Summary
In Meinhold v. Sprint Spectrum, L.P., 2007 WL 1456141 (E.D. Cal. May 16, 2007), the plaintiff brought claims against the defendant based on allegations that defendant had represented, in its advertisements, that consumers would be charged particular fees only in certain circumstances.
Summary of this case from Janda v. T-Mobile, USA, Inc.Opinion
NO. CIV. S-07-00456 FCD EFB.
May 16, 2007
MEMORANDUM AND ORDER
This matter comes before the court on defendant Sprint Spectrum, L.P.'s ("Sprint") motion to dismiss plaintiff Carol Lee Meinhold's ("Meinhold") complaint pursuant to Rules 12(b)(1), 12(b)(6), 9(b), and 23(b)(3) of the Federal Rules of Civil Procedure. The court heard oral argument on the matter on April 27, 2007. For the reasons set forth below, defendant's motion to dismiss plaintiff's complaint is GRANTED.
BACKGROUND
The facts of this case are taken from plaintiff's allegations in the complaint.
Plaintiff alleges that after entering into the Agreement, defendant began to charge her for roaming minutes although her calls were made within the Network and that defendant continued to charge her for roaming minutes even after she paid an additional monthly fee to add roaming coverage to her plan. (Id. ¶ 3). Plaintiff also noticed that she was charged fees that were in excess of the promotional credit included in her plan for downloads that she did not request or receive. (Id.)
On February 5, 2007, plaintiff filed this action in the Superior Court of the State of California for the County of Placer, asserting claims for violations of Business and Professions Code §§ 17200 and 17500 and violations of California Civil Code §§ 1710(2) and 1710(3). Plaintiff's claims are based upon defendant's alleged "unlawful, unfair, and fraudulent conduct in (1) charging excess roaming fees to consumers who signed up for defendant's cellular service plans, and (2) charging excess fees to consumers for downloading games, applications, ringers, screensavers, etc." (Compl. ¶ 1). On March 9, 2007, defendant removed the case to this court on the basis of diversity jurisdiction.
STANDARD
A. Rule 12(b)(1)
Federal Rule of Civil Procedure 12(b)(1) allows a defendant to attack a pleading for lack of subject matter jurisdiction. Fed.R.Civ.P. 12(b)(1). The court presumes a lack of subject matter jurisdiction until it is proved otherwise. See Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994);Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989). The plaintiff bears the burden of proof that jurisdiction exists. See Stock West, Inc., 873 F.2d at 1225. The nature of the burden depends on the type of jurisdictional challenge. A complaint will be dismissed for lack of subject matter jurisdiction if (1) the cause does not "arise under" any federal law or the United States Constitution, (2) there is no case or controversy within the meaning of that constitutional term, or (3) the cause is not one described by any jurisdictional statute. Baker v. Carr, 369 U.S. 186, 198 (1962).
A motion to dismiss for lack of subject matter jurisdiction may attack either the allegations of the complaint (a "facial attack"), or the existence of subject matter jurisdiction in fact (a "factual attack"). See Thornhill Publ'g Co. v. General Tel. Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979). If, as here, the challenge is a factual attack, "the district court may review evidence beyond the complaint without converting the motion to dismiss into a motion for summary judgment." Safe Air for Everyone v. Mayer, 373 F.3d 1035, 1039 (9th Cir. 2004). The court need not presume the truthfulness of the allegations in the complaint. Id. "Once the moving party has converted the motion to dismiss into a factual motion by presenting affidavits or other evidence properly brought before the court, the party opposing the motion must furnish affidavits or other evidence necessary to satisfy its burden of establishing subject matter jurisdiction."Id. (quoting Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n. 2 (9th Cir. 2003)).
"Where the jurisdictional issue is separable from the merits of the case, the judge may consider the evidence presented with respect to the jurisdictional issue and rule on that issue, resolving factual disputes if necessary." Thornhill, 594 F.2d at 733. However, where jurisdiction is "inextricably bound to the merits of the case," Cameron v. Children's Hosp. Med. Ctr., 131 F.3d 1167, 1170 (6th Cir. 1997), such that resolution of the jurisdictional inquiry depends on the resolution of the merits, "the trial court should employ the standard applicable to a motion for summary judgment." Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir. 1983); see also Careau Group v. United Farm Workers of America, 940 F. 2d 1291, 1293 (9th Cir. 1990). "[T]he question of jurisdiction and the merits of an action will be considered intertwined where . . . `a statute provides the basis for both the subject matter jurisdiction of the federal court and the plaintiff's substantive claim for relief." Sun Valley Gasoline, Inc. v. Ernst Enters., Inc., 711 F.2d 138, 139-40 (9th Cir. 1983) (quoting Timberlane Lumber Co. v. Bank of America, 549 F.2d 597, 602 (9th Cir. 1976).
B. Rule 9(b)
Rule 9(b) of the Federal Rules of Civil Procedure provides that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." In order to comply with the requirements of Rule 9(b), the circumstances constituting the alleged fraud "must be `specific enough to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong.'" Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001) (quoting Neubronner v. Milken, 6 F.3d 666, 672 (9th Cir. 1993)). "Averments of fraud must be accompanied by `the who, what, when, where, and how' of the misconduct charged." Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). The plaintiff "must set forth more than the neutral facts necessary to identify the transaction. The plaintiff must set forth what is false or misleading about a statement, and why it is false." Id. (quoting Decker v. GlenFed, Inc., 42 F.3d 1541, 1548 (9th Cir. 1994)) (emphasis in original).
ANALYSIS
A. Standing
The issue of standing is a threshold determination of "whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues." Warth v. Seldin, 422 U.S. 490, 498 (1975); Steel Co. v. Citizens For A Better Env't, 523 U.S. 83 (1998). Article III limits "the federal judicial power `to those disputes which confine federal courts to a role consistent with a system of separated powers and which are traditionally thought to be capable of resolution through the judicial process.'" Valley Forge Christian Coll. v. Americans United For Separation of Church and State, Inc., 454 U.S. 464, 472 (1982) (quoting Flast v. Cohen, 392 U.S. 83, 97 (1968));Steele, 523 U.S. at 102. "Those who do not possess Article III standing may not litigate as suitors in the Courts of the United States." Id. at 476.
The Supreme Court has set forth that "[t]he `irreducible constitutional minimum of standing' contains three requirements."Steele, 523 U.S. at 102-03 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). First, plaintiff must allege an "injury in fact — a harm suffered by the plaintiff that is concrete and actual or imminent, not conjectural, or hypothetical." Id. at 103 (internal quotations and citations omitted). Second, plaintiff must allege causation — "a fairly traceable connection between the plaintiff's injury and the complained — of conduct of the defendant." Steele, 523 U.S. at 103. (citing Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 41-42 (1976). Third, the injury must be redressable — there must be "a likelihood that the requested relief will redress the alleged injury. Steele, 523 U.S. at 103 (citing Simon, 426 U.S. at 45-46).
Defendant contends that plaintiff does not have Article III standing to bring this suit because she has not suffered an injury in fact. This case has been removed to this court based upon diversity jurisdiction pursuant to 28 U.S.C. § 1332. As such, jurisdiction is not conferred by any statute under which plaintiff has brought her claims. Cf. Thornhill, 594 F.2d 730. Whether plaintiff has suffered an injury sufficient to confer Article III standing is not "inextricably bound" to the resolution of the merits of plaintiff's claims under California state law and thus, is a separable inquiry. See Cameron, 131 F.3d at 1170. Therefore, the court does not employ the standard applicable to a motion for summary judgment and considers the evidence presented by the parties with respect to the jurisdictional issue, resolving factual disputes if necessary.See Thornhill, 594 F.2d at 733.
Specifically, defendant asserts that plaintiff has not suffered an injury in fact with respect to her claims arising out of roaming charges because (1) defendant made her whole through the issuance of credits for any roaming charges that she had paid; and (2) she is no longer assessed roaming charges on any of her five phone numbers. (Decl. of Brandon Howard ("Howard Decl."), filed Mar. 16, 2007, ¶ 7). In response, plaintiff submits an affidavit, declaring (1) that the credit issued by Sprint did not remedy all the charges in dispute at the time that the credit was issued; and (2) that she still incurred additional roaming charges on the invoice that she received from Sprint in September 2006. (Decl. of Carol Lee Meinhold in Supp. of Opp'n to Def.'s Mot. to Dismiss ("Meinhold Decl."), filed Apr. 13, 2007, ¶¶ 3-4).
At oral argument, defendant conceded that plaintiff had standing for her claims arising out of the assessment of downloading fees.
In its reply, Sprint presents evidence that on August 22, 2006, Sprint revised plaintiff's account so that she is no longer assessed roaming charges on any of her five phone numbers. (Decl. of Brandon Howard in Supp. of Def.'s Reply ("Howard Reply Decl."), filed Apr. 20, 2007, ¶ 4). Specifically, defendant attaches plaintiff's billing statements from August 22, 2006 until March 22, 2007. (Exs. A-D to Howard Reply Decl.). On Meinhold's August 22, 2006 billing statement, Sprint issued a credit of $204.65 for the roaming fees that she had paid. (Id.) However, as a result of processing time, a roaming charge of $3.00 was assessed to plaintiff on her September 22, 2006 billing statement. (Id. ¶ 5). Subsequently, Sprint reversed the roaming charges assessed to Meinhold on her September statement and credited her $3.13 on her October 22, 2006 billing statement. (Id. ¶ 6). Plaintiff has not been billed for any roaming charges since her September 22, 2006 billing statement. (Id. ¶ 7).
In a supplemental declaration filed by plaintiff, she asserts that since June 22, 2004, Sprint charged her a total of $282.50 in disputed roaming charges. (2d. Supp. Decl. of Carol Lee Meinhold in Resp. to Def.'s Reply ("2d. Supp. Meinhold Decl."), filed May 4, 2007, ¶ 6). While plaintiff acknowledges that defendant issued her credits in the total amount of $261.80, (Id. ¶ 7), plaintiff contends that she has suffered an economic injury due to the disputed roaming charges that have not been credited to her account in the amount of $20.70. (Id. ¶ 8). Plaintiff also states that Sprint charged her fees for downloads that she did not request or receive. (Supp. Decl. of Carol Lee Meinhold in Resp. to Def.'s Reply ("Supp. Meinhold Decl."), filed Apr. 24, 2007, ¶ 4).
Because defendant presented new evidence in support of its reply, the court will consider plaintiff's unauthorized supplemental declaration. At oral argument, the court ordered plaintiff to submit the billing statements upon which she relied in her supplemental declaration, and allowed defendant to file any additional evidence in response.
In defendant's supplemental reply, defendant does not assert that plaintiff's billing records do not support her alleged injury from roaming charges in the amount of $20.70. Rather, defendant argues that plaintiff cannot claim that she was injured for roaming charges incurred between June 24, 2004 and May 23, 2005 because plaintiff never complained to Sprint before about these charges and thus, acquiesced in their validity.
Defendant's argument is not well taken. Defendant originally moved to dismiss plaintiff's claims for injuries arising out of assessed roaming charges for lack of standing because it asserted that it had already credited plaintiff for all assessed roaming charges that were in dispute. In opposition, plaintiff presented evidence that she did not receive a credit for certain roaming charges that she disputes as improperly assessed. In response, defendant does not assert that these roaming charges were credited, but that these charges were proper. In support of this contention, defendant proffers evidence only that plaintiff has repeatedly contacted defendant about concerns with her bill and that she did not contact defendant about these charges specifically. Such evidence is insufficient to rebut plaintiff's documented evidence that she suffered an injury in fact arising out of the assessment of roaming charges. Therefore, plaintiff has set forth an injury arising out of the imposition of roaming charges sufficient to allege Article III standing.
However, while plaintiff has proffered sufficient evidence demonstrating that she has suffered injury in fact from the imposition of roaming and downloading fees by defendant, plaintiff has not demonstrated that she has standing to seek prospective relief for her claims arising out of roaming fees. Where a party seeks prospective relief, she must establish that there is "a likelihood of future injury." White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). "Past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief if unaccompanied by any continuing, present adverse effects." Lujan, 504 U.S. at 564 (internal quotations omitted). Defendants have presented evidence that plaintiff's account was adjusted so that she was no longer assessed roaming charges, and that plaintiff has not been assessed any charges for roaming calls made after August 22, 2006. (Howard Reply Decl. ¶ 7). Plaintiff has proffered no evidence to the contrary. As such, there is insufficient evidence that, at the commencement of litigation in February 2007, there was a likelihood that defendant Sprint would assess roaming fees to plaintiff Meinhold in the future. See Lujan, 504 U.S. at 563-64; cf. White, 227 F.3d at 1242-43 (finding that a temporary policy in place for a month did not defeat the likelihood of future injury). Therefore, plaintiff lacks subject matter jurisdiction to litigate her claims for prospective relief based upon roaming charges assessed by defendant, and defendant's motion to dismiss such claims for prospective relief are GRANTED without leave to amend.
At oral argument, plaintiff conceded that she did not have standing to seek prospective relief in regards to her claims arising out of assessed roaming charges.
Defendant's motion to dismiss pursuant to Rule 12(b)(6) is based upon its argument that plaintiff has not suffered an injury in fact. Because the court found that plaintiff has demonstrated sufficient standing to assert at least some of her claims, the court does not address the merits of defendant's Rule 12(b)(6) motion. Further, a motion for 12(b)(6) addresses only the sufficiency of the allegations in the complaint. Cruz v. Beto, 405 U.S. 319, 322 (1972). To the extent defendant's arguments relating to injury are based on facts outside of the complaint, the court cannot consider such facts under a Rule 12(b)(6) analysis.
B. Failure to Plead Fraud with Particularity
Defendant asserts that plaintiff's complaint should be dismissed because she fails to plead fraud with particularity. Plaintiff argues that not all of her claims are grounded in fraud, but that to the extent they are, she has adequately alleged facts supporting her claims. Plaintiff contends that she does not need to meet Rule 9(b)'s heightened pleading requirement with respect to her claims brought pursuant to §§ 17200 and 17500 of the Business and Professions Code because fraud is not a necessary element of these claims, nor are her claims grounded in fraud.
"In cases where fraud is not a necessary element of a claim, a plaintiff may choose nevertheless to allege in the complaint that the defendants has engaged in fraudulent conduct." Vess, 317 F.3d at 1103. The Ninth Circuit has held that in such cases, where fraudulent conduct is the basis of the claim, that claim is "grounded in fraud" and "the pleading of that claim as a whole must satisfy the particularity requirement of Rule 9(b)." Id. at 1103-04 (citations omitted). Claims may be "grounded in fraud" where a plaintiff alleges a uniform course of fraudulent conduct.Id. at 1103. Under California law, the "indispensable elements of a fraud claim include a false representation, knowledge of its falsity, intent to defraud, justifiable reliance, and damages."Moore v. Brewster, 96 F.3d 1240, 1245 (9th Cir. 1996) (superceded by statute on other grounds) (citing Bank of the West v. Valley Nat'l Bank of Arizona, 41 F.3d 471, 477 (9th Cir. 1994)).
Plaintiff's allegations relating to her claim under § 17200 provide that "[t]he unlawful, unfair, and fraudulent business practices by defendants," as described in the preceding allegations of her claim, "present a continuing threat to Plaintiff" who suffered and continues to suffer monetary loss as a result of these practices. (Compl. ¶ 23) (emphasis added). Plaintiff's allegations relating to her claim under § 17500 provide that defendant made representations that it knew or should have known were untrue or misleading and that defendants will continue to do so. (Compl. ¶¶ 27-29). Such facts necessarily imply fraud by defendant. Further, the factual basis for all of plaintiffs' claims arise out of a uniform course of alleged fraudulent conduct, specifically, the false and misleading statements allegedly made by defendant through its advertising and marketing. (Compl. ¶¶ 1-2) ("This is a consumer action by Plaintiff . . . to secure [relief] based upon defendant's unlawful, unfair, and fraudulent conduct.") (emphasis added). Therefore, all of plaintiff's claims are "grounded in fraud" such that she must meet 9(b)'s heightened pleading standard.
Plaintiff argues that defendant's knowledge of wrongdoing or of the falsity is not necessary to a claim under § 17500. While this may be true, plaintiff has alleged that defendant knowingly misled plaintiff and the public and continues to do so.
Plaintiff relies heavily on the Northern District's opinion inQarbon.com v. eHelp Corp., 315 F. Supp. 2d 1046 (N.D. Cal. 2004). However, the facts of Qarbon are readily distinguishable from the facts alleged in plaintiff's complaint. In Qarbon, the counterclaimant, eHelp Corp., alleged that Qarbon was enforcing an invalid patent in bad faith. Id. at 1052. Counterclaimaint's assertions neither contained the word "fraud" nor alleged that Qarbon intended to defraud the public or that the public justifiably relied on the misrepresentation. In this case, not only does the plaintiff explicitly refer to defendant's alleged "fraudulent" conduct throughout the complaint, she also alleges facts that give rise to intent and reliance by the public. Therefore, plaintiff's argument is entirely without merit.
In this case, plaintiff failed to identify any specific statement made by defendant, let alone explain why such specific statements were fraudulent. See Moore, 96 F.3d at 145-46 (holding that the requirements of 9(b) were not satisfied where specific statements or actions were not identified). Plaintiff generally alleges that false or misleading statements were made to her and the public through Sprint's advertisements. Meinhold does not identify what advertisements she is referring to, when she saw them, where she saw them, or how the statements made in those specific advertisements were untrue or misleading. Such general allegations are insufficient to give defendant notice of the particular misconduct charged by plaintiff. See, e.g., Vess, 317 F.3d at 1106 (dismissing plaintiff's fraud claims where plaintiff failed to provide the particulars of when, where, or how the alleged conspiracy occurred); United States v. SmithKline Beecham, 245 F.3d 1048, 1051 (9th Cir. 2001) (holding that broad allegation that the defendant "knowingly . . . changed control numbers to wrongfully represent lab results did not satisfy Rule 9(b) where the plaintiff did not specify the types of tests, the employees who performed the tests, or the dates, time, or places where the tests were conducted); Decker, 42 F.3d at 1547-48 (requiring the plaintiff to state the time, place, and content of an alleged misrepresentation and explain why the statement is false and misleading in order to satisfy Rule 9(b)); cf. Cooper, 137 F.3d at 627 (holding that the plaintiff satisfied the requirements of Rule 9(b) where a complaint for excessive revenue recognition identified some of the specific customers defrauded, the four types of improper revenue recognition, the general time frame in terms of financial quarters, that the fraud arose out of financial statements, and that plaintiff was misled by defendant's claiming that its policy was stricter than it was). Rather, plaintiff's general allegations would put defendant in the untenable position of having to deny that it has ever done anything wrong in regards to its advertising and marketing, a circumstance that Rule 9(b) demands be avoided. See Vess, 317 F.3d at 1106. Therefore, because plaintiff has not pled her allegations of fraud with particularity, defendant's motion to dismiss is GRANTED with leave to amend. See Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995) ("In dismissing for failure to state a claim, a district court should grant leave to amend even if no request to amend the pleading was made, unless it determined that the pleading could not be cured by the allegation of other facts.") (citations and quotations omitted);see also Vess, 317 F.3d at 1107 (holding that dismissals under Rule 9(b) are functionally equivalent to dismissals under Rule 12(b)(6) and should be without prejudice if defects are curable).
Because defendant's motion to dismiss is GRANTED pursuant to Rule 9(b), the court does not consider defendant's Rule 23(b)(3) arguments relating to plaintiff's class action allegations.
CONCLUSION
For the foregoing reasons, defendant's motion to dismiss plaintiff's complaint is GRANTED. Plaintiff is granted twenty (20) days from the date of this order to file a first amended complaint in accordance with this order. Defendant is granted thirty (30) days from the date of service of plaintiff's first amended complaint to file a response thereto.
IT IS SO ORDERED.