Cain v. Redbox Automated Retail, LLC

• Decision Date: 12 November 2013
• Docket Number: No. 2:12–cv–15014.,2:12–cv–15014.
• Citation: 981 F.Supp.2d 674
• Parties: Michelle CAIN and Radha Sampat, individually, and on behalf of all others similarly situated, Plaintiffs, v. REDBOX AUTOMATED RETAIL, LLC, a Delaware Limited Liability Company, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

981 F.Supp.2d 674

Michelle CAIN and Radha Sampat, individually, and on behalf of all others similarly situated, Plaintiffs,

v.REDBOX AUTOMATED RETAIL, LLC, a Delaware Limited Liability Company, Defendant.

No. 2:12–cv–15014.

United States District Court,

E.D. Michigan,

Southern Division.

Nov. 12, 2013.

Brian C. Summerfield, Bodman, Troy, MI, Christine E. Ficks, Bodman, Detroit, MI, Ari J. Scharg, Edelson LLC, Chicago, IL, for Plaintiffs.

Carol G. Schley, Peter B. Kupelian, Clark Hill PLC, Detroit, MI, John I. Grossbart, SNR Denton U.S. LLP, Chicago, IL, for Defendant.

OPINION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS

GERALD E. ROSEN, Chief Judge.

I. INTRODUCTION

Plaintiffs Michelle Cain and Radha Sampat (Plaintiffs) bring this putative class action against Defendant Redbox (Defendant), a video rental company, based upon Defendant's alleged disclosure to third parties of certain personal information obtained during Defendant's rental process. They assert three causes of action: (1) a violation of Michigan's Video Rental Privacy Act, M.C.L. § 445.1711 et seq.; (2) breach of contract; and (3) unjust enrichment. Defendant has now moved to dismiss Plaintiffs' Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), which the parties have fully briefed. Both parties have also filed supplemental material with this Court.¹ Having reviewed and considered the parties' briefs, supplemental authorities, supporting documents and the entire record of this matter, the Court has determined that the pertinent allegations and legal arguments are sufficiently addressed in these materials and that oral argument would not assist in the resolution of this motion. Accordingly, the Court will decide Defendant's motion “on the briefs.” See Local Rule 7.1(e)(2), U.S. District Court, Eastern District of Michigan. This Opinion and Order sets forth the Court's ruling.

II. PERTINENT FACTS

A. The Michigan Video Rental Privacy Act

This case involves interpreting several provisions of Michigan's Video Rental Privacy Act (VRPA), which, as another Eastern District of Michigan Court recently noted, “is a state statute that lacks any significant litigation history.” Halaburda v. Bauer Pub. Co., LP, 2013 WL 4012827, at *2 (E.D.Mich. Aug. 6, 2013) (Steeh, J.). The VRPA has its origins in Judge Robert H. Bork's nomination to the United States Supreme Court, during which a Washington weekly newspaper obtained and published “a profile” of Judge Bork based on the titles of 146 films Judge Bork's family rented from a video store. S.Rep. No. 100–599, at 5 (1988), reprinted in 1988 U.S.C.C.A.N. 4342. Congress and several states responded, passing laws regulating the disclosure of video rental and purchase records.

The relevant provisions of the federal legislation, the Video Privacy Protection Act of 1988 (VPPA),² are as follows:

(1) A video tape service provider who knowingly discloses, to any person, personally identifiable information concerning any consumer of such provider shall be liable to the aggrieved person for the relief provided in subsection (d).

(2) A video tape service provider may disclose personally identifiable information concerning any consumer—

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(B) to any person with the informed, written consent of the consumer given at the time the disclosure is sought; ³

(E) to any person if the disclosure is incident to the ordinary course of business ⁴ of the video tape service provider;

18 U.S.C. § 2710(b).

A year later, Michigan enacted the VRPA. The VRPA differs from the federal VPPA in several ways. It, in certain aspects, contains broader consumer protections. The VRPA, for example, also applies to “books or other written materials” and “sound recordings.” M.C.L. § 445.1712. Moreover, though the VRPA's disclosure exceptions generally track the VPPA's disclosure exceptions, it does not include the VPPA's “ordinary course of business” exception. The VRPA's relevant provisions are as follows:

Section 2: Except as provided in section 3 or as otherwise provided by law, a person, or an employee ⁵ or agent of the person, engaged in the business of selling at retail, renting, or lending books or other written materials, sound recordings, or video recordings shall not disclose to any person, other than the customer,⁶ a record or information concerning the purchase, lease, rental, or borrowing of those materials by a customer that indicates the identity of the customer.

Section 3: A record or information described in section 2 may be disclosed only in 1 or more of the following circumstances:

(a) With the written permission of the customer.

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(d) If the disclosure is for the exclusive purpose of marketing goods and services directly to the consumer. The person disclosing the information shall inform the customer by written notice that the customer may remove his or her name at any time by written notice to the person disclosing the information.

* * *

Section 5: Regardless of any criminal prosecution for a violation of this act, a person who violates this act shall be liable in a civil action for damages to the customer identified in a record or other information that is disclosed in violation of this act. The customer may bring a civil action against the person and may recover both of the following:

(a) Actual damages, including damages for emotional distress, or $5,000.00, whichever is greater.

(b) Costs and reasonable attorney fees.

M.C.L. §§ 445.1712, 1713, 1715.

B. Redbox's Business Model and Plaintiffs' Allegations

Defendant rents (and sells) videos—including those on DVDs and Blu-ray discs—through a nationwide network of self-service kiosks. (Plfs' Compl., Dkt. # 1, at ¶ 17). When renting (or purchasing) a video at a kiosk, a customer must, at a minimum: (1) select a movie title; (2) pay with a credit/debit card; (3) enter an email address; and (4) enter a billing zip code. ( Id. at ¶ 18). Defendant charges between $1.00 and $2.00 per day for each movie rental. ( Id. at ¶ 19). Plaintiff Cain rented movies from Michigan kiosks “on or around February 2, 2011 and February 5, 2011.” ( Id. at ¶ 27). Similarly, Plaintiff Sampat rented movies from Michigan kiosks “beginning in November 2010.” ( Id. at ¶ 35).

This lawsuit deals not with the rental process, but rather with what Defendant allegedly does with information collected during that process. In no uncertain terms, Plaintiffs assert that Defendant discloses customers' first and last names, email addresses, movie rental and purchase history, and debit/credit card information (characterized by Plaintiffs as “Personal Viewing Information”) to third parties “each and every time a customer rents or purchases a movie or video from a Redbox kiosk.” ( Id. at ¶ 2). According to Plaintiffs, Defendant discloses this Personal Viewing Information to “an unrelated third party for something it calls ‘service support’ ... [and] for analytics and promotions purposes.” ( Id. at ¶¶ 22, 25, 34, 42). Defendant disclosed this practice during the course of litigation involving a similar VPPA claim in the Northern District of Illinois. ( Id. at ¶ 22; see Sterk v. Redbox Automated Retail, LLC, 11–cv–01729 (N.D.Ill. June 8, 2012)).

Plaintiffs claim that Defendant does not “seek or obtain the consent of a customer to share or otherwise disclose his or her Personal Viewing Information to third parties for any purpose.” ( Id. at ¶ 20). Plaintiffs did not give consent to Defendant to disclose their Personal Viewing Information to any third party and Defendant did not inform Plaintiffs in writing or otherwise that they could remove their names at any time from third party disclosures. ( Id. at ¶¶ 30, 31, 33, 38, 39, 41). As a result, Plaintiffs assert that Defendants caused “privacy and economic injuries,” and additionally “deprived them of the full value of their paid-for rentals ... [b]ecause Plaintiffs ascribe monetary value to the privacy of their Personal Viewing Information (including ... Redbox's obligation to not disclose such information to third parties).” ( Id. ¶¶ 62–64). They also “would not have rented or purchased any movie or video material from Redbox had they known that Redbox would disclose their Personal Viewing Information to third parties in violation of the VRPA.” ( Id. at ¶ 71).

Based upon this alleged practice, Plaintiffs bring three causes of action: a violation of the VRPA, breach of contract, and unjust enrichment. First, Plaintiffs assert that Defendant's disclosure of Personal Viewing Information for the purpose of “service support” and for “analytics and promotions purposes” violates the VRPA. Second, Plaintiffs claim that they entered into a binding contract with Defendant for video material rentals, that they would not have done so had they known Defendant was going to disclose their Personal Viewing Information to third parties, that the VRPA imposed non-disclosure terms on the contract, and that Defendant breached this contract by disclosing their Personal Viewing Information to third parties. Third and finally, Plaintiffs assert a claim of unjust enrichment in the alternative to their breach of contract claim.

Defendant has now moved to dismiss Plaintiffs' Complaint, raising issues concerning Plaintiffs' standing, timeliness, and statutory interpretation. For the reasons set forth below, this Court denies Defendant's Motion.

III. DISCUSSION

A. Rule 12 Standard

1. Rule 12(b)(1)

“When subject matter jurisdiction is challenged under Rule 12(b)(1), the plaintiff has the burden of proving jurisdiction in order to survive the motion.” Madison–Hughes v. Shalala, 80 F.3d 1121, 1130 (6th Cir.1996). A district court may “resolve factual disputes when necessary to resolve challenges to subject matter jurisdiction.” Id. Motions to dismiss for lack of subject matter jurisdiction fall into two general categories: facial attacks and factual attacks. United States v. Ritchie, 15 F.3d 592, 598 (6th Cir.1994). A facial attack on subject matter jurisdiction goes to...