Judge: Teresa A. Beaudet, Case: 24STCV01365, Date: 2024-06-24 Tentative Ruling

Case Number: 24STCV01365    Hearing Date: June 24, 2024    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff Karla Huff (“Plaintiff”) filed this action on January 18, 2024 against Defendant Lendbuzz, Inc. (“Defendant”). The Complaint alleges one cause of action for aiding and abetting violations of the California Invasion of Privacy Act.

Defendant now moves for an order granting judgment on the pleadings in its favor. Plaintiff opposes.

Discussion

A.    Legal Standard

A motion for judgment on the pleadings has the same function as a general demurrer but is made after the time for demurrer has expired. Except as provided by ¿Code of Civil Procedure section 438¿, the rules governing demurrers apply. (¿Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999¿.) A motion by a defendant can be made on the ground that the complaint (or any cause of action therein) “¿does not state facts sufficient to constitute a cause of action against that defendant.¿” (¿Code Civ. Proc., § 438, subd. (c)(1)(B)(ii)¿.) Pursuant to Code of Civil Procedure section 438, subdivision (d), “[t]he grounds for motion provided for in this section shall appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.”

¿“¿To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.¿” (¿C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872¿.) For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded. (¿Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967¿.) A demurrer “¿does not admit contentions, deductions or conclusions of fact or law.¿” (¿Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713¿.)

B.    Allegations of the Complaint

In the Complaint, Plaintiff alleges that Defendant is a “financing corporation that operates the website www.lendbuzz.com,” and that Defendant “gives consumers access to a broader range of credit options in order to become car owners.” (Compl., ¶ 9.)

Plaintiff alleges that Defendant has “implant[ed] code on its website allowing for the unauthorized recording and creation of transcripts of private conversations. In order to facilitate this invasive eavesdropping, Defendant has entered into financial agreements with drift.com (‘Drift’) to embed code into Defendant’s website chat function. This code enables Drift to covertly intercept and monitor a website visitor’s chat conversation in real-time, without their knowledge or consent.” (Compl., ¶ 11.)

Plaintiff alleges that “Drift and others use the collected data of these chat communications along with other information obtained through the chat, including IP address, geolocation, browsing history, and search history. Drift then keeps the information it collects for an undisclosed amount of time and uses it in conjunction with other data they have collected about the user from other sources. Drift also provides some of these details about chat users back to Defendant, Drift also uses the data gathered from chats for ‘servce [sic] improvement and development.’” (Compl., ¶ 15.) Plaintiff alleges that Drift “combines and shares this user data, obtained without consent, with third parties, completely disregarding consumer consent and privacy rights.” (Compl., ¶ 16.)

Plaintiff alleges that she “visited Defendant’s Website. Defendant did not inform Plaintiff that Defendant was secretly wiretapping or recording her communications or aiding, abetting, and paying third parties to eavesdrop on her, despite website users having a reasonable expectation of privacy in using the seemingly harmless chat box feature.” (Compl., ¶ 22.)

C.    First Cause of Action for Aiding and Abetting Violations of the California Invasion of Privacy Act

Defendant asserts that the instant motion should be granted and the Complaint should be dismissed without prejudice, “because Drift is an indispensable party that Plaintiff has failed to join.” (Mot. at p. 2:1-2.)

As set forth above, Plaintiff alleges, inter alia, that “Defendant has entered into financial agreements with drift.com (‘Drift’) to embed code into Defendant’s website chat function. This code enables Drift to covertly intercept and monitor a website visitor’s chat conversation in real-time, without their knowledge or consent.” (Compl., ¶ 11.) Plaintiff alleges that “Defendant is aware that communicatison [sic] with its chat feature are occurring [sic] on Drift servers. Defendant is also aware that Drift collects and stores chat recordings as they occur and that Drift collects a bevy of personal information obtained from a user without their consent or knowledge…These chat conversations with Drift are also automatically collected and shared by Drift and Defendant…” (Compl., ¶¶ 14-15.) In the first cause of action, Plaintiff alleges that “[a]t all relevant times, Defendant intentionally caused the internet communication between Plaintiff with Defendant’s Website to be recorded. Defendant also aided, abetted, and even paid third parties to eavesdrop upon such conversations.” (Compl., ¶ 27.) Plaintiff alleges that “Defendant’s conduct constitutes aiding and abetting violations of Cal. Penal Code § 631(a).” (Compl., ¶ 29.)

Code of Civil Procedure section 389, subdivision (a), cited by Defendant, provides as follows:

“A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party.”

Defendant asserts that here, “Plaintiff seeks declaratory relief, injunctive relief, and statutory damages, which necessarily implicate and affect the interests and rights of non-party Drift, without whom complete relief cannot be accorded.” (Mot. at p. 3:22-24.)

First, Defendant notes that in the prayer for relief, Plaintiff seeks, inter alia, “[a]n order declaring Defendant’s conduct violates CIPA.” (Compl., Prayer for Relief, ¶ 1.) Defendant asserts that “[b]efore the Court can declare [Defendant] ‘aided and abetted’ a third-party in violation of CIPA, the Court must determine that non-party Drift violated CIPA. Ordering declaratory relief against [Defendant] necessarily requires ordering declaratory relief against non-party Drift.” (Mot. at pp. 3:27-4:2.) Defendant notes that “[c]ourts will not entertain a declaratory relief action the sole object of which is to settle rights of third persons who are not parties.” (Connerly v. Schwarzenegger (2007) 146 Cal.App.4th 739, 748 [internal quotations omitted].) Defendant also asserts that “the declaratory relief Plaintiff seeks would necessarily affect Drift’s rights and interests. A disposition in Drift’s absence could impair its ability to protect its interest in this action.” (Mot. at p. 4:25-26.)

Indeed, Penal Code section 631, subdivision (a) provides in pertinent part as follows:

“Any person who, by means of any machine, instrument, or contrivance, or in any other manner, intentionally taps, or makes any unauthorized connection, whether physically, electrically, acoustically, inductively, or otherwise, with any telegraph or telephone wire, line, cable, or instrument, including the wire, line, cable, or instrument of any internal telephonic communication system, or who willfully and without the consent of all parties to the communication, or in any unauthorized manner, reads, or attempts to read, or to learn the contents or meaning of any message, report, or communication while the same is in transit or passing over any wire, line, or cable, or is being sent from, or received at any place within this state; or who uses, or attempts to use, in any manner, or for any purpose, or to communicate in any way, any information so obtained, or who aids, agrees with, employs, or conspires with any person or persons to unlawfully do, or permit, or cause to be done any of the acts or things mentioned above in this section, is punishable by a fine not exceeding two thousand five hundred dollars ($2,500), or by imprisonment in the county jail not exceeding one year, or by imprisonment pursuant to subdivision (h) of Section 1170, or by both a fine and imprisonment in the county jail or pursuant to subdivision (h) of Section 1170.” (Pen. Code, § 631, subd. (a), emphasis added.)

Plaintiff asserts that here, Defendant violated the foregoing underlined portion of Penal Code section 631, subdivision (a).) (Compl., ¶ 24.)

Defendant also notes that Plaintiff seeks “[a]n order enjoining Defendant’s conduct as alleged herein and any other injunctive relief that the Court finds proper.” (Compl., Prayer for Relief, ¶ 3.) Defendant asserts that “[a]ny injunction related to the functionality of Drift’s chat software or Drift’s privacy policies necessarily requires action by non-party Drift and, thereby, affects and potentially harms Drift’s interests.” (Mot. at p. 5:17-19.)

In the opposition, Plaintiff asserts that Drift is not an “indispensable party.” Plaintiff asserts that “just because Plaintiff alleges Drift violated CIPA, does not mean Drift is ‘indispensable’ to the instant lawsuit. Plaintiff can subpoena documents from Drift and serve a deposition subpoena on Drift to establish the elements.” (Opp’n at p. 4:23-25.) But as noted by Defendant, “[n]either of these options would allow Drift to protect or defend its interests, as it would only allow Drift to present information narrowed by Plaintiff’s document requests and scope of deposition questioning, and not defend itself…” (Reply at pp. 4:27-5:1.)

In the opposition, Plaintiff also asserts that “CIPA does not encompass typical indispensable party situations.” (Opp’n at p. 5:7.) Plaintiff cites to Serrano v. Priest (1976) 18 Cal.3d 728, 752-753, where the California Supreme Court noted that “[i]ndispensable parties, as we said in Bank of California v. Superior Court (1940) 16 Cal.2d 516, at page 521…are parties whose interests, rights, or duties will inevitably be affected by any decree which can be rendered in the action. Typical are the situations where a number of persons have undetermined interests in the same property, or in a particular trust fund, and one of them seeks, in an action, to recover the whole, to fix his share, or to recover a portion claimed by him. The other persons with similar interests are indispensable parties. The reason is that a judgment in favor of one claimant for part of the property or fund would necessarily determine the amount or extent which remains available to the others. Hence, any judgment in the action would inevitably affect their rights.” But Plaintiff does not appear to cite any legal authority demonstrating that Code of Civil Procedure section 389 is limited to such situations. 

Moreover, Plaintiff does not appear to dispute that in Drift’s absence, “complete relief cannot be accorded among those already parties.” (Code Civ. Proc., § 389, subd. (a)(1). Plaintiff also does not appear to dispute that Drift “claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest…” (Code Civ. Proc., § 389, subd. (a)(2)(i).) The Court finds that Defendant has demonstrated these factors here.

Code of Civil Procedure section 389, subdivision (b) provides as follows:

“If a person as described in paragraph (1) or (2) of subdivision (a) cannot be made a party, the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed without prejudice, the absent person being thus regarded as indispensable. The factors to be considered by the court include: (1) to what extent a judgment rendered in the person’s absence might be prejudicial to him or those already parties; (2) the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; (3) whether a judgment rendered in the person’s absence will be adequate; (4) whether the plaintiff or cross-complainant will have an adequate remedy if the action is dismissed for nonjoinder.”

In the motion, Defendant asserts that the four factors outlined in Code of Civil Procedure section 389, subdivision (b) “weigh heavily in favor of the Court’s dismissal without prejudice for Plaintiff’s failure to join Drift.” (Mot. at p. 6:25-26.) However, Defendant does not appear to assert that Drift “cannot be made a party” to the instant action. As set forth above, Code of Civil Procedure section 389, subdivision (b) provides in pertinent part that “[i]f a person as described in paragraph (1) or (2) of subdivision (a) cannot be made a party, the court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed without prejudice, the absent person being thus regarded as indispensable.” (Emphasis added.) Thus, the Court does not find that Defendant has demonstrated that the Complaint should be dismissed without prejudice.

In light of the foregoing, the Court grants Defendant’s motion, with leave to amend. Leave to amend is granted to allow Plaintiff an opportunity to amend the Complaint to address the issues identified above.

Lastly, in the reply, Defendant asserts that it should be awarded its attorney’s fees for filing the instant motion. Defendant cites to Code of Civil Procedure section 128.5, which provides that “[a] trial court may order a party, the party’s attorney, or both, to pay the reasonable expenses, including attorney’s fees, incurred by another party as a result of actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay.”
(Code Civ. Proc., § 128.5, subd. (a).) As an initial matter, Code of Civil Procedure section 128.5, subdivision (f)(1)(A) provides that “[a] motion for sanctions under this section shall be made separately from other motions or requests…” Thus, the Court denies Defendant’s request for attorney’s fees.  

Conclusion

Based on the foregoing, the Court grants Defendant’s motion for judgment on the pleadings as to the sole cause of action of the Complaint, with leave to amend.

The Court orders Plaintiff to file and serve an amended complaint, if any, within 20 days of the date of this order. If no amended complaint is filed within 20 days, the Court orders Defendant to file and serve a proposed judgment of dismissal within 30 days of the date of this order.

Defendant is ordered to give notice of this order.¿ 

DATED:  June 24, 2024                                 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court