1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 ASIF KUMANDAN, et al., Case No. 19-cv-04286-BLF
8 Plaintiffs, ORDER GRANTING MOTION TO 9 v. DISMISS COUNTS 8 AND 9 OF THE FOURTH AMENDED 10 GOOGLE LLC, et al., CONSOLIDATED CLASS ACTION COMPLAINT 11 Defendants. [Re: ECF No. 144] 12
13 Before the Court is Defendants Alphabet Inc. and Google LLC’s (“Google”) Motion to 14 Dismiss Counts 8 and 9 of Plaintiffs’ Fourth Amended Consolidated Class Action Complaint. 15 Claim 8 is for violation of California’s Consumer Legal Remedies Act (“CLRA”) and Claim 9 is 16 for common law fraud brought by Plaintiffs Edward Brekhus (“Brekhus”) and Jon Hernandez 17 (“Hernandez”) based on Google’s alleged reconfiguring of Google Assistant-enabled devices in 18 2020 to activate based on certain “alarm events” like the sound of breaking glass or a smoke alarm. 19 Brekhus and Hernandez allege that this reconfiguration was contrary to Google’s representations 20 that these devices only activated in response to voice commands or other forms of user control. 21 Google moves to dismiss Brekhus and Hernandez’s CLRA and common law fraud claims, arguing 22 that Plaintiffs’ allegations fail to meet the Rule 9(b) standard for pleading fraud claims “with 23 particularity,” including because Google’s reconfiguration of Google Home devices was due to a 24 software bug, and Google rolled back the feature shortly after its introduction. Plaintiffs argue that 25 they have alleged sufficient facts to support the CLRA and common law fraud claims. 26 Based on the below reasoning, the Court GRANTS Google’s Motion to Dismiss WITHOUT 27 LEAVE TO AMEND. I. BACKGROUND 1 The seven Named Plaintiffs are residents of New York and California who allege they owned 2 Google Assistant-enabled devices during the Class Period. See Fourth Amended Complaint 3 (“4AC”), ECF No. 141 ¶¶ 18–75. Brekhus and Hernandez are residents of California. See id. ¶¶ 45, 4 61. Defendants are Delaware companies with their principal place of business in California, who 5 manufacture and sell hardware and software products. See id. ¶¶ 4, 76–77. 6 Plaintiffs’ claims pertain to Google’s alleged privacy violations related to its hardware 7 devices capable of running the Google Assistant software (“Google Assistant-enabled devices” or 8 “GAEDs”), including the Google Home devices owned by Brekhus and Hernandez. Google 9 Assistant allows users to activate and interact with these devices using voice commands or other 10 forms of manual activation, like pressing a button. See id. ¶ 4. To use a GAED, a user must sign up 11 for a Google Account and agree to Google’s Terms of Service and Privacy Policy. Id. Plaintiffs 12 allege that based on Google’s public representations, Terms of Service, and Plaintiffs’ reasonable 13 expectation of privacy, GAEDs were only able to record, transmit, and process sound after being 14 activated based on voice commands or manual activation. However, Plaintiffs allege that in fact, 15 GAEDs could activate in other circumstances, including to collect data to improve the speech 16 recognition abilities of GAEDs and based on “alarm events” like the sound of breaking glass or a 17 smoke alarm. See, e.g., id. ¶¶ 7, 9, 117. Plaintiffs allege that GAEDs improperly transmit sound 18 files recorded without users’ consent, including to unauthorized third-party contractors. See, e.g., 19 id. ¶¶ 8, 101. 20 At issue in the Motion are Brekhus and Hernandez’s claims based on Google’s alleged 21 misrepresentations regarding its devices’ ability to activate in response to “alarm events” based on 22 (1) violation of the CLRA (claim 8) and (2) common law fraud, deceit, and/or misrepresentation 23 (claim 9). Id. ¶¶ 271–295. 24 Plaintiffs allege that Hernandez acquired a Google Home Mini device—a type of GAED— 25 in December 2018, and Brekhus acquired one in October 2019. See id. ¶¶ 46, 62. Before acquiring 26 the devices, Plaintiffs allege that Brekhus and Hernandez saw representations that the devices were 27 to be activated by saying the phrase, “Ok Google” or “Hey Google.” See id. ¶¶ 49, 63. Plaintiffs 1 further allege that Brekhus and Hernandez reasonably relied on these representations in acquiring 2 the devices. See id. ¶¶ 50, 55, 59–60, 65–66, 74–75. Brekhus points to representations on the 3 Google Home Mini webpage regarding the function of a Google Home device, including “Control 4 your smart home products using your voice,” “Get real-time answers to questions with Google,” 5 and “Simply say ‘OK Google.’” See id. ¶ 47. Hernandez alleges that he had seen representations 6 on Google’s website that GAEDs would not transmit recordings to Google without the activation 7 phrase or manual activation. See id. ¶ 63. The Fourth Amended Complaint also identifies the 8 following representations made by Google that GAEDs were voice activated: 9 • On a Frequently Asked Questions page of its website regarding its Privacy Policy, Google 10 answered the question, “Is Google Home recording all of my conversations?” with the 11 following: 12 “No. Google Home listens in short (a few seconds) snippets for the 13 hotword. Those snippets are deleted if the hotword is not detected, and none of that information leaves your device until the hotword is 14 heard. When Google Home detects that you’ve said “Ok Google” or “Hey Google,” or that you’ve physically long pressed the top of your 15 Google Home device, the LEDs on top of the device light up to tell you that recording is happening, Google Home records what you say, 16 and sends that recording (including the few-second hotword recording) to Google in order to fulfill your request. You can delete 17 these recordings through My Activity anytime.” 18 Id. ¶ 90. 19 • Google’s polices state that GAED audio recordings will not be shared with third parties 20 without explicit consent. See id. ¶ 91. 21 • Google included the following statement on its website on the privacy page for GAEDs: 22 The Google Assistant is designed to wait in standby mode until it is 23 activated, like when you say “Hey Google.” The Assistant starts in standby mode, waiting to be activated. In standby mode, it processes 24 short snippets of audio (a few seconds) to detect an activation (such as “Ok Google”). If no activation is detected, then those audio 25 snippets won’t be sent or saved to Google. When an activation is detected, the Assistant comes out of standby mode to fulfill your 26 request.
27 Id. ¶ 92. 1 • Google published videos regarding GAEDs, including one titled “Privacy On Google 2 Assistant” that featured voiceover stating the following: 3 The Google Assistant is built to keep your information private, safe, 4 and secure. This is a speaker with a Google Assistant. It’s built to wait in standby mode until it is activated, like when you say “Hey Google.” 5 And when it’s in standby mode, Assistant won’t send what you were saying, to Google or anyone else. 6 Id. ¶ 93. The voiceover also states: “Occasionally, the assistant may activate when you 7 didn’t intend it to, because it incorrectly detected that you wanted its help. We have a 8 number of protections designed to prevent this from occurring.” Id. ¶ 97. 9 • The Google Home packaging states: “Just start with, ‘Ok Google.’” Id. ¶ 94. 10 • A support page on Google’s website states: “Google Nest and Google Home speakers or 11 displays make life easier by helping you do things like access media, manage your tasks, and 12 plan your day using only your voice.” Id. ¶ 95. 13 • A Google webpage states, “You can activate your assistant in many ways,” in response to 14 the Frequently Asked Question, “What are some types of activation methods?” Id. ¶ 96. 15 • The privacy page on Google’s website features the questions, “Can Google Assistant 16 unintentionally collect my voice data? What happens if it does and what are my choices?” 17 Google’s answer is the following: “Occasionally, the Assistant will activate when you didn’t 18 intend it to, because it incorrectly detected that you wanted its help (like by a noise that 19 sounds like ‘Hey Google). If that happens, just say ‘Hey Google, that wasn’t for you,’ and 20 the Assistant will delete the last thing it sent to Google.” Id. ¶ 98. Google states that this 21 happens “[o]n rare occasions.” Id. ¶ 98. 22 • Google’s online community forum states that Google Home can “accidentally activate when 23 it hears something similar to ‘Hey Google.’” Id. ¶ 99. The forum describes how users can 24 adjust the responsiveness of their devices. Id. 25 Plaintiffs allege that in 2020, Google automatically configured GAEDs to record and 26 transmit audio when the devices detected certain “alarm events” like the sound of a smoke alarm or 27 of breaking glass. See id. ¶¶ 9, 117–22, 124, 261, 277–78, 289. Plaintiffs allege that Google claimed 1 this was an accident based on a software update, and only GAEDs belonging to users of Google’s 2 security-related subscription service were supposed to activate in response to alarm events, so 3 Google rolled back the feature. See id. ¶ 118 (citing article at Bali Decl., ECF No. 144-1, Ex. A). 4 But Plaintiffs allege that Google’s reconfiguration of GAEDs was part of a deliberate effort to get 5 GAEDs into users’ homes with the promise of privacy before expanding into home security and 6 changing the function of the devices. See id. ¶¶ 278, 289. Plaintiffs allege that Google developed 7 its plan to engage in this deception of its users as early as 2016 or 2017, when it submitted various 8 patent filings pertaining to the configuration of GAEDs to detect alarm events like the sound of 9 shattered glass. See id. ¶¶ 108–12. Plaintiffs further point to Google’s partnership with the security 10 company ADT, which began as early as January 2018, which Google allegedly entered into in order 11 to compete with Amazon in the home security space. See id. ¶¶ 113–15. 12 As a result of Google’s reconfiguration of the GAED devices in 2020, Plaintiffs allege that 13 users unexpectedly received notifications regarding “alarm events” from their GAEDs. See id. ¶¶ 14 9, 116–17. Plaintiffs allege that Brekhus and Hernandez set up their GAEDs in their homes and 15 Google recorded their personal conversations without their consent. See id. ¶¶ 53–54, 67–68, 70. 16 However, Plaintiffs do not allege that Brekhus and Hernandez’s GAEDs made these recordings 17 based on alarm events. See id. In fact, at the January 6, 2022 hearing, Plaintiffs stated that neither 18 Brekhus nor Hernandez’s GAEDs activated based on an alarm event. 19 Plaintiffs allege that had Brekhus and Hernandez known their GAEDs could be reconfigured 20 to record, transmit, or process audio even when they were not activated by a voice command or via 21 manual activation, Brekhus and Hernandez would not have acquired, set up, or used the devices. 22 See id. ¶¶ 50, 55, 59–60, 65–66, 74–75. Further, Plaintiffs allege that Brekhus and Hernandez would 23 have paid less for the devices or taken measures to prevent the devices from hearing unwanted audio, 24 including by unplugging them. See id. ¶¶ 60, 75, 134, 291. 25 Brekhus and Hernandez assert claims against Google based on (1) its violation of the 26 California Consumer Legal Remedies Act (“CLRA”) and (2) for common law fraud, deceit, and/or 27 misrepresentation. See id. ¶¶ 271–95. In support of both claims, Plaintiffs allege that Google made 1 activation, which Plaintiffs allege Brekhus and Hernandez relied on. Id. Further, Plaintiffs allege 2 that Google made these misrepresentations knowing that its devices could be reconfigured to 3 activate in response to other sounds like alarm events. Id. Brekhus and Hernandez seek damages, 4 including the amount they paid to obtain the GAEDs, based on their common law fraud claim. See 5 id. ¶¶ 293–94. Further, under the CLRA, Brekhus and Hernandez seek an injunction preventing 6 Google from continuing to employ the alleged unlawful methods, acts, and practices in the future. 7 See id. ¶ 281. Brekhus and Hernandez further seek compensatory damages, punitive damages, and 8 restitution of Google’s ill-gotten gains under the CLRA based on Google’s failure to correct, repair, 9 replace, or otherwise rectify the alleged unlawful, unfair, false, and/or deceptive practices. See id. ¶ 10 282. 11 The Court previously dismissed Brekhus and Hernandez’s CLRA and common law fraud 12 claims because they failed to plead these claims “with particularity” under Rule 9(b).1 See Order 13 on Motion to Dismiss Third Amended Complaint (“3AC Order”), ECF No. 138 at 25–27. The Court 14 found Plaintiffs’ pleadings “exceedingly thin.” Id. at 25. In the Third Amended Complaint, 15 Plaintiffs based their fraud claim in part on Google’s representations about “adequate security 16 measures” that prevented GAED’s from misusing users’ personal information. 3AC, ECF No. 118 17 ¶ 272. The Court found these allegations “vague to the point of meaninglessness.” 3AC Order, 18 ECF No. 138 at 26. For Plaintiffs’ fraud theory based on Google reconfiguring GAEDs to activate 19 in response to alarm events, the Court found that Plaintiffs’ allegations “[fell] far short of Rule 9’s 20 requirements.” Id. at 26. The Court found that Plaintiffs (1) failed to plead a “unified theory of 21 fraud,” instead peppering their allegations throughout the Third Amended Complaint; (2) failed to 22 plead facts suggesting justifiable and detrimental reliance on Google’s alleged misrepresentations; 23 and (3) failed to plead that Google had the intent to mislead or omit material information about the 24 future circumstances under which the GAEDs would record audio at the time of the alleged 25 26 1 Rule 9(b) applies to Brekhus and Hernandez’s CLRA claim because it sounds in fraud. See Order 27 on Motion to Dismiss Third Amended Complaint, ECF No. 138 at 25 (citing Kearns v. Ford Motor 1 misrepresentations. Id. at 26–27. Accordingly, the Court dismissed Brekhus and Hernandez’s 2 CLRA and common law fraud claims as alleged in the Third Amended Complaint with leave to 3 amend. 4 Plaintiffs amended their allegations in the Fourth Amended Complaint. See 4AC, 5 ECF No. 141. First, at paragraph 107 of the Fourth Amended Complaint, Plaintiffs added that 6 Google reconfigured its GAEDs “in 2020.” See 4AC Redline, ECF No. 141-1 at 27. Second, 7 Plaintiffs added the allegations related to (1) Google’s patent activity between 2016 and 2018 related 8 to “alarm event” activation of GAEDs and (2) Google’s partnership with ADT starting in 2018. 9 See id. at 29–30. Third, Plaintiffs added paragraphs 275 through 279 and 285 through 289 to its 10 allegations in support of its CLRA and common law fraud claims, which allege facts related to 11 (1) Brekhus and Hernandez’s reliance on Google’s representations and (2) Google’s intent to get 12 GAEDs into user’s homes on promises about privacy before reconfiguring them to offer home 13 security functionality. See id. at 63–66. Fourth, Plaintiffs removed the allegations in support of 14 their common law fraud claim related to “adequate security measures.” See id. at 66. 15 The question before the Court is whether Plaintiffs’ amendments to their allegations in the 16 Fourth Amended Complaint are sufficient to change the Court’s prior conclusion that Plaintiffs have 17 not alleged enough facts to meet the Rule 9(b) standard for Brekhus and Hernandez’s CLRA and 18 common law fraud claims. Google argues that Plaintiffs have continued to fail to allege sufficient 19 facts including by failing to plead with particularity (1) a single misrepresentation or actionable 20 omission by Google; (2) Google’s knowledge that the alleged misrepresentations were false when 21 made prior to 2018 and 2019; (3) Google’s duty to disclose facts in support of Plaintiffs’ fraud by 22 omission theory; (4) Google’s intent to defraud Plaintiffs; (5) Brekhus and Hernandez’s justifiable 23 and detrimental reliance on the alleged misrepresentations; or (6) Brekhus and Hernandez’s injury 24 from the alleged fraud. See Motion, ECF No. 144 at 3–5. In response, Plaintiffs argue that they 25 have adequately alleged each of the elements required for their fraud claims. See Opposition, ECF 26 No. 145 at 2–5. 27 II. LEGAL STANDARD 1 claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’” Conservation Force 2 v. Salazar, 646 F.3d 1240, 1241–42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 729, 732 3 (9th Cir. 2001)). When determining whether a plaintiff has stated a claim, the Court accepts as true 4 all well-pled factual allegations and construes them in the light most favorable to the plaintiff. Reese 5 v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). However, the Court need not 6 “accept as true allegations that contradict matters properly subject to judicial notice” or “allegations 7 that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re 8 Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotation marks and citations 9 omitted). While a complaint need not contain detailed factual allegations, it “must contain sufficient 10 factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. 11 Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A 12 claim is facially plausible when it “allows the court to draw the reasonable inference that the 13 defendant is liable for the misconduct alleged.” Id. On a motion to dismiss, the Court’s review is 14 limited to the face of the complaint and matters judicially noticeable. MGIC Indem. Corp. v. 15 Weisman, 803 F.2d 500, 504 (9th Cir. 1986); N. Star Int’l v. Ariz. Corp. Comm’n, 720 F.2d 578, 581 16 (9th Cir. 1983). 17 In deciding whether to grant leave to amend, the Court must consider the factors set forth by 18 the Supreme Court in Foman v. Davis, 371 U.S. 178 (1962), and discussed at length by the Ninth 19 Circuit in Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048 (9th Cir. 2003). A district court 20 ordinarily must grant leave to amend unless one or more of the Foman factors is present: (1) undue 21 delay, (2) bad faith or dilatory motive, (3) repeated failure to cure deficiencies by amendment, (4) 22 undue prejudice to the opposing party, or (5) futility of amendment. Eminence Capital, 23 316 F.3d at 1052. “[I]t is the consideration of prejudice to the opposing party that carries the 24 greatest weight.” Id. However, a strong showing with respect to one of the other factors may 25 warrant denial of leave to amend. Id. 26 III. DISCUSSION 27 A. Request for Judicial Notice 1 at 1. Plaintiffs do not oppose Google’s request. See Opposition, ECF No. 145. 2 There are two doctrines that permit district courts to consider material outside the pleadings 3 without converting a motion to dismiss into a motion for summary judgment: judicial notice under 4 Federal Rule of Evidence 201 and incorporation by reference. See Khoja v. Orexigen Therapeutics, 5 Inc., 899 F.3d 988, 998 (9th Cir. 2018), cert. denied sub nom. Hagan v. Khoja, 139 S. Ct. 2615 6 (2019). The judicial notice doctrine permits a court to take judicial notice of matters that are “not 7 subject to reasonable dispute.” Fed. R. Evid. 201(b). A fact is “not subject to reasonable dispute” 8 if it is “generally known,” or “can be accurately and readily determined from sources whose 9 accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(1)–(2). However, “[j]ust because 10 the document itself is susceptible to judicial notice does not mean that every assertion of fact within 11 that document is judicially noticeable for its truth.” Khoja, 899 F.3d at 999. For instance, though 12 public records are generally subject to judicial notice, a court may not take judicial notice of disputed 13 facts within public records. See id. 14 “[I]ncorporation-by-reference is a judicially created doctrine that treats certain documents 15 as though they are part of the complaint itself.” Khoja, 899 F.3d at 1002. This doctrine permits a 16 court to consider a document “if the plaintiff refers extensively to the document or the document 17 forms the basis of the plaintiff’s claim.” United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). 18 A court generally “may assume an incorporated document’s contents are true for purposes of a 19 motion to dismiss under Rule 12(b)(6).” Khoja, 899 F.3d at 1003 (internal quotations omitted). 20 Because all inferences must still be drawn in the nonmoving party’s favor, however, “it is improper 21 to assume the truth of an incorporated document if such assumptions only serve to dispute facts 22 stated in a well-pleaded complaint.” Id. 23 First, Google requests that the Court take judicial notice of Exhibit A—an article regarding 24 the 2020 introduction and rollback of “alarm event” detection capabilities in GAEDs that Plaintiffs 25 cite in the Fourth Amended Complaint. See Bali Decl., ECF No. 144-1, Ex. A; Motion, 26 ECF No. 144 at 1; 4AC, ECF No. 141 ¶¶ 118–20, 281. Since Plaintiffs repeatedly cite to the article 27 and Plaintiffs rely on it for a significant part of their alleged facts in support of the theory based on 1 notice of Exhibit A. See Bali Decl., ECF No. 144-1, Ex. A. 2 Second, Google requests that the Court take judicial notice of Exhibit B—a publicly 3 available blogpost on Google’s website published on October 15, 2019 regarding Google’s Nest 4 Aware subscription service, including details about the ability of Google Home devices to listen for 5 “critical sounds, like smoke or carbon monoxide alarms” through the service. See Bali Decl., 6 ECF No. 144-1, Ex. B; Motion, ECF No. 144 at 1. While this document is not incorporated by 7 reference in the complaint, its existence is a judicially noticeable fact and Plaintiffs do not dispute 8 its contents, so the Court GRANTS Google’s request for judicial notice of Exhibit B. See Bali Decl., 9 ECF No. 144-1, Ex. B; Perkins v. LinkedIn Corp., No. 13–CV–04303–LHK, 53 F.Supp.3d 1190, 10 1204 (N.D. Cal. June 12, 2014). 11 B. Claims 8 and 9 12 Google moves to dismiss Brekhus and Hernandez’s CLRA and common law fraud claims. 13 Fraud allegations must be pled “with particularity.” Fed. R. Civ. P. 9(b). To satisfy Rule 9(b), “a 14 pleading must identify the who, what, when, where, and how of the misconduct charged, as well as 15 what is false or misleading about the purportedly fraudulent statement, and why it is false.” Cafasso, 16 U.S. ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (quotation marks 17 and citations omitted). Rule 9(b)’s heightened pleading standard extends to Brekhus and 18 Hernandez’s CLRA claim as it sounds in fraud. See Kearns v. Ford Motor Co., 567 F.3d 1120, 19 1125 (9th Cir. 2009). “[I]ndispensable elements of a fraud claim include a false representation, 20 knowledge of its falsity, intent to defraud, justifiable reliance, and damages.” Vess v. Ciba-Geigy 21 Corp. USA, 317 F.3d 1097, 1105 (9th Cir. 2003). 22 1. Actionable Omission 23 Plaintiffs allege that Google misrepresented GAEDs by repeatedly publicly disclosing that 24 GAEDs are activated by a user’s voice or manual inputs like button presses, when in fact the GAEDs 25 could be reconfigured to be activated based on other types of sound inputs, like “alarm events.” See 26 4AC, ECF No. 141 ¶¶ 275, 277, 288–89. Google argues that Plaintiffs have failed to allege a 27 misrepresentation or actionable omission. See Motion, ECF No. 144 at 3. Google argues that 1 events, but Google’s Terms of Service notified Plaintiffs that Google could automatically update 2 software. See id. Plaintiffs argue that their consent in the Terms of Service to automatic software 3 updates was limited by the bounds of the representations they relied on at the time of purchase. See 4 Opposition, ECF No. 145 at 3. 5 Plaintiffs’ Opposition makes clear that they are alleging omission claims under their CLRA 6 and common law fraud claims. Opposition, ECF No. 145 at 2 (“Plaintiffs have alleged they relied 7 on Defendants’ misrepresentations that were misleading by omission.”). An actionable fraudulent 8 omission is either an omission that is “[1] contrary to a representation actually made by the 9 defendant, or [2] an omission of a fact the defendant was obliged to disclose.” Daugherty v. Am. 10 Honda Motor Co., 144 Cal.App.4th 824, 835 (2006). 11 While it appears that Plaintiffs only allege omissions based on Google’s duty to disclose, to 12 the extent Plaintiffs are alleging any omissions “contrary to a representation actually made by the 13 defendant,” the Court first considers whether Plaintiffs have adequately alleged any such omissions. 14 Id.; see Opposition, ECF No. 145 at 2–3. 15 The Court finds that Plaintiffs have not adequately alleged Google’s ability to reconfigure 16 GAEDs to listen for sounds other than voice commands was contrary to any of Google’s alleged 17 misrepresentations. Most of the alleged misrepresentations Plaintiffs identify merely show that 18 Google disclosed that GAEDs could be activated by voice or a button press among other forms of 19 activation. See 4AC, ECF No. 141 ¶¶ 92 (“an activation (such as ‘Ok Google’)”); id. ¶ 93 (Google 20 Assistant is “built to wait in standby mode until it is activated, like when you say ‘Hey Google.’”); 21 id. ¶ 94 (packaging states “[j]ust start with, ‘Ok Google,’” but also indicates “more things you can 22 do with Google Home Mini” with link); see also id. ¶¶ 95–99. The Court does not find it plausible 23 that these representations, which explicitly identify examples of ways to activate GAEDs, were 24 contrary to the alleged fact that Google could reprogram GAEDs to detect events other than voice 25 commands or manual activation. 26 The closest Plaintiffs come to pleading a representation contrary to the alleged omitted facts 27 is Google’s disclosure cited in paragraph 90 of the Fourth Amended Complaint: “Google Home 1 is not detected, and none of that information leaves your device until the hotword is heard.” 4AC 2 ¶ 90. However, the Court finds that this allegation is still not sufficient to show that Google made 3 representations contrary to the alleged facts. At no point does this representation state that it 4 describes the only form of processing that GAEDs do of sound information. Rather, this excerpt 5 explicitly describes a GAED’s process for recognizing “a hotword,” and it appears in a Frequently 6 Asked Questions section in response to the query, “Is Google Home recording all of my 7 conversations?” Id. (emphasis added). Accordingly, it is not plausible that this is a representation 8 about the only activation events a GAED can respond to—it applies specifically to the activation 9 events a GAED can respond to in the context of human speech. Further, this excerpt makes no claim 10 about the capability of GAEDs—it does not state that GAEDs cannot be reconfigured to listen for 11 other kinds of activation events that are not specific hotwords. Accordingly, the Court finds that 12 this representation is not plausibly contrary to the alleged omitted facts, particularly in light of the 13 variety of other representations Plaintiffs allege that list voice activation and manual activation as 14 merely example events that could lead to GAED activation. See id. ¶¶ 92–99. 15 Accordingly, the Court finds that Plaintiffs failed to adequately allege omissions based on 16 the theory that Google omitted information about “alarm event” detection “contrary to a 17 representation actually made by” Google. To determine if Plaintiffs have adequately alleged that 18 Google engaged in omissions based on information it was “obliged to disclose,” the Court must 19 determine if Google had a duty to disclose any information related to the “alarm event” detection 20 feature. Daugherty, 144 Cal.App.4th at 835. The Court turns to that issue below. 21 2. Duty to Disclose 22 A plaintiff can also plead an actionable omission by alleging that a defendant had a duty to 23 disclose the information allegedly omitted from his or her representations. Daugherty, 144 24 Cal.App.4th at 835. Plaintiffs argue that Google had a duty to disclose the fact that “the software 25 in the Google Home devices was designed to allow the devices to be activated outside the user’s 26 control.” See Opposition, ECF No. 145 at 3. 27 “California courts have generally rejected a broad obligation to disclose[.]” Wilson v. 1 a duty to disclose may arise under California law: 2 (1) when the defendant is the plaintiff’s fiduciary; (2) when the 3 defendant has exclusive knowledge of material facts not known or reasonably accessible to the plaintiff; (3) when the defendant actively 4 conceals a material fact from the plaintiff; and (4) when the defendant makes partial representations that are misleading because some other 5 material fact has not been disclosed. 6 Rasmussen v. Apple Inc., 27 F.Supp.3d 1027, 1033 (N.D. Cal. 2014) (citing Collins v. eMachines, 7 Inc., 202 Cal.App.4th 249, 255 (2011) and LiMandri v. Judkins, 52 Cal.App.4th 326, 336 (1997)). 8 These are referred to as the LiMandri factors. See Beyer v. Symantec Corp., 333 F.Supp.3d 966, 9 979 (N.D. Cal. 2018). 10 Plaintiffs plead that Google is liable for failing to disclose that it had the capability to 11 reprogram Google Home devices to record based on alarm events rather than voice activation. See 12 4AC, ECF No. 141 ¶¶ 275–79, 285–89. Google argues that Plaintiffs have failed to show that 13 Google had a duty to disclose under any of the LiMandri factors. Motion, ECF No. 144 at 4. In 14 response, Plaintiffs argue that they have pled sufficient facts to show (1) exclusive knowledge, (2) 15 active concealment, and (3) partial misrepresentation. Opposition, ECF No. 145 at 3–4. On reply, 16 Google argues that Plaintiffs have not pled sufficient facts to show that any of these factors apply. 17 Reply, ECF No. 146 at 1–2. The Court considers each of the LiMandri factors in turn—excluding 18 the fiduciary duty factor, which Plaintiffs concede does not apply. See Opposition, ECF No. 145 19 at 3. 20 a. LiMandri Factor #2: Exclusive Knowledge of Material Facts not Known or Reasonably Accessible to Plaintiffs 21 Under the second LiMandri factor, the Court considers whether Google had exclusive 22 knowledge of material facts not known or reasonably accessible to Brekhus and Hernandez at the 23 time they obtained their Google Home devices. Rasmussen, 27 F.Supp.3d at 1033. 24 Plaintiffs argue that they have sufficiently pled that Google had exclusive knowledge giving 25 rise to a duty to disclose. Opposition, ECF No. 145 at 3. Plaintiffs point to their allegations 26 regarding patent applications and Google’s competition with Amazon in home security as support 27 of Google’s exclusive knowledge as early as 2016. Id. Plaintiffs also argue that they had no reason 1 to know of these facts. Id. In response, Google argues that Plaintiffs have not alleged sufficient 2 facts to show exclusive knowledge because (1) Google’s Terms of Service disclosed that it could 3 automatically update software and (2) it did not know in 2018 and 2019 that its 2020 software would 4 have a bug. Reply, ECF No. 146 at 1. 5 The Court agrees with Google. Google’s Terms of Service disclosed that it could 6 automatically update software. See Declaration of Sunita Bali, ECF No. 121, Ex. D at 3. Further, 7 many of the materials Plaintiffs point to regarding Google’s patent activity and entry into the home 8 security space were publicly available prior to Plaintiffs acquiring their Google Home devices. See 9 4AC, ECF No. 141 ¶¶ 46–48 (alleging that Plaintiff Brekhus acquired his Google Home device in 10 October 2019 or later); id. ¶ 62 (alleging that Plaintiff Hernandez acquired his Google Home device 11 “on or about December 11, 2018”); id. at 29 n.23 (citing U.S. Patent No. 9,672,427 (published June 12 6, 2017); U.S. Publication No. 2017/0328997 (published November 16, 2017); U.S. Publication No. 13 2018/0012460 (published January 11, 2018); U.S. Publication No. 2018/0012463 (same); U.S. 14 Publication No. 2018/0012462 (same)); id. ¶ 109 (citing U.S. Publication No. 2018/0330589 15 (published November 15, 2018); id. at 29 n.24 (citing Marcia Heroux Pounds, Your Home Will 16 Hear You, SOUTH FLORIDA SUN-SENTINEL, Jan. 13, 2018, at B7). The public availability of 17 this information undermines Plaintiffs’ arguments that (1) their allegations regarding Google’s 18 patent and home security activity are sufficient to support Google’s exclusive knowledge and 19 (2) Plaintiffs had no reason to know of these facts. See Opposition, ECF No. 145 at 3. 20 Accordingly, the Court finds that Plaintiffs have failed to plausibly plead that Google had 21 exclusive knowledge giving rise to a relevant duty to disclose. 22 b. LiMandri Factor #3: Active Concealment 23 Under the third LiMandri factor, the Court considers whether Google actively concealed a 24 material fact from Brekhus and Hernandez. Rasmussen, 27 F.Supp.3d at 1033. 25 Plaintiffs argue that they have pled sufficient facts to show that Google actively concealed 26 its intent to reprogram the Google Home devices for home security by repeatedly assuring 27 consumers that they control when the devices are activated. Opposition, ECF No. 145 at 4–5. In 1 fail to allege any affirmative acts of concealment, like affirmative denials. Reply, ECF No. 146 at 2. 2 The Court agrees with Google. Mere nondisclosure is not enough to show active 3 concealment. See Ahern v. Apple Inc., 411 F.Supp.3d 541, 576 n.5 (N.D. Cal. 2019) (citing Herron 4 v. Best Buy Co. Inc., 924 F.Supp.2d 1161, 1176 (E.D. Cal. 2013)). Plaintiffs have pointed to no 5 caselaw indicating that allegations regarding repeated instances of nondisclosure are sufficient. 6 Further, Plaintiffs’ allegations regarding public patent filings and other materials regarding Google’s 7 security-related technology further undermine that they have plausibly alleged active concealment. 8 See, e.g., 4AC, ECF No. 141 at 29 n.23 (citing, inter alia, U.S. Patent No. 9,672,427 (published 9 June 6, 2017); U.S. Publication No. 2017/0328997 (published November 16, 2017)). 10 Accordingly, the Court finds that Plaintiffs have inadequately pled that Google had a duty 11 to disclose based on active concealment. 12 c. LiMandri Factor #4: Partial Misrepresentation 13 Under the fourth LiMandri factor, the Court considers whether Google made partial 14 representations that are misleading because some other material fact had not been disclosed. See 15 Rasmussen, 27 F.Supp.3d at 1033. “A partial representation claim may arise when ‘the defendant 16 makes representations but does not disclose facts which materially qualify the facts disclosed, or 17 which render his disclosure likely to mislead.’” Herron, 924 F.Supp.2d at 1177 (E.D. Cal. 2013) 18 (quoting Warner Constr. Corp. v. City of Los Angeles, 2 Cal.3d 285, 294 (1970)). “Thus a defendant 19 may not ‘suppress or conceal any facts within his knowledge which materially qualify those stated.’” 20 Id. (citations omitted). 21 Plaintiffs argue that they have pled sufficient facts to show that Google made partial 22 misrepresentations. See Opposition, ECF No. 145 at 4. Plaintiffs argue they have alleged that 23 Google advertises that users are in control by voice command of the Google Home devices while 24 failing to provide a disclaimer that Google could change the device to be activated without voice 25 commands. See id. In response, Google argues that the existence of its sound sensing technology 26 does not materially qualify or make its marketing about voice activation misleading. See Reply, 27 ECF No. 146 at 1–2. 1 Plaintiffs point to that allegedly omit information about the “alarm event” detection feature contain 2 disclaimers that voice and manual activation are not the only types of inputs that can cause GAEDs 3 to activate. Google describes forms of activation inputs “such as ‘Ok Google[.]’” 4AC, 4 ECF No. 141 ¶¶ 92 (emphasis added). Google indicates that a GAED is “built to wait in standby 5 mode until it is activated, like when you say ‘Hey Google.’” Id. ¶ 93. Further, Google states that 6 “[y]ou can activate your assistant in many ways.” Id. ¶ 96 (emphasis added). Even closer calls like 7 Google’s representation that GAEDs can “help[] you do things like access media, manage your 8 tasks, and plan your day using only your voice” and its representation that no information about user 9 conversations “leaves your device until the hotword is heard” have qualifying language that 10 indicates that these representations pertain to GAED voice processing only—not every type of sound 11 processing that a GAED can do. Id. ¶¶ 90, 95. Plaintiffs have failed to allege sufficient facts to 12 support that Google’s alleged representations are “materially qualified” or rendered misleading 13 based on the existence of other, unlisted forms of GAED activation inputs. Rather, Google’s alleged 14 representations appear to be open-ended statements that already contain qualifiers indicating that 15 GAEDs can activate in response to an assortment of input types. 16 Further, based on Plaintiffs’ allegations and judicially noticed documents, the introduction 17 of the “alarm event” detection feature into non-subscriber GAEDs resulted from a bug in a software 18 update that Google rolled back shortly after its distribution. See 4AC, ECF No. 141 ¶¶ 9, 116–120; 19 Bali Decl., ECF No. 144-1, Exs. A–B. Accordingly, in asserting that it was a partial 20 misrepresentation for Google not to disclose that GAEDs could be reconfigured to record in 21 response to “alarm events,” Plaintiffs are effectively arguing that Google needed to include in its 22 representations about GAEDs that they are voice activated unless Google makes a mistake. The 23 Court does not consider this to be sufficient to render Google’s statements about GAEDs voice 24 activation capabilities partial misrepresentations. Finding any representation about a product 25 misleading if its manufacturer later makes a mistake that allegedly qualifies that representation 26 would be an absurd result. 27 Finally, to the extent that Plaintiffs are arguing that the mere existence of the “alarm event” 1 representations about GAEDs being voice activated, the Court does not agree. Software and 2 hardware companies develop new technologies all the time that may add features or change aspects 3 of their products. While there may be disclosure obligations that companies have when they 4 introduce those features into users’ devices through a software update, the Court is not convinced 5 that merely developing a technology that could someday lead to changes in a product renders 6 conflicting representations about that product misleading. Accordingly, the Court finds that 7 Plaintiffs have not alleged facts sufficient to support that Google’s development of its “alarm event” 8 detection technology—as evidenced through patent filings, for example—materially qualified or 9 rendered misleading its representations about GAEDs being voice activated. 10 * * * 11 Accordingly, the Court finds that Plaintiffs have failed to adequately allege that Google had 12 a duty to disclose under any of the LiMandri factors. 13 3. Knowledge of Falsity 14 Google argues that Plaintiffs do not adequately allege that Google knew the alleged 15 misrepresentations were false when made because it did not have knowledge in 2018 and 2019 that 16 a software bug would occur in 2020. See Motion, ECF No. 144 at 3. Plaintiffs argue that they allege 17 facts indicating that Google had knowledge as early as 2016 that its Google Home devices could be 18 reprogrammed so that they were not exclusively voice-activated, including facts related to Google’s 19 patent applications and its competition with Amazon in home security. See Opposition, ECF No. 20 145 at 3 (citing 4AC ¶¶ 108–14). 21 The Court agrees with Google. Since Plaintiffs have failed to adequately allege an actionable 22 omission stemming from Google’s representations about GAEDs being voice activated, the Court 23 finds that Plaintiffs have also failed to adequately plead that Google had knowledge of the falsity of 24 those representations. As outlined above, it is not plausible that Google could have anticipated a 25 software bug or future successful development of new software features at the time of the alleged 26 disclosures in 2018 and 2019. The same reasoning applies to knowledge of falsity—Google’s mere 27 knowledge of a possibility of mistakes or a developing technology did not constitute knowledge of 1 Accordingly, the Court finds that Plaintiffs have failed to adequately plead knowledge of 2 falsity. 3 4. Intent to Defraud 4 Google argues that Plaintiffs have failed to adequately allege intent to defraud at the time of 5 the alleged misrepresentations in 2018 and 2019. See Motion, ECF No. 144 at 4–5. Pleading 6 scienter, including intent to defraud, requires more than “conclusory . . . allegations” and “bare 7 assertions . . . amount[ing] to nothing more than a ‘formulaic recitation of the elements.’” Iqbal, 8 556 U.S. at 680–81 (quoting Twombly, 550 U.S. at 555); see also Nalbandyan v. Citibank, NA, 777 9 Fed.Appx. 189, 191 (9th Cir. 2019). 10 Google argues that Plaintiffs fail to plausibly plead that Google intended to activate the alarm 11 event feature on Brekhus and Hernandez’s devices, rather than on Nest Aware subscribers’ devices. 12 Id. at 4–5. In response, Plaintiffs argue that they adequately allege that Google “intended consumers 13 rely on the misrepresentation” to get their devices “in as many homes as possible before expanding 14 into home security and changing the function of the devices.” Opposition, ECF No. 145 at 5 (citing 15 In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 1547 (9th Cir. 1994) (“[P]laintiffs may aver scienter 16 . . . simply by saying that scienter existed.”)). Plaintiffs argue their allegations are further supported 17 by “circumstantial allegations” of Google’s relationship with ADT and its competition with 18 Amazon, which was active in the home security space. Id. (citing 4AC ¶¶ 113–16). On reply, 19 Google argues that Plaintiffs’ circumstantial evidence is insufficient to plausibly plead intent to 20 defraud, particularly (1) under the pleading standard after Ashcroft v. Iqbal and (2) in light of the 21 “obvious alternative explanation” of a software bug that Google has provided. See Reply, ECF No. 22 146 at 2–3 (citing Eclectic Props. E., LLC v. Marcus & Millichap Co., 751 F.3d 990, 996 (9th Cir. 23 2014)); Iqbal, 556 U.S. at 686-87. 24 The Court previously dismissed Brekhus and Hernandez’s CLRA and common law fraud 25 claims in part because they failed to adequately allege that “Google, at the time of the alleged 26 misrepresentations, had the intent to mislead or omit material information about the future 27 circumstances under which the GAEDs would record audio.” 3AC Order, ECF No. 138 at 27 1 allegations regarding Google’s patent filings between 2016 and 2018 and its partnership with ADT 2 starting in 2018 and (2) they added allegations that Google intended to “get their devices in as many 3 homes as possible before expanding into home security and changing the function of the devices.” 4 See 4AC Redline, ECF No. 141-1 at 28–30, 64–66. 5 The Court agrees with Google that Plaintiffs still fail to allege facts showing Google’s intent 6 to defraud at the time of the alleged misrepresentations. The main problem with Plaintiffs’ 7 allegations is the time gap between Brekhus and Hernandez obtaining their devices in alleged 8 reliance on Google’s representations and Google allegedly rolling out the “alarm event” detection 9 feature in GAEDs. Nearly a year passed between Brekhus obtaining his Google Home device in 10 October 2019 and Google rolling out the “alarm event” detection feature around July 2020—longer 11 for Hernandez, who acquired his device in 2018. See 4AC, ECF No. 141 ¶¶ 9, 46, 62, 116–120; see 12 also Bali Decl., Ex. A. For the Court to find that Plaintiffs have adequately alleged Google’s intent 13 to defraud, the Court must infer that Google had the intent to roll out the “alarm event” detection 14 feature in the way that it did—automatically reconfiguring non-subscribing users’ devices via a 15 software update without their knowledge or consent—nearly a year or more prior to when it 16 executed that alleged plan. The Court finds that this inference is a bridge too far, particularly given 17 that Plaintiffs can only support this inference with facts from 2016 through early 2018—years before 18 Google allegedly introduced the “alarm event” detection feature. See 4AC, ECF No. 141 ¶¶ 108–15; 19 Iqbal, 556 U.S. at 678. At the time Brekhus and Hernandez obtained their devices, Google’s alleged 20 plan to move into the security space may have been nothing more than an aspiration. Further, 21 Plaintiffs’ intent to defraud allegations are not aided by the fact that they are based on public patent 22 filings, and a Google-ADT partnership that is not alleged to have been secret at the time Plaintiffs 23 acquired their devices. See 4AC, ECF No. 141 ¶¶ 108–15. 24 Additionally, Plaintiffs’ allegations about Google’s rollback of the “alarm event” detection 25 feature further undermine the inference that Google had the intent to defraud at the time of the 26 alleged misrepresentations. Plaintiffs allege that Google claims the “alarm event” detection feature 27 being added to GAEDs was the result of an “accident that occurred through a software update,” 1 the alternative explanation that Google introduced the “alarm event” detection feature to non- 2 subscriber GAEDs as an accident, so it subsequently removed the feature. See In re Century 3 Aluminum Co. Sec. Litig., 729 F.3d 1104, 1108 (9th Cir. 2013) (“When faced with two possible 4 explanations, only one of which can be true and only one of which results in liability, plaintiffs 5 cannot offer allegations that are ‘merely consistent with’ their favored explanation but are also 6 consistent with the alternative explanation.”) (citations omitted); Eclectic Props., 751 F.3d at 996; 7 see also Harry v. KCG Americas LLC, No. 17–cv–02385–HSG, 2018 WL 4075885, at *7 (N.D. 8 Cal. Aug. 27, 2018) (finding contradictory allegations implausible “especially given the heightened 9 pleading requirement under Federal Rule of Civil Procedure 9(b).”). 10 Google’s alternative explanation has further support from the articles the Court judicially 11 notices. Exhibit A to the Bali Declaration further supports Google’s alternative explanation, 12 indicating that a spokesperson for Google stated by August 3, 2020, “A recent software update 13 enabled these alerts on some of our speakers that didn’t have a subscription, but we’ve since rolled 14 that back.” Bali Decl., ECF No. 144-1, Ex. A. Plaintiffs’ allegations support that the “alarm event” 15 detection feature was introduced to GAEDs around the end of July 2020, so the fact that this quote 16 about the rollback appears in an article on August 3, 2020 supports that the “alarm event” detection 17 feature was short-lived. See 4AC, ECF No. 141 ¶¶ 9, 116–120. Further, Exhibit B to the Bali 18 Declaration indicates that as of October 15, 2019, Google had introduced the “alarm event” 19 detection service as a feature of its paid Google Nest subscription service. Id., Ex. B. These 20 judicially noticed articles support the explanation that Google intended to introduce the “alarm 21 event” detection feature only to GAEDs belonging to subscribers to its Google Nest service. See 22 Bali Decl., ECF No. 144-1, Exs. A–B. Further, these articles support that Google introduced the 23 feature to other devices because of a software bug, and it rolled back the feature shortly after its 24 activation on non-subscriber GAEDs. Id. Accordingly, Plaintiffs’ allegations about the rollback 25 and the Court’s judicially noticed facts further undermine Plaintiffs’ already inadequately supported 26 inference that Google intended to defraud Brekhus and Hernandez in 2018 and 2019. 27 Plaintiffs argue that it is enough for them to have alleged that Google intended “to get [its] 1 function of the devices.” Opposition, ECF No. 145 at 5. But as Google points out, Plaintiffs appear 2 to base that contention on an outdated standard. See Reply, ECF No. 146 at 2. The Court agrees 3 with the courts in Google’s cited cases that after Ashcroft v. Iqbal, it is not enough to allege scienter 4 “simply by saying that it existed.” Eclectic Props. East LLC v. Marcus and Millichap Co., 5 No. C–09–00511 RMW, 2012 WL 713289, at *11 (citing In re GlenFed, Inc. Sec. Litig., 42 F.3d 6 1541, 1547 (9th Cir. 1994)). 7 Accordingly, the Court finds that Plaintiffs have failed to plead sufficient facts in support of 8 Google’s intent to defraud at the time of the alleged misrepresentations. 9 5. Justifiable Reliance 10 Google argues that Plaintiffs have failed to allege sufficient facts to show justifiable reliance. 11 Google argues that it is implausible that Plaintiffs would have changed their behavior if they had 12 known that Google (1) had the ability to perform software updates or (2) had the ability to enable 13 devices to detect alarm events and intended to offer that feature as part of a paid service. See Motion, 14 ECF No. 144 at 5. In response, Plaintiffs argue that they have alleged sufficient facts to support 15 justifiable reliance, including (1) privacy concerns inherent to bringing recording and transmitting 16 devices into one’s home and (2) allegations that they would not have purchased Google Home 17 devices had they known a software update “could render their privacy settings futile.” See 18 Opposition, ECF No. 145 at 2. Further, Plaintiffs argue that Google’s arguments go to the weight 19 of the evidence. Id. On reply, Google argues that (1) Plaintiffs’ allegations only support that they 20 relied on truthful representations that Google Home devices can (not can only) be activated by 21 hotwords and (2) it is implausible that Plaintiffs would not have purchased their devices had they 22 known a future software update might have the sound sensing bug. See Reply, ECF No. 146 at 3. 23 The Court previously dismissed Plaintiffs’ CLRA and common law fraud claims in part 24 because Plaintiffs failed to adequately allege that Brekhus and Hernandez justifiably relied on 25 Google’s alleged misrepresentations. The Court found that the Third Amended Complaint was 26 “void of facts that so much as suggest that . . . Brekhus and Hernandez justifiably and detrimentally 27 relied on Defendants’ alleged misrepresentations.” 3AC Order, ECF No. 138 at 26–27. In the 1 common law fraud claims stating that they relied on Google’s representations about GAEDs being 2 voice activated, which “did not inform consumers that the devices could activate without the use of 3 a hot word or manual activation.” See 4AC Redline, ECF No. 141-1 at 63–66. 4 Based on Plaintiffs’ additions between the Third and Fourth Amended Complaints, the Court 5 agrees with Plaintiffs. Plaintiffs have alleged reasonable reliance on Google’s alleged 6 misrepresentations in purchasing their GAEDs. See 4AC, ECF No. 141 ¶¶ 49–50, 63–66, 90–99, 7 286–87, 293. Google’s cited case—where the court found allegations of reliance conclusory given 8 that plaintiffs failed to allege that they made purchases based on the allegedly relied-on 9 representations—is distinguishable. See Ferrari v. Mercedes Benz USA, LLC, No. 10 17–CV–00018–YGR, 2019 WL 2103438, at *5 (N.D. Cal. May 14, 2019); Motion, ECF No. 144 at 11 5 (citing Ferrari, 2019 WL 2103438, at *4); Reply, ECF No. 146 at 3 (same). Plaintiffs have 12 adequately alleged Brekhus and Hernandez purchased Google Home devices in reliance on 13 Google’s alleged misrepresentations. See 4AC, ECF No. 141 ¶¶ 49–50, 63–66. 14 Accordingly, the Court finds that Plaintiffs have adequately alleged justifiable reliance. 15 6. Injury 16 Google argues that Plaintiffs have not alleged that Brekhus and Hernandez were injured by 17 the alleged fraud because they do not allege that their Google Home devices were activated by alarm 18 events. See Motion, ECF No. 144 at 5. In response, Plaintiffs argue that their allegations are 19 sufficient to support the inference that Brekhus and Hernandez’s devices received the software 20 update. See Opposition, ECF No. 145 at 4–5. Further, Plaintiffs argue that since the software that 21 runs on Brekhus and Hernandez’s devices is peculiarly within Defendants’ knowledge, it is 22 appropriate for Plaintiffs to have alleged this generally. See id. at 5. On Reply, Google argues that 23 (1) Plaintiffs’ allegations do not support the inference that Brekhus and Hernandez’s devices were 24 activated by alarm events and (2) since an alarm event causes a user-facing notification, whether 25 Brekhus and Hernandez received an alarm event is not peculiarly within Google’s knowledge. See 26 Reply, ECF No. 146 at 3. At the January 6, 2022 hearing, Plaintiffs argued that they had adequately 27 alleged injury to Brekhus and Hernandez because damage under a fraud claim is the economic injury 1 The Court agrees with Plaintiffs. Since Plaintiffs have alleged that Brekhus and Hernandez 2 would not have bought or would have paid less to obtain their Google Home devices if they had 3 known they could record or transmit without voice-based or manual activation, the Court finds that 4 Plaintiffs have adequately alleged economic injury on the part of Brekhus and Hernandez. See 4AC, 5 ECF No. 141 ¶¶ 49–50, 55, 59–60, 63–67, 74–75, 134. Further, the Court finds it to be a plausible 6 inference that Brekhus and Hernandez’s GAEDs received the software update with the “alarm 7 event” detection feature. The fact that Brekhus and Hernandez did not personally experience their 8 devices activating based on an “alarm event” does not change that Plaintiffs have plausibly alleged 9 economic injury. It is plausible that even if Brekhus and Hernandez had known there was only a 10 chance that the “alarm event” feature would cause their GAEDs to record their conversations before 11 Google rolled the feature back, Brekhus and Hernandez would have nonetheless chosen to pay less 12 or not to purchase the GAEDs so as to avoid the risk of a sensitive conversation getting recorded. 13 See, e.g., Koller v. Med Foods, Inc., No. 14–cv–02400–RS, 2015 WL 13653887, at **3–4 (N.D. 14 Cal. Jan. 6, 2015) (plaintiff was entitled to receive products that conformed to defendant’s 15 representations “by design, not by happenstance”). 16 Accordingly, the Court finds that Plaintiffs have adequately pled injury to Brekhus and 17 Hernandez based on Google’s alleged fraud. 18 * * * 19 Based on the above reasoning, the Court finds Plaintiffs have failed to adequately plead 20 fraud under Rule 9(b) due to their failure to allege sufficient facts in support of an actionable 21 omission, Google’s knowledge of falsity, or Google’s intent to defraud Brekhus and Hernandez. 22 Accordingly, the Court GRANTS Google’s motion to dismiss Brekhus and Hernandez CLRA and 23 common law fraud claims. 24 C. CLRA Claim 25 Google argues that Brekhus cannot bring a claim under the CLRA, because he does not meet 26 the statute’s definition of a “consumer.” See Motion, ECF No. 144 at 5 n.1. Under the CLRA, a 27 “consumer” is “an individual who seeks or acquires, by purchase or lease, any goods or services for 1 Plaintiffs allege that Brekhus obtained his Google Home Mini through a promotion by 2 Spotify whereby individuals with a paid Spotify subscription could obtain a free Google Home Mini. 3 See 4AC, ECF No. 141 ¶ 46. Plaintiffs allege that Brekhus bought a Spotify subscription, then 4 ordered his Google Home Mini from Google directly. See id. ¶ 47. Plaintiffs allege that in doing 5 so, Brekhus entered into a purchase transaction with Google directly. See id. ¶ 48. In a footnote, 6 Google argues that since Brekhus obtained his Google Home Mini for free through the Spotify 7 promotion, he is not a “consumer” within the meaning of the CLRA. See Motion, ECF No. 144 8 at 5 n.1. Based on Google’s cited case, Google’s argument appears to be in part that since Brekhus’s 9 transaction was with Spotify, rather than Google, he was not a “consumer” under the CLRA as to 10 Google, because he did not receive the Google Home device as part of a consumer transaction with 11 Google. See id. (citing Schauer v. Mandarin Gems of Cal., Inc., 125 Cal.App.4th 949, 960 (2005) 12 (plaintiff was not a “consumer” under the CLRA where “[p]laintiff’s ownership . . . was not acquired 13 as a result of her own consumer transaction with defendant”)). Plaintiffs do not respond to Google’s 14 argument in their opposition. See Opposition, ECF No. 145. 15 The Court disagrees with Google. While Brekhus did not pay Google in exchange for a 16 Google Home Mini, Plaintiffs allege that Brekhus paid Spotify and ordered his Google Home Mini 17 directly from Google. See 4AC, ECF No. 141 ¶ 47. Further, Plaintiffs allege that Brekhus entered 18 into a purchase transaction with Google directly. See id. ¶ 48. This is distinguishable from Google’s 19 cited case, where plaintiff had been given a ring as a gift by her former husband, and since she was 20 not the purchaser and had not been assigned the purchaser’s rights, she was not a “consumer” for 21 purposes of the CLRA. See Schauer, 125 Cal.App.4th at 960. As alleged, Brekhus was a direct 22 purchaser from Google. See 4AC, ECF No. 141 ¶¶ 47–48. The Court finds that Plaintiffs’ 23 allegations are sufficient to state a claim that Brekhus was a “consumer” under the CLRA. 24 Accordingly, the Court will not dismiss Brekhus’s CLRA claim on the basis that he was not 25 a “consumer” under the CLRA. 26 D. Leave to Amend 27 As outlined above, the Court has previously dismissed Brekhus and Hernandez’s CLRA and 1 3AC Order, ECF No. 138 at 27. As the Court outlines above, Plaintiffs’ allegations are again 2 || insufficient to support the CLRA and common law fraud claims because of the inadequacy of 3 Plaintiffs’ intent to defraud allegations. Accordingly, the Court finds it is appropriate to deny 4 Plaintiffs leave to amend, because Plaintiffs have shown a repeated failure to cure deficiencies in 5 their CLRA and common law fraud claims by amendment. Further, given that the main deficiency 6 || in Plaintiffs’ intent to defraud allegations is the significant time gap between Brekhus and 7 || Hernandez’s purchase of GAEDs and the introduction of the “alarm event” detection feature, it is 8 || unclear to the Court how Plaintiffs will be able to avoid this time gap through amendment of their 9 || pleadings. Accordingly, the Court finds that amendment of Brekhus and Hernandez’s CLRA and 10 common law fraud claims would be futile. Eminence Capital, 316 F.3d at 1052. 11 Based on the above reasoning, the Court’s dismissal of Brekhus and Hernandez’s CLRA and 12 || common law fraud claims is WITHOUT LEAVE TO AMEND. 13 || IV. ORDER 14 For the foregoing reasons, IT IS HEREBY ORDERED that Google’s Motion to Dismiss 3 15 || Claims 8 and 9 of the Fourth Amended Complaint is GRANTED WITHOUT LEAVE TO AMEND. 16
17 || Dated: January 11, 2022 Lh han tp 18 kom BETH LABSON FREEMAN 19 United States District Judge 20 21 22 23 24 25 26 27 28