Wade v. OnePlus USA Corp.

[2] 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION [6] ERIC WADE, et al., individually and on 7 behalf of all others similarly situated, Case No. 21-cv-05811-BLF 8 Plaintiffs, ORDER GRANTING MOTION TO DISMISS FIRST AMENDED 9 v. COMPLAINT WITH LEAVE TO AMEND 10 ONEPLUS USA CORP., [Re: ECF 37] 11 Defendant. [12] 13 In this putative class action, Plaintiffs sue Defendant OnePlus USA Corp. (“OnePlus”) for 14 unfair competition, false advertising, fraud, and related federal and state law claims arising from 15 the design, marketing, and sale of the OnePlus 9 and OnePlus 9 Pro smartphones. On August 11, 16 2022, the Court heard oral argument on OnePlus’s motion to dismiss the first amended complaint 17 (“FAC”) pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The Court issued its 18 ruling on the record, which is memorialized herein. For the reasons stated on the record and 19 summarized below, the motion is GRANTED WITH LEAVE TO AMEND. 20 The FAC is DISMISSED for lack of Article III standing, because it does not sufficiently 21 allege that the named Plaintiffs suffered injury in fact. See McGee v. S-L Snacks Nat’l, 982 F.3d 22 700, 710 (9th Cir. 2020) (affirming dismissal of putative consumer class action for lack of Article 23 III standing where named plaintiff did not sufficiently allege injury in fact). While Plaintiffs 24 allege that the smartphones at issue “contain a ‘Secret Setting’ that restricts—or ‘throttles’— 25 access to the Devices’ processing power and other resources,” FAC ¶ 1, they do not allege that 26 they personally experienced reduced power or performance when using their smartphones. This 27 case is factually distinguishable from In re Apple Inc. Device Performance Litig., 386 F. Supp. 3d 1 established Article III standing to assert a throttling claim even though the operative pleading did 2 not allege facts regarding each named plaintiff’s experience, because the pleading adequately 3 alleged that the iOS updates “affected all Plaintiffs alike.” In the present case, the throttling is 4 alleged to affect only certain applications and functions, and therefore it is not clear that each 5 named Plaintiff was affected alike. When they amend to cure this defect, Plaintiffs also may 6 amend their nationwide class allegations as they requested leave to do in their opposition. 7 The Court finds unpersuasive OneNote’s argument that Plaintiffs also lack Article III 8 standing because they did not comply with a condition precedent to suit contained in § 8.2 of the 9 applicable End User License Agreement (“EULA”). The cases cited by OneNote, addressing 10 agreements that clearly required mediation prior to commencement of litigation, are factually 11 distinguishable from the present case, in which the EULA requires only that the parties engage in 12 “friendly negotiation” and does not clearly state that such negotiation is a condition precedent to 13 litigation. The Court observes that the parties have participated in an unsuccessful mediation, 14 which in the Court’s view would satisfy the asserted condition precedent with respect to the as-yet 15 unfiled second amended complaint. 16 The FAC also is DISMISSED for failure to state a claim. With respect to the claims 17 brought under the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030 , and the 18 California Computer Data Access and Fraud Act (“CDAFA”), Cal. Penal Code § 502 , Plaintiffs 19 appear to allege both that the secret setting was installed on the smartphones at the factory before 20 sale and that it was implemented by the push of an update after sale. If Plaintiffs’ theory is that 21 the secret setting was factory-installed, they cannot plausibly allege that installation was “without 22 authorization” as required to sue under certain provisions of the CFAA and CDAFA. If Plaintiffs’ 23 theory is that the secret setting was implemented after sale, they have not alleged enough facts to 24 make out a plausible claim. If Plaintiffs intend to proceed on both theories, they must clarify 25 which alleged conduct supports each claim asserted under the CFAA and CDAFA. Finally, 26 Plaintiffs have not adequately alleged that they suffered losses meeting the $5,000 threshold under 27 the CFAA, or that they suffered damage or loss as required under the CDAFA. 1 chattels, as least one district court has held that a trespass claim cannot lie where the interference 2 occurred prior to sale. See Kandel v. Brother Int’l Corp., No. CV 08-1040 DSF RCX, 2009 WL 3 9100406, at *1 (C.D. Cal. Feb. 13, 2009). The failure to allege injury also renders the claim for 4 trespass to chattels subject to dismissal. See Brodsky v. Apple Inc., 445 F. Supp. 3d 110 , 124 5 || (N.D. Cal. 2020). 6 The fraud claims do not satisfy Federal Rule of Civil Procedure 9(b), and Plaintiffs have 7 failed to allege an actionable omission. It may be that Plaintiffs’ fraud claims will become clearer 8 || once their pleading identifies when the secret setting was installed on Plaintiffs’ smartphones. 9 The claim for money had and received is dismissed for failure to plead a sum certain. See 10 Walter v. Hughes Commc’ns, Inc., 682 F. Supp. 2d 1031, 1047 (N.D. Cal. 2010). 11 Plaintiffs have not adequately alleged that they suffered a loss of money or property as 12 || required for statutory standing to sue under California’s Unfair Competition Law (“UCL”), Cal. 5 13 || Bus. & Prof. Code § 17200, and California’s False Advertising Law (“FAL”), Cal. Bus. & Prof. 14 Code § 17500. See Cal. Bus. & Prof. Code §§ 17204 , 17535. The Court notes that in order to 3 15 prevail on any of their claims for equitable relief, including their UCL, FAL, and unjust a 16 || enrichment claims, Plaintiffs will have to prove that they lack an adequate legal remedy. See 3 17 Sonner v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020). District courts within the Ninth 18 Circuit are split as to how strictly to apply Sonner at the pleading stage. See Jeong v. Nexo Fin. 19 || LLC, No. 21-CV-02392-BLF, 2022 WL 174236 , at *27 (N.D. Cal. Jan. 19, 2022) (collecting 20 || cases). It is this Court’s view that Plaintiffs may assert equitable claims in the alternative to legal 21 claims at the pleading stage. See id. When they amend, Plaintiffs should clarify that their 22 || equitable claims are pled in the alternative to their legal claims. 23 Accordingly, OnePlus’s motion to dismiss the FAC is GRANTED WITH LEAVE TO 24 || AMEND. Any amended complaint shall be filed by October 3, 2022. Plaintiffs may not add new 25 claims or parties without express leave of the Court. 26 IT IS SO ORDERED. 27 Dated: August 17, 2022 fod trun frornael. ETH LABSON FREEMAN 28 United States District Judge