Teatotaller, LLC v. Facebook, Inc.

173 N.H. 442

242 A.3d 814

TEATOTALLER, LLC

v.FACEBOOK, INC.

No. 2019-0328

Supreme Court of New Hampshire.

Argued: March 10, 2020

Opinion Issued: July 24, 2020

Emmett Soldati, non-lawyer representative appearing by approval of the Supreme Court under Rule 33(2), on the brief and orally, for the plaintiff.

Paul Frank + Collins P.C., of Burlington, Vermont (Stephen J. Soule on the brief); Keker, Van Nest & Peters, LLP, of San Francisco, California (Matan Shacham and Victor Chiu on the brief); and Primmer, Piper, Eggleston & Cramer, PC, of Manchester (Doreen F. Connor orally), for the defendant.

HANTZ MARCONI, J.

The plaintiff, Teatotaller, LLC (Teatotaller), appeals an order of the Circuit Court (Gardner, J.) dismissing its small claim complaint against the defendant, Facebook, Inc. (Facebook). We reverse and remand.

The relevant facts follow. Teatotaller alleged that in June 2018, Facebook "deleted [Teatotaller's] Instagram ... account without notice."¹ Teatotaller further alleged that Facebook "sent two contradicting statements as to the reason for deletion and provided no appeal or contact to get more information." Teatotaller also alleged that Facebook "had a duty of care to protect [Teatotaller] from an algorithmic deletion as it hampers [Teatotaller's] business" and that Teatotaller has "continue[d] to lose business and customers due to [Facebook's] negligence." In addition to seeking $9,999 in damages, Teatotaller sought restoration of its Instagram account.²

Facebook moved to dismiss Teatotaller's complaint on several grounds. Pertinent to the instant appeal, Facebook argued that Teatotaller's claims are "barred under Section 230(c)(1) of the Communications Decency Act ..., which immunizes [it] from claims that seek to hold it liable for deciding whether to publish, withdraw, postpone or alter content." (Quotation omitted.) See 47 U.S.C. § 230(c)(1) (2012). In addition, Facebook asserted that Teatotaller's complaint failed to establish that the trial court had personal jurisdiction over Facebook.

Teatotaller objected to the motion, urging the trial court not to accept Facebook's defense under section 230(c)(1) of the federal Communications Decency Act (CDA) at this stage of the proceedings, and asserting that the court had personal jurisdiction over Facebook pursuant to Instagram's "Terms of Use" appended to Teatotaller's objection. In a subsequent pleading, Teatotaller asserted that its "claim against Facebook ... stems from [its] failure to act in accordance with [the Terms of Use] in the treatment of [Teatotaller's] account and intellectual property owned." Facebook countered that "the contract [Teatotaller] now claims it agreed to with Facebook explicitly provides that [Teatotaller] will not seek to hold Facebook ... liable in any way for [the] deletion" of Teatotaller's Instagram account.

Following a hearing, the trial court granted Facebook's motion, determining that the Terms of Use gave the court personal jurisdiction over Facebook, but also precluded Teatotaller's claims. Specifically, the court determined that, "given the language in the [Terms of Use]," Teatotaller "cannot state a claim or demonstrate any breach of contract that gives rise to a cause of action." In response to Teatotaller's subsequent motion to reconsider, the trial court stated that Facebook is entitled to immunity under the CDA for "the acts that are alleged by [Teatotaller]." This appeal followed.

On appeal, Teatotaller essentially argues that the trial court erred by: (1) ruling that Teatotaller failed to state a cause of action for breach of contract;³ and (2) determining that its claim is barred by the CDA. We address each argument in turn.

In reviewing a trial court's decision to grant a motion to dismiss, we examine whether the allegations in the plaintiff's pleadings are reasonably susceptible of a construction that would permit recovery. Pro Done, Inc. v. Basham, 172 N.H. 138, 141, 210 A.3d 192 (2019). We assume the facts alleged in the plaintiff's pleadings to be true and construe all reasonable inferences in the light most favorable to the plaintiff. See id. However, we do not assume the truth of statements in the plaintiff's pleadings that are merely conclusions of law. Sanguedolce v. Wolfe, 164 N.H. 644, 645, 62 A.3d 810 (2013). We then engage in a threshold inquiry that tests the facts in the complaint against the applicable law, and if the allegations constitute a basis for legal relief, we must hold that it was improper to grant the motion to dismiss. Id.

We apply the above-stated standard of review liberally in the instant case because it involves a small claim proceeding. RSA chapter 503 establishes a "simple, speedy, and informal procedure" for the determination of small claims. RSA 503:2 (2010); see Thomas v. Crete, 141 N.H. 708, 709, 692 A.2d 503 (1997). In such proceedings, formal discovery is not allowed unless specifically ordered at the pretrial hearing, Dist. Div. R. 4.5, and the rules of evidence do not apply. RSA 503:7 (2010). The pleading requirements in small claim actions are minimal. Dist. Div. R. 4.1. Substantively, a small claim complaint need only provide "a description setting forth with specificity the reason(s) the plaintiff believes that the defendant owes money to the plaintiff" and "[t]he amount that the plaintiff claims that the defendant owes." Id. Thus, in a small claim proceeding, in ruling on a motion to dismiss, a trial court may consider factual allegations made by the plaintiff in a motion or objection, in addition to those in the small claim complaint. See Dist. Div. R. 1.8(B) ("The Court will not hear any motion grounded upon facts, unless the moving party indicates in writing an understanding that making a false statement in the pleading may subject that party to criminal penalties, or the facts are apparent from the record or from the papers on file in the case, or are agreed to and stated in writing signed by the parties or their attorneys; and the same rule will be applied as to all facts relied on in opposing any motion.")

"Under New Hampshire law, a breach of contract occurs when there is a failure without legal excuse to perform any promise which forms the whole or part of a contract." Basham, 172 N.H. at 142, 210 A.3d 192 (quotation and brackets omitted). Construing Teatotaller's complaint and objection liberally, and assuming all of the facts alleged by Teatotaller to be true, we conclude that Teatotaller has sufficiently alleged a claim for breach of contract for the purposes of its small claim action.

Teatotaller alleged that it entered into the Terms of Use with Facebook regarding Teatotaller's use of Instagram in exchange for fees. Teatotaller further alleged that Facebook deleted Teatotaller's Instagram account in violation of the Terms of Use, causing Teatotaller to "lose business and customers," for which Teatotaller requested "damages and the restoration of [its] account." Assuming the facts alleged by Teatotaller to be true, we hold that these allegations suffice in the context of a small claim action to state a cause of action for breach of contract. See id.

In reaching a contrary conclusion, the trial court relied upon the following provision in the Terms of Use:

You agree that we won't be responsible ... for any lost profits, revenues, information, or data, or consequential, special, indirect, exemplary, punitive, or incidental damages arising out of or related to [the Terms of Use], even if we know they are possible. This includes when we delete your content, information, or account.

The trial court ruled that this provision precluded Teatotaller's breach of contract action. In so ruling, the trial court erred.

We review a trial court's interpretation of a contract de novo. Id. When interpreting a written agreement, we give the language used by the parties to the agreement its reasonable meaning, considering the circumstances and the context in which the agreement was negotiated, and reading the document as a whole. Id. We give an agreement the meaning intended by the parties when they wrote it. Id. Absent ambiguity, we determine the parties’ intent from the plain meaning of the language used in the contract. Id.

The very next sentence of the provision upon which the trial court relied provides: "Our aggregate liability arising out of or relating to these Terms will not exceed the greater of $100 or the amount you have paid us in the past twelve months." Reading the provision as a whole, we conclude that it does not preclude Teatotaller's action. Rather, the last sentence of the provision constitutes an agreement by the parties that Facebook's "aggregate liability arising out of or relating to" the terms of the agreement would "not exceed the greater of $100 or the amount [Teatotaller has] paid [Facebook] in the past twelve months." Because the parties have not yet litigated the issue, we express no opinion as to whether this provision is enforceable.

We next consider whether Facebook is entitled to immunity under the CDA for Teatotaller's breach of contract claim. Generally speaking, immunity under the CDA is considered to be an affirmative defense. See Klayman v. Zuckerberg, 753 F.3d 1354, 1357 (D.C. Cir. 2014). As such, it may support a motion to dismiss only if the CDA's "barrier to suit is evident from the face of the ... complaint." Force v. Facebook, Inc., 934 F.3d 53, 63 n.15 (2d Cir. 2019) (quotation omitted), cert. denied, ––– U.S. ––––, 140 S.Ct. 2761, 206 L.Ed.2d 936 (2020) ; see Marshall's Locksmith Service Inc. v. Google, LLC, 925 F.3d 1263 (D.C. Cir. 2019) (affirming dismissal of claims at pleading stage based on CDA immunity); see also National Ass'n of the Deaf v. Harvard University, 377 F. Supp. 3d 49, 68 (D. Mass. 2019) (observing that "[a] plaintiff is not required to anticipate and plead around affirmative defenses raised by a defendant" (quotation and brackets omitted)). Here, because we conclude that the CDA's barrier to Teatotaller's...