Fraley v. Facebook, Inc.
Angel FRALEY v. FACEBOOK, INC., a corporation and Does 1-100
Attorneys
Jonathan Ellsworth Davis, Robert Stephen Arns, Steven Richard Weinmann, The Arns Law Firm, San Francisco, CA, Jonathan Matthew Jaffe, Jonathan Jaffe Law, Berkeley, CA, for Plaintiffs., Matthew Dean Brown, Jeffrey Gutkin, Michael Graham Rhodes, Cooley Godward Kronish LLP, San Francisco, CA, Mark John Tamblyn, Wexler Wallace LLP, Sacramento, CA, for Defendants.
Full Opinion (html_with_citations)
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTâS MOTION TO DISMISS
Facebook, Inc. (âFacebookâ) owns and operates Facebook.com, a social networking site with over 600 million members worldwide and over 153 million members in the United States. While members join Facebook.com for free, Facebook generates its revenue through the sale of advertising targeted at its users. At issue here is one of Facebookâs advertising practices in particular, âSponsored Stories,â which appear on a memberâs Facebook page, and which typically consist of another memberâs name, profile picture, and an assertion that the person âlikesâ the advertiser, coupled with the advertiserâs logo. Sponsored Stories are generated when a member interacts with the Facebook website or affiliated sites in certain ways, such as by clicking on the âLikeâ button on a companyâs Facebook page.
In this putative class action, Plaintiffs Angel Fraley; Paul Wang; Susan Mainzer; J.H.D., a minor, by and through James Duval as Guardian ad Litem; and W.T., a minor, by and through Russell Tait as Guardian ad Litem (collectively âPlaintiffsâ), on behalf of themselves and all others similarly situated, allege that Facebookâs Sponsored Stories violate Californiaâs Right of Publicity Statute, Civil Code § 3344; Californiaâs Unfair Competition Law, Business and Professions Code § 17200, et seq. (âUCLâ); and the common law doctrine of unjust enrichment. Plaintiffs allege that Facebook unlawfully misappropriated Plaintiffsâ names, photographs, likenesses, and identities for use in paid advertisements without obtaining Plaintiffsâ consent. Second Am. Compl. (âSACâ) ¶¶ 107-136, June 6, 2011, ECF No. 22.
I. BACKGROUND
Unless otherwise noted, the following allegations are taken from the Complaint and judicially noticeable documents and are presumed to be true for purposes of ruling on Defendantâs motion to dismiss.
Facebook earns revenue primarily through the sale of targeted advertising that appears on membersâ Facebook pages. Id. at ¶¶ 13, 21. Plaintiffs challenge one of Facebookâs advertising services in particular, known as âSponsored Stories,â which Facebook launched on January 25, 2011, and which was enabled for all members by default. Id. at ¶¶ 26, 30. A Sponsored Story is a form of paid advertisement that appears on a memberâs Facebook page and that generally consists of another Friendâs name, profile picture, and an assertion that the person âlikesâ the advertiser. A Sponsored Story may be generated whenever a member utilizes the Post, Like, or Check-in features, or uses an application or plays a game that integrates with the Facebook website, and the content relates to an advertiser in some way determined by Facebook. Id. at ¶ 26. For example, Plaintiff Angel Fraley, who registered as a member with the name Angel Frolicker, alleges that she visited Rosetta Stoneâs Facebook profile page and clicked the âLikeâ button in order to access a free software demonstration. Subsequently, her Facebook user name and profile picture, which bears her likeness, appeared on her Friendsâ Facebook pages in a âSponsored Storyâ advertisement consisting of the Rosetta Stone logo and the sentence, âAngel Frolicker likes Rosetta Stone.â Id. at ¶¶ 65-68. Plaintiffs Susan Mainzer, Paul Wang, J.H.D., and W.T. were similarly featured in âSponsored Sto
Unlike ordinary âStoriesâ that appear in a memberâs News Feed, Sponsored Stories are offset along with other advertisements paid by Facebook advertisers. The SAC quotes Facebook CEO Mark Zuekerberg explaining that â[n]othing influences people more than a recommendation from a trusted friendâ and that â[a] trusted referral is the Holy Grail of advertising.â Id. at ¶ 43. On average, actions taken by Facebook members are shared with 130 people, the average number of friends a member has. Id. at ¶ 45. The SAC also quotes Facebook COO Sheryl Sandberg stating that â[mjaking your customers your marketersâ is âthe illusive goal weâve been searching for.â Id. These beliefs about the marketing value of friend endorsements have been corroborated by the Nielsen Company, a leading marketing research firm. Id. at ¶ 42. According to Facebook, members are twice as likely to remember seeing a Sponsored Story advertisement compared to an ordinary advertisement without a Friendâs endorsement and three times as likely to purchase the advertised service or product. Id. at ¶¶ 44-45. Plaintiffs therefore assert that the value of a Sponsored Story advertisement is at least twice the value of a standard Facebook.com advertisement, and that Facebook presumably profits from selling this added value to advertisers. Id. at ¶¶ 44, 47.
Plaintiffs assert that Sponsored Stories constitute âa new form of advertising which drafted millions of [Facebook members] as unpaid and unknowing spokepersons for various products,â for which they are entitled to compensation under California law. Oppân at 1; see SAC ¶ 46. Although Facebookâs Statement of Rights and Responsibilities provides that members may alter their privacy settings to âlimit how your name and [Facebook] profile picture may be associated with commercial, sponsored, or related content (such as a brand you like) served or enhanced by us,â id. at ¶ 32, members are unable to opt out of the Sponsored Stories service altogether, id. at ¶¶ 30, 34. Furthermore, although the Statement of Rights and Responsibilities provides that â[y]ou give us permission to use your name and [Facebook] profile picture in connection with [commercial, sponsored, or related] content, subject to the limits you place,â id. at ¶ 32, Plaintiffs all registered for a Facebook account prior to January 25, 2011. Therefore, they could not have known about Sponsored Stories at the time they agreed to Facebookâs Terms of Use, nor did Facebook ask them to review or re-affirm the Terms of Use upon introduction of the Sponsored Story advertising feature. Id. at ¶¶ 50-53.
Plaintiffs allege that Facebookâs practice of misappropriating their names and likenesses for commercial endorsements without their consent (1) violated their statutory right of publicity under California Civil Code § 3344; (2) violated the UCL; and (3) unjustly enriched Facebook. Plaintiffs bring this putative class action on behalf of all persons in the United States who were registered members of Facebook.com as of
II. LEGAL STANDARDS
A. Motion to Dismiss Under Rule 12(b)(1)
A Rule 12(b)(1) motion to dismiss tests whether a complaint alleges grounds for federal subject matter jurisdiction. If the plaintiff lacks standing under Article III of the U.S. Constitution, then the court lacks subject matter jurisdiction, and the case must be dismissed. See Steel Co. v. Citizens for a Better Envât, 523 U.S. 83, 101-02, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998).
A jurisdictional challenge may be facial or factual. Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir.2004). Where the attack is facial, the court determines whether the allegations contained in the complaint are sufficient on their face to invoke federal jurisdiction, accepting all material allegations in the complaint as true and construing them in favor of the party asserting jurisdiction. See Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). Where the attack is factual, however, âthe court need not presume the truthfulness of the plaintiffs allegations.â Safe Air for Everyone, 373 F.3d at 1039. In resolving a factual dispute as to the existence of subject matter jurisdiction, a court may review extrinsic evidence beyond the complaint without converting a motion to dismiss into one for summary judgment. See id.; McCarthy v. United States, 850 F.2d 558, 560 (9th Cir.1988) (holding that a court âmay review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdictionâ). Once a party has moved to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the opposing party bears the burden of establishing the Courtâs jurisdiction. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir.2010).
B. Motion to Dismiss Under Rule 12(b)(6)
A motion to dismiss pursuant to Rule 12(b)(6) for failure to state a claim upon which relief can be granted âtests the legal sufficiency of a claim.â Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). Dismissal under Rule 12(b)(6) may be based on either (1) the âlack of a cognizable legal theory,â or (2) âthe absence of sufficient facts alleged under a cognizable legal theory.â Balistreri v. Pacifica Police Depât, 901 F.2d 696, 699 (9th Cir.1988). While â âdetailed factual allegationsâ â are not required, a complaint must include sufficient facts to â âstate a claim to relief that is plausible on its face.â â Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). âA 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.â Id.
For purposes of ruling on a Rule 12(b)(6) motion to dismiss, the Court accepts all allegations of material fact as true and construes the pleadings in the light most favorable to the plaintiffs. Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir.2008). The Court need not, however, accept as true pleadings that are no more than legal conclusions or the â âformulaic recitation of the
C. Leave to Amend
Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend âshall be freely given when justice so requires,â bearing in mind âthe underlying purpose of Rule 15 to facilitate decision on the merits, rather than on the pleadings or technicalities.â Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir.2000) (en banc) (internal quotation marks and alterations omitted). When dismissing a complaint for failure to state a claim, â âa district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.â â Id. at 1130 (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir.1995)). Generally, leave to amend shall be denied only if allowing amendment would unduly prejudice the opposing party, cause undue delay, or be futile, or if the moving party has acted in bad faith. Leadsinger, Inc. v. BMG Music Publâg, 512 F.3d 522, 532 (9th Cir.2008).
III. EVIDENTIARY ISSUES
In support of its arguments that members consent to the use of their name and likeness in Sponsored Stories, and that Facebook did not engage in unlawful, unfair, or fraudulent business practices, Defendant asks the Court to take judicial notice of (1) Facebookâs Statement of Rights and Responsibilities; (2) a screen-shot of a page from Facebookâs website entitled âWhere can I view and edit my privacy settings for sponsored content?â Facebook Help Center,â accessed on July 1, 2011; (3) a screenshot of a page from Facebookâs website entitled âHow can I control what my friends see in their News Feeds?âFacebook Help Center,â accessed on July 1, 2011; (4) a screenshot of a page from Facebookâs website entitled âHow can I control who can see things I post (for example: status updates, links, videos)?â Facebook Help Center,â accessed on July 1, 2011; (5) a screenshot of a page from Facebookâs website entitled âHow do I create Sponsored Stories?âFacebook Help Center,â accessed on July 1, 2011; and (6) a screenshot of a page from Facebookâs website entitled âHow do I unlike something?âFacebook Help Center,â accessed on July 1, 2011. ECF No. 31 at 2 & Exs. A through F.
As previously discussed, the Court generally may not look beyond the four corners of the complaint in ruling on a Rule 12(b)(6) motion, with the exception of documents incorporated into the complaint by reference, and any relevant matters subject to judicial notice. See Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007); Lee v. City of L.A., 250 F.3d 668, 688-89 (9th Cir.2001). Under the doctrine
The SAC cites the Statement of Rights and Responsibilities, and therefore the Court will take judicial notice of this document. See SAC ¶ 32. However, as to the remaining documents, the Court finds that they are neither documents on which the Complaint ânecessarily relies,â nor documents whose relevance and authenticity are uncontested. See Coto Settlement, 593 F.3d at 1038. First, Exhibits B through F were all accessed on July 1, 2011. It is thus unclear whether the particular web pages Defendant submits were even in existence at the time Facebook first launched the Sponsored Stories feature or at the time Plaintiffs took the actions that rendered them subject to Sponsored Stories. Cf. Cohen v. Facebook, Inc., 798 F.Supp.2d 1090, 1094-95 (N.D.Cal.2011) (âCohen I â) (rejecting Facebookâs request to take judicial notice of various Terms of Use documents because âsubstantial questions ... remain in this instance as to when various versions of the documents may have appeared on the website and the extent to which they necessarily bound all plaintiffs.â). Second, although Plaintiffs cite one excerpt from a Help Center page on Facebookâs website in their SAC, see SAC ¶ 34, it does not follow that a member would necessarily see the other, Help Center pages Facebook submits. Cf. Knievel v. ESPN, 393 F.3d 1068, 1076-77 (9th Cir.2005) (considering surrounding web pages under the incorporation by reference doctrine upon finding that âin order to access the [allegedly defamatory] photograph, one must first view, at minimum, the nine photographs that precede itâ). For these same reasons, even if the Court were to find these documents to be susceptible of judicial notice, the Court concludes that they would not give rise to proper grounds for dismissal, as discussed more fully below. Defendantâs request for judicial notice of Exhibits B through F is therefore denied.,
IY. DISCUSSION
Defendant moves to dismiss on grounds that (1) Plaintiffs fail to allege a cognizable injury and therefore lack Article III standing necessary to maintain an action in federal court; (2) the federal Communications Decency Act (âCDAâ) bars Plaintiffsâ claims; (3) Plaintiffs fail to state a claim for misappropriation under California Civil Code § 3344 because they have not alleged any actionable injury, they consented to the use of their names and likenesses, and the republished content is newsworthy under § 3344(d); (4) Plaintiffs fail to state a claim under the UCL because they have not alleged, and cannot allege, loss of money or property, and therefore lack standing, and furthermore because they fail to allege unlawful, unfair, or fraudulent conduct; and (5) Plaintiffs fail to state a claim for Unjust Enrichment because there is no such independent cause of action in California. The Court addresses each ground for dismissal in turn.
To establish Article III standing, Plaintiffs must demonstrate that they satisfy three irreducible requirements: (1) they have suffered an âinjury in fact,â ie., âan invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypotheticalâ; (2) the injury is âfairly traceable to the challenged action of the defendantâ; and (3) it is âlikely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.â Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (internal citations, quotation marks, and alterations omitted); accord Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000). In a class action, named plaintiffs representing a class âmust allege and show that they personally have been injured, not that injury has been suffered by other, unidentified members of the class to which they belong and which they purport to represent.â Gratz v. Bollinger, 539 U.S. 244, 289, 123 S.Ct. 2411, 156 L.Ed.2d 257 (2003) (internal quotation marks and citations omitted). â[I]f none of the named plaintiffs purporting to represent a class establishes the requisite of a case or controversy with the defendants, none may seek relief on behalf of himself or any other member of the class.â OâShea v. Littleton, 414 U.S. 488, 494, 94 S.Ct. 669, 38 L.Ed.2d 674 (1974); accord Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1022 (9th Cir.2003). Here, there is no dispute that Plaintiffs satisfy the second and third requirements of constitutional standing. Solely at issue is whether Plaintiffs have properly alleged injury-in-fact.
Because âinjuryâ is a requirement under both Article III and Plaintiffsâ individual causes of action, the Court notes at the outset that âthe threshold question of whether [Plaintiffs have] standing (and the [C]ourt has jurisdiction) is distinct from the merits of [Plaintiffsâ] claim.â Maya v. Centex Corp., 658 F.3d 1060, 1068 (9th Cir.2011). Standing âin no way depends on the merits of the plaintiffs contention that particular conduct is illegal.â Warth, 422 U.S. at 500, 95 S.Ct. 2197; accord Equity Lifestyle Props., Inc. v. Cnty. of San Luis Obispo, 548 F.3d 1184, 1189 n. 10 (9th Cir.2008) (âThe jurisdictional question of standing precedes, and does not require, analysis of the merits.â). At the same time, it is well established that â[t]he actual or threatened injury required by Article] III may exist solely by virtue of âstatutes creating legal rights, the invasion of which creates standing.â â Warth, 422 U.S. at 500, 95 S.Ct. 2197 (quoting Linda R.S. v. Richard D., 410 U.S. 614, 617 n. 3, 93 S.Ct. 1146, 35 L.Ed.2d 536 (1973)); see also Massachusetts v. EPA, 549 U.S. 497, 516, 127 S.Ct. 1438, 167 L.Ed.2d 248 (2007) (âCongress has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before.â (quotation marks and citation omitted)). Although âCongress cannot erase Article Illâs standing requirements by statutorily granting the right to sue to a plaintiff who would not otherwise have standing,â Raines v. Byrd, 521 U.S. 811, 820 n. 3, 117 S.Ct. 2312, 138 L.Ed.2d 849 (1997), a plaintiff may be able to establish constitutional injury in fact by pleading violation of a right conferred by statute, so long as she can allege that the injury she suffered was specific to her, see Warth, 422 U.S. at 501, 95 S.Ct. 2197.
Here, Plaintiffsâ primary asserted injury is violation of their statutory right of publicity under California Civil Code § 3344. As discussed more fully below, § 3344 prohibits the nonconsensual use of anotherâs name, voice, signature, photo
Furthermore, Plaintiffsâ alleged injury is both âconcrete and particularized,â as well as âactual or imminent, not conjectural or hypothetical.â Lujan, 504 U.S. at 560-61, 112 S.Ct. 2130. The SAC contains specific allegations describing exactly what information belonging to each named Plaintiff was used by Defendant, how Defendant used that information, and to whom that information was published. The SAC alleges that each named Plaintiff clicked the âLikeâ button on a companyâs Facebook page, and then each Plaintiffâs name and profile photograph bearing his likeness was subsequently featured, without his consent, in a Sponsored Story advertisement displayed to his Facebook Friends. See SAC ¶¶ 65-85. The SAC further alleges that each named Plaintiff was featured in a Sponsored Story advertising that the Plaintiff âlikesâ a certain product, company, or brand, irrespective of Plaintiffs motive in clicking the âLikeâ button on the companyâs page. Id. ¶¶ 25-26. The alleged commercial misappropriation is thus concrete and particularized with respect to each individual named Plaintiff. Cf. Low v. LinkedIn Corp., No. 11-cv-01468-LHK, 2011 WL 5509848, at *3-4 (N.D.Cal. Nov. 11, 2011) (plaintiff asserting privacy violations stemming from alleged disclosure of his personally identifiable browsing history to third party advertising and marketing companies lacked standing where he was unable to articulate what information of his, aside from his user identification number, had actually been transmitted to third parties, nor how disclosure of his anonymous user ID could be linked to his personal identity); In re iPhone Application Litig., No. 11-md-02250-LHK, 2011 WL 4403963, at *4 (N.D.Cal. Sept. 20, 2011) (plaintiffs asserting privacy violations resulting from mobile device makerâs alleged disclosure of their personal information to third party application developers lacked standing where they failed to identify what devices they used, what apps they downloaded, or which defendant (if any) actually accessed or tracked their personal information);
Nor can the Court say that the alleged injury is merely âconjectural or hypothetical.â Defendant argues that Plaintiffsâ theory of economic harm is merely speculative, pointing to a line of privacy cases involving the alleged disclosure of personal information that have been dismissed for failure to show injury. See Low, 2011 WL 5509848, at *4-6 (plaintiffs general allegation that the data collection industry considers consumer information valuable was insufficient to establish standing where he failed to allege what personal information of his was purportedly collected by a third party and how such collection deprived him of the economic value of his data); In re iPhone Application, 2011 WL 4403963, at *5-6 (plaintiffsâ mere âgeneral allegationsâ about the mobile device market for apps and about abstract concepts such as âlost opportunity costsâ and âvalue-for-value exchangesâ were insufficient to establish a concrete theory of injury); Specific Media, 2011 WL 1661532, at *4-6 (plaintiffsâ reference to âacademic articles concerning the nature of Internet business models driven by consumersâ willingness to supply data about themselvesâ was insufficient, on its own, to establish standing in the absence of âsome particularized example of their application in this caseâ (internal quotation marks, citations, and alterations omitted)); In re Jetblue Airways Corp. Privacy Litig., 379 F.Supp.2d 299, 327 (E.D.N.Y.2005) (rejecting plaintiffsâ attempt to recover the loss of the economic value of their personal information as a contract damage where airline disclosed their personal data to a third-party data mining company in violation of airlineâs privacy policy); In re Doubleclick, Inc. Privacy Litig., 154 F.Supp.2d 497, 525 (S.D.N.Y.2001) (rejecting argument that the economic value of the collection of demographic consumer data is an economic loss to the individual consumer); but see Krottner v. Starbucks Corp., 628 F.3d 1139, 1143 (9th Cir.2010) (holding that plaintiffs âalleged a credible threat of real and immediate harm stemming from the theft of a laptop containing their unencrypted personal data,â which included their names, addresses, and social security numbers); Doe 1 v. AOL LLC, 719 F.Supp.2d 1102, 1109-11 (N.D.Cal.2010) (holding that plaintiffs were injured by defendantâs collection and publication of âhighly sensitive personal information,â including credit card numbers, social security numbers, financial account numbers, and information regarding plaintiffsâ personal issues, including sexuality, mental illness, alcoholism, incest, rape, and domestic violence).
While instructive, all of these cases are distinguishable. Not one of these cases involved the statutory right of publicity at issue here or the asserted economic value of an individualâs commercial endorsement of a product or brand to his friends. Rather, in In re iPhone Application, Specific Media, In re Doubleclick, and Low, the plaintiffsâ theories of economic injury were all grounded in the alleged economic value of their personal information either as used by advertisers to target advertising at plaintiffs themselves, or as used in the aggregate by marketing and analytics companies. The courts in those cases found that the plaintiffs were unable to articulate how they were economically injured by the use of their own information
Here, by contrast, Plaintiffs have articulated a coherent theory of how they were economically injured by the misappropriation of their names, photographs, and likenesses for use in paid commercial endorsements targeted not at themselves, but at other consumers, without their consent. Unlike the plaintiffs in In re iPhone Application, Specific Media, In re Doubleclick, and Low, Plaintiffs here do not allege that their personal browsing histories have economic value to advertisers wishing to target advertisements at Plaintiffs themselves, nor that their demographic information has economic value for general marketing and analytics purposes. Rather, they allege that their individual, personalized endorsement of products, services, and brands to their friends and acquaintances has concrete, provable value in the economy at large, which can be measured by the additional profit Facebook earns from selling Sponsored Stories compared to its sale of regular advertisements. See SAC ¶¶ 47, 63, 93; Oppân at 11, 17. Furthermore, Plaintiffs do not merely cite abstract economic concepts in support of their theory of economic injury, but rather point to specific examples of how their personal endorsement is valued by advertisers. The SAC quotes Face-book CEO Mark Zuckerberg stating that â[a] trusted referral influences people more than the best broadcast message. A trusted referral is the Holy Grail of advertising.â SAC ¶ 43. The SAC also quotes Facebook COO Sheryl Sandberg explaining that â[mjarketers have always known that the best recommendation comes from a friend.... This, in many ways, is the Holy Grail of advertising.â Id. According to Sandberg, the value of a Sponsored Story advertisement is at least twice and up to three times the value of a standard Facebook.com advertisement without a friend endorsement. Id. at ¶ 44-45. Plaintiffs allege that the Nielsen Company, a well-respected marketing research firm frequently quoted by Facebook, has also determined that advertising consisting of recommendations by friends is the most effective form of advertising. Id. at ¶ 42. Based on these concrete allegations, Plaintiffs assert that they have a tangible property interest in their personal endorsement of Facebook advertisersâ products to their Facebook Friends, and that Facebook has been unlawfully profiting from the nonconsensual exploitation of Plaintiffsâ statutory right of publicity. Thus, in the same way that celebrities suffer economic harm when their likeness is misappropriated for anotherâs commercial gain without compensation, Plaintiffs allege that they have been injured by Facebookâs failure to compensate them for the use of their personal endorsements
Only one case identified by Defendant is directly on point. In Cohen v. Facebook, Inc., 798 F.Supp.2d 1090, 1094-95 (N.D.Cal.2011) (âCohen Iâ), Facebook users brought similar misappropriation claims against Facebook in connection with promotion of its âFriend Finderâ service, which enables a user to identify which of its e-mail address book contacts are not yet Facebook members and to invite them to join Facebook. In Cohen I, plaintiffs challenged Facebookâs practice of placing notifications on membersâ homepages stating that certain of their Facebook Friends had used the Friend Finder service, and encouraging members to âgive it a try!â 798 F.Supp.2d at 1092-93. Facebook did not raise an Article III defense, but the district court dismissed the misappropriation claim under Rule 12(b)(6) upon finding plaintiffs failed to show âhow the mere disclosure to their Facebook friends that they have employed the Friend Finder service ... causes them any cognizable harm, regardless of the extent to which that disclosure could also be seen as an implied endorsement by them of the service.â Id. at 1097. The court granted plaintiffs leave to amend, but later dismissed their amended complaint with prejudice in a second order. See Cohen v. Facebook, Inc., No. CIO-5282 RS, 2011 WL 5117164, at *1, *3 (N.D.Cal. Oct. 27, 2011) (âCohen IIâ). In Cohen II, the court was not persuaded by plaintiffsâ argument that âFacebookâs use of plaintiffsâ names and likenesses can be seen as serving a commercial purpose, undertaken with at least the intent of achieving growth in Facebookâs user base, thereby ultimately resulting in monetary gain for Facebook.â Id. at *2.
Although at first blush the Cohen cases appear highly similar to the one at bar, the Court finds this ease distinguishable. The Cohen plaintiffs were unable to show that their names and likenesses had any general commercial valueâand in fact plaintiffs denied that they were required to make such a showing to maintain their § 3344 claims. See Cohen II, 2011 WL 5117164, at *2. By contrast, Plaintiffs here have quoted explicit statements by Facebookâs own CEO and COO that friend endorsements are two to three times more valuable than generic advertisements sold to Facebook advertisers. Plaintiffs here have furthermore identified a direct, linear relationship between the value of their endorsement of third-party products, companies, and brands to their Facebook friends, and the alleged commercial profit gained by Facebook. Thus, Plaintiffs have alleged facts showing that their personal endorsement has concrete, measurable, and provable value in the economy at large. For all these reasons, the Court finds this case distinguishable from the cases cited by Defendant.
Defendant would have the Court evaluate the merits of Plaintiffsâ § 3344 claim before even allowing Plaintiffs through the courthouse door. But as the Ninth Circuit recently reminded, âstanding analysis, which prevents a claim from being adjudicated for lack of jurisdiction, [may not] be used to disguise merits analysis, which determines whether a claim is one for which relief can be granted if factually true.â Catholic League for Religious and Civil Rights v. City & Cnty. of S.F., 624 F.3d 1043, 1049 (9th Cir.2010) (en banc); accord Maya, 658 F.3d at 1068. At this stage, the Court must presume âthat general allegations embrace those specific facts that are necessary to support the claim.â Lujan, 504 U.S. at 561, 112 S.Ct. 2130 (internal quotation marks omitted); see also Ruiz v. Gap, Inc., 540 F.Supp.2d 1121,
B. Communications Decency Act § 230
Defendant next argues that Plaintiffsâ claims are barred by § 230 of the CDA, which provides, in relevant part, that â[n]o provider or member of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.â 47 U.S.C. § 230(c)(1). Section 230 was enacted âto promote the continued development of the Internet and other interactive computer services and other interactive mediaâ and âto preserve the vibrant and competitive free market that presently exists for the Internet and other interactive computer services, unfettered by Federal or State regulation.â Id. §§ 230(b)(l)(2).
Defendant insists that it is an âinteractive computer serviceâ and that Plaintiffs themselves provided the information content at issue, citing various cases for the blanket proposition that âCDA immunity encompasses all state statutory and common law causes of action,â including âclaims alleging misappropriation of name and likeness.â See Mot. at 11-13 (citing Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1118-19 (9th Cir.2007); Carafano v. Metrosplash.com, Inc., 339 F.3d 1119, 1123 (9th Cir.2003); Doe v. MySpace, Inc., 528 F.3d 413 (5th Cir.2008); Jurin v. Google, Inc., 695 F.Supp.2d 1117, 1122-23 (E.D.Cal.2010); Goddard v. Google, Inc., 640 F.Supp.2d 1193, 1197 (N.D.Cal.2009); Doe IX v. MySpace, Inc., 629 F.Supp.2d 663 (E.D.Tex.2009); Doe II v. MySpace, Inc., 175 Cal.App.4th 561, 96 Cal.Rptr.3d 148 (2009); and others). Defendantâs reliance on these cases is misplaced. There is no question that § 230 âprovides broad immunity [to websites that publish] content provided primarily by third parties.â Carafano, 339 F.3d at 1123. But Defendant ignores the nature of Plaintiffsâ allegations, which accuse Defendant not of publishing tortious content, but rather of creating and developing commercial content that violates their statutory right of publicity. The SAC alleges that Facebook takes Plaintiffsâ names, photographs, and likenesses without their consent and uses this information to create new content that it publishes as endorsements of third-party products or services. See ¶¶ 26-27, 40, 53-54, 57-59, 86, 89. While members provide some of the information used in Sponsored' Stories by taking an action such as clicking the âLikeâ button on a third-partyâs website, Plaintiffs allege that Facebook contributes, at least in part, to the creation or development of the Sponsored Story that ultimately appears on other membersâ Facebook pages in the form of a product or service endorsement.
Although Facebook meets the definition of an interactive computer service under the CDA, see 47 U.S.C. § 230(f)(2) (defining an interactive computer service, in part, as âany information service, sys
For the same reasons that Defendant appears to be a content provider, Defendantâs assertion that its actions are âwell within the editorial function for which websites receive immunityâ is unpersuasive. Mot. at 13. Although âthe exercise of a publisherâs traditional editorial functions ... do not transform an individual into a âcontent providerâ within the meaning of § 230,â Facebookâs actions in creating Sponsored Stories go beyond âa publisherâs traditional editorial functions[,] such as deciding whether to publish, withdraw, postpone or alter content.â Batzel, 333 F.3d at 1031 n. 18 (internal quotation marks omitted); accord Gentry v. eBay, Inc., 99 Cal.App.4th 816, 828-29, 121 Cal. Rptr.2d 703 (2002). Plaintiffs do not allege merely that Facebook âedit[ed] user-created contentâsuch as by correcting spelling, removing obscenity or trimming for length.â Roommates.com, 521 F.3d at 1169. Rather, Plaintiffs allege not only that Facebook rearranged text and images provided by members, but moreover that by grouping such content in a particular way with third-party logos, Facebook transformed the character of Plaintiffsâ words, photographs, and actions into a commercial endorsement to which they did not consent. Defendantâs alleged actions go far beyond simply adding HTML meta tags to make user-provided text more visible, see Asia Econ. Inst. v. Xcentric Ventures LLC, No. CV 10-01360-SVW (PJWx), 2011 WL 2469822, at *6-7 (C.D.Cal. May 4, 2011), or simply placing its own watermark on photographs and
For all of these reasons, Defendantâs actions are distinguishable from the actions taken by other web providers granted CDA immunity in the cases Defendant cites, and thus Defendantâs motion to dismiss under CDA § 230 is denied.
C. Individual Causes of Action
Finally, Defendant moves to dismiss all three causes of action for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6). That Plaintiffs have satisfied the injury-in-fact requirement for constitutional standing does not necessarily mean they have properly stated a claim for relief. A plaintiff may have âinjury enough to open the courthouse door, but without more [may have] no cause of actionâ under which he can successfully obtain relief. Doe v. Chao, 540 U.S. 614, 624-25, 124 S.Ct. 1204, 157 L.Ed.2d 1122 (2004); accord In re Facebook Privacy Litig., 791 F.Supp.2d at 712 n. 5.
Plaintiffs assert three causes of action: (1) commercial misappropriation under California Civil Code § 3344; (2) unlawful, unfair, and fraudulent business practices in violation of the California UCL; and (3) unjust enrichment. Both Plaintiffsâ § 3344 and UCL claims appear to present novel issues of state law for which there is no binding authority. ââWhere the stateâs highest court has not decided an issue, the task of the federal courts is to predict how the state high court would resolve it. In answering that question, this [C]ourt looks for âguidanceâ to decisions by intermediate appellate courts of the state and by courts in other jurisdictions.â â DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir.1992) (quoting Dimidowich v. Bell & Howell, 803 F.2d 1473, 1482 (9th Cir.1986), modified on other grounds, 810 F.2d 1517 (1987) (internal citations omitted)). The Court addresses each cause of action in turn.
1. Misappropriation Under California Civil Code § 3344
California has long recognized a right to protect oneâs name and likeness against appropriation by others for their advantage. Downing v. Abercrombie & Fitch, 265 F.3d 994, 1001 (9th Cir.2001) (citing Eastwood v. Superior Court, 149 Cal.App.3d 409, 416, 198 Cal.Rptr. 342 (1983)). California law provides two vehicles for asserting such a right: a common law cause of action for commercial misappropriation, and a statutory remedy for commercial misappropriation under California Civil Code § 3344. To state a common law cause of action for misappropriation, a plaintiff must plead sufficient facts to establish â(1) the defendantâs use of the plaintiffs identity; (2) the appropriation of plaintiffs name or likeness to defendantâs advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury.â Id. (quoting Eastwood, 149 Cal.App.3d at 417, 198 Cal.Rptr. 342). To state a statutory cause of action under § 3344, a plaintiff must plead all the elements of the common law action and must also prove (5) âa knowing use by the defendant,â and (6) âa direct connection between the alleged use and the commercial purpose.â Id. (citing Eastwood, 149 Cal.App.3d at 417, 198 Cal.Rptr. 342).
The SAC alleges that Facebookâs non-consensual use of Plaintiffsâ names, photographs, and likenesses in Sponsored Stories violates § 3344, which provides, in relevant part:
[a]ny person who knowingly uses anotherâs name, voice, signature, photograph, or likeness, in any manner, on or in products, merchandise, or goods, or for purposes of advertising or selling, or*804 soliciting purchases of, products, merchandise, goods or services, without such personâs prior consent, or, in the case of a minor, the prior consent of his parent or legal guardian, shall be liable for any damages sustained by the person or persons injured as a result thereof.
Cal. Civ.Code § 3344(a). The statute further provides that a party in violation of § 3344 âshall be liable to the injured party or parties in an amount equal to the greater of [$750] or the actual damages suffered by him or her as a result of the unauthorized use,â and shall disgorge âany profits from the unauthorized use that are attributable to the use and are not taken into account in computing the actual damages.â Id.
Defendant moves to dismiss on grounds that (1) Facebookâs actions fall within § 3344(d)âs ânewsworthyâ exception for which consent is not required; (2) in any event, Plaintiffs consented to the use of their names, photographs, and likenesses; and (3) Plaintiffs fail to allege sufficient injury under § 3344(a). Notably, Defendant does not at this juncture dispute that it knowingly used Plaintiffsâ identity, or that the use of Plaintiffsâ names or likenesses was to Defendantâs advantage,
a. Newsworthiness
Defendant argues that Plaintiffsâ § 3344 claim must be dismissed for failure to state a claim because the Sponsored Stories fall within the newsworthy exception under § 3344(d) for which consent is not required. Section 3344(d) provides that the âuse of a name, voice, signature, photograph, or likeness in connection with any news, public affairs, or sports broadcast or account, or any political campaign, shall not constitute a use for which consent is required under [§ 3344(a) ].â Cal. Civ.Code § 3344(d). Under California law, the ânewsworthinessâ exception under § 3344(d) tracks the constitutional right to freedom of speech under the First Amendment. See Shulman v. Group W. Prods., Inc., 18 Cal.4th 200, 214-16, 74 Cal.Rptr.2d 843, 955 P.2d 469 (1998). A statutory cause of action for commercial appropriation therefore will not lie for â âthe publication of matters in the public interest, which rests on the right of the public to know and the freedom of the press to tell it.â â Downing, 265 F.3d at 1001 (quoting Montana v. San Jose Mercury News, Inc., 34 Cal.App.4th 790, 793, 40 Cal.Rptr.2d 639 (1995)). âThis First Amendment defense extends âto almost all reporting of recent events,â as well as to publications about âpeople who, by their accomplishments, mode of living, professional standing, or calling, create a âlegitimate and widespread attentionâ to their activities.â â Id. (quoting Eastwood, 149 Cal.App.3d at 422, 198 Cal.Rptr. 342).
Defendantâs argument is twofold. Facebook argues that its republication of membersâ names or profile images next to statements about pages or content they âLikeâ or other actions they have taken is newsworthy because (1) Plaintiffs are âpublic figuresâ to their friends, and (2) âexpressions of consumer opinionâ are generally newsworthy. Mot. at 20-21. Plaintiffs deny that they are public figures and dispute whether their act of clicking on a âLikeâ buttonâwhich they may do simply out of curiosity rather than affinityâmay be accurately characterized as âexpressions of consumer opinion.â
The Court agrees with Defendant that Plaintiff âcannot have it both waysââ Plaintiffs cannot assert economic injury under the theory that they are âcelebritiesâ to their Facebook Friends, while at the same time denying that they are âpublic figuresâ to those same friends for newsworthy purposes. See Oppân at 14 & n. 11.
Nonetheless, the Court is not convinced that Defendant gains much from its own argument. While the Court agrees that
b. Consent
Defendant next argues that even if consent was required, Plaintiffs gave the necessary consent by registering for and using the Facebook website under its Terms of Use, which informs members that â[y]ou can use your privacy settings to limit how your name and profile picture may be associated with commercial, sponsored, or related content (such as a brand you like) served or enhanced by us. You give us permission to use your name and [Facebook] profile picture in connection with that content, subject to the limits you place.â SAC ¶ 32 (quoting Section 10.1 of the Statement of Rights and Responsibilities). According to Facebook, âSponsored Stories are only delivered to your confirmed friends and respect the privacy settings you configure for News Feed.â Mot. at 17. Members may also prevent a specific story from being republished as a Sponsored Story by clicking the âXâ displayed in the upper right side of a story and choosing the appropriate option when prompted. SAC ¶ 34. Thus, although members may not opt out of the Sponsored Stories feature wholesale, they exercise control over whether to take actions that can become Sponsored Stories, whether individual actions may be republished as Sponsored Stories, and the precise audience to whom their Sponsored Stories are shown. Mot. at 17 n. 6.
Facebook made a similar argument in Cohen I, but the court there was not persuaded, concluding that â[n]othing in the provisions of the Terms documents to which Facebook has pointed constitutes a clear consent by members to have their name or profile picture shared in a manner that discloses what services on Facebook they have utilized, or to endorse those services.â Cohen I, 798 F.Supp.2d at 1095. Plaintiffs here contend that they never consented in any form to the use of their names or likenesses in Sponsored Stories, noting that Sponsored Stories were not even a feature of Facebook at the time they became registered members, and alleging that Plaintiffs were never asked to review or renew their Terms of Use subsequent to Facebookâs introduction of the Sponsored Stories feature, which operates on an opt-out basis. Oppân at 15. The gravamen of Plaintiffsâ consent argument
c. Injury
The right to prevent others from appropriating elements of oneâs identity for commercial gain has evolved from the common law right of privacy, which is often described as comprising four separate and distinct torts: â(1) intrusion upon the plaintiffs seclusion or solitude; (2) public disclosure of private facts; (3) placing the plaintiff in a false light in the public eye; and (4) appropriation, for defendantâs advantage, of plaintiffs name or likeness.â Motschenbacher v. R.J. Reynolds Tobacco Co., 498 F.2d 821, 824 (1974) (citing Dean Prosser, Law of Torts (4th ed.1971), at 804); accord KNB Enterprises v. Matthews, 78 Cal.App.4th 362, 366, 92 Cal. Rptr.2d 713 (2000). While violation of oneâs right to privacy may result in âinjury to the feelingsâ that is wholly mental or subjective, California law has long recognized that âwhere the identity appropriated has a commercial value, the injury may be largely, or even wholly, of an economic or material nature.â Motschenbacher, 498 F.2d at 824. The right of publicity has therefore âbecome a tool to control the commercial use and, thus, protect the economic value of oneâs name, voice, signature, photograph, or likeness.â KNB Enterprises v. Matthews, 78 Cal.App.4th 362, 366, 92 Cal.Rptr.2d 713 (2000).
Here, Plaintiffs allege not that they suffered mental anguish as a result of Defendantâs actions, but rather that they suffered economic injury because they were not compensated for Faeebookâs commercial use of their names and likenesses in targeted advertisements to their Face-book Friends. See Downing, 265 F.3d at 1002-03 (remanding for trial surferâs common law and § 3344 misappropriation claims against clothing retailer based on retailerâs use of surferâs photo in advertising catalogue without permission). Defendant does not deny that Plaintiffs may assert economic injury, but insists that, because they are not celebrities, they must demonstrate some preexisting commercial value to their names and likenesses, such as allegations that they âpreviously received remuneration for the use of their name or likeness, or that they have ever sought to obtain such remuneration.â Mot. at 15-16.
First, the Court finds nothing in the text of the statute or in case law that supports Defendantâs interpretation of § 3344 as requiring a plaintiff pleading economic injury to provide proof of preexisting commercial value and efforts to capitalize on such value in order to survive a motion to dismiss. The plain text of § 3344 provides simply that â[a]ny person who knowingly uses anotherâs name, voice, signature, photograph, or likeness, in any manner ... for purposes of advertising or selling ... without such personâs consent ... shall be liable for any damages sustained by the person or persons injured as a result thereof.â Cal. Civ.Code § 3344. The statutory text makes no mention of preexisting value, and in fact can be read to presume that a person whose name, photograph, or likeness is used by another for commercial purposes without their consent is âinjured as a result thereof.â Consistent with this reading, at least one court has suggested, after surveying California court decisions,
Nor does the Court find any reason to impose a higher pleading standard on non-celebrities than on celebrities. California courts have clearly held that âthe statutory right of publicity exists for celebrity and non-celebrity plaintiffs alike.â KNB Enterprises, 78 Cal.App.4th at 373 n. 12, 92 Cal.Rptr.2d 713. As the Ninth Circuit.reeognized long ago, although â[generally, the greater the fame or notoriety of the identity appropriated, the greater will be the extent of the economic injury suffered ... the appropriation of the identity of .a relatively unknown person- may result in economic injury or may itself create economic value in what was , previously valueless.â Motschenbacher, 498 F.2d at 825 n. 11 (emphasis added). Thus, courts have long recognized that a personâs âname, likeness, or other attribute of identity can have commercial value,â even if the individual is relatively obscure. Id. at 825 n. 10. For example, in KNB Enterprises, the owner of copyright to erotic photographs of relatively obscure models sued for misappropriation. In recognizing the modelsâ right of publicity, the California appellate court explained that, although the models were not celebrities, their anonymity was itself âallegedly a valuable asset in the marketing of erotic photographs.â 78 Cal. App.4th at 368, 92 Cal.Rptr.2d 713.
Admittedly, these previous non-celebrity plaintiffs have typically been models, entertainers, or other professionals who have cultivated some commercially exploitable value through their own endeavors. Nevertheless, the Court finds nothing requiring that a plaintiffs commercially exploitable value be a result of his own talents or efforts in order to state a claim for damages under § 3344. See White v. Samsung Elees, of Am., Inc., 971 F.2d 1395, 1399 (9th Cir.1992) (âTelevision and other media create marketable celebrity identity value.... The law protects the celebrityâs sole right to exploit this value whether the celebrity has achieved her fame out of rare ability, dumb luck, or a combination thereof.â (emphasis added)); see also Motschenbacher, 498 F.2d at 825 n. 11 (recognizing that the act of exploitation may itself imbue someoneâs likeness with commercial value). In a society dominated by reality television shows, YouTube, Twitter, and online social networking sites, the distinction between a âcelebrityâ and a ânon-celebrityâ seems to be an increasingly arbitrary one.
Moreover, even if non-celebrities are subject to a heightened pleading standard under § 3344, the Court finds that Plaintiffsâ allegations satisfy the requirements for pleading a claim of economic injury under § 3344. Plaintiffs quote Facebook CEO Mark Zuckerberg stating that â[njothing influences people more than a recommendation from a trusted friend. A trusted referral influences people more than the best broadcast message. A trusted referral is the Holy Grail of advertising.â SAC ¶ 43. They also quote Face-bookâs COO Sheryl Sandberg similarly explaining that:
[marketers have always known that the best recommendation comes from a friend.... This, in many ways, is the Holy Grail of marketing.... When a customer has a good experience ... on Facebook, the average action is shared with the average number of friends, which is 130 people. This is the illusive goal weâve been searching for, for a long time; [mjaking your customers your marketers. On average, if you compare an ad without a friendâs endorsement, and you compare an ad with a friendâs [Facebook] âLike,â these are the differences: on average, 68% more people are likely to remember seeing the ad with their friendâs name. A hundred percentâso two times more likely to remember the adâs message; and 300% more likely to purchase.
Id. ¶¶ 43, 45. Plaintiffs allege that these assertions made by Facebookâs chief officers are corroborated by the Nielsen Company, a leading marketing research firm, which Facebook frequently quotes. Id. ¶ 42. â âThe so-called right of publicity means in essence that the reaction of the public to name and likeness ... endows the name and likeness of the person involved with commercially exploitable opportunities.â â Wendt v. Host Intâl, Inc., 125 F.3d 806, 811 (9th Cir.1997) (quoting
The specificity of Plaintiffsâ allegations distinguishes this case from Cohen I and Cohen II. There, plaintiffs accused Face-book of violating their rights by sharing their names and profile pictures with other users to promote Facebookâs âFriend Finderâ service in a manner that constituted â(1) an express representation that plaintiffs had utilized the Friend Finder service, and (2) at least arguably, an implied endorsement by plaintiffs of that service.â Cohen I, 798 F.Supp.2d at 1095. The court dismissed their § 3344 claim, holding that â[pjlaintiffs have not shown how the mere disclosure to their Facebook friends that they have employed the Friend Finder service (even assuming some of them did not) causes them any cognizable harm, regardless of the extent to which that disclosure could also be seen as an implied endorsement by them of the service.â Id. at 1097. Reviewing their amended complaint, the court found that plaintiffs had not shown entitlement to relief simply by alleging that Facebookâs use of their names and likenesses to attract a larger user base resulted in monetary gain for Facebook. Cohen II, 2011 WL 5117164, at *2. Unlike in Cohen I or Cohen II, however, Plaintiffs here have made specific allegations that their personal endorsement of Facebook advertisersâ products are worth two to three times more than traditional advertisements on Face-book, and that Facebook presumably profits from exploitation of this calculable commercial value.
Of course, at summary judgment or at trial, Plaintiffs may not simply demand $750 in statutory damages in reliance on a bare allegation that their commercial endorsement has provable value, but rather must âprove actual damages like any other plaintiff whose name has commercial value.â See Miller v. Collectors Universe, Inc., 159 Cal.App.4th 988, 1006, 72 Cal.
2. Violation of Unfair Competition Law (âUCLâ)
Plaintiffs also allege that Defendantâs actions violate Californiaâs UCL, which does not prohibit specific activities but instead broadly proscribes âany unfair competition, which means âany unlawful, unfair or fraudulent business act or practice.â â In re Pomona Valley Med. Group, Inc., 476 F.3d 665, 674 (9th Cir.2007) (quoting Cal. Bus. & Prof.Code § 17200, et seq.); see Boschma v. Home Loan Ctr., Inc., 198 Cal.App.4th 230, 251-52, 129 Cal. Rptr.3d 874 (2011). The UCL is designed to ensure âfair business competitionâ and governs both anti-competitive business practices and consumer injuries. Boschma, 198 Cal.App.4th at 252, 129 Cal. Rptr.3d 874 (internal quotation marks omitted). Its scope is âsweeping,â and its standard for wrongful business conduct is âintentionally broad,â allowing courts âmaximum discretion to prohibit new schemes to defraud.â In re First Alliance Mortg. Co., 471 F.3d 977, 995 (9th Cir. 2006) (internal citation omitted). Each of the three UCL prongs provides a âseparate and distinct theory of liabilityâ and an independent basis for relief. Rubio v. Capital One Bank, 613 F.3d 1195, 1203 (9th Cir.2010) (internal quotation marks and citations omitted); accord Lozano v. AT & T Wireless Servs., Inc., 504 F.3d 718, 731 (9th Cir.2007). Plaintiffs assert that Defendantâs conduct violates all three prongs of the UCL. Defendant contends that Plaintiffs lack standing to assert a UCL claim and that, even if they have standing, their claim fails on its merits.
a. Standing
Only those who have both suffered injury in fact and lost money or property as a result of the alleged unfair competition may bring suit under the UCL. Cal. Bus. & Prof.Code § 17204; see Rubio, 613 F.3d at 1203-04; Lozano, 504 F.3d at 731-32 (explaining how Proposition 64 amended the UCL in November 2004 by eliminating private attorney general standing for UCL claims); Peterson v. Cellco Pâship, 164 Cal. App.4th 1583, 1590, 80 Cal.Rptr.3d 316 (2008) (same). If Plaintiffs cannot allege both that they suffered injury in fact and that they lost money or property as a result of an unlawful, unfair, or fraudulent business practice, then they lack statutory standing to sue under the UCL. Peterson, 164 Cal.App.4th at 1590, 80 Cal.Rptr.3d 316; accord Rubio, 613 F.3d at 1203; Kwikset Corp. v. Superior Court, 51 Cal.4th 310, 323-24, 120 Cal.Rptr.3d 741, 246 P.3d 877 (2011).
Plaintiffs contend they assert sufficient facts to meet both requirements for standing under § 17204. The Court agrees that they have asserted an injury in fact under § 17204, which is defined as either âa distinct and palpable injury suffered as a result of the defendantâs actions,â or âan invasion of a legally protected interest which is (a) concrete and particularized; and (b) actual or imminent, not conjectural or hypothetical,â see Peterson, 164 Cal.App.4th at 1590, 80 Cal. Rptr.3d 316 (internal quotation marks omitted), the latter of which is identical to the injury-in-fact standard for establishing constitutional standing. As previously discussed, Plaintiffs have adequately alleged injury in fact for purposes of establishing Article III standing. Thus, they likewise have alleged injury in fact under § 17204.
The more difficult question is whether Plaintiffs have adequately alleged loss of
Nevertheless, the Court finds the reasoning in this line of cases inapplicable to Plaintiffsâ misappropriation claim, which, as previously discussed, is of an entirely different nature than a privacy tort claim. Plaintiffs here do not assert that their personal information has inherent economic value and that the mere disclosure of such data constitutes a loss of money or property. Rather, Plaintiffs insist they have sustained economic loss resulting from Facebookâs failure to compensate them for their valuable endorsement of third-party products and services to their Faeebook Friends, and that under § 3344, they have an expectation interest in a minimum statutory damages award of $750. See SAC ¶¶ 128-29.
To the extent Plaintiffs allege they have a right to be paid for their endorsements and can establish how much these endorsements are worth, see SAC ¶ 91, the Court finds that they have alleged a loss of money or property sufficient to state a claim under the UCL. Under the UCL, ââthe concept of restoration or restitution ... is not limited only to the return of money or property that was once in the possession of that person. Instead, restitution is broad enough to allow a plaintiff to recover money or property in which he or she has a vested interest.â â Lozano, 504 F.3d at 733-34 (quoting Juarez v. Arcadia Fin., Ltd., 152 Cal.App.4th 889, 61 Cal.Rptr.3d 382 (2007)). For example, a plaintiff has a vested interest in unpaid wages and therefore may state a restitution claim under the UCL to recover such lost money or property. See Cortez v. Purolator Air Fil
However, to the extent Plaintiffs rely on the $750 minimum statutory damages award under § 3344, the California Supreme Court has recently made clear that a mere âexpectation interestâ in a statutory damage award is not a âvested interestâ for purposes of stating a claim for restitution under the UCL. See Pineda v. Bank of America, 50 Cal.4th 1389, 1401-02, 117 Cal.Rptr.3d 377, 241 P.3d 870 (2010). In a case where plaintiff-employees sought to recover under the UCL not only unpaid wages but also additional statutory penalties provided for under § 203 of the Labor Code, the California Supreme Court explained that while â[t]he vested interest in unpaid wages ... arises out of the employeesâ action, i.e., their labor, ... [b]y contrast, ... it is the employersâ action (or inaction) that gives rise to section 203 penalties.... Until awarded by a relevant body, employees have no comparable vested interest in section 203 penalties.â Id. Similarly here, Plaintiffs may have suffered loss of money or property in the form of unpaid compensation for the use of their names, photographs, and likenesses in Sponsored Stories, and therefore have adequately alleged standing to bring a UCL claim, but the $750 minimum statutory damage award provided for under § 3344 is not a vested interest to which they have a restitution claim under the UCL.
For the reasons stated above, Defendantâs motion to dismiss Plaintiffsâ UCL claim for lack of standing is denied.
b. Unlawful
An unlawful business practice proscribed by the UCL âincludes âanything that can properly be called a business practice and that at the same time is forbidden by law.â â Farmers Ins. Exchange v. Superior Court, 2 Cal.4th 377, 383, 6 Cal.Rptr.2d 487, 826 P.2d 730 (1992) (internal citation omitted). âBy âborrowingâ violations of other laws, the UCL deems those violations independently actionable under the UCL.â Smith v. Wells Fargo Bank, 135 Cal.App.4th 1463, 1480, 38 Cal. Rptr.3d 653 (2006) (quoting Cel-Tech Commâns, Inc. v. L.A. Cellular Tel. Co., 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999)). Facebookâs alleged commercial misappropriation of Plaintiffsâ names and likenesses without their consent can properly be characterized as a business practice. Plaintiffsâ properly pled § 3344 claim may therefore serve as the predicate unlawful business practice under the UCL. By properly alleging a § 3344 violation, Plaintiffs have also alleged a UCL violation under the âunlawfulâ prong. See Rubio, 613 F.3d at 1204. Accordingly, the Court denies Defendantâs motion to dismiss for failure to allege unlawful conduct.
c. Unfair
The UCL also creates a cause of action for a business practice that is âunfairâ even if not specifically proscribed by some other law. Korea Supply Co. v. Lockheed Martin Corp., 29 Cal.4th 1134, 1143, 131 Cal.Rptr.2d 29, 63 P.3d 937 (2003). In consumer cases, however, the question of what constitutes an unfair business prac
Regardless of which of the first two tests endorsed by the Ninth Circuit is employed, Plaintiffs have stated a claim for unfair conduct under the UCL. See Rubio, 613 F.3d at 1204-05 (analyzing plaintiffs UCL claim for unfair conduct under both the balancing and public policy approaches); Lozano, 504 F.3d at 736 (same). To the extent Plaintiffs have alleged that Defendantâs conduct is unlawful under § 3344, Plaintiffs have also successfully alleged that Defendantâs practice is contrary to a statutorily declared public policy of preventing the nonconsensual appropriation of an individualâs name, photograph, or likeness for commercial gain. Presently, the Court has no basis for finding that Defendantâs conduct has any utility, much less that its utility outweighs the gravity of the alleged harm to Plaintiffs. Accordingly, the Court finds that under either accepted test for unfair business practices in a consumer action, Plaintiffs have stated a claim upon which relief can be granted. The Court therefore denies Defendantâs motion to dismiss for failure to allege unfair conduct.
d. Fraudulent
To state a claim under the âfraudulentâ prong of the UCL, a plaintiff must show that â â[reasonable] members of the public are likely to be deceivedâ â by the alleged unfair business practice, though the âdeception need not be intended.â Rubio, 613 F.3d at 1204 (quoting Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008)); accord Morgan v. AT & T Wireless Servs., Inc., 177 Cal.App.4th 1235, 1255, 99 Cal.Rptr.3d 768 (2009). Claims sounding in fraud are subject to the heightened
Here, Plaintiffs do not allege that others were deceived into buying products advertised on Facebook.com as a result of their endorsements. Instead, they allege that a reasonable Facebook member was likely to be deceived into believing he had full control to prevent his appearance in Sponsored Story advertisements while otherwise engaging with Facebookâs various features, such as clicking on a âLikeâ button, when in fact members lack such control. SAC ¶¶ 122-23. Plaintiffs point to language in the Statement of Rights and Responsibilities indicating that members âcan use your privacy settings to limit how your name and [Facebook] profile picture may be associated with commercial, sponsored, or related content,â and to language in the Privacy Policy stating, â[y]ou can control exactly who can see [your posts] at the time you create [them],â which they argue led them to believe they have control over Facebookâs use of their likeness in advertising such as Sponsored Stories. In reality, however, members are unable to opt. out of the Sponsored Stories service, which was introduced after Plaintiffs became Facebook members, and instructions on how to disable an individual post from appearing on Friendsâ News Feeds or as a Sponsored Story are only available on a âburied Help Center page, not connected by any link within the Privacy Policy or Statement of Rights and Responsibilities pages.â SAC ¶ 34. Plaintiffs allege that their false belief of control over the use of their names, photographs, and likenesses led them to join Facebook and to engage with Face-book in ways that rendered them unwitting commercial spokespersons without compensation, in violation of their statutory right of publicity. Alternatively, Plaintiffs argue that to the extent Facebook modified its Terms of Use at a later time to truthfully represent a memberâs inability to meaningfully opt out of Sponsored Stories, Facebook acted fraudulently by knowingly and intentionally failing to seek and acquire membersâ informed consent regarding changes to the Terms of Use. SAC ¶ 123. Plaintiffs have properly alleged fraudulent conduct, and Defendantâs motion to dismiss for failure to do so is therefore denied.
For all the reasons stated above, the Court finds that Plaintiffs have adequately alleged unlawful, unfair, and fraudulent conduct under the UCL, and accordingly denies Defendantâs motion to dismiss this claim.
3. Unjust Enrichment
Notwithstanding earlier cases suggesting the existence of a separate, stand-alone cause of action for unjust enrichment, the California Court of Appeals has recently clarified that â[u]njust enrichment is not a cause of action, just a restitution claim.â Hill v. Roll Intâl Corp., 195 Cal.App.4th 1295, 1307, 128 Cal.Rptr.3d 109 (2011); accord Levine v. Blue Shield of Cal., 189 Cal.App.4th 1117, 1138, 117 Cal. Rptr.3d 262 (2010); Melchior v. New Line Prods., Inc., 106 Cal.App.4th 779, 793, 131 Cal.Rptr.2d 347 (2003); Durell v. Sharp Healthcare, 183 Cal.App.4th 1350, 1370, 108 Cal.Rptr.3d 682 (2010). In light of this recent persuasive authority, this Court has previously determined that âthere is no cause of action for unjust enrichment under California law.â In re iPhone Application Litig., 2011 WL 4403963, at *15 (internal quotation marks and citations omitted); accord Ferrington v. McAfee,
Plaintiffs note that California courts have recognized multiple grounds for awarding restitution, and that Facebookâs actions alleged here qualify for such relief. See McBride v. Boughton, 123 Cal.App.4th 379, 388, 20 Cal.Rptr.3d 115 (2004) (âUnder the law of restitution, an individual is required to make restitution if he or she is unjustly enriched at the expense of another.â). To the extent Plaintiffs have pled causes of action that give rise to restitution as a remedy, the Court agrees that they may properly seek restitution as a form of relief in connection with those claims. See Cal. Civ.Code § 3344(a) (providing for disgorgement of defendantâs profits attributable to the unlawful misappropriation); Cal. Bus. & Profs. Code § 17203 (providing for restitution of any money or property, real or personal, acquired by defendant attributable to the unfair competition). Indeed, Plaintiff has already done so. See SAC ¶¶ 118, 129, 136. Because Plaintiffs have already properly pleaded restitution in their demand for relief under § 3344 and the UCL, and because they cannot cure through amendment the fact that unjust enrichment is not an independent cause of action under California law, the Court finds no need to grant Plaintiffs leave to amend their third cause of action. The Court therefore grants Defendantâs motion to dismiss Plaintiffsâ third cause of action for unjust enrichment with prejudice.
y. CONCLUSION
For the reasons discussed herein, Defendantâs motion to dismiss is GRANTED in part and DENIED in part. Defendantâs motion to dismiss the Complaint based on lack of Article III standing, immunity under CDA § 230, failure to state a claim under California Civil Code § 3344, and failure to state a claim under the UCL is DENIED. Defendantâs Rule 12(b)(6) motion to dismiss Plaintiffsâ claim for unjust enrichment is GRANTED with prejudice.
IT IS SO ORDERED.
. Plaintiffs amended once as of right in state court, before Defendant filed a response, primarily to add additional class representatives. After Defendants removed the case to federal court and filed a first motion to dismiss, see ECF No. 16, Plaintiffs filed a Second Amended Complaint, again as of right, for the purpose of adding supplemental details regarding matters already pleaded, such as the details about the specific Sponsored Stories published about them on Facebook.
. Defendant filed a Request for Judicial Notice in Support of its Motion to Dismiss the Second Amended Class Action Complaint (âRJNâ), asking the Court to take judicial notice of Facebook's Statement of Rights and Responsibilities and of various screenshots of Facebook.com's Help Center. ECF No. 31. Plaintiffs oppose this request. ECF No. 54. Defendant also submits declarations with similar types of exhibits attached. The Court addresses these evidentiary issues in Section III.
. Defendant also submitted a supplemental declaration in support of its reply to Plaintiffsâ opposition, through which Defendant seeks to introduce copies of the "Terms of Useâ and Statement of Rights and Responsibilities purportedly in effect at the time the various named Plaintiffs registered for their Facebook accounts. See Supp. Muller Deck, ECF No. 59, at 2. However, Defendant does not formally request that the Court take judicial notice of these supplemental exhibits, and thus the Court will not do so. Furthermore, the Court will not convert Defendantâs motion to dismiss into one for summary judgment by relying on extrinsic materials. See Swedberg v. Marotzke, 339 F.3d 1139, 1146 (9th Cir. 2003); Anderson v. Angelone, 86 F.3d 932, 934 (9th Cir.1996); cf. Fed.R.Civ.P. 12(d).
. Judge Gutierrez acknowledged the apparent tension between the test for § 3344 misappropriation claims as articulated and as applied, but nonetheless noted that the presumption of injury upon establishing the first three elements of a § 3344 claim "is present both in precedent that is binding upon this Court ... and precedent that the Court finds persuasive ...." 2008 WL 4414514, at *7 n. 4.
. Although the legal issue in KNB Enterprises was not whether the noncelebrity models properly pled economic injury under § 3344 but rather whether the noncelebrity models' § 3344 claims were preempted by federal copyright law, the California appellate court impliedly accepted that the models had stated a claim under § 3344, notwithstanding their noncelebrity status. In fact, the court reasoned that "determining preemption of a plaintiffâs section 3344 claim on the basis of the plaintiffâs celebrity status would be violative of California law [because] [u]nder California law, the statutory right of publicity exists for celebrity and non-celebrity plaintiffs alike.â KNB Enterprises, 78 Cal.App.4th at 373 n. 12, 92 Cal.Rptr.2d 713.
. Defendant further argues that Plaintiffsâ claim that their action of clicking on a âLikeâ button may not reflect genuine affinity for the product, event, company, or cause at issue, renders their theory of economic injury even more implausible, because advertisers would not have paid them to endorse products they do not actually like. Mot. at 15-16. This argument merits little discussion, for as common sense dictates, the value of a celebrity endorsement does not necessarily correlate with the celebrityâs actual affinity for the advertised product.
. The UCL protects âboth consumers and competitors by promoting fair competition in commercial markets for goods and services.â Drum v. San Fernando Valley Bar Assân, 182 Cal.App.4th 247, 251, 106 Cal.Rptr.3d 46 (2010) (internal quotation marks and citation omitted). The standards for determining what constitutes an "unfair business practiceâ under the UCL currently appear to differ depending on whether the UCL claim is brought by a competitor or a consumer. Plaintiffs here appear to bring their claim only as consumers.