Arnold v. Hearst Magazine Media, Inc.

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA [10] 11 FENELLA ARNOLD, KELLY Case No.: 19-cv-1969-WQH-MDD NAKAI, and MICHELE [12] RUPPERT, individually and on ORDER 13 behalf of all others similarly situated, [14] Plaintiffs, [15] v. [16] HEARST MAGAZINE MEDIA, [17] INC., a Delaware corporation; 18 CDS GLOBAL, INC., an Iowa corporation; and DOES 1-50, [19] inclusive, [20] Defendants. [21] HAYES, Judge: [22] The matter before the Court is the Motion to Dismiss Plaintiffs’ First Amended [23] Complaint filed by Defendants Hearst Magazine Media, Inc., and CDS Global, Inc. (ECF [24] No. 17). [25] I. BACKGROUND [26] On September 10, 2019, Plaintiffs Fenella Arnold and Kelly Nakai filed a Class [27] Action Complaint in the Superior Court for the State of California, County of San Diego, [28] 1 against Defendants Hearst Magazine Media, Inc. (“Hearst”), CDS Global, Inc. (“CDS”), 2 and Does 1 through 50, inclusive. (ECF No. 1-2). On October 10, 2019, Defendants 3 removed the action to this Court pursuant to the Class Action Fairness Act, 28 U.S.C. § 4 1332(d), and 28 U.S.C. § 1441 (a). (ECF No. 1). On December 9, 2019, Plaintiffs Fenella 5 Arnold, Kelly Nakai, and Michele Ruppert filed the First Amended Complaint (“FAC”). 6 (ECF No. 14). 7 In the FAC, Plaintiffs allege that Defendant Hearst is “one of the largest magazine 8 publishers in the world.” (Id. ¶ 11). Plaintiffs allege that Hearst publishes approximately 9 two dozen magazines in the United States, including Food Network Magazine, 10 Cosmopolitan, Good Housekeeping, Woman’s Day, Country Living, HGTV Magazine, and 11 Car & Driver. Plaintiffs allege that Defendant CDS is “the largest magazine fulfillment 12 house in the United States.” (Id. ¶ 12). Plaintiffs allege that CDS is a wholly-owned 13 subsidiary of Hearst that provides services to Hearst, including “assisting with 14 subscriptions, billing, collection, and/or other account services.” (Id.). 15 Plaintiffs allege that Defendants have “implemented a negative option model” for 16 renewal of Defendants’ magazine subscriptions. (Id. ¶ 14). Plaintiffs allege that one aspect 17 of the negative option model is that Defendants “solicit orders for magazine subscriptions 18 that purport to be fixed for a period of time (e.g., one year, or two years),” and then “enroll 19 the consumer in a program under which the magazine subscription will be ‘automatically 20 renewed’ for subsequent periods, with corresponding charges posted to the consumer’s 21 credit card, debit card, or other payment account.” (Id. ¶ 15). Plaintiffs allege that another 22 aspect of the negative option model is that Defendants “send consumers an ‘invoice’ stating 23 that payment is due for a subscription when, in fact, the recipient did not request a 24 subscription and no money is actually due.” (Id. ¶ 16). 25 Plaintiff Arnold alleges that in June 2017, she completed and returned a paper order 26 form for a two-year subscription to HGTV Magazine. Arnold alleges that she received a 27 $22.00 email invoice for the HGTV Magazine subscription and paid the invoice “by 28 entering her credit card information through Defendants’ website.” (Id. ¶ 26). Arnold 1 alleges that she subsequently submitted order forms for one-year subscriptions to Good 2 Housekeeping, Woman’s Day, and Oprah Magazine. Arnold alleges that Defendants sent 3 her “Order Confirmation” emails and charged her credit card $5.00 for each one-year 4 subscription. (Id. ¶¶ 34, 40). Arnold alleges that on June 28, 2019, “Defendants posted a 5 charge of $34.97 to Arnold’s credit card, purportedly for renewal of HGTV Magazine.” (Id. 6 ¶ 30). Arnold alleges that on September 20, 2019, “Defendants posted charges of $19.97 7 and $14.97 to Arnold’s credit card, purportedly for renewal of Good Housekeeping and 8 Woman’s Day, respectively.” (Id. ¶ 37). Arnold alleges that on October 11, 2019, 9 “Defendants posted a charge of $34.97 to Arnold’s credit card, purportedly for renewal of 10 Oprah Magazine.” (Id. ¶ 43). 11 Arnold alleges that she did not authorize or consent to renewal of the magazine 12 subscriptions. Arnold alleges that when she submitted the order forms and made credit card 13 payments for the subscriptions to HGTV Magazine, Good Housekeeping, Woman’s Day, 14 and Oprah Magazine, Arnold “was not aware that Defendants were going to enroll her in 15 a program under which the subscription[s] would automatically renew for subsequent 16 periods . . . .” (Id. ¶¶ 28, 33, 39). Arnold alleges that Defendants’ advertisements, order 17 forms, email invoices, payment webpages, and order confirmation emails for HGTV 18 Magazine, Good Housekeeping, Woman’s Day, and Oprah Magazine “did not contain clear 19 and conspicuous disclosure of automatic renewal offer terms . . . .” (Id.). Arnold alleges 20 that if she knew that Defendants were going to enroll her in an automatic subscription 21 program, she would not have submitted orders to Defendants or paid Defendants any 22 money. 23 Plaintiff Ruppert alleges that in July 2018, she received a paper advertisement from 24 Defendants for a one-year subscription to Food Network Magazine for $9.99 and a one25 year subscription to HGTV Magazine for $2.00. Ruppert alleges that on July 25, 2018, she 26 submitted an order for the one-year subscriptions to Food Network Magazine and HGTV 27 Magazine “by entering her order and credit card information through a website operated 28 by Defendants.” (Id. ¶ 52). Ruppert alleges that she received “Order Confirmation” emails 1 for each one-year subscription. (Id. ¶ 54). Ruppert alleges that on April 5, 2019, 2 “Defendants posted a charge of $34.97 to Ruppert’s credit card, purportedly for renewal of 3 HGTV Magazine.” (Id. ¶ 57). Ruppert alleges that on May 17, 2019, “Defendants posted a 4 charge of $29.97 to Ruppert’s credit card, purportedly for renewal of Food Network 5 Magazine.” (Id.). 6 Ruppert alleges that she did not authorize or consent to renewal of the magazine 7 subscriptions. Ruppert alleges that “[w]hen Ruppert submitted the order and made the 8 payment for the one-year subscriptions to Food Network Magazine and HGTV Magazine, 9 she was not aware that Defendants were going to enroll her in a program under which the 10 subscriptions would automatically renew for subsequent periods . . . .” (Id. ¶ 53). Ruppert 11 alleges that Defendants’ advertisement, webpage, and order confirmation emails for Food 12 Network Magazine and HGTV Magazine “did not provide clear and conspicuous disclosure 13 of automatic renewal offer terms . . . .” (Id. ¶¶ 51, 53, 54). Ruppert alleges that if she knew 14 that Defendants were going to enroll her in an automatic subscription program, she would 15 not have submitted orders to Defendants or paid Defendants any money. 16 Plaintiff Nakai alleges that on September 5, 2018, she received an email from 17 Defendants promoting a sweepstakes to win a trip to the New York City Wine and Food 18 Festival. Nakai alleges that a link in the email took Nakai to Defendants’ webpage, which 19 directed Nakai to “[f]ill in the fields below to get 1 FREE issue of Food Network Magazine 20 and be automatically entered for your chance to win.” (Id. ¶ 45 (emphasis omitted)). Nakai 21 alleges that she submitted the sweepstakes entry and received an issue of Food Network 22 Magazine. Nakai alleges that on September 8, 2018, she “received an email from 23 Defendants purporting to be an ‘INVOICE’ for an 11-issue term subscription to Food 24 Network Magazine, stating that there is now a ‘Payment Due’ of $12.00.” (Id. ¶ 46). Nakai 25 alleges that the purported invoice did “not contain the notice or disclaimer required by Civil 26 Code § 1716(b)” that no money was actually due. (Id. ¶ 47). Nakai alleges that she 27 “assumed she owed Defendants the money . . . and [ ] paid the ‘invoice’ with her credit 28 card,” even though “Nakai had not ordered a subscription to Food Network Magazine, and 1 no money was actually due.” (Id.). Nakai alleges that “[i]f [she] had known that, upon 2 receipt of her sweepstakes entry, Defendants were going to enroll her in, and charge her 3 for, a subscription for Food Network Magazine, she would not have submitted the 4 sweepstakes entry.” (Id. ¶ 48). 5 Nakai further alleges that the eleven-month subscription to Food Network Magazine 6 that Nakai paid for is an automatic renewal subscription. Nakai alleges that Defendants’ 7 promotional email, sweepstakes entry form, and credit card authorization did not contain 8 “clear and conspicuous disclosure of automatic renewal offer terms . . . .” (Id. ¶¶ 49-50). 9 Nakai alleges that if she “had known that Defendants were going to treat her submission 10 of a sweepstakes entry as enrollment into an automatic renewal subscription, she would 11 not have entered the sweepstakes, would not have requested the magazine issue from 12 Defendants, and would not have paid any money to Defendants for that magazine.” (Id. ¶ 13 49). 14 Plaintiffs allege that other consumers have been victimized by Defendants’ negative 15 option model. Plaintiffs seek to represent a class of “[a]ll individuals in California who, 16 within the applicable limitations period, were enrolled by Defendants in an automatic 17 renewal program or a continuous service program and had a credit card, debit card, and/or 18 a third-party payment account charged by Defendants as part of such program . . .” (the 19 “ARL Class”). (Id. ¶ 61). Plaintiff Nakai further seeks to represent a class of “[a]ll 20 individuals in California who, within the applicable limitations period, received an invoice, 21 bill, or account statement from Defendants for a magazine subscription that had not been 22 ordered . . .” (the “False Invoice Class”). (Id. ¶ 62). 23 Plaintiffs allege that Defendants’ failure to present the automatic renewal offer terms 24 in a clear and conspicuous manner violates California’s Automatic Purchase Renewals 25 Statute, Cal. Bus. & Prof. Code §§ 17600 , et seq. (“Automatic Renewal Law” or “ARL”). 26 Based on Defendants’ alleged violation of the Automatic Renewal Law, Plaintiffs and the 27 proposed ARL Class bring claims against Defendants under California’s False Advertising 28 Law, Cal. Bus. & Prof. Code § 17500 , et. seq.; California’s Unfair Competition Law, Cal. 1 Bus. & Prof. Code § 17200, et seq.; California’s Consumer Legal Remedies Act, Cal. Civ. 2 Code § 1770; and for unjust enrichment. Plaintiff Nakai and the proposed False Invoice 3 Class further bring a claim against Defendants for violating section 1716 of the California 4 Civil Code. Plaintiffs seek damages, restitution, injunctive relief, attorneys’ fees, and costs. 5 On January 22, 2020, Defendants filed a Motion to Dismiss Plaintiffs’ FAC. (ECF 6 No. 17). Defendants move to dismiss the FAC pursuant to Rule 12(b)(6) of the Federal 7 Rules of Civil Procedure on the grounds that Plaintiffs fail to state a claim upon which 8 relief can be granted. On February 12, 2020, Plaintiffs filed an Opposition to Defendants’ 9 Motion to Dismiss. (ECF No. 18). On February 6, 2020, Defendants filed a Reply. (ECF 10 No. 19). 11 II. LEGAL STANDARD 12 Rule 12(b)(6) of the Federal Rules of Civil Procedure permits dismissal for “failure 13 to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). In order to state 14 a claim for relief, a pleading “must contain . . . a short and plain statement of the claim 15 showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Dismissal under Rule 16 12(b)(6) “is proper only where there is no cognizable legal theory or an absence of 17 sufficient facts alleged to support a cognizable legal theory.” Shroyer v. New Cingular 18 Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) (quotation omitted). 19 “To survive a motion to dismiss, a complaint must contain sufficient factual matter, 20 accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, [21] 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). 22 “A claim has facial plausibility when the plaintiff pleads factual content that allows the 23 court to draw the reasonable inference that the defendant is liable for the misconduct 24 alleged.” Id. (citation omitted). However, “a plaintiff’s obligation to provide the ‘grounds’ 25 of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic 26 recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 27 (alteration in original) (quoting Fed. R. Civ. P. 8(a)). A court is not “required to accept as 28 true allegations that are merely conclusory, unwarranted deductions of fact, or 1 unreasonable inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2 2001). “In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual 3 content, and reasonable inferences from that content, must be plausibly suggestive of a 4 claim entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 5 2009) (quotation omitted). 6 III. JUDICIAL NOTICE AND INCORPORATION BY REFERENCE 7 Defendants request that the Court take judicial notice of 1) the webpage on which 8 Plaintiff Nakai alleges that she submitted a sweepstakes entry; 2) the first amended 9 complaint filed in McKee v. Audible, Inc., No. CV 17-19741-GW(Ex) (ECF No. 40) (S.D. 10 Cal. Aug. 11, 2017); 3) the unpublished minute order of the Superior Court for State of 11 California, County of Sacramento, in Cortez v. McClatchy, No. 34-2014-00169700- CU12 BT-GDS (ECF No. 241) (Cal. Super. Ct. Aug. 16, 2018); and 4) the unpublished order of 13 the United States District Court for the Southern District of California in Samsung Int’l, 14 Inc. v. Allied Carriers Exch., No. 00-cv-01074-K-POR (ECF No. 83) (S.D. Cal. June 12, 15 2001). (ECF No. 17-3). 16 “[A] court may consider ‘material which is properly submitted as part of the 17 complaint’ on a motion to dismiss without converting the motion to dismiss into a motion 18 for summary judgment.” Lee v. City of Los Angeles, 250 F.3d 668, 688 (9th Cir. 2001) 19 (quoting Branch v. Tunnell, 14 F.3d 449, 453 (9th Cir. 1994), overruled on other grounds 20 by Galbraith v. Cty. of Santa Clara, 307 F.3d 1119 (9th Cir. 2002)). Under this 21 “incorporation by reference” doctrine, the court may consider “documents ‘whose contents 22 are alleged in a complaint and whose authenticity no party questions, but which are not 23 physically attached to the [plaintiff’s] pleading.’” Knievel v. ESPN, 393 F.3d 1068 , 1076 24 (9th Cir. 2005) (alteration in original) (quoting In re Silicon Graphic Inc. Sec. Litig., 183 25 F.3d 970, 986 (9th Cir 2002)). The court may also consider documents incorporated by 26 reference where “the plaintiff’s claim depends on the contents of a document, the defendant 27 attaches the document to its motion to dismiss, and the parties do not dispute the 28 authenticity of the document, even though the plaintiff does not explicitly allege the 1 contents of that document in the complaint.” Id. (citing Parrino v. FHP, Inc., 146 F.3d 699 , 2 706 (9th Cir. 1998)). 3 In this case, Plaintiff Nakai alleges the contents of the sweepstakes entry webpage 4 in the FAC. Nakai attaches an identical, but less legible, copy of the webpage to the FAC. 5 (See Ex. 9, ECF No. 14-9 at 2). The Court finds that the webpage on which Plaintiff Nakai 6 alleges that she submitted a sweepstakes entry, attached as “Exhibit A” to the Declaration 7 of Robert J. Herrington, is incorporated by reference to the FAC. Judicial notice of the 8 other requested documents is unnecessary for this Order. Defendants’ request that the Court 9 take judicial notice of the first amended complaint filed in McKee, the unpublished minute 10 order in Cortez, and the unpublished order in Samsung is denied. See Asvesta v. Petroutsas, [11] 580 F.3d 1000 , 1010 n. 12 (9th Cir. 2009) (denying request for judicial notice where 12 judicial notice would be “unnecessary”). 13 IV. SECTION 1716 OF THE CALIFORNIA CIVIL CODE 14 Plaintiff Nakai brings a claim against Defendants for violating section 1716 of the 15 California Civil Code by sending Nakai a false invoice. Defendants contend that Nakai 16 fails to state a claim under section 1716 because “the Complaint’s own allegations make 17 clear that the invoice at issue was a properly issued bill seeking payment for an order placed 18 by Nakai, not ‘in fact a solicitation for an order . . . .’” (ECF No. 17-1 at 26). Nakai contends 19 that the invoice was a solicitation for an order because she ordered a single free issue of 20 Food Network Magazine, not an eleven-month subscription. 21 Section 1716 of the California Civil Code provides that “it is unlawful for a person 22 to solicit payment of money by another by means of a written statement or invoice, or any 23 writing that reasonably could be considered a bill, invoice, or statement of account due, but 24 is in fact a solicitation for an order,” unless the solicitation contains a disclaimer that the 25 recipient is under no obligation to make a payment. Cal. Civ. Code § 1716 (a). To comply 26 with section 1716, the solicitation must include one of the following two disclaimers: 1) 27 “THIS IS NOT A BILL. THIS IS A SOLICITATION. YOU ARE UNDER NO 28 OBLIGATION TO PAY THE AMOUNT STATED ABOVE UNLESS YOU ACCEPT 1 THIS OFFER,” Cal. Civ. Code. § 1716(b); or 2) “This is a solicitation for the order of 2 goods or services, or both, and not a bill, invoice, or statement of account due. You are 3 under no obligation to make any payments on account of this offer unless you accept this 4 offer,” 39 U.S.C. § 3001 (d)(2)(A). Cal. Civ. Code § 1716 (b). The disclaimer must also 5 meet certain size, font, and color requirements. See Cal. Civ. Code § 1716 (b)-(f). 6 In this case, Nakai alleges that on September 5, 2018, she entered a sweepstakes 7 sponsored by Defendants to win a trip to the New York City Wine and Food Festival 8 through Defendants’ website. Nakai attaches the online sweepstakes entry form to the 9 FAC. The entry form states, “Fill in the fields below to get 1 FREE issue of Food Network 10 Magazine and be automatically entered for your chance to win. If you’d prefer to enter the 11 sweepstakes without getting a free trial, click here.” (Ex. 9, ECF No. 14-9 at 2; Ex. A, 12 Herrington Decl., ECF No. 17-2 at 6). Below the offer, in smaller text, the entry form states, 13 “If you like what you see, you’ll get 1 year (for a total of 11 issues) for just $12.00 –– that’s 14 78% less than others pay on the newsstand. If not, return the bill marked ‘cancel’ and keep 15 the first issue with no obligation. You’ll still be eligible to win the sweepstakes.” (Ex. 9, 16 ECF No. 14-9 at 2 (emphasis omitted); Ex. A, Herrington Decl., ECF No. 17-2 at 6 17 (emphasis omitted)). Nakai alleges that she “submitted a sweepstakes entry, which 18 included a request for the ‘FREE’ issue.” (ECF No. 14 ¶ 45). 19 Nakai alleges that on September 8, 2018, she “received an email from Defendants 20 purporting to be an ‘INVOICE’ for an 11-issue term subscription to Food Network 21 Magazine, stating that there is now a ‘Payment Due’ of $12.00.” (Id. ¶ 46). Nakai attaches 22 a screenshot of a section of the invoice to the FAC. (Id. ¶ 46). The invoice states, “Thank 23 you for subscribing to Food Network Magazine and entering the sweepstakes. You will be 24 notified if you are selected as the winner. Please pay your subscription now.” (Id.). Nakai 25 alleges that she had “not ordered a subscription to Food Network Magazine.” (Id. ¶ 47). 26 Nakai alleges that the invoice did not contain a disclaimer that Nakai was under no 27 obligation to pay Defendants any money. Nakai alleges that she “assumed she owed [28] 1 Defendants the money that was stated as the ‘Amount Due,’ and Nakai paid the ‘invoice’ 2 with her credit card, in the amount of $12.00.” (Id.). 3 Nakai’s allegation that she did not order a subscription to Food Network Magazine 4 is contradicted by the sweepstakes entry form that Nakai attaches to the FAC. See Steckman 5 v. Hart Brewing, 143 F.3d 1293 , 1295-96 (9th Cir. 1998) (“[W]e are not required to accept 6 as true conclusory allegations which are contradicted by documents referred to in the 7 complaint.” (citing In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1403 (9th Cir. 1996))). The 8 entry form states, “Fill in the fields below to get 1 FREE issue of Food Network Magazine 9 . . . .” (Ex. 9, ECF No. 14-9 at 2; Ex. A, Herrington Decl., ECF No. 17-2 at 6). Below the 10 offer, in smaller text, the entry form states, “If you like what you see, you’ll get 1 year (for 11 a total of 11 issues) for just $12.00 . . . . If not, return the bill marked ‘cancel’ and keep the 12 first issue with no obligation.” (Ex. 9, ECF No. 14-9 at 2; Ex. A, Herrington Decl., ECF 13 No. 17-2 at 6). Taking as true Nakai’s allegation that she submitted a request for a free 14 issue of Food Network Magazine, Nakai accepted Defendants’ offer for an eleven-month 15 subscription to Food Network Magazine. The invoice Nakai received from Defendants 16 three days later was a bill for the subscription Nakai ordered, not “in fact a solicitation for 17 an order.” Cal. Civ. Code § 1716 (a). Nakai fails to state facts that support a reasonable 18 inference that Defendants violated section 1716 and are uncontroverted by the exhibits 19 attached to the FAC. Defendants’ Motion to Dismiss Nakai’s claim for violation of section 20 1716 is granted. 21 V. FALSE ADVERTSING LAW 22 Plaintiffs bring claims against Defendants for violations of California’s False 23 Advertising Law (“FAL”), based upon Defendants’ alleged violations of California’s 24 Automatic Renewal Law. Defendants contend that Plaintiffs fail to allege facts from which 25 the Court can infer that Defendants violated the Automatic Renewal Law. Defendants 26 contend that Plaintiffs fail to allege the contents of Defendants’ disclosures and fail to 27 allege facts that demonstrate the disclosures did not comply with the Automatic Renewal 28 Law’s requirements. Plaintiffs contend that their allegations, when considered with the 1 exhibits attached to the FAC, are sufficient for each Plaintiff to state a claim against 2 Defendants under the Automatic Renewal Law and FAL. 3 California’s Automatic Renewal Law was enacted to “end the practice of ongoing 4 charging of consumer credit or debit cards . . . without the consumers’ explicit consent for 5 ongoing shipments of a product or ongoing deliveries of service.” Cal. Bus. & Prof. Code. 6 § 17600. The Automatic Renewal Law applies to “any business that makes an automatic 7 renewal offer or continuous service offer to a consumer in [California].” Cal. Bus. & Prof. 8 Code § 17602(a). “Automatic renewal” means “a plan or arrangement in which a paid 9 subscription or purchasing agreement is automatically renewed at the end of a definite term 10 for a subsequent term.” Cal. Bus. & Prof. Code § 17601 (a). “Continuous service” means 11 “a plan or arrangement in which a subscription or purchasing agreement continues until the 12 consumer cancels the service.” Cal. Bus. & Prof. Code § 17601 (e). 13 Section 17602 of the Automatic Renewal Law makes it unlawful to do any of the 14 following: 15 (1) Fail to present the automatic renewal offer terms or continuous service offer terms in a clear and conspicuous manner before the subscription or [16] purchasing agreement is fulfilled and in visual proximity . . . to the request for 17 consent to the offer. If the offer also includes a free gift or trial, the offer shall include a clear and conspicuous explanation of the price that will be charged [18] after the trial ends or the manner in which the subscription or purchasing 19 agreement pricing will change upon conclusion of the trial. [20] (2) Charge the consumer’s credit or debit card . . . for an automatic renewal 21 or continuous service without first obtaining the consumer’s affirmative consent to the agreement containing the automatic renewal offer terms or [22] continuous service offer terms, including the terms of an automatic renewal 23 offer or continuous service offer that is made at a promotional or discounted price for a limited period of time. [24] 25 (3) Fail to provide an acknowledgment that includes the automatic renewal offer terms or continuous service offer terms, cancellation policy, and [26] information regarding how to cancel in a manner that is capable of being 27 retained by the consumer. If the automatic renewal offer or continuous service offer includes a free gift or trial, the business shall also disclose in the [28] 1 acknowledgment how to cancel, and allow the consumer to cancel, the automatic renewal or continuous service before the consumer pays for the [2] goods or services. [3] Cal. Bus. & Prof. Code § 17602 (a). The requirements of section 17602 “apply only prior [4] to the completion of the initial order for the automatic renewal or continuous service.” Cal. [5] Bus. & Prof. Code § 17602(e)(1). However, the requirements of subdivision (a)(3) “may [6] be fulfilled after completion of the initial order.” Id. [7] The “automatic renewal offer terms” that a business must present in a “clear and [8] conspicuous” manner include: [9] (1) That the subscription or purchasing agreement will continue until the [10] consumer cancels. [11] (2) The description of the cancellation policy that applies to the offer. [12] 13 (3) The recurring charges that will be charged to the consumer’s credit or debit card or payment account with a third party as part of the automatic renewal [14] plan or arrangement, and that the amount of the charge may change, if that is 15 the case, and the amount to which the charge will change, if known. [16] (4) The length of the automatic renewal term or that the service is continuous, 17 unless the length of the term is chosen by the consumer. [18] (5) The minimum purchase obligation, if any. [19] Cal. Bus. & Prof. Code § 17601 (b). “Clear and conspicuous” means “in larger type than [20] the surrounding text, or in contrasting type, font, or color to the surrounding text of the [21] same size, or set off from the surrounding text of the same size by symbols or other marks, [22] in a manner that clearly calls attention to the language.” Cal. Bus. & Prof. Code § 17601 (c). [23] There is no private right of action under the Automatic Renewal Law. Johnson v. [24] Pluralsight, LLC, 728 F. App’x 674 , 676-77 (9th Cir. 2018). A consumer who has been [25] harmed by a violation of the Automatic Renewal Law may bring a claim pursuant to other [26] consumer protection statutes, including California’s FAL, Unfair Competition Law, and [27] Consumer Legal Remedies Act. Id.; see Cal. Bus. & Prof. Code § 17535 (section of the [28] 1 FAL authorizing a private right of action by “any person” for violations of Chapter 1 of 2 California’s Business and Professions Code, which includes the Automatic Renewal Law). 3 In this case, Plaintiffs allege that Defendants violated the FAL by failing to comply 4 with the requirements of the Automatic Renewal Law. Specifically, Plaintiffs allege that 5 Defendants failed to disclose the terms of their automatic renewal offers in a “clear and 6 conspicuous manner” and charged Plaintiffs’ credit cards without obtaining Plaintiffs’ 7 consent to the automatic renewal offer terms. Cal. Bus. & Prof. Code § 17602 (a)(1). 8 Plaintiff Arnold alleges that she submitted order forms for a two-year subscription 9 to HGTV Magazine and one-year subscriptions to Good Housekeeping, Woman’s Day, and 10 Oprah Magazine. Arnold alleges that at the end of her term subscriptions, Defendants 11 automatically renewed the subscriptions and charged Arnold’s credit card for the renewal 12 fees. Arnold relies upon the conclusory allegation that, on information and belief, the order 13 forms “did not contain clear and conspicuous disclosure of automatic renewal offer terms 14 as required by Bus. & Prof. Code § 17601(b) and (c) and § 17602(a)(1) and (a)(2).” (ECF 15 No. 14 ¶¶ 28, 33, 36, 39; see Twombly, 550 U.S. at 555 (explaining that Rule 8 requires 16 more than “a formulaic recitation of the elements of a cause of action”)). Arnold fails to 17 allege any fact to support her claim that the contents of the order forms she submitted to 18 Defendants violated the Automatic Renewal Law. See Cal. Bus. & Prof. Code § 19 17602(a)(1) (the disclosures required by the Automatic Renewal Law may be presented at 20 any time “before the subscription or purchasing agreement is fulfilled and in visual 21 proximity . . . to the request for consent to the offer”). 22 The Court cannot infer from the facts alleged that the order forms failed to include 23 a disclosure that the subscriptions would continue until the consumer cancels, a description 24 of the cancellation policy, the amount of the recurring charge, the length of the automatic 25 renewal term, or the minimum purchase obligation. See Cal. Bus. & Prof. Code § 17601 (b). 26 The Court cannot infer from the facts alleged that the order forms failed to disclose the 27 automatic renewal terms in larger or contrasting type, font, or color to the surrounding text, 28 or set off from the surrounding text of the same size by symbols or other marks. See Cal. 1 Bus. & Prof. Code § 17601(c). Arnold attaches to the FAC a copy of a paper order form 2 for Good Housekeeping and Woman’s Day and alleges that the order form is “similar” to 3 the order form she submitted. (ECF No. 14 ¶ 32). However, Arnold fails to allege facts 4 from which the Court can identify any violation of the Automatic Renewal Law. Arnold 5 does not allege any basis for her FAL claim independent of the Automatic Renewal Law. 6 Arnold fails to state a claim for violation of the FAL. 7 Plaintiff Ruppert alleges that in response to a paper advertisement, she submitted an 8 order and paid for one-year subscriptions to Food Network Magazine and HGTV Magazine 9 through Defendants’ website. Ruppert alleges that at the end of her term subscriptions, 10 Defendants automatically renewed the subscriptions and charged Ruppert’s credit card for 11 the renewal fees. Ruppert relies on the conclusory allegation that “Defendants did not 12 provide clear and conspicuous disclosure of automatic renewal offer terms as required by 13 Bus. & Prof. Code § 17601(b) and (c) and § 17602(a)(1), and charged [Ruppert’s] credit 14 card without first obtaining her affirmative consent to an agreement containing clear and 15 conspicuous disclosure of automatic renewal offer terms as required by Bus. & Prof. Code 16 § 17602(a)(2).” (ECF No. 14 ¶ 53). Ruppert fails to allege any fact to support her claim 17 that the contents of the webpage where she placed her order and paid for the magazine 18 subscriptions violated the Automatic Renewal Law. 19 The Court cannot infer from the facts alleged that the webpage failed to include a 20 disclosure that the subscriptions would continue until the consumer cancels, a description 21 of the cancellation policy, the amount of the recurring charge, the length of the automatic 22 renewal term, or the minimum purchase obligation. See Cal. Bus. & Prof. Code § 17601 (b). 23 The Court cannot infer from the facts alleged that the webpage failed to disclose the 24 automatic renewal terms in larger or contrasting type, font, or color to the surrounding text, 25 or set off from the surrounding text of the same size by symbols or other marks. See Cal. 26 Bus. & Prof. Code § 17601(c). Ruppert fails to allege facts that support a reasonable 27 inference that Defendants violated the Automatic Renewal Law. Ruppert does not allege [28] 1 any basis for her FAL claim independent of the Automatic Renewal Law. Ruppert fails to 2 state a claim for violation of the FAL. 3 Plaintiff Nakai alleges that she submitted a sweepstakes entry and request for a free 4 issue of Food Network Magazine on Defendants’ website. Nakai alleges that she received 5 an email invoice for an eleven-month subscription to Food Network Magazine and paid the 6 subscription online through Defendants’ website. Nakai alleges, on information and belief, 7 “that the Food Network Magazine subscription into which Defendants enrolled her is an 8 automatic renewal subscription.” (ECF No. 14 ¶ 49). Nakai relies on the conclusory 9 allegation that “[n]either the initial promotional email (Exhibit 8) not the sweepstakes entry 10 form (Exhibit 9) contains clear and conspicuous disclosure of automatic renewal offer 11 terms as required by Bus. & Prof. Code § 17601(b) and (c) and § 17602(a)(1).” (Id.). 12 Exhibits attached to a complaint are not a substitute for factual allegations. Nakai fails to 13 state facts from which the Court can infer that Defendants enrolled Nakai in an automatic 14 renewal subscription. Nakai fails to state facts that support a reasonable inference that 15 Defendants violated the Automatic Renewal Law. Nakai does not allege any basis for her 16 FAL claim independent of the Automatic Renewal Law. Nakai fails to state a claim for 17 violation of the FAL. Defendants’ Motion to Dismiss Plaintiffs’ claims for violations of 18 California’s FAL is granted. 19 VI. CONSUMER LEGAL REMEDIES ACT 20 Plaintiffs bring claims against Defendants for violating California’s Consumer Legal 21 Remedies Act (“CLRA”) by making false or misleading statements regarding the automatic 22 renewal of Defendants’ magazine subscriptions. Defendants contend that Plaintiffs’ CLRA 23 allegations are conclusory. Defendants contend that Plaintiffs fail to identify any 24 representation Defendants made and fail to allege facts that support an allegation that any 25 representation was false. Plaintiffs contend that they state facts sufficient to state claims 26 under the CLRA. 27 The CLRA outlaws “unfair methods of competition and unfair or deceptive acts or 28 practices” undertaken in the course of consumer transactions. Cal. Civ. Code § 1770 (a). 1 Section 1770 provides, in relevant part, that is it unlawful for “any person in a transaction 2 intended to result or that results in the sale or lease of goods or services to any consumer” 3 to “[r]epresent[ ] that goods or services have sponsorship, approval, characteristics, 4 ingredients, uses, benefits, or quantities that they do not have . . .,” Cal. Civ. Code § 5 1770(a)(5); to “[a]dvertis[e] goods or services with intent not to sell them as advertised,” [6] Cal. Civ. Code § 1770 (a)(9); to “[m]ak[e] false or misleading statements of fact concerning 7 reasons for, existence of, or amounts of, price reductions,” Cal. Civ. Code § 1770 (a)(13); 8 to “[r]epresent[ ] that a transaction confers or involves rights, remedies, or obligations that 9 it does not have or involve, or that are prohibited by law,” Cal. Civ. Code § 1770 (a)(14); 10 and to “[r]epresent[ ] that the consumer will receive a rebate, discount, or other economic 11 benefit, if the earning of the benefit is contingent on an event to occur subsequent to the 12 consummation of the transaction,” Cal. Civ. Code § 1770 (a)(17). Section 1770 proscribes 13 both false or misleading omissions and false or misleading affirmative misrepresentations. 14 Collins v. eMachines, Inc., 202 Cal. App. 4th 249, 255 (2011) (citing Outboard Marine 15 Corp. v. Superior Court, 52 Cal. App. 3d 30, 37 (1975); McAdams v. Monier, Inc., 182 16 Cal. App. 4th 174, 185 (2010)). 17 In this case, Plaintiffs allege that Defendants offered and advertised term magazine 18 subscriptions without adequately disclosing the automatic renewal features attached to 19 those subscriptions. However, Plaintiffs fail to state facts that support an inference that 20 Defendants violated section 1770. As discussed above, Plaintiffs fail to state facts that 21 support an inference that Defendants failed to adequately disclose the terms of the 22 automatic renewal program under the Automatic Renewal Law. Plaintiffs’ allegations that 23 Defendants failed to “present the automatic renewal offer terms or continuous service offer 24 terms in a clear and conspicuous manner” are conclusory. (See, e.g., ECF No. 14 ¶¶ 28, 33, 25 36, 39, 53). Plaintiffs fail to allege facts from which the Court can infer that Defendants 26 made any representations to Plaintiffs that were false or misleading. See Daugherty v. Am. 27 Honda Motor Co., Inc., 144 Cal. App. 4th 824, 835 (2006) (“[A]lthough a claim may be 28 stated under the CLRA in terms constituting fraudulent omissions, to be actionable the 1 omission must be contrary to a representation actually made by the defendant, or an 2 omission of a fact the defendant was obliged to disclose.”). Plaintiffs fail to state a claim 3 under the CLRA. Defendants’ Motion to Dismiss Plaintiffs’ CLRA claims is granted. 4 VII. UNFAIR COMPETITION LAW 5 Plaintiffs bring claims against Defendants for violating California’s Unfair 6 Competition Law (“UCL”) by violating the Automatic Renewal Law, FAL, CLRA and 7 section 1716 of the California Civil Code. Defendants contend that the Court should 8 dismiss Plaintiffs’ UCL claims because Plaintiffs’ allegations “do[ ] no more than to 9 purportedly allege violations of other laws.” (ECF No. 17-1 at 30). Defendants contend 10 that “Plaintiffs’ claim that Hearst engages in unfair business practices relies on conclusory 11 statements parroted from the UCL legal standard.” (Id. at 31). Plaintiffs contend that they 12 sufficiently allege UCL claims because they have stated claims for violations of the 13 Automatic Renewal Law, FAL, CLRA and section 1716. 14 The UCL prohibits “any unlawful, unfair or fraudulent business practice.” Cal. Bus. 15 & Prof. Code §§ 17200, 17203. “By proscribing ‘any unlawful’ business practice, ‘section 16 17200 borrows violations of other laws and treats them as unlawful practices’ that the 17 unfair competition law makes independently actionable.” Cel-Tech Commc’ns, Inc. v. L.A. 18 Cellular Tel. Co., 20 Cal. 4th 163, 180 (1999) (quoting State Farm Fire & Cas. Co. v. 19 Superior Court, 45 Cal. App. 4th 1093, 1103 (1996)). The UCL also prohibits a broader 20 category of “practice[s] [that] may be deemed unfair [or fraudulent] even if not specifically 21 proscribed by some other law.” Id. “An act or practice is unfair [under the UCL] if the 22 consumer injury is substantial, is not outweighed by any countervailing benefit to 23 consumers or to competition, and is not an injury the consumers themselves could 24 reasonably have avoided.” Daugherty, 144 Cal. App. 4th at 839 . 25 The term “fraudulent” under the UCL “does not refer to the common law tort of 26 fraud but only requires a showing members of the public are likely to be deceived.” Puentes 27 v. Wells Fargo Home Mortg., Inc., 160 Cal. App. 4th 638, 645 (2008) (quotation omitted). 28 “Unless the challenged conduct ‘targets a particular disadvantaged or vulnerable group, it 1 is judged by the effect it would have on a reasonable consumer.’” Id. (quoting Aron v. U2 Haul Co. of Cal., 143 Cal. App. 4th 796, 806 (2006)). In order to state a claim under the 3 UCL’s fraudulent prong, a plaintiff must plead that the alleged misrepresentation was 4 directly related to the plaintiff’s injurious conduct and that the plaintiff actually relied on 5 the alleged misrepresentation. In re Tobacco II Cases, 46 Cal. 4th at 326-27. UCL claims 6 that are grounded in fraud must be pleaded with particularity under Rule 9(b). Kearns v. 7 Ford Motor Co., 567 F.3d 1120, 1125-26 (9th Cir. 2009). 8 In this case, the Court has concluded that Plaintiffs fail to state claims for violations 9 of the FAL, CLRA, and section 1716. Plaintiffs have not alleged any basis for their UCL 10 claims other than violations of the FAL, CLRA, and section 1716. Accordingly, Plaintiffs 11 fail to state claims under the UCL. Defendants’ Motion to Dismiss Plaintiffs’ UCL claims 12 is granted. 13 VIII. EQUITABLE RELIEF 14 Defendants contend that Plaintiffs’ requests for equitable relief under the FAL, UCL, 15 and unjust enrichment claims should be dismissed because Plaintiffs have alleged other 16 claims for damages. Plaintiffs contend that they are entitled to pursue claims for equitable 17 relief because the CLRA permits damages in addition to equitable relief. 18 The only remaining claim for which Plaintiffs seek equitable relief is Plaintiffs’ 19 unjust enrichment claim. Plaintiffs bring an independent claim for unjust enrichment “in 20 the alternative to relief provided under any legal claim alleged herein.” (ECF No. 14 ¶ 96; 21 see Bruton v. Gerber Prods. Co., 703 F. App’x 468, 470 (9th Cir. 2017) (recognizing unjust 22 enrichment as an independent claim under California law)). However, the Court has 23 concluded that Plaintiffs fail to state any claim against Defendants. Defendants’ Motion to 24 Dismiss Plaintiffs’ requests for equitable relief is granted. 25 /// [26] 27 /// [28] 1 CONCLUSION 2 IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss Plaintiffs’ FAC 3 || (ECF No. 17) is granted. No later than thirty (30) days from the date of this Order, Plaintiffs 4 file a motion for leave to amend pursuant to Civil Local Rules 7.1 and 15.1(c). If no 5 || motion is filed, the Clerk shall close the case. 6 || Dated: June 25, 2020 BME: Me Z. A a 7 Hon. William Q. Hayes g United States District Court