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Reparata Mazzola, On Behalf v. Roomster

March 26, 2012

REPARATA MAZZOLA, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, AND THE GENERAL PUBLIC AND ACTING IN THE PUBLIC INTEREST,
PLAINTIFF,
v.
ROOMSTER CORP., JOHN S. SHRIBER, ROMAN ZAKS, AND DOES 1-10,
DEFENDANTS.



The opinion of the court was delivered by: John G. Koeltl, District Judge:

OPINION AND ORDER

The plaintiff, Reparata Mazzola (the "plaintiff"), brings this putative class action against Roomster Corporation ("Roomster"), and its founders and principal owners, John S. Shriber and Roman Zaks (collectively, the "defendants"). The plaintiff asserts claims for breach of contract, fraud, negligent misrepresentation, conversion, and violation of the California Consumer Legal Remedies Act, Cal. Civ. Code § 1770 et seq., and Cal. Bus. & Prof. Code §§ 17200 et seq. and 17500 et seq. The defendants now move to dismiss the Second Amended Class Action Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). In the alternative, the defendants move to strike the class allegations in the Complaint pursuant to Federal Rules of Civil Procedure 12(f) and 23(d)(1)(D).

I.

On a motion to dismiss for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6), the allegations in the complaint are accepted as true, and all reasonable inferences must be drawn in favor of the plaintiff. McCarthy v. Dun & Bradstreet Corp., 482 F.3d 184, 191 (2d Cir. 2007). The Court's function on a motion to dismiss is "not to weigh the evidence that might be presented at a trial but merely to determine whether the complaint itself is legally sufficient." Velez v. Levy, 401 F.3d 75, 80 (2d Cir. 2005) (internal quotation marks and citation omitted). The Court should not dismiss the Complaint if the plaintiff has stated "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). While detailed factual allegations are not required, the pleading must include more than an "unadorned, the-defendant-unlawfully-harmed-me accusation," "'labels and conclusions,'" "'a formulaic recitation of the elements of a cause of action,'" or "'naked assertion[s].'" Id. (alteration in original) (quoting Twombly, 550 U.S. at 555, 557). Accordingly, the basic principle that a court must accept all allegations as true is inapplicable to either legal conclusions or "mere conclusory statements." Id. A court can thus begin its analysis of the sufficiency of pleadings "by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 1950. "When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id.

A claim that sounds in fraud must meet the heightened pleading standard of Federal Rule of Civil Procedure 9(b). See Litwin v. Blackstone Grp., L.P., 634 F.3d 706, 715 (2d Cir. 2011); Campbell v. Mark Hotel Sponsor, LLC, No. 09 Civ. 9644, 2010 WL 3466020, at *4 (S.D.N.Y. Sept. 3, 2010). Rule 9(b) requires that the complaint "(1) specify the statements that the plaintiff contends were fraudulent, (2) identify the speaker, (3) state where and when the statements were made, and (4) explain why the statements were fraudulent." ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 99 (2d Cir. 2007).

When presented with a motion to dismiss pursuant to Rule 12(b)(6), the Court may consider documents that are referenced in the complaint, documents that the plaintiff relied on in bringing suit and that are either in the plaintiff's possession or that the plaintiff knew of when bringing suit, or matters of which judicial notice may be taken. See Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002); SEC v. Rorech, 673 F.Supp.2d 217, 221 (S.D.N.Y. 2009).

II.

The following assertions of fact are assumed to be true on this motion to dismiss.

Roomster Corporation owns and operates Roomster.com, an online roommate matching service whose principals are John S. Shriber and Roman Zaks. (Second Am. Class Action Compl. ("Second Am. Compl."), at ¶¶ 5-8.) Roomster.com allows members to connect to each other to find roommates or rent apartments in a safe online environment. (Second Am. Compl. ¶ 14.)

To use the features of Roomster.com, users must become members by providing personal information and confirming that they have read and agreed to Roomster's Privacy Policy and Terms of Use. (Decl. of John S. Shriber in Supp. of Defs.' Mot. Dismiss ("Shriber Decl."), at ¶¶ 9-11.) Users confirm their acceptance by checking a box next to the statement, "I affirm that I have read and agree to the Privacy Policy and Terms of [U]se." (Shriber Decl. Ex. C.) Embedded in the statement is a hyperlink to Roomster's Terms of Use. (Shriber Decl. ¶ 10.) The Terms of Use describe Roomster's policies with respect to subscription fees and automatic renewals, as well as the procedure for closing an account or canceling a subscription. (Shriber Decl. Ex. A ¶ 3.)

Once a user becomes a member, the user chooses between a Basic Membership and a Full Membership. (Second Am. Compl. ¶

15.) The Basic Membership is free and allows a member to search, post, and contact other members of the website. (Shriber Decl. ¶ 6.) The Full Membership provides the same functions as the Basic Membership, as well as access to a secure private email account on the website. (Shriber Decl. ¶ 6.) The cost of a Full Membership depends on the length of the subscription and varies from $5.95 for three days to $29.95 for four weeks. (Second Am. Compl. ¶ 16.) Roomster has an automatic renewal policy, set out in its Terms of Use, under which Full Memberships are automatically renewed for thirty days at a cost of $29.95 and continue to be renewed until the member cancels the member's subscription. (Shriber Decl. ¶ 16.) If a member chooses a Full Membership, the member is directed to confirm again that the member has read and agreed to Roomster's Privacy Policy and Terms of Use before Roomster will charge the provided credit card. (Shriber Decl. ¶ 14.)

On September 28, 2009, the plaintiff became a member of Roomster.com. (Shriber Decl. Ex. C.) The plaintiff selected a Full Membership for three days, provided her credit card and billing information, and was charged $5.95. (Second Am. Compl.

¶¶ 28-30.) Before the plaintiff's credit card was charged, she checked the box confirming that she had read and agreed to the Terms of Use. (Shriber Decl. Ex. C.) In accordance with the Terms of Use, Roomster charged the plaintiff's credit card $5.95 for her initial three day membership. Roomster subsequently charged the plaintiff's credit card $29.95 on October 2, November 2, and December 2, 2009. (Second Am. Compl. ¶¶ 30-32.)

The plaintiff alleges that, in December 2009, she noticed the three $29.95 charges from Roomster on her credit card bill. (Second Am. Compl. ¶ 33.) She alleges that she asked the credit card company to discontinue the charges and also tried to cancel her Roomster membership by following instructions posted on Roomster.com. (Second Am. Compl. ¶ 33.) She alleges that she was unable to cancel her membership by following the instructions on Roomster.com, which directed her to click on the "close account" button under the "my account" tab on her logged in homepage. (Second Am. Compl. ¶¶ 17, 33.) The Terms of Use agreement contains a different set of instructions, which requires users to "click the 'Settings' button located under the 'Account' tab" on the logged in homepage and then to "click on the 'Subscription' link and choose 'Cancel my subscription.'" (Shriber Decl. ¶ 21.) The defendants claim that the plaintiff succeeded in having the charges on her credit card reversed. (Shriber Decl. ¶ 24; see also Shriber Decl. Ex. F.) The plaintiff alleges that the defendants did not cancel her membership, as she attempted to have done by using the website. Rather, the plaintiff alleges, the only way she was able to have her membership canceled was "to cancel her credit/debit card to avoid further charges." (Second Am. Compl. ¶ 33.)

The plaintiff brought this action asserting claims for breach of contract, fraud, negligent misrepresentation, conversion, and violation of the California Consumer Legal Remedies Act, Cal. Civ. Code § 1770 et seq., and Cal. Bus. & Prof. Code §§ 17200 et seq. and 17500 et seq. The plaintiff's claims are based on her allegation that the defendants failed to disclose adequately the automatic renewal billing procedure and prevented her from canceling her Roomster membership.

III.

This action was brought in the Central District of California and transferred to this Court pursuant to 28 U.S.C. § 1404(a).*fn1

A.

The defendants move to dismiss the plaintiff's First, Second, Third, Fifth, and Sixth Claims for Relief, namely the plaintiff's breach of contract, fraud, and negligent misrepresentation claims, and her claims under the California Consumer Legal Remedies Act, Cal. Civ. Code § 1770 et seq., and Cal. Bus. & Prof. Code §§ 17200 et seq. and 17500 et seq. The defendants claim that the ...


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