IN RE GOOGLE ASSISTANT PRIVACY LITIGATION
Case No. 19-cv-04286-BLF
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
May 6, 2020
[Re: ECF 56]
The instant litigation comprises two separately-filed cases that the Court has consolidated. See ECF 42 (consolidating Kumandan et al v. Google LLC et al, Case No. 19-cv-04286-BLF and Galvan et al v. Google LLC et al, Case No. 19-cv-04360-BLF). Both cases charge Defendants Google LLC and Alphabet, Inc. with unlawfully intercepting, recording, disclosing, and using the private conversations of thousands of users of the Google Assistant software. Presently before the Court is Defendants’ motion to dismiss the entire consolidated suit. ECF 56. Having considered the parties’ arguments and the applicable law, the Court GRANTS IN PART and DENIES IN PART the motion to dismiss; further, any dismissals are WITH LEAVE TO AMEND.
I. BACKGROUND
This is a putative consumer class action concerning the Google Assistant, a virtual assistant software developed by Defendants Google LLC and Alphabet, Inc. for use on various “Google Assistant Enabled Devices” (“GAEDs“) manufactured by Defendants and by third parties. Specifically, the operative Consolidated Amended Class Action Complaint (“Consolidated FAC“), which was filed on October 25, 2019, ECF 48, contains the following allegations:
Plaintiffs allege that Defendants also keep and use the audio recordings for two purposes other than carrying out the user‘s command: (1) to target personalized advertising to users, and (2) to improve the voice recognition capabilities of the Google Assistant. Id. ¶ 25. The focus of this suit is the latter. Citing a 2019 news article by VRT NWS, Plaintiffs allege that the Google Assistant produces a script of each audio recording that it stores; Defendants then task human subcontractors with comparing the script to the audio recording to check the accuracy of the Google Assistant‘s interpretation. Id. ¶ 35. In a blog post responding to this and similar reports, Google apparently confirmed that it uses human reviewers to analyze audio recordings, but stated that only “0.2 percent” of all audio recordings are subject to such analysis. Id. ¶ 39.
Sometimes, the Google Assistant may be triggered into active listening mode when the Google Assistant misperceives other words as the hotwords. This is known as a “false accept.” Id. ¶ 39. Plaintiffs believe that in such situations, Defendants do not destroy the audio recordings, but rather continue to use them for personalized advertising and to analyze the accuracy of the Google Assistant — just as Defendants would do with authorized recordings. Id. ¶¶ 38, 41. As evidence, Plaintiffs point to the investigation carried out by VRT NWS, in which VRT NWS reviewed “more than a thousand” audio recordings and “identified 153 conversations” that were recorded due to false accepts. Id. ¶ 36.
This suit is based on Defendants’ use of audio recordings in “false accept” situations. In Plaintiffs’ view, such use is an invasion of privacy, especially because many of the recorded conversations take place in individuals’ homes. Id. ¶¶ 27-30. Plaintiffs also believe that this practice contravenes the privacy assurances that Defendants make to users in their Privacy Policy. Id. ¶ 31. Finally, Plaintiffs are particularly troubled by the fact that some of the recordings include the conversations of children because they do not believe that these children can consent to being recorded. Id. ¶ 42.
Based on the foregoing, Plaintiffs have sued Google LLC and its parent company Alphabet Inc. under various state and federal laws. There are 12 claims in the Consolidated FAC: (1) violation of the federal Wiretap Act,
These claims are brought by five Named Plaintiffs:
- Plaintiff Asif Kumandan is a resident of Kings County, New York. Consol. FAC ¶ 13. He alleges that he owned a Google Pixel smartphone during the Class Period (defined below) and that he “interacted with the Google Assistant on his Google Pixel repeatedly.” Id. ¶ 52.
- Plaintiff Melissa Spurr is a resident of Union County, New York. Id. ¶ 14. She alleges that she owned a Google Home device during the Class Period and that “she interacted with this Google Home device repeatedly.” Id. ¶ 51.
- Plaintiff B.S. is a minor member of Plaintiff Spurr‘s household; as such, she has allegedly interacted with Plaintiff Spurr‘s Google Home device during the Class Period. Id. ¶¶ 15, 51. She brings suit by and through her legal guardian, Plaintiff Spurr. Id. ¶ 15.
- E.G., is a member of Plaintiff Galvan‘s household; she was a minor during a portion of the Class Period but now brings suit on her own. Id. ¶¶ 17, 53. Plaintiff E.G. alleges that she owned a Samsung Galaxy Tab device on which she activated the Google Assistant. Id. ¶ 53. She further alleges that she interacted with the Samsung Galaxy Tab device repeatedly during the Class Period. Id.
- Lourdes Galvan is a resident of Los Angeles County, California. Id. ¶ 16. She alleges that she interacted with Plaintiff E.G.‘s Samsung Galaxy Tab device during the Class Period. Id. ¶ 53.
To be precise, all five Named Plaintiffs assert Counts 1-7 and 11-12 on behalf of themselves and the following nationwide “Class“:
All individual purchasers of a Google Assistant Enabled Device, who reside in the United States and its territories and members of their households, whose conversations were obtained by Google without their consent or authorization and/or were shared with third parties without their consent from at least as early as May 18, 2016 to the present, or during the applicable statute of limitations period (the “Class Period“).
Consol. FAC ¶ 60. As for Counts 8, 9, and 10, Plaintiffs Kumadan and Spurr assert these claims on behalf of themselves and the “Google Manufactured Device Subclass,” which is defined as:
A Subclass of individual purchasers of a Google Manufactured Device, who reside in the United States and its territories, and members of their households, whose conversations were obtained by Google without their consent or authorization and/or were shared with third parties without their consent during the Class Period.
Id.
Defendants now move to dismiss the Consolidated FAC in full pursuant to
II. LEGAL STANDARD
A court‘s review on a
III. REQUEST FOR JUDICIAL NOTICE AND INCORPORATION BY REFERENCE
Defendants have submitted six exhibits that they ask the Court to review in ruling on their motion to dismiss. See ECF 56-1 ¶¶ 2-7; id. at Ex. A-F. Defendants believe these exhibits are either incorporated by reference by the Consolidated FAC or subject to judicial notice.
There are two doctrines that permit district courts to consider material outside the pleadings without converting a motion to dismiss into a motion for summary judgment: judicial notice under
“[I]ncorporation-by-reference is a judicially created doctrine that treats certain documents as though they are part of the complaint itself.” Khoja, 899 F.3d at 1002. This doctrine permits a court to consider a document “if the plaintiff refers extensively to the document or the document forms the basis of the plaintiff‘s claim.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). A court generally “may assume an incorporated document‘s contents are true for purposes of a motion to dismiss under
Having reviewed the basic principles of judicial notice and incorporation by reference, the Court turns to each of the six documents Defendants have submitted. Plaintiffs have not opposed the Court‘s consideration of any of the documents at issue.
Exhibit A is a copy of the 2019 news report by VRT NWS cited by Plaintiffs in Consolidated FAC. ECF 56-1, Ex. A; see Consol. FAC ¶¶ 34-38. Defendants ask the Court to treat the article as incorporated by reference; Defendants also argue that the article is subject to judicial notice, as it “appears on [a] publicly accessible website.” Mot. at 2-3. It is well-established that “[c]ourts may take judicial notice of publications introduced to indicate what was in the public realm at the time, not whether the contents of those articles were in fact true.” Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954, 960 (9th Cir. 2010) (internal quotations omitted); see also Packsys, S.A. de C.V. v. Exportadora de Sal, S.A. de C.V., 899 F.3d 1081, 1087 n.2 (9th Cir. 2018) (“We take notice of the fact of publication, but do not assume the truth of the article‘s contents.“). The Court therefore takes judicial notice of the fact that VRT NWS published each of the allegations contained in the article, but not of the truth of those allegations. As Defendants do not ask the Court to treat the contents of the article as true—indeed, they dispute its truth—the Court need not reach the issue of incorporation by reference. The request for judicial notice is GRANTED, with the caveats just described.
Defendants similarly ask the Court to consider Exhibit B—the Google blog post referenced in the Consolidated FAC, see Consol. FAC ¶ 39—as incorporated by reference or as a judicially-noticeable website. Mot. at 2-3; ECF 56-1, Ex. B. Again, Defendants do not ask the Court to treat the contents of the blog post as true. Thus, as with the VRT NWS article, the Court takes judicial notice of the blog post for the fact that Google made the statements it contains, but not for the truth of those statements. The request for judicial notice is GRANTED as stated; the Court need not decide whether the blog post was incorporated by reference.
Exhibits C and D are copies of Defendants’ Terms of Service (“TOS“) and Privacy Policy, respectively. ECF 56-1, Ex. C (Google Terms of Service), Ex. D (Privacy Policy). These documents “form the basis” for Plaintiffs’ claims for breach of contract (Count 7) and breach of express warranty (Count 8), as they contain the contract terms and warranty terms that were allegedly breached. See Consol. FAC ¶¶ 189-199, 210. Defendants’ request to incorporate by reference the Terms of Service
Lastly, Exhibit E purports to be a copy of the “Google Home Warranty – United States” and Exhibit F purports to be a copy of the “Hardware limited warranty for Android Hardware devices, including the Pixel smartphone.” ECF 56-1 ¶¶ 6-7; see id. Ex. E-F. These documents are not incorporated by reference by the Consolidated FAC; rather, Defendants ask the Court take judicial notice of them because “they appear on publicly accessible websites and their authenticity cannot be reasonably questioned.” Mot. at 3 (citing Datel Holdings Ltd. v. Microsoft Corp., 712 F. Supp. 2d 974, 983-84 (N.D. Cal. 2010)). The Court agrees that the existence of these documents is a judicially noticeable fact, and therefore GRANTS Defendants’ unopposed request. See, e.g., Opperman v. Path, Inc., 84 F. Supp. 3d 962, 976 (N.D. Cal. 2015) (collecting cases in which courts have taken judicial notice of publicly available policies and agreements). The Court notes, however, that its judicial notice does not establish that these documents are “valid or binding contracts.” Datel Holdings, 712 F. Supp. 2d at 984.
IV. DISCUSSION
Defendants move to dismiss all the claims in the Consolidated FAC; Plaintiffs, of course, oppose the motion. Because the legal requirements for each claim differ substantially, the Court considers the sufficiency of Plaintiffs’ allegations as to each set of claims seriatim.
A. Count 1: Federal Wiretap Act
The Federal Wiretap Act (“Wiretap Act“),
Defendants contend that Plaintiffs have failed to adequately plead either of their theories because (1) Plaintiffs have not shown that any interception was “intentional” rather than inadvertent, (2) Plaintiffs have not identified any specific “oral communications” that were allegedly intercepted, (3) Defendants’ conduct falls within the “ordinary course of business exception,” and (4) Plaintiffs have not shown that Defendants used or disclosed information they knew to be unlawfully obtained. Mot. at 4-8. The Court addresses each argument below.
As the text of the statute makes clear, the Wiretap Act prohibits only interception that is “intentional, as opposed to inadvertent.” Sunbelt Rentals, Inc. v. Victor, 43 F. Supp. 3d 1026, 1030 (N.D. Cal. 2014) (citing Sanders v. Robert Bosch Corp., 38 F.3d 736, 742-43 (4th Cir. 1994)). Defendants emphasize that Plaintiffs’ claim is based only on “false accepts,” which Defendants maintain are definitionally inadvertent rather than intentional. Mot. at 4-5. That is, false accepts are a defect rather than an intended feature of the Google Assistant. Id. Plaintiffs respond that Defendants’ knowledge of the defect combined with its failure to remedy it or to destroy the recordings suffice to make its conduct “intentional” under the statute. ECF 58 (“Opp.“).
The intent requirement under
The Court agrees with Plaintiffs and these various courts that interceptions may be considered intentional where a defendant is aware of the defect causing interception and takes no remedial action. And indeed, the Consolidated FAC alleges that Defendants are aware of false accepts and the recordings they cause to be made, yet have not fixed the problem. See Consol. FAC ¶¶ 38-39. At the same time, the Court finds persuasive Defendants’ argument that some de minimis error rate in the Google Assistant may be tolerated without exposing them to liability; after all, even the human ear misinterprets words and sounds at times. For that reason, the degree of error will likely be material to the ultimate factual determination of whether Defendants’ conduct was intentional. At the motion to dismiss stage, however—construing the allegations in Plaintiffs’ favor—the Court will not assume that the rate of false accepts is de minimus.
Besides, Plaintiffs’ objection is not only to Defendants’ failure to prevent recordings
The Court therefore rejects Defendants’ argument that Plaintiffs have not adequately pleaded “intentional” interception. To be clear, the Court does not hold that inaction in the face of a known design defect necessarily makes an interception “intentional” under the Wiretap Act—only that the facts alleged here are sufficient to survive a motion to dismiss.
ii. “Oral Communications”
Defendants’ second argument for dismissal concerns the requirement that a plaintiff show interception of a “wire, oral, or electronic communication.”
In response, Plaintiffs point first to the 153 recordings due to false accepts that VRT NWS discovered in the course of reporting its 2019 news piece. Consol. FAC § 36. To show that these conversations were subject to a reasonable expectation of privacy, VRT NWS‘s description of these conversations as including “bedroom conversations, conversations between parents and their children,” and “professional phone calls containing lots of private information.” Id. But Plaintiffs do not allege that any of these 153 recordings covered Plaintiffs’ communications rather than the communications of unnamed third parties. Hence, these allegations do not suffice to show that Plaintiffs’ own oral communications were intercepted, which they must do. See Lewis v. Casey, 518 U.S. 343, 357 (1996) (“[N]amed plaintiffs who represent a class must allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent.“) (internal quotations omitted).
As for the allegations regarding the Named Plaintiffs themselves, the Court finds these to be too vague. See Consol. FAC ¶¶ 51-53. At the outset, the Court rejects Defendants’ suggestion that Plaintiffs must identify specific communications that Plaintiffs reasonably believed to be private and that were wrongly recorded. The Court is not convinced that Plaintiffs are required to produce such details at the pleading stage, prior to discovery. At the motion hearing, Defendants represented that through their accounts, users can view all their past conversations with the Google Assistant, including false accepts. If that is the case, Plaintiffs are advised to avail themselves of that information. But the Court believes it would be enough for Plaintiffs to show that they
In their Opposition, Plaintiffs maintain that they have done this. Opp. at 6. Not so. The Consolidated FAC contains insufficient detail regarding the particular circumstances under which Plaintiffs used their Google Assistant Enabled Devices. The Consolidated FAC merely alleges that Plaintiffs’ conversations were “confidential” without alleging any facts regarding the participants in the conversations, the locations of the conversations, or examples of content from the conversations. Cf. In re Yahoo Mail Litig., 7 F. Supp. 3d 1016, 1041 (N.D. Cal. 2014) (finding plaintiffs’ allegations that their emails were “private” to be “fatally conclusory“). Nor does the bare allegation that each Named Plaintiff “interacted with” their device “repeatedly” establish that those devices necessarily picked up private conversations, or that any expectation of privacy was reasonable. Cf. Sunbelt Rentals, Inc. v. Victor, 43 F. Supp. 3d 1026, 1035 (N.D. Cal. 2014) (“[T]here is no legally protected privacy interest and reasonable expectation of privacy in electronic messages, in general. Rather, a privacy interest can exist, if at all, only with respect to the content of those communications.“) (internal quotations omitted).
This problem is especially glaring for Plaintiffs Kumandan, Galvan, and E.G., who allegedly interacted with smartphones. After all, smartphones are by their nature mobile and are frequently used in public places. The allegations as to Plaintiffs Spurr and B.S. also fall short. Though they allegedly interacted with a Google Home device—which presumably is less mobile—Plaintiffs make no allegations as to where the Google Home device was located and how Plaintiffs used it. Consol. FAC ¶ 51. Under these circumstances, the Court cannot infer that the Plaintiffs themselves had “oral communications” intercepted, as necessary under the Wiretap Act.
Accordingly, the Court must GRANT Defendants’ motion to dismiss. That dismissal is WITH LEAVE TO AMEND, as leave ordinarily must be granted in this Circuit and Defendants have articulated no reason it should not be. See Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).
iii. Ordinary Course of Business Exception
Although the Court must dismiss the Wiretap Act claim for failure to adequately plead “oral communications,” the Court proceeds to address Defendants’ other proposed grounds for dismissal. The next of these is Defendants’ contention that the “ordinary course of business exception” inoculates its alleged interceptions here. The Wiretap Act defines “intercept” as “the aural or other acquisition of the contents of any wire, electronic, or oral communication through the use of any electronic, mechanical, or other device.”
In response, Plaintiffs contend that Defendants are not a provider of “electronic communication service” (“ECS“) as required for the exception to apply. Opp. at 7 (quoting
Plaintiffs misunderstand Defendants’ argument, however. The “wire or electronic communication service” that the Google Assistant purports to provide is the transmission of valid commands from the user to Defendants’ servers, which carry out the commands. These commands arguably constitute “electronic communications,” which “means any transfer of signs, signals, writing, images, sounds, data, or intelligence of any nature transmitted in whole or in part by a wire, radio, electromagnetic, photoelectronic or photooptical system that affects interstate or foreign commerce.”
Nevertheless, the Court need not conclusively decide the merits of this issue, which has not been treated in any depth by the parties. Even assuming the Google Assistant is an electronic communication service provider, the ordinary course of business exception does not preclude Plaintiffs’ Wiretap Act claims.
As Defendants themselves acknowledge, “the ordinary course of business exception ... offers protection from liability only where an electronic communication service provider‘s interception facilitates the transmission of the communication at issue or is incidental to the transmission of such communication.” In re Google Inc. Gmail Litig., 2013 WL 5423918, at *8.
False accepts certainly do not “facilitate” the functioning of the Google Assistant; they are, in both parties’
iv. Use or Disclosure
Plaintiffs’ Wiretap Act claim also asserts the theory that Defendants “used” and “disclosed” unlawfully intercepted information, which is itself unlawful under
Defendants move to dismiss this theory on two grounds. First, they correctly point out that liability for disclosure or use is contingent on the original interception being unlawful. Noel, 568 F.3d at 751; see Mot. at 8. Because the Court has just determined that Plaintiffs have not adequately pleaded the unlawfulness of the interceptions, their use or disclosure claim likewise fails.
Defendants’ second argument implicates the requirement under
To be sure, Defendants may mount a defense based on this argument. But Plaintiffs have specifically pleaded that “even after Google discovers that it has wrongly recorded a conversation, it nonetheless keeps and analyzes the recording.” Consol. FAC ¶ 38. In other words, Plaintiffs allege that Defendants knew each recording was the product of an unauthorized interception at the time of their alleged use and disclosure. The Court must construe this allegation to be true at the motion to dismiss stage, despite Defendants’ assertion to the contrary. Accordingly, the Court will dismiss the “use” or “disclosure” theory, but not on the ground that Defendants lacked knowledge of the antecedent interception.
B. Count 2: Stored Communications Act
Count 2 alleges violations of the Stored Communications Act (“SCA“). As the Ninth Circuit has explained, the SCA
(1) intentionally accesses without authorization a facility through which an electronic communication service is provided; or
(2) intentionally exceeds an authorization to access that facility;
and thereby obtains, alters, or prevents authorized access to a wire or electronic communication while it is in electronic storage in such system shall be punished as provided in subsection (b) of this section.
Subsection (c) goes on to state that subsection (a) does not apply “to conduct authorized” “(1) by the person or entity providing a wire or electronic communications service; [or] (2) by a user of that service with respect to a communication of or intended for that user.”
The Consolidated FAC asserts claims for unlawful access pursuant to
i. Unlawful Access under 18 U.S.C. § 2701(a)
To make out a claim under either subsection of
(A) any temporary, intermediate storage of a wire or electronic communication incidental to the electronic transmission thereof; and
(B) any storage of such communication by an electronic communication service for purposes of backup protection of such communication;
In their motion to dismiss, Defendants argue that a facility must be “physical means or equipment,” such as a server. Mot. at 9 (quoting Council on Am.-Islamic Relations Action Network, Inc. v. Gaubatz, 793 F. Supp. 2d 311, 335 (D.D.C. 2011)). Defendants believe that Plaintiffs have failed to identify a qualifying “facility” providing “electronic storage” that has allegedly been accessed. See Mot at 9; Reply at 5. The Consolidated FAC indicates that the Google Assistant “is the facility through which Google provides an electronic service.” Consol. FAC ¶ 115. In their Opposition brief, Plaintiffs reiterate
Turning first to whether the Google Assistant is a “facility,” the Court notes that Plaintiffs have not been consistent or precise as to what they mean by the “Google Assistant.” For clarity, the Court uses “Google Assistant” to refer to the virtual assistant software and not the Google Assistant Enabled Device onto which it may be pre-installed or downloaded. See Consol. FAC ¶¶ 21, 112. Without adopting Defendants’ definition of “facility” as “physical” equipment, the Court is skeptical that software could properly be considered a facility. Regardless whether a facility is necessarily “physical,” it indisputably must provide “electronic storage.” It is not alleged that the Google Assistant itself—which, as a “computer program,” is comprised of lines of code—provides electronic storage of any kind. See Consol. FAC ¶ 21. Rather, the Consolidated FAC states that a Google Assistant Enabled Device‘s RAM stores the snippets of audio that are continuously being analyzed by the Google Assistant. See id. ¶ 23.
It is perhaps unsurprising, then, that Plaintiffs do not attempt to argue that the Google Assistant software is a “facility” in their Opposition brief; they assert instead that their devices’ RAM constitutes the facility from which their communications were accessed “while they were temporarily stored” there. Opp. at 9. Defendants object that a user‘s personal device cannot be a “facility” under the SCA. It is true that courts in this Circuit and others have interpreted “facility” to exclude users’ personal devices. See, e.g., In re Google Inc. Cookie Placement Consumer Privacy Litig., 806 F.3d 125, 147-48 (3d Cir. 2015); In re Facebook Internet Tracking Litig., 263 F. Supp. 3d 836, 845 (N.D. Cal. 2017), aff‘d, 956 F.3d 589 (9th Cir. 2020); In re iPhone Application Litig., 844 F. Supp. 2d 1040, 1057-58 (N.D. Cal. 2012); Freedom Banc Mortg. Servs., Inc. v. O‘Harra, No. 2:11-cv-01073, 2012 WL 3862209, at *9 (S.D. Ohio Sept. 5, 2012). Even the Ninth Circuit has alluded to the SCA as “cover[ing] access to electronic information stored in third party computers.” In re Zynga Privacy Litig., 750 F.3d 1098, 1104 (9th Cir. 2014); see also Theofel, 359 F.3d at 1072-73 (“Just as trespass protects those who rent space from a commercial storage facility to hold sensitive documents, the Act protects users whose electronic communications are in electronic storage with an ISP or other electronic communications facility.“) (internal quotations and citation omitted).
These courts have focused on the requirement that the facility be one “through which an electronic communication service is provided.”
Thus, the weight of authority supports Defendants’ position. Plaintiffs, meanwhile, have failed even to respond, let alone show that the Google Assistant Enabled Devices at issue are factually distinct from the above situations. Under these circumstances, the Court does not believe Plaintiffs’ current allegations permit an inference that their personal Google Assistant Enabled Devices constitute “facilities.”
Plaintiffs also argue that “Google‘s remote servers” constitute the requisite facilities. Opp. at 9. But of course, Defendants have authorization to access their own servers. See
Because Plaintiffs have not pleaded unauthorized access to a “facility” within the meaning of the SCA, their SCA claim under
ii. Unlawful Disclosure under 18 U.S.C. § 2702(a)
Next, turning to Plaintiffs’ claim for unlawful disclosure
First, to the extent Plaintiffs assert a claim based on Defendants’ use of audio or transcripts to “target[] personalized advertising to users,” the Court agrees with Defendants that this claim fails. There are no allegations in the Consolidated FAC suggesting that Defendants disclose any information to “third parties” to accomplish this purpose. Defendants’ own use of Plaintiffs’ data for advertising purposes does not constitute an unlawful “disclosure.” The Court therefore DISMISSES WITH LEAVE TO AMEND any claim based on targeted advertising.
On the other hand, the Consolidated FAC does contain allegations of disclosure to third parties for the purpose of improving the Google Assistant‘s voice recognition functionality; these third parties are the “subcontractors” Defendants allegedly use to perform the relevant analysis. See Consol. FAC ¶¶ 35, 39. Defendants move to dismiss this claim on the ground
disclosure was consented to by Plaintiffs. Mot. at 10. As relevant here,
The Privacy Policy, of which the Court has taken judicial notice, see infra Part III, contains a section entitled “When Google shares your information.” ECF 56-1 at 30. That section states, “We do not share your personal information with companies, organizations, or individuals outside of Google except in the following cases.” ECF 56-1 at 30. It then goes on to state that one of these instances is “for external processing“:
We provide personal information to our affiliates and other trusted businesses or persons to process it for us, based on our instructions and in compliance with our Privacy Policy and other appropriate confidentiality and security measures. For example, we use service providers to help us with customer support.
Id. at 31.
Plaintiffs contend that this provision is too general to conclusively establish consent, and the Court agrees. See Opp. at 11. The Privacy Policy says nothing about the types of information that Defendants might send to “affiliates and other trusted business or persons” for “processing.” Critically, moreover, the Privacy Policy does not indicate that such “processing” might involve human reviewers listening to the audio. Under these circumstances, the Court cannot say that a reasonable user reading the Privacy Policy must have understood it to cover the disclosures alleged in the Consolidated FAC. As the party seeking the benefit of an exception, Defendants have the burden to establish the existence of consent. See In re Yahoo Mail Litig., 7 F. Supp. 3d at 1028. It also bears repeating that, at the motion to dismiss stage, the Court must give Plaintiffs the benefit of all reasonable inferences. Where, as here, “the contract language at issue is reasonably susceptible to more than one interpretation, with one of those interpretations suggesting consent and another belying it, the Court cannot decide the consent issue in [Defendants‘] favor.” In re Facebook, Inc., Consumer Privacy User Profile Litig., 402 F. Supp. 3d at 789.
Other courts in this district have come to the same conclusion when evaluating similarly vague language. In particular, the instant terms bear a close resemblance to those in Campbell v. Facebook Inc., 77 F. Supp. 3d 836 (N.D. Cal. 2014). There, Facebook‘s counsel argued that their disclosure “that Facebook ‘may use the information we received about you’ for ‘data analysis.‘” Id. at 847. The court held, however, that “this disclosure is not specific enough to establish that users expressly
In an effort to supplement the Privacy Policy‘s notice regarding information sharing, Defendants highlight another provision in the Privacy Policy:
We also use your information to ensure our services are working as intended, such as tracking outages or troubleshooting issues that you report to us. And we use your information to make improvements to our services—for example, understanding which search terms are most frequently misspelled helps us improve spell-check features used across our services.
ECF 56-1 at 24. However, this provision comes in a different section of the Privacy Policy, entitled “Why Google collects data.” A reasonable user cannot be expected to connect the two sections and anticipate that Defendants may use “external processing” for any purpose for which Defendants collect data. Put another way, although users may have consented to Google‘s collection of their data to “to improve the functionality of the Assistant,” Mot. at 11 (quoting Consol. FAC ¶ 122), that consent does not reasonably extend to disclosure of data. The Court DENIES Defendants’ motion to dismiss the
Defendants assert an additional reason for dismissal in a footnote: They maintain that their subcontractors are “employees or agents” and not “third parties” under
In sum, the Court finds that Plaintiffs have adequately pleaded a claim for unlawful disclosure under
C. Counts 3 and 4: California Invasion of Privacy Act
Counts 3 and 4 of the Consolidated FAC assert violations of the California Invasion of Privacy Act (“CIPA“),
Defendants move to dismiss both counts on several grounds, as set forth below.
i. Section 631
To briefly describe the statutory framework,
Any person who, by means of any machine, instrument, or contrivance, or in any other manner, intentionally taps, or makes any unauthorized connection, whether physically, electrically, acoustically, inductively, or otherwise, with any telegraph or telephone wire, line, cable, or instrument, including the wire, line, cable, or instrument of any internal telephonic communication system, or who willfully and without the consent of all parties to the communication, or in any unauthorized manner, reads, or attempts to read, or to learn the contents or meaning of any message, report, or communication while the same is in transit or passing over any wire, line, or cable, or is being sent from, or received at any place within this state; or who uses, or attempts to use, in any manner, or for any purpose, or to communicate in any way, any information so obtained . . . .
In their motion to dismiss, Defendants argue that Plaintiffs cannot state a claim based on any of the three types of conduct prohibited by
Beginning the first clause of
The Court turns next to the second clause, which applies to any person who “willfully and without the consent of all parties to the communication, or in any unauthorized manner, reads, or attempts to read, or to learn the contents or meaning of any message, report, or communication while the same is in transit or passing over any wire, line, or cable, or is being sent from, or received at any place within this state.”
However, Plaintiffs also point out that the second clause applies if a communication is “in transit or passing over any wire, line, or cable, or is being sent from, or received at any place within this state.” Because the clause is written in the disjunctive, the Court agrees that it could be read to cover messages “being sent from, or received at any place within this State,” without regard to whether the sending and receiving makes use of a “wire, line, or cable.” See Opp. at 13.
At the same time, California courts have often distinguished the essential concepts of eavesdropping under
This Court may also leave that question to another day. That is because Plaintiffs have not plausibly alleged that their communications were being “sent from, or received at any place within this State.” Although it may be possible for a communication to be “sent” or “received” without use of a wire, line or cable, it cannot fairly be said that a face-to-face conversation between two people in the same location involves “sending” or “receiving” communications within the meaning of the
Last, the third clause covers any “attempt[] to use or communicate information obtained as a result of engaging in either of the two previous activities.” Tavernetti, 22 Cal. 3d at 192. In other words, Plaintiffs must establish that the information at issue—here, the recordings and transcripts that Defendants’ allegedly analyzed—was obtained through a violation of the first or second clauses. Because Plaintiffs have not done so, they also have failed to plead a violation of the third clause of
For these reasons, Count 3 is DISMISSED. Although Plaintiffs’ theories as currently alleged do not appear to be compatible with
ii. Section 632
Defendants next challenge Plaintiffs’ claim under
A person who, intentionally and without the consent of all parties to a confidential communication, uses an electronic amplifying or recording device to eavesdrop upon or record the confidential communication, whether the communications is carried on among the parties in the presence of one another or by means of a telegraph, telephone, or other device, except a radio . . . .
“California courts interpret ‘eavesdrop,’ as used in section 632, to refer to a third party secretly listening to a conversation between two other parties.” Thomasson v. GC Services Ltd. P‘ship, 321 Fed. App‘x. 557 (9th Cir. 2008) (citing Ribas v. Clark, 38 Cal. 3d 355, 363 (1985)); see also Flanagan v. Flanagan, 27 Cal. 4th 766, 775 (2002) (
A claim under
Taking the latter first, the Court considered the parties’ arguments regarding whether Defendants’ conduct could be considered “intentional” as to Plaintiffs’ Wiretap Act claim. As explained, the Court finds that Defendants’ failure to rectify the defect causing “false accepts” or destroy the recordings produced under such circumstances could plausibly be considered “intentional” rather than “a result of accident
In the same vein, though, the Court agrees that Plaintiffs have not adequately pleaded “confidential communications.” The California Supreme Court has held that a conversation is “confidential” under
Having dismissed Count 4 for failure to allege “confidential communications,” the Court need not address Defendants’ additional argument that Plaintiffs “have not alleged facts showing that the parties did not consent to the alleged recording.” Mot. at 14. The Court nonetheless advises Plaintiffs to further develop their contention that Defendants lacked consent to listen or record, as required to state a claim under
D. Counts 5 and 6: Common Law Intrusion upon Seclusion and Invasion of Privacy
Plaintiffs’ next two claims are also California state law claims: Count 5 is the common law tort of intrusion upon seclusion and Count 6 is invasion of privacy in violation of the
To state a claim for intrusion upon seclusion, a plaintiff must allege “(1) intrusion into a private place, conversation or matter (2) in a manner highly offensive to a reasonable person.” Shulman v. Group W Prods., Inc., 18 Cal. 4th 200, 231 (1998). As to the first element, the plaintiff must have had an “objectively reasonable expectation of seclusion or solitude in the place, conversation or data source.” Id. at 232. “The second common law element essentially involves a policy determination as to whether the alleged intrusion is “highly offensive” under the particular circumstances.” Hernandez, 47 Cal. 4th at 287. “Relevant factors include the degree and setting of the intrusion, and the intruder‘s motives and objectives.” Id.
To allege a violation of California‘s constitutional right to privacy, a plaintiff must allege “(1) a legally protected privacy interest; (2) a reasonable expectation of privacy under the circumstances; and (3) conduct by the defendant that amounts to a serious invasion of the protected privacy interest.” Low v. LinkedIn Corp., 900 F. Supp. 2d 1010, 1024 (N.D. Cal. 2012) (citing Hill v. Nat‘l Collegiate Athletic Ass‘n, 7 Cal. 4th 1, 35-37 (1994)). Regarding the first element, the California Supreme Court has explained that “[l]egally recognized privacy interests are generally of two classes: (1) interests in precluding the dissemination or misuse of sensitive and confidential information (‘informational privacy‘); and (2) interests in making intimate personal decisions or conducting personal activities without observation, intrusion, or interference (‘autonomy privacy‘).” Hill, 7 Cal. 4th at 35. The third element, meanwhile, requires the invasion to be “sufficiently serious in [its] nature, scope, and actual or potential impact to constitute an egregious breach of the social norms underlying the privacy right.” Id. at 37.
In this case, Plaintiffs allege that Defendants’ practice of “intercepting, recording, transmitting, and disclosing” Plaintiffs’ communications in false accept situations “constitute[s] an intentional intrusion” upon Plaintiffs’ seclusion “in that Google effectively placed itself in the middle of a conversation to which it was not invited.” Consol. FAC ¶ 164. Plaintiffs further allege that this same practice invades Plaintiffs’ informational privacy interest “in the confidential and sensitive information” contained in their communications as well as Plaintiffs’ autonomy privacy interest “in conducting their personal activities.” Id. ¶ 179.
As evident from the foregoing, the constitutional and common law causes of action overlap substantially. Accordingly, the California Supreme Court has recognized that “the largely parallel elements of these two causes of action” require a court to consider “(1) the nature of any intrusion upon reasonable expectations of privacy, and (2) the offensiveness or seriousness of the intrusion, including any justification and other relevant interests.” Hernandez, 47 Cal. 4th at 288. In their motion to dismiss, Defendants argue that (1) Plaintiffs have failed to allege a “reasonable expectation of privacy” in the communications at issue and (2) the alleged intrusion is not sufficiently “offensive” or “serious” to support a claim for invasion of privacy or intrusion upon seclusion. Mot. at 15.
First, Defendants contend that Plaintiffs have not shown that they had a “reasonable expectation of privacy” in the
In addition, Defendant argue that Plaintiffs have not alleged sufficient facts to establish a “highly offensive” or “serious” invasion of privacy. Mot. at 15-16. It is true, as Defendants emphasize, that “[t]he California Constitution and the common law set a high bar” for an intrusion to be actionable. Low, 900 F. Supp. 2d at 1025 (collecting cases). Many courts have found that the collection—and even disclosure to certain third parties—of personal information about the users of a technology may not constitute a sufficiently “egregious breach of social norms” to make out a common law or constitutional privacy claim. See, e.g., In re Google, Inc. Privacy Policy Litig., 58 F. Supp. 3d 968, 988 (N.D. Cal. 2014) (no intrusion claim based on Google‘s collection and disclosure of users’ data, including their browsing histories); Low, 900 F. Supp. 2d at 1025 (finding that LinkedIn did not commit a “highly offensive” invasion of users’ privacy by disclosing users’ browsing histories to third parties); In re iPhone Application Litig., 844 F. Supp. 2d 1040, 1063 (N.D. Cal. 2012) (finding no invasion of privacy based on Defendants’ disclosure of each user‘s addresses, geolocation, the unique device identifier assigned to the user‘s device, gender, age, time zone, and information about app usage). These courts have characterized the collection and disclosure of such data as “routine commercial behavior.” Low, 900 F. Supp. 2d at 1025 (quoting Folgelstrom v. Lamps Plus, Inc., 195 Cal. App. 4th 986, 992 (2011)).
Nonetheless, the Court is not persuaded that the conduct Plaintiffs have described is not “highly offensive” or “serious” as a matter of law. Although it is a close call, the Court believes that a reasonable person could find Defendants’ alleged conduct to be “highly offensive.”
To begin with, the Court observes that courts have repeatedly found the surreptitious recording of a plaintiff‘s conversations or activity to constitute an actionable intrusion. See, e.g., Shulman v. Grp. W Prods., Inc., 18 Cal. 4th 200, 237 (1998), as modified on denial of reh‘g (July 29, 1998); Safari Club Int‘l v. Rudolph, No. SACV131989JVSANX, 2014 WL 12577408, at *8 (C.D. Cal. May 14, 2014). Plaintiffs’ allegations that Defendants recorded their private conversations without authorization could be considered more analogous to these surreptitious recording cases than cases involving, for instance, browsing history. That human reviewers are alleged to listen to the recordings makes the analogy to surreptitious recording especially apt.
In any event, determining whether an intrusion is “highly offensive” requires a fact-intensive inquiry that “examine[s] all of the surrounding circumstances.” Hernandez, 47 Cal. 4th at 295. Such an inquiry cannot be conducted at the motion to dismiss stage where, as here, there are open factual questions regarding “the likelihood of serious harm to the victim, the degree and setting of the intrusion, the intruder‘s motives and objectives, and whether countervailing interests or social norms render the intrusion inoffensive.” In re Facebook, Inc. Internet Tracking Litig., 2020 WL 1807978, at *11 (N.D. Cal. Apr. 9, 2020) (“The ultimate question of whether Facebook‘s tracking and collection
Many other factual circumstances remain to be ascertained. Take for instance the frequency with which false accepts occur and the amount of information that is subsequently recorded. As the California Supreme Court has recognized in the context of surreptitious surveillance, the scope or frequency of recording affects the offensiveness and seriousness of the privacy intrusion; “electronic surveillance that is persistent and pervasive may constitute a tortious intrusion on privacy even when conducted in a public or semi-public place.” Hernandez, 47 Cal. 4th at 297. Other relevant factors include the content of the recordings and the degree to which the recordings are anonymized.
In sum, Plaintiffs have failed adequately to plead claims for intrusion upon seclusion or invasion of privacy because they have not established a reasonable expectation of privacy in the conversations or the recordings thereof. If they are able to do so, however, the Court believes that any dispute regarding the offensiveness of Defendants’ alleged conduct is ill-suited for resolution on a motion to dismiss. Defendants’ motion to dismiss Counts 5 and 6 is GRANTED WITH LEAVE TO AMEND.
E. Count 7: Common Law Breach of Contract
Count 7 is a claim for breach of contract based on Defendants’ Terms of Service (“TOS“) and the Privacy Policy contained therein. Consol. FAC ¶¶ 188-201. In order to plead a claim for breach of contract, Plaintiffs must allege: (1) the existence of a contract with Defendants, (2) their performance under that contract, (3) Defendants breached that contract, and (4) they suffered damages. In re Facebook, Inc. Internet Tracking Litig., 2020 WL 1807978, at *14 (citing Oasis West Realty, LLC v. Goldman, 51 Cal. 4th 811, 821 (2011)). Defendants move to dismiss on the grounds that (1) Plaintiffs have failed to identify the specific provisions that have allegedly been breached; (2) there has been no breach, in any event; and (3) Plaintiffs have not alleged an adequate damages theory. See Mot. at 16-18.
i. Specific Contractual Provisions
The Court begins with Defendants’ contention that Plaintiffs have not identified the specific contractual provisions creating the obligation Defendants are said to have breached, which the Court confirms Plaintiffs must do. See Miron v. Herbalife Int‘l, Inc., 11 Fed. App‘x. 927, 929 (9th Cir. 2001); Young v. Facebook, Inc., 790 F. Supp. 2d 1110, 1117 (N.D. Cal. 2011).
Defendants do not dispute that the TOS and the Privacy Policy are binding agreements to which they are parties. See Mot. at 16. Hence, there is no dispute that any provisions contained therein would be actionable in Plaintiffs’ breach of contract claim. The Consolidated FAC alleges that Defendants breached the provision of the Privacy Policy promising, “We do not share your personal information with companies, organizations, or individuals outside of Google except in the
We‘ll share personal information outside of Google when we have your consent. For example, if you use Google Home to make a reservation through a booking service, we‘ll get your permission before sharing your name or phone number with the restaurant. We‘ll ask for your explicit consent to share any sensitive personal information.
See ECF 56-1 at 30. The Consolidated FAC specifically highlights the statement, “We‘ll ask for your explicit consent to share any sensitive personal information.” See Consol. FAC ¶ 193. The Court finds these provisions to be alleged with particularity, as required to state a claim for breach of contract.
However, these are the only contractual provisions that may form the basis for Plaintiffs’ breach of contract claim. As the Court will explain, the other provisions referenced in the Consolidated FAC are not actionable.
First, in their Opposition brief, Plaintiffs assert a violation of another provision of the Privacy Policy: one stating that Defendants “may” collect “voice and audio information when you use audio features.” Opp. at 18 (quoting ECF 56-1 at 22). The Consolidated FAC makes no reference to this provision, which means the Court cannot consider it to be alleged for purposes of the instant motion. Broam v. Bogan, 320 F.3d 1023, 1026 n.2 (9th Cir. 2003) (“In determining the propriety of a Rule 12(b)(6) dismissal, a court may not look beyond the complaint to a plaintiff‘s moving papers, such as a memorandum in opposition to a defendant‘s motion to dismiss.“).
Additionally, Plaintiffs attempt to base their contract claim upon various provisions from different websites, including the “Google Nest Help Center” and the “Google Safety Center.” See Consol. FAC ¶ 193-94. Plaintiffs assert that these websites are “incorporated into Google‘s TOS or Privacy Policy” by virtue of the following provision in the TOS:
Our Services are very diverse, so sometimes additional terms or product requirements (including age requirements) may apply. Additional terms will be available with the relevant Services, and those additional terms become part of your agreement with us if you use those Services.
Consol. FAC ¶ 191; see ECF 56-1 at 13. But this vague statement is hardly sufficient to establish that the particular websites cited by Plaintiffs are part of the TOS or otherwise are binding upon the parties. Although it certainly possible that statements on the cited websites constitute binding agreements between the parties, Plaintiffs have not plausibly alleged this to be so.
All told, the only specific contractual terms allegedly breached are Defendants’ promises in the Privacy Policy (1) not to share users’ “personal information” “outside of Google” except in the four stated circumstances (2) to “ask for [users‘] explicit consent to share any sensitive personal information.”
ii. Breach
The Court now turns to whether Plaintiffs have plausibly alleged that Defendants breached these terms of the Privacy Policy. In Plaintiffs’ view, these provisions amount to a promise that Defendants will not share users’ “personal information” with “companies organizations, or individuals outside of Google except . . . [with the express consent of the user].” Opp. at 19 (alterations in original). Plaintiffs
At the outset, the Court observes that in paraphrasing the relevant terms, Plaintiffs have altered them. Remember, the Privacy Policy listed four circumstances under which it would share users’ personal information: “with your consent,” “with domain administrators,” “for external processing,” and “for legal reasons.” To establish a breach, then, Plaintiffs must not only plead that Defendants lacked consent, but also that their conduct does not fall within the other three circumstances. The Consolidated FAC has not done this. It all but ignores the existence of these three circumstances, focusing only on the alleged lack of consent. See Consol. FAC ¶¶ 197-99.
The Consolidated FAC falls short for another reason: It does not adequately plead that Plaintiffs’ “personal information” has been shared. The vague and conclusory allegation that Plaintiffs “private conversations” were recorded and disclosed does not suffice. Consol. FAC ¶ 199. As already discussed multiple times, Plaintiffs have not plausibly alleged that Plaintiffs’ own conversations were intercepted. See supra Part IV.A.ii. Relevant here, the Consolidated FAC contains no allegations describing the content of those conversations or the circumstances under which they were had. See id. In the absence of such allegations, the Court has no basis upon which to infer that Plaintiffs’ “sensitive personal information” is implicated.
For these reasons, the Court finds that Plaintiffs have not stated a claim for breach of contract and DISMISSES Count 7. The Court will grant LEAVE TO AMEND.
iii. Damages
Although the Court need not do so, it now briefly considers the parties’ arguments regarding Plaintiffs’ damages theories. Plaintiffs proffer three damages theories: (1) benefit of the bargain, (2) “harm to [Plaintiffs‘] “privacy interests,” and (3) “disgorgement of profits made by Google as a result of its breach of contract.” Consol. FAC ¶ 201; see Opp. at 19. Defendants believe all of these theories to be flawed. See Mot. at 18-19.
The first theory is benefit of the bargain damages: “Plaintiffs seek damages resulting from their overpayment for the GAEDs, which they allege are worth less due to Google‘s breaches of contract.” Opp. at 19; see Consol. FAC ¶ 201. Also known as expectation damages, a benefit of the bargain measure of damages is intended “to give the injured party the benefit of his bargain and insofar as possible to place him in the same position he would have been in had the promisor performed the contract.” Coughlin v. Blair, 262 P.2d 305, 314 (Cal. 1953); see also Twin City Fire Ins. Co. v. Philadelphia Life Ins. Co., 795 F.2d 1417, 1425 (9th Cir. 1986).
Courts have approved damages based on benefit of the bargain in several technology cases involving privacy. For instance, in In re Yahoo! Inc. Customer Data Sec. Breach Litig., 313 F. Supp. 3d 1113, 1130 (N.D. Cal. 2018), Plaintiff Mortensen alleged that he paid “$19.95 each year since December 2007 for Yahoo‘s premium email service” but did not acquire the full value of Yahoo‘s service because it was not secure. There, Plaintiff Mortensen plausibly lost the benefit of the bargain in that he received a less valuable email service than the one he paid for. See id. Similarly, in In re Anthem, Inc. Data Breach Litig., No. 15-MD-02617-LHK, 2016 WL 3029783, at *7-*8 (N.D. Cal. May 27, 2016). When the defendants experienced various breaches of its database containing individuals’ health record information, the plaintiffs alleged, inter alia, that the defendants had breached their privacy policies. Id. at *9. The Court allowed the plaintiff to pursue a theory of benefit of the bargain losses on the theory that some portion of their premiums went toward paying for robust security measures, which they allegedly did not receive. Id. at *13.
In this case, however, Plaintiffs have not alleged that they paid anything to Defendants for the Google Assistant. Not only does the Consolidated FAC say nothing about any fee or premium paid, it appears that the Google Assistant is available free of charge for use on Google Assistant Enabled Devices. See Consol. FAC ¶ 21. As a result, it cannot be said that Plaintiffs received less than what they paid for—they appeared to have paid nothing. See In re LinkedIn User Privacy Litig., 932 F. Supp. 2d 1089, 1093 (N.D. Cal. 2013) (rejecting plaintiffs’ benefit of the bargain theory because “the FAC fails to allege that Plaintiffs actually provided consideration for the security services which they claim were not provided“). The Court therefore does not believe that benefit of the bargain is a viable damages theory.
On the other hand, Plaintiffs’ second theory of damages—harm to their privacy interests—is more promising. Generally, a plaintiff may seek damages for “the detriment caused by the breach.” Stephens v. City of Vista, 994 F.2d 650, 657 (9th Cir. 1993) (citing
Plaintiffs’ third theory of damages suffers from a similar problem, but may also be viable. That theory is that Plaintiffs are entitled to “disgorgement of profits made by Google as a result of its breach of contract.” Consol. FAC ¶ 201. The Ninth Circuit has said that “under California law, a defendant‘s unjust enrichment can satisfy the ‘damages’ element of a breach of contract claim, such that disgorgement is a proper remedy.” Foster Poultry Farms, Inc. v. SunTrust Bank, 377 Fed. App‘x 665, 669 (9th Cir. 2010) (citing Ajaxo Inc. v. E*Trade Group, Inc., 135 Cal. App. 4th 21, 56-57 (2005)). The Ninth Circuit has further held that “California law recognizes a right to disgorgement of profits resulting from unjust enrichment, even where an individual has not suffered a corresponding loss.” In re Facebook, Inc. Internet Tracking Litig., 2020 WL 1807978, at *5-*6.
To plead a theory of disgorgement, Plaintiffs must show “that they retain a stake in the profits garnered.” Id. at *6. Plaintiffs attempt to plead that they are entitled to the “substantial profits” that Defendants’ have earned using their “personal information” because Defendants’ use was unauthorized. Consol. FAC ¶¶ 199-200. But Plaintiffs have not adequately alleged that their unspecified “personal information” has financial value or that Defendants have profited from the information. Although courts have found
F. Counts 8, 9, 10: Breach of Warranty
Counts 8, 9, and 10 are claims for breach of express and implied warranty; Counts 8 and 9 are brought under California state law and Count 10 is brought under the federal Magnuson-Moss Warranty Act. Unlike the other counts, these are asserted only by Plaintiffs Kumandan and Spurr, based upon their purchases of GAEDs manufactured by Defendants. Specifically, Plaintiff Kumandan allegedly purchased a Google Pixel smartphone and Plaintiff Spurr allegedly purchased a Google Home. The three claims assert essentially the same factual basis for relief: Defendants made affirmations of fact or promises to consumers that they would not intercept, record, or use the consumers’ communications unless hotwords were uttered or the device was manually activated; Defendants subsequently breached these promises.
Defendants move to dismiss Counts 8, 9, and 10 on various grounds. As set forth below, the motion GRANTED WITH LEAVE TO AMEND as to all three claims.
i. Breach of Express Warranty
Count 8 alleges a breach of express warranty. Consol. FAC ¶¶ 202-210. “Any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain creates an express warranty that the goods shall conform to the affirmation or promise.”
Defendants move to dismiss this claim for two reasons. First, Defendants argue that Plaintiffs have not alleged the exact terms of the warranty, as they are required to do at this stage, see, e.g., Blennis v. Hewlett-Packard Co., No. C 07-00333 JF, 2008 WL 818526, at *2 (N.D. Cal. Mar. 25, 2008). Mot. at 19. In response, Plaintiffs simply refer to the Court
Most of the statements that Plaintiffs cite from the “Google Nest Help Center” and the “Google Safety Center” webpages fare no better. See Consol. FAC ¶¶ 193-195. There is one statement, however, that could plausibly be construed as an express warranty term for the Google Home. In the Frequently Asked Questions section of the Google Nest Help Center cite, Defendants provided the following response to the question, “Is Google Home recording all of my conversations?“:
No. Google Home listens in short (a few seconds) snippets for the hotword. Those snippets are deleted if the hotword is not detected, and none of that information leaves your device until the hotword is heard. When Google Home detects that you‘ve said “Ok Google” or “Hey Google,” or that you‘ve physically long pressed the top of your Google Home device, the LEDs on top of the device light up to tell you that recording is happening, Google Home records what you say, and sends that recording (including the few-second hotword recording) to Google in order to fulfill your request. You can delete these recordings through My Activity anytime.
Id. ¶ 195. This passage pertains to the Google Home device and describes the way that it functions. The Court finds that this statement about the Google Home is sufficiently specific and unequivocal, and could plausibly be considered a promise that the Google Home will delete any recordings “if the hotword is not detected.” However, Plaintiffs have not adequately alleged that the promise was breached. See Mot. at 17-18. As described in the Consolidated FAC, false accepts are situations in which a hotword is detected, albeit mistakenly. Plaintiffs must plausibly plead that retaining recordings when a hotword is mistakenly detected violates a promise to delete recording if a hotword is not detected. They have not yet done so.
Accordingly, because Plaintiffs have not identified any particular warranty term that has plausibly been breached, Count 8 is DISMISSED WITH LEAVE TO AMEND.
The Court also briefly addresses Defendants’ second ground for dismissal: They argue in a
footnote that the Google Home and Google Pixel “are subject to express limited warranties which state that they are the only express warranty that Google provides for these devices, and provide an exclusive remedy in the event a defect arises during the warranty period.” Mot. at 19 n.4. In other words, Defendants disclaim any express warranties beyond the ones they have submitted in their request for judicial notice. ECF 56-1 ¶¶ 6-7; see id. Ex. E-F. In Part III, the Court took judicial notice of the existence of the two documents—the “Google Home Warranty – United States” and the “Hardware limited warranty for Android Hardware devices, including the Pixel smartphone“—
Consequently, the Court cannot yet determine whether the two documents asserted by Defendants operate to preclude any warranty claim based other statements Defendants have made. See Ladore v. Sony Computer Entm‘t Am., LLC, 75 F. Supp. 3d 1065, 1074 (N.D. Cal. 2014) (“[T]he Court will not consider whether Sony may have effectively disclaimed any express warranties in its Terms of Service or Software License.“). Therefore, Count 8 is not subject to dismissal on that basis.
To summarize, then, Defendants’ motion to dismiss Count 8 is GRANTED WITH LEAVE TO AMEND for failure to plead a prima facie case of breach of express warranty, but not based on the disclaimer proffered by Defendants.
ii. Breach of Implied Warranty
Next, Defendants move to dismiss Count 9, Plaintiffs’ claim for breach of the implied warranty of merchantability. Consol. FAC ¶¶ 211-222; see Mot. at 20-21. Plaintiffs have asserted Count 9 under
Defendants cite the following provision from their Terms of Service, of which the Court has taken judicial notice, see supra Part III:
Other than as expressly set out in these terms or additional terms, neither Google nor its suppliers or distributors make any specific promises about the services. For example, we don‘t make any commitments about the content within the services, the specific functions of the services, or their reliability, availability, or ability to meet your needs. We provide the services “as is.”
Some jurisdictions provide for certain warranties, like the implied warranty of merchantability, fitness for a particular purpose and non-infringement. To the extent permitted by law, we exclude all warranties.
ECF 56-1 at 16. Plaintiffs do not dispute that they are bound by the TOS or that the disclaimer contained therein covers the implied warranty of merchantability asserted in Count 9.
Plaintiffs nonetheless challenges the validity of the disclaimer by arguing that it is “unconscionable in that it ‘creates an overly harsh or one-sided result that shocks the conscience.‘” Opp. at 22. But Plaintiffs have alleged no facts to support this argument, which is made in a scant few sentences in their Opposition brief. They simply assert that the TOS is “a non-negotiable contract of adhesion.” Id. That is not enough, for not all contracts of adhesion are unconscionable. Under California law, a contract provision is unconscionable, and therefore unenforceable, only if it is both procedurally and substantively unconscionable. See Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83, 113-14 (2000). Procedural unconscionability “focus[es] on ‘oppression’ or ‘surprise’ due to unequal bargaining power,“;
Meanwhile, this Court and other courts in this district have dismissed implied warranty claims based on similar disclaimers. See In re Nexus 6P Prod. Liab. Litig., 293 F. Supp. 3d 888, 944 (N.D. Cal. 2018) (collecting cases). Under these circumstances, the Court is not persuaded by Plaintiffs’ cursory argument that the instant disclaimer is unconscionable.
The Court will therefore enforce the disclaimer and GRANT Defendants’ Motion to Dismiss the implied warranty claim. The Court will grant LEAVE TO AMEND to allege further facts in support of Plaintiffs’ unconscionability argument.
iii. Magnuson-Moss Warranty Act
Count 10 alleges a violation of the federal Magnuson-Moss Warranty Act based on breach of the implied warranty of merchantability. Consol. FAC ¶¶ 223-233. Although the Magnuson-Moss Warranty Act creates a separate federal cause of action for breach of an implied warranty, it directs courts to state law to determine the meaning and scope of the implied warranty. See
G. Count 11: California UCL
Count 11 is brought under California‘s Unfair Competition Law (“UCL“), which prohibits any “unlawful, unfair or fraudulent business practice and unfair, deceptive, untrue or misleading advertising.”
In their motion to dismiss, Defendants contend that Plaintiffs have failed to allege economic injury, which would preclude any UCL claim. Defendants also challenge the sufficiency of Plaintiffs’ allegations as to each of the three prongs (“unlawful,” “unfair,” and “fraudulent“).
i. Economic injury
The Court begins by addressing Defendants’ contention that Plaintiffs
A plaintiff may (1) surrender in a transaction more, or acquire in a transaction less, than he or she otherwise would have; (2) have a present or future property interest diminished; (3) be deprived of money or property to which he or she has a cognizable claim; or (4) be required to enter into a transaction, costing money or property, that would otherwise have been unnecessary.
In the instant case, Plaintiffs advance two theories of economic injury. First, Plaintiffs allege overpayment for their Google Assistant Enabled Devices, i.e. “that they would not have purchased their GAEDs, or would have paid less for them, if they had known that Google was intercepting, recording, disclosing, and otherwise misusing their conversations without their authorization.” Opp. at 22 (citing Consol. FAC ¶¶ 7, 54, 241). Certainly, overpayment is an economic injury under the UCL. See, e.g., Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 966 (9th Cir. 2018), cert. denied, 139 S. Ct. 640 (2018). The question becomes whether Plaintiffs have pleaded sufficient facts to establish overpayment here.
On that issue, Defendants maintain that the Consolidated FAC contains insufficient details regarding Plaintiffs’ purchase of their Google Assistant Enabled Devices. Mot. at 22; Reply at 13. According to Defendants, the Consolidated FAC merely alleges that Plaintiffs “owned” and “interacted” with GAEDs and not that they purchased their devices. Id. (citing Consol. FAC ¶¶ 51-53). That is true of Named Plaintiff B.S., who allegedly interacted with a GAED that he did not own. See Consol. FAC ¶ 51. It is also true of Named Plaintiffs Galvan and E.G., who allegedly interacted with a device that was not manufactured by Defendants, the Samsung Galaxy Tab. See id. ¶ 53. Because these Named Plaintiffs have failed to allege that they actually paid any money for a Google Assistant Enabled Device, they cannot have been injured by overpayment.
By contrast, the Consolidated FAC does allege that Plaintiffs Kumandan and Spurr “purchased their Google Manufactured Device either directly from Google or from actual or apparent agents of Google.” Consol. FAC ¶ 215. This allegation suffices to support an inference that Plaintiffs Kumandan and Spurr paid for their respective GAEDs. Defendants raise no other objection to the overpayment theory of damages. The Court therefore finds that Plaintiffs Kumandan and Spurr have plausibly alleged they would not have purchased their GAEDs, or would have paid less for them, if they had been aware of Defendants’ practices with regard to false accepts.
Plaintiffs’ second theory of economic injury is that Defendants “wrongfully monetized and profited from Plaintiffs’ personal content and information, which is of value, entitling Plaintiffs to restitution.” Opp. at 23. According to Plaintiffs, “[e]ntitlement to restitution is sufficient to demonstrate a loss of money or property under the UCL.” Opp. at 23.
Moreover, Plaintiffs have not shown that they are, in fact, entitled to restitution under the UCL. The California Supreme Court has “defined an order for ‘restitution’ as one ‘compelling a UCL defendant to return money obtained through an unfair business practice to those persons in interest from whom the property was taken.‘” Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1144 (2003). Of relevance here, restitution is distinguished from disgorgement. “‘Disgorgement’ is a broader remedy than restitution” in that disgorgement “has been used to refer to surrender of all profits earned as a result of an unfair business practice regardless of whether those profits represent money taken directly from persons who were victims of the unfair practice.” Id. at 1145 (emphasis in original). By contrast, restitution under the UCL must “restore the status quo” by “returning to the plaintiff” funds taken from him or “benefits in which the plaintiff has an ownership interest.” Id. at 1148-49. Put another way, restitutionary disgorgement “focuses on the plaintiff‘s loss, and nonrestitutionary disgorgement “focuses on the defendant‘s unjust enrichment.” Meister v. Mensinger, 230 Cal. App. 4th 381, 398 (2014). Although the defendant‘s benefit and the plaintiff‘s loss are often the same, nonrestitutionary disgorgement may also be had “where a benefit has been received by the defendant but the plaintiff has not suffered a corresponding loss.” Id. (internal quotations and alterations omitted).
Plaintiffs say they are entitled to restitution because Defendants “wrongfully monetized and profited from Plaintiffs’ personal content and information.” Opp. at 23. But “plaintiff‘s assertion that defendants received ill-gotten gain does not make a viable UCL claim unless the gain was money in which plaintiff had a vested interest.” Madrid v. Perot Systems Corp., 130 Cal. App. 4th 440, 455 (2005). Here, as discussed in connection with Plaintiffs’ breach of contract claim, see supra Part IV.E.iii, Plaintiffs have not shown that they have a vested interest in any money earned from unspecified “personal content and information.”
To be clear, the Court is not requiring Plaintiffs to show they are entitled to restitution under the UCL in order to establish their standing under the UCL. See Kwikset Corp., 51 Cal. 4th at 337 (holding that standing is not dependent on eligibility for restitution). But where, as here, Plaintiffs
In sum, the Court GRANTS Defendants’ motion to dismiss Plaintiff Galvan‘s, Plaintiff B.S.‘s, and Plaintiff E.G.‘s UCL claims for failure to adequately plead economic injury; the Court will GRANT LEAVE TO AMEND, however, because they may able to remedy that defect. Plaintiffs Kumandan and Spurr have adequately pleaded economic injury. Because their UCL claims shall go forward, the Court proceeds to consider of the adequacy of Plaintiffs’ pleadings under each prong of the UCL.
i. Unlawful Prong
The “unlawful” prong of the UCL “borrows violations of other laws and treats them as unlawful practices that the unfair competition law makes independently actionable.” Cel-Tech, 20 Cal. 4th at 180. In other words, to be “unlawful” under the UCL, Defendants’ conduct must violate another “borrowed” law. HSBC Bank Nevada, 691 F.3d at 1168. “Virtually any state, federal or local law can serve as the predicate for an action under section 17200.” Id. (quoting People ex rel. Bill Lockyer v. Fremont Life Ins. Co., 104 Cal. App. 4th 508, 515 (2002)) (alterations omitted). Here, Plaintiffs predicate their “unlawful” claim on Defendants’ alleged violations of (1) the Wiretap Act, (2) the SCA, (3), the CIPA, (4) the Magnuson-Moss Warranty Act, (5)
Because Plaintiffs assert each of these alleged violations as independent counts, the Court has already considered the adequacy of Plaintiffs’ allegations as to those counts. The Court‘s findings in that regard are equally determinative of the validity of Plaintiffs’ UCL claim. Accordingly, the Court must DISMISS WITH LEAVE TO AMEND any claims based on (1) the Wiretap Act, as alleged in Count 1; (2)
Although not addressed in Plaintiffs’ Opposition brief, the Consolidated FAC also alleges an “unlawful” claim based on
Except as otherwise provided by statute, a contract of a minor may be disaffirmed by the minor before majority or within a reasonable time afterwards or, in case of
the minor‘s death within that period, by the minor‘s heirs or personal representative.
The Consolidated FAC alleges that Defendants have run afoul of this provision by failing to obtain “minor Plaintiff B.S.‘s or E.G.‘s consent to intercept, record, disclose, or use their confidential communications.” Consol. FAC ¶ 238.
In their motion to dismiss, Defendants argue that Plaintiffs have not shown how the facts of this case implicate a minor‘s right of disaffirmance. Mot. at 24. The Court agrees that it is not clear how Plaintiffs’ allegations pertain to the statute, and Plaintiffs have provided no explanation in their Opposition briefing. Based on Plaintiffs’ lack of response, the Court considers the claim based on
For these reasons, Plaintiffs may proceed with their UCL claim premised on
ii. Fraudulent Prong
The UCL also provides a cause of action again “fraudulent” business acts or practices. “A business practice is fraudulent under the UCL if members of the public are likely to be deceived.” HSBC Bank Nevada, 691 F.3d at 1169 (citing Puentes v. Wells Fargo Home Mortg., Inc., 160 Cal. App. 4th 638, 645 (2008)). In their Opposition brief, Plaintiffs argue that they “adequately allege affirmative misrepresentations” and “omissions,” which are presumably meant to form the basis of a claim that Plaintiffs have engaged in “fraudulent” business practices. Opp. at 23. But the Consolidated FAC does not purport to assert a claim under the fraudulent prong of the UCL. See Consol. FAC ¶ 234-242. Furthermore, the Consolidated FAC makes no mention of “affirmative misrepresentations” or “omissions“; certainly, it has not identified any misrepresentations or omissions with particularity.
The lack of specific allegations regarding the allegedly fraudulent business practices is especially problematic here because claims under the fraudulent prong of the UCL are subject to “the heightened pleading requirements of
iii. Unfair Prong
Last, Plaintiffs allege that Defendants have “engaged in business acts or practices deemed ‘unfair’ under the UCL.” Consol. FAC ¶ 239.
“The UCL does not define the term ‘unfair.’ In fact, the proper definition of ‘unfair’ conduct against consumers is currently in flux among California courts.” Hodsdon v. Mars, Inc., 891 F.3d 857, 866 (9th Cir. 2018), (internal quotations omitted). For some years, the California Courts of Appeal formulated different tests, such as whether the practice “offends an established public policy or when the practice is immoral, unethical, oppressive, unscrupulous or substantially injurious
However, the Cel-Tech court expressly limited its decision, stating, “Nothing we say relates to actions by consumers or by competitors alleging other kinds of violations of the unfair competition law such as ‘fraudulent’ or ‘unlawful’ business practices or ‘unfair, deceptive, untrue or misleading advertising.‘” Cel-Tech, 20 Cal. 4th at 187 n.12. Consequently, California courts remain divided on whether the Cel-Tech definition applies to “consumer actions” or whether the State Farm Fire and South Bay tests remain valid. See HSBC Bank Nevada, 691 F.3d at 1170. The Ninth Circuit has noted this continued controversy but awaits the California Supreme Court‘s resolution of it. See id.; Hodsdon, 891 F.3d at 866.
In this case, the parties follow the Ninth Circuit‘s lead and argue under both Cel-Tech and the prior balancing tests from State Farm Fire and South Bay. See Consol. FAC ¶ 239.
First, as to Plaintiffs’ claim that Defendants’ conduct is unfair under the Cel-Tech test, the Court agrees with Defendants that Plaintiffs have not alleged any harm to competition or violation of the “letter, policy, or spirit of the antitrust laws,” HSBC Bank Nevada, 691 F.3d at 1170. See Mot. at 24. Indeed, the Court cannot discern a single allegation in the Consolidated FAC pertaining to competitive harm. Plaintiffs’ brief in Opposition makes no attempt to explain or defend their omissions, wherefore the Court considers the claim abandoned. See Montgomery, 772 Fed. App‘x at 477.
Second, as to the pre-Cel-Tech definitions of “unfair,” some courts have treated the State Farm Fire and South Bay tests as distinct tests; others, including the Ninth Circuit, have referred to them together as the “balancing test,” see HSBC Bank Nevada, 691 F.3d at 1169; Accord Herskowitz v. Apple Inc., 940 F. Supp. 2d 1131, 1146 (N.D. Cal. 2013). In any event, the parties agree that both tests require the Court to “weigh the utility of the defendant‘s conduct against the gravity of the harm to the alleged victim.” Mot. at 25; Opp. at 25 (quoting HSBC Bank Nevada, 691 F.3d at 1169). Plaintiffs say that Defendants’ actions have harmed Plaintiffs by “illegally wiretapping and wrongfully transmitting to third parties Plaintiffs’ confidential communications.” Opp. at 25. Defendants object that, considering the substantial benefit the Google Assistant
Just how “occasional” the error is, however, is a question of fact that remains unanswered at this stage. Moreover, the harm that is asserted here is the invasion of privacy, which is difficult to quantify. The Court cannot say, as a matter of law, that the utility of the Google Assistant necessarily outweighs the harm from false accepts. Accord In re Carrier IQ, Inc., 78 F. Supp. 3d 1051, 1117 (N.D. Cal. 2015) (“The cost-benefit analysis this test calls for is not properly suited for resolution at the pleading stage.“); In re iPhone Application Litigation, 844 F. Supp. 2d 1040 (N.D. Cal. 2012) (“While the benefits of Apple‘s conduct may ultimately outweigh the harm to consumers, this is a factual determination that cannot be made at this stage of proceedings.“).
The Court nevertheless finds that Plaintiffs’ “unfair” claim is deficient because, as discussed in Part IV.A.ii., the Named Plaintiffs failed to adequately plead that their own conversations were intercepted and that those conversations were subject to a reasonable expectation of privacy. That failure means that Plaintiffs have not adequately pleaded “harm to the alleged victim” for purposes of their UCL claim. The Court therefore must DISMISS Plaintiffs’ claims under the “unfair” prong of the UCL but will GRANT LEAVE TO AMEND.
H. Count 12: Declaratory Judgment
Defendants do not move to dismiss Count 12, Plaintiffs’ request for declaratory judgment under the
V. ORDER
For the foregoing reasons, the Court rules on Defendants’ motion to dismiss the 12 Counts in the Consolidated FAC as follows:
- Count 1: GRANTED WITH LEAVE TO AMEND.
- Count 2: GRANTED WITH LEAVE TO AMEND as to the claim under
18 U.S.C. § 2701(a) ; DENIED as to the claim under18 U.S.C. § 2702(a) . - Count 3: GRANTED WITH LEAVE TO AMEND.
- Count 4: GRANTED WITH LEAVE TO AMEND.
- Count 5: GRANTED WITH LEAVE TO AMEND.
- Count 6: GRANTED WITH LEAVE TO AMEND.
- Count 7: GRANTED WITH LEAVE TO AMEND.
- Count 8: GRANTED WITH LEAVE TO AMEND.
- Count 9: GRANTED WITH LEAVE TO AMEND.
- Count 10: GRANTED WITH LEAVE TO AMEND.
- Count 11: GRANTED WITH LEAVE TO AMEND as to the fraudulent and unfair prongs; DENIED as to the unlawful prong.
Any amended complaint is due by June 5, 2020. Plaintiffs are directed to file a redlined complaint as an attachment to any amended complaint. Leave to amend is restricted to the defects discussed in this Order and in Defendants’ motion; Plaintiff may not add new parties or claims without obtaining prior express leave of the Court. However, to the extent Plaintiffs fail to cure the defects identified by this Order,
IT IS SO ORDERED.
Dated: May 6, 2020
BETH LABSON FREEMAN
United States District Judge
Notes
This provision states:
An operator of a commercial Web site or online service that collects personally identifiable information through the Web site or online service from individual consumers who use or visit the commercial Web site or online service and who reside in California shall be in violation of this section if the operator fails to comply with the provisions of Section 22575 or with the provisions of its posted privacy policy in either of the following ways:
(a) Knowingly and willfully.
(b) Negligently and materially.