Divino Grp. v. Google LLC

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DIVINO GROUP LLC, et al., Plaintiffs, v. GOOGLE LLC, et al., Defendants.

No. 19-cv-04749-VKD

United States District Court, N.D. California, San Jose Division

July 5, 2023

ORDER GRANTING MOTION TO DISMISS FOURTH AMENDED COMPLAINT; DENYING AS MOOT MOTION TO STRIKE; DENYING PLAINTIFFS' MOTION FOR LEAVE TO AMEND RE: DKT. NOS. 121 126

VIRGINIA K. DEMARCHI UNITED STATES MAGISTRATE JUDGE

Defendants Google LLC (“Google”) and YouTube LLC (“YouTube”) move pursuant to Rule 12(b)(6) to dismiss plaintiffs' sole remaining claim for breach of the implied covenant of good faith and fair dealing. Dkt. No 121. They also move pursuant to Rule 12(f) to strike certain portions of plaintiffs' fourth amended class action complaint. Id. Plaintiffs oppose those motions. Dkt No. 125. Plaintiffs also separately move for leave to amend their pleading to, among other things, assert additional fact allegations.^[1] Dkt. No. 126. Upon consideration of the moving and responding papers, as well as the oral arguments of counsel, the Court grants defendants' motion to dismiss without further leave to amend, denies as moot defendants' motion to strike, and denies plaintiffs' motion for leave to amend.^[2]

I. BACKGROUND

Plaintiffs Divino Group LLC, Chris Knight, Celso Dulay, Cameron Stiehl, BriaAndChrissy LLC d/b/a “BriaAndChrissy,” Bria Kam, Chrissy Chambers, Chase Ross, Brett Somers, Lindsay Amer, Stephanie Frosch, Sal Cinquemani (also known as “SalBardo”), Tamara (Sheri) Johnson, and Greg Scarnici are Lesbian, Gay, Bisexual, Transgender, Transsexual or Queer (“LGBTQ+”) content creators, viewers, users, and consumers who filed this putative class action against Google and YouTube. Plaintiffs claim that despite YouTube's purported viewpoint neutrality, defendants have discriminated against them based on their sexual or gender orientation, identity, and/or viewpoints by censoring, demonetizing, or otherwise interfering with certain videos that plaintiffs uploaded to YouTube. See, e.g., Dkt. Nos. 1, 7, 20, 67.^[3]

Plaintiffs filed their original complaint on August 13, 2019. Dkt. No. 1. They have amended their pleading several times since then. See Dkt. Nos. 7, 20, 67, 116. The Court granted two prior motions to dismiss plaintiffs' claims. See Dkt. Nos. 65, 107. In its most recent order granting defendants' motion to dismiss the third amended class action complaint, the Court dismissed, without leave to amend, plaintiffs' claim for a declaratory judgment, as well as their claims under the Lanham Act and the California Constitution. See Dkt. No. 107. While the Court found that plaintiffs pled plausible claims under the California Unruh Act and California's unfair competition law, those claims were dismissed without leave to amend, as barred by Section 230 of the Communications Decency Act (“CDA”), 47 U.S.C. § 230(c). Id. The Court also dismissed plaintiffs' claim for breach of the implied covenant of good faith and fair dealing, finding that plaintiffs' allegations did not clearly identify the applicable underlying agreement(s) or contract term(s). Plaintiffs were given leave to amend their implied covenant claim to “clearly identify which Terms of Service and ‘other agreement(s)' and ‘other contract(s)' form the basis for their claim.” Id. at 23-24. The Court reserved judgment as to whether any such claim may be barred by CDA Section 230. Id. at 24 n.11.

Plaintiffs filed their operative fourth amended class action complaint, reasserting their sole remaining claim for breach of the implied covenant of good faith and fair dealing. See Dkt. No. 116.^[4]Defendants move pursuant to Rule 12(f) to strike portions of that pleading, arguing that some of plaintiffs' allegations concern matters that have been dismissed, and are immaterial and inflammatory. Dkt. No. 121. Defendants maintain that plaintiffs' implied covenant claim must be dismissed, in any event, pursuant to Rule 12(b)(6), on the grounds that their amended complaint still fails to allege sufficient facts supporting a plausible claim for relief. They also argue that the claim is barred by a one-year contractual limitations provision, a contractual limitation of liability provision, and by CDA Section 230. Id.

Focusing first on defendants' Rule 12(b)(6) motion to dismiss the implied covenant claim, for the reasons discussed below, the Court finds that plaintiffs have not asserted a plausible claim for relief and dismisses that claim without further leave to amend.

II. LEGAL STANDARD

“A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted ‘tests the legal sufficiency of a claim.'” Conservation Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). When determining whether a claim has been stated, the Court accepts as true all well-pled factual allegations and construes them in the light most favorable to the plaintiff. Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). While a complaint need not contain detailed factual allegations, it “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when it “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.

The Court is not required to “‘assume the truth of legal conclusions merely because they are cast in the form of factual allegations.'” Prager Univ. v. Google LLC (“Prager I”), No. 17-CV-06064-LHK, 2018 WL 1471939, at *3 (N.D. Cal. Mar. 26, 2018) (quoting Fayer v. Vaughn, 649 F.3d 1061, 1064 (9th Cir. 2011) (per curiam)). Nor does the Court accept allegations that contradict documents attached to the complaint or incorporated by reference, Gonzalez v. Planned Parenthood of L.A., 759 F.3d 1112, 1115 (9th Cir. 2014), or that rest on “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).

A court generally may not consider any material beyond the pleadings when ruling on a Rule 12(b)(6) motion. If matters outside the pleadings are considered, “the motion must be treated as one for summary judgment under Rule 56.” Fed.R.Civ.P. 12(d). However, documents appended to the complaint, incorporated by reference in the complaint, or which properly are the subject of judicial notice may be considered along with the complaint when deciding a Rule 12(b)(6) motion. Khoja v. Orexigen Therapeutics, 899 F.3d 988, 998 (9th Cir. 2018); see also Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990).

III. DISCUSSION

A. Breach of Implied Covenant of Good Faith and Fair Dealing

Plaintiffs assert, for themselves and on behalf of the YouTube Community Class,^[5] a claim for breach of the implied covenant of good faith and fair dealing. See Dkt. No. 116 ¶¶ 135-268. “[E]very contract imposes upon each party a duty of good faith and fair dealing in the performance of the contract such that neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.” Storek & Storek, Inc. v. Citicorp Real Estate, Inc., 100 Cal.App.4th 44, 55 (2002) (citing Waller v. Truck Ins. Exchange, Inc., 11 Cal.4th 1, 36 (1995)). The implied covenant of good faith and fair dealing “is based on general contract law and the long-standing rule that neither party will do anything which will injure the right of the other to receive the benefits of the agreement.” Waller, 11 Cal.4th at 36 (internal quotations and citations omitted). The covenant “is implied as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct that frustrates the other party's rights to the benefits of the agreement.” Id. (internal quotations and citation omitted). The elements required to establish a claim for breach of the implied covenant are: “(1) the parties entered into a contract; (2) the plaintiff fulfilled his obligations under the contract; (3) any conditions precedent to the defendant's performance occurred; (4) the defendant unfairly interfered with the plaintiff's rights to receive the benefits of the contract; and (5) the plaintiff was harmed by the defendant's conduct.” Rosenfeld v. JPMorgan Chase Bank, N.A., 732 F.Supp.2d 952, 968 (N.D. Cal. 2010).

“It is universally recognized [that] the scope of conduct prohibited by the covenant of good faith is circumscribed by the purposes and express terms of the contract.” Carma Developers (Cal.), Inc. v. Marathon Dev. Cal, Inc., 2 Cal.4th 342, 373 (1992). “[T]he implied covenant of good faith is read into contracts in order to protect the express covenants or promises of the contract, not to protect some general public policy interest not directly tied to the contract's purpose.” Id. (internal quotations and citation omitted). “[A]s a general matter, implied terms should never be read to vary express terms.” Id. at 374 (citation omitted). “And if defendants were given the right to do what they did by the express provisions of the contract there can be no breach.” Id. (citation omitted).

As confirmed at oral argument, plaintiffs do not contend that there is an express contract provision requiring defendants to post plaintiffs' videos on YouTube. Nor do plaintiffs deny that defendants have broad discretion in deciding whether to remove, restrict, or demonetize content on YouTube. See Dkt. No. 136 (Mar. 21, 2023 Tr. at 26:20-27:4; 28:14-22;...