Khoday v. Symantec Corp.
| Decision Date | 31 March 2014 |
| Docket Number | Civil No. 11-180 (JRT/TNL) |
| Parties | DEVI KHODAY and DANISE TOWNSEND, individually and on behalf of the class they represent, Plaintiffs, v. SYMANTEC CORP. and DIGITAL RIVER, INC., Defendants. |
| Court | U.S. District Court — District of Minnesota |
Douglas J. McNamara and Andrew N. Friedman, COHEN, MILSTEIN, SELLERS & TOLL PLLC, 1100 New York Avenue N.W., West Tower Suite 500, Washington, DC 20005; Richard Wentz, THE WENTZ LAW FIRM, 33 Via Ricardo, Newbury Park, CA 91320; Karen Hanson Riebel and Kate M. Baxter-Kauf, LOCKRIDGE GRINDAL NAUEN PLLP, 100 Washington Avenue South, Suite 2200, Minneapolis, MN 55401, for plaintiffs.
Patrick E. Gibbs, LATHAM & WATKINS, LLP, 140 Scott Drive, Menlo Park, CA 94025; Steve W. Gaskins, GASKINS, BENNETT, BIRRELL, SCHUPP, LLP, 333 South Seventh Street, Suite 2900, Minneapolis, MN 55402, for defendant Symantec Corp.
Charles Smith, Amy Van Gelder, and Jessica Frogge, SKADDEN, ARPS, SLATE, MEAGHER & FLOM, 155 North Wacker Drive, Chicago, IL 60606; and Steve W. Gaskins, GASKINS, BENNETT, BIRRELL, SCHUPP, LLP, 333 South Seventh Street, Suite 2900, Minneapolis, MN 55402, for defendant Digital River, Inc.
This is a class action lawsuit brought by named Plaintiffs Devi Khoday and Danise Townsend against Defendants Symantec Corp. ("Symantec") and Digital River, Inc.("Digital River") (collectively, "Defendants"). Plaintiffs allege that Defendants sold download insurance products to consumers using misrepresentations that those products were the exclusive means by which customers could redownload software purchased from Defendants. Plaintiffs bring claims against Digital River under Minnesota's Consumer Fraud Act, and against Symantec under California's Unfair Competition Law and Consumers Legal Remedies Act, as well as claims for unjust enrichment against both Defendants.
Plaintiffs move for class certification of all individuals in the United States that purchased the two download insurance products at issue during a certain period of time dictated by the statute of limitations. The Court will certify Plaintiffs' proposed class under Federal Rule of Civil Procedure 23(b)(3) because it finds that Plaintiffs have satisfied the prerequisites for certification, and have also demonstrated that class issues will predominate and a class action is a superior method for adjudicating the claims against Defendants.
Symantec is a California-based company that sells internet security software products under its Norton brand. Digital River is a Minnesota-based company that builds and manages e-commerce websites for online retailers. (Second Decl. of Amy L. Van Gelder, Ex. 1 (Decl. of Andrew Carrane ("Carrane Decl.") ¶ 2), Aug. 23, 2013, Docket No. 215.)
In 2000, Symantec contracted with Digital River to manage Symantec's online storefront, through which it sold its Norton products. (See Second Decl. of Douglas J. McNamara, Ex. 1 at 12:16-18, 15:3-20, June 26, 2013, Docket No. 183; see also id., Ex. 2.) Digital River managed the storefront until October 2009. (Second Van Gelder Decl., Ex. 2 at 17:20-18:5.) Although Digital River managed the storefront, Symantec dictated the content and offerings of the website, as well as the disclosures Digital River made to customers. (Second McNamara Decl., Ex. 2 at DR-0054160-DR-0054172; Second Van Gelder Decl., Ex. 3 at 78:22-25.) Between October 2009 and June 2010 Symantec began transitioning sale of its Norton products to a new online storefront managed by Symantec, and at the end of June 2010 Digital River ceased managing the sale of Norton products. (Gibbs Decl., Ex. 4 at 38:15-39:3; id., Ex. 5 at 21:24-22:7.)
During the relevant time period, a Symantec customer who purchased a downloadable Norton product online would receive access to a hyperlink that the customer could click to begin the software's automatic download. (Gibbs Decl., Ex. 7 at 56-57; id., Ex. 8 at 25.) The customer's click would cause the software to automaticallybe downloaded and installed upon the customer's computer. (Id., Ex. 8 at 60, 65.) During installation, the customer's unique "product key"2 associated with the purchased software would be "injected" or added to the software - allowing the software to run on the customer's computer. (Id., Ex. 10 at 93:20-94:2; id., Ex. 11 at 21:22-22:5; Second Van Gelder Decl., Ex. 9 at 86:11-16.) After purchasing the product, a customer would have sixty days within which to download and install the product. (Gibbs Decl., Ex. 14 at 62:9-12; id., Ex. 15 at 53:11-13.) During this sixty-day window, customers were able to redownload and reinstall the product an unlimited number of times by accessing their Norton account and reinitiating the automatic download process. (Id., Ex. 14 at 62:9-12.)
During the time period that Digital River was managing Symantec's online storefront, Symantec authorized Digital River to offer a product called Electronic Download Service ("EDS"). (Second McNamara Decl., Ex. 2 at DR-0054170; Digital River's Answer at 6, Apr. 11, 2012, Docket No. 86.) EDS allowed customers to redownload the Norton software they had purchased after the original sixty-day period had expired. (Second McNamara Decl., Ex. 10; Digital River's Answer at 3-4.) If, for example, customers lost their Norton software through a computer crash or purchased anew computer, they could redownload their software using EDS for up to a year after their purchase. (Gibbs Decl., Ex. 18 at 197:10-25.) To activate EDS, customers would visit Symantec's online storefront and enter identifying information, which would bring them to a list of Norton products they had purchased. (Id., Ex. 20 at 86:10-20; id., Ex. 21 at 136:10-137:1; Second Van Gelder Decl., Ex. 3 at 292:24-293:4.) Products for which EDS had been purchased (as well as products that had been purchased less than sixty days prior to the site visit) would display download links. (Gibbs Decl., Ex. 20 at 86:10-20; id., Ex. 21 at 136:10-137:1.) Clicking the download link would redownload and install the exact version of the software the customer had originally purchased, and the customer's unique product key would be automatically injected into the software. (Id., Ex. 19 at 134:12-135:6; Second Van Gelder Decl., Ex. 3 at 292:19-293:9.)
A representative of Digital River testified that the title EDS was carefully chosen to give customers a particular impression about the product, recognizing that "the title of EDS was probably more impactful than . . . the fine details." (Second McNamara Decl., Ex. 16 at 94:22-25; see id., Ex. 16 at 95:13-16 ().)
In October 2009, when Symantec began selling its Norton products through its own online storefront, it offered customers a product similar to EDS called Norton Download Insurance ("NDI"). (Id., Ex. 8; Gibbs Decl., Ex. 8 at 39.) NDI operated almost identically to EDS, allowing customers to redownload previously purchasedsoftware for up to one or two years depending on the license period selected. (Gibbs Decl., Ex. 22 at 26:10-15; id., Ex. 26 at 281:1-10.) After a customer logged into her Norton account, she could click a download button that would automatically download and install a product key injected version of the software. (Id., Ex. 22 at 26:10-15; id., Ex. 23 at 34.) In contrast to EDS, which redownloaded the exact version of the product originally purchased, NDI would download the most recent edition of the product the consumer had originally purchased. (Id., Ex. 22 at 26:6-15; id., Ex. 23 at 35.) Symantec stopped selling NDI in the United States on March 10, 2011. (Id., Ex. 25 at 51.)
Because the class claims arising out of the sale of EDS and NDI are almost identical, the remainder of this Order discusses the facts surrounding the sale of these two products (collectively, "download insurance") holistically, unless otherwise noted.
When a customer purchased any Norton Product, download insurance was automatically added to the customer's shopping cart. (See Gibbs Decl., Ex. 8 at 39; id., Ex. 29 at 66.) A customer who did not want to purchase the download insurance was required to "opt out" and remove it from the cart. (Second Van Gelder Decl., Ex. 12 at 50:4-16; Second McNamara Decl., Ex. 2 at DR-0054171.) Information about download insurance available to customers at the point of sale varied somewhat over time because Defendants changed the location, display, and content of the information to "improve" the online shopping experience. (Second Van Gelder Decl., Ex. 4 at 19-20; id., Ex. 7 at 34:1-15.) For example, Defendants tested different names for download insuranceincluding "Download Backup Service," "Download Insurance," and "Download Protection Service." (Id., Ex. 17.) In the sections that follow, the Court sets forth details regarding the purchase of download insurance that form the basis of the parties' dispute regarding class certification.
Defendants charged between $4.99 and $16.99 for the download insurance products. (Carrane Decl. ¶ 4; Second McNamara Decl., Ex. 25 at 138; id., Ex. 6 at 20.) Download insurance was essentially "pure profit" for Defendants, as it cost almost nothing to provide the service. (Second McNamara Decl., Ex. 5 at DR-0918108; id., Ex. 6 at 20; Third Decl. of Douglas J. McNamara, Ex. 51 at 5, Oct. 4, 2013, Docket No. 228 ().)3 Defe...
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