Fan v. NBA Properties Inc.

Background

Thomas Fan brought a proposed class action against NBA Properties Inc. and Dapper Labs, Inc. The second amended complaint asserted claims under the Video Privacy Protection Act, a federal privacy statute, and California Civil Code § 1799.3. Fan alleged that the defendants sold blockchain video clips called “Moments” through NBA Top Shot and collected and shared sensitive information about users’ video-consumption habits without their informed written consent.

The court had previously dismissed Fan’s claims against NBA Properties and the National Basketball Players Association, while allowing amendment to provide more detail about a possible joint venture. The court had previously allowed the claims against Dapper Labs to proceed under the federal and California statutes. Fan’s second amended complaint added allegations based on a publicly recorded conversation between Dapper Labs’ chief executive officer and the NBA Commissioner, a website pop-up, and license agreements. Fan alleged that NBA Properties controlled aspects of the NBA Top Shot venture, shared in its profits, had an ownership interest, and acted as a partner in the enterprise.

Motion to Dismiss

NBA Properties argued that these allegations did not adequately establish a joint venture or partnership and that Fan consequently lacked standing to sue NBA Properties. Under the law discussed by the court, a joint venture requires joint control, shared profits, and an ownership interest for each member. Whether such a venture exists depends on the parties’ intent and may be determined from their agreements, conduct, and surrounding circumstances.

Court’s Ruling

The court held that Fan’s allegations were sufficient as a pleading matter. It emphasized that whether NBA Properties and Dapper Labs actually created a joint venture or partnership was a factual question that should be determined on a full factual record. The court also noted that the second amended complaint included allegations beyond the license agreements, and that Fan cited authority supporting the possibility that a joint venture or partnership could exist even when agreements expressly disclaim that intent.

The court concluded that Fan had alleged a basis for holding NBA Properties liable and had standing to bring claims against it. The court therefore denied NBA Properties’ motion to dismiss the second amended complaint. The court also granted the parties’ administrative motions to seal. The order did not decide whether a joint venture actually existed or resolve the ultimate merits of Fan’s statutory claims.