Stemmelin v. Matterport, Inc.

District Court, N.D. California·Decided August 10, 2022·No. 3:20-cv-04168·Unknown

Opinion

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8

10 JOHN STEMMELIN, 11 Plaintiff, No. C 20-04168 WHA

12 v.

13 MATTERPORT, INC., et al., ORDER RE DEFENDANTS' MOTION FOR SUMMARY JUDGMENT 14 Defendants.

15 16 17 INTRODUCTION 18 In this false and deceptive advertising action, defendants move for partial summary 19 judgment regarding plaintiff’s Section 17200, Section 17500, and implied covenant claims, as 20 well as plaintiff’s requested equitable relief. To the following extent, the motion is GRANTED 21 IN PART and DENIED IN PART. 22 STATEMENT 23 Defendants, Matterport, Inc., and its officers (together, “Matterport”), market “3D 24 cameras that create 3D models of real-world places, which have many potential applications, 25 including in connection with real estate sales.” Supporting these cameras, Matterport also 26 offers services such as software for three-dimensional image manipulation and cloud storage. 27 Relevant here, Matterport also developed a Matterport Service Partner (MSP) program as a 1 way for individuals that purchased a camera to start their own business selling 3D scans taken 2 using the camera. 3 Plaintiff John Stemmelin of Illinois saw Matterport’s ads for the MSP program around 4 January 2017 and purchased his first camera in February. In May, he applied for the MSP 5 program. Matterport’s MSP ads allegedly made several material misrepresentations and 6 omissions regarding how the program could help members build their own “lucrative, self- 7 owned business.” After many hours learning to use the cameras and attempting to start his 8 own 3D scanning business, Stemmelin had spent tens of thousands of dollars but had little to 9 show for it. 10 Stemmelin brought this lawsuit as a putative class action in June 2020, alleging violations 11 of, among other claims, unfair and false advertising laws as well as numerous states’ business 12 opportunity laws. A November 2020 order granted defendants’ motion to dismiss (Dkt. No. 13 38). A later order granted in part Stemmelin’s motion for leave to amend his complaint. The 14 remaining claims alleged violations of: (1) California Civil Code Section 17200 and Section 15 17500; (2) the Illinois Consumer Fraud Deceptive Business Practices Act (ICFA); (3) the 16 Illinois Business Opportunity Sales Law (BOSL); (4) the California Seller-Assisted Marketing 17 Plan Act (SAMP Act); and (5) breach of the implied covenant of good faith and fair dealing. 18 Only the BOSL claim survived as to the named directors (Dkt. No. 53). 19 A March 2022 order denied Stemmelin’s motion to certify an Illinois class and a national 20 class (Dkt. No. 136). Matterport now moves for partial summary judgment regarding 21 Stemmelin’s Section 17200 and Section 17500 claims, his implied covenant claim, and the 22 equitable relief he seeks. In his opposition, Stemmelin voluntarily withdrew his BOSL and 23 ICFA claims, which Matterport does not contest (Dkt. No. 166). This order follows full 24 briefing and oral argument. 25 ANALYSIS 26 Summary judgment is appropriate if there is no genuine dispute of material fact, those 27 facts that may affect the outcome of the suit. “[T]he substantive law’s identification of which 1 477 U.S. 242, 247–49 (1986). A genuine dispute contains sufficient evidence such that a 2 reasonable jury could return a verdict for the nonmoving party. Ibid. “In judging evidence at 3 the summary judgment stage, the court does not make credibility determinations or weigh 4 conflicting evidence. Rather, it draws all inferences in the light most favorable to the 5 nonmoving party.” Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). But 6 “mere allegation and speculation do not create a factual dispute for purposes of summary 7 judgment.” Nelson v. Pima Cmty. Coll., 83 F.3d 1075, 1081–82 (9th Cir. 1996). Furthermore, 8 where the nonmoving party bears the burden of proof on a given issue, summary judgment is 9 appropriate if the moving party demonstrates an absence of evidence to support the nonmoving 10 party’s position. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). 11 1. SONNER AND THE INADEQUATE-REMEDY-AT-LAW DOCTRINE. 12 Matterport argues Stemmelin’s Section 17200 and Section 17500 claims fail because he 13 has an adequate remedy at law, citing for support our court of appeals’ recent decision Sonner 14 v. Premier Nutrition Corp., 971 F.3d 834 (9th Cir. 2020). This order disagrees. 15 The plaintiff in Sonner asserted claims under the CLRA and Section 17200 but, on the 16 eve of trial, strategically dropped her CLRA damages claim and sought only equitable 17 restitution instead. Plaintiff argued that California had abrogated its inadequate-remedy-at-law 18 doctrine for claims arising out of the CLRA and Section 17200. Id. at 838–39. Sonner 19 nevertheless held that “the traditional principles governing equitable remedies in federal 20 courts, including the requisite inadequacy of legal remedies, apply when a party requests 21 restitution under the UCL and CLRA in a diversity action.” Id. at 844 (emphasis added). 22 Stemmelin says legal damages would not provide an adequate remedy and he is entitled 23 to equitable restitution because his equitable claims are based on different conduct than his 24 legal claims (Opp. 8). True enough, Sonner premised its conclusion on that logic: “Sonner 25 concedes that she seeks the same sum in equitable restitution as . . . she requested in damages 26 to compensate her for the same past harm. Sonner fails to explain how the same amount of 27 money for the exact same harm is inadequate or incomplete . . . .” Id. at 844; see also In re 1 JUUL Labs, Inc., Marketing Sales Practices, & Prods. Liability Litig., 497 F. Supp. 3d 552, 2 638–39 (N.D. Cal. 2020) (Judge William H. Orrick). 3 However, Stemmelin can only make this argument because he dropped his ICFA claim, 4 which authorized a damages award. He concedes his Section 17200 and Section 17500 claims 5 are based upon the same conduct as his ICFA claim (Opp. 10). 6 Stemmelin explains, however, that all the relevant contracts here have California choice- 7 of-law provisions, and his Illinois claims were simply inapplicable remnants of when he 8 initially filed a complaint in that state. He voluntarily dismissed that complaint after 9 Matterport moved to dismiss based on choice-of-law issues (id. at 1–2). Matterport is a 10 resident of California. Furthermore, Stemmelin signed three contracts with Matterport to 11 become an MSP. All three stated that the agreement would be governed by California law, 12 without reference to its conflict-of-law provisions.* 13 California favors enforcement of choice-of-law provisions. A reasonable basis exists for 14 the choice of California law. Matterport cannot now dispute the applicability of its own 15 contract provisions or California’s interest in having its law apply to Matterport. See Wash. 16 Mut. Bank, FA v. Super. Ct., 24 Cal. 4th 906, 916 (2001); Cimoli v. Alacer Corp., 2022 WL 17 580789, at *3–6 (N.D. Cal. Feb. 25, 2022) (Judge Beth Labson Freeman). Consequently, 18 inasmuch as California law applies, Stemmelin’s withdrawal of his improper ICFA claim does 19 not pose the same problems as those in Sonner, where the plaintiff withdrew otherwise valid 20 claims seeking damages in order to solely seek restitution as a matter of trial strategy.

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