Circle Click Media LLC v. Regus Mgmt. Grp. LLC
| Decision Date | 29 October 2015 |
| Docket Number | Case No. 3:12-CV-04000-SC |
| Court | U.S. District Court — Northern District of California |
| Parties | CIRCLE CLICK MEDIA LLC, a California limited liability company, and CTNY INSURANCE GROUP LLC, a Connecticut limited liability company, on behalf of themselves and all others similarly situated, Plaintiffs, v. REGUS MANAGEMENT GROUP LLC, a Delaware limited liability company; REGUS BUSINESS CENTRE LLC, a Delaware limited liability company; REGUS plc, a Jersey, Channel Islands public limited company; HQ GLOBAL WORKPLACES LLC, a Delaware limited liability company, and DOES 1 through 50, Defendants. |
Now before the Court are (1) Motion to Dismiss for lack of subject matter jurisdiction, ECF No. 271 ("MTD"), filed by Defendants Regus Management Group LLC, Regus Business Centre LLC, Regus plc, and HQ Global Workplaces LLC (collectively "Regus") (2) Regus's Motion for Summary Judgment on its counterclaim for breach of contract, ECF No. 272 ("MSJ"), (3) Regus's Motion for Sanctions under Rule 37, ECF No. 283 ("Mot. for Sanc."), (4) Motion to Exclude Expert Reports of Mark Vogel and James Pampinella, ECF No. 311 ("Mot. to Excl."), filed by Plaintiffs Circle Click Media LLC ("Circle Click") and CTNY Insurance Group Inc. ("CTNY") (collectively "Plaintiffs"), (5) Plaintiffs' Motion for Class Certification, ECF No. 238 ("Mot. for Cert."), and (6) Regus's Motion for Security for Costs, ECF No. 273 ("Mot. for Sec."). The Motions are fully briefed and suitable for disposition without oral argument per Local Rule 7-1(b). For the reasons set forth below, the Court finds as follows:
Regus is in the business of leasing commercial office space throughout California and New York. Through its website, Regus has represented that it provides customers with fully equipped offices for one all-inclusive monthly price. Regus has also represented that its services are "simple, easy, and flexible," that its one-page contract -- the Office Service Agreement ("OSA") -- "takesjust 10 minutes to complete," and that it provides a "single monthly invoice." ECF No. 65 ("2AC") ¶¶ 34-41.
The OSA is in fact one page, and it merely identifies the location of the office space, the monthly office fee, the term of the agreement, and the parties to it. Regus's monthly invoices, however, routinely exceed the monthly payment amount indicated on the OSA due to various mandatory fees disclosed in other documents.
One of these documents is the Terms and Conditions, which the OSA incorporates by reference. The Terms and Conditions is also only one page, but it is printed in five-point font, which is almost illegible. In hardcopy, the Terms and Conditions are printed on the reverse side of the OSA. In the online version, customers have to download them. The font is equally small in the online version, though a customer can, of course, change the settings on their computer to increase the size. When a customer signs the OSA, they affirm that they have read and understood the Terms and Conditions.
The Terms and Conditions reference another document, the "House Rules." The House Rules also reference a "Service Price Guide," which lists the prices for a variety of services, including kitchen amenities and phone and IT services.
There are four allegedly unfair, illegal, or deceptive fees at issue in this case. None of them are disclosed on the OSA. There is a comments box on the OSA, however, where Regus employees can add additional information to the standard OSA form. In a minority of executed OSA's, Regus employees have made a note in the comments box of one or more of the mandatory fees.
The first fee at issue is the Kitchen Amenities Fee ("KAF"). The KAF is a monthly fee charged by Regus for the provision of unlimited beverages. The service -- and therefore the fee -- is mandatory; thus, all Regus tenants pay the KAF. The KAF is neither disclosed in the OSA nor the Terms and Conditions. The first mention of the KAF is in the House Rules, which states that it is mandatory but does not list the amount. The amount of the KAF is listed in the Services Price Guide.
The second mandatory fee at issue is the Office Restoration Services fee ("ORS"). The ORS is a mandatory fee charged upon a tenant's departure for "normal cleaning and testing and to return the accommodations to its original state." ECF No. 279-1 ("Cert. Opp'n") at 12. The ORS is disclosed -- though the amount of the fee is not provided -- in the Terms and Conditions and House Rules.
The third mandatory fee at issue is the Business Continuity Services fee ("BCS"). The BCS is a mandatory fee charged upon the client's departure for services such as answering phone calls and forwarding mail. The BCS is disclosed in the Terms and Conditions and House Rules; those disclosures, however, merely indicate that the BCS is "three months of the Virtual Office fee," without providing the amount of the Virtual Office fee. Mot. for Cert. at 9.
The final fee in dispute is the amount that Regus charges clients for taxes on certain services.1 Although the OSA and Terms and Conditions disclose that quoted fees are "excluding tax,"Plaintiffs claim that "Circle Click was charged furniture and phone handset taxes that were excessive." Id.
The content and form of Regus's invoices for telephone services are also at issue in this case. Specifically, Plaintiffs allege that the invoices that Regus provides for telephone services do not comply with California Public Utilities Code ("CPUC") section 2890, which sets forth a number of requirements for the contents of telephone bills.
Circle Click is a California company with its principal place of business in San Francisco, California. Circle Click executed an OSA with Regus for two offices in San Francisco for a period starting in May 2011 and ending in May 2012. Prior to entering into the OSA, Circle Click's principal viewed Regus's website and allegedly relied on Regus's advertisements indicating Regus offered fully-equipped office space for a single low monthly price. Before signing the OSA online, Circle Click's principal opened and read the Terms and Conditions linked to the OSA on her computer. Although the OSA indicated that Circle Click's total monthly payment was to be $2,461, Regus invoiced Circle Click for significantly more than that due to additional fees that were not listed on the OSA.
CTNY is a Connecticut company doing business in New York. CTNY entered into a Regus OSA for New York office space in May 2012. Prior to entering into the OSA, CTNY's principal viewed Regus's website and allegedly relied on Regus's advertisements indicating Regus offered fully-equipped office space for a single low monthly price. CTNY also allegedly relied on oralrepresentations made by Regus's sales representatives that the monthly payment per the list price included all the required charges and constituted the total monthly payment. While reviewing the OSA online, CTNY's principal was unable to open a link to Regus's Terms and Conditions. Nevertheless, CTNY's principal confirmed that he had read and understood the Terms and Conditions. Soon after executing the agreement, CTNY complained about the KAF and other services it allegedly thought were included in the OSA price. CTNY moved out of the Regus space within a few weeks of moving in.
In July 2012, Plaintiffs filed this action against Defendants in California state court. ECF No. 1. The action was subsequently removed, and several rounds of pleading followed. The gravamen of Plaintiffs' Second Amended Complaint ("2AC"), Plaintiffs' operative pleading, is that Regus and the other Defendants routinely assessed Plaintiffs for charges that were not disclosed in the OSA. ECF No. 65 ("2AC"). For example, according to Plaintiffs' complaint, the monthly fee listed in Circle Click's OSA was $2,461, but Circle Click received monthly invoices ranging from $2,559.67 to $6,653.79. Id. ¶ 49.
The Court's April 22, 2013 Order, ECF No. 77 ("4/22/13 MTD Order"), dismissed several of Plaintiffs' claims with prejudice. The following causes of action were left undisturbed: violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200, et seq.; violation of California's False Advertising Law ("FAL"), id. § 17509; and unjust enrichment. As part of the UCL claim, Plaintiffs allege violations of the unfair, fraudulent, andunlawful prongs of the UCL. As part of their FAL and UCL claims, Plaintiffs assert violations of California Business and Professions Code section 17509 and CPUC section 2890.
Regus asserted a variety of counterclaims in their Answer. After the Court dismissed those counterclaims with leave to amend, Regus filed a Second Amended Counterclaim. ECF No. 101 ("SACC"). Regus's SACC alleges that CTNY breached the OSA by: (1) failing to make its full monthly office payments, plus applicable taxes, in an amount of $12,209.01; (2) failing to pay the KAF, plus applicable taxes, in an amount of $391.92; (3) failing to pay the office set-up fee, plus applicable taxes, in an amount of $81.66; (4) failing to pay the BCS fee in an amount of $987; (5) failing to pay the ORS fee, plus applicable taxes, in an amount of $239.45; and (6) failing to pay late payment fees....
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