Martin v. LG Elecs. U.S., Inc.
| Decision Date | 31 March 2015 |
| Docket Number | 14-cv-83-jdp |
| Parties | SCOTT MARTIN, Plaintiff, v. LG ELECTRONICS USA, INC., LG ELECTRONICS, INC., HITACHI-LG DATA STORAGE, INC., CYBERLINK.COM CORP., and CYBERLINK CORP., Defendants. |
| Court | U.S. District Court — Western District of Wisconsin |
In 2011, plaintiff Scott Martin purchased an LG "Super Multi Blue" Blu-ray disc drive (BD player) that he installed in his computer. The BD Player came with PowerDVD software for the playback of prerecorded Blu-ray discs. But when he tried to use his BD player to watch a rented Blu-ray disc, the BD player could not play the movie unless he purchased a software upgrade. Defendants LG Electronics USA, Inc. (LGUS); LG Electronics, Inc. (LG); and Hitachi-LG Data Storage, Inc. (HLDS) made, designed, packaged, marketed, distributed, and sold Martin's BD player. Defendants Cyberlink.com and Cyberlink (collectively Cyberlink) marketed the PowerDVD software. Martin alleges that defendants conspired to sell a product bundled with obsolete software, which rendered the player useless without an upgrade. He brings this class action to enforce his own rights and the rights of those who are similarly situated.
All five defendants have moved to dismiss on various grounds. Dkt. 22, Dkt. 34, and Dkt. 68. The court will grant Cyberlink's motion to dismiss for lack of personal jurisdiction. The court will grant much of LGUS, LG, and HLDS's motions to dismiss for failure to state a claim and lack of subject matter jurisdiction. Martin may proceed only on his claim that defendantsLG and LGUS violated the Wisconsin Deceptive Trade Practices Act (WDTPA). Cyberlink and HLDS will be dismissed from this case.
Also before the court are Martin's motions to certify the following proposed classes: (1) all persons in Wisconsin who purchased LG, LGUS, or HLDS BD players bundled with discontinued Cyberlink software at any time between February 8, 2008, and the date of an order granting class certification (Wisconsin Class); (2) all persons in Wisconsin who purchased LG, LGUS, or HLDS Super Multi Blue Blu-ray Disc players bundled with discontinued Cyberlink software at any time between February 8, 2008, and the date of an order granting class certification (Wisconsin Super Multi Blue Class); (3) all persons in the United States who purchased LG, LGUS, or HLDS Blu-ray Disc players bundled with discontinued Cyberlink software at any time between February 8, 2008, and the date of an order granting class certification (National Class); and (4) all persons in the United States who purchased LG, LGUS, or HLDS Super Multi Blue Blu-ray Disc players bundled with discontinued Cyberlink software at any time between February 8, 2008, and the date of an order granting class certification (National Super Multi Blue Class). Dkt. 3. The court will not certify Martin's proposed National Class or National Super Multi Blue Class, and defer Martin's motion for class certification of the proposed Wisconsin Class and Wisconsin Super Multi Blue Class.
The court recounts the facts as alleged by Martin because on a motion to dismiss, the "court must accept the complaint's well-pleaded factual allegations as true and draw reasonable inferences from those allegations in the plaintiff's favor." Transit Exp., Inc. v. Ettinger, 246 F.3d 1018, 1023 (7th Cir. 2001). The court will also consider affidavit evidence supplied by the parties in connection with Cyberlink's motion to dismiss for lack of personal jurisdiction. Nelsonby Carson v. Park Indus., Inc., 717 F.2d 1120, 1123 (7th Cir. 1983).
In February 2011, Martin purchased a "Super Multi Blue" BD player from Newegg, Inc. (a non-party) to insert as an internal drive into his computer. HLDS, LG, and LGUS were responsible for designing, providing, packaging, marketing, distributing, and selling the BD player. The Cyberlink defendants were responsible for the PowerDVD 8 software, which was bundled with the BD player. By the time Martin bought the player, the Cyberlink defendants had discontinued the software and were no longer providing free updates. But Martin had no knowledge that his PowerDVD 8 software was obsolete and that he would need to purchase an upgrade to fully operate his BD player.
Approximately eight months after Martin purchased the BD Player, he tried to watch a rented Blu-ray movie. But his screen displayed a message indicating that he would have to purchase a software upgrade. He had the same experience when he attempted to watch certain other movies on his BD player. Martin contacted each defendant regarding the problem. HLDS advised Martin to contact LG and LGUS. LG and LGUS did not respond. The Cyberlink defendants claimed that Martin could install free updates that would allow him to play the movies. However, Cyberlink had stopped issuing free updates compatible with PowerDVD 8 long before Martin had purchased his BD player, and so Martin would have to purchase any upgrade he wanted to install.
Martin, assuming that other consumers in Wisconsin and the United States had experienced similar problems with their BD players, filed this case as a purported class action. The court has jurisdiction under 28 U.S.C. § 1332 because the parties are diverse and the amount in controversy exceeds $75,000.
Martin brought this action against LGUS, LG, HLDS, Cyberlink.1 He asserts five causes of action: (1) tortious interference with contract; (2) common law fraudulent misrepresentation; (3) violation of the Wisconsin Deceptive Trade Practices Act (WDTPA), Wis. Stat. § 100.18 et seq.; (4) unjust enrichment; and (5) civil conspiracy. Martin alleges that defendants' actions interfered with his contract with non-party Newegg to sell him a functional BD player. He further alleges that the packaging and marketing of the BD player fraudulently misrepresented that it could play all BDs regardless of format. Similarly, the false statements violated WDTPA. Because his player was less valuable than advertised, Martin alleges that defendants were unjustly enriched. Finally, Martin alleges that defendants knowingly conspired to violate the law by selling BD players with obsolete software. He claims that if he and other class members had known that the PowerDVD 8 software was obsolete, they would have returned the BD player, paid less for it, or simply not purchased it. Martin seeks to represent a class and be awarded damages and restitution. He proposes that the court establish a constructive trust that would consist of a portion of money defendants received from BD player sales and software upgrades.
Defendants LGUS, LG, HLDS, and Cyberlink have moved to dismiss on numerous grounds. First, the Cyberlink defendants assert that this court lacks personal jurisdiction over them. Further, defendants all contend that Martin fails to state a claim for tortious interference with contract, fraudulent misrepresentation, and civil conspiracy. LGUS and LG argue that Martin has not pled his WDTPA claim with sufficient particularity. Finally, defendants LGUS, LG, and HLDS assert that Martin fails to state a claim for unjust enrichment. Based on thesealleged deficiencies, defendants argue that Martin's motion to certify the proposed classes is moot and should be denied. They also assert that even if he has a claim, Martin lacks standing to assert claims on behalf of BD player purchasers outside of Wisconsin.
The Cyberlink defendants assert that this court lacks personal jurisdiction over Cyberlink.com, a California corporation, and Cyberlink, a Taiwanese company. They first contend that neither Cyberlink.com nor Cyberlink are registered to do business, have offices, or pay taxes in Wisconsin. Neither had employees in Wisconsin at the time the suit was filed or at the time the alleged conduct took place. They also do not advertise in Wisconsin, and did not manufacture, import, market, or sell Martin's BD player to him. Finally, they assert that Martin does not allege that any of Cyberlink's conduct specifically targeted or exploited Wisconsin, or that his claims arise from any alleged conduct between Cyberlink and Wisconsin.2 The court agrees that it lacks personal jurisdiction over Cyberlink and will grant its motion to dismiss.
On a motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the burden of proof rests on the party asserting jurisdiction. Hy Cite Corp. v. Badbusinessbureau.com, L.L.C., 297 F. Supp. 2d 1154, 1157 (W.D. Wis. 2004). Wisconsin courts require the party asserting personal jurisdiction to satisfy the requirements of the state's long-arm statute, Wis. Stat. § 801.05, and the Due Process Clause of the United States Constitution. See Logan Prod.s, Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996). Wisconsin's long-arm statute is liberally construed in favor of jurisdiction. See Marsh v. Farm Bureau Mut. Ins. Co., 179Wis. 2d 42, 52, 505 N.W.2d 162 (Ct. App. 1993). The Cyberlink defendants are covered by the Wisconsin long-arm statute, but personal jurisdiction over them would not satisfy the due process requirements of the Constitution.
When a plaintiff suffers an injury within this state arising out of a defendant's out-of-state act or omission, the plaintiff must establish that at the time of the injury, the defendant's products, materials, or things processed, serviced, or manufactured were consumed in Wisconsin in the ordinary course of trade. Wis. Stat. § 801.05(4)(b). Here, Martin purchased a BD player that included PowerDVD 8 software and he attempted to use it in Wisconsin. Martin's injury—the result of his nonfunctional BD player—also occurred in Wisconsin. Cyberlink's PowerDVD software comes with continuing upgrades that extend well past purchase and Cybrlink's software was consumed in Wisconsin in the ordinary course of trade. Based on these considerations, Cyberlink falls within Wisconsin's long arm statute. Id.
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