ORDER
Plaintiff Richard Vaccariello (“Plaintiff’) brings this action against Defendant XM Satellite Radio, Inc. (“Defendant”) under New York General Business Law § 349 (“GBL § 349”) and New York General Obligations Law § 5-903 (“GOL § 5-903”). Plaintiff asserts that Defendant, through its practice of automatically renewing customers’ subscriptions, violated GBL § 349 and was unjustly enriched, and also seeks injunctive relief mandating Defendant comply with GOL § 5-903’s notice provisions. Plaintiff seeks to certify a class under Federal Rule of Civil Procedure 23, consisting of “all residents of
Magistrate Judge George Yanthis issued a Report and Recommendation (the “Report”) in which he recommended that Plaintiffs motion for class certification be denied. For the reasons that follow, this Court concurs with the Report and hereby adopts it as the Order of this Court. Accordingly, Plaintiffs motion is DENIED.
BACKGROUND
The factual background is provided in further detail in the Report and Recommendation. Defendant XM provides subscription based satellite radio service through XM compatible automobiles, radios, and the internet. XM automatically renews the customer’s service for an identical term upon expiration of a subscription.
Plaintiff purchased a one-year XM subscription in April 2004 at the end of a three-month trial period following his leasing of a vehicle with a pre-installed XM radio. Approximately a year later, Plaintiff purchased a three-year subscription by telephone, and at around the same time, activated an XM online account allowing him to listen to satellite radio over the internet. In the process of activating this account online, Plaintiff checked a box indicating that he had read and that he accepted XM’s terms and conditions of service, which included, among other things, that “the term of this Agreement is indefinite and Services will continue until canceled.”
Plaintiffs subscription was renewed and Plaintiff thereafter received an invoice for an additional three year subscription. After receiving a past due notice a month later and then cancelling his subscription, Plaintiff paid a pro-rated bill for the cost of XM services for the time period between automatic renewal and cancellation.
Plaintiff asserts the following three causes of action: 1) that XM’s automatic renewal policy was a deceptive trade practice in violation of New York General Business Law (“GBL”) § 349(a). (Am.Comp. ¶ 34)
On April 4, 2011, Magistrate Judge Yanthis issued a Report and recommendation on (the “Report”), in which he recommended that Plaintiffs motion for class certification be denied, and issued an order staying discovery in this matter. (Docket Entry Nos. 106, 107). Plaintiff timely filed objections to the Report, and Defendant filed a reply to Plaintiffs objections. (Docket Entry No. 110-12.) This case was thereafter reassigned to this Court. (Docket Entry No. 113.)
DISCUSSION
The Report recommends that Plaintiffs motion for class certification be denied. First, the Report finds that Plaintiff lacks Article III standing and as such cannot certify a Rule 23(b)(2) injunctive class. The Report also recommends that Plaintiffs claims under GBL § 349 and for unjust enrichment are not amenable to class certification under Rule 23(b)(3) on the basis that the elements of the causes of action are not susceptible to class-wide proof because common evidence does not support Plaintiffs claims on a class-wide basis. The need for individual inquiries on multiple issues make class certification inappropriate in this action. Specifically, because proposed class members who requested, wanted, or assented to automatic renewal cannot recover for unjust enrichment, individual inquiries are required to assess injury and determine damages. The Report also found that class treatment is precluded by the individual inquiries necessary to determine which proposed class members entered into “cliekwrap” agreements. Furthermore, the Report found that individual defenses
A. Standard of Review
United States Magistrate Judges hear dis-positive motions and make proposed findings of fact and recommendations, generally in the form of a Report and Recommendation. In reviewing a Report and Recommendation, a district court “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1)(C).
A party may file “specific written objections,” Fed. R. Civ. P. 72(b), to a Magistrate Judge’s proposed findings and recommendations, and in that case, the district court has an obligation to make a de novo determination as to those portions of the Report and Recommendation to which objections were made. 28 U.S.C. § 636(b)(1); First Union Mortgage Corp., v. Smith,
Where no timely objection has been made by either party, a district court need only find that “there is no clear error on the face of the record” in order to accept the Report and Recommendation. Nelson v. Smith,
B. Plaintiff’s Motion to Certify a Class
A putative class must be certified under the criteria of Federal Rules of Civil Procedure 23(a) and 23(b), and Plaintiffs bear the burden of establishing that they meet these requirements. Fed. R. Civ. Pro. 23(a)-(b). The requirements of 23(a) are referred to as: 1) numerosity; 2) commonality; 3) typicality; and 4) adequate representation. See Moore v. PaineWebber, Inc.,
A plaintiff attempting to demonstrate predominance must show that the issues that are subject to generalized proof, and are thus applicable to the class as a whole, predominate over those issues subject to individualized proof. Amchem Products, Inc. v. Windsor,
1. Plaintiff Cannot Certify a Class Under Federal Rule of Civil Procedure 23(b)(2)
The Report finds that Plaintiff lacks standing to certify a Rule 28(b)(2) class because he was not an XM customer at the time this action was commenced. A plaintiffs standing is considered at the time the action was commenced. Comer v. Cisneros,
A class cannot be certified if a named plaintiff lacks Article III standing. Cent. States Southeast & Southwest Areas Health & Welfare Fund v. Merck-Medco Managed Care, LLC,
Plaintiff cannot satisfy the injury-in-fact requirement in actions for injunctive relief by relying on past injuries for two primary reasons. Because Plaintiff was no longer an XM customer at the time this action was filed, he did not face future harm from XM’s renewal policies. In addition, Plaintiff has demonstrated that he is now keenly aware of XM’s renewal practices and policies, and as such, he is very unlikely to suffer from being billed without his knowledge.
Plaintiff claims that there has always been a likelihood that he would suffer future harm as demonstrated by the fact that he subscribed to Sirius, now Sirius XM and that, unlike cases cited, this case involves a situation which is likely to be repeated and where customers, including Plaintiff, are limited in their options and are forced to use Defendant’s services in the future.
As stated in the Report, Plaintiffs lack of standing is based on the fact that Plaintiff was not an XM customer at the time he commenced the action, not based on the fact that Plaintiff paid the disputed charges.
2. Plaintiff Cannot Certify a Class Under Federal Rule of Civil Procedure 23(b)(3)
The Report finds that Plaintiff cannot demonstrate injury under GBL § 349 on a class-wide basis because individual issues predominate. Specifically, Plaintiff is unable to show injury to proposed class members on a class-wide basis, Defendant could submit individual defenses to Plaintiffs claims, and damage calculations require individual considerations.
Specifically, Plaintiff would necessarily have to show which of the proposed class members were actually injured when then-subscriptions were automatically renewed. Whether a customer requested, wanted, or approved renewal of their subscription is not amenable to being proven through class-wide proof. Because Plaintiff is unable to prove through common evidence which customers in fact wanted their subscriptions to be automatically renewed, the predominance questions are not met. Furthermore, the fact that Defendant would likely submit individual defenses make this action inappropriate for class treatment. Among these defenses, as the Report discusses, are the voluntary payment doctrine, under which any proposed class member who was aware of Defendant’s renewal policy cannot recover subscription fees in a GBL § 349 claim.
Similarly, Plaintiffs unjust enrichment claim is similarly not amenable to class treatment because of the individual inquiries
As such, the Report properly found that Plaintiffs unjust enrichment claim is not amenable to class treatment. Plaintiffs arguments to the contrary are without merit and generally repeat arguments made in earlier pleadings.
CONCLUSION
For the reasons set forth above, this Court concurs with the Report and Recommendation of Magistrate Judge Yanthis and adopts it as the Order of this Court, in its entirety. Accordingly, Plaintiffs motion for class certification is hereby denied.
SO ORDERED.
REPORT AND RECOMMENDATION
TO THE HONORABLE CATHY SEIBEL, United States District Judge:
Plaintiff, Richard Vaceariello (“plaintiff’ or “Vaecariello”), brought this action against defendant, XM Satellite Radio Inc. (“defendant” or “XM”), alleging that XM violated New York Gen. Bus. Law § 349 (“GBL § 349”) and was unjustly enriched through its practice of automatically renewing customers’ subscriptions. Plaintiff also seeks injunctive relief mandating XM comply with the notice provisions of New York Gen. Oblig. Law § 5-903 (“GOL § 5-903”). Pursuant to Fed.R.Civ.P. 23 (“Rule 23”), Vaecariello seeks to certify a class consisting of, “all residents of the State of New York who subscribed to XM Satellite radio service and have had their service plan automatically renewed at any time since June 11, 2005.” For the reasons set forth below, I respectfully recommend denial of plaintiffs motion for class certification.
I. BACKGROUND
A. XM’s Business Practices
XM is a publically traded company that provides subscription based satellite radio services. (Am. Compl. ¶ 8; Dreyer Decl. Ex. H at ¶2
When a subscription expires, XM automatically renews the customer’s service for an identical term. (Id. at 5-6; Def.’s Mem. at 1, 6-7). By way of example, at the end of a three year subscription a customer’s service automatically renews for another three years. XM disclosed its automatic renewal policy to subscribers. (Reply Mem. of Law in Further Support of Pl.’s Mot. for Class Certification at 18—19
In January, 2004 Vaecariello leased a General Motors (“GM”) Cadillac Escalade with a pre-installed XM radio. (Dreyer Decl. Ex. H at ¶ 5). On or about January 21, 2004 plaintiff began a free three month trial of XM radio. {Id. at ¶ 10). At the end of the trial period, April 2004, Vaecariello purchased a one year XM subscription. {Id. at ¶¶ 17-18).
In early April 2005, plaintiff called XM’s Listener Care Center and purchased an additional three year subscription. {Id. at ¶ 44). At approximately the same time that he renewed his subscription, Vaecariello activated an XM online account. {Id. at ¶ 33). The XM online account allowed Vaecariello to listen to satellite radio over the internet. {Id.). Activation of this online account required plaintiff to click on a check box indicating that he read and accepted XM’s terms and conditions of service. {Id. at 1134; Pl.’s Mem. at 11). XM’s terms and conditions stated, in part, that, “the term of this Agreement is indefinite and Services will continue until canceled.” (Lochhaas Decl. Ex. X at 00681).
In early February 2008, several months prior to the end of his subscription, plaintiff returned his leased vehicle. (Dreyer Decl. Ex. H at ¶ 58). After turning in his vehicle and prior to actual renewal, XM alleges plaintiff was sent a letter advising him that his subscription was set to renew for an additional three years. (Def.’s Mem. at 17-18). In early April 2008, Vaccariello’s subscription was in fact renewed. (Dreyer Decl. Ex. H at ¶ 60). Accordingly, plaintiff received an invoice for an additional three year subscription. {Id.).
Plaintiff failed to pay the April invoice and on or about May 9, 2008 received a past due notice. (Id. at ¶ 61). On that same day Vaecariello called XM and cancelled his subscription. (Id. at ¶ 64; Pl.’s Mem. at 12). After cancelling his subscription, XM sent plaintiff a pro-rated bill for the cost of satellite services rendered between automatic renewal and cancellation. (Dreyer Decl. Ex. H. at ¶ 63). Ultimately, by check dated May 29, 2008 the plaintiff paid his outstanding XM balance. (Id. at ¶ 65).
C. Plaintiffs Complaint
Based on his interactions with XM, plaintiff commenced this action in his own name and on behalf of all other New York subscribers. who had their service automatically renewed since June 11, 2005. (Am. Compl. at ¶ 1; Pl.’s Mem. at 1). In his complaint Vaecariello asserts three causes of action. First, plaintiff alleges that XM’s automatic renewal policy was a deceptive trade practice in violation of GBL § 349. (Am. Compl. at ¶ 34). This cause of action is premised, in part, on the theory that nonconformity with GOL § 5-903 constitutes a per se violation of GBL § 349. (Pl.’s Mem. at 3, 22). Alternatively, Vaecariello argues that XM violated GBL § 349 by inadequately disclosing the requirement that subscribers affirmatively cancel their satellite service. (Id. at 3, 35). Second, Vaecariello alleges that XM was unjustly enriched by its collection of fees from subscribers whose service was automatically renewed. (Am. Compl. at ¶ 37). Third, plaintiff seeks an injunction compelling XM to conform with the notice provisions of GOL § 5-903. (Id. at ¶ 41).
II. DISCUSSION
A. Legal Standard
Motions for class certification are governed by Federal Rule of Civil Procedure 23. See Fed.R.Civ.P. 23. Rule 23(a) has four familiar requirements: “(1) numerosity; (2) commonality; (3) typicality; and (4) adequacy of representation.” McLaughlin v. Am. Tobacco Co.,
In this case, plaintiff seeks to certify a class pursuant to Rule 23(b)(2) and (3). Rule 23(b)(2) permits certification where “the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole.”
Courts must conduct a rigorous analysis of the moving party’s compliance with Rule 23. In re IPO,
B. Fed.R.Civ.P. 28(b)(2)
Plaintiff cannot certify a Rule 23(b)(2) injunctive class because he lacks Article III standing. See U.S. Const, art. III, § 2. The jurisdiction of federal courts are circumscribed to actual “cases” and “controversies.” W.R. Huff Asset Mgmt. Co. v. Deloitte & Touche L.L.P. (‘W.R. Huff”),
“(1) injury-in-fact, which is a concrete and particularized harm to a legally protected interest; (2) causation in the form of a fairly traceable connection between the asserted injury-in-fact and the alleged actions of the defendant; and (3) redressability, or a non-speculative likelihood that the injury can be remedied by the requested relief.” W.R. Huff,
The three irreducible elements of standing apply to each claim and form of relief sought. Baur v. Veneman,
To satisfy standing’s injury-in-fact requirement a plaintiff seeking injunctive relief must demonstrate: (1) a “likelihood of future harm”; and (2) “the existence of an official policy or its equivalent.” Shain v.
In this case, XM had an official policy of automatically renewing customer’s subscriptions. However, Vaccariello cannot demonstrate that he faced a likelihood of future harm from XM’s renewal policy. When this action was commenced, the time for testing plaintiffs standing, Vaccariello was no longer an XM customer. See (Pl.’s Mem. at 12) (plaintiff no longer an XM customer as of May 9, 2008); (Id. at 14) (initial complaint filed on June 11, 2008); (Mackiel Reply Decl. Ex. I at 94) (plaintiff subscribed to Sirius in January 2010). In the absence of a satellite subscription, plaintiff did not face a realistic possibility of future harm from XM’s renewal policy at the time he filed the complaint.
Vaccariello’s knowledge of XM’s practices further vitiates the likelihood of future harm. The crux of plaintiffs complaint is that XM’s customers unwittingly pay extra fees because they are unaware that their service automatically renews. As a result of his billing dispute with defendant, Vaccariello is now clearly aware of XM’s billing practices. Given this knowledge, plaintiff is not likely to unwittingly face automatic renewal and its accompanying fees. Accordingly, there is insufficient evidence that Vaccariello is likely to suffer future harm from XM’s policies. See Laster v. T-Mobile USA Inc., No. 05cv1167,
This Court has considered and ultimately concludes that plaintiffs arguments in favor of standing are unpersuasive. Vaccariello’s reliance on McNair v. Synapse Group Inc., No. 06-5072,
Crucial factual differences distinguish McNair from the case at bar. Different from Synapse, XM is not a secret force purveying satellite radio. As such, it is unlikely that a subscriber who canceled their service will unwittingly purchase an XM radio in the future. Therefore, one of the key rationales underlying the McNair decision is inapposite. McNair is also distinguishable on the grounds that XM’s allegedly deceptive practices have remained constant over time. Thus, after experiencing automatic renewal a subscriber is unlikely to be deceived by the practice in the next billing cycle. Given these factual distinctions, McNair does not cure Vaccariello’s lack of standing.
Cassese v. Washington Mut. Inc.,
Plaintiffs reliance on Jermyn v. Best Buy Stores,
Finally, GBL § 349(h)’s injunction provision cannot cure plaintiffs standing defect. In a diversity ease, such as this, the plaintiff must possess Article III and statutory standing. See Mid-Hudson,
C. Fed.R.Civ.P. 23(b)(3)
For the reasons set forth below plaintiffs GBL § 349 and unjust enrichment claims are not susceptible to class certification under Rule 23(b)(3). Rule 23(b)(3)’s predominance requirement, “tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Brown,
The applicability of individualized defenses to particular class members is another factor courts consider in adjudicating the predominance requirement. McLaughlin,
(1) GBL § 349
Plaintiffs alleging a violation of GBL § 349’s prohibition against deceptive acts and practices must prove: “(1) the [challenged] act was consumer oriented; (2) the act or practice was misleading in a material respect; and (3) the plaintiff was injured as a result.” Spagnola v. Chubb Corp.,
Vaccariello’s attempt to certify a class fails, in part, because he cannot prove the injury element of his GBL § 349 on a class wide basis. Brissenden v. Time Warner Cable of New York City,
Vaccariello, like the plaintiff in Brissenden, faces an insurmountable challenge of proving class wide injury through common proof. Similar to Time Warner’s customers, a portion of XM’s 600,000 New York customers may have wanted their service automatically renewed. Like those Time Warner customers who wanted the optional equipment, XM subscribers who wished to have their service automatically renewed did not suffer a cognizable GBL § 349 injury. Accordingly, even if XM’s disclosures were deficient, customers who desired automatic renewal are not entitled to relief under GBL § 349. Ascertaining which customers actually wanted renewal requires a myriad of individual inquiries that would predominate over any common questions. Plaintiffs inability to prove class wide injury through common evidence is, alone, grounds for denying Rule 23(b)(3) certification based on a lack of predominance. See In re Currency Conversion,
XM’s individual defenses against proposed class members further hampers plaintiffs ability to satisfy Rule 23(b)(3). These specific defenses include the voluntary payment doctrine as well as the existence of full or partial refunds. In a GBL § 349 claim the voluntary payment doctrine “bars recovery of payments voluntarily made with full knowledge of the facts.” Solomon v. Bell Atlantic Corp.,
XM’s ability to assert a defense based on the existence of credits and refunds also raises individual issues. Under New York law, a plaintiff who has received billing credits as compensation for defendant’s allegedly deceptive practices is prohibited from asserting a GBL § 349 claim. Solomon,
Vaceariello’s reliance on Jermyn, Dupler v. Costco Wholesale Corp.,
Additionally, plaintiffs reliance on GOL § 5-903 does not overcome the lack of predominance. Vaecariello, throughout his motion papers, argues that defendant’s noncompliance with GOL § 5-903 raises common questions that predominate over individual issues. However, by its plain language GOL § 5-903 simply provides consumers with a defense against automatically renewing contracts. See New York Gen. Oblig. Law § 5-903 (“Automatic renewal provision of contract for service ... unenforceable by contractor unless notice thereof given to recipient of service.”) (emphasis added). The statute does not, as plaintiff implies, create mandatory obligations that can serve as the predicate for a causes of action. Plaintiff has failed to cite a single case where noncompliance with GOL § 5-903’s disclosure requirements constituted an independent cause of action or was held to violate GBL § 349. In fact New York courts have affirmatively held that GOL § 5-903 does not create an independent cause of action. See Ovitz v. Bloomberg L.P.,
(2) Unjust Enrichment
In New York a plaintiff suing on the theory of unjust enrichment must prove: “(1) that the defendant benefitted; (2) at the plaintiffs expense; and (3) that equity and good conscience require restitution.” Leibowitz v. Cornell Univ.,
Plaintiffs attempt to certify a class as to his unjust enrichment claim fails, in part, because the elements of the cause of action are not susceptible to class wide proof. Specifically plaintiff cannot prove through common evidence that equity and good conscience require restitution. An “indispensable ingredient” of the equity and good conscience requirement is the existence of “an injustice as between the two parties involved.” In re Jetblue Airways Corp. Privacy Litig.,
Accordingly, individual inquiries are necessary to determine which proposed class members wanted automatic renewal and/or continued to listen to satellite radio after renewal, as these subscribers cannot recover for unjust enrichment. Such individualized
Moreover, plaintiff cannot prove through common evidence that members of the proposed class are entitled to recover damages under the theory of unjust enrichment. Unjust enrichment claims only lie in the absence of a binding agreement between the parties. See Beth Israel,
The “cliekwrap” agreements in this case required subscribers to accept XM’s customer agreement prior to receiving satellite radio service. See (Lochhaas Decl. at ¶ 9). One of the terms in every customer agreement informed subscribers, in some form, that their service was continuous. See e.g., (Lochhaas Deck Ex. J at 08822). Therefore, a number of XM customers entered a valid contract that addressed the disputed matter in this case, automatic renewal. Accordingly, subscribers who accepted the “cliekwrap” agreement cannot recover under the unjust enrichment claim. See Beth Israel,
III. CONCLUSION
For the reasons set forth above, I respectfully recommend that plaintiffs motion for class certification be denied in its entirety.
IV. NOTICE
Pursuant to 28 U.S.C. § 636(b)(1)(C), as amended, and Fed.R.Civ.P. 72(b), the parties shall have fourteen (14) days from receipt of this Report to serve and file written objections to this Report and Recommendation. If copies of this Report are served upon the parties by mail, the parties shall have seventeen (17) days from receipt of this Report to file and serve written objections. See Fed.R.Civ.P. 6(d). Such objections, if any, shall be filed with the Clerk of the Court, with extra copies delivered to the chambers of The Honorable Cathy Seibel, United States District Court, Southern District of New York, 300 Quarropas Street, White Plains, New York, 10601, and to the chambers of the undersigned at said Courthouse.
Failure to file timely objections to this Report and Recommendation will preclude later appellate review of any order of judgment that will be entered. See Caidor v. Onondaga County,
Requests for extensions of time to file objections must be made to the Honorable Cathy Seibel and not to the undersigned.
Dated: April 4, 2011
Notes
. "Am. Compl.” refers to Plaintiff's Amended Class Action Complaint, dated October 16, 2008.
. Citations to Declarations refers to the declarations submitted with this motion
. Hereinafter Def.'s Mem.
. Hereinafter PL’s Mem.
. Hereinafter, Pl.’s Reply Mem.
. “Cliekwrap” agreements generally entail a website user clicking an "I accept” box after being presented with terms and conditions. See Hines v. Overstock.com, Inc.,