Antitrust Law Daily Wrap Up, FALSE ADVERTISING—NDCal: Netflix Not Liable for Statements About Availability of Captioned Movies, (Jan 15, 2013)

By Jody Coultas, J.D.

A Netflix, Inc. subscriber could not state California consumer protection law claims against Netflix for allegedly misrepresenting the company’s intentions to offer movies with captions and/or subtitles, the federal district court in San Jose has held (Cullen v. Netflix, Inc., January 10, 2013, Davlia, E.).

The subscriber was a deaf individual and member of Netflix. The company’s website stated that “more than 3,500 TV episodes and movies have subtitles available, representing about 30% of viewing” and noted that more were added each week. Netflix allegedly represented that it would reach 80% viewing coverage by the end of 2011. A blog entry on Netflix’s website stated that it reached that goal and that 80% of the hours streamed in the U.S. were of content with captions or subtitles available. The subscriber alleged that these statements were false and misleading in violation of the California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumer Legal Remedies Act (CLRA).

The court found that the subscriber failed to sufficiently plead that his injuries were caused by the allegedly false, deceptive, or misrepresentative statements made by Netflix. The injury alleged was the monetary loss from paying for and maintaining his Netflix subscription. Because the subscriber began subscribing to Netflix well before he read the statements at issue, the injury could not have been caused by those statements. The claim that the subscriber maintained the subscription based on the misleading statements was insufficient to confer standing because it was unsubstantiated.

Even if the subscriber had standing, the court would have dismissed the claims for failure to state a claim. The subscriber alleged that the statements made on Netflix’s website constituted fraud and misrepresentation. At issue was the discrepancy between the ways the subscriber and Netflix calculated the percentage of online streaming content with closed captioning. Netflix’s calculations and assertions were not false and would not have misled a reasonable consumer. Thus, the subscriber could not maintain the claims.

Netflix pricing scheme did not violate the UCL, according to the court. The subscriber alleged that Netflix’s DVD-by-mail subscription plans—which he considers to provide sufficient access to video programming for deaf individuals like himself—cost more than the online-only streaming subscription plans. However, the allegations were merely conclusory and insufficient to state a claim.

The case is No. 5:11-CV-01199-EJD.

Attorneys: Courtland Wayne Creekmore (The Weston Firm) for Donald Cullen. David Frank McDowell (Morrison & Foerster LLP) for Netflix, Inc.

Companies: Netflix, Inc.

Cases: Advertising CaliforniaNews