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WO 

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF ARIZONA 

Janet Cheatham, 

Plaintiff, 

v. 

ADT Corporation, et al., 

Defendants.

No. CV-15-02137-PHX-DGC

ORDER 

 On September 9, 2015, Plaintiff Janet Cheatham initiated this action by filing a 

class action complaint against Defendants ADT Corporation (“ADT Corp.”) and ADT 

LLC in the Maricopa County Superior Court. Doc. 1-1 at 9-33. The complaint asserts 

claims against ADT LLC for consumer fraud and unjust enrichment, and claims against 

ADT Corp. for consumer fraud, unjust enrichment, and strict products liability. Id. 

On October 23, 2015, Defendants removed the action to this Court pursuant to 

28 U.S.C. § 1441(a), asserting federal jurisdiction under the Class Action Fairness Act of 

2005, 28 U.S.C. § 1332(d)(2). Doc. 1-1 at 1-7. Each Defendant has filed its own motion 

to dismiss. ADT Corp. asks the Court to dismiss it from this case for lack of personal 

jurisdiction or, in the alternative, to dismiss the case for failure to state a claim. Doc. 9. 

ADT LLC asks the Court to dismiss the case for failure to state a claim or, in the event 

any of Plaintiff’s claims survive, to strike Plaintiff’s class allegations. Doc. 10. 

The motions have been fully briefed (Docs. 17, 18, 19, 24) and no party has 

requested oral argument. For the reasons set forth below, ADT Corp.’s motion will be 

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granted, and ADT LLC’s motion will be granted in part and denied in part. 

I. Background. 

A. Parties. 

Plaintiff is a resident and citizen of Maricopa County, Arizona. Complaint, ¶ 16. 

Defendant ADT Corp. is a Delaware corporation with its principal place of business in 

Boca Raton, Florida. Id., ¶ 17. Defendant ADT LLC is a Florida limited liability 

corporation with its principal place of business in Boca Raton. Id., ¶ 18. Defendants are 

in the business of selling home security equipment and monitoring services across the 

nation, including in Arizona. Id., ¶ 20. This case concerns the company’s wireless home 

security system. 

B. ADT’s Wireless Security System. 

 ADT’s wireless security system uses a variety of devices – including wireless 

panels, sensors, detectors and cameras – to monitor a customer’s home. See www.adt. 

com/wireless-security (accessed Jan. 18, 2016). If an unauthorized entry is detected, 

ADT alerts the user and offers to contact the police. See id.

In July 2014, Forbes published an article detailing vulnerabilities associated with 

this system. See Kashmir Hill, How Your Security System Could Be Used to Spy on You, 

Forbes (Jul. 23, 2014), www.forbes.com/sites/kashmirhill/2014/07/23/how-your-securitysystem-could-be-used-to-spy-on-you (accessed Jan. 18, 2016). The article explains that 

the system’s components communicate with one another using unencrypted and 

unauthenticated signals. Id. An unauthorized third party can interfere with these signals, 

thereby gaining control of the system. Id. According to the article, one researcher found 

a way to hack into a research participant’s security system using a readily available 

device called a “Software-Defined Radio.” Id. Using this device, the researcher could 

deactivate the participant’s security system, trigger a false alarm, and spy on the 

participant using her system’s video monitoring equipment. Id.

Plaintiff’s allegations largely track the Forbes article. She alleges that “ADT’s 

wireless systems are unencrypted and unauthenticated, and otherwise insecure,” that they 

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are easily hacked by third parties, and that a hacker can deactivate a customer’s system, 

trigger a false alarm, or use the customer’s cameras to spy on her. Complaint, ¶¶ 30-33. 

She alleges that all of this can be done using a Software-Defined Radio, and that it is 

possible to purchase such a device on the open market with no restrictions for less than 

$10. Id., ¶ 34. Finally, she alleges that ADT has been aware of these vulnerabilities at 

least since the Forbes article was published. Id., ¶ 35. 

Plaintiff contends that ADT has engaged in unlawful deception since discovering 

these security vulnerabilities. She alleges that ADT does not warn its customers to take 

precautions against hacking, and does not inform them that its system uses unencrypted 

and unauthenticated signals. Id., ¶¶ 38, 42. She further alleges that ADT deliberately 

refuses to disclose this information because it knows that consumers would not purchase 

an ADT wireless security system if they knew about these vulnerabilities. Id., ¶ 45. 

According to Plaintiff, “customers are much less safe than they think that they are when 

ADT’s wireless systems are activated.” Id., ¶ 44. 

C. Marketing Statements. 

Plaintiff also contends that ADT produces advertisements for its wireless security 

system that are misleading in light of the system’s vulnerabilities. Complaint, ¶¶ 24-29. 

She points to a number of statements on the company’s website. Id. For example, the 

website encourages consumers to “get security you can count on every day of the year” 

and to “live worry-free with ADT Security for less than $1 a Day.” Id., ¶ 25(a), (c) 

(punctuation and capitalization modified). It states that ADT can provide the customer 

with a “haven . . . armed with 24-hour-a-day protection, 365 days a year.” Id., ¶ 25(b). 

And it promises “fast, reliable security protection,” explaining: 

ADT stays constantly alert with six Customer Monitoring Centers operating day and night across the country. Our Customer Monitoring Centers are nationally connected, equipped with secure communication links and 

backed by the latest technology so that our security team is always ready to act the moment an incident occurs. 

Id., ¶ 25 (punctuation and capitalization modified). 

ADT’s website makes a number of additional claims about the reliability and 

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efficacy of its wireless security system. For example: 

 “When you want to do everything you can to safeguard your loved ones, 

your home and your treasured possessions, you owe it to yourself and your 

family to talk to us about our continuous 24/7 protection.” 

 “When it comes to you and your family’s safety, we let nothing stand in the 

way of our professionally trained team immediately working to help ensure 

your safety.” 

 “Only home security monitoring provides you and your family with the 

reassurance that even when no one’s home, you’re protected against 

unwanted entry and property loss.” 

 “When the alarm is triggered, every second counts.” 

 “When security counts, count on the company with a fast response time.” 

Id., ¶ 26. 

ADT’s website also emphasizes the technological sophistication of ADT and its 

products. For example: 

 “ADT takes pride in using the most advanced technology.” 

 “Only ADT has the most security industry experience, is the leader in 

innovative security technology, and can provide you with the fastest 

response times.” 

 “Our experience, technology and people make the difference in your 

security protection.” 

 “You invest in ADT home security and automation systems to help protect 

your loved ones. Your satisfaction is important to us, and is the reason we 

are committed to providing you with state-of-the-art equipment and 

service.” 

Id., ¶ 28. 

 D. Facts Specific to Plaintiff. 

 Plaintiff alleges that she decided to purchase an ADT wireless security system 

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after seeing the web advertisements discussed above. Id., ¶ 47. On May 29, 2013, she 

signed a contract under which Defender Security Company – an authorized ADT dealer – 

agreed to sell and install the system components in her home, and ADT LLC agreed to 

provide monitoring services using this equipment. Id., ¶ 48. Plaintiff asserts that ADT 

Corp. provided Defender Security Company with the equipment it sold to her, but she 

acknowledges that she had no direct interaction with ADT Corp. Id., ¶ 50. 

 In November 2014, Plaintiff noticed items moved in her residence on several 

occasions. Id., ¶¶ 54-55. These incidents – which Plaintiff characterizes as “security 

breaches” – were not detected by her wireless security system. Id. Plaintiff began to 

research her security system after these incidents, which is when she discovered that the 

system used unencrypted and unauthenticated signals. Id., ¶ 56. Plaintiff contends that 

she would not have purchased her security system or entered into a monitoring contract 

with ADT LLC if she had known about the system’s lack of encryption and 

authentication at the time of these transactions. Id., ¶ 57. Notwithstanding her 

dissatisfaction, Plaintiff remains bound to her contract with ADT LLC and will have to 

pay a penalty to cancel it. Id., ¶ 58. 

E. This Action. 

Plaintiff asserts claims against ADT LLC and ADT Corp. for consumer fraud and 

unjust enrichment, and an additional claim against ADT Corp. for strict products liability. 

Plaintiff purports to bring this action on behalf of herself and a putative class that 

includes “[a]ll Arizona residents and entities who entered into an ADT Alarm Services 

Contract and purchased ADT Corp. wireless security equipment.” Id., ¶ 59. She requests 

several forms of relief, including actual and punitive damages, an injunction requiring 

ADT to “secure its wireless systems,” and an injunction requiring ADT to warn class 

members about the vulnerability of its system. Id., ¶¶ 85, 96, 104. 

 Plaintiff contends that her putative class likely consists of thousands of individuals 

and entities in Arizona. Id., ¶ 60. She contends that her claims are typical of those 

possessed by members of the class because (1) all of ADT’s wireless security systems 

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have the same defect (i.e., the lack of encryption or authentication), (2) anyone who 

purchases monitoring services from ADT LLC must enter the same contract, and 

(3) ADT’s misrepresentations and omissions “were uniformly made to Plaintiff and all 

Class members.” Id., ¶ 62. Finally, she alleges that she will “fairly and adequately 

represent and protect the interests of the class,” and that class adjudication is superior to 

any other mechanism for resolving this controversy. Id., ¶¶ 63-64. 

II. ADT Corp.’s Motion to Dismiss. 

 ADT Corp. contends that it is not subject to this Court’s jurisdiction and moves for 

dismissal under Rule 12(b)(2). Doc. 9 at 3-5. In the alternative, ADT Corp. argues that 

Plaintiff has failed to state any viable claim against it, and moves for dismissal under 

Rule 12(b)(6). Id. at 6-7. Because the Court lacks jurisdiction over ADT Corp., the 

Court will not reach the 12(b)(6) motion. 

To withstand a 12(b)(2) motion, the plaintiff must show that the defendant is 

properly subject to the court’s jurisdiction. Mavrix Photo, Inc. v. Brand Techs., Inc., 647 

F.3d 1218, 1223 (9th Cir. 2011) (citation omitted). The plaintiff must make only a prima 

facie showing of jurisdictional facts when the defendant’s motion is based on written 

materials rather than an evidentiary hearing. Id. (citation omitted). In ruling on such a 

motion, the court will consider the pleadings and any affidavits submitted by the parties, 

accepting as true any uncontroverted allegations in the complaint and resolving any 

factual conflicts in the plaintiff’s favor. Id. (citations omitted). 

The court may order jurisdictional discovery where “pertinent facts bearing on the 

question of jurisdiction are controverted or where a more satisfactory showing of the 

facts is necessary.” Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1285 n.1. 

(9th Cir. 1977). The court may also grant a defendant’s motion without jurisdictional 

discovery if it is clear that the plaintiff cannot establish personal jurisdiction over the 

defendant. Wells Fargo & Co. v. Wells Fargo Exp. Co., 556 F.2d 406, 430 n.24 (9th Cir. 

1977) (district court may deny plaintiff’s request for jurisdictional discovery “when it is 

clear that further discovery would not demonstrate facts sufficient to constitute a basis for 

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jurisdiction”); Terracom v. Valley Nat’l Bank, 49 F.3d 555, 562 (9th Cir. 1995) 

(“[W]here a plaintiff’s claim of personal jurisdiction appears to be both attenuated and 

based on bare allegations in the face of specific denials made by defendants, the Court 

need not permit even limited discovery”) (citation omitted). 

 ADT Corp. contends that it has no contacts with Arizona. ADT Corp. provides a 

declaration from Lorna R. Simms, its corporate secretary. Doc. 9-1. Simms states that 

the company has no employees apart from its officers, and conducts no business apart 

from owning another holding company. Id., ¶ 3. Simms further states that ADT Corp. 

does not purchase, package, distribute, or sell alarm equipment or any other goods, and 

that it conducts no business in Arizona, maintains no offices in Arizona, owns no real 

property in Arizona, has no employees or agents in Arizona, does not solicit or engage in 

business in Arizona, and does not advertise in Arizona or elsewhere. Id., ¶¶ 9-17. Simms 

further states that ADT Corp. is not a member of ADT LLC, is not involved in its 

operations, and has no right to control it. Id., ¶ 8. 

 ADT Corp. also provides a declaration from Ryan Petty, ADT LLC’s Vice 

President of Product Development & Innovation. Doc. 9-2. Petty states that ADT Corp. 

does not make, package, distribute, or sell alarm equipment, and does not participate in 

any way in the operations of ADT LLC. Id., ¶¶ 6-7. 

 Plaintiff argues that ADT Corp.’s filings with the Security and Exchange 

Commission (“SEC”) paint a starkly different picture from that set forth in ADT Corp.’s 

affidavits. For example, a recent Form 10-K filed by ADT Corp. states: 

The ADT Corporation . . . is a leading provider of monitored security, interactive home and business automation and related monitoring services in the United States and Canada. . . . We currently serve approximately 6.7 million residential and small business customers, making us the largest company of our kind in both the United States and Canada. We deliver an 

integrated customer experience by maintaining the industry’s largest sales, installation, and service field force as well as a robust monitoring network, all backed by the support of approximately 17,500 employees. 

Doc. 18-2 at 5. 

 These statements do not show that ADT Corp. is subject to jurisdiction in Arizona. 

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Courts have recognized that companies may omit distinctions between related corporate 

entities in their SEC filings, and still insist on these distinctions when haled into court. 

See Doe v. Unocal Corp., 248 F.3d 915, 928 (9th Cir. 2001) (“references in the parent’s 

annual report to subsidiaries or chains of subsidiaries as divisions of the parent company 

do not establish the existence of an alter ego relationship”); Nat’l Prod. Workers Union 

Tr. v. CIGNA Corp., No. 05 C 5415, 2007 WL 1468555, at *7 (N.D. Ill. May 16, 2007) 

(“‘we’ and ‘our’ in annual report did not overcome parent and subsidiary’s separate 

identities such that subsidiary’s forum contacts could be imputed to parent”) (citing 

Gruca v. Alpha Therapeutic Corp., 19 F. Supp. 2d 862, 868 (N.D. Ill. 1998)). 

 Plaintiff also attempts to show that ADT Corp. holds patents for ADT’s security 

system technology. Doc. 18 at 8. Plaintiff notes that a recent Form 8-K filed by ADT 

Corp. contains an exhibit titled: “Patent Agreement, dated as of September 26, 2012, by 

and between Tyco International Ltd. and The ADT Corporation.” Doc. 18-3 at 10. 

Another exhibit refers to a trademark agreement between several companies, including 

ADT Corp. Id. Plaintiff does not attach the exhibits or offer the Court any basis for 

inferring that the agreements relate to products at issue in this case. Moreover, Defendant 

points the Court to evidence that forecloses the inference that ADT Corp. owns patents or 

trademarks associated with these products. Doc. 20 (ADT Corp. is not listed as a current 

or prior owner or assignee of any patent or trademark on the U.S. Patent & Trademark 

Office database). In light of this evidence, the Court finds that mere references to 

unspecified patent and trademark agreements in a Form 8-K do not controvert ADT 

Corp.’s evidence that it has no involvement in the sale of home security equipment. 

 Finally, Plaintiff notes that ADT Corp. has consented to jurisdiction in other cases 

pertaining to the ADT wireless security system. Doc. 18 at 9 (citing Doc. 18-4). ADT 

Corp. explains that it chose to waive its jurisdictional objection in these cases because the 

distinction between ADT Corp. and ADT LLC was immaterial to the substantive defense 

the company intended to present. Doc. 19 at 4-5. By contrast, the distinction is material 

here: Plaintiff is precluded from bringing a strict liability claim against ADT LLC by her 

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contract with the company, which means she can only recover on this claim if ADT Corp. 

appears as a codefendant. Id. at 5 (citing Complaint, ¶ 96 (“Plaintiff and the members of 

the Class are not in contractual privity with ADT Corp., and therefore their claims against 

ADT Corp. are not affected by the economic loss rule.”)). In any event, ADT Corp. does 

not need to show that it has a good reason for declining to consent to jurisdiction here 

because “[a] party’s consent to jurisdiction in one case extends to that case alone.” 

Weisler v. Cmty. Health Sys., Inc., No. CIV. 12-0079 MV/CG, 2012 WL 4498919, at *7 

(D.N.M. Sept. 27, 2012); see Dow Chem. Co. v. Calderon, 422 F.3d 827, 835 (9th Cir. 

2005) (“defense on the merits in a suit brought by one party cannot constitute consent to 

suit as a defendant brought by different parties”). 

 The Court may exercise general jurisdiction over a defendant when it contacts 

with Arizona are substantial, or continuous and systematic. Haisten v. Grass Valley Med. 

Reimbursement Fund, Ltd., 784 F.2d 1392, 1396 (9th Cir. 1986). Plaintiff has made no 

showing that ADT Corp. has such contacts with Arizona. Alternatively, the Court may 

assert specific jurisdiction if Plaintiff demonstrates that (1) ADT Corp. purposefully 

availed itself of the privileges of conducting activities in Arizona, thereby invoking the 

benefits and protections of its laws, or purposely directed conduct at Arizona that has 

effects in the forum, (2) the claims arise out of or result from ADT Corp.’s Arizonarelated activities, and (3) the exercise of jurisdiction is reasonable. Bancroft & Masters, 

Inc. v. Augusta Nat’l, Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). Plaintiff has not made 

this showing, and has given the Court no reason to believe that further discovery would 

allow it to do so. Therefore, ADT Corp.’s 12(b)(2) motion will be granted and Plaintiff’s 

request to conduct jurisdictional discovery will be denied. 

III. ADT LLC’s Motion to Dismiss. 

Plaintiff asserts consumer fraud and unjust enrichment claims against ADT LLC. 

Complaint, ¶¶ 67-85, 97-104. ADT LLC moves to dismiss these claims under Rule 

12(b)(6). Doc. 10 at 3-13. 

 

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Legal Standard. 

A successful 12(b)(6) motion must show either that the complaint lacks a 

cognizable legal theory or fails to allege facts sufficient to support its theory. Balistreri 

v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). A complaint that sets forth a 

cognizable legal theory will survive a motion to dismiss as long as it contains “sufficient 

factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” 

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v. Twombly, 550 

U.S. 544, 570 (2007)). A claim has facial plausibility when “the plaintiff pleads factual 

content that allows the court to draw the reasonable inference that the defendant is liable 

for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). 

“The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more 

than a sheer possibility that a defendant has acted unlawfully.” Id. (citing Twombly, 550 

U.S. at 556). 

In ruling on a 12(b)(6) motion, the Court takes the plaintiff’s well-pleaded factual 

allegations as true and construes them in the light most favorable to the plaintiff. Cousins 

v. Lockyer, 568 F.3d 1063, 1067 (9th Cir. 2009). Legal conclusions couched as factual 

allegations are not entitled to a presumption of truth and are not sufficient to defeat a 

12(b)(6) motion. Iqbal, 556 U.S. at 678. 

B. Arizona Consumer Fraud Act. 

 The Arizona Consumer Fraud Act (“ACFA”) broadly prohibits fraudulent, 

deceptive, or misleading conduct in connection with the sale or advertisement of 

consumer goods and services. Ariz. Rev. Stat. § 44-1522(A). Arizona courts construe 

the ACFA to provide a right of action on any person damaged by a violation of the Act. 

Sellinger v. Freeway Mobile Home Sales, Inc., 521 P.2d 1119, 1122 (Ariz. 1974). To 

prevail, a plaintiff must establish that (1) the defendant made a misrepresentation in 

violation of the Act, and (2) defendant’s conduct proximately caused plaintiff to suffer 

damages. Parks v. Macro-Dynamics, Inc., 591 P.2d 1005, 1008 (Ariz. Ct. App. 1979). It 

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is not necessary for the plaintiff to show that the defendant made an affirmative 

misstatement. Material omissions are also actionable. Maurer v. Cerkvenik-Anderson 

Travel, Inc., 890 P.2d 69, 72 (Ariz. Ct. App. 1994). A misrepresentation causes injury 

where the consumer actually relies on it, but “unlike common law fraud, this reliance 

need not be reasonable.” Parks, 591 P.2d at 1008 (citing Peery v. Hansen, 585 P.2d 574 

(Ariz. Ct. App. 1978)). 

 Plaintiff asserts that ADT LLC violated ACFA by misrepresenting the reliability 

and technical sophistication of its wireless security system and by failing to disclose that 

this system was “unencrypted and unauthenticated, and otherwise insecure.” Complaint, 

¶¶ 24-30, 67-85. ADT LLC argues that this claim is untimely and fails to identify any 

misrepresentation or consequent damages. Doc. 10 at 5-13. 

 1. Statute of Limitations. 

 Private actions under the ACFA are subject to a one-year statute of limitations. 

Ariz. Rev. Stat. § 12-541(5); see Murry v. W. Am. Mortgage Co., 604 P.2d 651, 654 

(Ariz. Ct. App. 1979). The limitations period begins to run when the consumer discovers 

or with reasonable diligence should have discovered both the “who” and the “what” of 

her claim. Gustafson v. Goodman Mfg. Co. L.P., No. 3:13-CV-8274-HRH, 2014 WL 

1669069, at *5 (D. Ariz. Apr. 28, 2014) (citations omitted). “This occurs when the 

consumer knows whose products were involved and that the products were not 

performing as expected.” Id. The date when discovery occurred is a question of fact. 

Walk v. Ring, 44 P.3d 990, 996 (Ariz. 2002). For this reason, a plaintiff’s allegations 

about the date of discovery must be accepted as true at the 12(b)(6) stage, and a claim 

should not be dismissed as untimely unless the running of the statute of limitations is 

“apparent on the face of the complaint.” Frazer v. Millennium Bank, N.A., No. 2:10-CV01509-JWS, 2010 WL 4269584, at *3 (D. Ariz. Oct. 27, 2010).

 Plaintiff alleges that she discovered that her wireless security system was 

unencrypted in November 2014, less than a year before she initiated this action on 

September 9, 2015. Complaint, ¶¶ 54-56. Defendant argues that she should have 

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discovered this fact in July 2014 when the Forbes article was published. Doc. 10 at 13; 

see How Your Security System Could Be Used to Spy on You, supra. But whether a 

consumer exercising reasonable diligence would have discovered the Forbes article, and 

whether the article provided sufficient notice to trigger the limitations period, are 

questions of fact that cannot be resolved on a motion to dismiss. As the Arizona 

Supreme Court has explained, “determinations of the time when discovery occurs and a 

cause of action accrues are usually and necessarily questions of fact for the jury.” Walk, 

44 P.3d at 996 (quotation marks and citations omitted); see also id. (“[W]e do not believe 

it can be said as a matter of law that a reasonable person in this circumstance can be 

required to undertake such questioning or be held accountable for not doing so. This is 

the very sort of factual determination that must be left for the jury.”). The Court cannot 

dismiss the ACFA claim as untimely.

 2. Misrepresentation. 

The ACFA prohibits persons from engaging in “any deception, deceptive or unfair 

act or practice, fraud, false pretense, false promise, misrepresentation, or concealment, 

suppression or omission of any material fact with intent that others rely on such 

concealment, suppression or omission” in connection with the sale or advertisement of 

consumer goods or services. Ariz. Rev. Stat. § 44-1522(A). A statement is “deceptive” 

if it has the “tendency and capacity to convey misleading impressions to consumers,” 

even if “interpretations that would not be misleading also are possible.” Madsen v. W. 

Am. Mortgage Co., 694 P.2d 1228, 1232 (Ariz. Ct. App. 1985) (quotation marks and 

citations omitted). Whether a statement has the tendency to mislead is determined from 

the perspective of the “least sophisticated reader,” in light of “all that is reasonably 

implied, not just from what is said.” Id. (citations omitted). 

 Plaintiff asserts that ADT LLC violated the ACFA both by making affirmative 

misrepresentations and by omitting material facts with the intent to deceive prospective 

buyers. Complaint, ¶¶ 24-46, 67-85. ADT LLC argues that Plaintiff cannot state a claim 

on either theory because its affirmative statements were only “puffery” and in any case 

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not false or misleading, and because it had no duty to disclose the communications 

protocol used by its wireless security system. 

 a. Affirmative Statements. 

 The complaint does not allege that ADT LLC made any statements about how the 

components of its wireless security system communicated with one another, whether the 

system used an encrypted or authenticated signal, or whether the system could be hacked. 

Instead, the complaint focuses on two types of statements: (1) claims about the reliability 

and efficacy of the wireless security system – e.g., that it “protects against unwanted 

entry and property loss” and provides “reliable security protection,” and (2) claims about 

the technological sophistication of ADT LLC and its product – e.g., that the company 

“takes pride in using the most advanced technology,” “is the leader in innovative security 

technology,” and is “committed to providing . . . state-of-the-art equipment and service.” 

Complaint, ¶¶ 25-26, 28. The complaint identifies one additional statement as deceptive: 

the claim that “Our Customer Monitoring Centers are nationally connected, equipped 

with secure communication links and backed by the latest technology so that our security 

team is always ready to act the moment an incident occurs.” Id. at ¶ 25 (emphasis 

added). 

ADT LLC contends that these statements cannot give rise to an action for fraud 

because they are puffery. Doc. 10 at 5-6. In the alternative, it argues that Plaintiff has 

not pleaded sufficient factual material to establish that any of these claims is false or 

misleading. Id. at 9. Finally, with respect to the statement about “secure communication 

links,” ADT LLC argues that this sentence is irrelevant because it clearly describes 

ADT’s monitoring centers, not its wireless security systems. Id. at 24. 

 Puffery is “[t]he expression of an exaggerated opinion – as opposed to a factual 

representation – with the intent to sell a good or service.” Black’s Law Dictionary (10th 

ed. 2014). Because puffery is a subjective characterization of a product’s value rather 

than a representation of fact, it cannot give rise to a fraud claim. See Law v. Sidney, 53 

P.2d 64, 66 (Ariz. 1936) (fraud “cannot be predicated upon the mere expression of an 

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opinion or upon representations in regard to matters of estimate or judgment”); see also 

Sorrells v. Clifford, 204 P. 1013, 1017 (Ariz. 1922); Ellis v. First Nat’l Bank, 172 P. 281, 

284 (Ariz. 1918). As the Ninth Circuit has explained in an analogous context, “the 

difference between a statement of fact and mere puffery rests in the specificity or 

generality of the claim.” Newcal Indus., Inc. v. Ikon Office Solutions, 513 F.3d 1038, 

1053 (9th Cir. 2008) (citing Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 

911 F.2d 242, 246 (9th Cir. 1990)). “Thus, a statement that is quantifiable, that makes a 

claim as to the ‘specific or absolute characteristics of a product,’ may be an actionable 

statement of fact while a general, subjective claim about a product is non-actionable 

puffery.” Id. (citing Cook, 911 F.2d at 246). Whether a defendant’s statement is puffery 

or a representation of fact is a question of law that may properly be decided on a motion 

to dismiss. Cook, 911 F.2d at 245. 

 ADT LLC cites several out-of-state cases dealing with similar claims made by 

other companies. See Tylka v. Gerber Prods. Co., No. 96 C 1647, 1999 WL 495126, at 

*8 (N.D. Ill. July 1, 1999) (baby food company’s claim to provide the “most wholesome 

nutritious safe foods you can buy anywhere in the world” was puffery); Isbell v. Carnival 

Corp., 462 F. Supp. 2d 1232, 1237 (S.D. Fla. 2006) (“it is well-settled that ‘[a] general 

promise that the trip will be ‘safe and reliable’ does not constitute a guarantee that no 

harm will befall plaintiff.’”) (citing Wilson v. Am. Trans Air, Inc., 874 F.2d 386, 391 (7th 

Cir. 1989)); Catalano v. N.W.A. Inc., No. PI 98-7768, 1998 WL 35483144, at *9 (Minn. 

Dist. Ct. Sept. 15, 1998) (travel company’s promise of “worry-free” vacation was 

puffery). Plaintiff responds that the ACFA’s “least sophisticated reader” standard is 

more demanding than the standard applied in these cases. Doc. 17 at 6-7. In addition, 

Plaintiff cites as persuasive authority a report and recommendation from a Magistrate 

Judge for this District which found that ADT’s trademark (“Always there”) was not 

puffery for purposes of the ACFA, but instead a representation from which “the least 

sophisticated consumer might infer . . . that ADT would actively monitor the alarm 

system and respond in a way calculated to deter or prevent a break-in.” Flores v. ADT 

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Sec. Servs., Inc., No. CV 10-036-TUC-FRZ, 2010 WL 6389598, at *6 (D. Ariz. June 28, 

2010), report and recommendation adopted, 2011 WL 1211516 (D. Ariz. Mar. 31, 2011). 

 The Court agrees that certain claims made by ADT LLC about the efficacy of its 

wireless security system are puffery. For example, the company’s claim that its system 

provides “worry-free” living (Complaint, ¶ 25(c)) is a statement of opinion, not fact. 

This claim is not amenable to general verification or falsification because its truth or 

falsity for a particular consumer depends as much on the characteristics of that consumer 

as the efficacy of the product. An abnormally anxious consumer might find it impossible 

to achieve “worry-free” living even in a fortified bunker, while an abnormally easygoing 

consumer might find it possible to achieve worry-free living without any security system 

at all. For similar reasons, it is impossible to provide an objective answer to the question 

whether “you owe it to yourself and your family to talk to [ADT].” Id., ¶ 26(a). 

 But when ADT LLC claims that its wireless security system “protects against 

unwanted entry and property loss” and provides “reliable security protection” (id., 

¶¶ 25(d), 26(c)), it is not simply expressing an opinion. At least in some circumstances, 

the reliability and efficacy of a security system are facts that can be measured and 

quantified. For example, if a company’s system fails often, it may be false and 

misleading to represent that the system is “reliable,” notwithstanding the imprecision of 

that term. Similarly, if customers using a company’s security system are just as likely to 

be burgled as those without a security system, it is false and misleading for the company 

to represent that its system protects against burglary.1

 Absent further development of the record, the Court cannot determine whether this 

 

1

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rely on a company’s superlative-laden claim to provide the “most wholesome nutritious safe foods you can buy anywhere in the world.” In contrast, there is nothing exaggerated about ADT LLC’s claim to provide “reliable security protection.” Isbell v. Carnival 

Corp. and related cases are also distinguishable. These cases hold that an injured traveler cannot sue his travel company based on the company’s representation that it provides “safe and reliable” vacations. Such a representation is not refuted by one instance where a traveler has an unsafe vacation. By contrast, ADT LLC’s claim that it provides “reliable security protection” might very well be refuted by evidence that of its wireless 

security systems are easily hacked. 

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is a case where a product’s lack of reliability and efficacy is objectively verifiable, or a 

case where reasonable people may disagree about whether a product possesses these 

qualities. ADT LLC argues that there is no need for further development of the record 

because Plaintiff has not alleged sufficient facts to render plausible her claim that ADT 

LLC’s wireless security system is unreliable and ineffective (Doc. 10 at 9-10), but the 

Court does not agree. Plaintiff alleges that “third parties can hack into ADT’s wireless 

systems with, inter alia, something as simple as a Software-Defined Radio . . . which 

sells on the open market with no restrictions for less than $10.” Complaint, ¶ 34. She 

further alleges that this device can be used to “remotely disconnect or turn off the 

security system[],” rendering it nonfunctional. Id., ¶ 31. Assuming these facts to be true, 

as the Court must in ruling on this motion, the Court finds plausible Plaintiff’s claim that 

ADT LLC’s wireless security system does not provide the “reliable security protection” 

and “protect[ion] against unwanted entry and property loss” that is promised. The Court 

therefore will not dismiss Plaintiff’s claims based on ADT LLC’s statements about the 

reliability and efficacy of its product. 

 With respect to ADT LLC’s statements about its technological sophistication, 

ADT LLC cites six cases, including one from within this circuit, for the proposition that 

“[g]eneral marketing statements regarding advanced or ‘state-of-the-art’ technology are 

nonactionable puffery.” Doc. 10 at 8.2

 Plaintiff does not address these cases and does 

not even mention the relevant statements in her opposition. See Doc. 17 at 4-7. The 

Court finds the cases persuasive, and holds that ADT LLC’s statements about its 

technological sophistication (Complaint, ¶ 28) are too far removed from any “specific or 

absolute characteristics of [its] product” to be actionable. Newcal, 513 F.3d at 1053 

 

2 Robins Printing Co. v. Crosfield Elecs., Inc., No. 92-2446, 1994 WL 284105 (6th 

Cir. 1994) (unpublished opinion); Winans by & through Moulton v. Emeritus Corp., No. 

13-CV-03962-SC, 2014 WL 970177, at *9 (N.D. Cal. Mar. 5, 2014); Deburro v. Apple, 

Inc., No. A-13-CA-784-SS, 2013 WL 5917665, at *4 (W.D. Tex. Oct. 31, 2013); In re 

Heartland Payment Sys., Inc. Customer Data Sec. Breach Litig., 834 F. Supp. 2d 566, 592 (S.D. Tex. 2011), rev’d on other grounds sub nom. Lone Star Nat’l Bank, N.A. v. 

Heartland Payment Sys., Inc., 729 F.3d 421 (5th Cir. 2013); Shema Kolainu-Hear Our 

Voices v. ProviderSoft, LLC, 832 F. Supp. 2d 194, 209 (E.D.N.Y. 2010). 

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(citation omitted). 

 With respect to ADT LLC’s statement that “Our Customer Monitoring Centers are 

. . . equipped with secure communication links,” Plaintiff urges the Court to follow the 

Central District of Illinois in holding that the company’s customers may state a 

misrepresentation claim based on this statement. Doc. 17 at 5-6 (citing Baker v. ADT 

Corp., No. 2:15-cv-02038-CSB-EIL at 16-17, (C.D. Ill. Oct. 5, 2015)). ADT LLC 

counters that “[n]o rational consumer could parse the clear syntax of that sentence to 

mean that the signals of her home’s wireless alarm components are encrypted.” Doc. 24 

at 10. 

 Although the tendency of a statement to mislead is determined from the 

perspective of the “least sophisticated reader,” Madsen, 694 P.2d at 1232, it is not 

determined from the perspective of a reader lacking a basic understanding of English 

vocabulary or grammar. The Court agrees with ADT LLC that even the least 

sophisticated reader could not read the statement “Our Customer Monitoring Centers are . 

. . equipped with secure communication links” to say anything about the nature of 

communications used by wireless security systems located in the home. 

But that is not the end of the matter. A consumer might infer from ADT LLC’s 

use of secure communication links at its monitoring centers that the company would also 

provide secure communication links to its home-based security systems. After all, those 

systems are the key locations – where the monitoring of dangerous activity actually 

occurs. If a consumer could reasonably make this inference, ADT LLC may be liable for 

this statement even though the statement does not speak directly to the communication 

protocol used by its home security systems. See Madsen, 694 P.2d at 1232 (courts must 

consider “all that is reasonably implied” in determining whether a statement gives rise to 

liability under the ACFA). The Court therefore agrees with the Baker court that “further 

clarification or context” is necessary to determine whether such an inference is 

reasonable. No. 2:15-cv-02038-CSB-EIL at 17. The Court will not grant ADT LLC’s 

motion with respect to the statement about “secure communication links.” 

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 b. Omissions. 

Plaintiff alleges that “ADT does not notify customers that their systems are 

unencrypted or insufficiently secure.” Complaint, ¶ 38. Plaintiff contends that this 

constitutes an omission of material fact that is actionable under the ACFA. Doc. 17 at 4-

5. ADT LLC counters that it had no duty to disclose the communications protocols used 

by its wireless security system. Doc. 10 at 10. 

 The ACFA prohibits “concealment, suppression or omission of any material fact 

with intent that others rely on such concealment, suppression or omission” in connection 

with the sale or advertisement of consumer goods or services. Ariz. Rev. Stat. § 44-

1522(A). A claim under the ACFA’s omission clause “requires proof that the omission is 

material and made with intent that a consumer rely thereon.” State ex rel. Horne v. 

AutoZone, Inc., 275 P.3d 1278, 1281 (Ariz. 2012). An omission is material if it is 

“logically related to the transaction in which it occurs and rationally significant to the 

parties in view of the nature and circumstances of the transaction.” Demaree v. Wal-Mart 

Stores, Inc., 511 F. App’x 660, 661 (9th Cir. 2013) (citing Haisch v. Allstate Ins. Co., 5 

P.3d 940, 945 (Ariz. Ct. App. 2000)). 

 ADT LLC contends that a claim under the ACFA’s omission clause must also 

show that the defendant was subject to a duty to disclose the omitted information under 

the common law or another statute. ADT LLC cites Loomis v. U.S. Bank Home 

Mortgage, 912 F. Supp. 2d 848 (D. Ariz. 2012), to support this proposition. Doc. 24 at 

11. Plaintiff responds that this argument cannot be squared with the Arizona Supreme 

Court’s decision in Horne v. AutoZone. Doc. 17 at 4-5. 

 Plaintiff has the better of the argument. Horne is the Arizona Supreme Court’s 

most recent statement on the question, and it states in no uncertain terms that the ACFA 

“itself imposes [an] actionable duty . . . to refrain from . . . an ‘omission of any material 

fact with intent that others rely’ thereon.” 275 P.3d at 1281 (citing Ariz. Rev. Stat. § 44-

1522(A)). In the face of a conflict between the Arizona Supreme Court and a federal 

district court on a question of Arizona law, the Arizona Supreme Court’s decision is 

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controlling. See also Starbuck v. City & Cty. of S.F., 556 F.2d 450, 457 (9th Cir. 1977) 

(“The doctrine of stare decisis does not compel one district court judge to follow the 

decision of another.”). 

Loomis held that a claim under the ACFA’s omission clause must show the 

defendant was under an independent duty to disclose the omitted information – i.e., a 

duty arising from the common law or another statute. 912 F. Supp. 2d at 856. Loomis 

did not cite the Arizona Supreme Court’s decision in Horne, nor explain how its holding 

could be reconciled with Horne’s statement that the ACFA itself imposes “an actionable 

duty . . . to refrain from . . . an omission of any material fact with intent that others rely 

thereon.”3

 Because Loomis misapprehended Arizona law, the Court cannot follow it.4

 Plaintiff has adequately pleaded the other elements of an omission claim. Docs. 

10 at 10; 24 at 11-12. Plaintiff alleges that ADT LLC deliberately failed to disclose the 

fact that its wireless security system uses an unencrypted protocol and that this omission 

was material. Complaint, ¶¶ 45, 57, 81. The complaint further alleges that this omission 

was “designed to mislead customers.” Id., ¶ 45. The complaint alleges sufficient factual 

material to render these allegations plausible. See id., ¶¶ 31-34. Therefore, the Court 

concludes that Plaintiff has stated a claim under the ACFA’s omission clause. 

 3. Damages. 

To state a claim under the ACFA, Plaintiff must allege that she has been damaged 

by ADT LLC’s violation of the Act. Nataros v. Fine Arts Gallery of Scottsdale, Inc., 612 

 

3 Loomis relied instead on the Arizona Court of Appeals’ decision in Horne, which 

was vacated by the Arizona Supreme Court on the precise question at issue here. See 

Horne, 275 P.3d at 1283 (“we vacate the opinion of the court of appeals” with respect to issues addressed on appeal). Even if the Court of Appeals’ decision were good law, however, it does not support Loomis’s holding. In Horne, the Court of Appeals explained that a plaintiff could establish liability under the ACFA’s “unfair act or practice” clause by showing that the defendant had an independent duty to disclose the omitted 

information. State ex rel. Horne v. AutoZone, Inc., 258 P.3d 289, 299 (Ariz. Ct. App. 2011). Such an approach, the Court of Appeals explained, would allow the plaintiff to “avoid the heightened intent requirement imposed by the omission clause.” Id. It follows 

that a plaintiff who cannot identify an independent duty to disclose could proceed under the omission clause and grapple with its heightened intent requirement. 

4

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P.2d 500, 504 (Ariz. Ct. App. 1980) (damages are an “essential element” of private right 

of action under the ACFA). ADT LLC argues that Plaintiff has not alleged any damages. 

Doc. 10 at 11. The Court disagrees. Plaintiff alleges that she would not have purchased 

her wireless security system but for ADT LLC’s violation of the ACFA. Complaint, 

¶ 57. She further alleges that she continues to suffer economic loss because she remains 

bound by her monitoring contract with ADT LLC and will have to pay a penalty if she 

cancels it. Id., ¶ 58. These allegations are sufficient to establish the damages element of 

Plaintiff’s claim. See Parks, 591 P.2d at 1009 (“out-of-pocket expenses necessary to 

perform the contract prior to discovering the fraud” are recoverable under the ACFA). 

 4. Conclusion. 

 Plaintiff fails to state a claim under the ACFA based on ADT LLC’s statements 

about its technological sophistication (Complaint, ¶ 28), its promise to provide “worryfree” living (id., ¶ 25(c)), or its claim that “you owe it to yourself and your family to talk 

to [ADT],” (id., ¶ 26(a)). The Court will grant ADT LLC’s motion to dismiss as to these 

statements. Plaintiff has stated a claim, however, based on ADT LLC’s statements about 

the reliability and efficacy of its alarm system and its representation that its customer 

support centers are connected by “secure communication links.” Complaint, ¶¶ 25(a), 

(b), (d), 26(b), (c). Plaintiff has also stated a claim based on ADT LLC’s failure to 

disclose that its wireless security systems use unencrypted and unauthenticated signals. 

The Court will not dismiss Plaintiff’s claims based on these statements and omissions. 

 C. Unjust Enrichment. 

“Unjust enrichment occurs when one party has and retains money or benefits that 

in justice and equity belong to another.” Trustmark Ins. Co. v. Bank One, Ariz., NA, 48 

P.3d 485, 491 (Ariz. Ct. App. 2002) (citing City of Sierra Vista v. Cochise Enter., Inc., 

697 P.2d 1125, 1131 (Ariz. Ct. App. 1984)). “To establish a claim for unjust enrichment, 

a party must show: (1) an enrichment; (2) an impoverishment; (3) a connection between 

the enrichment and the impoverishment; (4) the absence of justification for the 

enrichment and the impoverishment; and (5) the absence of a legal remedy.” Id. (citing 

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Sierra Vista, 697 P.2d at 1131). Plaintiff asserts that ADT LLC was unjustly enriched 

and she was unjustly impoverished when she purchased equipment and monitoring 

services in reliance on the company’s misrepresentations and material omissions. 

Complaint, ¶ 98. She further contends that ADT LLC’s retention of her payment is 

without justification, and that she will be without an adequate remedy at law in the event 

her ACFA and strict liability claims are denied. Id., ¶ 102. 

 ADT LLC does not dispute that Plaintiff has adequately pleaded the first four 

elements of an unjust enrichment claim. Instead, it argues that Plaintiff cannot establish 

the absence of a legal remedy because she can bring an action for fraud and because she 

is party to a monitoring contract with ADT LLC. Doc. 10 at 3-4. 

In support of its first argument, ADT LLC cites Stratton v. American Medical 

Security, 266 F.R.D. 340 (D. Ariz. 2009), for the proposition that a plaintiff asserting an 

unjust enrichment claim based on fraud “has an adequate remedy at law and should prove 

the fraud claim.” Id. at 354 (citing Waddell v. White, 108 P.2d 565, 568-69 (Ariz. 1940)). 

This argument is unavailing. Plaintiff is attempting to prove a fraud claim, but asserts her 

unjust enrichment claim in the alternative. “An unjust enrichment count should not be 

dismissed unless it [is] insufficient apart from its inconsistency with the other counts.” 

Isofoton, S.A. v. Giremberk, No. CV-04-0798-PHX-ROS, 2006 WL 1516026, at *3 (D. 

Ariz. May 30, 2006) (citing Arnold & Assocs., Inc. v. Misys Healthcare Sys., 275 F. 

Supp. 2d 1013, 1030-31 (D. Ariz. 2003); Adelman v. Christy, 90 F. Supp. 2d 1034, 1045 

(D. Ariz. 2000)). Stratton is not to the contrary – the court refused to certify a class 

action on an unjust enrichment claim, but did not dismiss the claim. 266 F.R.D. at 354. 

In support of its second argument, ADT LLC points to several Arizona cases 

holding that the doctrine of unjust enrichment has no application “where there is a 

specific contract which governs the relationship of the parties.” Brooks v. Valley Nat’l 

Bank, 548 P.2d 1166, 1171 (Ariz. 1976); see also Ashton Co., Inc. v. State, 454 P.2d 

1004, 1010 (Ariz. Ct. App. 1969) (unjust enrichment “has no application to a situation 

where there is an explicit contract which has been performed”). Plaintiff counters that 

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more recent cases have criticized Brooks’ formulation as “misleadingly overbroad” and 

have held that the “mere existence of a contract governing the dispute does not 

automatically invalidate an unjust enrichment alternative theory of recovery.” Adleman, 

90 F. Supp. 2d at 1045; see also Arnold, 275 F. Supp. 2d at 1030-31. She contends that 

her monitoring contract with ADT LLC is no bar to her unjust enrichment claim because 

her current dispute with the company is not governed by this contract. Doc. 17 at 8-9. 

She further argues that it would be premature for the Court to rule on this question before 

it has examined the contract. Id. at 9-10. The Court agrees. 

A contract normally bars an action for unjust enrichment because it precludes a 

finding that the plaintiff is without an adequate remedy at law – a party deprived of 

benefits due under a contract generally has the ability to enforce the contract. See Burge 

v. Freelife Int’l, Inc., No. 09-CV-1159-PHX-JA, 2009 WL 3872343, at *4 (D. Ariz. Nov. 

18, 2009) (explaining that the Brooks rule rests on the assumption that the contract 

provides an adequate legal remedy); see also USLife Title Co. of Ariz. v. Gutkin, 732 P.2d 

579, 585 (Ariz. Ct. App. 1986) (explaining that the Brooks rule exists to prevent plaintiff 

from obtaining “double recovery” in contract and restitution). Consistent with this 

rationale, Arizona courts permit a plaintiff to bring an unjust enrichment claim where her 

inability to enforce the contract leaves her without an adequate remedy at law. See, e.g.,

Arnold, 275 F. Supp. 2d at 1024-25 (restitution available where contract is unenforceable 

under the statute of frauds) (citing Trollope v. Koerner, 470 P.2d 91 (Ariz. 1970)). 

Similarly, a plaintiff may bring an unjust enrichment claim where she asserts a right that 

is not subject to vindication in an action to enforce the contract. See Ellis v. J.P. Morgan 

Chase & Co., 950 F. Supp. 2d 1062, 1091 (N.D. Cal. 2013) (unjust enrichment claim not 

barred by contract unless it “derives from the subject matter of the agreement[]”); In re 

Countrywide Fin. Corp. Mortgage Mktg. & Sales Practices Litig., 601 F. Supp. 2d 1201, 

1220-21 (S.D. Cal. 2009) (unjust enrichment claim would not be dismissed where 

contracts did not appear to provide for the specific recovery sought by plaintiff); see

generally USLife, 732 P.2d at 584 (only “a contract specifically governing the rights and 

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obligations of each party precludes recovery for unjust enrichment.”) (emphasis added).5

The Court cannot conclude that Plaintiff’s monitoring contract with ADT LLC 

specifically governs the rights and obligations at issue here. Therefore, the Court will not 

dismiss Plaintiff’s unjust enrichment claim.6

IV. ADT LLC’s Motion to Strike. 

A court “may order stricken from any pleading . . . any redundant, immaterial, 

impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). Although generally disfavored, 

a motion to strike may be granted where necessary to spare the parties the time and 

expense associated with “litigating spurious issues.” Sidney-Vinstein v. A.H. Robins Co., 

697 F.2d 880, 885 (9th Cir. 1983). A successful motion to strike must show that the law 

is clear beyond reasonable dispute and that the relevant claim or defense could not 

succeed under any set of circumstances. Sanders v. Apple, Inc., 672 F. Supp. 2d 978, 990 

(N.D. Cal. 2009) (citing RDF Media Ltd. v. Fox Broadcasting Co., 372 F. Supp. 2d 556, 

566 (C.D. Cal. 2005)). The motion to strike “was never intended to furnish an 

opportunity for the determination of disputed and substantial questions of law.” Salcer v. 

Envicon Equities Corp., 744 F.2d 935, 939 (2d Cir. 1984), judgment vacated on other 

grounds, 478 U.S. 1015 (1986) (citation omitted). Moreover, even a purely legal 

question will not be decided on a motion to strike if discovery might provide useful 

context for decision or render the question moot. See id. (citations omitted). Rule 12(f) 

requires the Court to accept the non-moving party’s well-pleaded facts as true and to 

draw all reasonable inferences in favor of that party. Farm Credit Bank of Spokane v. 

 

5

 ADT LLC cites Johnson v. KB Home, 720 F. Supp. 2d 1109 (D. Ariz. 2010), for 

the proposition that a contract may bar an action for unjust enrichment even if it is silent 

on the specific point of disagreement between the parties. That much is true: where the 

plaintiff’s claim “clearly arise[s] from relationships governed by” the contract, it is immaterial whether the contract speaks directly to the point of dispute, as the plaintiff may sue to enforce the contract’s implied covenant of good faith and fair dealing. 720 F. Supp. 2d at 1123. But that covenant applies only to matters that “flow from the[] agreement or contractual relationship.” Id. (citation omitted). It does not provide redress where the defendant has been unjustly enriched due to wrongful actions unrelated to the terms of the contract, so it cannot preclude an equitable remedy in these cases. 

6

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Parsons, 758 F. Supp. 1368, 1371 n.4 (D. Mont. 1990). 

 Motions to strike class allegations are particularly disfavored because it is rarely 

easy to determine before discovery whether the allegations are meritorious. See 

Baughman v. Roadrunner Commc’ns, No. CV-12-565-PHX-SMM, 2013 WL 4230819, at 

*2 (D. Ariz. Aug. 13, 2013) (a motion for class certification is generally the more 

appropriate vehicle for determining whether class relief is available) (citing Thorpe v. 

Abbott Labs., Inc., 534 F. Supp. 2d 1120, 1125 (N.D. Cal. 2008)). Nonetheless, class 

allegations may be stricken when it is clear from the face of the complaint that no class 

can be certified. Baughman, 2013 WL 4230819, at *2 (citing Tietsworth v. Sears, 720 F. 

Supp. 2d 1123, 1146 (N.D. Cal. 2010); Vinole v. Countrywide Home Loans, Inc., 571 

F.3d 935, 941 (9th Cir. 2009)). 

 The question raised by ADT LLC’s motion is whether a violation of the ACFA 

can ever give rise to a class action under Rule 23(b)(3). To maintain a class action, a 

prospective class representative must establish four prerequisites: “(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.” Fed. R. Civ. P. 23(a). To maintain a 

class action under Rule 23(b)(3), a prospective class representative must also show “that 

the questions of law or fact common to class members predominate over any questions 

affecting only individual members, and that a class action is superior to other available 

methods for fairly and efficiently adjudicating the controversy.” 

 A finding of predominance is generally warranted in a consumer fraud case if each 

class member was exposed to a substantially similar misrepresentation and manifested a 

similar kind and degree of reliance. In re First All. Mortgage Co., 471 F.3d 977, 990 

(9th Cir. 2006) (citing Rule 23, Advisory Committee Notes to 1966 Amendments, 

Subdivision (b)(3)). These factors are evaluated with an eye to both the legal and factual 

context of the litigation. Yokoyama v. Midland Nat’l Life Ins. Co., 594 F.3d 1087, 1010 

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(9th Cir. 2010). Thus, variation in individual class member’s reliance will not defeat a 

finding of predominance where the cause of action does not require a showing of 

individual reliance. Id. at 1093. Similarly, variation in the defendant’s oral 

misrepresentations to each class member will not defeat a finding of predominance where 

the plaintiff seeks to certify a claim based on common omissions of material fact or 

misstatements in publicly available documents. Id.

 ADT LLC argues that class certification is categorically unavailable in ACFA 

cases. Doc. 24 at 1-2. It notes that the ACFA requires each plaintiff to show that she 

actually relied on the defendant’s misrepresentation, and cites Stratton v. American 

Medical Security, Inc., 266 F.R.D. 340, for the proposition that this individualized 

reliance inquiry will invariably predominate over any issues common to the class. Id. 

Plaintiff disagrees, and notes that courts have certified class actions under the ACFA on 

at least three occasions. Doc. 17 at 11-17 (citing London v. Green Acres Trust, 765 P.2d 

538, 542 (Ariz. Ct. App. 1988); Siemer v. Assocs. First Capital Corp., No. CV-97-281-

TUC-JMR-JCC, 2001 WL 35948712, at *5 (D. Ariz. Mar. 30, 2001); Persky v. Turley, 

No. CIV-88-1830-PHX-SMM, 1991 WL 329564, at *4 (D. Ariz. Dec. 20, 1991)). In 

addition, Plaintiff argues that even if the reliance question is inappropriate for class 

adjudication, the Court could certify an issue-based class to address whether ADT LLC 

made misrepresentations in violation of the ACFA. Id. at 12. 

 ADT LLC has not shown that it is clear beyond reasonable dispute that the ACFA 

claim cannot be certified as a class action. ADT LLC argues that certification is barred 

by Stratton, but there are a number of ways that case could plausibly be distinguished. 

First, Stratton dealt with an affirmative misrepresentation claim; the Court went out of its 

way to emphasize that the plaintiff was not asserting a material omission. 266 F.R.D. at 

349. Plaintiff characterizes this as “primarily an omissions case.” Doc. 17 at 4. Second, 

Stratton was not dealing with an “inherently flawed” product – a fact the Court relied on 

to distinguish a case that did certify an ACFA class. 266 F.R.D. at 349. Plaintiff alleges 

that ADT LLC’s wireless home security system is inherently flawed. Complaint, ¶¶ 44-

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45. Third, Stratton found that reliance could not be presumed in part because the 

plaintiff’s testimony demonstrated that her purchasing decision was motivated by factors 

other than the defendant’s misrepresentation. 266 F.R.D. at 350. There is no comparable 

evidence here.

 Plaintiff has a number of colorable arguments as to why class certification may be 

appropriate in this case. The Court need not decide whether any of these arguments is 

meritorious. It is enough to recognize that the argument presented by ADT LLC involves 

a “disputed and substantial question[] of law,” which the Court should not decide on a 

motion to strike. Salcer, 744 F.2d at 939. 

 IT IS ORDERED: 

1. ADT Corp.’s motion to dismiss for lack of personal jurisdiction (Doc. 9) is 

granted. 

2. ADT LLC’s motion to dismiss for failure to state a claim (Doc. 10) is 

granted with respect to any ACFA claims based on statements set forth in 

Paragraphs 25(c), 26(a), or 28 of the Complaint. 

3. ADT LLC’s motion to dismiss is otherwise denied. 

4. ADT LLC’s motion to strike (Doc. 10) is denied. 

Dated this 11th day of February, 2016. 

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