Moeller et al v. American Media, Inc. et al
Filing
23
MEMORANDUM OPINION and ORDER Denying 8 MOTION to Dismiss - Signed by District Judge Judith E. Levy. (FMos)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
Elizabeth Moeller, et al.,
Plaintiffs,
v.
Case No. 16-cv-11367
Judith E. Levy
United States District Judge
American Media, Inc., et al.,
Mag. Judge Elizabeth A. Stafford
Defendants.
________________________________/
OPINION AND ORDER DENYING DEFENDANTS’ MOTION TO
DISMISS [8]
Before the Court is defendants’ motion to dismiss. (Dkt. 8.) For the
reasons set forth below, defendants’ motion is denied.
I. Background
Plaintiffs Elizabeth Moeller and Nicole Brisson are Michigan citizens
who subscribe to magazines published by defendants American Media, Inc.
and Odyssey Magazine Publishing Group, Inc. (Dkt. 1 at 10-12.)
Defendants, as magazine publishers, maintain a database of their
subscribers and the magazines to which they subscribe.
(Id. at 2.)
Plaintiffs refer to such information as their personal-reading information.
(Id.) Plaintiffs claim that defendants unlawfully disclosed their personalreading information to third-parties in two ways. First, plaintiffs allege
that defendants shared the information with “data-mining companies.”
(Id.)
Data-mining companies add information they may have about a
particular subscriber—including age, gender, ethnicity, income level,
etc.—to defendants’ records.
(Id.)
The data miners’ additions to
defendants’ records increase the “street value” of the personal-reading
information when defendants, in turn, sell subscribers’ information to
third parties. (Id.) Second, plaintiffs allege that defendants participated
in “database cooperatives,” through which defendants traded subscribers’
information with other publishers. (Id. at 9.)
Thus, defendants allegedly profited from the unlawful disclosure of
plaintiffs’ personal-reading information, and plaintiffs claim that these
disclosures made their subscriptions less valuable. (Id. at 12.) Plaintiffs
did not consent to the disclosure of their information, nor have defendants
provided plaintiffs notice of their practices. (Id. at 10.)
Plaintiffs claim the disclosure of their personal-reading information
violates the Michigan Personal Privacy Protection Act. (Id. at 12, 14.)
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Plaintiffs also claim that any revenue derived from selling subscribers’
personal information unjustly enriched defendants. (Id. at 23.)
The Michigan Personal Privacy Protection Act (“PPPA”) prohibits
individuals “engaged in the business of selling at retail, renting, or lending
books or other written materials” from “[disclosing] to any person, other
than the customer, a record or information concerning the purchase . . . of
materials by a customer that indicates the identity of the customer.”
MICH. COMP. LAWS § 445.1712. Further, the original PPPA provided that a
customer whose information was disclosed could recover “actual damages,
including damages for emotional distress, or $5,000, whichever is greater.”
Mich. Pub. Acts 1988, No. 378, § 5, eff. Nov. 7, 1989 (amended 2016).
In 2016, the Michigan legislature amended the PPPA. MICH. COMP.
LAWS § 445.1711 et seq.) (“Am. PPPA”). The amendment excluded from
liability “disclosure[s] incident to the ordinary course of business.” Am.
PPPA § 3(d). The legislature clarified that the new exception “only applies
to a record or information that is created or obtained after the effective
date of the amendatory act.” Id. The legislature also amended section five
of the PPPA, which governs the remedies available under the act. Section
five originally stated that a customer “identified in a record or other
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information disclosed in violation” of the PPPA could sue to recover
“[a]ctual damages, including damages for emotional distress, or $5000,
whichever is greater.” Am. PPPA § 5. The amendment stated that only a
customer “who suffers actual damages as a result of a violation of this act
may bring a civil action” and removed the statutory-damages provision.
Id. And the legislature included an enacting section which states, “[t]his
amendatory act is curative and intended to clarify” provisions of the
original statute. Am. PPPA, enacting § 2.
Plaintiffs filed this suit in April 2016, and the amended statute went
into effect on July 31, 2016. Id.
Defendants move to dismiss plaintiffs’ PPPA claims on two grounds.
First, defendants argue that plaintiffs do not have standing because they
have not suffered an injury-in-fact. Second, defendants argue that the
recent amendment of the PPPA precludes plaintiffs’ claims. Defendants
also move to dismiss plaintiffs’ unjust enrichment claims.
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II. Standard of Review
Defendants bring their motion to dismiss under both Rule 12(b)(1)
for lack of subject-matter jurisdiction and Rule 12(b)(6) for failure to state
a claim.
When subject-matter jurisdiction is challenged under Rule 12(b)(1),
the plaintiff has the burden to prove jurisdiction.
Moir v. Greater
Cleveland Reg’l Transit Auth., 895 F.2d 266, 269 (6th Cir. 1990).
Rule
12(b)(1) challenges to a court’s subject-matter jurisdiction may be either
facial or factual. Ohio Nat. Life Ins. Co. v. United States, 922 F.2d 320,
325 (6th Cir. 1990).
A facial attack “questions the sufficiency of the
pleading,” whereas a factual attack challenges the veracity of the facts on
which subject-matter jurisdiction is predicated. Id. When reviewing a
facial challenge, the Court “takes the allegations in the complaint as true.”
Id. But when reviewing a factual challenge “no presumptive truthfulness
applies to the factual allegations.” Id.
When deciding a motion to dismiss under Fed. R. Civ. P. 12(b)(6),
the Court must “construe the complaint in the light most favorable to the
plaintiff and accept all allegations as true.” Keys v. Humana, Inc., 684
F.3d 605, 608 (6th Cir. 2012). “To survive a motion to dismiss, a complaint
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must contain sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009). A plausible claim need not contain “detailed factual allegations,”
but it must contain more than “labels and conclusions” or “a formulaic
recitation of the elements of a cause of action.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007).
III. Analysis
A. Standing
Defendants bring a facial challenge to plaintiffs’ standing under
Fed. R. Civ. P. 12(b)(1). (Dkt. 8 at 23.) Thus, the Court “will take the
allegations in the complaint as true.” Ohio Nat. Life Ins. Co., 922 F.2d
at 325.
“[A] plaintiff must possess both constitutional and statutory
standing in order for a federal court to have jurisdiction.” Loren v. Blue
Cross & Blue Shield of Mich., 505 F.3d 598, 606 (6th Cir. 2007).
Constitutional standing requires that a plaintiff: (1) suffer an “injury in
fact”; (2) that is “fairly . . . trace[able] to the challenged action of the
defendant”; and (3) that a favorable decision is likely to redress. Lujan
v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
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Defendants argue that plaintiffs lack standing to pursue claims for
violations of the PPPA because they did not suffer an injury-in-fact. To
establish an injury-in-fact, plaintiffs must plead facts showing that they
suffered an “invasion of a legally protected interest” that is “concrete and
particularized” and “actual or imminent,” not “conjectural or hypothetical.”
Id. at 560. A plaintiff does not “automatically satisfy the injury-in-fact
requirement whenever a statute grants a person a statutory right and
purports to authorize that person to sue to vindicate that right.” Spokeo,
Inc. v. Robins, __ U.S. __, 136 S. Ct. 1540, 1549 (2016). Thus, plaintiffs
must allege “a concrete injury even in the context of a statutory violation.”
Id. “Concrete is not, however, necessarily synonymous with tangible . . .
intangible injuries can nevertheless be concrete.” Id.
To evaluate whether intangible harms are sufficiently concrete for
Article III purposes, courts consider:
(1) whether the harm has been
“traditionally regarded as providing a basis for a lawsuit in English or
American courts”; and (2) the judgment of the legislature because it “has
the power to define injuries and articulate chains of causation that will
give rise to a case or controversy where none existed before.” Id. But a
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“bare procedural violation” of a statute does not itself satisfy the injury-infact requirement of Article III. Id. at 1550.
Here, defendants argue that plaintiffs’ claims amount to a “bare
procedural violation” of the PPPA because plaintiffs have not identified a
concrete harm resulting from defendants’ unlawful disclosure of their
personal-reading information.
(Dkt. 8 at 22.)
Defendants argue that
Spokeo is dispositive. Id. Although defendants correctly read Spokeo to
hold that violation of a statute alone does not automatically establish a
concrete injury, Spokeo does not foreclose standing here.
In the complaint, plaintiffs allege that defendants violated their
privacy rights by disclosing personal-reading information to data-mining
companies and third-party database cooperatives.
(Dkt. 1 at 11.)
Plaintiffs also claim that their subscriptions without privacy protections
are “substantially less valuable” than subscriptions with privacy
protections. (Id. at 12.) Plaintiffs’ alleged injuries are concrete, as set
forth below.
Subscribers’ right to privacy in their personal-reading information is
grounded in an interest “traditionally regarded as providing a basis for a
lawsuit in English or American courts.”
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Spokeo, 136 S. Ct. at 1549.
Indeed, “the common law ha[s] long recognized a right to personal privacy,
and both the common law and the literal understandings of privacy
encompass the individual’s control of information concerning his or her
person.” Hillson v. Kelly Servs. Inc., No. 15-CV-10803, 2017 WL 279814,
at *4 (E.D. Mich. Jan. 23, 2017).
Here, the Michigan Legislature
recognized subscribers’ right to privacy in their personal-reading
information, and through the enactment of the PPPA, “define[d] the
injury” and “articulate[d] the chain of causation that gives rise to the
injury.”
Spokeo, 136 S. Ct. at 1549.
Thus, although an invasion of
plaintiffs’ privacy in violation of the PPPA may be “intangible,” it is
sufficiently concrete. See In re Nickelodeon Consumer Privacy Litig., 827
F.3d 262, 274 (3d Cir. 2016) (holding that harm resulting from disclosure
of personal information is “concrete in the sense that it involves a clear de
facto injury, i.e., the unlawful disclosure of legally protected information.”)
And because the alleged violation of the Michigan PPPA here
implicates plaintiffs’ “concrete interest” in the nondisclosure of their
personal information without their permission, they have adequately pled
a concrete injury-in-fact. Lujan, 504 U.S. at 572.
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Moreover, plaintiffs allege that the disclosure of their protected
information “deprived [them] of the full value of their paid-for
subscriptions.” (Dkt. 1 at 20.) Taking plaintiffs’ allegations as true at this
stage, the economic harm caused by the disclosure of their personal
information bolsters their claim of concrete injury. See Boelter v. Hearst
Commc’ns, Inc., 192 F. Supp. 3d 427 (S.D.N.Y. 2016) (same).
Accordingly, plaintiffs have standing.
B. Retroactivity of the PPPA Amendments
Defendants argue that the 2016 PPPA amendment is retroactive and
thus forecloses plaintiffs’ claims under the act.
(Dkt. 8 at 25.)
The
amendment, in pertinent part, requires that plaintiffs “suffer [] actual
damages as a result of a violation of this act” in order to bring a claim.
Am. PPPA § 5(2). Prior to the 2016 amendment, courts consistently held
that a violation of the PPPA alone was sufficient to provide a cause of
action. See Kinder v. Meredith Corp., No. 14-CV-11284, 2014 WL 4209575,
at *3 (E.D. Mich. 2014).
To determine whether a Michigan statute should be applied
retroactively, the Court must apply Michigan law. In re Oswalt, 444 F.3d
524, 528 (6th Cir. 2006) (applying Michigan law to determine whether a
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Michigan statute operates retroactively). And “[i]n Michigan, the question
of whether a statute should be applied retroactively or only prospectively
is a question of legislative intent."
Kia Motors Am., Inc. v. Glassman
Oldsmobile Saab Hyundai, Inc., 706 F.3d 733, 739 (6th Cir. 2013.)
Under Michigan law, “statutes are presumed to operate prospectively
unless the contrary intent is clearly manifested.” Frank W. Lynch & Co. v.
Flex Techs., Inc., 463 Mich. 578, 583 (2001); see Lafontaine Saline, Inc. v.
Chrysler Group, LLC, 496 Mich. 26, 38 (2014). The “context of the statute
itself” may demonstrate the requisite “clear, direct, and unequivocal
intent” that a statute apply retroactively. Davis v. State Emps.’ Ret. Bd.,
272 Mich. App. 151 (2006). “The Michigan Supreme Court has repeatedly
observed that the Michigan Legislature ‘knows how to make clear its
intention that a statute apply retroactively,’ so the absence of express
retroactive language is a strong indication that the Legislature did not
intend a statute to apply retroactively.” Kia Motors Am., Inc., 706 F.3d at
739 (quoting Brewer v. A. D. Trans. Express, Inc., 486 Mich. 50 (2010)).
The amendment to the PPPA nowhere contains express retroactivity
language.
Compare MICH. COMP. LAWS § 141.1157 (“This act shall be
applied retroactively . . .” ).
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Defendants nevertheless argue that the Michigan legislature
manifested its clear intent that the PPPA amendment apply retroactively.
(Dkt. 8 at 25.) Defendants rely primarily on the enacting section, which
provides that “the amendatory act is curative and intended to clarify . . .
that a civil action for a violation of [the act] may only be brought by a
customer who has suffered actual damages as a result of the violation.”
Am. PPPA, enacting § 2.
But the legislature’s statement that the
amendment is “curative” and “intended to clarify,” does not “clearly
indicate” retroactivity. It is just as likely that the legislature sought to
affect the future application of the PPPA as it is that the legislature
sought to alter the rights of those whose personal-reading information had
already been disclosed in violation of the existing PPPA.
Moreover, in cases where Michigan courts have retroactively applied
statutes containing “curative” or “intended to clarify” language, the
statutes have contained additional language—not present here—that more
clearly manifests legislative intent that the statute apply retroactively.
For example, in Doe v. Department of Corrections, the court found
sufficient legislative intent in the enacting language: “this amendatory act
is curative and intended to correct any misinterpretation of legislative
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intent in [an earlier case]. This legislation further expresses the original
intent of the legislature.” 641 N.W.2d 269, 273 (Mich. Ct. App. 2001).
Although the Doe court found that the legislature’s use of “curative” may
suggest retroactivity, the court placed the most interpretive weight on the
amendment’s statement that it expressed the legislature’s “original
intent.” Id. at 61. The enacting language here does not contain similar or
analogous language to that in Doe.
And in Daimler Chrysler, a statute was held to apply retroactively
because the enacting statement stated that “[t]his amendatory act is
curative and shall be retroactively applied, expressing the original intent
of the legislature.” Daimler Chrysler Servs. of N. Am., LLC v. Dep’t of
Treasury, No. 288347, 2010 WL 199575, at *2 n.1 (Mich. Ct. App. Jan 21,
2010). As in Doe, the statement of original intent is sufficient to clearly
indicate retroactivity, but the PPPA amendment’s enacting section
contains no such language.
Defendants argue that the legislature enacted the PPPA amendment
to remedy judicial interpretations of the act with which the legislature
disagreed.
But the legislature knows how to expressly correct judicial
interpretations, and it has not done so here. See, e.g., Romein v. Gen.
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Motors Corp., 425 N.W.2d 174, 176 (Mich. Ct. App. 1988) (amendment
stated that the purpose of the act was to correct an “erroneously rendered”
Michigan Supreme Court decision interpreting the statute.)
The absence of express language or clear contextual indications of
retroactivity makes clear that the intent of the Michigan legislature here
is—at best—ambiguous. Thus, the legislature has not “clearly manifested”
its intent that the statute apply retroactively. Frank W. Lynch & Co, 463
Mich. at 578.
The presumption against retroactivity does not apply to “statutes
which operate in furtherance of a remedy or mode of procedure and which
neither create new rights nor destroy, enlarge, or diminish existing
rights.”
Id. at 584.
Defendants argue that the amendment here is
remedial and does not affect existing rights. (Dkt. 8 at 31.) But Michigan
courts have been clear that a statute cannot be considered remedial if it
“affect[s] substantive rights.” Id. at 585. Here, the PPPA amendment
affects substantive rights, because it “alter[s] the scope of those rights and
the recourse available should the rights be violated.” Boelter, 2016 WL
3369541, at *6. Thus, the amendment is not remedial, and defendants
have not defeated the presumption of prospective application.
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For these reasons, the 2016 PPPA amendment does not operate
retroactively, and the Court need not address whether plaintiffs’ claims
survive the amended PPPA.
C. Unjust Enrichment
Defendants move to dismiss plaintiffs’ unjust enrichment claims on
two grounds. First, defendants argue that plaintiffs have failed to state a
claim under Michigan law for unjust enrichment “because they lost
nothing of value.” (Dkt. 8 at 34.) Second, defendants argue that the PPPA
preempts the common-law remedy for unjust enrichment. (Id. at 35.)
Under Michigan law, a claim for unjust enrichment requires the
plaintiff “to establish (1) the receipt of a benefit by the other party from
the complaining party and (2) an inequity resulting to the complaining
party because of the retention of the benefit by the other party.” Karaus v.
Bank of N.Y. Mellon, 300 Mich. App. 9, 22 (2012).
Plaintiffs have sufficiently pled an unjust enrichment claim because
they allege that defendants’ unlawful disclosure of their personal
information rendered their subscriptions less valuable.
Moreover,
plaintiffs allege that defendants have made a profit by selling subscribers’
information and have retained the revenue from their unlawful
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disclosures. (Dkt. 1 at 23.) Thus, plaintiffs have sufficiently pled a claim
for unjust enrichment under Michigan law. See Halaburda v. Bauer Pub.
Co., LP, No. 12-CV-12831, 2013 WL 4012827, at *8 (E.D. Mich. Aug. 6,
2013) (same).
Moreover, courts in this district and elsewhere have found
indistinguishable unjust enrichment claims under Michigan law to survive
motions to dismiss for failure to state a claim. See, e.g., Boelter v. Advance
Magazine Publishers Inc., No. 15 CIV. 5671 (NRB), 2016 WL 5478468, at
*18 (S.D.N.Y. Sept. 28, 2016); Boelter, 2016 WL 336941 at *15; Kinder v.
Meredith Corp., No. 14-CV-11284, 2014 WL 4209575, at *7 (E.D. Mich.
Aug. 26, 2014); Halaburda, 2013 WL 4012827, at *8.
Finally, defendants argue that plaintiffs’ unjust enrichment
claims are preempted by the PPPA because it provides the exclusive
remedy for the disclosure of plaintiffs’ personal information. (Dkt. 8 at
35.) “Whether or not a statutory scheme preempts the common law on
a subject is a matter of legislative intent.” Millross v. Plum Hollow Golf
Club, 429 Mich. 178, 183 (1987). Michigan courts have found legislative
intent to preempt common law claims when the statute expressly says
so.
See Hoerstman Gen. Contracting, Inc. v. Han, 474 Mich. 66, 74
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(2006) (holding that when the legislature intends abrogate the common
law, it “should speak in no uncertain terms”). Here, although the PPPA
provides for damages for violation of the statute, it does not expressly
preclude common-law remedies.
Defendants point out that under Michigan law, “if a statute gives
new rights and prescribes new remedies . . . a party seeking a remedy
under the act is confined to . . . that [remedy] only.” Dep’t of Agric. v.
Appletree Mktg., LLC., 485 Mich. 1, 7 (2010). But the court in Appletree
held that the Michigan legislature did not displace parallel common law
claims because the statute “did not contain an exclusive remedy
provision.” Id. The PPPA does not have such a provision. Because the
PPPA does not expressly displace common-law remedies, it does not
preempt plaintiffs’ well-pled unjust enrichment claim here.
Accordingly, plaintiffs have sufficiently pleaded a claim for unjust
enrichment.
IV. Conclusion
For the reasons set forth in this opinion, defendants’ motion to
dismiss (Dkt. 8) is DENIED.
IT IS SO ORDERED.
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Dated: January 27, 2017
Ann Arbor, Michigan
s/Judith E. Levy
JUDITH E. LEVY
United States District Judge
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served
upon counsel of record and any unrepresented parties via the Court’s
ECF System to their respective email or First Class U.S. mail addresses
disclosed on the Notice of Electronic Filing on January 27, 2017.
s/Felicia M. Moses
FELICIA M. MOSES
Case Manager
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