Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Certification denied in action against payment processor over ebook website advertising, (Apr 18, 2014)

By: Jody Coultas, J.D.

The federal district court in San Francisco declined to certify an online purchaser’s California Unfair Competition Law (UCL), False Advertising Law (FAL), and Consumers Legal Remedies Act (CLRA) class action claims against Plimus, Inc. based on the purchaser’s failure to show questions of law and fact common to the class (Yordy v. Plimus, Inc., April 15, 2014, Henderson, T.).

The purchaser paid a one-time $49.99 fee for access to the website TheNovelNetwork.com. TheNovelNetwork website, along with two other Unlimited Download Websites, allegedly promised unlimited downloads of ebooks, but offered links only to ebooks already available elsewhere on the Internet for free. Plimus allegedly controlled the advertising for the websites, and profited by taking a percentage of each fee as a payment processing charge.

Yordy asserted putative class action claims against Plimus for violation of the UCL, FAL, and CLRA. Plimus denied the charges, claiming that it only processed payments for the websites and connected them to third-party marketers, but was not involved in their promotion. Yordy moved for class certification.

The court previously denied certification on October 29, 2013, based on a failure to show that the proposed class satisfied the commonality, typicality, and adequacy requirements of Federal Rule of Civil Procedure 23(a).

Federal Rule of Civil Procedure 23(a) requires a plaintiff to demonstrate that (1) “the class is so numerous that joinder of all members is impracticable,” (2) “there are questions of law or fact common to the class,” (3) “the claims or defenses of the representative parties are typical of the claims or defenses of the class,” and (4) “the representative parties will fairly and adequately protect the interests of the class.”

The purchaser failed to demonstrate that there were questions of law and fact common to the class, according to the court. Plimus argued that, even if the questions at issue could be resolved on a class-wide basis, there was no evidence that it directly participate in the alleged unlawful activity. Under the UCL and FAL, a defendant’s liability must be based on his actual participation or control over the unlawful activities. Vicarious liability is insufficient. Therefore, the proposed common questions regarding whether Plimus facilitated the websites’ activity, promoted them to other marketers, or had knowledge of their fraud were irrelevant to whether Plimus was liable for the violations alleged. None of the common questions were based on actions taken by Plimus regarding the alleged misrepresentations.

The court also noted that the purchaser failed to show that Plimus operated each website in similar manner such that its liability could be assessed as to all three websites together. There was no evidence that Plimus’s involvement with the allegedly false advertising was common across all three websites.

The case is No. C12-0229 TEH.

Attorneys: Mark Stephen Eisen (Edelson PC) for Kimberly Yordy. Nickolas Alexander Kacprowski (Kirkland & Ellis LLP) for Plimus, Inc.

Companies: Plimus, Inc.

Cases: StateUnfairTradePractices CaliforniaNews