Heskiaoff v. Sling Media, Inc.
17-1094-cv
| 2d Cir. | Nov 22, 2017Background
- Plaintiffs (Heskiaoff, Langenohl, Mann) purchased Slingbox devices and licensed Sling Media software; they allege Sling pushed advertisements to users without prior notice.
- Plaintiffs brought a consolidated class action asserting state consumer-protection and contract-based claims, including violation of New York Gen. Bus. Law § 349 and breach of the implied covenant of good faith and fair dealing under the EULA.
- The EULA contained a limited choice-of-law clause selecting California law "for this Agreement" and included multiple disclaimers and reservation of rights.
- The district court dismissed the Consolidated Class Action Complaint (CAC) for failure to state a claim and denied leave to file a Second Consolidated Amended Complaint (SCAC) as futile.
- Plaintiffs appealed; the Second Circuit affirmed, applying New York law to non‑contractual claims and California law only to contract-based claims governed by the EULA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for non-contractual statutory claims | Plaintiffs argued California law applies because the EULA selects California law | Sling argued New York choice-of-law rules govern non-contractual claims | New York law governs non-contractual statutory claims; EULA’s clause applies only to contract claims (affirmed) |
| Whether Sling violated NY GBL § 349 (consumer deception) | Plaintiffs alleged Sling’s failure to warn about ads and dissemination of ads constituted deceptive acts/omissions | Sling argued no affirmative misrepresentation and no reasonable consumer expectation that Slingbox would always be ad-free | Plaintiffs failed to plead a deceptive act or omission that would mislead a reasonable consumer; § 349 claim dismissed (affirmed) |
| Futility of proposed amendment to add more § 349 detail | Plaintiffs contended additional facts would cure pleading defects | Sling contended added allegations still would not show a deceptive practice under § 349 | Amendment would be futile because the amended facts still would not show reasonable-consumer deception (affirmed) |
| Breach of implied covenant under the EULA (California law) | Plaintiffs claimed Sling’s ad conduct breached implied covenant and deprived them of contract benefits | Sling argued the EULA contains no term promising an ad-free product and disclaims extra promises; implied covenant cannot create independent substantive duties | District court correctly found no contractual term to support implied‑covenant claim; leave to amend futile (affirmed) |
Key Cases Cited
- Krock v. Lipsay, 97 F.3d 640 (2d Cir.) (choice-of-law principles distinguishing contract and non-contract claims)
- Fin. One Pub. Co. v. Lehman Bros. Special Fin., 414 F.3d 325 (2d Cir.) (limited choice-of-law clauses govern only contract claims)
- Ashcroft v. Iqbal, 556 U.S. 662 (Sup. Ct.) (plausibility standard for Rule 12(b)(6))
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Sup. Ct.) (pleading must state a plausible claim)
- Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A., 85 N.Y.2d 20 (N.Y.) (objective standard for deceptive acts under NY GBL § 349)
- Frommoethelydo v. Fire Ins. Exch., 721 P.2d 41 (Cal. 1986) (California implied covenant requires refraining from injuring other's right to receive contract benefits)
- Guz v. Bechtel Nat. Inc., 8 P.3d 1089 (Cal. 2000) (implied covenant cannot create obligations beyond contract terms)