Halperin v. Int'l Web Servs., LLC

123 F.Supp.3d 999

Dan Halperin, on behalf of himself and others similarly situated, Plaintiff,

v.International Web Services, LLC, and Affluent Ads, LLC, Defendants.

13 C 8573

United States District Court, N.D. Illinois, Eastern Division.

Signed June 5, 2015

Joseph J. Siprut, Gregg Michael Barbakoff, Melanie K. Nelson, Michael Loren Silverman, Richard Lane Miller, II, Ismael Tariq Salam, Siprut PC, Chicago, IL, for Plaintiff.

Blaine C. Kimrey, Bryan K. Clark, Vedder Price PC, Kyle Alexander Davis, Dykema Gossett PLLC, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

Gary Feinerman, United States District Judge

Dan Halperin brings this putative class action against Affluent Ads, LLC, and International Web Services, LLC, the creator and distributor of I Want This!, which Halperin claims is a malicious software program that, having surreptitiously been installed on his computer, selectively underlines words displayed in his web browser and generates unwanted pop-up ads when his cursor hovers over the underlined text. Doc. 85 at ¶ 31. The original complaint alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), 815 ILCS 505/1 et seq. , the Illinois Computer Tampering Act ("ICTA"), 720 ILCS 5/17–50 et seq. , and two federal statutes, the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, and the Electronic Communications Privacy Act's anti-wiretap provisions, 18 U.S.C. §§ 2510 et seq. Doc. 2. The court dismissed without prejudice the federal claims under Federal Rule of Civil Procedure 12(b)(6) and, as Halperin had not adequately pleaded the minimal diversity required by the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d), exercised its discretion under 28 U.S.C. § 1367(c)(3) to relinquish supplemental jurisdiction over the state law claims. Docs. 76–77 (reported at 70 F.Supp.3d 893 (N.D.Ill.2014) ). The court did, however, give Halperin leave to file an amended complaint. 70 F.Supp.3d at 905.

The amended complaint does not replead the federal claims, but it again raises the ICFA and ICTA claims on behalf of himself and an Illinois-only class, and it also raises, on behalf of a multi-state class, consumer fraud claims under the laws of nine other States (California, Florida, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, and Washington) alleged to be similar to Illinois's. Doc. 85. Defendants have moved to dismiss the amended complaint under Rules 12(b)(1) and 12(b)(6), Doc. 90, and to strike its class allegations under Rule 12(f). Doc. 92. The motion to dismiss is granted, the motion to strike is denied without prejudice as moot, and Halperin is given one last chance to replead.

Background

On a Rule 12(b)(6) motion to dismiss, the court must accept the operative complaint's well-pleaded factual allegations, with all reasonable inferences drawn in Halperin's favor, but not its legal conclusions. See Smoke Shop, LLC v. United States, 761 F.3d 779, 785 (7th Cir.2014) ; Munson v. Gaetz, 673 F.3d 630, 632 (7th Cir.2012). The court must also consider "documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice," along with additional facts set forth in Halperin's briefs opposing dismissal, so long as those additional facts "are consistent with the pleadings." Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1020 (7th Cir.2013) (internal quotation marks omitted) (quoting Geinosky v. City of Chicago, 675 F.3d 743, 745 n. 1 (7th Cir.2012) ). The facts are set forth as favorably to Halperin as those materials permit. See Meade v. Moraine Valley Cmty. Coll., 770 F.3d 680, 682 (7th Cir.2014) ; Gomez v. Randle, 680 F.3d 859, 864 (7th Cir.2012).

Affluent Ads created a software program called I Want This!, which International Web Services then distributed. Doc. 85 at ¶¶ 26–27. Defendants somehow installed I Want This! on Halperin's computer. Id. at ¶ 35. A key component of I Want This! is called "Text Enhance." Id. at p. 7, n.11. When Halperin visits a website using his computer, Text Enhance "automatically scans the text of the webpage" for certain keywords, and for each keyword found, it "turns the [word] blue and underlines it." Id. at ¶ 31. If Halperin's cursor hovers over an underlined word, "an advertisement will appear over the website." Ibid. For example, in the image below (taken from the amended complaint), Text Enhance underlines the word "bet," and when Halperin's cursor hovers over that word, a pop-up advertisement entitled "Play Free Slots" appears:

?

Id. at ¶ 31, Image 1. Were Halperin to click on the pop-up ad, his browser would be directed to the website "Youplaytime.net," which is not affiliated with the website ("April Dammann Website") he had been viewing. Id. at ¶ 31.

Halperin alleges that "I Want This! causes computers to slow down, takes up bandwidth over an Internet connection, uses up memory, utilizes pixels and screen space on monitors, causes the loss of data, and otherwise frustrates the customary and intended uses of computers." Id. at ¶ 37. To remedy these problems, "consumers are required to purchase remedial products, such as internal hard-drives or random access memory," id. at ¶ 38, or "spend valuable time and money to investigate ... how the malware can be removed," id. at ¶ 40. Nowhere, however, does the amended complaint allege that Halperin has actually spent any money to remedy the problems caused by I Want This! or to remove it from his computer.

Discussion

I. Subject Matter Jurisdiction

A. CAFA Jurisdiction

Halperin alleges subject matter jurisdiction under the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d). Doc. 85 at ¶ 3. The amended complaint identifies Defendants as being citizens of New Jersey, Pennsylvania, and Canada, id. at ¶¶ 8–10, 12–16, and because he is a citizen of Illinois, Halperin has alleged the minimal diversity necessary under CAFA. See 28 U.S.C. § 1332(d)(2)(A). As for the amount in controversy, Halperin alleges that each class member faces roughly $150 of damages (an estimate of what a professional would charge to uninstall I Want This! from a user's computer, Doc. 85 at ¶ 4 & n.1), which means that if the class contains at least 33,334 people, CAFA's $5 million amount-in-controversy threshold is met. See 28 U.S.C. § 1332(d)(2).

The estimated population of the ten States in Halperin's proposed multi-state class is more than 135 million, see United States Census Bureau, "Population Estimates," www.census.gov/popest/data/state/totals/2014/index.html (visited June 4, 2015), requiring therefore around 0.025% (roughly 1 in 4,000) of the population in those States to be class members. That does not strike the court as "legally impossible," and if "the proponent of federal jurisdiction has explained plausibly how the stakes exceed $5,000,000, the case belongs in federal court unless it is legally impossible for the plaintiff to recover that much." Blomberg v. Serv. Corp. Int'l, 639 F.3d 761, 764 (7th Cir.2011) (citation omitted).

B. Mootness

Defendants argue that the case is moot because they made Halperin a $10,000 offer of judgment, more than enough to satisfy his demand. See Damasco v. Clearwire Corp., 662 F.3d 891, 896 (7th Cir.2011). Because mootness would deprive the court of Article III jurisdiction, the court must address the issue before reaching the merits. See Genesis Healthcare Corp. v. Symczyk, ––– U.S. ––––, 133 S.Ct. 1523, 1528, 185 L.Ed.2d 636 (2013) ; Ortiz v. Fibreboard Corp., 527 U.S. 815, 831, 119 S.Ct. 2295, 144 L.Ed.2d 715 (1999) ; Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 92, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) ; Hinrichs v. Speaker of House of Representatives of Ind. Gen. Assembly, 506 F.3d 584, 590 (7th Cir.2007).

Under settled Seventh Circuit precedent, an offer of judgment that gives a plaintiff everything he seeks will moot a case. See Swanigan v. City of Chicago, 775 F.3d 953, 960 (7th Cir.2015) ("In this circuit an unaccepted Rule 68 offer that meets or exceeds all the relief the plaintiff has demanded eliminates any remaining case or controversy."); McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1018 (7th Cir.2014) ("[A]n unaccepted settlement offer can render the plaintiff's case moot if it gives the plaintiff everything she requested. ") (quotation marks omitted); Scott v. Westlake Servs. LLC, 740 F.3d 1124, 1127 (7th Cir.2014) ("Westlake was offering to pay only the amount it felt might be due. That was not enough to moot Scott's case."); Greisz v. Household Bank (Illinois), N.A., 176 F.3d 1012, 1015 (7th Cir.1999) ("[A]n offer, by giving the plaintiff the equivalent of a default judgment ..., eliminates a legal dispute upon which federal jurisdiction can be based. You cannot persist in suing after you've won.") (citations omitted); Rand v. Monsanto Co., 926 F.2d 596, 598 (7th Cir.1991) ("Once the defendant offers to satisfy the plaintiff's entire demand, there is no dispute over which to litigate, and a plaintiff who refuses to acknowledge this loses outright, under Fed.R.Civ.P. 12(b)(1), because he has no remaining stake") (citation omitted). The Supreme Court has left unanswered the question whether an unaccepted offer of judgment—like Defendants' offer to Halperin—can moot a case. See Genesis Healthcare, 133 S.Ct. at 1528–29 ("While the Courts of Appeals disagree whether an unaccepted offer that fully satisfies a plaintiff's claim is sufficient to render the claim moot, we do not reach this question, or resolve the split, because the issue is not properly before us.") (footnote omitted). Although Justice Kagan's dissent in Genesis Healthcare forcefully answers "no," see id. at 1533 (dissenting opinion) ("[A]n unaccepted offer of judgment cannot moot a case. When a plaintiff rejects such an offer—however good the terms—her interest in the lawsuit remains just what it was before. And so too does the court's ability to grant her...