Roberts v. Weight Watchers International, Inc.
Filing
37
OPINION AND ORDER re: 27 MOTION to Dismiss Amended Complaint. filed by Weight Watchers International, Inc. The Court has considered all of the arguments raised by the parties. To the extent not specifically addressed, the arguments a re either moot or without merit. For the foregoing reasons, the defendant's motion to dismiss is granted and the Amended Complaint is dismissed with prejudice. The Clerk is directed to enter judgment dismissing this action and closing the case. The Clerk is also directed to close all pending motions. (As further set forth in this Order.) (Signed by Judge John G. Koeltl on 11/12/2016) (cf)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
────────────────────────────────────
RAYMOND M. ROBERTS, INDIVIDUALLY AND
ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED,
Plaintiff,
16-cv-913 (JGK)
OPINION AND ORDER
- against –
WEIGHT WATCHERS INTERNATIONAL, INC.,
Defendant.
────────────────────────────────────
JOHN G. KOELTL, District Judge:
This dispute arises out of the allegedly shoddy online
website and mobile phone application that the defendant, Weight
Watchers International, Inc., provided its paying subscribers as
part of its fee-based subscription service, “OnlinePlus.” The
plaintiff, Raymond M. Roberts, brings this purported class
action for breach of contract on behalf of himself and all
others who subscribed to OnlinePlus from November 26, 2015
through the present.1 The defendant has moved to dismiss the
claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure.
The plaintiff initially brought this action in the Supreme
Court of the State of New York, New York County. The defendant
1
While the Amended Complaint alleged that the defendant violated
New York General Business Law § 349, the plaintiff in his papers
has abandoned that claim. See Dkt. 30 at 5 n.1.
1
subsequently removed the action to this Court pursuant to 28
U.S.C. §§ 1332(d)(2), 1441, 1446, and 1453.
For following reasons, the defendant’s motion to dismiss is
granted and the Amended Complaint is dismissed with prejudice.
I.
In deciding a motion to dismiss pursuant to Rule 12(b)(6),
the allegations in the complaint are accepted as true, and all
reasonable inferences must be drawn in the plaintiff’s favor.
McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir.
2007). The Court’s function on a motion to dismiss is “not to
weigh the evidence that might be presented at a trial but merely
to determine whether the complaint itself is legally
sufficient.” Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir.
1985). The Court should not dismiss the complaint if the
plaintiff has stated “enough facts to state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009).
While the Court should construe the factual allegations in
the light most favorable to the plaintiff, “the tenet that a
court must accept as true all of the allegations contained in
2
the complaint is inapplicable to legal conclusions.” Id.; see
also Springer v. U.S. Bank Nat’l Ass’n, No. 15-cv-1107 (JGK),
2015 WL 9462083, at *1 (S.D.N.Y. Dec. 23, 2015). When presented
with a motion to dismiss pursuant to Rule 12(b)(6), the Court
may consider documents that are referenced in the complaint,
documents that the plaintiff relied on in bringing suit and that
are either in the plaintiff’s possession or that the plaintiff
knew of when bringing suit, or matters of which judicial notice
may be taken. Chambers v. Time Warner, Inc., 282 F.3d 147, 153
(2d Cir. 2002); see also Springer, 2015 WL 9462083, at *1.
II.
The allegations in the Amended Complaint are accepted as
true for the purposes of this motion to dismiss.
The defendant is a leading provider of weight management
services. Am. Compl. ¶ 3. The defendant offers, among other
things, the fee-based OnlinePlus subscription service that is
designed to help any subscriber manage the subscriber’s weight.
Am. Compl. ¶ 1. As part of the OnlinePlus subscription, paying
subscribers gain access to an online website and the Weight
Watchers Mobile App (the “Mobile App”), both of which purport to
offer a bevy of features to facilitate weight management,
including the ability to “chat” with a “Weight Watchers Coach”
at any time for “motivation and advice,” and online data storage
3
that enables users to track recipes, food intake, and physical
activity. Am. Compl. ¶¶ 1, 8.
Subscribers to the defendant’s “Fee-Based Products,” which
includes OnlinePlus, must agree to the Terms and Conditions set
forth in a 25-page subscription agreement (the “Subscription
Agreement”) that was operative throughout the proposed class
period. Subscription Agreement (available at Dkt. 29-1) at 1;
see also Subscription Agreement §§ 1-2; Am. Compl. ¶ 7. The
Subscription Agreement granted a subscriber the “right to
access, use and display” OnlinePlus, including through the
website and Mobile App.2 Subscription Agreement § 2; see also Am.
Compl. ¶¶ 1, 8.
The Subscription Agreement provided for the broad
disclaimer of any warranties and representations related to the
2
The parties agree that the Subscription Agreement constitutes a
valid contract and governs this dispute. The Subscription
Agreement defined the term “Fee-Based Products” as any “feebased products or offerings including OnlinePlus and Personal
Coaching.” Subscription Agreement at 1. The Subscription
Agreement defined the term “Website” to include all websites
that the defendant and its related entities “owned or operated.”
Subscription Agreement § 1. The defendant presumes that
“Website” as used in the Subscription Agreement included any
access, use and display of OnlinePlus regardless of whether
OnlinePlus was accessed, used or displayed through its website
or Mobile App, and the plaintiff accepts that construction.
Regardless, a less expansive construction of “Website” that
excluded access, use and display of OnlinePlus through the
Mobile App would not change the outcome of this case because the
term “Fee-Based Products” clearly included all of OnlinePlus’s
component features, including its website and Mobile App.
4
use of OnlinePlus in the section entitled “Disclaimers of
Warranties”:
THE
PRODUCTS,
OFFERINGS,
CONTENT
AND
MATERIALS
(INCLUDING,
WITHOUT
LIMITATION,
THE
FEE-BASED
PRODUCTS) ON THIS WEBSITE ARE PROVIDED “AS IS” AND
WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED. WE DISCLAIM ALL WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING BUT NOT LIMITED TO . . . FITNESS
FOR A PARTICULAR PURPOSE [and] COMPAT[I]BILITY . . . .
NEITHER [the defendant or any related entities]
WARRANT THAT THIS WEBSITE OR ANY FUNCTION CONTAINED IN
THIS WEBSITE WILL BE UNINTERRUPTED OR ERROR-FREE, [or]
THAT DEFECTS WILL BE CORRECTED . . . . YOU WILL BE
SOLELY RESPONSIBLE FOR ANY DAMAGE TO YOUR COMPUTER
SYSTEM OR LOSS OF DATA THAT RESULTS FROM THE DOWNLOAD
OF ANY SUCH PRODUCT, OFFERING, CONTENT OR MATERIAL
(INCLUDING,
WITHOUT
LIMITATION,
THE
FEEBASED
PRODUCTS). NEITHER [the defendant or any related
entities]
WARRANT
OR
MAKE
ANY
REPRESENTATIONS
REGARDING THE USE OR THE RESULTS OF THE USE OF THE
PRODUCTS, OFFERINGS, CONTENT AND MATERIALS (INCLUDING,
WITHOUT LIMITATION, THE FEE-BASED PRODUCTS) IN THIS
WEBSITE IN TERMS OF THEIR . . . RELIABILITY, OR
OTHERWISE. Subscription Agreement § 17 (emphasis in
original).
In addition, the Subscription Agreement limited a
subscriber’s recourse against the defendant, providing that a
subscriber’s “only right with respect to any dissatisfaction
with any modification or discontinuation of service made by us
pursuant to this provision or this Agreement, or any policies or
practices by us in providing this Website or our Fee-Based
Products, . . . is to cancel or terminate your subscription or
registered user account . . . .” Subscription Agreement § 2
(emphasis added). The Subscription Agreement reiterated the
5
point several times. In the section entitled “Cancellation of
Subscription,” the Subscription Agreement provided:
You understand and agree that the cancellation or
termination of your subscription is your sole right
and remedy with respect to any dispute with us
including, without limitation, any dispute related to,
or arising out of: . . . (iii) the content available
through this Website or any change in content provided
through the Website or on or through a Fee-Based
Product; [or] (iv) your ability to access and/or use
our Website or any Fee-Based Product . . . .
Subscription Agreement § 4 (emphasis added).
Likewise, the section entitled “Limitation of Liability”
provided:
YOU EXPRESSLY UNDERSTAND AND AGREE THAT WE AND OUR
AFFILIATES SHALL NOT BE LIABLE FOR ANY DIRECT,
INDIRECT,
INCIDENTAL,
SPECIAL,
CONSEQUENTIAL,
EXEMPLARY OR PUNITIVE DAMAGES, OR ANY OTHER DAMAGES
WHATSOEVER, INCLUDING BUT NOT LIMITED TO, DAMAGES FOR
LOSS OF PROFITS, GOODWILL, USE, DATA OR OTHER
INTANGIBLE LOSSES (EVEN IF WE HAVE BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES), ARISING OUT OF, OR
RESULTING FROM, (A) THE USE OR THE INABILITY TO USE
THIS WEBSITE (INCLUDING, WITHOUT LIMITATION, THE FEEBASED PRODUCTS); . . . OR (F) ANY OTHER MATTER
RELATING TO THIS WEBSITE. IN NO EVENT SHALL OUR TOTAL
LIABILITY TO YOU FOR ALL DAMAGES, LOSSES, AND CAUSES
OF ACTION (WHETHER IN CONTRACT, TORT (INCLUDING, BUT
NOT LIMITED TO, NEGLIGENCE), OR OTHERWISE) EXCEED THE
AMOUNT PAID BY YOU, IF ANY, FOR ACCESSING THIS
WEBSITE. IF YOU ARE DISSATISFIED WITH ANY PORTION OF
OUR WEBSITE, OR WITH ANY PROVISION OF THIS AGREEMENT,
YOUR SOLE AND EXCLUSIVE REMEDY IS THE DISCONTINUATION
OF YOUR USE OF THIS WEBSITE. Subscription Agreement §
18 (emphasis in original).
Finally, the Subscription Agreement provided that
subscription fees were generally nonrefundable except in certain
limited circumstances related to the cancellation of the
6
Subscription Agreement where a subscriber had already prepaid
the defendant pre-cancellation, see Subscription Agreement §§ 2,
3.E, or where the defendant inadvertently charged a subscriber
post-cancellation, see Subscription Agreement § 4.
On September 28, 2015, the plaintiff alleges that he became
a subscriber to OnlinePlus by agreeing to the Subscription
Agreement, and paying the defendant an initial membership fee of
$49.95 for the first three months of his membership, and $19.95
per month thereafter. Am. Compl. ¶ 7.
On or around November 26, 2015, the plaintiff alleges that
the defendant botched major updates to the website and Mobile
App, leading the quality of OnlinePlus to decline markedly. Am.
Compl. ¶¶ 8, 13. From that point on, the plaintiff alleges that
myriad technical glitches have beset the website and the Mobile
App despite the defendant’s efforts to remedy them in subsequent
updates and, accordingly, that the “plaintiff and the other
Class Members have been unable to fully utilize the online
website and Mobile App, which are integral to the OnlinePlus
program.” Am. Compl. ¶¶ 11-13.
The plaintiff alleges that on March 17, 2016, he was
personally “unable to utilize the Mobile App” after two lengthy
conversations with the defendant’s support staff, Am. Compl. ¶
19, and that members of the class have lost data stored on the
website, Am. Compl. ¶¶ 22-23. The plaintiff also alleges that
7
numerous OnlinePlus subscribers have complained about OnlinePlus
to the defendant and posted complaints to various Internet
sites, such as Facebook and Consumer Affairs. Am. Compl. ¶¶ 1518. The Amended Complaint includes representative examples of
these complaints, such as claims that stored data has been
deleted, that interfaces are unwieldy, that subscribers have had
occasional problems logging into the website and the Mobile App,
that the website and Mobile App are “incomplete,” and that the
defendant’s support staff has been unable to fix these issues.
Am. Compl. ¶¶ 16-18.
The Amended Complaint alleges that the defendant is aware
of the “disastrous rollout” of the updated website and Mobile
App, for which the defendant has publicly apologized multiple
times. Am. Compl. ¶¶ 15, 21. Nevertheless, the defendant has not
offered a general refund to the subscribers that constitute the
purported class, although the defendant has purportedly given
occasional refunds to especially vociferous subscribers on a
case-by-case basis. Am. Compl. ¶ 20.
The plaintiff attributes OnlinePlus’s problems to the
defendant’s alleged failure to follow unofficial though accepted
industry standards in the software development field, which the
plaintiff terms “best practices.” Am. Compl. ¶ 13. For example,
the plaintiff alleges, among other things, that the November 26,
2015 update was premature and poorly planned. Am. Compl. ¶ 14.
8
The plaintiff claims that the defendant breached the
Subscription Agreement because the website and the Mobile App
“ceased working properly and Class members’ ability to use [the
website and the Mobile App] was either diminished or nonexistent for extended periods of time.” Am. Compl. ¶¶ 33-35. He
seeks compensatory damages for OnlinePlus’s subscription fees,
and compensatory damages, including consequential damages, for
any lost data previously stored on the website and the Mobile
App. Am. Compl. ¶¶ 34-35.
III.
A.
As an initial matter, the plaintiff includes in his Amended
Complaint a host of third-party complaints about OnlinePlus
culled from various online sources. Under Rule 12(b)(6) of the
Federal Rules of Civil Procedure, the Court accepts as true the
plaintiff’s allegations that others have complained about
OnlinePlus. See Warth v. Seldin, 422 U.S. 490, 502 (1975).
However, as the purported lead plaintiff of a proposed
class action, the plaintiff must have standing to bring his
claim and accordingly “must allege and show that [he] personally
[has] been injured, not that injury has been suffered by other,
unidentified members of the class to which [he] belong[s] and
which [he] purport[s] to represent.” Id.; see also Springer,
2015 WL 9462083, at *4. Accordingly, to survive the motion to
9
dismiss the Amended Complaint, the plaintiff must show that he
has a plausible breach of contract claim against the defendant.
B.
“Under New York law, the initial interpretation of a
contract is a matter of law for the court to decide.” K. Bell &
Assocs., Inc. v. Lloyd’s Underwriters, 97 F.3d 632, 637 (2d Cir.
1996) (citation and internal quotation marks omitted); see also
Apple Mortg. Corp. v. Barenblatt, 162 F. Supp. 3d 270, 281
(S.D.N.Y. 2016).3 The “unambiguous provisions” of a contract
“must be given their plain and ordinary meaning.” White v.
Cont’l Cas. Co., 878 N.E.2d 1019, 1021 (N.Y. 2007). A contract
is unambiguous when its “language has a definite and precise
meaning, unattended by danger of misconception in the purport of
the contract itself, and concerning which there is no reasonable
basis for a difference of opinion.” Sayers v. Rochester Tel.
Corp. Supplemental Mgmt. Plan, 7 F.3d 1091, 1095 (2d Cir. 1993)
(citation and internal quotation marks omitted).
3
The parties both assume that New York law applies to the
Subscription Agreement and the Subscription Agreement itself
specifies that it “shall be governed by and construed in
accordance with the law of the State of New York, without giving
effect to any principles of conflicts of law.” Subscription
Agreement § 20. See also Apsan v. Gemini Consulting, Inc., No.
98 CIV. 1256 (JGK), 1999 WL 58679, at *2 n.1 (S.D.N.Y. Feb. 4,
1999).
10
(i)
The plaintiff identifies one obligation that the defendant
purportedly breached under the Subscription Agreement: the
“right to access, use and display” OnlinePlus through its
component parts, the website and the Mobile App. Subscription
Agreement § 2. The plaintiff argues that the alleged technical
issues he experienced --- specifically, data loss and, on one
occasion, difficulty accessing OnlinePlus --- prevented him from
“fully utilizing” OnlinePlus during the proposed class period,
and thus breached his “right to access, use and display”
OnlinePlus, which entitles him to seek money damages against the
defendant.
The plaintiff’s interpretation of the “right to access, use
and display” OnlinePlus has no support in the text of the
Subscription Agreement. The Subscription Agreement did not
obligate the defendant to provide the plaintiff with a right to
access, use and display OnlinePlus through the website and
Mobile App that was free of data loss, access errors or delays,
or other similar technical errors. To the contrary, the
Subscription Agreement expressly provided that the defendant had
not undertaken these obligations.
The right to access, use and display OnlinePlus was
expressly conditioned upon the plaintiff’s agreement to the
other provisions of the Subscription Agreement, see Subscription
11
Agreement § 2, and accordingly cannot be interpreted in
isolation from the rest of the Subscription Agreement, see Adams
v. Suozzi, 433 F.3d 220, 228 (2d Cir. 2005)(“A written contract
will be read as a whole, and every part will be interpreted with
reference to the whole; and if possible it will be so
interpreted as to give effect to its general purpose.”
(citations omitted)); John Hancock Mut. Life Ins. Co. v.
Carolina Power & Light Co., 717 F.2d 664, 669 n.8 (2d Cir. 1983)
(“New York law recognizes that definitive, particularized
contract language takes precedence over expressions of intent
that are general, summary, or preliminary.”).
In the stand-alone section entitled “Disclaimer of
Warranties,” the Subscription Agreement clearly and unmistakably
disclaimed any and all warranties and representations related to
the access, use and display of OnlinePlus, “express or implied.”
Subscription Agreement § 17. The Subscription Agreement further
specified that OnlinePlus was provided “AS IS” and that there
was no warranty that any aspect of OnlinePlus would function
reliably. Subscription Agreement § 17. Moreover, the
Subscription Agreement provided that the defendant did not
warrant that methods of accessing, using or displaying
OnlinePlus would function error-free or uninterrupted, or that
defects would be corrected. Subscription Agreement § 17.
12
Under New York law, disclaimers of warranties and
representations are permissible, and bar contract claims based
on the alleged breach of those warranties and representations.
Goodman Mfg. Co. L.P. v. Raytheon Co., No. 98-cv-2774 (LAP),
1999 WL 681382, at *13 (S.D.N.Y. Aug. 31, 1999) (citing Smith v.
Fitzsimmons, 584 N.Y.S.2d 692, 694 (App. Div. 1992); Young v.
Keith, 492 N.Y.S.2d 489, 490 (App. Div. 1985)); see also
Freidman v. Gen. Motors Corp., 721 F. Supp. 2d 218, 225-26 &
n.42 (S.D.N.Y. 2010) (noting the phrase “AS IS” is commonly
understood to disclaim any implied warranties). The Court of
Appeals for the Second Circuit recently applied this principle
in Lanier v. Bats Exch., Inc., No. 15-1683, 2016 WL 5335022, at
*1 (2d Cir. Sept. 23, 2016), and affirmed the dismissal of a
purported class action for breach of contract against an
equities market exchange based on purported breaches of the
exchange’s alleged obligation to ensure that all of its
subscribers received data on an equally timely basis. To the
extent that the plaintiff’s claim was based on the terms of the
subscription agreements at issue, the Court of Appeals held that
the plaintiff could not state a claim for breach of contract
because the plaintiff could not identify any contractual
obligations by the exchange to ensure timely receipt of data in
the text of the agreements; indeed, those subscriber agreements
13
had expressly “disclaim[ed] liability for the untimely delivery
of data.” Id. at *12-13.
Likewise, here, the plaintiff is attempting to maintain a
claim for breach of contract against the defendant based upon
purported obligations that do not exist within the Subscription
Agreement. The general right to access, use and display
OnlinePlus in Section 2 of the Subscription Agreement was
conditioned upon the express language of Section 17, where the
defendant clearly and unmistakably disclaimed any
representations and warranties related to accessing, using and
displaying OnlinePlus. Beyond the general disclaimer, Section 17
addressed the exact issues at the heart of the plaintiff’s
claim, making clear that the defendant was not obligated to
provide reliable service free of data loss, errors, or
interruptions, or to correct any defects in service. The
plaintiff got what he bargained for: the ability to access, use
and display OnlinePlus on an “AS IS” basis. Accordingly, his
allegations of, at best, some data loss and occasional
difficulty accessing OnlinePlus during the proposed class period
fail to state a claim for breach of contract. See, e.g., id.;
Goodman Mfg. Co. L.P., 1999 WL 681382, at *13 (dismissing breach
of contract claim because “the parties limited the warranties
and representations that make up the [contract]”); T.T.
14
Exclusive Cars, Inc. v. Christie’s Inc., No. 96-cv-1650 (LMM),
1996 WL 737204, at *3 (S.D.N.Y. Dec. 24, 1996) (same).
The plaintiff does not seriously contest that the
disclaimer of warranties in Section 17 of the Subscription
Agreement clearly and unambiguously disclaimed all warranties
with respect to OnlinePlus. Instead, the plaintiff raises
several arguments in an effort to circumvent the Subscription
Agreement’s disclaimer of warranties, none of which is
persuasive.
First, the plaintiff argues incorrectly that, in offering
the right to access, use, and display OnlinePlus, the
Subscription Agreement necessarily contained an implicit,
subsidiary obligation to adhere to unofficial though allegedly
industry-standard software development “best practices” in
connection with updating and supporting the component parts of
OnlinePlus, its website and Mobile App. According to the
plaintiff, had the defendant followed these best practices, he
would never have suffered his alleged injuries. There is no
textual support in the Subscription Agreement for this
obligation, which would essentially function as an implied
warranty to maintain the website and Mobile App at an
unspecified industry-standard level. An implied “best practices”
obligation is plainly inconsistent with, and would overwrite,
the express disclaimer of all warranties, which provides that
15
OnlinePlus is offered “AS IS.” See Freidman, 721 F. Supp. 2d at
225-26 & n.42. The plaintiff’s position is thus untenable.
Second, in a similar vein, the plaintiff argues at length
in his opposition papers that the defendant violated its implied
covenant of good faith and fair dealing, and that this covenant
should be used to interpret the Subscription Agreement. The
claim is without merit.
“In New York, all contracts imply a covenant of good faith
and fair dealing in the course of performance,” which “embraces
a pledge that neither party shall do anything which will have
the effect of destroying or injuring the right of the other
party to receive the fruits of the contract.” 511 W. 232nd
Owners Corp. v. Jennifer Realty Co., 773 N.E.2d 496, 500 (N.Y.
2002) (internal quotation marks omitted); see also First Am.
Int’l Bank v. Cmty.’s Bank, 771 F. Supp. 2d 276, 283 (S.D.N.Y.
2011). The covenant incorporates “any promises which a
reasonable person in the position of the promisee would be
justified in understanding were included,” Rowe v. Great Atl. &
Pac. Tea Co., 385 N.E.2d 566, 569 (N.Y. 1978) (citation and
internal quotation marks omitted), but does not include any
obligation that would be inconsistent with the express terms of
the contract, Dalton v. Educ. Testing Serv., 663 N.E.2d 289,
291-92 (N.Y. 1995). The covenant “does not extend so far as to
undermine a party’s general right to act on its own interests in
16
a way that may incidentally lessen the other party's anticipated
fruits from the contract.” M/A-COM Sec. Corp. v. Galesi, 904
F.2d 134, 136 (2d Cir. 1990) (per curiam) (citations and
internal quotation marks omitted); see also Vysyaraju v. Mgmt.
Health Sols., Inc., No. 12 CIV. 4420 (JGK), 2013 WL 4437236, at
*11 (S.D.N.Y. Aug. 19, 2013).
The plaintiff argues that the defendant violated the
implied covenant of good faith and fair dealing because the
defendant failed to use reasonable efforts to remedy
OnlinePlus’s defects and thus provide reasonable access to a
reasonably functioning service. The plaintiff’s claim fails
because the defendant’s obligations under the implied covenant,
as interpreted by the plaintiff, are inconsistent with the
express terms of the Subscription Agreement. The Subscription
Agreement explicitly disclaimed all warranties, and, in
particular, was clear that the defendant had not promised that
it would correct any defects related to access, use or display
of OnlinePlus, or that access, use or display of OnlinePlus
would function without errors, interruptions, or loss of data.
The implied covenant of good faith and fair dealing “cannot add
to, detract from, or alter the terms of the contract itself.”
Warner Theatre Assocs. Ltd. P’ship v. Metro. Life Ins., 97-cv4914 (SS), 1997 WL 685334, at *6 (S.D.N.Y. Nov. 4, 1997)
(Sotomayor, J.), aff’d, 149 F.3d 134 (2d Cir. 1998); see also
17
Vanlex Stores, Inc. v. BFP 300 Madison II, LLC, 887 N.Y.S.2d
576, 577 (App. Div. 2009). The plaintiff cannot invoke the
covenant to erase or otherwise vary the Subscription Agreement’s
disclaimer of warranties. See Bank of Am., N.A. v. Column Fin.,
Inc., No. 10-cv-6378 (LLS), 2011 WL 2652464, at *4 (S.D.N.Y.
July 6, 2011) (finding that implying a covenant of good faith
imposing obligation on lender to conduct due diligence on
mortgages “in accordance with customary commercial mortgage
lending standards” would be inconsistent with terms of contract
that provided that the transfer of the mortgages was nonrecourse). The plaintiff’s resort to the covenant of good faith
and fair dealing does not salvage his breach of contract claim.
Third, the plaintiff argues that giving effect to the
disclaimer of warranties would render the Subscription Agreement
illusory because the defendant could stop performing in its
discretion by deciding to provide no access to OnlinePlus. See
Coventry Enters. LLC v. Sanomedics Int’l Holdings, Inc., No. 14
CIV. 8727 (NRB), 2015 WL 4486335, at *4 (S.D.N.Y. July 23, 2015)
(“A bilateral contract may be illusory for lack of mutuality of
obligation.” (citation and internal quotation marks omitted)).
In New York, contract “interpretation that renders a contract
illusory and therefore unenforceable is disfavored and
enforcement of a bargain is preferred, particularly where, as
here, the parties have expressed their intent to be
18
contractually bound in a writing.” Credit Suisse First Bos. v.
Utrecht-Am. Fin. Co., 915 N.Y.S.2d 531, 535 (App. Div. 2011)
(citations omitted).
The plaintiff’s argument is without merit. As discussed
above, under New York contract law, a party may disclaim
warranties and representations, and such disclaimers do not
render contracts illusory. The defendant admits that, pursuant
to the Subscription Agreement, it has an obligation to provide
the plaintiff with a right to access OnlinePlus on an “AS IS”
basis. See Def.’s Reply Br. at 8-9 & n.3. Given that the
Subscription Agreement can be read so that the defendant owes
the plaintiff an obligation, the Subscription Agreement should
not be interpreted to be illusory.4 See Coventry Enters. LLC,
2015 WL 4486335, at *4 (rejecting interpretation that would
render contract illusory when other permissible contract
constructions existed); In re Cablevision Consumer Litig., 864
F. Supp. 2d 258, 263 (E.D.N.Y. 2012) (rejecting cable-provider’s
argument that contract did not obligate it to provide customers
with access to any channels because that interpretation would
4
The plaintiff attempts to analogize this case to Wood v. Lucy,
Lady Duff-Gordon, 118 N.E. 214 (N.Y. 1917) (Cardoza, J.). But
this case is nothing like Lady Duff-Gordon, where the Court of
Appeals interpreted a marketing contract as imposing an implied
best efforts obligation on the defendant in order to avoid a
finding that the contract was illusory. See id. at 214-215.
19
mean the cable-provider had “not really promised to provide
anything and the contract [would be] arguably illusory”).
Finally, the plaintiff inconsistently argues at various
points in his opposition that the defendant provided the
plaintiff with literally “no service,” for a period of months,
as opposed to a service that the plaintiff could access but
found wanting due to several alleged deficiencies. Compare Pl.’s
Op. Br. at 11 (“[this case] involves no service”), with Pl.’s
Op. Br. at 5 (“plaintiff and the other proposed class members
were unable to utilize fully [OnlinePlus]”), and Pl.’s Op. Br.
at 14 (“subscribers at various times could not (a) access
[OnlinePlus]”). The “no service” characterization greatly
overstates the plaintiff’s alleged injuries in the Amended
Complaint: some data loss, Am. Compl. ¶¶ 22-23, and difficulty
accessing OnlinePlus on one occasion after two chat-room
conversations with the defendant’s support staff, Am. Compl. ¶
19. At best, the Amended Complaint’s allegations support a
plausible inference that the plaintiff experienced data loss and
intermittent access interruptions, which led him to be
dissatisfied with OnlinePlus; they do not support a plausible
inference that the plaintiff could not access OnlinePlus at all
for an extended period of time. Moreover, the Amended Complaint
alleges that third-parties were able to access OnlinePlus
throughout the class period, notwithstanding that the third20
parties claimed to find OnlinePlus unsatisfactory. The plaintiff
cannot amend his complaint “merely by raising new facts and
theories in [his] opposition papers.” Guo v. IBM 401(k) Plus
Plan, 95 F. Supp. 3d 512, 526 (S.D.N.Y. 2015) (quoting Southwick
Clothing LLC v. GFT (USA) Corp., No. 99–cv–10452, 2004 WL
2914093, at *6 (S.D.N.Y. Dec. 15, 2004)). It is unnecessary to
decide if an extended inability to access OnlinePlus at all
would constitute a breach of the defendant’s obligations under
the Subscription Agreement because that is not the injury that
the plaintiff is alleged to have suffered. Under the terms of
the Subscription Agreement, the allegations of data loss and
intermittent access interruptions do not constitute a breach of
the Subscription Agreement.
Accordingly, because the plaintiff cannot identify an
obligation that the defendant breached, his claim must be
dismissed.
(ii)
Moreover, Sections 2, 4, and 18 of the Subscription
Agreement (collectively, the “Limitation of Liability
Provisions”) are an independent bar to the plaintiff’s breach of
contract claim for money damages. In New York, “A limitation on
liability provision in a contract represents the parties’
Agreement on the allocation of the risk of economic loss in the
event that the contemplated transaction is not fully executed,
21
which the courts should honor.”5 Metro. Life Ins. Co. v. Noble
Lowndes Int’l, Inc., 643 N.E.2d 504, 507 (N.Y. 1994); see also
Assured Guar. Mun. Corp. v. Flagstar Bank, FSB, No. 11-cv-2375
(JSR), 2011 WL 5335566, at *2, *5 (S.D.N.Y. Oct. 31, 2011).
The defendant argues that the Limitation of Liability
Provisions limited the plaintiff’s recourse for his alleged
injuries to termination or cancellation of the Subscription
Agreement. The plaintiff responds that the defendant’s
interpretation of the Subscription Agreement would limit a
subscriber’s recourse to cancellation or termination in all
circumstances, which cannot be accurate because Section 18 --the section entitled “Limitation of Liability” --- contains a
clause that provides: “IN NO EVENT SHALL OUR TOTAL LIABILITY TO
YOU FOR ALL DAMAGES, LOSSES, AND CAUSES OF ACTION (WHETHER IN
CONTRACT, TORT (INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE), OR
OTHERWISE) EXCEED THE AMOUNT PAID BY YOU, IF ANY, FOR ACCESSING
THIS WEBSITE.” Subscription Agreement § 18. The plaintiff
contends that a clause setting a cap on damages in the event of
5
New York courts recognize that limitation of liability
provisions may be unenforceable in certain circumstances where,
for example, the contract is an unenforceable contract of
adhesion, or a party willfully and tortiously breaches the
contract. See Metro. Life Ins. Co., 643 N.E.2d at 507 n.*. The
plaintiff has not advanced either argument as a ground for
finding the Limitation of Liability Provisions here
unenforceable, and those arguments therefore need not be
considered. In any event, the plaintiff has failed to identify
an obligation that the defendant breached, which independently
defeats his claim.
22
litigation has no purpose unless the Subscription Agreement
contemplates the possibility of litigation. See Givati v. Air
Techniques, Inc., 960 N.Y.S.2d 196, 198 (App. Div. 2013) (“[A]
court should not read a contract so as to render any term,
phrase, or provision meaningless or superfluous.”). The
plaintiff thus concludes that any subscriber is entitled to
pursue money damages for any breach of the Subscription
Agreement, with recovery presumably capped by the subscriber
fees paid to the defendant.
The plaintiff ignores that the Subscription Agreement
provides that subscribers are entitled to fee refunds in certain
limited circumstances specifically related to when the defendant
discontinues a subscriber’s service or when a subscription is
cancelled but a subscriber has already prepaid the defendant for
future access to OnlinePlus, see Subscription Agreement §§ 2,
3.E, or when the defendant inadvertently receives fees postcancellation, see Subscription Agreement § 4. Read in the
context of the Subscription Agreement as a whole, see Adams, 433
F.3d at 228, the clause referenced by the plaintiff is plainly
intended to set a cap on the fee refunds available pursuant to
Sections 2, 3.E, and 4 of the Subscription Agreement. The
plaintiff’s interpretation of the lone sentence in Section 18 as
permitting subscribers to pursue money damages for any breach of
the Subscription Agreement would render meaningless the rest of
23
Section 18 along with Sections 2 and 4 of the Subscription
Agreement, in contravention of basic principles of contract
interpretation. See Givati, 960 N.Y.S.2d at 198.
It is unnecessary to reach the issue of whether the
Subscription Agreement limits a subscriber’s recourse to
cancellation or termination in all circumstances other than
those provided in Sections 2, 3.E, and 4, because the Limitation
of Liability Provisions clearly and unambiguously limited the
plaintiff’s recourse to cancellation or termination for his
alleged injuries. As discussed above, the plaintiff has alleged
that he was dissatisfied with OnlinePlus because he experienced
access issues on one occasion, Am. Compl. ¶ 19, and lost some
data stored on the website, Am. Compl. ¶¶ 22-23. Any reasonable
party to the Subscription Agreement would have understood that,
based on the express terms contained in the Limitation of
Liability Provisions, the sole remedy for any complaint related
to data storage issues, occasional access problems, or overall
dissatisfaction with OnlinePlus was to exercise the subscriber’s
right to cancel or terminate the OnlinePlus subscription, a
right the subscriber was free to exercise at any time. See
Subscription Agreement § 2 (a subscriber’s “only right with
respect to any dissatisfaction with any modification or
discontinuation of service made by us pursuant to this provision
or this Agreement, or any policies or practices by us in
24
providing this Website or our Fee-Based Products, . . . is to
cancel or terminate your subscription or registered user
account”); Subscription Agreement § 4 (“You understand and agree
that the cancellation or termination of your subscription is
your sole right and remedy with respect to any dispute with
us.”); Subscription Agreement § 18 (“IF YOU ARE DISSATISFIED
WITH ANY PORTION OF OUR WEBSITE, OR WITH ANY PROVISION OF THIS
AGREEMENT, YOUR SOLE AND EXCLUSIVE REMEDY IS THE DISCONTINUATION
OF YOUR USE OF THIS WEBSITE.”). The plaintiff’s interpretation
of the Subscription Agreement as permitting the pursuit of money
damages based on these sorts of alleged injuries cannot be
squared with the plain, unambiguous terms of the Subscription
Agreement. Because the plaintiff’s allegations do not plausibly
claim more than mere dissatisfaction with the service he
purchased from the defendant, his recourse is limited to
termination or cancellation of the Subscription Agreement, and
he is barred from seeking money damages against the defendant.
IV.
The plaintiff’s contract claim is dismissed with prejudice.
The plaintiff has not requested leave to amend his Amended
Complaint and he represented to the Court at a pre-motion
conference held on May 3, 2016 that he would not seek further
amendment. In any event, further amendment would be futile. See
25
Foman v. Davis, 371 U.S. 178, 182 (1962); Mackensworth v. S.S.
Am. Merch., 28 F.3d 246, 251 (2d Cir. 1994); see also
Graham v. Select Portfolio Servicing, Inc., 156 F. Supp. 3d 491,
516 (S.D.N.Y. 2016) (“Generally, the grant of leave to amend the
pleadings pursuant to Rule 15(a) is within the discretion of the
trial court.” (citation and quotation marks omitted)). Any new
allegations will not alter the text of the Subscription
Agreement, which is clear and unambiguous, and does not offer a
basis for the plaintiff to pursue a breach of contract claim.
CONCLUSION
The Court has considered all of the arguments raised by the
parties. To the extent not specifically addressed, the arguments
are either moot or without merit. For the foregoing reasons, the
defendant’s motion to dismiss is granted and the Amended
Complaint is dismissed with prejudice. The Clerk is directed to
enter judgment dismissing this action and closing the case. The
Clerk is also directed to close all pending motions.
SO ORDERED.
Dated:
New York, New York
November 12, 2016
______________ /s/_____________
John G. Koeltl
United States District Judge
26
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