Leventhal v. Streamlabs LLC

ZARA LEVENTHAL, individually and on behalf of all others similarly situated, Plaintiff, v. STREAMLABS LLC, Defendant.

No. 22-cv-01330-LB

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

December 23, 2022

ORDER DENYING MOTION TO DISMISS

Re: ECF No. 32

LAUREL BEELER UNITED STATES MAGISTRATE JUDGE

INTRODUCTION

The plaintiff, on behalf of a nationwide class, contends that Streamlabs LLC deceives consumers into signing up for a subscription product that carries an automatic monthly fee of $5.99. Streamlabs has software that allows content creators to (1) stream their videos on platforms (such as YouTube) and (2) collect donations from viewers through third-party payment processors (such as PayPal). The subscription product is Streamlabs Pro, which allows donors to add GIFs or other effects (such as hearts, stars, or confetti) to the messages that accompany the viewers' donations. The plaintiff in this case added a GIF to a donation and contends that Streamlabs' subsequent disclosure to her - that adding a GIF or effect required joining Streamlabs Pro for $5.99 per month - was deceptive because it suggested that it was a one-time fee and did not disclose that the $5.99 monthly fee would renew automatically, in violation of California's Consumer Legal Remedies Act (CLRA) and Unfair Competition Law (UCL).

Streamlabs moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), generally on the ground that the plaintiff did not plausibly allege claims. The plaintiff alleges facts that violate two requirements of California's Automatic Renewal Law (ARL): conspicuous disclosure of subscription terms and a consumer's affirmative consent to automatic renewal. She parrots the ARL's language but does not cite it, possibly because the ARL protects only California consumers and she resides in New York. Streamlabs contends that she thus cannot rely on the ARL, the CLRA's reasonable-consumer test otherwise does not require the ARL's conspicuous disclosure and consumer consent, and, alternatively, the plaintiff must provide a more definite statement that cites the ARL explicitly so that Streamlabs can assert its ARL defenses. It also contends that the plaintiff did not plead fraud with the particularity required by Rule 9(b), unfair conduct in violation of the UCL, or an entitlement to equitable relief under the UCL.

The court denies the motion. The plaintiff's fact allegations, if true, plausibly plead that Streamlabs deceived consumers with its disclosures about the $5.99 fee. The complaint's reliance on ARL requirements does not bar the claims.

STATEMENT

Streamlabs is a California-based company that allows content creators (known as “streamers”) to post live videos on platforms such as YouTube and - if they create a donation page - collect donations from viewers through payment processors such as PayPal.^[1] When viewers donate, they can add a GIF or other effects to the message through a subscription product called Streamlabs Pro that costs $5.99 per month and is renewed automatically every month.^[2]

In August 2020, the plaintiff made a $5 donation to a streamer added a GIF, was taken to a confirmation page, and subscribed there to Streamlabs Pro. Streamlabs then charged her $5.99 per month, which she did not realize until May 2021.^[3] She challenges the sufficiency of Streamlabs' disclosures: she contends that the disclosures suggest a one-time fee of $5.99, when in fact, the monthly fee is an automatically recurring fee. To illustrate the donation process, the complaint shows the webpages that viewers encounter when donating.

At the time of her donation, the streamers' donation page looked like this:^[4]

(Image Omitted)

Among other features, the page has a place to specify a donation amount, a place to send a message to the streamer, the message “Donate at least 1USD to use a GIF,” thumbnail pictures of GIFs and effects (with the word “Pro” next to them), and a green “donate” button to submit the donation. It says nothing about subscription fees.

The complaint has a donation page “that matches what the [donation] page looked like when [plaintiff] Leventhal donated.” It has the same content as the previous image:^[5]

(Image Omitted)

The current donation page is similar and looks like this ^[6]

(Image Omitted)

It has areas for the donation amount, a message to the streamer, and the “donate” button. Instead of thumbnail pictures, it has a red box with “Extras Pro $5.99/mo” and slide buttons that allow a viewer to add a GIF or effect.

For both versions of the donation page, when a viewer clicks “Donate,” a “Donation Confirmation” page pops up:^[7]

(Image Omitted)

It shows the donation amount and, in a red box, shows a $5.99 charge for Streamlabs Pro. Underneath the red box, there is a notice: “You will be charged $5.99 per month by joining Streamlabs Pro, which allows you to add special effects and other features to your alerts. Click here for more information.” The $5.99 charge and the notice have a font that is smaller in size and lighter in color than the bolded font used for the donation amount.^[8] Also, the page does not say that the Streamlabs Pro subscription and the $5.99 monthly charge are renewed automatically each month until the viewer cancels the subscription.^[9] If viewers click “Click here for more information,” a Streamlabs Pro page (https://streamlabs.com/content-hub/post/streamlabs-pro) pops up. It “explains the benefits, monthly cost, [and] cancellation and refund policy of Streamlabs Pro subscription[s],” but it does not “disclose that Streamlabs will keep charging Streamlabs Pro subscribers $5.99 per month on their credit or debit cards until the subscribers cancel the plan.”^[10]

“Streamlabs failed to present the automatic renewal function of [the] Streamlabs Pro subscription . . . in a clear and conspicuous way that called the attention of Donators” because “from the moment Donators added a GIF or effect to the moment” that Streamlabs charged them “they were not notified [or] asked to give consent to the automatic renewal function of [the] Streamlabs Pro subscription.”^[11] “As a result, thousands of Donators who subscribed to Streamlabs Pro have been unknowingly charged $5.99 per month when their subscription automatically renewed.” Some “were charged for many months without realizing it.”^[12]

The complaint has additional fact allegations about the process and webpages (displayed above) that the plaintiff encountered when she made her $5 donation in August 2020. The donation page gave her the option to add a GIF or an effect. It said “PRO” on top of the GIFs and effects, but “it did not explain what [PRO] means [or] how much it costs.” It “did not contain any information about [a] Streamlabs Pro subscription, such as its automatic renewal feature, the cost of each renewal, the future monthly charges on a subscriber's credit or debit cards, the cancellation policy, and the length of the renewal term.”^[13] “Without knowing that she would be automatically signed up for a Streamlabs Pro subscription and that she would be charged every month when the subscription automatically renews, [plaintiff] Leventhal added a GIF or an effect to her donation . . . and proceeded to checkout.” At the Donation Confirmation page, “Streamlabs again failed to disclose any information about the automatic renewal function of [the] Streamlabs Pro subscription.” As a result, the plaintiff “made the payment without knowing that she would be charged $5.99 per month for the subscription until she cancel[ed] the plan.” Streamlabs charged her that day with her $5 donation and the $5.99 fee and charged her $5.99 per month thereafter.^[14] The plaintiff did not discover the recurring monthly charges until May 2021, when PayPal emailed her about them. She “did not even have an account with Streamlabs at the time.” She created an account with the email linked to her PayPal account to try to cancel the subscription, but “she could not find a way to cancel the subscription.” On May 10, 2021, she contacted Streamlabs customer support to ask about the charges and told them “that she had never agreed to enroll in any Streamlabs subscriptions and that she had been completely unaware of the charges.” On May 12, 2021, a Streamlabs representative responded that they would cancel her Streamlabs Pro account, refunded her $5.99 for the most recent subscription month, and refused to refund the rest. The total charges for the ten months were $59.90. The representative also said that “to avoid being automatically signed up for Streamlabs Pro, she should ‘make sure to not toggle on Pro effects or GIFs' when she donates.”^[15]

By “at the latest[] early 2019,” Streamlabs knew about consumer complaints from threads on Twitter, Reddit, and YouTube where customers complained about their unknowing enrollment in the subscription service and Streamlabs' refusal to contact them about refunds and cancellation of the subscriptions.^[16] For example, in a 2017 Twitter thread, “many Twitter users tagged [Streamlabs'] official Twitter account and complained about the $5.99 monthly charges,” and Streamlabs' official Twitter account “responded to most of the complaints.” The complaint cites two complaints on Twitter in May 2019. One said that the user was charged for two months for “unk[n]owingly [] being a Streamlabs Pro member. I didn't even know it existed at all?! All I have been using Streamlabs for so far has been opening it up, and starting streams. Not even click[ing] anything that allowed me to be charged.” The second said,

What the actual hell guys? I was charged for a pro service that I never signed up for. If you automatically sign people up who donate[,] that seems mighty

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