Campbell v. Science

Background

Tom Campbell, Daniel Jenks-Berryman, Declan Lynn, Adithya Narayanan, James Poad, Dan Sorahan, and Alan Sutch brought a purported class action against Honey Science, LLC and PayPal, Inc. The opinion states that the plaintiffs are citizens of the United Kingdom. They use Honey, a free browser extension that searches for coupons and discount codes and applies them during online shopping.

The plaintiffs alleged that Honey’s website advertised that it found the “best” coupons, while partner vendors could choose which coupons Honey displayed. They claimed that some vendors withheld their best coupons and that the plaintiffs sometimes paid more than they would have paid if Honey had applied the most favorable coupon. Their second amended complaint asserted one claim under California’s Unfair Competition Law and sought the difference between the price paid and the lower price that would have resulted from applying the best publicly available coupon.

Legal standard

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. At this stage, the court accepts well-supported factual allegations as true and asks whether they plausibly show that the defendants are liable. The court does not accept unsupported legal conclusions or unreasonable factual deductions.

Analysis

The defendants argued that the plaintiffs had not alleged enough facts for California’s law to apply to conduct affecting nonresidents outside California. The court rejected that argument. Although the defendants’ California citizenship alone would not be enough, the second amended complaint alleged that the relevant public statements were made and disseminated from California. The court found those allegations sufficiently specific at the dismissal stage to plausibly allege that the challenged conduct originated in California.

The court agreed with the defendants, however, that the complaint did not allege a viable remedy under California’s Unfair Competition Law. The plaintiffs sought the full difference between what they paid and what they would have paid with a better coupon. The court explained that damages are not recoverable under the law, while restitution generally requires that the plaintiff lost money or property and that the defendant acquired that money or property.

The court characterized the plaintiffs’ requested recovery as an expectancy interest because it concerned money paid to third parties and the price the plaintiffs expected to pay, rather than identifiable money held by the defendants. Although the plaintiffs alleged that partner vendors paid Honey a 3% commission on orders made through the extension, they did not specifically seek the return of those commissions or a portion of them. Instead, they sought the entire price difference, which the court held could not be traced to particular funds in the defendants’ possession and was better understood as damages.

The court noted that the plaintiffs might have been able to continue pursuing a claim if they had sought restitution or injunctive relief, but the theory pleaded in the second amended complaint was unavailable under the Unfair Competition Law. The court therefore concluded that the complaint failed to state a claim.

Disposition

The court granted the defendants’ motion to dismiss the plaintiffs’ complaint. Dismissal was with leave to amend, and any amended complaint had to be filed within 28 days of the order. Discovery was stayed pending the defendants’ filing of an answer to a future complaint.