Plaintiffs Michael Heskiaoff, Marc Lan-genhol, and Rafael Mann were New York residents who bring this putative class-action lawsuit seeking over $5,000,000 against Defendant Sling Media, Inc. alleging causes of action for violations of California’s Unfair Competition Law (“UCL”), False Advertising Law (“FAL”), and Consumers Legal Remedies Act (“CLRA”).
I. Background
Sling Media, Inc. is a Delaware corporation with its principal offices located in Foster City, California. (Id. at ¶8.) Since 1995, Sling Media has produced and sold a device known as a “Slingbox.” (See id. at ¶ 9.) With the purchase of each Slingbox, Sling Media grants the purchaser a license to use accompanying software, without which the Slingbox device would be useless. (See id. at ¶¶ 9, 28; Plaintiffs’ Opposition to Defendants’ Motion to Dismiss (“Opp. Br.”), (ECF No. 33), Exhibit A (“EULA Exh.”), (ECF No. 33-1), at 2 (“In order to use and access your Slingbox through your computer or mobile device, you must use this Software.” (Emphasis added)).) The terms of the license are set forth in a document referred to by the parties as the “End User License Agreement” (“EULA”), which is provided to consumers at the time they purchase a Sling-box.
In late 2014, for the first time, Sling Media began transmitting its own advertising content through its Slingbox Systems (thus subjecting users to more advertising than the ordinary commercials which are inherent in TV programming itself). (Id. at ¶ 12.) These advertisements appear “after product startup,” as well as “alongside streamed ... content.”
Sling Media’s advertising became ubiquitous by March 17, 2015. (Id. at ¶ 12.) The EULA does not contain any reference whatsoever to advertising.
Each of the named Plaintiffs purchased a Slingbox in New York while residing in New York.
II. Failure to State a Claim
Defendants move to dismiss the CAC pursuant to Federal Rule of Civil Procedure 12(b)(6). To survive a Rule 12(b)(6) motion to dismiss, a “complaint must contain sufficient factual matter ... to ‘state a claim for relief that is plausible on its face.’ ” Ashcroft v. Iqbal,
A. Choice of Law
To determine whether Plaintiffs have pleaded facts sufficient to state a claim, this Court must first determine under which jurisdictions’ substantive law the named Plaintiffs’ allegations must be analyzed. New York’s choice-of-law principles
Plaintiffs maintain that they may proceed under California’s consumer-protection statutes by virtue of a choice-of-law provision that Sling Media included in the EULA. The provision provides:
If you are a customer in the United States, then this Agreement will be governed by and construed in accordance with the laws of the State of California, without regard to or application of conflicts of law rules or principles.
(EULA Exh, at 6 ¶ 12 (emphasis added); CAC at ¶ 28 (emphasis added).)
Under New York law, “in order for a choice-of-law provision to apply to claims for tort[s] arising incident to [a] contract, the express language of the provision must be sufficiently broad as to encompass the entire relationship between the contracting parties.” Krock v. Lipsay,
The EULA provides only that “this Agreement will be governed and construed in accordance with the laws of ... California .... ” (EULA Exh. at 6 ¶ 12 (emphasis added); CAC at ¶28 (emphasis added).) Plaintiffs do not allege contractual breaches of the EULA. Rather, they allege violations of California’s consumer-protection statutes, which sound in fraud. See Kearns v. Ford Motor Co.,
B. New York General Business Law § 3⅛9
Having established that New York law applies, this Court must decide wheth
It is readily apparent, and Sling Media does not dispute, that its conduct was “consumer oriented.” Sling Media acted in a uniform manner with respect to all Sling-box System purchasers, who are consumers as contemplated by GBL § 349. See Gaidon,
Sling Media does dispute, however, whether the CAC plausibly alleged that it engaged in an act or practice that is deceptive or misleading. Both affirmative representations and omissions may qualify as deceptive or misleading acts or practices. The CAC, however, does not assert any affirmative statement made by Sling Media related to advertising that was deceptive or misleading. Plaintiffs have not stated a cause of action on this basis.
Omissions are actionable “where the business alone possesses material information that is relevant to the consumer and fails to provide this information.” Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank,
Plaintiffs have failed to plead facts sufficient to lead to the reasonable inference that Sling Media had knowledge of a plan to disseminate advertising at the time Plaintiffs purchased their Slingbox Systems, and therefore, that Sling Media engaged in a deceptive or misleading act or practice. The CAC alleges that Sling Media sold Slingboxes for “decades” without airing its own advertisements, but completely fails to allege any facts suggesting when Sling Media might have developed its plan to display its own advertisements. Furthermore, the CAC fails to plead any facts regarding when Plaintiffs purchased their Slingbox Systems. Because this Court is left speculating as to whether
The CAC also failed to allege facts indicating that Sling Media’s failure to reveal this information was a “material” deception. Not all deceptive acts or practices are actionable under § 349; only those acts or practices that are “likely to mislead a reasonable consumer acting reasonably under the circumstances.” Oswego,
The CAC’s allegations reveal that consumers purchase Slingbox Systems to: (1) watch Uve or recorded programming that they have already purchased from a cable or satellite provider; (2) on another device; (3) anywhere in the world. The CAC does not provide any facts regarding the advertisements themselves, such as how often they appear, for how long, how they can be proactively terminated, skipped or otherwise avoided by the viewer, etc.
Finally, the CAC has failed to allege that Sling Media’s acts or practices caused Plaintiffs “actual” injury. See Stutman,
Ill, Conclusion
The Defendants’ motion to dismiss the CAC is GRANTED. The Clerk of the Court is directed to close the motion docketed as EOF No. 28. Plaintiffs may move within thirty (30) days, by letter application with an attached proposed amended complaint, for leave to amend if amendment would not be futile.
SO ORDERED.
Notes
. Cal. Bus. & Prof. Code § 17200, etseq., Cal. Bus. & Prof. Code, § 17500, and Cal. Civ. Code §§ 1750, et seq., respectively.
. The CAC brings causes of action under the laws of the District of Columbia and all other States save Alabama, Iowa, and Mississippi.
.The CAC refers to this document as the "Sling Player Software License Agreement and Warranly.” (CAC at ¶ 28.) However, the document actually appears to be titled "Sling-Player (Universal Edition) Software License Agreement and Warranty.” (See EULA Exh. at 2.)
.At oral argument, the parties provided additional details regarding these two types of Sling Media advertisements. The first type refers to a video advertisement that appears when users first accesses the Sling Media software (i.e., application or app) on their tablet, etc. After a few seconds, most likely five to fifteen, users can opt to skip the remaining portion of the video advertisement and proceed to utilize their Slingbox Systems as they like. These advertisements can be analogized to the commercial advertisements that sometimes appear when accessing a YouTube video. (See Oral Argument Transcript, (ECF No. 38), at 13:7-12.) The second type of advertisement is referred to as a "banner advertisement." A banner advertisement does not contain video or sound, but is simply a thin billboard-lilce band that appears at the edge of a screen. The banner advertisement disappears when users view their TV content full screen. (See id. at 13:4-6.) Additionally, it appears that Slingbox users can purchase an app if they prefer an "ad-free experience.” (See id. at 17:15-18.)
. On a motion to dismiss, the Court "may consider any written instrument ... incorporated into the complaint by reference ...." ATSI Commc'ns v. Shaar Fund, Ltd.,
. Langenohl is now a citizen of the State of Florida. (CAC at ¶ 6.)
. The parties do not dispute that New York's choice-of-law rules apply. See Johnson v. Nextel Commc'ns Inc.,
. See In re Grand Theft Auto Video Game Consumer Litig.,
. Nor do Plaintiffs allege a cause of action for a breach of the implied covenant of good faith and fair dealing—a cause of action to which the EULA’s choice-of-law provision might apply. See Commerce & Indus. Ins. Co. v. U.S. Bank Nat'l Ass’n No. 07-cv-5731 (JGK),
. Although the CAC repeatedly references "advertising” and "misrepresentations,” it fails to describe them, and therefore does not plausibly plead any misleading statements sufficient to survive a motion to dismiss. Chiste v. Hótels.com L.P.,
. Sling Media also argues that Plaintiffs have failed to establish that they have Article III standing because Plaintiffs have failed to allege that they purchased after Sling Media formed its plan to begin advertising, but before advertising was apparent. However, in light of Plaintiffs’ failure to state a cause of action under GBL § 349, this Court need not further analyze Sling Media’s standing argument,
. This standard does not, however, impose a requirement that the consumer have relied on the materially deceptive or misleading act or practice, Stutman v. Chem. Bank,
. Additionally, it appears that Slingbox users can purchase an app if they prefer an “ad-free experience.” (See Oral Argument Transcript at 17:15-18, 23:1-24:10.)
. See Opp. Br. at 9 n.4; compare id. (arguing that "ad-free experience” was part of bargain), with CAC at ¶ 10 (quoting Sling Media’s website regarding "experience” Sling Media promises, but not representing that "experience” would be "ad-free”).
. Plaintiffs further allege that had Sling Media not failed to disclose its advertising plan, “consumers would not have bought the machines or would have been unwilling to pay the price they, in fact, purchased them for.” (CAC at ¶ 96.) This allegation is also insufficient to adequately plead GBL § 349’s "actual injury” element. See Small v. Lorillard Tobacco Co., Inc.,
. The harm alleged in all of the cases cited by Plaintiffs fits into one of the categories enumerated by this Court. See Cohen v. JP Morgan Chase & Co.,
.To the extent Plaintiffs allege that their injury is the impairment of a legal right established by contract, they have failed to plausibly allege such an injury. Plaintiffs have not asserted a breach of contract claim nor alleged a specific contractual benefit they have not received. The EULA contains no reference whatsoever to advertising. Additionally, Plaintiffs did not purchase the software, but merely licensed it, and there is nothing within the EULA prohibiting Sling Media from modifying the software of which it retained ownership.
