Case Name: Mayron v. Google, Inc.
Case No.: 2015-1-CV-275940

This is a putative class action brought by plaintiff Eric Mayron (“Plaintiff”). (First Amended Complaint (“FAC”), ¶ 1.) Plaintiff alleges that defendant Google, Inc. (“Google”) offers free and paid storage plans for Google Drive, which gives subscribers the ability to reach stored-data files from any smartphone, tablet, or computer. (FAC, ¶ 17.) Defendant offers subscribers 15 gigabytes of storage for free. (Ibid.) Defendant also offers the ability to upgrade membership to its paid service by purchasing a storage plan. (Ibid.) In connection with the subscriptions, Plaintiff alleges:

During the Class Period, Defendant made automatic renewal and/or continuous service offers to consumers in California and (a) at the time of making the automatic renewal and/or continuous service offers, failed to present the automatic renewal offer terms, and/or continuous service offer terms, in a clear and conspicuous manner and in visual proximity to the request for consent to the offer before the subscription or purchasing agreement was fulfilled in violation of Cal. Bus. & Prof. Code § 17602(a)(1); (b) charged Plaintiff’s and Class Members’ credit or debit cards, or third-party account [sic] . . . without first obtaining Plaintiff’s and Class Members’ affirmative consent to the agreement containing the automatic renewal offer terms and/or continuous service offer terms in violation of Cal. Bus. & Prof. Code § 17602(a)(2); and (c) failed to provide an acknowledgment that includes the automatic renewal and/or continuous service offer terms, cancellation policy, and information regarding how to cancel in a manner that is capable of being retained by the consumer in violation of Cal. Bus. & Prof. Code § 17602(a)(3).

(FAC, ¶ 2.)

The Complaint, filed on January 23, 2015, set forth the following causes of action: [1] Failure to Present the Automatic Renewal Offer Terms or Continuous Service Offer Terms Clearly and Conspicuously and in Visual Proximity to the Request for Consent Offer (Cal. Bus. & Prof. Code § 17602(a)(1)); [2] Failure to Obtain the Consumer’s Affirmative Consent Before the Subscription is Fulfilled (Cal. Bus. & Prof. Code §§ 17602(a)(2) and 17603); [3] Failure to Provide Acknowledgment with Automatic Renewal Terms and Information Regarding Cancellation Policy (Cal. Bus. & Prof. Code § 17602(a)(3); [4] Unfair Competition Law Violations (Cal. Bus. & Prof. Code § 17200, et seq.); and [5] Injunctive Relief (Cal. Bus. & Prof. Code § 17535). Defendant demurred to each cause of action on the grounds that they fail to state facts sufficient to constitute a cause of action against Defendant and, on February 26, 2016, the Court sustained the demurrer without leave to amend as to the first, second, and third causes of action, and with leave to amend as to the fourth and fifth causes of action.

The FAC, filed on March 17, 2016, sets forth the following causes of action: [1] Unfair Competition Law Violations (Cal. Bus. & Prof. Code § 17200, et seq.); and [2] Injunctive Relief (Cal. Bus. & Prof. Code § 17535). Defendant now demurs to each cause of action on the grounds that they fail to state facts sufficient to constitute a cause of action.

The first and second causes of action are both UCL claims based on Defendant’s alleged violation of the Automatic Renewal Law (“ARL”). The Automatic Renewal law provides, generally:

(a) It shall be unlawful for any business making an automatic renewal or continuous service offer to a consumer in this state to do any of the following:

(1) Fail to present the automatic renewal offer terms or continuous service offer terms in a clear and conspicuous manner before the subscription or purchasing agreement is fulfilled and in visual proximity, or in the case of an offer conveyed by voice, in temporal proximity, to the request for consent to the offer.

(2) Charge the consumer’s credit or debit card or the consumer’s account with a third party for an automatic renewal or continuous service without first obtaining the consumer’s affirmative consent to the agreement containing the automatic renewal offer terms or continuous service offer terms.

(3) Fail to provide an acknowledgment that includes the automatic renewal or continuous service offer terms, cancellation policy, and information regarding how to cancel in a manner that is capable of being retained by the consumer. If the offer includes a free trial, the business shall also disclose in the acknowledgment how to cancel and allow the consumer to cancel before the consumer pays for the goods or services.

(b) A business making automatic renewal or continuous service offers shall provide a toll-free telephone number, electronic mail address, a postal address only when the seller directly bills the consumer, or another cost-effective, timely, and easy-to-use mechanism for cancellation that shall be described in the acknowledgment specified in paragraph (3) of subdivision (a).

(c) In the case of a material change in the terms of the automatic renewal or continuous service offer that has been accepted by a consumer in this state, the business shall provide the consumer with a clear and conspicuous notice of the material change and provide information regarding how to cancel in a manner that is capable of being retained by the consumer.

(d) The requirements of this article shall apply only prior to the completion of the initial order for the automatic renewal or continuous service, except as follows:

(1) The requirement in paragraph (3) of subdivision (a) may be fulfilled after completion of the initial order.

(2) The requirement in subdivision (c) shall be fulfilled prior to implementation of the material change.

(Bus. & Prof. Code, § 17602.)

In addition to arguing that Plaintiff’s claims fail substantively as a matter of law, Defendant argues (as it did in connection with the demurrer to the Complaint) that Plaintiff lacks standing to sue under the UCL because Plaintiff did not lose money or property as a result of Defendant’s alleged violation of the ARL.

“Proposition 64 amended section 17204 to provide that no private party has standing to prosecute a UCL action unless he or she ‘has suffered injury in fact and has lost money or property as a result of the unfair competition.’” (Law Offices of Mathew Higbee v. Expungement Assistance Services (2013) 214 Cal.App.4th 544, 555.) In the FAC, Plaintiff makes the conclusory allegation that, “as a result of Defendant’s unlawful policies and/or practices, Plaintiff lost money and/or property.” (FAC, ¶ 7.) A court does not assume the truth of conclusions of law on demurrer. (Hawkins v. TACA International Airlines, S.A. (2014) 223 Cal.App.4th 466, 478.) Therefore, Plaintiff’s allegation is insufficient to establish standing.

Plaintiff argues that, as a result of Defendant’s violations of the ARL, Plaintiff’s drive space is deemed an unconditional gift and therefore each monthly payment Plaintiff is unlawfully charged for the drive space is an economic injury that can establish standing. Business and Professions Code section 17603, states:

In any case in which a business sends any goods, wares, merchandise, or products to a consumer, under a continuous service agreement or automatic renewal of a purchase, without first obtaining the consumer’s affirmative consent as described in Section 17602, the goods, wares, merchandise, or products shall for all purposes be deemed an unconditional gift to the consumer, who may use or dispose of the same in any manner he or she sees fit without any obligation whatsoever on the consumer’s part to the business, including, but not limited to, bearing the cost of, or responsibility for, shipping any goods, wares, merchandise, or products to the business.

(Bus. & Prof. Code, § 17603.)

In connection with the demurrer to the Complaint, the Court stated that Section 17603 refers to “goods, wares, merchandise, or products” and does not include “services.” The Court found, therefore, that this section only applies to tangible goods or products and that it does not apply to Google Drive because Google Drive is a “service.”

Plaintiff contends that Google Drive is a tangible product that is subject to Section 17603. Defendant responds that Google Drive is an intangible cloud-based storage service. In support of the contention that Google Drive is a product, Plaintiff relies on one of this Court’s orders in a different case – Siciliano v. Apple, Inc., Case No. 1-13-CV-257676, where the Court found that because software works a physical change on a hard drive, it can be considered a product. That order is not binding authority and is therefore not relevant. Moreover, that case concerned the CLRA and it is not apparent that the same definition of product would apply to the ARL for purposes of determining whether something can be deemed an unconditional gift. Lastly, the Siciliano order relied on Haskins v. Symantec Corporation (N.D. Cal. 2013) 2013 WL 6234610. In that case, the software at issue could be purchased either online or on a disc in a store. The court found it would be inequitable to treat the physical disc as a “tangible chattel,” but not the software delivered online, stating: “At least where the same software can be purchased both in a store and online, construing the statute to exempt only the version purchased online would not be a liberal construction consistent with the CLRA’s purposes.” (Id. at *9-10.) In the instant matter, Google Drive is available only online; there is no allegation that it can be purchased on a disc or in some other physical format. Therefore, the cases relied on by Plaintiff for the proposition that Google Drive is a product are inapposite.

The plain language of Section 17603 contemplates that a “good” or “product” is something tangible. Section 17603 refers to the consumer’s ability to use or dispose of the good or product and the consumer’s lack of obligation to pay for shipping the good or product back to the business. (Bus. & Prof. Code, § 17603. Google Drive is not a tangible good that can be disposed of or shipped back to Defendant. It is intangible and is a service provided to consumers who pay a subscription fee. (See FAC, ¶ 7.) Consequently, Section 17603 does not apply to make Google Drive an “unconditional gift” and Plaintiff cannot establish that he lost money or property in this manner.

The Court previously stated in connection with the prior demurrer:

[T]he allegations show that Plaintiff received the service for which he paid. There are no allegations that Plaintiff tried to cancel the service, or even that he did not want the service. If Plaintiff used the service for which he was charged, then it is not apparent how he has lost money or property as a result of any allegedly unlawful conduct by Defendant; Defendant simply charged Plaintiff for a service provided to Plaintiff that Plaintiff used.

(Order After Hearing on February 5, 2016, Exhibit A.)

Plaintiff has added no allegations to cure this defect. Plaintiff also fails to assert that this defect can be cured. Accordingly, Defendant’s demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.