United States District Court, S.D. New York
JUSTIN BAKER-RHETT, individually and on behalf of others similarly situated, Plaintiff,
ASPIRO AB, a Norwegian limited liability company, and KANYE WEST, an individual, together d/b/a/ TIDAL, Defendants.
MEMORANDUM OPINION AND ORDER
GREGORY H. WOODS UNITED STATES DISTRICT JUDGE
February 15, 2016, Kanye West tweeted that his new
album-The Life of Pablo-“will never never
never be on Apple. And it will never be for sale . . . You
can only get it on Tidal.” Six weeks later, the album
was on Apple, and was for sale on sites other than Tidal, the
online streaming service operated by defendant Aspiro AB
(“Aspiro”). The plaintiff, Mr. Baker-Rhett, on
behalf of himself and a putative class, claims that
statements by Aspiro and Mr. West were deceptive-and that
they fraudulently induced him to pay for Tidal's services
in order to obtain access to its purportedly exclusive
content. Mr. West's allegedly false Tweet provides
adequate support for the plaintiff's common law
fraudulent inducement claims. However, because Mr.
Baker-Rhett viewed the allegedly false representations and
subscribed to Tidal outside of New York, he does not satisfy
the territoriality requirement for the claims he asserts
under Sections 349 and 350 of New York's General Business
law. For those, and the other reasons set forth below, the
defendants' motions to dismiss are GRANTED in part and
DENIED in part.
launched Tidal-a high fidelity music streaming site-in 2014.
Second Am. Compl. (ECF No. 59) ¶ 20. Shortly thereafter,
Aspiro was acquired by rap impresario Sean Carter-known to
the world as Jay-Z-and a holding company controlled by him.
Id. ¶ 21. Mr. Carter announced to the world
that Tidal would be “the streaming home” for
artists like himself and other bold faced names in the music
industry. Id. ¶ 22. Tidal was marketed as the
first “artist-owned” streaming service, and a
number of musicians, including defendant Kanye West, were
offered 3% stakes in the company “in exchange for
creating Tidal exclusive content to drive consumers to the
subscription only streaming site.” Id.
artist-owners of Tidal leveraged their massive presence on
social media to promote Tidal. Id. ¶ 24. For
example, in February 2015, Mr. West tweeted his millions of
Twitter followers: “Please to all my friends fans and
music lovers. Sign up to Tidal now.” Id.
the sizzle created by the marketing efforts of Tidal's
owner-artists, the service itself soon fizzled. Id.
¶ 25. Indeed, Tidal's “inability to generate
revenue led many in the music industry to believe the media
platform faced almost imminent doom.” Id.
Tidal admitted in early 2015 that the company had
insufficient funds to last for another year; and conceded
that it would “have to achieve an extreme and
unprecedented growth in number of subscribers simply to
Pablo to the Rescue
midst of Tidal's struggles, Mr. West announced that his
next album-The Life of Pablo-would be released
exclusively on the streaming platform. According to the
complaint, Mr. West is a “musical paragon.”
Id. ¶ 27. There is no doubting Mr. West's
success as a musician; among his other accomplishments, he
has twenty-one Grammy awards. Id. He has a robust
following on social media. With over 26 million followers,
“his Twitter feed is regularly at the center of a
maelstrom of discussion and scrutiny by both the media and
public at large.” Id. ¶ 28.
“Despite Mr. West's wild success and popularity,
and his personal claim as the most influential person in the
world, he has been plagued with an extraordinary amount of
debt . . . .” Id. ¶ 29. It was against
this backdrop of financial struggle, by both Tidal and Mr.
West himself, that Mr. West announced the release of his
album on Tidal in early 2016. Id. “It quickly
became one of the most anticipated albums of 2016.”
marketed that the album was available exclusively on Tidal.
Id. In the first of the series of two Tweets that
form the principal basis for Plaintiff's claims here, on
February 14, 2016, the official Tidal Twitter account issued
the following Tweet: âWe're bringing @KanyeWests's
#TLOP to fans around the globe. It's streaming
exclusively on TIDAL.com.” Id. The next day,
February 15, 2016, Mr. West tweeted from his Twitter account:
“My album will never never never be on Apple. And it
will never be for sale . . . You can only get it on
Tidal.” Id. ¶ 30. The complaint alleges
that Mr. West wrote his Tweet “both as an artist and
owner of Tidal, ” and that he, “as a part owner
of Tidal, is an agent of the company and therefore capable of
making statements on its behalf.” Id.
press reported on Mr. West's Tweet in stories with
headlines like “Kanye West says his new album will be a
permanent Tidal exclusive, ” “Kanye West Says
‘The Life of Pablo' ‘Will Never Be For
Sale'” and “Kanye West: You can only get The
Life of Pablo on TIDAL.” Id. ¶ 32.
“Customers flocked to Tidal at a frenzied pace after
Mr. West declared it would be the exclusive source of his
album, and as a result, Tidal's subscription numbers
skyrocketed.” Id. ¶ 33. Indeed, within
the first ten days of the release of The Life of
Pablo, Tidal's subscription numbers tripled from 1
million to 3 million. Id. ¶ 34. Mr. West
boasted to his Twitter followers about their impact on the
increase in Tidal's subscription base. Id.
Life of Pablo was available exclusively on Tidal for
about a month and a half before Mr. West announced that it
would be available for free streaming on both Apple Music and
Spotify- somewhat less than Mr. West's tweeted
“never never never.” Id. ¶¶
37-38. The complaint alleges that the defendants always knew
that The Life of Pablo would not be available
exclusively on Tidal forever. Id. ¶ 39.
“As such, Mr. West and Aspiro deceived customers into
believing that The Life of Pablo would only be
available through the streaming service, when in fact it
[sic] knew that statement to be false.” Id.
¶ 40. The complaint claims that the defendants benefited
from their alleged fraud as a result of Aspiro's
increased subscriber base and subscription revenue.
Mr. Baker-Rhett Loses $9.99
named plaintiff, Mr. Baker-Rhett, lives in California.
Id. ¶ 14. He is a fan of Mr. West's music.
Id. ¶ 49. Immediately after Mr. West's
February 15, 2016 Tweet, Mr. Baker-Rhett signed up for
Tidal's streaming service. Id. ¶ 50. As
“a result of viewing Tidal's and Mr.
West's announcements and representations that The
Life of Pablo would only ever be available on Tidal,
” Mr. Baker-Rhett believed it was the only music
platform on which the album would ever be available.
Id. ¶ 53 (emphasis added). He began to stream
The Life of Pablo that same day. Id. ¶
first month of Mr. Baker-Rhett's subscription to Tidal
was free. Id. ¶ 50. But before he learned that
the album would be available on streaming sites other than
Tidal, he was charged $9.99 for his second month.
Id. ¶ 54. After learning that the album would
be available on Spotify, for which he already had a paid
subscription, Mr. Baker-Rhett cancelled his subscription to
Tidal. Id. ¶¶ 54-55. The cancellation was
effective before he was charged for a second time.
Id. ¶ 55. Mr. Baker-Rhett asserts that had he
known that Mr. West's album would eventually be made
available to stream on platforms other than Tidal, he would
never have signed up for the service at all. Id.
¶ 54. As a result of the defendants' allegedly
deceptive Tweets, Mr. Baker-Rhett was out $9.99. Id.
He launched this lawsuit to get it back.
filed this action in the Northern District of California
against Mr. West, who resides in California, and S. Carter
Enterprises, LLC. ECF No. 1. The factual predicate of the
original complaint was very similar to that pleaded in the
governing complaint in effect now. Significantly, however,
the original complaint asserted claims arising under
California state law-particularly California's false
advertising law, Cal. Bus. & Prof. Code § 17500,
unfair competition law, Cal. Bus. & Prof. Code §
17200, et seq., and California common law of
fraudulent inducement and unjust enrichment. Id.
¶¶ 64-101. The plaintiff amended his complaint on
May 9, 2016, replacing defendant S. Carter Enterprises, LLC,
with Aspiro, but continuing to assert claims under California
law. ECF No. 5. After Aspiro filed a motion to transfer venue
of the litigation to the Southern District of New York, the
parties entered into a stipulation to transfer the case to
this district. ECF No. 23.
months after the case was transferred to this district,
Aspiro filed a motion to dismiss the first amended complaint,
arguing, among other things, that New York substantive law
should apply to the plaintiff's claims, and that, as a
result, the claims governed by California law should be
dismissed. ECF No. 49. The motion relied heavily on the
effect of the choice of law provision contained in the
“Terms and Conditions” to which Mr. Baker-Rhett
and other Tidal subscribers agreed in order to sign up for
the service. That provision read as follows:
The Agreement is governed by the internal substantive laws of
the State of New York, without respect to its conflict of
laws provisions. If there is any dispute between you and
Supplier about or involving the Service, by using the
Service, you expressly agree to submit to the exclusive
personal jurisdiction of the state and federal courts sitting
in the State of New York, County of New York.
ECF No. 52-2 at 12.
memorandum of law in support of its motion analyzed the
application of this governing law provision under California
law. First Aspiro Mem. of Law (ECF No. 50) (“First
Aspiro Mem.”), at 8. In the first step of the analysis,
Aspiro asserted that the claims contained in the complaint
fell within the scope of the contractual governing law
provision when analyzed under California law. Aspiro wrote
that “California courts take a liberal approach to
governing law provisions in agreements. Unlike in New
York, California courts do not require contracting
parties to explicitly state that the governing law provision
will apply to claims tangential to the agreement, as well as
those pertaining to the contract itself.” Id.
(emphasis added). Aspiro argued that, as a result of the
governing law clause “any claims relating to the
service, including his relationship with the service
provider, would be governed by New York state laws.”
Id. at 7. Aspiro claimed that “[t]his choice
of law provision further encompasses ...