C. M. v. MarinHealth Medical Group, Inc.

Background

C. M. sued MarinHealth Medical Group, Inc. over alleged privacy violations involving personally identifiable information and protected health information. C. M. alleged that MarinHealth used Meta’s Pixel technology on its websites and allowed unauthorized third parties, including Meta Platforms, Inc., doing business as Facebook, to intercept information about users seeking healthcare-related services.

MarinHealth moved under Federal Rule of Civil Procedure 12(b)(6), which requires dismissal when a complaint does not state a legally sufficient claim for relief. The motion challenged the claims for negligence, breach of implied contract, larceny under California Penal Code section 496, and unjust enrichment.

Negligence

MarinHealth argued that C. M. had not alleged nonspeculative damages. C. M. alleged that the misuse of his private information led to targeted advertising related to his medical conditions, as well as loss of the value of and control over that information.

The court distinguished cases involving only a possible future risk of harm. Because C. M. alleged that his information was actually misused soon after he visited MarinHealth’s website, the court found that allegation sufficient to establish Article III standing. But the court concluded that the alleged loss of the value of sensitive healthcare data did not adequately support a negligence claim. C. M. had not yet alleged lost time or expenses connected to responding to the alleged misuse.

The court dismissed the negligence claim with leave to amend. It allowed C. M. to add allegations about lost time or expenses and any other facts supporting the required injury.

Breach of Implied Contract

C. M. alleged that he and other class members entered implied contracts with MarinHealth under which MarinHealth agreed to safeguard their private information and not disclose it without consent. He alleged that MarinHealth breached those agreements by disclosing information to third parties, including Facebook.

MarinHealth argued that C. M. had not alleged benefit-of-the-bargain damages or specific consideration for data-security promises. The court concluded that this case involved paid healthcare services and that C. M. adequately alleged that the payment for those services was based in part on MarinHealth’s security promises. The court therefore denied the motion to dismiss the implied-contract claim.

Larceny

C. M. brought a larceny claim under California Penal Code sections 496(a) and 496(c), alleging that MarinHealth obtained private information through false pretenses and transmitted it to unauthorized third parties, including Facebook and Google.

The court declined to decide the possible extraterritorial scope of the California statute at the motion-to-dismiss stage. It also rejected MarinHealth’s argument that C. M.’s continued use of the MarinHealth website defeated the claim. The court stated that this issue might affect later liability but did not justify dismissal at the pleading stage.

The court held that C. M. had identified alleged false representations in MarinHealth’s privacy policies, alleged reliance on those representations, and provided MarinHealth adequate notice of the basis for the claim. The court also found sufficient allegations that MarinHealth knowingly and willfully incorporated the relevant technologies despite its alleged representations that it would not share this information. The court denied the motion to dismiss the larceny claim.

Unjust Enrichment

MarinHealth argued that C. M.’s unjust-enrichment claim sought remedies duplicative of damages or restitution available under another claim. The court explained that, at the pleading stage, a plaintiff may pursue an equitable claim by alleging that legal remedies are inadequate or by pleading equitable claims in the alternative on that basis.

The court found that C. M. had made the required allegation and was seeking a form of non-restitutionary disgorgement that, according to the opinion, was not available under the California Unfair Competition Law. It therefore declined to dismiss the unjust-enrichment claim at the pleading stage. The court noted that it could prevent an improper windfall if the claim later proceeded to an equitable remedies phase.

Disposition

The court dismissed the negligence claim with leave to amend. It denied the remainder of MarinHealth’s motion to dismiss. C. M. was ordered to file an amended complaint within 20 days of the order.