Lynch v. Matterport, Inc

Background

Shawn Lynch brought a putative class action against Matterport, Inc. He alleged that Matterport used false and deceptive advertising to market its Matterport Service Partner program. Matterport’s program encouraged people to buy its three-dimensional cameras and subscribe to its software and cloud-storage services as part of starting businesses offering three-dimensional scanning services. Lynch alleged that, after investing to qualify for and join the program, he received few of the promised benefits. He also alleged that Matterport’s Capture Services program competed with Matterport Service Partners and took away clients.

Two claims remained after an earlier order on Matterport’s motion to dismiss: a claim under Section 17200 of the California Unfair Competition Law and a claim for breach of the implied covenant of good faith and fair dealing. Lynch sought certification of an injunction class, a damages class, and several issue classes under the federal class-action rule.

Proposed Damages and Injunction Classes

The proposed class included people in the United States who had not previously owned a Matterport three-dimensional camera, applied online to become a Matterport Service Partner, and bought a Matterport camera or cloud services in connection with joining the program, or incurred other expenses starting or operating their businesses.

The court found that the revised definition did not identify a workable group of people who relied on Matterport’s alleged misrepresentations. Potential class members could have encountered different statements through webpages, marketing materials, trade-show materials, or sales representatives. They also could have bought cameras for reasons unrelated to the program and joined the program later. Determining what each person saw and relied on would therefore require individual inquiries.

For the implied-covenant claim, the court likewise found that determining whether Matterport’s conduct caused harm would require individualized inquiries. Some proposed class members did not offer scanning services, some may not have had clients, and the availability of leads varied by geographic area. The proposed damages theory also did not match the alleged liability theory because the requested camera-price damages did not follow from rescinding the program’s terms of service.

The court denied certification of the Rule 23(b)(3) damages class. It also found that Lynch’s claims and defenses were not sufficiently typical of the proposed class and that he was not an adequate representative for the proposed classes. The court denied certification of the Rule 23(b)(2) injunction class because the requested relief—stopping Capture Services from competing with Matterport Service Partners and requiring Matterport to provide leads—did not apply on a common basis to all proposed members.

Proposed Issue Classes

Lynch proposed ten issues for class treatment. The court denied certification of the first five, which concerned whether Matterport made particular misrepresentations, because deciding those issues would not overcome the lack of a cohesive classwide theory of reliance. The court also denied certification of the eighth and ninth issues, which asked whether Matterport violated the Unfair Competition Law and breached the implied covenant, because those were ultimate liability questions that could not be decided for the proposed class as a whole.

The court denied certification of the sixth and seventh issues because Matterport admitted the underlying facts and deciding them would not advance the litigation. It denied the tenth issue concerning ownership of scanned images because Lynch did not explain its significance and the pleadings did not present that dispute.

The court did find one common issue concerning the implied-covenant claim. All enrolled Matterport Service Partners had agreed to the program’s terms of service. The court therefore certified a class of all enrolled Matterport Service Partners when Matterport launched its Capture Services program, solely to decide whether those terms prevented a claim for breach of the implied covenant based on Matterport’s operation of Capture Services.

Disposition

The court granted in part and denied in part Lynch’s motion for class certification. It certified only the limited issue class described above and appointed Lynch as the class representative.