Judge Joel R Wohlfeil, Case Number: 37-2020-00017100-CU-MC-CTL, Date: 2024-04-26 Tentative Ruling

Judge: Joel R Wohlfeil, Case: 37-2020-00017100-CU-MC-CTL, Date: 2024-04-26 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - April 24, 2024

04/26/2024 09:00:00 AM C-73 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Joel R. Wohlfeil

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Civil - Unlimited Misc Complaints - Other Summary Judgment / Summary Adjudication (Civil) 37-2020-00017100-CU-MC-CTL SUSAN COSTA VS. ROAD RUNNER SPORTS, INC. [E-FILE] CAUSAL DOCUMENT/DATE FILED: Motion for Summary Judgment and/or Adjudication, 09/25/2023

The Motion (ROA # 276, 298, 300, 329, 332, 333) of Defendants Road Runner Sports, Inc. and Road Runner Sports Retail, Inc. (collectively 'Road Runner') for summary judgment or, in the alternative, for summary adjudication on each separate cause of action in the First Amended Complaint (ROA #71, the 'FAC') filed by Plaintiff Michael O'Connor ('Plaintiff'), is DENIED.

This ruling is premised on the admissible evidence provided within Separate Statement facts numbers 1 - 25, and Additional Fact numbers 26 - 29. Defendant did not segregate the fact numbers into separate causes of action or issues.

This ruling is premised on the analysis set forth below.

Plaintiff's evidentiary objections (ROA # 340) are OVERRULED.

Defendants' evidentiary objections (ROA # 350) are OVERRULED IN PART and SUSTAINED IN PART.

The objections are OVERRULED except no. 1 which is SUSTAINED.

Standing -- Economic Injury UCL actions 'shall be prosecuted ... by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.' Bus. & Prof. Code 17204.

To satisfy standing a party must: (1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury; and (2) show that that economic injury was the result of, or caused by, the unfair business practice or false advertising that is the gravamen of the claim. Kwikset Corp. v. Superior Court (2011) 51 Cal. 4th 310, 322.

'There are innumerable ways in which economic injury from unfair competition may be shown. 'A plaintiff may (1) surrender in a transaction more, or acquire in a transaction less, than he or she otherwise would have; (2) have a present or future property interest diminished; (3) be deprived of money or property to which he or she has a cognizable claim; or (4) be required to enter into a transaction, costing money or property, that would otherwise have been unnecessary .... Neither the text of Proposition 64 nor the ballot arguments in support of it purport to define or limit the concept of 'lost money or property,' nor can or need we supply an exhaustive list of the ways in which unfair competition may cause economic harm. It suffices to say that, in sharp contrast to the state of the law before passage of Proposition 64, a private plaintiff filing suit now must establish that he or she has personally Calendar No.: Event ID: TENTATIVE RULINGS

3101223 CASE NUMBER: CASE TITLE: SUSAN COSTA VS. ROAD RUNNER SPORTS, INC. [E-FILE] 37-2020-00017100-CU-MC-CTL suffered such harm.' Id. at 323 (internal citations omitted).

'Any consumer who suffers any damage 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 recover' actual damages and other relief. Civ. Code 1780(a).

This provision requires that plaintiffs in a CLRA action show not only that a defendant's conduct was deceptive but that the deception caused them harm. Tucker v. Pacific Bell Mobile Services (2012) 208 Cal. App. 4th 201, 222.

This Court agrees with, and finds persuasive, the analysis found in the following two District Court orders: 'Here, the Court finds Plaintiffs have alleged both injury and reliance sufficient to establish standing under the FAL, UCL, and CLRA. With respect to injury, Plaintiffs Price and Edgemon allege that Defendants' fraudulent conduct resulted in charges of $71 and $190 to their credit cards, respectively.

These allegations state a loss of money or property sufficient to satisfy economic injury under the FAL and UCL, and by extension the 'any damage' requirement of the CLRA. Defendants contend that a credit card charge cannot constitute economic injury absent allegations that Plaintiffs actually paid the charge, but that argument is unconvincing. Economic injury under the FAL and UCL may be shown in 'innumerable ways,' Kwikset, 246 P.3d at 885, and in a modern economy in which credit card transactions are a ubiquitous feature, deprivation of a consumer's credit line is surely among the most common. Defendants cite no authority for their 'cash only' theory of economic injury.

Defendants also argue that Plaintiffs fail to plead economic injury because Plaintiffs authorized the charges they now cite as the source of injury. As evidence of Plaintiffs' authorization, Defendants point to the fact that the automatic renewal terms were disclosed on the order page on which Plaintiffs entered their credit card information and completed their order.

This argument is unavailing and overlooks the very gravamen of Plaintiffs' claims. Plaintiffs do not argue the charges were unauthorized in the sense of being carried out without Plaintiffs having entered their credit card information. Rather, Plaintiffs argue the charges were unauthorized in the sense that Defendants charged their credit cards without presenting the automatic renewal terms in a clear and conspicuous manner beforehand. Thus, because Plaintiffs allege that the credit card charges stem from Defendants' deceptive conduct, those charges constitute economic injury cognizable under the FAL, UCL, and CLRA.' Price v. Synapse Group, Inc. (S. D. Cal., July 24, 2017, No. 16-CV-01524-BAS-BLM) 2017 WL 3131700, at *4 – 5.

'The court concludes that Plaintiffs meet the statutory standing requirements with respect to their UCL and CLRA claims based on Audible's alleged failure to adequately disclose its automatic renewal terms, obtain Plaintiffs' affirmative consent to those terms, or provide an appropriate acknowledgment ....

... Standing under the UCL and CLRA requires a plaintiff to (1) plead an economic injury, and (2) show that the injury was caused by the challenged conduct ....

To establish causation, the questions are twofold: whether [the defendant's] failure to adequately disclose that [its subscription] plan would automatically renew each month caused [the] plaintiff to spend money he otherwise would not have spent; or alternatively, whether [the defendant's] failure to provide an easy cancellation mechanism caused [the] plaintiff to continue to spend money on a service he would have discontinued .... Thus, Plaintiffs can establish statutory standing if they plead facts showing that they lost money and that their loss resulted from either (1) Audible's failure to adequately disclose the automatic renewals, or (2) Audible's failure to provide a compliant cancellation mechanism. The court first addresses statutory standing with respect to Plaintiffs' claims premised on Audible's alleged failure Calendar No.: Event ID: TENTATIVE RULINGS

3101223 CASE NUMBER: CASE TITLE: SUSAN COSTA VS. ROAD RUNNER SPORTS, INC. [E-FILE] 37-2020-00017100-CU-MC-CTL to disclose, obtain consent to, or provide an acknowledgment of its automatic renewal offer terms. The court then considers whether Plaintiffs have standing to bring their claims based on Audible's alleged failure to provide an adequate cancellation mechanism under the ARL.

First, Plaintiffs' claims based on violations of Sections 17602(a)(1) - (3) stem from allegations that they lost money due to Audible's failure to adequately disclose the automatic renewals ....

Plaintiffs' allegations plausibly demonstrate that, as a result of Audible's 'defective disclosures,' they were 'not aware that [their] subscription[s] would automatically renew' and therefore 'lost money' each month .... Such allegations are sufficient to bring claims based on a defendant's failure to fully disclose, obtain consent to, or provide an adequate acknowledgment of its automatic renewal offer terms.

Plaintiffs allege that they suffered a monetary loss as a result of Audible's deficient disclosures because they 'would not have subscribed' had Audible 'fully and clearly disclosed the terms associated with their Audible Subscription.' (Compl. ¶ 124) .... Accordingly, Plaintiffs have standing to pursue their UCL and CLRA claims concerning the sufficiency of Audible's automatic renewal offer terms, Plaintiffs' consent to those terms, and the required acknowledgment.

Second, Plaintiffs allege that they suffered injury cognizable under the UCL and CLRA based on Audible's alleged failure 'to provide an immediately available and 'exclusively online' cancellation mechanism.' (Compl. ¶ 43 .... These allegations plausibly establish that Ms. Viveros suffered an economic harm, in the form of monthly subscription fees, as a result of Audible's alleged failure to provide an ARL-compliant cancellation mechanism ....' Viveros v. Audible, Inc. (W. D. Wash., Oct. 20, 2023, No. C23-0925JLR) 2023 WL 6960281, at *5 – 6.

Regarding the existence of injury in this action, disputed facts exist demonstrating that the renewal fees charged to Plaintiff's credit card are a loss of money sufficient to satisfy economic injury under the UCL, and the CLRA's 'any damage' requirement. This evidence shows that, at most, plaintiff spent $19.99 for what he believed was a one-year membership, but lost money as a result of being charged recurring annual membership fees totaling $136.96.

Regarding causation, disputed facts exist demonstrating that Plaintiff would not have purchased the membership if he knew it would automatically renew each year for a fee. Plaintiff testified he purchased the membership to achieve the same-day savings, which was more than the cost of the membership, and would not have purchased the membership if he knew it was an annually renewing subscription.

Statute of Limitations A UCL action 'shall be commenced within four years after the cause of action accrued.' Bus. & Prof.

Code 17208. A cause of action accrues when it is complete with all of its elements: wrongdoing, harm and causation. Pooshs v. Philip Morris USA, Inc. (2011) 51 Cal. 4th 788, 797.

The statute of limitations governing a request for declaratory relief is the one applicable to an ordinary legal or equitable action based on the same claim. Mangini v. Aerojet-General Corp. (1991) 230 Cal. App. 3d 1125, 1155. Arguably, the declaratory relief cause of action mirrors the UCL claim such that a four-year limitations period applies.

In this action disputed facts exist demonstrating that the UCL and declaratory relief causes of action accrued when the first purported unlawful renewal charge occurred on November 26, 2017. Plaintiff O'Connor became a named Plaintiff on February 16, 2021, when the FAC was filed. This is within four years of accrual such that the UCL and declaratory relief causes of action are timely.

A CLRA action 'shall be commenced not more than three years from the date of the commission of such method, act, or practice.' Civ. Code 1783.

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3101223 CASE NUMBER: CASE TITLE: SUSAN COSTA VS. ROAD RUNNER SPORTS, INC. [E-FILE] 37-2020-00017100-CU-MC-CTL A statute of limitations begins to run when a cause of action has accrued, that is, when the cause of action is complete with all of its elements. Pineda v. Bank of Am., N.A. (2010) 50 Cal. 4th 1389, 1397.

This limitations period runs from the time a reasonable person would have discovered the basis for a claim. Meyer v. Sprint Spectrum L.P. (2009) 45 Cal. 4th 634, 645.

Generally speaking, a cause of action accrues at the time when the cause of action is complete with all of its elements. Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal. 4th 797, 806.

An important exception to the general rule of accrual is the 'discovery rule,' which postpones accrual of a cause of action until Plaintiff discovers, or has reason to discover, the cause of action. Id. at 807.

Plaintiff has reason to discover a cause of action when he or she has reason at least to suspect a factual basis for its elements. Id. Under the discovery rule, suspicion of one or more of the elements of a cause of action, coupled with knowledge of any remaining elements, will generally trigger the statute of limitations period. Id. Rather than examining whether Plaintiff suspects facts supporting each specific legal element of a particular cause of action, courts look to whether Plaintiff has reason to at least suspect that a type of wrongdoing has injured them. Id. 'Our Supreme Court has never held that under the discovery rule, the suspicion necessary to trigger the statute may be imputed to a plaintiff, and we do not believe that to be the law. When the cases are read in whole, rather than in isolated quotes, it is clear that a plaintiff's duty to investigate does not begin until the plaintiff actually has a reason to investigate.' Nelson v. Indevus Pharmaceuticals, Inc. (2006) 142 Cal. App. 4th 1202, 1206.

In this action, disputed facts exist demonstrating Plaintiff lacked knowledge of renewal charges on November 26, 2017, and whether he should have checked his credit card statements for unauthorized charges. It is disputed whether Plaintiff did not discover the unauthorized charges until January 2021. It is disputed whether Plaintiff's prior memberships put him on notice of future unauthorized charges. It is disputed whether Plaintiff reasonably believed his earlier sign-ups only lasted one year for each. It is disputed whether Plaintiff was informed of the renewal charges by an employee prior to signing up, or was put in inquiry notice by statements made by employees.

Predicate Violation of Automatic Renewal Law ('ARL') This action alleges Defendants violated the UCL and CLRA via a predicate violation of the ARL.

'It is unlawful for any business that makes an automatic renewal offer or continuous service offer to a consumer ... to do any of the following: ... ¶ ... (1) Fail to present the automatic renewal offer terms or continuous service offer terms in a clear and conspicuous manner before the subscription or purchasing agreement is fulfilled ... ¶ ... (2) Charge the consumer's credit or debit card ... for an automatic renewal or continuous service without first obtaining the consumer's affirmative consent to the agreement containing the automatic renewal offer terms or continuous service offer terms ... ¶ ... (3) Fail to provide an acknowledgment that includes the automatic renewal offer terms or continuous service offer terms, cancellation policy, and information regarding how to cancel in a manner that is capable of being retained by the consumer .... [and] ¶ ... (4) Fail to provide a consumer with a notice ... that clearly and conspicuously states all of the following: ...¶ ... (A) That the automatic renewal or continuous service will automatically renew unless the consumer cancels .... ¶ ... (B) The length and any additional terms of the renewal period .... ¶ ... (C) One or more methods by which a consumer can cancel the automatic renewal or continuous service .... ¶ ... (D) If the notice is sent electronically, the notice shall include either a link that directs the consumer to the cancellation process, or another reasonably accessible electronic method ... [and] ¶ ... (E) Contact information for the business.' Bus. & Prof. Code 17602(a).

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3101223 CASE NUMBER: CASE TITLE: SUSAN COSTA VS. ROAD RUNNER SPORTS, INC. [E-FILE] 37-2020-00017100-CU-MC-CTL In this action, disputed facts exist regarding whether defendants clearly and conspicuously disclosed the automatic renewal offer terms.

'Clear and conspicuous' or 'clearly and conspicuously' means 'in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from the surrounding text of the same size by symbols or other marks, in a manner that clearly calls attention to the language.' Bus. & Prof. Code 17601(c). The disputed evidence demonstrates the print material did not adhere to these guidelines.

Disputed facts exist regarding whether Defendants charged Plaintiff's credit card for an automatic renewal without first obtaining plaintiff's consent. The record lacks evidence that Plaintiff's consent was sufficiently obtained via the renewal letters.

Disputed facts exist regarding whether Defendants provided an acknowledgment of the automatic renewal terms. The record lacks evidence that Plaintiff was sufficiently alerted to the impending renewals.

Disputed facts exist regarding whether Defendants provided a cancellation method that was reasonably easy to access and use. The submitted evidence suggests actions were taken to make cancellation harder to accomplish.

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