Johnson v. Fiverr Inc.

Background

Andrew Miller, Marcus Johnson, and Jonathan Hageman brought consolidated putative class actions against Fiverr Inc. They challenged Fiverr’s practice of showing a service price during the shopping process and adding a separate service fee before payment. The plaintiffs called this “drip pricing.” They asserted claims under sections 349 and 350 of the New York General Business Law, California’s Consumers Legal Remedies Act, California’s False Advertising Law, California’s Unfair Competition Law, and New York and California unjust-enrichment law.

The plaintiffs alleged that they saw prices of $80, $35, and $35 for separate purchases, then saw service fees and higher totals at checkout. Fiverr’s checkout screen separately displayed the seller’s charge, the service fee, and the total amount before the buyer selected “Confirm & Pay.” Fiverr moved to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The court also granted Fiverr’s request to consider the plaintiffs’ account records, transaction histories, communications, and publicly available Fiverr materials when deciding the motion.

Court’s Analysis

The court held that Fiverr’s pricing practice was not deceptive under the reasonable-consumer standard. That standard asks whether the practice would likely mislead a significant portion of reasonable consumers, viewing the purchasing process as a whole. The court emphasized that Fiverr’s marketplace offers services from independent freelancers, that listings use terms such as “From” and “Starting at,” and that the final service fee and total are shown before payment. The plaintiffs did not allege that Fiverr charged more than the displayed total, misstated the fee, hid the fee at checkout, or prevented buyers from canceling.

The court also held that the named plaintiffs did not plausibly allege that they were deceived or relied on the earlier prices. Each had previously made Fiverr purchases carrying service fees. Miller and Hageman accepted individualized offers after communicating with freelancers, rather than relying on ordinary listed prices. All three plaintiffs saw the service fee and total before completing their challenged purchases. The court concluded that they did not plausibly allege deception, reliance, causation, or injury resulting from the timing of the disclosure.

The New York General Business Law claims independently failed because all three plaintiffs resided in California and the complaint did not allege that they viewed the prices, ordered the services, or paid in New York. Fiverr’s principal place of business in New York did not supply the required connection. The California Consumers Legal Remedies Act claims also failed because the complaint did not allege facts showing that the plaintiffs purchased the services for personal, family, or household purposes; the records instead reflected commercial uses. The False Advertising Law and Unfair Competition Law claims failed because they depended on the rejected deception theory. The unjust-enrichment claims likewise failed because the plaintiffs identified no inequitable conduct in Fiverr’s disclosure of the fees and totals.

The court found that the plaintiffs had adequately alleged standing to seek money damages or restitution, but it concluded that they lacked standing to seek an injunction because they knew about Fiverr’s service fees and therefore did not face a likely risk of being deceived in the same way again.

Disposition

Judge Naomi Reice Buchwald granted Fiverr’s motion to dismiss. The court dismissed Counts I through V with prejudice, denied the plaintiffs’ request for leave to amend, denied their request for injunctive relief, directed the Clerk to terminate the pending motion, and directed the Clerk to close case numbers 25-cv-2684 and 25-cv-5079.