In re Sling Media Slingbox Adver. Litig.

• Citation: 202 F.Supp.3d 352
• Decision Date: 12 August 2016
• Docket Number: 15-cv-05388 (GBD)
• Parties: IN RE SLING MEDIA SLINGBOX ADVERTISING LITIGATION. All Actions.
• Court: U.S. District Court — Southern District of New York

202 F.Supp.3d 352

IN RE SLING MEDIA SLINGBOX ADVERTISING LITIGATION.

All Actions.

15-cv-05388 (GBD)

United States District Court, S.D. New York.

Signed August 12, 2016

MEMORANDUM DECISION AND ORDER

GEORGE B. DANIELS, District Judge

Plaintiffs Michael Heskiaoff, Marc Langenhol, and Rafael Mann were New York residents who bring this putative class-action lawsuit seeking over $5,000,000 against Defendant Sling Media, Inc. alleging causes of action for violations of California's Unfair Competition Law ("UCL"), False Advertising Law ("FAL"), and Consumers Legal Remedies Act ("CLRA").¹ (Consolidated Class Action Complaint ("CAC"), (ECF No. 24), at ¶¶ 5-8, 26-45.) Plaintiffs allege alternative causes of action under the consumer-protection laws of forty-seven other jurisdictions,² including under New York General Business Law § 349 ("NY GBL"). (Id. at ¶¶ 46-96.) Pending before this Court is Sling Media's motion to dismiss the CAC in its entirety. Sling Media's motion to dismiss is GRANTED.

I. Background

Sling Media, Inc. is a Delaware corporation with its principal offices located in Foster City, California. (Id. at ¶ 8.) Since 1995, Sling Media has produced and sold a device known as a "Slingbox." (See id. at ¶ 9.) With the purchase of each Slingbox, Sling Media grants the purchaser a license to use accompanying software, without which the Slingbox device would be useless. (See id. at ¶¶ 9, 28; Plaintiffs' Opposition to Defendants' Motion to Dismiss ("Opp. Br."), (ECF No. 33), Exhibit A ("EULA Exh."), (ECF No. 33-1), at 2 ("In order to use and access your Slingbox through your computer or mobile device, you must use this Software." (Emphasis added)).) The terms of the license are set forth in a document referred to by the parties as the "End User License Agreement" ("EULA"), which is provided to consumers at the time they purchase a Slingbox.³ (See CAC at ¶ 28.) Used together, the Slingbox and accompanying software (together, "Slingbox System") allow a user to shift media programming from a cable or satellite box to a remote device, such as a computer, tablet or smartphone. (Id. at ¶ 9.) In other words, the Slingbox System allows consumers to watch the cable or satellite TV programming they have access to in their home on another device anywhere in the world. (Id. )

Plaintiffs' complaint specifically alleges that Sling Media represents to consumers that its product works in the following manner: "According to Sling Media's website, it offers ‘products and solutions that empower you to watch your home TV—including 100% of the content you already pay for—anywhere in the world, on any Internet-connected device.’ " (Id. at ¶ 8.) "[T]he Slingbox provides the facility for consumers to stream and view content provided, licensed, or sold by third parties, i.e., broadcast, satellite, and cable networks." (Id. at ¶ 10.)

In late 2014, for the first time, Sling Media began transmitting its own advertising content through its Slingbox Systems (thus subjecting users to more advertising than the ordinary commercials which are inherent in TV programming itself). (Id. at ¶ 12.) These advertisements appear "after product startup," as well as "alongside streamed ... content."⁴ (Id. ) It is alleged that "[t]his ad placement negatively impacted the experience of Slingbox owners and the value of its product to its installed base of consumers ...." (Id. at ¶ 4.) Plaintiffs allege that "[a]t no time did Sling Media disclose that it would force consumers to view its advertising content—alongside the streamed third-party content—and consumers had no reason to believe that they would be forced to view Defendant's advertisements while using the Slingboxes which they had purchased." (Id. at ¶ 11.)

Sling Media's advertising became ubiquitous by March 17, 2015. (Id. at ¶ 12.) The EULA does not contain any reference whatsoever to advertising.⁵ (See EULA Exh.) Nor do Plaintiffs allege that they were aware that their viewing experience would be free of Sling Media advertisements before they decided to purchase their Slingbox Systems.

Each of the named Plaintiffs purchased a Slingbox in New York while residing in New York.⁶ (Id. at ¶¶ 2, 5-7.) Each Plaintiff alleges that "[a]t no time was [Plaintiff] informed by Sling Media or its agents prior to his purchase that the use of his Slingbox would be subject to its advertising or that advertisements would be displayed during use of the product he purchased from Defendant." (Id. at ¶¶ 5, 6, 7.) They contend that Sling Media's failure to inform consumers of its intention to display its own advertising through the Slingbox System, and its subsequent unilateral imposition of this unwanted advertising, violated California's consumer-protection statutes, and with regard to additional class members, the consumer-protection statutes of forty-seven other jurisdictions where class members may have purchased Slingbox Systems. The basis of Plaintiffs' claims is that "Sling Media failed to disclose that the use of the product would be contingent upon and subject the purchaser to unrequested advertising from Defendant." (Id. at ¶ 3.) Plaintiffs seek an injunction prohibiting Sling Media from transmitting its own advertising, as well as money damages.

II. Failure to State a Claim

Defendants move to dismiss the CAC pursuant to Federal Rule of Civil Procedure 12(b)(6). To survive a Rule 12(b)(6) motion to dismiss, a "complaint must contain sufficient factual matter ... to ‘state a claim for relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 677, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (internal quotation marks and citation omitted). This standard is met "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id.

A. Choice of Law

To determine whether Plaintiffs have pleaded facts sufficient to state a claim, this Court must first determine under which jurisdictions' substantive law the named Plaintiffs' allegations must be analyzed. New York's choice-of-law principles⁷ dictate that New York substantive law governs Plaintiffs' claims, since the named Plaintiffs purchased their Slingbox Systems in New York and were residents of New York at the time of their purchases.⁸

Plaintiffs maintain that they may proceed under California's consumer-protection statutes by virtue of a choice-of-law provision that Sling Media included in the EULA. The provision provides:

If you are a customer in the United States, then this Agreement will be governed by and construed in accordance with the laws of the State of California, without regard to or application of conflicts of law rules or principles.

(EULA Exh. at 6 ¶ 12 (emphasis added); CAC at ¶ 28 (emphasis added).)

Contractual choice-of-law provisions are generally enforceable under New York law. See Terwilliger v. Terwilliger, 206 F.3d 240, 245 (2d Cir.2000) (quoting Marine Midland Bank, N.A. v. United Missouri Bank, N.A., 223 A.D.2d 119, 643 N.Y.S.2d 528, 530 (N.Y.App.Div.1996) ). But "[t]he effect of [a] choice-of-law clause depends on ... its scope." Fin. One Pub. Co. v. Lehman Bros. Special Fin., 414 F.3d 325, 332 (2d Cir.2005). "New York courts decide the scope of such clauses under New York law, not under the law selected by the clause ...." Id. at 333 (citing J.A.O. Acquisition Corp. v. Stavitsky, 192 Misc.2d 7, 745 N.Y.S.2d 634, 638 (Sup.Ct.N.Y.County 2001) ).

Under New York law, "in order for a choice-of-law provision to apply to claims for tort[s] arising incident to [a] contract, the express language of the provision must be sufficiently broad as to encompass the entire relationship between the contracting parties." Krock v. Lipsay, 97 F.3d 640, 645 (2d Cir.1996) (citation and internal quotation marks omitted). Where the choice of law provision states only that " ‘this [contract] shall be governed by and construed in accordance with the laws of [a particular state]’ .... [there is] no way such language can be read broadly enough to apply to [tort claims]." Id. (original alteration omitted); see also Fin. One , 414 F.3d at 335 ("Under New York law, ... tort claims are outside the scope of contractual choice-of-law provisions that specify what law governs construction of the terms of the contract ...."); Plymack v. Copley Pharm., Inc., No. 93–cv–2655 (KMW), 1995 WL 606272, at *5 (S.D.N.Y.1995) (under New York law, "[a] contractual choice-of-law provision ... does not bind the parties with respect to non-contractual causes of action").

The EULA provides only that "this Agreement will be governed and construed in accordance with the laws of ... California ...." (EULA Exh. at 6 ¶ 12 (emphasis added); CAC at ¶ 28 (emphasis added).) Plaintiffs do not allege contractual breaches of the EULA. Rather, they allege violations of California's consumer-protection statutes, which sound in fraud. See Kearns v. Ford Motor Co., 567 F.3d 1120, 1126–27 (9th Cir.2009) (indicating that claims under California's consumer protection statutes based on defendant's "nondisclosure" usually sound in fraud). The EULA does not grant Slingbox purchasers outside of California the right to bring California consumer-protection claims. Thus, New York's choice-of-law principles provide that New York Plaintiffs must proceed under New York substantive consumer-protection law.⁹

B. New York General Business Law § 349

Having established that New York law applies, this Court must decide whether Plaintiffs have sufficiently alleged that Sling Media violated New York General Business Law Section 349. A plaintiff asserting such a cause of action must plead factual content that allows a court to draw the reasonable inference that: "(1) ‘the defendant has engaged in...