Saeedy v. Microsoft Corp.

1

NOAH SAEEDY, et al., individually, and on behalf of all others similarly situated, Plaintiffs, v. MICROSOFT CORPORATION, Defendant.

No. 23-cv-1104

United States District Court, W.D. Washington, Seattle

December 21, 2023

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS

Barbara Jacobs Rothstein, U.S. District Court Judge

I. INTRODUCTION

Plaintiffs sued Microsoft Corporation on July 21, 2023 in this putative class action, alleging that the Microsoft Edge browser intercepts and collects users' internet browsing activities and private data for Microsoft's use, which results in numerous violations of both federal and state laws. Currently pending before the Court is Microsoft's Motion to Dismiss Under Rules 12(b)(1) and 12(b)(6),^[1] ECF No. 36, which Plaintiffs have opposed. Having reviewed the parties' filings^[2] and the relevant legal authorities, the Court GRANTS Microsoft's motion to dismiss under Rule 12(b)(1) for lack of standing. The reasoning for the Court's decision follows.

II. BACKGROUND^[3]

Plaintiffs^[4] allege that certain Microsoft Edge internet browser versions “surreptitiously intercept, collect and send to Defendant a wide range of private data relating to users' internet browsing activities, internet searches, and online shopping behavior, including while in ‘private' browsing mode.” Compl. ¶¶ 1-2, ECF No. 1. This allegedly private data is collected and associated with unique user identifiers and sent to Microsoft-controlled servers, which allows Microsoft to determine an individual users' internet browsing activities and habits. Id. ¶¶ 2-4. Plaintiffs allege that this is done without the users' consent. Id. ¶ 5.

Plaintiffs used Edge for both personal and work purposes and allege that they would not have used the Edge browser if they had known that Microsoft was collecting their data and using it to improve its software and services, provide targeted advertising, and develop artificial intelligence. Id. ¶¶ 7-10; 176-79. Plaintiffs claim economic injury because of Microsoft's unlawful and unauthorized interceptions and recordings. Id. Plaintiffs have sued Microsoft, on behalf of a nationwide class and subclasses, for violations of the Electronic Communications Privacy Act, 18 U.S.C. § 2510, et seq., the Computer Fraud and Abuse Act, 18 U.S.C. § 1030, and various California and Washington state law claims. In total, they assert 13 causes of action:

• First Cause of Action - Violation of the Electronic Communications Privacy Act, 18 U.S.C. § 2510, et seq. (All Plaintiffs, Classes, and Subclasses)

• Second Cause of Action - Violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 (All Plaintiffs, Classes, and Subclasses) • Third Cause of Action - Intrusion Upon Seclusion (California Plaintiffs, California Class, and California Subclasses)

• Fourth Cause of Action - Violation of the Right to Privacy - California Constitution (California Plaintiffs, California Class, and California Subclasses)

• Fifth Cause of Action - Violation of California Invasion of Privacy Act, California Penal Code §§ 630, et seq. (California Plaintiffs, California Class, and California Subclasses)

• Sixth Cause of Action - Statutory Larceny, Cal. Penal Code §§ 484 and 496 (California Plaintiffs, California Class, and California Subclasses)

• Seventh Cause of Action - Conversion (California Plaintiffs, California Class, and California Subclasses)

• Eighth Cause of Action - Violation of the California Unfair Competition Law, Bus. & Prof. Code §§ 17200, et seq. (California Plaintiffs, California Class, and California Subclasses)

• Ninth Cause of Action - Intrusion Upon Seclusion (Washington Plaintiff, Washington Class, Washington Subclasses)

• Tenth Cause of Action - Conversion (Washington Plaintiff, Washington Class, Washington Subclasses)

• Eleventh Cause of Action - Violation of the Washington Privacy Act, Wash. Rev. Code ch. 9.73 (Washington Plaintiff, Washington Class, Washington Subclasses)

• Twelfth Cause of Action - Violation of the Washington Consumer Protection Act, Wash. Rev. Code ch. 19.86 (Washington Plaintiff, Washington Class, Washington Subclasses)

• Thirteenth Cause of Action - Restitution / Unjust Enrichment (All Plaintiffs, Classes, and Subclasses)

Microsoft seeks to dismiss Plaintiffs' complaint for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), arguing that Plaintiffs lack standing under Article III of the Constitution. Microsoft also argues that Plaintiffs' claims should be dismissed under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim on which relief may be granted.

III. LEGAL STANDARD

A. 12(b)(1) Standard

Federal Rule of Civil Procedure 12(b)(1) allows litigants to seek the dismissal of an action for lack of subject matter jurisdiction. A motion to dismiss for lack of subject matter jurisdiction can either attack the sufficiency of the pleadings on their face (a “facial attack”) or present affidavits or other evidence that contest the truth of the allegations in the pleadings (a “factual attack”). Sullivan v. Ferguson, 636 F.Supp.3d 1276, 1283 (W.D. Wash. 2022) (citing Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004)).

When the movant does not offer affidavits or other evidence challenging the truth of the allegations in the complaint, the Court construes the motion as a facial attack on subject matter jurisdiction. See id. And the Court resolves a facial jurisdictional challenge “as it would a motion to dismiss under Rule 12(b)(6): Accepting the plaintiff's allegations as true and drawing all reasonable inferences in the plaintiff's favor, the court determines whether the allegations are sufficient as a legal matter to invoke the court's jurisdiction.” Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014). The Court presumes that a case lies outside of its “limited jurisdiction” unless the plaintiffs establish otherwise. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). If at any time the court determines that it lacks subject matter jurisdiction, it must dismiss the action. Fed.R.Civ.P. 12(h)(3).

B. 12(b)(6) Standard

A motion to dismiss for failure to state a claim under Rule 12(b)(6) is properly granted if the complaint does not “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 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The plaintiff must plead “factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “A complaint may fail to show a right to relief either by lacking a cognizable legal theory or by lacking sufficient facts alleged under a cognizable legal theory.” Woods v. U.S. Bank N.A., 831 F.3d 1159, 1162 (9th Cir. 2016). When considering a motion to dismiss under Rule 12(b)(6), courts must accept the factual allegations in the complaint as true and construe such allegations in the light most favorable to the plaintiff. Interpipe Contracting, Inc. v. Becerra, 898 F.3d 879, 886-87 (9th Cir. 2018).

IV. DISCUSSION

“Under Article III, the Federal Judiciary is vested with the ‘Power' to resolve not questions and issues but ‘Cases' or ‘Controversies.'” Ariz. Christian Sch. Tuition Org. v. Winn, 563 U.S. 125, 132 (2011). Among other things, that limitation requires a plaintiff to have standing.” Fed. Election Comm'n v. Cruz, 596 U.S. 289, 295-96 (2022). Whether Plaintiffs have Article III standing to proceed with this lawsuit implicates the Court's subject matter jurisdiction. See Warth v. Seldin, 422 U.S. 490, 498 (1975) (stating that standing is jurisdictional). Therefore, the Court will begin by considering Microsoft's standing arguments.

The three elements of standing “are well established: A plaintiff must show (1) an injury in fact, (2) fairly traceable to the challenged conduct of the defendant, (3) that is likely to be redressed by the requested relief.” Id. at 296 (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). Plaintiffs bear the burden of establishing each of these elements “with the manner and degree of evidence required at the successive stages of the litigation.” Lujan, 504 U.S. at 561. “At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice[.]” Id.; accord Tingley v. Ferguson, 47 F.4th 1055, 1066 (9th Cir. 2022); see also Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016) as revised (May 24, 2016) (“[T]he plaintiff must clearly allege facts demonstrating each element.” (citation omitted)).

“[S]tanding is not dispensed in gross; rather, plaintiffs must demonstrate standing for each claim that they press and for each form of relief that they seek.” TransUnion LLC v. Ramirez, 594 U.S. ___, 141 S.Ct. 2190, 2208 (2021) (citations omitted). Further, for each of the state claims asserted, at least one plaintiff must demonstrate standing. See, e.g., Fenerjian v. Nongshim Co., Ltd., 72 F.Supp.3d 1058, 1082-83 (N.D. Cal. 2014) (finding that named plaintiffs “lack standing to assert claims based on” states' laws where they neither resided nor suffered an injury); Hamilton v. NuWest Grp. Holdings LLC, C22-1117-JCC, 2023 WL 130485, at *3 (W.D. Wash. Jan. 9, 2023) (“[C]ourts dismissed state law claims where no named plaintiff has alleged injury, residence, or other pertinent connection (i.e., standing).”). Even in a class action, “standing is the threshold issue .... If the individual plaintiff lacks standing, the court need never reach the class action issue.” Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1022 (9th Cir. 2003).

At issue here is the “[f]irst and foremost” of standing's three requirements-“a harm suffered by ...