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Case No. cv-08-5113 (TEH)
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Douglas R. Young (State Bar No. 073248)
dyoung@fbm.com
C. Brandon Wisoff (State Bar No. 121930)
bwisoff@fbm.com
Farella Braun + Martel LLP
235 Montgomery Street, 17th Floor
San Francisco, CA 94104
Telephone: (415) 954-4400
Facsimile: (415) 954-4480
David A. Handzo (Admitted Pro Hac Vice)
dhandzo@jenner.com
Jenner & Block LLP
1099 New York Avenue, N.W.
Suite 900
Washington, DC 20001
Telephone: (202) 639-6000
Facsimile: (202) 649-6066
Attorneys for Defendants
CENTURYTEL and EMBARQ
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
SAN FRANCISCO DIVISION
DAN VALENTINE, et al.,
Plaintiffs,
vs.
NEBAUD, INC., a Delaware Corporation,
et al.,
Defendants.
Civil Case No.: CV-08-5113 (TEH)
NOTICE OF MOTION AND MOTION OF
DEFENDANTS CENTURYTEL AND
EMBARQ FOR ORDER DISMISSING THEM
FOR LACK OF PERSONAL JURISDICTION
AND FAILURE TO STATE A CLAIM;
MEMORANDUM IN SUPPORT
(Fed. R. Civ. P. 12(b)(2), (6))
The Honorable Thelton E. Henderson
Date: March 9, 2009
Time: 10:00 a.m.
Courtroom: Twelve
Complaint Filed: Nov. 10, 2008
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TABLE OF CONTENTS
TABLE OF AUTHORITIES ........................................................................................................... ii
NOTICE OF MOTION AND MOTION ........................................................................................ vi
ISSUES TO BE DECIDED ............................................................................................................ vi
INTRODUCTION ........................................................................................................................... 1
BACKGROUND ............................................................................................................................. 3
ARGUMENT ................................................................................................................................... 5
I. THIS COURT LACKS PERSONAL JURISDICTION OVER CENTURYTEL AND
EMBARQ............................................................................................................................. 5
A. This Court Lacks General Personal Jurisdiction Over CenturyTel and Embarq. ..... 6
B. This Court Lacks Specific Personal Jurisdiction Over Defendant ISPs. .................. 8
C. Exercising Personal Jurisdiction over CenturyTel and Embarq Is Unreasonable... 10
D. Alternatively, this Court Should Transfer this Action to an Appropriate Venue.... 13
II. PLAINTIFFS’ CALIFORNIA STATUTORY CLAIMS MUST BE DISMISSED.......... 14
A. California and Federal Law Prevent the Application of California Law to the
Non-California Activities of a Non-California Company Affecting Only
Non-California Residents........................................................................................ 14
B. Plaintiffs Have Failed To State a Claim for Any of the California Statutes They
Invoke...................................................................................................................... 18
III. PLAINTIFFS HAVE ALLEGED WRONGDOING BY NEBUAD, NOT CENTURYTEL
OR EMBARQ, WHO CANNOT BE LIABLE FOR NEBUAD’S ALLEGED
VIOLATIONS OF FEDERAL PRIVACY LAWS............................................................ 20
A. Plaintiffs Have Not Alleged Acts by CenturyTel or Embarq that Directly Violate
Federal Privacy Laws.............................................................................................. 20
B. CenturyTel and Embarq Cannot Be Sued for Allegedly Aiding and Abetting
Violations by, or Conspiring With, NebuAd. ......................................................... 22
IV. PLAINTIFFS HAVE FAILED TO STATE A CLAIM FOR UNJUST ENRICHMENT. 26
CONCLUSION.............................................................................................................................. 29
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TABLE OF AUTHORITIES
Page(s)
CASES
Allstate Insurance Co. v. Hague, 449 U.S. 302 (1981)................................................................. 17
Bancroft & Masters, Inc. v. Augusta National Inc., 223 F.3d 1082 (9th Cir. 2000)......... 6, 7, 8, 10
Bates v. United States, 522 U.S. 23 (1997)................................................................................... 26
Board of Supervisors of Louisiana State University v. Louisiana Agricultural Finance
Authority, 984 So. 2d 72 (La. Ct. App. 2008)......................................................................... 28
BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996)................................................... 11, 18
Brand v. Menlove Dodge, 796 F.2d 1070 (9th Cir. 1986) .......................................................... 7, 8
Brazil v. Dell, Inc., 585 F. Supp. 2d 1158 (N.D. Cal. 2008)......................................................... 27
Calder v. Jones, 465 U.S. 783 (1984) ............................................................................................. 8
Campbell v. Arco Marine, Inc., 42 Cal. App. 4th 1850 (2d Dist. 1996)....................................... 17
Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164
(1994) ................................................................................................................................ 22, 23
Core-Vent Corp. v. Nobel Industries AB, 11 F.3d 1482 (9th Cir. 1993) ...................................... 10
Crowley v. CyberSource Corp., 166 F. Supp. 2d 1263 (N.D. Cal. 2001)..................................... 21
Cubbage v. Merchent, 744 F.2d 665 (9th Cir. 1984) ...................................................................... 7
Diamond Multimedia System, Inc. v. Superior Court, 19 Cal. 4th 1036 (1999)........................... 15
Doe v. Dartmouth-Hitchcock Medical Center, No. Civ. 00-100-M, 2001 WL 873063
(D.N.H. July 19, 2001)............................................................................................................ 26
Doe v. GTE Corp., 347 F.3d 655 (7th Cir. 2003) ......................................................................... 24
Dole Food Co. v. Watts, 303 F.3d 1104 (9th Cir. 2002)..................................................... 8, 10, 12
Edgar v. MITE Corp., 457 U.S. 624 (1982)............................................................................ 12, 18
Enreach Technology, Inc. v. Embedded Internet Solutions, Inc., 403 F. Supp. 2d 968 (N.D.
Cal. 2005)................................................................................................................................ 26
Estate of Walker v. Peters, 989 So. 2d 241 (La. Ct. App. 2008) .................................................. 28
Fernandez-Vargas v. Gonzales, 548 U.S. 30 (2006) .................................................................... 25
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Forrand v. Federal Express Corp., No. C07-4674, 2008 WL 276389 (N.D. Cal. Jan. 31,
2008) ....................................................................................................................................... 13
Freeman v. DirecTV, Inc., 457 F.3d 1001 (9th Cir. 2006)................................................ 22, 23, 24
Garland-Sash v. Lewis, No. 05 Civ. 6827, 2007 WL 935013 (S.D.N.Y. Mar. 26, 2007) ............ 26
Glud & Marstrand A/S v. Microsoft Corp., No. C05-01563, 2006 WL 2380717 (W.D.
Wash. Aug. 15, 2006) ............................................................................................................... 9
Gray Line Tours v. Reynolds Electrical & Engineering Co., 193 Cal. App. 3d 190 (2d
Dist. 1987)................................................................................................................................. 7
Haz-Mat Response, Inc. v. Certified Waste Services Ltd., 910 P.2d 839 (Kan. 1996) ................. 27
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984) .................................... 6
Injen Technology Co. Ltd. v. Advanced Engine Management, Inc., 270 F. Supp. 2d 1189
(S.D. Cal. 2003) ........................................................................................................................ 7
Kearney v. Salomon Smith Barney, Inc., 39 Cal. 4th 95 (2006) ................................... 9, 16, 17, 18
In re Late Fee & Over-Limit Fee Litigation, 528 F. Supp. 2d 953 (N.D. Cal. 2007)................... 26
Lawrence v. Clepper, 865 P.2d 1150 (Mont. 1993)...................................................................... 27
Locke v. Aston, 814 N.Y.S.2d 38 (N.Y. App. Div. 2006) ............................................................. 17
Lou v. Belzberg, 834 F.2d 730 (9th Cir. 1987) ............................................................................. 13
MCA Records, Inc. v. Charly Records Ltd., 108 F.3d 338, 1997 WL 76173 (9th Cir. 1997)
(unpublished table decision) ..................................................................................................... 9
In re Marriage of Wageman, 968 P.2d 1114 (Kan. Ct. App. 1998) ............................................. 27
Melchior v. New Line Productions, Inc., 106 Cal. App. 4th 779 (2d Dist. 2003)......................... 26
Montana Petroleum Tank Release Compensation Board v. Capitol Indemnity Co., 137
P.3d 522 (Mont. 2006) ............................................................................................................ 28
Munro v. Carstensen, 945 So. 2d 961 (La. Ct. App. 2006) .......................................................... 28
Nance v. Maxwell Federal Credit Union (MAX), 186 F.3d 1338 (11th Cir. 1999) ...................... 23
National Indemnity Co. v. Garamendi, 233 Cal. App. 3d 392 (2d Dist. 1991) ............................ 19
North Alaska Salmon Co. v. Pillsbury, 174 Cal. 1 (1916) ............................................................ 15
Norwest Mortgage, Inc. v. Superior Court, 72 Cal. App. 4th 214 (4th Dist. 1999) ..................... 15
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Panavision International, L.P. v. Toeppen, 141 F.3d 1316 (9th Cir. 1998) ............................. 7, 12
PBA Local No. 38 v. Woodbridge Police Department, 832 F. Supp. 808 (D.N.J. 1993) ............. 21
Pearce v. E.F. Hutton Group, Inc., 664 F. Supp. 1490 (D.D.C. 1987)..................................... 9, 16
People v. Ratekin, 212 Cal. App. 3d 1165 (4th Dist. 1989).......................................................... 19
Perkins-Carrillo v. Systemax, Inc., No. 1:03CV2836-TW, 2006 WL 1553957 (N.D. Ga.
May 26, 2006) ......................................................................................................................... 25
Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985)................................................................. 18
Randolph V. Peterson, Inc. v. J.R. Simplot Co., 778 P.2d 879 (Mont. 1989) ......................... 21, 28
Reynolds v. Spears, 93 F.3d 428 (8th Cir. 1996) .......................................................................... 21
Sandberg v. McDonald, 248 U.S. 185 (1918)............................................................................... 15
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (9th Cir. 2004)............................ 6, 7, 9
Security Benefit Life Insurance Corp. v. Fleming Cos., 908 P.2d 1315 (Kan. Ct. App.
1995) ....................................................................................................................................... 27
Sinatra v. National Enquirer, Inc., 854 F.2d 1191 (9th Cir. 1998) .............................................. 11
Standfacts Credit Services, Inc. v. Experian Information Solutions, Inc., 405 F. Supp. 2d
1141 (C.D. Cal. 2005), aff’d, 294 F. App’x 271 (9th Cir. 2008) ............................................ 16
Tos v. Mayfair Packing Co., 160 Cal. App. 3d 67 (5th Dist. 1984).............................................. 19
In re Toys R Us, Inc. Privacy Litigation, No. 00-CV-2746, 2001 WL 34517252 (N.D. Cal.
Oct. 9, 2001)............................................................................................................................ 25
Unicorn Investment Bank v. Kuruvilla, No. CV-04-3135-FVS, 2005 WL 1151996 (E.D.
Wash. May 16, 2005) ................................................................................................................ 8
Wild v. Subscription Plus, Inc., 292 F.3d 526 (7th Cir. 2002)...................................................... 13
Williams v. Bowman, 157 F. Supp. 2d 1103 (N.D. Cal. 2001) ..................................................... 13
Ziegler v. Indian River County, 64 F.3d 470 (9th Cir. 1995)........................................................ 10
STATUTES
18 U.S.C. § 1030(b) ...................................................................................................................... 25
18 U.S.C. § 1030(g) ...................................................................................................................... 25
18 U.S.C. § 2510 et seq................................................................................................................. 24
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18 U.S.C. § 2511(1)(a).................................................................................................................. 25
18 U.S.C. § 2520(a) ...................................................................................................................... 25
18 U.S.C. § 2701(a) ...................................................................................................................... 24
18 U.S.C. § 2707........................................................................................................................... 23
28 U.S.C. § 1404(a) ...................................................................................................................... 13
28 U.S.C. § 1712(e) ................................................................................................................ 12, 14
Pub. L. No. 110-326, Title II, § 206, 122 Stat. 3561, 3563 (2008)............................................... 25
Cal. Penal Code § 502..................................................................................................................... 2
Cal. Penal Code § 502(a) .............................................................................................................. 16
Cal. Penal Code § 502(e) .............................................................................................................. 19
Cal. Penal Code § 630.............................................................................................................. 16-17
Cal. Penal Code § 631..................................................................................................................... 2
Cal. Penal Code § 631(a) .................................................................................................. 17, 18, 19
Stats. 2000, ch. 635 § 2 ................................................................................................................. 19
OTHER AUTHORITIES
Federal Trade Commission Staff, Online Behavioral Advertising: Moving the Discussion
Forward to Possible Self-Regulatory Principles (Dec. 20, 2007), available at
http://www.ftc.gov/os/2007/12/P859900stmt.pdf..................................................................... 4
15 Charles A. Wright et al., Federal Practice and Procedure (3d ed. 2007) ............................... 13
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NOTICE OF MOTION AND MOTION
PLEASE TAKE NOTICE that on March 9, 2009, at 10:00 a.m., or as soon thereafter as
the matter may be heard before the Hon. Thelton E. Henderson, United States District Judge, in
Courtroom 12, 19th Floor of the United States District Court for the Northern District of
California, San Francisco Division, located at 450 Golden Gate Avenue, San Francisco,
California, Defendants CenturyTel and Embarq will and hereby do move this Court for an order,
pursuant to Federal Rule of Civil Procedure 12(b)(2) or 12(b)(6), dismissing the Complaint of
Plaintiffs Dan Valentine, Dale Mortensen, Melissa Becker, Samuel Green, Sherron Rimpsey,
Charlotte Miranda, Frank Miranda, Saul Dermer, Wayne Copeland, Crystal Reid, Andrew Paul
Manard, Kathleen Kirch, Terry Kirch, Neil Deering, and Paul Driscoll (“plaintiffs”) for lack of
personal jurisdiction (alternatively, for transfer of venue pursuant to 28 U.S.C. § 1404(a)) and
failure to state a claim in any of the counts in the Complaint. CenturyTel and Embarq’s motion is
based upon this Notice of Motion and Motion, the following Memorandum of Points and
Authorities, the accompanying declarations, the Complaint, and such additional matters as may be
judicially noticed or properly come before this Court prior to or at the hearing of this matter.
ISSUES TO BE DECIDED
(1) Whether this Court can assert personal jurisdiction over CenturyTel and Embarq.
(2) Whether this Court should transfer the actions against CenturyTel and Embarq to an
appropriate venue.
(3) Whether the California Privacy Act or the California Computer Crimes Law can
impose liability on CenturyTel or Embarq, non-California companies, for non-California
activities affecting non-California residents.
(4) Whether plaintiffs have stated a direct, aiding and abetting, or conspiracy claim
against CenturyTel and Embarq under the California Privacy Act.
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(5) Whether plaintiffs have stated a direct, aiding and abetting, or conspiracy claim
against CenturyTel and Embarq under the California Computer Crimes Law.
(6) Whether plaintiffs have stated a direct, aiding and abetting, or conspiracy claim
against CenturyTel and Embarq under the Electronic Communications Privacy Act.
(7) Whether plaintiffs have stated a direct, aiding and abetting, or conspiracy claim
against CenturyTel and Embarq under the Computer Fraud and Abuse Act.
(8) Whether plaintiffs have stated a direct, aiding and abetting, or conspiracy claim
against CenturyTel and Embarq for unjust enrichment.
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Defendants CenturyTel Communications, Inc. and Embarq, Inc. respectfully submit this
memorandum in support of their Motion to Dismiss Plaintiffs’ Complaint pursuant to Federal
Rule of Civil Procedure 12(b).
INTRODUCTION
Plaintiffs claim that an innovative technology invented, patented, owned and implemented
by a California-based company called NebuAd, Inc. (“NebuAd”) violated the privacy rights of
internet users. Whatever the merits of this claim — and the undersigned defendants believe there
are none — plaintiffs reach too far by bringing CenturyTel and Embarq into this case.
To begin, the Court cannot assert personal jurisdiction over CenturyTel and Embarq.
Neither these defendants nor the plaintiffs who are suing them have any relevant connection with
California. None of the plaintiffs and putative class members who assert claims against
CenturyTel and Embarq resides in California, and the harm they allegedly suffered occurred
entirely out of state. Neither Louisiana-based CenturyTel nor Kansas-based Embarq has
substantial contacts in California. Neither company is alleged to have taken any action in
California that is relevant to this case. Their only conceivable connection to this forum is their
agreement to let NebuAd, a California company, conduct a test of its technology on CenturyTel
customers in Montana, Wyoming, and Idaho, and Embarq customers in Kansas. Under clearly
established Ninth Circuit law, that fact is insufficient to establish general jurisdiction and
irrelevant to establishing specific jurisdiction. This Court cannot assert personal jurisdiction over
non-California defendants sued by non-California plaintiffs for alleged injuries suffered outside
of California.
For much the same reasons, the out-of-state plaintiffs’ attempt to enforce California law
against these non-California defendants must fail. California law simply cannot govern the non-
California dealings of a non-California company with its non-California customers. This is clear
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both in the California laws themselves, which explicitly limit their extraterritorial application, and
in the long line of Due Process Clause cases that prohibit states from trying to make their
individual laws apply to all conduct, anywhere. Even if the California laws did apply, plaintiffs
have failed to state claims under the California Invasion of Privacy Act, Cal. Penal Code § 631,
which guards against the tapping of telephone lines, and the California Computer Crime Law,
Cal. Penal Code § 502, which was designed to prevent the spread of computer viruses.
Plaintiffs similarly have failed to state claims that CenturyTel and Embarq violated two
federal statutes, the Electronic Communications Privacy Act (“ECPA”) and the Computer Fraud
and Abuse Act (“CFAA”), either directly or by aiding and abetting or conspiring with NebuAd to
do so. Plaintiffs’ complaint alleges that the acts forbidden by those statutes — intercepting and
using private communications transmitted over the internet — were all taken by NebuAd, with
CenturyTel and Embarq taking no action other than allowing NebuAd access to their networks.
Although plaintiffs allege in conclusory terms that CenturyTel and Embarq committed the same
purportedly illegal acts they accuse NebuAd of performing, the specific allegations of the
complaint belie that conclusion. The complaint is replete with allegations that NebuAd
intercepted communications, that NebuAd analyzed those communications, and that NebuAd
used those communications, but makes nary a mention of any affirmative step that CenturyTel or
Embarq took apart from opening their doors to NebuAd in return for a share of the revenue
NebuAd earned. Such allegations do not state any direct violation of the privacy laws by
CenturyTel and Embarq. Apparently conscious of this, plaintiffs try to hold CenturyTel and
Embarq liable for NebuAd’s acts on theories of aiding and abetting and conspiracy liability.
Those claims fail, too. There is no general secondary liability under federal law, and none of the
statutes in question admits of conspiracy or aiding and abetting liability.
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Finally, plaintiffs’ unjust enrichment claim goes nowhere. The core of an unjust
enrichment suit is the claim that a defendant accepted a benefit that should have gone to, or
constituted a loss by, the plaintiff. Here, plaintiffs have alleged that defendants received money
for their role in delivering relevant advertisements to the end-user. To succeed, plaintiffs would
have to show that such ad revenue belongs to the end-user. But that is not how advertising works,
or has ever worked. The allegations in plaintiffs’ complaint demonstrate that in both traditional
and online advertising, end-users do not receive compensation for viewing ads. The defendants
have in no way been enriched with income that should have gone to plaintiffs.
BACKGROUND
CenturyTel and Embarq are communications companies that, among other things, offer
internet access services to their customers. The complaint alleges that CenturyTel and Embarq
separately1 entered “partnership[s]” with NebuAd, a specialist in online behavioral advertising.
Compl. ¶ 68. Online behavioral advertising seeks to match the advertisements that an internet
user sees with that user’s interests. Thus, for example, “[i]f the consumer was visiting multiple
car sites over a period of time, and then searched for a sports site,” behavioral advertising would
aim to have car ads, rather than randomly generated ads that held little interest to the consumer,
on the sports site. Compl. ¶ 53. Although the complaint insinuates that behavioral advertising is
somehow nefarious, the Federal Trade Commission has observed that behavioral advertising
provides numerous benefits to consumers:
The benefits include, for example, access to newspapers and information from
around the world, provided free because it is subsidized by online advertising;
tailored ads that facilitate comparison shopping for the specific products that
consumers want; and, potentially, a reduction in ads that are irrelevant to
consumers’ interests and that may therefore be unwelcome.
1 At the time of the events recited in the complaint, CenturyTel and Embarq were unrelated.
Since then, the companies have agreed that CenturyTel will acquire Embarq and, assuming that
the requisite regulatory approvals are obtained, the companies will merge.
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Federal Trade Commission Staff, Online Behavioral Advertising: Moving the Discussion
Forward to Possible Self-Regulatory Principles 2 (Dec. 20, 2007), available at
http://www.ftc.gov/os/2007/12/P859900stmt.pdf.
In late 2007, NebuAd began “test[s]” of its technology on small populations of
CenturyTel customers in Montana, Idaho, and Wyoming, and Embarq customers in Kansas.
Compl. ¶¶ 92-93. Embarq and CenturyTel amended the privacy policies on their websites to
advise their consumers that data was being collected for behavioral advertising purposes, and
offered their users the choice not to participate. Compl. ¶¶ 92-93. The defendants received
assurances from NebuAd that the data was collected and maintained in a manner that would make
it impossible, after the fact, to link individual users and their history, Compl. ¶ 92, and that
NebuAd’s system did not collect any health- or child-related information.
Pursuant to contracts with CenturyTel and Embarq, “NebuAd placed a hardware
interception device directly onto the data hub of the ISP.” Compl. ¶ 60. NebuAd’s device
“analyzed the contents of the traffic, monitored and intercepted consumer communications,
Compl. ¶¶ 68, 70, and used information thus obtained to route advertising to the consumer.
Compl. ¶ 72. All of these actions “took place by and through NebuAd’s headquarters.” Compl. ¶
77; see also id. ¶¶ 76, 78. Apart from the defendants “permit[ing]” NebuAd to install the device
in their Montana and Kansas data centers, Compl. ¶ 104, and accepting a modest check for a
portion of revenue from the trial, Compl. ¶¶ 77, 79, the test was under NebuAd’s control.
One customer of CenturyTel (a Montana resident) and two customers of Embarq (both
Kansas residents) have sued CenturyTel and Embarq here in the Northern District of California.
Compl. ¶ 28. Claiming that NebuAd’s online behavioral advertising system violates federal and
state wiretapping and computer-hacking laws, plaintiffs have also sued NebuAd and four other
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internet service providers. As explained below, there is no basis for the suits against CenturyTel
and Embarq to proceed, and they should be dismissed in their entirety.
ARGUMENT
I. THIS COURT LACKS PERSONAL JURISDICTION OVER CENTURYTEL AND
EMBARQ.
At the outset, plaintiffs’ claims against CenturyTel and Embarq must be dismissed
because this Court lacks personal jurisdiction over them.
As the accompanying declarations demonstrate, neither of the entities named —
CenturyTel Communications, Inc. and Embarq, Inc. — had any involvement in the matters at
issue in this case.2 Instead, the contract between Embarq and NebuAd was signed by Embarq
Management Company, and the network on which the NebuAd equipment was installed is owned
by United Telephone Company of Eastern Kansas (we will refer to these two companies
collectively as “Embarq”). Similarly, CenturyTel Service Group, LLC entered into an agreement
with NebuAd, on behalf of its operating subsidiary, CenturyTel Broadband Services LLC (we
will refer to these two companies collectively as “CenturyTel”).3.
None of the companies that was actually involved in the NebuAd test is incorporated in
California. None of the tortious acts alleged was undertaken by these defendants in California.
And not a single plaintiff — neither any named or a putative class member — is a California
citizen who suffered harm in California. At bottom, plaintiffs are asking this Court to exercise
jurisdiction over out-of-state defendants who allegedly have taken actions outside the state that
2 CenturyTel and Embarq do not at this time move to dismiss on the grounds that plaintiffs have
named the incorrect corporate entity, but will move for summary judgment at the appropriate time
if plaintiffs fail to substitute the correct defendants. CenturyTel and Embarq have stipulated that
they will not object to a motion by the plaintiffs to substitute the correct entities, reserving,
however, all objections to the assertion personal jurisdiction.
3 There is no entity known as CenturyTel Communications, Inc. See Mangum Decl. ¶ 3.
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harmed out-of-state plaintiffs. It is difficult to imagine a clearer case for finding that personal
jurisdiction does not exist.
A. This Court Lacks General Personal Jurisdiction Over CenturyTel and
Embarq.
For general jurisdiction to exist over a non-resident defendant, the plaintiff must show that
the defendant has engaged in “continuous and systematic general business contacts” in California.
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984); see Bancroft &
Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000) (no general personal
jurisdiction for company that was not registered in California, paid no taxes in California, and
targeted no advertising toward California residents). The standard requires the equivalent of
showing the defendant’s “‘approximate physical presence’” in California, because a finding of
general jurisdiction would permit the defendant to be sued in California for any dispute,
regardless of its connection to the defendant’s California contacts. Schwarzenegger v. Fred
Martin Motor Co., 374 F.3d 797, 801 (9th Cir. 2004) (quoting Bancroft, 223 F.3d at 1086).
CenturyTel and Embarq have no continuous or systematic business contacts in California.
Mangum Decl. ¶¶ 8-12; Ramsey Decl. ¶¶ 6-10; Huber Decl. ¶¶ 5-9; Binder Decl. ¶¶ 5-10. None
of the companies is a resident of California. Mangum Decl. ¶¶ 8-12; Ramsey Decl. ¶ 6; Huber
Decl. ¶ 5; Binder Decl. ¶ 6. The relevant CenturyTel entities are organized under the laws of
Louisiana, and headquartered in Louisiana. Mangum Decl. ¶¶ 8-9. None of the relevant Embarq
entities are incorporated under California law or are headquartered there. Ramsey Decl. ¶ 6;
Huber Decl. ¶ 5; Binder Decl. ¶ 6. None of the companies has an office or an employee within
California. Mangum Decl. ¶¶ 8-12; Ramsey Decl. ¶¶ 7-8; Huber Decl. ¶¶ 6-7; Binder Decl. ¶¶ 7-
8. The relevant Embarq entities have no California customers. Ramsey Decl. ¶ 10; Huber Decl. ¶
9; Binder Decl. ¶ 10. One of the two relevant CenturyTel entities has no customers in California,
and the other has no more than 16 dial-up ISP customers in California, none of whom has any
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connection to the allegations in the Complaint. Mangum Decl. ¶ 12. None of the companies
advertises in California. Mangum Decl. ¶ 11; Ramsey Decl. ¶ 9; Huber Decl. ¶ 8; Binder Decl. ¶
9. These facts are more than sufficient to establish a lack of general jurisdiction.
Schwarzenegger, 374 F.3d at 801; Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th
Cir. 1998).4
The sole California contact alleged by plaintiffs is the contract that CenturyTel and
Embarq separately entered into with NebuAd. But a single contract is hardly “continuous or
systematic” and in any case merely shows one instance of doing business with California, not an
instance of doing business in California. Bancroft & Masters, 223 F.3d at 1086 (agreements with
California vendors “constitute doing business with California, but do not constitute doing
business in California”).5 Defendants who have a single contract with a California company may
not be haled into the California courts for the resolution of any dispute against them.
Schwarzenegger, 374 F.3d at 801 (“implausibl[e]” to think general personal jurisdiction exists
over nonresident defendant even where defendant purchased California products, hired California
contractors, and provided for California law to govern certain California disputes); Brand v.
4 One of the relevant Embarq entities, Embarq Management Company, has a registered agent for
service purposes in California. That fact, however, is wholly insufficient to establish personal
jurisdiction in California. E.g., Gray Line Tours v. Reynolds Elec. & Eng’g Co., 193 Cal. App.
3d 190, 194-95 (2d Dist. 1987) (presence of agent only permits suit regarding company’s in-state
activities) (citing Miner v. United Air Lines Transp. Corp., 16 F. Supp. 930 (S.D. Cal. 1936)). At
most, the presence of a registered agent is but one factor among many relevant to the stringent
showing required for general jurisdiction. Bancroft & Masters, 223 F.3d at 1086.
5 Nor does the fact that one of the two relevant CenturyTel entities has 16 Californian ISP
customers give rise to general jurisdiction. General jurisdiction arises only where the defendant’s
forum contacts are “substantial.” Bancroft & Masters, 223 F.3d at 1086. These customers
represent no more than .0028 percent of CenturyTel’s ISP customers (Mangum Decl. ¶ 12), and
thus plainly do not constitute substantial contacts. See Brand v. Menlove Dodge, 796 F.2d 1070,
1073 (9th Cir. 1986) (no jurisdiction based on occasional sales to California residents); Cubbage
v. Merchent, 744 F.2d 665, 667-68 (9th Cir. 1984) (no jurisdiction over hospital despite fact that
26 percent of patients came from forum state); Injen Tech. Co. Ltd. v. Advanced Engine Mgmt.,
Inc., 270 F. Supp. 2d 1189, 1194-95 (S.D. Cal. 2003) (no general jurisdiction over company that
did small amount of business in state).
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Menlove Dodge, 796 F.2d 1070, 1073 (9th Cir. 1986) (occasional sales by nonresident to
California residents are insufficient to create general jurisdiction).
B. This Court Lacks Specific Personal Jurisdiction Over These Defendants.
It is equally clear that this Court lacks specific personal jurisdiction over CenturyTel and
Embarq. In order to show that these defendants have “purposefully availed [themselves] of the
privileges of conducting activities in the forum” in order to support specific jurisdiction, Bancroft
& Masters, 223 F.3d at 1086, plaintiffs must satisfy the “effects test” articulated in Calder v.
Jones, 465 U.S. 783, 789 (1984). The effects test rejects the notion that a “foreign act with
foreseeable effects in the forum state always gives rise to specific jurisdiction.” Bancroft &
Masters, 223 F.3d at 1087. Instead, “something more” is required — namely, that the defendant
has “expressly aimed” the allegedly illegal conduct at the forum state, by “engag[ing] in wrongful
conduct target[ing] a plaintiff whom the defendant knows to be a resident of [California].” Id.
(emphasis added). Furthermore, the acts must cause “harm that the defendant knows is likely to
be suffered in the forum state.” Dole Foods Co. v. Watts, 303 F.3d 1104, 1111 (9th Cir. 2002)
(emphasis added). Plaintiffs’ complaint fails to meet either of these requirements.
First, it is undisputed that no plaintiff is this case is a resident of California. Compl.
¶¶ 15-29 (alleging that plaintiffs are “resident[s]” of Montana, Alabama, Georgia, Kansas, and
Illinois). Nor is any class member — defined as a subscriber of CenturyTel or Embarq whose
communications were monitored or otherwise affected by the NebuAd device — a resident of
California, because the NebuAd device was used only in conjunction with non-Californian
residents. Mangum Decl. ¶¶ 6-7; Huber Decl. ¶ 4. Consequently, it is obvious that CenturyTel
and Embarq did not target any plaintiff who resides in California, making personal jurisdiction
improper. Unicorn Inv. Bank v. Kuruvilla, No. CV-04-3135-FVS, 2005 WL 1151996, at *5 (E.D.
Wash. May 16, 2005) (no jurisdiction over nonresident who “injures another nonresident in a
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foreign state”); Glud & Marstrand A/S v. Microsoft Corp., No. C05-01563, 2006 WL 2380717, at
*6 (W.D. Wash. Aug. 15, 2006) (where plaintiff resides in Denmark, harm is “better described as
being aimed at [the plaintiff] in Denmark”). The Ninth Circuit recently reaffirmed the targeting
requirement in Schwarzenegger, 374 F.3d at 801. In that case the Ninth Circuit held that there
was no personal jurisdiction over an Ohio car dealership that had allegedly made an unauthorized
use of Governor Schwarzenegger’s likeness in advertising directed toward Ohio consumers. The
Ninth Circuit held that because the activity was targeted at Ohioans, the car dealership could not
be sued in a California court — even though the plaintiff in the case was a Californian. Id. at 807
(“[While the defendant] may have known that Schwarzenegger lived in California[, that] does not
confer jurisdiction, for [the defendant’s] express aim was local.”). If a Californian may not hale a
nonresident defendant into a California court for acts directed at nonresidents, it is abundantly
clear that nonresidents may not sue in California either.
Second, and relatedly, the plaintiffs suffered no harm — and CenturyTel and Embarq had
no reason to think that they would suffer harm — in California. The alleged harm at issue is the
interception of subscribers’ online transmissions. Any harm the plaintiffs suffered from the
alleged interception of the transmissions would have been felt where the plaintiffs resided, not in
California. E.g., Kearney v. Salomon Smith Barney, Inc., 39 Cal. 4th 95, 119-20 & n.12 (2006)
(recognizing that privacy harm occurs where plaintiff lives); see also Pearce v. E.F. Hutton
Group, Inc., 664 F. Supp. 1490, 1499 (D.D.C. 1987) (same); MCA Records, Inc. v. Charly
Records Ltd., 108 F.3d 338, 1997 WL 76173, at *8 (9th Cir. 1997) (unpublished table decision)
(finding that the “brunt of the [trademark] injury is nevertheless borne by the alleged trademark
owner where the owner resides”).
It is thus irrelevant to personal jurisdiction over CenturyTel and Embarq that NebuAd
allegedly processed plaintiffs’ data in California. The pertinent question is where the effects of
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their actions were targeted and felt, and there is no plausible argument that these non-California
plaintiffs felt these effects in California. Setting aside plaintiffs’ allegations of what NebuAd did
in California, there are no allegations that CenturyTel or Embarq did anything in, targeted
anything at, or affected anyone in the forum state.
C. Exercising Personal Jurisdiction over CenturyTel and Embarq Is
Unreasonable.
Even if they could satisfy the other requirements of general or specific personal
jurisdiction, plaintiffs still cannot show that it is reasonable to exercise jurisdiction here. Ziegler
v. Indian River County, 64 F.3d 470, 474-75 (9th Cir. 1995) (requiring showing of
reasonableness); Dole Foods, 303 F.3d at 1114 (even where defendant has targeted forum,
personal jurisdiction is inappropriate where it would be unreasonable) (citing Burger King Corp.
v. Rudzewicz, 471 U.S. 462 (1985)); Bancroft & Masters, 223 F.3d at 1086 (making
reasonableness a prerequisite of specific jurisdiction). This Court looks to seven factors in
assessing the reasonableness of jurisdiction:
(1) the extent of the defendants’ purposeful injection into the forum state’s affairs;
(2) the burden on the defendant of defending in the forum; (3) the extent of
conflict with the sovereignty of the defendant’s state; (4) the forum state’s interest
in adjudicating the dispute; (5) the most efficient judicial resolution of the
controversy; (6) the importance of the forum to the plaintiff’s interest in
convenient and effective relief; and (7) the existence of an alternative forum.
Dole Foods, 303 F.3d at 1114. Each factor supports a finding that personal jurisdiction would be
unreasonable here.
Purposeful injection. This Circuit recognizes that “the smaller the element of purposeful
interjection, the less is jurisdiction to be anticipated and the less reasonable is its exercise.” Core-
Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1488 (9th Cir. 1993) (quotation marks omitted). As
explained above, neither CenturyTel nor Embarq has taken any action to inject itself into
California. The complained-of conduct in this case is that CenturyTel and Embarq targeted non-
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Californians by allowing NebuAd to intercept their communications outside of California,
thereby causing them to receive more targeted advertising information at their non-California
place of service. The sole California connection in this case is NebuAd, which, unlike
CenturyTel and Embarq, is based in California. That CenturyTel and Embarq each contracted
with NebuAd is insufficient to establish meaningful purposeful interjection into California,
particularly when neither of them took actions in California pursuant to that contract.
Burden on the Defendants. While the factor is not dispositive, it is typical for a court to
“examine the burden on the defendant in light of the corresponding burden on the plaintiff.”
Sinatra v. Nat’l Enquirer, Inc., 854 F.2d 1191, 1199 (9th Cir. 1998) (quotation marks omitted).
When it is equally difficult for the defendant to come to the plaintiff’s forum as it is for the
plaintiff to come to the defendant, this factor is neutral. Here, however, neither the plaintiffs nor
the defendants are from California; neither side benefits from a California forum. Moreover, the
burden of litigating in California is substantial for CenturyTel and Embarq. Because the events at
issue took place outside of California, all witnesses and documents will need to be brought in
from other states. Mangum Decl. ¶ 14; Huber Decl. ¶ 11. The complaint alleges a nationwide
class action on multiple claims that could turn on complex technical testimony concerning the
nature of defendants’ operations. Proceedings could be lengthy. It would be a substantial (and
unnecessary) burden for CenturyTel and Embarq to defend their out-of-state actions in California.
Conflict with Other States. Given California’s minimal connection to this suit, it would be
inappropriate for it to serve as the forum. Plaintiffs’ claims involve non-California conduct
against non-Californians, and as the Supreme Court has put it, “a State may not impose economic
sanctions on violators of its laws with the intent of changing the tortfeasors’ lawful conduct in
other States.” BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 572 (1996). To the extent that
plaintiffs’ rights are in need of vindication, that is the sole concern of the jurisdictions in which
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they live. Edgar v. MITE Corp., 457 U.S. 624, 644 (1982) (recognizing that a state “has no
legitimate interest in protecting nonresident shareholders”). It is not for California to dictate to
other states whether, and how, they should regulate the provision of internet access.
Importance to California. This factor favors the extension of personal jurisdiction when it
would serve California’s “interest in providing a forum for its residents and citizens who are
tortiously injured.” Dole Foods, 303 F.3d at 1115-16. Because no California resident or citizen
is alleging injury, California correspondingly has no interest in hearing this suit.
Efficient Resolution. “This factor focuses on the location of the evidence and witnesses.”
Panavision, 141 F.3d at 1323. Simple mathematics shows that it is inefficient to try this case in
California. There are 23 named parties to this suit plus thousands of putative class members; only
one party — NebuAd — resides in California. It is inefficient to require 22 of 23 parties and
thousands of class members to litigate in California, instead of requiring NebuAd to litigate in the
home fora of the parties. Even a settlement would be difficult to efficiently negotiate in
California given the Class Action Fairness Act’s requirement of a fairness hearing. 28 U.S.C.
§ 1712(e). Unnamed class members would be required to come to California to challenge any
settlement instead of being able to litigate in their home jurisdictions.
Importance to Plaintiffs. The plaintiffs have no interest in hearing this suit in California
because none of them resides in California. Plaintiffs’ choice to file in California appears to have
been entirely the choice of their counsel. It would be far more convenient for the plaintiffs to
litigate in their home forum, which is also the site of their alleged injury.
Alternative Forum. As explained below, there are undeniably alternative fora open to the
plaintiffs. The most obvious forum for each class of plaintiffs is in a suit against CenturyTel or
Embarq where those companies have substantial contacts, such as in Montana and Kansas,
respectively. There is no question that personal jurisdiction would lie over CenturyTel and
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Embarq in such a forum, and plaintiffs would likely be able to establish personal jurisdiction over
NebuAd in such a forum as well.
This case presents a rare personal jurisdiction hat trick: Neither the plaintiffs, nor the
undersigned defendants, nor any of their actions in this case are connected to California.
Consequently, it would violate due process to hale CenturyTel or Embarq into a California court.
Other constitutionally sufficient jurisdictions are available. This Court should hold that no
personal jurisdiction over CenturyTel and Embarq exists here.
D. Alternatively, this Court Should Transfer this Action to an Appropriate
Venue.
If this Court concludes that personal jurisdiction lies, it should transfer the action against
CenturyTel to the District of Montana, where the alleged interceptions occurred and where the
great majority of the putative class members reside. It should transfer the action against Embarq
to the District of Kansas for the same reasons. This Court has the authority to transfer this action
“[f]or the convenience of parties and witnesses, in the interests of justice, . . . to any other district
or division where it might have been brought.” 28 U.S.C. § 1404(a). It also has the power to
authorize the severance and transfer of claims against separate defendants to separate districts,
particularly where, as here, there is no forum in which all the defendants are subject to
jurisdiction. E.g., Wild v. Subscription Plus, Inc., 292 F.3d 526, 530-31 (7th Cir. 2002). See
generally 15 Charles A. Wright et al., Federal Practice and Procedure § 3845 (3d ed. 2007).
When none of the plaintiffs resides in the forum, Williams v. Bowman, 157 F. Supp. 2d 1103,
1106 (N.D. Cal. 2001), and when the operative facts took place elsewhere, Lou v. Belzberg, 834
F.2d 730, 739 (9th Cir. 1987), venue transfers are plainly appropriate. See generally Forrand v.
Federal Exp. Corp., No. C07-4674, 2008 WL 276389 (N.D. Cal. Jan. 31, 2008) (Henderson, J.).
Because the Districts of Montana and Kansas are home to the plaintiffs, key witnesses, and
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documents, the suits against CenturyTel and Embarq should proceed in those fora, respectively, if
at all.
It is worth noting that there are particularly strong grounds for transferring venue in this
class action. Although the named class plaintiffs — or their California-based counsel —
apparently prefer to litigate their claims outside of their home state, there is no reason to think
that any other class members would, should a class be certified. Out-of-state litigation will
impose obvious and substantial burdens on those class members. As noted, in the event that a
settlement is reached, this Court would need to hold a fairness hearing to ensure that the
settlement meets the requirements stated in the Class Action Fairness Act. 28 U.S.C. § 1712(e).
To the extent any class members believe that the settlement is unfair, they will need to travel to
California to vindicate their rights and/or procure out-of-state counsel. Venue should be
transferred to the home jurisdictions of class members to avoid this problem.
II. PLAINTIFFS’ CALIFORNIA STATUTORY CLAIMS MUST BE DISMISSED.
Even if the Court were to proceed, it would have to do so without plaintiffs’ California
statutory claims. Just as there is no basis for bringing CenturyTel and Embarq into a California
court, there is no basis for subjecting CenturyTel and Embarq to California law. Neither
California law nor the Due Process Clause permits such extraterritorial application of state power.
Further, even if California law could apply here, plaintiffs’ claims would fail because plaintiffs
have failed to state a claim.
A. California and Federal Law Prevent the Application of California Law to the
Non-California Activities of a Non-California Company Affecting Only Non-
California Residents.
There is no basis for subjecting CenturyTel and Embarq to the California laws invoked
here. CenturyTel is a Louisiana-based company accused by a Montana resident of taking certain
actions in Montana; Embarq is a Kansas-based company, and it is accused by Kansas plaintiffs of
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taking certain actions in Kansas. Neither California law nor the Due Process Clause permits
plaintiffs to apply the laws of California to these activities and parties.
First, there is a basic presumption that a state’s laws do not apply beyond its borders. That
is a simple requirement of a multi-jurisdictional federal system; a state’s laws are “presumptively
territorial and confined to limits over which the law-making power has jurisdiction.” Sandberg v.
McDonald, 248 U.S. 185, 195 (1918). Under that well-established principle, state laws are not to
be given extraterritorial effect. See, e.g., N. Alaska Salmon Co. v. Pillsbury, 174 Cal. 1, 4 (1916);
Norwest Mortgage, Inc. v. Superior Court, 72 Cal. App. 4th 214, 222-23 (4th Dist. 1999).
Although this test may present some difficult cases, where both the offending conduct and the
resulting harm occurred beyond California’s borders, courts apply the presumption against
extraterritorial effects. See Diamond Multimedia Sys., Inc. v. Superior Court, 19 Cal. 4th 1036,
1059 n.20 (1999). California courts will not apply their state’s law in those circumstances “unless
a contrary intention is clearly expressed or reasonably can be inferred from the language or
purpose of the statute.” Norwest, 72 Cal. App. 4th at 222.
Plaintiffs, none of whom reside in California, have not alleged that CenturyTel or Embarq
engaged in any activity in California, nor have they pointed to any harm that they suffered in
California. The wrongful conduct that they allege to have been committed by these two
defendants all occurred, by plaintiffs’ own admission, at the CenturyTel and Embarq facilities in
Montana and Kansas. See Compl. ¶ 60 (alleging that the defendants cooperated with NebuAd to
install the “hardware interception device directly into the data hub of the ISP”); see also Compl.
¶¶ 90-95 (identifying locations of hubs involved). The only activities that allegedly occurred in
California were NebuAd’s. See Compl. ¶¶ 75-78 (alleging that the NebuAd devices “collected
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and transmitted” data to the NebuAd center in California, where “NebuAd analyzed the content of
the traffic”).6
Similarly, as a matter of law, all of the harm that plaintiffs allege occurred outside of
California. Privacy harms arise in the state of the purported victim. See Kearney, 39 Cal. 4th at
120 n.12 (noting that the recording in Georgia, by a Georgia resident, of a conversation with a
California resident without the Californian’s consent “constitutes an invasion of privacy within
California”); see also Pearce, 664 F. Supp. at 1499 (“Invasion of privacy is a personal injury—an
injury to feelings. . . . Clearly, an injury to one’s feelings can only occur where the plaintiff is
located at the time of the impact of the privacy invasion.”). Because all of the named plaintiffs
are citizens and residents of other states, communicating through their non-California service
providers, Compl. ¶ 9, the alleged harms occurred in those other states. Neither the activities
alleged against CenturyTel and Embarq nor the harms those activities allegedly caused occurred
in California. The presumption against extraterritorial effects therefore applies.
Nothing in the particular state laws that plaintiffs have invoked overcomes the
presumption against applying California law. If anything, there are only additional reasons not to
apply it. First, both of the statutes at issue — the California Invasion of Privacy Act and the
Computer Crime Law — expressly state that they are limited to offenses against Californians. In
the Computer Crime Law, the California legislature explained in its statement of intent that the
law was necessary to protect “individuals as well as … others within this state.” Cal. Penal Code
§ 502(a) (emphasis added). The Privacy Act is doubly clear: Its statement of intent emphasizes
that the Act was “intend[ed] to protect the right of privacy of the people of this state,” Cal. Penal
6 That the California statutes do not apply extraterritorially dooms plaintiffs’ state-law conspiracy
and aiding and abetting claims, too. Secondary liability may not be based solely on
extraterritorial conduct under laws that lack extraterritorial effect. See Standfacts Credit Servs.,
Inc. v. Experian Info. Solutions, Inc., 405 F. Supp. 2d 1141, 1148 (C.D. Cal. 2005), aff’d, 294 F.
App’x 271 (9th Cir. 2008).
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Code § 630 (emphasis added), and the statute’s plain terms limit its application to wiretaps or the
unauthorized reading of communications “in this state.” Cal. Penal Code § 631(a); see also
Kearney, 39 Cal. 4th at 119-20 (“[T]he principal purpose of section 632 [of the Privacy Act] is to
protect the privacy of confidential communications of California residents while they are in
California.”) (emphasis added). Courts inside and outside California have recognized that such
clear statements bar these statutes’ use by out-of-state plaintiffs. See, e.g., Campbell v. Arco
Marine, Inc., 42 Cal. App. 4th 1850, 1860 (2d Dist. 1996) (“[S]tatements that the law was enacted
for the benefit of the citizenry of this state is persuasive indication of the Legislature’s intent
concerning the applicability of the FEHA.”); see also Locke v. Aston, 814 N.Y.S.2d 38, 41-42
(App. Div. 2006) (relying on Section 630 to hold that the California Privacy Act does not provide
a cause of action for a New York resident whose calls were recorded while he was in New York).
Far from overcoming the presumption of extraterritoriality, every additional piece of evidence
confirms that the laws in question do not reach conduct outside California, by non-Californians,
that allegedly injures non-California residents.
Any interpretation of these laws that would permit their application to the activities
alleged would raise serious federal constitutional concerns. Even apart from any state-law
presumption against extraterritoriality, it is well established that the Due Process Clause and
Commerce Clause place significant limits on California’s ability to regulate a Louisiana or
Kansas company’s out-of-state activities with respect to out-of-state residents. For a state to
regulate conduct beyond its borders, the state must establish “a significant contact or significant
aggregation of contacts, creating state interests, such that [application] of its law is neither
arbitrary nor fundamentally unfair.” Allstate Ins. Co. v. Hague, 449 U.S. 302, 313 (1981).
Three key factors doom any effort to expand California’s reach to touch the non-
California defendants’ relationship with their non-California customers. First, California’s
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interest in regulating the actions of CenturyTel and Embarq with respect to out-of-state customers
is extraordinarily weak. Edgar, 457 U.S. at 644 (recognizing that a state “has no legitimate
interest in protecting nonresident shareholders”). Second, the Supreme Court has recognized that
“an important element” in the due process analysis “is the expectation of the parties.” Phillips
Petro. Co. v. Shutts, 472 U.S. 797, 822 (1985). Plaintiffs have not alleged, and could not allege,
any basis on which CenturyTel and Embarq could have expected to be subjected to California
laws when they agreed to provide internet service to Montanans or Kansans. Finally, comity and
state sovereignty forbid states from trying to regulate activities of others. As the Supreme Court
put it, the Due Process Clause and Commerce Clause dictate “that a State may not impose
economic sanctions on violators of its laws with the intent of changing the tortfeasors’ lawful
conduct in other states.” Gore, 517 U.S. at 572. Indeed, this is precisely the class of case that the
California Supreme Court has advised is not be subject to California law: one “in which
California would be applying its law in order to alter a defendant’s conduct in another state vis-à-
vis another state’s residents.” Kearney, 39 Cal. 4th at 104. The California claims must be
dismissed.
B. Plaintiffs Have Failed To State a Claim for Any of the California Statutes
They Invoke.
Even if California law did apply, the California claims would have to be dismissed
regardless. Count IV of the Complaint alleges a violation of Section 631 of the California
Invasion of Privacy Act (the “Privacy Act”), which applies to any person who “taps, or makes
any unauthorized connection, . . . with any telegraph or telephone wire, line, cable or instrument.”
Cal. Penal Code § 631(a). However, unlike the federal Wiretap Act, the California Privacy Act
has not been amended to cover non-telephonic communications. By its plain terms, Section 631
is limited to communications carried over “any telegraph or telephone wire, line, cable, or
instrument.” Cal. Penal Code § 631(a) (emphasis added); see also People v. Ratekin, 212 Cal.
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App. 3d 1165, 1168 (4th Dist. 1989) (“In order to violate section 631 it is necessary that the
intercepted communication be carried over ‘[]telegraph or telephone wire, line, cable, or
instrument.’”) (quoting Cal. Penal Code § 631(a)). It is clear from the first mention of “wire, line,
[or] cable” that the legislature intended to restrict the scope of Section 631 to telegraph or
telephone communications. See Nat’l Indem. Co. v. Garamendi, 233 Cal. App. 3d 392, 406 (2d
Dist. 1991) (relying on an express limitation in another section of a statute to construe a disputed
term similarly, “even if the limitation is not expressly stated” a second time). Indeed, it appears
that no California court has ever applied Section 631 to email or other computer communications.
This Court should not extend the statute where California courts and the California legislature
have not, particularly when doing so would drastically expand the statute’s criminal application.
Tos v. Mayfair Packing Co., 160 Cal. App. 3d 67, 80 (5th Dist. 1984) (“When a statute is penal,
principles governing construction of penal statutes apply even when the underlying action is civil
in nature.”).
Plaintiffs’ California Computer Crimes Act claim fails, too. Although it proscribes
various kinds of conduct, that law — like the federal CFAA on which it is modeled — provides a
civil cause of action only for one “who suffers damage or loss” as a result of a violation. Cal.
Penal Code § 502(e). There is no California case law interpreting that requirement, but it is clear
that the “loss or damage” requirement must be interpreted like the parallel federal provision.
Prior to 2000, the private cause of action was available to anyone whose computer was attacked
in violation of the law’s substantive provisions. In 2000, however, the legislature amended the
right of action to track the CFAA, inserting the requirement that a plaintiff have “suffer[ed]
damage or loss.” See Stats. 2000, ch. 635 § 2. As discussed in the accompanying briefs of the
other Defendant ISPs, see, e.g., Cable One Br. at 19-20, the federal law’s “damage or loss”
restriction has consistently been interpreted to exclude privacy-related harms and require actual
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economic expenditure. There is no reason to think that California, which amended its prior act to
incorporate this language, would interpret its law any differently.7
III. PLAINTIFFS HAVE ALLEGED WRONGDOING BY NEBUAD, NOT
CENTURYTEL OR EMBARQ, WHO CANNOT BE LIABLE FOR NEBUAD’S
ALLEGED VIOLATIONS OF FEDERAL PRIVACY LAWS.
In Counts I, III, V, and VI, plaintiffs allege that CenturyTel and Embarq directly violated,
aided and abetted violations of, and conspired to violate ECPA and the CFAA. Plaintiffs do not,
however, allege facts that would permit a finding of direct liability based on actions taken by
CenturyTel and Embarq. Rather, plaintiffs allege only that CenturyTel and Embarq agreed to
allow allegedly illegal acts by NebuAd. Plaintiffs, in effect, seek to hold CenturyTel and Embarq
liable for NebuAd’s alleged violations of federal law. None of the federal privacy statutes
provide for such indirect liability, and under established Supreme Court and Ninth Circuit
precedent, plaintiffs cannot expand these statutes to make CenturyTel and Embarq responsible for
NebuAd’s actions under “aiding and abetting” or “conspiracy” theories.
A. Plaintiffs Have Not Alleged Acts by CenturyTel or Embarq that Directly
Violate Federal Privacy Laws.
Plaintiffs’ complaint is very clear that it was NebuAd, not CenturyTel or Embarq, who
engaged in the activities plaintiffs challenge. Their complaint is replete with allegations about
what NebuAd allegedly did and how NebuAd did it. Plaintiffs allege, for example, that “NebuAd
obtained its data by tapping directly into the consumer’s ISP connection” and that “NebuAd
placed a hardware interception device directly into the data hub of the ISP.” Compl. ¶ 60. They
claim that “NebuAd advertising hardware monitors, intercepts, and then modifies the contents of
internet packets.” Compl. ¶ 68 (emphasis omitted); see id. ¶ 70 (“NebuAd intercepted, modified,
and altered the contents of the Internet packets . . . ”). Plaintiffs state that all of the storage,
7 Because plaintiffs have failed to establish any underlying violations of state law, plaintiffs’
claims based on secondary liability — aiding and abetting and conspiracy — fail, too.
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analysis, and use of the data that they allege — “[a]ll of the activities complained of herein” —
“took place by and through NebuAd’s headquarters.” Compl. ¶ 77; see also id. ¶¶ 76, 78.
By contrast, the complaint is nearly silent concerning actions allegedly taken by
CenturyTel and Embarq. Indeed, the most that plaintiffs allege regarding activities by CenturyTel
and Embarq is that they “permitted” the interception, Compl. ¶ 104, and “gained profit” from it,
Compl. ¶¶ 77, 79, not that they actually engaged in an interception. Apart from conclusory
allegations that the “[d]efendants” violated various provisions of federal privacy laws,8 Compl. ¶¶
116-118, there is no factual allegation that CenturyTel and Embarq did much of anything — and
certainly nothing that would violate ECPA or the CFAA.
These allegations do not state claims that CenturyTel or Embarq themselves illegally
intercepted plaintiffs’ communications. Indeed, courts consistently reject the argument that a
service provider “intercepts” a communication by letting some third party act on the service
provider’s network. In PBA Local No. 38 v. Woodbridge Police Department, 832 F. Supp. 808
(D.N.J. 1993), for example, a federal district court rejected efforts to hold a phone company liable
under the Wiretap Act for installing, at another’s request, a device that enabled the other party to
intercept communications. Whatever the phone company had done, it had not intercepted any
calls itself: “All NJB did was install, and perhaps maintain or service, a ‘call director’ in the
Director’s office. This does not amount to ‘interception’ or procuring another to intercept.” Id. at
832; see also Reynolds v. Spears, 93 F.3d 428, 432-33 (8th Cir. 1996) (refusing to hold wife
liable for interception conducted by husband with wife’s knowledge and to further their common
objective).
8 “The Court need not accept a conclusory allegation that conduct alleged in the complaint
constituted an interception under the Wiretap Act.” Crowley v. CyberSource Corp., 166 F. Supp.
2d 1263, 1268 (N.D. Cal. 2001).
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B. CenturyTel and Embarq Cannot Be Sued for Allegedly Aiding and Abetting
Violations by, or Conspiring With, NebuAd.
Given the paucity of factual allegations concerning CenturyTel and Embarq, plaintiffs can
succeed against these defendants only if they can hold them liable for NebuAd’s wrongdoing.
They cannot, however, because there is no federal statute that creates civil conspiracy or aiding
and abetting liability, and nothing in these particular statutes expands their scope to capture such
secondary claims.
As explained in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, 511 U.S.
164, 182 (1994), “Congress … has taken a statute-by-statute approach” to civil secondary
liability. That is, rather than applying a common rule to all cases potentially involving civil
secondary liability, it is necessary to examine the particular statute at issue rigorously and
determine whether Congress intended to create a private cause of action against those who aid
and abet or conspire to commit that offense. See id. (“[T]here is no general presumption that the
plaintiff may also sue aiders and abettors.”). “When ‘a statute is precise about who … can be
liable’ courts should not implicitly read secondary liability into the statute.” Freeman v. DirecTV,
Inc., 457 F.3d 1001, 1006 (9th Cir. 2006) (quoting Doe v. GTE Corp., 347 F.3d 655, 659 (7th Cir.
2003)). As the Central Bank Court explained, “Congress knew how to impose aiding and
abetting liability when it chose to do so.” 511 U.S. at 176 (rejecting secondary liability under
Section 10b of the 1934 Securities Act).
The analysis thus begins with the terms of the statute, which indisputably “control the
definition of conduct covered.” Central Bank, 511 U.S. at 175. In assessing whether Congress
intended to authorize suits based on secondary liability, it should be noted that Congress has
regularly done so by including the words “aid” and “abet” in the text, see id. at 176; accordingly,
there must be some affirmative indication that Congress intended to cover “persons who do not
engage in the proscribed activities at all, but who give a degree of aid to those who do.” Id.
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When there is no indication of such expansive liability, as when the statute narrowly identifies the
individuals against whom Congress intended to create liability, then courts are not to create a
conspiracy or aiding and abetting cause of action where Congress did not. See id. at 179-80. As
the Eleventh Circuit put it in concluding that Congress did not create secondary liability under the
Age Discrimination in Employment Act, in which “liability is limited to ‘employers,’”
[a]llowing a state-law conspiracy claim in an ADEA case would permit plaintiffs
to make an “end run” around this federal statutory structure for age discrimination
suits. Such evasion would surely frustrate congressional intent. We therefore hold
that the enforcement of rights secured through the ADEA must be pursued in the
manner specified in the ADEA.
Nance v. Maxwell Fed. Credit Union (MAX), 186 F.3d 1338, 1342 (11th Cir. 1999). When
Congress particularly identifies those it intends to be held civilly liable, courts cannot frustrate
that intent.
In each of the federal statutes at issue here, Congress clearly identified a narrow, specific
class of wrongdoers it intended to be held liable. None of the statutes permits secondary liability.
With respect to the sections of ECPA addressing the access and use of stored communications
(the Stored Communications Act or “SCA”), the Ninth Circuit has directly rejected an effort to
impute aiding and abetting and conspiracy liability under Section 2702. See Freeman, 457 F.3d
at 1004-09. The court there followed Central Bank precisely, looking for indications of how
broadly Congress intended to extend the private right of action — 18 U.S.C. § 2707, which
creates the right of action for all SCA claims — that plaintiffs invoke here. Concluding that there
was “no textual support for [the] contention that Congress explicitly provided for aiding and
abetting or conspiracy claims,” Freeman, 457 F.3d at 1005, the Court could find nothing in the
SCA’s structure that suggested any intention to impose liability on those who were not
enumerated in the statute. To the contrary, the Ninth Circuit ruled that the SCA “impose[s] civil
liability on a defined group for specific conduct.” Id. Indeed, Section 2702 — and Section 2701,
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which was not directly at issue in Freeman but for which the analysis is identical — precisely
identifies the conduct that the statute seeks to outlaw. See 18 U.S.C. § 2701(a) (providing
liability for those who, among others, intentionally access, without authorization, an electronic
communications facility and obtain, alter, or prevent access to a stored communication). Unlike
statutes that impose liability on anyone who was “involved” in particular wrongdoing, or that
require courts to define the contours of that liability using aiding and abetting or conspiracy
theories, Congress itself defined those contours in the SCA. Freeman, 457 F.3d at 1008
(comparing SCA to anti-terrorism statute that imposes consequences on anyone “involve[d]” in
particular activities). Plaintiffs’ secondary liability claims under the SCA must be dismissed.
Similarly, with respect to the sections of ECPA addressing communications that were
intercepted while in transit over a carrier’s network, 18 U.S.C. § 2510 et seq. (“the Wiretap Act”),
the Seventh Circuit explained in a Wiretap Act case (on which the Ninth Circuit relied in reaching
the same conclusion with respect to the SCA), Congress did not provide for aiding and abetting or
conspiracy liability. See Doe v. GTE Corp., 347 F.3d 655, 658 (7th Cir. 2003) (“nothing in the
statute condemns assistants, as opposed to those who directly perpetrate the act”); see also
Freeman, 457 F.3d at 1006 (relying on Doe). Recognizing the Wiretap Act’s specific imposition
of civil liability on those who intercept electronic communications or use or disclose such
intercepted communications, the Seventh Circuit concluded that “[a] statute that is this precise
about who, other than the primary interceptor, can be liable, should not be read to create a
penumbra of additional but unspecified liability.” Doe, 347 F.3d at 659.
Confirming this conclusion, courts have rejected the suggestion that secondary civil
liability can be imposed on one who procures another to intercept a communication. Although
the Wiretap Act imposes criminal liability for “procur[ing]” interceptions, 18 U.S.C. §
2511(1)(a), the section which creates a private civil cause of action, 18 U.S.C. § 2520(a), does
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not. Courts thus do not permit civil suits against those who procure interceptions. E.g., Perkins-
Carrillo v. Systemax, Inc., No. 1:03CV2836-TW, 2006 WL 1553957, at *15 (N.D. Ga. May 26,
2006); In re Toys R Us, Inc. Privacy Litig., No. 00-CV-2746, 2001 WL 34517252, at *6-7 (N.D.
Cal. Oct. 9, 2001). If the statute does not permit liability for procuring an interception, logically
there cannot be liability when two entities enter into an agreement (or conspiracy) that one will
intercept communications. The Wiretap Act is thus just the kind of statute that Central Bank
envisioned: one in which Congress clearly defined who was liable and gave no indication that
courts should expand it. The direct and secondary liability claims must be dismissed with respect
to the Wiretap Act, just as with the SCA.
Finally, the Computer Fraud & Abuse Act is perhaps the most clearly limited of all.
While the statute does provide for conspiracy liability in certain circumstances, that liability is
expressly limited in two ways that make it inapplicable in this case. First, the CFAA did not
include any conspiracy provisions until September 2008, when Congress amended Section
1030(b) of the statute to impose conspiracy liability. Pub. L. No. 110-326, Title II, § 206, 122
Stat. 3560, 3563 (2008). That amendment cannot apply retroactively to punish CenturyTel or
Embarq for alleged activities that were legal when conducted. See Fernandez-Vargas v.
Gonzales, 548 U.S. 30, 37-38 (2006). Second, however, even if Congress had intended its new
conspiracy provision to apply retroactively, it created conspiracy liability only for criminal cases.
The amended Section 1030(b) provides criminal punishments for “[w]hoever conspires to commit
or attempts to commit an offense” under it. 18 U.S.C. § 1030(b). In contrast, Congress provided
only for “a civil action against the violator.” 18 U.S.C. § 1030(g) (emphasis added). The
contrast could not be more plain, and there is no reason to think that the different treatment is
anything but purposeful. See Bates v. United States, 522 U.S. 23, 29-30 (1997) (requiring courts
to interpret different language differently). Courts consistently recognize that the CFAA provides
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no basis for broadening the civil liability that Congress kept narrow. See, e.g., Doe v. Dartmouth-
Hitchcock Med. Ctr., No. Civ. 00-100-M, 2001 WL 873063, at *5 (D.N.H. July 19, 2001) (“[T]he
CFAA …. creates only a limited private right of action ‘against the violator.’”) (citation omitted);
Garland-Sash v. Lewis, No. 05 Civ. 6827, 2007 WL 935013, at *4 (S.D.N.Y. Mar. 26, 2007).9
Unable to allege any unlawful actions by CenturyTel or Embarq, and unable to hold them
liable for NebuAd’s alleged wrongdoing, plaintiffs have failed to state claims against CenturyTel
and Embarq under ECPA or the CFAA. Accordingly, their federal claims — both those premised
on direct violations and those premised on secondary liability — against CenturyTel and Embarq
must be dismissed.
IV. PLAINTIFFS HAVE FAILED TO STATE A CLAIM FOR UNJUST
ENRICHMENT.
Although plaintiffs do not specify which state’s law they hope to apply for their unjust
enrichment claim, Compl. ¶¶ 174-178, in the end that will make no difference in this motion’s
outcome. The unjust enrichment claim fails under the law of any of the states in question. Were
California law to apply — which it clearly cannot, for all the reasons stated above — the
resolution is simple: “[T]here is no cause of action in California for unjust enrichment.”
Melchior v. New Line Prods., Inc., 106 Cal. App. 4th 779, 793 (2d Dist. 2003); see also, e.g., In
re Late Fee & Over-Limit Fee Litig., 528 F. Supp. 2d 953, 966-67 (N.D. Cal. 2007) (dismissing
unjust enrichment claim as not valid under California law); Enreach Tech., Inc. v. Embedded
Internet Solutions, Inc., 403 F. Supp. 2d 968, 976 (N.D. Cal. 2005) (same).
Applying the laws that CenturyTel, Embarq and their customers agreed would apply, see
Brazil v. Dell, Inc., 585 F. Supp. 2d 1158, 1162 (N.D. Cal. 2008) (recognizing that California
9 Also, as explained in the briefs of Cable One and Bresnan Communications, which CenturyTel
and Embarq expressly incorporate herein, a CFAA claim lies only when the conduct at issue
caused economic losses aggregating to $5,000 or more. Plaintiffs do not meet that standard.
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applies no presumption against contractual choice-of-law provisions), the unjust enrichment claim
fares no better. Under Kansas law, which governs the Kansas-based Embarq’s relationship with
the Kansas-based customers who are plaintiffs here, Huber Decl. ¶ 10; Compl. ¶¶ 26-27, 34, an
unjust enrichment claim requires plaintiffs to show that defendants reaped rewards at the expense
of plaintiffs. As the Kansas Supreme Court explained, unjust enrichment has its roots in “the
older doctrine of quasi-contracts,” and is based on “a promise implied in law that one will restore
to the person entitled thereto that which in equity and good conscience belongs to him [or her].”
Haz-Mat Response, Inc. v. Certified Waste Servs. Ltd., 910 P.2d 839, 846 (Kan. 1996) (quotation
marks omitted; alteration in original). The paradigmatic case is one in which a plaintiff has
provided some labor to the defendant, and the defendant gladly accepts it in a way that leads the
plaintiff to understand he or she will be compensated for providing it. See, e.g., In re Marriage of
Wageman, 968 P.2d 1114, 1119 (Kan. Ct. App. 1998). The key to an unjust enrichment claim is
that the plaintiff is out something: the defendant’s enrichment comes “at the expense of another”
such that the plaintiff must be “restore[d],” Haz-Mat Response, 910 P.2d at 847, and that the
defendant must give back to the plaintiff “that which in equity and good conscience belongs to
him.” Sec. Ben. Life Ins. Corp. v. Fleming Cos., 908 P.2d 1315, 1323 (Kan. Ct. App. 1995)
(quotation marks omitted).
The conclusion is the same for CenturyTel, applying the Louisiana law that governs
claims arising out of CenturyTel’s provision of service to its users.10 Mangum Decl. ¶ 13. To
10 Were the Court to ignore the parties’ choice-of-law provision and apply the law of Montana,
where the plaintiffs reside, Compl. ¶ 28, the analysis would mirror the Embarq analysis under
Kansas law. Montana’s law, likes Kansas’s, requires that the enrichment come “at the expense of
another” or must “belong to another.” Lawrence v. Clepper, 865 P.2d 1150, 1156 (Mont. 1993).
Because the ad revenue was not owed to plaintiffs, they have no unjust enrichment claim against
the ISPs. See Randolph V. Peterson, Inc. v. J.R. Simplot Co., 778 P.2d 879, 883-84 (Mont. 1989)
(rejecting claim that defendant was unjustly enriched for failing to pay plaintiff a commission,
because “[n]o commission was due”); Mont. Pet. Tank Release Comp. Bd. v. Capitol Indemnity
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state an unjust enrichment claim in Louisiana, not only must there be an enrichment, but “there
must be an impoverishment,” Estate of Walker v. Peters, 989 So. 2d 241, 246 (La. Ct. App.
2008), which the law defines in purely economic terms: “[O]ne is impoverished when assets are
diminished, a justified expectation of gain is prevented, or liabilities increased.” Munro v.
Carstensen, 945 So. 2d 961, 966 (La. Ct. App. 2006); see also, e.g., Bd. of Supervisors of La.
State Univ. v. La. Agricultural Finance Auth., 984 So. 2d 72, 81 (La. Ct. App. 2008) (requiring
economic detriment).
Plaintiffs here simply cannot and did not claim that they suffered any such
impoverishment. Whatever revenue CenturyTel and Embarq derived from their role in delivering
relevant ads, Compl. ¶ 77, it did not diminish plaintiffs’ assets, increase their liabilities, or deny
them revenue they would have expected: Ad revenue does not belong to the one who views the
ads, but to those who deliver the ads. While alleging that CenturyTel and Embarq were
compensated for their role in ensuring that advertisements that their users saw on websites were
more tailored to user interests, plaintiffs here have made no allegation that the revenue defendants
received came at plaintiffs’ expense, left the plaintiffs needing to be restored, or in any way
belonged to plaintiffs. To the contrary, taking plaintiffs’ allegations as true, plaintiffs show that
this revenue was like advertising revenue in any other model. It is beyond dispute that in
traditional print advertising, for example, a newspaper or magazine will promote the demographic
details of its audience to potential advertisers, the advertisers will pay the newspaper or magazine
for delivering the ad to subscribers, and the subscriber has (hopefully) relevant ads. See Compl. ¶
46. Except inasmuch as the newspaper’s advertising revenue helped keep subscription costs
down, in no sense did the ad revenue belong to the subscriber, even though it was placed using
Co., 137 P.3d 522, 529 (Mont. 2006) (“One cannot be unjustly enriched by failing to pay a debt
one does not owe.”).
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demographic information about him or her. Earlier versions of online advertising were similar:
“Commercial websites, known as ‘publishers’ allow portions of their web page to be sold to
online advertising networks, which act as an intermediary between ‘publishers’ and the
‘advertisers.’” Compl. ¶ 47. The publishers collect data about their users and are paid by
advertisers for delivering the ads to the end-user. Compl. ¶¶ 47-49.
For unjust enrichment purposes, that context is dispositive. Plaintiffs do not, and cannot,
claim that the revenue that these defendants received for delivering relevant advertisements to
users belonged, in any way, to the users. Advertising revenue has never gone to the end-user; it
goes to those involved in delivering the advertising. Thus, because plaintiffs have not alleged that
CenturyTel or Embarq accepted any benefit that belonged to plaintiffs, their unjust enrichment
claim fails.
CONCLUSION
For the foregoing reasons, plaintiffs’ claims against CenturyTel and Embarq must be
dismissed in their entirety.
DATED: January 30, 2009.
Respectfully submitted,
FARELLA BRAUN + MARTEL LLP
By: /s/
C. Brandon Wisoff
David A. Handzo
JENNER & BLOCK LLP
Attorneys for Defendants
CENTURYTEL and EMBARQ
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