Court Opinion

ID: 4564942
Source: CourtListenerOpinion
Date Created: 2020-09-11 20:02:53.889596+00
Date Added: 2024-06-11T08:58:44.433176
License: Public Domain

Filed 9/11/20
                            CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                              SIXTH APPELLATE DISTRICT

 ERIC MAYRON,                                      H044592
                                                  (Santa Clara County
          Plaintiff and Appellant,                 Super. Ct. No. CV275940)

          v.

 GOOGLE LLC,

          Defendant and Respondent.

        In this putative class action, plaintiff Eric Mayron sued Google LLC for violating
the automatic renewal law (Bus. & Prof. Code, § 17600, et seq.) and for unfair
competition (Bus. & Prof. Code, § 17200, et seq.). Plaintiff appeals after the trial court
sustained Google’s demurrer to the complaint without leave to amend. We conclude
there is no private right of action for violation of the automatic renewal law. Further,
since plaintiff has not alleged an injury caused by Google’s conduct, he has no standing
to sue under the unfair competition statute. We will therefore affirm the judgment.
                                      I. BACKGROUND
        California’s automatic renewal law was enacted “to end the practice of ongoing
charging of consumer credit or debit cards [] without the consumers’ explicit consent for
ongoing shipments of a product or ongoing deliveries of service.” (Bus. & Prof. Code,
§ 17600 (unspecified statutory references are to this code).) The law requires a
consumer’s affirmative consent to any subscription agreement automatically renewed for
a new term when the initial term ends. (§ 17602, subd. (a)(2).) It further requires “clear
and conspicuous” disclosure of the offer terms, and an “easy-to-use mechanism for
cancellation.” (§ 17602, subds. (a)(1), (b).)
       Plaintiff sued Google on behalf of a putative class, alleging that Google’s
subscription data storage plan violates the automatic renewal law. As described in the
complaint, “Google Drive” allows users (those registered for a Google account) to
remotely store electronic data that can be accessed from any computer, smartphone, or
similar device. There is no charge for 15 gigabytes of storage capacity. For a $1.99
monthly fee, users can upgrade to 100 gigabytes of storage. Plaintiff alleged the
upgraded Google Drive plan violates the automatic renewal law because Google did not
provide the required clear and conspicuous disclosures nor obtain his affirmative consent
to commence a recurring monthly subscription agreement, and did not adequately explain
how to cancel.
       Plaintiff asserted one cause of action for violation of the automatic renewal law,
and another for statutory unfair competition based on the alleged unlawful practice.
Google demurred to the complaint. It argued there is no private right of action under the
automatic renewal law and that plaintiff did not allege actual injury sufficient to confer
standing for an unfair competition claim. The trial court ultimately sustained the
demurrer without leave to amend.
                                   II.    DISCUSSION
       Appellate review of a decision sustaining a demurrer is de novo. (Moore v.
Regents of University of California (1990) 51 Cal. 3d 120, 125.) We assume the truth of
the allegations in the complaint and determine whether a valid cause of action is stated
under any legal theory. (Doan v. State Farm General Ins. Co. (2011)
195 Cal. App. 4th 1082, 1091.)

   A. THE AUTOMATIC RENEWAL LAW DOES NOT PROVIDE A PRIVATE RIGHT OF
      ACTION
       A private party can sue for violation of a statute only where the statute in question
allows it. (Lu v. Hawaiian Gardens Casino, Inc. (2010) 50 Cal. 4th 592, 596 (Lu).) We

                                             2
first examine the statutory text to see if it contains “ ‘clear, understandable, unmistakable
terms,’ which strongly and directly” indicate a private right of action is allowed. (Id. at
p. 597.) The statute may, for instance, refer to obtaining a remedy or enforcing its
provisions “by way of an action.” (Ibid.) Where the text does not contain an
unmistakable directive, the legislative history may indicate whether the Legislature
intended to create a private cause of action. (Id. at p. 598.)
       Plaintiff asserts section 17604 of the automatic renewal law clearly shows intent to
create a private right of action. Entitled “Violations; Civil remedies,” that section
provides: “violation of this article shall not be a crime. However, all available civil
remedies that apply to a violation of this article may be employed.” Plaintiff reads the
reference to “all available civil remedies” to mean that a private party can sue for any
remedies available under the civil law, such as damages or an injunction. Plaintiff’s
interpretation is not unreasonable. While a remedy is not the same thing as a cause of
action, a statute that says all available remedies can be employed for a violation suggests
a right of action exists, since one cannot obtain a remedy without a viable cause of action.
       At the same time, we are mindful there must be a “clear, understandable,
unmistakable” indication of intent to allow a private right of action. It is not enough that
the statutory text suggests such a right. (See Lu, supra, 50 Cal. 4th 592 at p. 597.) A
clear indication means the text cannot be reasonably susceptible of competing
interpretations. The language here is susceptible of more than one meaning. As we have
noted, plaintiff’s interpretation is plausible. But so is the one urged by Google—that the
phrase “all available civil remedies … may be employed” does not mean what plaintiff
says but rather the opposite: it specifically indicates an intent not to create a new cause
of action but to require enforcement through existing means (such as through Business
and Professions Code section 17200, et seq., which allows individuals harmed by
unlawful business practices to seek restitution and injunctive relief). We find that the
statute’s somewhat imprecise phrasing—“all available civil remedies that apply to a
                                              3
violation of this article may be employed”—is not sufficiently clear to conclude in the
affirmative that a private individual may sue for a violation.
       Plaintiff argues general rules of statutory interpretation, such as the rule against
surplusage, dictate that the reference to remedies should be given effect as creating a
cause of action. But a more specific rule controls in this context: the rule that in order to
create a private right of action the Legislature must clearly express that intent.
       Section 17603 similarly contains no clear indication of intent to create a private
right to sue. Section 17603 provides that “any goods, wares, merchandise, or products”
sent to a consumer under a subscription agreement that violates the automatic renewal
law “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.” That provision relieves the
consumer of any obligation to return what has already been received and ensures the
consumer has no liability for the products. But it does not follow from that language (at
least not with sufficient clarity) that a consumer may affirmatively bring an action to
enforce the statute. That is in contrast to the statute considered in Goehring v. Chapman
University (2004) 121 Cal. App. 4th 353, 377, cited by plaintiff. There the court found a
private right of action in Business and Professions Code section 6061, subdivision (h),
which requires certain disclosures by unaccredited law schools and mandates that any
school in violation “shall make a full refund of all fees paid by students.” As the
Legislature “unquestionably intended to bestow students or former students with
individual monetary claims, it must have intended to give them private rights of action to
pursue such claims.” (Goehring v Chapman University, at p. 378.) Section 17603 is
different because it provides only a passive right to retain any products received from a
violator, rather than a right to pursue a refund of fees a claimant could show had been
paid. We also note that Goehring was decided several years before Lu, and therefore did
not apply the Supreme Court’s guidance regarding the clarity with which the Legislature
must express its intent to create a private right of action.
                                               4
       We draw further support for our conclusion that the statutory text does not show
an intent to create a private cause of action from the fact that the Legislature has in many
instances demonstrated its ability to clearly express such an intent. Numerous statutes
contain clear, unmistakable language regarding private enforcement that is much more
explicit than the language used here. (See Lu, supra, 50 Cal. 4th 592, 597, listing statutes
with a private right of action including Health & Saf. Code, § 1285, subd. (c) [“Any
person who is detained in a health facility solely for the nonpayment of a bill has a cause
of action against the health facility for the detention”]; Lab. Code § 218 [“Nothing in this
article shall limit the right of any wage claimant to sue directly or through an assignee for
any wages or penalty due him under this article”]; Bus. & Prof. Code, § 17070 [“Any
person ... may bring an action to enjoin and restrain any violation of this chapter and, in
addition thereto, for the recovery of damages”]; Bus. & Prof. Code § 6175.4, subd. (a)
[“A client who suffers any damage as the result of a violation of this article by any
lawyer may bring an action against that person to recover or obtain one or more of the
following remedies”]; Civ. Code, § 1748.7, subd. (d) [“Any person injured by a violation
of this section may bring an action for the recovery of damages, equitable relief, and
reasonable attorney's fees and costs”].) Had the Legislature wanted to create a private
right of action for violation of the automatic renewal law, it could have said so. We find
its choice not to is significant.

       But even without clear statutory language, legislative history can reveal the
Legislature’s intent to create a private right of action. 1 (Lu, supra, 50 Cal. 4th 592, 598.)
Again though, it must be “clear” that was the intent. (Id. at p. 597.) The legislative
history of the automatic renewal law contains no clear statement about an individual’s
right to sue under the statute. There is no mention of a private right action at all. And the
relevant material does not support plaintiff’s argument. Under a heading that reads

       We grant plaintiff’s request for judicial notice of the legislative history of the
       1

automatic renewal law.
                                              5
“Remedies available under the bill”—where one would expect reference to a private right
of action if one were contemplated—the bill’s author instead notes violations can be
enforced through Business and Professions Code section 17200, which allows a private
party to “bring a civil action for injunctive relief and/or for restitution of profits that the
defendant unfairly obtained from that party.” (Sen. Ellen Corbett, Chair of Senate
Judiciary Committee, letter to Sen. Yee, 2009-2010 reg. session.) The legislative
history’s reference to enforcement by way of a different statute is a strong indication that
no independent private right of action was intended by the new law.
       Seeing no clear indication of intent to create a private right of action in either the
statutory text or its legislative history, we conclude there is no such right under the
automatic renewal law. Plaintiff urges that outcome is contrary to the remedial purpose
of the statute and will undermine its consumer protection function. But the automatic
renewal law can be enforced with an action brought by the Attorney General. A private
individual can also pursue enforcement through an unfair competition lawsuit, if
economic loss resulted from the violation—an issue we turn to next.

   B. STANDING TO SUE FOR UNFAIR COMPETITION REQUIRES ACTUAL INJURY AND
      CAUSATION
       In addition to his claim for violation of the automatic renewal law, plaintiff alleged
a cause of action against Google under Business and Professions Code, section 17200,
et seq., which prohibits unfair competition. “Section 17200 ‘borrows’ violations from
other laws by making them independently actionable as unfair competitive practices.”
(Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal. 4th 1134, 1143.) The
statutory violation plaintiff imports here is Google’s alleged violation of the automatic
renewal law.

       The unfair competition statutes come with an express standing requirement,
however. An action can be brought only “by a person who has suffered injury in fact and
has lost money or property as a result of the unfair competition.” (§ 17204.) It is not
                                                6
enough that a plaintiff lost money; to have standing, there must be a causal link between
the unlawful practice and the loss. (Hall v. Time, Inc. (2008) 158 Cal. App. 4th 847, 849
[“We hold the phrase ‘as a result of’ in the [Unfair Competition Law] imposes a
causation requirement; that is, the alleged unfair competition must have caused the
plaintiff to lose money or property.”].)
       The statutory violations alleged by plaintiff are that Google did not provide
required disclosures and did not make it easy enough to cancel the subscribed service. To
establish standing, plaintiff would also need to allege that he ordered increased Google
Drive storage but would not have done so had the disclosures been provided, or that he
would have cancelled the additional storage had it been easier to do so. (See, e.g.,
Kwikset Corp. v. Superior Court (2011) 51 Cal. 4th 310, 317 (Kwikset) [plaintiffs who can
truthfully allege they were deceived by a product’s label into purchasing the product and
would not have purchased it otherwise, have “lost money or property” within the
meaning of section 17204].) But plaintiff makes no such allegation, which suggests he
would have purchased and maintained the added Google Drive capacity even if Google
had complied with the automatic renewal law. The complaint therefore does not show a
causal link between plaintiff’s payments and Google’s alleged violations. (Daro v.
Superior Court (2007) 151 Cal. App. 4th 1079, 1098 [“In short, there must be a causal
connection between the harm suffered and the unlawful business activity. That causal
connection is broken when a complaining party would suffer the same harm whether or
not a defendant complied with the law.”].)
       Plaintiff contends he has standing based on the unconditional gift provision of the
automatic renewal law, which allows a consumer to keep “any goods, wares,
merchandise, or products” sent under a continuous service agreement that is not in
compliance with the law. (§ 17603.) Any such goods “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
                                             7
business, including, but not limited to, bearing the cost of, or responsibility for, shipping
any goods, wares, merchandise, or products to the business.” (Ibid.) In plaintiff’s view,
the effect of that provision is that he paid for a product the law deems a gift. In other
words, he asserts that he lost money as a direct result of Google’s alleged statutory
violation because he paid for something he did not need to pay for.
       Plaintiff’s standing argument misses the crucial requirement of causation. The
unconditional gift provision of the automatic renewal law creates a right to retain a
product already received. That right is a consequence of violating the statute. But a
consequence imposed on a defendant for violating a statute is not the same thing as a loss
caused by the defendant’s conduct. (Kwikset, supra, 51 Cal. 4th 310, 335–336 [eligibility
for a remedy and standards for causation under section 17200 are “wholly distinct”].)
The relevant inquiry for standing purposes is whether a defendant’s unlawful conduct
caused the plaintiff to part with money. In the context of this case, the questions are
twofold: whether Google’s failure to adequately disclose that the Google Drive storage
plan would automatically renew each month caused plaintiff to spend money he
otherwise would not have spent; or alternatively, whether Google’s failure to provide an
easy cancellation mechanism caused plaintiff to continue to spend money on a service he
would have discontinued (which he characterizes as a gift under the law).
       Whether a loss was caused by the defendant is what matters for standing, not any
resulting consequence imposed by statute. An example demonstrates the point: suppose
the automatic renewal law imposed a statutory penalty of $1,000 for each violation. The
mere existence of the penalty—a consequence of violating the statute—does not mean the
defendant caused a consumer’s loss that is separate and distinct from the penalty. An
after-the-fact right provided by the Legislature cannot amount to causation. Nor should a
penalty imposed on a vendor be viewed as the source of injury to a consumer.
       Plaintiff cites two federal district court cases and an unpublished Ninth Circuit
Court of Appeals case which concluded the unconditional gift provision does confer
                                              8
section 17200 standing. But we are not persuaded by the reasoning in those cases. In
Roz v. Nestle Waters North America, Inc. (C.D. Cal. 2017) 2017 U.S. Dist. LEXIS 5177,
the court’s basis for finding standing was that “[w]hen the Defendant then collected
money in return for that ‘gift,’ it injured the Plaintiffs because it took money that the
Plaintiffs did not owe. Therefore, the charges must qualify as an injury.” (Id. at p. 22).
The Roz court’s analysis ignores the requirement that the consumer’s injury must be
caused by the defendant’s misconduct; that is, caused by the defendant’s failure to
provide the required disclosures. Lack of a causal link between the underlying statutory
violation and the nature of the plaintiff’s loss precludes standing under section 17200.
The other district court case plaintiff cites, Lopez v. Stages of Beauty (S.D. Cal. 2018)
307 F. Supp. 3d 1058, 1070, relies on Roz and applies the same reasoning.
       In Johnson v. Pluralsight, LLC (9th Cir. 2018) 728 Fed. Appx. 674, 676–677, the
Ninth Circuit decided a plaintiff asserting a section 17200 claim premised on an
automatic renewal law violation established standing in federal court under Article III of
the United States Constitution, and the court summarily concluded that “for the same
reasons he has satisfied Article III’s injury-in-fact requirement, he has alleged an injury
in fact sufficient to support statutory standing under [section 17200].” But federal
Article III standing is far broader than the standing requirement contained in
section 17200, which expressly requires a financial loss caused by the defendant’s
conduct. As the California Supreme Court explained in Kwikset, supra, 51 Cal. 4th 310,
324, “because economic injury is but one among many types of injury in fact, the []
requirement that injury be economic renders standing under section 17204 substantially
narrower than federal standing under article III, section 2 of the United States
Constitution, which may be predicated on a broader range of injuries.” The Johnson
court’s conclusion that the plaintiff had section 17200 standing rests on a faulty premise.
       Because we conclude that the unconditional gift provision of the automatic
renewal law does not confer standing for a section 17200 cause of action, we need not
                                              9
reach the issue of whether the gift provision applies only to tangible goods and not to a
data storage plan like Google Drive.
       Plaintiff has no private cause of action under the automatic renewal law, and he
has not properly alleged causation of an economic loss as required to bring a claim under
section 17200. The trial court therefore correctly sustained Google’s demurrer to the
complaint. And as plaintiff has not shown how he would amend the complaint to change
its legal effect, there was no abuse of discretion in denying leave to amend. (Rosen v.
St. Joseph Hospital of Orange County (2011) 193 Cal. App. 4th 453, 458.)
                                  III.   DISPOSITION
       The judgment is affirmed. The parties shall bear their own costs on appeal.

                                            10
                                 ____________________________________
                                 Grover, J.

WE CONCUR:

____________________________
Greenwood, P. J.

____________________________
Danner, J.

H044592 - Mayron v. Google LLC
Trial Court:                           Santa Clara County Superior Court
                                       Superior Court No. CV275940

Trial Judge:                           Hon. Peter H. Kirwan

Counsel for Plaintiff/Appellant ERIC   Julian Hammond
MAYRON                                  Hammon Law, P.C.
                                       Laura Luo Ho
                                       Anne P. Bellows
                                        Goldstein, Borgen, Dardarian & Ho

Counsel for Defendant/Respondent       David H. Kramer
GOOGLE LLC                             Brian M. Willen
                                        Wilson, Sonsini, Goodrich & Rosati

H044592 - Mayron v. Google LLC