Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_07-cv-05938/USCOURTS-cand-5_07-cv-05938-2/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Non-Motor Vehicle

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United States District Court

For the Northern District of California

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ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS —No. C-07-05938 RMW

MAG

United States District Court

For the Northern District of California

E-FILED on 5/5/08

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

MARY SANBROOK on behalf of herself and

others similarly situated,

Plaintiff,

v.

OFFICE DEPOT, INC.,

Defendant.

No. C-07-05938 RMW

ORDER GRANTING IN PART AND

DENYING IN PART MOTION TO DISMISS

[Re Docket No. 6, 14]

Defendant Office Depot, Inc. ("Office Depot") moves to dismiss plaintiff Mary Sanbrook's

complaint. For the reasons set forth below, the court grants in part and denies in part defendant's

motion.

I. BACKGROUND

On July 24, 2006, plaintiff Mary Sanbrook bought a computer, printer and other products

from an Office Depot store in Mountain View, California. Compl. ¶ 5, Ex. 1. On the same date,

after seeing Office Depot's advertisements for the Performance Protection Plan ("the Plan"),

Sanbrook also purchased a two-year repair plan for $119.99. Id. ¶¶ 6, 21. The Plan is offered for

sale by Office Depot throughout the country to consumers who purchase items such as computers

and peripherals. Id. ¶ 8. Office Depot advertises the Plan as providing "100% of parts and labor

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1

 This brochure is attached to the complaint as Exhibit 2.

2

 The terms and conditions are attached to the complaint as Exhibit 3.

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS —No. C-07-05938 RMW

MAG 2

coverage from day one," "on-site service for your computer system," and "[c]ertified technical

assistance [] available toll free, 24 hours a day, 7 days a week." Compl. ¶¶ 9-11, Ex. 2. A brochure

containing the foregoing representations was given to Sanbrook and is allegedly given to every

purchaser at the time of sale.1 Id. ¶ 12. The terms and conditions for the Plan are separately

available on a website to users who click a link labeled "Register Your Plan."2

 Id. ¶ 13. The terms

and conditions are not distributed with the brochure and allegedly differ materially from the

representations set forth in the brochure distributed to consumers at the Office Depot store. Id. ¶¶

13-14; see also id. ¶¶ 16-18 (asserting that there are 26 categories of exclusions set forth in the terms

and conditions for the Plan that do not appear in the Plan's brochure).

In May 2007, Sanbrook's computer froze and she sought to have it repaired under the Plan. 

Compl. ¶ 22. Office Depot allegedly refused to repair the computer, asserting that it was still under

the manufacturer's warranty. Id. ¶ 23. Sanbrook then sought to have the problem fixed by the

manufacturer, only to be told that the problem was not covered by the manufacturer's warranty. Id. ¶

24. Sanbrook again contacted Office Depot and requested on-site repair of the computer, but was

told that Office Depot did not offer on-site repair. Id. ¶ 25. Sanbrook ultimately hired a third party

to repair the computer at a cost of $650.00. Id.

Sanbrook complained to Office Depot and received a refund of her $119.99 purchase price

for the Plan. Id. ¶ 26. She was also refunded approximately half of what she paid for the third party

repair of her computer, for a total refund of $450.00. Id. Sanbrook claims to have sustained

damages in the amount of the interest lost on the funds paid to Office Depot (or the amount gained

by Office Depot during the time Office Depot held Sanbrook's funds) as well as "consequential

damages of approximately $323.00." Id. ¶ 27. 

On October 12, 2007, Sanbrook filed a putative class action against Office Depot in the

Superior Court of California for the County of Santa Clara asserting causes of action for (1)

violation of Cal. Bus. & Prof. Code § 17200; (2) violation of the Consumer Legal Remedies Act

("CLRA"), Cal. Civ. Code § 1750; (3) violation of the Song-Beverly Consumer Warranty Act, Cal.

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3

 Plaintiff filed a motion to remand on December 26, 2007. She has since withdrawn that motion

stating that Office Depot has provided evidence that supports this court's jurisdiction over the action. 

See Docket No. 20. 

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS —No. C-07-05938 RMW

MAG 3

Civ. Code § 1790; (4) unjust enrichment; (5) breach of contract; (6) fraud; and (7) negligent

misrepresentation. On November 7, 2007, Office Depot removed the action to this court.3

 

II. ANALYSIS

A. CLRA

Office Depot argues that the CLRA is the exclusive mechanism for pursuing the remedies

sought in the instant action. Accordingly, Office Depot asks the court to dismiss plaintiff's first and

third through seventh claims for violations of Cal. Bus. & Prof. Code § 17200 and Cal. Civ. Code §

1790, and for unjust enrichment, breach of contract, fraud and negligent misrepresentation. 

In support of its position, Office Depot cites Vasquez v. Superior Court, 4 Cal. 3d 800 (1971)

and Outboard Marine Corp. v. Superior Court, 52 Cal. App. 3d 30 (1975), which state that the

CLRA "provides the exclusive remedy for conduct falling within its purview." Outboard Marine,

52 Cal. App. 3d at 35-36 (citing Vasquez, 4 Cal. 3d at 818). 

The current text of the CLRA contradicts Office Depot's position. Section 1752 of the

CLRA reads: 

The provisions of this title are not exclusive. The remedies provided herein for

violation of any section of this title or for conduct proscribed by any section of this

title shall be in addition to any other procedures or remedies for any violation or

conduct provided for in any other law. 

Nothing in this title shall limit any other statutory or any common law rights of the

Attorney General or any other person to bring class actions. Class actions by

consumers brought under the specific provisions of Chapter 3 [] of this title shall be

governed exclusively by the provisions of Chapter 4 []; however this shall not be

construed so as to deprive a consumer of any statutory or common law right to bring

a class action without resort to this title. If any act or practice proscribed under this

title also constitutes a cause of action in common law or a violation of another

statute, the consumer may assert such common law or statutory cause of action under

the procedures and with the remedies provide for in such law.

Cal. Civ. Code § 1752 (emphasis added). In 1975, this section was amended to add the highlighted

text above. As plaintiff points out, Vasquez was decided before the 1975 amendment of the CLRA.

Outboard Marine, although decided in 1975, does not appear to have considered the 1975

amendment to the CLRA, but instead relies heavily on Vasquez in reaching its conclusion that the

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ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS —No. C-07-05938 RMW

MAG 4

CLRA provides the exclusive remedy for conduct falling within the proscriptions set forth in the act. 

See Outboard Marine, 52 Cal. App. 3d at 36 ("The Supreme Court has made it clear in Vasquez that

the legislative intent was not to grant consumers the unfettered discretion whether or not to sue

under the act. The court pointed out that consumers have no choice if the defendant's conduct falls

within the purview of the act, for it provides the exclusive remedy."). Thus, the court finds Office

Depot's contention that the CLRA provides the exclusive mechanism for plaintiff's claims to be

without merit. Cf. Kraus v. Trinity Management Services, Inc., 23 Cal. 4th 116, 153-54 (2000)

(Werdegar, J., concurring and dissenting) ("[T]he CLRA sweepingly declares its provisions are 'not

exclusive' and are 'in addition to any other procedures or remedies' in 'any other law.'"). 

Accordingly, the court declines to dismiss plaintiff's first and third through seventh causes of action

on that basis at the pleading stage.

B. CLRA Demand Letter

At least thirty days prior to initiating an action for damages under the CLRA, a consumer

plaintiff must "(1) Notify the person alleged to have employed or committed methods, acts, or

practices declared unlawful by Section 1770 of the particular alleged violations of Section 1770."

and "(2) Demand that the person correct, repair, replace, or otherwise rectify the goods or services

alleged to be in violation of Section 1770." Cal. Civ. Code § 1782(a). This section requires the

notice to be in writing and be sent certified or registered mail, return receipt requested, to the place

where the transaction occurred or to the person's principal place of business within California. Id.

By contrast, under § 1782(d), a consumer who brings an action for injunctive relief may give notice

after filing suit, and at least thirty days after giving notice, may amend her complaint to add a

request for damages.

Plaintiff acknowledges that although her complaint was filed on October 12, 2007, she did

not serve a demand letter as required by the CLRA until October 23, 2007. Nevertheless, she

contends that because the demand letter has now been filed, she may amend her complaint to include

claims for damages under the CLRA. Office Depot, on the other hand, argues that plaintiff's

complaint originally claimed damages under the CLRA and that any such claim must be dismissed

for failure to comply with § 1782(a).

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ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS —No. C-07-05938 RMW

MAG 5

Plaintiff asserts that it is clear that she sought only injunctive relief and not damages under

the CLRA in her complaint such that her having failed to give the required thirty-day notice is

irrelevant. It is true that the paragraphs of the complaint in which she sets forth her CLRA claim do

not expressly seek damages. Compl. ¶¶ 54-59. Instead, plaintiff cites Cal. Civ. Code § 1780(a) and

seeks relief as follows:

California Civil Code § 1780(a) provides, "Any consumer who suffers damages as a

result of the use or employment by any person of a method, act, or practice declared

to be unlawful by Section 1770 may bring an action against that person to obtain an

order enjoining those methods, acts, or practices.["] In accordance with that

provision, Named Plaintiff seeks an order prohibiting Defendant from

misrepresenting the Plan to potential purchasers.

Id. ¶ 59. Office Depot points out, however, that in her prayer for relief, plaintiff seeks not only an

injunction, but "an order awarding as damages all monies paid by Plaintiff and the Class Members

for any repairs that had to be made by third party companies because Office Depot refused to

perform under the Plan"; and "actual and punitive damages plus interest thereon." Compl. at 15 ¶¶

d, i. These prayers for relief make no attempt to differentiate between the theories of liability that

plaintiff asserts, thus Office Depot contends that plaintiff impermissibly seeks damages under the

CLRA without having complied with § 1782.

Although a close call, the court concludes that, as pleaded, plaintiff's complaint does not seek

damages for the alleged CLRA violations. In her third, fifth, sixth and seventh claims, plaintiff

specifies with respect to each of those claims that she is seeking damages. In contrast, she only

specifies a request for equitable relief in her first, second and fourth claims. Although her global

prayer for relief does not limit her damages claims to specific legal theories and thus could be read

to ask for damages on her CLRA claim, the prayer is not technically part of the complaint. 

Bontkowski v. Smith, 305 F.3d 757, 761 (7th Cir. 2000). Therefore, plaintiff's CLRA claim is

governed by § 1782(d) and no pre-filing demand was required. 

Since the court concludes that plaintiff's complaint does not seek damages on her CLRA

claim, the court does not reach the question of whether, if it did, the failure to give pre-suit notice

would be fatal. District court decisions go both ways. However, in a well-reasoned case from this

district, wherein the complaint asserted injunctive relief and alluded to a request for damages, the

court stated, "Given that the legislature specifically contemplated that an action seeking injunctions

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ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS —No. C-07-05938 RMW

MAG 6

can be amended to include a damages claim after the thirty days have run, the goal of the legislature

would best be served by allowing amendment in the circumstances of this case." Deitz v. Comcast

Corp., 2006 WL 3782902 at *6 (N.D. Cal. Dec. 21, 2006) (Alsup, J.) (suggesting that "[t]here are

other disciplinary ways to deal with any willful disregard of the law, such as attorney's fees awards .

. ."); see also Kennedy, 2007 WL 2300746 at *3 ("Here, the complaint is unclear as to whether

Plaintiff seeks damages under the CLRA. Under the circumstances of this case, the Court dismisses

any damages allegation under the CLRA without prejudice.").

C. Plaintiff's § 17200 Standing

In November 2004, California voters approved Proposition 64, which amended Cal. Bus. &

Prof. Code § 17200 to provide that a private individual only has standing to assert a claim under

California's Unfair Competition Law ("UCL") if she "has suffered injury in fact and has lost money

or property as a result of such unfair competition. Cal. Bus. & Prof. Code § 17204. Office Depot

contends that Sanbrook cannot assert claim under the UCL because she has not alleged that she has

been injured by Office Depot's alleged misconduct. It contends that the allegation in the complaint

that Office Depot has paid approximately $450.00, which includes a refund of her $119.99 payment

for the Plan, demonstrates that Sanbrook has not suffered any injury in fact or lost money or

property as a result of the actions allegedly undertaken by Office Depot. Compl. ¶ 26. Office Depot

contends that this amount refunds plaintiff for all sums she spent purchasing the Plan, including any

interest associated with the lost use of the funds used to pay the original purchase price.

Office Depot contends that because remedies under the UCL are restricted to injunctive relief

and restitution, Sanbrook cannot demonstrate that she has suffered injury for which restitution would

be appropriate. An order for restitution is one "compelling a UCL defendant to return money

obtained through an unfair business practice to those persons in interest from whom the property

was taken, that is, to persons who had an ownership interest in the property or those claiming

through that person." Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 1149 (2003).

Office Depot argues that Sanbrook's allegations cannot state a claim for restitution. To the extent

that Sanbrook has alleged that she was required to pay for third party repairs, Office Depot argues

that the amount paid for such repairs was paid to the third party, not to Office Depot. Because

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ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS —No. C-07-05938 RMW

MAG 7

Office Depot was not a recipient of these amounts paid to third parties for repair, Sanbrook cannot

seek restitution against Office Depot. 

Plaintiff, on the other hand, argues that she had a vested interest in receiving services under

the Plan because she experienced problems with her computer. Because repair of these problems

should have been covered under the Plan but were not, plaintiff argues that she is entitled to

restitution in the amount of the services denied by Office Depot, which, she contends, is equal to the

cost of the service she was forced to obtain from a third party. In support of her argument, she cites

Lozano v. AT&T Wireless, 504 F.3d 718, 734 (9th Cir. 2007). In Lozano, the Ninth Circuit assessed

whether restoring "reserved" minutes to a user who was deprived of them under his cell phone plan

constituted restitution for purposes of the UCL. The question was whether restitution could lie

where the plaintiff had never had "possession" of the minutes. Ninth Circuit noted, "The California

Supreme Court has 'stated that the concept of restoration or restitution, as used in the UCL, is not

limited only to the return of money or property that was once in the possession of that person. 

Instead, restitution is broad enough to allow a plaintiff to recover money or property in which he or

she has a vested interest.'" Lozano, 504 F.3d at 733-34 (citing Juarez v. Arcadia Fin., Ltd., 152 Cal.

App. 4th 889, ___, 61 Cal. Rptr. 3d 382, 400 (2007)). Although the court does not quarrel with the

proposition that a plaintiff may have a restitutionary interest in property that was never in plaintiff's

possession where plaintiff has a vested interest, the court does not find that this is the question

presented here. Rather, the question is whether plaintiff has a restitutionary interest in property that

was never in the possession of the defendant. The court finds that Lorenzo does not support

plaintiff's position.

Based on the allegations of the complaint, the court agrees that Sanbrook lacks standing to

pursue a claim for restitution under the UCL. Sanbrook's allegations establish that Office Depot has

paid Sanbrook approximately $450.00, an amount that reimburses Sanbrook for the $119.99

purchase price for the Plan as well as for any detriment Sanbrook may have suffered for the use of

the funds otherwise used to purchase the Plan. The money Sanbrook paid for third party repair is

not money that Office Depot obtained through any alleged unfair business practice. Therefore,

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4

 For the same reason, Office Depot's argument that Sanbrook cannot state a claim under the SongBeverly Consumer Warranty Act fails. The allegation that Sanbrook had to pay $650.00 for a third

party to repair her computer, which was not reimbursed by Office Depot, is sufficient to demonstrate

damages under the act for purposes of a motion to dismiss. 

ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS —No. C-07-05938 RMW

MAG 8

Sanbrook does not have standing to seek restitution under the UCL based on the allegations of her

complaint.

Nevertheless, the court does not come to the same conclusion regarding Sanbrook's standing

to pursue injunctive relief. Taking her allegations as true as the court must for purposes of a motion

to dismiss, Sanbrook suffered an injury in fact by having had to pay $650.00 to obtain third party

repair of her computer. She has not alleged that the entire amount of the third party repair has been

repaid by Office Depot, therefore she has experienced an injury as a result of Office Depot's alleged

unfair business practices.4

Office Depot further argues that Sanbrook lacks Article III standing to pursue any claim for

prospective relief because all she can demonstrate is "past exposure to illegal conduct" which "does

not in itself show a present case or controversy regarding injunctive releif if unaccompanied by any

continuing, present adverse effects." Mot. at 20 (citing Lujan v. Defenders of Wildlife, 504 U.S. 555,

564 (1992)). Specifically, Office Depot argues that there is no evidence that Sanbrook's injury is

likely to be repeated because the return of Sanbrook's purchase price for the Plan demonstrates that

she is no longer utilizing the Plan, and, even assuming Sanbrook is still entitled to coverage under

the Plan, the two-year term of the Plan is due to expire in less than seven months and there is no

evidence that Sanbrook's computer will fail again during that time. Neither argument is particularly

persuasive in the context of a motion to dismiss. First, the pleadings do not sufficiently establish

that Sanbrook is no longer entitled to coverage on the Plan, even assuming the purchase price was

refunded. Second, assuming that Sanbrook still has coverage for her computer under the Plan, there

is still a likelihood that some repair or replacement of the computer may be required during the time

remaining on the Plan. 

In sum, the court concludes that Sanbrook does not have standing to seek restitution under

the UCL, therefore her remedy under the UCL is limited to injunctive relief.

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ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS —No. C-07-05938 RMW

MAG 9

C. Failure to State A Claim

Finally, Office Depot argues that plaintiff fails to state a claim for unjust enrichment, breach

of contract, fraud or negligent misrepresentation.

Unjust enrichment is a general equitable principle "underlying various legal doctrines and

remedies." Dinosaur Development, Inc. v. White, 216 Cal. App. 3d 1310, 1315 (1989). It is "based

on the idea 'that one person should not be permitted unjustly to enrich himself at the expense of

another, but should be required to make restitution of or for property or benefits received, retained,

or appropriated, where it is just and equitable that such restitution be made, and where such action

involves no violation or frustration of law or opposition to public policy, either directly or

indirectly.'" County of San Bernardino v. Walsh, 158 Cal. App. 4th 533, ___, 69 Cal. Rptr. 3d 848,

855 (2007) (citing Dinosaur Development, 216 Cal. App. 3d at 1315). As set forth above in the

court's discussion of Sanbrook's standing under the UCL, Sanbrook has been repaid $450.00, which

includes her cost for the Plan and any interest that may have been due on her original $119.99

payment. Thus, as currently pleaded, she does not have standing to seek restitution. Accordingly,

the court dismisses her unjust enrichment claim.

Office Depot also contends that plaintiff's allegations fail to establish that Office Depot

breached the actual terms and conditions of the Plan. Plaintiff's allegations establish that the terms

and conditions of the Plan were available on a website and are attached to the complaint. Office

Depot argues that these online terms and conditions, not the brochure, set forth the terms of the

contract and that plaintiff's pleadings do not allege that Office Depot ever breached those terms and

conditions. The court agrees that plaintiff's complaint does not sufficiently allege that Office Depot

breached the online terms and conditions. Nevertheless, plaintiff alleges that it is the content of the

brochure, not the online terms and conditions, that constitutes the terms of the contract between

plaintiff and Office Depot because the online terms and conditions were not provided at the time the

Plan was purchased and could not have been reviewed by the purchaser. See, e.g., Compl. ¶ 19

("Defendant cannot reasonably expect customers to read the Terms and Conditions prior to

purchasing the Plan when it is offered at the time of sale. In order to read the Terms and Conditions,

customers must first find them online at http://www.officedepotservices.com. Even after customers

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ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS —No. C-07-05938 RMW

MAG 10

access the designated website, they still have to click on a link titled "Register Your Plan" in order

to finally view the Terms and Conditions."); id. ¶¶ 71-73 (alleging that the brochure constituted an

offer to enter into a service contract, which was accepted by purchasing the Plan and subsequently

breached when Office Depot refused to provide the coverage as promised in the brochure). Because

the facts alleged set forth that the brochure may have formed the basis of the contract between

Office Depot and Sanbrook, these allegations are sufficient to plead a breach of contract.

Based on similar arguments, Office Depot argues that plaintiff's sixth and seventh causes of

action for fraud and negligent misrepresentation fail. Specifically, Office Depot asserts that the

"claims for fraud and negligent misrepresentation fail because the Terms and Conditions attached to

the Complaint show that Plaintiff was not defrauded." Mot. at 24. As discussed above, even though

the complaint does not allege that Office Depot misrepresented the services available under the Plan

as set forth in the online terms and conditions, plaintiff sufficiently alleges that she relied upon the

terms of the brochure because of the unavailability of the online terms at the time the Plan was sold. 

While it is questionable whether this would be sufficient to sustain a claim for fraud or negligent

misrepresentation for purposes of a motion for summary judgment, the allegations are sufficient to

state a claim.

III. ORDER

For the foregoing reasons, the court grants in part and denies in part Office Depot's motion to

dismiss as follows:

1. defendant's motion to dismiss plaintiff's claim under the CLRA is denied as the claim

is deemed to be one for equitable relief only;

2. plaintiff's claim for restitution under the UCL is dismissed without prejudice;

3. plaintiff's claim for unjust enrichment is dismissed without prejudice;

4. defendant's motion to dismiss is denied with respect to all other claims.

Plaintiff shall have twenty (20) days to amend her complaint to state a claim for restitution and unjust

enrichment. 

DATED: 5/5/08

RONALD M. WHYTE

United States District Judge

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ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS —No. C-07-05938 RMW

MAG 11

Notice of this document has been electronically sent to:

Counsel for Plaintiff:

Scott Richard Kaufman lemonatty@gmail.com

Barbara Quinn Smith bqsesq@aol.com

Counsel for Defendants:

Robin Jonathan Samuel rjsamuel@hhlaw.com

Julie Shepard jashepard@hhlaw.com

Laura Michelle Wilson lmwilson@hhlaw.com

Counsel are responsible for distributing copies of this document to co-counsel that have not

registered for e-filing under the court's CM/ECF program.

Dated: 5/5/08 /s/ MAG

Chambers of Judge Whyte

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