United States District Court, D. Minnesota
June 4, 2015
Matthew Carlsen, individually and on behalf of other similarly situated, Plaintiff,
GameStop, Inc., a Minnesota corporation; and Sunrise Publications, Inc. d/b/a Game Informer, a Minnesota corporation, Defendants.
Alicia E. Hwang, Esq., Ari J. Scharg, Esq., Benjamin S. Thomassen, Esq., and Rafey S. Balabanian, Esq., Edelson PC; and Robert K. Shelquist, Esq., Lockridge Grindal Nauen PLLP, counsel for Plaintiffs.
Casie D. Collignon, Esq., Paul G. Karlsgodt, Esq., and Theodore J. Kobus, III, Esq., Baker & Hostetler LLP; Mathew M. Wrenshall, Esq., Reed Smith LLP; and Teresa J. Kimker, Esq., Nilan Johnson Lewis PA, counsel for Defendants.
MEMORANDUM OPINION AND ORDER
DONOVAN W. FRANK, District Judge.
This matter is before the Court on Defendants GameStop, Inc. ("GameStop") and Sunrise Publications, Inc. d/b/a Game Informer's ("Game Informer") (collectively, "Defendants") motion to dismiss. (Doc. No. 32.) For the reasons set forth below, the Court grants Defendants' motion.
Plaintiff Matthew Carlsen ("Carlsen" or "Plaintiff"), individually and on behalf of others similarly situated (collectively, "Plaintiffs"), are users of print and online materials published by Game Informer ("Game Informer Magazine") and other content. (Doc. No. 31, Am. Compl. ¶¶ 1, 8, 23.) Game Informer Magazine offers news, reviews, and commentary about the video game industry. (Id. ¶ 1.) Registered subscribers can access digital versions of the Game Informer Magazine through the website www.gameinformer.com and they can also manage their subscriptions and access enhanced content and message boards. (Id. ¶¶ 1, 17.) A one-year subscription costs between $14.99 and $19.98. (Id. ¶¶ 15-16, 50.) Plaintiff paid for a one-year digital subscription to receive access to the Game Informer Magazine and other enhanced content; he paid $14.99 in January 2014. (Id. ¶¶ 2, 50.)
The Site provides video game related content for all visitors as well as enhanced content and message boards, among other items, for registered users (such enhanced content and message boards, among other items, are referred to as the "Service"). All visitors and registered users are referred to in this Policy as "Users." This Policy (i) covers Game Informer's treatment of personally identifiable information collected when you are on the Site and when you use the Service, and (ii) discloses Game Informer's information gathering and dissemination practices for the Site and Service.
I. Legal Standard - Rule 12(b)(1)
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) challenges the Court's subject matter jurisdiction. To survive a motion to dismiss for lack of subject matter jurisdiction, the party asserting jurisdiction has the burden of proving jurisdiction. VS Ltd. P'ship v. Dep't of Hous. & Urban Dev., 235 F.3d 1109, 1112 (8th Cir. 2000) (citation omitted). "Subject matter jurisdiction is a threshold requirement which must be assured in every federal case." Kronholm v. Fed. Deposit Ins. Corp., 915 F.2d 1171, 1174 (8th Cir. 1990).
A motion to dismiss for lack of subject matter jurisdiction may challenge a plaintiff's complaint either on its face or on factual truthfulness of its averments. Osborn v. United States, 918 F.2d 724, 729 n.6 (8th Cir. 1990) (citations omitted). When a defendant brings a facial challenge-a challenge that, even if truthful, the facts alleged in a claim are insufficient to establish jurisdiction-a court reviews the pleadings alone, and the non-moving party receives the same protections as it would defending against a motion brought pursuant to Rule 12(b)(6). Id. (citation omitted). In a factual challenge to jurisdiction, the court may consider matters outside the pleadings, and the non-moving party does not benefit from the safeguards of Rule 12(b)(6). Id. at 728-30 n.4 (citations omitted) (holding that on a Rule 12(b)(1) motion challenging subject-matter jurisdiction, the court "has authority to consider matters outside the pleadings").
II. Article III Standing
Defendants seek dismissal of Plaintiff's claims, pursuant to Rule 12(b)(1), on the grounds that Plaintiffs lack Article III standing for failure to allege an injury in fact.
To establish standing under Article III of the Constitution, a plaintiff must have a "justiciable case or controversy, " which requires: (1) injury in fact; (2) a causal connection between the injury and the conduct at issue; and (3) likelihood that the remedy the plaintiff seeks will redress the alleged injury. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83 (1998) (quotations and citation omitted); Iowa League of Cities v. E.P.A., 711 F.3d 844, 869 (8th Cir. 2013); see also Clapper v. Amnesty Int'l, USA, 133 S.Ct. 1138, 1147 (2013).
To establish an injury in fact, the plaintiff must allege "an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical.'" Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (quotations and citations omitted). The party invoking federal jurisdiction bears the burden of proof for each element of standing. Id. at 561. The burden corresponds with the degree of evidence required at the relevant stage of litigation. Id. "At the pleading stage... general factual allegations of injury... may suffice." Id.; Iowa League of Cities, 711 F.3d at 869.
Defendants argue that Plaintiff has failed to satisfy the first prong of the standing test-that there is an injury in fact. Defendants assert that Plaintiff has failed to allege any economic injury at all. Specifically, Defendants argue that: the disclosure of personal information alone does not constitute a cognizable injury; Plaintiff's subscription payment, as an "overpayment, " does not constitute injury; and there is no "impending" injury.
Plaintiff, however, contends that he has sufficiently alleged injury in the form of monetary damages based on a theory of "overpayment." Plaintiff further appears to assert that he has adequately alleged injury under a "would not have shopped" theory.
Courts have generally found "overpayment" theories insufficient to establish injury, even in situations involving highly sensitive PII. See, e.g., In re Target Corp. Customer Data Sec. Breach Litig., MDL No. 14-2522, 2014 WL 7192478, at *22 (D. Minn. Dec. 18, 2014) (holding that where the plaintiffs alleged that they were overcharged for the goods they purchased, which they alleged included a premium for adequate data security, "Plaintiffs' overcharge' theory ha[d] no merit, " and "the fact that all customers regardless of payment method pay the same price renders Plaintiffs' overcharge theory implausible"); see also, e.g., In re Barnes & Noble Pin Pad Litig., Civ. No. 12-8617, 2013 WL 4759588, at *5 (N.D. Ill. Sept. 3, 2013) (finding no merit to the plaintiffs' "overpayment" theory in which plaintiffs alleged that there was a diminished value to the products and services purchased at the retailer because the security measures were inadequate, "particularly as Plaintiffs have not pled that [the retailer] charged a higher price for goods whether a customer pays with credit, and therefore, that additional value is expected in the use of a credit card"). Further, as the court explained in In re Science Applications Int'l Corp. (SAIC) Backup Tape Data Theft Litig.:
To the extent that Plaintiffs claim that some indeterminate part of their premiums went toward paying for security measures, such a claim is too flimsy to support standing. They do not maintain, moreover, that the money they paid could have or would have bought a better policy with a more bullet-proof information-security regime. Put another way, Plaintiffs have not alleged facts that show that the market value of their insurance coverage (plus security services) was somehow less than what they paid. Nothing in the Complaint makes a plausible case that Plaintiffs were cheated out of their premiums. As a result, no injury lies.
45 F.Supp. 3d 14, 30 (D.D.C. 2014) (emphasis added).
Moreover, courts have held that to establish standing, a claim must include allegations relating to monetary losses or "any other injuries such as identity theft, identity fraud, medical fraud, or phishing." See, e.g., In re Horizon Healthcare Servs. Inc. Data Breach Litig., Civ. No. 13-7418, 2015 WL 1472483, at *4-5 (D.N.J. Mar. 31, 2015) (emphasis added) (citing Resnick v. Avmed, Inc., 693 F.3d 1317 (11th Cir. 2012)) (holding that the plaintiffs had failed to sufficiently allege an "economic injury" sufficient to establish standing because they did not allege any monetary loss or other injuries); cf., e.g., In re Target, 2014 WL 7192478, at *2 (finding injury adequately alleged for standing to the extent plaintiffs' allegations included injuries for "unlawful charges, restricted or blocked access to bank accounts, inability to pay other bills, and late payment charges or new card fees"). Likewise, to the extent plaintiffs allege future harm, that harm must be imminent and not speculative. See, e.g., In re Adobe Sys., Inc. Privacy Litig., Civ. No. 13-05226, 2014 WL 4379916, at *2, 8 (N.D. Cal. Sept. 4, 2014) (finding injury was sufficiently alleged where hackers deliberately accessed customer PII that included names, login IDs, passwords, credit and debit card numbers, expiration dates, and mailing and e-mail addresses because the risk that the "personal data will be misused by the hackers who breached Adobe's network is immediate and very real"); see also Doe 1 v. AOL, LLC, 719 F.Supp.2d 1102, 1113 (N.D. Cal. 2010) (finding injury where AOL disclosed "highly sensitive personal information... include[ing] members' names, addresses, telephone numbers, credit card numbers, social security numbers, financial account numbers, user names and passwords... [and] information regarding members' personal issues, including sexuality, mental illness, alcoholism, incest, rape, adultery and domestic violence").
Thus, even accepting as true all of Plaintiff's allegations and construing all reasonable inferences in Plaintiff's favor, Plaintiff has failed to adequately plead facts relating to overpayment for Game Informer products or services or for any other injury that could establish Article III standing.
B. "Would Not Have Shopped" and Reasonable Belief
Plaintiff also appears to allege injury-in-fact based on a "would not have shopped" theory, in which he asserts that he would not have purchased the Gamer Informer subscription if he had known his data would be shared. Plaintiff further appears to contend that this theory supports a claim for unjust enrichment. For unjust enrichment, a plaintiff must show that the defendant "knowingly received or obtained something of value for which the defendant in equity and good conscience' should pay." ServiceMaster of St. Cloud v. Sentry Ins., 544 N.W.2d 302, 306 (Minn. 1996).
Plaintiff points to the Target case, in which the plaintiffs argued that they "would not have shopped at Target had they known about the [credit card] breach." Target, 2014 WL 7192478, at *22-3. In Target, a court in this District held that:
Plaintiffs' "would not have shopped" theory... is plausible and supports their claim for unjust enrichment. If Plaintiffs can establish that they shopped at Target after Target knew or should have known of the breach, and that Plaintiffs would not have shopped at Target had they known about the breach, a reasonable jury could conclude that the money Plaintiffs spent at Target is money to which Target "in equity and good conscience" should not have received.
Id. Plaintiff further asserts that his belief that Defendant would protect his PII was reasonable and that the reasonableness of that belief supports his claims.
Plaintiff has also not alleged that he has stopped using the online portion of his Game Informer subscription or that he quit staying logged in to Facebook while browsing the Game Informer website after he allegedly found out about Defendants' alleged practices in his investigation of this lawsuit.
(Doc. No. 44 at 12-13.) Defendants therefore assert that Plaintiff cannot establish injury through his "would not have shopped" theory.
The Court agrees. The "would not have shopped" theory fails to establish injury for purposes of standing. Here, the Court concludes that this case is distinguishable from Target because Plaintiff suffered no actual damages and did receive the full value of his purchase, as explained above. Plaintiff has not adequately identified money which Game Informer "in equity and good conscience" should not have received. Target, 2014 WL 7192478, at *23. And, while not dispositive of this issue, as Defendants state, Plaintiff could have simply stopped being logged in to Facebook while using the Game Informer website, whereas plaintiffs in Target had no similar options within their control. Additionally, no purchase was necessary for a PII disclosure as alleged by Plaintiff. Without any change in disclosure of PII resulting from the purchase, Plaintiff's allegation that awareness of the disclosure would have been determinative in his purchase decision is speculative and cannot establish injury for purposes of standing. This case also differs from most data breach cases, where, due to the inherent risks to both consumer and retailer, an expectation for protection of certain PII such as credit card information is reasonable. See generally Target, 2014 WL 7192478; see also generally AOL, 719 F.Supp.2d 1102. In contrast, Plaintiff's complaint alleges his Facebook ID and Game Informer browsing information was disclosed by Defendants. Plaintiff does not plausibly allege the reasonableness of a consumer's belief that the PII at issue would not be disclosed if they were on Facebook while using Game Informer or that the PII is not normally disclosed on other sites using a Facebook SDK. Because Plaintiff does not allege disclosure of this type of PII is not standard practice for sites using a Facebook SDK, the complaint does not allege the reasonableness of any expectation that this type of PII would not be disclosed with a Game Informer subscription that could support injury.
Therefore, Plaintiff does not adequately claim an unjust enrichment injury under a "would not have shopped" theory or injury based upon reasonable expectations of privacy in this case. Accordingly, Plaintiff fails to allege Article III injury on these grounds as well.
Plaintiff has failed to allege an injury in fact and as a result has not established standing under Article III of the Constitution. Plaintiff's complaint is therefore dismissed pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction. Further, on the record before Court, the Court concludes that leave to amend would be futile in this case, and, as a result, the Court dismisses the claims with prejudice.
Based on the foregoing, and all the files, records, and proceedings herein, IT IS HEREBY ORDERED that:
1. Defendant's Motion to Dismiss the First Amended Complaint (Doc. No. ) is GRANTED.
2. The claims in this matter are DISMISSED WITH PREJUDICE.
LET JUDGMENT BE ENTERED ACCORDINGLY.