Street v. Amazon.com Services Inc

Opinion

5 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 6 AT SEATTLE

7 MARY AND MATTHEW STREET, NO. 2:21-cv-0912-BJR

Plaintiffs, 8 ORDER DENYING MOTION TO v. AMEND 9 AMAZON.COM SERVICES, LLC, a 10 Delaware Limited Liability Company, and AMAZON DIGITAL SERVICES, LLC, a 11 Delaware Limited Liability Company,

Defendants. 12

13 I. INTRODUCTION 14 This matter comes before the Court on a Motion to Amend, Dkt. No. 44, filed by Plaintiffs 15 Mary and Matthew Street (“Plaintiffs” or the “Streets”). Plaintiffs filed this Motion after the Court 16 granted the Motion to Dismiss, filed by Defendants Amazon.com Services, LLC and Amazon 17 Digital Services, LLC (collectively “Defendants” or “Amazon”). The Order Granting the Motion 18 to Dismiss was “grounded in the insufficiency of Plaintiffs’ allegations,” and was without 19 prejudice, providing Plaintiffs the opportunity to cure the deficiencies in their complaint by 20 amendment. Order Granting Mot. to Dismiss, Dkt. No. 43, at 11. 21 Having reviewed the parties’ briefs and supporting material filed in support of and 22 opposition to the motion, including the Proposed Second Amended Complaint (“PSAC”), and the 23

24 ORDER DENYING MOTION TO AMEND

25 2 II. BACKGROUND 3 This proposed class action challenges an Amazon technology called Sidewalk, which is 4 enabled on certain newer models of Amazon’s Echo smart speakers (“Sidewalk Devices”). The 5 technology “enables those Sidewalk Devices to connect to other Sidewalk-enabled devices nearby 6 through their Bluetooth connections, creating a new, shared network.” PSAC, ¶ 3. Using this 7 network, nearby third-party devices such as pet trackers like Tile can connect to the internet and 8 send small amounts of data (concerning, for example, their location) using the private residential 9 internet accounts belonging to owners of the Sidewalk Devices. Id., ¶¶ 3, 4. Use of these internet 10 accounts is capped at 500 megabytes. Id., ¶ 42. Echo owners are not compensated for use of their 11 internet, but can opt out of Sidewalk by disabling the feature on their devices. Opting out requires

12 owners to “take several steps to disable Sidewalk on their devices.” Id., ¶ 43. 13 Plaintiffs own a Sidewalk-compatible Echo Dot smart speaker, which they purchased in 14 2018. PSAC, ¶ 14. Sidewalk launched on June 8, 2021, and Plaintiffs disabled the Sidewalk 15 feature on their Echo on June 27, 2021. Id., ¶¶ 46, 50. The Streets have alleged “on information 16 and belief” that during that 19-day period, Sidewalk provided third parties access to the internet 17 using Plaintiffs’ personal internet account, which “consumed data from the Streets’ limited 18 Internet data allocations.” Id., ¶¶ 16, 53. The Streets pay for internet access, with a data limit of 19 1.2 terabytes1 a month, but do not allege that they incurred any overage charges or other fees 20 during the period that Sidewalk was enabled on their device. They also do not claim that their 21

23 1 A terabyte is equal to one million megabytes.

25 2 only other putative injury they claim to have suffered relates to the “significant time” they spent 3 learning about how to disable Sidewalk on their Echo. Id., ¶ 50. 4 On March 21, 2022, the Court granted Amazon’s Motion to Dismiss, finding several 5 critical deficiencies in Plaintiffs’ First Amended Complaint. The Court found, among other 6 things, that Plaintiffs had failed “to include in their FAC any allegation their Echo ever actually 7 connected through Sidewalk, or that their data and bandwidth were ever actually shared,” and that 8 Plaintiffs “fail[ed] . . . to allege facts supporting [a] required element of their theft claim.” Order 9 Granting Mot. to Dismiss, p. 5. In their opposition to Amazon’s Motion to Dismiss, Plaintiffs 10 requested leave to amend their FAC. The Court granted Plaintiffs leave to file a motion to amend, 11 setting a deadline of April 22, 2022. On that day, Plaintiffs filed the instant motion.

12 Like the First Amended Complaint, the Proposed Second Amended Complaint includes 13 three claims: (1) for violation of the Washington Consumer Protection Act (“CPA”), RCW 14 19.86.010, et seq.; (2) for Theft of Telecommunications Services (“TTS”), under RCW § 15 9A.56.268 and .262; and (3) for unjust enrichment. Plaintiffs seek an award of damages and 16 injunctive relief, and propose to represent a class of “[a]ll persons in the United States who 17 bought or acquired and use an Amazon Sidewalk Device.” PSAC, ¶ 55. 18 /// 19 /// 20

21 2 The PSAC does make reference to a potential “increased risk to the security of [Plaintiffs’] personal data,” PSAC, ¶ 8, but Plaintiffs have not argued that this caused them injury, and the facts as alleged here would not support them 22 if they did. See Krottner v. Starbucks Corp., 628 F.3d 1139, 1143 (9th Cir. 2010) (increased risk of future harm is an injury for Article III standing only where plaintiffs “alleged a credible threat of real and immediate harm.”). 23

25 2 A. Standard on a Motion to Amend: Whether Amendment Would Be Futile 3 Under Federal Rule 15, leave to amend a complaint “shall be freely given when justice so 4 requires.” Fed. R. Civ. P. 15(a). However, leave need not be granted when the proposed 5 amendment is futile.3 See Wheeler v. City of Santa Clara, 894 F.3d 1046, 1059 (9th Cir. 2018). A 6 proposed amended complaint is futile if it would be immediately “subject to dismissal.” Steckman 7 v. Hart Brewing, Inc., 143 F.3d 1293, 1298 (9th Cir.1998). Thus, the “proper test to be applied 8 when determining the legal sufficiency of a proposed amendment is identical to the one used 9 when considering the sufficiency of a pleading challenged under Rule 12(b)(6).” Miller v. Rykoff– 10 Sexton, Inc., 845 F.2d 209, 214 (9th Cir.1988). 11 To avoid a Rule 12(b)(6) dismissal, “a complaint must contain sufficient factual matter,

12 accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 13 662, 678 (2009); see Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-570 (2007).4 “A claim has 14 facial plausibility when the plaintiff pleads factual content that allows the court draw the 15 reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 16 678. “Plausibility” means less than “probability,” but “more than a sheer possibility,” and facts 17 that are “merely consistent with” a defendant’s liability stop “short of the line between possibility 18

19 3 Defendants do not raise any of the other recognized grounds for denying a motion to amend a complaint, such as bad faith or prejudice. 20 4 Both Plaintiffs and Defendants assert that “[a] proposed amendment is futile if no set of facts can be proven under the amended pleading that would constitute a valid and sufficient claim.” Defs.’ Opp. at 3; Pls.’ Rep. at 2 (citing 21 Miller, 845 F.2d at 214). However, “Twombly retired the Conley no-set-of-facts test.” Iqbal, 556 U.S. at 678. In the wake of Twombly and Iqbal, therefore, “it might more appropriately be said that an amendment is futile when the proposed amended complaint fails to allege ‘enough facts to state a claim to relief that is plausible on its face.’” 22 Fulton v. Advantage Sales & Mktg., LLC, 2012 WL 5182805, at *2–3 (D. Or. Oct. 18, 2012) (citations omitted) (acknowledging that Twombly abrogated Conley’s “no set of facts” standard for purposes of evaluating the futility of 23 a motion to amend a complaint).

25 2 material fact are taken as true and construed in the light most favorable to the non-moving party. 3 Faulkner v. ADT Sec. Servs., 706 F.3d 1017, 1019 (9th Cir. 2013). However, the Court is not 4 required “to accept as true allegations that are merely conclusory, unwarranted deductions of fact, 5 or unreasonable inferences.” Wilson v. Hewlett–Packard Co., 668 F.3d 1136, 1145 n. 4 (9th Cir. 6 2012); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). 7 B. Whether Plaintiffs’ Amendments Would Be Futile 8 Defendants argue that the claims in the Proposed Second Amended Complaint fail 9 because the Streets have not alleged enough facts to support a reasonable inference that they 10 sustained any injury. “In a class action, the named plaintiffs attempting to represent the class 11 ‘must allege and show that they personally have been injured, not that injury has been suffered

12 by other, unidentified members of the class to which they belong and which they purport to 13 represent.’” In re Zappos.com, Inc., 108 F. Supp. 3d 949, 953–54 (D. Nev. 2015) (quoting Warth 14 v. Seldin, 422 U.S. 490, 502 (1975)). Adequately alleging injury is necessary to establish both 15 standing in this Court under Article III to the U.S. Constitution, and a required element of each 16 of Plaintiffs’ three claims. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992) (to 17 establish standing “the plaintiff must have suffered an ‘injury in fact’—an invasion of a legally 18 protected interest which is (a) concrete and particularized and (b) actual or imminent, not 19 conjectural or hypothetical”) (citations omitted); Panag v. Farmers Ins. Co. of Washington, 166 20 Wn.2d 27, 57 (2009) (“Washington requires a private CPA plaintiff to establish the deceptive act 21 caused injury.”) (citing Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105

22 Wn.2d 778, 794 (1986)); Young v. Young, 164 Wn.2d 477, 484–85 (“A claim of unjust 23

25 2 received benefit is at the plaintiff’s expense, and (3) the circumstances make it unjust for the 3 defendant to retain the benefit without payment.”); RCW 9A.56.268(2) (theft of 4 telecommunications services private cause of action may be brought only by “[a] person who 5 sustains injury to his or her person, business, or property.”). 6 In this case, Plaintiffs have alleged “on information and belief, Amazon’s use of the 7 Street Plaintiffs’ bandwidth through Sidewalk consumed data from the Streets’ limited Internet 8 data allocations and also exposed them to possible overage charges for exceeding their data 9 allocation.” PSAC, ¶ 16. In connection with their CPA claim, Plaintiffs allege that their damages 10 amount to “the value of their personal Internet bandwidth, time spent learning about the 11 Sidewalk network, time spent disabling the Sidewalk function on Sidewalk Devices, costs of

12 Internet data use overages charged by Internet service providers, and other fees, expenses, and 13 costs to be proven at trial.” PSAC, ¶ 76. On closer examination of their proposed amended 14 complaint, the Court concludes that the Streets have failed to allege facts in the PSAC that would 15 give rise to an inference that they have been injured, and that their proposed amendments would 16 therefore be futile. 17 1. Plaintiffs’ Pleading That They Suffered Injury “On Information and Belief” Is Inadequate to Confer Standing 18 According to the facts alleged in the PSAC, use of Plaintiffs’ internet account would have 19 occurred when “Amazon’s partner companies’ Bluetooth devices like Tile send packets of data 20 through Sidewalk to Amazon’s servers.” PSAC ¶ 83. But the PSAC does not sufficiently allege 21 facts that support a reasonable inference regarding when, how often, or even if this ever 22 occurred. 23

25 2 connected to the Street Plaintiffs’ Echo device over the Sidewalk network and used the Street 3 Plaintiffs’ limited Internet bandwidth.” PSAC, ¶ 53. Plaintiffs argue that whether the Sidewalk 4 technology was ever used on their device is information known only to Defendants, and that 5 pleading on information and belief is appropriate when facts are in the “peculiar possession” of a 6 defendant or otherwise unavailable to the plaintiff. See Park v. Thompson, 851 F.3d 910, 928 7 (9th Cir. 2017). Even where information and belief pleading is appropriate, however, it must still 8 be “based on factual information that makes the inference of culpability plausible.” Arista Recs., 9 LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010). Furthermore, in the highly unusual case in 10 which a plaintiff pleads an injury on information and belief, such as here, the concern is not 11 merely whether the plaintiff has adequately pleaded a necessary element of its claims, but

12 whether it has even suffered a “concrete and particularized” injury necessary to confer standing. 13 See Brickstructures, Inc. v. Coaster Dynamix, Inc., No. 16 CV 10969, 2017 WL 4310671, at *4 14 (N.D. Ill. Sept. 28, 2017) (“[I]nformation and belief allegations are perfectly fine in appropriate 15 circumstances . . . But where something is alleged which should be within a plaintiff’s personal 16 knowledge, an information and belief allegation thrusts the complaint into the realm of 17 speculation. . . . If plaintiff has nothing on which it can base a clear and direct allegation that it 18 has suffered an injury, this litigation is grounded on pure speculation, something that [Twombly 19 and Iqbal] prohibit. . . . But the problem in the [context of plaintiff’s Lanham Act claim] is even 20 more significant. Without an adequate allegation that it has sustained an injury within the reach 21 of the Lanham Act, it is unclear that plaintiff has articulated an Article III case or controversy.”).

22 23

25 2 are sparse. Sidewalk was activated on June 8, 2021. PSAC, ¶ 46. The Streets disabled the feature 3 on their Echo on June 27, 2021. PSAC, ¶ 50. For Sidewalk to have provided access to the 4 Streets’ internet account, third-party devices would have had to connect through their Echo 5 during that 19-day period. The only such third-party device that Plaintiffs identify by name is the 6 Tile brand tracker, which was not connected to the Sidewalk network until June 14, 2021, 7 narrowing the period a Tile could have accessed the Streets’ Echo to 13 days. PSAC ¶ 46.5 The 8 Streets live in a “densely populated area near downtown Miami,” which they allege, with no 9 factual support, “likely contains other Sidewalk devices and Amazon partner company devices 10 like Tile.” Id., ¶ 49. Apart from this allegation, the Court is provided no facts that support a 11 plausible inference that a Tile device connected through the Streets’ Echo in that 13-day period,

12 such as an estimate of how many Tile devices were in circulation nationally at the time, let alone 13 in the Miami area;6 a description of how and when a Tile device might connect through a nearby 14 Sidewalk device (for example, do such devices automatically and continuously connect through 15 and draw data from any and all nearby Echoes as a pet walks down the street? Or do they use 16 data only episodically, as when a pet owner activates a function to find a lost pet?); how close a 17 18 5 Plaintiffs do not provide any information regarding any device, other than the Tile, that would have used the 19 Streets’ Echo. They do reference partnerships Amazon may have with two other companies—Level and CareBand—but do not provide any details regarding when (or even if) those devices might have joined the Sidewalk network, or under what circumstances such devices might have been activated to send data through the Streets’ (or 20 anyone’s) Sidewalk device. PSAC, ¶ 39. 6 In their briefing, Plaintiffs state that “the number of Sidewalk-enabled devices that are in consumer hands indicates 21 that they are likely in use in just about every neighborhood across the country.” Rep. at 3. But the PSAC does not contain any allegations supporting this conclusory claim, including what that number (even roughly) might be. Instead, the PSAC alleges only that “at least tens of millions of Sidewalk Devices have been sold nationwide, with 22 more than 100 million Echo devices sold.” Id. at ¶ 57 (emphasis added). The phrase “Sidewalk Devices” refers to Echoes and other Amazon smart speakers that enable access to the putative class’s internet accounts; not to Tile 23 trackers and other similar devices, which are what would theoretically have caused Plaintiffs’ injury. See PSAC, ¶ 2.

25 2 from the Plaintiffs’ Echo to the nearest public space, such as a street or sidewalk, where a Tile 3 device might have passed by; or other tangible, real-world facts supporting Plaintiffs’ conclusory 4 assertion that “Sidewalk-enabled devices most likely connected to their Echo and used their 5 bandwidth without their consent.” Rep. at 1. The Court is provided almost no facts to assess just 6 how “likely” this event truly was. “Where a complaint pleads facts that are ‘merely consistent 7 with’ a defendant’s liability, it stops short of the line between possibility and plausibility of 8 ‘entitlement to relief.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557). In the 9 absence of such facts giving rise to a reasonable inference that a third-party device accessed and 10 used the Streets’ internet in the short period of time during which Sidewalk was activated on 11 their Echo, Plaintiffs have failed to articulate a “concrete and particularized” injury and thus their

12 pleading not only inadequately states any claim; it also fails to establish that these Plaintiffs have 13 standing. 14 2. Even Assuming Sidewalk Accessed Plaintiffs’ Internet as Claimed, Plaintiffs Have Not Articulated a Cognizable Injury 15 The Court also concludes that even if one could reasonably infer from Plaintiffs’ 16 allegations that third-party devices connected through their Echo, Plaintiffs have not sufficiently 17 pleaded a cognizable injury supporting any of their three claims. 18 a. Washington Consumer Protection Act Claim 19 Under Washington’s CPA, “[n]o monetary damages need be proven so long as there is 20 some injury to property or business.” Sorrel v. Eagle Healthcare, Inc., 110 Wn. App. 290, 298 21 (2002). Nevertheless, a plaintiff must allege and prove facts showing that he was at least 22 “deprived of the use of his property as a result of an unfair or deceptive act or practice.” Id. 23

25 2 overage or other fees; they have not even alleged that they were “deprived of the use of their 3 property” as a result of Sidewalk accessing their internet connection. They have not alleged, for 4 example, that Sidewalk caused an interruption—or even a perceptible slowdown—in their 5 internet connectivity. Compare In re: Lenovo Adware Litig., No. 15-MD-02624-RMW, 2016 6 WL 6277245, at *9 (N.D. Cal. Oct. 27, 2016) (“[P]laintiffs in the instant case plausibly allege 7 that the operation of VisualDiscovery significantly degraded the performance of the Lenovo 8 computers. Plaintiffs describe VisualDiscovery as running “constantly,” and allege that while 9 VisualDiscovery was operational, it decreased battery life, slowed internet upload speeds by as 10 much as 55 percent and download speeds by as much as 16 percent, and caused certain webpages 11 to fail to load correctly or not load at all. Plaintiffs allege that consumers complained that

12 VisualDiscovery interfered with watching videos online, caused the computers to run slow, 13 blocked or slowed connections to certain websites, and caused security issues.”) (citations 14 omitted). In the absence of an allegation that Sidewalk somehow deprived Plaintiffs of the use of 15 their property, they fail to state a claim on which relief can be granted. See Brodsky v. Apple Inc., 16 445 F. Supp. 3d 110, 124 (N.D. Cal. 2020). (“Plaintiffs’ allegations are insufficient to allege the 17 requisite showing of harm. . . . Plaintiffs do not allege that 2FA prevents Plaintiffs from logging 18 in after that delay, or that Plaintiffs’ devices are “damaged” by the delay.”); Opperman v. Path, 19 Inc., 87 F. Supp. 3d 1018, 1055–56 (N.D. Cal. 2014) (finding that “[b]ecause Plaintiffs have not 20 quantified or otherwise articulated the alleged resource usage, they fail to allege an injury that 21 can serve as the basis of standing” even where plaintiffs claimed “the unauthorized transmissions

25 2 and caused loss of use and enjoyment of some portion of each iDevice’s useful life”). 3 Plaintiffs have also attempted to cast the “significant time” they spent learning about and 4 disabling Sidewalk as an injury. PSAC, ¶ 50. However, while “[p]ecuniary losses occasioned by 5 inconvenience may be recoverable as actual damages, . . . damages for . . . inconvenience are not 6 recoverable under the CPA.” Panag, 166 Wn.2d at 57–58 (citing Keyes v. Bollinger, 31 Wn. App. 7 286, 295 (1982) (emphasis added). Plaintiffs have not alleged any “pecuniary” losses occasioned 8 by the “significant time” they spent on their Echo. The cases Plaintiffs cite for the proposition that 9 the CPA recognizes injury for the expense of “time and money,” therefore, are inapposite. See, 10 e.g., McDonald v. OneWest Bank, FSB, 929 F. Supp. 2d 1079, 1098 (W.D. Wash. 2013) (denying 11 summary judgment on CPA claim where plaintiff provided evidence the defendant’s “deceptive

12 acts forced him to expend time and money” to investigate) (emphasis added). There is no 13 authority supporting Plaintiffs’ position that time alone, in the absence of pecuniary consequence, 14 is a cognizable injury under the CPA. And even if it were as a general matter, here Plaintiffs’ 15 claim that they spent “significant” time and had to take “several steps” to disable the feature is too 16 vague and de minimus to constitute the kind of injury for which the law provides redress. 17 b. Unjust Enrichment Claim 18 Plaintiffs’ claim for unjust enrichment fails for the same reasons. A claim for unjust 19 enrichment provides “the method of recovery for the value of the benefit retained absent any 20 contractual relationship because notions of fairness and justice require it.” Young, 164 Wn. 2d at 21 484. To prevail on such claim, however, a plaintiff must demonstrate, among other elements, that

22 the defendant was enriched at the “plaintiff’s expense.” Id. at 484–85. In the absence of an 23

25 2 claim is appropriate. See Lavington v. Hillier, 510 P.3d 373, 377 (Wash. Ct. App. 2022) 3 (affirming dismissal of unjust enrichment claim based on defendant’s use of plaintiff’s driveway 4 without permission, where defendant received a benefit, but plaintiff “acknowledged that she did 5 not give anything to [defendant] that benefited him”). Here, as noted above, the PSAC fails to 6 allege facts supporting an inference of such expense. Even if Plaintiffs had plausibly alleged that 7 third parties accessed the Sidewalk network through their Echo (which they did not), Plaintiffs 8 were not charged an overage fee therefor, or suffer any alleged pecuniary consequences that could 9 be characterized as an “expense” to them as a result. Because the unjust enrichment claim would 10 therefore be subject to dismissal, the proposed amendment is futile. 11 c. Theft of Telecommunications Services Claim

12 Finally, because Plaintiffs have failed to allege any injury, the Court denies their request 13 to amend the Theft of Telecommunications Services claim. A person is authorized to bring a 14 private right of action under the TSS statute only if he or she suffered an “injury to his or her 15 person, business, or property.” RCW 9A.56.268(2). It is clear that Plaintiffs cannot plead 16 sufficient allegations, as discussed above, to support an inference any such injury occurred. Their 17 request to amend the TSS claim is therefore also denied. 18 /// 19 /// 20 21

25 2 For the foregoing reasons, Plaintiffs’ Motion to Amend is DENIED, and this matter is 3 hereby DISMISSED with prejudice. 4 DATED this 25th day of August, 2022. 5 A 6 7 B arbara Jacobs Rothstein U.S. District Court Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23