ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ FIRST AMENDED CONSOLIDATED CLASS ACTION COMPLAINT
This action arises out of a criminal intrusion into a computer network system used to provide online gaming and Internet connectivity via an individual’s gaming console or personal computer. Plaintiffs, a nationwide putative consumer class, allege that Sony Computer Entertainment America, LLC (“SCEA”), Sony Online Entertainment, LLC (“SOE”), and Sony Network Entertainment America, Inc. (“SNE”) (collectively, “Sony” or “Defendants”), failed to provide reasonable network security, including utilizing industry-standard encryption, to safeguard Plaintiffs’ personal and financial information stored on Sony’s network.
Presently before the Court is Sony’s motion to dismiss Plaintiffs’ First Amended Consolidated Class Action Complaint (“FACC”). (Doc. No. 135.) Sony also submitted a request for judicial notice, (Doc. No. 135, Ex. 2), a notice of lodgment of foreign authorities, (Doc. No. 135, Ex. 2), and a notice of supplemental authorities, (Doc. No. 137).
BACKGROUND
I. Factual Background
Sony develops and markets the PlayStation Portable hand-held device (“PSP”) and the PlayStation 3 console (“PS3”) (collectively, “Console” or “Consoles”). (FACC ¶¶ 38, 39.) Both Consoles allow users to play games, connect to the Internet, and access Qriocity, Sony Online Entertainment Services, and the Play Station Network (“PSN”) (collectively, “Sony Online Services”).
Before establishing a PSN, Qriocity, and/or SOE account, Plaintiffs and other consumers were required to enter into a Terms of Service User Agreement with Sony and agree to Sony’s Privacy Policy. (Id. at ¶¶ 55-60.) As part of this registration process, Plaintiffs and other consumers were required to provide Sony with personal identifying information, including their names, mailing addresses, email addresses, birth dates, credit and debit card information (card numbers, expiration dates, and security codes), and login credentials (collectively, “Personal Information”).
On April 16, 2011 or April 17, 2011, Plaintiffs allege that hackers accessed Sony’s Network (computer systems, servers, and databases), thereby stealing the Personal Information of millions of Sony’s customers, including Plaintiffs. (Id. at ¶ 65.) Plaintiffs further allege that even though Sony discovered that PSN and Qriocity user data had been stolen as early as April 17, 2011, Sony did not notify Plaintiffs and other affected consumers at that time. (Id. at ¶ 70.) Instead, on April 20, 2011, Sony simply took the PSN and Qriocity systems offline, stating that “[w]e’re aware certain functions of PlayStation Network are down. We will report back here as soon as we can with more information.” (Id. at ¶ 71.) Thereafter, the PSN and Qriocity systems remained offline for almost a month while Sony conducted a system audit to determine the cause of the breach. (Id. at ¶ 124.) During this time, Plaintiffs and the other Class members were unable to use Sony Online Services, and many were unable to access Third Party Services via their Consoles. (Id.)
Between April 21, 2011 and April 25, 2011, while Qriocity and the PSN remained offline, Plaintiffs allege that Sony continued to misrepresent the circumstances of the breach. (Id. at ¶¶ 73-77.) Specifically, Plaintiffs allege that Sony did not inform the public of the breach until April 26, 2011, when Sony made a public statement that user Personal Information had been compromised, and encouraged those affected to “remain vigilant, to review [their] account statements!,] and to monitor [their] credit reports.” (Id. at ¶ 78.) Shortly thereafter, Plaintiffs contend Sony admitted that its failures “may have had a financial impact on our loyal customers. We are currently reviewing options and will update you when the service is restored.” (Id. at ¶ 79.) Plaintiffs further allege that Sony conceded that “[s]ome games may require access to PSN for trophy sync, security checks[,] or other network functionality!,] and therefore cannot be played offline.” (Id.) On May 2, 2011, Sony also took SOE offline, (Id. at ¶ 82), and announced that SOE user Personal Information may have been compromised in the breach, (Id. at ¶ 83). This was the first time SOE users were informed that their Personal Information may have been compromised as a result of the intrusion. (Id. at ¶ 83.)
On April 30, 2011, ten days after Sony took the PSN and Qriocity systems offline, Sony announced that it would compensate PSN and Qriocity users in the United States with free identity theft protection services, certain free downloads and online services, and would consider helping customers who had to apply for new credit cards. (Id. at ¶ 85.) Likewise, on May 12, 2011, ten days after Sony took the SOE network offline, Sony announced that it would compensate SOE users in the United States by offering free identity theft protection services, one month of free service, and certain free in-game bonuses and currency. (Id. at ¶ 86.)
On August 16, 2011, the Judicial Panel on Multidistrict Litigation transferred certain civil actions from various district courts across the country into one consolidated action before this Court. (Doc. No. 1.) On November 11, 2011, the Court appointed a Liaison Counsel and a Plaintiffs’ Steering Committee (“PSC”) to streamline the process. (Doc. No. 61.) On January 31, 2012, the PSC filed a Consolidated Class Action Complaint (“Consolidated Complaint”), (Doc. No. 78), and on March 16, 2012, Sony moved to dismiss the Consolidated Complaint, (Doc. No. 94). The Court heard oral argument on the motion on September 27, 2012, and granted in part and denied in part Sony’s motion to dismiss the Consolidated Complaint on October 11, 2012. (Doc. No. 120.) Plaintiffs filed the operative FACC on December 10, 2012. (Doc. No. 128.) The FACC contains eleven named Plaintiffs from nine different states and alleges fifty-one independent causes of action.
III. Named Plaintiffs
Robert M. Bova (“Bova”) resides in Tewksbury, Massachusetts and alleges that he acquired his PS3 in 2008. (FACC ¶ 18.) In or around 2009, Bova created a PSN account and provided his Personal Information to Sony, including information possibly regarding his Bank of America Visa and TD Bank debit card accounts. (Id.) Bova used the PSN through his PS3 to play games and to download additional game content such as “map packs.” (Id.) As a result of the intrusion, Bova’s Personal Information was stolen, he was unable to access the PSN during the brief interruption in service, and he purchased credit monitoring services at a cost of approximately $10.00 per month. (Id.) Bova does not allege when he purchased credit monitoring services or that he experienced any unauthorized charges as a result of the intrusion. (Id.)
Christian Pierce Railed (“Railed”) resides in Wolfeboro, New Hampshire and alleges that he acquired his PS3 in 2009. (Id. at ¶ 19.) On or about October 21, 2009, Railed created a PSN account and provided his Personal Information to Sony, including information possibly regarding his American Express credit card. (Id.). Railed used the PSN through his PS3 to play games, to download game updates, to browse the Internet, and to stream prepaid media content from Netflix. (Id.) As a result of the intrusion, Ralled’s Personal Information was stolen, he was unable to access the PSN during the brief interruption in service, and he was unable to access his Netflix account through his PS3. (Id.) Railed does not allege that he experienced any unauthorized charges on any of his accounts as a result of the intrusion. (Id.)
Scott Lieberman (“Lieberman”) resides in Plantation, Florida and alleges that he acquired his PS3 in early 2007. (Id. at ¶ 20.) In or around 2007, Lieberman created a PSN account and provided his Personal Information to Sony, including information regarding his American Express credit card. (Id.) Lieberman used the PSN through his PS3 to play games, to download games, and to stream prepaid media content from Netflix. (Id.) As a result of the intrusion, Lieberman’s Personal Information was stolen, he was unable to access the PSN during the brief interruption in service, and he was unable to access his Netflix account through his PS3. (Id.) Lieberman does not allege that he experienced any unauthorized charges
Kyle Johnson (“Johnson”) resides in San Diego, California and alleges that he acquired his PS3 in 2007. (Id. at ¶ 21.) In or around 2007, Johnson created a PSN account and provided his Personal Information to Sony, including information regarding his Discover, American Express, and Visa credit card accounts. (Id.) Johnson used the PSN through his PS3 to play games, purchase and download games, and stream prepaid media content from Net-flix. (Id.) As a result of the intrusion, Johnson’s Personal Information was stolen, he was unable to access the PSN during the brief interruption in service, and he was unable to access his Netflix account through his PS3. (Id.) In or around October 2011, Johnson alleges two unauthorized charges appeared on his Visa card. (Id.) Johnson does not allege whether these charges were later reimbursed. (Id.)
Arthur Howe (“Howe”) resides in San Diego, California and alleges that he acquired his PS3 in 2008. (Id. at ¶ 22.) Howe alleges he created two PSN accounts, one for him and one for his minor son. (Id.) In order to register for both accounts, Howe alleges he provided his Personal Information to Sony, including his Union Bank debiVcredit card account and a U.S. Bank account. (Id.) Howe used the PSN through his PS3 to play games, purchase and download games such as “map packs,” and stream prepaid media content from Netflix. (Id.) As a result of the intrusion, Howe’s Personal Information was stolen, he was unable to access the PSN during the brief interruption in service, and he was unable to access his Netflix account through his PS3. (Id.) Howe also alleges that he was forced to close two bank accounts and purchased credit monitoring services at a charge of approximately $9.00 per month. (Id.) Howe does not allege that he experienced any unauthorized charges on any of his accounts as a result of the intrusion, nor does Howe allege that he was forced to close his banks accounts due to unauthorized charges. (Id.)
Christopher Munsterman (“Munster-man”) resides in Kansas City, Missouri and alleges that he acquired his PS3 in 2008. (Id. at ¶ 23.) In or around 2008, Munsterman created a PSN account and provided his Personal Information to Sony, including information possibly regarding his Commerce Visa Debit card. (Id.) Mun-sterman used the PSN through his PS3 to play games, download games and movies, browse the internet, and stream prepaid media content from Netflix. (Id.) As a result of the intrusion, Munsterman’s Personal Information was stolen, he was unable to access the PSN during the brief interruption in service, and he was unable to access his Netflix account through his PS3. (Id.) Munsterman does not allege that he experienced any unauthorized charges on any of his accounts as a result of the intrusion. (Id.)
Adam Schucher (“Schucher”) resides in Surfside, Florida and alleges that he acquired his PS3 in mid-2008. (Id. at ¶ 24.) In or around 2008, Schucher created a PSN account and provided his Personal Information to Sony, including information regarding his Citibank Visa credit card. (Id.) Schucher used the PSN through his PS3 to purchase and download karaoke songs for Karaoke Revolution Presents: American Idol. (Id.) As a result of the intrusion, Schucher’s Personal Information was stolen and he was unable to access the PSN during the brief interruption in service. (Id.) Schucher does not allege that he experienced any unauthorized charges on any of his accounts as a result of the intrusion. (Id.)
Christopher Wilson (“Wilson”) resides in Dallas, Texas and alleges that he acquired his PS3 in January 2007. (Id. at ¶ 26.) In or around 2007, Wilson created a PSN account and provided his Personal Information to Sony, including information regarding his Chase Bank Visa debit card. (Id.) Wilson used the PSN to play games and stream prepaid media content from Netflix. (Id.) As a result of the intrusion, Wilson’s Personal Information was stolen, and he was unable to access the PSN during the brief interruption in service. (Id.) Wilson does not allege that he experienced any unauthorized charges on any of his accounts as a result of the intrusion. (Id.)
James Wright (“Wright”) resides in Columbus, Ohio and alleges that he acquired his PS3 in 2008. (Id. at ¶27.) In or around 2008 or 2009, Wright created a SOE account, a Qriocity account, and PSN account, and provided his Personal Information to Sony, including information regarding his Visa U.S. Bank debit/credit card (Id.) Wright used his SOE account to play DC Universe Online, his Qriocity account to play music, and his PSN account to play games and stream prepaid media content from Netflix. (Id.) As a result of the intrusion, Wright’s Personal Information was stolen and he was unable to access his SOE, Qriocity, and PSN accounts during the brief interruption in service. (Id.) Wright does not allege that he experienced any unauthorized charges on any of his accounts as a result of the intrusion. (Id.)
Timothy B. Whyland (“Whyland”) resides in Baldwinsville, New York and alleges that he acquired his PS3 in 2009. (Id. at 28.) In or around 2009, Whyland created a PSN account and provided his Personal Information to Sony, including information regarding his debit card. (Id.) Whyland used the PSN to play games and download additional golf courses for Tiger Woods Golf Masters PGA Tour 2012 and maps for Battlefield Bad Company 2. (Id.) As a result of the intrusion, Whyland’s Personal Information was stolen and he was unable to access his PSN for approximately twenty-one (21) days. (Id.) Why-land does not allege that he experienced any unauthorized charges on any of his accounts as a result of the intrusion. (Id.)
LEGAL STANDARDS
A complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R.Civ.P. 8(a). A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Fed.R.Civ.P. 12(b)(6); Navarro v. Block,
To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations; rather, the complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
Complaints alleging fraud must satisfy the heightened pleading requirements of Rule 9(b). Rule 9(b) requires that in all averments of fraud or mistake, the circumstances constituting that fraud or mistake should be stated with particularity. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally. A pleading is sufficient under Rule 9(b) if it “state[s] the time, place[,] and specific content of the false representations as well as the identities of the parties to the misrepresentation.” Misc. Serv. Workers, Drivers & Helpers v. Phil-co-Ford Corp.,
In interpreting federal law, a transferee court in a multidistrict case should look to the law of its own circuit rather than the law of the transferor courts’ circuits. In re Nat’l Century Fin. Enters., Inc., Inv. Litig.,
DISCUSSION
The fifty-one claims alleged in the FACC can be categorized into nine subgroups: (1) negligence; (2) negligent misrepresentation; (3) breach of express warranty; (4) breach of implied warranty; (5) unjust enrichment; (6) violation of state consumer protection statutes; (7) violation of the California Database Breach Act; (8) violation of the federal Fair Credit Reporting Act; and (9) partial performance/breach of the covenant of good faith and fair dealing. Sony moves to dismiss the FACC on the basis that Plaintiffs lack
I. Standing
Sony’s standing argument is two-fold. First, Sony contends SOE should be dismissed as a named Defendant because Plaintiffs do not have standing to pursue non-Ohio state law claims against SOE on behalf of non-Ohio residents. And second, Sony contends Plaintiffs’ amended allegations fail to establish Article III standing in light of the Supreme Court’s recent decision in Clapper v. Amnesty International, — U.S.-,
A. Standing to Assert Claims Against SOE
First, Sony contends Plaintiffs lack standing to pursue non-Ohio state-law claims on behalf of non-Ohio residents because Plaintiff Wright, an Ohio resident, is the only named Plaintiff that is an SOE network subscriber. Plaintiffs do not rebut that Wright is the only SOE network subscriber, but contend that Wright has standing to pursue claims: (1) on behalf of SOE network subscribers alleging violations of Ohio law; and (2) on behalf of all SOE network subscribers, regardless of their state of residence, for enforcement of the settlement agreement and alleged violations of the FCRA. The Court agrees. As stated below, although each of Plaintiffs’ claims under Ohio law and the FCRA are dismissed without leave to amend, Plaintiffs have standing to assert claims against SOE for enforcement of the settlement agreement and/or breach of the covenant of good faith and fair dealing. Accordingly, Sony’s motion to dismiss SOE as a named Defendant is DENIED.
B. Article III Standing
Second, in an argument relegated to a footnote, Sony contends the FACC should be dismissed for lack of Article III standing because Plaintiffs’ amended allegations have once again failed to allege an “injury-in-fact” as a result of the intrusion. (Doc. No. 135 at 9 n. 12.) The Court’s prior order denied this exact argument, finding that under Krottner v. Starbucks,
To establish Article III standing, a plaintiff must plead: (1) injury-in-fact; (2) causation; and (3) redressability. Lujan,
The Supreme Court rejected both arguments. Id. With regard to the first argument, the Supreme Court stated that although it may be “objectively reasonable” that respondents’ communications may at some point be intercepted under the Act, respondents had failed to show that the “threatened injury” was “certainly impending.” Id. at 1147. The Supreme Court noted that a “speculative chain of possibilities ... based on potential future surveillance” was not enough. Id. at 1150. With regard to respondents’ second argument, the Supreme Court stated that if parties could base Article III standing on reasonably incurred costs to avoid the risk of future harm, it would “water[] down the fundamental requirements of Article III.” Id. at 1151. “If the law were otherwise, an enterprising plaintiff would be able to secure a lower standard for Article III standing simply by making an expenditure based on a nonparanoid fear.” Id. Therefore, the Supreme Court held that even though respondents’ measures to avoid surveillance authorized under the Act was not “fanciful, paranoid, or otherwise unreasonable,” respondents could not “manufacture standing merely by inflicting harm on themselves based on fears of hypothetical harm that was not “certainly impending.” ” Id. at 1151.
Based on the above, Sony argues Clapper tightened the “injury-in-fact” analysis set forth by the Ninth Circuit in Krottner v. Starbucks and previously relied upon by the Court in its prior order. The Court does not agree. The Ninth Circuit in Krottner found Article III standing based on a “credible threat of harm” that was “both real and immediate, not conjectural or hypothetical,”
Therefore, the Court finds both Clapper and Krottner controlling, and case law in this circuit analyzing the “injury-in-fact” requirement following Krottner highly persuasive.
Therefore, the Court finds Plaintiffs’ allegations that their Personal Information was collected by Sony and then wrongfully disclosed as a result of the intrusion sufficient to establish Article III standing at this stage in the proceedings. (FACC ¶¶ 18-29, 119-123, 124-127.) Although Sony argues that Plaintiffs’ allegations are insufficient because none of the named Plaintiffs have alleged that their Personal Information was actually accessed by a third party, neither Krottner nor Clapper require such allegations. Instead, Plaintiffs have plausibly alleged a “credible threat” of impending harm based on the disclosure of their Personal Information following the intrusion.
II. Failure to State a Claim Under Rule 12(b)(6)
A. Negligence Claims
Plaintiffs assert negligence claims under California law (Count 5), Florida law (Count 11), Massachusetts law (Count 14), Missouri law (Count 27), and Ohio law (Count 43). (FACC ¶¶ 196-211, 244-249, 262-270, 355-360, 451-456.) Each claim requires a plaintiff to allege the following four elements: (1) the existence of a legal duty; (2) breach of that duty; (3) causation; and (4) cognizable injury.
1. Florida, Missouri, and Ohio Negligence Claims
The Florida, Missouri, and Ohio negligence claims contain identical factual allegations. (FACC ¶¶ 244-249, 355-360, 451-456.) Each claim alleges that because Sony requested, gathered, and promised to secure Plaintiffs’ Personal Information, Sony had a duty to provide reasonable security consistent with industry standards, to ensure Sony Online Services were secure, and to protect Plaintiffs’ Personal Information from theft or misuse. Plaintiffs allege Sony breached this duty by failing to adequately secure its network, and that Plaintiffs suffered “economic injury and property damage” as a result of the intrusion. {Id. at ¶¶249, 360, 456.) The FACC does not explicitly allege what economic injury and/or property damage Plaintiffs allegedly suffered as a result of the intrusion.
Although Plaintiffs are not required to put forth evidence of their alleged injury at this stage in the proceeding, Plaintiffs’ allegations of causation and harm are wholly conclusory, and therefore fail to put the Court or Sony on notice of the specific relief requested. Iqbal,
Therefore, although the Florida, Missouri, and Ohio negligence claims were not previously dismissed for lack of specificity in the Consolidated Complaint, because these claims appeared for the first time in the FACC, the Court finds its previous order dismissing the California negligence claim sufficiently put Plaintiffs’ counsel on notice that conclusory allegations of causation and harm would not suffice. (Doc. No. 120 at 18-20.) This is especially true in light of Plaintiffs’ factual allegations with respect to the Massachusetts negligence claim, which also appeared for the first time in the FACC, as this claim includes specific allegations of causation and harm. As a result, the Court finds Plaintiffs’ counsel, who are sophisticated attorneys well versed in high-profile class-action litigation, were well aware of what was required to state a claim for negligence, and further amendment of these claims would prejudice Defendants. See Eminence Capital, LLC v. Aspeon, Inc.,
2. California and Massachusetts Negligence Claims
Similar to the Florida, Missouri, and Ohio negligence claims, the California and Massachusetts negligence claims contain identical factual allegations.
a. Cognizable Injuries Resulting From Sony’s Duty to Timely Disclose the Intrusion
Assuming without deciding that Sony owed Plaintiffs a legal duty to timely disclose the intrusion and the possibility that Plaintiffs’ Personal Information may have been disclosed, the Court finds Plaintiffs have failed to allege a single cognizable injury proximately caused by Sony’s resulting breach. See Held v. Bail,
Therefore, even though the Court finds Plaintiffs may have alleged a brief delay in the time period between the intrusion and when Sony notified consumers of the intrusion, the Court finds Plaintiffs have failed to allege that their injuries — credit monitoring services, loss of use and value of the PSN, loss of use and value of Third Party Services, and/or a diminution in value of their Consoles — were proximately caused by Sony’s alleged untimely delay.
As set forth above, the FACC also alleges that Sony owed Plaintiffs Johnson, Howe, and Bova a duty to exercise reasonable care in safeguarding and protecting their Personal Information. (FACC ¶¶ 197, 263.) Plaintiffs allege this duty included, among other things, the duty to design, implement, maintain, and test Sony’s security system in order to ensure Plaintiffs’ Personal Information was adequately secured and protected. (Id.) Plaintiffs allege Sony breached this duty by failing to implement proper procedures to protect Plaintiffs’ Personal Information, and as a result, Plaintiffs incurred economic damages, including the cost to purchase credit monitoring services, loss of use and value of Sony Online Services, loss of use and value of Third Party Services, and/or a diminution in value of their Consoles. Sony moves to dismiss these claims on the basis that Plaintiffs have failed to allege: (1) a legal duty to provide reasonable security; and (2) cognizable injuries not barred by the economic loss doctrine. The Court discusses each in turn.
i. Legal Duty to Provide Reasonable Security
Although neither party provided the Court with case law to support or reject the existence of a legal duty to safeguard a consumer’s confidential information entrusted to a commercial entity, the Court finds the legal duty well supported by both common sense and California and Massachusetts law. See, e.g., Witriol v. Lexis-Nexis Grp., No. C05-02392 MJJ,
ii. Economic Loss Doctrine
However, the existence of a legal duty and a corresponding breach are not the only elements required to state a claim for negligence — Plaintiffs must also allege appreciable, non-speculative harm proximately caused by Sony’s breach. See, e.g., Vinci v. Byers,
Massachusetts generally prohibits the recovery of purely economic losses in tort absent personal injury or property damage. Aldrich v. ADD Inc.,
Similarly, under California law, “[i]n the absence of (1) personal injury, (2) physical damage to property, (3) a ‘special relationship’ existing between the parties, or (4) some other common law exception to the rule, recovery of purely economic loss is foreclosed.” Kalitta Air, LLC v. Cent. Tex. Airborne Sys., Inc.,
Based on the above, Sony moves to dismiss the California negligence claim on the basis that neither Howe nor Johnson have alleged personal injury or property damage as a result of the intrusion, nor have Howe or Johnson alleged a “special relationship” with Sony based on the factors articulated by the California Supreme Court in J'Aire Corp. v. Gregory,
Before turning to the application of the J’Aire factors, the Court dispels Sony’s contention that their contract with Plaintiffs forecloses tort liability. As stated by the California Supreme Court in Aas v. Superior Court, “[a] person may not ordinarily recover in tort for the breach of duties that merely restate contractual obligations.”
Under J’Aire special relationship exception to the economic loss doctrine, the existence of a “special relationship” is based on a determination of the following six factors:
(1) the extent to which the transaction was intended to affect the plaintiff, (2) the foreseeability of harm to the plaintiff, (3) the degree of certainty that the plaintiff suffered injury, (4) the closeness of the connection between the defendant’s conduct and the injury suffered, (5) the moral blame attached to the defendant’s conduct and (6) the policy of preventing future harm.
J’Aire,
Here, Plaintiffs Johnson and Howe allege a “special relationship” between the parties because: (1) Sony developed Sony Online Services for use with PSPs and PS3s and intended its contract with consumers, which required consumers to provide their Personal Information before registering for such services, to effect Plaintiffs and other class members; (2) if Sony did not reasonably perform its contractual obligations, in light of previous instances of admitted security vulnerabilities, Plaintiffs’ Personal Information could be disclosed; (3) Plaintiffs suffered injury as a result of the intrusion, including expenses incurred to purchase credit monitoring services, loss of use and value of
After considering the six J’Aire factors in light of Plaintiffs’ factual allegations, the Court finds Plaintiffs have failed to allege a “special relationship” with Sony beyond those envisioned in everyday consumer transactions, and therefore, negligence is the wrong legal theory on which to pursue recovery for Plaintiffs’ economic losses. See Greystone Homes, Inc. v. Midtec, Inc.,
First, with respect to the alleged loss of use and value of Sony Online Services and the alleged loss of use and value of Third Party Services, neither are recoverable in negligence because they were not proximately caused by Sony’s alleged failure to provide reasonable network security and/or did not result in a measurable loss. Although the amount of recoverable damages is usually a question of fact, which is a determination not properly before the court on a motion to dismiss, the measure of damages, existence of damages, and whether a plaintiff has sufficiently pled a causal connection between the damage and the alleged harm is a question of law. See, e.g., Hendricks v. DSW Shoe Warehouse Inc.,
Here, Plaintiff Howe has not met this high burden because has not alleged any instances of identity theft resulting from the intrusion. See Kahle v. Litton Loan Servicing, LP,
Therefore, at this stage in the proceedings, although Plaintiffs are not required to come forward with evidence to support their allegations, Plaintiffs must set forth a plausible claim for relief. Plaintiffs have not done that here. See In re iPhone Application Litig.,
Plaintiffs’ allegations with respect to the remaining J’Aire factors fare no better. With regard to the first factor, the extent to which the transaction was intended to affect the plaintiff, the Court finds Plaintiffs have failed to allege why the transactions at issue were intended to affect Plaintiffs “in a way particular to [them], as opposed to all potential” consumers. Greystone Homes,
With regard to the second factor, the foreseeability of harm, the Court finds, as it did above, that Plaintiffs’ injuries were not a foreseeable result of Sony’s alleged negligence. As to the fourth factor, the closeness of the connection between the defendant’s conduct and the injury suffered, the Court finds Plaintiffs have sufficiently alleged a connection between Sony’s conduct and the brief interruption in PSN access. Finally, with regard to fifth and sixth factors, the moral blame attached to Sony’s conduct and the policy of preventing future harm, the Court finds Plaintiffs have alleged that Sony knew of its security vulnerabilities and that imposing liability might influence other businesses to take the necessary precautions. Thus, these factors also weigh in favor of Plaintiffs.
B. Negligent Misrepresentation/Innocent Misrepresentation/Negligent Omission
Plaintiffs assert negligent misrepresentation claims under Florida law (Count 9), Massachusetts law (Count 15), Michigan law (Count 19), New Hampshire law (Count 31), Ohio law (Count 42), and Texas law (Count 47), an innocent misrepresentation claim under Michigan law (Count 20), and a negligent omission claim under Missouri law (Count 26). (FACC ¶¶ 234-238, 271-275, 300-304, 305-309, 346-354, 383-387, 446-450, 479-483.) Although there are slight differences between the required elements for each claim, each claim essentially requires Plaintiffs to allege that: (1) they relied upon a material misrepresentation made by Sony; and (2) that the misrepresentation resulted in a subsequent pecuniary loss.
1. Ohio and Missouri Claims
First, Sony contends the Ohio negligent misrepresentation claim should be dismissed because Ohio only recognizes the claim if the alleged misrepresentation was made for the guidance of others in the course of a business transaction. To support this contention, Sony relies on Doe v. SexSearch.com and Thornton v. State Farm Mutual Auto Insurance Company.
Under Ohio law, a “defendant is liable for negligent misrepresentation if he: (1) supplies false information (2) for the guidance of others in their business transaction (3) causing pecuniary loss to the plaintiff (4) while the plaintiff justifiably relied upon the information and (5) the defendant failed to exercise reasonable care or competence in obtaining or communicating the information.” Doe,
Second, citing Moore v. U.S. Bank and Lowdermilk v. Vescovo Building & Realty Company, Sony contends the Missouri negligent omission claim should be dismissed because Missouri does not recognize such a claim.
2. Remaining Negligent Misrepresentation Claims
In addition to the arguments set forth above, Sony contends the remaining misrepresentation claims should be dismissed because Plaintiffs have failed to: (1) specify the actual misrepresentations upon which they relied; and (2) allege a pecuniary loss resulting from Plaintiffs’ reliance on the actionable misrepresentation. To the extent the Court finds Plaintiffs have sufficiently stated a claim, Sony also contends that the Michigan, New Hampshire, and Texas misrepresentation claims are barred by the economic loss doctrine.
First, Sony contends the Florida, Massachusetts, Michigan, New Hampshire, and Texas misrepresentation claims should be dismissed because Plaintiffs have failed to allege actionable misrepresentations in compliance with Rule 9(b). Specifically, Sony argues the Florida, Massachusetts, and Texas claims should be dismissed because Plaintiffs have failed to identify what “advertising, packaging, and correspondence” the alleged misrepresentations were contained in, and the Florida and Texas claims should be dismissed because Plaintiffs have failed to identify how the alleged misrepresentations were “reiterated and disseminated by the officers, agents, representatives, servants, or employees of Defendants acting within the scope of their authority.” (FACC ¶¶ 232, 272, 384, 480, 235, 480.)
Although Sony raises valid arguments, the Court finds Plaintiffs have sufficiently alleged the specific representations they contend were false and/or misleading when made (representations regarding reasonable security and industry-standard encryption), and that these representations were contained in the PSN and SOE User Agreements and/or Privacy Policies, both of which were presented to Plaintiffs at the time they registered for the PSN or SOE network. Therefore, Plaintiffs have sufficiently alleged actionable misrepresentations in compliance with Rule 9(b). However, Plaintiffs allegations regarding the dissemination of these alleged misrepresentations by the officers, employees, and/or representatives of Sony do not satisfy Rule 9(b). Neither the FACC nor Plaintiffs’ opposition supports these allegations with the required specificity. Swartz v. KPMG LLP,
b. Pecuniary Loss Flowing From Plaintiffs’ Reliance on the Alleged Misrepresentations
Sony also contends that Plaintiffs have failed to allege a pecuniary loss flowing from the alleged negligent misrepresentations. The Court agrees. First, with respect to the Florida and Michigan negligent misrepresentation claims, Plaintiffs allege they would not have registered with Sony Online Services or sent their Personal Information to Sony had they known the truth regarding Sony’s network security. (FACC ¶¶ 234-238, 300-304.) However, as stated above, because Plaintiffs’ Personal Information does not have independent monetary value, registration and use of Sony Online Services was provided to consumers free of charge, and none of the Plaintiffs allege that they paid for premium PSN services, the Court finds Plaintiffs have failed to allege a pecuniary loss caused by Sony’s alleged misrepresentations. See Doe v. Chao,
The same is true with respect to the Massachusetts, New Hampshire, and Texas negligent misrepresentations claims and the Michigan innocent misrepresentation claim. (FACC ¶¶ 271-275, 305-309, 383-387, 446-450.) Each claim alleges that Plaintiffs would not have purchased their Consoles, Sony Online Services, and/or registered for Sony Online Services, or paid as much for these products or services, had they known the truth regarding Sony’s network security. However, as set forth above, Sony Online Services was provided free of charge, and none of the Plaintiffs allege they paid for premium PSN services. Moreover, and even more detrimental to Plaintiffs’ claims, although Plaintiffs allege that they would not have purchased their Consoles “but for” Sony’s alleged misrepresentations, Plaintiffs concede that they base their misrepresentation claims on statements contained in the PSN User Agreement and/or the PSN Privacy Policy, both of which were presented to Plaintiffs “after” they purchased their Consoles. Therefore, the Court finds Plaintiffs cannot plausibly allege that the misrepresentations contained in these agreement induced them to purchase their Consoles. Accordingly, the Court finds the Massachusetts, New Hampshire, and Texas negligent misrepresentations claims and the Michigan innocent misrepresentation claim each fail to allege a pecuniary loss.
Accordingly, the Court GRANTS Sony’s motion to dismiss the Florida, Massachusetts, Michigan, New Hampshire, and Texas negligent misrepresentations claims and the Michigan innocent misrepresentation claim. Because the Court’s prior order highlighted the deficiencies noted above, dismissal is without leave to amend. See Foman v. Davis,
C. Breach of Warranty Claims
Plaintiffs assert breach of warranty claims under Florida law (Count 7), Michigan law (Count 17), Missouri law (Count 24), New Hampshire law (Count 29), New York law (Count 34), Ohio law (Counts 40-41), and Texas law (Count 45). (FACC ¶¶ 222-227, 288-293, 334-339, 404-409, 371-376, 441-445, 467-472, 436-440.) Each claim essentially asserts the same factual basis for relief — Sony made affirmations of fact and/or promises to consumers regarding the adequacy and performance of Sony’s network security, and subsequently breached these promises by failing to provide adequate network security to protect Plaintiffs’ Personal Information.
Sony moves to dismiss each warranty claim on the basis that: (1) the choice-of-law provisions in the PSN and SOE User Agreements, upon which Plaintiffs base their claims, require any and all claims arising out of the agreements to be brought under California law; (2) Plaintiffs have failed to allege a cognizable injury; (3) Plaintiffs have failed to plead reliance; (4) Plaintiffs have failed to demonstrate that an express warranty has been breached; and (5) Plaintiffs cannot recover consequential, incidental, or special damages pursuant to limitation of damages clauses contained in the agreements. Because the Court finds the choice-of-law clauses in the PSN and SOE User Agreements require Plaintiffs to bring their breach of warranty claims under California law, which Plaintiffs
1. Choice-of-Law Analysis
Sony contends each breach of warranty claim should be dismissed pursuant to the choice-of-law clauses in the PSN and SOE User Agreements because the agreements specify that any and all claims arising under the agreements must be brought under California law. (Doc. No. 94-2, Ex. A, SNE User Agreement; Doc. No. 135-2, Ex. 1, SOE User Agreement.) Sony further argues judicial estoppel supports this argument because Plaintiffs previously relied on the PSN and SOE User Agreements to support their UCL, FAL, and CLRA claims, and therefore can not now elect to contest the applicability of these agreements. (Doc. No. 78 ¶ 116; FACC ¶ 145). In response, Plaintiffs do not specifically address the applicability of the choice-of-law clauses, rather, Plaintiff argue that judicial estoppel does not bar their claims because they never asserted California breach of warranty claims, and they did not previously “achieve success” with regard to their UCL, FAL, and CLRA claims. The Court finds Plaintiffs’ judicial estoppel arguments fail to address the dispositive issue before the Court — the applicability and enforceability of the choice-of-law provisions.
In pertinent part, the PSN User Agreement states: “Except as otherwise required by applicable law, this Agreement shall be construed and interpreted in accordance with the laws of the State of California applying to contracts fully executed and performed within the State of California.” (Doc. No. 94-2, Ex. A at 9.) Similarly, the SOE User Agreement states: “This Agreement is governed in all respects by the substantive laws of the State of California and of the United States of America.” (Doc. No. 135-2, Ex. 1 at 32.) Therefore, based on the unambiguous language set forth above, the Court finds each of Plaintiffs’ breach of warranty claims is potentially subject to dismissal under the choice-of-law clauses, subject only to the enforceability of the provisions under applicable law. See, e.g., Wolph v. Acer Am. Corp.,
To determine the enforceability of the choice-of-law clauses in the PSN and SOE User Agreements, the Court employs a two-step process. First, the Court must decide which forum’s choice-of-law rules apply; and second, the Court must decide whether the choice-of-law clauses are enforceable in each of the selected forum(s). Under the first determination, courts generally apply the choice-of-law rules of the forum in which the action is currently pending, which in this case would be California. See Klaxon Co. v. Stentor Elec. Mfg., Co.,
a. Enforceability Under California Law
In deciding whether to enforce a contractual choice-of-law provision, California applies the Restatement (Second) Conflict of Laws Section 187, “which reflects a strong public policy favoring enforcement of such provisions.” ABF Capital Corp. v. Osley,
Here, although neither party analyzed whether the choice-of-law clauses in the PSN and SOE User Agreements are enforceable under Section 187, the allegations set forth in the FACC are sufficient to enable the Court to make this determination without further briefing. The FACC alleges that: (1) SCEA is a Delaware limited liability company with its principal place of business in Foster City, California, (FACC ¶ 30); (2) SNEA is a Delaware corporation that conducts business in California, (Id. at ¶ 31); (3) SNEI is a Delaware limited liability company with its principal place of business in Los Angeles, California, (Id. at ¶ 32); and (4) SOE is a Delaware limited liability company that has its principal place of business in Ter-man Court, San Diego, (Id. at ¶ 33). Therefore, because three of the four Sony Defendants (SCEA, SNEI, and SOE) have their principal place of business in California and the remaining Sony Defendant (SNEA) conducts business in the state of California, the Court finds California has a substantial relationship to the parties. See, e.g., Ruiz v. Affinity Logistics Corp.,
Finding the first condition met, i.e., that California has a substantial rela
Therefore, based on the above, the Court finds the choice-of-law clauses in the PSN and SOE User Agreements enforceable and each of the warranty claims not alleged under California law should be dismissed. Moreover, because Plaintiffs did not bring express warranty claims under California law, did not address Sony’s contentions that a California breach of express warranty claim would nonetheless fail as a matter of law, and explicitly alleged that California law should be applied to each of their claims pursuant to the PSN and SOE User Agreements (FACC ¶ 145), the Court GRANTS Sony’s motion to dismiss each of the express warranty claims without leave to amend. See Civ. L.R. 7.1.f.S.b (“The opposition shall contain a brief and complete statement of all reasons in opposition to the position taken by the movant, an answering memorandum of all points and authorities, and copies of all documentary evidence which the party in opposition relies.”); Missud v. Oakland Coliseum Joint Venture, No. 12-02967 JCS,
D. Breach of Implied Warranty
Plaintiffs’ breach of implied warranty claims can be categorized into two subgroups — common law claims and statutory claims. Plaintiffs assert common law implied warranty claims under Florida law (Count 8), Michigan law (Count 18), Missouri law (Count 25), and New York law (Count 35), (FACC ¶¶ 228-233, 294-299,
Sony moves to dismiss each implied warranty claim on the basis that: (1) Plaintiffs have not alleged a cognizable injury; (2) the common law claims fail because there is an express agreement between the parties governing the exact warranties at issue; (3) the statutory claims fail because network services are not “goods” as defined under the Uniform Commercial Code (“UCC”); and (4) the implied warranties were expressly disclaimed and/or expressly limited by clear and conspicuous language in the PSN User Agreement.
1. Common Law Implied Warranties
First, Sony contends each common law implied warranty claim should be dismissed because implied terms are disfavored under common law where the parties have a written agreement that covers the exact terms at issue. Therefore, Sony argues the Florida, Michigan, Missouri, and New York implied warranty claims should be dismissed because they are based on the same factual allegations as Plaintiffs’ Florida, Michigan, Missouri, and New York express warranty claims. (Compare FACC ¶¶ 229, 295, 341, 411 with ¶¶ 223, 289, 335, 405.) Assuming without deciding that Plaintiffs would be permitted to pursue their implied warranty claims in the alternative to their breach of express warranty claims, as set forth below, the Court finds Plaintiffs’ common law implied warranty claims are subject to dismissal based on the disclaimer in the PSN User Agreement and the PSN Privacy Policy. (Doc. No. 94, Ex. A at 9, PSN User Agreement; Doc. No. 94, Ex. C at 4, PSN Privacy Policy.)
2. Disclaimer of Implied Warranties
Second, as a general rule, statutory and common law implied warranties can be disclaimed by conspicuous language in a contract presented to the consumer at the time of the transaction.
16. WARRANTY AND DISCLAIMER AND LIMITATION OF LIABILITY
No warranty is given about the quality, functionality, availability or performance of Sony Online Services or any content or service offered on or though Sony Online Services. All services and content are provided “AS IS” and “AS AVAILABLE” with all fault. SNEA does not warrant that the service and content will be uninterrupted, error-free or without delays. In addition to the limitations of liability in merchantability, warranty of fitness for a particular purpose and warranty of non-infringement, SCEA assumes no liability for any inability to purchase, access, download or use any content, data, or service.
(Doc. No. 94, Ex. A at 9.) Although not labeled as a disclaimer, the PSN Privacy Policy contained similar admonitory language regarding the adequacy of Sony’s network security:
Accuracy & Security
We take reasonable measures to protect the confidentiality, security, and integrity of the personal information collected from our website visitors ... Unfortunately, there is no such thing as perfect security. As a result, although we strive to protect personally identifying information, we cannot ensure or warrant the security of any information transmitted to us through or in connection with our websites, that we store on our systems or that is stored on our service providers’ systems.
(Doc. No. 94, Ex. C at 4.) Based on the above, both parties agree that Florida, Michigan, Missouri, New York, New Hampshire, and Texas law each allow a party to waive implied warranties, but waiver of implied warranties is prohibited under Massachusetts law.
a. Florida, Michigan, Missouri, New York, New Hampshire, and Texas Implied Warranty Claims
Although the parties agree that Florida, Michigan, New York, New Hampshire, and Texas law permit the waiver of implied warranties, the parties disagree over whether the waiver was effective because it was made at the time Plaintiffs registered for the PSN and not at the time Plaintiffs purchased their Consoles. To the extent the waiver is ineffective, the parties also disagree over whether the lim
After a review of the parties’ respective arguments, the Court finds the waiver effective. Plaintiffs’ contentions that the waiver was ineffective because it was made at the time Plaintiffs registered for the PSN and not at the time Plaintiffs purchased their Consoles is nonsensical, and representative of Plaintiffs’ continued attempts to bootstrap the purchase of a PSP or PS3 with registration for free PSN access. The FACC clearly alleges that Sony breached both common and statutory implied warranties by representing and warranting that Sony Online Services and/or the Network would provide adequate security for Plaintiffs’ Personal Information, when in fact, Sony knew its security was inadequate. (FACC ¶¶ 229, 295, 341, 378, 411, 474.) Thus, although Plaintiffs try to allege that the disclaimer in the PSN User Agreement and/or the PSN Privacy Policy was ineffective because it was not made at the time Plaintiffs purchased their Consoles, each implied warranty claim explicitly alleges that Sony Online Services and/or the Network — not Plaintiffs’ Consoles — failed to function as warranted. (Id.) This inconsistency in the FACC is further supported by the fact that Plaintiffs continue to rely on representations and warranties contained in the PSN User Agreement and the PSN Privacy Policy to support their claims, both of which were presented to Plaintiffs after they purchased their Consoles and before registering for free PSN access. Therefore, the Court finds the disclaimer effective because it was made at the time Plaintiffs bargained for free PSN access. See Bowdoin v. Showell Growers, Inc.,
Finding the disclaimer applicable, the Court now examines the language of the disclaimer to determine the reach and effect of the disclaimer. As stated above, the PSN User Agreement states that “[a]ll services and content are provided ‘AS IS’ and ‘AS AVAILABLE’ with all faults.”
Therefore, based on the disclaimer and admonitory language in the PSN User Agreement and the PSN Privacy Policy, the Court finds the language clear and conspicuous. Read in conjunction, both documents explicitly disclaimed any and all claims arising under the implied warranty of merchantability, disclaimed any and all claims arising under the implied warranty of fitness for a particular purpose, stated in all caps that Sony Online Services would be provided “AS IS” and “AS AVAILABLE,” and informed consumers that Sony was not warranting the security of consumer personal information transmitted to Sony via the network. See, e.g., Rudy’s Glass Constr. Co. v. E.F. Johnson Co.,
b. Massachusetts Implied Warranty Claim
Finally, although the Massachusetts implied warranty claim cannot be disclaimed, the claim is nonetheless subject to dismissal under the UCC. See Mass. Gen. Law § 2-316A. Under Section 2 of the UCC, the implied warranty of merchantability and fitness for a particular purpose only applies to “transactions in goods.” Mass. Gen. Law § 2-102. The UCC defines “Goods” as “all things ... which are movable at the time of identification to the contract for sale.” Mass. Gen. Law § 2-105(1). The rendition of services is not covered by Section 2. See White v. Peabody Constr. Co.,
Here, Plaintiffs allege that by “creating, marketing, and selling PS3s, PSPs, and Sony Online Services,” Sony “impliedly represented and warranted that the Network was merchantable, fit for its intended purposes, and provided adequate security.” (FACC ¶ 252.) Plaintiffs then define the “Network” as Sony’s computer systems, servers, and databases. (Id. at ¶ 4.) Therefore, based on Plaintiffs’ own allegations, Plaintiffs allege that the “Network,” i.e., Sony’s computer systems, servers, and/or databases were not merchantable or fit for their intended purposes— not Plaintiffs’ Consoles. Thus, because network services are not subject to the UCC because they are not physically “movable at the time of identification to the contract,” nor could PSN access be considered a good because it was offered free of charge, the Court finds Plaintiffs’ claim is barred by the UCC.
Accordingly, based on the disclaimer in the PSN User Agreement, the admonitory language in the PSN Privacy Policy, and
E. Unjust Enrichment Claims
Plaintiffs assert unjust enrichment claims under Florida law (Count 10), Massachusetts law (Count 13), Michigan law (Count 21), Missouri law (Count 23), New Hampshire law (Count 32), New York law (Count 36), Ohio law (Count 39), and Texas law (Count 48). (FACC ¶¶ 239-243, 256-261, 310-313, 329-333, 388-392, 416-420, 432^435, 484-488.) Each cause of action essentially alleges that Plaintiffs conferred benefits on Sony by purchasing, registering with, and/or sending their Personal Information to Sony Online Services, and that Sony was unjustly enriched in retaining revenues derived from these benefits. (Id. at ¶¶ 240-241, 257, 259, 311-312, 330-331, 389-390, 433-434, 485-486.) Sony moves to dismiss each claim on the basis that: (1) Plaintiffs cannot assert claims for unjust enrichment claims because an express contract governs the same subject matter at dispute between the parties; and (2) Plaintiffs have failed to allege a benefit conferred upon Sony that was wrongly retained.
In response, Plaintiffs contend their unjust enrichment claims are properly plead in the alternative to their breach of contract claims. The Court, however, does not agree. Under Florida, Massachusetts, Michigan, Missouri, New Hampshire, New York, Ohio, and Texas law a plaintiff may not recover for unjust enrichment where a “valid, express contract governing the subject matter of the dispute exists.” Coghlan v. Wellcraft Marine Corp.,
F. Consumer Protection Claims
Plaintiffs assert consumer protection claims under the California Unfair Competition Law (“UCL”) (Count 1), the California False Advertising Law (“FAL”) (Count 2), the California Consumer Legal Remedies Act (“CLRA”) (Count 3), the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”) (Count 6), the Michigan Consumer Protection Act (“MCPA”) (Count 16), the Missouri Merchandising Practices Act (“MMPA”) (Count 22), the New Hampshire Consumer Protection Act (“NHCPA”) (Count 28), the New York Deceptive Practices Act (“NYDPA”) (Count 33), the Ohio Consumer Sales Practices Act (“OCSPA”) (Count 37), the Ohio Deceptive Trade Practices Act (“ODTPA”) (Gount 38), and the Texas Deceptive Trade Practices Act- (“TDTPA”) (Count 44). On October 24, 2013, the Court ordered supplemental briefing on the FDUTPA, MCPA, MMPA, NHCPA, NYDPA, OCS-PA, and the TDTPA causes of actions. (Doc. No. 159.) Because consumer protection claims are a “creature of the state in which they are fashioned,” the Court separately addresses the sufficiency of each claim. See Mazza v. Am. Honda Motor Co.,
1. California Consumer Protection Claims
Plaintiffs’ first three causes of action allege Sony violated California’s, consumer protection statutes — the UCL, the FAL, and the CLRA. (FACC ¶¶ 146-185.) Courts often analyze these statutes together because they share similar attributes. See, e.g., Paduano v. Am. Honda Motor Co.,
a. Standing Under the UCL, FAL, and CLRA
First, Sony contends Plaintiffs do not have standing under the UCL, FAL, or CLRA because the alleged misrepresentations and/or omissions did not result in a cognizable injury. As stated in the Court’s prior order, standing under the UCL and FAL is limited to individuals who can “(1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim.” Kwikset Corp. v. Super. Ct.,
Here, Plaintiffs allege they lost money or property under the UCL and FAL because: (1) they lost the unencumbered use of their passwords; (2) their passwords were obtained by a third party without their consent; (3) they were unable to access Sony Online Services during the time the PSN was temporarily disabled; (4) certain applications and products that can only be accessed via the network were rendered worthless during the brief interruption in PSN service; and (5) their Consoles diminished in value as a result of Sony’s failure to secure the network and/or the extended time during which the network was disabled. (FACC ¶¶ 157-158, 168-169.) With respect to the CLRA, Plaintiffs allege that they were harmed as a result of Sony’s unlawful conduct because their Personal Information was compromised, they now have an increased risk of future identity theft, they lost the unencumbered use of their passwords, and their passwords were disclosed to third parties without their consent. Plaintiffs also allege that they lost money or property under the CLRA because their Consoles diminished in value as a result of: (1) Sony’s failure to secure their Personal Information; (2) the brief interruption in PSN services; and (3) the diminished value of products and services that could not be accessed during the brief interruption in PSN service. Although the Court does not readdress Plaintiffs’ previously dismissed contentions that their Personal Information has independent monetary value, (Doc. No. 120 at 21:11-16), under the unusual circumstances presented here, the Court finds Plaintiffs’ amended allegations have satisfied the standing requirement under the UCL, FAL, and CLRA based on
As an initial matter, neither party disputes that the PSN was offered to Plaintiffs free of charge or that Plaintiffs registered for the PSN after acquiring them Consoles. Nonetheless, the parties ardently dispute whether Plaintiffs have sufficiently alleged a loss of money or property and/or harm that was “caused by” Sony’s alleged unfair business practices or deceptive conduct. Throughout the FACC, Plaintiffs contend that access to the PSN and the corresponding ability to access the Internet via their Consoles was a key feature of Plaintiffs’ Consoles, and that had Sony disclosed that the PSN was not reasonably secure and/or that Sony did not use industry-standard encryption to secure Plaintiffs’ Personal Information, Plaintiffs would not have purchased their Consoles and/or would not have paid as much for their Consoles.
Although the Court agrees with Sony, that Plaintiffs cannot plausibly rely on alleged misrepresentations contained within the PSN User Agreement and/or the PSN Privacy Policy, as these representations were presented to Plaintiffs after they purchased their Consoles, Sony’s arguments fail to address Plaintiffs’ fraudulent omission contentions. As set forth by the California Supreme Court in Kwikset v. Superior Court,
Therefore, although this is not a false advertising case, which was acknowledged by Plaintiffs at the October 18, 2013 motion hearing, In re Tobacco II,
b. Failure to Allege Unlawful, Unfair, or Deceptive Conduct
Second, even if Plaintiffs have standing to assert claims under the UCL, FAL, and CLRA, Sony contends each claim should be dismissed because Plaintiffs have faded to allege unlawful, unfair, or deceptive conduct in compliance with Rule 9(b). Under Rule 9(b), allegations sounding in fraud “must state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b). Where claims allege a “unified course of fraudulent conduct and rely entirely on that course of conduct as the basis of that claim, ... the claim is said to be ‘grounded in fraud’ or to ‘sound in fraud,’ and the pleading ... as a whole must satisfy the particularity requirement of Rule 9(b).” Kearns,
Here, Plaintiffs’ UCL, FAL, and CLRA claims each allege the same factual basis for relief.
i. Fraud-Based Affirmative Misrepresentations
A plaintiff alleging fraudulent misrepresentations under the UCL, FAL, and CLRA must allege that he was exposed to the particular representation claimed to be deceptive. See, e.g., Baltazar v. Apple, Inc., No. CV-10-3231-JF,
Here, Plaintiffs allege that Sony: (1) misrepresented that access to the PSN was a feature of PSPs and PS3s; (2) misrepresented that online connectivity and the corresponding ability to access Sony Online Services and Third Party Services was a feature of PSPs and PS3s; (3) misrepresented the characteristics and quality of Sony’s network security; (4) misrepresented that Sony uses “reasonable measures to protect the confidentiality, security, and integrity of the personal information collected from [its] website visitors;” and (5) misrepresented that Sony maintains security measures “to protect the loss, misuse, and alteration of’ consumer Personal Information. (FACC
As stated in the Court’s prior order, Plaintiffs’ first two contentions are without merit. No reasonable consumer would believe that Sony’s representations regarding the network were meant to promise continued and uninterrupted access to Sony Online Services and/or that Sony was providing uninterrupted access to the PSN. (Doc. No. 120 at 26-27.) However, notwithstanding the Court’s prior order, Plaintiffs continue to advance these same misrepresentation contentions in the FACC. For example, the FACC points to two Internet links where Plaintiffs allege Sony misrepresented that PSN access and online connectivity were" features of the PS3.
However, the Court finds Plaintiffs’ final two contentions are sufficiently plead. “Plaintiffs allege that Sony misrepresented that it would take “reasonable steps” to secure Plaintiffs’ Personal Information, and that Sony Online Services use[d] industry-standard encryption to prevent unauthorized access to sensitive financial information.” (Doc. No. 94-2, Ex. B at 6.) Although Sony seeks to combat these allegations by stating that Sony disclaimed any right to so-called “perfect security,” the Court agrees with Plaintiffs that whether or not Sony’s representations regarding “reasonable security” were deceptive, in light of Sony’s additional representations regarding “industry-standard” encryption, are questions of fact not suitable for disposition on a motion to dismiss. Thus, because Sony made competing, potentially ambiguous representations, the Court cannot find the representations were are not deceptive as a matter of law. See Lavie v. Procter & Gamble Co.,
In addition to affirmative misrepresentations, the FACC now alleges fraud-based omission claims under the UCL, FAL, and CLRA. To be actionable under all three California consumer protections statutes, an omission must be “contrary to a representation actually made by the defendant, or an omission of a fact the defendant was obliged to disclose.” Daugherty,
Here, Plaintiffs allege that Sony: (1) failed to tell consumers that it did not have reasonable and adequate safeguards in place to protect consumers’ confidential information; (2) failed to immediately notify members of the California subclass that the intrusion had occurred; and (3) omitted material facts regarding the security of its network, including the fact that Sony failed to install and maintain firewalls and utilize industry-standard encryption. Sony does not separately address Plaintiffs’ fraud-based omission claims. Rather, Sony contends Plaintiffs’ omission claims fail because Sony clearly disclosed the possibility of an intrusion. However, as discussed above with respect to statutory standing under the UCL, FAL, CLRA, the Court finds Plaintiffs’ fraud-based omission claims are sufficiently plead. Accordingly, the Court DENIES Sony’s motion to dismiss Plaintiffs’ claims under the UCL, FAL, and CLRA based on fraudulent omissions.
c. Restitution and Injunctive Relief Under the UCL and FAL
Third, Sony contends the UCL and FAL claims should be dismissed because Plaintiffs have failed to allege any basis for restitution and/or injunctive relief — the only two remedies allowed under the UCL and FAL. Although the Court previously dismissed Plaintiffs’ restitution claims with prejudice, Plaintiffs’ amended allegations have persuaded the Court to reconsider its prior ruling. (Doc. No. 120 at 29:4-30:3.) As set forth above, the FACC now clarifies that Plaintiffs seek restitution based on the fact that Sony benefitted financially from the' sale of PSPs and PS3s, which was made possible and enhanced by Sony’s fraudulent omissions. (Doc. 146 at 27:7-8.) Therefore, to the extent Plaintiffs’ can prevail on their fraud-based omission claims, the Court finds Plaintiffs may be able to recover the purchase price of their Consoles or a portion thereof. Accordingly, the Court DENIES Sony’s motion to dismiss Plaintiffs’ claims for restitution under the UCL and FAL.
However, with regard to Plaintiffs’ claims for injunctive relief under the UCL and FAL, the Court previously dismissed theses claims for failure to allege the specific relief sought. (Doc. No. 120 at 29:25-30:3.) Plaintiffs’ acknowledged this deficiency at the September 27, 2012 motion hearing, stating that amendment would allow Plaintiffs to correct the pleading error. Plaintiffs have failed to do so. Accordingly, the Court GRANTS Sony’s motion to dismiss Plaintiffs’ claims for injunctive relief without leave to amend. See Sisseton-Wahpeton Sioux Tribe of Lake Traverse Indian Res., N.D. & S.D. v. United States,
d. Applicability of the CLRA
Finally, Sony contends Plaintiffs’ CLRA claim should be dismissed because it is inapplicable to the transactions at issue — registration for free PSN services. The Court previously dismissed the CLRA claim with leave to amend on these exact grounds, finding that the claim was specifically linked to Plaintiffs’ registration for the PSN, which is neither a good nor a service under the CLRA. However, as acknowledged above, the FACC now alleges liability under the CLRA based on omissions that occurred at the point of purchase of Plaintiffs’ Consoles. (FACC ¶ 176.) Daugherty,
2. Florida Deceptive and Unfair Trade Practices Act
Count 6 is brought by Plaintiffs Lieberman and Schucher and alleges violation of the FDUTPA. (FACC ¶¶ 212-221.) The FDUTPA prohibits “[u]nfair methods of competition, unconscionable acts or practices, and unfair or deceptive acts or practices in the conduct of any trade or commerce.” Fla. Stat. § 501.204(1); see also Delgado v. J.W. Courtesy Pontiac GMC-Truck, Inc.,
a. Actual Damages Caused by Sony’s Deceptive and Unfair Conduct
As an initial matter, Sony contends the FDUTPA claim should be dismissed because Plaintiffs have not alleged actual damages caused by Sony’s deceptive or unfair conduct. The Court agrees. To state a claim under the FDUTPA, a consumer must allege: “(1) a deceptive act or unfair practice; (2) causation; and (3) actual damages.” Rollins, Inc. v. Butland,
Here, Plaintiffs Lieberman and Schucher seek to recover: (1) the purchase price of their Consoles and/or the amount they overpaid for their Consoles; (2) monthly premiums paid for Third Party Services during the time Plaintiffs were unable to access these services via their Consoles; and (3) the value of them Personal Information that was wrongfully disclosed. As explained below, none of these injuries are “actual damages” recoverable under the FDUTPA. Fitzpatrick v. Gen. Mills, Inc.,
First, although Plaintiffs’ supplemental brief contends that Plaintiffs suffered actual damages in the form of the purchase price of their Consoles, because they bargained for secure access to the PSN at the time they purchased their Consoles, the FACC does not support these contentions. (Doc. No. 164 at 5-7.) Rather, the FACC merely alleges that Plaintiffs were aggrieved by Sony’s deceptive and unfair conduct “in that they registered with, and sent their Personal Information[ ] to Sony Online Services after exposure to Defendants’ false and misleading representations regarding the security of Sony Online Services.” (FACC ¶ 218.) Nowhere does the FDUTPA claim allege that Plaintiffs would not have purchased their Consoles but for Sony’s alleged deceptive or unfair conduct. See, e.g., Pa. ex rel. Zimmerman v. Pepsi-Co, Inc.,
Moreover, even if the Court were to entertain Plaintiffs’ unpled contentions, which it will not, Plaintiffs have failed to allege that an “objective reasonable person would have behaved” differently absent the alleged deceptive or unfair conduct. Fitzpatrick,
Finally, although Plaintiffs’ third contention is supported by the FACC, in that the FACC alleges that Plaintiffs would not have sent their Personal Information to Sony had they known the truth regarding Sony’s network security, these allegations fail to allege “actual damages” under the FDUTPA. As stated by the court in Burrows v. Purchasing Power, LLC, No. 1:12-cv-22800-UU,
Therefore, the Court finds Plaintiffs have failed to allege “actual damages” flowing from Sony’s alleged deceptive or unfair misrepresentations, nor would further amendment correct these deficiencies. Accordingly, the Court GRANTS Sony’s motion to dismiss the FDUTPA claim seeking actual damages without leave to amend. See, e.g., Sisseton-Wahpeton
b. Deceptive or Unfair Conduct Warranting Declaratory and Injunctive Relief Under the FDUTPA
Next, Sony moves to dismiss the declaratory and injunctive relief claims on the basis that Plaintiffs have failed to allege deceptive or unfair conduct under the FDUTPA. Specifically, Sony contends Plaintiffs have failed to: (1) allege deceptive or unfair conduct with particularity under Rule 9(b); (2) plausibly allege how Sony’s representations were deceptive in light of the admonitory language in the PSN Privacy Policy; (3) show how Sony violated Fla. Stat. § 500.04 and 21 U.S.C. § 343 because both statutes pertain to misbranded food; and (4) allege how Sony’s conduct was unfair in light of the fact that Plaintiffs have not alleged a single instance of identity theft or unreim-bursed charges. The Court only addresses Sony’s second and fourth contentions.
Under the FDUTPA, a deceptive practice is one that is “likely to mislead” consumers, Davis v. Powertel, Inc.,
Therefore, although Sony contends that the representations in the PSN User Agreement and the PSN Privacy Policy could not have plausibly been deceptive or unfair in light of admonitory language in the PSN Privacy Policy, which disclaimed any right to so-called “perfect security,” Plaintiffs have refashioned their allegations to escape dismissal. As exemplified in the FACC and Plaintiffs’ opposition, Plaintiffs do not allege that Sony’s representations were deceptive because Sony promised perfect security (which was clearly disclaimed), Plaintiffs allege Sony violated the FDUTPA because Sony warranted that it would take “reasonable security” measures, including utilizing “industry-standard encryption”, but failed to do so. (FACC ¶¶ 3, 57, 62, 88, 97.) Thus, as discussed above, Plaintiffs have raised an issue of fact as to whether Sony’s representations, when viewed as a whole, were deceptive.
3. Michigan Consumer Protection Act
Count 16 is brought by Plaintiff Mitchell and alleges violation of the MCPA. (FACC ¶¶ 276-287.) The MCPA prohibits “[u]nfair, unconscionable, or deceptive methods, acts, or practices in the conduct of trade or commerce[.]” Mich. Comp. Laws Ann. § 445.903(1). A plaintiff can pursue a claim under the MCPA based on fraud, deception, or breach of express or implied warranties. See Parsley v. Monaco Coach Corp.,
(c) Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, quantities that they do not have or that a person has sponsorship, approval, status, affiliation, or connection that he or she does not have ...
(e) Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another ...
(bb) Making a representation of fact or statement of fact material to the transaction such that a person reasonably believes the represented or suggested state of affairs to be other than it actually is .... [and]
(cc) Failing to reveal facts that are material to the transaction in light of representations of fact made in a positive manner.
Mich. Comp. Laws § 445.903(l)(c), (e), (bb), (cc). Sony moves to dismiss the MCPA claim on the basis that Plaintiffs have failed to allege: (1) actual damages caused by a violation of the statute; and (2) a violation of the statute warranting declaratory or injunctive relief.
a. Actual Damages Under the MCPA
Plaintiffs seek the following actual damages under the MCPA: (1) the disclosure of their Personal Information and a corresponding loss in privacy; (2) the purchase price of them Consoles or a portion thereof; and (3) the inability to access Sony Online Services during the brief interruption in PSN access. (FACC ¶ 282.) Sony contends none of these damage allegations suffice because: (1) Plaintiffs have failed to plead reliance on the alleged misrepresentations in compliance with Rule 9(b); and (2) Sony Online Services was offered free of charge and Sony clearly disclaimed any right to uninterrupted access. Plaintiffs do not dispute that the potential risk of future identity theft resulting from the loss of personal information is not a cognizable injury under Michigan law. Hammond v. The Bank of N.Y. Mellon Corp., No. 08 CIV. 6060 RMB RLE,
As an initial matter, the parties dispute whether Plaintiffs are required to plead actual reliance on the alleged misrepresentations, and to the extent actual reliance is required, whether reliance must be pled with particularity under Rule 9(b). Sony contends that pursuant to Mich. Comp. Laws Ann. Section 445.911(3), and countless Michigan courts interpreting the MCPA, Plaintiffs must allege actual reliance on Sony’s alleged deceptive conduct with specificity under Rule 9(b). In response, Plaintiffs argue that actual reliance is not required, and to the extent reliance is required, Plaintiffs have sufficiently alleged that Mitchell relied on Sony’s alleged misrepresentations. The Court agrees with Sony on both points.
First, although Plaintiffs attempt to rely on Dix v. American Bankers Life Assurance Co. of Florida,
Second, although Plaintiffs are correct, that Rule 9(b) is inapplicable to MCPA claims based on breach of warranty rather than fraud, as stated above, the Court dismissed Plaintiffs’ breach of express and implied warranty claims under Michigan law. See Michels v. Monaco Coach Corp.,
Based on the above, the Court finds Plaintiffs have failed to sufficiently allege that Mitchell actually relied on Sony’s alleged deceptive conduct in compliance with Rule 9(b). With regard to Plaintiffs’
The Court also finds Plaintiffs have failed to state a claim for actual damages relating to the brief interruption in Sony Online Services. As advanced by Sony and previously recognized by the Court, Sony Online Services were provided to Plaintiffs free of charge, Plaintiff Mitchell did not pay for premium services, and Sony clearly disclaimed any right to continuous and uninterrupted service. Thus, even though Plaintiffs correctly point out that a “frustration of a plaintiffs expectations” can constitute a “loss” under the MCPA, Mitchell’s expectation of uninterrupted service was not reasonable, nor could Mitchell have had an “expectation” of uninterrupted service. Mayhall,
b. Declaratory and Injunctive Relief
Sony also moves to dismiss Plaintiffs’ claims for injunctive and declaratory relief on the basis that Plaintiffs have neither alleged a violation of the MCPA, nor have Plaintiffs alleged why such relief is necessary. The Court does not agree. First, under the MCPA a plaintiff can seek declaratory and/or injunctive relief in the absence of actual damages. Therefore, taking the allegations set forth in the FACC as true, to the extent Plaintiffs have alleged that Sony misrepresented the security of its network, including the fact that it utilized industry-standard encryption to secure Plaintiffs’ Personal Information, Plaintiffs have set forth a viable claim under Sections 445.903(l)(c), (e), (bb), and (cc). Moreover, Sony’s reliance on Workman v. Publishers Clearing House,
Accordingly, because Plaintiffs have alleged that Sony’s network security is still inadequate, the Court DENIES Sony’s motion to dismiss the injunctive and declaratory relief claims under the MCPA. (FACC ¶ 285) (“Defendants continue to misrepresent the adequacy of their security systems and will continue to so unless retained by Court order.”).
4. Missouri Merchandising Practices Act
Count 22 is brought by Plaintiff Munsterman and alleges violation of the MMPA. (FACC ¶¶ 314-328.) The MMPA was enacted “to preserve fundamental honesty, fair play, and right dealings in public transactions,” Scott v. Blue Springs Ford Sales, Inc.,
Plaintiffs allege Sony violated the MMPA by “failing to disclose that the security of Plaintiffs’ Personal Information on Sony Online Services was inadequate,” and that Sony had a “legal duty” to disclose this information to consumers. (FACC ¶ 320-321.) Sony moves to the dismiss the MMPA claim on the basis that Plaintiffs have failed to allege: (1) an ascertainable loss of money or property caused by Sony’s alleged misconduct; (2) the purchase or lease of merchandise; (3) a deceptive or unfair practice; and (4) an entitlement to declaratory or injunctive relief. The Court disagrees.
As a general matter, Sony erroneously characterizes the MMPA claim as one based solely on affirmative misrepresentations, rather than a claim based on misrepresentations and omissions — an error fatal to most if not all of Sony’s contentions. Therefore, although Sony argues that Plaintiffs have not alleged the pro-chase of merchandise flowing from a violation of the MMPA, because Plaintiffs purchased their Consoles prior to being presented with the alleged misrepresentations, Sony’s arguments fail to account for Plaintiffs’ allegations that Sony omitted material information regarding the security of its network at the point of sale of the Consoles. Thus, the Court finds Plaintiffs have sufficiently alleged that Plaintiff Munsterman would not have purchased his Console if Sony had disclosed the truth regarding the security of its network. See Sunset Pools of St. Louis, Inc. v. Schaefer,
Next, the parties dispute whether Plaintiffs have alleged an ascertainable loss of money or property as a result of an act or practice declared unlawful under the MMPA. Mo.Rev.Stat. § 407.020 (stating that an act is deemed unlawful if it is unfair or deceptive). Similar to Sony’s first contention, however, this dispute is easily dispelled. Plaintiffs’ MMPA claim is premised in part on Sony’s alleged material omissions regarding the security of its network, omissions that allegedly induced Plaintiffs to purchase their Consoles. See Owen,
Finally, although Sony argues that Plaintiffs may not pursue equitable relief under the MMPA because they have not suffered actual damage, as stated above, this contention lacks merit. See Mo. Ann. Stat. § 407.025; Freeman Health Sys. v. Wass,
5. New Hampshire Consumer Protection Act
Count 28 is brought by Plaintiff Rallad and alleges violation of the NHCPA. (FACC ¶¶ 361-370.) The NHCPA prohibits the use of “any unfair or deceptive act or practice in the conduct of any trade or commerce.” N.H.Rev.Stat. § 358-A:2. Similar to the CLRA, the NHCPA provides a non-exhaustive list of prohibited practices, including several prohibitions codifying common law unfair competition. See N.H.Rev.Stat. § 358-A:2(II) (“Causing likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services”); N.H.Rev.Stat. § 358-A:2(III) (“Causing likelihood of confusion or of misunderstanding as to the source, sponsorship, approval, or certification of goods or services”); N.H.Rev.Stat. § 358-A:2(V) (“Representing that goods or services have sponsorship [or] ... approval that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that he does not have”). However, regardless of whether a practice is included in the NHCPA’s enumerated unlawful practices, conduct can violate the NHCPA if it “attaints] a level of rascality that would raise an eyebrow of someone
Plaintiffs allege Sony violated the NHCPA by misrepresenting the adequacy of Sony’s network security and by representing that PS3s, PSPs, and Sony Online Services had specific security characteristics, uses, and benefits, when Sony knew they did not. (FACC ¶¶366, 370.) Plaintiffs allege they suffered actual and statutory damages as a result of Sony’s deceptive conduct because the misrepresentations induced them to purchase their Consoles and/or register for Sony Online Services. (Id. at ¶ 367.) Plaintiffs also seek declaratory and injunctive relief under Section 358-A-.10. (Id. at ¶ 369.) Sony moves to dismiss the NHCPA claim on the basis that Plaintiffs have failed to allege: (1) actual damages under Section 358-A:10-a(I); (2) unfair conduct; (3) causation; and (4) any basis for injunctive relief. The Court discusses each in turn.
First, contrary to Sony’s contentions, the NHCPA “does not require a showing of actual damages for the claimant to be awarded the statutory minimum and attorneys’ fees.” Becksted v. Nadeau,
Second, Sony contends Plaintiffs have failed to allege unlawful conduct under the NHCPA. As set forth in the FACC, Plaintiffs allege Sony violated three of the fourteen enumerated unfair or deceptive practices outlined in the NHCPA. These include:
V. Representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that such person does not have; .
VII. Representing that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another; and
IX. Advertising goods or services with intent not to sell them as advertised.
N.H.Rev.Stat. § 358-A:2(V), (VII), (IX). In addition to the enumerated provisions set forth above, Plaintiffs allege Sony’s violated the NHCPA because Sony’s conduct violated the “rascality test.” In opposition, Sony contends none of these allegations set forth a plausible claim for relief because no reasonable consumer would have been deceived by Sony’s representations regarding “reasonable security.” In addition, to the extent Plaintiffs base their NHCPA claim on acts or practices not specifically enumerated in the NHCPA,
As stated by the New Hampshire Supreme Court in Beer v. Bennett,
Here, Plaintiffs allege Sony affirmatively represented that it would take “reasonable security measures” to protect Plaintiffs’ Personal Information, when in fact, Sony knew that its security systems were both inadequate and vulnerable to attack. Therefore, in contrast to the cases cited by Sony, which contained clear disclaimers of the alleged misrepresentations, at this stage in the proceedings, the Court cannot find that the language in the PSN User Agreement and/or the PSN Privacy Policy did not create an “overall misleading” impression as a matter of law. Beer,
Third, Sony argues Plaintiffs’ class action allegations should be dismissed because Plaintiffs have not alleged an injury to unnamed class members that was “caused by” Sony’s deceptive or unlawful conduct. Sony relies on N.H.Rev. Stat. Section 358-A:10-a(I) to support this proposition. Under N.H.Rev.Stat. Section 358-A:10-a(I):
Persons entitled to bring an action under RSA 358-A:10 may, if the unlawful act or practice has caused similar injury to numerous other persons, institute an action as representative or representatives of a class of persons who are residents of this state or whose cause of action arose within this state against one or more defendants as individuals or as representatives of a class or against one or more such defendants having a principal place of business within this state, and the petition shall allege such facts as will show that these persons or the named defendants specifically named and served with process have been fairly chosen and adequately and fairly represent the whole class, to recover actual damages as provided for in RSA 358-A:10.
Based on the language of Section 358-A:10-a(I) and Section 358-A:10(I), which provide for the recovery of “actual damages or $1,000,” Sony contends statutory damages are disallowed in the absence of
Although the New Hampshire Supreme Court has interpreted the NHCPA to allow plaintiffs to recover statutory damages in the absence of actual damages, the NHCPA still requires a named plaintiff instituting a representative action to allege that class members were personally harmed as a result of the defendant’s unlawful conduct. See Pagan v. Abbott Labs., Inc.,
Finally, because the FACC seeks to enjoin Sony’s “wrongful acts and practices,” which includes Kalled’s individual allegations under the NHCPA that have not been dismissed, the Court DENIES Sony’s motion to dismiss Plaintiffs’ NHCPA claims seeking injunctive relief. N.H.Rev.Stat. § 358-A:10 (“Injunctive relief shall be available to private individuals under this chapter without bond, subject to the discretion of the court.”).
6. New York Deceptive Practices Act
Count 33 is brought by Plaintiff Whyland and alleges violation of the NYDPA.
Plaintiffs allege Sony violated the NYD-PA by misleading consumers into believing that their Personal Information would be safe upon transmission to Sony, when Sony knew that its security systems were woefully inadequate. (FACC ¶ 397.) Plaintiffs allege they were injured as a result of these material misrepresentations because they: (1) suffered a loss of privacy and/or a loss of value of their Personal Information; and (2) paid for PSPs, PS3s, Sony Online Services and/or registered for Sony Online Services after exposure to Sony’s materially misleading representations. (Id. at ¶ 398.) Sony moves to dismiss the NYDPA claim on the basis that Plaintiffs have not alleged: (1) actual injury caused by Sony’s material misrepresen
With regard to damages, Sony contends Plaintiffs cannot state a claim under the NYDPA because they have not alleged actual injury caused by Sony’s material misrepresentations. Pursuant to Section 349(h), “any person who has been injured by reason of any violation of this section may bring an action ... to enjoin such unlawful act or practice, an action to recover his actual damages or fifty dollars, whichever is great, or both.” N.Y. Gen. Bus. Law § 349(h). New York courts interpreting this statutory language have held that even though a plaintiff need not prove justifiable reliance on the alleged deceptive conduct, a plaintiff must still allege “that the defendant engaged in a material deceptive act or practice that caused actual, although not necessarily pecuniary harm.” Oswego Laborers’ Local 211 Pension Fund,
First, with regard to Plaintiffs’ allegations that they suffered a loss of privacy and/or a loss in value of their Personal Information, each of cases relied upon by Plaintiffs are distinguishable. None of the cases dealt with a loss of privacy resulting from a data breach and each of the cases dealt with intentional conduct on behalf of the defendant. For example, in Meyerson v. Prime Realty Sers., LLC,
As a result, the Court finds the cases relied upon by Plaintiffs unavailing and the data breach cases cited by Sony highly instructive. See, e.g., Pisciotta v. Old Nat. Bancorp,
Second, Plaintiffs’ allegations that they were injured as a result of paying for their Consoles and/or registering for Sony Online Services are also without merit. (FACC ¶ 398.) As stated above, Plaintiffs’ misrepresentation allegations are based on representations contained within the PSN User Agreement and/or the PSN Privacy Policy, both of which were presented to Plaintiffs after they purchased their Consoles. Therefore, even though justifiable reliance is not required under the NYDPA, Plaintiffs cannot plausibly allege an injury relating to the purchase of their Consoles based on representations presented to Plaintiffs after they purchased their Consoles. See Stutman v. Chem. Bank,
Accordingly, because Plaintiffs have failed to allege an injury caused by a violation of the statute, the Court GRANTS Sony’s motion to dismiss the NYDPA claim.
7. Ohio Consumer Protection Statutes
Plaintiffs assert two consumer protection claims under Ohio law: (1) violation of the OCSPA (Count 37); and (2) violation of the ODTPA (Count 38). (FACC ¶¶421-431.) Each is discussed in turn.
The OCSPA “prohibits unfair, deceptive, and unconscionable practices in consumer sales transactions,” and permits both individual claims and representative actions. Marrone v. Philip Morris USA, Inc.,
b. Ohio Deceptive Trade Practices Act
Count 38 alleges violation of the ODTPA. (FACC ¶¶ 426-431.) Sony moves to dismiss the ODTPA claim on the basis that the statute does not grant consumers standing to sue. Sony cites In re Oreck Corp. Halo Vacuum & Air Purifiers Marketing and Sales Practices Litigation, No. 12-CV-2317,
Although the parties have presented the Court with conflicting case law, Bower represents a minority position not followed by a majority of Ohio’s intermediate appellate courts. See In re Oreck Corp.,
8. Texas Deceptive Trade Practices Act
Count 44 is brought by Plaintiff Wilson and alleges violation of the
Plaintiffs contend Sony violated the TDTPA by misrepresenting the security of Sony Online Services, advertising Sony Online Services with the intent not to sell the services as warranted, breaching express and implied warranties, and engaging in unconscionable conduct.
With respect to damages, Sony contends Plaintiffs have failed to allege an actual injury caused by Sony’s unlawful conduct. To prevail under the TDTPA, a plaintiff must prove that the defendant’s misrepresentation or unlawful conduct was the “producing cause of [his] economic damages or damages for mental anguish.” Tex. Bus. & Com.Code § 17.50(a); see also Alexander v. Turbur & Assocs.,
Here, the FACC alleges Plaintiff Wilson suffered actual injury as a result of Sony’s unlawful conduct because he purchased his Console and/or registered for Sony Online Services “after” exposure to Sony’s material misrepresentations. (FACC ¶ 463.) Plaintiffs attempted to bolster these allegations in their opposition to Sony’s supplemental brief by stating that in addition to the injuries stated above, they are also more vulnerable to cyber stalking/phishing, and lost access to Sony Online Services during the brief interruption in PSN access. However, neither of these allegations were pled in the FACC, and even if they were, they would not suffice under the TDTPA. See N. Port Firefighters’ Pension-Local Option Plan v. Temple-Inland, Inc.,
First, with respect to Plaintiffs’ allegations that they suffered an actual injury in the form of the purchase price of their Consoles, Plaintiffs are unable to satisfy the causation requirement. Throughout the FACC, Plaintiffs concede that they purchased their Consoles before registering for Sony Online Services, and that the alleged misrepresentations were contained in the PSN User Agreement and/or the PSN Privacy Policy — two agreements Plaintiffs were required to assent to before registering for the network and after purchasing their Consoles. As a result, it is factually impossible for Sony’s alleged misrepresentations to have been the “producing cause” of Plaintiffs’ decision to purchase their Consoles. See Bartlett v. Schmidt,
Moreover, contrary to Plaintiffs’ contentions, whether a cause of action under the TDTPA is based on misrepresentations or unconscionable conduct, the plaintiff is still required to show that the defendant’s unlawful conduct was the “producing cause” of the plaintiffs injury. See Tex. Bus. & Com.Code § 17.50(a); Daugherty v. Jacobs,
Second, Wilson’s allegation that he suffered an actual injury because he registered for Sony Online Services is also without merit. As stated above, registration and use of Sony Online Services was free, and Wilson does not allege that he purchased premium PSN services. Moreover, although not alleged in the FACC, to the extent Plaintiffs allege they were injured as a result of the brief interruption in PSN access, or the inability to access Third Party Services via their Consoles, Sony clearly disclaimed any right to uninterrupted and continuous PSN access. See Robinson v. Match.com, LLC, No. 3:10-CV-2651-L,
G. California Database Breach Act
Plaintiffs’ fourth cause of action alleges Sony violated the California Database Breach Act (“DBA”) by failing to notify Plaintiffs of the intrusion in the most expedient manner possible and without unreasonable delay. (FACC ¶¶ 186— 195.) Plaintiffs seek injunctive relief, attorneys’ fees, and economic damages (fees incurred to obtain credit monitoring services, loss of use and value of Sony Online Services, loss of use and value of Third Party Services, and a diminution in value of them Consoles) as a result of the violation. (Id. at ¶¶ 193-195.) Sony moves to dismiss the DBA claim on the basis that Plaintiffs have failed to allege: (1) why notice of the intrusion within the 90-day safe harbor provision set forth in Section 1798.84(d) was unreasonable; (2) how Sony’s conduct was willful, intentional, and/or reckless in violation of Section 1798.83; and (3) how Plaintiffs’ economic damages flow from the purported unreasonable delay.
California Civil Code Section 1798.82 sets forth the parameters of the DBA, including what is required to state a violation of the statute. In pertinent part, Section 1798.82 states:
Any person or business that conducts business in California, and that owns or licenses computerized data that includes personal information, shall disclose any breach of the security of the system following discovery or notification of the breach in the security of the data to any resident of California whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person. The disclosure shall be made in the most expedient time possible and without unreasonable delay, consistent with the legitimate needs of law enforcement, as provided in subdivision (c), or any measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system.
Cal. Civ.Code § 1798.82(a). Here, neither party contests that Sony conducts business in California, that Sony owns/licenses computerized data that includes Plaintiffs’ Personal Information, and that Plaintiffs’ Personal Information may have been exposed as a result of the intrusion. Therefore, in order to comply with the DBA, Sony was required to notify consumers of the intrusion “in the most expedient time possible and without unreasonable delay.” Id. Although Sony contends they complied with the DBA based on the 90-day safe harbor provision set forth in Section 1798.83(d), as correctly noted by Plaintiffs, the safe harbor provision only applies to the sale of information to marketers without disclosure, and is therefore inapplicable here. As a result, whether or not the ten-day delay was unreasonable is a factual determination not properly decided by the Court on a motion to dismiss.
Nonetheless, even though the length of the delay is a factual question to be resolved by the trier of fact, whether Plaintiffs have sufficiently pled an entitlement to damages or injunctive relief is a legal question to be determined by the Court. With respect to the recovery of actual damages, Section 1798.84(b) states that “[a]ny customer injured by a violation of
For example, in Grigsby II, an unreported case out of the Western District of Washington, the court concluded that the words “injured by a violation” required the plaintiff to allege that the damages flowed from the delay, and not just that the damage flowed from the intrusion.
Valve argues that Mr. Grigsby’s allegations concerning injury are insufficient. The court agrees. With respect to a claim under RCW 19.255.010, it is not enough for Mr. Grigsby to have been injured by the hacking incident. The statute does not penalize companies that simply suffer a security breach or fail to prevent an unauthorized third-party from acquiring their customers’ personal information; rather, the statute penalizes companies that fail to disclose such incidents in the manner prescribed by the statute to affected state residents. See RCW 19.255.010(1); see also RCW 19.255.010(10) (providing for a private right of action and injunctive relief). Thus, Mr. Grigsby must allege facts supporting the claim that he was injured due to the interval between the hacking incident and Valve’s notice of the incident and not just that he was injured by the hacking incident alone. Mr. Grigsby has failed to do so, and the court therefore finds his claim lacking in this respect as well.
(Doc. No. 146, Ex. A at 12:6-17.) The same conclusion can be reached in the instant case. Here, Plaintiffs have failed to allege how the ten-day delay caused Howe to incur expenses for credit monitoring services, when these credit monitoring services were purchased, how the loss of use and value of Sony Online Services and Third Party Services were caused by the delay (and not the intrusion); and how Plaintiffs’ Consoles diminished in value as a result of the delay.
Accordingly, the Court GRANTS Sony’s motion to dismiss the DBA claims seeking economic damages under § 1789.84(b). However, because Plaintiffs may pursue their injunctive relief claims under § 1798.84(e), which affords relief when a “business violates, proposes to violate, or has violated” the DBA, the Court DENIES Sony’s motion to dismiss the DBA claim seeking injunctive relief.
H. Violation of the Federal Fair Credit Reporting Act
Plaintiffs assert two causes of action under the federal Fair Credit Reporting Act, 15 U.S.C. § 1681 (“FCRA”). Count 49 alleges willful violation of the FCRA and Count 50 alleges negligent violation of the FCRA. (FACC ¶¶ 489^98, 499-504.) Sony moves to dismiss both claims on the basis that: (1) Defendants are not consum
1. Consumer Reporting Agencies
First, Sony contends Plaintiffs’ FCRA claims should be dismissed because Plaintiffs have not alleged which Defendants are consumer reporting agencies or how any of the Defendants fit the definition of a consumer reporting agency. Although Plaintiffs attempt to combat Sony’s contentions by arguing that each Defendant is a consumer reporting agency because they assembled the personal information of consumers for the purpose of furnishing information to third parties, including, by and between the various Sony Defendants, Plaintiffs’ allegations stretch the statutory definition beyond its plain meaning.
Congress enacted the FCRA to regulate “consumer reporting agencies” that accumulate consumer credit histories and then regularly make that information available to third parties via “consumer reports.” Holmes v. Countrywide Fin. Corp., No. 08-CV-00205,
[A]ny person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.
15 U.S.C. § 1681a(f). Courts construing Section 1681a(f) have restricted the definition of “consumer reporting agency” to include only those agencies that furnish “consumer reports” for “consumer purposes.” Willingham v. Global Payments, Inc., No. 1:12-CV-01157-RWS,
Here, the FACC does not contain any allegations suggesting that Sony regularly compiles and distributes consumer reports as defined under the FCRA. Rather, Plaintiffs merely recite the language of the statute in an attempt to come within the confines of the FCRA, or stretch the statutory language beyond its intended purpose. For example, although Plaintiffs allege that Sony furnished reports to “third parties” by disseminating Plaintiffs’ Personal Information by and between the Sony Defendants, such conduct is clearly excluded under the FCRA when it occurs between entities related by common ownership. See 15 U.S.C. § 1681 a(d)(2)(ii) (excluding from the definition of “consumer
I. Pax-tial Performance and Breach of the Covenant of Good Faith and Fair Dealing
Plaintiffs’ final cause of action seeks partial performance and breach of the covenant of good faith and fair dealing regarding a settlement agreement (“Settlement Agreement”) allegedly entered into by and between Sony and Plaintiffs’ counsel. (FACC ¶¶ 505-515.) Plaintiffs allege the Settlement Agreement was entered into between the parties soon after the instant litigation commenced, and required the parties to negotiate attorney’s fees, costs, and expenses, in addition to including the Canadian and Israeli cases in the settlement. {Id. at ¶¶ 506, 509.) Plaintiffs allege that after the Canadian cases joined in the Settlement Agreement and Sony waived the requirement that the Israeli cases join, Sony failed to negotiate attorney’s fees, costs, and expenses with Plaintiffs and separately settled with the Canadian plaintiffs. {Id. at ¶¶ 510-512.) As a result, Plaintiffs seek partial performance of the Settlement Agreement, including attorney’s fees, costs, and expenses incurred in the litigation thus far. {Id. at ¶ 515.)
Sony moves to dismiss the claim on the basis that Plaintiffs confuse settlement discussions with an executed settlement agreement. Sony contends that because Plaintiffs do not allege facts showing that an agreement was in fact executed (and by whom), the date the agreement was allegedly executed, or that an executed agreement was ever delivered from one party to another, Plaintiffs have failed to state a viable cause of action. Moreover, to the extent that there was an actual settlement agreement executed between the parties, Sony contends the continued prosecution of this case is tantamount to an abandonment of the Settlement Agreement.
Based on the arguments set forth above, the crux of the disagreement between the parties focuses on whether an executed agreement actually exists, and if it does not, the extent to which an “agreement to negotiate” can form the basis of Plaintiffs’ claim. Although the Court is perplexed as to why Plaintiffs did not file a motion to enforce the Settlement Agreement (to the extent there is an executed settlement agreement between the parties), Plaintiffs’ claim could be based on an alleged breach of an “agreement to negotiate.” As explained by the California Court
Here, Plaintiffs allege that the Settlement Agreement required the parties to negotiate attorney’s fees, costs, and expenses in good faith, and that Sony failed and refused to negotiate such expenses with Plaintiffs as required under the agreement. Plaintiffs further allege that Sony separately settled with the Canadian plaintiffs in direct contravention of the Settlement Agreement. Therefore, to the extent there is an executed document requiring Sony to negotiate attorney’s fees, costs, and expenses, and Sony failed to do so, or negotiated with Plaintiffs in bad faith, Plaintiffs have stated a, claim for relief. Accordingly, at this stage in the proceedings, the Court DENIES Sony’s motion to dismiss Plaintiffs’ final cause of action alleging partial performance and breach of the implied covenant of good faith and fair dealing.
CONCLUSION
For the reasons set forth above, the Court GRANTS IN PART and DENIES IN PART Defendants’ motion to dismiss the FACC. (Doc. No. 135.) Defendants are instructed to file an answer to the FACC no later than February 22, 2014, and contact Magistrate Judge Dembin’s chambers to schedule a Case Management Conference and the necessary Rule 26 requirements no later than February 4, 2014. Accordingly, the following causes of action have been dismissed without leave to amend:
1. California Negligence Claim (Count 5);
2. Florida Negligence Claim (Count ID;
3. Massachusetts Negligence Claim (Count 14);
4. Missouri Negligence Claim (Count 27);
5. Ohio Negligence Claim (Count 43);
6. Florida Negligent Misrepresentation Claim (Count 9);
7. Massachusetts Negligent Misrepresentation Claim (Count 15);
8. Michigan Negligent Misrepresentation Claim (Count 19);
9. New Hampshire Negligent Misrepresentation Claim (Count 31);
10. Ohio Negligent Misrepresentation Claim (Count 42);
11. Texas Negligent Misrepresentation Claim (Count 47);
12. Michigan Innocent Misrepresentation Claim (Count 20);
13. Missouri Negligent Omission Claim (Count 26);
14. Florida Breach of. Warranty Claim (Count 7);
15. Michigan Breach of Warranty Claim (Count 17);
16. Missouri Breach of Warranty Claim (Count 24);
17. New Hampshire Breach of Warranty Claim (Count 29);
18. New York Breach of Warranty Claim (Count 34);
19. Ohio Breach of Warranty Claims (Counts 40, 41);
20. Texas Breach of Warranty Claim (Count 45);
21. Florida Breach of Implied Warranty Claim (Count 8);
23. Missouri Breach of Implied Warranty Claim (Count 25);
24. New York Implied. Warranty Claim (Count 35);
25. Massachusetts Implied Warranty Claim (Count 12);
26. New Hampshire Implied Warranty Claim (Count 30);
27. Texas' Implied Warranty Claim (Count 46);
28. Florida Unjust Enrichment Claim (Count 10);
29. Massachusetts Unjust Enrichment Claim (Count 13);
30. Michigan Unjust Enrichment Claim (Count 21);
31. Missouri Unjust Enrichment Claim (Count 23);
32. New Hampshire Unjust Enrichment Claim (Count 32);
33. New York Unjust Enrichment Claim (Count 36);
34. Ohio Unjust Enrichment Claim (Count 39);
35. Texas Unjust Enrichment Claim (Count 48);
36. UCL and FAL Claims based on misrepresentations regarding uninterrupted PSN and Internet access and Plaintiffs’ ability to seek in-junctive relief (Counts 1, 2);
37. FDUTPA Claim seeking actual damages (Count 6);
38. MCPA Claim seeking actual damages (Count 16);
39. Class Action Claims under the NHCPA (Count 28);
40. NYDPA Claim (Count 33);
41. OCSPA Claim (Count 37);
42. ODTPA Claim (Count 38);
43. TDTPA Claim (Count 44);
44. DBA Claim seeking economic damages (Count 4); and
45. FCRA Claims (Counts 49, 50).
The following causes of action have survived dismissal and may proceed:
1. UCL and FAL Claims based on misrepresentations and omissions regarding reasonable network security and industry-standard encryption and Plaintiffs’ ability to seek restitution under the statutes (Counts 1, 2);
2. CLRA Claim based on misrepresentations and omissions regarding reasonable network security and industry-standard encryption;
3. FDUTPA Claim requesting declaratory and injunctive relief (Count 6);
4. MCPA Claim requesting declaratory and injunctive relief (Count 16);
5. MMPA Claim seeking damages and equitable relief (Count 22);
6. NHCPA Claim seeking damages and injunctive relief (Count 28);
7. DBA Claim requesting injunctive relief (Count 4);
8. Partial Performance/Breach of Covenant of Good Faith and Fair Dealing (Count 51).
IT IS SO ORDERED.
Notes
. On September 30, 2011, Sony Network Entertainment America, Inc. ("SNEA”) merged into Sony Network Entertainment International, LLC (“SNE!”).
. Plaintiffs filed a response to Sony’s notice of supplemental authorities on March 20, 2013. (Doc. No. 138.) The document was struck from the record as an improper surreply.
.The Court does not specifically address Plaintiffs' submission of the Ninth Circuit's memorandum opinion in In Re Sony PS3 "Other OS" Litigation. (Doc. No. 166, Ex. A.) The Court did not rely on any language included in the district court’s decision that was subsequently overruled, nor did the Court dismiss Plaintiffs' UCL, FAL, and/or CLRA claims (the only rulings pertinent here that were reversed by the Ninth Circuit).
. The SOE network is an online gaming network distinct from the PSN, as the SOE network is principally accessed via a computer. (Doc. 135 at 4:17-20.) However, certain SOE games can also be played through the PSN. (Id.) As of January 25, 2011 the PSN had over 69 million users worldwide and SOE had over 24.6 million users worldwide. (FACC ¶¶41, 43.)
. Plaintiffs allege that all user Personal Information was stored and maintained by Sony in perpetuity, regardless of whether the user deactivates or terminates their account, and that Sony continually monitors and records
. The FACC adds five additional named Plaintiffs and forty-four additional causes of action. (Compare Doc. No. 78 and Doc. No. 128.)
. See also Cent. Delta Water Agency v. United States,
. Although only persuasive, courts in other circuits have also held that a plaintiff can establish an "injury-in-fact” by alleging a threat of future harm. See, e.g., Denney v. Deutsche Bank AG,
. Krottner
.Notwithstanding controlling case law in this circuit, and the Court’s previous order Sony again directs the Court to consider the Third Circuit's reasoning in Reilly v. Ceridian Corporation,
. See, e.g., Paz v. Cal.,
. Neither party addressed the Court's tentative ruling at oral argument, which stated that each negligence claim was subject to dismissal without leave to amend based on Plaintiffs’ failure to allege a cognizable injury and/or based on the economic loss doctrine.
. The California negligence claim also alleges a special relationship between Sony and the California Class. (FACC ¶¶ 204-210.)
. Plaintiffs fail to allege when Howe or Bova purchased credit monitoring services, whether Howe and Bova were aware of Sony’s Welcome Back Package offering free credit monitoring services, or whether Howe and Bova purchased credit monitoring services on account of Sony’s alleged untimely delay.
. Although Paragraph 270 alleges Bova suffered a cognizable injury in the form of loss of use and value of Third Party Services, Para
. The rationale behind the doctrine is that a "commercial user can protect himself by seeking express contractual assurances concerning the product (and thereby perhaps paying more for the product) or by obtaining insurance against losses.” Bay State-Spray & Provincetown S.S., Inc. v. Caterpillar Tractor Co.,
. The Court only addresses the J’Aire exception because this was the only exception cited by Plaintiffs.
. Plaintiff Johnson does not allege he purchased credit monitoring services.
. "Under the medical monitoring cases, individuals who have been exposed to potentially harmful substances but have no presently detectable illnesses may recover the costs of future medical surveillance by showing 'through reliable expert testimony,' (1) the 'significance and extent of exposure,’ (2) the 'toxicity of [the contaminant], [and] the seriousness of the [harm]_for which the individuals are at risk,' and (3) the 'relative increase in the chance of _ [the harm] in those exposed,’ such that (4) ‘monitor[ing] the effects of exposure_is reasonable and necessary.' " Stollenwerk,
.See, e.g., Kahle,
.See, e.g., Baggett v. Electricians Local 915 Credit Union,
. Neither party addressed the Court’s tentative ruling at oral argument, which stated that each of the misrepresentation and omission claims were subject to dismissal without leave to amend based on Plaintiffs failure to allege a cognizable injury and/or because the Ohio claim does not apply to consumer transactions. (Doc. No. 157.)
. Doe v. SexSearch.com,
. Moore v. U.S. Bank, N.A., No. 4:07CV205 HEA,
. Only Sony addressed the Court’s tentative ruling at oral argument, requesting that each warranty claim be dismissed without leave to amend.
. Lieberman v. Sony Computer Entm’t Am. LLC, et al., No. 11-cv-1920 AJB-MDD, originally filed on May 4, 2011 in the Northern District of California as Case No.: 11-cv-2197; Schucher v. Sony Computer Entm’t Am. LLC, et al, No. 11-cv-1105 AJB-MDD, originally filed on May 19, 2011 in the Southern District of California; Rebecca Mitchell v. Sony Computer Entm’t Am. LLC, et al., No. 11-cv-1785 AJB-MDD, originally filed on April 27, 2011 in the Central District of California as Case No.: 11-cv-3601; Munsterman v. Sony Computer Entm't Am. LLC, et al., 11-cv-1179 AJB-MDD, originally filed on May 31, 2011 in the Southern District of California; McKewon et al. v. Sony Network Entm’t Am. LLC, et al. No. 11-cv-1911 AJB-MDD, originally filed on May 3, 2011 in the Northern District of California. Plaintiffs Whyland, Rallad, and Wright were all added as Plaintiffs for the first time at the filing of the FACC on December 10, 2012. (Doc. No. 128.)
. See, e.g., Williams v. Beechnut Nutrition Corp.,
. See, e.g., Pollard v. Saxe & Yolles Dev. Co.,
. Sony argued in its reply brief that Plaintiffs' implied warranty claims were also subject to dismissal based on the choice-of-law provision in the PSN User Agreement. However, because Sony's motion to dismiss did not present this contention the argument is not properly before the Court. See United States v. Romm,
. Neither party addressed the Court's tentative ruling at oral argument, which stated that the implied warranty claims were subject to dismissal without leave to amend based on the disclaimer in the PSN User Agreement. (Doc. No. 157.)
.See, e.g., Belle Plaza Condo. Ass’n, Inc. v. B.C.E. Dev., Inc.,
. Massachusetts is an exception to this general rule, enacting a provision that renders void any attempt to disclaim an implied warranty of merchantability or fitness for a particular purpose with regard to consumer goods. See Mass. Gen. Laws § 2-316A; Jacobs v. Yamaha Motor Corp., USA,
. The Court does not consider the SOE User Agreement and SOE Privacy Policy because Plaintiffs did not bring an implied warranty claim under Ohio law.
. As stated by Sony, and never once rebutted by Plaintiffs, the PSN is a free service and none of the Plaintiffs allege that they purchased premium PSN services.
. Neither party addressed the Court’s tentative ruling at oral argument, which stated that each unjust enrichment claim was subject to dismissal without leave to amend based on the existence of a valid contract between the parties. (Doc. No. 157.)
. See, e.g., Diamond "S" Dev. Corp. v. Mercantile Bank,
.An unjust enrichment claim may only be pled in the alternative to a breach of contract claim where one party asserts that the contract governing the dispute is invalid or the contract does not cover the subject matter at issue. See, e.g., In re Managed Care Litig.,
. The FACC alleges that Sony represented and/or omitted material information regarding the security of the PSN at the time Plaintiffs purchased or otherwise acquired their Consoles. (FACC ¶¶ 18-28, 29; Doc. No. 146 at 19-20.) Plaintiffs further allege that had they known that Sony did not utilize reasonable, adequate, or industry-standard security measures to protect Plaintiffs' Personal Information transmitted to Sony before registering for the PSN, Plaintiffs, acting as reasonable consumers, would not have purchased their PS3s, would not have paid the same amount for their PS3s, and/or would not have provided their Personal Information to Sony. (FACC ¶ 29; Doc. No. 146 at 19:12-18.) Plaintiffs support these contentions by alleging that access to the PSN, although a free service, was a key feature of PS3s, and a major factor in Plaintiffs’ decision to purchase a PS3. (FACC ¶¶ 40, 41, 167.)
. Plaintiffs allege Sony violated the following enumerated sections of the CLRA §§ 1770(a)(5), (7), (9), (14), and (16). (FACC ¶ 176.)
. At the October 18, 2013 motion hearing, Plaintiffs contended that not all of their California consumer protection claims sounded in fraud. The Court does not agree. Each of Plaintiffs’ consumer protection claims alleges that Sony omitted or misrepresented material facts regarding the adequacy of its network security, and that Sony was aware that its network security was inadequate. Moreover, as stated in the Coürt's prior order Plaintiffs previously agreed with Sony that their consumer claims were subject to Rune 9(b)'s particularity requirements. (Doc. No. 120 at 25:8-13.)
. See http://us.playstation.com/ps3/features/ ps3featuresnetwork.html and http://us. playstation.com/ps3/features/ps_ps3_ connectivity.html.
. Section 501.211(a) states: "In any action brought by a person who has suffered a loss as a result of a violation of this part, such person may recover actual damages, plus attorney's fees and court costs as provided in s. 501.2105. However, damages, Tees, or costs are not recoverable under this section against a retailer who has in good faith, engaged in the dissemination of claims of a manufacturer or wholesaler without actual knowledge that it violated this part.”
. Plaintiffs did not address Sony's third contention and it appears these statutes were erroneously included in the FACC.
. This is true even though the PSN Privacy Policy states that "we cannot ensure or warrant the security of any information transmitted to us through [the PSN] ...(Doc. No. 94-2, Ex. B at 6.)
.The Court also finds Sony’s contentions regarding the interpretations of the FTC unavailing. The FACC properly alleges numer
. Sony reliance on Padberg v. DISH Network LLC, No. 11-04035-CV-C-NKL,
. “Any person injured by another's use of any method, act or practice declared unlawful under this chapter may bring an action for damages and for such equitable relief, including an injunction, as the court deems necessary and proper.” N.H.Rev.Stat. § 358-A: 10(1).
. Plaintiffs have failed to allege actual damages under the NHCPA because they have not alleged material misrepresentations at or pri- or to the purchase of their Consoles, have not alleged actual instances of identify theft or unauthorized charges, and cannot recover damages relating to a brief interruption in PSN access because uninterrupted service was clearly disclaimed in the PSN User Agreement. (Doc. No. 94-2, Ex. A at 9.)
. Count 33 only alleges a violation of Section 349 (Deceptive Acts and Practices) and not Section 350 (False Advertising).
. Plaintiffs did not address Sony’s contentions that injunctive relief under the NYDPA is disallowed in the absence of actual injury.
. Plaintiffs’ opposition to Sony's supplemental brief represented that their TDTPA claims were based only on misrepresentations and unconscionable conduct, and not on breach of warranty.
. Plaintiffs' reliance on Pirozzi v. Apple, Inc., No. 12-CV-01529-JST,
. Injunctive and declaratory relief are only available in the event the plaintiff prevails. Tex. Bus. & Com.Code § 17.50(b)(2) ("In a suit filed under this section, each consumer who prevails may obtain ... an order enjoining such acts or failure to act”).
. In Boorstein v. Men’s Journal, the plaintiff brought a claim under the DBA alleging that the defendant failed to provide him with the required disclosures when it sold him a magazine.
. The Washington statute mirrors the DBA.
. Neither party, addressed the Court's tentative ruling at oral argument, which stated that both FCRA claims were subject to dismissal without leave to amend because none of the Defendants are "consumer reporting agencies" as defined under Section 1681 a(f). (Doc. No. 157.)
. The two cases cited by Plaintiffs are distinguishable. See, e.g., Rowe v. UniCare Life & Health Ins. Co., No. 09 C 2286,
. Neither party addressed the Court’s tentative ruling at oral argument which stated that Plaintiffs' partial performance/breach of the covenant of good faith and fair dealing claim was subject to dismissal with leave to amend. (Doc. No. 157.)