Order Submitted Matter

Cal. Super. - 6th Dist.June 5, 2020

KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA LANCE DUTCHER, Case N0.: 20CV366905 Plaintiff, ORDER CONCERNING DEFENDANTS’ DEMURRER TO VS. THE COMPLAINT GOOGLE LLC, d/b/a YOUTUBE, et al., Defendants. This is a putative class action arising from the automatic renewal 0f subscriptions for digital content offered by Defendants Google LLC, d/b/a YouTube and YouTube, LLC (“Defendants” 0r “YouTube”). Defendants demur t0 each cause 0f action in the complaint (“Complaint”) for failure t0 state a claim (Code CiV. Proc., § 430.10, subd. (6)), and Plaintiff Lance Dutcher opposes their demurrer. As explained below, the Court OVERRULES Defendants’ demurrer. I. BACKGROUND A. Factual Allegations in Complaint Defendants own and operate a media-sharing platform, YouTube (the “YouTube Platform”), which contains Videos created by individuals and entities that have registered with YouTube and uploaded their Videos t0 a “channel.” (Complaint, 1] 2.) The YouTube Platform is ORDER ON SUBMITTED MATTER Electronically Filed by Superior Court of CA, County of Santa Clara, on 1/27/2021 9:44 AM Reviewed By: R. Walker Case #20CV366905 Envelope: 5720662 KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO accessible as a website at youtube.com (the “YT Website”), 0r as a mobile application 0r application 0n a set-top streaming device (the “YT Apps”). (Ibid) Through the YouTube Platform, Defendants market, advertise, and sell paid memberships t0 certain auto-renewing membership programs (the “YT Subscriptions”). (Id, 1] 3.) Among these are: o YouTube TV, which provides paying subscribers in the United States access t0 exclusive YouTube content, premium channels, and film rentals; o YouTube Music, offering ad-free music streaming; and o YouTube Premium, offering ad-free content 0n the YouTube Platform, YouTube’s premium original series, and films produced by YouTube personalities, as well as background playback 0f content 0n mobile devices. (161., W 3, 16.) Consumers may sign up for Defendants’ YT Subscriptions through the YT Website and, in some cases, the YT Apps. (Id, 1] 3.) Plaintiff alleges that YouTube is among many large websites that have used “dark patterns” in their user interfaces t0 trick users into doing things they might not otherwise d0, like signing up for recurring bills. (Complaint, 1] 20.) Defendants have used these dark patterns “t0 prevent user unsubscription from the YT Subscriptions by adopting complex cancellation procedures t0 increase the friction in the subscription cancellation process,” making it next t0 impossible for subscribers t0 cancel and leading t0 an increase in unintentional enrollments in paid subscriptions. (Ibid) Many angry customers allegedly have complained 0f these practices. (Id,W 21-24.) Plaintiff resides in California. (Complaint, 1] 8.) In February 2020, he signed up for a free trial 0fYouTube TV from Defendants’ website. (Ibid) Plaintiff alleges that, in Violation 0f California’s Automatic Renewal Law (Bus. Prof. Code §§ 17600, et seq., the “ARL”) Defendants did not disclose t0 him all required automatic renewal offer terms associated with his subscription 0r obtain his affirmative consent t0 those terms. (Ibid) Again Violating the ARL, Defendants sent Plaintiff an acknowledgement email that failed t0 provide him with the complete automatic renewal terms that applied t0 Defendants’ offer, a description 0f Defendants’ full cancellation policy, 0r information regarding how to cancel his YT Subscription in a manner KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO capable 0f being retained by him. (Ibid) About two weeks later, Defendants automatically renewed Plaintiff’s YT Subscription and charged him $49.99, the full standard monthly rate. (Ibid.) Immediately after seeing Defendants’ charge t0 his credit card, Plaintiff attempted t0 cancel his subscription, which he struggled t0 d0 due t0 Defendants’ confusing cancellation policy, crucial aspects 0fwhich were missing from the checkout page. (Ibid) Plaintiff ultimately called Defendants t0 request a refund 0f the monthly charge, but they denied his request. (Ibid) “Had Defendants complied with the ARL, Plaintiff would have been able t0 read and review the automatic renewal terms prior t0 subscribing, and he would have not subscribed 0r would have cancelled his YT Subscription prior t0 the expiration 0f the initial subscription period.” (Ibid) Specifically, Plaintiff explains that he believed that his free trial would last for four weeks rather than two. (Id, 1] 60.) B. Procedural Based 0n these allegations, Plaintiff filed the Complaint in June 2020 on behalf of a putative class 0f Californians who “incurred renewal fee(s) in connection with Defendants’ YouTube TV, YouTube Music, and YouTube Premium subscription offerings.” (1d,, 1] 69.) He brings individual and putative class claims for (1) Violations 0f the Unfair Competition Law (Bus. & Prof. Code §§ 17200, et seq., the “UCL”) through unlawful and/or unfair business practices, including Violations 0f the ARL; (2) conversion; (3) Violations 0f the False Advertising Law (Bus. & Prof. Code §§ 17500, et seq., the “FAL”); (4) Violations 0f the Consumers Legal Remedies Act (CiV. Code §§ 1750, et seq., the “CLRA”); (5) unjust enrichment/restitution; (6) negligent misrepresentation; and (7) fraud. The Complaint describes in detail the manner in which users enroll in YT Subscriptions, the ways in which Plaintiff contends this violates the ARL, and Plaintiff’s own experience. (Complaint,W 34-68.) Defendants filed this demurrer t0 all claims in the Complaint; Plaintiff opposes the demurrer. The Court heard oral argument 0n January 21, 202 1 , and took the matter under submission. The Court now issues its final order. KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO II. LEGAL STANDARD The function 0f a demurrer is t0 test the legal sufficiency 0f a pleading. (Trs. ofCapital Wholesale Elec. Etc. Fund v. Shearson Lehman Bros. (1990) 221 Cal.App.3d 617, 621 .) Consequently, “[a] demurrer reaches only t0 the contents 0f the pleading and such matters as may be considered under the doctrine ofjudicial notice.” (South Shore Land C0. v. Petersen (1964) 226 Cal.App.2d 725, 732, internal citations and quotations omitted; see also Code CiV. Proc., § 430.30, subd. (a).) “It is not the ordinary function 0f a demurrer t0 test the truth 0f the plaintiff’s allegations 0r the accuracy with which he describes the defendant’s conduct. Thus, the facts alleged in the pleading are deemed t0 be true, however improbable they may be.” (Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958, internal citations and quotations omitted.) In ruling on a demurrer, the allegations 0f the complaint must be liberally construed, with a View t0 substantial justice between the parties. (Glennen v. Allergan, Inc. (2016) 247 Cal.App.4th 1, 6.) Nevertheless, while “[a] demurrer admits all facts properly pleaded, [it does] not [admit] contentions, deductions 0r conclusions 0f law 0r fact.” (George v. Automobile Club ofSouthern California (201 1) 201 Cal.App.4th 1112, 1120.) A demurrer will succeed where the allegations and matters subject t0 judicial notice clearly disclose a defense 0r bar t0 recovery. (Casterson v. Superior Court (2002) 101 Cal.App.4th 177, 183.) III. DISCUSSION Defendants contend that Plaintiff” s claims regarding YouTube Music and YouTube Premium “are not properly before the Court” because Plaintiff did not subscribe t0 those services; Plaintiff does not allege any Violation 0f the ARL and thus fails t0 state a derivative claim under the UCL; and the remaining causes 0f action in the Complaint also fail t0 state a claim. A. YouTube Music and YouTube Premium Defendants urge that Plaintiff lacks standing t0 assert claims regarding YouTube Music and YouTube Premium, and “[e]ven in a purported class action, a plaintiff cannot represent the claims 0f absent class members if the plaintiff does not personally have the same claim.” But KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO Plaintiff alleges that “[t]he enrollment process for each YT Subscription is substantially the same” and violates the ARL is the same manner. (Complaint,w 37-5 1 .) Plaintiff alleges that he was injured by this common course 0f conduct, establishing standing; his claims are typical 0f the class “as a result 0f Defendants’ uniform wrongful conduct”; and specified common questions 0f law and fact predominate. (Id.,W 67, 73, 74.) “[U]nder the class action mechanism, a named plaintiffmay properly include allegations in his complaint involving products that he did not purchase, so long as those products are substantially similar t0 the products that allegedly caused his own injuries,” Viewed in light 0f the claims at issue. (Backus v. General Mills (N.D. Cal. 2015) 122 F.Supp.3d 909, 923-924 (Backus).) That is the situation here. Defendants essentially contend that the Court should resolve the issues 0f commonality, predominance, and typicality 0n the pleadings. (See Melendres v. Arpaio (9th Cir. 2015) 784 F.3d 1254, 1262 [“the question whether [a class representative] may be allowed t0 present claims 0n behalf 0f others who have similar, but not identical, interests depends not 0n standing, but 0n an assessment 0f typicality and adequacy 0f representation,” quoting 7AA Charles Alan Wright et al., Federal Practice & Procedure § 1785.1 (3d ed.)]; Forcellati v. Hyland ’s, Inc. (C.D. Cal. 2012) 876 F.Supp.2d 1155, 1161-1 162 [denying motion t0 dismiss based 0n argument that “Plaintiff cannot assert claims as t0 the entire category 0f Defendants’ ‘Cold and Flu Remedies’ and instead may only assert these claims with respect t0 the one product within that category that Plaintiff alleges t0 have purchased,” holding the issue “is better taken under the lens 0f typicality 0r adequacy 0f representation, rather than standing”].) But this is not the preferred approach. As the Sixth District has explained: Class certification is generally not decided at the pleading stage 0f a lawsuit. The preferred course is t0 defer decision 0n the propriety 0f the class action until an evidentiary hearing has been held 0n the appropriateness 0f class litigation. (In re BCBG Overtime Cases (2008) 163 Cal.App.4th 1293, 1298-1299, internal citations and quotations omitted.) A court may decide the propriety 0f class certification 0n the pleadings “only if it concludes as a matter 0f law that, assuming the truth 0f the factual KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO allegations in the complaint, there is n0 reasonable possibility that the requirements for class certification Will be satisfied.” (Tucker v. Pacific Bell Mobile Services (2012) 208 Cal.App.4th 201, 211 (Tucker), internal quotation marks and citation omitted.) Here, Plaintiff plausibly alleges that the enrollment process for all 0f the subscriptions at issue is similar enough that certification 0f a class including subscribers 0f all three YT Subscriptions would be appropriate. The ultimate merits 0f this approach are appropriately resolved at class certification, not 0n the pleadings. Defendants’ demurrer 0n this ground accordingly fails. B. Violation 0f the ARL Among other requirements, the ARL states that it is unlawful for a business that makes an automatic renewal offer t0: [flail t0 provide an acknowledgment that includes the automatic renewal offer terms 0r continuous service offer terms, cancellation policy, and information regarding how t0 cancel in a manner that is capable 0f being retained by the consumer. If the automatic renewal offer 0r continuous service offer includes a free gift 0r trial, the business shall also disclose in the acknowledgment how t0 cancel, and allow the consumer t0 cancel, the automatic renewal 0r continuous service before the consumerpaysfor the goods 0r services. (Bus. & Prof. Code § 17602, subd. (a)(3), italics added.) Plaintiff alleges that Defendants Violate this requirement because the acknowledgement emails governing all three YT Subscriptions, which are reproduced in the Complaint, “failed t0 provide Plaintiff and members 0f the Class with the complete automatic renewal 0r continuous service terms that applied t0 the offer, a description 0f the full cancellation policy, 0r any specific information regarding how t0 cancel” and, specifically, d0 not state “that cancellation must be affected at least twenty-four hours prior t0 the end 0f the subscriber’s current billing cycle.” (SAC,W 50-5 1 .) With regard t0 the 24-hour cancellation requirement, Defendants assert that this requirement applies only t0 subscriptions purchased through the Apple iTunes store, and not t0 KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO direct purchases from YouTube like Plaintiff’s. T0 support this assertion, they cite t0 a web site reflecting the “YouTube Paid Service Terms 0f Service,” which they contend show that “anyone who buys from YouTube can in fact cancel at any time.” But that document states: Please note: YouTube TV is an auto-renewing subscription which will renew automatically each month. Please refer t0 your individual application for pricing information. Your payment will be charged t0 your iTunes account at confirmation 0f purchase. Please check your Membership tab under the Settings menu for details about your subscription and t0 cancel at any time. Your subscription automatically renews unless you cancel your subscription at least 24 hours before the end 0f the current period. Your subscription Will be billed t0 your iTunes account within 24 hours before the end 0f the current period and the renewal charge will be your monthly charge plus any additional add-on content you may have elected. (Italics added.) The “YouTube Paid Service Terms 0f Service” thus state: a) a YouTube TV subscription can be “cancel[led] at any time”; but b) must be cancelled 24 hours before the end 0f the current period t0 avoid automatic renewal. The 24-hour requirement is not plainly limited t0 subscriptions billed through the iTunes store (although it is discussed in close context with information about iTunes subscriptions). Ultimately, it is just not clear from the face 0f the Terms 0f Service that the 24-hour requirement only applies t0 iTunes subscriptions-and the way the Terms 0f Service characterize subscriptions as capable 0f being “cancel[led] at any time” despite this ostensible 24-hour requirement calls into question whether other references t0 cancellation “at any time” should be taken at face value. In any event, even granting that judicial notice 0f the content 0f the Terms 0f Service is proper under the incorporation-by-reference doctrine} the disputed fact that subscribers can cancel at any time is clearly not. (See Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1568 [court cannot take judicial notice 0f the truth 0f hearsay statements 0r facts set forth in otherwise 1 Defendants’ request for judicial notice is GRANTED t0 that extent only. KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO judicially noticeable documents]; Fremont Indem. C0. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 114-1 15 [“a court cannot by means ofjudicial notice convert a demurrer into an incomplete evidentiary hearing in which the demurring party can present documentary evidence and the opposing party is bound by what that evidence appears t0 show”].) As urged by Plaintiff, the Complaint alleges that subscribers could not actually cancel anytime, and the Court cannot ignore these allegations 0r resolve the parties’ factual dispute 0n demurrer. (See Opp’n, at pp. 17-18.) Accepting Plaintiff’s allegations that YT Subscriptions must be cancelled 24 hours prior t0 the end 0f the subscription period t0 avoid automatic renewal, Plaintiff plausibly alleges that Defendants violated the ARL’S requirement t0 “disclose in the acknowledgment how t0 cancel the automatic renewal 0r continuous service before the consumer pays for the goods 0r services.” (Bus. & Prof. Code § 17602, subd. (a)(3), italics added.) While Defendants accuse Plaintiff of “invent[ing] a rule that the disclosures must be contained within one acknowledgement email,” this interpretation is consistent with the plain language 0f the statute, and Defendants provide n0 authority supporting a contrary interpretation? Plaintiff accordingly alleges an ARL Violation adequate t0 support his claim under the URL. Since Plaintiff states a claim 0n this theory, the Court need not address the several other ARL Violations Plaintiff alleges t0 support his UCL claim. 2 In fact, Defendants’ authority supports Plaintiff’s interpretation. In Hall v. Time, Inc. (C.D. Cal. Sep. 24, 2019, N0. SACV 19-001 153 AG (ADSX)) 2019 U.S.Dist.LEXIS 228322, at *3-4 (Hall) the plaintiff alleged that she received a postcard acknowledgment stating: Your PEOPLE subscription will continue for the next term 0f issues using the account number you agreed t0 be billed. You will be billed 0r charged $67.50 for a total 0f 54 issues, which will run from 12/10/18-11/26/19. If you wish t0 discontinue, call 1-800-541-9000 by 10/2/18 and n0 charge will appear . . . . The trial court held the plaintiff failed t0 state a claim under section 17602, subdivision (a)(3) 0f the ARL, but the information Plaintiff contends is lacking here-the date by which he was required t0 cancel-was specifically provided in Hall, within the single postcard acknowledgement. KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO At oral argument, Defendants’ counsel argued that the Court should reach the merits 0f their demurrer as t0 Plaintiff’s ARL claims based 0n YouTube Music and YouTube Premium, and sustain the demurrer for those ARL “sub-claims.” But a demurrer is not properly sustained as t0 a portion 0f a cause 0f action. (Daniels v. Select Portfolio Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1 167 (Daniels).) In Daniels, the plaintiff” s intentional and negligent misrepresentation causes 0f action were based 0n six distinct misrepresentations. The Sixth District stated that 0n demurrer, “the question for this court is whether appellants stated a claim for intentional or negligent misrepresentation based 0n any 0f the alleged misrepresentations.” (Ibid., emphasis added.) Plaintiff’s ARL claim is similar: it is based 0n three separate products. If Plaintiff can validly state an ARL claim based 0n any 0f the products, that’s enough t0 avoid overruling 0f the demurrer. And that is so here for YouTube TV, as discussed above. The Court therefore OVERRULES the demurrer as t0 the first cause 0f action. C. Conversion Defendants demur t0 the second cause 0f action for conversion 0n the ground that the facts alleged in the Complaint establish Plaintiff consented t0 pay the amounts allegedly converted. Lack 0f consent is an element 0f a conversion claim that Plaintiff ultimately bears the burden t0 prove. (CACI N0. 2100 (2017 rev.).) The Complaint alleges that “[d]uring the enrollment process but before finally consenting t0 Defendants’ subscription offering, thereby completing the checkout process, Mr. Dutcher provided his credit card information directly t0 Defendants.” (Complaint, 1] 8.) The Complaint goes 0n t0 explain that Plaintiff believed that his free trial would last for four weeks rather than two. (Id., 1] 60.) Thus, Plaintiff effectively alleges that he did not consent t0 Defendants’ charging his credit card until four weeks had passed. (See id., 1] 97 [alleging Defendants charged Plaintiffs and class members payment methods “without authorization”].) While Plaintiffmay have consented t0 a credit charge, he alleges he did not consent t0 the credit charge happening two weeks after enrollment. KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO Granted, “the law is well settled that there can be n0 conversion where an owner either expressly 0r impliedly assents t0 0r ratifies the taking, use 0r disposition 0f his property.” (Farrington v. A. Teichert & Son, Inc. (1943) 59 Cal.App.2d 468, 474.) But Plaintiff (“the owner”) claims he conditioned that consent 0r ratification 0n a timing issue (e.g., two versus four weeks). And where Defendants did not follow the supposedly-proper timing, there was n0 real consent/ratification, 0r so Plaintiff claims. Consistent with this theory, the screen shots from the enrollment process for YT Subscriptions included in the Complaint refer t0 a “1 -m0nth Trial” 0r d0 not refer to the length 0f the trial subscription. (161.,W 38-40.) Based 0n these allegations, the Court cannot conclude from the face 0f the Complaint that Plaintiff consented t0 0r ratified the charges at issue at the time the charges were made. While Defendants urge that they informed Plaintiff of the particular, correct date 0n which he would be billed, this also cannot be determined from the face of the Complaint, which merely includes sample screen shots from the enrollment processes that are not claimed t0 be those actually Viewed by Plaintiff at the time he enrolled. The Court hence OVERRULES the demurrer t0 the second cause 0f action.3 3 While mentioned by neither party, the Supreme Court 0f California recently addressed claims for conversion 0f money in Voris v. Lampert (2019) 7 Cal.5th 1141 (Voris). Voris explained that “[a] cause 0f action for conversion 0f money can be stated only where a defendant interferes with the plaintiff’s possessory interest in a specific, identifiable sum”; “the simple failure t0 pay money owed does not constitute conversion.” Were it otherwise, the tort 0f conversion would swallow the significant category 0f contract claims that are based 0n the failure t0 satisfy “mere contractual right[s] 0f payment.” (Voris, supra, 7 Cal.5th at pp. 115 1-1 152, citations omitted.) Based 0n this and additional reasoning, Voris held that conversion was not an appropriate remedy for a claim for the nonpayment 0f wages, which constitutes a dispute over a contractual 0r statutory right t0 payment. In their reply brief, Defendants cite federal trial court opinions analogous t0 Voris for the proposition that a failure t0 comply with statutory requirements related t0 funds allegedly owed t0 the plaintiff does not constitute a conversion 0f those funds, just as conversion is not a proper remedy for a mere contractual dispute. This is an interesting point, but one that is not properly raised for the first time 0n reply. (See Reichardt v. Hoflman (1997) 52 Cal.App.4th 754, 764 10 KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO D. Remaining Causes 0f Action Defendants urge that Plaintiffs FAL, CLRA, negligent misrepresentation, and fraud claims fail because the Complaint “identifies only one specific statement [giving rise t0 these claims]-that subscribers ‘can cancel anytime.’ ” (Opening Brief, at p. 20.) “But this statement correctly described the applicable cancellation policy. Without a false 0r misleading statement, these claims all fail.” (Ibid) As already discussed, the truth 0f the disputed fact that YT Subscriptions can be cancelled any time is not properly resolved 0n demurrer. Defendants’ demurrer t0 these claims will be overruled. Finally, Defendants argue that there is n0 standalone claim for unjust enrichment/restitution, so “this claim also fails as a matter 0f law.” (Opening Brief, at p. 20.) They are correct that there is n0 cause 0f action in California for unjust enrichment. (See, e.g., Everett v. Mountains Recreation and Conservancy Authority (2015) 239 Cal.App.4th 541, 553 [affirming decision t0 sustain demurrer t0 unjust enrichment cause 0f action because n0 such cause 0f action exists]; see also Jogani v. Superior Court (2008) 165 Cal.App.4th 901, 911 [calling unjust enrichment not a cause 0f action but “a general principle underlying various doctrines and remedies, including quasi-contract”].) However, when confronted with a claim for unjust enrichment, courts should overlook the label and determine if the plaintiff states a claim for restitution. (See McBride v. Houghton (2004) 123 Cal.App.4th 379, 387-388.) Thus, Defendants’ argument that Plaintiff” s claim for unjust enrichment should be rejected out 0f hand is incorrect, and their demurrer will be overruled in this regard as well.4 [points raised for the first time in reply brief will not ordinarily be considered, because such consideration would deprive respondent 0f an opportunity t0 counter the argument] .) 4 For the first time 0n reply, Defendants argue there is n0 merit t0 a quasi-contractual claim for unjust enrichment because the parties had an actual contract in this case. Again, the Court will not consider new arguments raised for the first time 0n reply. 11 KOOONONUl-hwwu-t NNNNNNNNNHHHHHHHHHH OONONM-PWNHOKOOONONm-PWNHO IV. Date: CONCLUSION For the reasons discussed above, Defendants’ demurrer is OVERRULED. IT IS SO ORDERED. The Honorable Sunil R. Kulkarni Judge 0f the Superior Court 12 January 27, 2021