Lopez v. Apple, Inc.

519 F.Supp.3d 672

Fumiko LOPEZ, et al., Plaintiffs,

v.APPLE, INC., Defendant.

Case No. 19-cv-04577-JSW

United States District Court, N.D. California.

Signed February 10, 2021

Mark N. Todzo, Eric Somers, Lexington Law Group, LLP, San Francisco, CA, Vincent Briganti, Pro Hac Vice, Andrea Farah, Pro Hac Vice, Christian Levis, Peter A. Barile, III, Lowey Dannenberg, P.C., White Plains, NY, Erin Green Comite, Pro Hac Vice, Scott & Scott, LLP, Colchester, CT, Hal Davis Cunningham, John T. Jasnoch, Scott Scott, Attorneys at Law, LLP, San Diego, CA, Joseph P. Guglielmo, Pro Hac Vice, ScottScott, Attorneys at Law, LLP, New York, NY, for Plaintiff Fumiko Lopez.

John T. Jasnoch, ScottScott Attorneys at Law LLP, San Diego, CA, Mark N. Todzo, Lexington Law Group, LLP, San Francisco, CA, for Plaintiffs Lishomwa Henry, Joseph Harms.

Isabelle Louise Ord, DLA Piper LLP, San Francisco, CA, Amanda Catherine Fitzsimmons, DLA Piper LLP, San Diego, CA, Eric Roberts, Pro Hac Vice, Raj N. Shah, Pro Hac Vice, DLA Piper LLP, Chicago, IL, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART APPLE'S MOTION TO DISMISS

Re: Dkt. Nos. 54, 59

JEFFREY S. WHITE, United States District Judge

Now before the Court is the motion to dismiss the amended class action complaint filed by the defendant Apple, Inc. ("Apple"). The Court has considered the parties’ papers, relevant legal authority, and the record in this case, and it finds the motion suitable for disposition without oral argument. See N.D. Civ. L.R. 7-1(b). The Court GRANTS Apple's motion.

BACKGROUND

Plaintiffs Fumiko Lopez, Fumiko Lopez as guardian of minor A.L., Lishomwa Henry, and Joseph Harms (collectively, "Plaintiffs") bring this putative consumer class action against Apple for violation of federal and state privacy laws. Like many others, Plaintiffs own Apple devices, namely, Apple iPhones. (Dkt. No. 48, Amended Complaint ("AC") ¶¶ 43-46.) All Apple devices allegedly come pre-installed with a software program called "Siri," which is a voice activated "intelligent assistant." (Id. ¶ 2.) Plaintiffs allege the following facts:

Siri is an artificial intelligence-based virtual assistant that allows individuals to use their voice to ask questions and give instructions. (Id. ) For instance, a user can ask Siri to provide information, set an alarm, or play music using only the voice. (Id. ¶ 21.) Apple launched Siri in 2011 and preinstalls it on every device it makes, from the Apple Watch to the Apple TV. (Id. ¶ 2.) Cognizant that users might be wary of vocal surveillance, Apple assures users that Siri will only listen to, record, and share their conversations when they give consent by, inter alia , saying a "hot word," such as "Hey Siri." (Id. ¶ 4.) Outside of this "active listening mode," Apple assures user that its devices only listen "to recognize the clear, unambiguous audio trigger" that the user wants to activate Siri. (Id. ¶¶ 26, 31.)

Notwithstanding these representations, on July 26, 2019, The Guardian published an article reporting that Apple had intercepted and disclosed private conversations without any user consent.¹ (Id. ¶ 5.) The article describes two sets of facts. First , Siri is routinely triggered by accident without any hot word. (Id. ¶ 35.) Two Apple devices, the Apple Watch and the Home Pod speakers, have particularly high accidental trigger rates and can be activated by a "sound of a zip." (Id. ) Second , a "small portion" of Siri recordings, both deliberate and accidental, are sent to third-party contractors for evaluation. (Id. ¶ 6.) The contractors grade Siri responses on "whether the activation of the voice assistant was deliberate or accidental, whether the query was something Siri could be expected to help with and whether Siri's response was appropriate." (Id. ¶ 34.) As the result, the third-party contractors are sometimes exposed to "private discussions between doctors and patients, confidential business deals, and sexual encounters." (Id. ¶ 33.)

Plaintiffs allege violations of the Federal Wiretap Act ("Wiretap Act"), 18 U.S.C. § 2510, et seq. , the Stored Communications Act ("SCA"), 18 U.S. C. § 2701, et seq. , California Invasion of Privacy Act ("CIPA"), California Penal Code §§ 631(a) and 632, intrusion upon seclusion, invasion of privacy under Article I, Section 1 of the California Constitution, breach of contract, and California Unfair Competition Law ("UCL"), California Business & Professions Code § 17200, and for declaratory and other equitable relief under the Declaratory Judgment Act, 28 U.S.C. § 2201, et seq. The Court will address additional facts as necessary in its analysis.

ANALYSIS

A. Legal Standard on Motion to Dismiss.

A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the pleadings fail to state a claim upon which relief can be granted. The Court's "inquiry is limited to the allegations in the complaint, which are accepted as true and construed in the light most favorable to the plaintiff." Lazy Y Ranch LTD v. Behrens , 546 F.3d 580, 588 (9th Cir. 2008). Even under the liberal pleading standard of Federal Rule of Civil Procedure 8(a)(2), "a plaintiff's obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citing Papasan v. Allain , 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ).

Pursuant to Twombly , a plaintiff must not merely allege conduct that is conceivable but must instead allege "enough facts to state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). If the allegations are insufficient to state a claim, a court should grant leave to amend, unless amendment would be futile. See, e.g., Reddy v. Litton Indus., Inc. , 912 F.2d 291, 296 (9th Cir. 1990) ; Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv., Inc. , 911 F.2d 242, 246-47 (9th Cir. 1990).

As a general rule, "a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." Branch v. Tunnell , 14 F.3d 449, 453 (9th Cir. 1994) (overruled on other grounds by Galbraith v. County of Santa Clara , 307 F.3d 1119 (9th Cir. 2002) (citation omitted)). However, documents subject to judicial notice may be considered on a motion to dismiss. In doing so, the Court does not convert a motion to dismiss to one for summary judgment. See Mack v. South Bay Beer Distrib. , 798 F.2d 1279, 1282 (9th Cir. 1986) (overruled on other grounds by Astoria Fed. Sav. & Loan Ass'n v. Solimino , 501 U.S. 104, 111 S.Ct. 2166, 115 L.Ed.2d 96 (1991) ).

B. Article III Standing.

As a threshold matter, Apple challenges Plaintiffs’ Article III standing. No principle is more fundamental to the role of the judiciary that the "constitutional limitations of federal-court jurisdiction to actual cases or controversies." Raines v. Byrd , 521 U.S. 811, 818, 117 S.Ct. 2312, 138 L.Ed.2d 849 (1997). A party seeking the federal court's jurisdiction bears the burden of demonstrating that she has standing to sue. See Lujan v. Defenders of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). If a plaintiff fails to satisfy the constitutional requirements to establish standing, the court lacks jurisdiction to hear the case and must dismiss the complaint. See Valley Forge Christian Col. v. Americans United for Separation of Church and State , 454 U.S. 464, 475-76, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982). Standing must be supported "with the manner and degree of evidence required at the successive stages of the litigation." Lujan , 504 U.S. at 561, 112 S.Ct. 2130. Thus, at the pleading stage, the court must "accept as true all material allegations," "construe the complaint in favor of the complaining party," and "determine whether the plaintiffs have clearly alleged facts demonstrating each element of standing." Namisnak v. Uber Techs., Inc. , 971 F.3d 1088 (9th Cir. 2020) (citations and internal quotation marks omitted).

The "irreducible minimum" of Article III standing requires plaintiffs to show that they have "(1) suffered injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Spokeo, Inc. v. Robins , 578 U.S. 330, 136 S. Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) (citing Lujan , 504 U.S. at 560-61, 112 S.Ct. 2130 ). The injury must be "concrete and particularized" and "actual or imminent, not conjectural or hypothetical." Id. at 1548 (quoting Lujan , 504 U.S. at 560, 112 S.Ct. 2130 ). To be "particularized," an injury "must affect the plaintiff in a personal and individual way." Id. (quoting Lujan , 504 U.S. at 560 n.1, 112 S.Ct. 2130 ). To be "actual or imminent," the injury must have already occurred or be "certainly impending." Clapper v. Amnesty Int'l USA , 568 U.S. 398, 409, 133 S.Ct. 1138, 185 L.Ed.2d 264 (2013). A violation of substantive privacy rights "gives rise to a concrete injury sufficient to confer standing." In re Facebook, Inc. Internet Tracking Litig. , 956 F.3d 589, 598 (9th Cir. 2020) ; Campbell v. Facebook, Inc. , 951 F.3d 1106, 1117-19 (9th Cir. 2020). But standing "requires more than an injury to a cognizable interest"; it requires "that the party seeking review be himself among the injured." Lujan , 504 U.S. at 563, 112 S.Ct. 2130.

Here, Plaintiffs allege two theories of harm: first, Apple disclosed Plaintiffs’ private information without consent and in violation of substantive privacy laws, and second, Plaintiffs suffered an economic injury because...