R.A. v. Amazon.com, Inc.

• Court: District Court, C.D. California
• Decided: September 6, 2019
• Docket: 2:19-cv-06454
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 ) 11 ) Case No.: CV 19-06454-CJC(AGRx) ) 12 R.A. a minor, by and through his ) ) 13 guardian, Steve Altes, individually and ) on behalf of others similarly situated, ) 14 ) ORDER DENYING PLAINTIFF’S ) MOTION TO REMAND [Dkt. 37] 15 Plaintiff, ) ) 16 v. ) ) 17 ) AMAZON.COM, INC. and A2Z ) 18 DEVELOPMENT CENTER, INC., ) ) 19 ) ) Defendants. 20 ) ) 21 22 23 I. INTRODUCTION 24 25 On June 11, 2019, Plaintiff R.A. brought this putative class action against 26 Amazon.com, Inc. (“Amazon”), and A2z Development Center, Inc. (“A2z 27 Development”) in Los Angeles County Superior Court alleging violations of the 1 [Complaint, hereinafter “Compl.”].) Defendants removed the action on July 25, 2019. 2 (Dkt. 1 [Notice of Removal].) Before the Court is Plaintiff’s motion to remand the case 3 to Los Angeles County Superior Court. (Dkt. 37 [hereinafter “Mot.”].) For the following 4 reasons, that motion is DENIED.1 5 6 II. BACKGROUND 7 8 The allegations in Plaintiff’s complaint concern Amazon’s smart speaker 9 technology, Alexa. Alexa is “the world’s leading voice-responsive personal assistant 10 technology.” (Compl. ¶ 7.) As of January 2019, over 100 million devices containing 11 Alexa had been sold. (Id. ¶ 9.) The Alexa technology allows users to access online 12 information verbally without using their phones or computers. The technology becomes 13 operational after a user downloads the Alexa application and pairs it with a device such 14 as an Amazon Echo or a Sonos speaker. (Id. ¶ 12.) Once this pairing occurs, the Alexa 15 technology is triggered whenever an individual says a “wake word,” like “Alexa.” (Id. 16 ¶ 15.) Typically, after saying this wake word, Alexa users make some sort of inquiry or 17 request, such as “Alexa, what is the weather today?” (Id. ¶ 11.) 18 19 Once Alexa detects that a wake word has been used, it allegedly records the 20 subsequent communication and sends the recording to Amazon’s servers. (Id. ¶ 15.) 21 Transmitting the recording to the servers is what allows Alexa to respond to the user 22 accurately. (Id. ¶ 16.) The recordings are then allegedly stored on Amazon’s servers for 23 later use and analysis. (Id. ¶ 17.) This practice of recording and storing users’ 24 communications with Alexa allegedly helps Amazon amass huge swaths of consumer 25 data, which it can use in other areas of its business. (Id. ¶¶ 22–24.) 26

27 1 Having read and considered the papers presented by the parties, the Court finds this matter appropriate 1 2 According to the complaint, Amazon fails to obtain consent to these recording 3 practices from a substantial number of Alexa users. The only people who allegedly 4 consent are the registered users who initially set up the Alexa-enabled device and install 5 the Alexa application. (Id. at 3.) However, Alexa is not programmed to only respond to 6 this consenting person’s voice. (Id.) Instead, every time Alexa detects that a wake word 7 has been used, it records and stores the subsequent communication regardless of who the 8 speaker is. (Id. ¶ 14.) Because devices paired with Alexa are typically stored inside 9 homes and used by all of their occupants, Alexa allegedly ends up recording and storing 10 the communications of many people who have not consented to this practice, including 11 minors. (Id. ¶¶ 26–29.) 12 13 Plaintiff R.A. is allegedly one of these nonconsenting minors. His father, a 14 registered user, purchased two Echo Dot smart speakers in November 2018 and paired 15 them with Alexa. (Id. ¶¶ 32–33.) R.A. is not a registered user, so he never consented to 16 Amazon’s recording practices. (Id. ¶ 35.) However, because he uses the Alexa-enabled 17 device a few times per week, his communications are recorded and stored without his 18 consent, in alleged violation of CIPA. (Id. ¶¶ 49–55.) 19 20 Plaintiff brings this CIPA claim on behalf of a proposed class of “all citizens of the 21 State of California who used a household Amazon Alexa device while they were minors, 22 but who have not downloaded and installed the Alexa app.” (Id. ¶ 40.) The complaint 23 names both Amazon and A2z Development as Defendants. Amazon is a Delaware 24 corporation with its principal place of business in Seattle, Washington. (Id. ¶ 2.) A2z is 25 a subsidiary of Amazon and has its principal place of business in Sunnyvale, California. 26 (Id. ¶ 3.) Defendants removed the action to federal court on July 25, 2019, invoking 27 jurisdiction under the Class Action Fairness Act of 2005 (“CAFA”). Plaintiff 1 subsequently moved to remand the action to Superior Court, asserting that the action fits 2 within CAFA’s “local controversy” exception. (Mot. at 3.) 3 4 III. LEGAL STANDARD 5 6 A civil action brought in state court may be removed by the defendant to a federal 7 district court if the action could have been brought there originally. 28 U.S.C. § 1441(a). 8 The party seeking removal bears the initial burden of establishing federal jurisdiction. 9 Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1252 (9th Cir. 2006). Under CAFA, 10 federal courts have original jurisdiction over a class action if (1) the parties are minimally 11 diverse, (2) the proposed class has more than 100 members, and (3) the aggregated 12 amount in controversy exceeds $5 million. 28 U.S.C. § 1332(d)(2). “Congress passed 13 CAFA with the ‘overall intent . . . to strongly favor the exercise of federal diversity 14 jurisdiction over class actions with interstate ramifications.’” Brinkley v. Monterey Fin. 15 Servs., Inc., 873 F.3d 1118, 1121 (9th Cir. 2017) (quoting S. Rep. No. 109–14, at 35 16 (2005)). 17 18 There are several exceptions to federal jurisdiction under CAFA, however. A 19 district court must decline to exercise jurisdiction over a class action if the requirements 20 of the “local controversy” exception are met. 28 U.S.C. § 1332(d)(4). The local 21 controversy exception applies to a class action in which: 22 (I) greater than two-thirds of the members of all proposed plaintiff classes in 23 the aggregate are citizens of the State in which the action was originally 24 filed; (II) at least 1 defendant is a defendant— 25 (aa) from whom significant relief is sought by members of the 26 plaintiff class; (bb) whose alleged conduct forms a significant basis for the claims 27 asserted by the proposed plaintiff class; and (cc) who is a citizen of the State in which the action was originally 1 filed; and 2 (III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was 3 originally filed; and 4 (ii) during the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations 5 against any of the defendants on behalf of the same or other persons[.] 6 7 28 U.S.C. § 1332(d)(4). “The local controversy exception to CAFA jurisdiction is a 8 narrow exception,” and once CAFA removal jurisdiction has been established, the party 9 seeking remand bears the burden of establishing that it applies. Allen v. Boeing Co., 821 10 F.3d 1111, 1116 (9th Cir. 2016). “However, if the exception applies, the district court 11 must remand the case to state court.” Id. 12 13 IV. DISCUSSION 14 15 The parties do not appear to dispute that the Court has original jurisdiction over 16 this action under 28 U.S.C. § 1332(d)(2). Rather, their disagreement concerns the 17 applicability of the local controversy exception. Specifically, the parties dispute whether 18 four separate requirements of the local controversy exception are met in this case: 19 (1) whether any other class action has been filed against Defendants alleging similar 20 factual allegations in the preceding three years before the filing of this case, (2) whether 21 the conduct of A2z Development, the only local defendant, formed a “significant basis” 22 for the claims asserted, (3) whether Plaintiff seeks significant relief from Az2 23 Development and, (4) whether the principal injuries resulting from the alleged conduct 24 were incurred in California. The Court will address each issue in turn. 25 26 27 1 A. Related Class Actions 2 3 The local controversy exception is met only if “during the 3-year period preceding 4 the filing of that class action, no other class action has been filed asserting the same or 5 similar factual allegations against any of the defendants on behalf of the same or other 6 persons.” 28 U.S.C. § 1332 (d)(4)(A)(ii). Defendants argue that C.O. v. Amazon.com, 7 Inc. et. al., 2:19-cv-00910-RAJ-MLP (hereinafter “the B.F. action”),2 a class action that 8 is currently pending in the Western District of Washington, precludes the local 9 controversy exception from applying. Defendants contend that Plaintiff failed to 10 establish that this action was filed before the B.F. action. The Court disagrees. 11 12 The B.F. action was filed on June 11, 2019 at 1:40 p.m. PDT. (See Dkt. 40 13 [Declaration of Brantley Pepperman].) This action was electronically filed in Superior 14 Court on June 10, 2019 and subsequently filed in person with the Court Clerk’s office at 15 approximately 11:15 a.m. PDT on June 11, 2019. Id. Because this action was filed 16 before the B.F. action, the B.F. action does not bar the local controversy exception from 17 applying. See 28 U.S.C. § 1332 (d)(4)(A)(ii). 18 19 B. Significant Basis 20 21 The parties next dispute whether A2z Development’s conduct “forms a significant 22 basis for the claims asserted.” 28 U.S.C. § 1332(d)(4)(A)(i)(II)(bb). When making this 23 determination, courts are required to compare the allegations against the local defendant 24 to those made against the other defendants. See Benko v. Quality Loan Serv. Corp., 789 25 F.3d 1111, 1118 (9th Cir. 2015). Courts must consider a local defendant’s conduct “in 26 the context of the overall claims asserted.” See id. (internal quotation omitted). “[T]he 27 1 local defendant’s alleged conduct must be an important ground for the asserted claims in 2 view of the alleged conduct of all the [d]efendants.” Coleman v. Estes Express Lines, 3 Inc., 730 F. Supp. 2d 1141, 1157 (C.D. Cal. 2010), aff’d, 631 F.3d 1010 (9th Cir. 2011) 4 (internal quotation omitted) (emphasis in original). Courts cannot look beyond the 5 complaint when determining whether the claims against a local defendant meet this 6 requirement. See Coleman v. Estes Express Lines, Inc., 631 F.3d 1010, 1012 (9th Cir. 7 2011). 8 9 Defendants argue that Plaintiff has failed to sufficiently allege that Az2 10 Development’s conduct is a “significant basis” for the claims asserted. The Court agrees. 11 Plaintiff’s complaint contains relatively few allegations that address A2z Development 12 specifically. The complaint alleges that A2z Development is a subsidiary of Amazon that 13 “employs thousands of individuals, many of whom work on Alexa-enabled devices.” 14 (Compl. ¶ 3.) A2z Development allegedly developed both the Echo “smart speaker” and 15 the Alexa voice assistant between 2010 and 2014. (Id. ¶ 7.) Since then, A2z 16 Development has continued to update and refine the Alexa program, as well as various 17 new Echo products that contain the Alexa program. (Id. ¶ 10.) The remainder of the 18 allegations in the complaint are asserted against “Amazon,” making it difficult for the 19 Court to determine which specific allegations refer to Amazon.com and which refer to 20 A2z Development. 21 22 Failing to specifically allege what conduct the local defendant engaged in 23 oftentimes frustrates a plaintiff’s ability to establish the significance of a local defendant. 24 See, e.g., Clark v. WorldMark, The Club, 2019 WL 1023887, at *5 (E.D. Cal. Mar. 4, 25 2019) (refusing to remand based on the local controversy exception when the Court could 26 not “determine which Defendants were responsible for . . . the actions forming the basis 27 for the specific claims asserted”); Adame v. Comprehensive Health Mgmt., Inc, 2019 WL 1 significant basis for the claims when complaint contained no specific allegations of their 2 conduct). After considering only the allegations that specifically refer to A2z 3 Development, the Court finds that A2z’s alleged conduct does not form a significant 4 basis of Plaintiff’s claims. Plaintiff’s CIPA claim does not center on the development 5 and upkeep of the Alexa technology, the sole allegations specific to A2z Development. 6 Rather, the allegedly illegal conduct is the recording of confidential communications 7 without the consent of non-registered minors. (Compl. ¶¶ 51, 57.) It is unclear from 8 Plaintiff’s complaint what role Az2 Development had in that specific activity. As 9 currently pled, Plaintiff’s complaint has not met its burden in alleging that A2z 10 Development’s conduct forms a significant basis for the claims asserted. 11 12 The Court disagrees with Plaintiff’s assertion that requiring it to separate out the 13 conduct of the local defendant creates pleading “absurdities.” (Dkt. 40 at 9.) Rather, this 14 approach is in line with the purposes of the local controversy exception outlined in the 15 Senate Judiciary Committee’s report. See S. Rep. No. 109–14. This report instructed 16 courts to “bear in mind that the purpose of each of these criteria is to identify a truly local 17 controversy—a controversy that uniquely affects a particular locality to the exclusion of 18 all others.” Id. at 38. Without specific allegations regarding the conduct of the local 19 defendant, courts would struggle to identify which cases are “truly local controvers[ies].” 20 See id. Nor does this approach frustrate plaintiffs’ ability to establish the local 21 controversy exception. The Ninth Circuit has made clear that plaintiffs are often 22 permitted to amend their complaint after removal to add CAFA-specific allegations. See 23 Benko, 789 F.3d at 1117. 24 25 C. Significant Relief 26 27 The parties next dispute whether Plaintiff seeks significant relief from A2z 1 courts “look to the remedies requested by the Plaintiffs.” Id. at 1119. Plaintiffs contend 2 that significant relief is sought from A2z Development because the complaint requests 3 (1) injunctive relief, (2) statutory damages under Cal. Penal Code § 673.2, and (3) costs 4 and attorneys’ fees. (Compl. ¶ 60.) 5 6 Defendants argue that Plaintiff has failed to meet its burden here because it does 7 not request specific relief from A2z Development but instead seeks identical relief from 8 all Defendants. However, “the local controversy exception does not require that plaintiffs 9 specify the division of damages between defendants.” Allen, 821 F.3d at 1119; see also 10 Bloomquist v. Covance, Inc., 2017 WL 1735170, at *4 (S.D. Cal. May 4, 2017) (holding 11 that the plaintiff sufficiently alleged that he sought significant relief from the local 12 defendants although “[the plaintiff] seeks damages from all defendants equally”). At the 13 pleading stage, “Plaintiffs may not know, and perhaps cannot know . . . how much of 14 their damages” are attributable to each Defendant. See Allen, 821 F.3d at 1119. 15 16 The Ninth Circuit has found that the significant relief requirement was met in a 17 case where a plaintiff alleged that both defendants had violated the same provisions of 18 California law and sought identical damages from each of them. See Coleman, 631 F.3d 19 at 1020. Accordingly, the fact that Plaintiff did not break down which of its damages 20 were attributable to Az2 Development is not fatal to its ability to establish this prong of 21 the local controversy exception. Given the sizable statutory damages available under Cal. 22 Penal Code § 673.2 and the substantial burdens that would arise from the complying with 23 the injunction Plaintiff seeks, the Court finds that Plaintiff has met its burden on the 24 significant relief prong of the local controversy exception. 25 26 27 1 D. Principal Injuries 2 3 The parties’ next dispute concerns the principal injury prong of the local 4 controversy exception. In order for the local controversy exception to apply, “[the] 5 principal injuries resulting from the alleged conduct or any related conduct of each 6 defendant [must have been] incurred in the State in which the action was originally 7 filed.” 28 U.S.C. § 1332 (d)(4)(A)(i)(III). Plaintiff argues that the principal injuries were 8 incurred within California because the “alleged conduct” at issue here is the violation of a 9 California statute and the class is restricted to California minors. (Mot. at 12–20.) 10 Defendants counter that, although Plaintiff’s proposed class is comprised of only 11 California residents and is premised on violation of a California statute, the conduct and 12 resulting injuries occurred on a nationwide scale. (Dkt. 39 [Defendants’ Opposition to 13 Motion to Remand] at 14–24.) The Court agrees with Defendants’ position. 14 15 The Court recognizes that there is a split of authority regarding how to best 16 construe the principal injury prong of the local controversy exception. Compare 17 Kaufman v. Allstate N.J. Ins. Co., 561 F.3d 144, 156 (3d. Cir 2009) (holding that 18 according to the text of CAFA, the principal injury requirement is met either (1) when the 19 principal injuries from the alleged conduct were incurred in the state, or (2) when the 20 principal injuries from any related conduct were incurred in the state) with Kearns v. 21 Ford Motor Co., 2005 WL 3967998, at *11 (C.D. Cal. Nov. 21, 2005) (finding that the 22 term “principal injuries” is ambiguous and that CAFA’s legislative history makes clear 23 that when injuries are suffered nationwide, the local controversy exception does not 24 apply). In keeping with the approach adopted by other California district courts, the 25 Court finds Kearns to be more persuasive. See, e.g., Beasley v. Lucky Stores, Inc., 379 F. 26 Supp. 3d 1039, 1045 (N.D. Cal. 2019) (noting that the Ninth Circuit has not adopted 27 Kaufman and that numerous district courts within the Ninth Circuit have found that the 1 “principal injury” requirement was not met when the offending product was sold 2 nationwide). 3 4 California district courts have consistently refused to remand class actions that 5 allege solely violations of California law but that are premised on nationwide conduct. In 6 Winn v. Mondelez Int’l, the plaintiff brought a putative class action alleging that 7 defendants had violated California law by failing to disclose that Ginger Snaps contained 8 trans-fat. See 2018 WL 3151774 (N.D. Cal. June 28, 2018). The court held that the local 9 controversy exception did not apply because “the principal injuries alleged in this suit are 10 not limited to California because Ginger Snaps are sold nationwide.” See id. at *5 11 (internal quotations omitted). The court in Beasley denied a motion to remand for similar 12 reasons. See 379 F. Supp. at 1041. There, the plaintiff alleged that Coffee-mate 13 packaging contained misleading statements and sought to represent a class of California 14 purchasers based on violations of California law. See id. The court first rejected 15 Kaufman and then held that the local controversy exception was not applicable because 16 Coffee-mate “was distributed and sold nationwide, not only or even principally in 17 California, and, consequently, that any damage caused by the conduct of one or more of 18 the defendants occurred nationwide.” See id. at 1044. 19 20 Plaintiff fails to meet the principal injury requirement of the local controversy 21 exception for similar reasons. Although Plaintiff’s proposed class is comprised of only 22 California minors, in no way is the underlying conduct at issue—Amazon’s alleged 23 practice of recording and storing the communications of nonconsenting Alexa users— 24 limited to California. As of January 2019, over 100 million devices containing Alexa had 25 been sold nationwide and there is no suggestion that Amazon’s recording was confined to 26 California. (Compl. ¶ 9.) As a result, Plaintiff’s action is not “truly local.” See Waller 27 v. Hewlett-Packard Co., 2011 WL 8601207, at *4 (S.D. Cal. May 10, 2011). Rather, it is 1 local “only in the trivial and almost tautological sense that the definition of the putative 2 class and the legal bases of the asserted claims make it so.” Id. 3 4 CAFA’s legislative history confirms that Plaintiff’s proposed class does not fit 5 within the narrow local controversy exception.3 See S. Rep. No. 109–14. The Senate 6 Report’s discussion of the principal injury prong explains: 7 [T]he principal injuries resulting from the actions of all the defendants must have 8 occurred in the state where the suit was filed. By this criterion, the Committee 9 means that all or almost all of the damage caused by defendants’ alleged conduct occurred in the state where the suit was brought. The purpose of this criterion is to 10 ensure that this exception is used only where the impact of the misconduct alleged 11 by the purported class is localized. . . . [I]f the defendants engaged in conduct that could be alleged to have injured consumers throughout the country or broadly 12 throughout several states, the case would not qualify for this exception, even if it 13 were brought only as a single-state class action. 14 15 Id. Here, Defendants’ alleged recording policy was not limited to or unique to California. 16 Instead, it “injured consumers throughout the country.” Id. Accordingly, this case does 17 not meet the principal injury prong even though it was brought as a single-state class 18 action. 19 20 “The local controversy exception to CAFA jurisdiction is a narrow exception.” 21 Allen, 821 F.3d at 1116. Its breadth would significantly expand if plaintiffs were 22 permitted to strategically limit the scope of their action to fall within it. The Court finds 23 that Plaintiff has not met its burden in establishing that the principle injuries resulting 24 from the alleged conduct occurred in California. 25 26 27 3 The Court rejects Plaintiff’s argument that this report is inherently unreliable. (See Mot. at 18–20.) In fact, the Ninth Circuit has heavily relied on it in several instances while interpreting CAFA’s local l 2 CONCLUSION 3 4 For the foregoing reasons, Plaintiff's motion to remand is DENIED. 5 6 DATED: — September 6, 2019 fe Oe

8 CORMAC J. CARNEY 9 UNITED STATES DISTRICT JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28