Liau v. WEEE! Inc.

CourtDistrict Court, S.D. New York
DecidedFebruary 22, 2024
Docket1:23-cv-01177
StatusUnknown

This text of Liau v. WEEE! Inc. (Liau v. WEEE! Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Liau v. WEEE! Inc., (S.D.N.Y. 2024).

Opinion

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

TYSON LIAU and RICHARD TENG, on behalf of themselves and on behalf of others similarly situated, 23 Civ. 1177 (PAE) Plaintiffs, -V- OPINION & ORDER WEEE! INC., Defendant.

PAUL A. ENGELMAYER, District Judge: Plaintiffs Tyson Liau and Richard Teng are former customers of defendant Weee! Inc. (“Weee”), an online grocery-delivery service specializing in Chinese and Hispanic ingredients. In February 2023, Weee informed its users that “some customer information” had been leaked in recent data breach. This putative class action followed, alleging that Weee’s conduct breached (1) New York General Business Law (“GBL”) § 349 and other states’ similar consumer- protection laws, and (2) its implied contract with its customers to “take reasonable measures to safeguard their data.” Dkt. 17 (‘Second Amended Complaint” or “SAC”) € 55. Pending now is Weee’s motion to dismiss plaintiffs’ Second Amended Complaint pursuant to Federal Rules of Civil Procedure 12(b)(1} and 12(b)(6). Weee argues that because the information disclosed was “non-sensitive in nature,” plaintiffs have failed to allege an injury in fact sufficient to support Article III standing. Dkt. 20 (“Def. Br.”) at 1. For the reasons that follow, the Court agrees, and thus grants Weee’s motion to dismiss under Rule 12(b)(1).

L Background A. Factual Background! 1. The Parties Liau created an account with Weee in August 2022 and has purchased goods from Weee since then. SAC □□□ Teng created an account with Weee in October 2021 and purchased goods from Weee “at least twice a month until after the data breach.” /d § 12. Both plaintiffs are New York citizens. fd. Jj 11-12. Weee! Inc. is a Delaware corporation with its principal place of business in California. id. 413. As an “e-grocer,” Weee does not have brick-and-motor stores. See id. Instead, Weee’s customers use its website and mobile application to place their orders online, and Weee delivers their food to their doorstep. See id. Weee pitches itself as the “largest e-grocer specializing in Chinese and Hispanic grocery items in the United States.” Id. 2. The Data Breach On February 6, 2023, a hacker by the name of “IntelBroker” uploaded a subset of Weee’s customers’ personal information to a website on the dark web.” Jd. | 16. The leak included customers’ names, email addresses, and phone numbers, but not payment data or passwords, Id. 431. Two days later, on February 8, 2023, an online publication focused on cybersecurity, Bleeping Computer, published a story about the breach. Jd. {[ 16. In that story, Weee confirmed

1 The Court draws the facts in this decision from the SAC, Dkt, 17, and from documents attached to or incorporated in the SAC. See DiFolco y. MSNBC Cable LLC, 622 F.3d 104, 111 (2d Cir. 2010); Kramer v. Time Warner Inc., 937 F.2d 767, 774 (2d Cir. 1991). 2 «The [djark [w]eb is a general term that describes hidden Internet sites that users cannot access without using special software.” McMorris v. Carlos Lopez & Assocs., LLC, 995 F.3d 295, 302 n.4 (2d Cir. 2021) (citation omitted), “Not surprisingly, criminals and other malicious actors... use the dark web to carry out technology-driven crimes, such as computer hacking, identity theft, credit card fraud, and intellectual property theft.” /d. (citation omitted),

that it had “recently bec[o]me aware” of the data breach, which affected customers who “placed an order between July 12, 2021 and July 12, 2022.” Mills Decl., Ex. A at 4. Plaintiffs’ data was disclosed in the breach. SAC 416. As to Teng, Weee confirmed as much in an email to him on February 9, 2023, stating that “the exposed information includes [his] name, address, email address, phone number, order number, order amount and order comments,” but that neither his “payment data (credit/debit card detail)” nor his “account password” were disclosed. Id. § 31. 3. The Consequences Plaintiffs allege that they suffered two injuries as a result of the data breach. The first

was the “opportunity cost and value of time that [they] have been forced to expend to monitor their financial and bank accounts as a result of the” data breach. Jd. § 37. In particular, Teng alleges that he was forced to purchase a $24.99/month subscription to credit-reporting agency Experian’s ID Protection Program, to minimize the “increased risk of identity theft caused by [Weee’s] wrongful conduct.” Id. J] 34-35. The second injury is specific to Teng. He alleges that he has received numerous “spam” telephone calls and text messages due to the leak, which included his phone number. /d. 4 36. B. Procedural Background On February 10, 2023, plaintiffs filed this action, asserting subject matter jurisdiction based on the Class Action Fairness Act (CCAFA”), 28 U.S.C. § 1332(d). Dkt. 1. On May 31, 2023, after Weee moved to dismiss their First Amended Complaint, plaintiffs filed the operative SAC. Dkt. 17. In the SAC, plaintiffs allege that Weee’s conduct with respect to the leak—and its data- security practices more broadly—breached (1) GBL § 349 and other states’ similar consumer-

protection laws and (2) its implied contract with its customers to “take reasonable measures to safeguard their data.” SAC 51-83. As to their consumer-protection claims, plaintiffs seek to represent “[a]ll persons residing in one of the Consumer Fraud States who registered an account with Weee! e-grocery service at any time from June 21, 2021 through February 6, 2023.” Id. § 393 As to their implied-contract claim, plaintiffs seek to represent “[a]{l persons residing in the United States who registered an account with Weee! e-grocery service at any time from June 21, 2021 through February 6, 2023.” Id. 738. Plaintiffs seek monetary damages. See id. at 18-19. On June 14, 2023, Weee moved to dismiss the SAC, Dkt. 18, and filed a memorandum of law in support, Dkt. 20 (“Def. Br.”). On June 28, 2023, plaintiffs opposed the motion. Dkt. 21 (“PL. Br.”). On July 12, 2023, Weee filed a reply. Dkt. 22 (Def. Reply Br.”). I. Legal Standard Under Rule 12(b)(1) In resolving a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), the Court “must take all facts alleged in the complaint as true and draw ail reasonable inferences in favor of plaintiff.” Nat, Res. Def. Council v. Johnson, 461 F.3d 164, 171 (2d Cir. 2006). A district court may also consider evidence outside the pleadings, such as affidavits and exhibits. See Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000); see also Amidax Trading Grp. v. SW.LE.T. SCRE, 671 F.3d 140, 145 (2d Cir. 2011). “A plaintiff asserting

3 The SAC defines the “Consumer Fraud States” as: Arkansas; California; Colorado; Connecticut; Delaware; the District of Columbia; Florida; Hawaii; Idaho; Illinois; Maine; Massachusetts; Michigan; Minnesota; Missouri; Montana; Nebraska; Nevada; New Hampshire; New Jersey; New Mexico; New York; North Dakota; Oklahoma, Oregon; Pennsylvania; Rhode et South Dakota; Virginia; Vermont; Washington; West Virginia; and Wisconsin. SAC {

subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.” Makarova, 201 F.3d at 113, Wl. ~——- Discussion Weee moves to dismiss the SAC on two grounds. First, under Rule 12(b)(1), it argues thatt plaintiffs lack standing under TransUnion LLC v. Ramirez, 594 U.S. 413 (2021).

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