Alicea v. PayByPhone US Inc.

Background

Justin Alicea sued PayByPhone US Inc. and PayByPhone Technologies Inc. on behalf of a proposed multi-state class of PayByPhone subscribers. He alleged that the defendants’ parking application starts the selected parking period when the user chooses a duration, even though the user may still be completing payment. According to the complaint, this can leave the user with less parking time than the user selected and paid for.

Alicea asserted twelve claims under state consumer-protection laws and related theories, including fraud by omission, unjust enrichment, conversion, and money had and received. He sought class certification, equitable relief, damages, and attorneys’ fees and costs.

Motion to Compel Arbitration

PayByPhone argued that Alicea agreed to terms of service containing an arbitration provision when he created an account using Facebook login. Alicea argued that he did not receive adequate notice of the terms and did not clearly agree to them. He also argued that the arbitration provision was procedurally and substantively unconscionable, meaning allegedly unfair in how it was presented and in what it required.

The court granted Alicea’s request to file a sur-reply because PayByPhone had introduced significant new arguments and evidence in its reply. The court nevertheless considered PayByPhone’s evidence and denied the motion to compel arbitration.

The court concluded that the terms of service were reasonably noticeable in the account-creation process. But the Facebook authentication screen did not explicitly tell users that clicking the button to continue would mean agreeing to the terms. Because PayByPhone did not show an unambiguous manifestation of Alicea’s assent, the court held that it had not established that a valid arbitration agreement was formed. The court therefore did not reach Alicea’s unconscionability arguments.

Motion to Dismiss

PayByPhone also moved to dismiss under Rules 9(b), 12(b)(1), and 12(b)(6) of the Federal Rules of Civil Procedure. The court granted the motion to dismiss with leave to amend. The court did not address whether the proposed class allegations were adequate because it dismissed the complaint.

Consumer-deception claims

The court held that nearly all of Alicea’s claims were based on the theory that the application misleads consumers by failing to disclose that the parking clock starts before payment is complete. Applying the reasonable-consumer standard used for the California Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act, the court concluded that the complaint did not plausibly allege an actionable deceptive omission.

The application displayed the exact time when parking would expire. The court viewed that expiration time as a corrective disclosure and found that Alicea alleged no specific facts showing why a reasonable consumer would understand it as merely hypothetical or illustrative. The court also found that the static display of the selected duration did not directly contradict the actual expiration time.

The court further held that Alicea’s allegations of injury were conclusory. Although receiving less parking time than paid for could constitute an economic injury in theory, the complaint did not explain how Alicea was shortchanged by at least one minute on the occasion he identified. The court found that the complaint did not plausibly establish that he suffered that injury.

The court rejected Alicea’s related claims under the unfair and unlawful parts of the California Unfair Competition Law because they relied on the same insufficient deception and injury allegations. It also held that the complaint did not adequately show that Alicea faced a likelihood of future harm sufficient to support an injunction.

Unjust enrichment, conversion, and money had and received

The court did not resolve whether a contract barred Alicea’s unjust-enrichment, conversion, and money-had-and-received claims because it was unclear what agreement governed the parties. Instead, the court held that all three claims failed because Alicea did not plausibly allege that PayByPhone profited at his expense. The complaint did not provide facts showing that he failed to receive what he paid for.

Disposition

The court denied PayByPhone’s motion to compel arbitration and granted its motion to dismiss with leave to amend. Alicea was ordered to file any amended complaint no later than October 1, 2026.