Flores-Mendez v. Zoosk, Inc.
- William Alsup
- 3:20-cv-04929
- U.S. District Court · Northern District of California
- 14
In Flores-Mendez v. Zoosk, Judge Alsup granted amendment for an unfairness theory, denied it without prejudice for unlawfulness, and denied other amendments with prejudice.
The ruling affected Juan Flores-Mendez, Amber Collins, the proposed classes, and Zoosk, Inc.; it allowed part of the proposed amendment while limiting further amendment of the section 17200 claim.
What happened
Flores-Mendez v. Zoosk, Inc. is a proposed class action by people affected by a 2020 data breach involving Zoosk’s online dating service. The plaintiffs sought permission to file a third amended complaint, alleging that Zoosk’s privacy statements and data-security practices caused losses.
The court found that Juan Flores-Mendez adequately alleged that Zoosk’s privacy statements influenced his decision to pay for a subscription and that he suffered financial harm. The court also found enough allegations to proceed under the unfairness part of California’s Unfair Competition Law, but not under its unlawfulness part because the proposed complaint did not clearly identify and connect a statutory violation to that theory.
Judge William Alsup granted permission to amend as to the unfairness theory, denied permission without prejudice as to the unlawfulness theory, and denied with prejudice all other proposed amendments. The order allowed another motion concerning the unlawfulness theory as a final opportunity to seek amendment.
The detailed version
- Flores-Mendez v. Zoosk, Inc. · No. 3:20-cv-04929
- William Alsup
- Feb. 7, 2022
Background
Juan Flores-Mendez and Amber Collins used Zoosk’s online dating platform. Zoosk offered free and paid subscription services and posted a privacy policy describing how it collected, used, and disclosed users’ personal information. Plaintiffs alleged that a massive data breach occurred in May 2020 because Zoosk failed to adequately protect that information.
The plaintiffs moved for leave to file a third amended complaint. Their proposed California Business and Professions Code section 17200 claim applied only to Flores-Mendez and a proposed subscription class. Flores-Mendez alleged that he paid for Zoosk’s premium service and provided personal information, and that he would have stopped using Zoosk, stopped providing information, and stopped paying if Zoosk had disclosed that its security was inadequate and that it was not complying with its privacy policy.
Legal Standard
Federal Rule of Civil Procedure 15(a)(2) generally requires courts to freely allow an amended pleading when justice requires. The court considered bad faith, delay, prejudice to Zoosk, whether the amendment would be futile, and the plaintiffs’ previous opportunities to amend. The court focused on futility, applying the same standard used for a motion to dismiss for failure to state a claim.
Standing and Economic Loss
The court held that the proposed third amended complaint adequately alleged reliance and economic injury for purposes of statutory standing under section 17200. Flores-Mendez alleged that Zoosk’s privacy-policy representations mattered to his decision to purchase a subscription and that he would have canceled the subscription had he known the truth about Zoosk’s data-security practices.
The court also accepted, at the amendment stage, benefit-of-the-bargain and overpayment theories. It found that Flores-Mendez alleged that he paid money and provided personal information in exchange for a dating service with the data-security practices Zoosk’s representations described. The court did not decide whether a breach-of-contract theory of standing would independently require reliance on an alleged misrepresentation.
Section 17200 Liability
Section 17200 prohibits unlawful, unfair, or fraudulent business acts or practices. The court found that the proposed complaint adequately alleged an unfairness theory under the balancing test. That theory alleged misleading statements, Zoosk’s failure to disclose inadequate data-security practices, and harms including lost time, risk of embarrassment, increased identity-theft risk, and financial loss.
The court rejected the argument that the alleged breach of the privacy policy itself established unfairness because the proposed complaint did not adequately allege a contractual relationship between Flores-Mendez and Zoosk. The court did not decide whether a breach of contract alone could support section 17200 liability.
The court found the unlawfulness theory inadequately pleaded. The proposed complaint did not clearly give Zoosk notice that plaintiffs intended to rely on a violation of section 5 of the Federal Trade Commission Act as the predicate violation for the section 17200 claim. The complaint referred to inadequate disclosures in the section 17200 count, while its Federal Trade Commission Act allegations concerned failure to implement reasonable data-security safeguards. The court also noted that the Federal Trade Commission Act does not provide a private right of action and did not decide whether that statute could support the unlawfulness theory.
Relief
The court found that Flores-Mendez adequately stated claims for restitution and injunctive relief under section 17203. It accepted the allegations that subscribers had an ownership interest in some portion of the subscription funds and that customers faced an ongoing risk of identity theft because the data-security problems allegedly had not been solved.
Disposition
Judge William Alsup granted the plaintiffs’ motion for leave to amend as to the unfairness theory of section 17200 liability. He denied the motion without prejudice solely as to the unlawfulness-prong theory, allowing another motion for leave to amend on that theory. He denied with prejudice all other amendments. The order stated that any further motion concerning the unlawfulness prong would be the final opportunity to seek leave to amend.
Read the full 14-page opinion on CourtListener, the free public archive maintained by the Free Law Project.