Cullen v. Shutterfly Lifetouch, LLC

Background

Don Cullen and Ellen Ross brought a proposed class action against Shutterfly, LLC and Shutterfly Lifetouch, LLC. They alleged that the companies’ “Family Approval Program” sent unsolicited school photographs home with children and told parents to pay for photographs they kept or return them to the school. They asserted claims for unjust enrichment; violations of California’s Consumer Legal Remedies Act, false-advertising law, unfair-competition law, and California Civil Code § 1584.5; common-law fraud, deceit, or misrepresentation; and violation of the Postal Reorganization Act of 1970.

Cullen’s child attended elementary school in Austin, Texas, and Cullen alleged that he returned the photo packages. Ross had children who attended school in Modesto, California, and alleged that she bought the packages from approximately 2001 until approximately 2019. The plaintiffs sought to represent a nationwide class and California subclasses.

Personal jurisdiction over Lifetouch

The court granted the defendants’ motion under Federal Rule of Civil Procedure 12(b)(2), which challenges a court’s authority over a defendant. The court held that Cullen did not make the required initial showing that Lifetouch had sufficient California contacts connected to his claims. Cullen relied on Lifetouch’s use of California-based Shutterfly for possible photo storage or printing, but the court found those arguments speculative and insufficient. It also concluded that Cullen had not shown that his claims arose from Lifetouch’s California-related conduct.

The court declined to exercise related personal jurisdiction over Cullen’s claims because the federal Postal Reorganization Act claim was subject to dismissal without leave to amend. The court also denied the plaintiffs’ request for jurisdictional discovery because they did not identify specific discovery or explain how it could establish jurisdiction.

Motion to compel arbitration

The court denied the defendants’ motion to compel arbitration as to both Cullen and Ross. Arbitration is a private process for resolving disputes outside court, but the defendants had to show that an arbitration agreement existed.

Cullen never ordered photographs from Lifetouch and therefore had not entered into a contract that incorporated Lifetouch’s website terms. The court rejected the defendants’ argument that Cullen was barred from challenging arbitration merely because his complaint relied on the terms’ choice-of-law and forum-selection provisions.

Ross had purchased photographs, but the complaint did not say whether she ordered them online or through paper forms. The defendants presented evidence that, beginning in spring 2019, the envelopes containing the photographs referred to Lifetouch’s online terms. The court found that this language could not cover Ross’s purchases from August 2016 through spring 2019. For later purchases, the court found that the language was too small and inconspicuous to show that a reasonably careful person would have been alerted to the arbitration provision. The court also rejected the defendants’ equitable-estoppel argument as to Ross.

Failure to state a claim

The court granted the defendants’ motion under Rule 12(b)(6), which tests whether a complaint alleges enough facts to support a legally plausible claim. The court found that the plaintiffs improperly treated Shutterfly and Lifetouch together throughout the complaint instead of identifying what each company allegedly did. It therefore dismissed all claims on that basis.

The court separately dismissed Claim 7, the Postal Reorganization Act claim, without leave to amend. The plaintiffs had not alleged that the photo packages were mailed, and they cited no authority supporting their argument that the packages were sent using “deputized child couriers.”

The court also found that Claims 2 through 5—the California Consumer Legal Remedies Act, false-advertising, fraud, and unfair-competition claims—did not describe the alleged misrepresentations or omissions with enough detail. Those claims were subject to the heightened requirement to identify the who, what, when, where, and how of the alleged misconduct. The court did not dismiss the claims based on the argument that non-California residents could not sue under California law, or based on the defendants’ arguments concerning California Civil Code § 1584.5 and equitable relief at that stage.

Disposition

The court ordered that all claims were dismissed with leave to amend except Claim 7, which was dismissed without leave to amend. The plaintiffs were permitted to file an amended complaint by June 9, 2021. The court granted the Rule 12(b)(2) motion to dismiss Cullen’s claims against Lifetouch, denied the motion to compel arbitration, and granted the Rule 12(b)(6) motion with leave to amend as to all claims except Claim 7, as to which it granted the motion without leave to amend.