Stark v. Patreon, Inc.

656 F.Supp.3d 1018

Brayden STARK, et al., Plaintiffs, v. PATREON, INC., Defendant.

Case No. 22-cv-03131-JCS

United States District Court, N.D. California

Signed February 17, 2023

Adam E. Polk, Kimberly Macey, Trevor Taige Tan, Simon Seiver Grille, Girard Sharp LLP, San Francisco, CA, for Plaintiffs.

Nathan Loy Walker, Gilbert Gordon Walton, William Fred Norton, Jr., Bree Hann, The Norton Law Firm PC, Oakland, CA, for Defendant.

ORDER REGARDING MOTION TO DISMISS FIRST AMENDED COMPLAINT

Re: Dkt. No. 48

JOSEPH C. SPERO, Chief Magistrate Judge

I. INTRODUCTION

Plaintiffs Brayden Stark and Judd Oostyen¹ bring this putative class action against Defendant Patreon, Inc. asserting claims under the federal Video Privacy Protection Act ("VPPA") and California law based on Patreon's alleged sharing of user data with Facebook. Patreon moves to dismiss Plaintiffs' first amended complaint on the grounds that the VPPA facially violates the First Amendment and that Plaintiffs have not met the heightened pleading standard applicable to their state law claims sounding in fraud. The United States intervened to defendant the constitutionality of the VPPA, and the Court held a hearing on February 10, 2023. For the reasons discussed below, Patreon's motion to dismiss the VPPA claim is DENIED without prejudice to addressing the constitutionality of that statute on a factual record. Patreon's motion is GRANTED as to Plaintiffs' claims sounding in fraud, which are DISMISSED with leave to amend.²

II. BACKGROUND

A. Allegations of the First Amended Complaint

Because the allegations of a complaint are generally taken as true in resolving a motion to dismiss under Rule 12(b)(6), this section summarizes Plaintiffs' allegations as if true. Nothing in this order should be construed as resolving any issue of fact that might be disputed.

Patreon allows its users or members to "access a variety of content on Patreon's website, including music, podcasts, and video content posted by content creators." 1st Am. Compl. ("FAC," dkt. 41) ¶ 43. Plaintiffs assert that Patreon is therefore a "video tape service provider" as that term is defined in the VPPA "because it engaged in the business of delivering audiovisual materials that are similar to prerecorded video cassette tapes and those sales affect interstate or foreign commerce." Id. ¶ 85.

Plaintiffs are current users of both Patreon and Facebook, the ubiquitous social network. Id. ¶¶ 19, 24. They pay Patreon subscription fees of around $15 and $5 respectively per month and regularly watch prerecorded video content on Patreon's website. Id. ¶¶ 21, 22, 26, 27. Their Facebook profiles include their "name[s] and other personal details," and they have used the same devices and browsers to access Patreon that they use to access Facebook, while logged into Facebook. Id. ¶¶ 23, 28.

When users view video content on Patreon's website, Patreon transmits the title of the video they are viewing, as well as the user's Facebook ID ("FID") to Meta, the company that owns Facebook, using a tracking tool created by Meta called the "Pixel." Id. ¶¶ 3-5, 47. An FID can be used "to quickly and easily locate, access, and view the user's corresponding Facebook profile," "which typically shows the Facebook user's name, gender, place of residence, career, educational history, a multitude of photos, and the content of the user's posts," among other information. Id. ¶¶ 4-5, 48 49. The Pixel "is a snippet of programming code that, once installed on a webpage, sends information to Meta," thus "allow[ing] website owners to track visitor actions on their websites for the purposes of sending the corresponding information to Meta" so that the website owners can better target their products and advertising towards users and Meta can compile more comprehensive profiles of its users. Id. ¶¶ 51-61.

Plaintiffs assert that they did not know of or authorize Patreon sharing their video usage information with Meta, id. ¶ 63, and that the "Terms of Use, . . . Privacy Policy, Data Practices, and . . . Cookie Policy" included on Patreon's website do not inform users "of Patreon's use of the Meta Pixel or its practice of sharing Users' personal information and video content choices with Meta in a way that allows Meta to identify their specific video-watching preferences," id. ¶ 64. In any event, Patreon never obtained a standalone agreement from users to share that information as required by the VPPA. Id. ¶ 65.

Plaintiffs contend that Patreon profited from this conduct and that Plaintiffs and other putative class members suffered harm in that Patreon shared data that users expected would be kept private, users lost the potential to obtain any value for that data themselves, and users paid greater subscription fees to Patreon than they would have if they had known how Patreon was sharing their data. Id. ¶¶ 66-72.

Plaintiffs assert the following claims: (1) violation of the VPPA, id. ¶¶ 83-93; (2) violation of the "unlawful," "unfair," and "fraudulent" prongs of California's Unfair Competition Law (the "UCL"), id. ¶¶ 94-109; (3) violation of California's Consumers Legal Remedies Act (the "CLRA"), id. ¶¶ 110-19; and (4) unjust enrichment, id. ¶¶ 120-25.

The Court previously granted a motion to dismiss some of Plaintiffs' claims for failure to allege that the videos at issue were prerecorded, a defect that Plaintiffs have remedied in their amended complaint. See generally Order Re Mot. to Dismiss ("1st MTD Order," dkt. 40).³ That previous order declined to reach Patreon's constitutional challenge to the VPPA. Id. at 14.

B. Request for Judicial Notice

In conjunction with its previous motion to dismiss, Patreon requested that the Court take judicial notice of the various versions of its terms of use, privacy policy, and cookie policy that were in effect during the period at issue, arguing that Plaintiffs' complaint incorporated those documents by reference. See generally Request for Judicial Notice ("RJN," dkt. 23).⁴ The terms of use describe Patreon's business as connecting individual "creators" with fans, who pay membership fees to the creators for access to content and merchandise that the creators provide through Patreon's website, with Patreon taking a cut of those membership fees in return for providing its platform and payment processing. See, e.g., RJN Ex. 1 at 1, 3-6. The privacy policy states that users provide personal information including their names and email addresses, e.g., RJN Ex. 5 at 2, that Patreon automatically collects information as users navigate the site and through third-party analytics, including information about the pages users visit and how they interact with the website, id. at 5, and that Patreon shares user data with, among other recipients, its "service providers," including companies Patreon contracts with for "analysing [sic] data trends" and "increasing [Patreon's] brand awareness and user engagement with marketing initiatives," id. at 11. The privacy policy notes that the service providers with which Patreon shares data "are obligated by contract to safeguard any of your data they receive from [Patreon] to the same extent that Patreon protects it." Id. at 12.

The Court previously found those documents subject to judicial notice for the purpose of showing what Patreon disclosed to its users, but held that at the pleading stage, they could not be used to contradict Plaintiffs' allegations regarding how Patreon operates its business. 1st MTD Order at 8-9.

C. The Parties' Arguments

1. Patreon's Arguments

Patreon contends that the VPPA violates the First Amendment by imposing a content-based restriction on speech without sufficiently compelling reason. See Mot. (dkt. 48) at 4-5. It contends that a substantial number of the VPPA's potential applications are unconstitutional, rendering the statute subject to facial invalidation. Id. at 5-6. (Unlike Patreon's previous motion, the present motion does not include an as-applied challenge.) Patreon argues that the VPPA is content-based because it applies only to "speech that discloses a particular consumer's video-viewing history," and that its limitation to certain speakers—video service providers—also warrants heightened scrutiny. Id. at 7-8. Patreon contends that the VPPA is not entitled to reduced scrutiny as a regulation of "commercial speech" because the speech at issue does not propose a commercial transaction. Id. at 8-9. Even if the disclosure at issue in this case were deemed commercial, Patreon offers a number of examples of speech that could be regulated by the VPPA in less commercial contexts, and argues that the statute is unconstitutional based on its overbreadth. Id. at 10-12. Patreon also argues that the statute's prohibition of sharing information even with a consumer's consent (if not provided in the specific form required by the statute) and even if the information had separately been made public is impermissible, that it is not limited to information that is actually sensitive, and that its liquidated damages provision is unconstitutional with respect to truthful speech that causes no actual harm. Id. at 12-15.

According to Patreon, the VPPA is not narrowly tailored to serve any compelling interest, and it also arbitrarily excludes other speech that would presumably implicate the same interests it is intended to serve, like disclosure of consumer information by libraries or bookstores. Id. at 15-17. Patreon acknowledges "a substantial governmental interest in protecting consumer privacy," and concedes for the purpose of its present motion that this interest is "compelling," but argues that the VPPA nevertheless violates the First Amendment in that it is not sufficiently tailored to further that interest. Id. at 15.

Patreon also contends that Plaintiffs have not satisfied the heightened pleading standard for claims sounding in fraud with respect to their claims under the CLRA and the fraud prong of the UCL, because they do not allege that they actually reviewed...