Court Opinion

ID: 4231383
Source: CourtListenerOpinion
Date Created: 2017-12-21 21:00:57.389557+00
Date Added: 2024-06-11T09:23:31.469646
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       DEC 21 2017
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

HELENE CAHEN and MERRILL NISAM,                 No.    16-15496
individually and on behalf of all others
similarly situated                              D.C. No. 3:15-cv-01104-WHO

                Plaintiffs-Appellants,
                                                MEMORANDUM*
 v.

TOYOTA MOTOR CORP.; et al.,

                Defendants-Appellees.

                  Appeal from the United States District Court
                       for the Northern District of California
                 William Horsley Orrick, District Judge, Presiding

                    Argued and Submitted November 15, 2017
                            San Francisco, California

Before: BERZON and FRIEDLAND, Circuit Judges, and SESSIONS,** District
Judge.

      Helene Cahen and Merrill Nisam (“plaintiffs”) appeal the district court’s

dismissal of their claims for violations of California’s Unfair Competition Law

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
              The Honorable William K. Sessions III, United States District Judge
for the District of Vermont, sitting by designation.
(“UCL”) (Count I), Consumers Legal Remedies Act (“CLRA”) (Count II), and

False Advertising Law (“FAL”) (Count III), as well as for Breach of Implied

Warranty of Merchantability (Count IV), Breach of Contract/Common Law

Warranty (Count V), Fraud by Concealment (Count VI), Violation of Song-

Beverly Consumer Warranty Act (Count VII), and Invasion of Privacy under

Article I of the California Constitution (Count VIII). We conclude that the district

court correctly found that plaintiffs failed to establish Article III standing for all of

their claims.

      1. We review the district court’s dismissal for lack of Article III standing de

novo. Nat’l Council of La Raza v. Cegavske, 800 F.3d 1032, 1039 (9th Cir. 2015);

Vaughn v. Bay Envtl. Mgmt, Inc., 567 F.3d 1021, 1024 (9th Cir. 2009). Standing

has three elements: “The plaintiff must have (1) suffered an injury in fact, (2) that

is fairly traceable to the challenged conduct of the defendant, and (3) that is likely

to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct.

1540, 1547 (2016) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992);

Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180–

81 (2000)). The plaintiff bears the burden of establishing these elements, and

when “a case is at the pleading stage, the plaintiff must ‘clearly . . . allege facts

demonstrating’ each element.” Id. (quoting Warth v. Seldin, 422 U.S. 490, 518

(1975)). “To establish injury in fact, a plaintiff must show that he or she suffered

                                            2                                     16-15496
an invasion of a legally protected interest that is concrete and particularized and

actual or imminent, not conjectural or hypothetical.” Friends of the Earth, Inc.,

528 U.S. at 1548 (quoting Lujan, 504 U.S. at 560); see also Clapper v. Amnesty

Int’l USA, 568 U.S. 398, 409 (2013).

      2. Plaintiffs claim that their vehicles are vulnerable to being hacked because

their vehicles’ computer systems lack security. Plaintiffs allege that “[a]s a result

of Defendants’ unfair, deceptive, and/or fraudulent business practices, and their

failure to disclose the highly material fact that their vehicles are susceptible to

hacking and neither secure nor safe, owners and/or lessees of Defendants’ vehicles

are currently at risk of theft, damage, serious physical injury, or death as a result of

hacking, and they will continue to face this risk until they are notified of the

dangers associated with their vehicles and are given funds and guidance by

Defendants as to how to correct the security defects, or until Defendants correct

them.” Plaintiffs also allege that they have been injured because their vehicles are

worth less than what they paid for them due to these hacking vulnerabilities and

allege that their privacy is invaded due to defendants’ collection of vehicle data.

      3. Plaintiffs have failed to sufficiently allege an injury due to the risk of

                                           3                                       16-15496
hacking itself.1 For their Breach of Implied Warranty of Merchantability, Breach

of Contract/Common Law Warranty, Fraud by Concealment, and Violation of

Song-Beverly Consumer Warranty Act claims, plaintiffs allege that the risk of

hacking itself is the source of their injury.

      Plaintiffs do not allege that any of their vehicles have actually been hacked.

More importantly, they do not allege that they are aware of any vehicles that have

been hacked outside of controlled environments. Even though no hacking has

occurred, plaintiffs allege that hacking is an “imminent eventuality,” that

defendants have known for a long time about these security vulnerabilities, and

that defendants have nonetheless marketed their vehicles as safe. These alleged

risks and defects are speculative. Article III standing requires a concrete and

particularized injury to plaintiffs’ interests that is simply not alleged in the First

Amended Complaint.

      4. Plaintiffs have failed to sufficiently allege an injury due to overpaying for

their vehicles. For their UCL, CLRA, and FAL claims, plaintiffs allege that they

suffered an injury because they either would not have purchased their vehicles or

would have paid less for them had they known about these hacking risks. This

1
 We note that on appeal, plaintiffs seem to have abandoned their arguments
relating to injuries from the risk of hacking itself. Plaintiffs’ Opening Brief
focuses solely on their economic loss theory.

                                            4                                     16-15496
economic loss theory is not credible, as the allegations that the vehicles are worth

less are conclusory and unsupported by any facts. The district court was correct in

noting that “plaintiffs have not, for example, alleged a demonstrable effect on the

market for their specific vehicles based on documented recalls or declining Kelley

Bluebook values . . . [n]or have they alleged a risk so immediate that they were

forced to replace or discontinue using their vehicles, thus incurring out-of-pocket

damages.” Additionally, “[n]early 100% of cars on the market include wireless

technologies that could pose vulnerabilities to hacking or privacy intrusions.”

Thus, plaintiffs have only made conclusory allegations that their cars are worth less

and have not alleged sufficient facts to establish Article III standing.

      5. Finally, Plaintiffs have failed to sufficiently allege an injury due to

invasion of their privacy. Plaintiffs claim that defendants collect data from their

vehicles and share the data with third parties. However, there are no specific

allegations as to why this data is sensitive or individually identifiable to particular

drivers, cf. Eichenberger v. ESPN, Inc., 2017 WL 5762817, at *4 (9th Cir. Nov. 29,

2017). Plaintiffs have not pleaded sufficient facts demonstrating how the

aggregate collection and storage of non-individually identifiable driving history

and vehicle performance data cause an actual injury. See Lujan, 504 U.S. at 560.

      The district court’s decision is AFFIRMED.

                                           5                                       16-15496