Deacon v. Pandora Media, Inc.

• Decision Date: 28 September 2012
• Docket Number: Case No. C 11–04674 SBA.,Docket No. 20.
• Citation: 901 F.Supp.2d 1166
• Parties: Peter DEACON, individually and on behalf of all others similarly situated, Plaintiff, v. PANDORA MEDIA, INC., a Delaware corporation, Defendant.
• Court: U.S. District Court — Eastern District of California

901 F.Supp.2d 1166

Peter DEACON, individually and on behalf of all others similarly situated, Plaintiff,

v.PANDORA MEDIA, INC., a Delaware corporation, Defendant.

Case No. C 11–04674 SBA.

Docket No. 20.

United States District Court,

N.D. California,

Oakland Division.

Sept. 28, 2012.

Sean Patrick Reis, Rancho Santa Margarita, CA, Ari Jonathan Scharg, Jay Edelson, Ryan D. Andrews, Edelson McGuire, LLC, Chicago, IL, for Plaintiff.

Jennifer Stisa Granick, San Francisco, Michele D. Floyd, K&L Gates, LLC, Palo Alto, CA, Jacob Alan Sommer, Zwillgen, PLLC, Marc J. Zwillinger, Washington, DC, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

SAUNDRA BROWN ARMSTRONG, District Judge.

Plaintiff Peter Deacon (“Plaintiff”) brings the instant putative action on behalf of himself and other residents of Michigan who use the internet radio services of Defendant Pandora Media, Inc. (“Pandora”). He alleges that Pandora improperly disclosed his “private” music preferences and other information to the public and his Facebook “friends” in violation of Michigan's Video Rental Privacy Act (“VRPA”), Michigan Compiled Laws (“MCL”) § 445.1712, and the Michigan Consumer Protection Act (“MCPA”), MCL § 445.903. Plaintiff alleges subject matter jurisdiction based on diversity. See28 U.S.C. § 1332. Venue is proper, as Pandora resides in this District. See id. § 1391(b)(1).

The parties are presently before the Court on Defendant Pandora's Motion to Dismiss, pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt. 20. Having read and considered the papers filed in connection with this matter and being fully informed, the Court hereby GRANTS the motion to dismiss with leave to amend, for the reasons set forth below. The Court, in its discretion, finds this matter suitable for resolution without oral argument. See Fed.R.Civ.P. 78(b); N.D. Cal. Civ. L.R. 7–1(b).

I. BACKGROUNDA. Factual Summary

Pandora operates an internet radio service through its website located at www. pandora. com. Compl. ¶¶ 2–4, Dkt. 1. Pandora's service allows its subscribers to create their own, customized “radio stations” based on the subscriber's selected preferences. Id. ¶ 3. For instance, a subscriber may enter the name of a particular artist or song, which Pandora then uses to create a station based on artists or songs with similar attributes. Id. ¶ 3. ¹ The songs selected by Pandora are then streamed to the subscriber's computer. Id. Pandora claims that its technology utilizes the “intrinsic qualities of music to initially create stations and then adapts playlists in real-time based on the individual feedback of each listener.” Id. ¶ 4 n. 1. Use of Pandora is free, though a premium version of Pandora service without advertisements is available for a fee. See Def.'s Mot. at 2 n. 3, Dkt. 30; Pandora Form S–1 Reg. Stmt. (“S–1 Reg. Stmt.”) at 46 (filed Feb. 1, 2011 (http:// www. sec. gov/ Archives/ edgar/ data/ 1230276/ 0001193125 11032963/ ds 1. htm # toc119636_10, last accessed Aug. 28, 2012)).

To facilitate the streaming process, Pandora “temporarily store[s] a digital copy of the song” on the subscriber's computer. Id. ¶ 20. The file remains on the subscriber's computer until the song has finished playing, at which time it is automatically deleted by Pandora. Id. Pandora's Terms of Use, with which all subscribers must abide as a condition to use Pandora's service, make clear that subscribers do not have any ownership rights to the music Pandora streams for playback and that they cannot download any of the songs. Id. ¶¶ 24, 31. In particular, section 3.2 of Pandora's Terms of Service specifies that subscribers shall not “copy, store, edit, change, prepare any derivative work of or alter in any way any of the tracks streamed through the Pandora Services,” while section 3.1 prohibits subscribers from “reproduc[ing] copyrighted materials.” Sterry Decl. Exs. A–I (“Terms of Service”), Dkt. 20–1. In addition, songs cannot be purchased from Pandora, though Pandora provides links to Apple's iTunes service and/or Amazon.com where subscribers may purchase the song being played from those vendors. Compl. ¶ 21.

When subscribers sign up for a Pandora account, a “Personal Page” is automatically created for them. Id. ¶ 23. The page contains the subscriber's full name, profile information, recent “station,” recent activity, listening history, bookmarked tracks and bookmarked artists (collectively “Protected Information”). Id. Although Pandora claims that Protected Information is available only to other registered Pandora subscribers with knowledge of the particular subscriber's unique email address, such information allegedly is “publically available and searchable on the World Wide Web for anyone to view.” Id. ¶ 6. In addition, on April 21, 2010, Pandora unilaterally integrated its subscribers' profile pages with their Facebook accounts. Id. ¶ 7. As a result, a Pandora subscriber's Facebook “friends” allegedly are now able to access “sensitive listening records” and “musical preferences” from the Pandora subscriber's profile. Id.

B. Procedural History

Plaintiff commenced the instant putative class action in this Court on September 20, 2011. The Complaint asserts two causes of action. First, Plaintiff alleges that the disclosure of subscribers' Protected Information to other Pandora and non-Pandora subscribers violates the VRPA. See Compl. ¶¶ 44–46. Second, Plaintiff contends that Pandora has violated the MCPA by disclosing his Protected Information to his Facebook contacts. See id. ¶ 52–54. Plaintiff purports to bring both claims on behalf of the following Class and Subclass:

The Disclosure Class: A class consisting of all Michigan residents who registered as users or subscribers of Pandora's services before August 5, 2010.

The Facebook Disclosure Subclass: A subclass consisting of all Michigan residents whose Pandora account was automatically integrated with a Facebook account before August 5, 2010.

Id. ¶ 35. As relief, Plaintiff seeks statutory damages under the VRPA in the amount of $5,000 per class member. Id. ¶¶ 9, 48. With respect to his claim under the MCPA, Plaintiff seeks “an injunction requiring Pandora to cease its unlawful conduct.” Id. ¶ 55.

In response to the Complaint, Pandora now moves to dismiss Plaintiff's claims under Rule 12(b)(6). Dkt. 20. Pandora first contends that Plaintiff has failed to allege facts showing that he suffered an injury-in-fact, and hence, subject matter jurisdiction is lacking.² With regard to the sufficiency of the claims, Pandora argues that Plaintiff's claim under the VRPA should be dismissed for failure to establish that it is engaged in the business of “selling at retail, renting, or lending ... sound recordings[.]” MCL § 445.1712. Likewise, Pandora contends that Plaintiff has failed to state a claim under the MCPA on the grounds that its conduct is authorized by law, and that Plaintiff has failed to demonstrate that he has prudential standing to sue for injunctive relief on a class basis. Plaintiff and Defendant filed an opposition and a reply, respectively. Dkt. 26, 30. The matter has been fully briefed and is ripe for adjudication.³

II. LEGAL STANDARDA. Rule 12(b)(1)

Under Federal Rule of Civil Procedure 12(b)(1), a complaint may be dismissed for lack of subject matter jurisdiction. “A jurisdictional challenge under Rule 12(b)(1) may be made either on the face of the pleadings or by presenting extrinsic evidence.” Warren v. Fox Family Worldwide, Inc., 328 F.3d 1136, 1139 (9th Cir.2003). In a “facial” challenge, the court assumes the truth of plaintiff's factual allegations and draws all reasonable inferences in its favor. Doe v. Holy See, 557 F.3d 1066, 1073 (9th Cir.2009). In the case of a “speaking” motion, the court is not restricted to the face of the pleadings and “may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction.” McCarthy v. United States, 850 F.2d 558, 560 (9th Cir.1988). “Once challenged, the party asserting subject matter jurisdiction has the burden of proving its existence.” Rattlesnake Coalition v. United States Envtl. Protection Agency, 509 F.3d 1095, 1102 n. 1 (9th Cir.2007).

B. Rule 12(b)(6)

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) “tests the legal sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). A complaint may be dismissed under Rule 12(b)(6) for failure to state a claim if the plaintiff fails to state a cognizable legal theory, or has not alleged sufficient facts to support a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1990). In deciding a Rule 12(b)(6) motion, courts generally “consider only allegations contained in the pleadings, exhibits attached to the complaint, and matters properly subject to judicial notice.” Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir.2007). The court is to “accept all factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Outdoor Media Group, Inc. v. City of Beaumont, 506 F.3d 895, 899–900 (9th Cir.2007).

To survive a motion to dismiss for failure to state a claim, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The allegations made in a complaint must be both “sufficiently detailed to give fair notice to the opposing party of the nature of the claim so that the party may effectively defend against it” and “sufficiently plausible” such that “it is not unfair to require the opposing party to be subjected to the expense of discovery.” Starr v. Baca, 633 F.3d 1191, 1204 (9th Cir.2011). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Where a...