure the right of the other party to receive the benefits of the

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agreement. Apple In-App Purchase Litig., 855 F. Supp. 2d at 1041 (citing Wolf v. Walt Disney

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Pictures & Tel., 162 Cal. App. 4th 1107, 1120 (2008)). The covenant is implied in every contract in

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order to protect the express covenants or promises of the contract. Id. at 1041-42 (citing Carma

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Developers (Cal.), Inc. v. Marathon Development California, Inc., 2 Cal. 4th 342, 373 (1992)). The

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“Agreement” refers to the Terms of Service to which each member of the class agreed when they
opened a Google Play account.
Case No. 5:14-CV-01070-RMW

- 13 ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

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covenant will not be implied “to prohibit a party from doing that which is expressly permitted by the

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agreement itself.” Id. at 1042 (citing Carma, 2 Cal. 4th at 373). The implied covenant “cannot

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impose substantive duties or limits on the contracting parties beyond those incorporated in the

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specific terms of their agreement.” Appling v. State Farm Mut. Auto. Ins. Co., 340 F.3d 769, 779

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(9th Cir. 2003) (quoting Guz v. Bechtel Nat. Inc., 24 Cal. 4th 317, 350 (2000)). “To establish a claim

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for breach of the implied covenant of good faith and fair dealing, [p]laintiffs must show that

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[defendant] lacked subjective good faith in the validity of its act or the act was intended to and did

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frustrate the common purpose of the agreement.” Apple In-App Purchase Litig., 855 F. Supp. 2d at

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1042 (citing Carma, 2 Cal. 4th at 373).

United States District Court
For the Northern District of California

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Here, Google’s Terms of Service signed by plaintiff and class expressly provides that

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signees are “responsible for the activity that happens on or through [their] Google account[s].”

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Schmidtlein Decl. Ex. B (Dkt. No. 20-1) at 2. This express provision agreed to by plaintiff and class

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entitles Google to bill plaintiff and class’s Google Play accounts for charges incurred through such

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activity regardless of their intent. However, plaintiff has alleged that Google encouraged children to

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make In-App Purchases, without providing notice to the parent or guardian of the 30-minute

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window in which the account holder’s password is not required to make subsequent purchases.

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Compl. ¶ 29. Such acts may frustrate the common purpose of the agreement by forcing parents to

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pay for purchases that Google induced parents’ minor children to make.

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Therefore, plaintiff has sufficiently pled facts which would demonstrate how Google

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breached the duty of good faith and fair dealing. Accordingly, the court DENIES Google’s motion

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to dismiss plaintiff’s claim for breach of the implied covenant of good faith and dealing.

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III. ORDER

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For the reasons explained above, the court orders as follows with respect to each of the

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claims at issue:
•

Declaratory Judgment: Dismissed with 30 days leave to amend.

•

CLRA: Dismissed with 30 days leave to amend.

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Case No. 5:14-CV-01070-RMW

- 14 ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS

1

•

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UCL
o
o
o
o

Unlawful business practices or act: dismissed with 30 days leave to amend.
Unfair business practices or act: dismissed with 30 days leave to amend.
Fraudulent business acts: dismissed with 30 days leave to amend.
Unfair, deceptive or misleading advertising: not dismissed.

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•

Unjust Enrichment and Restitution: Not dismissed.

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•

Breach of Good Faith and Fair Dealing: Not dismissed.

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Dated: July 21, 2014
_________________________________
Ronald M. Whyte
United States District Judge

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United States District Court
For the Northern District of California

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Case No. 5:14-CV-01070-RMW

- 15 ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT GOOGLE, INC.’S MOTION TO
DISMISS