Sheski v. Shopify (USA) Inc.

• Court: District Court, N.D. California
• Decided: May 13, 2020
• Docket: 4:19-cv-06858
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 DAVID SHESKI, Case No. 19-cv-06858-HSG

8 Plaintiff, ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS 9 v. Re: Dkt. No. 15 10 SHOPIFY (USA) INC., et al., 11 Defendants.

12 Pending before the Court is Defendants’ motion to dismiss Plaintiff’s class action 13 complaint, for which briefing is complete. Dkt. No. 15 (“Mot.”), 21 (“Opp.”), 22 (“Reply”). For 14 the reasons articulated below, the Court GRANTS Defendants’ motion to dismiss, WITH 15 LEAVE TO AMEND. 16 I. BACKGROUND 17 On October 21, 2019, Plaintiff David Sheski filed a class action complaint on behalf of a 18 putative nationwide class, alleging violations of the Telephone Consumer Protection Act 19 (“TCPA”), and three state common law claims: negligence, invasion of privacy, and unlawful 20 intrusion. Dkt. No. 1 (“Compl.”). Plaintiff’s claims are based on Defendant Shopify (USA) Inc. 21 and Defendant Shopify Inc.’s (collectively, “Shopify” or “Defendants”) alleged “unlawful practice 22 of making, facilitating, and participating in unauthorized text message marketing campaigns en 23 masse to consumers’ cellular telephones.” Id. ¶ 1. Shopify is an e-commerce company that 24 “provides the infrastructure and software for online retailers to build their online presence, 25 including their point-of-sale systems and specifically the tools to structure retailers’ checkout 26 webpages to collect consumers’ personal identification information, including their cellular 27 numbers.” Id. ¶ 2. 1 physical locations, whose website is “maintain[ed], operate[d], direct[ed] and/or otherwise 2 control[led]” by Shopify. Id. ¶ 30. When processing the purchase on the website, Plaintiff used 3 the online checkout form which “specifically brands it as a Shopify platform, labeling the online 4 order form ‘Shopify Checkout.’” Id. ¶ 30. It additionally included “a line item input field for 5 consumers to provide their telephone number,” where the form “indicates the telephone number is 6 ‘(For shipping updates).’” Id. Specifically, “[t]here [was] no line item check-box on the checkout 7 page for consumers to click to indicate their prior express written consent to have their phone 8 number used for text advertisements.” Id. After completing the purchase, Plaintiff “received two 9 text messages to his cell phone,” on or about November 26, 2018. Id. ¶ 31. Both messages read 10 “Masorini: Hey David. Cyber Monday! 30% OFF – Code: “CM30” Shop here! [sic] – STOP 11 17908 to opt-out.” Id. ¶¶ 31–32. 12 II. LEGAL STANDARD 13 Federal Rule of Civil Procedure (“Rule”) 8(a) requires that a complaint contain “a short 14 and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 15 8(a)(2). A defendant may move to dismiss a complaint for failing to state a claim upon which 16 relief can be granted under Rule 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only 17 where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable 18 legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To 19 survive a Rule 12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to relief that is 20 plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially 21 plausible when a plaintiff pleads “factual content that allows the court to draw the reasonable 22 inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 23 678 (2009). 24 In reviewing the plausibility of a complaint, courts “accept factual allegations in the 25 complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” 26 Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Nonetheless, 27 courts do not “accept as true allegations that are merely conclusory, unwarranted deductions of 1 2008) (quoting Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001)). The Court 2 also need not accept as true allegations that contradict matter properly subject to judicial notice or 3 allegations contradicting the exhibits attached to the complaint. Sprewell, 266 F.3d at 988. 4 If the court concludes that a 12(b)(6) motion should be granted, the “court should grant 5 leave to amend even if no request to amend the pleading was made, unless it determines that the 6 pleading could not possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 7 1122, 1127 (9th Cir. 2000) (en banc) (internal citations and quotation marks omitted). 8 III. ANALYSIS 9 Defendants argue that Plaintiff fails to state a TCPA claim since the complaint fails to 10 sufficiently allege that Defendants were “directly involved” with, or vicariously liable for, placing 11 the texts at issue. Mot. at 6–16. Defendants also argue that Plaintiff fails to state a claim for the 12 three common law claims. Id. at 18–21. The Court addresses each argument in turn below. 13 A. TCPA 14 The TCPA makes it unlawful

15 to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any 16 automatic telephone dialing system or an artificial or prerecorded voice . . . to any telephone number assigned to a . . . cellular telephone 17 service . . . or any service for which the called party is charged for the call. . . . 18 19 47 U.S.C. § 227(b)(1)(A)(iii). To state a claim under the TCPA, a Plaintiff must allege that “(1) 20 the defendant called a cellular telephone number; (2) using an automatic telephone dialing system 21 [“ATDS”]; (3) without the recipient’s prior express consent.” Meyer v. Portfolio Recovery 22 Assocs., LLC, 707 F.3d 1036, 1043 (9th Cir. 2012); see also 47 U.S.C. § 227(b)(1)(A)(iii). The 23 TCPA defines an ATDS as “equipment which has the capacity—(A) to store or produce telephone 24 numbers to be called, using a random or sequential number generator; and (B) to dial such 25 numbers.” 47 U.S.C. § 227(a)(1). A text message constitutes a “call” for purposes of the TCPA. 26 See Satterfield v. Simon & Schuster, Inc., 569 F.3d 946, 954 (9th Cir. 2012). 27 i. Direct Liability 1 Shopify sent or was directly involved with sending the text messages at issue. Defendants point to 2 the FCC’s guidance in a 2015 order to argue that they do not qualify as having made a call under 3 the TCPA and therefore cannot be liable for any TCPA violation. See In the Matter of Rules & 4 Regulations Implementing the Tel. Consumer Prot. Act of 1991, 30 FCC Rcd. 7961, 7980–84 5 (2015) (hereinafter, “2015 TCPA Declaratory Ruling”), set aside in part by ACA Int’l v. FCC, No. 6 15-1211 (D.C. Cir. Mar. 16, 2018). 7 The TCPA and its implementing regulations do not define the term “make a call” to 8 determine who may be liable under the statute. The FCC has concluded that “a person or entity 9 ‘initiates’ a telephone call when it takes the steps necessary to physically place a telephone call, 10 and generally does not include persons or entities, such as third-party retailers, that might merely 11 have some role, however minor, in the causal chain that results in the making of a telephone call.” 12 In the Matter of the Joint Petition filed by Dish Network, LLC, 28 FCC Rcd. 6574, 6583 ¶ 26 13 (2013). As for whether entities that provide software applications or platforms that facilitate 14 calling can be liable, the FCC explained that it “look[s] to the totality of the facts and 15 circumstances surrounding the placing of a particular call to determine: 1) who took the steps 16 necessary to physically place the call; and 2) whether another person or entity was so involved in 17 placing the call as to be deemed to have initiated it, considering the goals and purposes of the 18 TCPA.” 2015 TCPA Declaratory Ruling, 30 FCC Rcd. at 7980. Applying this standard, the FCC 19 determined that the maker of an app called TextMe did not make or initiate calls when its app 20 users used the TextMe app to send invitational text messages; rather it was the app user that 21 initiated the text messages through “affirmative choices.” Id. at 7983. Specifically, the FCC 22 found it significant that the “app user [had to]: (1) tap a button that reads ‘invite your friends’; (2) 23 choose whether to ‘invite all their friends or [] individually select contacts’; and (3) choose to send 24 the invitational text message by selecting another button.” Id. at 7983–84. 25 Defendants argue that similar to TextMe, they only provide a platform that third-party 26 retailers use to send text messages to consumers. Shopify points to numerous cases in support of 27 its position, primarily relying on Meeks v. Buffalo Wild Wings, Inc., No. 17-cv-07129-YGR, 2018 1 SAB, 2019 WL 4855378 (E.D. Wash. Oct. 1, 2019). In Meeks, the plaintiff provided his 2 cellphone number to a restaurant hostess so he could be notified when his table was ready, and 3 later received texts from the restaurant that included links to the website of platform provider 4 Yelp. 2018 WL 1524067 at *1–2. The Meeks court held that “[w]hile plaintiff allege[d] that the 5 restaurants use Yelp’s ‘platform’ to send the offending text messages . . . he d[id] not allege that 6 Yelp decided whether, when, or to whom to send the messages.” Id. at *5. Instead, “his 7 allegations regarding Yelp pertain[ed] to its purported business model and the general advertising 8 and analytics services Yelp provides to restaurants.” Id. Somewhat similarly, in Frank the court 9 dismissed the complaint, finding “no allegations that Defendant Springbig exercised any 10 discernible involvement in deciding whether, when, or to whom the text message is sent, or what 11 the text message said.” 2019 WL 4855378 at *2. Here, Defendants argue that Plaintiff fails to 12 provide any factual allegations that Defendants “exerted any control over the recipient lists, 13 timing, or content of the texts sent by the users of the Shopify platform.” Mot. at 12. 14 In response, Plaintiff argues that none of Defendants’ cited cases are on point based on the 15 allegations in the Complaint. Opp. at 14–15. For example, unlike the platform providers at issue 16 in the other cases, Plaintiff alleges that “Shopify continues to be actively involved in its retailers’ 17 businesses both directly and indirectly” even after the retailers select their platform package, by 18 providing “the creation of an online store, 24/7 support from dedicated Shopify employees, 19 ongoing business counseling services, shipping services, and the creation of a point-of-sale 20 software system, among other things.” Compl. ¶ 18. Additionally, Plaintiff points to (1) 21 Shopify’s receipt of a percentage of retailers’ revenues, id. ¶ 25, (2) the use of the same SMS short 22 code by different retailers as evidence of “a common Shopify or Shopify-approved source,” id. 23 ¶ 26, (3) Shopify’s awareness, “based on its participation in the creation and maintenance of 24 retailers’ checkout pages, whether a particular retailer has obtained express written consent form a 25 consumer to use the consumer’s cellular telephone number for text message marketing 26 campaigns,” id. ¶ 23, and (4) Shopify’s “counsel[ to retailers] on best practices with respect to data 27 collections and text message marketing, including the content and timing of te[x]t message 1 Importantly, however, these allegations do not lead to the inference that Shopify sent or 2 was directly involved in sending the text messages at issue in this case. That Shopify provides the 3 template for the checkout form, offers a suite of apps (including texting apps) that can integrate 4 into its platform, provides counseling on best practices for marketing, and takes a percentage of 5 the retailer’s revenue, does not indicate that Shopify has any control over a retailer’s actual text 6 marketing campaigns. Further, much like Yelp’s platform in Meeks or the TextMe application in 7 the 2015 TCPA Declaratory Ruling, the fact that Shopify provides a platform to send the text 8 messages such that the SMS short code is the same for all of the retailers does not lead to the 9 inference that Shopify, rather than the individual retailer identified in the text itself, controlled the 10 content of and sent the message. Here, Plaintiff received only two text messages, which 11 specifically identified Masorini as the sender. See Compl. at ¶ 26.1 12 Thus, even making all inferences in Plaintiff’s favor, the allegations provide no factual 13 basis to establish that Shopify was directly involved in the procurement of consumers’ phone 14 numbers, stores those numbers, transfers the numbers to texting apps, or approves the messages to 15 be sent to those numbers. While Shopify might provide additional resources beyond those 16 provided by the platform provider in Meeks, these resources and features do not suggest that 17 Shopify has any control over any individual retailer’s marketing campaigns. Instead, the factual 18 allegations suggest that Shopify provides a platform with a suite of capabilities and options for the 19 retailer, which then sends text messages to numbers obtained when processing a direct sale to a 20 consumer, such as Plaintiff.2 21 1 The timing of the texts further belies Plaintiff’s allegation that Defendant sent the text messages 22 at issue. Similar to Meeks, the texts were sent after Plaintiff interacted with the retailer, providing his number for “shipping updates.” See 2018 WL 1524067 at *4 (“[T]he complaint indicates that 23 the timing of the text messages was linked to information in the [retailer’s], not [Defendants’] possession.”). 24 2 In his Opposition to Defendant’s motion to dismiss, Plaintiff references facts not in the Complaint to support his argument that Defendant was directly involved in sending the text 25 messages. See Opp. at 7–9. However, “[a] Complaint cannot be amended through allegations made in an opposition to a motion to dismiss.” Remington v. Mathson, 42 F. Supp. 3d 1256, 1278 26 n.3 (N.D. Cal. 2012), aff’d, 575 F. App’x 808 (9th Cir. 2014). Accordingly, the Court does not consider these new facts. See Schneider v. California Dep’t of Corr., 151 F.3d 1194, 1197 n.1 27 (9th Cir. 1998) (“In determining the propriety of a Rule 12(b)(6) dismissal, a court may not look 1 Because Plaintiff fails to plead sufficient facts to show that Defendant sent the text 2 messages, the Court GRANTS Defendant’s motion to dismiss Plaintiff’s TCPA claim. 3 ii. Vicarious Liability 4 Defendants next argue that Plaintiff fails to state a claim for vicarious liability under the 5 TCPA. “[A] defendant may be held vicariously liable for TCPA violations where the plaintiff 6 establishes an agency relationship, as defined by federal common law, between the defendant and 7 a third-party caller.” Gomez v. Campbell-Ewald Co., 768 F.3d 871, 879 (9th Cir. 2014), aff’d, 136 8 S. Ct. 663 (2016), as revised (Feb. 9, 2016). “Agency is the fiduciary relationship that arises when 9 one person (a ‘principal’) manifests assent to another person (an ‘agent’) that the agent shall act on 10 the principal’s behalf and subject to the principal’s control, and the agent manifests assent or 11 otherwise consents so to act.” Mavrix Photographs, LLC v. LiveJournal, Inc., 873 F.3d 1045, 12 1054 (9th Cir. 2017) (quoting Restatement (Third) of Agency § 1.01 (Am. Law Inst. 2006)). “For 13 an agency relationship to exist, an agent must have authority to act on behalf of the principal and 14 ‘[t]he person represented [must have] a right to control the actions of the agent.’” Id. (quoting 15 Restatement (Third) of Agency § 1.01 cmt. c). 16 Here, Plaintiff simply points to Shopify’s relationship with its retailers as evidence of an 17 agency relationship via explicit and implicit authorization. Opp. at 17–18. This is insufficient. 18 There are no factual allegations that support any sort agency relationship outside of Plaintiff’s 19 conclusory statement that “Defendants and their agents transmit text messages.” Compl. at ¶ 37. 20 Instead, it appears (accepting the well-pleaded factual allegations as true, as the Court must at this 21 stage) that Defendants provide a suite of software options for retailers, who then determine which 22 options to utilize. “In order to allege a traditional agency relationship, Plaintiff would have to 23 allege Defendant controlled or had the right to control [the entity responsible for the text 24 messages] and, more specifically, the manner and means of the text message campaign they 25 conducted.” Linlor v. Five9, Inc., No. 17-cv-218-MMA (BLM), 2017 WL 2972447, at *3 (S.D. 26 Cal. July 12, 2017) (quotations omitted). The only semblance of an allegation suggesting that 27 Masorini acted on Defendants’ behalf is the claim that Defendants receive a percentage of retail 1 at ¶ 18. But this in no way supports an inference that retailers act on Defendants’ behalf or that 2 Defendants have any sort of control over third-party retailers. The Complaint entirely fails to 3 plausibly plead any sort of agency relationship. 4 Accordingly, Plaintiff’s vicarious liability claim is also DISMISSED. 5 B. Common Law Claims 6 Defendants also argue that Plaintiff fails to state a claim for negligence, invasion of 7 privacy or unlawful intrusion. Mot. at 18–21. 8 i. Negligence 9 “Under California law, “[t]he elements of negligence are: (1) defendant’s obligation to 10 conform to a certain standard of conduct for the protection of others against unreasonable risks 11 (duty); (2) failure to conform to that standard (breach of the duty); (3) a reasonably close 12 connection between the defendant’s conduct and resulting injuries (proximate cause); and (4) 13 actual loss (damages).” Corales v. Bennett, 567 F.3d 554, 572 (9th Cir. 2009) (quoting McGarry 14 v. Sax, 70 Cal. Rptr. 3d 519 (Cal. Ct. App. 2008)). Defendants argue that Plaintiff failed to allege 15 any duty owed by Defendants to consumers, any breach of a general duty of care (since no specific 16 duty is alleged), or any actual damages, even if breach was alleged. Mot. at 18–19. The Court 17 agrees. 18 “[T]here is generally no duty to protect others from the conduct of third parties.” Regents 19 of Univ. of California v. Superior Court, 413 P.3d 656, 669 (Cal. 2018). “[P]lantiffs alleging a 20 defendant had a duty to protect them must establish: (1) that an exception to the general no-duty- 21 to-protect rule applies and (2) that the Rowland factors support the imposition of the duty.” Brown 22 v. USA Taekwondo, 253 Cal. Rptr. 3d 708, 723 (Cal. Ct. App. 2019), as modified on denial of 23 reh’g (Nov. 6, 2019) (citing Rowland v. Christian, 443 P.2d 561 (Cal. 1968)). The Rowland 24 factors include “the foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff 25 suffered injury, the closeness of the connection between the defendant’s conduct and the injury 26 suffered, the moral blame attached to the defendant’s conduct, the policy of preventing future 27 harm, the extent of the burden to the defendant and the consequences to the community of 1 prevalence of insurance for the risk involved.” Regents, 413 P.3d at 670 (quoting Rowland, 443 2 F.2d at 564)). 3 Plaintiff fails to establish that Defendants’ owe any duty to Masorini’s customers. Plaintiff 4 alleges that Defendants “failed to comply with third-party vendor rules, which require Defendants 5 to have consumers’ prior express written consent prior to sharing their personal identification 6 information with the vendors,” suggesting that these rules created a duty owed to Plaintiff and 7 other consumers. Compl. at ¶ 52. Plaintiff provides no further allegations.3 This vague reference 8 to third-party vendor rules does not establish that an exception to the general rule applies, or that 9 any duty should be imposed under Rowland. Moreover, for the same reasons discussed above, 10 Plaintiff has failed to adequately plead that Defendants themselves sent the texts. As pled, 11 Plaintiff’s negligence claim thus fails. 12 Plaintiff further fails to allege any damages in this case. The TCPA provides specific 13 statutory damages for unconsented marketing calls precisely because proving damages from a 14 marketing phone call or a text is particularly difficult. Here, Plaintiff entered his phone number 15 into the retail checkout and received two marketing texts afterwards. Plaintiff has not even alleged 16 that he was charged for those texts or that he received other texts due the dissemination of the 17 phone number outside of the retailer such that the conduct was particularly oppressive or a 18 nuisance. 19 Because Plaintiff fails to adequately plead duty or damages, the Court dismisses the 20 negligence cause of action for failure to state a claim. 21 ii. Invasion of Privacy or Unlawful Intrusion 22 As Defendants note, it is not entirely clear what claim Plaintiff is attempting to state under 23 the third and forth causes of action. “At common law there are four kinds of invasion of privacy 24 actions which sound in tort . . . (1) unreasonable intrusion upon solitude; (2) appropriation of name 25 or likeness; (3) unreasonable publicity given to private life; and (4) publicity that unreasonably 26

27 3 Again, Plaintiff attempts to add facts in his Opposition that are not in the Complaint to support 1 places one in a false light.” Alim v. Superior Court, 229 Cal. Rptr. 599 (Cal. Ct. App. 1986). 2 Plaintiff’s third purported cause of action is invasion of privacy and his fourth purported cause of 3 action is unlawful intrusion, but unlawful intrusion is simply one alternative means of stating an 4 invasion of privacy claim. So the Court assumes that Plaintiff is claiming unreasonable intrusion 5 upon solitude. 6 That tort subjects to liability “[o]ne who intentionally intrudes, physically or otherwise, 7 upon the solitude or seclusion of another or his private affairs or concerns . . ., if the intrusion 8 would be highly offensive to a reasonable person.” Taus v. Loftus, 151 P.3d 1185, 1212 (Cal. 9 2007). Plaintiff does not allege any facts sufficient to support such a claim here. Even accepting 10 Plaintiff’s factual allegations, he voluntarily entered his phone number into the form, and even if 11 he provided the number solely for “shipping updates,” as a matter of law using that phone number 12 to send two texts for other purposes related to the retailer does not rise to the level of being 13 “highly offensive to a reasonable person.” See Folgelstrom v. Lamps Plus, Inc., 125 Cal. Rptr. 3d 14 260, 266 (Cal. Ct. App. 2011), as modified (June 7, 2011) (holding that defendant’s “conduct of 15 obtaining his ZIP code under false pretenses and using it for its own marketing purposes . . . [did] 16 not meet the standard of ‘highly offensive.’”); see also Marseglia v. JP Morgan Chase Bank, 750 17 F. Supp. 2d 1171, 1178 (S.D. Cal. 2010) (dismissing an invasion of privacy claim where defendant 18 placed 50 calls to plaintiff, but “there [were] no facts alleged upon which this Court could infer 19 plaintiffs ever answered any of these calls or defendant ever made any direct contact with 20 plaintiffs that might be construed as annoying or harassing conduct.”). 21 Accordingly, the Court dismisses Plaintiff’s third and fourth causes of action for failure to 22 state a claim. 23 // 24 // 25 // 26 // 27 // IV. CONCLUSION For the reasons noted above, the Court GRANTS Defendants’ motion to dismiss 2 Plaintiffs Class Action Complaint for failure to state a claim WITH LEAVE TO AMEND.* 3 Any amended complaint must be filed within twenty-eight (28) days of the date of this order, and 4 Plaintiff may not add any new claims or defendants in any such complaint. 5 6 IT IS SO ORDERED. 7 Dated: 5/13/2020 | | | | 9 HAYWOOD S. GILLIAM, JR. 10 United States District Judge 11 12

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Z 18 19 20 21 22 23 24 25 26 27 |) 4 The Court need not address Defendants’ motion to strike and it is DENIED AS MOOT. 28 Depending on the nature of an amended complaint, if any, Defendants may raise the argument again.