E.K.D. v. Facebook, Inc.

• Decision Date: 08 March 2012
• Docket Number: Civil No. 11–461–GPM.
• Citation: 885 F.Supp.2d 894
• Parties: E.K.D., by her next friend Melissa K. DAWES, and C.M.D., by his next friend Jennifer E. Deyong, individually and on behalf of all others similarly situated, Plaintiffs, v. FACEBOOK, INC., Defendant.
• Court: U.S. District Court — Southern District of Illinois

885 F.Supp.2d 894

E.K.D., by her next friend Melissa K. DAWES, and C.M.D., by his next friend Jennifer E. Deyong, individually and on behalf of all others similarly situated, Plaintiffs,

v.FACEBOOK, INC., Defendant.

Civil No. 11–461–GPM.

United States District Court, S.D. Illinois.

March 8, 2012.

Aaron M. Zigler, Steven A. Katz, Korein Tillery, St. Louis, MO, Garry T. Stevens, Jr., Lee Squitieri, Squitieri and Fearon LLP, New York, NY, Edward A. Wallace, Wexler Wallace LLP, Chicago, IL, for Plaintiffs.

Matthew D. Brown, Jeffrey M. Gutkin, Michael G. Rhodes, Cooley LLP, San Francisco, CA, Charles J. Swartwout, Michael C. Hermann, Boyle Brasher LLC, Belleville, IL, for Defendant.

MEMORANDUM AND ORDER

MURPHY, District Judge:

I. Introduction

This case is before the Court on the motion to transfer brought by Defendant Facebook, Inc. (“Facebook”) (Doc. 57). Plaintiffs E.K.D., by her next friend Melissa K. Dawes, and C.M.D., by his next friend Jennifer E. Deyong, who bring this action individually and on behalf of all others similarly situated, have responded to the motion to transfer. Having considered the matter carefully, the Court now rules as follows.

II. Background

According to the record of this case, Facebook operates facebook.com, a free, Internet-based social networking site with over 153 million members in the United States; over fourteen million facebook.com users in the United States are under the age of eighteen. To join facebook.com, a user must provide his or her name, age, gender, and a valid e-mail address, and click a button leading to a message stating that “By clicking Sign Up, you are indicating that you have read and agree to” Facebook's Terms of Service (“TOS”), with a hyperlink to Facebook's TOS. Doc. 63 at 2 ¶ 6. Once registered, a facebook.com user receives a “profile” page, may upload a “profile photo” of himself or herself, and may connect with other facebook.com users by approving them as “friends.” Also, facebook.com allows users to share information with friends. Users may “post” by adding text, images, videos, and hyperlinks to their own profile page, “check-in” by announcing their geographicallocation using the website's “places” feature, and “like” content by clicking on a thumbs-up button that appears next to certain items on the Internet, both within facebook.com and on external sites. When facebook.com users take one of these actions, facebook.com generates a “story,” which appears on their friends' “news feed.”

Facebook earns revenue primarily through the sale of targeted advertising that appears on facebook.com users' profile pages. Plaintiffs challenge one of Facebook's advertising services in particular, known as “sponsored stories,” which Facebook launched on January 25, 2011, and which was enabled for all facebook.com users by default. A sponsored story is a form of paid advertisement that appears on a facebook.com user's profile page and that generally consists of another friend's name, profile picture, and an assertion that the person “likes” the advertiser. A sponsored story may be generated whenever a facebook.com user utilizes the website's post, like, or check-in features, or uses an application or plays a game that integrates with facebook.com, and the content relates to an advertiser in some way determined by Facebook. Thus, if a facebook.com user clicks on the “like” button on a company's website, the facebook.com user's user name and profile picture, which bears the user's likeness, will appear on the facebook.com pages of the user's friends in a sponsored story advertisement stating that the user likes the company, operating in effect as an endorsement by the facebook.com user of the company or its products and services to the facebook.com user's friends. Such sponsored story advertisements are more valuable than standard facebook.com advertisements, and Facebook profits from selling this added value to advertisers.

Users of facebook.com can modify the commercial use of their names and likenesses by Facebook, but they cannot opt out of the sponsored stories feature of the website entirely. Specifically, Facebook's TOS advise facebook.com users that “You can use your privacy settings to limit how your name and profile picture may be associated with commercial, sponsored, or related content (such as a brand you like) served or enhanced by us. You give us permission to use your name and profile picture in connection with that content, subject to the limits you place.” Doc. 63–1 at 4 § 10(1). Plaintiffs, who are minors residing in Illinois and users of facebook.com, allege that Facebook's practice of misappropriating their names and likenesses for commercial endorsements without their consent violates their right of privacy under the laws of various states. Federal subject matter jurisdiction is proper in this case on the basis of 28 U.S.C. § 1332, as amended by the Class Action Fairness Act of 2005, Pub. L. No. 109–2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.).¹ Plaintiffs seek class certification:

The proposed class is defined as follows:

All facebook users, who during a time that facebook records identified them to be under the age of 18, had their name used in connection with a facebook advertisement. (the “Class” or “Class Members”).

Alternatively, Plaintiffs seek certification of a class defined as follows:

All facebook users, who during a time that facebook records identified them to be under the age of 18 and a resident of California, Ohio, Nevada, Illinois, or Indiana and had their name used in connection with a facebook advertisement. (the “Class” or “Class Members”).

Doc. 2 at 7 ¶ 24. Facebook in turn has moved for transfer of this case to the United States District Court for the Northern District of California pursuant to a forum-selection clause in Facebook's TOS. The clause advises users of facebook.com:

You will resolve any claim, cause of action or dispute (claim) you have with us arising out of or relating to [these TOS] or Facebook exclusively in a state or federal court located in Santa Clara County[, California]. The laws of the State of California will govern [these TOS], as well as any claim that might arise between you and us, without regard to conflict of law provisions. You agree to submit to the personal jurisdiction of the courts located in Santa Clara County, California for the purpose of litigating all such claims.

Doc. 63–1 at 5 § 15(1). Having set out the relevant background of this case, the Court will turn next to the merits of Facebook's motion for transfer of the case.

III. Analysis

A. Disaffirmance of the Contract

Before reaching the issue of the forum-selection clause in Facebook's TOS and the enforceability of the clause, the Court first must determine whether Facebook is barred from enforcing the forum-selection clause against Plaintiffs, who, as noted, are minors, by the doctrine of infancy. Certain categories of persons are held by the law to have no capacity, or only a limited capacity, to contract:

(1) No one can be bound by contract who has not legal capacity to incur at least voidable contractual duties. Capacity to contract may be partial and its existence in respect of a particular transaction may depend upon the nature of the transaction or upon other circumstances.

(2) A natural person who manifests assent to a transaction has full legal capacity to incur contractual duties thereby unless he is

(a) under guardianship, or

(b) an infant, or

(c) mentally ill or defective, or

(d) intoxicated.

Restatement (Second) of Contracts § 12 (1981). The commentary to the Restatement notes that “[h]istorically, the principal categories of natural persons having no capacity or limited capacity to contract were married women, infants, and insane persons.” Id. cmt. b. The doctrine of infancy is codified in California law. Under that law, “minors” are all persons under eighteen years of age. SeeCal. Fam. Code § 6500. California law provides,

A minor cannot do any of the following:

(a) Give a delegation of power.

(b) Make a contract relating to real property or any interest therein.

(c) Make a contract relating to any personal property not in the immediate possession or control of the minor.

Cal. Fam. Code § 6701. The contracts enumerated in the statute are void, and no act of disaffirmance is required to avoid them. See Burnand v. Irigoyen, 30 Cal.2d 861, 186 P.2d 417, 419 (1947). Contracts that are not void under California law are voidable, and may be disaffirmed by the minor, either before majority or within a reasonable time thereafter. SeeCal. Fam. Code § 6710. See also Berg v. Traylor, 148 Cal.App.4th 809, 56 Cal.Rptr.3d 140, 148 (2007) (a minor may disaffirm a contract by any act or declaration disclosing an unequivocal intent to disaffirm). If a minor dies within the statutory period, the minor's heirs or personal representatives may disaffirm the contract. SeeCal. Fam. Code § 6710.

As California law recognizes also, however, “the disability of infancy [is not] a ‘sword’ rather than a ‘shield [.]’ ” Hastings v. Dollarhide, 24 Cal. 195, 216 (Cal.1864). The infancy defense may not be used inequitably to retain the benefits of a contract while reneging on the obligations attached to that benefit. See, e.g., MacGreal v. Taylor, 167 U.S. 688, 701, 17 S.Ct. 961, 42 L.Ed. 326 (1897) (“To say that the consideration paid to [a minor] ... is not in her hands, when the money has been put into her property in conformity with the disaffirmed contract, and notwithstanding such property is still held and enjoyed by her, is to ... make the privilege of infancy a sword to be used to the injury of others, although the law intends it simply as a shield to protect the infant from injustice and wrong.”). Thus, “[i]f an infant enters into any contract subject to conditions or stipulations, the minor cannot take the benefit of the contract without the burden of the conditions or stipulations.” 5 Samuel Williston & Richard...