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Cline v. TouchTunes Music Corp.

United States District Court, S.D. New York

January 7, 2015

MICHELLE CLINE, et ano, Plaintiff,
v.
TOUCHTUNES MUSIC CORPORATION, Defendant

For Michelle Cline, Individually and on behalf of all others similarly situated, Kelly Engstrom, Individually and on behalf of all others similarly situated, Plaintiffs: Jeffrey Michael Norton, LEAD ATTORNEY, Newman Ferrara LLP, New York, NY.

For Touchtunes Music Corporation, Defendant: Jamie A. Levitt, LEAD ATTORNEY, Cameron Andrew Tepfer, Morrison & Foerster LLP (NYC), New York, NY.

MEMORANDUM AND ORDER

Lewis A. Kaplan, United States District Judge.

Defendant TouchTunes Music Corporation (" TouchTunes") allegedly offers pay-for-play digital jukebox services through its in-venue interactive music and entertainment platform. That is, it, or others with whom it deals, contracts with venues -- one might think primarily bars -- for the placement of TouchTunes hardware, which allows consumers to select recorded music to be played in the venue, paying for it with cash or credit card at the physical jukebox or through TouchTunes' mobile " app."

Plaintiffs -- citizens of Montana and North Dakota -- bring this purported class action under the Class Action Fairness Act of 2005 (" CAFA") on behalf of all persons who, between May 30, 2010 and October 28, 2013, purchased the playing of music by the TouchTunes service, either via the " app" or at a physical jukebox, which, for various reasons, was not played and for which no refund was received. Plaintiffs claim that TouchTunes has violated Sections 349 and 350 of the New York General Business Law (" GBL") and otherwise wronged them by, among other things, (1) knowingly retaining payments for unplayed or " skipped" pieces of music, and (2) deceptively advertising " pay-for-play" services without disclosing that some purchased songs would be skipped and that no refund Plaintiffs - citizens of Montana and North Dakota - bring this purported class action payments or credits would be issued for such skipped songs.

TouchTunes moves to dismiss the amended complaint on the grounds that (1) the Court lacks subject matter jurisdiction because the complaint fails adequately to allege that the amount in controversy exceeds $5 million, [1] and (2) the complaint fails to state a legally sufficient claim. In addition, it asks that the class action allegations be stricken on the ground that a class could not properly be certified in this case.

1. TouchTunes' jurisdictional argument -- while it ultimately may prevail -- fails at this stage. Plaintiffs have alleged the requisite amount in controversy. TouchTunes has failed to demonstrate that plaintiffs could not recover the amount alleged.

2. The determination of the propriety of class certification manifestly would be improper at this stage of the litigation or on the record -- more properly, the utter lack of any record -- before the Court. Accordingly, so much of the motion as seeks to have the class action allegations stricken must be denied.

3. The question whether the amended complaint states a legally sufficient claim, under the GBL or otherwise, is more interesting. To mention just two points:

o TouchTunes properly points out that the relevant sections of the GBL apply only to deceptive acts or practices[2] and false advertising[3] in New York.[4] The plaintiffs, meanwhile, complain only of alleged harm in Montana, but argue that the GBL is an appropriate vehicle for this suit in light of TouchTunes' terms of use, which include a New York governing law clause. Plaintiffs allege elsewhere, however, that TouchTunes does not require consumer accession to its terms of use and that the agreement is difficult to find on the TouchTunes " app" and not available at all on its in-venue hardware. It therefore is questionable whether plaintiffs can sweep the entire nation under the New York GBL on this account. And the estoppel argument plaintiffs advance perhaps is problematic given the absence of any allegation of detrimental reliance on the governing law clause of the user agreement that, plaintiffs say, few if any TouchTunes users are likely ever to have seen.
o There are no allegations of any specific advertising by TouchTunes in New York or anywhere else, thus raising serious questions as to whether the GBL Section 350 claims are sufficient.

Moreover, plaintiffs seek leave to amend their complaint if TouchTunes' motion is granted.

Considering all the circumstances, the more economical course is to grant TouchTunes' motion now without prejudice to the filing of a second amended complaint, the framing of which will have the benefit of TouchTunes' arguments on the present motion. Thus, plaintiffs would be given a final opportunity to put their best foot forward and then to confront any motion to dismiss in that context.

* * *

Defendant's motion to dismiss the amended complaint or for other relief [DI 11] is granted without prejudice to the filing, on or before January 28, 2015, of a second amended complaint, but denied insofar as it seeks to have the class action allegations stricken. Absent a change in the jurisdictional allegations, the Court would be unlikely to revisit their sufficiency on any motion to dismiss the second amended complaint. Nor would it be likely to revisit the class certification issue on any such motion.

SO ORDERED.


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