Antitrust Law Daily Wrap Up, PRIVACY—W.D. Wash.: Xbox LIVE subscribers lacked standing to bring unfair competition claims against Microsoft, (Sep 12, 2014)

By Greg Hammond, J.D.

Two former Xbox LIVE subscribers failed to allege sufficient privacy and unfair competition claims against computer software and application company, Microsoft Inc. In granting Microsoft’s motion to dismiss, the federal district court in Seattle determined that the subscribers failed to allege any injury, and therefore did not have standing to pursue their claims (Mendoza v. Microsoft Inc., September 11, 2014, Pechman, M.).

Background. Xbox LIVE is a well-known gaming portal that provides consumers with streaming video via Internet access, as well as online gaming, online video rental, and online video services. Manuel Mendoza and Frank Ortega are two self-professed former subscribers to Xbox LIVE, and filed a putative class action, alleging that Microsoft retained and disclosed their “names, addresses, credit information, billing addresses, and video programming viewing histories after cancellation of their membership services with Microsoft’s X-Box LIVE Gaming System.” They alleged that Microsoft violated the Video Privacy Protection Act (VPPA), California Customer Records Act (CCRA), California’s Unfair Competition Law (UCL), and the Texas Deceptive Trade Practices Act (DTPA). Microsoft moved to dismiss the suit, arguing that Mendoza and Ortega never had Xbox LIVE accounts and otherwise failed to allege a particularized injury.

Xbox LIVE subscriptions. In support of its motion to dismiss, Microsoft disclosed that it did not have any record that either Mendoza or Ortega subscribed to Xbox LIVE, and argued that they could not assert claims when they never purchased Xbox LIVE services. However, the court determined that at this early stage of litigation, the declarations of Mendoza and Ortega, stating that they had Xbox LIVE accounts, were sufficient.

Particularized injury. To establish Article III standing, Mendoza and Ortega were required to allege an invasion of a legally protected interest that is (1) particularized, and (2) actual or imminent, not conjectural or hypothetical. However, the court agreed with Microsoft and found that both consumers failed to identify an injury that is actual or imminent and particularized. Instead, the court noted that Mendoza’s and Ortega’s allegations were conclusory and formulaic recitations of the CPPA and CRRA statutes and that they failed to “allege a single fact to support their allegation that Microsoft allegedly retained and disclosed personally identifiable information.” Consequently, the court concluded that the consumers failed to allege sufficient facts to establish a particularized injury under Article III for the VPPA and CRRA claims, or to establish a concrete injury-in-fact under Article III for the UCL and DTPA claims.

The case number is C14-316-MJP.

Attorneys: Lish Whitson (Lish Whitson PLLC) for Manuel Mendoza. Rebecca J. Francis (Davis Wright Tremaine) for Microsoft Inc.

Companies: Microsoft Inc.

Cases: Privacy StateUnfairTradePractices WashingtonNews