Monday, August 29, 2011

Be careful when you put that screenshot in the complaint

Fasugbe v. Willms, 2011 WL 3667440 (E.D. Cal.)

Swipebids is back, now as a defendant in this putative class action. Plaintiffs alleged that defendants, including, violated the California CLRA, FAL, and UCL, and committed related torts.

Plaintiffs alleged that defendants advertise SwipeBids via sponsored links, banner advertisements, and links in fake news articles and fake blogs. The links go to a registration page that says "Winning is Easy: Step 1: JOIN & RECEIVE BIDS Step 2: PLACE BIDS on AUCTIONS Step 3: WIN GREAT PRODUCTS!" They alleged that, "on the credit card submit page, Swipebids represents that the consumers' account information is only necessary in order to pay for 'winning auctions,' " but that the page "fails to disclose the existence of its membership fees," which are actually $150 or $159.

Consumers who complain, plaintiffs alleged, are often directed via a link to a transaction page SwipeBids says is the one they initially used. That page discloses the membership fee. But, plaintiffs alleged, that’s not the real transaction page.

After dismissing the claims against the individual defendant for want of personal jurisdiction, the court turned to other issues.

The original complaint had a screenshot of a “credit card submit” page with several references to a $150 membership fee, but the first amended complaint had an identical screenshot except for the fact that the section in which consumers would have entered their credit card information, with its references to the $150 membership fee, was removed. The current complaint simply alleged that the website "fails to disclose the existence of its membership fees,” and also included a different version of the initial registration page, which includes a graphic stating "Our players Win Lots of Prizes! Here's just a few," with pictures of items customers have won and statements that the customers "Paid $159 for Access" to the prizes. The court declined to decide on a motion to dismiss “whether the statement on the initial registration page that customers paid $159 for access constitutes sufficient disclosure of the membership fee.”

Plaintiffs attempted to explain the inconsistencies by saying that the screenshot was inadvertently attached twice, the first time in error and the second to show the fabricated webpage to which consumers were sent after complaining. They stated that they never obtained a screenshot of the actual credit card submit page they viewed, and therefore could not include it in their complaint. The court was skeptical because, if they never had a copy, they wouldn’t have had anything to attach in position one, and the explanation was inconsistent with the pleadings. However, the court wanted to leave the question of whether they’d engaged in sanctionable conduct until discovery.

As for stating a claim, defendants argued that the allegations flunked Rule 9(b), since all of the claims relied at least in part on the allegation that defendants fraudulently charged an undisclosed membership fee. The court disagreed: plaintiffs described the webpages they visited and the statements and omissions about fees. They alleged reliance on the representation that their credit cards would only be used in the event that they won a prize, and that they were damaged when defendants charged a membership fee. That was enough.

The court also refused to strike the class allegations, because arguments over whether certification is appropriate are for a later date.

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