Perlin v. Time Inc.

• Decision Date: 15 February 2017
• Docket Number: CASE NO. 16–10635
• Citation: 237 F.Supp.3d 623
• Parties: Carolyn PERLIN, individually and on behalf of all others similarly situated, Plaintiff, v. TIME INC., a Delaware Corporation, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

237 F.Supp.3d 623

Carolyn PERLIN, individually and on behalf of all others similarly situated, Plaintiff,

v.TIME INC., a Delaware Corporation, Defendant.

CASE NO. 16–10635

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

Signed February 15, 2017

Benjamin Scott Thomassen, Eve–Lynn Rapp, Roger J. Perlstadt, Ari J. Scharg, Edelson P.C., Chicago, IL, for Plaintiff.

Jacob A. Sommer, Jeffrey G. Landis, Marc J. Zwillinger, Zwillgen, PLLC, Washington, DC, Lara F. Phillip, Robert M. Jackson, Honigman, Miller, Detroit, MI, for Defendant.

OPINION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS (DOC. 10)

GEORGE CARAM STEEH, UNITED STATES DISTRICT JUDGE

Plaintiff Carolyn Perlin filed a two-count complaint against defendant Time Inc., alleging in Count 1 that Defendant violated Michigan's Video Rental Privacy Act ("VRPA"), Mich. Comp. Laws § 445.1711 et seq. , and alleging in Count 2 that Defendant was unjustly enriched through its violation of the VRPA. (See Compl., Doc. 1). Now before the Court is Defendant's Motion to Dismiss. (Doc. 10). Defendant argues that a recent amendment to the VRPA, eliminating the VRPA's statutory-damages remedy, applies retroactively so as to bar Plaintiff's claims. Defendant also argues that based on the Supreme Court's recent decision in Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016), Plaintiff lacks Article III standing. Finally, Defendant argues that Plaintiff's unjust-enrichment count fails to state a claim upon which relief can be granted. A hearing on Defendant's motion was held on September 1, 2016. For the reasons explained below, the Court denies Defendant's motion in full.

I. BACKGROUND

Plaintiff was a subscriber to People , a magazine published by Defendant. (Compl. ¶ 30). Plaintiff claims that Defendant "has disclosed, and continues to disclose, [Plaintiff's] Personal Reading Information (i.e., information that identifies [Plaintiff] as having purchased a subscription to People )—without obtaining her permission or providing prior notice—to data mining companies...." (Id. ¶ 34). "Data miners," according to Plaintiff, are "companies [that] purchase, trade, and otherwise collect massive databases of information about consumers." (Id. ¶ 19). They "profit by selling this ‘extraordinarily intrusive’ information in an open and largely unregulated market." (Id. ). Plaintiff alleges that Defendant "profited from its disclosures" to the data miners, and Plaintiff further alleges that "what [Plaintiff] received (a subscription without privacy protections) was substantially less valuable than what she paid for (a subscription with accompanying privacy protections)." (Id. ¶¶ 37–38).

Plaintiff claims that Defendant's conduct violates the VRPA. The VRPA—like the federal Video Privacy Protection Act and similar state laws around the country—was enacted in the late 1980s in the wake of the disclosure of Robert Bork's video-rental records during Bork's (ultimately unsuccessful) candidacy for the position of Supreme Court Justice. See generally Neil M. Richards, The Perils of Social Reading , 101 Geo. L.J. 689, 693–97 (2013). Despite its popular name¹ and historical origin, the VRPA applies to more than just video rentals. Its central provision states that

a person, or an employee or agent of the person, engaged in the business of selling at retail, renting, or lending books or other written materials, sound recordings, or video recordings shall not knowingly disclose to any person, other than the customer, a record or information that personally identifies the customer as having purchased, leased, rented, or borrowed those materials from the person engaged in the business.

Mich. Comp. Laws § 445.1712(1). The VRPA provides both a criminal penalty and a civil cause of action to enforce this prohibition. See id. §§ 445.1714, 445.1715.

II. LEGAL STANDARDS

Under Federal Rule of Civil Procedure 12(b)(1), a defendant may challenge a court's subject-matter jurisdiction. Where, as in the instant case, the defendant argues that the allegations in the complaint are insufficient to create subject-matter jurisdiction, the court should "confine its ... ruling to matters contained within the pleadings and accept all well-pleaded allegations as true." Tackett v. M & G Polymers, USA, LLC , 561 F.3d 478, 481 (6th Cir. 2009) ; see also Cartwright v. Garner , 751 F.3d 752, 759 (6th Cir. 2014) ; Nichols v. Muskingum Coll. , 318 F.3d 674, 677 (6th Cir. 2003). If the complaint fails to set forth an adequate basis for subject-matter jurisdiction, the court must dismiss it. See Sweeton v. Brown , 27 F.3d 1162, 1169 (6th Cir. 1994).

Pursuant to Rule 12(b)(6), a defendant may move to have a complaint dismissed for "failure to state a claim upon which relief can be granted." A court confronted with a Rule 12(b)(6) motion must construe the complaint in favor of the plaintiff, accept the allegations of the complaint as true, and determine whether the plaintiff's factual allegations present plausible claims. Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 554–56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The court must not accept "legal conclusions cloaked as fact." Haddad v. Randall S. Miller Associates, PC , 587 Fed.Appx. 959, 963 (6th Cir. 2014) (unpublished). Similarly, "naked assertions devoid of further factual enhancement" and "unadorned, the-defendant-unlawfully-harmed-me accusation[s]" are insufficient 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). The complaint need not contain "detailed" factual allegations, but its "factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true." Ass'n of Cleveland Fire Fighters v. City of Cleveland , 502 F.3d 545, 548 (6th Cir. 2007).

III. DISCUSSION

A. Plaintiff Has Standing to Sue.

Defendant's primary argument is that Plaintiff lacks both statutory standing under the VRPA and standing under Article III of the United States Constitution. In a previous case, this Court held that the VRPA confers statutory standing on a person whose information was disclosed in violation of the VRPA, regardless of whether the person suffered actual damages. Halaburda v. Bauer Pub. Co., LP , No. 12-CV-12831, 2013 WL 4012827, at *6 (E.D. Mich. Aug. 6, 2013) (unpublished). This Court also held that a person whose information was disclosed in violation of the VRPA has suffered a cognizable injury in fact and thus has Article III standing. Id. at *3–*5.² Defendant argues that two recent developments have undermined the Court's analysis in Halaburda . First, Defendant points out that the Michigan legislature recently amended the VRPA to require a plaintiff asserting a VRPA cause of action to plead actual damages. Although Defendant allegedly began violating the VRPA before the amendment took effect (July 31, 2016), Defendant argues that the amendment is retroactive and therefore applies to the pre-amendment conduct.³ The second development is the Supreme Court's recent decision in Spokeo , ––– U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635. Defendant contends that under the standard set forth in Spokeo , the type of VRPA violation alleged by Plaintiff is now insufficient to constitute an injury in fact. As explained below, the Court rejects both arguments.

1. The VRPA Amendment Is Not Retroactive and Therefore Does Not Deprive Plaintiff of Statutory Standing.

When this Court decided Halaburda , the VRPA allowed a customer whose VRPA rights had been violated to recover "[a]ctual damages ... or $5,000.00, whichever is greater." 1989 Mich. Pub. Act No. 206 (codified at Mich. Comp. Laws § 445.1715(2)(a) until amended by 2016 Mich. Pub. Act. No. 92). However, the Michigan legislature recently enacted Senate Bill 490. See 2016 Mich. Pub. Act. No. 92. As amended by Senate Bill 490, the VRPA no longer contains the $5,000 statutory damages provision. See Mich. Comp. Laws § 445.1715(2)(a). Moreover, the VRPA now only allows "customers ... who [have] suffer[ed] actual damages" to bring a civil action. Id. § 445.1715(2). Senate Bill 490 became effective on July 31, 2016. See 2016 Mich. Pub. Act No. 92. The Court must decide whether Senate Bill 490 applies retroactively, so as to preclude Plaintiff from proceeding with her suit against Defendant without alleging actual damages.⁴ Other district courts have already held that Senate Bill 490 is not retroactive. Boelter v. Hearst Commc'ns, Inc. , 192 F.Supp.3d 427, 438–42 (S.D.N.Y. 2016) ; Boelter v. Advance Magazine Publishers, Inc. d/b/a Condé Nast , 210 F.Supp.3d 579, 596–97 (S.D.N.Y. 2016) ; Moeller, et al. v. American Media, Inc. et al. , 235 F.Supp.3d 868, 2017 WL 416430 (E.D. Mich. 2017).⁵

Whether Senate Bill 490 applies retroactively depends on Michigan law—and, in particular, on Michigan principles of statutory interpretation. See Kia Motors Am., Inc. v. Glassman Oldsmobile Saab Hyundai, Inc. , 706 F.3d 733, 739 (6th Cir. 2013). Under Michigan law, a statute is presumed to operate prospectively, but this presumption can be rebutted by a "clear[ ] manifest[ation]" of "contrary intent." Frank W. Lynch & Co. v. Flex Techs., Inc. , 463 Mich. 578, 583, 624 N.W.2d 180 (2001) (quoting Franks v. White Pine Copper Div. , 422 Mich. 636, 671, 375 N.W.2d 715 (1985) ) (internal quotation marks omitted); see also Kia Motors , 706 F.3d at 739 ; LaFontaine Saline, Inc. v. Chrysler Grp., LLC , 496 Mich. 26, 38, 852 N.W.2d 78 (2014) ("We have ... required that the Legislature make its intentions clear when it seeks to pass a law with retroactive effect."); cf. Bowen v. Georgetown Univ. Hosp. , 488 U.S. 204, 208, 109 S.Ct. 468, 102 L.Ed.2d 493 (1988) ("Retroactivity is not favored in the law.").

Four principles govern the inquiry into the legislative intent. The first principle is that a court should give effect to "specific language in [a] new [statute] which states...