United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 and itscustomers. PendingbeforetheCourtisDefendants’ surreptitiously interceptedpersonaldataandcommunications andtransmitted thisdatatoCarrierIQ embedded, theCarrierIQSoftwareontheir mobile devicesand,onceembedded, thissoftware mobile devices.PlaintiffsallegethatCarrierIQdesigned,andtheDeviceManufacturersDefendants consumer protectionstatutesthroughthecreationanduseofCarrierIQ’ssoftwareonPlaintiffs’ that DefendantshaveviolatedtheFederalWiretap Actaswellanumber ofstate’sprivacyand Defendant CarrierIQ,Inc.andanumber ofmanufacturers ofmobile devices.TheComplaint alleges states –havefiledasecondconsolidatedamended complaint (“SCAC”or“Complaint”) against ______/ CONSUMER PRIVACYLITIGATION. CARRIER IQ,INC., IN RE joint motion, andwillaffordPlaintiffsleave tofileathirdconsolidatedamended complaint. entirety. Forthereasonsthatfollow,Court as “Defendants”or“Device Manufacturers”throughoutthisorder. their motion todismiss. motions todismiss, CarrierIQ,Inc.reached asettlement withPlaintiffs andsubsequentlywithdrew Case3:12-md-02330-EMC Document339Filed01/21/15Page1of96 Plaintiffs inthismultidistrict litigation–eighteen(18)individualsfrom thirteendifferent 1 Originally,alltheDefendants moved todismiss theSCAC. Afterthehearingon See NORTHERN DISTRICTOFCALIFORNIA DocketNos.322,334. The remaining Defendantsarereferredto either UNITED STATESDISTRICTCOURT I. INTRODUCTION GRANTS (Docket No.304) COMPLAINT CONSOLIDATED AMENDED MOTION TODISMISSSECOND DENYING INPARTDEFENDANTS’ ORDER GRANTINGINPARTAND No. C-12-md-2330 EMC inpartand 1 jointmotion todismiss theSCACinits DENIES inpartDefendants’ United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 .Plaintiffs A. each PlaintiffhadwiththeCarrierIQSoftwareinstalled: the Plaintiff,stateinwhicheachresidedduringrelevantperiod,andmobile device this matter, heresidedinSeattle,Washington.” SCAC¶24. order, Mr.Clinewillbe treated asaresidentofMichigan. matter, heresided inOaklandCounty,Michigan.”SCAC¶19. Accordingly, forpurposesofthis ayCib ayadSamsung GalaxyS2 Samsung Epic4G HTCEVO4G LGMarquee HTC EVO4G Samsung Moment Michigan Mississippi Maryland HTC EVO Samsung EpicTouch 4G Kentucky Motorola Bravo Samsung GalaxySII4G LTE Bobby Cline Illinois Iowa Florida Shawn Grisham Samsung GalaxyS4G Gary Cribbs Connecticut California Michael Allan Luke Szulczewski California Matthew Hiles California Leron Levy Ryan McKeen Arizona Dao Phong Jennifer Patrick Daniel Pipkin Patrick Kenny ole ice icni LGLS670Optimus S Samsung Replenish HuaweiAscendIIm865 HTCEVO PantechP5000 Wisconsin Washington Texas Texas Colleen Fischer Texas Texas Brian Sandstrom Eric Thomas Douglas White Clarissa Portales Mark Laning Case3:12-md-02330-EMC Document339Filed01/21/15Page2of96 There are18plaintiffsinthisaction,from 13differentstates.Belowisachartthatidentifies 3 2 Mr.Sandstrom isaresidentofCalifornia,butthe SCACallegesthat“atpertinenttimes to Mr.ClineresidesinNewHampshire, butthe SCACallegesthat“atpertinenttimes tothis litf tt Device State Plaintiff II. FACTUAL&PROCEDURALBACKGROUND 2 3 2 HTC Touch HTC EVO LG LS670Optimus S United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 .Asserted CausesofAction C. Carrier IQSoftwareandCIQInterfacesoftwareonatleastsome oftheir mobile devicemodels. Electronics Co.,Ltd.(collectively“Samsung”). EachDefendantisallegedtohaveinstalledthe Wireless, Inc.(“Pantech”);(6)Samsung Telecommunications America, Inc.andSamsung and LGElectronics,Inc.(collectively“LG”);(4)MotorolaMobilityLLC(“Motorola”);(5)Pantech “HTC”); (2)HuaweiDeviceUSA,Inc.(“Huawei”),(3)LGElectronicsMobileComm U.S.A.,Inc. CIQ Interfacesoftwareforms thebasisofPlaintiffs’claims, asdescribed “related implementing orportingsoftwareknownastheCIQInterface.” software andprovidedthemobile devicemanufacturers the“guideortemplate” neededforthe Plaintiffs allegethatCarrierIQisthe“designer,author,programmer, andvendor”oftheIQAgent .Defendants B. alleged herein.” installed andoperatingonhisdevice,taxingdevice’sbattery,processor,memory, as had heknownthattheCarrierIQSoftwareandrelatedimplementing orportingsoftwarewas confidential, andsensitiveinformation. [ThePlaintiff]wouldnothavepurchasedhismobile device browsing andtextmessaging, includingaccessing,inputting,andtransmitting personal,private, pre-installed. Inadditiontousinghisdevicesmake phonecalls,[thePlaintiff]hasuseditforweb Plaintiff’s] mobile devicecame withtheCarrierIQSoftwareandimplementing orportingsoftware Case3:12-md-02330-EMC Document339Filed01/21/15Page3of96 The remaining Defendantsare:(1)HTCAmerica, Inc.andHTCCorporation(collectively The remaining defendantsinthis actionareanumber ofmobile devicemanufacturers. • • The SCACallegesfivecausesofaction: In describingeachPlaintiff,theSCACprovidesthat“[u]poninformation andbelief,[the Washington, West Virginia, Wisconsin, and Wyoming. Pennsylvania, RhodeIsland, SouthCarolina,Tennessee,Texas,Utah,Virginia, Nevada, NewHampshire, Mexico,NorthCarolina, Ohio,Oregon, NewJersey, Iowa, Louisiana,Maine, Maryland,Massachusetts,Michigan,Minnesota, Nebraska, Arizona, California,Connecticut,Delaware,Florida, Hawaii,Idaho,Illinois,Indiana, citizens ofthefollowing35statesunderthosestates’ respectiveprivacylaws: all residentsoftheUnitedStatesunderCal.Penal Code§502andonbehalfof Count 2:ViolationofStatePrivacyLaws Count 1:ViolationoftheFederalWiretapAct (18U.S.C.§2551) See SCAC ¶¶8-25. 3 : Plaintiffsasserttheirclaims onbehalfof infra Id. ¶26.TheIQAgentand . United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 such thatthetypicaluser hasnoideathatitisrunningandcannotturn off. software ontheirmobile devices. program” theCIQInterface(withCarrierIQ’said)andtheninstallIQAgent possible transmittals.” names, andpasswords .andtosendthatmaterial downtotheIQAgentfurtherprocessing and of dataandcontent,includingSMStextmessage contentandURLscontainingsearchterms, user is allegedtobea“wrappingorportinglayerofcodedesignedseerecognizeandintercepthost personal dataoffofauser’smobile device. providers. “embedded” method ofinstallation. authoring, programming, installing,andactivatingtheCIQInterfaceindeployments” throughthe 62. Italso“designed,authored,andprovidedguidestotheDeviceManufacturersfordesigning, the CarrierIQSoftware,includingso-calledAgent,ondevicesatissueinthiscase.” CarrierIQSoftwareBackground D. Software by“rooting”their devicesandvoidingthewarrantiesoftheirdevices. Case3:12-md-02330-EMC Document339Filed01/21/15Page4of96 Carrier IQrepresentsthatitssoftwareisa“networkdiagnosticstool”forcellphoneservice • • • Carrier IQ“designed,authored,programmed, andcausedtheinstallationactivationof 4 Itisallegedthatevenusers withadvancedtechnicalskillscanonlyremove theCarrier IQ Id. ¶40.Itisallegedthatinreality,thesoftwarecollects,andtransfers,sensitive behalf ofresidentsthestatesenumerated underCount4. Count 5:ViolationoftheImpliedWarrantyMerchantability West Virginia,andWyoming. Rhode Island,SouthCarolina,Dakota,Texas,Utah,Virginia,Washington, Hampshire, NewJersey,Mexico,NorthDakota,Oklahoma, Pennsylvania, Michigan, Minnesota,Mississippi,Missouri,Montana,Nebraska,Nevada,New Columbia, Hawaii,Indiana,Kansas,Louisiana,Maine,Maryland,Massachusetts, of Columbia): Alaska,Arkansas,California,Colorado,Delaware,Districtof 2312) Count 4:ViolationoftheMagnuson-MossWarrantyAct(15U.S.C.§2301- Virginia. Rhode Island,SouthCarolina,Dakota,Texas,Vermont, Washington, andWest Maryland, Michigan,Missouri,Nevada,NewHampshire, NewJersey,Oklahoma, statutes: Arkansas,California,Connecticut,Delaware,Florida,Hawaii,Kansas, residents ofthefollowing21statesunderthosestates’respectiveconsumer protection Count 3:ViolationofStateConsumerProtectionActs: : Assertedonbehalfoftheresidentsfollowing34states(andDistrict Id. ¶63.TheSCACallegesthattheDeviceManufacturers “designand Id. Id. Onceinstalled,thesoftware“operatesinbackground,” See id. 4 ¶¶1-2.Specifically,theCIQInterfacesoftware Asserted onbehalfof Id. ¶64. Id. : assertedon ¶64. 4 Usersare Id. ¶ United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Id. intercepted aspartoftheCarrierIQSoftware’s“calls”ondeviceoperatingsystem for“metrics.” keypad presses/keystrokes;and(6)applicationpurchasesuses. information; (3)SMStextmessages; (4)telephonenumbers dialedandreceived;(5)theuser’s terms, usernames, passwords,andGPS-basedgeo-locationinformation); (2)GPS-location (1) URLs(includingthosewhichcontainquerystringswithembedded information suchassearch functions, andsystem memory.” it isalwaysrunning,thePlaintiffsallegethat“taxesdevice’sbatterypower,processor never giventhechoiceofoptingintooroutCarrierIQSoftware’sfunctionality. AT&T hasadmitted thatthe“Carrier IQ Softwaretransmitted textmessage contenttoit.” “grave breachesofprivacy.” customers [that]usedevicesthatcontainCarrierIQ’sdiagnosticsoftware.” specific problems.” for diagnosticneedsandthata30,000devicesubset ofthis1.3million wereused for“research and statedthatSprintqueriedinformation from afractionofthose(c.1.3million) atanygiventime indicated thattherewere“26million activeSprintdevicesthat haveCarrierIQSoftwareInstalled” collecting andreportingwirelessserviceperformance information toAT&T.” Carrier IQ’sSoftwarewasinstalledonapproximately “900,000devices,withabout575,000ofthose provide aglimpse intothepotentialscopeofCarrierIQSoftwaredeployment. AT&Tstatedthat Senator AlFrankeninresponsetohisinquiriesregardingtheCarrierIQSoftware.Theseletters requesting customer (thewirelesscarriersordevicemanufacturers). as requested),theProfile-specifieddatawouldthenbetransmitted from themobile devicetothe specify whichdatatheywantfrom theabovedescribed“metrics.” customers (who aretypicallywirelesscarriers,butcanalsoincludedevicemanufacturers) will Itthenstorestheinformation inthemobile device’s RAMmemory on arollingbasis. Case3:12-md-02330-EMC Document339Filed01/21/15Page5of96 Plaintiffs allegethatthedatainterceptedbyCarrierIQSoftwareincludesfollowing: The CarrierIQSoftwarealsohasafeaturereferredtoas“Profiles.”ViaProfiles, The SCACrecountstwo wayswheredeployment oftheCarrierIQSoftware hasresultedin The SCACquotesfrom anumber ofletterswhichthevariousDeviceManufacturers sentto Id. ¶54.T-Mobilestatedthattherewere“approximately 450,000T-Mobile Id. ¶69.First,duetoa“programming error,”theSCACalleges that Id. 5 Id. Id. Id. ¶68.Atdesignatedtimes (or ¶65.Thisinformation is Id. ¶56. Id. ¶53.Sprint Id. Because Id. Id. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 “logging” applicationsnoted bytheFTCwasCarrierIQSoftware.Relevant tothiscase,the logging applicationsonHTC devicesandaccessavarietyofsensitiveinformation.” measures, “anythird-partyapplication thatcouldconnecttotheinternet communicate withthe placing sensitiveinformation atrisk. use “documented secure communications mechanisms inimplementing loggingapplications,”thus information aboutmillions ofconsumers atrisk.” developed foritssmartphones andtabletcomputers, introducingsecurityflawsthatplacedsensitive agreement inFebruary2013. security flaw”inHTCmobile devices. commenced aninvestigationintoHTCregardingtheCarrierIQSoftwareanda“relatedprivacy .FTCInvestigationofandActionAgainstHTCRe:CarrierIQSoftware E. using thedevicesolelyonaWi-Fi network(asopposedtoacellularnetwork). via widelyavailablesoftwaretools.” draw ondevicelogsasameans ofdiagnosingapplicationcrashes(orforotherpurposes),including Accordingly, Plaintiffscontendthatthisinformation “may havegonetoapplicationdeveloperswho information throughits“TellHTC”toolwhich“drawsoncontentstoredinthedevicelogs.” reports. was transmitted toGoogle(whoistheauthorofAndroidOperatingSystem) aspartofcrash information wascontainedinsystem logs,theprivateinformation improperly interceptedandstored the system logs,includingtoindividualswithmalicious intent. affected devices. Carrier IQSoftwarewassentinunencrypted,human-readable form intothesystem logsofthe mobile devicesandpossiblyoncertainotherdevices,”thedatacontentinterceptedby message content. Plaintiffs usethisasevidencethattheCarrierIQSoftwaredoes,infact,interceptandcapturetext Case3:12-md-02330-EMC Document339Filed01/21/15Page6of96 The FTCfoundthatHTChad“failedtotakereasonable stepstosecurethesoftwareit Since thefilingofFirstConsolidatedAmended Complaint inthisaction,theFTC Plaintiffs allegethattheCarrierIQSoftwarecontinuestooperateevenifconsumer is Id. ¶73.Similarly, HTChasacknowledgedthattheyhavealsoreceivedthisprivate Id. Id. ¶71.Accordingly,thisinformation wasvulnerabletoanyonewithaccess Second,Plaintiffsstatethat“withsome deployments, includingthoseonHTC Id. ¶76. Id. Id. Id. ¶77.BecauseofHTC’sfailuretoimplement security ¶75.Thisinvestigationculminated inaConsentOrder 6 Id. Oneofthefailurescited,wasHTC’sfailureto Id. ¶72.Further,becausethis Id. ¶74. Id. Oneofthe Id. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 .LegalStandard A. insufficient toavoidaRule 12(b)(6)dismissal.” nonmoving party, although“conclusoryallegationsoflawandunwarranted inferencesare must takeallallegationsofmaterial factastrueandconstrue them inthelight most favorabletothe of Bus.v.Symington, dismiss basedonRule12(b)(6)challengesthelegalsufficiency oftheclaims alleged. failure tostateaclaim uponwhichreliefmay begranted. manuals anduserinterface. practices inviolationoftheFederalTradeCommission Actgivendeceptivestatements initsuser by HTC.” “little, ifany,reasontoknowtheirinformation wasatriskbecauseofthe vulnerabilitiesintroduced sent toHTCthroughits“TellHTC”errorreportingtool.” then “[a]ccessibletoanythird-partyapplicationwithpermission toread thesystem log”andwas the Androidsystem logonthedevice.” Thus, “allinformation thattheCIQInterfacesenttoCarrierIQsoftware.wasalsowritten HTC failedtodeactivatethedebugcodebeforeitsdevicesshippedforsaleconsumers.” a particulardevicelogknownastheAndroidsystem log,whichcouldthenbereviewed.However, Interface wasoperatingproperly.“Thedebugcodeaccomplished thisbywritingtheinformation to of itsCIQInterface,HTCactivated“debugcode”intheoperatingsystem totestwhetherthe CIQ individuals toperform “malicious actions”suchas“sendingtextmessages withoutpermission.” “the sensitiveinformation beingcollectedbytheCarrierIQsoftware”andpotentiallyallowed exploit thevulnerabilitytocommunicate withtheCIQInterface.” mechanism, anythird-partyapplicationontheuser’sdevicethatcouldconnecttointernet been accessibleonlybynetworkoperators,butbecauseHTCusedaninsecurecommunications Consent Ordernoted:Theinformation collectedbytheCarrierIQsoftwarewassupposed to have Case3:12-md-02330-EMC Document339Filed01/21/15Page7of96 Under FederalRuleofCivilProcedure12(b)(6), apartymay move todismiss basedonthe The FTCConsentOrderexplainedhowthissecurityflawoccurred.Duringthedevelopment Id. ¶78.Ultimately, theFTCfoundthatHTChadengaged inunfairordeceptiveacts 51F.3d1480,1484(9thCir.1995).Inconsidering suchamotion, acourt Id. ¶79. III. DISCUSSION Id. Onceinthesystem log,thesensitiveinformation was Cousins v.Lockyer, 7 See Id. TheFTCnotedtheconsumers had Fed.R.Civ.P.12(b)(6).Amotion to Id. 568F.3d1063,1067(9th Cir. Thispermitted interceptionof See Parks Sch. Parks See Id. Id. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 (N.D. Cal.Sept.4,2014); sought.” a plaintiffmust establishArticleIIIstanding foreachofherclaims and foreachform ofrelief Admin. redressed byafavorabledecision. in-fact thatisfairlytraceabletotheactionsof defendant,andthathisinjuryislikelytobe circumstances surroundingreliance. Gen. DynamicsC4Sys.,Inc., Salameh v.TarsadiaHotel, well aswhatisfalseormisleading aboutthepurportedlyfraudulentstatement, andwhyitisfalse.’” the “complaint must ‘identifythewho,what,when,where,andhowofmisconduct charged, as conditions ofaperson’smind may beallegedgenerally.”Fed.R.Civ.P.9(b). TosatisfyRule9(b), particularity thecircumstances constitutingfraudormistake. Malice,intent,knowledge,andother 1125 (9thCir.2009).Rule9(b)provides:“Inallegingfraudormistake, apartymust statewith standard ofFederalRuleCivilProcedure9(b). unlawfully.” ‘probability requirement,’ butitasksformore thansheerpossibilitythatadefendantacted Atl. Corp.v.Twombly, defendant isliableforthemisconduct alleged.” the plaintiffpleadsfactualcontentthatallowscourttodrawreasonableinference facts tostateaclaim toreliefthatisplausibleonitsface.’” 2009). While “acomplaint neednotcontaindetailedfactualallegations.itmust plead‘enough .Plaintiffs’StandingtoAssertTheirClaims B. relied). to theallegedlyfraudulentadvertisements, whichoneshefoundmaterial, andonwhichoneshe not meet thestandardofRule9(b)partlybecauseplaintifffailedtospecifywhenhewasexposed Case3:12-md-02330-EMC Document339Filed01/21/15Page8of96 , 733F.3d939,950(9thCir.2013).Further,standing is“claim- andrelief-specific,suchthat In ordertohaveArticleIIIstandingassertaclaim, aplaintiffmust havesufferedaninjury- To theextentPlaintiffs’claims soundinfraud,theSCACmust meet theheightenedpleading In reAdobeSystems,Inc. PrivacyLitig. Iqbal, 129S.Ct.at1949. 550U.S.544,556(2007).“Theplausibilitystandardisnotakintoa see alsoDaimlerChrysler Corp.v.Cuno 726F.3d1124,1133(9thCir.2013)(quoting 637F.3d1047,1055(9thCir.2011)).Thisencompasses the See, e.g. e Kearns, See , Ass’n ofPublicAgencyCustomersv.Bonneville Power Ashcroft v.Iqbal, 567F.3dat1125(holdingthatthecomplaint did , —F.Supp.2d2014 WL 4370016,at*10 8 e Kearnsv.Ford MotorCo., See Id. “Aclaim hasfacialplausibilitywhen 556U.S.662(2009); , 547U.S.332,352(2006) Cafasso, U.S.exrel.v. 567F.3d1120, e loBell see also United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 “was installedandoperating onhisdevice,andtaxingdevice’sbattery, processor,andmemory, motion todismiss onthisgroundis Accordingly, theCourtneednotaddressPlaintiffs’ alternativetheoriesofdamage andDefendants’ alleging thattheCarrierIQSoftwarediminished theirmobile devices’battery lifeandresources. installed. Plaintiffshavesufficientlyalleged“damage” forpurposesofthepleading stageby (3) theywouldnothavepurchasedtheirmobile deviceshadtheyknowntheCarrierIQSoftwarewas a resultoftheCarrierIQSoftware;(2)allegedcollectionanddisclosurepersonalinformation; and have suffereddamage inthreeways: (1)diminished batterypowerandlifeintheirmobile devicesas or lossbyreasonofaviolation.”Cal.PenalCode§502(e).Plaintiffsrespond,however,thatthey protection statutebecausethesestatutoryclaims requireproofthatthePlaintiffs“suffer[ed]damage Consumer DataAccessandFraudAct(“CCDAFA”),Cal.PenalCode§502,oranystateconsumer mobile devices.TheCourtaddresseseachargument inturn. state lawsinwhichtheydonotresideandagainstDeviceManufacturerswhodidproducetheir Pipkin havefailedtoallegeanyinjury;and(3)thatPlaintiffslackstandingassertclaims under protection statutes)astheyhavenotallegedasufficientinjury-in-fact;(2)thatPlaintiffsCribbsand standing toasserttheirclaims underCaliforniaPenalCode§502(andrelatedstateconsumer various claims intheSCAC.Specifically,Defendantsarguethat:(1)PlaintiffslackArticleIII be establishedbymembers oftheclass. (9th Cir.2014)(citationomitted). Asdiscussedbelow,onceaclassiscertified,standingmay also requirements.” ifatleastonenamedpress.”). “Inaclassaction,standingissatisfied plaintiffmeets the (“[O]ur standingcasesconfirm thataplaintiffmust demonstrate standingforeachclaim heseeksto Case3:12-md-02330-EMC Document339Filed01/21/15Page9of96 As detailedabove,theSCAC hasalleged,foreachPlaintiff,thattheCarrier IQSoftware Defendants arguethatPlaintiffslackstandingtoassertaclaim underthe California .PlaintiffsHaveAdequatelyAllegedStandingUnder Cal. PenalCode§502andState 1. The DeviceManufacturersraiseanumber ofchallengestoPlaintiffs’standingbringthe Consumer ProtectionStatutes Ollier v.SweetwaterUnionHighSch.Dist. DENIED . 9 , —F.3d2014WL 4654472,at*15 United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 1793MJP, 2012WL 2412070(W.D. Wash. June26,2012),thecourt foundallegationsofdrained sufficient forthepleading stage. in question(andthushow oftenitusedthedevice’sresources),nonetheless foundtheallegation question “close”becausetheplaintiffshadnotalleged howfrequentlyGooglehadcollectedthedata resource intensiveandconsumers batterylife.” in adecreasetotheirdevice’sbatterylife“because theprocessofcollectinggeolocationdatais and transmitted theirgeographiclocation. alleged thatcertain“spyware”hadbeeninstalled intheAndroidOSandthatthisspywaretracked User PrivacyLitig. send geographiclocationinformation toitsservers. personal information wassenttoappdevelopersandthatAppledesignedtheiPhonecontinually and enjoyment ofsome portionofeachiDevice’s usefullife.” iDevice resources,batterylife,energyandcellulartime atacosttoPlaintiffsandcausedlossofuse bandwidth.” they hadalleged“diminished andconsumed iDeviceresources,suchasstorage,batterylife,and Litigation PSG, 2013WL 6248499,at*7(N.D.Cal.Dec.3,2013).Forexample, in minimis drainonthoseresources. resources cansufficetoestablishacognizableinjury”whenallegationsplausiblysuggestednon-de alleged resourceusage,theyfailtoallegeaninjurythatcanserveasthebasisofstanding.” insufficient, statingthatbecausetheplaintiffshadfailedto“quantif[y]orotherwisearticulate[] bandwidth.” on theiriDevicesresultedin“diminished mobile deviceresources,suchasstorage,batterylife,and (N.D. Cal.May14,2014),forthisproposition.Inthatcase,plaintiffsallegedinstalledmalware “too vagueandspeculative”toestablishArticleIIIstanding. as allegedherein.” Case3:12-md-02330-EMC Document339Filed01/21/15Page10of96 At thesame time, othercourtsinthisdistricthave“foundthatunauthorizeduseofsystem Defendants relyprimarily on , 844F.Supp.2d1040(N.D.Cal.2012),thecourtfoundthatplaintiffshadstandingwhere Id. Id. at1054.Plaintiffsfurtherallegedthateverytime anapplicationwasdownloaded, at*22.Theyallegedthatthe“unauthorizedtransmissions andoperationsused , 11-MD-02264JSW, 2013WL 1283236(N.D.Cal.Mar.26,2013), plaintiffs See SCAC ¶¶8-25.Defendantscontendthatthese“generalized”allegationsare Id. In reGoogle,Inc.PrivacyPolicyLitigation at*4,5.Finally,in Opperman v.Path,Inc. Id. *2.Plaintiffsallegedthatthesetransmissions resulted Id. 10 at*2.While thecourtfoundstanding Id. at1050.Similarly, in Goodman v.HTCAmerica, Inc. , No.C13-0453-JST,2014WL 1973378 Id. Thecourtfoundtheseallegations In reiPhoneApplication In reGoogleAndroid , No.C12-01382- , No.C11- Id. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 sufficient toplausiblyallege standingatthepleadingstage. “systemic,” ratherthan“episodic,”effectonthe resourcesofPlaintiffs’mobile devices.Thisis the CourtconcludesthatPlaintiffshavesufficiently allegedthattheCarrierIQSoftwarehashada 40, 64,74.Takingtheseallegationsastrue,and drawing allplausibleinferencesinPlaintiffs’favor, allegation thattheCarrierIQSoftwareisalways operatingandcannotbeturnedoff. SCAC ¶85(emphasis added)(citationomitted). PlaintiffselsewhereintheSCACrepeat plausible forpurposesofthepleadingstage.Specifically,SCACallegesthat However, theSCACprovidesfurtherfactualenhancement thatmakes Plaintiffs’allegations memory” wouldlikelybeinsufficienttostateasufficientinjury-in-factforstandingpurposes. (with oneplaintiffallegingthatitoccurred27times). defendant uploadedtheplaintiff’slocationinformation Google standing willbefound. device’s mobile resourcesasaresultof“systemic ratherthanepisodic”useofthoseresources, and plausible.” mobile device’sscreenwasrefreshed. application collected,andsent,theuser’sgeographicinformation everythreehoursorwheneverthe system resourcessufficientforstandingpurposeswhereitwasallegedthatthedefendant’s Case3:12-md-02330-EMC Document339Filed01/21/15Page11of96 , thecourtfoundacognizableinjuryinfacthadbeenallegedwhereplaintiffsclaimed that The Plaintiffs’bareassertionthatCarrierIQ“taxed”eachPlaintiff’s“battery,processor,and It isevidentthatwhereplaintiffshaveallegedmore thana“deminimis” injurytotheir performance, andbattery life. purchased, andwhicharemarketed, inpart,basedontheirspeed, are notgettingtheoptimal performance ofthemobile devices they communications intercepted,plaintiffsandprospectiveclassmembers of theCarrierIQSoftware,inadditiontohavingtheirprivate slowing performance anddecreasingbatterylife.Asaresult,because cannot beturnedoff which itisinstalled.TheCarrierIQSoftware IQ Softwarenecessarilydegradestheperformance ofanydeviceon has notedthatinadditiontotheprivacyissues,embedded Carrier Carrier IQSoftwareonmultiple Androidsmartphone platforms. He Android developerTim Schofieldresearchedthepresenceof Id. In reGoogle,IncPrivacyLitig. . Itnecessarilyusessystem resources,thus Id. at*7.Thecourtfoundtheallegedinjury“bothspecific 11 See id. every , 2013WL 6248499,at*7.Thus,in time anapplicationwasdownloaded always operatingand e,eg id. See, e.g. In re ¶¶ United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 proceedings. Theallegations intheSCACatParagraph53quotealetter from AT&T.Takingall tension witheachother. However,thistensionisnotfataltoPlaintiffs’standing atthisstageofthe Docket No.309,at29. factual allegationfrom plaintiffs’experienceortheircounsel’sinvestigation,whichisongoing.” Defendants relyuponwasa“from AT&T’sDecember 14,2011lettertoSen.Franken,andnota device[s’] battery,processor,andmemory.” implementing orportingsoftwarewas installedandoperatingon[their]device[s],taxing Cribbs andPipkinanyinjury. 17. DefendantsthereforecontendthattheCarrierIQSoftwarecouldnothavecausedPlaintiffs Plaintiffs CribbsandPipkinarebothallegedtohaveSamsung Skyrocketdevices. agent tointerferewiththeperformance ofthosedevices.’”SCAC¶53.Thisissignificantbecause and Samsung Skyrocketdevices,buthasnotbeenactivatedduetothepotential forthesoftware states: “AT&Tindicatedfurtherthatthesoftware‘alsoisembedded ontheHTCVivid,LGNitro the allegationsinParagraph53ofSCACwhich,quotinganAT&TlettertoSenatorAlFranken, allegations intheSCACaffirmatively establishthattheyhavenotsufferedanyinjury.Theypointto statute claims forlackofstandingisaccordingly Android UserPrivacyLitig. minimis impact onthebatterylifeandperformance ofPlaintiffs’mobile devices. Software inobtainingthisinformation plausiblyallegesandimplies theSoftwarehasmore thanade isalwayson,thecontinualoperationof Plaintiffs haveallegedthattheCarrierIQSoftware Software’s legitimate uses.However,suchaneffectmay clearlybeinferredfrom theSCAC.As IQ Softwarethatatissuehadincremental effectonbatterylifeorperformance aboveandbeyondthe Case3:12-md-02330-EMC Document339Filed01/21/15Page12of96 Defendants arecorrectthat thePlaintiffs’variousallegationsonthispoint appeartobein Plaintiffs respondthattheyhaveproperlyalleged“CarrierIQSoftwareandrelated Defendants arguethatPlaintiffsCribbsandPipkindonothavestandingbecausethe .Plaintiffs CribbsandPipkin’sStanding 2. Defendants motion todismiss Plaintiffs’CCDAFAandotherstateconsumer protection Defendants arguethatPlaintiffshavefailedtoallegethe , 2013WL 1283236,at*4-5; Id. ¶¶917.Theyfurtherarguethatthequote DENIED 12 Goodman . , 2012WL 2412070,at*7. specific functions e InreGoogle See See oftheCarrier SCAC ¶¶9, United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Device Manufacturers. laws asserted;noristhereanamed plaintiffwhocanassertcertainstatelawclaims againstspecific there iscurrentlynonamed aninjury-in-factarisingundermany plaintiffwhocanassert ofthestate the reasonsdiscussedabove.AsDeviceManufacturers havecorrectlypointedout,however, who made hisorhermobile device,andnotthosewhomanufactured phonespurchasedbyothers. each individuallynamed Plaintiff onlyhasstandingtoassertclaims againsttheDeviceManufacturer purchased byanynamed Plaintiffinstateswhichnoresides.Defendantsalsoarguethat law claims arisingunderthelawsofastateinwhichnoPlaintiffresidesandastodevicesnot standing is question properlydirectedatthesummary judgment stage. purposes ofthepleadingstage.Whether theCarrierIQSoftwarewasactivatedontheirdevicesisa viewed, theCourtconcludesthatPlaintiffsCribbsandPipkinhaveadequatelyallegedstandingfor complaint must betakenastrueandallreasonableinferencesmust bedrawninPlaintiffs’favor.So Samsung Skyrocketdevicesusedonmobile carriersotherthanAT&T.Theallegationsofthe Software from mobile devices”),itispossiblethattheCarrierIQSoftwarewasactivatedon Carrier IQSoftware, carrier. GiventhattheSCACallegesmobile carriershavethepowertodeactivateorremove the are noallegationsintheSCAC,however,thatPlaintiffsCribbsorPipkinusedAT&Tastheir Software onSamsung Skyrocketdevicesoutofconcernsforperformance onthosedevices.There inferences inPlaintiffs’favor,thislettersuggeststhat Plaintiff from, have purchasedmobile devicesfrom theotherDeviceManufacturers. Similarly, thereisno named HTC EVO4G–LukeSzulczewski. Therearenonamed Plaintiffsfrom Illinoiswhoarealleged to Case3:12-md-02330-EMC Document339Filed01/21/15Page13of96 Plaintiffs haveadequatelyallegedaninjury-in-fact astotheirindividualstatelawclaims for APlaintiff’sStandingtoAssertClaims UnderStateLawsfrom StatesinWhich He 3. Defendants’ motion todismiss PlaintiffCribbs’andPipkin’sclaims forlackof Defendants’ finalargument isthatthisCourtshoulddismiss forlackofstandinganystate 5 Forexample, thereisonenamed Plaintifffrom Illinoisanditisallegedthathepurchasedan DENIED inter alia Does NotResideandAgainstDefendants Who DidNotManufactureHisDevice . see 5 While theputativeclassmay bedefinedtoincludethosewithsuch , Nevada. SCAC ¶55(Sprintindicatingthatit“beganremoving theCarrierIQ 13 AT&T chosenottoactivatetheCarrierIQ United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 what wasmissing in suit whohasArticleIIIstanding toassertaclaim againsteachoftheDeviceManufacturers. Thisis standing, itwouldbeimproper toallowthecaseproceed was injuredbyandthereforehadstandingtosue anumber ofthedefendants.Absentsuchthreshold the case(orthatportionofcase)couldnotproceed. In at leastonenamed plaintiff withstandingtosuesaiddefendant.Without suchthresholdstanding, have standingtosueatleastonenamed defendant;toholdeachdefendantinthecase,theremust be proposition thatforaclassactiontoproceedbetweenthenamed parties,eachnamed plaintiffmust before itaddressedtheissueofclasscertification.” almost noanalysisordiscussion)thatthe“districtcourtcorrectlyaddressedissueofstanding Plaintiff hadArticleIIIstandingtoassertanyclaim againstthem –theNinthCircuitnoted(with this precisecircumstance –wherecertaindefendantshadbeenincludedinalawsuitwhen mortgagehad notharmed interestrates–includingdefendantswho anyof thenamed plaintiffs.In Easter controlling andrequirestheCourttoaddressitsstandingarguments attheinitialpleadingstage.In contend, however,that 2014) (“Surprisingly,thereisnocontrollingcaselawonthisissue.”).TheDeviceManufacturers DuPont DeNemours&Co. Ninth Circuitprecedentspecificallydecidingthisquestion. question untilafterdecidingclasscertification. named plaintiffsonlyor,asPlaintiffsmaintain, theCourtshoulddeferconsiderationofstanding adjudicate thestandingquestionnowatpre-certificationpleadingstageasmeasured bythe 1087, 1091(S.D.Cal.2004)).Asdiscussedbelow,thecriticalquestioniswhetherCourtshould not partiestoanactionpriorclasscertification’”(quoting 1827 SI,2011WL 1753784(N.D.Cal.May9,2011)(recognizingthat“‘putativeclassmembers are standing, noclasshasyetbeencertified. Case3:12-md-02330-EMC Document339Filed01/21/15Page14of96 , home loanborrowerssuedanumber ofdefendantsallegingthattheychargedusurious The caseatbarisdistinguishable. Unlikein Given theprevalenceofnationwideclassactions,itisperhapssurprisingthatthereno Easter Easter v.AmericanWestFinancial : thethresholdstanding that might permit thecase toproceedbeyondthe , No.13-cv-01180-BLF,2014WL 4774611,at*3(N.D.Cal.Sept.22, See InreTFT-LCD(FlatPanel) AntitrustLitig. 14 Id. Easter at962. , 381F.3d948(9thCir.2004),is , herethereisanamed plaintiff inthis Easter See LosGatosMercantile,Inc.v.E.I. Saleh v.TitanCorp. e.g. Easter , therewasnonamed plaintiffthat , classcertification. standsfortheunremarkable , 353F.Supp.2d , No.M.07- no named United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Los GatosMercantile standing questionsintheclassactioncontextcanbedeferreduntilaftercertification. ed.). have made similar observations. propriety ofclasscertificationpursuanttoFederalRuleCivilProcedure23(a).”).Commentators in graduateadmissions], ifany,isamatter ofArticleIIIstandingatallorwhetheritgoestothe relevance ofthisvariation[betweenuseraceinundergraduatetransferadmissions anduseofrace 23. treated asastandingissueoroneofadequacyandtypicalityunderFederalRuleCivilProcedure differences betweenanamed plaintiff’sclaims andtheunnamed classmembers’ claims shouldbe Bollinger should bedecidedbeforestanding.” expressly decliningtoreachthe“difficultchicken-and-eggquestionofwhetherclasscertification 711 F.3d1109(9thCir.2013).There,theNinthCircuitrecognizedthisquestionwasanopenone, hold thatdistrictcourts certify theclassbeforeaddressingstandingofunnamed classmembers. address thequestion:Whether, oncethresholdstandingisestablished,theCourthaspower to initial pleadingstatetoclasscertificationdidnotexistin plaintiff andshehasnot alleged thatshepurchasedICBINBSoutsideof California. Thus,Plaintiff Unilever UnitedStates,Inc. pleading stage. consideration oftheseissues,treatingitasathreshold matter thatshouldbeaddressedatthe can beconsideredpriortoclasscertificationin actionlawsuits.”). 17, 2012)(“Thereiscurrentlyasplitamong federalcourtsasto.thequestion of whetherstanding Refrigerant CompressorsAntitrustLitig. Case3:12-md-02330-EMC Document339Filed01/21/15Page15of96 See id. It is not surprising, therefore, that district courtsacrossthecountryhavesplitonwhether It isnotsurprising,therefore,thatdistrict Any doubtastothelimited scopeof Many courts–includinganumber ofcourts inthisDistrict–haverefusedtodefer , 539U.S.244(2003)notedthattherewas“tensionin[its]priorcases”astowhether at263n.15; See, e.g. , 2014WL 4774611,*3-4(notingthedivisionandcitingcases); see alsoid. must always , Los GatosMercantile , 961F.Supp.2d1048(N.D. Cal.2013)(“[T]hereisonlyonenamed See at 263(“Asaninitialmatter, thereisaquestionwhetherthe address standingissuesbeforeclasscertification. William B.Rubenstein, Id. at.1113-14.Indeed,theSupreme Courtin , No.2:09-md-02042, 2012 WL 2917365(E.D.Mich.July Easter , 2014WL 4774611, at*4; 15 holdingwasresolvedin Easter Newberg onClassActions asitdoeshere. see alsoPardiniv. Perez v.NidekCo.,Ltd. Easter Easter didnotbroadly Gratz v. see alsoInre didnot §2.6(5th See, e.g. , , United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Mercantile unless atleastonenamed plaintiff hassufferedthe injurythatgivesrisetoclaim.’” action “‘eachclaim must beanalyzedseparately,andaclaim cannotbeassertedonbehalfofaclass one named classrepresentativemust haveArticleIIIstandingtoraiseeachclaim” andthatinaclass Mercantile laws aresubjecttodismissal.”). Where. .arepresentativeplaintiffislackingforparticularstate,allclaims basedon Cal. 2009)(“Aclasscannotassertaclaim onbehalfofanindividualthattheydonotrepresent. class certification.”); named intheComplaint. Thisisapleadingdefectamenable todetermination priortoamotion for does nothavestandingtoassertaclaim undertheconsumer protectionlawsoftheotherstates addressed beforeclasscertification.” (citing the NinthCircuithasstatedthatstandingshould be certification, notatthepleadingstage.However, WL 5685562(N.D.Cal.Nov. 4,2014)(“Classallegationsaretypicallytestedonamotion forclass rejected this“exactargument”); “determination ofstandingispremature priortoclasscertification”onthe groundthat prior toclasscertification. these courtshaveread may beexamined aftercertification (whentheunnamed classmembers become partiestothesuit), lacked standingtoassertsuchclaims. Onthecriticalquestionofwhetherthesestandingprinciples under thelawsofstatesinwhichnonamed plaintiffresidedandconcluded thatthe Id. other, unidentifiedmembers oftheclasstowhichtheybelongandthypurportrepresent.” he canallegeandshowthat,“theypersonallyhavebeeninjured,notthatinjuryhassuffered by 1098 (N.D.Cal.2007),thecourtreliedonpropositionthatnamed plaintiffs onlyhavestandingif Case3:12-md-02330-EMC Document339Filed01/21/15Page16of96 (quoting The courtsinthesecasehaveattempted togeneralizeArticleIIIprinciples.In , 2014WL 4774611,*4.Similarly, in , forinstance,thecourtnotedthatwhereacomplaint includesmultiple claims “atleast Lewis v.Casey I reFlashMemoryAntitrustLitigation In Easter , 518U.S.343,347(1996)).Thesecourtshavelookedatclaims brought See, e.g. broadlyasrequiringthatstandingconsiderationsshouldbeaddressed see alsoFenerjianv.NongshimCo.,Ltd. , id. at1107(dismissing plaintiffs’argument thatthe Easter 16 In reDitropanXLAntitrustLitig. , 381F.3dat962)). , 643F.Supp.2d1133,1164(N.D. , —F.Supp.3d2014 , 529F.Supp.2d named plaintiff Los Gatos Easter that Los Gatos state’s had United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Supreme Courtin First, forthereasonsstatedabove, categorical requirement thatthestandinganalysismust precedeclasscertificationisunwarranted. plaintiffs’ positiononlytobefacedwiththesame problem months downtheroad.” Id. Litig. oriented standingquestionsatthepleadingstage.Forexample, in Ortiz questions couldbeaddressed firstastheywere“logicallyantecedent”to the standingquestions. yet experiencedanyphysical injury.TheSupreme Court inbothcasesstatedthatclasscertification cases were“exposureonly”plaintiffs–individuals whohadbeenexposedtoasbestosbutnot involved aglobalsettlement inasbestosclassactions.Among theunnamed classmembers in both must beinterpretedinkeepingwithArticle III constraints..’”).Both the issueaboutRule23certificationshouldbetreated first,‘mindful that[theRule’s]requirements appropriate toreachthem first.” certification issueswas“logicallyantecedenttotheexistenceofanyArticleIIIissues,itis Article IIIstandingquestions.Specifically,theCourtstatedthatbecauseresolutionof Supreme Courtheldthatthelowercourtshadproperlyaddressedclasscertificationfirstpriorto Corp. may addressclasscertificationprior toresolvingstandingquestions.Inboth Case3:12-md-02330-EMC Document339Filed01/21/15Page17of96 at155.Thecourtdeclinedto“indulgeintheprolongedandexpensiveimplications ofthe , 527U.S.at831; , 260F.R.D.143(E.D.Pa.2009),thecourtstated: , 527U.S.815(1999)and While theabovecasesarenotwithoutlogicalforce,Courtconcludesthat astrict In addition,some courtshavearticulatedprudentialreasonsforadjudicatingtheseclass- Furthermore, the Supreme Courthasexpressly recognizedthat,inatleastsome cases,courts precise problem thatthelimitations ofstandingseektoavoid. injuries andmodes ofredresswouldnotshare.Thatpresentthe certification, proposingtorepresenttheclaims ofpartieswhose conclusion ofthatdiscovery,theplaintiffswouldapplyforclass with respecttoinjuriesinpotentiallyeverystatetheUnion.At referenced intheircomplaint toembark onlengthyclassdiscovery class action,withnoinjuriesinrelationtothelawsofcertainstates until classcertification]wouldallownamed plaintiffs inaproposed The alternativeproposedbytheplaintiffs[deferringconsideration Gratz Amchem andtheNinthCircuitin , 521U.S.at612.These “logicallyantecedent”cases,although Amchem Products,Inc.v.Windsor Amchem Easter cannotbereadsobroadly.Itsfactsarenarrow,andthe 2 ..at612; , 521U.S. Perez 17 haveconfirmed thisisanopenquestion. see alsoOrtiz In reWellbutrinXLAntitrust , 521U.S.591(1997),the , 527U.S.at831(“Thus Ortiz Ortiz v.Fibreboard and Amchem Id. See United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 command. establish thattheorderingofstandingversusclasscertificationisnotdrivenbyarigidconstitutional ordering whereallstandingquestionsmust bedetermined priortoclasscertification;thesecases arising underunusualcontexts,demonstrate thattheSupreme Courthasnotinsisteduponarigid supra be decidedfirst‘whereits outcome will affecttheArticleIIIstandingdetermination.’” Rubenstein, recognizes thata“‘growingconsensus’among lowercourtsisthatclasscertificationshouldindeed Ortiz 2:2 (5thed.); considered beforestandinginglobalsettlement-only mass tortclassactions.” Rubenstein, narrowly, holdingthatthosecasesstandforalimited exceptionthatclasscertificationcanbe management oftheorderingtheseissues. of the“logicallyantecedent”doctrineisrequired,areadingwhichaffordsflexibilityincourt’s Ill. Jan.9,2012).Forthereasonsdiscussedabove,thisCourtconcludesthatamore nuancedreading In rePlasma-DerivativeProtenTherapiesAntitrustLitig. Ortiz 707. TheNorthernDistrictofIllinoishasconciselysummarized thethreedominant approachesto Amchem great dealofmischief.” Amchem Seventh Circuithasnoted: Case3:12-md-02330-EMC Document339Filed01/21/15Page18of96 islimited tothe“unique contextofglobal-mass settlements”). However,thatcommentator and , §2:2(quoting To besure,theprecisecontoursof“logicallyantecedent”doctrinecoinedin A leadingcommentator hasnotedthat“[m]ost courtshaveinterpreted aresubjecttodispute,withatleastonecommentator notingthattheconcepthas“causeda and Amchem Ortiz see alsoHoffmanv.UBS-AG consider classcertificationbeforestanding. settlement class,”anddonotinterpretthosecasestorequirecourts and considered “logicallyantecedent.”Finally,some courtslimit fashion agoverningprincipletodetermine whenclasscertificationis inquiry. Othershavetakena“nuanced”approach,attempting to resolving classcertificationquestionspriortoconductingastanding Some courtshavetakenanalmost categoricalapproach,routinely ’s “logicallyantecedent”languageasfollows: Amchem : TheProblemof“LogicallyAntecedentInquiries Winfield v.Citibank,N.A. See tothe“veryspecificsituationofamandatory global LindaS.Mullenix, , 591F.Supp.2d522,531(S.D.N.Y.2008)(noting that , 842F.Supp.2d560,574 (S.D.N.Y.2012).Asthe Standing andOtherDispositiveMotionsAfter 18 , No.MDL2109,2012WL 39766 (N.D. , 2004Mich.St.L.Rev.703, Ortiz Amchem and Ortiz supra Ortiz and , § United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 2060856 (W.D. Wash. May1,2007),thedistrictcourtfoundthatwhere anamed plaintiffhad Id. logically, antecedenttoquestionsofstanding: individuals adequately.” of thoseindividualswhoseclaims ariseunderthelawsofotherstates andhecanrepresentthose found thatinorderforhim torepresenttheputativeclass,“hemust establishthathisclaim istypical recognized thatitwasundisputedplaintiffhadestablishedstandingunderMichiganlaw.Itthen Arizona, Colorado,Maryland,Minnesota,Missouri,NewJersey,andWashington. Michigan, butsoughttorepresentaclassofconsumers harmed bythedefendantinMichigan, insurance company overchargeditspremium ontitleinsurance. Supp. 2d662(E.D.Mich.2008),plaintiffbroughtaclassactionallegingthatthedefendanttitle antecedent toclassconsiderations.Forexample, in precise “sisterstate”lawscenarioraisedinthiscaseandfoundclasscertificationtobelogically (quoting certification acquire[s]alegalstatusseparatefrom therepresentative.’” recognized that“onceaclasshasbeencertified,‘theofunnamed personsdescribedinthe Payton v.CountyofKane Case3:12-md-02330-EMC Document339Filed01/21/15Page19of96 at668.Similarly, in Indeed, anumber ofcasesinthis“growingconsensus”haveaddressedissuethe Sosna v.Iowa defendant’s requesteddismissal presently. certification decision,butittheargument doesnotsupportthe proceed asaclassrepresentativewillbesubsumed intheclass own refinancingtransaction.Thequestionwhether hehasstandingto standing toasserthisclaims arisingfrom theallegedoverchargeonhis Arizona law.Thedefendanthasnotseriouslychallenged theplaintiff’s likely wouldhavesufferedaninjurythatcouldbe redressedunder Arizona law;however,amember ofhisproposedclass from thatstate certainly couldnotfileanindividualsuitonlyseeking reliefunder For example, withthefacts presentedinthecomplaint, theplaintiff independent oftheinterestassertedbynamed plaintiff.” “[a] properlycertifiedclasshasalegalstatusseparatefrom and certification ofaclasschangesthestandingaspectssuit,because not simply with referencetotheindividualnamed plaintiffs.The requirements must beassessed withreferencetotheclassasawhole, once aclassisproperlycertified,statutoryandArticleIIIstanding , 419U.S.393,399(1975)). Jepson v.TicorTitleInsurance Company Id. , 308F.3d673,680(7thCir.2002).TheNinthCircuithassimilarly at668.Accordingtothecourt,thisanalysiswasnecessarily,and 19 Hoving v.TransnationTitleIns.Co. See id. , No.C06-1723-JCC,2007 WL at664.Plaintiffresidedin Bates , 511F.3dat987 Id. Thecourt , 545F United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Clancy v.BromleyTeaCompany Bruton v.GerberProds. Co. General Mills,Inc. adequately representaclassofindividualswhopurchased the“similar” products. product claims andleave forclasscertificationthequestionofwhethernamed plaintiffcan number ofcourtsinthisDistrictallowtheseputativeclassactions toproceedasthe“similar” can notclaim tohavesufferedaninjury-in-factfrom thatproduct.Despite thisfact,agrowing directly suchclaims against thedefendant–havingneverpurchased“similar” product,he orshe cases, itcouldbearguedthatthenamed plaintiffwouldnothaveArticleIIIstandingtoassert purchased productsdifferentfrom, butsimilar to,thosepurchasedbythenamed plaintiff.Inthese whether anamed plaintiffinconsumer classactioncanbringsuitonbehalfofindividualswho the classiscertified. addressing standingdoesnoviolencetoArticleIII.Acaseorcontroversymay stillbeassuredonce cognizable partiesareinthecase( threshold standingforeachnamed plaintiff,orderingtheadjudication processsoastoaddresswho to pursueclaims ofunnamed classmembers isconsistentwithArticleIII.Providedthere sense oftheterm, be“logicallyantecedent”tostanding. the classofpersonsshehasbeencertifiedtorepresent.”).Thus,certificationmay, inatrue (although controversywasnolongeraliveastothenamed plaintiff,“itremains verymuch alivefor interests ofthemembers of thecertifiedclass; legal statusonceaclassiscertified–standingmay beestablishedbylookingtotherightsand certified.” toassertnon-Washingtonquestion thattheproposedclasswouldhavestanding claims ifitwere of residentsfrom otherstateswerelogicallyantecedenttostandinginquiriesbecause“there[was]no established individualstanding,questionsabouttheplaintiff’sabilitytorepresentaclassconsisting Case3:12-md-02330-EMC Document339Filed01/21/15Page20of96 This conclusionisalsoconsistentwithabodyofcasesthathaveexamined thequestion The conclusionthatitispermissible todecideclasscertificationbeforedetermining standing Because ofthenatureclasscertification–aprocesswhereinmembers oftheclassacquire Id. at*1. , No.12-cv-05099-WHO, 2014WL 1248017, at*10(N.D.Cal.Mar.26,2014); , No.12-cv-02412-LHK, 2014WL 172111(N.D.Cal.Jan.15,2014). , No.12-cv-03003-JST, 2013 WL 4081632(N.D.Cal.Aug. 9, i.e. , whetherunnamed classmembers havelegalstatus)before see Sosnav.Iowa 20 , 419U.S.393,401(1975) See , e.g. , Rojas v. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Cal. Nov.17,2014),thecourt,indecidingtoaddress classcertificationatthepleadingstage,stated: in analysis theyhaveundertakenfirst,couched theirdecisionasoneofdiscretion.Forexample, questions ofstandinguntilafterclasscertification. Indeed,anumber ofcourts,regardlesswhich standing issues. principle thatthereisnorigidruleprecludesclasscertificationfrom beingaddressedbefore on pragmatic factorsinafamiliar andaccessible manner”). Thesecasesfurtherexemplify the concerns abouttherelationshipbetweenclassrepresentativeandclass”“focusesacourt certification ispreferableinsofarasRule23’srequirements “aredesignedpreciselytoaddress Id. The courtcontinued: first litigation isconductedbyandonbehalfoftheindividualnamed partiesonly.’” plaintiff meets therequirements,’ andthat‘[t]heclassactionisanexceptiontotheusualrule well-established principlesthat‘[i]naclassaction,standingissatisfiedifatleastonenamed that “[t]ransmogrifying typicalityorcommonality intoanissueofstandingwouldundermine the 2013) providesacogentdiscussionofthereasoningunderlyingthesecases.There,courtnoted United Food&CommercialWorkersLocal1776 Case3:12-md-02330-EMC Document339Filed01/21/15Page21of96 ; see also Bates Accordingly, forthereasonsdiscussed,Court findsthatithasthediscretiontodefer , 511F.3dat985andthen Rubenstein, determine standing atthisjuncture,andthatefficiencyconsiderations I findthattheweightof the persuasiveauthority issue ofstandingbefore it addresse[s]theissueofclasscertification.’ The NinthCircuithasconfirmed thatdistrictcourts requirements ofRule23. rather anearlyanalysisofthetypicality,adequacy,andcommonality “sufficient similarity” oftheproductsisnotastandinginquiry,but “dissimilar” producthedidnotbuy.Seenthisway,analyzingthe product hedidnotbuythandoestoassertclaims relatingtoa plaintiff hasnomore standingtoassertclaims relatingtoa“similar” similar” isanappropriateinquiry,butitdoesnotrelatetostanding:a not besubstantiallyidentical.”Whether productsare“sufficiently reasonably co-extensivewiththoseofabsentclassmembers; theyneed sufficiently “typical”claims torepresentaclassifhisclaims “are unwarranted, atleastonthefactsofthiscase.Aplaintiffhas who purchasedanydifferentproductsthantheplaintiffseems Deciding atthepleadingstagethataplaintiffcannotrepresentclass supra , §2.6(recognizingthataddressingthesequestionsatclass Wal-Mart Stores,Inc.v.Dukes 21 , —F.Supp.3d2014WL 6465235(N.D. allows me can address , 131S.Ct.2541,2550(2001)). to ‘the Id. at*5(quoting United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 particular forcehere.Moreover, giventhebreadthofproposedclass and thenumber ofstate law articulated bythecourtin standing andarewilling and abletoassertclaims underthesestatelaws.The policyconcerns burden ofnationwidediscoverywithoutPlaintiffs firstsecuringactualplaintiffswhoclearlyhave Puerto Rico).TheCourthasreservationsofsubjecting theDeviceManufacturerstoexpenseand certification wheresinglenamed plaintiffassertedclaims arisingunderthelawsof22statesand 13-2664 ADM/SER,2014WL 943224(D.Minn.Mar.11,2014)(refusingtoallowclass four andtheDistrictofColumbia.”); does notreside.Rather,thereare114named Plaintiffswhoresideineverystatetheunionsave a casewheresinglenamed plaintiff assertsthelawsofamultitude ofstatesinwhichthatplaintiff 7192478 (D.Minn.Dec.18,2014)(permitting classcertificationtoproceed,notingthat,“thisisnot standing. state lawclaims areassertedisvastrelativetotheclaims towhichthenamed Plaintiffshave this actioncome from 13differentstates.Thenumber ofconsumers from 35otherstatesinwhich First,theCourtnotesthatnamed Plaintiffsin against Defendants.Itdoessoforseveralreasons. to presentanamed classmember whopossessesindividualstandingtoasserteachstatelaw’sclaims declines toexercisethisdiscretionandopts,asamatter ofcasemanagement, torequirethePlaintiffs language isindicativeofacourtrecognizingthatitpossessesthediscretiontotakegivenaction. antecedent’ toArticleIIIconcerns.’(emphasis added)).“Allows,”“can”or“may,” andsimilar court Kassman v.KPMGLLP standing. Rather,itisamendable toanalysisasamatter of represent aclassofanotherstate’sresidentsisnotnecessarily,oratleastonly,anissue (N.D. Cal.Oct.2,2014)(“[T]heCourtobservesthatthequestionofwhetheraplaintiffmay Id. Case3:12-md-02330-EMC Document339Filed01/21/15Page22of96 at*19(emphases added); may defer On thefactsofthiscase,however,astoclaims broughtunder35statelaws,theCourt Compare InreTargetCorp.DataSec.BreachLitig. of thiscase. militate againstwaitinguntilclasscertificationtodetermine thescope consideration ofArticleIIIstandinguntilafterclasscertificationare‘logically , 925F.Supp.453(S.D.N.Y.2013)(“TheSupreme Courthasheldthata In reWellbutrinXLAntitrust Litig. see alsoInreLithium with InsulateSB,Inc.v.AdvancedFinishingSystems, Inc. 22 , No.13-MD-2420YGR,2014WL 4955377 either , 260F.R.D.at155,apply with , —F.Supp.3d2014WL standing or class representation.”); , No. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 ‘all wiretappingandelectronic surveillancebypersonsotherthandulyauthorized lawenforcement .Plaintiffs’Federal Wiretap Act Claim C. Court addressesclasscertification. against eachoftheDefendantDeviceManufacturers is denied withoutprejudicetorenewalafterthe granted forlackofstandingbythenamed Plaintiffs.Themotion todismiss named Plaintiffs’claim South Carolina,Dakota,Tennessee,Utah, Vermont, Virginia,West Virginia,andWyoming is Carolina, NewHampshire, NorthDakota, Ohio,Oklahoma, Oregon,Pennsylvania,RhodeIsland, Massachusetts, Minnesota,Missouri,Montana,Nebraska,Nevada,NewJersey,Mexico,North Colorado, Delaware,DistrictofColumbia, Hawaii,Idaho,Indiana,Kansas,Louisiana,Maine, states. expansive burdenentailedinpermitting plaintiffstosueeachdefendantunderthelawsof35other Plaintiff); thepotentialburdenofadjudicatingclasscertificationwillnotimpose thekindof these Defendantsareproperlyinthecase(havingallegedlysoldadevicetoatleastonenamed discretion todeferdetermination ofstandinguntilafterclasscertification.Incontrastto Manufacturers from whom othernamed Plaintiffsboughtdevices,theCourtwillexerciseits purchase theirmobile device. Plaintiffs donothavestandingtoassertclaims from statesinwhichtheydonotresideordid this casetoaddressstandinginadvanceofclasscertification.Insodoing,theCourtfindsnamed in orderingthedeterminations ofclasscertificationandstanding,theCourtfindsitappropriatein standing tobringsome 35statelawclaims beforeclasscertification. round ofdiscoveryandfurtherclasscertificationmotion practice).Itmakes sensetoaddress would engenderdelay(addingthatanynewnamed plaintiffswouldlikelybesubjecttoanother certification underRule23may notbemet or,iftheyare,subclassesmay havetobecreatedwhich claims assertedonbehalfoftheclass,thereisameaningful riskthattherequirements ofclass Case3:12-md-02330-EMC Document339Filed01/21/15Page23of96 The FederalWiretap Act(“Wiretap Act”),18U.S.C.§2510-2520, “isdesignedtoprohibit Accordingly, themotion todismiss claims broughtunderthelawsofAlaska,Arkansas, However, astothenamed Plaintiffs’abilitytosueundertheirownlawsDevice In sum, althoughtheCourtbelievesArticleIIIallows the districtcourttoexercisediscretion 23 Easter , United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 contemporaneously with transmission Act’s interceptionelement as requiringthatthedefendantinterceptcommunication inquestions 2009) (quoting communication arecapturedorredirectedinanyway,’” (9th Cir.1998).Ithasfurtherheldthat“[s]uchacquisition occurs‘whenthecontentsofawire “act ofacquiring,orcoming intopossession of.” in thestatute,butNinthCircuit,lookingat term’s “ordinary meaning” hasdefineditasthe of acommunication. 18U.S.C.§2510(4)(emphasis added).Theterm “acquisition”isnotdefined alleged thatanyoftheDeviceManufacturers“acquired”electroniccommunications. of Plaintiffs’allegationsdonotinvolve“contents”communications; and(4)Plaintiffs havenot Ninth Circuit,(2)theCarrierIQSoftwareisnota“device”asrequiredbyWiretap Act;(3)many Defendants “intercepted”anycommunications, asthatterm hasbeendefinedandappliedbythe statutory andpunitivedamages; and(3)reasonableattorney’sfees. are entitledto:(1)anypreliminary, equitable,ordeclaratoryreliefthatmay beappropriate;(2) damaged bytheinterceptionor disclosure oftheircommunications inviolationoftheWiretap Act mechanical, orotherdevice.” contents ofanywire,electronic,ororalcommunication throughtheuseofanyelectronic, Id. person to: Plaintiffs allegethattheDefendantsviolated18U.S.C.§2511(1)(a),whichmakes itunlawfulfora County officials engagedininvestigationofspecifiedtypesmajor crimes.’” Case3:12-md-02330-EMC Document339Filed01/21/15Page24of96 §2511(1)(a).TheActdefinestheterm “intercept”asthe“auralorotheracquisitionof , 752F.2d1387,1388(9thCir.1985)(quotingS.Rep.No.1097,90thCong.,2dSess.). Central toDefendants’arguments inthiscase, the NinthCircuithasconstruedWiretap As discussedabove,“intercept”isdefinedasthe“auralor .Plaintiffs HaveAdequatelyAllegedan“Interception”forPurposesoftheWiretap Act 1. Defendants arguethatPlaintiffs’Wiretap Actclaims failbecause(1)Plaintiffsto allege electronic communication.” other persontointerceptorendeavorintercept,anywire,oral, “intentionally intercept[],endevaor[]tointercept,orprocure[]any United Statesv.Rodriguez Id. §2510(4).Under18U.S.C.2520,anyonewhohasbeen . In , 968F.2d130,136(2dCir.1992)). Konop v.HawaiianAirlines, Inc. United Statesv.Smith 24 Noel v.Hall other acquisition See , 568F.3d743,749(9thCir. Greenfield v.Kootenai , 155F.3d1051,1055n.7 18U.S.C.§2520(b). , 302F.3d868(9thCir. ofthecontents” United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 when itpassedthePATRIOT Actandamended theElectronic Communications ProtectionAct electronic storage,” communication referencedin§2511(1)(a))must be“acquiredduringtransmission, not while itisin 1055-56, the could be“intercepted”whenitwasinstorage(for instance,whenstoredinvoicemail), Circuit in “transfer” ofdata,signs,signals,writings,etc. contrast, didnotinclude“storage”ofelectroniccommunications, butwas(as itisnow)limited tothe 18 U.S.C.§2510(1)(1998)(emphasis added).Thedefinitionof“electroniccommunications,” by communications” weredefinedas: (“ECPA”) ofwhichtheWiretap Actispart.PriortothepassageofUSAPATRIOTAct,“wire communications” and“electroniccommunications” intheElectronicCommunications PrivacyAct based itsholdingprimarily onthedifferencein way Congressoriginallychosetodefine“wire F.3d at878(quoting ‘intercept,’ whichis‘tostop,seize,orinterruptinprogresscoursebeforearrival.’” acquisition contemporaneous withtransmission wasmost “consistentwiththeordinarymeaning of Act. and retrievingasavedvoicemail message wouldnotconstitutean“interception”undertheWiretap requirement, tappingintoorotherwisegainingunauthorizedaccessanindividual’svoicemail to electroniccommunications”). Accordingly,underthisinterpretationoftheinterception interception – States v.Steiger been “acquiredduringtransmission, notwhileitisinelectronicstorage.” 2002), theNinthCircuitheldthatforanelectroniccommunication tobe“intercepted,”itmust have Case3:12-md-02330-EMC Document339Filed01/21/15Page25of96 In United Statesv.Smith Konop Konop i.e. storage ofsuchcommunication other likeconnection.and for thetransmissions ofcommunications bytheaidofwire,cable,or any auraltransfermade inwholeorpartthroughtheuseoffacilities , 318F.3d1039,1048-49(11thCir.2003)(holdingthat“contemporaneous , theNinthCircuitfoundthatanarrowdefinitionof“intercept”whichrequired , anacquisitionduringflight–isrequiredtoimplicate theWiretap Actwithrespect courtconcludedthatan“electroniccommunication” (thekindof Konop Webster’s NinthNewCollegiateDictionary , 302F.3dat878.Thisreasoning wasbolsteredbythefactthatCongress, , 155F.3d1051(9thCir.1998)hadheldthatawire communication such termincludesanyelectronic . e Konop See 25 , 302F.3dat877.Thus,whiletheNinth 630(1985)).However,theCourt Id. at878; see alsoUnited Konop see id. , 302 at United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 access toasecurewebsite didnotconstitutean“interception”ofcommunications onthatsite); for purposeoftheWiretap Act. access toe-mails stored onaserver(suchasane-mail server) doesnotconstitutean“interception” has revolvedarounde-mail andrelatedcommunications. Thesecaseshaveheldthatunauthorized of communication.” Court itselfrecognizedthat“theexistingstatutory framework isill-suitedtoaddress modern forms Id. which anewlycomposed message issavedtoanytemporary locationfollowingasendcommand.’” narrow windowduringwhichanE-mail interceptionmay occur–thesecondsormili-seconds before application tothatform ofelectroniccommunication isundoubtedlylimited” and“‘[t]hereisonlya (N.D. Cal.Aug.4,2014),thedistrictcourtnotedthat“[g]ivenspeedofemail, theWiretap Act’s For example, in extend protectiontoelectroniccommunications, itisforCongresstocoverthebasesuntouched.”). (3d Cir.2003)(“While Congress’sdefinitionof‘intercept’doesnotappeartofitwithitsintent of communications may belimited. communications, some courtshavesuggestedthattheWiretap Act’sapplicabilitytomodern forms communications (letters,telephonecalls,andthelike)didnot.Giventheseaspectsofelectronic communications necessarilydependonelectronicstorageinawaythatmore “traditional”forms of instantaneous, speedinwhichtheycanbetransmitted. Further,transmission ofthese Id. approved thejudicialdefinitionof‘intercept’asacquisitioncontemporaneous withtransmission.” communications. reference to“electronicstorageofsuchcommunication” from thedefinitionofwire fact, Congressmade thatnarrowdefinitionapplicable towirecommunications byremoving the respect toelectroniccommunications andchosenottochangeormodify thatdefinition.” (“ECPA”), hadbeen“awareofthenarrowdefinitioncourtsgiventerm ‘intercept’with Case3:12-md-02330-EMC Document339Filed01/21/15Page26of96 at*10(quoting Case lawinthiscircuitapplying Of course,theprime benefitofmodern electroniccommunications isthetremendous, almost NovelPoster v.JavitchCanfieldGroup Id. United Statesv.Steiger Thus,the Konop , 302F.3dat874. Konop See, e.g. See, e.g. court concluded,“Congress.acceptedandimplicitly Konop , Konop , 318F.3d1039,1050(11thCir.2003)).The , Fraserv.NationwideMut.Ins.Co. ’s “contemporaneous with transmission” requirement , 302F.3dat875,878(holding thatunauthorized 26 , No.13-cv-05186-WHO, 2014WL 3845148 , 352F.3d107,114 Konop Id. In see United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 “received” textmessages wereintercepted).Similarly, indescribinghowtheCIQ Interface interception duringtransmission (asopposed,for example, toanallegation thatalready“sent”or queries andsearchterms.” SCAC¶46.The“incoming” and “outgoing”qualifiersimply IQ Softwarewas“interceptingincoming SMStextmessages” and“interceptingoutgoing web regarding CarrierIQ’ssoftware)uploadedavideo onYouTubeinwhichheshowedthattheCarrier Forexample, theSCACallegesthatMr.Eckhart(the individualwho“broke”thestory process. issue inthiscaseisallegedtooperateonsentand receivedcommunications and nofurther“movement” ofthemessage wasnecessary.Incontrast,theCarrierIQ Softwareat transmission wascompleted difference.”). [defendant] couldhavereceivedtheforwardedmessages inmilliseconds ordays,itmakes no 1154 (C.D.Cal.2007)(“[T]heamount oftime amessage isinstorageimmaterial. Assuch, intercepted.”); recipient hadnotreadtheemails intendedtoreachthatrecipientbeforeitwasallegedly transmission. “milliseconds” afterreceipt–ifthee-mail wasreceivedbythedestination server,itwasnolongerin communication priortothepurportedinterceptionorthatchallengedacquisitionoccurred destination server”).Ithasnotmattered thattherecipientdidnotactually“open”orread accessed atsome pointbetweenthetime thecommunication issentandthetime itisreceivedbythe Va. 2009)(holdingaqualifyinginterceptcanonlyoccur“whenane-mail communication is under thestatute.”); that havealreadybeenreceivedinanemail account’sinboxdoesnotconstitution‘intercept[ion]’ interception isnolongerpossible. been receivedbythedestinationserver,acommunication becomes “stored”andcontemporaneous constitute aninterception).Thesecasesgenerallystandforthepropositionthatoncee-mail has an ISP’sserverswerein“electronicstorage”andthereforeacquisitionbysubpoenadidnot Theofelv.Farey-Jones also Case3:12-md-02330-EMC Document339Filed01/21/15Page27of96 The common threadinthesecasesisthatthechallengedacquisitionoccurred See NovelPoster see alsoBunnellv.MotionPictureAssociationofAmerica see alsoGlobalPolicyPartners,LLCv.Yesin , 359F.3d1066,1077(9thCir.2003)(determining thate-mails storedon –thee-mail messages atissuewerereceivedbythedestinationserver , 2014WL 3845148,at*11(“Nordoesitmatter iftheintended See NovelPoster 27 , 2014WL 3845148,at*11(“[R]eadingemails , 686F.Supp.2d631,638(E.D. , 567F.Supp.2d1148, during thetransmission after the United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 inference thattheCarrierIQSoftwareoperatescontemporaneously withtransmission. transmission process. which communications toandfrom thephonearebeingcontemporaneously analyzedduringthe “recognizes” certainactivityandthensendsitdowntotheIQAgentsuggestsacontinualprocessby and possibletransmittals.” SCAC¶63.TheallegationthattheCIQInterface“sees”and host ofdataandcontent”then“sendthatmaterial downtotheIQAgentforfurtherprocessing operates, theSCACallegesthatitisa“layerofcode”“designedtosee,recognizeandintercept See that thereceivedtextmessage senttotheenduser’s“inbox.” message wasdisplayedinplaintext.Onlyafterallthisdonedoesthesystem logcodesuggest The textmessage wasthensenttocom.htc.android.iqagent.action. smsnotify wherethetextof Part #2 code “dispatchWAPPushtoCIQ” andthen“dispatchSmsToCIQ.” before theSMStextmessage evenappearedonthemobile device,themobile devicefirstranthe log todemonstrate howtheCarrierIQSoftwareoperated.Thevideoappearstodemonstrate that Mr. Eckhartsentatextmessage tohismobile deviceandsubsequentlyreviewedthedevice’ssystem effectively incorporated by referenceintotheSCAC. by referenceinthecomplaint, ormatters ofjudicialnotice”).Here,theYouTubevideowas may, at thepleadingstage,consider“documents attachedtothecomplaint, documents incorporated pleading stage. Case3:12-md-02330-EMC Document339Filed01/21/15Page28of96 SCAC ¶65.Includedinthisinterviewwasthefollowingexchange: Further, reviewingtheYouTubevideocitedinSCACcontainsadditionalsupportfor Finally, theSCACreferencesandquotesfrom amedia interviewwithaCarrierIQexecutive. 6 , TheCourtmay properlyconsiderthecontents ofthereferencedYouTubevideoat http://youtube.com/watch?=T17XQI_AYNo it? You shouldn’tneedto?Doesthatmeanyoucategorically don’tdo information. there’s thiskindoffastprocess.We shouldn’tneedtobufferthis No,discard.Sowithinthesoftwareitself we’ll lookatit.Isitforus? We receivethisinformationinrealtime messages, oracache.AmIright? It seemstheremustbesomesortofbufferreceivedtext Cf. UnitedStatesv.Ritchie , 342F.3d903,908(9th Cir.2003)(holdingthatacourt 28 (at12:30)(lastvisitedonOctober22,2014). See , soatextmessage comes in, SCAC ¶¶46,65. Id. See TrevorEckhart, 6 Inthevideo, Carrier IQ United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 United Statesv.Councilman the transmissionprocess premise to Defendant’sargument –thatacommunication intemporary, transientstorage Konop at thetime theCarrierIQ Softwareoperatedonthem, storedcommunications thatcouldnot,under some form oftemporary storage.Accordingly,Defendantsconcludethatthecommunications were, the CarrierIQSoftwareoperatedoninformation locatedonamobile device,itwas,bydefault,in defined bytheECPA.Inessence,Defendants’argument ispremised onthecontentionthatbecause device whentheCarrierIQSoftwareoperated,theywerein“temporary, intermediate storage”as 18 U.S.C.§2510(17).Defendantsarguethatbecausethecommunications wereonthemobile defines “electronicstorage”as: of theWiretap Act’sprovisions.Atthehearing,DefendantsrepeatedlycitedfactthatECPA communications), thecommunications atissueare,asamatter oflaw,in“storage”andthusoutside received communications) orhadnotyetleftthemobile device (inthecaseofsent operated oncommunications thateitherhadbeenreceivedbyamobile device(inthecaseof Carrier IQsoftwareoperatescontemporaneously withtransmissions. analogizing theprocesstoafishnetthroughwhichtransmission passesfurthersuggestthatthe 2014) (emphases added).Thisdescriptionof“realtime” processingbytheCarrierIQSoftwareand (lastvisitedOctober 22, http://www.theregister.co.uk/2011/12/02/carrier_iq_interview/?page=2 Case3:12-md-02330-EMC Document339Filed01/21/15Page29of96 and As aninitialmatter, theCourthasseriousreservationsastowhether theunderlyinglegal Nonetheless, DefendantsarguethatbecauseitisundisputedtheCarrierIQSoftware Theofel communication; communication serviceforpurposesofbackupprotectionsuch (B) anystorageofsuchcommunication byanelectronic communication incidentaltotheelectronictransmission thereof;and (A) anytemporary, intermediate storageofawire orelectronic applies. Just likelettingthesmall fishgothroughthenet,same analogy SMS come Yes,OK,let’sdealwithit.Ifnot,discard. in.Isitforus? need tobufferit. I haven’thadthatquestionbefore.can’tthinkofareasonwhywe’d beintercepted. isa“storedcommunication” thatcannotbeintercepted –iscorrect.In , 418F.3d67(1stCir.2005), theFirstCircuit,sittingenbanc,directly Because we’reoperatinginrealtime 29 , we’llseethe as partof United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 storage” tobeinsignificant: communications,” butnot“electroniccommunications,” asincludingcommunications in“electronic concluded thatthefactCongresshad,priorto thePATRIOTAct,chosentodefine“wire as messages storedinauser’smailbox” from unauthorizedaccess. Communications Act,“messages andby-productfilesthatareleftbehind aftertransmission, aswell determined thatCongressintendedthedefinitionof“electronic storage”toprotect,undertheStored mail messages storedduringtransmission from thosestrong protections.” storage wastoenlargeprivacyprotectionsforstoreddataundertheWiretap Act,nottoexcludee- Defendants inthiscaserely),thecourtfoundthat“purposeofbroaddefinitionelectronic Then, afterlookingatthelegislativehistorybehinddefinitionof“electronicstorage”(onwhich Wiretap Actwhenitisinelectronicstorage clearly statewhetheracommunication isstillan‘electroniccommunication’ withinthescopeof The districtcourtandaFirstCircuitpanelagreed,buttheenbancreversed. “electronic communications” undertheWiretap Act,butrather,wereinelectronicstorage. memory (RAM)orinharddisks,both,withinInterloc’scomputer system’” theywerenot “procmail recipe”operatedonthee-mail messages, the“messages existed‘intherandom access Id. defendant: and thenactedasthee-mail provider. rare andout-of-printbooklistingservice.Interlocgaveitsdealercustomers ane-mail address addressed thisquestion.Inthatcase,thedefendantwasVicePresidentofInterloc,Inc.,anonline Case3:12-md-02330-EMC Document339Filed01/21/15Page30of96 at70.Defendantmoved todismiss theindictment, arguingthatbecause,atthetime the The FirstCircuitsittingenbancbeganbynotingthattheplaintextofECPAdid“not and therefore,beforetheintendedrecipientcouldreadmessage. Amazon.com beforetheyweredeliveredtotherecipient’smailbox, procmail wouldinterceptandcopyallincoming messages from copy inaseparatemailbox thatCouncilman couldaccess.Thus, recipient’s mailbox, procmail wouldcopythemessage andplacethe so that,beforedeliveringanymessage from Amazon.com tothe Interloc’s systems administrator modified theserver’sprocmail recipe communications tosubscriberdealersfrom Amazon.com . directed Interlocemployees tointerceptandcopyallincoming Id. at71.Theindictment againstthedefendantallegedthat during transmission 30 .” Id. Id. at76(emphasis added). at77.Finally,thecourt Id. Specifically, thecourt Id. at71. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 under theWiretap Actrequiredacquisition“duringtransmission, notwhile itisinelectronic requirement articulatedin no evidentrelationshiptothepurposesofpolicies oftheWiretap Act. particular circuitry’sdesign: thorough andconvincing,toholdotherwisewould make theWiretap Actturnontheintricaciesofa include accessingthemessages storedonadestinationserver.”). accessing messages intransient storageonaserverduringthecourseoftransmission, butdoes e-mail accountoronaserver.”); Skaggs interceptedtheoriginale-mail transmission, ratherthanaccessingitlaterwhilestoredinhis CV-401-H, 2010Wl 2572815(W.D. Ky.June23,2010)(“Vincentmust assertthatThackerand and laterstorageofacommunication. for purposesoftheECPA. intrinsic tothecommunication processforsuchcommunications” wasnotastoredcommunication ‘storage-transit dichotomy’” andfoundthatacommunication in“transientelectronicstoragethatis Wiretap Act(asopposedtotheStoredCommunications Act). definition of“wirecommunication” wasmerely meant toprotectvoicemail messages underthe Id. Case3:12-md-02330-EMC Document339Filed01/21/15Page31of96 at78.Rather,thecourtconcludedthatadditionof“electronicstorage”element tothe Moreover, This analysisispersuasive.Notonly Based onitsexhaustiveanalysisofthelegislativehistory,FirstCircuitrejecteda“rigid become electroniccommunications again. electronic communications forveryshortintervals,andthensuddenly Councilman’s interpretationcreates:messages .brieflyceasetobe we doubtthatCongresscontemplated theexistentialodditythat storage outofthedefinition“electroniccommunication.” Indeed, definition of“wirecommunication” wouldtakemessages inelectronic suggested thattheadditionofelectronicstorageclauseto no one,evidently,remarked uponit.Nodocument orlegislatorever the Senateco-sponsorssawfittomention thistotheircolleagues,and technologically easiesttointerceptthosecommunications –neitherof destinations –which,asitturnsout,areoftenthepointswhereis instants duringwhichtheyareintemporary storageenroutetotheir communications from thescopeofWiretap Actforthebrief “wire communication” was intendedtoremove electronic If theadditionofelectronicstorageclausetodefinition Councilman Konop Id. e.g. at79.Othercourtshavedistinguishedbetween“transitory”storage isconsistentwiththeNinth Circuit’s“contemporaneous” Yessin . TheNinthCircuitin , whetherthereiscachememory –an engineeringintricacythathas See, e.g. , 686F.Supp.2dat638(“Thus,interceptionincludes , Councilman Fredrick v.OldhamCountyFiscalCourt 31 Konop ’s analysisoflegislativehistory merely heldthat an interception , No.3:08- not United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 storage.” electronic communication canbe“intercepted”whenitisacquiredin would becommonly understood.Thesecases,unlike the past on asecurewebsite); reached its involve situationswherethetransmission ofthecommunication atissuehadterminated andithad that is communications intransitory,temporary storage.Hence,thelanguagequoted abovewasnota storage onaserver the issueoftransitory“en route”storage.Rather,itexamined onlycommunications inpermanent communication instoragemore generally.But,the communications atissue in electronic communications, the“interception”requirement shouldapplytoelectronic as supportforthebroaderargument thatbecausesuchtemporary storagewas inherentinall communication wasnotdirectlypresentedbythepartiestoaction,butratherused amici whether theterm “interception”shouldapplytointransient“enroute”storagestageof Id. The courtrespondedtothisargument bystating: prohibition against‘intercepting’electroniccommunications wouldhavevirtuallynoeffect.” ‘intercept’ doesnotapplytothe communications.” communications instoragebecauseisanecessaryincidenttothetransmission ofelectronic “dissent, amici, andseverallawreviewarticles”that“theterm ‘intercept’must apply toelectronic Case3:12-md-02330-EMC Document339Filed01/21/15Page32of96 (utn 18U.S.C.§2510(17)(A)).This statement in (quoting part oftheoveralltransmissionprocess To besure,infootnote6of retainedbytheISP).Thus,matter transmitted hadreachedthestoragestageasthatterm Konop final destination communication. understood thatelectronicstoragewasaninherentpartof to theelectronictransmission thereof,”indicatingthatCongress intermediate storageofawireorelectroniccommunication incidental argument. Congressdefined“electronicstorage”as“anytemporary, of theECPAdemonstrate thatCongressconsideredandrejectedthis While thisargument isnotwithoutappeal,thelanguageandstructure , 302F.3dat87. after Konop see alsoTheofel transmission –afactualscenariofarafieldfrom thatpresentedby , 302F.3dat878n.6.Thesesourcesfurtherarguedthatifthe“term , evenifonlyforamoment. en route Konop Konop , 359F.3dat1077(addressingcopiesofe-mails , storage ofelectroniccommunications, theWiretap Act’s , theNinthCircuitaddressedanargument raisedby Theofel anelectronicmessage. 32 , andeverycasecitedbyDefendantsinthisaction Councilman See id. Konop (addressingbulletinsandpostings , however,is , didnotaddresswhetheran transitory dicta electronicstorage Konop . Thequestionof transmitted in didnotraise Id. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Software operatedoncommunications whiletheyresidedinsuch“storage.” that thereare contemporaneous byanystandard.”). messages forSzymuszkiewicz withinasecondofeachmessage’s arrivalandassembly .that’s 701 (7thCir.2010)(“EithertheserverinKansasCityorInfusino’scomputer made copiesofthe Wiretap Act. intercepted communications contemporaneously withtheirtransmission asrequired underthe reference anddiscussedabove,Plaintiffshavesufficiently allegedthattheCarrierIQSoftware Looking solelyatthefactualallegationsofSCAC, alongwiththematerials incorporatedby intercepted emails “whiletheemails areintransit”and“before placingtheemails intostorage”). [its] servers”wasafactualquestioncontradicted bythecomplaint’s allegationsthatthedefendant defendant’s argument that itschallengedpracticesonlyaffectedemails thathad“alreadyreached Mail Litig. with theirtransmission. apparent whytherewasno“captur[ing]orredirect[ing]”ofthesecommunications contemporaneous memory, cachememory, etc.)whentheCarrierIQSoftwareoperatedonthem, itisnotatall this casewereintransitorystorageonPlaintiffs’mobile devices(suchas thedevices’random access facility, notaplaceofpermanent storage.”). interception ofemail messages must haveoccurredwhilethemessages wereinatransientstorage 30, 2006)(“Inordertoconstituteunlawfulinterceptionofelectroniccommunication, the decisions. District hasappliedboth decisions from ourcourtoranyothercourt.”(quotationomitted)) (“We arenotboundbydicta–discussionsthat‘unnecessarytotheCourt’sholdings,’in holding ofthecourt. Case3:12-md-02330-EMC Document339Filed01/21/15Page33of96 Ultimately, however,theCourtneednotconclusivelydecidethisissue for thesimple fact Accordingly, eveniftheDefendantsarefactuallycorrectthatcommunications atissuein , —F.Supp.2d2014WL 3962824(N.D.Cal.Aug.12,2014),(noting that See, e.g. no allegationsintheSCACfrom whichitcanbeestablishedthattheCarrierIQ , Garcia v.Haskett See, e.g. Noel Councilman , 568F.3dat749; , United Statesv.Pedregon and , No.C05-3754CW, 2006WL 1821232,at*3(N.D.Cal.June Konop see alsoUnitedStatesv.Symuszkiewicz , implicitly findingnoconflictbetweenthe 33 , 520F.App’x605,608(9thCir.2013) . Atleastonedecisioninthis See, e.g. , In reYahoo , 622F.3d United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 communication such that divulgingaURLcontainingsearchterm toathirdpartycould amount circumstances, auser’srequest toasearchengineforspecificinformation couldconstitute a under theWiretap Act. messages andURLs(totheextentcontainauser’s search terms) implicate “content” is not“content”information forpurposes of theStoredCommunications Act). Records toGov’t re ApplicationofU.S.foranOrderDirectingaProvider ofElec.Comm’cnServ.toDisclose location information “doesnotconstitutethecontentsofacommunication under§2510(8)”); Cousineau v.MicrosoftCorp. device atanygiventime haslikewisebeendeemed tobenon-contentinformation. not capture“contents”ofanycommunication). Similarly, thegeographiclocationofamobile a devicethatcaptured, (9th Cir.2009); been foundtobenon-content“record”information. “content.” Forinstance,information aboutatelephonecall’s“origination,lengthandtime” have of thecommunication” isnotincludedinthedefinitionof“contents.” that “recordinformation regardingthecharacteristicsofmessage thatisgeneratedinthecourse Id. “includ[ing] anyinformation concerningthesubstance,purport,ormeaning ofthatcommunication.” “contents” ofacommunication. DENIED the groundsthatPlaintiffshadfailedtoallegeaninterceptioncontemporaneous withtransmission is Case3:12-md-02330-EMC Document339Filed01/21/15Page34of96 §2510(8).In The partiesagreethatPlaintiffs’allegations the CarrierIQSoftwareinterceptedtext Courts haveexcludedvarioustypesofinformation from theWiretap Act’sdefinitionof The definitionof“intercept”undertheWiretap Actonlyappliestotheinterceptionof .PlaintiffsMayOnlyRelyonAllegedInterceptionofTextMessagesandInternet 2. For theforegoingreasons,Defendants’motion todismiss Plaintiffs’Wiretap Actclaim on . Search Terms forItsWiretap ActClaim see alsoGildayv.Dubois , 620F.3d304,305-06(3dCir.2010)(holdingthat cellphoneuser’slocationdata In reZyngaPrivacyLitig. inter alia See Docket No.311; , 992F.Supp.2d1116,1127(W.D. Wash. 2012)(holdingthatcell-site , “thenumber called,andthedate,time andlengthofthecall”did See 18U.S.C.§2510(4).“Contents,”inturn,isdefinedas , 124F.3d277,296n.27(1stCir.1997)(determining that , 750F.3d1098(9thCir.2014),theNinthCircuitfound see alsoZynga 34 See UnitedStatesv.Reed , 750F.3dat1108-09(“Under some Id. at1106. , 575F.3d900,917 See, e.g. , f In cf. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 number called,thedurationofcall,and inmate’s PINnumber (thenumber assignedtothat wiretap act.Underthe“detailing” system, the prison system recorded information suchasthe prison’s system telephonemonitoring anddetailing regime violated thefederalandMassachusetts case, entire substanceofthecommunication. access, andthattheinterceptionofusername andpasswordresultsintheinterception ofthe communication, Plaintiffs’contend,istheestablishment oftheuser’s identityandarequestfor communication withthedestinationserveris created. The“substance,purport,ormeaning” ofthis cases byarguingthatwhenausertransmits information thattheNinthCircuitrecognizedasrecordinformation in The courtconcludedthisinformation wasnot“content”information becauseitwas“thetypeof at *1.Google,inturn,allegedlydisclosedthisinformation tothirdpartyappdevelopers. some instancestelephonenumber”) aspartofsigningupforGoogle’s“GoogleWallet” service. (specifically their“name, email address,Google accountname, home cityandstate,zipcode,in 3962820 (N.D.Cal.Aug.12,2014),plaintiffshadprovidedGooglewiththeircontactinformation identity.’” record information, insofarasitsimply functionedasa“‘name’ ora‘subscribernumber or information. Forexample, in meaning” ofanycommunication. Courtshave,therefore,foundcomparable datatonotbe“content” concludes theyarenot. content suchthatinterceptionofthisdatafallsundertheWiretap Act’sprovisions.TheCourt As aresult,thepartiesonlydisputeonthisgroundiswhether“usernames” or“passwords”are or applicationspurchasedbyauserimplicate “contents”ofcommunications asdefinedbystatute. that dataregardingamobile device’sgeographiclocation,thetelephonenumbers dialedorreceived, to adisclosureofthecontentscommunication.”). Additionally,Plaintiffshavenotcontended Case3:12-md-02330-EMC Document339Filed01/21/15Page35of96 Gilday v.Dubois The Courtisnotpersuaded.In At thehearingonDefendants’motion todismiss, Plaintiffsattempted todistinguishthese User names asindicatorsoftheidentityauserdo notdisclosethe“substance,purport,or Zynga , 750F.3dat1107.Similarly, in . There,plaintiff–aninmate inaMassachusettsprison–allegedthatthe Zynga theNinthCircuitfoundthatauser’sFacebookIDwasmere Zynga both , theNinthCircuitcitedwithapprovalFirst ausername andpasswordtogether,asubstantive 35 Svenson v.GoogleInc. Zynga , —F.Supp.2014WL .” Id. at*2. Id. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Carrier IQSoftwarewas usedbythemobile carriersintheir ordinarycourseofbusiness. alleges thattheCarrierIQ Softwareisa“component’ of the mobile devicesand,second, that the the CarrierIQSoftwarewasa“device”fortworeasons. First,DefendantsarguethattheSCAC Id. which canbeusedtointerceptawire,oral,orelectroniccommunication” 2510(4). “Electronic,mechanical, orotherdevice”is,inturn,definedas “anydeviceorapparatus communication “throughtheuseofanyelectronic, mechanical, orotherdevice.” 18U.S.C.§ Wiretap Actforallegedinterceptionoftheirusernames orpasswordsbytheCarrierIQSoftware. any communication. Accordingly,theCourt concludes thatPlaintiffscannotstateaclaim underthe access one’semail), thecredentialsthemselves donotrevealthesubstance,purport,ormeaning of prerequisite toengagingincommunications (i.e.,enteringausername andpasswordinorderto information, neitherdoesinterceptionofausername orpassword.While suchcredentialsmay bea password underPlaintiff’sargument –authenticationforpurposesofaccess. Id. signals relatingtothePINofcaller,number called,andthedate,time andlengthofthecall.” procedure didnotfallwithintheambit oftheWiretap Actbecauseit“simply captureselectronic at 281.InfindingnoWiretap Actviolation,theFirstCircuitheld, inmate thattheinmate hadtoenterinorderfortheoperatorcomplete thecall). Case3:12-md-02330-EMC Document339Filed01/21/15Page36of96 §2510(5)(a)(emphases added).Defendants contendthattheSCACfailstoproperlyallege at296n.27.ThePINnumber in As quotedabove,theWiretap Actdefinesinterceptionasacquiringthecontentsofa .Plaintiffs HaveAdequatelyAllegedthattheCarrierIQSoftwareisa“Device”for 3. Just asinterceptionofthePINnumber inthatcasewasfoundtonotimplicate “content” business electronic communicationserviceintheordinary courseofits course ofitsbusiness;or connection tothefacilitiesofsuchserviceandused intheordinary course ofitsbusinessandbeingusedbythesubscriber oruserfor provider ofwireorelectroniccommunication serviceintheordinary any componentthereof (a) Purposes oftheWiretap Act any telephoneortelegraphinstrument,equipmentfacility, . Gilday (i) furnishedtothesubscriberoruserbya (ii) beingusedbyaproviderofwireor servedthesame functionasatraditionalusername and 36 inter alia except , thatthe“detailing” : Gilday , 124F.3d United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 of hisemployment whileengagedinany activitywhichisanecessaryincidenttotherendition ofhis communication servicewhointercepts,discloses,or usesthatcommunication inthe“normal course 2511(2)(a)(i) protectsfrom Wiretap Actliabilityanyemployee, officer,oragentofanelectronic communication.” transmission ofthecommunication atissueorisincidentaltothetransmission ofsuch liability onlywhereanelectroniccommunication serviceprovider’sinterceptionfacilitatesthe re Google the subscriber’sultimate business,thatis,theabilitytoprovideunderlyingserviceorgood.” and requiredthattherebe“some nexusbetweentheneedtoengagein allegedinterceptionand hand, thecourtin 1983). ‘ordinary courseofbusiness’exception.” 2013). Statedanotherway,“noteverythingthatacompany may wanttodofallswithinthe Google Inc.GmailLitig. everything [theprovider]doesinthecourseofitsbusinesswouldfallwithinexception.” § 2510(5)(a),courtshavenotedthatthemodifier “ordinary”intheexemption means “not purposes oftheWiretap Act. Accordingly, PlaintiffshavesufficientlyallegedthattheCarrierIQSoftwareisa“device”for used bythemobile carriersintheir“ordinarycourseofbusiness”cannotberesolvedatthisstage. their businessareexcluded.Asdiscussedbelow,whethertheCarrierIQSoftware,asalleged,was “components” thatareusedbyaproviderofelectroniccommunications intheordinarycourseof telegraph instrument from thedefinitionof“device.”Rather,relevanttothisaction,only “electronic, mechanical, orotherdevice.” Accordingly, theDefendants’arguethat,under§2510(5)(a),CarrierIQSoftwareisnotan Case3:12-md-02330-EMC Document339Filed01/21/15Page37of96 The legislativehistoryoftheECPAprovidessome supportforthisnarrowreading.Section Courts inthisdistricthavedisagreedastotheprecisecontoursofexemption .Onone In addressingthescopeof“ordinarycoursebusiness”exemption containedin As tothefirstargument, §2510(5)doesnotexcludeall“components” ofatelephoneor , 2013WL 5423918,at*11.Underthisreading, theexception“offersprotectionfrom In reGoogleInc.GmailLitigation Id. at *8. , No.13-MD-2430-LHK,2013WL 5423918,at*8(N.D.Cal.Sept.26, Watkins v.LMBerry&Co. 37 adopteda“narrowreading”oftheexception, , 704F.2d577,582(11thCir. In re In United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 as plaintiffshaveadmitted thatEmbarq conductedtheNebuAdtestto furtherlegitimate business (10th Cir.2012)(finding defendant’s“ordinarycourseofbusiness”defense “appearstohavemerit, Mgmt. Co. business purpose”or“perhaps,atleast.beshown tobeundertakennormally”); 1003, 1009(D.C.Cir.1998)(notingthattheactivity inquestionmust “bejustifiedbyavalid provider tofurtherits“legitimate businesspurposes.” electronic communication services.atissue”butrathercouldalsoinclude actionstakenbya “‘ordinary courseofbusiness’exceptionisnotlimited toactionsnecessary toprovidingthe exception “coversmore farrangingactivity.” The courtnotedthatCongresschosetousethebroadterm “business”– thussuggestingthatthe that thechallengedconductbe“necessary”toprovisionofelectroniccommunication services. 2013 WL 6248499(N.D.Cal.Dec.3,2013),rejectedanarrowreadingoftheexceptionasrequiring and manage messages.” communications forthepurposesofensuring that theproviderscouldappropriatelyroute,terminate, electronic communication serviceprovidersfrom liabilitywhentheprovidersweremonitoring business.” Nonetheless,thereportcanbereadassuggestingthat“Congressintendedtoprotect 2510(5)(a)(ii) –“necessaryincidenttotherenditionof”servicesasopposed“ordinarycourseof report wasaddressingadistinctliabilityexceptionanduseddifferentlanguagethanthatin§ S. Rep.No.541,99thCong.,2dSess., Senate JudiciaryCommittee stated: service.” 18U.S.C.§2511(2)(a)(i).Inaddressingthis(atthetime) proposedliabilityexception,the Case3:12-md-02330-EMC Document339Filed01/21/15Page38of96 By contrast,thecourtin , No.10-2047-JAR,2011WL 3651359(D.Kan.Aug.19,2011), on voiceconversations.Accordinglytheyarenotprohibited. electronic communication service, donotinvolvehuman listeningin monitoring functions,whichmay benecessarytotheprovision ofan and otherwisemanage theindividualmessages theycontain.These monitor astream oftransmissions inordertoproperlyroute,terminate, The providerofelectroniccommunications servicesmay haveto electronic communications andtraditionalvoicetelephoneservice. [T]his provisionreflectsanimportant technicaldistinctionbetween In reGoogleInc.GmailLitig. In reGoogle,Inc.PrivacyPolicyLitigation reprinted at Id. at*10.Thus,thecourtdetermined thatthe 38 1986U.S.C.C.A.N.3555,3575.Tobesure,this Id. , 2013WL 5423918,at*10. at*11. See alsoBerryv.Funk , No.C-12-01382-PSG, aff’d 702F.3d1245 Kirch v.Embarq , 146F.3d United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 from theCarrierIQSoftware.” “contents ofthetextmessages” usersreceivedorsent the“contentsofusers’onlinesearchqueries location.” DocketNo.304-2, at2.Similarly, Sprintinitsletterstateditdidnotreceive the customers’ communications, totrackwhereourcustomers goontheInternet,ortotrackcustomer the same AT&Tletterquotedabove,statedthatitdid“notuseCIQtoobtainthecontentsof and internetsearchterm retrieval)thatthephonecarriershaveexpresslydisclaimed. Forinstance,in troubleshooting), Plaintiffshaveallegedthatthe Carrier IQSoftwarehasfunctionality(textmessage was usedbythemobile serviceprovidersforlegitimate businesspurposes(networkdiagnostics and troubleshooting toolintheordinarycourseoftheirbusiness. of theSCACthatCarrierIQSoftwarewasusedbycarriersasadiagnosticand Docket No.304-5,at3(citedSCAC¶54).Defendantsthusarguethatitisundisputedontheface Docket No.304-4,at2(citedSCAC¶53).Similarly, SprintwrotetoSenatorFrankenthat which stated: his questionsregardingtheuseofCarrierIQSoftware.Forexample, theyciteAT&T’sletter, SCAC establishestheexception,evenifbroadlyconstrued,doesnotapply. the CarrierIQSoftwarewasusedbymobile carriersintheordinarycourseoftheirbusiness, construed narrowlyorbroadlyisunnecessaryatthepleadingstageinthiscase.Incontendingthat Internet”). purposes andthatbehavioraladvertisingisawidespreadbusinesscommonplace onthe Case3:12-md-02330-EMC Document339Filed01/21/15Page39of96 The problem withDefendants’argument, however,isthateveniftheCarrierIQSoftware Defendants citetotheletterssentbyvariouscarriersSenatorAlFrankeninresponse The Courtfindsthatresolutionofthequestionwhether§2510(5)(a)exceptionshouldbe customer experiences. Sprint’s networkorotherwisetoimprove networkoperationsand specifically relatedtocertifyingthatadeviceisableoperateon behavior, servetargetedadvertising,orforanypurposenot Sprint hasnotusedCarrierIQdiagnosticstoprofilecustomer improved callcompletion rates.” operational datathatcanpointtopossiblenetworkupgrades,including Internet, ortotrackcustomer location..AT&Tmust collect customers’ communications, totrackwhereourcustomers goonthe We donotuse[theCarrierIQSoftware]toobtainthecontentsof Id. at4. 39 United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 send orreceivewireelectronic communications”). Nonetheless,in lightofthisCourt’s “electronic communication service”as“anyservice whichprovidestousersthereoftheability provider ofwireorelectronic communication services. of it.”).TheDeviceManufacturerswouldnotappear tofitwithinthisstatutorydefinitionofa exception, employees of theproviderwhoareactingwithoutauthorizationmay nottakeadvantage communications service..Asonlythe‘provider’canusedeviceinordertofallinto 4049484, at*5(“The‘ordinarycourseofbusiness’ exemption appliesonlytotheproviderof and was“designedonlytoprotectelectroniccommunication serviceproviders”); Google GmailLitig. that theexception “ordinary courseofbusiness”exceptioncodifiedat§2510(5)(a)(ii).Atleasttwocourtshaveheld to whetherthechallengedactivitiesfellwithindefendant’s“ordinarycourseofbusiness”). 2012 WL 4049484(C.D.Ill.Sept.13,2012)(findinga“genuinedisputeofmaterial fact” existedas ‘customary orroutine,’‘instrumental’ toGoogle’s business”); exception becausethecourt“cannotdetermine basedonthepleadingsalonewhatis‘necessary,’ development would benecessary”todetermine whetherthechallengedinterceptionsfitwithin 13-MD-2430-LHK, 2014WL 294441, at*3n.2(N.D.Cal.Jan.27,2014)(notingthat“factual business,” evenifthatexceptionisbroadlyconstrued. used asaproviderofwireorelectroniccommunication serviceintheoridnarycourseofits motion todismiss thatthesoftwarequalifiesasacomponent ofatelephonesystem thatis“being regarding thefunctionalityanduseofCarrierIQSoftware,Courtcannotconcludeona the allegationsofscopeandinferencesthatmust reasonablybedrawninPlaintiff’sfavor “legitimate” andordinarybusinesspurposes(underthemore broad readingoftheexception).Given a mobile device(underthenarrowreadingofexception)or(2)furthersmobile carriers either (1)“facilitates”oris“incidental”tothetransmission ofelectroniccommunications toorfrom and onlinesearchqueriesDefendantshavenotexplainedhow Case3:12-md-02330-EMC Document339Filed01/21/15Page40of96 Finally, theCourthasdoubtsastowhetherDeviceManufacturersmay eveninvokethe Plaintiffs havealleged,however,thattheCarrierIQSoftwareinterceptedbothtextmessages only , 2013WL 5423918,at*11(findingthatthe§2510(5)(a)(ii)exceptionisnarrow applies totheactualprovidersofcommunication services. 40 See, e.g. See 18U.S.C.§2510(15)(defining , In reGoogleGmailLitig. Shefts v.Petrakis this functionalityofthesoftware Shefts , No.10-cv-1104, See, e.g. , 2012WL , No.5: , In re United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Plaintiffs’ communications (includingtextmessages) viathe“Tell HTC”errorreportingtool. 12(b)(6) dismissal”). Further factualspecificityisrequiredunder that “conclusoryallegationsoflawandunwarranted inferencesareinsufficienttoavoidaRule conclusory allegationsareinsufficienttostatea claim. constituent element ofthedefinition“interception.”DocketNo.309,at37,38. However,these that they“allegeinterceptionbythemanufacturers throughouttheSCAC”andthat“acquisition”isa Plaintiffs’ textmessages orinternetsearchinquiries.Intheiropposition,Plaintiffs pointtothefact exception ofHTC,discussed sometimes devicemanufacturers.” SCAC ¶68.Therearesimply noallegations–withthe information allegedly interceptedbytheCarrierIQSoftware–are“typicallywirelesscarriersbut any DeviceManufacturer“acquired”communications. TheCourtagrees. DefendantscontendthatPlaintiffshavenotalleged of acommunication. 18U.S.C.§2510(4). detailed above,thedefinitionof“interception”requires“auralorotheracquisitioncontents” to allegeany“unlawfulacquisition”ofPlaintiffs’communications bytheDeviceManufacturers. As Accordingly, Defendants’motion todismiss onthisgroundis which “canbeusedtointerceptawire,oral,orelectroniccommunication” 18U.S.C.§2510(5). SCAC properlyallegesthattheCarrierIQSoftwareisan“[e]lectronic,mechanical, orotherdevice” service providersintheordinarycourseoftheirbusiness.Asaresult,Courtconcludesthat from whichitmay beinferredthattheCarrierIQSoftwareisnotusedbyelectronic communication the precisequestionofwhetheranon-serviceprovidercaninvoke§2510(5)(a)(ii)exception. IQ Softwarewaseveninthemobile carrier’sordinarycourseofbusiness,theCourtneednotresolve determination thatfurtherfactualdevelopment isneeded toevendetermine iftheuseofCarrier Case3:12-md-02330-EMC Document339Filed01/21/15Page41of96 It istruetheSCACcontains amyriad of allegationsregardingHTC’sacquisition The SCACallegesthattheCarrierIQ’scustomers –theindividualswhowouldreceive Defendants’ finalargument againstPlaintiffs’Wiretap Actclaim isthatPlaintiffshavefailed .PlaintiffsHaveFailedtoStateaClaim for ViolationoftheWiretap ActAgainstthe 4. For theforegoingreasons,CourtconcludesthatPlaintiffshaveallegedsufficientfacts Device Manufacturers infra –thatanyDeviceManufactureractuallyreceivedcopiesof 41 See, e.g. DENIED , Cousins Twombly . , 568F.3dat1067(noting and Iqbal . See, United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 the DeviceManufacturers wereinvolvedintheinstallationofCarrier IQSoftwareontheir 38. ItistruethattheSCAC containssufficientfactualallegationsfrom whichitcanbeinferredthat by wayofthesoftwarethey wroteandplacedonphonesdirectedtoconsumers.” DocketNo.309,at resulting acquisition–“[ the DeviceManufacturers,byinstallingCarrier IQSoftwareonitsmobile devices,”caused” the instrumental intheinterception ofPlaintiffs’communications. Specifically, Plaintiffscontendthat the CarrierIQSoftwarethroughtheirdevelopment oftheCIQInterfacesoftware–were crimes under the ElectronicCommunications PrivacyAct”). 1990) (notingthattheECPAwasamended to“underscorethatinadvertent interceptionsarenot intentional conductislacking.”); Victor’s textmessages totheSunbelt iPhone..Giventhesecircumstances, therequisite 2014 WL 4274313(N.D.Cal.Aug.28,2014)(“Sunbeltdidnotintentionallycaptureorredirect against theseDeviceManufacturers. communications wasintentional,Plaintiffshave failedtopleadabasisforWiretap Actliability Because therearenofactualallegationssuggestingthatHTC(orSamsung’s) acquisitionof against adefendantwhointerceptsanelectroniccommunication “inviolationofthischapter”). electronic communication.” 18U.S.C.§2511(1)(a); Act. Liabilityunder§2511(1)(a)makes unlawfulto“ the contentsofuser’scommunications, theynonethelessfailtoestablishliabilityundertheWiretap its errorreportingtools. suggesting thatSamsung committed asimilar errorandthereforereceivedcommunications through the hearingonDefendants’motion todismiss, Plaintiffsindicated that ithadreceivedinformation Android operatingsystem, resultinginthecommunications beingrecordedinthesystem logs.At through itserrorreportingtoolasaresultofiterroneouslyfailingtodeactivate“debug”mode inthe acquisition wasintentional–rather,itappearsthatHTCobtainedthecommunications inquestion e.g. Case3:12-md-02330-EMC Document339Filed01/21/15Page42of96 , SCAC¶72.However,theallegationsindonotsupportaninferencethatHTC’s Plaintiffs additionallyarguethattheDeviceManufacturers –astheentitiesthatimplemented While theseallegationssupportafindingthattwoDeviceManufacturersactuallyreceived t ] hey intercepted theplaintiffs’textmessages andInternetsearchterms . see alsoShubertv.Metrophone,Inc. See, e.g. , Sunbelt Rentals,Inc.v.Victor 42 e loid. see also intentionally §2520(a)(creatingcivilliability intercept.anywire,oral,or , 808F.2d401,405(3dCir. , —F.Supp.2d United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 information.” dispute thattheISP“had noaccesstothatinformation or totheprofilesconstructedfrom that meaning ofthatcommunication. ‘intercept’ acommunication, data collected. suggested thattheISPhadnoinvolvement intheNebuAdSystem anddidnothaveaccesstothe responsible for“connect[ing]itsuserstotheUTA.” connection totheNebuAdequipment.” information. This softwaretrackedcustomers’ internetbrowsinghabitsand“builtinterest profilesbased”onthat Transparent Appliance”software(“UTA”)ontheISP’snetworks. that ithadhiredathirdpartyadvertisingcompany, NebuAd,Inc.,toinstallNebuAd’s“Ultra- communications.” failed toallegethat“ToysRUsitselfintercepted,disclosed,orusedplaintiffs’electronic Webpages.’” transmit andrecordallaspectsofaWebuser’s privateactivitywhentheyaccessToysRUs’ Toys RUs’website. software onitsserverswhichloadedjavascriptcodeontothecomputers ofindividualswhovisited 34517252 (N.D.Cal.Oct.9,2001),ToysRUshadpermitted athirdparty,Coremetrics, toplace liability. Forexample, in intercepts communications. Tothecontrary,authorityhasconsistentlyrejectedsuchatheoryof liability onapartywhomerely providedameans throughwhichathirdpartysubsequently customers (typicallywirelesscarriers)–wereabletointerceptcommunications. the DeviceManufacturersprovidedaframework throughwhich themselves “seized”or“redirected”anycommunications themselves. Rather,theSCACalleges that mobile devices.Again,however,therearenofactualallegationsthattheDeviceManufacturers Case3:12-md-02330-EMC Document339Filed01/21/15Page43of96 Similarly, in Plaintiffs havefailedtociteanycasethatwouldsupporttheimposition ofWiretap Act Id. Id. Id. Id. TheISProutedallitsinternettrafficthroughtheUTAand“furnished The courtdismissed plaintiffs’claims againstToysRUs,findingthatplaintiffshad Accordingly,becausethere was“nothingintherecordthat[theISP] Thecourtrejectedplaintiffs’claims againsttheISP,statingthat“inorderto Id. Kirch v.EmbarqManagementCo. See id. at*7. In reToysRUs,Inc.PrivacyLitigation at*1.Thiscodeallegedlypermitted defendantsto“monitor, intercept, one mustcomeintopossessionorcontrolofthesubstance, purport,or ” Id. at*6(emphasis added).Thecourtnotedthattherewas no Id. at*4.Asaresult,theplaintiffsallegedthat ISP was 43 Id. , customers ofanISPsuedthealleging Beyondthis,thesummary judgment record other , No.00-CV-2746,2001WL Kirch parties–CarrierIQandits , 2011WL 3651359,at*2. itself United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 from creatingsecondaryliabilitythatisnotspecified bystatute.”).TheECPAprovisionthatcreates 2010); it specificallysayssoin the text.” courts “shouldpresume thatCongressdoesnotcreateacauseofactionforaiding andabettingunless Denver, N.A.v.FirstInterstateBankof N.A. wishe[s] tocreatesuch[secondary]liability,itha[s] littletroubledoingso.’” communications inviolationoftheECPA.”).TheSupreme Courthasnotedthatwhen “‘Congress those whoaidandabetorconspirewithothersto intercept,disclose,oruseelectronic (N.D. Ill.2012)(“Asageneralmatter, courtshavedeclinedtofindaprivatecauseofactionagainst statutory structureoftheECPA.”); 1327503 (W.D. Pa.Mar.31,2014)(“[S]econdaryliabilitynolongerexistsunderthecurrent aiding andabetting)undertheECPA. devices”). SCAC ¶55(Sprintindicatingthatit“beganremoving theCarrierIQSoftwarefrom mobile wanted, remove theCarrierIQSoftwarefrom devicesontheirnetworksthroughsystem updates. choose what,ifany,information theyreceivedfrom theCarrierIQSoftwareandcould,ifthey fact thattheSCACeffectivelyallegesmobile carriers(notthedevicemanufacturers) could mobile carrierswereabletoeffectuatesuchaninterception.Suchaconclusion isbolsteredbythe any communication, asopposedtomerely providinganavenuethroughwhichCarrierIQandthe Twombly of CarrierIQ. communications istheassertionthat“sometimes” unnamed DeviceManufacturerswerecustomers The closesttheSCACcomes totyingtheDeviceManufacturersactualacquisitionof Manufacturers inthiscasethemselves acquiredthecontentsofanyPlaintiffs’communications. concluded thattheISPcouldnotbeheldcivillyliableunderWiretap Act. acquired thecontentsofanycommunications astheyflowedthroughitsnetwork,”thecourt Case3:12-md-02330-EMC Document339Filed01/21/15Page44of96 see alsoDoev.GTECorp. Plaintiffs’ failureissignificantbecauseastheresimply nosecondaryliability (suchas Like thedefendantsinabovecases,therearenoallegationsthatDevice and Iqbal See SCAC¶68.Thishighlygeneral,unsupportedassertionisinsufficientunder toestablishthattheDeviceManufacturersthemselves acquiredthecontentsof , 347F.3d655(7thCir. 2003) (“Normally federalcourtsrefrain Valentinev.WideOpenWestFinance,LLC Wultz v.IslamicRepublic ofIran See, e.g. , Byrd v.Aaron’s,Inc. 44 , 511U.S.164,184(1994).Accordingly, , 755F.Supp.2d1,57(D.D.C. , —F.Supp.2d2014WL Central Bankof Id. , 288F.R.D.407 (emphasis added). United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 .Plaintiffs’StatePrivacyLawClaims D. an opportunitytoamend theircomplaint tocurethisdeficiency. fatal totheirWiretap Actclaim againstthesedefendants.However,theCourtwill afford Plaintiffs that theDeviceManufacturersthemselves intentionallyinterceptedPlaintiffs’communications is create apenumbra ofadditionalbutunspecifiedliability.” is thispreciseaboutwho,otherthantheprimary interceptor,canbeliableshouldnotreadto statute “condemns assistants,asopposedtothosewhodirectlyperpetratetheact”anda“statutethat engaged inthatviolation.”18U.S.C.§2520(a).AstheSeventhCircuitheld communication isintercepted.may inacivilactionrecoverfrom thepersonorentity.which a civilcauseofactionforviolation§2511providesthat“anypersonwhose.electronic claims whichDefendantscontendtracktheWiretap Act. Defendants’ arguments, Wiretap Actclaim. and/or privacylawsshouldbedismissed onthesame groundsDefendantsarguedfordismissal ofthe of thosestates’laws.TheCourtaddresseseachthesearguments inturn. raised separatearguments astosome ofPlaintiffs’statelawwiretapclaims basedonuniquefeatures Federal Wiretap Actclaims intoitsholdingregarding Plaintiffs’statelawclaims. various statelawclaims anddeclinestosimply import anypartofitsaboveanalysisPlaintiffs’ of eachstate’slaws,isinsufficient toactuallypresentanargument tothisCourtforresolution. approach,devoidofanyactualanalysis decisions consideringTitleIII.”).Defendants’blunderbuss state statutesthereforebenefitsfrom thelegislativehistoryandintentofTitleIIIfrom federal (“Wisconsin’s electronicsurveillancestatutes arepatternedafterTitleIII.Ourinterpretationofthe Federal Wiretap Actclaims asguidance. states’ wiretapactsaremodeled aftertheFederal Wiretap Actand/orthatstatecourtswilllookto paragraph withastringciteofcasesfrom theapplicablestates’courtssuggestingthatsome ofthese wiretap claims simply onthisbasis.Defendants’argument onthisgroundconsistedofasingle with prejudice,theCourtwouldnothavebeeninclined tosummarily dismiss Plaintiffs’statelaw Case3:12-md-02330-EMC Document339Filed01/21/15Page45of96 Accordingly, Plaintiffs’failuretoallegesufficientlyspecificfactssupportingaconclusion Defendants generallycontendthatPlaintiffs’claims forviolationsofvariousstates’wiretap As aresult,theCourtonly addressesthosearguments Defendants specificallyraisedastothe 7 EveniftheCourthadfoundPlaintiffs’Wiretap Actclaim defectiveastowarrantdismissal See DocketNo.304,at49.Accordingly,totheextentCourthasrejected supra , thesearguments arelikewiseunavailingagainstthevariousstatelaw See, e.g. 45 , State v.House 7 Inaddition,however,Defendantshave Doe , 347F.3dat659. , 302Wis. 2d1,11(Wis. 2007) Doe , nothinginthis United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 “to ‘stop.beforearrival .orinterrupttheprogresscourse.’” Relying onadictionary definition, thecourtfoundthat the“ordinarydefinitionof‘intercept’”was interpretation and,therefore, theterm “intercept”shouldbegivenitsordinary meaning. “interception” ofthetextmessages, thecourtnotedthattherewasnostatutorydefinition toguideits a thirdpartyinanattempt tosetupadrugdeal. messages onthephone,and,posingassuspect,sentandreceivedanumber oftextmessages with private communication. by useofadevicedesignedtorecordand/ortransmit; (4)withouttheconsentofallpartiesto communication wastransmitted byadevice; (2)thiscommunication wasinterceptedorrecorded;(3) 9.73.030(1)(a). Tostateaclaim underthisprovision,aplaintiffmust establish:(1)thataprivate or otherwisedesignedtorecordand/ortransmit saidcommunication.” Wash. Rev.Code between twoormore individualsbetweenpointswithinorwithoutthestatebyanydeviceelectronic record” any“[p]rivatecommunication transmitted bytelephone,telegraph,radio,orotherdevice Washington claim. may notrelyonthefullpanoplyofallegedlyinterceptedcommunications insupportofits Defendants’ globalchallengetoPlaintiffs’Washington PrivacyActclaim, itagreesthatPlaintiffs to Plaintiffs’textmessages andthenumbers dialedandreceived.While theCourtdisagreeswith the extentPlaintiffscanstateaclaim underWashington’s PrivacyAct,suchaclaim must belimited between twoormore individuals. reaching itsintendedaudienceandbecausethestatuterequiresinterceptionofacommunication interpreted the“intercept”requirement asrequiringthecomplete stoppageofatransmission from SCAC ¶113(ee).Defendantsarguethatthisclaim failsbecausetheWashington Supreme Courthas Case3:12-md-02330-EMC Document339Filed01/21/15Page46of96 In Washington RevisedCode9.73.30makes it unlawfulforanyindividualto“intercept,or Plaintiffs assertaclaim underWashington’s PrivacyAct,Wash. Rev.Code§9.73.060. .PlaintiffSandstrom’s Claim undertheWashington PrivacyAct 1. Roden .DefendantsMisreadWashington LawRegardingtheRequirements foran a. , apoliceofficerseizedcriminal suspect’siPhone,lookedthrough thetext “Interception” State v.Roden See DocketNo.304,at50-51.Defendantsfurtherarguethatto , 179Wash. 2d893,898(2014)(enbanc). Id. 46 at897.Inaddressingwhetherthisconstitutedan Id. (quoting Webster’s Third Id. at904. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 a letterinsomeone’s mailbox beforetheyreceivedit. constituted aninterceptionunderthisdefinition,analogizingittoindividualopeningandreading New InternationalDictionary 9.73.030 aspreventing“eavesdropping”through electronicdevices. surreptitiously listeninonthecommunication. Numerous Washington courtshavedescribed purpose ofeavesdroppingisnottoentirelypreventorinterruptacommunication, butratherto telephone callsthroughtheuseofalisteningdevice–classicexample ofa“wiretap.”The absurd resultthatWashington’s privacylawwouldnotaddressanindividualwhoeavesdroppedon stoppage orinterruptionbepermanent. progress ofacommunication –thereisnomodifier orlimitation inthisdefinitionrequiringthatthe deprivation. suggest thattheWashington Supreme Courtwasnarrowlyreading “intercept”asrequiringsucha intended recipientneverreceivedthecommunications atissue,thereisnothinginthedecisionto Defendants misread communications orstoppedthem from reachinghim ortherecipienttowhom hedirectedthem.”). Sandstrom, bycontrast,doesnot,andcannotallegethattheCarrierIQsoftwareinterruptedany recipient ofthecommunication from everreceivingit. for acommunication tobeintercepted,theinterceptingpartymust completely preventtheintended telephone discussionsand relayedinformation obtained tothepolice. (Wash. 1996)(enbanc),anindividualhaduseda policescannereavesdroponhisneighborscordless eavesdropping istheall-party consentrequirement.”). Forexample, in significant pieceofevidenceabouttheextentto which thelegislatureintendedtorestrict fact thattherewasnolawpreventedeavesdropping.”); order tokeeppacewiththechangingnatureofelectronic communications andinrecognitionofthe 102 P.3d789,794(Wash. 2004)(enbanc)(“In 1967,thelegislatureamended [theprivacyact]in Case3:12-md-02330-EMC Document339Filed01/21/15Page47of96 Relying on Second, adoptingthereadingof“intercept”advancedbyDefendantswouldleadto First, the“ordinarydefinition”adoptedin Roden Roden , Defendantsseektoimport alimitation intoWashington lawthatinorder andWashington law.While 1176(2002)).Thecourtdetermined thatthepoliceofficer’saction 47 Roden Id. See onlyspeaksofstoppingorinterruptingthe Roden at905. id. Docket No.304,at51(“Plaintiff at794n.3(“Arguably,themost involvedafactualscenariowherethe See, e.g. Id. State v.Faford at448.Thecourt , State v.Christensen , 910P.2d447 , United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 an individualontheother endofhercommunication (otherthanMicrosoft), thetransmission of and Wiretap Act,theWPA requiresacommunication betweenatleast twoindividual..Without location datawasnotcovered undertheWashington Privacy Actbecause“[u]nlikethefederalSCA Supp. 2d1116(W.D. Wash. 2012),thecourtfoundthatMicrosoft’sinterceptionofuser’sgeo- more individuals.”Wash. Rev.Code§9.73.030(1)(a).In private communications “transmitted bytelephone,telegraph,radio,orotherdevicebetween twoor Defendants arecorrect,inpart. the statuteonlyappliestocommunications betweentwoormore individuals.DocketNo.304,at51. that thisclaim cannotextendtotheallegedinterceptionofanydataotherthantextmessages because on Defendants’proposedconstructionofWashington’s “interception”requirement. its customers. Sucharecordingandtransmission wouldconstituteaviolationunder9.73.030. communications andtransmitted thesubstanceofthosecommunications toeitherCarrierIQand/or processing atextmessage anddisplayingthetextmessage inplaintext)thechallenged that theCarrierIQSoftwareeffectivelyrecorded( private communications. TherearesufficientallegationsintheSCACfrom whichitcanbeinferred “intercept,” Washington RevisedCode9.73.030prohibitsboththeinterception law. calls atissue,anessentialrequirement foraninterceptionunderDefendants’readingofWashington evidence thattheeavesdroppingresultedinneighborsbeingunabletomake orreceivethephone “interception” andviolatedtheprivacyact. determined theuseofscannertoeavesdroponneighbor’sconversationsconstituted an Case3:12-md-02330-EMC Document339Filed01/21/15Page48of96 As quotedabove,Washington’s PrivacyActmakes unlawful theinterceptionorrecordingof Defendants secondargument againstPlaintiffSandstrom’s Washington PrivacyActclaim is Accordingly, theCourtdeclinestodismiss Plaintiffs’Washington PrivacyActclaim based Third, evenifDefendantswerecorrectthattheirallegedactionscouldnotconstitutean .Plaintiff Sandstrom’s Washington Privacy ActClaim MayOnlyExtendto b. Received Alleged InterceptionofTextMessagesandPhoneNumbers Dialedand Id. at452.Thecourtsohelddespitethelackofany 48 e.g. , theCarrierIQSoftwarecodewasobserved Cousineau v.MicrosoftCorp. or recording , 992F. of United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 and thereforedoesnotapply tothetypeofelectroniccommunications atissueinthiscase. discourse ofotherswithout permission ofallpersonsengaged inthediscourse.” “Eavesdropping” isdefinedas“tooverhear,record, amplify ortransmit anypartoftheprivate Mich. Stat.§750.539c; SCAC ¶113(n).Thisprovisionstates,inrelevantpart: language oftheAct. Washington courttothecontrary, suchcommunication doesnotappeartobecoveredbytheplain between individualsbutinsteaddirectedtoanautomated system. Absentaninterpretationfrom a liability underWashington’s PrivacyActasthisdatawasnottransmitted aspartofacommunication – suchasuser’sgeographicallocation,URLs,searchterms, etc.–may notform thebasisfor therefore fitswithinWashington’s definitionofinterception. Theallegedinterception ofotherdata received. Suchinformation reflectscommunications “betweentwoormore individuals”and Privacy Actclaim ontheallegedinterceptionoftextmessages andphonenumbers dialedand Id. “private communications” forpurposesoftheact.Thecourtreasoned: pen-register devicethatrecordedthephonenumbers dialedandreceivedonagivenlineintercepted State v.Gunwall Cousineau’s datacannotbeconsideredacommunication undertheWPA.” Case3:12-md-02330-EMC Document339Filed01/21/15Page49of96 at816. Defendants arguethatthis statuteonlycoverstherecordingof“audible” communications Plaintiffs assertaclaim underMichigan’seavesdroppingstatute,Mich.Stat.§750.539c. .PlaintiffCline’sClaims UnderMichigan’s Law 2. In lightof violation ofthissection,isguiltyafelony. . knowingly aids,employs orprocuresanotherpersontodothesame in conversation withouttheconsentofallpartiesthereto, orwho conversation andwhowifullyusesanydeviceto eavesdropuponthe Any personwhoispresentornot during aprivate obtaining documents inasingleroutinesearchwarrant. can involvemultiple invasionsofprivacyasdistinguishedfrom devices inthatitiscontinuingnature,may affectotherpersonsand The penregisteriscomparable inimpact toelectroniceavesdropping , 720P.2d808(Wash. 1986)(enbanc),theWashington Supreme Courtheldthata Cousineau see alsoid. and Gunwall §750.539h(creatingaprivatecauseofaction). , theCourtfindsthatPlaintiffsmay basetheirWashington 49 Id. at1129.Similarly, in Id. §750.539a. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 at §750.539c,thereisno privatecauseofactionorcivilliabilityforaviolation of§750.540. of communication that thepersonaccessedwithoutauthorization.”Unlike theeavesdroppingstatute computer network,computer program, orcomputer system, ortelephoneother electronicmedium maliciously read[ing] orcopy[ing]anymessage from anytelegraph,telephoneline,wire, cable, network, ortelephone.”Section750.540(b),inturn, barsanindividualfrom “willfullyand connection, includingtheinternetoracomputer, computer program, computer system, orcomputer disconnect, interrupt,tap,ormake anyunauthorizedconnectionwithelectronic medium of Specifically, Mich.Stat.§750.540(a)makes itacrime to“willfullyandmaliciously cut, break, supported bythefactthatanotherprovisioncovers“tapping”electroniccommunications. Id. interpretation, thecourtnotedthat: recording orsecretlylisteningto then statedthat“[t]hestatutewasmeant toprohibiteavesdroppinginthetraditionalsenseof with anyoneelseandthedevicedidnotrecord“theresponseonotherside.” compose emails, shewasnotengaginginaconversation” becauseshewasnotina“directdialogue” the courtfoundthat“[w]henPlaintiffpressedkeystoenterherpasswords,compose messages, or apply asthe“keylogger”softwarewasnotusedinrespecttoa“conversation.” district courtfoundthata“plainreading”oftheeavesdroppingstatutedemonstrated thatitdidnot hearing, plaintiffsuedalleging, divorce attorneycopiesofhiswife’semails. Afterahighlycontentiousdivorceandchildcustody monitor hiswife’s(theplaintiff)internetcommunications. learn thepasswordshiswifeusedforheremails andprivatemessaging accountsso thathecould Mich. Feb.6,2008).Inthatcase,defendantinstalledkeyloggersoftwareonhishome computers to Defendants relyonthedistrictcourtcaseof Case3:12-md-02330-EMC Document339Filed01/21/15Page50of96 Accordingly,thecourtgranteddefendantsummary judgment astothisclaim. Consistent with would beredundantif§750.539calreadyprohibitedthesame. computer withoutauthorization.Section750.540[discussed below] specifically withthereadingorcopyingofanymessage from a the Michiganlegislaturefeltneedtoaddastatutethatdeals Bailey , Defendants’arguetheirnarrowinterpretationof§750.539cis inter alia audible conversation , aviolationofMichigan’seavesdroppingstatute.The Bailey v. 50 [s].” Id. Id. , No.07-11672,2008WL 324156 (E.D. at*1.Defendanteventuallygavehis (emphasis added).Reinforcingthis Id. Id. at*7.Rather, at*8.Thecourt See United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 750.539c. judgment onthegroundthatafaxisnotanaudiblecommunication ofthe kindcoveredby§ defendants (andthefederalcourtin eavesdropping device.” copies ofthefacsimiles theyreceivedwereobtainedbythewilfuluseofafacsimile machine asan electronic devicetoeavesdroporthatanyofthe defendants kneworshouldhaveknownthatthe so onthebasisthatfactsdidnot“establish defendantsmay beliableforthewilfuluseofany id. plaintiff allegedthatdefendanthadimproperly obtainedcopiesoffaxesintendedforplaintiff. Ct. App.Apr.18,2006),thestatecourtofappealsreviewedaneavesdroppingclaim inwhich (1992)). sentence.’” of thoughtbywords;talk;conversation;.anyunitconnectedspeech defined bystatute,thecourtlookedtoitsordinarydefinition,whichitfoundbe“‘communication amplifying, ortransmitting the“privatediscourse ofothers.” court notedthatthestatutorydefinitionof“eavesdropping”waslimited tooverhearing,recording, permission ofallpersonsengagedinthecommunication.” amplifying, ortransmitting theprivate,oral, case,” wentontostatethateavesdroppingunder§750.539cis“limited tooverhearing,recording, 2003), theMichiganCourtofAppeals,despitenotingthat“eavesdropping[was]notatissueinthis court’s narrowinterpretationof§750.539c.In SCAC, §750.540willberenderedanullity. argue thatif§750.539cisconstruedtocoverelectroniccommunications suchasthoseallegedinthe action, anddoesprovideforadequateenforcement bycreatingcriminal penalties.”).Defendants Bailey at*1.While thecourtultimately affirmed thetrialcourt’ssummary judgment oftheclaim, itdid Case3:12-md-02330-EMC Document339Filed01/21/15Page51of96 , 2008WL 324156,at*9(“Here,§750.540doesnotexpresslyprovideforaprivatecauseof Further, intheunpublishedcaseof There are,however,Michiganstatecourtcasesthatareintensionwiththefederaldistrict Id. (emphasis added)(quoting Id. at*2.Thisholdingissignificantbecauseif§750.539c isasnarrow Bailey ) suggest,thecourtcouldhavesimply affirmed summary Vollmar v.Laura Random HouseWebster’sCollegeDictionary or written Lewis v.LeGrow 51 communications Id. , No.262658,2006WL 1008995(Mich. Id. at683(firstemphasis added).The , 670N.W.2d 675(Mich.Ct.App. Because “discourse”wasnot of others or writing withoutthe longerthana 384 See United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 court report’stranscript. Eventuallythecourtreporterreferreddefendant tohersupervisor,the 6 N.E.3d120(Ill.2014). facially overbroadundertheFirstAmendment bytheIllinoisSupreme Courtin 720 Ill.Comp. Stat.§5/14-2(a).Subsections (a)(1)and(a)(3),however,havebeenstruckdownas 2(a)(1). SCAC¶113(g).Section5/14-2provides,inrelevantpart: under Michigan’seavesdroppingstatute. a constructionwouldbeunwarranted,theCourtdeclinesatthistime todismiss Plaintiffs’claims narrow constructionof§750.534c,andtheindicationfrom theMichiganCourtofAppealsthatsuch written address theMichiganCourtofAppeal’sstatement in However, thecourtin 750.539c and§750.540iftheformer isconstruedasencompassing electroniccommunications. on oralcommunications seems reasonable,giventhesubstantialoverlapthatwouldexistbetween§ Case3:12-md-02330-EMC Document339Filed01/21/15Page52of96 communications. Giventheapparentabsenceofstatecourtauthoritysupporting In Plaintiffs assertaclaim underIllinois’eavesdroppinglaw,720Ill.Comp. Stat.§5/14- .PlaintiffSzulczewski’sClaim Underthe Illinois EavesdroppingLawFails 3. The Melongo Bailey (a) Apersoncommits eavesdroppingwhenhe: court’snarrowinterpretationof§750.539casonlyextendingtoeavesdropping , thedefendanthadadispute withacourtreporterregardingtheaccuracy ofthe Bailey through theuseofaneavesdroppingdevice. knows orreasonablyshouldknowwasobtained (3) Usesordivulges.anyinformation whichhe provisions ofthisArticle;or intended oractualuseofthedeviceiscontraryto transcription ofelectroniccommunications andthe conversations ortheinterception,retention, purpose ofthesurreptitioushearingorrecordingoral design ofthedevicerendersitprimarily usefulforthe device knowingorhavingreasontoknowthatthe any electronic,mechanical, eavesdropping,orother (2) Manufacturers,assembles, distributes,orpossesses transcribes electroniccommunication . part ofanyconversationorintercepts,retains, device forthepurposeofhearingorrecordingallany (1) Knowinglyandintentionallyusesaneavesdropping citednostatecourtauthorityforitsreadingofthestatuteanddidnot 52 Lewis that theeavesdroppingstatutecovered People v.Melongo Bailey ’s , United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 therefore aprohibitiononherdisclosingthoserecording wasunconstitutional. unconstitutional, thedefendant’srecordingscould notbecharacterizedas“illegallyobtained”and U.S. at526).Becausethecourthadfoundthat“recordingprovision”of§5/14(a)(1)was a regulationofpurespeech’byaninnocentparty.” Vopper 127. Further,thecourtnotedthatunderUnitedStatesSupreme Court’sdecisionin regardless ofconsent.Thisalonewouldseem tobesufficientinvalidatetheprovision.” provision criminalizes thepublicationofanyrecordingmade onacellphoneorothersuchdevice, that §5/14(a)(3)(the“publishingprovision”)wasalsounconstitutionalas“theplainlanguageof this enough thatthespeakersshouldexpecttobeheardbyothers.” street, apoliticaldebateoncollegequad,yellingfansatanathleticevent,oranyconversationloud “criminalizes therecordingofconversationsthatcannotbedeemed private:aloudargument onthe that §5/14(a)(1)(the“recordingprovision”)criminalized a“widerangeofinnocentconduct”asit and asapplied. affirmed thelowercourts’findingthatthesetwoprovisionswereunconstitutionalbothontheirface communications obtainedthroughtheuseofaneavesdroppingdevice).TheIllinoisSupreme Court conversations throughaneavesdroppingdevice)and§5/14(a)(3)(fordivulgingthecontentsof at 122-23.Defendantwaschargedwithviolationsofboth§5/14(a)(1)(forrecordingthe surreptitiously recordedtheseconversationsandthenpostedtherecordingsonherwebsite. phone conversationswiththeadministrator abouthisunderlyingdisputewiththecourtreporterand Assistant Administrator oftheCookCountyCourtReporter’sOffice.Defendanthadanumber of its opinion,theSeventhCircuitnotedthat likelihood ofprevailingonitsFirstAmendment challengeto720Ill.Comp. Sta.§5/14-2(a)(1).In 2012), inthecontextofareviewpreliminary injunction,foundthattheACLUhadastrong Case3:12-md-02330-EMC Document339Filed01/21/15Page53of96 , 532U.S.514(2001),a“nakedprohibitionagainstdisclosures”was“‘fairlycharacterizedas The courtfoundthatthestatutesunconstitutionalforseveralreasons.First, 8 Priorto banning communication. Instead, thestatutesweepsmuch more broadly, is notthesecretinterception orsurreptitiousrecordingofaprivate most otherstates,thegravamen oftheIllinois eavesdroppingoffense Unlike thefederalwiretapping statuteandtheeavesdroppinglawsof Melongo all , theSeventhCircuitin audiorecordingof any 53 oralcommunication absent consent ACLU ofIll.v.Alvarez Melongo , 6N.E.3dat127(quoting Id. at126.Second,thecourtfound , 679F.3d583(7thCir. 8 Bartnicki v. Vopper Id. See id. at , 532 United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 “surreptitious interception,retentionandtranscription ofelectroniccommunication” (thussatisfying Accordingly, evenifPlaintiffsarecorrectthatthe CarrierIQSoftwarehadasitsprimary purposethe provisions of§5/14-2(c)havebeenstruckasunconstitutional. 720Ill.Comp. Stat. §5/14-2(a)(1). conversation” orto“intercept[],retain[],transcribe[]electroniccommunication” –those to “[k]nowinglyandintentionallyus[ing]aneavesdroppingdevice”“hear[]orrecord[]any 720 Ill.Comp. Stat.§5/14-2(c)(emphasis added).After Complimenting thisrequirement is§5/14-2(c),whichexpresslyprovidesthat device manufactured ordistributedbythedefendantbe“contrarytoprovisionsofthisArticle.” 2(a)(2) hasthreeelements, thelastofwhichisthat“intendedoractual”useeavesdropping 2(a)(2) intheSCAC,Plaintiffsclaim wouldstillfail.Asdetailedabove,aviolationof§5/14- provisions ofArticle14theIllinoisStatutes.”DocketNo.309,at44. interception, retention,andtranscriptionofelectroniccommunication incontraventionofthe Software fitswithinthisprovisionasitwas“designedfortheprimary purpose ofthesurreptitious provision of§5/14-2notaddressedbythecourtin instead, theycontendthatcanstateacauseofactionunder§5/14-2(a)(2)–theonlysubstantive Melongo for reliefviolationsof See Alvarez Case3:12-md-02330-EMC Document339Filed01/21/15Page54of96 SCAC ¶113(g)(“Ill.Comp. Stat.Ch.720§5/14-6providestheforrecoveryinacivil action Even iftheCourtweretoconcludethatPlaintiffshadproperlyallegedaviolationof§5/14- In theSCAC,itappearsthatPlaintiffsintendedtoallegeonlyaviolationof§5/14-2(a)(1). , 679F.3dat595. decision,however,Plaintiffsnolongerattempt toassertaclaim under§5/14-2(a)(1); purposes notcontrarytothisArticle eavesdropping devicewithinthenormal courseoftheirbusiness devices .tomanufacture, assemble, sell,orpossessan It isnotunlawfulforamanufacturer orasupplierofeavesdropping reconcile withbasicspeech andpressfreedoms. intended tobeprivate.The expansivereachofthisstatuteishardto of thepartiesregardless of whetherthecommunication isorwas Ill. Comp.Stat.Ch.720§5/14-2(a)(1) 54 Melongo . Melongo . PlaintiffsassertthattheCarrierIQ . .”).Inlightofthesupervening , however,itisnolongerunlawful for United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 computer access.Specifically,theactdefinesfollowingasacriminal offense: afford Plaintiffsleavetoamend. Accordingly, whiletheCourtwillgrantDefendants’motion todismiss theCCDFAclaim, itwill circumventingalleged thattheCarrierIQSoftwareoperatesby technicalorcodebasedmeasures. of theCCDFAtheyallegeDefendantshaveviolated,CourtfindsthatPlaintiffsadequately below, theCourtconcludesthatPlaintiffsshouldberequiredtoaffirmatively statewhichprovisions acquired communications byovercoming “technicalorcodebased”measures. While, as explained Second, theyarguePlaintiffshavefailedtoallegethatDefendants,throughtheCarrierIQSoftware, they contendthatPlaintiffshavefailedtoidentifythepreciseprovisionsunderwhicharesuing. Comprehensive DataandFraudAct(“CCDFA”),Cal.Pen.Code§502, shoulddismissed. First, claim underIllinois’eavesdroppingstatute. the provisions”of§5/14-2asrequiredbythirdelement of§(a)(2). the firstandsecondelements of§(a)(2)),suchusecouldnotbedeemed tobelawfully“contrary Case3:12-md-02330-EMC Document339Filed01/21/15Page55of96 California PenalCode§502enumerates ninedifferentoffensesrelatingtounauthorized Plaintiff raisestwodistinctarguments astowhyPlaintiffs’claims undertheCalifornia .Plaintiffs’ CaliforniaComprehensive Data andFraudActClaim Will BeDismissed 4. Accordingly, theCourtgrants,withprejudice,Defendants’motion todismiss Plaintiffs’ computer services. (3) Knowinglyandwithout permission usesorcausestobeused system, or computer network. existing orresidinginternalexternaltoacomputer, computer network, ortakescopiesanysupportingdocumentation, whether makes useofanydata from acomputer, computer system, orcomputer (2) Knowinglyaccessesandwithoutpermission takes,copies,or control orobtainmoney, property,ordata. any scheme orartificetodefraud,deceive,extort,(B)wrongfully system, orcomputer networkinordertoeither(A)deviseorexecute deletes, destroys,orotherwiseusesanydata,computer, computer (1) Knowinglyaccessesandwithoutpermission alters,damages, PlaintiffsHaveFailedtoIdentifyWhich Provisionsof§502(c)TheyAllege a. With Leaveto Amend Defendants HaveViolated 55 United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 they allegeDefendants computer services.” Similarly, “disrupte[d]orcause[d]thedisruptionof PlaintiffshavenotallegedthatDefendants introduced a“contaminant” intoacomputer, computer system, ornetwork. facts allegedintheSCAC.Forexample, therearenoallegationsintheSCACthatDefendants who suffersdamage orlossasaresultofviolationonetheseprovisions. Cal. PenalCode§502(c).Subsection502(e)providesaprivatecauseofactionforanyindividual Case3:12-md-02330-EMC Document339Filed01/21/15Page56of96 A reviewof§502(c)revealsthatatleastsome oftheseprovisionsclearlydonotapplytothe network. or causesdamage toacomputer, computer system, orcomputer sending ofoneormore electronicmail messages, andtherebydamages of anotherindividual,corporation,orentityinconnectionwiththe (9) Knowinglyandwithoutpermission usestheInternetdomain name computer, computer system, orcomputer network. (8) Knowinglyintroducesanycomputer contaminant intoany accessed anycomputer, computer system, orcomputer network. (7) Knowinglyandwithoutpermission accessesorcausestobe network inviolationofthissection. a means ofaccessingacomputer, computer system, orcomputer (6) Knowinglyandwithoutpermission providesorassistsinproviding system, orcomputer network. computer servicestoanauthorizeduserofacomputer, computer disruption ofcomputer servicesordeniescausesthedenialof (5) Knowinglyandwithoutpermission disruptsorcausesthe computer system, orcomputer network. programs whichresideorexistinternalexternaltoacomputer, deletes, ordestroysanydata,computer software,orcomputer (4) Knowinglyaccessesandwithoutpermission adds,alters,damages, basis. purchases anduses.Defendants actedonasystematic andcontinuous numbers dialedandreceived;otherkeystrokes;application apart form thattransmitted inURLs;textmessages; telephone granular geo-locationinformation; granulargeo-locationinformation information includingsearchterms, usernames, passwords,and URL containingHTTPandHTTPSquerystrings embedded with and/or alteringplaintiffs’andprospectiveclassmembers’ datasuchas knowingly accessing,copying,using,making useof,interfering, Id. Defendants haveviolatedCaliforniaPenalCode § 502by did §502(c)(5).However,Plaintiffsneverspecifywhichprovisionsof502 violate.Rather,theygenerallyallege: 56 Id. §502(c)(8). See id. §502(e). United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 has violated. consistent withFed.R.Civ.P.11,whichprovisionsof§502(c)theycontendDefendants’conduct statute thatwasviolated”).Plaintiffswill,however,begrantedleavetoamend tospecificallyallege, 612 (1993),aclaim allegingunfairbusinesspractices“must identifytheparticularsectionof (N.D. Cal.Oct.31,2006)(notingthatunder brings hisclaim ..”); the amended complaint must identifyunderwhichsubsectionorsubsectionsof§1985plaintiff 3014 SI,2008WL 5234236(N.D.Cal.Dec.15,2008)(“Ifplaintiffwishestoallegea§1985claim, sufficiently allegewhichprovisionoftheEFTAhasbeenviolated.”); dismissal. SCAC. DocketNo.309,at46. language foundinCal.PenalCode§502(c)(1)-(9)”andaresupportedbyallthefactsalleged SCAC ¶105.Intheiropposition,Plaintiffsstatethatallegations“borrowfrom thestatutory requires thatthedefendantact“withoutpermission” experience and,aspartofthisservice,usersprovided defendantwiththeirFacebookloginand a websitethatalloweduserstointegratetheirmultiple socialnetworkingaccountsinto asingle then theaccessdoesqualifyasbeing‘withoutpermission.’” manner thatcircumvents technicalorcode-basedbarriersinplacetorestrictbarauser’saccess, (N.D. Cal.2012),acourtinthisDistrictheldthatwhendefendant“accesses[a]network have yettointerpret.However,in *13 (N.D.Cal.Sept.20, 2011). permission.” all oftheconductprohibited by§502(c)requiresashowingthatthedefendant acted“without the definitionof“contaminant” inthestatuteincorporatesapermission requirement, so,inreality, allegations thattheDefendants haveintroduceda“contaminant” toacomputer network.Further, Case3:12-md-02330-EMC Document339Filed01/21/15Page57of96 Plaintiffs’ failuretospecifythespecificstatutorybasisfortheir§502actionrequires With theexception of§502(c)(8),alltheprohibitedconductarticulatedin502(c) 9 Asreferencedabove,itappearsthat§502(c)(8) isinapplicabletothiscaseasthereareno See, e.g. See InreiPhoneApplication Litig. .PlaintiffsHaveSufficientlyAllegedthatDefendants Acted “Without b. , I.B. v.Facebook,Inc. Permission” Brothers v.Hewlett-PackardCo. Facebook, Inc.v.PowerVentures,Inc. , 905F.Supp.2d989(N.D.Cal.2012)(“Plaintiffsdonot Khoury v.Maly’sofCalifornia,Inc. , No.11-MD-02250-LHK, 2011WL 4403963,at 57 9 –arequirement thattheCaliforniastatecourts , No.C06-02254RMW, 2006WL 3093685 Id. at1036.Inthatcase,defendantran Baluv.LakeCounty , 844F.Supp.2d1025 , 14Cal.App.4th , No.C08- United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Tech Corp. user’s access.”); permission’ whenthey‘circumvent[] technicalorcode-based barriers inplacetorestrictorbara WL 4274313(N.D.Cal.Aug.28,2014)(“ForpurposesofSection 502,partiesact‘without violation ofaterm ofservice. test todetermine ifDefendantactedwithout permission evenoutsidethecontextofanalleged District havelargelyadoptedthis“overcoming technicalorcodebasedbarriers”testastheoperative specifically topreventsuchaccesswassufficient tomake thisshowing.Nonetheless,courtsin service” wasinsufficienttoestablishlackofpermission, whileovercoming barrierserected permission. It merely held thataccessofacomputer networkthatviolatedaprovider’s“terms of barriers” designedtopreventaccesswasthe July 20,2010). Facebook, Inc.v.PowerVentures, court stated: otherwise interactwithFacebook.” of usewhichrequiredusersto“refrainfrom usingautomated scriptstocollectinformation from or password. Case3:12-md-02330-EMC Document339Filed01/21/15Page58of96 Nothing inthe , No.5:13-cv-0034-PSG, 2014WL 2213910,at*4(N.D.Cal.May28,2014) (“This Id. at1028.Facebooksuedallegingthatdefendant’sserviceviolatedFacebook’sterms the system, or tobartheuserfrom thesystem altogether. or websiteadministrator erectstorestricttheuser’sprivilegeswithin circumvents technicalorcode-basedbarriersthatacomputer network can bemade betweenaccessthat violatesaterm ofuseandaccessthat sufficient tosupportsuchafinding.TheCourtfindsthatdistinction of Section502,theissuebecomes whattypeofactionwouldbe a findingthattheuser’saccesswas“withoutpermission” inviolation simply becausethatuserviolatedacontractualterm ofuse. or useacomputer, computer network,orwebsitewithoutpermission infirm, theCourtfindsthatauserofinternetservicesdoesnotaccess use. .Thus,inordertoavoidrenderingthestatuteconstitutionally be meted outonthebasisofviolatingvagueorambiguous terms of constitutionally untenablesituationinwhichcriminal penaltiescould of useorreceiptaceaseanddesistletterwouldcreate permission” inamanner thatimposes liabilityforaviolationofterm NovelPoster If aviolationofterm ofuseisbyitselfinsufficienttosupport The Courtfindsthatinterpretingthestatutoryphrase“without Power Ventures , 2014WL 3845148, at*9(same); See, e.g. Id. decisionheldthatovercoming “technicalorcode-based InrejectingFacebook’s“violatedterms ofuse”theory,the , No.C08-05780JW, 2010WL 3291750,at*11(N.D.Cal. , Sunbelt Rentals,Inc.v.Victor only waytoestablishthattheDefendantactedwithout 58 Flextronics Int’l,Ltd.v. Parametric , No.C13-4240SBA,2014 United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 term “permission.” restrict orbarauser’saccess”leadstoresultswhichstraintheplainandordinarymeaning ofthe the CCDFAanytime itdoesnotneedtoovercome “technicalorcodebasedbarriersinplaceto permission tousethatcomputer). Holdingthatadefendantactswith“permission” forpurposesof gives anemployee “authorization”toaccessacomputer whentheemployer givestheemployee LVRC HoldingsLLCv.Brekka defined theterm “authorization”asmeaning “permission orpowergrantedbyanauthority.” Similarly, theNinthCircuithas,incontextoffederalComputer FraudandAbuseAct, license orlibertytodosomething; authorization.”BlacksLawDictionary1176(8thed.2004). United States words willbeinterpretedastakingtheir“ordinary,contemporary, common meaning.” fundamental canonofstatutoryconstructionthatunlessaterm isspecificallydefinedbystatute, reservations astowhetherthistestcorrectlyconstruestheterm “withoutpermission.” Itisa Despite thegrowingacceptanceof the software“operatedaspartofnormal operationofPlaintiffs’phones.”DocketNo. 304, at55. Carrier IQSoftwarewas“embedded onPlaintiffs’devicesatthepointofmanufacture” and,assuch, “without permission” bycircumventing anytechnicalorcodebasedbarrierstooperatebecausethe 2011 WL 4403963,at*12(same). the computer system ‘inamanner thatovercomes technicalorcode-basedbarriers.’”); district hasinterpretedthephrase‘withoutpermission’ torequirethatthedefendanthaveaccessed of suchaconstruction.First,in be givenforce. permission” qualifiermodifies the“tak[ing],cop[ying] ormak[ing] useofanydata” actionandmust computer system waswithpermission (asitwasin utilization ofthedata utilizes datafrom acomputer withouthavingobtainedpermission computer.” Cal.PenalCode§502(c)(2). Underthisprovision,adefendantwhoacquires,copies,or “[k]nowingly accessandwithoutpermission take[],cop[y],ormake[] useofanydatafrom a Case3:12-md-02330-EMC Document339Filed01/21/15Page59of96 Defendants arguethatPlaintiffshavenot–andcannotallegeacted The casesuponwhichDefendantsprimarily relydemonstrate theseemingly perverseresult 10 Bywayofexample, §502(c)(2),makes itillegal, , 444U.S.37,42(1979).“Permission” isdefinedasthe“actofpermitting” or“a 10 has violatedthestatute. Even ifthedefendant’sgeneral“access”into , 581F.3d1127,1133(9thCir.2009),(holdingthatanemployer In reiPhoneApplicationLitig. Power Ventures 59 In reiPhone testinthisDistrict,theCourthas inter alia , plaintiffshaddownloaded and for theacquisition,copying, or , foradefendantto Opperman ), the“without In reiPhone Perrin v. See , United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 the alleged‘surreptitiouscode’–wereallinstalledorupdated 502 claim, because“[o]nPlaintiffs’ownallegations,theiOSandthirdpartyapps–which contain “surreptitous[ly]” andneversecuredplaintiffs’permission. Nonetheless,thecourtdismissed the§ have beengrantedatthetime ofpurchaseandthatdefendanthadacquiredthepersonalinformation *2. Plaintiffscontendedthatdefendanthad“exceededthescopeofanyauthorization”could but also(2)thattheyhad erectedsome form oftechnicalorcodebasedbarrier topreventsuch they didnotgivedefendants permission toaccessandtransmit tothirdpartiestheirpersonaldata, result. Instead,relyingon absence ofpermission does notact“withoutpermission” –ananomalous andlinguisticallystrained personal data.Yet question ofwhethertheplaintiffsgave“permission” tothedefendantsaccessandtransmit their plaintiffs hadunquestionablydownloadedtheoffending appsinquestiondoesnotanswerthe never giventheapppermission toaccesstheinformation intheirdevices’addressbooks.That the the caseof question. Infact,inbothcasestheoffendingappwasallegedtohaveactedsurreptitiouslyand, the plaintiffgave“permission” totheappdeveloperdefendantaccesstheirinformation in the appsinquestionhadopenaccesstoPlaintiffs’addressbooks.” ‘technical orcodebasedbarriersinplacetorestrictbarauser’saccess.’AccordingtheCAC, permission totheappscopytheiraddressbooks,thereisnosuggestion thattheappsovercame here.” barrier” requirement, becausethey “didnotknowthattheappscontainedmalicious codeatissue Plaintiffs arguedtheirCCDAFAclaim wasviable,notwithstandingthe“technicalorcodebased user’s AddressBookinformation toitsserverswithouttheuser’sknowledgeorconsent. 2014), plaintiffscontendedthatanumber ofappdevelopersdesignedtheirapplicationstocopythe Similarly, in on theiDeviceswithoutuser’spermission orknowledge.” defendant’s appandallegedthattheapplicationusedcodetoaccessplaintiffs’“personalinformation Case3:12-md-02330-EMC Document339Filed01/21/15Page60of96 Id. In neitherofthesecasescanittrulybesaid,inanordinarysensethewordpermission, that at*21.Thecourtrejectedthisargument: “AlthoughPlaintiffsallegetheydidnotgrant Opperman Opperman v.Path,Inc. In reiPhone , thecourtacknowledgedthatplaintiffshadaffirmatively allegedthattheyhad Power Ventures and , No.C13-0453-JST,2014WL 1973378(N.D.Cal.May14, Opperman , thesecasesrequiredplaintiffs toshownotonly(1)that essentiallyheldthatadefendantwhoactsinthe 60 voluntarily In reiPhone Id. byPlaintiffs.” , 2011WL 4403963,at Id. Id. at*12. at*3. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 California stateauthorityoronthestatutorylanguage”). previously notingthatthe Solutions, Inc. broadly construedsoastodefeatPlaintiffs;claims inthiscase. access. TheCourtdoesnotbelievesuchareadingofthephrase“withoutpermission” shouldbeso permission.” Plaintiffs haveadequatelyallegedthatDefendants’ useoftheCarrierIQSoftwarewas“without failure toallegethatDefendantscircumvented a“technicalorcodebasedbarrier”is requirement. 1283236, at*12(N.DCal.Mar.26,2013).This issufficienttosatisfythe“withoutpermission” information. to renderineffectiveanybarriersthePlaintiffsmight wishtousepreventaccess”theirprivate from whichitcanbereasonablyinferredthattheCarrierIQSoftwarewas“designedinsuchaway context whichdoesnotinvolvemerely aviolationofterm ofservice,Plaintiffshaveallegedfacts barrier, interceptthetextmessage and/orthegeographiclocation.Accordingly, atleastinthe mobile deviceandreceivedatextmessage orphonecall,theCarrierIQSoftwarewould,despitethis implemented bythePlaintiffsineffective.Forexample, ifauserhadplacedpasswordonhis 64), theCarrierIQSoftwarewouldeffectivelyrenderany“technicalorcodebased”barrier Id. imposed.” system torenderbarriersineffectiveandthosewhichrespond aftertheyhavebeen court itselffound“noreasontodistinguishbetweenmethods ofcircumvention builtintoasoftware its functionality. that theyhadnonoticewasoperating,andwaytoremove thesoftwareortoopt-out of Case3:12-md-02330-EMC Document339Filed01/21/15Page61of96 Giventhebackgroundnatureofsoftwareandfactitiscontinuallyoperating(SCAC¶ Plaintiffs haveallegedthattheCarrierIQ Software,anditsoperation,was“deeplyhidden For theforegoingreasons,Defendants’motion todismiss Plaintiffs’CCDFAclaim for Facebook, Inc.v.PowerVentures, In reGoogleAndroidConsumerPrivacyLitig. , No.C11-3109EMC,2012WL 2327660(N.D.Cal.June19,2012)(thisCourt See, e.g. , SCAC¶40.Evenunderthe Power Ventures courthadnot“base[d]itsconstructionof§502onany 61 , 844F.Supp.2d1025,1038(N.D.Cal.2012). Power Ventures , No.11-MD-02264JSW, 2013WL See Weingandv.HarlandFinancial test,the Power Ventures DENIED . ;” United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 litigating thematter incourt.” requirement is“toallowthebreachingpartytocurebreachandtherebyavoid thenecessityof 110 S.W. 3d194,198(Tex. Ct.App.2003)(Texaslaw).Ingeneral,thepurposeofnotice Co. WL 5077633(D.Md.Oct.17,2012)(Marylandlaw); (N.D. Cal.Mar.14,2014)(Californialaw); Communications, Inc.v.UbiquitiNetworks, Co. v.JP&WJ,Inc. provide thedefendantwithreasonablenoticeofallegedbreach. California, Maryland,Michigan,NewHampshire, Texas,andWashington law. Manufacturers pre-suitnoticeoftheirimplied warrantyofmerchantability claims asrequiredby that Plaintiffshavefailedtoallegetheirmobile deviceswerenot“merchantable.” failed toallegethattheypurchasedtheirmobile devicesinCalifornia.Finally,Defendantscontend warranty claims failbecausePlaintiffswerenotinprivitywiththeDeviceManufacturerandhave suit noticeofanyallegedbreach.Second,DefendantsarguethatPlaintiffsCalifornia-basedimplied Hampshire, Defendants arguethattheimplied warrantyclaims underCalifornia,Maryland,Michigan,New The DeviceManufacturershavemoved todismiss theseclaims onavarietyofgrounds.First, under thelawsofoverthirtystatesandDistrictColumbia againsttheDeviceManufacturers. Plaintiffs’Implied Warranty ofMerchantabilityClaims E. Amended Complaint, allegefactsestablishing PlaintiffCline’sabilitytoassertsuchclaims. claims underthelawsofbothMichigan “at allpertinenttimes.” fact theonlyNewHampshire Plaintiffinthisactionisalleged tohavebeenaresidentofMichigan Case3:12-md-02330-EMC Document339Filed01/21/15Page62of96 , 617F.Supp.1265(D.N.H.1984)(NewHampshire law); Each ofthesestatesrequireaplaintiffseekingtoassertbreachimplied warrantyclaim to Effect ofPlaintiffs’AllegedFailuretoProvideNoticeDeviceManufacturers 1. Defendants arguethatPlaintiffshavefailedtoallegetheyprovidedtheDevice Plaintiffs’ fifthcauseofactionallegesabreachtheimplied warrantyofmerchantability 11 TheCourtneednotaddress arguments arisingunderNewHampshire lawinlightofthe 11 Texas,andWashington lawshouldbedismissed asPlaintiffsfailedtoaffordthem pre- , 230F.App’x650,652(9thCir.2007)(Washington law); See supra Donohue v.Apple,Inc. note1.TotheextentPlaintiffs seektohavePlaintiffClineassert and Ingram v.AutoPalace,Inc. NewHampshire, theyshall,intheThirdConsolidated , No.C13-1803EMC,2014WL 1048710,at*9n.2 62 Town ofHooksettSch.Dist.v.W.R.Grace& , 871F.Supp.2d913,929(N.D.Cal.2012); U.S. Tire-Tech,Inc.v.Boeran,B.B. See, e.g. , No.BPG-09-2660,2012 , Charter OakFireIns. Tasion , United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 this basis,citingfederal district courtcasesinvolvingconsumers, theCourtstated“federal district (quoting in actionsbyinjured Court hadconcludedthatthe“‘noticerequirement .isnotanappropriateone for thecourttoadopt 1048710, at*5.Itreachingthisconclusion,however, theCourtnotedthatCaliforniaSupreme required a defective bed. without analysis,thataconsumer hadtoprovidenoticetheentitythat manufactured herallegedly Retail Corp. suit againstthem.” found that“underCalifornialaw,aconsumer neednotprovidenoticetoamanufacturer beforefiling 838 F.Supp.2d929(C.D.Cal.2012),wherethedistrictcourt,relyingonalineofCaliforniacases, breach ofwarrantyaction.Ononehand,Plaintiffscite a consumer toprovidenoticearemote manufacturer withwhom hehasnotdealtbeforefilinga see also,e.g. breaches likelymade tothem directly”bythirdpartypressreportsandthelike.SCAC¶342. preceded filingofeitherconsolidatedamended complaint” orbywayof“numerous reportsofthese that theDeviceManufacturershadnoticeofPlaintiffs’claims “bywayoftheindividualsuitsthat notice oftheallegedbreachimplied warrantyofmerchantability. Rather,the SCACalleges product, thusenablinghim tocorrectthedefect,ifpossible,andminimize anydamages.”). Ct. App.1977)(“Apurposeofthenoticerequirement .wastoinform thesellerofadefectin to cure,barsrecoveryonthebasisofbreachwarranty”); Texas law,thatfailuretonotifythesellerofbreach“therebyallowinganopportunity Case3:12-md-02330-EMC Document339Filed01/21/15Page63of96 This Courthasrecentlyaddressedthispreciseissue andconcludedthatCalifornialaw The partieshavecitedconflictingcaselawonthequestionofwhetherCaliforniarequires Plaintiffs’ SCACcontainsnoallegationsthat PlaintiffsprovidedtheDeviceManufacturers Greenman v.YubaPower Products,Inc. business entity , No.08-2746JF,2008WL 4542967 (N.D.Cal.Oct.1,2008)wherethecourtheld, , McKayv.NovartisPharm.Corp. .CaliforniaLawDoesNotRequireConsumers toProvide NoticetoRemote a. See id. Id. consumers at*5. Manufacturers at951.Ontheotherhand,Defendantsciteto toprovidenoticearemote manufacturer. againstmanufacturers withwhom they havenotdealt.’” , 751F.3d694,705(5thCir.2014)(holding,under 63 , 59Cal.2d57,61(1963)) (emphasis added).On Keegan v.AmericanHondaMotorCo.,Inc. Mattos, Inc.v.Hash Stearns v.SelectComfort See Tasion , 368A.2d993(Md. , 2014WL Id. , United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 requirement shouldprovide themanufacturer withanaffirmative defense.”); immediate sellerofabreach.Itisonlylogical,therefore,thatconsumer’s failuretoobserve this Md. 2008)(“[A]manufacturer hasadistinctinterestinwhetheranaggrievedconsumer notifieshis notice tohis remote manufacturer may raiseasanaffirmative defenseaplaintiff’sfailuretoprovide therequired only decisiontoaddressthisquestionunderMaryland law,theDistrictofMarylandheldthata Firestone Tire&RubberCo.v.Cannon breach ofwarrantyclaim againstaremote manufacturer withoutprovidingthatpartynotice. (Mich. Ct.App.2013). Michigan lawholdssimilarly. Consumer Litig. reasonable noticeofanyallegedbreachtoaremote manufacturer. recently heldthattheweightofTexasauthorityrequiredabreachwarrantyplaintifftoprovide warranty toaremote manufacturer.” Tech be giventoaremote manufacturer. With respecttoTexaslaw,Plaintiffsaremistaken. In the Courtwillnotdismiss theCaliforniaimplied warrantyclaims onthisbasis. Plaintiffs areeithersophisticatedbusinessentitiesordealtwiththeDeviceManufacturersdirectly, this issuein remote seller/manufacturer withwhom theyhavenotdealt.” courts inCaliforniahaveroutinelyheldthatplaintiffsarenotrequiredtoprovidepre-suitnoticea Case3:12-md-02330-EMC Document339Filed01/21/15Page64of96 , theTexasCourtofAppealsheldthat“abuyerisrequiredtogivenoticeanallegedbreach Plaintiff CribbsiscorrectthatMarylandlawgenerallypermits abuyerofgoodstofile In theiropposition,PlaintiffscontendthatneitherMarylandorTexaslawrequiresnotice Defendants haveprovidednoauthoritytocausethisCourtreconsideritsearlierrulingon Tasion immediate .Plaintiffs’Maryland,MichiganandTexasImplied Warranty Claims Will Be b. , —F.Supp.2d2014WL 2451291,at*25(N.D.Cal.May30,2014). . Accordingly,insofarastheSCACcontainsnoallegationsthatCalifornia Dismissed forLackofNotice seller. See Llloydv.GeneralMotorsCorp. See Gormanv.AmericanHondaMotorCo. U.S. Tire-Tech , 452A.2d192(Md.Ct.App.1982).Nonetheless,inthe 64 , 110S.W.3d at199.Inaddition,thisCourthas Id. , 575F.Supp.2d714,723(D. See InreMyFordTouch , 839N.W.2d 223,229-30 but seeFirestoneTire U.S. Tire- See United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 generalized knowledgeofcomplaints regardingtheCarrierIQ Softwareasconstitutingnoticeof normal settlement throughnegotiation”). “inform[] thesellerthattransactionisclaimed toinvolveabreach,andthusopen[]thewayfor McKay v.NovartisPharm.Corp. than, thebuyer,butof breach requiredisnotofthefacts,whichsellerpresumably knowsquiteaswell,ifnotbetter breach oftheimplied warranty. their products.Instead,aplaintiffmust providenoticethatheconsidersthedefendanttobein constitute notice.”).Further,itisnotsufficientthatadefendantgenerallyknowofproblems with 2451291, at*25(N.D.Cal.May30,2014)(“UnderTexaslaw,thefilingofacomplaint doesnot 229-30 (requiring“presuitnoticeofabreach-of-warrantyclaim”); does notexistandthebuyer-plaintiffhaslostrightofhisremedy.”); prior totheinstitutionofactionanessentialconditionprecedentrightbring upon whethernotificationhasbeengiventhesellerbybuyer,wherenonotice Inc. filing ofacivilcomplaint cannotconstitute“reasonablenotice.” immediate seller(Maryland).TheCourtfindsthattheyhavenot. provided reasonablenoticeeithertotheDeviceManufacturers(MichiganandTexas)ortheir seller. Accordingly,theCourtmust examine whetherPlaintiffshave adequatelyallegedthatthey or permit aremote manufacturer toassertthefailureofPlaintiffsaffordnoticeimmediate may raiseaconsumer’s failuretonotifyhisimmediate sellerofanallegedbreachwarranty). & RubberCo.v.Cannon affirmative defense“obviousonthefaceofacomplaint,” SCAC, Plaintiffs’failure toprovidetheirimmediate sellernoticeissuchacase. F.3d 892,902(9thCir.2013). Forthereasonsthatfollow,andbasedon the allegationsin Case3:12-md-02330-EMC Document339Filed01/21/15Page65of96 , 327A.2d502,514(Md.Ct.App.1974)(“Sincetheexistenceofarightactionisconditioned Accordingly, Plaintiffs’relianceintheirSCACon thefilingofcomplaints andDefendants’ Courts applyingthelawsofthesestateshaverequired Accordingly, Maryland,Michigan,andTexaseitherrequirenoticetoaremote manufacturer, 12 Courtsmay addressaffirmative defensesatthemotion todismiss stagewherean the buyer’s , 452A.2d192,196n.6(1982)(decliningtoaddresswhetheradefendant , 751F.3d694,706(5thCir.2014)(holdingthat the noticemust See Lloyd claim thattheyconstituteabreach.’” (citationomitted)); , 575F.Supp.2dat723(holdingthatthe“noticeof 65 Rivera v.Peri&SonsFarms, Inc. pre-suit SeeLynx,Inc.v.OrdnanceProds., In reMyFordTouch notice–accordingly,the Gorman , 839N.W.2d at , 2014WL see also , 735 12 United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Sandstrom’s implied warrantyclaim onthisground. construe Washington lawasitsuggests.Forthesereasons,theCourtdeclinestodismiss Plaintiff Defendants havefailedtobriefwhy,intheabsence ofthisauthority,theCourtshouldnonetheless opposing party(asisthecasehere)may constitutereasonablytimely notice..”). 279 F.Supp.2d1096,1116(D.Ariz.2003)(“TheCourtfindsthat.filingacomplaint uponan the filingofacivilcomplaint couldserveasnoticeofbreach.”); N.E. 2d624(Ohio1989)(“We declinetoadoptsuchanabsoluterule,as webelieveinapropercase breach ofwarrantyaction. notice, otherjurisdictionsallowthefilingofacivilcomplaint toconstitutetherequirednoticefora on thesequestions.Forexample, while,asjustdiscussed,TexasandMarylandrequirethe authority issignificantbecausethevariousjurisdictionsinthiscountryhavereacheddifferingresults is requiredorwhethernoticetoadefendantmust occurbeforefilingsuit.Thelackofanyon-point search hasfailedtolocateanyWashington caseaddressingwhethernoticetoaremote manufacturer absolute requirement underWashington law.” law wasacaseoutofthisDistrictwherethecourtstatedit“notclearthatpre-suitnoticeisan to beprovidedpriorfilingsuit.Instead,theonlycasecitedbyDefendantsapplyingWashington consumer must providenoticetoaremote manufacturer, or(2)thatWashington requiresanynotice the commercial codemust beinverticalprivitywiththedefendant. laws ofthesestates. Texas. Accordingly,theCourtwilldismiss Plaintiffs’implied warrantyclaims arisingunderthe their breachofwarrantyclaim failsasamatter oflawunderthelawsMaryland, Michigan and Case3:12-md-02330-EMC Document339Filed01/21/15Page66of96 .Plaintiffs’California Implied Warranty of MerchantabilityClaim Will BeDismissed 2. Accordingly, thestateofWashington lawontherelevantquestionsisunclear.Further, Defendants havecitednoWashington authorityforeithertheproposition:(1)thataninjured Under Californialaw,a plaintiff assertingabreachofimplied warrantycauseofactionunder for LackofPrivity,with LeavetoAmend .TheCourtWill NotDismiss PlaintiffSandstrom’s Washington Implied c. Warranty Claim See, e.g. , Chemtrol Adhesives,Inc.v.AmericanMfs.Mut.Ins.Co. Donohue 66 , 871F.Supp.2dat930.ThisCourt’sown see alsoHearnv.R.J.Reynolds See, e.g. , Clemens v. presuit , 537 , United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 instance, shortoftheconclusory allegationthatPlaintiffspurchasedmobile devices“from actualor mobile device. result ofthewrittenwarrantiesmanufacturer providedinconjunctionwiththe purchaseofthe mobile devices.”).Finally, Plaintiffsasserttheyhad“directdealings”withthemanufacturer asa devices tothepersonsorentitiesfrom whom plaintiffsandtheclassultimately purchasedtheir members wereintendedthird-partybeneficiariesoftheDeviceManufacturers’ contractforsaleof the classwereandarealsoinprivitywithDevice Manufacturers..[P]laintiffsandtheclass beneficiaries ofacontractbetweenthemanufacturers andretailers. Second, theycontendthatarethird-party the DeviceManufacturers’authorizeddealers.”). purchased theirmobile devicesfrom actualor apparentagentsoftheDeviceManufacturers,suchas ¶ 336(“[P]laintiffsandtheclasswereinprivitywithDeviceManufacturersthatthey they purchasedtheirmobile devicesfrom actual orapparentagentsofthemanufacturers. Health 301,Inc.v.TycoElectronicsCorp. numerous direct dealingsbetweentheparties,requisiteprivitycanbeestablished.” manufacturer “essentiallyadoptsandbenefitsfrom theinitialsalesnegotiationsandthereare purchase aregenerallyinsufficienttocreateanexceptiontheprivityrequirement,” wherethe courts havestatedthatwhile“directdealingsbetweenapurchaserandmanufacturer afterthe viable underCalifornialaw.” retailer. In an implied warrantyclaim asathirdpartybeneficiaryofagreements betweenthemanufacturer and party beneficiaryexceptiongenerallyprovidesthataconsumer may, incertaincircumstances, assert There aretwopotentiallyapplicableexceptionstotheverticalprivityrequirement First,the third- other words,privityofcontractisrequiredtosustainanimplied warrantyclaim inCalifornia.”). Farms, Int’lLLCv.VentilexB.V. warranty claims must standinverticalcontractualprivitywiththedefendant.”); DaimlerChrysler Corp. Case3:12-md-02330-EMC Document339Filed01/21/15Page67of96 The SCAC,however,contains nofactualallegationstosupportanyofthese theories.For Plaintiffs arguethattheyhavemet theprivityrequirement inthreeways:First,theyargue In reMyFordTouchConsumerLitig. , 534F.3d1017,1023(9thCir.2008)(“[A]plaintiffassertingbreachof In reMyFordTouch , 500F.App’x586,588(9thCir.2012)(“Verticalprivity,orin , 169Cal.App.4th116,a143(2008). , thisCourtheldthatexception“remain[ed] 67 , 2014WL 2451291,at*31.Second,California See id. ¶337(“[P]laintiffsand see alsoParamount Cardinal See SCAC United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 dealings” withthatconsumer. an expresswarrantytoaconsumer doesnotestablishthatthemanufacturer has“numerous direct manufacturers ..”DocketNo. 309,at68(quotingSCAC¶337).However,theactofproviding devices, andthewrittenwarrantiesareenforceablebyplaintiffsclassagainst that themanufacturer provided written warrantiesinconjunctionwiththepurchaseoftheirmobile one factinsupportoftheirargument thatthedirectdealingsexceptionapplies:“[P]laintiffsallege tending tosupportthattheyarethird-partybeneficiaries”). Litig. Toyota MotorCorp.UnintendedAccelerationMarketing,SalesPractices&ProductsLiability putative contractsforwhichtheycontendareintendedthird-partybeneficiaries. elements ofagencyalleged.Similarly, Plaintiffshavefailedtoallegethefactsofunderlying California residentsinthisactionpurchasedtheirphonesfrom suchanagent.Norarethefactual apparent agentsoftheDeviceManufacturers,”there arenofactualallegationsthatanyofthe requirement exists. facts, asopposedtolegal conclusions,establishingthatanexceptiontothe verticalprivity Comm. Code§2314is re SonyPS3OtherOSLitig. in implied warrantyclaims eventhoughithasbeeneliminated inexpresswarrantyclaims.” warranty wouldbeinconsistent“withclearCalifornia precedentthatprivityremains arequirement implied warranty actionstobe“relaxed”anytime aplaintiffhasallegedrelianceonanexpress presumably relies.”).AsacourtinthisDistricthasrecognized,toallowtheprivityrequirement in one whomakes affirmative claims astothemerits oftheproduct,upon whichtheremote consumer required forliabilityonan requirement inbreachof argument onthispointispreciselywhyCalifornialawdoesnotimpose averticalprivity Case3:12-md-02330-EMC Document339Filed01/21/15Page68of96 , 754F.Supp.2d1145,1185(C.D.Cal.2010)(notingthatplaintiffshad“allege[d]facts Finally, Plaintiffs’attempt toinvokethe“directdealings”exceptionfails.Plaintiffspoint Accordingly, Defendants’motion todismiss Plaintiffs’implied warrantyclaim underCal. GRANTED express express , No.C10-1811RS,2011WL 672637,at*4 (N.D.Cal.Feb.17,2011). See CardinalHealth warrantyclaims. warrantybecauseitisdeemed fairtoimpose responsibilityon . Plaintiffswillbeaffordedleavetoamend topleadsufficient 68 See id. , 169Cal.App.4that143.Rather,Plaintiffs’ at143-44(“Privityisgenerallynot Compare Inre See In United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 314(2)(c); N.H.Rev.Stat. §382-A:2-314(2)(c);Tex.Bus.&Com. Code§2.314(b)(3); Wash. Rev. Comm. Code§2314(2)(c);Md.Code,Comm. Law§2-314(2)(c); Miss.CodeAnn.§75-2- a purchasedgoodis“fit for theordinarypurposeswhichsuchgoodsare used.” California, Maryland,Michigan,Mississippi,New Hampshire, Texas,andWashington. accordingly seekdismissal ofPlaintiffs’implied warrantyclaims arising underthelawsof IQ Softwarerenderedtheirmobile devicesunmerchantable. DocketNo.304,at72.Defendants alleging thatPlaintiffshavenot–andcannotallege thatthepresenceandoperationofCarrier purchased theirmobile devices. GRANTED the CaliforniaPlaintiffspurchasedtheirmobile devicesinCalifornia. California are actuallynoallegationsintheSCACthatanyofthesePlaintiffspurchasedtheirmobile devices sold inCalifornia.”).Here,whilePlaintiffsallegeanumber ofPlaintiffsresideinCaliforniathere F. Supp.2d843,851(N.D.Cal.2012)(“Byitsterms, theSong-BeverlyActappliesonlytogoods only Song-Beverly Act,thereisnoprivityrequirement.”). However,theSong-BeverlyWarranty Act See InreMyFordTouch under the under theSong-BeverlyConsumer Warranty Act.SCAC¶¶353-363.Unliketheimplied warranty the CaliforniaCommercial Code,Plaintiffsalsoassertaclaim forbreachoftheimplied warranty Case3:12-md-02330-EMC Document339Filed01/21/15Page69of96 appliestoconsumer productspurchasedinCalifornia. Under thelawsofeachthesestates,implied warrantyofmerchantability warrantsthat PlaintiffsHaveSufficientlyAllegedthatTheirMobileDevicesWere Unmerchantable 4. Accordingly, Defendant’smotion todismiss Plaintiffs’Song-BeverlyActclaims willbe Defendants substantivelyattackPlaintiffs’implied warrantyofmerchantability claims In additiontoassertingaclaim forbreachoftheimplied warrantyofmerchantability under .Plaintiffs’CaliforniaImplied Warranty Claim UndertheSong-BeverlyActWill Be 3. Commercial . Plaintiffs,however,haveciteddocuments suggestingthattheywillbeabletoallege butPlaintiffswillbeaffordedleavetoamend toallegewheretheCaliforniaPlaintiffs for PurposesofTheirImplied Warranty Claims Dismissed withLeavetoAmend Code,thereisnoprivityrequirement undertheSong-Beverly Warranty Act. , 2014WL 2451291,at*29(“Fortheimplied warrantyclaim underthe 69 See Eliasv.Hewlett-PackardCo. See, e.g. , Cal. , 903 in United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 See software renderedthedevices unabletomake andreceive phonecalls,textmessages, and thelike. renders theirmobile devicesunfitforthisordinarypurposebecause therearenoallegationsthatthe apps. Becauseofthis,Defendantsargue,Plaintiffs cannotestablishthattheCarrierIQSoftware making andreceivingphonecalls,textmessages, facilitatinginternetusage,andallowingusageof renders theproductunfitforitsordinarypurpose.”). breach oftheimplied warrantyofmerchantability. Instead,theremust beafundamental defectthat 1123, 1142(N.D.Cal.2010)(“Themere manifestation ofadefectbyitselfdoes not constitutea product unfitforitsordinarypurpose. (Tex. 1998).Rather,theallegeddefectinproductmust besofundamental astorenderthe buyer wouldlike,orevenaswellitcould.” breach theimplied warrantyofmerchantability merely becauseitdoesnotfunctionaswellthe 1291, 1296(1995).Therefore,aproductwhich“performs itsordinaryfunctionadequatelydoesnot fulfill theexpectationofbuyer,” 2009). Assuch,theimplied warranty“doesnotimpose ageneralrequirement thatgoodsprecisely will perform at a“minimum levelofquality.” usual andreasonablyforeseeablemanners”). inquiry “focusesontheexpectationsforperformance oftheproductwhenusedincustomary, 730, 736(N.Y.1995)(notingthatthe“fitforordinarypurposeswhichsuchgoodsareused” one centeringaroundreasonableconsumer expectations.”); (1st Cir.1980)(“UnderMassachusettslawthequestionoffitnessforordinarypurposesislargely Co., Inc. reasonable expectationsintotheconceptofmerchantability.” whether aproductis“fitforordinarypurposes”necessarily“incorporates.theconsumer’s Code §62A.2-314(2)(c).Courtsacrossvariousjurisdictionshaverecognizedthattheconceptof Case3:12-md-02330-EMC Document339Filed01/21/15Page70of96 DocketNo.304,at73. Defendants contendthatthe“ordinarypurpose” of mobile devicesiscommunication – At thesame time, theimplied warrantyofmerchantability merely guaranteesthattheproduct , 551F.3d218(4thCir.2009); Am. SuzukiMotorCorp.v.SuperiorCourt e Tietsworth v.Sears,Roebuck&Co. See see alsoVeneziav.MillerBrewingCo. Birdsong v.Apple,Inc. Gen. MotorsCorp.v.Brewer 70 Denny v.FordMotorCo. Robinson v.AmericanHondaMotor , 590F.3d955,958(9thCir. , 966SW.2d 56, 57 , 720F.Supp.2d , 626F.2d188,190 , 37Cal.App.4th , 662N.E.2d United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 from courtsinthisDistrict.Specifically, phone occasionallydropped ormissed phonecalls.Thecourtfound, however,thatplaintiffshad specifically, theyalleged, 2, 2012),plaintiffsdidallege defectswhichtouchedonthecorefunctionality oftheGooglephone– *8. Finally,in the iPhone’sabilitytomake calls,sendorreceivetextmessages, orusemobile applications. court rejectedplaintiff’simplied warrantyclaim, findingthattheglassdefectdidnotrenderdeficient despite Apple’srepresentationstothecontrary. plaintiffs allegedthattheglassontheiriPhonewas defectiveasitwaseasilyscarredandbroken, was deficient“inprovidingtheSirifeaturetoaccessthesefunctions.” messages, orallowingtheuseofmobile applications.”Rather,plaintiffshadallegedthattheiPhone alleged thattheiPhone4Sisdeficient”in“making andreceivingcalls, sending andreceivingtext allegation failedtostateaclaim forbreachoftheimplied warrantybecauseplaintiffshad“not not perform asadvertised.2013WL 3829653,at*16.Thecourt,however,foundthatthis re iPhone functionality didnotrenderthemobile devicesunfitfortheirordinarypurposes. Forexample, in the enumerated ways.isnotexhaustive.”). EMC, 2013WL 3829268,at*3(N.D. Cal.July23,2013)(“[U]seoftheword‘including’indicates definition ofamobile device’sordinaryandintendeduse. messages, andthelike,suggestingthatcourtswere notintendingtoprovideanexhaustive found thatamobile device’sordinaryandintendeduse“includes”making andreceivingcalls,text 3835104, at*8-9(N.D.Cal.Sept.4,2012)).Notably,asthisquotedemonstrates, thecourt merely applications.’” and receivingcalls,sendingtextmessages, orallowingforuseofmobile ordinary useisasasmartphone, ‘whichthecourtsafelypresumes includesfunctionslikemaking 2013 WL 3829653(N.D.Cal.July23,2013),thecourtstatedthat“iPhone4S’sintendedand Case3:12-md-02330-EMC Document339Filed01/21/15Page71of96 Defendants’ definitionofmobile devices’“ordinarypurpose”findssome supportincaselaw Nonetheless, thesecourtshavefoundthatallegeddefectswhichdidnotaffectthiscore , plaintiffsallegedthattheiPhonewasrenderedunfitbecauseApple’s“Siri”featuredid In reGooglePhoneLitig. Id. at*16(quoting inter alia Williamson v.Apple,Inc. , thatthephone’s3Gdata connectivitywasinconsistentandthe , No.10-CV-0117-EJD,2012WL 3155571(N.D.Cal.Aug. In reiPhone4SConsumerLitig. See Williamson 71 Cf. Dairyv.Bonham , No.5:11-cv-0377EJD,2012Wl , 2012WL 3835104,at*1.The Id. Similarly, in , No.C12-1227CW, , No.C-13-1519 Williamson Id. at In , United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 to bean“unjustifieddilution” oftheimplied warranty.Rather,itheldthatavehicle “smells, to pointB,itnecessarily wasfitforitsordinarypurpose.Thecourtrejected thisargument, finding it 19 (2007),acarmanufacturer arguedthatsolongasavehicle providedtransportationfrom pointA or buckleincaseofanemergency.” minimum purpose”butratherwouldexpectthat they“wouldbeabletoquicklyunlatchtheharness was unfit. “adequate protectiverestraint”forthechild, court foundplaintiffsadequatelyallegedthecarseat impossible tounlatch.” alleged thatdefendants’carseatscontainedadefectivebucklewas“unreasonablydifficultor Products Inc. of theimplied warrantyofmerchantability.” because “apersonstillmay sleep onamoldy beddoesnotbarasamatter oflawaclaim forbreach alleged thatthebedsatissue“didnotconform toexpectationsregarding ordinaryuse,”andsimply the basisofmold growingonitsbeds.Thecourtdetermined that the plaintiffshadadequately perform asareasonableconsumer wouldexpect. capable ofperforming itsordinaryfunction,theproductnonethelessfails inasignificantwayto function. Thesecourtshavefoundthattheimplied warrantycanbebreachedwhen,although unfit notwithstandingthefactproductatissuecould,inatechnicalsense,perform itsbase 2009). Thereareanumber ofexamples ofcourtswhichhaveheldthatadefectcanrenderproduct Stearns v.SelectComfortRetailCorp. warranty, “thisdoesnotmean theallegeddefectmust precludeany useoftheproductatall.” simplistic andunderinclusive.While adefectmust be“fundamental” toimplicate theimplied make andreceivephonecalls,textmessages, usemobile apps,andaccesstheinternetisoverly Plaintiffs’ mobile devicesunfitforthedevices’ordinarypurposesimply becausethedevicescould unfit foritsordinarypurpose. failed to“demonstrate thatthisallegeddefectismore thaninconvenience” suchthatthephonewas Case3:12-md-02330-EMC Document339Filed01/21/15Page72of96 Thus, in This CourtfindsthatDefendants’argument thattheCarrierIQSoftwaredoesnotrender Id. , No.13-cv-01257-WHO, 2013WL 4566763(N.D.Cal.Aug.26,2013), plaintiff at*12.Itheldthat“[c]onsumers donotmerely expectacarseattoserveitsbare- Stearns , plaintiffsallegedanimplied warrantyclaim against abedmanufacturer on Id. at*1.Eventhoughitwasnotdisputedthatthecar seatprovided Id. at*5. Id. , No.08-2746JF,2009WL 1635931,at*8(N.D.Cal.June5, Finally,in Id. at*8.Similarly, in 72 Isip v.Mercedes-BenzUSA Long v.GracoChildren’s , 155Cal.App.4th United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 adequately allegedthatthe CarrierIQSoftwarerenderedtheirmobile devicesunmerchantable. prevent theproductfrom reachingareasonably expectedminimum levelofquality. Birdsong discussed, theimplied warrantyonlyensuresthataproductwillmeet a“minimum levelofquality.” product doesnotautomatically mean thattheproductisunfitforitsordinary purposes.Rather,as Stearns, can sleep,butrathertoprovideaplacewherean individualcansleepthatisfreefrom mold, App. 4that27,andthecorefunctionofabedisnotsimply toprovideaplaceonwhichanindividual is nottoprovidetransportation,itsafeandreliable reasonable expectationsintotheconceptofmerchantability.”). Thus,thecorefunctionofavehicle (“This definitionofmerchantability incorporatestradequalitystandardsandtheconsumer’s view ofacarseat’spurposeinlightconsumer expectations); type ofproductinageneralsense. a common senseviewinformed byreasonableconsumers’ expectations aboutthefunctionof should notseektoreduceaproductitsmost basic,bareminimum purpose,butrathershouldtake WL 3829653,at*16–wouldbeinsufficient.Indefiningaproduct’scorefunctionality,court used inamobile deviceortheeffectivenessofApple’sSirifunction, that isperipheralortangentialtothecorefunctionofproduct–forexample thestrengthofglass 1635931, at*7(requiringa“fundamental defect’).Thusdefectswhichonlyaffectsfunctionality “fundamental” inthatitaffectsthecorefunctionality oftheproduct. unfit foritsordinarypurpose,theCourtmust asktwoquestions.First,thedefectinquestionmust be structural support,buttoalsomeet “acertainaestheticexpectation”). of adefectwasunfitforordinarypurposeasconsumers expectoutdoordeckstonotonlyprovide Nov. 2,2012)(plaintiffsadequatelyallegedoutdoordeckthatbecame discoloredbymold asaresult Id. lurches, clanks,andemits smoke overanextendedperiodoftime isnotfitforitsintendedpurpose. Case3:12-md-02330-EMC Document339Filed01/21/15Page73of96 at 27; On thisbasis,theCourt finds, forpurposesofthemotion to dismiss, thatPlaintiffshave The Courtconcludesthatindetermining ifadefectrisestothelevelofrenderingproduct 2009 WL 1635931,at*7.Second,justbecauseadefectaffects the corefunctionalityofa , 590F.3dat958.Theimpairment ofthecorefunctionalitymust besignificantenoughto see alsoFleisherv.FiberComposites,LLC See Long, 2013 WL 4566763,at*12(rejecting“bare-minimum” 73 , No.12-1326,2012WL 5381381 (E.D.Pa. see alsoRobinson. see, e,g. See, e.g. , , InreiPhone Stearns see Isip , 551F.3dat224 , 2009WL , 155Cal. , 2013 see United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 /// /// /// /// summary judgment. development ofafactualrecord,CarrierIQ Softwaremay renewtheirargument viamotion for personal dataorcommunications were infactcompromised by theCarrierIQSoftware.Basedon out theprecisewayCarrierIQSoftwareoperates, includingthedegreetowhichPlaintiffs’ unfit toperform theircorefunctions.Duringdiscovery,thepartieswillhaveopportunitytoflesh consumers’ reasonable expectationsinprivacytosuchadegreesoasrendertheirmobile devices allegations aresufficientfortheCourttoconcludethatCarrierIQSoftwareundermines keystrokes; numbers dialedandreceived;etc.).TakingallinferencesinfavorofthePlaintiffs,these internet searchterms, usernames andpasswords;textmessages; apppurchasesanduses;auser’s intercepts andtransmits toCarrierIQanditscustomers datathatcanincludeURLSwhichcontain communication datatothirdparties. conclude, atthisstage,thattheCarrierIQSoftwareinterceptsand/ortransmits personal or herprivatecommunication dataandpotentiallysharethatwiththirdparties. with mold, aconsumer wouldlikelychoosetonotuseamobile devicethatactivelyinterceptedhis expectation ofprivacy).Justasaconsumer wouldlikelychoosenottosleeponabedcontaminated interests atstakeinsearchesofcellphonesbylawenforcement andrecognizingtheuser’s mobile devices. have areasonableexpectationofprivacyastothecontentscommunications made withtheir those communications tothird parties.Statedanotherway,itisbeyondcontroversythatindividuals them tocommunicate withotherswithouthavingathirdpartysurreptitiouslyinterceptandtransmit dispositive. Consumers haveareasonableexpectationthatmobile devices,ingeneral,willallow make andreceivephonecalls,textmessages, andthelikeontheir devices,thataloneisnot While didnotmake thereisnodisputethattheCarrierIQSoftware itimpossible forPlaintiffsto Case3:12-md-02330-EMC Document339Filed01/21/15Page74of96 Plaintiffs have,intheSCAC,providedsufficientfactualallegationsforCourtto Cf. Rileyv.California See,e.g. , 134S.Ct.2473,2489-91(2014)(discussingtheprivacy , SCAC¶65,68(allegingthattheCarrierIQSoftware 74 United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 .Plaintiffs’Magnuson-MossWarranty ActClaims NecessarilyDependontheStateLaw F. /// /// being made astothevariousotherstates’laws. The bulkofDefendants’arguments aredirectedtotheCaliforniaUCLclaim, withsimilar arguments StateConsumer ProtectionStatutes G. DENIED Accordingly, Defendant’smotion todismiss Plaintiffs’Magnuson-MossWarranty ActClaims is Court hasdeclinedtodismiss allofPlaintiffs’stateimplied warrantyclaims atthisstage. (“Therefore, thefederalclaims hingeonthestatelawwarrantyclaims.”). Asdetailedabove,the Moss claims “hingeonthestatelawwarrantyclaims.” 2d —,2014WL 1340339,at*12(N.D. Cal.Mar.31,2014).Accordingly,Plaintiff’sMagnuson- the meaning andscopeoftheimplied warranty.” federal causeofactionforbreachanimplied warranty,courtsmust looktostatelawdetermine Coach Corp. federal courtjurisdictionforstatelawbreachofimplied warrantyclaims.” ground is devices wereunmerchantable andDefendantsmotion todismiss theimplied warrantyclaims onthis insufficient asamatter oflawtostateaclaim thattheMacBookisnotfitforordinary use.”). shut down,andthathiscomputer shutdownonceoverthecourse of asixmonth period,are circumstances, namely ‘heavyloads’undertaken whenthebatteryisalreadylow,MacBook may DAD, 2012WL 2857035(E.D.Cal.July 11,2012)(“Plaintiff’sallegationsthat,underunique render thedeviceunfitfor itsordinarypurpose. inference thattheCarrierIQSoftware’simpact onamobile device’sbattery issosignificantasto device battery.TheCourtrejectsthisargument. Thereareno allegationsthatwouldpermit the unmerchantable because itdepletesbatterypowerandlife,thusreducingthelifespanoftheirmobile Case3:12-md-02330-EMC Document339Filed01/21/15Page75of96 Accordingly, fortheforegoingreasons,Plaintiffshaveadequatelyallegedthattheirmobile Defendants havemoved todismiss Plaintiffs’ stateconsumer protectionstatute-basedclaims. The Magnuson-MossWarranty Act“doesnotcreateimplied warranties,butinsteadconfers Implied Warranty Claims 13 PlaintiffsarguethattheCarrierIQSoftwarealso renderstheirmobile devices . DENIED , 581F.Supp.2d994,999(N.D.Ill.2008).Thus,whiletheAct“createsaseparate . 13 See Tomekv.Apple,Inc. 75 MacDonald v.FordMotorCompany See Clemens , 534F.3dat1022n.3 , 2:11-cv-02700-MCE- IWOI, LLCv.Monaco , —F.Supp. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 to disclosetheexistenceandfunctionalityof Carrier IQSoftware.Specifically,theyallege: WHO, 2014WL 1471054,at*6(N.D.Cal.Apr.15,2014). Federal RuleofCivilProcedure9(b). reliance’ uponthedefendant’smisrepresentation oromission”). for afraudulentbusinesspracticesclaim, theUCL mandates thatplaintiffdemonstrate ‘actual Supp. 2d—,2014WL 2945774,at*5(N.D.Cal.June30,2014)(notingthat seeking reliefunderthefraudulentprongofUCL.”(citationomitted)); that thisstandingrequirement . . imposes anactualreliancerequirement on named plaintiffs Wireless Servs.,Inc. prosecuting aprivateenforcement actionundertheUCL’sfraudprong”); 326 (interpretingProposition64as“impos[ing] anactualreliancerequirement onplaintiffs has heldthataplaintiffstatingclaim underthe“fraud”prongmust pleadactualreliance. 46 Cal.4th298,312(2009).FollowingthepassageofProposition64,CaliforniaSupreme Court members ofthepublicare likely tobedeceived”bythebusinesspractice. dismiss Plaintiffs’prongunderallthreeoftheprongs. unfair, unlawful,andfraudulentconductinviolationoftheCaliforniaUCL.Defendantsmove to Case3:12-md-02330-EMC Document339Filed01/21/15Page76of96 In theSCAC,PlaintiffscontendthatDefendants engagedinfraudulentconductbyfailing Claims undertheUCLfraudulentprongmust meet theheightenedpleadingstandardof To stateaclaim underthe“fraudulent”prongofUCL,“itisnecessaryonlytoshowthat Plaintiffs allegethatDefendants’conductregardingtheCarrierIQSoftwareconstitutes .CaliforniaUnfairCompetition LawClaims, Cal.Bus.&Prof.Code§17200 1. battery powerandlife. overtaxing processorpower anddevicememory, andbydepleting the CarrierIQSoftware degraded theperformance oftheir devicesby it infactdidinterceptsuch communications; andfailed todisclosethat Software wascapableofinterceptingprivatecommunications, andthat always operatingonsuchdevices;failedtodisclose thatthecarrierIQ mobile devices;failed to disclosethattheCarrierIQSoftwarewas Defendants secretlyinstalledtheCarrierIQSoftware onplaintiffs’. .Plaintiffs’HaveStatedaClaim forViolationoftheUCLFraud-ProngBased a. , 177Cal.App.4th1235,1257(2009)(“In on Defendants’AllegedOmissions See, e.g. , Grant v.PenscoTrustCo.,LLC 76 Tobacco II see alsoMorganv.AT&T , theSupreme Courtheld In reTobaccoIICases Rosado v.eBay Tobacco II , No.12-cv-06084- held“that , —F. See id. , at United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 defendant, actionable undertheUCL,‘theomission must becontrarytoarepresentation actuallymade bythe reasonably discoverablebyplaintiffsandtheclass.” the CarrierIQSoftware”and“knewthatexistenceofSoftwarewasnotknownor of theCarrierIQSoftware”because“onlydefendantsknewinstallationandfunctionality SCAC ¶120.PlaintiffsallegethatDefendantshadadutyto“disclosethepresenceandfunctionality plaintiffs hadto 2009), JudgePatelstatedthatinordertocomply withRule9(b) inanomission-based fraudaction, have failedtocomply withRule9(b).In omitted)). differently.’ Materialityisviewedfrom theprospectiveofreasonableconsumer.” (citation that, ‘hadtheomitted information beendisclosed,onewouldhaveawareofit and behaved 916 (C.D.Cal.2010)(“Inanomissions case,omitted information ismaterial ifaplaintiff canallege 3299936 (C.D.Cal.July29,2011)); of it.’” omitted information wouldcauseareasonableconsumer tobehavedifferentlyifheorshewasaware eMachines, Inc. that aremisleading becausesome othermaterial facthasnotbeendisclosed. conceals amaterial factfrom theplaintiff;or(4)whendefendantmakes partialrepresentations material factsnotknownorreasonably accessibletotheplaintiff;(3)whendefendantactively when thedefendantisplaintiff’sfiduciary;(2)hasexclusiveknowledgeof (emphasis added).Adefendanthasa“dutytodisclose”information inoneoffourinstances: (1) 4, 2014)(quoting Inc. PrivacyLitig. Case3:12-md-02330-EMC Document339Filed01/21/15Page77of96 Omissions canform thebasisofafraudulentprongUCLclaim. “Foranomission tobe Defendants arguethattheCourtshoulddismiss thefraudulentprongclaim becausePlaintiffs Elias or , 2014WL 493034,at*6(quoting anomission ofafactthedefendantwasobligedtodisclose.’” representative samples ofadvertisements, offers,orother information shouldorcouldhavebeenrevealed,aswell as provide describe thecontentof omission and wheretheomitted , 202Cal.App.4th249,255(2011)(same). “Anon-disclosed factismaterial ‘ifthe Daugherty v.Am.HondaMotorCo. , —F.Supp.2dC13-05226LHK,2014WL 4379916,at*20(N.D.Cal.Sept. see alsoEhrlichv.BMWofN.Am,LLC Marolda v.SymantecCorp. O’Shea v.EpsonAm.,Inc. 77 Id. , 144Cal.App.4th824,835(2006)) ¶122. , 672F.Supp.2d992(ND.Cal. , No.09-8063,2011WL In reAdobeSystems, , 801F.Supp.2d908, Id. ; see alsoCollinsv. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 devices hadtheyknown that thesedevicesborehiddenbattery-,processor- andmemory-taxing of theproposedclasshave sufferedeconomic harm; theywouldnothavepurchasedtheir mobile IQ Software,theywould nothavepurchasedtheirmobile devices. materiality byallegingthathadtheybeenawareoftheinstallationandfunctionality oftheCarrier functionality oftheCarrierIQSoftware.SCAC ¶ 120.Further,itappearstheyhavealleged Hewlett-Packard Co. advertisement, whichtheplaintiffhadfailedtoproduceoradequatelydescribe.” allegations. Itrecognizedthat Id. MacDonald Marolda (quoting Marolda (N.D. Cal.Mar.31,2014),thecourtnotedthat WL 909295,at*5-6(C.D.Cal.Mar.15,2012). alleging afraudulentomission.” spawned bythe Id. Case3:12-md-02330-EMC Document339Filed01/21/15Page78of96 at*6(quotingfirst at1002.“Subsequentcaseshave,however,calledintoquestionthesespecificrequirements Here, Plaintiffshaveclearlyallegedthecontentof theallegedomission –theinstallationand For example, in requirements werenot“necessarilyappropriate”forallomissions cases,thecourtin , the“‘contentofrepresentation[was]clearlywithinplaintiff’sknowledge.” Marolda stated: act.” cannot pointoutthespecificmoment whentheDefendantfailedto alleging afailuretoactinsteadofanaffirmative act,the[Plaintiffs] plaintiff inafalserepresentationclaim.” Becausetheplaintiffs“[are] the time, place,andspecificcontentofanomission aswoulda plaintiff alleginganomission-based fraudwill“notbeabletospecify specificity requiredbyanormal fraudclaim.” Thisisbecausea based onanomission “cansucceedwithoutthesame levelof what whenwhere,andhowofthemisconduct charged,”butclaims Typically, “[a]verments offraudmust beaccompanied bythewho and thatfailedtoincludetheallegedlyomitted information. representations thatplaintiff[s]reliedontomake[their]purchase[s] Marolda , 672F.Supp.2dat1001).Afterrecognizingthatcourtshadheldthe , 582F.Supp.2d1261,1267(C.D.Cal.2007)). Cooper v.Pickett MacDonald v.FordMotorCo. court”andthe“requirements arenotnecessarilyappropriateforallcases Marolda Overton v.BirdBrain,Inc. “concernedanallegedomission withinaparticular , 137F.3d616,627(9thCir.1997),andthen Marolda 78 , —F.Supp.2d2014WL 1340339 involvedacomplaint withdissimilar factual , No.SACV11-1054DOC(ANx),2012 Id. ¶3(“[P]laintiffsandmembers Id. at*6.Thus,in Baggett v. Id. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 they reviewed”). still shouldbeabletoidentify withparticularityatleastthespecificpolicies andrepresentationsthat 2010 WL 3341062,at*10(N.D.Cal.Aug.25, 2010)(statinginthereliancecontextthat“Plaintiffs Ehrlich been disclosed,hewouldhaveawareofit omission claim withleavetoamend, findingthatplaintiffhadfailedtoallegethedefect – adefectinBMW windshieldsmaking them pronetocracking. However,thecourtdismissed the Thus, in Id. information beendisclosed,[theplaintiff]wouldhaveawareofitandbehaveddifferently.’” “‘[r]eliance canbeprovedinafraudulentomission casebyestablishing thathadtheomitted 162 NorthWolfeLLC Defendants contendthisispartofthe“actualreliance”requirement undertheUCL.In allege that to disclosebutchoseomit. to plausiblyallegethatDefendantshadexclusiveknowledgeofamaterial factthattheyhadaduty Software wasintheexclusiveknowledgeofDefendants. manners alleged).Finally,Plaintiffshaveallegedthattheinformation regardingtheCarrierIQ these deviceshadtheyknownwerebearingtheCarrierIQSoftwarethatoperatedin Carrier IQSoftware-bearingdevices,anditisonemore reasonwhytheywouldnothavepurchased unintended recipients.”); software thatinterceptsprivateandconfidentialcommunications thatenablesthem tobesent Case3:12-md-02330-EMC Document339Filed01/21/15Page79of96 at1193-94(quoting Nonetheless, Defendantscontendthatcourtsinomission caseshaverequiredplaintiffsto , 801F.Supp.2dat920; Ehrlich had amaterial factbeendisclosed,theplaintiffs purchased hisMINIandBMW publicizedthisinformation. would haveplausiblybeenawareofthecracking defectbeforehe agrees withBMW thattheFACisdevoidof allegationsthatPlaintiff course ofmaking his purchasing decision.Nevertheless,theCourt the buyingpublic,wouldhavebecome aware ofthedefectin disclose ittoprospectivebuyers,presumably Plaintiff,asamember of Given theimportance ofthecrackingdefect,hadBMW chosento , thedistrictcourtfoundthatplaintiffhadallegedBMW omitted amaterial fact , 228Cal.App.4th1178(2014),theCaliforniaCourtofAppealheldthat Boschma v.HomeLoanCenter,Inc. id. ¶74(“Mobiledeviceownerswereunawareofthisfunctionalitytheir see alsoInreFacebookAdvertisingLitig. 79 Id. would have , 198Cal.App.4th230,250(2011)). ¶122.Theseallegationsaresufficient beenawareofthedisclosure. , No.5:09-cv-03043, Hoffman v. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 noted thatthe“properdefinition of‘unfair’conductagainstconsumers ‘iscurrentlyinflux’among Cal. 4th163,180(1999)). Theterm “unfair”isundefined inthestatuteandNinthCircuithas 4th 1134,1143(2003)(quoting specifically proscribedbysome otherlaw.’” certification orsummary judgment. explore Plaintiffs’relianceduringdiscoveryand,ifnecessary,re-raisethisargument duringclass Plaintiffs wouldhavebeenawareofitandacteddifferently.Defendantsremain free,however,to conclude thathadDefendantsdisclosedtheexistenceandfunctionalityofCarrierIQSoftware, outcry underscoresthemateriality oftheallegedomission. reports andSenatorFrankensendinglettersofinquirytomobile carriers. Theintensityoftheir regarding theCarrierIQSoftwareonceitsexistencebecame publicknowledge–includingmedia included PSU.”).Second,theSCACcontainsextensiveallegationsregardingpublicoutcry differently bynotpurchasingthecomputer asordered hadheknownabouttheinsufficiencyof 493034, at*6(“Plaintiffhasadequatelypleadedmateriality byallegingthathewouldhaveacted money orproperty‘asaresult’ofSony’sallegedunfairbusinesspractices.”); consumers purchasedtheirConsoles,theCourtfindsPlaintiffshavesufficientlyallegedalossof Sony OnlineServices,andthatthisinformation shouldhavebeendisclosedtoconsumers atthetime (“[B]ecause PlaintiffshaveallegedthatSonyomitted material information regardingthesecurityof Gaming Networks&CustomerDataSec.BreachLitig. Carrier IQSoftware,theywouldnothavepurchasedaffectedmobile devices. been awareofit.First,asdetailedabove,Plaintiffshaveallegedthathadtheythe Carrier IQSoftware–amaterial factexclusivelyinDefendants’knowledge–Plaintiffswouldhave it canbeinferredthathadDefendantsreasonablydisclosedtheexistenceandfunctionalityof Case3:12-md-02330-EMC Document339Filed01/21/15Page80of96 Under theunfairnessprongofUCL,“‘apractice may bedeemed unfairevenifnot In lightoftheSCAC’sallegations,Courtfindsthereisasufficientbasistoplausibly While acloseissue,theCourtfindsthatSCACcontainssufficientallegationsfrom which .PlaintiffsHaveAdequately PleadaViolationoftheUnfairnessProng b. UCL Cel-Tech Commc’ns,Inc. v.LosAngelesCellularTelephoneCo. Korea SupplyCo.v.LockheedMartinCorp. 80 , 996F.Supp.2d942,988(S.D.Cal.2014) Elias See, e.g. , 2014WL , InreSony , 29Cal. , 20 United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 California courts.” Supp. 2d—,2014WL 3707508,at*10(N.D.Cal.July21, 2014)(dismissing unfairness prong 1798.80, ortheCalifornia Constitution. Defendants’ conductviolated toCaliforniaPenalCode§§502,631,632.7, Cal.CivilCode§ offended CaliforniapublicpolicyfailbecausePlaintiffs havenotpleadsufficientfactsthat SCAC ¶119. It alleges: avoided. consumers orcompetition; and(3)theinjuryisonethatconsumers couldnothavereasonably injury besubstantial;(2)thatthenotoutweighedbyanycountervailingbenefitsto definition of“unfair”from theFederalTradeCommission Actandrequires:(1)thattheconsumer victim.’” the courttoweighutilityofdefendant’sconductagainstgravityharm tothealleged “‘immoral, unethical,oppressive,unscrupulousorsubstantiallyinjurioustoconsumers andrequires which hasbeenreferredtoasthe“balancingtest”,askswhetherallegedbusinesspracticeis 257 (quoting of theUCLmust betetheredtospecificconstitutional,statutory,orregulatoryprovisions.’” “‘public policywhichisapredicatetoconsumer unfaircompetition actionunderthe ‘unfair’prong Appeal articulatedthreepossibletestsdefining“unfair.”First,the“tetheringtest”requiresthat Drum v.SanFernandoValleyBarAss’n Case3:12-md-02330-EMC Document339Filed01/21/15Page81of96 As tothe“tethering”test,Defendantsarguethat Plaintiffs’ allegationsthattheirconducthas Plaintiffs’ SCACcontainsallegationsrelatingtoboththe“tethering”and“balancing”tests. Id. Id. Bardinv.DaimlerchryslerCorp. (quoting their privacyinterests,includingCaliforniaCivil Code§1798.80. California statutesrecognizingtheneedforconsumers tosafeguard constitution; CaliforniaPenalCode§§502,631, and632.7; policy asreflectedintherighttoprivacyenshrined inthestate defendants’ conductisunfairbecauseitoffendsCaliforniapublic personal information andtheuseoftheirdeviceresources.Further, fact, sufferedinjuryregardingtheprivacyandconfidentialityoftheir nature andintegrityofdefendants’goodsserviceshave,in plaintiffs andprospectiveclassmembers havebeenmisled astothe that defendantshavebenefittedfrom suchconductandpracticeswhile Defendants’ conductlacksreasonableandlegitimate justificationin Davis v.HSBCBankNevada,NA Bardin , 136Cal.App.4that1260).Finally,thethirdtestincorporates , 182Cal.App.4th247(2010),theCaliforniaCourtof e loInreGoogle,Inc.PrivacyPolicyLitigation See also , 136Cal.App.4th1273-74(2006)).Thesecondtest, 81 , 691F.3d1152,1169(9thCir.2012).In Id. , —F. at United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 ‘comparable’ toaviolationoflaw.” on thispoint,”andthusfound that“Plaintiffsha[d]adequatelyalleged Adobe’sconduct[was] about Californiaresidents isprotected.”).JudgeKohfoundthat“California legislativeintentisclear Civ. Code§1798.81.5(a)(“Itistheintentof Legislaturetoensurethatpersonalinformation declares that.allindividualshavearightofprivacy ininformation pertainingtothem ..”); Cal. embodied inthreestatutes. Adobes actionsviolatedCalifornia’spublicpolicy of“protectingcustomer data,”allegedly hackers accessingAdobe’scustomers’ personalinformation. “deeply flawed”securitypracticesthatfailedtoconform toindustrystandards andcontributedto 4th 163,185(1999))(emphasis added).Inthatcase,plaintiffshadallegedAdobeemployed Id. offended betiedtoaspecificstatutoryprovision.AsJudgeKohhasrecognized, Additionally, the“tethering”testmerely requiresthatthe act canbe“unfair”evenifnotunlawful. and essentiallyconflatesthe“unfair”“unlawful”prongsunderUCL.Asalreadystated,an constitutional provisionwillforecloseresultunderthe“tethering”unfairnessprongtest. there iscaselawwhichsuggeststhatthefailuretoactuallyallegeaviolationofspecificstatuteor provision, thecourtwillgrantdefendants’motion todismiss plaintiff’s UCLclaim.”). Accordingly, Accordingly, becauseplaintiffdoesnotsuccessfullyallegeaviolationofanyunderlyingstatutory unfairness claims to§1981andsection51,theclaims failsforthesame reasonssetforthabove. WBS KJN,2013WL 6070483(E.D. Cal.Nov.14,2013)(“Totheextentplaintifftethersits Constitutional righttoprivacy”); claim becauseplaintiffshadfailedtoallegefactssufficient“[p]roveaclaim undertheCalifornia Case3:12-md-02330-EMC Document339Filed01/21/15Page82of96 at*18(quoting The Courtconcludes,however,thatthesecaseshavereadthe“tetheringtest”toonarrowly significantly threaten[]orharm []competition.” comparable toorthesameasaviolationoflaw Plaintiffs needmerely toshow of astatutetobringclaim undertheUCL’sunfairprong.Instead, Adobe’s assertion,Plaintiffsdonotneedtopleadanydirectviolations Turning tothe“tetheringtest,”Courtnotesthatcontrary Cal-Tech Communications,Inc.v.LosAngelesCellularTelephoneCo. Id. at18; Tat Tohumculuk,A.S.v.H.J.HeinzCompany In reAdobe see also,e.g. See InreAdobeSystems that theeffectsofAdobe’sconduct“are , 2014WL 4379916,at*18; 82 , Cal.Civ.Code§1798.1(“TheLegislature public policy Id. at*2.Plaintiffscontendedthat , 2014WL 4379916,at*17. , orotherwise thathasallegedlybeen see alsoJolleyv. , No.Civ.13-0773 , 20Cal. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 invasion California Constitution] protects theindividual’s (USA), Inc.v.SuperiorCourt property, andpursuingobtainingsafety,happiness, andprivacy.”); Among theseareenjoyinganddefendinglifeliberty,acquiring,possession, protecting Const. art.1,§1(“Allpeoplearebynaturefree and independenthaveinalienablerights. message, report,orcommunication whilethesame isintransit”),orprivacygeneral, individual to,withoutconsent,“read[],attempt[] toread,orlearnthecontentsmeaning ofany unauthorized accesstocomputers, computer systems, orcomputer data),631(making illegalforan communications ordataarenotintercepted, conduct tetheredtoaviolationofconstitutional,statutory,orregulatoryprovision.” statements about theappraisaloropinionsaboutpossiblefuturevalueofhome constitute allegedly misled consumers. appraisal methods” usedtosupport“unnecessarilylargevariablerateloanpackages”which affirmed dismissal ofan“unfairness”prongUCLclaim basedondefendant’s“highlyspeculative Graham v.BankofAmerica,N.A. Equate Migraine’spriceandredpackagingviolate pointed toanyspecificconstitutional,statutory,orregulatoryprovisionthat defendants’ conductviolatedastatuteorconstitutional provision,butbecause“[p]laintiffshavenot test. Thisclaim wasdismissed, however,notbecauseofPlaintiffs’failuretosufficientlyallegethat Apr. 9,2014),thedistrictcourtdismissed plaintiff’sunfairness-prongUCLclaim underthetethering history may stillcontributetoitsbeingconsidered‘unfair’forpurposesoftheUCL”). the time ofdefendant’sconduct,“thenewlegislation[regardingdualtracking]anditslegislative unfairness UCLclaim basedonalleged“dualtracking”ofmortgages because,whilenotillegalat Chase HomeFinance Case3:12-md-02330-EMC Document339Filed01/21/15Page83of96 Plaintiffs havesufficientlyidentifiedaCaliforniapublicpolicyinensuringthatprivate Likewise, in ...”). TheSCAC–alleging indetail,asdetailedabove,thattheCarrierIQ Software Boris v.Wal-MartStores,Inc. , 213Cal.App.4th872,907-08(2013)(reversingsummary judgment on , 40Cal.4th360,370(2007)(“[T]herightofprivacy [underthe Id. at611.Thecourtfoundthatplaintiffhadfailedto“allegeany , 226Cal.App.4th594(2014),theCaliforniaCourtofAppeal see, e.g. 83 reasonable —F.Supp.2d,2014WL 1477404(C.D.Cal. .” , Cal.PenalCode§§502(making illegal Id. at*6(emphasis added).Similarly, in expectationofprivacyagainst aserious see alsoPioneerElectronics embodies apolicythat Id. see at613. Cal. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 assert aWiretap ActorCal.PenalCode§502claim. Plaintiffs’ unlawfulprongUCLclaim pendingPlaintiffs’amendment toattempt to successfully Code §502andWiretap Actcausesofactionwithleavetoamend. TheCourtdefersrulingon Trade Commission Act.SCAC¶118.TheCourthas previously dismissed Plaintiff’sCal.Penal Wiretap Act,Cal.PenalCode§§502,631,and632.7,thefactthatHTCviolatedFederal requires that [the] plaintiff allege that [the] defendant engagedinunfairmethodsrequires that[the]plaintiff allegethat[the]defendant ofcompetition and conduct ofanytradeorcommerce.” Conn.Gen. Stat.§42-110b(a).“‘Aclaim underCUTPA from “engag[ing] inunfairmethods ofcompetition andunfairordeceptive actsorpracticesinthe UCL-unfairness prongclaim is Id. court held: For example, in The cost-benefitanalysisthistestcallsforisnotproperlysuitedresolutionatthepleadingstage. communications anddata)thatplausiblycouldoutweightheutilityofsuchconducttoDefendants. have adequatelyallegedconduct(interceptionandtransmission ofprivateandconfidential pleading stagethatDefendants’conductoffendedthepublicpolicyreflectedintheseprovisions. surreptitiously interceptsvariouspersonalinformation –sufficientlyallegesforpurposesofthe Case3:12-md-02330-EMC Document339Filed01/21/15Page84of96 at1073. .ConnecticutUnlawful TradePracticesAct,Conn.Gen.Stat.§42-110a 2. Plaintiffs basetheirUCL“unlawful”prongclaims onallegedviolationsoftheFederal The ConnecticutUnlawfulTradePracticesAct(“CUTPA”) generallyprohibitsindividuals Accordingly, fortheforegoingreasons,Defendants’motion todismiss Plaintiff’sCalifornia Further, Plaintiffshavestatedaclaim undertheUCL-unfairness“balancing”test.Plaintiffs .Plaintiffs’UnlawfulProngClaim Will BeDismissed With Leave toAmend c. practices arenotinjurioustoconsumers asamatter oflaw. proceedings. NorcantheCourtconcludeatthisstagethatApple’s this isafactualdetermination thatcannotbemade atthisstageof of Apple’sconductmay ultimately outweightheharm toconsumers, consumers’ information withouttheirknowledge. While thebenefits according toPlaintiffs,Appleallowedthirdpartiescollect regarding itsprotectionofuser’spersonalinformation. Incontrast, Plaintiffs havealleged.Applemakes affirmative representations In reiPhoneApplicationLitigation DENIED . 84 , 844F.Supp.2d1040(N.D.Cal.2012),the United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 disclose thepresenceand functionalityoftheCarrierIQSoftwareon mobile devices.In 2011 WL 2633658(D. Conn.July5,2011)foritsassertionthatDefendants didnothaveadutyto speak.’” assumes tospeakmust make afullandfairdisclosureastothematters aboutwhichheassumes to disclose willbeimposed .onapartyinsofarashevoluntarilymakes disclosure.Apartywho disclose, thegeneralruleisthat.silencecannot giverisetoanaction”however,“[a]duty only if,inlightofallthecircumstances, thereisadutytodisclose.”).“‘Regardingthe Mercury, Inc. had adutytodisclosetheinformation inquestion. is basedonafailuretodiscloseinformation, Connecticutcourtsfirstlooktowhetherthedefendant Health Sys.,Inc. defendant wasunderanyobligationtodowhatitrefrainedfrom doing.” conduct violatesCUTPA.common sensedictatesthatacourtshouldinquirewhetherthe CUTPA. DocketNo.304,at60. software” andthereforehavenotallegedany“unfair ordeceptiveacts orpractices”forpurposesof did nothave“anydutyinthefirstinstancetodisclosepresenceorfunctionalityofCarrier IQ Harris v.BradleyMemorialHosp.&HealthCenter,Inc. practice is“unfairordeceptive”: The ConnecticutSupreme Courthasadoptedthefollowingfactorsfordetermining whetheratrade Lanmar Aviation,Inc. unfair ordeceptiveactspracticesintheconductofanytradecommerce.’” Case3:12-md-02330-EMC Document339Filed01/21/15Page85of96 Defendants relyprimarily on The Connecticutcourtshaveheldthatwhenaplaintiff“allegesdefendant’s Defendants contendthatPlaintiffs’CUTPAclaim shouldbedismissed becauseDefendants Miller v.Guimaraes , 730A.2d115,117(Conn.Ct.App.1999)(“Afailuretodisclosecanbedeceptive consumers, competitors, orotherbusinessmen. or unscrupulous;and(3)whetheritcausessubstantialinjuryto concept ofunfairness;(2)whetheritisimmoral, unethical,oppressive, least apenumbra ofsome common law,statutory,or otherestablished the common law,orotherwise–whether,itotherwords,iswithinat unlawful, offendspublicpolicyasithasbeenestablishedbystatutes, (1) Whether thepractice,withoutnecessarilyhavingbeenconsidered , 63A.3d1011,1023(Conn.Ct.App.2013).Accordingly,whereaCUTPAclaim , No.3:11-CV-01842(AWT), 2013WL 1103915(D.Conn.Mar.16,2013). , 829A.2d422,434-35(Conn.Ct.App.2003). Putnam Bankv.IkonOffice Solutions,Inc. 85 See, e.g. , 994A.2d153,173(Conn.2010). , Kenney v.HealeyFord-Lincoln- DiTeresi v.Stamford , No.3:10-cv-1067, Star ChildII,LLCv. passive Putnam United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 2014). An“unfairpractice is‘onethatoffendsestablishedpublicpolicy and onethatisimmoral, damages. (“FDUTPA”) hasthreeelements: (1)adeceptiveact or unfairpractice;(2)causation; and (3)actual defendants (oronecommensurate withCalifornia’sUCL). Docket No.304,at61. Defendants wasthesaleofaphone,nothandlingdatathatwouldbesavedonphone. Id. the automatic storagedevices.Itstated: court dismissed plaintiffs’CUTPAclaim findingthat Ikonhadnodutytodisclosethepresenceof equipment toanotherperson. printed, orscannedandthatIkondidnotdestroythesavedimages beforeitsoldorleasedthe leased contained“automatic storagedevices”thatsavedimages ofdocuments thathadbeenfaxed, Bank cited nocaseinConnecticutthatappliesabroad dutytodiscloselikeCalifornia. a dutytodisclosethepresenceandfunctionality of theCarrierIQSoftware.Notably,Plaintiffshave to amend sothatPlaintiffsmay attempt toallegesufficientfactsdemonstrating thatDefendants’had information canbeinferred.Accordingly,Plaintiffs CUTPAclaim willbe fiduciary duty).Ascurrentlypled,theSCACfailstopleadfactsfrom whichadutytodisclose disclosure, whereitisimposed bystatuteorregulation,whereaspecialrelationshipgivesriseto 929, 961(Conn.2005)(notingthatadutytodisclosecanarisewherepartymakes avoluntary Case3:12-md-02330-EMC Document339Filed01/21/15Page86of96 at*3.DefendantsherearguethattheessenceoftransactionbetweenPlaintiffMcKeenand , plaintiffallegedthatthedefendant,Ikon,knewcopiersandfaxmachines itsoldand A claim fordamages undertheFlorida Deceptive&UnfairTradePracticesAct The CourthaslocatednoConnecticutcasethatimposes abroaddutyto discloseon .Florida Deceptive&UnfairTradePracticesAct,Fla.Stat.§501.201 3. See Garciav.KashiCo. security didnotneedtobementioned explicitlyintheleases. have enteredintotheleasesonincorrectassumption thatdata the leases.IkonthereforecouldnothaveknownthatPutnam may would causePutnam tobelievethatdatasecuritywouldbecoveredby that Ikonknewtherewasacustom orotherobjectivecircumstance that Putnam’s apparentlackoffamiliarity withdigitalstoragedevicesor the equipment. Putnam doesnotallegethatIkonknewabout of officeequipment, nottheprotectionofdatathatwouldbesavedon the essenceoftransactionsbetweenPutnam andIkonwasthelease Id. at*1.PlaintiffsallegedthatIkonfailedtodisclosethisfact.The , —F.Supp.2d2014 WL 4392163, at*16(S.D.Fla.Sept.5, 86 Cf Glazerv.DressBarn,Inc. DISMISSED withleave , 873A.2d United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 circumstances, totheconsumers’ detriment.” representation, omission, orpracticethatislikelytomislead consumers actingreasonablyinthe Property Mgmt.,Inc. unethical, oppressive,unscrupulousorsubstantiallyinjurioustoconsumers.” mobile devices(ortheirmobile deviceslosingvalue) becausetheirresourceswerebeingtaxedby Plaintiffs haveallegedthat theysufferedascertainablelossasaresultof them overpayingfortheir 61166-CIV, 2011WL 1833366, at*6(S.D.Fla.May13,2011). led tobelievetheywerepurchasing.” “FDUTPA, Plaintiffssuffereddamages whentheypurchasedsomething thatwasnotwhattheywere parties.” market valueintheconditionwhichitshouldhavebeendeliveredaccordingto thecontractof in themarket valueoftheproduct orserviceintheconditionwhichitwasdeliveredand result oftheCarrierIQSoftware.“Actualdamages” aredefinedbytheFDUTPAas“thedifference customers” andthenchargedcustomers toupgrade thesystem toworkasoriginallypromised. security system thatitknewwouldstopworkingafter5years“withoutdisclosingthisfactto plaintiff hadstatedanomission-based FDUTPAclaim basedontheallegationthatADTsolda v. ADTSecServices at leastonecourtinFloridahasheldthata“dutytodiscloseisnotanelement ofFDUTPA.” duty ofdisclosureinthatcontextunderFloridalaw. real estatetransaction.Earlierintheopinion,courthaddetermined thattherewasnoaffirmative predicate actplaintiffallegedwasabreachofan“affirmative dutyofdisclosure” inthecontextofa All theEleventhCircuitdidinthatcasewasaffirm dismissal ofaFDUTPAclaim becausetheonly 680 F.3d1329(11thCir.2012),forthisproposition,butcasedoesnotsupporttheirposition. plaintiff must establishthatadutytodiscloseactuallyexists.Theycite 387 (Fla.Ct.App.2014). Case3:12-md-02330-EMC Document339Filed01/21/15Page87of96 Under this“market value”theory,Plaintiffshave sufficientlyallegedactualdamages. Defendants furtherarguethatPlaintiffshavefailedtodemonstrate “actualdamages” asthe Defendants arguethatwhereanallegeddeceptiveactisafailuretodiscloseinformation, the Rollins, Inc.v.Heller , 580F.Supp.2d1305,1310(S.D.Fla.2008).In , 842So.2d773,777(Fla.2003).“Deceptionoccursifthereisa , 454So.2d580585(Fla.Ct.App.1984).However, under Point BlankSolutions,Inc.v.ToyoboAm., State v.BeachBlvd.AutomotiveInc. 87 Id. at1338.ContrarytoDefendants’assertion, Morris Virgilio v.RylandGrp.,Inc. , thecourtfound PNR, Inc.v.Beacon , 139So.3d380, , No.09- Morris Id. , United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 duty todisclose,Maryland lawexpresslyprohibitsanypersonengagedin the“promotion orsaleof rejects thelattertwoarguments forthe same reasonsthesearguments failed failed toshowactualdamages, andhavefailed toallegethattheyreliedonanyomission. TheCourt above, namely thatPlaintiffs havefailedtodemonstrate thatDefendantshadadutytodisclose,have in questionhadthecommercial entitydisclosedtheomitted information.’” under theMCPAwhereitissubstantiallylikely that theconsumer wouldnothavemade thechoice (D.Md. 2011)).Plaintiffsmust alsoallegereliance, andaconsumer “reliesonamaterial omission 2014) (quoting action.’” unsophisticated consumers wouldfindthatinformation important indetermining acourseof Law §13-301(3).“Omissions arematerial undertheMCPA‘ifasignificantnumber of unfair ordeceptivetradepractice“ifthefailuredeceivesintendstodeceive.”Md.CodeCom. discussed above.TheMCPAexpresslyprovidesthatthe“[f]ailuretostateamaterial fact”isan DENIED FDUTPA. Accordingly, forpurposesofthepleadingstage,Courtfindsdamages adequatelyallegedunder device plausiblyisnotasvaluableonthemarket as onethatdoesnothavethesoftware. and transmits personalinformation andhasanoticeableimpact onthemobile device’sresources,the 201, 207,218.Theseallegationsareplausible–if,asisalleged,theCarrierIQSoftwareintercepts purchased mobile devicesthatarenotsecureandprivate. have diminished nowthattheprivacyissueshavecome tolight,andplaintiffstheclass the mobile devicesanddidnotreceivethebenefitofbargain.Thevaluetheirmobile device software onthemobile devices).SCAC¶147.Plaintiffsallegethattheyandtheclassoverpaid for the constantlyrunningCarrierIQSoftware(aswellasprivacyissuesinherentinhaving Case3:12-md-02330-EMC Document339Filed01/21/15Page88of96 Defendants havemoved todismiss Plaintiffs’ MCPAclaim onsimilar groundsdiscussed Maryland’s Consumer ProtectionAct(“MCPA”)ismaterially similar tothestatutes .MarylandConsumer ProtectionAct,Md.Code.Com. L.§13-101 4. For theforegoingreasons,Defendants’motion todismiss Plaintiffs’FDUTPAclaim is Castle v.CapitalOne,N.A. . Bank ofAmerica,N.A.v.JillP.MitchellLivingTrust , No.WMN-13-1830, 2014WL 176790,at*7(D.Md.Jan.15, 88 See, e.g. , SCAC¶¶147,156,164,182, , 822F.Supp.2d505,534 Id. supra . Astothealleged United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 four categoriesofconduct: (1)false,misleading, ordeceptiveactspractices;(2)any Protection Actclaim is courts employ ininterpretingCalifornia’sconsumer protectionstatute.”). Ohio 2012)(“Thislanguage[inMich.Comp. Law§ 445.903(1)(s)]mirrors thetestthatCalifornia similar circumstances. similar toCalifornialawwhich,asdiscussed material factwhenthatisin theexclusiveknowledgeofdefendant.Thistestismaterially Comp. Law§445.901(1)(s).Thislanguageimposes anaffirmative dutyondefendantstodisclosea or deceivetheconsumer, andwhichfactcouldnotreasonably beknownbytheconsumer.” Mich. includes aproscriptionon“[f]ailingtorevealmaterial fact,theomission ofwhichtendstomislead disclose undertheMichiganConsumer ProtectionAct.TheMichiganConsumer ProtectionAct damages. specific provisionofthe DTPA,andthatDefendantsactswerea“producing cause”ofactual allege that(1)theywereconsumers ofDefendants’goodsorservices;(2)Defendants violateda DENIED sufficiently allegedthattheexistenceandfunctionalityofCarrierIQSoftwareis“material.” As discussedaboveinthecontextofCaliforniaUCL“unfairness”prongclaim, Plaintiffshave (holding thatMarylandlawimposes alegaldutytodisclosematerial factsinconsumer transactions). Group LLC sellers ofconsumer goodsandservicesthedutytodiscloseallmaterial facts. consumer relyonthesame.” Md.CodeCom. Law§13-301(9)(i).Thisprovisionimposes onthe any consumer good[]”from engaginginan“omission ofanymaterial factwiththeintentthata Case3:12-md-02330-EMC Document339Filed01/21/15Page89of96 .TexasDeceptive TradePracticesAct,Tex.Bus.&Prof.Code§17.41 6. For theforegoingreasonsDefendants’motion todismiss Plaintiffs’Michigan Consumer Defendants arguethatPlaintiffshavefailedtoallegeanybasisforimposing adutyto To stateaclaim under the TexasDeceptiveTradePracticesAct(“DTPA”),plaintiffsmust .MichiganConsumer ProtectionAct,Mich.Comp. Laws§445.901 5. For theforegoingreasons,Defendants’motion todismiss Plaintiffs’MCPAclaim is . Amstadt v.U.S.BrassCorp. , No.SACV13-0620JVS(ANx),2014WL 1910628,at*11.(C.D.Cal.Jan.29,2014) See InrePorscheCarsNorthAmerica,Inc. DENIED . , 919S.W.2d 644,649(Tex.1996).TheDTPAproscribes supra 89 , imposes aduty todisclosematerial factsin , 880F.Supp.2d801,855(S.D. See Doylev.Chrysler United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 provision. Court neednotaddresswhetherPlaintiffshave adequately stated aviolationofanyotherDTPA consumers topurchasethesubjectphones. failure todisclosethefunctionandeffectofCarrierIQSoftwarewasintendeddidinduce claim, theCourtdeclinestodismiss PlaintiffsDTPAclaim onthisground.Plaintiffsallegethe and theCourthaspreviouslyrejectedthesearguments inthecontextofPlaintiffs’CaliforniaUCL 9(b).” DocketNo.304,at67.BecauseDefendantshaveraisednospecificargument astotheDTPA have failedtopleadany‘false,misleading, ordeceptive’actwiththeparticularityrequiredbyRule arguments theyraisedagainstPlaintiffs’CaliforniaUCLclaims onthispoint,statingthat“Plaintiffs been disclosed.”Tex.Bus.&Prof.Code§17.46(b)(24).Defendantssimply incorporatethe consumer intoatransactionwhichtheconsumer wouldnothaveenteredhadtheinformation at thetime ofthetransactionifsuchfailuretodiscloseinformation wasintendedtoinducethe practices” toinclude“failingdiscloseinformation concerninggoodsorserviceswhichwasknown specific provisionoftheDPTA.TheDTPAdefines“false,misleading, ordeceptiveacts mobile devices”theysubsequently soldtoPlaintiffs.DocketNo.304,at67. carriers werecapableof “assessing thesuitabilityofsoftware’sfunctionality foruseinthe the CarrierIQSoftware was nota“producingcause”ofanyactualdamages becausethemobile dismiss eachofPlaintiffs’claims. the SCAC,PlaintiffscontendthatDefendantsviolatedfirstthreeprovisions.seekto act orpracticeinviolationofTex.Ins.Code§541. unconscionable actionorcourseofaction;(3)breachanexpressimplied warranty;and(4)an Case3:12-md-02330-EMC Document339Filed01/21/15Page90of96 Because PlaintiffshaveadequatelyallegedatleastonepredicateviolationoftheDTPA, Defendants contendthatPlaintiffshavefailedtoadequatelyallegeviolateda Defendants firstarguethatanyomission bythem regardingthepresenceorfunctionalityof .PlaintiffsHaveFailedtoAllegethatDefendants’ ConductWas a“Producing b. .PlaintiffsHaveAdequatelyAllegedthatDefendantsViolatedSpecific a. Cause” ofTheirDamages Provisions oftheDTPA 90 See Tex.Bus.&Com. CodeAnn.§17.50(a).In United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 allegedly failed),thecourtstated: with aconsumer transaction.” Id. manufacturers andsupplierswhen theirmisrepresentations arenotcommunicated totheconsumer.” sufficiently connectedtotheplaintiffs’injuries. had failed(Celanese).Thecourtfoundthatanymisrepresentations bythesedefendantswerenot Brass) aswellthemanufacturer ofaplasticcompound (Celcon)usedinthesystem thatallegedly those systems. Thedefendantsincludedtheactualmanufacturers oftheplumbing system (U.S. defective plumbing system, allegingthatthemanufacturers hadmisrepresented variousaspectsof plaintiffs werehomeowners whosuedundertheDTPA themanufacturers whomade theirhome’s injuries, Defendantsrelyon Id. provided thefollowingdefinitionfor“producingcause”: Case3:12-md-02330-EMC Document339Filed01/21/15Page91of96 at649.Accordingly,itheldthatthe“defendant’sdeceptiveconductmust occurinconnection at46. The courtfoundthattheTexasLegislaturehadnot“intendedDTPAtoreachupstream In arguingthatanyomission byDefendantscouldnotbethe“producingcause”ofPlaintiffs’ In Ford MotorCo.v.Ledesma of Celconforuseinthe systems. homebuilders, wereintermediaries capableofassessing thesuitability systems andthebuilding codeofficials,andtoalesserdegreethe finished homes totheconsumers. Themanufacturers oftheplumbing systems tohomebuilders orbuildingcodeofficials,market the the manufacturers oftheplumbing systems. Itdidnotmarket the Celanese’s marketing effortswerelimited topromoting itsmaterial to tools, anddidnotinstructortrainthehomebuilders’ plumbers. . U.S. Brass’selectionofrawmaterials, didnotdesignthepartsor to make fittingsforits plumbing systems. Celanesedidnotcontrol Brass andothermanufacturers, andknewthatU.S.Brassused Celcon Celanese promoted theuseofCelconinplumbing applications toU.S. which theeventwouldnothaveoccurred. event inissueand(2)itmust beabut-forcause,namely onewithout of producingcausethat(1)themust beasubstantialcauseofthe occurred, iseasilyunderstoodandconveystheessentialcomponents about aninjury,andwithoutwhichtheinjurywouldnothave Defining producingcauseasbeingasubstantialfactorinbringing Amstadt v.U.S.BrassCorp. Id. AstodefendantCelanese(themanufacturer ofthecompound that , 242S.W.3d 32(Tex.2007),theTexasSupreme Court 91 , 919S.W.2d 644(Tex.1996).There, United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 and unfairordeceptiveacts orpracticesintheconductofanytradecommerce.” Wash. Rev. “[a]ny personwhoisinjured inhisorherbusinessproperty”by“[u]nfair methods ofcompetition by theTexasSupreme Courtin leave toamend toafford Plaintiffsanopportunitytomeet the“producingcause”testasarticulated DTPA.” (footnoteomitted)).Accordingly, theCourtwill may suedirectly(despitetheabsenceofprivity)forbreachexpresswarranty or violationofthe (“Of course,ifmanufacturers make representationsorwarrantiesdirectlytoconsumers, thelatter e.g. manufacturer orsupplier”)thatDefendants’marketing effortsreachedthem asconsumers. their mobile devicesdirectlyfrom aDefendant(inwhichcasetheisnotan“upstream “producing cause”oftheiractualdamages. Plaintiffshavefailedtoallegeeitherthattheypurchased goods orservices.” actionable undertheDTPAunlessitwascommitted have varied,theconcepthasbeenconsistent:defendant’sdeceptivetradeactorpracticeisnot did nothaveaDTPAcauseofactionagainstthosedefendants.Thecourtnoted,“While ourwords transaction atissue,andtheirallegedmisrepresentations hadnotreachedtheconsumer, theplaintiffs Id. court stated: Id. Case3:12-md-02330-EMC Document339Filed01/21/15Page92of96 at652.Accordingly,becausebothdefendantswereremoved from theactualconsumer at650-51.Similarly, astoU.S.Brass,theactualmanufacturer oftheentireplumbing system, the , PPG Indus.,Inc.v.JMB/HoustonCentersPartnersLtd.Ptnshp. The Washington Consumer ProtectionAct (“WCPA”) providesaprivatecauseofaction for .Washington Consumer ProtectionAct,Wash. Rev.Code§19.86.010 7. As currentlyplead,PlaintiffshavefailedtoadequatelyallegethatDefendants’werea the plumbing contractorswhoinstalledthematerials. independent evaluationbybuildingcodeofficials,homebuilders, and homes totheplaintiffs.Finally,U.S.Brass’productsweresubject intended to,norwerethey,incorporatedintothemarketing ofthe the plaintiffs.AswithShell,U.S.Brass’marketing effortswerenot Shell andCelanese,U.S.Brasshadnoroleinthesaleofhomes to over thedesignandinstallationofplumbing systems, butaswith required forDTPAliability.U.S.Brassexercisedsignificantcontrol conduct ofShellorCelanese,italsofallsshortmeeting thenexus connection withtheplaintiffs’purchaseoftheirhomes thanthe Although theconductofU.S.Brasscomes closertobeingin Id. at650. Amstadt. 92 in connectionwith DISMISS Plaintiffs’DTPAclaim with , 146S.W.3d 79(Tex.2004) theplaintiff’stransactionin See, United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 purposes ofthepleading stage,theseallegationsaresufficienttoallegeactionable damages. it hadanoticeableimpact ontheperformance (andthusthevalue)of the mobile phones.For background, itisplausiblethatitsoperatingtaxed themobile devices resourcesandbatterysuchthat to thirdparties.Further,theextentCarrier IQSoftwareoperatedcontinuallyinthe messages, passwords,internetsearchterms, andthelikebymaking them availablefortransmission geolocation data.Itissomething quitedifferenttohaveadevicethatcompromises theuser’stext with the insignificant impact onthemarket valueofPlaintiffs’mobile devices.Thisisentirelyconsistent plausible that,ascurrentlyalleged,theCarrierIQSoftwarewouldhaveanoticeable,not- not withoutforce,theCourtconcludestheyarepremature atthisstage.TheCourtdetermines itis Article IIIstanding–arguments theCourthasaddressed assertion thatthecoverttrackingdiminished thephone’smarket value.” plans.’”). Thecourtfoundthiswasinsufficientbecauseplaintiffprovided“nosupportforthe second thattheunauthorizedtransmission ofdata‘toitsserverscausedadiminution inusers’data CPA claim, CousineauarguesfirstthatMicrosoft’sconductdiminished thevalueofherphone,and collection ofgeo-locationdatadiminished thevalueofherphone. injury. PlaintiffshadpurchasedMicrosoftsmart phonesand,astoinjury,allegedthatMicrosoft’s dismiss plaintiff’sWCPA claim onthegroundthatplaintiffshadfailedtoadequatelyallegean Supp. 2d1116(W.D. Wash. 2012).Inthatcase,thedistrictcourtgranteddefendant’s motion to business orproperty”asrequired.Theyrelyonthecaseof (W.D. Wash. 2013). unfair ordeceptiveact.” causing injurytotheplaintiffs’sbusinessorpropertyand(5)iscausallylinked deceptive actorpractice,(2)occurringintradecommerce, (3)impacting thepublicinterest,(4) Code 19.86.020;19.86.090.Theelements ofaclaim undertheWCPA are“(1)anunfairor Case3:12-md-02330-EMC Document339Filed01/21/15Page93of96 Defendants’ argument onthispointechoestheirarguments made inchallengingPlaintiffs’ Defendants contendthatPlaintiffshavefailedtoadequatelyallege“injurytheplaintiff’s Cousineau decision.Itisonethingtohaveamobile devicethatallegedly collects Frias v.AssetForeclosuresServices,Inc. 93 supra Cousineau v.MicrosoftCorp. . While Defendants’arguments are , 957F.Supp.2d1264,1270 Id. at1128(“Insupportofher Id. , 992F. United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 motion todismiss. Specifically,theCourtdismisses thefollowingclaims withleavetoamend: relies onHTC’sallegedfailuretodisclosethe“debug”error. concludes thatPlaintiffSandstrom’s WCPA claim shouldbedismissed withprejudicetotheextentit “debug deactivation”errorasallegedintheSCACandPlaintiffs’failuretorespond,Court and toolsinplaceforreviewingtestingthesecurityofitssoftwarecode.”SCAC¶77. detected itsfailuretodeactivatethedebugcodeinCIQInterfacehaditadequateprocesses failing todeactivatethecodeandbeingunawareofthatfact,stating“HTCcouldhave engage inthetransmission asitquotesextensivelyfrom anFTCinvestigationwhich speaksofHTC “debug codedeactivation”wasamistake. TheSCACseems tosuggestHTCdidnotknowingly Defendants arguethattheSCACandFTCinvestigationrevealHTC’sconductregarding added). However,thisdutytodiscloserequiresthattheseller buyer.” material toatransactionwhenthefactsare imposes abroaddutyofdisclosureondefendants–they havea “generalduty.todisclosefacts Plaintiffs donotallegethatHTCwasawareofthisissueatthetime ofthetransaction.The WCPA copied intothesystem logandthentransmitted toHTC,theclaim shouldbedismissed because HTC’s failuretodisclosethe“deactivatedebugcode”errorthatpermitted textmessages from being discovery atthesummary judgment stage. Defendants remain freetochallengethefactualandlegalbasisfortheseallegeddamages after Case3:12-md-02330-EMC Document339Filed01/21/15Page94of96 Plaintiffs’ Cal.PenalCode§502claim isdismissed forfailuretospecifywhich • Plaintiffs’ Wiretap Actclaim isdismissed forfailuretoallegethattheDevice • For theforegoingreasons,Court Plaintiffs donotrespondtothislatterargument byDefendants.Giventhenatureof Defendants alsoarguethattotheextentPlaintiffSandstrom’s WCPA claim isbasedon Griffith v.CentexRealEstateCorp. specific provisionsofthis sectionDefendantsareallegedtohaveviolated. Wiretap Act. Manufacturers intentionallyinterceptedanycommunication asdefinedbythe IV. CONCLUSION known totheseller GRANTS , 969P.2d486,492(Wash. Ct.App.1998)(emphasis 94 in partand butnoteasilydiscoverablebythe know DENIES the factsthatareatissue. in partDefendants’ United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 /// /// /// /// respective statessoastocontinueassertthese claims inathirdconsolidatedamended complaint. of statesinwhichnonamed may Plaintiffresides.Plaintiffs seektoaddnamed Plaintiffs from these 720 Ill.Comp. Stat.§5/14-2(a)(1). Case3:12-md-02330-EMC Document339Filed01/21/15Page95of96 Finally, theCourtdismisses, withoutprejudice, thosestatelawclaims arisingunder thelaws The Courtdismisses, withprejudice,Plaintiffs’claim undertheIllinoisEavesdroppingLaw, Plaintiffs’ implied warrantyclaims underthelawsofMaryland,Michigan,andTexas • Plaintiffs’ claim undertheWashington Consumer ProtectionActagainstHTCis • Plaintiffs’ claim undertheTexasDeceptiveTradePracticesActisdismissed for • Plaintiffs’ claim undertheConnecticutUnlawfulTradePracticesActisdismissed for • Plaintiffs’ UnfairCompetition Lawclaim isdismissed totheextentitrelieson • Plaintiffs’ implied warrantyclaim arisingunderCalifornialawisdismissed forfailure • Defendants. are dismissed withoutprejudiceforfailuretoprovidepre-suitnoticethe dismissed tothe extentitreliesonHTC’sfailuretodisclosethe“debug”error. interpreted byTexascourts. their conductwasotherwisea“producingcause”ofinjuryasthatphraseis Plaintiffs’ failuretoallegeDefendants’marketing effortsreachedconsumers orthat the CarrierIQSoftwareunderConnecticutlaw. failure toallegethatDefendants’hadadutydisclosetheexistenceandoperationof Wiretap ActoraCalifornialawregulation. allegedly “unlawful”conductpendingPlaintiffsadequatelyallegingaviolationofthe purchased amobile deviceinCalifornia. Plaintiff’s Song-BeverlyActclaim isdismissed forfailuretoallegethatanyPlaintiff to allegefactsinsupportofanexceptionCalifornia’sprivityrequirement. Further, 95 United States District Court For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Dated: January21,2015 third consolidatedamended complaint shallbefiledby Case3:12-md-02330-EMC Document339Filed01/21/15Page96of96 IT ISSOORDERED. This orderdisposesofDocketNo.304. Defendants’ motion todismiss isdeniedinallotherrespectsasprovided herein.Plaintiffs’ 96 United StatesDistrictJudge EDWARD M.CHEN ______March 23,2015 .