Martin v. Sephora U.S.

1

RUTH MARTIN, Plaintiff, v. SEPHORA USA, INC., Defendant.

No. 1:22-cv-01355-JLT-SAB

United States District Court, E.D. California

March 30, 2023

FINDINGS AND RECOMMENDATIONS RECOMMENDING GRANTING IN PART MOTION TO DISMISS (ECF NOS. 12, 14, 16, 17, 18)

Plaintiff Ruth Martin (“Plaintiff”) initiated this putative class action on October 23, 2022. (ECF No. 1.) Currently before the Court is Defendant Sephora USA, Inc.'s (“Defendant”) motion to dismiss. (ECF No. 12.) The matter was referred to this Court pursuant to 28 U.S.C § 636(b)(1)(B) and Local Rule 302(c)(7). (ECF No. 15.) On March 24, 2023, finding this matter suitable for decision without oral argument, Local Rule 230(g), the Court vacated the hearing set for March 29, 2023. (ECF No. 20.) Having considered the moving, opposition, and reply papers, the declarations and exhibits attached thereto, as well as the Court's file, the Court issues the following findings and recommendations recommending granting Defendant's motion to dismiss, without prejudice.

I. RELEVANT BACKGROUND

The instant putative diversity class action is premised on claims that Defendant secretly wiretaps the private conversations of everyone who communicates through the chat feature at www.sephora.com, and allows at least one third party to eavesdrop on such communications to harvest data for financial gain.^[1] (See Compl. at 2, ECF No. 1.)

A. Plaintiff's Allegations

Plaintiff alleges the California Invasion of Privacy Act (“CIPA”), Cal. Penal Code §§ 630 et seq.) prohibits both wiretapping and eavesdropping of electronic communications without the consent of all parties to the communication. (Id. at ¶ 8.) Plaintiff alleges compliance with CIPA is “easy” and the majority of website operators comply by conspicuously warning visitors when their conversations are being recorded or if third parties are eavesdropping on them. (Id.) However, Plaintiff alleges, Defendant ignores CIPA, and instead wiretaps the conversations of all website visitors and allows a third party to eavesdrop on the conversations in real time during transmission. (Id. at ¶ 9.) Plaintiff maintains Defendant's wiretapping and eavesdropping are not incidental to the act of facilitating e-commerce, nor are they undertaken in the ordinary course of business; but instead, the actions violate both industry norms and the legitimate expectations of consumers. (Id. at ¶ 10.) More specifically, Plaintiff alleges that eight in ten Americans believe that companies do not collect or share consumer data gathered online, and seven in ten believe that they remain anonymous when engaged in online activities like web browsing and chatting. (Id. at ¶ 10 n.2.)

To enable the alleged “wiretapping,” Defendant has embedded code into its chat feature that automatically records and creates transcripts of all chat conversations. (Id. at ¶ 11.) To enable the alleged “eavesdropping,” Defendant allows “Hubspot and/or Salesforce” (independent third-party vendors) “to secretly intercept (during transmission and in real time), eavesdrop upon, and store transcripts of Defendant's chat communications with unsuspecting website visitors....”

(Id.) Plaintiff alleges that Defendant neither informs visitors of this conduct, nor obtains their consent to do so. (Id. at ¶ 12.) Plaintiff alleges that the chat conversations between website visitors and Defendant are “private and deeply personal,” that such visitors “often share highly sensitive personal data with Defendant via the website chat feature,” and that they would be “shocked and appalled to know that Defendant secretly records those conversations, and would be even more troubled to learn that Defendant allows a third party to eavesdrop on the conversations in real time under the guise of ‘data analytics.' ” (Id. at ¶¶ 11, 13.)

With respect to Plaintiff, specifically, Plaintiff asserts she is a consumer privacy advocate who is both “genuinely interested in learning more about the goods and services offered by Defendant,” and is a “ ‘tester' who works to ensure that companies abide by the privacy obligations imposed by California law.” (Id. at ¶ 15.) Plaintiff alleges she visited Defendant's website within the past year via her smartphone (i.e., “a cellular telephoned with an integrated computer to enable web browsing”) and had a conversation with Defendant via its website chat feature. (Id. at ¶ 17; see also id. at ¶ 13.) Defendant did not inform Plaintiff that it was recording their conversation or “allowing, aiding, and abetting a third party to intercept and eavesdrop on them in real time.” (Id. at ¶ 19.) Plaintiff did not learn about the foregoing until after the conversation was completed and “additional, highly technical research was completed.” (Id.) Further, Plaintiff alleges Defendant did not obtain express or implied consent prior to the purported wiretapping and eavesdropping. (See id. at ¶ 20.) Plaintiff claims Defendant's actions violated §§ 631(a) and 632.7 of CIPA. (Id. at ¶¶ 27-40.)

Plaintiff seeks to bring a putative class action based on these allegations.

B. Procedural Posture

On October 23, 2022, Plaintiff filed the operative complaint, asserting causes of action for violations of CIPA and seeking class certification, declaratory relief, injunctive relief, statutory and punitive damages, prejudgment interest, and attorneys' fees and costs. (ECF No. 1 at 7-11.) Defendant moved to dismiss the complaint, with prejudice, on January 24, 2023. (ECF No. 12.) Plaintiff opposed the motion on February 7, 2023 (ECF No. 14), concurrently submitting a request for judicial notice of an order issued in the Central District of California case Byars v. Goodyear Tire and Rubber Co. (Goodyear), No. 5:22-cv-01358-SSS-KKx (C.D. Cal. Feb. 3, 2023) (ECF Nos. 14-1, 14-2). On February 17, 2023, Plaintiff filed a notice of supplemental authority, with respect to the exact same Central District order that is attached to the request for judicial notice in her oppositional brief. (ECF No. 16.) Also on February 17, 2023, Defendant filed a reply to Plaintiff's opposition. (ECF No. 17.) On March 21, 2023, Defendant filed a notice of supplemental authority, regarding additional rulings from the Central District of California in cases Licea v. Cinmar, LLC (Licea I), No. CV 22-6454-MWF (JEM), 2023 WL 2415592 (C.D. Cal. Mar. 7, 2023), Licea v. Am. Eagle Outfitters, Inc. (Licea II), No. EDCV 22-1702-MWF (JPR), 2023 WL 2469630 (C.D. Cal. Mar. 7, 2023), and Cody v. Boscov's Inc., No. 8:22-cv-143-SSS-KKx, 2023 WL 2338302 (C.D. Cal. Mar. 2, 2023). (ECF No. 19.) The Court notes this matter is fully briefed and the motion to dismiss is deemed submitted.

II. LEGAL STANDARD

A motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure (“Rule”) 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Rule 8(a) requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” See Ashcroft v. Iqbal (Iqbal), 556 U.S. 662, 678-79 (2009). Under notice pleading in federal court, the complaint must “give the defendant fair notice of what the claim ... is and the grounds upon which it rests.” Bell Atlantic v. Twombly (Twombly), 550 U.S. 544, 555 (2007) (internal quotations omitted). “This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002).

On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). A court is bound to give the plaintiff the benefit of every reasonable inference to be drawn from the “well-pleaded” allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn (Retail Clerks), 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege “‘specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief.” Twombly, 550 U.S. at 570. “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.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556).

Nevertheless, a court “need not assume the truth of legal conclusions cast in the form of factual allegations.” U.S. ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed factual allegations, “it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (citation omitted); see also id. at 679-79 (“Rule 8 ... does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.”). A pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”). Moreover, it is inappropriate to assume that the plaintiff “can prove facts that it has not alleged or that the defendants have violated the . laws in ways that have not been alleged.” Assoc. Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

Ultimately a court may not dismiss a complaint in which the plaintiff has alleged “enough facts to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 679 (quoting Twombly, 550 U.S. at 570). This plausibility inquiry is “a context-specific task that requires the reviewing court to draw on its judicial experience and...