Lee v. Plex, Inc.

Background

Richard Lee alleged that he used Plex’s online video-streaming service and that Plex used the Meta Tracking Pixel to send Meta information about his viewing activity without his consent. The alleged information included video titles, Lee’s Facebook ID, and his email address. Lee asserted claims under the Video Privacy Protection Act and California Civil Code § 1799.3.

The defendants were Plex GmbH and Plex, Inc. The opinion states that Plex GmbH is a Swiss corporation with its principal place of business in Berlin, Germany, and that Plex, Inc. is a Delaware corporation with its principal place of business in Los Gatos, California. The complaint generally referred to the defendants collectively and did not consistently attribute particular conduct to either entity.

Plex filed one motion seeking several forms of relief: an order compelling arbitration, dismissal for lack of personal jurisdiction, dismissal for failure to state a claim, striking of the class allegations, and transfer to the District of Delaware.

Arbitration

The court denied the motion to compel arbitration. Under California law, the court examined whether Plex gave reasonably conspicuous notice of its terms and whether Lee took an action that clearly showed agreement to them.

Lee created his account through a prominent “Continue with Facebook” button. The court found that the notice on Plex’s sign-up page was at the bottom of the page, used small gray text, and did not make the hyperlinks to the terms of service and privacy policy sufficiently apparent. The Facebook account-creation page also placed the terms at the bottom in small text and did not connect the “Continue” button clearly to agreement with Plex’s terms.

The court further found that the website did not clearly identify what action would constitute agreement. The sign-up page referred to “creating an account” or “continuing to use” Plex, but Lee clicked “Continue with Facebook,” which automatically directed him to Facebook. The court concluded that Plex did not show either reasonably conspicuous notice or Lee’s unambiguous assent. As a result, the court also rejected Plex’s argument that Lee was bound by a class-action waiver in the terms of service.

Personal jurisdiction over Plex GmbH

The court granted Plex GmbH’s motion to dismiss for lack of personal jurisdiction. Personal jurisdiction is a court’s authority to exercise power over a defendant. The court found that Lee did not plausibly allege facts showing that Plex GmbH was subject to general or specific jurisdiction in California.

The complaint alleged that Plex GmbH worked with Plex, Inc. to offer the streaming service and that Plex GmbH oversaw and controlled Plex, Inc.’s operations. But the complaint did not specifically attribute the alleged conduct to Plex GmbH. The court found that the allegation that the defendants conducted substantial business in California was too ambiguous and insufficient to establish general jurisdiction. The allegations about Plex GmbH’s direction of activities toward the United States also did not show that it purposefully directed activities toward California.

The dismissal was granted with leave to amend. The court stated that it was unclear whether Lee could plausibly allege personal jurisdiction over Plex GmbH in light of evidence submitted by Plex, but this was the court’s first ruling on the sufficiency of Lee’s allegations.

Failure to state a claim

The court denied Plex’s motion to dismiss for failure to state a claim. Plex argued that Lee consented to the disclosure by signing up for the service. The court rejected that argument because Plex’s website did not provide sufficiently clear notice of the terms and Lee did not clearly agree to them. The Facebook Userflow also did not tell Lee that his viewing activity would be sent from Plex to Meta.

Plex also argued that Lee did not allege disclosure of personally identifiable information. The court disagreed. It held that Lee plausibly alleged that his Facebook ID, email address, and video-viewing information were disclosed. The court concluded that a Facebook ID can qualify as personally identifiable information because, under Lee’s allegations, it could be used to locate his Facebook profile and identify him. The court also noted Lee’s allegation that his Facebook profile used his real name.

Because Lee did not agree to Plex’s terms of service, the court also denied Plex’s request to dismiss based on the class-action waiver in those terms.

Class allegations

The court denied Plex’s motion to strike the proposed class allegations. Lee proposed a nationwide class and a California subclass involving people who used Plex and a Facebook account in the same browser.

Plex argued that Lee lacked standing to represent people who created Plex accounts through Google or Apple rather than Facebook. The court rejected that argument at this stage, reasoning that the different sign-up methods did not change the essential privacy claims. The court stated that differences among sign-up methods could matter later when deciding whether to certify a class, including questions about typicality and whether individual issues would predominate.

The court also found it premature to decide whether individualized proof would be required for each class member. Discovery might show whether Plex’s or Meta’s records could provide common evidence about the alleged disclosures. The court further stated that Plex’s arguments concerning other class-certification provisions were irrelevant because Lee invoked Rule 23(b)(3), not those provisions.

Transfer

The court denied Plex’s motion to transfer the case to the District of Delaware. Plex relied on a forum-selection clause in updated 2024 terms of service, but the parties agreed that the 2020 terms were the relevant terms. The court found that Lee did not have notice of the 2024 change and was not bound by the updated terms. The court had already found that Lee was not bound by the 2020 terms because Plex’s notice and assent process was insufficient.

Disposition

Judge Sumi K. Lee ordered:

- Plex’s motion to compel arbitration: denied. - Plex’s motion to dismiss Lee’s claims against Plex GmbH for lack of personal jurisdiction: granted with leave to amend. - Plex’s motion to dismiss for failure to state a claim: denied. - Plex’s motion to strike class allegations: denied. - Plex’s motion to transfer: denied.

Lee was ordered to file an amended complaint within 21 days of the order.