Cottrell v. AT&T Inc.

Background

David Cottrell alleged that he contacted AT&T about reducing the cost of his U-verse internet service. After declining a customer service representative’s offer of a video-streaming service, he allegedly discovered several months later that AT&T had charged him several hundred dollars for DirecTV Now. Cottrell alleged that he had difficulty canceling the service and that Bank of America, rather than AT&T, refunded the charges.

Cottrell asserted six claims on behalf of himself and a proposed class of similarly situated consumers. AT&T moved under Rule 12(b)(6), which allows dismissal when a complaint does not adequately state a legally recognized claim, as to four claims: a claim under California’s Customer Records Act (CCRA), and claims under California’s Unfair Competition Law (UCL), for unjust enrichment, and for conversion.

CCRA claim

The CCRA requires certain businesses to notify California residents after a security breach in which personal information is acquired by an unauthorized person. The court held that the statute addresses unauthorized access to a company’s computer systems, not a company’s allegedly unauthorized use of information that its employees were permitted to access.

Because Cottrell did not allege that anyone accessed his personal information without AT&T’s permission, the court dismissed the CCRA claim with leave to amend. Cottrell could file a second amended complaint by September 4, 2020, if he wished to pursue that claim.

Unjust-enrichment claim

AT&T argued that Cottrell could not pursue unjust enrichment after receiving a refund. The court relied on Ninth Circuit precedent stating that California law permits recovery of profits resulting from unjust enrichment even when the plaintiff has not suffered a corresponding loss. The court therefore denied AT&T’s motion to dismiss the unjust-enrichment claim.

Conversion claim

Conversion is a claim alleging that a defendant wrongfully took or dealt with property belonging to someone else. AT&T argued that Cottrell could not show damages because Bank of America refunded the charges.

The court applied the collateral-source rule, which generally prevents compensation from an independent source from reducing the amount recoverable from the alleged wrongdoer. The court concluded that Bank of America was sufficiently independent of AT&T because the alleged wrongdoing occurred before the bank’s refund and there was no indication that the refund arose from the bank’s relationship with AT&T. The court denied AT&T’s motion to dismiss the conversion claim.

UCL claim

The UCL generally requires a person bringing an individual claim to have lost money or property because of the alleged unfair competition. The court held that Cottrell lost money when AT&T charged him for a service he had declined to purchase. It further held that the collateral-source rule made Bank of America’s reimbursement irrelevant to the UCL claim. The court denied AT&T’s motion to dismiss that claim.

Disposition

Judge Joseph C. Spero granted AT&T’s motion as to Cottrell’s CCRA claim and dismissed that claim with leave to amend. The court otherwise denied the motion. The order did not resolve the factual disputes or decide the ultimate merits of the remaining claims.