Price v. Synapse Grp., Inc.
| Decision Date | 24 July 2017 |
| Docket Number | Case No. 16-cv-01524-BAS-BLM |
| Court | U.S. District Court — Southern District of California |
| Parties | SHANNON DALE PRICE and CHERYL EDGEMON, individually and on behalf of all others similarly situated, Plaintiffs, v. SYNAPSE GROUP, INC., a Delaware corporation; SYNAPSECONNECT, INC., a Delaware corporation; TIME INC., a Delaware corporation; and DOES 1-50, inclusive, Defendants. |
Plaintiffs Shannon Price and Cheryl Edgemon bring this putative class action against Defendants Synapse Group, Inc., SynapseConnect, Inc., and Time, Inc., alleging that Defendants' enrollment of consumers in automatic subscription renewal programs violates various California consumer protection laws. Defendants now move to dismiss the operative Second Amended Complaint for failure to state a claim. For the following reasons, the Court GRANTS IN PART and DENIES IN PART Defendants' motion to dismiss. (ECF No. 17.)
This case involves the sometimes fine line between a company's legitimate efforts to incentivize consumer behavior and the use of deceptive tactics to defraud the buying public. Plaintiffs Price and Edgemon are individual consumers who purchased magazine subscriptions from Defendants Synapse Group, Inc. ("Synapse") and SynapseConnect, Inc. ("SynapseConnect")—corporations whose primary business is marketing magazine subscriptions. (ECF No. 13, Second Amended Complaint ("SAC") ¶¶ 2, 3.) Plaintiffs also name as a defendant the prominent mass media company Time, Inc., who is Synapse's parent corporation. (Id. ¶¶ 4, 5.)
Plaintiffs allege that after they completed an online retail purchase and follow-up survey, Defendants presented them with an online "reward" offer to receive annual magazine subscriptions at a discounted rate of $2.00 per subscription. (Id. ¶ 28.) Under the terms of the offer, Plaintiffs could select up to five magazine titles. Plaintiff Price selected two magazine titles and paid $4.00 with his credit card; Plaintiff Edgemon selected four magazine titles and paid $8.00 with her credit card. (Id.)
Plaintiffs allege that when they selected and paid for the discounted magazine subscriptions, they were unaware that Defendants enrolled them in an "automatic renewal" program under which the subscriptions would renew each year at much higher rates unless Plaintiffs chose to cancel. (Id. ¶¶ 29, 35.) Although the order page from which Plaintiffs made their purchases included information regarding automatic renewal, Plaintiffs assert that the manner in which this information was presented was insufficient to put them on notice. (Id. ¶¶ 30-33.) As a result, Plaintiffs allege that Defendants charged their credit cards for renewed subscriptions—approximately $71.00 in the case of Plaintiff Price and $190.00 in the case of Plaintiff Edgemon—without their knowing consent. Plaintiffs state that if they had known Defendants were going to enroll them in automatic renewal programs, they would not have ordered the magazines in the first place. (Id. ¶¶ 34, 36.)
According to Plaintiffs, the terms of the automatic renewal offer are containedin the middle of a ten-sentence paragraph located at the end of the order page. (Id. ¶¶ 30-32.) This "disclosure" paragraph appears below sections of the order page where consumers select magazine titles and enter their credit card information, and immediately above a red "Complete" button consumers must click to complete their order. The paragraph reads as follows:1
(SAC, Exh. 17 (ECF No. 13-17 at 11)).
Plaintiffs allege that the format, content, placement, and text size of this disclosure violate California's Automatic Purchase Renewals Statute ("Automatic Renewal Law" or "ARL"), Cal. Bus. & Prof. Code §§ 17600-17606. The ARL requires businesses to satisfy three main conditions when making automatic renewal offers to consumers in California: (1) present the terms of the automatic renewal offer in a clear and conspicuous manner, (2) obtain consumers' affirmative consent to the renewal offer before charging them, and (3) provide to consumers an acknowledgement that includes the terms of the renewal program and information on how to cancel, and that is capable of being retained. See Cal. Bus. & Prof. Code §§ 17601(a)(1)-(3). Plaintiffs allege that Defendants violated each of these provisions ofthe ARL in the course of offering discounted magazine subscriptions to Plaintiffs. (SAC ¶ 33.)
Plaintiffs do not, however, bring a standalone cause of action under the ARL. Instead, they cite Defendants' alleged violations of the ARL as a predicate for other claims. Specifically, Plaintiffs assert claims under (1) California's False Advertising Law ("FAL"), Cal. Bus. & Prof. Code §§ 17500-17509, (2) California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code §§ 17200-17210, (3) California's Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1770, and for (4) conversion and (5) unjust enrichment. Plaintiffs bring the suit on behalf of a class of California consumers who were enrolled in an automatic renewal program by Defendants in connection with a magazine subscription selection offered by Defendants. (Id. ¶ 39.) Plaintiffs seek restitution, injunctive relief, damages, and fees and costs.
Plaintiffs originally filed suit in the Superior Court of California, County of San Diego. Defendants removed the case to this Court under the Class Action Fairness Act of 2005, 28 U.S.C. § 1332(d)(2), and the general removal statute, 28 U.S.C. § 1441(b), after which Plaintiffs filed a First Amended Complaint ("FAC"). (ECF Nos. 1, 11.) Defendants responded to the FAC by bringing a motion to dismiss for failure to state a claim. (ECF No. 12.) Thereafter, Plaintiffs filed the operative Second Amended Complaint. (ECF No. 13.) Defendants now move to dismiss the SAC under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. (ECF No. 17.) Plaintiffs oppose. (ECF No. 18.)
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims stated in the complaint. See Conservation Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011). A complaint may be dismissed under Rule 12(b)(6) "only when it fails to state a cognizable legal theory or fails to allege sufficient factual support for its legal theories." Caltex Plastics, Inc. v.Lockheed Martin Corp., 824 F.3d 1156, 1159 (9th Cir. 2016).
To survive a motion to dismiss, a complaint must contain facts sufficient to "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). The plausibility standard does not require a showing of "probability," "but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Where a complaint contains allegations that are "merely consistent with" a defendant's liability, it stops short of the line between possible liability and plausible entitlement to relief. Id. (citing Twombly, 550 U.S. at 557).
In deciding a motion to dismiss, the court must accept as true all factual allegations in the complaint and draw reasonable inferences from those allegations in the light most favorable to the plaintiff. See Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005, 1014 (9th Cir. 2012). However, the court need not assume the truth of legal conclusions, unwarranted deductions of fact, or inferences that are unreasonable in light of the facts alleged. See Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (per curiam) (citations omitted); In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (citation omitted). Ruling on a Rule 12(b)(6) motion is "a context-specific task" that requires the court "to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 682.2
Defendants move to dismiss Plaintiffs' claims on grounds that: (1) Plaintiffslack statutory standing to assert claims under the FAL, UCL, and CLRA; (2) Plaintiffs fail to sufficiently allege any violation of the ARL on which to base the asserted statutory and common law claims; (3) Plaintiffs' CLRA, conversion, and unjust enrichment claims are premised on invalid legal theories or insufficient facts; (4) Plaintiffs fail to state a claim against Defendant Time, Inc. under an agency or alter ego theory; and (5) Plaintiffs lack Article III standing for injunctive relief. Before addressing each of these arguments in turn, the Court first resolves Defendants' request for judicial notice.
Defendants request the Court take judicial notice of three postcard mailers, purportedly mailed to Plaintiffs, that contain information regarding Plaintiffs'...
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