Moeller v. Am. Media, Inc.

• Decision Date: 27 January 2017
• Docket Number: Case No. 16–cv–11367
• Citation: 235 F.Supp.3d 868
• Parties: Elizabeth MOELLER, et al., Plaintiffs, v. AMERICAN MEDIA, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

235 F.Supp.3d 868

Elizabeth MOELLER, et al., Plaintiffs,

v.AMERICAN MEDIA, INC., et al., Defendants.

Case No. 16–cv–11367

United States District Court, E.D. Michigan, Southern Division.

Signed January 27, 2017

Benjamin Scott Thomassen, Eve–Lynn Rapp, Ari J. Scharg, Edelson P.C., Chicago, IL, Joseph I. Marchese, Philip L. Fraietta, Scott A. Bursor, Bursor & Fisher, P.A., New York, NY, for Plaintiffs.

Jacob A. Sommer, Zwillgen, PLLC, Washington, DC, John T. Eads, III, Wilson Elser, William S. Cook, Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, Livonia, MI, for Defendants.

OPINION AND ORDER DENYING DEFENDANTS' MOTION TO DISMISS [8]

JUDITH E. LEVY, United States District Judge

Before the Court is defendants' motion to dismiss. (Dkt. 8.) For the reasons set forth below, defendants' motion is denied.

I. Background

Plaintiffs Elizabeth Moeller and Nicole Brisson are Michigan citizens who subscribe to magazines published by defendants American Media, Inc. and Odyssey Magazine Publishing Group, Inc. (Dkt. 1 at 10–12.)

Defendants, as magazine publishers, maintain a database of their subscribers and the magazines to which they subscribe. (Id. at 2.) Plaintiffs refer to such information as their personal-reading information. (Id. ) Plaintiffs claim that defendants unlawfully disclosed their personal-reading information to third-parties in two ways. First, plaintiffs allege that defendants shared the information with "data-mining companies." (Id. ) Data-mining companies add information they may have about a particular subscriber—including age, gender, ethnicity, income level, etc.—to defendants' records. (Id. ) The data miners' additions to defendants' records increase the "street value" of the personal-reading information when defendants, in turn, sell subscribers' information to third parties. (Id. ) Second, plaintiffs allege that defendants participated in "database cooperatives," through which defendants traded subscribers' information with other publishers. (Id. at 9.)

Thus, defendants allegedly profited from the unlawful disclosure of plaintiffs' personal-reading information, and plaintiffs claim that these disclosures made their subscriptions less valuable. (Id. at 12.) Plaintiffs did not consent to the disclosure of their information, nor have defendants provided plaintiffs notice of their practices. (Id. at 10.)

Plaintiffs claim the disclosure of their personal-reading information violates the Michigan Personal Privacy Protection Act. (Id. at 12, 14.) Plaintiffs also claim that any revenue derived from selling subscribers' personal information unjustly enriched defendants. (Id. at 23.)

The Michigan Personal Privacy Protection Act ("PPPA") prohibits individuals "engaged in the business of selling at retail, renting, or lending books or other written materials" from "[disclosing] to any person, other than the customer, a record or information concerning the purchase ... of materials by a customer that indicates the identity of the customer." MICH. COMP. LAWS § 445.1712. Further, the original PPPA provided that a customer whose information was disclosed could recover "actual damages, including damages for emotional distress, or $5,000, whichever is greater." Mich. Pub. Acts 1988, No. 378, § 5, eff. Nov. 7, 1989 (amended 2016).

In 2016, the Michigan legislature amended the PPPA. MICH. COMP. LAWS § 445.1711 et seq. ) ("Am. PPPA"). The amendment excluded from liability "disclosure[s] incident to the ordinary course of business." Am. PPPA § 3(d). The legislature clarified that the new exception "only applies to a record or information that is created or obtained after the effective date of the amendatory act." Id. The legislature also amended section five of the PPPA, which governs the remedies available under the act. Section five originally stated that a customer "identified in a record or other information disclosed in violation" of the PPPA could sue to recover "[a]ctual damages, including damages for emotional distress, or $5000, whichever is greater." Am. PPPA § 5. The amendment stated that only a customer "who suffers actual damages as a result of a violation of this act may bring a civil action" and removed the statutory-damages provision. Id. And the legislature included an enacting section which states, "[t]his amendatory act is curative and intended to clarify" provisions of the original statute. Am. PPPA, enacting § 2.

Plaintiffs filed this suit in April 2016, and the amended statute went into effect on July 31, 2016. Id.

Defendants move to dismiss plaintiffs' PPPA claims on two grounds. First, defendants argue that plaintiffs do not have standing because they have not suffered an injury-in-fact. Second, defendants argue that the recent amendment of the PPPA precludes plaintiffs' claims. Defendants also move to dismiss plaintiffs' unjust enrichment claims.

II. Standard of Review

Defendants bring their motion to dismiss under both Rule 12(b)(1) for lack of subject-matter jurisdiction and Rule 12(b)(6) for failure to state a claim.

When subject-matter jurisdiction is challenged under Rule 12(b)(1), the plaintiff has the burden to prove jurisdiction. Moir v. Greater Cleveland Reg'l Transit Auth. , 895 F.2d 266, 269 (6th Cir. 1990). Rule 12(b)(1) challenges to a court's subject-matter jurisdiction may be either facial or factual. Ohio Nat. Life Ins. Co. v. United States , 922 F.2d 320, 325 (6th Cir. 1990). A facial attack "questions the sufficiency of the pleading," whereas a factual attack challenges the veracity of the facts on which subject-matter jurisdiction is predicated. Id. When reviewing a facial challenge, the Court "takes the allegations in the complaint as true." Id. But when reviewing a factual challenge "no presumptive truthfulness applies to the factual allegations." Id.

When deciding a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the Court must "construe the complaint in the light most favorable to the plaintiff and accept all allegations as true." Keys v. Humana, Inc. , 684 F.3d 605, 608 (6th Cir. 2012). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A plausible claim need not contain "detailed factual allegations," but it must contain more than "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

III. Analysis

A. Standing

Defendants bring a facial challenge to plaintiffs' standing under Fed. R. Civ. P. 12(b)(1). (Dkt. 8 at 23.) Thus, the Court "will take the allegations in the complaint as true." Ohio Nat. Life Ins. Co. , 922 F.2d at 325.

"[A] plaintiff must possess both constitutional and statutory standing in order for a federal court to have jurisdiction."Loren v. Blue Cross & Blue Shield of Mich. , 505 F.3d 598, 606 (6th Cir. 2007). Constitutional standing requires that a plaintiff: (1) suffer an "injury in fact"; (2) that is "fairly ... trace[able] to the challenged action of the defendant"; and (3) that a favorable decision is likely to redress. Lujan v. Defenders of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).

Defendants argue that plaintiffs lack standing to pursue claims for violations of the PPPA because they did not suffer an injury-in-fact. To establish an injury-in-fact, plaintiffs must plead facts showing that they suffered an "invasion of a legally protected interest" that is "concrete and particularized" and "actual or imminent," not "conjectural or hypothetical." Id. at 560, 112 S.Ct. 2130. A plaintiff does not "automatically satisfy the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 1549, 194 L.Ed.2d 635 (2016). Thus, plaintiffs must allege "a concrete injury even in the context of a statutory violation." Id. "Concrete is not, however, necessarily synonymous with tangible ... intangible injuries can nevertheless be concrete." Id.

To evaluate whether intangible harms are sufficiently concrete for Article III purposes, courts consider: (1) whether the harm has been "traditionally regarded as providing a basis for a lawsuit in English or American courts"; and (2) the judgment of the legislature because it "has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before." Id. But a "bare procedural violation" of a statute does not itself satisfy the injury-in-fact requirement of Article III. Id. at 1550.

Here, defendants argue that plaintiffs' claims amount to a "bare procedural violation" of the PPPA because plaintiffs have not identified a concrete harm resulting from defendants' unlawful disclosure of their personal-reading information. (Dkt. 8 at 22.) Defendants argue that Spokeo is dispositive. Id. Although defendants correctly read Spokeo to hold that violation of a statute alone does not automatically establish a concrete injury, Spokeo does not foreclose standing here.

In the complaint, plaintiffs allege that defendants violated their privacy rights by disclosing personal-reading information to data-mining companies and third-party database cooperatives. (Dkt. 1 at 11.) Plaintiffs also claim that their subscriptions without privacy protections are "substantially less valuable" than subscriptions with privacy protections. (Id. at 12.) Plaintiffs' alleged injuries are concrete, as set forth below.

Subscribers' right to privacy in their personal-reading information is grounded in an interest "traditionally regarded as providing a basis for a lawsuit in English or American courts." Spokeo , 136 S.Ct. at 1549. Indeed, "the common law ha[s] long recognized a right to personal privacy, and both the common law and the...