Wednesday, December 30, 2020

business can assert California consumer protection claims against platform

Gaby’s Bags, LLC v. Mercari, Inc., No. C 20-00734 WHA, 2020 WL 7664455 (N.D. Cal. Dec. 25, 2020)

After the court dismissed plaintiff’s Lanham Act false advertising claims against a platform because the plaintiff was a customer and not a competitor, the plaintiff sought to amend to assert California consumer protection law (and related) claims. The court agreed that leave to amend was justified.

Mercari allegedly promoted its web platform as a venue where “anyone can sell.” Plaintiff opened a Mercari account and began selling handbags, making nearly $400,000 over a two-year period until Mercari terminated plaintiff’s account for violating its TOS, which barred “business accounts.”

Mercari argued that the word “anyone” clearly indicated any individual, but the court wasn’t so sure. Plaintiff seemed to be a consumer who had been harmed by reliance on the alleged misrepresentation, which was enough to allow the amended complaint under the circumstances, which included the court’s own invitation to replead when it dismissed the Lanham Act claim.

Mercari also argued that California law didn’t apply, but the complaint sufficiently alleged that the misconduct originated in California, tethering the alleged harm to Mercari’s headquarters in California. Plus,

Mercari’s terms of service foisted a California choice-of-law provision onto plaintiff, which was the basis for dismissing plaintiff’s Florida consumer protections claims. Mercari argued that plaintiff cannot invoke Florida law because of the California choice-of-law provision. Now, when plaintiff does just that, Mercari flips flops and says plaintiff cannot invoke California law. Apparently, in Mercari’s universe, plaintiff is simply without any recourse. This absurd result will not be tolerated.

A negligent misrepresentation claim, however, would not be allowed, because plaintiff failed to plead anything other than an arms-length relationship between the parties, not the extra duty required.

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