Baird v. Samsung Elecs. Am., Inc.

• Citation: 522 F.Supp.3d 679
• Decision Date: 26 January 2021
• Docket Number: Case No. 4:17-cv-06407-JSW
• Parties: Lance BAIRD, et al., Plaintiffs, v. SAMSUNG ELECTRONICS AMERICA, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of California

522 F.Supp.3d 679

Lance BAIRD, et al., Plaintiffs,

v.SAMSUNG ELECTRONICS AMERICA, INC., et al., Defendants.

Case No. 4:17-cv-06407-JSW

United States District Court, N.D. California.

Signed January 26, 2021

Jacob L. Karczewski, Law Offices of Jacob Karczewski, Seattle, WA, for Plaintiff Lance Baird.

David Raymond Ongaro, Ongaro PC, San Francisco, CA, for Plaintiffs.

Lance Allan Etcheverry, Skadden, Arps, Slate, Meagher & Flom LLP, Palo Alto, CA, for Defendant Samsung Electronics America, Inc.

ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS

Re: Dkt. No. 62

JEFFREY S. WHITE, United States District Judge

Now before the Court is defendants’ motion to dismiss the amended complaint filed by Defendant Samsung Electronics America, Inc. ("Samsung"). The Court has carefully considered the parties’ papers, relevant legal authority, and the complaint, and it finds the motion suitable for disposition without oral argument. See N.D. Civ. L.R. 7-1(b). The Court GRANTS Samsung's motions to dismiss.

BACKGROUND

A. The Allegations

This case concerns discontinuation of YouTube access on Samsung's "Smart TVs." Back in 2010, when Smart TVs were novel, Samsung promoted them by promising the convenience of a television set with the access to entertainment apps of a smartphone. (Dkt. No. 25 ("FAC") ¶ 2.) Samsung did not promise access to any particular app. However, Samsung broadly advertised pictures of YouTube, Netflix, Hulu and other streaming apps on its packaging and further stated that customers can "connect" to these apps through a Smart TV in commercials, advertisements, and interviews. (Id. ¶¶ 2, 30 & Ex. B.)

Samsung could not guarantee access to all of the apps. For example, Samsung could not provide access to Netflix if the user did not have a Netflix account, a fact that it disclosed on the product packaging. (Id. ¶ 30(a).) Samsung also could not provide access to apps without an internet connection or outside of area limitations, which it also disclosed on the packaging. (Id. ) However, Samsung made no risk disclosures on the packaging with respect to YouTube. (Id. ) Plaintiffs allege that this was misleading because YouTube, which helped Samsung develop its Smart TV app, reserved the right to discontinue support at any time. (Id. ¶ 3.) And that is what happened: in 2017, YouTube stopped supporting older "flash-based" Smart TVs, and the owners of those TVs lost access to the YouTube app. (Id. ¶¶ 4-5.)

Plaintiffs¹ are residents of California, Massachusetts, and Illinois who purchased Samsung's Smart TVs in 2011 and 2012. (Id. ¶¶ 25-28.) They claim that they relied on the packaging when they purchased the Smart TVs, believing that YouTube would be supported for the lifetime of the product, and that they would not have purchased Smart TVs if they knew that YouTube could terminate support. (Id. ¶¶ 35-37.) Plaintiffs bring claims on behalf of a class of similar purchasers for breach of contract, unjust enrichment, negligent misrepresentation, fraudulent nondisclosure, and violation of several states’ consumer protection laws.

The Court shall address additional facts as necessary in the analysis.

B. Procedural History

This Court has previously dismissed the complaint based, in relevant part, on judicial notice of certain disclaimers in Samsung's user manuals, warranties, and terms of service. (Dkt. No. 47 ("MTD Order").) Plaintiffs appealed. The Ninth Circuit reversed and remanded because the Court did not address Plaintiffs’ arguments that the disclaimers could only be accessed after they purchased the Smart TVs and that they were substantively and procedurally unconscionable. (Dkt. No. 57 ("Mem. Opinion").)

The Ninth Circuit instructed the Court to construe the breach of contract claim as breach of an express warranty. (Id. at 4 n.2.) With respect to that claim, the court identified three additional issues, including (1) whether post-purchase disclaimers negate or limits express representations, (2) whether disclaimers that contradict an express warranty are inoperable under California Commercial Code § 2316(1), and (3) whether post-purchase disclaimers buried in a lengthy digital document are unenforceable. (Id. at 5-6.) However, the Ninth Circuit did not address whether the lack of express representations on the packaging alone doomed Plaintiffs’ claims. Because this Court "d[id] not [previously] address whether the advertising and packaging of Samsung's Smart TV boxes were independently misleading," neither did the Ninth Circuit. (MTD Order at 10.)

ANALYSIS

C. Legal Standard.

Defendants move to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Dismissal under Rule 12(b)(6) is granted when the pleadings fail to state a claim upon which relief can be granted. Pursuant to Bell Atlantic v. Twombly , a plaintiff must allege "enough facts to state a claim to relief that is plausible on its face."

550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). If the allegations are insufficient to state a claim, a court should grant leave to amend, unless amendment would be futile. See Reddy v. Litton Indus., Inc. , 912 F.2d 291, 296 (9th Cir. 1990). Where a plaintiff alleges fraud, Rule 9(b) requires the plaintiff to state the circumstances constituting fraud with particularity. See Fed. R. Civ. P. 9(b). Particularity under Rule 9(b) requires the plaintiff to plead the "who, what, when, where, and how" of the misconduct. See Kearns v. Ford Motor Co. , 567 F.3d 1120, 1124 (9th Cir. 2009).

D. Request for Judicial Notice.

Samsung seeks judicial notice of the disclaimers raised in the previous motion. The Court has previously considered the documents under the incorporation by reference doctrine. (MTD Order at 5-7.) However, it did so when Plaintiffs relied on a breach of contract claim, reasoning that the disclaimers were part of the contract on which Plaintiffs’ claims are based. On appeal, the Ninth Circuit instructed this Court to construe the breach of contract claim as a breach of express warranty claim. Under that theory, consideration of the disclaimers is not appropriate.

As previously explained, incorporation by reference may only be used when documents "form[ ] the basis of the plaintiff's claim" or the plaintiff "refers extensively to the document." Khoja v. Orexigen Therapeutics, Inc. , 899 F.3d 988, 1003 (9th Cir. 2018) (quoting Coto Settlement v. Eisenberg , 593 F.3d 1031, 1038 (9th Cir. 2010) ). The purpose of the doctrine is to prevent a plaintiff "from selecting only portions of documents that support their claims, while omitting portions of those very documents that weaken—or doom—their claims." Id. (quoting Parrino v. FHP, Inc. , 146 F.3d 699, 706 (9th Cir. 1998) ). Ordinarily, warranty disclaimers are undoubtedly "integral" to an express warranty claim. See, e.g., In re Sony Gaming Networks & Customer Data Sec. Breach Litig. , 903 F. Supp. 2d 942, 954, 968 (S.D. Cal. 2012) ; Datel Holdings Ltd. v. Microsoft Corp. , 712 F. Supp. 2d 974, 984 (N.D. Cal. 2010). In those cases, however, both the warranties and the disclaimers are found in the same document, which renders consideration of the entire context appropriate. Here, on the other hand, Plaintiffs allege an express warranty on the packaging of the Smart TVs, while Samsung seeks notice of disclaimers found in entirely different documents that are cited nowhere in the complaint. They are therefore not "integral" to Plaintiffs’ claims because Samsung relies on them primarily to create a defense. Khoja , 899 F.3d at 1002.

Moreover, the import of those documents is disputed. For example, Plaintiffs dispute that they were required to open Samsung's electronic e-Manual and term and conditions before using the Smart TVs, which could significantly impact the "clear and conspicuous" nature of the disclaimers. Dorman v. Int'l Harvester Co. , 46 Cal.App.3d 11, 19-20, 120 Cal.Rptr. 516 (1975) (disclaimers that are not "clear and distinct" are not effective). Samsung attempts to work around the issue by introducing a declaration from its senior manager, but such evidence is clearly inappropriate on a 12(b)(6) motion where Plaintiffs have not had the opportunity to test the evidence.² See Khoja , 899 F.3d at 1003 (noting that submitting documents not cited in the complaint deprives the plaintiff of opportunity to respond). These disputes also render judicial notice inappropriate. See id. at 1000 (judicial notice improper where "there is a reasonable dispute as to what [the document] establishes"). Accordingly, the Court DENIES Samsung's request to consider the disclaimers in these documents.

E. The Court Grants Defendants’ Motion to Dismiss.

Samsung moves to dismiss on six grounds. First, Plaintiffs fail to allege a "specific and unequivocal" statement of perpetual YouTube access for their express warranty claim. Second, they fail to comply with Rule 9(b) for claims sounding in fraud. Third, Plaintiffs fail to identify a positive assertion for the negligent misrepresentation claim. Fourth, Plaintiffs waived their fraud by nondisclosure claim. Fifth, no reasonable consumer would interpret Samsung's representations to mean that YouTube would be available in perpetuity. And sixth, Plaintiffs fail to allege gain by deception for their unjust enrichment claim. The Court addresses Samsung's arguments by claim.

1. Express Warranty Claim – First Cause of Action.

Under California law, an express warranty may arise from an "affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain," or by a "description of the goods which is made part of the basis of the bargain." Frenzel v. AliphCom , 76 F. Supp. 3d 999,...