Erler v. Hasbro, Inc.

506 F.Supp.3d 1275

Johnathan ERLER, et al., Plaintiffs,

v.HASBRO, INC. and Wizards of the Coast LLC, Defendants.

CIVIL ACTION NO. 1:19-CV-02658-AT

United States District Court, N.D. Georgia, Atlanta Division.

Signed December 11, 2020

Cesie Chanel Alvarez, Thomas Patrick Lane, Matthew Anthony Stark, Winston & Strawn, 200 Park Avenue, New York, NY 10166-4193, William P. Eiselstein, Elizabeth Marquardt, Miller & Martin, PLLC, Suite 2100, 1180 West Peachtree Street, N.W., Atlanta, GA 30309-3407, Kimberly Blount Reeves, Caiola & Rose, LLC, 125 Clairemont Avenue, Ste 240, Decatur, GA 30030, for Defendant Hasbro, Inc.

Robert Neil Friedman, Werner Wetherington, P.C., 2860 Piedmont Rd., N.E., Atlanta, GA 30305, Matthew Q. Wetherington, Wetherington Law Firm, 55 Ivan Allen Blvd, Suite 700, Atlanta, GA 30308, for Plaintiff Aaron Pinkham.

ORDER

Amy Totenberg, United States District Judge

This is a putative class action involving Plaintiffs’ attempted eBay purchases of special edition expansion versions of the trading card game, Magic: The Gathering, from Defendants Hasbro, Inc. ("Hasbro") and Wizards of the Coast LLC ("Wizards"). Plaintiffs allege that after they bought the special edition games, Defendants unilaterally canceled their purchases. Plaintiffs assert claims for breach of contract, breach of the duty of good faith and fair dealing, and negligence. Defendants have filed the instant Motion to Dismiss the Second Amended Complaint [Doc. 34]. For the following reasons, Defendants’ Motion to Dismiss is GRANTED, and Plaintiffs’ Second Amended Class Action Complaint [Doc. 32] is DISMISSED WITH PREJUDICE .¹

I. FACTUAL BACKGROUND²

Sale of the Special Edition Expansion Game:

Defendant Hasbro is a toy and board game company incorporated and headquartered in Rhode Island³ , registered to do business in Georgia. (Second Amended Complaint ("SAC"), Doc. 32 ¶ 29.) Defendant Wizards is a subsidiary of Hasbro. (Id. at 1.) On April 18, 2019, Defendants Hasbro and Wizards announced the sale of a special edition Magic: the Gathering expansion game, the War of the Spark Mythic Edition ("WSME"). (Id. ¶ 31.) The announcement gave buyers a taste of the cards included in the forthcoming expansion pack:

(Id. ¶ 31, Ex. 3.) In addition, this special edition announcement teased:

Similar to Ravnica Allegiance Mythic Edition, War of the Spark Mythic Edition will be limited to only 12,000 units and will be available for sale on Hasbro's eBay store starting Wednesday May 1 at 3 p.m. ET (noon PT/8 p.m. GMT). Limit 2 per person. There will be no reprints of War of the Spark Mythic Edition—once it's gone, it's gone.

(Id. ) (emphasis added). After much anticipation, on May 1, 2019, at 3 p.m. ET, the sale went live. Defendants, using the eBay platform, listed the War of the Spark Mythic Edition game at a "Buy It Now" price of $249.99 per unit. (Id. ¶¶ 57, 64.) In a frenzy, Jonathan Erler and the other Plaintiffs—who hail from twenty-five different states across the nation—clicked the "Buy It Now" button to purchase one or more units of the special edition game. (Id. ¶¶ 32, 63, 64.) After they clicked the "Buy It Now" button, Plaintiffs received email notification from eBay, stating "Your order is confirmed," (id. ¶¶ 34, 65, Ex. 4, eBay Order Confirmation) as well as emails from PayPal confirming that payment had been sent to the seller "HasbroToyShop." (Id. ¶ 37, Ex. 5, PayPal Receipt).

Within "several days" of the alleged purchases, however, Plaintiffs all received "cancellation requests" from Defendants, noting that the product ordered was "out of stock." (Id. ¶¶ 40, 41, 44.)⁴ Plaintiffs and other disappointed fans also received emails from eBay first stating that "technical issues resulted in the set being oversold beyond the limited quantity available. As a result, we were not able to successfully complete your order. We'll issue your refund very shortly in your original form of payment," and, second, promising a $20 coupon towards a future purchase as well as "something special" to every person whose order was cancelled. (eBay Refund Emails, Docs. 34-7, Ex. D, Ex. E.) Plaintiffs allege that they received these refund emails at some point after Defendants’ sent the cancellation requests, though they do not explicitly note the timeframe. (SAC ¶ 45.)⁵ Plaintiffs further claim that Defendants delayed issuing refunds for as long as two weeks in certain cases. (Id. ¶ 49.) Consequently, Plaintiffs were deprived of the WSME game they believed they had purchased, left only with the option to buy this rare product at a higher price from third parties. (Id. ¶ 48.)

eBay User Agreement:

In order to buy and sell products on eBay, all users agree to abide by eBay's User Agreement. (SAC ¶ 61; User Agreement, Doc. 34-7, Ex. A ("You agree to comply with all terms of this User Agreement when accessing or using our services.")) The User Agreement imposes specific obligations on buyers and sellers. For buyers, the User Agreement dictates, "You enter into a legally binding contract to purchase an item when you commit to buy an item, your offer for an item is accepted, or if you have a winning bid (or your bid is otherwise accepted)." (User Agreement) (emphasis added). For sellers, the Agreement requires compliance with eBay's Listing Policies and Selling Practices Policy. (Id. )⁶ The Selling Practices Policy specifically allows for the cancellation of orders:

"Occasionally, you may need to cancel a transaction because the item is broken, you made a mistake in your listing, or the item is out of stock. In these cases, you must first contact the buyer and let them know that you are canceling the transaction and the reason why. Make sure you use the correct process in My eBay or Seller Hub to cancel these transactions. Learn more about Canceling a transaction (linking to the specific "Canceling a transaction" policy).

(Selling Practices Policy, Doc. 34-7, Ex. C.) This referenced "Canceling a transaction" policy provides specific direction for sellers seeking to do just that. (Cancel a Transaction Policy, Doc. 34-7, Ex. B.) The text of the policy states:

If you can't complete a sale with a buyer—for example, the item is damaged, or you have fewer items in stock than you thought—you can cancel the transaction....

You can cancel a transaction as long as:

• You haven't sent the item yet

• The buyer hasn't asked us to step in and help because they didn't receive the item • You haven't opened an unpaid item case

You can cancel a transaction by selecting the button below. After you cancel, we'll let the buyer know. If they've already paid, they'll get a refund....

You can cancel a transaction up to 30 days after a sale, even if your buyer has already paid.

(Id. ) The User Agreement contains one final term of note. Under a section entitled "Purchase Conditions" that details obligations of buyers, the Agreement contains a provision addressing relevant law, explaining that " Utah Code Annotated § 70A-2-401(2) and Uniform Commercial Code § 2-401(2) apply to the transfer of ownership between the buyer and the seller, unless the buyer and the seller agree otherwise." (User Agreement.)

II. PROCEDURAL BACKGROUND

Plaintiff Erler originally filed this action in the State Court of Gwinnett County on May 8, 2019, alleging breach of contract, breach of the duty of good faith and fair dealing, and negligence. (Doc. 1, ¶ 2.) A few weeks later, Plaintiff amended his complaint to include twenty-seven additional plaintiffs, from twenty-five different states, alleging the same operative claims. (Id. ¶ 3, Ex. A.) Shortly after this amendment, Defendants removed the case to federal court pursuant to the Class Action Fairness Act, see 28 U.S.C. § 1332 ; (Doc. 1 ¶¶ 8-9), and then filed a Motion to Dismiss for Failure to State a Claim. (Doc. 21.) In turn, Plaintiffs filed their Response (Doc. 25), and a Motion for Leave to File Amended Complaint. (Doc. 24.)

On January 30, 2020, the Court granted Plaintiffs leave to amend their complaint⁷ and thus denied as moot Defendants’ initial Motion to Dismiss. (Doc. 31.) In its Order, the Court expressed concerns about the Parties’ failure to discuss choice of law issues surrounding Plaintiffs’ claims and instructed the Parties to address issues of applicable law in the event of a renewed motion to dismiss. ( Id. ) Since then, Defendants have in fact filed the instant Motion to Dismiss the Second Amended Complaint (Doc. 34), which—after Plaintiffs’ Response (Doc. 43) and Defendants’ Reply (Doc. 45)—is now ripe for resolution.

III. STANDARD FOR MOTION TO DISMISS

To survive a motion to dismiss under Rule 12(b)(6), "a complaint 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). For the purposes of a motion to dismiss, the court must accept all factual allegations in the complaint as true; however, the court is not bound to accept as true a legal conclusion couched as a factual allegation. Twombly , 550 U.S. at 555, 127 S.Ct. 1955. "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Iqbal , 556 U.S. at 679, 129 S.Ct. 1937. Although the plaintiff is not required to provide "detailed factual allegations" to survive dismissal, "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Twombly , 550 U.S. at 555, 570, 127 S.Ct. 1955 ; Iqbal , 556 U.S. at 678, 129 S.Ct. 1937.

IV. ANALYSIS

A. Contract Claims (Counts I and II)

The Court first addresses Plaintiffs’ claims for breach of contract and breach of the duty of good faith and fair dealing. Before proceeding to the merits of these claims, however, the Court must determine what law applies.

i. Choice of Law

As noted, in its January 30, 2020 Order, the Court instructed the...