Meyer v. Aabaco Small Business, LLC
5:17-cv-02102
N.D. Cal.Jan 5, 2018Background
- Plaintiffs Meyer (MI) and Apolo (CA) paid Yahoo!/Aabaco for web hosting; both allege abrupt service suspensions while being charged. Meyer alleges multi-month outage; Apolo alleges ~one week outage despite prepaid term.
- Plaintiffs cite inability to cancel or obtain refunds, difficulty reaching/using customer service, and lack of notice about suspensions; they seek to represent a nationwide class of customers charged but not provided hosting or charged after cancellation requests.
- Causes of action in the FAC: UCL (unfair, fraudulent, unlawful), FAL, breach of contract, and unjust enrichment. (No Count V in pleading.)
- Defendants moved to dismiss under Rule 12(b)(6); the Terms of Service (TOS) disclaim warranties, reserve right to suspend/modify services with or without notice, and limit liability for interruptions.
- Court: dismissed UCL fraud and FAL claims with prejudice; dismissed UCL "unlawful" and breach of contract claims with prejudice; dismissed UCL "unfair" claim with leave to amend; denied motion as to unjust enrichment (allowed as alternative pleading). Plaintiffs given leave to amend limited claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| UCL (fraud) / FAL based on omissions | Plaintiffs: Defendants omitted that services could be suspended/terminated without notice while charging customers; omission caused reliance/injury | Defendants: TOS expressly discloses possible suspension, discontinuance, and lack of warranty/liability; no actionable misrepresentation or omission | Dismissed with prejudice — TOS disclosures defeat fraud/FAL claims and causal reliance |
| UCL (unlawful prong) | Plaintiffs: Violations of FAL and breach of contract render conduct "unlawful" | Defendants: FAL fails and breach claim cannot support UCL unlawful prong absent independent illegality | Dismissed with prejudice — unlawful theory fails because predicate claims fail |
| UCL (unfair prong) | Plaintiffs: Practices (poor cancellation, outdated verification, delays) are unfair and injure consumers | Defendants: Practices fall within TOS and lack the substantial, unethical or untethered-to-law showing required for "unfair" | Dismissed with leave to amend — pleadings lack particularity and fail to meet any test for "unfair" |
| Breach of contract | Plaintiffs: TOS created duty to provide hosting and notice before termination; Defendants breached by suspending service while charging | Defendants: TOS does not require reimbursement for interruptions and only mandates notice for actual terminations; alleged events are interruptions, not terminations | Dismissed with prejudice — alleged facts show service disruptions, not TOS-defined terminations or an entitlement to reimbursement |
| Unjust enrichment | Plaintiffs: Defendants were unjustly enriched by charging for services not provided | Defendants: An express, binding TOS governs, precluding quasi-contract recovery | Not dismissed — claim survives as an alternative pleading (but may be limited by existence of TOS) |
Key Cases Cited
- Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480 (9th Cir.) (12(b)(6) standard and allegations accepted as true)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standards for well-pleaded factual allegations)
- Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir.) (Rule 9(b) particularity for fraud-based claims)
- Kearns v. Ford Motor Co., 567 F.3d 1120 (9th Cir.) (Rule 9(b) applies to UCL/FAL claims sounding in fraud)
- Cel-Tech Commc’ns, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 (Cal.) (definition and scope of "unfair" business practices under UCL)
- Kwikset Corp. v. Superior Court, 51 Cal.4th 310 (Cal.) (causal reliance requirement for UCL/FAL claims)
- Mosier v. Stonefield Josephson, Inc., 815 F.3d 1161 (9th Cir.) (unjust enrichment inapplicable where express contract defines parties' rights)
- In re Sony Gaming Networks & Customer Data Sec. Breach Litig., 996 F. Supp.2d 942 (S.D. Cal.) (reasonable-consumer standard and disclosures defeating UCL/FAL claims)