Byars v. Hot Topic, Inc.

656 F.Supp.3d 1051

Arisha BYARS v. HOT TOPIC, INC. et al.

Case No. EDCV 22-1652 JGB (KKx)

United States District Court, C.D. California

Filed February 14, 2023

Scott J. Ferrell, Pacific Trial Attorneys APC, Newport Beach, CA, for Arisha Byars.

Joshua M. Briones, E. Crystal Lopez, Mintz Levin Cohn Ferris Glovsky and Popeo P.C., Los Angeles, CA, for Hot Topic Inc.

Gabriela Gonzalez Araiza, Lehotsky Keller LLP, Washington, DC, Mithun Mansinghani, Pro Hac Vice, Lehotsky Keller LLP, Oklahoma City, OK, for Amicus National Retail Federation.

Proceedings: Order (1) GRANTING Defendant's Motion to Dismiss (Dkt. No. 18); and (2) VACATING the February 27, 2023 Hearing

JESUS G. BERNAL, UNITED STATES DISTRICT JUDGE

Before the Court is a motion to dismiss filed by Defendant Hot Topic Inc. ("Defendant" or "Hot Topic"). ("Motion," Dkt. No. 18.) The Court determines the matter is appropriate for resolution without a hearing. See Fed. R. Civ. P. 78; L.R. 7-15. After considering all papers filed in support of and in opposition to the Motion, the Court GRANTS the Motion. The February 27, 2023 hearing is VACATED.

I. BACKGROUND

On September 20, 2022, Plaintiff Arisha Byars ("Plaintiff" or "Ms. Byars") filed a putative class action complaint against Defendant Hot Topic and Does 1-25. ("Complaint," Dkt. No. 1.) On September 29, 2022, the parties filed a joint stipulation extending the time for Defendant to answer the Complaint. (Dkt. No. 10.) On November 11, 2022, Defendant filed a motion to dismiss the Complaint. (Dkt. No. 11.)

On November 18, 2022, Plaintiff filed a first amended complaint. ("FAC," Dkt. No. 16.) The FAC asserts subject matter jurisdiction under the Class Action Fairness Act ("CAFA"). (See id.) The FAC alleges two causes of action: (1) violations of the California Invasion of Privacy Act ("CIPA") pursuant to Cal. Penal Code § 631; and (2) violations of CIPA pursuant to Cal. Penal Code § 632.7. (See id.)

On November 21, 2022, the Court denied Defendant's motion to dismiss the Complaint as moot. (Dkt. No. 17.)

On December 2, 2022, Defendant filed the Motion. (Motion.) In support of the Motion, Defendant filed a request for judicial notice. ("RJN," Dkt. No. 19.)¹

On December 7, 2022, the National Retail Federation (NRF) filed a motion for leave to file an amicus curiae brief. ("Motion for Leave," Dkt. No. 21.) In support of the Motion for Leave, the National Retail Federation filed a Brief of Amicus Curiae the National Retail Federation in Support of Defendant's Motion to Dismiss. ("Brief Amicus Curiae of NRF," Dkt. No. 21-2.)

On December 30, 2022, Plaintiff filed an opposition to the Motion. ("Opposition to Motion," Dkt. No. 25.) The same day, Plaintiff filed an opposition to the Motion for Leave. ("Opposition to NRF," Dkt. No. 26.) On January 9, 2023, Plaintiff filed a reply in support of the Motion. ("Reply," Dkt. No. 28.) The same day, Plaintiff filed a reply in support of the RJN. (Dkt. No. 29.)

On January 19, 2023, the Court continued the hearing on the Motion from January 23, 2023 to February 27, 2023. (Dkt. No. 31.) On February 9, 2023, the Court granted the Motion for Leave. (Dkt. No. 32.)

II. FACTS

Hot Topic is a retailer that specializes in clothing, accessories and music. (Motion at 2.)² Plaintiff is a resident and citizen of California. (FAC ¶ 4.) Defendant is a Delaware corporation that owns, operates and controls a website, www.hottopic.com (the "Website"). (Id. ¶ 5.) Plaintiff alleges jurisdiction under CAFA because "there are believed to be at least 5,000 class members, each entitled to $5,000 in statutory damages, thus making the amount in controversy at least $25,000,0000 exclusive of interests and costs." (Id. ¶ 1.) "Defendant is subject to personal jurisdiction because it has sufficient minimum contacts with California and it does business with California residents." (Id. ¶ 3.)³

Defendant "ignores" CIPA because it "wiretaps the conversations of all website visitors and allows a third party to eavesdrop on the conversations in real time during transmission." (Id. ¶ 10.) Defendant uses a chat feature on its website that automatically records and creates transcripts of conversations with visitors to the Website. (Id. ¶ 12.) It allows at least one third-party vendor ("on information and belief, SalesForce") to "intercept," eavesdrop upon and store transcripts of Defendant's chat communications with website visitors. (Id.) Defendant allows a third-party to access these communications, purportedly "under the guise of 'data analytics.' " (Id. ¶¶ 11, 14.)

Plaintiff is a "tester" with "dual motivations for initiating a conversation with Defendant." (Id. ¶ 16.) First, she was "genuinely interested" in learning about the (unspecified) "goods and services offered by Defendant." (Id.) Second, as a "tester," she works to ensure that companies abide by privacy laws, and believes she should be "praised rather than vilified" for her efforts. (Id.)⁴

Plaintiff brings the action on behalf of a proposed class defined as, "[a]ll persons within the United States who: (1) visited Defendant's website, and (2) whose electronic communications were recorded, stored, and/or shared by Defendant without prior express consent within the statute of limitations period." (Id. ¶ 22.) Plaintiff "does not know the number of Class Members but believes the number to be in the tens of thousands, if not more." (Id.)⁵

III. LEGAL STANDARD

A. Subject Matter Jurisdiction under CAFA

Federal courts have limited jurisdiction, "possessing only that power authorized by Constitution and statute." Gunn v. Minton, 568 U.S. 251, 256, 133 S.Ct. 1059, 185 L.Ed.2d 72 (2013). The Court's jurisdiction is either that of federal question or complete diversity of citizenship. See 28 U.S.C. §§ 1331, 1332. "It is to be presumed that a cause lies outside [of a federal court's] limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) (citations omitted). Federal courts must ordinarily address jurisdictional questions before proceeding to the merits of the case. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998); Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 577, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999); Snell v. Cleveland, 316 F.3d 822, 826 (9th Cir. 2002). "Without jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause." Ex parte McCardle, 7 Wall. 506, 514, 19 L.Ed. 264 (1868). "The objection that a federal court lacks subject-matter jurisdiction . . . may be raised by a party, or by a court on its own initiative, at any stage in the litigation[.]" Arbaugh v. Y&H Corp., 546 U.S. 500, 506, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006). "Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action." Id. (citations and internal quotations omitted); see also Fed. R. Civ. P. 12(h)(3).

"CAFA gives federal district courts original jurisdiction over class actions in which the class members number at least 100, at least one plaintiff is diverse in citizenship from any defendant, and the aggregate amount in controversy exceeds $5 million, exclusive of interests and costs." Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1195 (9th Cir. 2015). Even with the "special liberalization" of jurisdictional requirements under CAFA, "there still must be a requisite amount in controversy that exceeds $5 million." Id. at 1195.

Under certain circumstances, attorney's fees may also be included in the amount in controversy. "[I]f the law entitles the plaintiff to future attorneys' fees if the action succeeds, then there is no question that future attorneys' fees are at stake in the litigation, and the defendant may attempt to prove that future attorneys' fees should be included in the amount in controversy." Fritsch v. Swift Transp. Co. of Ariz., 899 F.3d 785, 794 (9th Cir. 2018) (internal quotations, brackets, and citation omitted). However, "a court's calculation of future attorneys' fees is limited by the applicable contractual or statutory requirements that allow fee-shifting in the first place." Id. at 796.

B. Rule 12(b)(6)

Under Rule 12(b)(6), a party may bring a motion to dismiss for failure to state a claim upon which relief can be granted. Rule 12(b)(6) must be read in conjunction with Federal Rule of Civil Procedure 8(a), which requires a "short and plain statement of the claim showing that a pleader is entitled to relief," in order to give the defendant "fair notice of what the claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); see Ileto v. Glock Inc., 349 F.3d 1191, 1199-1200 (9th Cir. 2003). When evaluating a Rule 12(b)(6) motion, a court must accept all material allegations in the complaint—as well as any reasonable inferences to be drawn from them—as true and construe them in the light most favorable to the non-moving party. See Doe v. United States, 419 F.3d 1058, 1062 (9th Cir. 2005); ARC Ecology v. U.S. Dep't of Air Force, 411 F.3d 1092, 1096 (9th Cir. 2005); Moyo v. Gomez, 32 F.3d 1382, 1384 (9th Cir. 1994). Courts are not required, however, "to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal citation and quotation omitted). Courts also need not accept as true allegations that contradict facts which may be judicially noticed. See Mullis v. U.S. Bankr. Court, 828 F.2d 1385, 1388 (9th Cir. 1987).

"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual...