ANTHONY VENTURA v. SONY COMPUTER ENTERTAINMENT AMERICA ( 2014 )

FILED
NOT FOR PUBLICATION JAN 06 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
IN RE SONY PS3 “OTHER OS” No. 11-18066
LITIGATION
D.C. No. 3:10-cv-01811-RS
ANTHONY VENTURA , JONATHAN
HUBER, JASON BAKER AND ELTON
STOVELL, on behalf of themselves and MEMORANDUM*
all those similarly situated,
Plaintiffs - Appellants,
v.
SONY COMPUTER ENTERTAINMENT
AMERICA, INC. and SONY
COMPUTER ENTERTAINMENT
AMERICA LLC,
Defendants - Appellees.
Appeal from the U.S. District Court
for Northern California, San Francisco
Richard Seeborg, District Judge, Presiding
Argued and Submitted October 11, 2013
San Francisco, California
Before: HAWKINS, N.R. SMITH and NGUYEN, Circuit Judges.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Plaintiffs (Anthony Ventura and other individuals) appeal the dismissal of
their First Amended Consolidated Class Action Complaint (“FAC”). We have
jurisdiction pursuant to 28 U.S.C. § 1291. Reviewing a dismissal for failure to
state a claim de novo, Zixiang Li v. Kerry, 710 F.3d 995, 998 (9th Cir. 2013)
(citation omitted), we affirm in part, reverse in part, and remand.
First Claim (Breach of Express Warranty)
The district court properly dismissed the first claim for breach of an express
warranty. “An express warranty is a contractual term relating to the title, character,
quality, identity, or condition of the sold goods.” Blennis v. Hewlett-Packard Co.,
No. C 07-00333 JF, 2008 WL 818526, at *2 (N.D. Cal. Mar. 25, 2008) (citing
Fogo v. Cutter Labs., Inc., 137 Cal. Rptr. 417 (Ct. App. 1977)). “A manufacturer’s
liability for breach of an express warranty derives from, and is measured by, the
terms of that warranty.” Cipollone v. Liggett Group, Inc., 505 U.S. 504, 525
(1992). A plaintiff must allege “the exact terms of the warranty.” Williams v.
Beechnut Nutrition Corp., 229 Cal. Rptr. 605, 608 (Ct. App. 1986).
Plaintiffs allege that Defendants Sony Computer Entertainment America Inc.
and Sony Computer Entertainment America LLC (“Sony”) gave Plaintiffs an
express warranty—through various statements made mostly in promotional
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materials—that the other operating software (“Other OS”) and PlayStation
Network (“PSN”) features both would be available for the advertised ten-year
lifespan of the PlayStation 3 (“PS3”). However, these disparate statements, even
when read together, do not include all the “exact terms” that would create an
express warranty that such dual functionality would be available for the ten-year
lifespan of the PS3. Moreover, Sony’s System Software License Agreement
(“SSLA”) and Terms of Service (“TOS”) expressly informed consumers that
updates and services “may cause some loss of functionality.”
Alternatively, even if Plaintiffs sufficiently have alleged that Sony gave
them an express warranty that the PS3 would operate as a computer through its
ability to run the Other OS, Plaintiffs do not adequately plead a breach of that
warranty. While Plaintiffs claim that they have pleaded a warranty that the Other
OS function would last for ten years, Sony’s statements only promise a ten-year
lifespan for the PS3 itself.
In addition, Sony’s written Limited Hardware Warranty curtailed
“WARRANTIES REQUIRED AS A MATTER OF LAW” to one year from the
original date of purchase. This limitation was valid, because it is “reasonable” to
construe a one-year limit together with the alleged Other OS warranty, which had
no temporal limit. See Cal. Com. Code § 2316(1). Thus, Plaintiffs’ alleged Other
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OS warranty would have expired by the time Sony released Update 3.21.
Accordingly, we affirm the dismissal of this claim.
Second and Third Claims (Breach of Implied Warranties
of Merchantability and Fitness for a Particular Purpose)
The district court properly dismissed the second and third claims for breach
of the implied warranties of merchantability and fitness for a particular purpose.
An implied warranty of merchantability arises when a product is not “fit for the
ordinary purposes for which such goods are used.” In re Ferrero Litig., 794 F.
Supp. 2d 1107, 1118 (S.D. Cal. 2011) (citing Hauter v. Zogarts, 534 P.2d 377 (Cal.
1975)) (internal quotation marks omitted); see Cal. Com. Code § 2314(2)(c).
“‘[T]he implied warranty of fitness for a particular purpose is a warranty implied
by law when a seller has reason to know that a buyer wishes goods for a particular
purpose and is relying on the seller’s skill and judgment to furnish those goods.’”
Cardinal Health 301, Inc. v. Tyco Elecs. Corp., 87 Cal. Rptr. 3d 5, 23 (Ct. App.
2008) (citation omitted); see Cal. Com. Code § 2315.
Plaintiffs nowhere allege that dual functionality is one of the “ordinary
purposes for which such goods are used.” Indeed, the FAC alleges that Sony
sought to distinguish the PS3 from the Wii and Xbox based on this supposed dual
functionality. Likewise, Plaintiffs fail to allege that Sony “ha[d] reason to know”
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that Plaintiffs purchased the PS3 for any “particular purpose,” whether dual
functionality or otherwise. Accordingly, we affirm the dismissal of these claims.
Fourth Claim (Violation of Magnuson-Moss
Warranty Act (“MMWA”), 15 U.S.C. § 2301 et seq.)
The district court properly dismissed Plaintiffs’ fourth claim for violation of
the MMWA. “[The] disposition of the state law warranty claims determines the
disposition of the Magnuson-Moss Act claims.” Clemens v. DaimlerChrysler
Corp., 534 F.3d 1017, 1022 (9th Cir. 2008). Further, the MMWA requires a
written warranty guaranteeing a product’s “specified level of performance” to state
a “period of time” over which performance is guaranteed. 15 U.S.C. § 2301(6);
see In re ConAgra Foods Inc., 908 F. Supp. 2d 1090, 1102 (C.D. Cal. 2012).
Because Plaintiffs fail to adequately allege a state warranty claim, the
MMWA claim fails. Further, the MMWA claim fails because there was no written
statement that warrants dual functionality for the ten-year lifespan of the PS3 or
any other specific time period. Accordingly, we affirm the dismissal of this claim.
Fifth and Sixth Claims (Violation of the Consumer Legal
Remedies Act (“CLRA”), Cal. Civ Code § 1770(a)(5), (7))
The district court erred in dismissing the fifth and sixth claims under Section
1770(a)(5) and (7) of the CLRA. To state a claim under these two subsections, a
plaintiff must allege: (1) a misrepresentation; (2) reliance on that
5
misrepresentation; and (3) damages caused by that misrepresentation. Marolda v.
Symantec Corp., 672 F. Supp. 2d 992, 1002-03 (N.D. Cal. 2009) (citations
omitted). CLRA claims are governed by the “reasonable consumer” test, under
which a plaintiff must allege that “members of the public are likely to be
deceived.” Williams v. Gerber Prods. Co., 552 F.3d 934, 938 (9th Cir. 2008)
(citation and internal quotation marks omitted). However, “a plaintiff need not
plead fraud.” Marolda, 672 F. Supp. 2d at 1003 (citation omitted). “Section
1770(a)(5) concerns representations that the product had a characteristic that it did
not actually have,” while “Section 1770(a)(7) focuses on the product being of a
different quality or grade than represented.” Id.
Plaintiffs have alleged sufficient facts as to each element of these claims.
First, they allege that Sony’s representations at the time of sale mischaracterized
the dual functionality of the PS3—and were likely to deceive members of the
public—because Sony later restricted users to using either the Other OS feature or
accessing the PSN feature, but not both. Second, Plaintiffs allege that they
reviewed Sony’s website, relevant articles on the internet, and the PS3 box label
before making their purchases, and that they relied on Sony’s representations about
the PS3’s features. Finally, Plaintiffs allege that they suffered damages because
they paid more for the PS3 than they would have otherwise because of the
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supposed dual functionality. Plaintiffs’ damages were in the form of lost
“premium” payments. Accordingly, we reverse the dismissal of these claims.
Seventh Claim (Violation of CLRA, Cal. Civ Code § 1770(a)(9))
The district court properly dismissed the seventh claim under Section
1770(a)(9) of the CLRA. “Section 1770(a)(9) is the only subsection that requires
pleading fraud, since it specifically requires intent to defraud, which, in turn,
implies knowledge of the falsity.” Marolda, 672 F. Supp. 2d at 1003.
Here, Plaintiffs allege that at the time of sale Sony believed that it retained
the right to disable, and therefore could terminate, the PS3’s dual functionality.
Plaintiffs allege only that Sony could terminate the PS3’s dual functionality rather
than alleging that Sony would terminate the dual functionality. Plaintiffs thus fail
to allege the requisite “intent” required to state a claim under Section 1170(a)(9).
Accordingly, we affirm the dismissal of this claim.
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Eighth Claim (Violation of CLRA, Cal. Civ Code § 1770(a)(19))
Plaintiffs’ brief only summarily states in a footnote that Plaintiffs plead
sufficient facts to show procedural and substantive unconscionability. Thus,
Plaintiffs waived their unconscionability claim under Section 1770(a)(19) of the
CLRA. See City of Emeryville v. Robinson, 621 F.3d 1251, 1262 n.10 (9th Cir.
2010) (Appellant waived claim “[b]y failing to address the issue in its opening
brief except in a footnote.”). Accordingly, we affirm the dismissal of this claim.1
Ninth Claim (Violation of False Advertising Law
(“FAL”), Cal. Bus. & Prof. Code § 17500 et seq.) and
Tenth Claim for Relief (Violation of Unfair Competition Law
(“UCL”), Bus. & Prof. Code § 17200 et seq., “Fraud” Prong)
The district court erred in dismissing the ninth claim under the FAL and
tenth claim under the fraud prong of the UCL. “[T]o state a claim under either the
UCL or the false advertising law, based on false advertising or promotional
practices, it is necessary only to show that members of the public are likely to be
deceived.” Kasky v. Nike, Inc., 45 P.3d 243, 250 (Cal. 2002) (citation and internal
quotation marks omitted); id. (“This court has recognized that [a]ny violation of
1
This claim fails even if considered on the merits. While Plaintiffs allege
that the SSLA and TOS contain unconscionable provisions, they fail to allege any
underlying “agreement” that promised them dual functionality for the lifespan of
the PS3. Indeed, the agreements (the SSLA and TOS) informed consumers that
updates “may cause some loss of functionality.” Thus, the premise of Plaintiffs’
unconscionability claim—i.e., a contract for dual functionality—is missing.
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the false advertising law . . . necessarily violates the UCL.” (citation and internal
quotation marks omitted)); see also Daugherty v. Am. Honda Motor Co., 51 Cal.
Rptr. 3d 118, 128 (Ct. App. 2006) (“Historically, the term ‘fraudulent,’ as used in
the UCL, has required only a showing that members of the public are likely to be
deceived.” (citation omitted)). In addition, “[t]o have standing to bring such a
claim, a plaintiff must show that he or she has ‘suffered injury in fact and has lost
money or property as a result of the unfair competition.’” Stewart v. Rolling Stone
LLC, 105 Cal. Rptr. 3d 98, 111 (Ct. App. 2010) (quoting Cal. Bus. & Prof. Code §
17204).
Plaintiffs adequately have alleged that members of the public were likely to
be deceived by Sony’s advertising and promotional statements about the PS3’s
dual functionality and ten-year lifespan. In addition, as discussed above, Plaintiffs
suffered injury in fact in the form of lost “premium” payments. See, e.g., Kwikset
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Corp. v. Superior Court, 246 P.3d 877, 885-87 (Cal. 2011). Accordingly, we
reverse the dismissal of these claims.2
Twelfth Claim (Violation of UCL, “Unfair” Prong)
The district court erred in dismissing the twelfth claim under the unfair
prong of the UCL. “The California Supreme Court has not established a definitive
test to determine whether a business practice is ‘unfair’ in consumer cases.” Bias
v. Wells Fargo & Co., 942 F. Supp. 2d 915, 933 (N.D. Cal. 2013) (citations
omitted). Under one of California’s three existing tests for unfairness, “‘unfair’
conduct requires that: ‘(1) the consumer injury must be substantial; (2) the injury
must not be outweighed by any countervailing benefits to consumers or
competition; and (3) it must be an injury that consumers themselves could not
reasonably have avoided.’” Id. (citations omitted); see also Davis v. Ford Motor
Credit Co., 101 Cal. Rptr. 3d 697, 706-10 (Ct. App. 2009) (discussing three tests).
2
Likewise, the district court erred in dismissing the eleventh claim under the
unlawful prong of the UCL. “Section 17200’s ‘unlawful’ prong borrows violations
of other laws . . . and makes those unlawful practices actionable under the UCL.”
Klein v. Chevron U.S.A., Inc., 137 Cal. Rptr. 3d 293, 326 (Ct. App. 2012) (citation
and internal quotation marks omitted). “[A] violation of the CLRA, which declares
numerous practices in the sale of goods or services to consumers to be unlawful
may form the predicate ‘unlawful act’ for the purposes of a UCL claim.” Id. at 327
(citations and internal quotation marks omitted). Because Plaintiffs adequately
allege claims under the CLRA, they necessarily allege a claim under the unlawful
prong of the UCL. Accordingly, we reverse the dismissal of this claim.
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Plaintiffs sufficiently allege that Sony caused them substantial injury by
charging a premium for the PS3’s dual functionality and then discontinuing access
to both the Other OS and PSN features. Specifically, Plaintiffs allege that (1) they
lost money because they would not have purchased or would have paid less for the
PS3 if they had known that Sony would disable or remove one or both of these
advertised features; (2) they could not have reasonably avoided this injury because
they would have lost access to the PSN if they chose not to download the update
which disabled the Other OS feature; and (3) there are no countervailing benefits to
consumers or competition that outweigh the substantial injury to consumers.
Accordingly, we reverse the dismissal of this claim.
Thirteenth Claim (Violation of Computer Fraud
and Abuse Act (“CFAA”), 18 U.S.C. § 1030 et seq.)
The district court properly dismissed the thirteenth claim under the CFAA.
The CFAA requires that a defendant “access[]” a protected computer without
authorization or “exceed[] authorized access.” See 18 U.S.C. § 1030(a)(4). As
lower courts have reasoned, users who had “voluntarily installed” software that
allegedly caused harm cannot plead unauthorized “access” under the CFAA. See,
e.g., In re iPhone Application Litig., 844 F. Supp. 2d 1040, 1066 (N.D. Cal. 2012)
(citing cases). Because Plaintiffs voluntarily installed the relevant software update,
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Plaintiffs cannot allege actionable “access” under the CFAA. Accordingly, we
affirm the dismissal of this claim.3
Fifteenth Claim (Unjust Enrichment)
The district court properly dismissed the fifteenth claim for unjust
enrichment. “The phrase ‘Unjust Enrichment’ does not describe a theory of
recovery, but an effect: the result of a failure to make restitution under
circumstances where it is equitable to do so.” Melchior v. New Line Prods., Inc.,
131 Cal. Rptr. 2d 347, 357 (Ct. App. 2003) (citation and internal quotation marks
omitted). “It is synonymous with restitution.” Id. (citations and internal quotation
marks omitted). Restitution “will not be given when the plaintiff’s remedies at law
are adequate.” Collins v. eMachs., Inc., 134 Cal. Rptr. 3d 588, 596-97 (Ct. App.
2011) (citations omitted).
In light of the adequate legal remedies available, Plaintiffs cannot state a
claim for unjust enrichment. To the extent Plaintiffs seek to recover money that
they may have prepaid to Sony for use in connection with the PSN, and which they
“lost” when they could no longer access the PSN, we agree with the district court
3
We “will not ordinarily consider matters on appeal that are not specifically
and distinctly argued in appellant’s opening brief.” Clark v. Time Warner Cable,
523 F.3d 1110, 1116 (9th Cir. 2008) (citation and internal quotation marks
omitted). We affirm the dismissal of the fourteenth claim for conversion because
Plaintiffs’ opening brief does not discuss the dismissal of this claim.
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that “Plaintiffs have failed to state a claim for restitution or damages because,
among other things, they have not alleged sufficient facts as to the terms and
conditions on which they paid monies to Sony.” Accordingly, we affirm the
dismissal of this claim.
The parties shall bear their own costs on appeal.
AFFIRMED in part, REVERSED in part, and REMANDED.
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