Rudgayzer et al v. Google Inc., No. 1:2013cv00120 - Document 32 (E.D.N.Y. 2013)
Court Description: ORDER granting in part and denying in part 12 Motion to Dismiss for Improper Venue; denying as moot 11 Motion to Dismiss for Failure to State a Claim. Ordered by Judge I. Leo Glasser on 11/15/2013. (Parachini, Alexander)
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Rudgayzer et al v. Google Inc. Doc. 32 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ------------------------------------------------------x RUDGAYZER, et al., Plaintiff, MEMORANDUM AND ORDER - against - 13 CV 120 (ILG) (RER) GOOGLE, INC., Defendant. ------------------------------------------------------x GLASSER, United States District J udge: Plaintiffs Albert Rudgayzer, Michael Am alfitano, and Lillian Ganci (“Plaintiffs”) bring this action against Google, Inc. (“Google”), alleging violations of the Stored Com m unications Act (“SCA”), 18 U.S.C. §§ 270 1– 2712, for purportedly m aking public their private inform ation without their consent. Two m otions are before the court. First, Google has m oved to dism iss this action for im proper venue, or in the alternative to transfer it to the Northern District of California for m ore convenient venue. Secon d, Google has m oved to dism iss the com plaint for lack of standing and failure to state a claim . Google’s venue m otion is GRANTED to the extent it requests dism issal and DENIED as m oot to the extent it requests transfer. Google’s m otion to dism iss for lack of standing an d failure to state a claim is DENIED as m oot. BACKGROU N D The following facts are taken from the Plaintiffs’ com plaint as well as from extrinsic docum ents that the Court m ay consider in ruling on these m otions. See Serdarevic v. Centex Hom es, LLC, 760 F. Supp. 2d 322, 328 (S.D.N.Y. 20 10 ). Google launched Buzz, a social networking tool, on February 9, 20 10 . Com plaint dated J anuary 1 Dockets.Justia.com 8 , 20 13 [Dkt. No. 1] (“Com pl.”) at ¶ 12. For those Gm ail users who had previously created public Google profiles for them selves, Buzz autom atically m ade public a list of people with whom the user had frequently em ailed or chatted. Id. at ¶¶ 12, 16, 20 . The plaintiffs had Gm ail accounts when Buzz was launched, though they do not say whether they had public profiles at that tim e. Id. at ¶ 23. On J uly 30 , 20 10 , a group of nam ed plaintiffs filed a consolidated and am ended class-action com plaint in the Northern District of California, for a class consisting of all Gm ail users, alleging that Buzz violated federal and state privacy laws by m aking Gm ail users’ contact lists public without consent. Mem orandum in Support of Google’s Motion to Dism iss for Failure to State a Claim and Lack of Subject Matter J urisdiction [Dkt. No. 11-1] (“Def.’s State a Claim Mem .”) at Ex. A. All three plaintiffs in this case were part of the putative class in the 20 10 case. Com pl. at ¶ 1. The parties agreed to settle on Septem ber 2, 20 10 ; Google’s prim ary concessions were to m ake Buzz opt-in rather than opt-out and to pay $ 8.5 m illion to nonprofit organizations prom oting internet privacy. Def.’s State a Claim Mem . at Ex. B. The district court prelim inarily approved the settlem ent on October 7, 20 10 , and gave putative class m em bers 60 days to request exclusion. Id. at Ex. C. Rudgayzer successfully excluded him self from the class. Com pl. at ¶ 32. Am alfitano’s request for exclusion was deem ed late, which he attributes to inconsistent deadlines in the settlem ent agreem ent and class notice. Id. at ¶¶ 25– 29, 34. Ganci did not attem pt to exclude herself from the class, but says she would have if she had been aware of inconsistencies between the class notice and settlem ent agreem ent regarding the deadline for exclusion, criteria for opting out, and the definition of the class. Id. at ¶¶ 30 , 36. One class m em ber challenged the settlem ent agreem ent on the 2 basis of these inconsistencies. Def.’s State a Claim Mem . at Ex. F. The district court rejected the challenge and finally approved the class on J une 2, 20 11. Id. at Ex. E. The Plaintiffs filed their com plaint in this court on J anuary 8 , 20 13. Dkt. No. 1. Google filed two m otions on February 19, one to dism iss or transfer the action on the basis of im proper or in convenient venue an d one to dism iss the com plaint for lack of standing and failure to state a claim . Def.’s State a Claim Mem .; Mem orandum in Support of Google’s Motion to Dism iss or Transfer for Im proper Venue [Dkt. No. 12] (“Def.’s Venue Mem .”). The Plaintiffs filed responses in opposition to both of Google’s m otions on J une 10 . Plaintiffs’ Opposition to Defendant’s Motion to Dism iss for Failure to State a Claim an d Lack of Standing [Dkt. No. 27] (“Pls.’ State a Claim Opp’n”); Plaintiffs’ Opposition to Defendant’s Motion to Dism iss or Transfer for Im proper Venue [Dkt. No. 22] (“Pls.’ Venue Opp’n”). Google filed replies in support of both of its m otions on J uly 31. Reply in Support of Google’s Motion to Dism iss for Failure to State a Claim and Lack of Standing [Dkt. No. 30 ] (“Def.’s State a Claim Reply”); Reply in Support of Google’s Motion to Dism iss or Transfer for Im proper Venue [Dkt. No. 29] (“Def.’s Venue Reply”). D ISCU SSION I. Mo tio n to D is m is s o r Tran s fe r fo r Im p ro p e r o r In co n ve n ie n t Ve n u e Google argues that this action should be dism issed under Federal Rule of Civil Procedure 12(b)(3) for contravening a forum -selection clause that sets venue in Santa Clara County, California. Def.’s Venue Mem . at 7– 18 . The forum -selection clause reads: “You and Google agree to subm it to the exclusive jurisdiction of the courts located within the county of Santa Clara, California to resolve any legal m atter arising from the Term s.” Declaration of Marc S. Crandall in Support of Google’s Motion to Dism iss or 3 Transfer for Im proper Venue [Dkt. No. 12-10 ] (“Crandall Decl.”) at Ex. B ¶ 20 .7. 1 The agreem ent also contains a separate choice-of-law clause, which provides that the agreem ent “shall be governed by the laws of the State of California.” Id. Google argues in the alternative that transfer to the Northern District of California is appropriate under 28 U.S.C. § 140 4(a). Def.’s Venue Mem . at 18 – 24. Section 140 4(a) provides: “For the convenience of parties and witnesses, in the interest of justice, a district court m ay transfer any civil action to any other district or division where it m ight have been brought or to any district or division to which all parties have consented.” 28 U.S.C. § 140 4(a). Plaintiffs respond by asserting that Google’s forum -selection clause is in fact a venue-selection clause. Pls.’ Venue Opp’n at 5– 6 (citing Alexander v. Superior Court, 8 Cal.Rptr.3d 111, 13 (Cal. App. 20 0 3). Plaintiffs argue that the clause is therefore invalid, reasoning that under Alexander, venue can only be determ ined by California’s venue laws, CAL. CIV. P ROC. CODE § 395.5, and not by a contractual provision. Pls.’ Venue Opp’n at 6– 11. Plaintiffs do not contest that they agreed to the forum -selection clause, that the clause is reasonable, and that the clause applies their claim s in this case. In response to Google’s alternative argum ent, plaintiffs argue that the case should not be transferred under § 140 4(a). Id. at 11– 16 a. Plain tiffs ’ Argu m e n ts Re gard in g Califo rn ia Law 1 An earlier version of the clause read: “Any claim s, legal proceeding or litigation arisin g in connection with the Service will be brought solely in Santa Clara County, California, and you consent to the jurisdiction of such courts.” Id. at Ex. A ¶ 13. It’s unclear when the plaintiffs sign ed up for their Gm ail accounts and first agreed to this clause, but it doesn’t m atter; the earlier version provides that a user would be bound by future changes to the term s, id. at Ex. A, and such contract provisions are en forceable. See TradeCom et.com LLC v. Google Inc., 693 F. Supp. 2d 370 , 376 (S.D.N.Y. 20 10 ); MySpace, Inc. v. The Globe.com , Inc., No. 0 6-CV-3391, 20 0 7 U.S. Dist. LEXIS 44143, at *31– 32, 20 0 7 WL 168 6966, at *10 (C.D. Cal. Feb. 27, 20 0 7). H ence, no m atter when plain tiffs signed up for their Gm ail accounts, they are bound by the clause in effect at the tim e that Buzz laun ched in 20 10 . 4 The Court first addresses plaintiffs’ argum ent that the clause is invalid under California law. Plaintiffs contend that the clause is not a forum -selection clause, which is valid in California, but a venue-selection clause, and that it is therefore invalid because venue can only be determ ined by California’s venue laws, CAL. CIV. P ROC. CODE § 395.5. Plaintiffs’ argum ent is entirely incorrect. First, plaintiffs are incorrect that the clause at issue is not a forum -selection clause. See Pls.’ Venue Opp’n at 5. California case law does distinguish between forum selection clauses, which concern the place of jurisdiction, and venue-selection clauses, which con cern the specific location within that jurisdiction where a case m ay be heard. See Alexander v. Superior Court, 8 Cal. Rptr. 3d 111, 113 (Cal. Ct. App. 20 0 3). But the clause here functions as both a venue-selection clause and a forum -selection clause, as it lim its litigation to a particular county—a venue—within the state of California—a forum . Plaintiffs assert that “the clauses at issue refer only a [sic] particular county” and not to a particular state, an d that the clause therefore only applies “if Plaintiffs had brought the action in California.” Pls.’ Venue Opp’n at 6 (em phasis in original). Plaintiffs are sim ply wrong. The clause clearly lim its all suits to a particular jurisdiction, as it provides for exclusive jurisdiction in Santa Clara County, in the state of California. Second, plaintiffs are incorrect about the validity of venue-selection clauses under California law. The only relevant lim itation on venue-selection clauses is that they m ay not specify a county outside of those provided for in the state’s venue laws. Battaglia Enters., Inc. v. Superior Court, 154 Cal. Rptr. 3d 90 7, 912– 13 (Cal. Ct. App. 20 13); Global Packaging, Inc. v. Superior Court, 127 Cal. Rptr. 3d 8 13, 8 16 (Cal. Ct. App. 20 11). California’s venue laws provide that a corporation m ay be sued in (am ong other places) the county of the corporation’s principal place of business. CAL. CIV. P ROC. CODE 5 § 395.5. Mountain View, where Google’s headquarters are located, is in Santa Clara County. Com pl. at ¶ 8. The clause here therefore com plies with California’s venue laws and so is a valid venue-selection clause under California law. b. En fo rce ability o f th e Fo ru m -Se le ctio n Cla u s e As noted supra, the agreem ent contains a choice-of-law clause, separate from the forum -selection clause, which provides that the agreem ent “shall be governed by the laws of the State of California.” Crandall Decl. at Ex. B ¶ 20 .7. A choice-of-law clause governs only substantive law, not procedural law. Phillips v. Audio Active, Ltd., 494 F.3d 378 , 38 4– 85 (2d Cir. 20 0 7); see Cronin v. Fam ily Educ. Co., 10 5 F. Supp. 2d 136, 139 (E.D.N.Y. 20 0 0 ). Questions of venue and forum are procedural, so the enforceability of the forum -selection clause is governed by federal law. Phillips, 494 F.3d at 384– 8 5; J ones v. Weibrecht, 90 1 F.2d 17, 19 (2d Cir. 1990 ); BNY AIS Nom inees Ltd. v. Quan, 60 9 F. Supp. 2d 269, 274 (D. Conn. 20 0 9); Schlessinger v. Holland Am erica, 16 Cal. Rptr. 3d 5, 9 (Cal. Ct. App. 20 0 4). In light of the choice-of-law clause, the Court will look to California law when federal law references state contract law. See Phillips, 494 F.3d at 38 4– 8 5; Prod. Res. Grp. v. Martin Prof’l, A/ S, 90 7 F. Supp. 2d 40 1, 40 9– 10 (S.D.N.Y. 20 12). See generally R ESTATEMENT (SECOND) OF CONFLICT OF LAWS §§ 187, 20 5 (1971). i. Le gal Stan d ard The standard governing a m otion to dism iss on the basis of a forum -selection clause is in flux. A m ajority of circuits, including the Second Circuit, address the enforceability of a forum -selection clause under one of the subsections of Federal Rule of Civil Procedure 12(b), and apply the holding announced in The Brem en v. Zapata OffShore Co., 40 7 U.S. 1, 15 (1972), that a “forum clause should control absent a strong showing that it should be set aside.” See TradeCom et.com LLC v. Google, Inc., 647 F.3d 6 472, 476– 77 & n.6 (2d Cir. 20 11) (collecting cases); Salovaara v. J ackson Nat’l Life Ins. Co., 246 F.3d 289, 298– 30 0 (3d Cir. 20 0 1); Security Watch, Inc. v. Sentinel Sys., 176 F.3d 369, 374– 75 (6th Cir. 1999). Last year, however, the Fifth Circuit held that the enforceability of a forum -selection clause should be addressed under 28 U.S.C. § 140 4(a), an d accordingly that the existence of such a clause was only one factor am ong m any that a court m ust consider in deciding whether to transfer a case. In re Atl. Marine Constr. Co., 70 1 F.3d 736 (5th Cir. 20 12). The Fifth Circuit acknowledged that it was siding with a m inority of the circuits. Id. at 739; see Kerobo v. Southwestern Clean Fuels, Corp., 285 F.3d 531 (6th Cir. 20 0 2); J um ara v. State Farm Ins. Co., 55 F.3d 8 73 (3d Cir. 1995). The Suprem e Court granted a certiorari request in Atlantic Marine Construction and recently heard argum ent to resolve this circuit split. Cert. granted sub nom . Atl. Marine Constr. Co. v. United States Dist. Court, 133 S. Ct. 1748 (20 13). This Court will apply the law that currently controls in the Second Circuit. In this circuit, an enforceable forum -selection clause is grounds for dism issal for im proper venue under Federal Rule of Civil Procedure 12(b)(3). TradeCom et.com LLC, 647 F.3d at 278. A forum -selection clause is presum ed enforceable if (1) the m oving party shows that the clause was reasonably com m unicated to the party challenging enforcem ent, (2) the clause is m andatory under state contract law, and (3) the claim s and parties involved in the suit are subject to the clause under state contract law. Global Seafood Inc. v. Bantry Bay Mussels Ltd., 659 F.3d 221, 224 & n.3 (2d Cir. 20 11); Phillips, 494 F.3d at 38 3; Prod. Res. Grp., 90 7 F. Supp. 2d at 40 9. The nonm oving party m ay rebut this presum ption by dem onstrating that enforcem ent would be unreasonable or unjust. Phillips, 494 F.3d at 383– 84. Because the parties chose to be bound by California law in their choice-of-law clause, California law applies when federal law 7 references state contract law. R ESTATEMENT (SECOND) OF CONFLICT OF LAWS §§ 187, 20 5 (1971). The Court accepts facts alleged in the com plaint as true. Zaltz v. J DATE, No. 12CV-3475, 20 13 U.S. Dist. LEXIS 95726, at *10 – 11, 20 13 WL 33690 73, at *2 (E.D.N.Y. J uly 8 , 20 13). The Court m ay rely on facts outside of, as well as within, the pleadings when addressing a Rule 12(b)(3) m otion. See Altvater Gessler-J .A. Baczewski Int’l (USA) Inc. v. Sobieski Destylarnia S.A., 572 F.3d 8 6, 8 9 (2d Cir. 20 0 9); TradeCom et.com , LLC, 693 F. Supp. 2d at 375 n.3 ii. An alys is The forum -selection clause is enforceable. First, the forum -selection clause was reasonably com m unicated to the plaintiffs. Google requires all users, after seeing a screen listing the term s or a link to the term s, to agree to the term s of use before creating an em ail account. Crandall Decl. at ¶ 6 & Ex. B ¶ 2.1. Agreem ents such as this— that require a user’s assent as a prerequisite for using the services and are known as “clickwrap” agreem ents—are considered reasonably com m unicated. 5381 Partners, LLC v. Shareasale.com , Inc., No. 12-CV-4263, 20 13 U.S. Dist. LEXIS 1360 0 3, at *21– 22, 20 13 WL 5328324, at *6 (E.D.N.Y. Sept. 23, 20 13); Person v. Google, Inc., 456 F. Supp. 2d 48 8 , 496– 97 (S.D.N.Y. 20 0 6). Second, the forum -selection clause is plainly m andatory. It states that Santa Clara County is the “exclusive jurisdiction” for bringing actions arising from the agreem ent. Crandall Decl. at ¶ 5 & Ex. B. ¶ 20 .7. The clause therefore requires—rather than sim ply perm its—suits to be brought in the selected forum and venue. Phillips, 494 F.3d at 38 3; see also Intershop Com m c’ns AG v. Superior Court, 127 Cal. Rptr. 2d 8 47, 8 50 – 52 (Cal. Ct. App. 20 0 2) (concluding that language specifying one place for 8 jurisdiction m ade clause m andatory); Berg v. Mtc Elec. Techs. Co., 71 Cal. Rptr. 2d 523, 528– 30 (Cal. Ct. App. 1998) (citing cases in which clauses using “shall” or “exclusive” were considered m andatory). Third, the claim s in this case are within the scope of the clause. The clause specifies a particular forum and venue for the resolution of “any legal m atter arising from the Term s.” Crandall Decl. at Ex. B ¶ 20 . California courts read forum -selection clauses very broadly. In Nedlloyd Lin es B.V. v. Superior Court, the Suprem e Court of California held that a choice-of-law clause providing that, “This agreem ent shall be governed by and construed in accordance with Hong Kong law,” applied not only to contract disputes but to “all causes of action arising from or related to that agreem ent, regardless of how they are characterized, including tortious breaches of duties em anating from the agreem ent or the legal relationships it creates.” 834 P.2d 1148, 1150 , 1153– 55 (Cal. 1992). The court explained Our conclusion in this regard com ports with com m on sense and com m ercial reality. When a rational businessperson enters into an agreem ent establishing a transaction or relationship and provides that disputes arisin g from the agreem ent shall be governed by the law of an identified jurisdiction, the logical conclusion is that he or she inten ded that law to apply to all disputes arising out of the transaction or relationship. We seriously doubt that any rational businessperson, attem pting to provide by contract for an efficient and business-like resolution of possible future disputes, would intend that the laws of m ultiple jurisdictions would apply to a single controversy having its origin in a single, contract-based relationship. Id. at 1154. The Suprem e Court of California later clarified that Nedlloyd applied not only to agreem ents between businesses, but also to contracts of adhesion between a business and a consum er. Washington Mut. Bank v. Superior Court, 15 P.3d 10 71, 10 79 (Cal. 20 0 1). And the California Appellate Court confirm ed that the reasoning in 9 Nedlloyd applies equally to forum -selection clauses in Cal-State Business Products & Services, Inc. v. Ricoh, 16 Cal. Rptr. 2d 417, 423– 24 (Cal. Ct. App. 1993). Indeed, the court in Nedlloyd had noted that choice-of-law and forum -selection clauses are “closely related.” Nedlloyd, 834 P.2d at 1150 . In Ricoh, an office-m achine dealership sued an office-m achine m anufacturer for restraint of trade, unfair trade practices, breach of contract, fraud, and negligent m isrepresentation, after their business relationship soured. Ricoh, 16 Cal. Rptr. 2d at 421. The Court concluded that a clause requiring that “any case or controversy arising under or in connection with the Agreem ent” be brought in New York encom passed all of the claim s at issue: “The entire gist of the com plaint in the present action relates to allegedly false prom ises m ade in the course of negotiations . . . and the subsequent conduct of the relationship between the parties created by the contract. All the causes of action are consequently within the scope of the forum selection clauses.” Id. These cases counsel that the forum -selection clause covers plaintiffs’ claim of a violation of the SCA. Plaintiffs’ claim arises from the parties’ “contract-based relationship,” and so is governed by the forum -selection clause. See Nedlloyd, 834 P.2d at 1154. Finally, the plaintiffs have not shown that enforcing the forum -selection clause would be unreasonable or unjust. The plaintiffs failed to contest Google’s argum ent that enforcem ent of the clause would be reasonable and just, an d have accordingly failed to dem onstrate that there is any reason to not enforce the clause. 10 Given the enforceability of the clause, the Court m ay either dism iss the action, as Google requests, or “if it be in the interest of justice,” transfer it to an appropriate court. See 28 U.S.C. § 140 6(a). The Court concludes that dism issal is appropriate. 2 c. Tran s fe r U n d e r 2 8 U .S.C. § 14 0 4 ( a) Google has also argued that, in the alternative, the action should be transferred to the Northern District of California under 28 U.S.C. § 140 4(a) for the convenience of the parties an d in the interest of justice. Mem . at 18– 25. Because the court has concluded that the action should be dism issed based on the forum -selection clause, this portion of the m otion is DENIED as m oot. II. Mo tio n to D is m is s fo r Lack o f Stan d in g an d Failu re to State a Claim Google argues that the plaintiffs do not have standing because they failed to allege they were actually injured. Def.’s State a Claim Mem . at 8– 10 . Google also argues that the plaintiffs did n ot state a claim because they did not plausibly allege that Google m ade their inform ation public or that it did so without their consent. Id. at 10 – 12. J urisdictional questions, such as standing, usually m ust be addressed before m erits questions. But a court m ay bypass jurisdictional questions and dispose of an action on the ground of im proper venue if considerations of conven ience, fairness, an d judicial econom y so warrant. Sucam po Pharm ., Inc. v. Astellas Pharm a, Inc., 471 F.3d 544, 550 (4th Cir. 20 0 6); Magi XXI, Inc. v. Stato della Citta del Vaticano, 8 18 F. Supp. 2d 597, 620 – 21 (E.D.N.Y. 20 11); see Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 2 The “the interest of justice” does not com pel tran sferring this case. The Second Circuit has m ade clear that an action should be transferred if it “would be tim e-barred on refilin g in the proper forum .” Gonzalez v. Hasty, 651 F.3d 318 , 324 (2d Cir. 20 11). This reasoning is not controlling here. Although this action would be tim e-barred if the plaintiffs had to re-file the action, as the two-year statute of lim itations passed last year, see 18 U.S.C. § 270 7(f), it was also tim e-barred when it was initially filed in J anuary of this year. The Court will not dism iss the action with prejudice for untim eliness because Google did not raise this affirm ative defense and a court is discouraged from raising it sua sponte. See Pino v. Ryan, 49 F.3d 51, 53– 54 (2d Cir. 1995). 11 549 U.S. 422, 432 (20 0 7) (concluding that a court m ay avoid question of jurisdiction and dispose of action based on forum non conveniens). Here, these considerations counsel in favor of bypassing the question of subject m atter jurisdiction and disposing of this case on the basis of im proper venue. The issue of venue is com pletely apart from the m erits of the case, whereas Google’s contention that the plaintiffs haven’t sufficiently alleged actual injury is closely related to the m erits of the case (as the caption for their m otion suggests). Moreover, Google is entitled to the benefit of the forum -selection clause at the earliest possible m om ent. Magi XXI, Inc., 8 18 F. Supp. 2d at 621. Since this court m ay avoid deciding the question of standing, an d the action is adequately disposed of on the basis of the forum -selection clause, Google’s m otion to dism iss for lack of standing an d failure to state a claim is DENIED as m oot. III. Sta tu s o f Plain tiff Ru d gayze r Mr. Rudgayzer passed away in May. Suggestion of Death [Dkt. No. 31]. The parties have not addressed whether he m ay continue to be a party. See United States v. Callard, No. 11-CV-4819, 20 13 U.S. Dist. LEXIS 68797, at *11– 12, 20 13 WL 20 22870 , at *4 (E.D.N.Y. May 14, 20 13). Given the disposition of this case, this Court need not resolve this issue. CON CLU SION For the foregoing reasons, Google’s m otion to dism iss or transfer on grounds of venue is GRANTED to the extent it requests dism issal and DENIED to the extent it requests transfer, and Google’s m otion to dism iss for lack of standing and failure to state a claim is DENIED. Plaintiffs’ claim s are dism issed without prejudice. SO ORDERED. 12 Dated: Brooklyn, New York Novem ber 14, 20 13 / s/ I. Leo Glasser Senior United States District J udge 13
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