Masry v. Lowe's Companies, Inc.

Background

Plaintiffs Omar Masry and Elliot Mass brought a class action against Lowe’s Companies, Inc. and Lowe’s Home Centers, LLC concerning an alleged non-disparagement clause in the terms of use for Lowes.com. The case was initially filed in state court. Plaintiffs later filed an amended complaint, defendants moved to dismiss it, and plaintiffs moved to remand the case to state court.

The challenged provision stated that users’ content could not “defame, misrepresent or contain disparaging remarks” about Lowe’s, its products, or other people, products, services, or companies. Plaintiffs alleged that the provision violated California Civil Code section 1670.8. That statute protects a consumer’s right to make statements about a seller, its employees or agents, or its goods or services, and prohibits threats to enforce an unlawful provision or penalties for making protected statements.

Standing Analysis

Article III standing requires a plaintiff to show an injury in fact that is concrete, particularized, and actual or imminent; a connection between the injury and the challenged conduct; and a likelihood that a favorable decision will redress the injury.

The court explained that claims involving free-speech rights receive a less demanding standing analysis, but plaintiffs still must show a credible threat that the challenged restriction will be enforced. In a pre-enforcement case, the court considers the likelihood of enforcement, whether the plaintiff has shown with concrete detail an intent to violate the challenged restriction, and whether the restriction applies to the plaintiff.

The court found that the amended complaint contained no factual allegations that the plaintiffs had violated or intended to violate Lowe’s terms. It also found no allegations that the plaintiffs had censored themselves because they feared violating the terms. Although plaintiffs alleged that defendants’ conduct aimed to suppress speech and that enforcement threats had been made, the court found no supporting facts. In particular, plaintiffs did not allege actual threats by Lowe’s to suspend or terminate their ability to use its websites or other efforts to silence them.

Because the plaintiffs did not show a credible threat of enforcement, the court held that they had not established an injury in fact and therefore lacked Article III standing.

Disposition

The court GRANTED plaintiffs’ motion to remand. It REMANDED the case to California state court. The court DENIED AS MOOT defendants’ motion to dismiss and vacated all upcoming hearings and deadlines before the federal court.