1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE KENDALL BRILL & KLIEGER LLP Richard B. Kendall (90072) rkendall@kbkfirm.com Robert N. Klieger (192962) rklieger@kbkfirm.com Gabriel D. Miller (243359) gmiller@kbkfirm.com 10100 Santa Monica Blvd., Suite 1725 Los Angeles, California 90067 Telephone: 310.556.2700 Facsimile: 310.556.2705 Attorneys for Defendant Oberon Media, Inc. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION BLAKE R. WILLIAMS, an individual, and PEGGY J. McGREGOR, an individual, for themselves and on behalf of all others similarly situated, Plaintiffs, v. OBERON MEDIA, INC., a Delaware corporation, and DOES 1 through 10, inclusive, Defendants. Case No. CV-09-8764 JFW (AGRx) OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM (RULE 12(b)(6)), MOTION FOR MORE DEFINITE STATEMENT (RULE 12(e)), AND MOTION TO STRIKE (RULE 12(f)) The Honorable John F. Walter Date: March 1, 2010 Time: 1:30 p.m. Crtrm.: 16, Spring Street Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 1 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 i OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE TABLE OF CONTENTS Page I. Plaintiffs’ Claim Regarding The “ETF” Is Insufficient .................................... 1 A. Plaintiffs Have Not Satisfied The Requirements of Rule 8(a) ............... 1 B. Plaintiffs Do Not Have Standing To Assert Their “ETF” Claim ........... 3 C. Section 4 Provides A Method Of Alternative Performance ................... 6 II. Plaintiffs Have Not Stated A Claim Under § 17200 ......................................... 8 III. Plaintiffs Have Not Stated A Claim For Breach Of Contract ......................... 10 IV. Plaintiffs’ Class Allegations Are Insufficient As A Matter Of Law ............... 11 Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 2 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ii OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE TABLE OF AUTHORITIES Page CASES Allen v. Smith, 94 Cal. App. 4th 1270 (2002). ........................................................................... 5 Ashcroft v. Iqbal, 556 U.S. __, 129 S.Ct. 1937, 173 L. Ed. 2d 868 (2009) ................................... 9 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007) ............................ 1, 2 Blank v. Borden, 11 Cal. 3d 963 (1974) ........................................................................................ 6 Campbell v. Allstate Insurance Cos., 1995 WL 376926 (C.D. Cal. May 17, 1995), ................................................. 10 Cetacean Community v. Bush, 386 F.3d 1169 (9th Cir. 2004) ........................................................................... 5 Conley v. Gibson, 355 U.S. 41, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957). ......................................... 1, 2 DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 126 S. Ct. 1854, 164 L. Ed. 2d 589 (2006) ................................ 4 Friends of the Earth, Inc. v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 120 S. Ct. 693, 145 L. Ed. 2d 610 (2000) .................................. 4 Gest v. Bradbury, 443 F.3d 1177 (9th Cir. 2006) ........................................................................... 5 Hearn v. R.J. Reynolds Tobacco Co., 279 F. Supp. 2d 1096 (D. Az. 2003) ................................................................. 2 Hitz v. First Interstate Bank, 38 Cal. App. 4th 274 (1995) .............................................................................. 7 Hutchison v. AT&T Internet Services, Inc., 2009 WL 1726344 (C.D. Cal. May 5, 2009) (Wilson, J.) ................................. 6 Johnson v. Robinson, 2009 WL 747231 (E.D. Cal. Mar. 20, 2009) (Fisher, CJ.) ....................... 2, 3, 8 Kearney v. Solomon Smith Barney, Inc., 39 Cal. 4th 95 (2006). ................................................................................ 11, 12 Laster v. T-Mobile USA, Inc., 2009 WL 4842801 (S.D. Cal. Dec. 14, 2009) ................................................... 5 Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 3 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 iii OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE McKell v. Washington Mutual, Inc., 142 Cal. App. 4th 1457 (2006) .................................................................. 10, 11 Meyers v. Home Sav. & Loan Ass’n, 38 Cal. App. 3d 544 (1974) ............................................................................... 8 Miller v. Nissan Motor Acceptance Corp., 362 F.3d 209 (3d Cir. 2004) .......................................................................... 4, 5 Morris v. Redwood Empire Bancorp, 128 Cal. App. 4th 1305 (2005) .......................................................................... 7 O’Neill v. Hilton Grand Vacations Club, 2001 WL 1673579 (D. Haw. Oct. 24, 2001) ..................................................... 3 Pontiflet-Moore v. GMAC Mortgage, 2010 WL 432076 (E.D. Cal. Jan. 15, 2010) ...................................................... 9 Ridgley v. Topa Thrift & Loan Ass’n, 17 Cal. 4th 970 (1998) ....................................................................................... 8 Sanders v. Apple Inc., __ F. Supp. 2d __, 2009 WL 150950 (N.D. Cal. 2009) .................................. 11 Shalwitz v. Health Initiatives for Youth, 2008 WL 4766692 (N.D. Cal. Oct. 31, 2008) ................................................... 9 Standfacts Credit Services, Inc. v. Experian Information Solutions, Inc., 405 F. Supp. 2d 1141 (C.D. Cal. 2005) ........................................................... 12 Vernon v. Qwest Communications International, Inc., 643 F. Supp. 2d 1256 (W.D. Wash. 2009) ........................................................ 3 Vess v. Ciba-Geigy Corp. U.S.A., 317 F.3d 1097 (9th Cir. 2003) ........................................................................... 9 William O. Gilley Enterprises, Inc. v. Atlantic Richfield Co., 588 F.3d 659 (9th Cir. Dec. 2, 2009) ................................................................ 2 Wong v. American Servicing Co., 2009 WL 5113516 (E.D. Cal. Dec. 28, 2009) ................................................... 8 Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 4 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 iv OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE STATUTES 15 U.S.C. § 1607 .......................................................................................................... 4 18 U.S.C. § 1341 .......................................................................................................... 9 18 U.S.C. § 1344 .......................................................................................................... 9 California Business & Professions Code § 17200 ................................................. 8, 12 California Civil Code § 1671 ................................................................................. 3, 12 California Penal Code § 484 ........................................................................................ 9 California Penal Code § 486 ........................................................................................ 9 RULES Federal Rule of Civil Procedure 8(a) ........................................................................... 3 Federal Rule of Civil Procedure 9(b) .......................................................................... 9 Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 5 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE The Complaint in this case suffers from a multitude of shortcomings. Plaintiffs attempt to avoid dismissal by relying upon an outdated pleading standard and citing irrelevant legal authority.1 As explained below, Plaintiffs have not offered any legitimate basis for denying Oberon’s Motion to Dismiss, Motion for More Definite Statement or Motion to Strike.2 Oberon thus respectfully requests that the Court grant each of these motions, in their entirety. I. Plaintiffs’ Claim Regarding The “ETF” Is Insufficient Plaintiffs offer several arguments as to why their “ETF” claim should not be dismissed, none of which has merit. A. Plaintiffs Have Not Satisfied The Requirements of Rule 8(a) First, Plaintiffs acknowledge that they need to provide a “short and plain statement of the claim that will give the defendant fair notice of what plaintiff’s claim is and the ground upon which it rests,” citing Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 80 (1957). Plaintiffs aver they have provided such a statement by alleging, in only conclusory terms, that “Defendant’s ETF constitutes an unlawful penalty.” Opp. at 4-5. This is not sufficient. Plaintiffs must allege “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action” to state a sufficient claim. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). Plaintiffs’ bare allegation that “Defendant’s ETF constitutes an unlawful penalty” is not enough. 1 Plaintiffs also suggest that Oberon has conceded that Plaintiffs’ unjust enrichment claim has merit. Opp. at 4, 11. As Plaintiffs are well aware, Oberon did not move to dismiss the unjust enrichment claim because Plaintiffs allege that Oberon charged them “hidden” foreign transaction fees. While this allegation is not true, it must be assumed for purposes of this motion. This is not a concession. 2 With respect to Oberon’s Motion for More Definite Statement, while Oberon will rely on the points and authorities set forth in its motion, it warrants repeating that had Plaintiffs been willing to provide any information to allow Oberon to confirm McGregor as a customer, this Motion could have been avoided. Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 6 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE Plaintiffs assert multiple times that a complaint should not be dismissed “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief,” citing Conley. Opp. at 3, 8. However, that is not the correct standard. Indeed, the Supreme Court in Twombly made clear that that passage from Conley is no longer good law. See William O. Gilley Enters., Inc. v. Atl. Richfield Co., 588 F.3d 659, 667 n.6 (9th Cir. Dec. 2, 2009) (“The Court went on to disapprove [in Twombly] the language in Conley that ‘a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.’” (quoting Twombly, 550 U.S. at 561)).3 Therefore, Plaintiffs’ repeated reliance on that language is misplaced. Plaintiffs also argue that Oberon’s motion to dismiss should be denied because Oberon has not “identif[ied] any case stating that Plaintiffs must specifically identify the statute upon which their cause of action rests.” Opp. at 4. Yet, Oberon in fact did cite legal authority directly on point. In Johnson v. Robinson, 2009 WL 747231, at *4 (E.D. Cal. Mar. 20, 2009), Circuit Judge Raymond C. Fisher (sitting by designation) held that a plaintiff must do more than merely allege that a defendant’s conduct is “unlawful” to satisfy Rule 8, finding explicitly that the plaintiff “failed to state cognizable claims for violations . . . of California law” because the complaint did “not identify which provisions of state law were allegedly violated, be they the California Constitution, state statutes or 3 Plaintiffs similarly argue that a complaint “should not be dismissed if it is possible to hypothesize facts, consistent with the complaint, that would make out a claim.” Opp. at 1, 8. But the case they purport to quote, Hearn v. R.J. Reynolds Tobacco Co., 279 F. Supp. 2d 1096, 1101 (D. Az. 2003), does not state that principle. It does, however, quote the same language from Conley that the Supreme Court expressly disavowed in Twombly. Id. Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 7 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE state common law.” Notwithstanding Plaintiffs’ assertions to the contrary, the holding in Johnson is clearly applicable to the instant case.4 Last, Plaintiffs argue that, even though the Complaint did not identify the specific laws that Oberon’s “ETF” allegedly violates, the Complaint was nonetheless sufficient under Rule 8(a) because (1) it alleged that “the ETF did not represent a reasonable measure or approximation of the anticipated or actual loss from a breach of the GameSaver subscription,” and (2) “Oberon acknowledges that . . . Plaintiffs’ allegation is that [the ‘ETF’] constitutes an illegal liquidated damages clause otherwise prohibited by California Civil Code section 1671.” Opp. at 5. Plaintiffs’ point appears to be that, notwithstanding the facial insufficiencies in the Complaint, they have satisfied Rule 8 because Oberon guessed correctly that their “ETF” claim is based on § 1671. However, Oberon should not be forced to guess at the legal bases of Plaintiffs’ claims. See O’Neill v. Hilton Grand Vacations Club, 2001 WL 1673579, at *3 (D. Haw. Oct. 24, 2001) (noting that complaint “fail[ed] to set out specific statutory or common law[] claims on which Plaintiff might be entitled to relief, leaving this court to guess the sources of Plaintiff’s claims”). B. Plaintiffs Do Not Have Standing To Assert Their “ETF” Claim Plaintiffs argue that they have standing to bring their “ETF” claim because Oberon “failed to provide case law stating that Plaintiffs must have actually paid the ETF in order to be injured by it.” Opp. at 5. Plaintiffs have it backwards. It is a foundational principle that “[P]laintiffs, as the parties . . . asserting federal jurisdiction, . . . carry the burden of establishing their standing under Article III.” DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342, 126 S. Ct. 1854, 164 L. Ed. 2d 4 Moreover, Plaintiffs ignore Vernon v. Qwest Communications International, Inc., 643 F. Supp. 2d 1256, 1266 (W.D. Wash. 2009), which Oberon cited in its motion, Mot. at 8, and in which the court dismissed a claim that an “early termination fee” was unlawful because the “[p]laintiffs ha[d] not alleged the existence of a contract, let alone a liquidated damages clause in such a contract.” Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 8 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE 589 (2006). Thus, Plaintiffs must demonstrate that Oberon’s accelerated payment provision caused Plaintiffs to suffer an “injury in fact,” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81, 120 S. Ct. 693, 145 L. Ed. 2d 610 (2000). Moreover, Plaintiffs are incorrect in their assertion that the GameSaver acceleration provision caused them harm sufficient to afford Article III standing. To have standing, Plaintiffs must prove, inter alia, that they suffered an injury that is “concrete and particularized and . . . actual or imminent, not conjectural or hypothetical.” Friends of the Earth, 528 U.S. at 180. Plaintiffs contend they suffered an injury sufficient to confer standing because “they were effectively prevented from terminating their membership because of the ETF, thereby incurring more fees by remaining members.” Opp. at 6. This is wrong. As the Third Circuit explained in Miller v. Nissan Motor Acceptance Corp., 362 F.3d 209, 221-23 (3d Cir. 2004)-in which the plaintiffs challenged a contractual provision that required an early termination charge-Plaintiffs’ alleged “injury” is precisely the type of “conditional” or “hypothetical” harm that is insufficient to confer Article III standing. The court in Miller expressly held that, because the plaintiffs “never paid the early termination charge” that they alleged to be unlawful, “they were not harmed by it.” Id. at 221. Therefore, “even assuming” the charge was “unreasonable and violate[d]” applicable law, the court concluded that the plaintiffs “nevertheless suffered no ‘injury in fact.’” Id. Plaintiffs attempt to distinguish Miller, but to no avail. Plaintiffs note that the specific statute under which the plaintiffs in Miller sought to invalidate the early termination provision was the Truth in Lending Act, 15 U.S.C. § 1607 et seq., but this is irrelevant. Opp. at 6. Whether a plaintiff has standing to sue under a specific statute is distinct from the question of whether the plaintiff has Article III standing, which, as held in Miller and countless other cases, requires an actual injury, irrespective of the statutory predicate for the plaintiff’s claim. See Cetacean Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 9 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE Community v. Bush, 386 F.3d 1169, 1174-75 (9th Cir. 2004) (explaining distinction between “constitutional standing” and “statutory standing”). Plaintiffs also argue that Miller is inapplicable because the plaintiffs in Miller paid an amount different from what they would have been required to pay under the early termination clause. Opp. at 6. This, too, is irrelevant, as it had no bearing on the Third Circuit’s decision, which was based squarely on the fact that the plaintiffs “never paid the early termination charge.” 362 F.3d at 221. Last, Plaintiffs argue that they have standing because “[p]arties to a contract have the right to cancel a contract without being forced to pay a ‘penalty,’” citing Allen v. Smith, 94 Cal. App. 4th 1270, 1278 (2002). Opp. at 7. However, Allen noted only that a “contractual provision imposing a ‘penalty’ is ineffective,” 94 Cal. App. 4th at 1278, which is a bedrock principle of contract law that Oberon readily acknowledges. Moreover, Allen does not (because it cannot) confer constitutional standing on such a plaintiff, as Allen was a state action, see Laster v. T-Mobile USA, Inc., 2009 WL 4842801, at *4 (S.D. Cal. Dec. 14, 2009) (“Article III defines the limits of federal jurisdiction and the states have no power directly to enlarge or contract federal jurisdiction.” (internal quotation marks omitted)), and, as explained in Miller, a plaintiff must have been actually charged an allegedly unlawful fee to have suffered an injury in fact. Furthermore, because Plaintiffs now know that a GameSaver member must make a lump-sum payment under the accelerated payment provision to terminate her membership early, and there is no allegation that either Plaintiff will or is even likely to purchase games from Oberon in the future, Plaintiffs have not alleged that “they are ‘realistically threatened by a repetition of the violation’ for the relief to address their alleged injuries,” and thus lack standing to seek injunctive or declaratory relief based on their “ETF” claim. Id. at *3 (quoting Gest v. Bradbury, 443 F.3d 1177, 1181 (9th Cir. 2006)). Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 10 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE C. Section 4 Provides A Method Of Alternative Performance Finally, Plaintiffs argue that the Court cannot determine as a matter of law that the accelerated payment requirement in Section 4 of the GameSaver membership agreement is an alternative performance provision rather than a liquidated damages clause. Opp. at 8-11. Plaintiffs are incorrect. As the court in Hutchison v. AT&T Internet Services, Inc., 2009 WL 1726344, at *2 (C.D. Cal. May 5, 2009) (Wilson, J.), explained, “[t]he question whether a contractual provision is an unenforceable liquidated damages provision [under Cal. Civ. Code § 1671] is one for the court.” Therefore, Plaintiffs’ contention that such a determination is premature is false. Plaintiffs try to make hay out of the fact that Hutchison was decided “during a motion for summary judgment, not at the pleading stage,” Opp. at 10, but Plaintiffs conspicuously neglect to mention that the Hutchison court stated explicitly that “[w]ith greater perspective, the Court would have granted the Motion to Dismiss. This Summary Judgment contains nearly the same analysis,” 2009 WL 1726344, at *1 n.1. Plaintiffs also cite Blank v. Borden, 11 Cal. 3d 963, 971 (1974), for the rule that a contract provides a means of alternative performance if, “at the inception of the contract, the contract offered the termination party ‘a realistic and rational choice in the future’ between two alternative performances.” Opp. at 9. While this is but one of several factors that courts consider, Hutchison, 2009 WL 1726344, at *4-*6, the accelerated performance provision does-as Oberon explained in its Motion-provide a GameSaver member a realistic and rational choice: she may elect to remain a member for the duration of her membership or she may terminate her membership and advance both her receipt of all the games she would have received during the term of her membership agreement and her obligation to pay the remaining monthly membership fees. Mot. at 10. In fact, Plaintiffs admit that a GameSaver member pays the same amount under the accelerated payment provision as she would have paid had she remained a member. See Opp. at 6-7. Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 11 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE Moreover, Plaintiffs contend that the accelerated payment provision must be construed as a liquidated damages clause because it only applies after a GameSaver member has breached her agreement. Opp. at 7. But this is not so, as the GameSaver Terms and Conditions expressly and unequivocally afford each GameSaver member the right-without breach-to cancel by accelerating both Oberon’s and the member’s performance obligations. See Oberon’s Request for Judicial Notice at 4-6. Indeed, a GameSaver member who cancels her membership receives precisely the same number of games she would have received had she not cancelled-which is a critical point that Plaintiffs conspicuously omit in their Complaint and their opposition brief, even though it is explained plainly on the “purchase option webpage” (the pertinent portion of which Plaintiffs deleted when they pasted that page into the Complaint) and in the Terms and Conditions. See id. Finally, not a single case that Plaintiffs cite supports their position on this issue.5 In Morris v. Redwood Empire Bancorp, 128 Cal. App. 4th 1305 (2005), the court held that a contract provision that permitted the plaintiff to cancel the agreement at any time, so long as he paid a cancellation fee, was not a liquidated damages clause because the plaintiff knew that the fee was “merely a deferred charge attendant to initiating” the contract, id. at 1315. The facts in Morris were thus very similar to the facts alleged here: Plaintiffs were given the option of cancelling their agreement with Oberon at any time, upon payment of all remaining membership fees owed (if any), and Plaintiffs knew when they enrolled as GameSaver members that they would be required to pay twelve-months-worth of membership fees-although they could choose when to pay those fees. 5 In Hitz v. First Interstate Bank, 38 Cal. App. 4th 274 (1995), the court did not even address the question of whether the fees at issue were alternative performance payments; instead, it was concerned only with determining whether the fees were invalid liquidated damages, as there was no question that the fees were imposed only after the plaintiffs breached the underlying agreement. Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 12 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE In contrast, in Ridgley v. Topa Thrift & Loan Ass’n, 17 Cal. 4th 970 (1998), see Opp. at 8, the late fees imposed on the plaintiffs were additional to the fees they were required to pay as a matter of course under their loan agreement with the defendant. Moreover, the court in Ridgley made a critical distinction, opining that “[i]n contrast to late payment fees, contractual charges for prepayment of the loan principal are generally considered valid provisions for alternative performance, rather than penalties or liquidated damages for breach.” Id. at 978. A GameSaver member’s accelerated payment obligation to Oberon, which is triggered upon early termination of her membership, is thus analogous to a borrower’s obligation to pay a prepayment charge to his lender upon early termination of his loan-both are methods of alternative performance and are available in the absence of breach. See, e.g., Meyers v. Home Sav. & Loan Ass’n, 38 Cal. App. 3d 544, 546 (1974) (“No breach is involved in [a] prepayment transaction, only the exercise of the option given to the debtor for an alternative method of paying the debt.”). II. Plaintiffs Have Not Stated A Claim Under § 17200 Oberon recognizes that § 17200 affords a Plaintiff with three independent bases upon which to assert a claim, but Plaintiffs must allege facts sufficient to provide Oberon with adequate notice as to which of the three bases their claims rely upon, what specific acts of alleged wrongdoing underlie each of their claims, and what forms of relief they seek with respect to each claim. Plaintiffs have instead alleged that every act of alleged wrongdoing is “unlawful, unfair and deceptive” and that they seek “restitution, injunctive relief and all other relief allowed” under the law to address every act. This is not sufficient to state a claim. See Johnson, 2009 WL 747231, at *4 (“Plaintiff bears the burden of notifying defendants and the court of the legal basis for his claims.”) (citing Rule 8(a)); Wong v. Am. Servicing Co., 2009 WL 5113516, at *3 (E.D. Cal. Dec. 28, 2009) (“[A] plaintiff must not be permitted to use ‘shotgun’ pleading tactics, such as providing inadequate factual Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 13 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE bases for his claims, to thwart the defendant’s ability to seek dismissal of the claims against him as early in the litigation as possible.”). Furthermore, although Plaintiffs deny their affirmative obligation to identify in the Complaint what specific law(s) Oberon has allegedly violated, Opp. at 12-13, it is clear that “[t]o state a cause of action based on an ‘unlawful’ business act or practice under the UCL, a plaintiff must allege facts sufficient to show a violation of some underlying law,” Pontiflet-Moore v. GMAC Mortg., 2010 WL 432076, at *9 (E.D. Cal. Jan. 15, 2010). By omitting any reference to any law or statute, Plaintiffs have not satisfied this requirement. Moreover, Plaintiffs’ assertion in their opposition brief that Oberon “violate[d] 18 U.S.C. sections 1341 and 1344 and California’s Penal Code sections 484 and 486” is wholly unsupported by the allegations in the Complaint, lacks legal or factual analysis, and, in any event, does not cure the insufficiencies in the Complaint. See Shalwitz v. Health Initiatives for Youth, 2008 WL 4766692, at *3 (N.D. Cal. Oct. 31, 2008) (“Although [plaintiff’s] opposition brief claims that she was [harmed by defendant], the complaint alone does not clearly allege this point and must be amended.”). In addition, Plaintiffs argue that they have sufficiently stated claims under the “unfair” and “fraudulent” prongs of § 17200 simply because they stated in the Complaint that Oberon’s alleged acts of wrongdoing were “unfair” and “fraudulent.” Opp. at 14-15. But as Oberon has explained, Plaintiffs’ allegations do not satisfy the legal standard required to state a claim under either prong, Mot. at 14, and Plaintiffs’ “threadbare” legal conclusions are clearly not enough. Ashcroft v. Iqbal, 556 U.S. __, 129 S. Ct. 1937, 1949-50, 173 L. Ed. 2d 868 (2009). What is more, to plead a sufficient claim under the “fraudulent” prong, Plaintiffs must meet the heightened pleading requirements of Rule 9(b), which mandates that “[a]verments of fraud . . . be accompanied by the who, what, when, where, and how of the misconduct alleged.” Vess v. Ciba-Geigy Corp. U.S.A., 317 F.3d 1097, 1106 (9th Cir. 2003). Plaintiffs have not come close to satisfying this standard. Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 14 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE III. Plaintiffs Have Not Stated A Claim For Breach Of Contract6 Plaintiffs argue that Oberon “misconstrue[d] the pleading requirements for a Breach of Contract claim” because, even though it did not attach a contract to the Complaint, “Plaintiffs must simply apprise [Oberon] of the legal effect . . . the GameSaver membership has on its users.” Opp. at 16. But Plaintiffs selectively quote McKell v. Washington Mutual, Inc., 142 Cal. App. 4th 1457, 1489 (2006), and misconstrue the applicable legal standard. In fact, the sentence immediately following the passage quoted by Plaintiffs reads: “This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.” Id. The allegations in the Complaint fall far short of providing “a careful analysis” of the GameSaver membership agreement- indeed, there is no mention of the membership agreement or the Terms and Conditions anywhere in the Complaint-and, as Oberon has shown, the Complaint contains numerous legal conclusions. Thus, Plaintiffs’ assertion that they have “provided Defendant, and this Court, with these material terms” is not even remotely accurate. Opp. at 16. Moreover, Plaintiffs simply ignore Campbell v. Allstate Insurance Cos., 1995 WL 376926 (C.D. Cal. May 17, 1995), Mot. at 15, in which the court recited the pleading requirements in unequivocal terms: “California law establishes that in order to state a valid claim for breach of contract, the terms of the contract must be set out verbatim in the body of the complaint or a copy of the written instrument must be attached and incorporated by reference,” id. at *2 (internal quotation marks omitted). Plaintiffs have not done this. 6 Plaintiffs do not dispute the authenticity of either the purchase option webpage or the GameSaver Terms and Conditions, submitted concurrently with Oberon’s motions and authenticated in the Declaration of Jordan Goldstein. Thus, for the reasons set forth in Oberon’s Request for Judicial Notice, the Court may properly consider these documents in connection with deciding these motions. Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 15 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE Furthermore, Plaintiffs’ statement that “the contract at issue is printed on page four of the Complaint,” is nonsensical. All that appears in the Complaint is a partial snapshot of the purchase option webpage, from which Plaintiffs deleted critical language that references and links to the GameSaver membership Terms and Conditions. See Mot. at 5 n.4. Page four, therefore, does not describe the contract terms verbatim nor their “legal effect.” See McKell, 142 Cal. App. 4th at 1489. IV. Plaintiffs’ Class Allegations Are Insufficient As A Matter Of Law Plaintiffs argue that the class allegations Oberon seeks to strike from the Complaint should not be stricken because evaluating those allegations before the class certification stage is premature. Opp. at 17. However, Plaintiffs recognize that “where the complaint demonstrates that a class action cannot be maintained on the facts alleged,” a motion to strike is appropriate. Id. (citing Sanders v. Apple Inc., __ F. Supp. 2d __, 2009 WL 150950, at *9 (N.D. Cal. 2009)). For reasons already explained, Plaintiffs lack standing to bring claims on behalf of the putative class based on their “ETF” claim. Mot. at 19. Plaintiffs entirely ignore this argument.7 Moreover, Plaintiffs argue that whether a § 17200 claim might be appropriate for a nationwide class action “should be addressed on a case-by-case basis,” citing Kearney v. Solomon Smith Barney, Inc., 39 Cal. 4th 95, 131-32 (2006). Opp. at 19. But the California Supreme Court in Kearney made precisely the opposite point, recognizing that applying California law “in order to alter a defendant’s conduct in another state vis-à-vis another state’s residents” raises federal due process concerns. Kearney, 39 Cal. 4th at 104. In fact, the court in Kearney took steps to make it clear 7 Plaintiffs also aver that their class definition is not overbroad because it is their “contention that all of [Oberon’s] customers are double-billed.” Opp. at 18. Not only is this allegation inconsistent with the allegations in the Complaint- McGregor is not alleged to have been double-billed, despite being a customer “since 2005,” Cmplt. ¶ 26-but it is difficult to believe that Plaintiffs performed sufficient due diligence to have a good-faith basis to make such a broad allegation. Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 16 of 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 OBERON MEDIA, INC.’S REPLY IN SUPPORT OF ITS MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM, MOTION FOR MORE DEFINITE STATEMENT, AND MOTION TO STRIKE that all the plaintiffs in that case were California residents: “The present legal proceedings are based upon defendant business entity’s alleged policy and practice of recording telephone calls of California clients, while the clients are in California.” Id. (emphases in original). Thus, as Oberon explained in its motion, Plaintiffs’ California-law claims are only applicable to putative class members who are California residents or are customers who purchased their games from within California.8 Mot. at 18; see also Standfacts Credit Servs., Inc. v. Experian Info. Solutions, Inc., 405 F. Supp. 2d 1141, 1148 (C.D. Cal. 2005) (“[T]he UCL does not apply to actions occurring outside of California that injure non-residents.”). Finally, Plaintiffs argue that “this Court may apply New York law to all fifty states based on a choice-of-law provision contained in the GameSaver contract,” and that if it does, “Plaintiffs should be given leave to amend New York law that is consistent with both section 17200, section 1671, and all other applicable code sections prohibiting” Oberon’s conduct. Opp. at 20-21. Not only is this argument nonsensical, but Plaintiffs have no constitutional standing to bring their “ETF” claim, irrespective of which state’s substantive laws apply. Dated: February 12, 2010 KENDALL BRILL & KLIEGER LLP By: s/ Richard B. Kendall Richard B. Kendall Attorneys for Defendant Oberon Media, Inc. 8 Inasmuch as Plaintiffs now argue that their “ETF” claim is predicated on Cal. Civ. Code § 1671, this claim must be limited (like the § 17200 claim), to California residents or GameSaver members who enrolled from within California. Case 2:09-cv-08764-JFW-AGR Document 19 Filed 02/12/10 Page 17 of 17
