Tsourdinis v. Google LLC

Background

This proposed class action concerns Google’s decision to disable WiFi-enabled smart features on first- and second-generation Nest Learning Thermostats. Tsourdinis alleges that Google effectively disabled (“bricked”) the thermostats to pressure consumers to buy newer versions. He seeks to represent a nationwide class and an Illinois subclass.

The first amended complaint asserts seven claims: breach of contract; violations of the Illinois Consumer Fraud and Deceptive Business Practices Act; violations of the unfair, fraudulent, and unlawful prongs of California’s Unfair Competition Law; violation of California’s Consumer Legal Remedies Act; and violation of the federal Computer Fraud and Abuse Act.

Motion to Compel Arbitration

Google moved to compel arbitration based on an arbitration provision in the 2018 version of Nest’s Terms of Service. The court explained that Google had the burden to prove the existence of an arbitration agreement by a preponderance of the evidence, meaning that the agreement’s existence had to be shown as more likely than not.

Google relied initially on a declaration stating that Tsourdinis accepted the 2018 terms on May 24, 2018. The court found that declaration inadequate because it did not provide a factual basis for that conclusion, screenshots of what Tsourdinis allegedly saw, or evidence showing how he manifested assent, such as by clicking an “I agree” button.

Google submitted additional evidence with its reply brief. The court sustained Tsourdinis’s objection and did not consider that new reply material. The court also stated that, even if considered, the additional evidence might not establish agreement because it did not include visual depictions of the application, the terms-of-service link, or the assent button. The court further noted that an email about the updated terms focused on changing European Union privacy laws and did not alert users that the terms might bind them to arbitration.

The court held that Google had not proved the existence of an agreement to arbitrate. It therefore denied Google’s motion to compel arbitration without prejudice to a renewed motion supported by an adequate record. The court indicated that arbitration-related discovery would be permitted and that the parties had submitted a proposed limited-discovery plan and briefing schedule for a renewed motion.

Motion to Dismiss

Google alternatively moved to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally recognized claim or provide enough supporting facts.

The court identified pleading problems with the state-law claims. In particular, the amended complaint did not adequately allege what statements or representations Google made about the thermostat’s connection to the application. The court noted that some advertisements and a blog post appeared to have been viewed after Tsourdinis purchased the thermostat, and that the complaint showed a box for a second-generation thermostat while discussing a first-generation purchase without alleging a factual basis for treating the packaging as substantially similar.

The court also expressed serious doubts about the Computer Fraud and Abuse Act claim. Tsourdinis described his thermostat as a protected computer, but the court stated that he had not plausibly alleged that Google accessed the thermostat or that Google lacked authority to unpair its application from the first- and second-generation thermostats.

The court indicated that the first amended complaint was subject to dismissal with leave to amend, but deferred a ruling on the motion to dismiss until the arbitration issue was resolved. The order terminated the motion to dismiss with the understanding that the amended complaint would be dismissed with leave to amend if Google’s renewed arbitration motion is denied. Judge Beth Labson Freeman ordered that Google’s arbitration motion was denied without prejudice, that the dismissal ruling was deferred, and that the order terminated ECF 21.