SAMUEL CONTI, District Judge.
Now before the Court are (1) Motion to Dismiss for lack of subject matter jurisdiction, ECF No. 271 ("MTD"), filed by Defendants Regus Management Group LLC, Regus Business Centre LLC, Regus plc, and HQ Global Workplaces LLC (collectively "Regus") (2) Regus's Motion for Summary Judgment on its counterclaim for breach of contract, ECF No. 272 ("MSJ"), (3) Regus's Motion for Sanctions under Rule 37, ECF No. 283 ("Mot. for Sanc."), (4) Motion to Exclude Expert Reports of Mark Vogel and James Pampinella, ECF No. 311 ("Mot. to Excl."), filed by Plaintiffs Circle Click Media LLC ("Circle Click") and CTNY Insurance Group Inc. ("CTNY") (collectively "Plaintiffs"), (5) Plaintiffs' Motion for Class Certification, ECF No. 238 ("Mot. for Cert."), and (6) Regus's Motion for Security for Costs, ECF No. 273 ("Mot. for Sec."). The Motions are fully briefed and suitable for disposition without oral argument per Local Rule 7-1(b). For the reasons set forth below, the Court finds as follows:
Regus is in the business of leasing commercial office space throughout California and New York. Through its website, Regus has represented that it provides customers with fully equipped offices for one all-inclusive monthly price. Regus has also represented that its services are "simple, easy, and flexible," that its one-page contract — the Office Service Agreement ("OSA") — "takes just 10 minutes to complete," and that it provides a "single monthly invoice." ECF No. 65 ("2AC") ¶¶ 34-41.
The OSA is in fact one page, and it merely identifies the location of the office space, the monthly office fee, the term of the agreement, and the parties to it. Regus's monthly invoices, however, routinely exceed the monthly payment amount indicated on the OSA due to various mandatory fees disclosed in other documents.
One of these documents is the Terms and Conditions, which the OSA incorporates by reference. The Terms and Conditions is also only one page, but it is printed in five-point font, which is almost illegible. In hardcopy, the Terms and Conditions are printed on the reverse side of the OSA. In the online version, customers have to download them. The font is equally small in the online version, though a customer can, of course, change the settings on their computer to increase the size. When a customer signs the OSA, they affirm that they have read and understood the Terms and Conditions.
The Terms and Conditions reference another document, the "House Rules." The House Rules also reference a "Service Price Guide," which lists the prices for a variety of services, including kitchen amenities and phone and IT services.
There are four allegedly unfair, illegal, or deceptive fees at issue in this case. None of them are disclosed on the OSA. There is a comments box on the OSA, however, where Regus employees can add additional information to the standard OSA form. In a minority of executed OSA's, Regus employees have made a note in the comments box of one or more of the mandatory fees.
The first fee at issue is the Kitchen Amenities Fee ("KAF"). The KAF is a monthly fee charged by Regus for the provision of unlimited beverages. The service — and therefore the fee — is mandatory; thus, all Regus tenants pay the KAF. The KAF is neither disclosed in the OSA nor the Terms and Conditions. The first mention of the KAF is in the House Rules, which states that it is mandatory but does not list the amount. The amount of the KAF is listed in the Services Price Guide.
The second mandatory fee at issue is the Office Restoration Services fee ("ORS"). The ORS is a mandatory fee charged upon a tenant's departure for "normal cleaning and testing and to return the accommodations to its original state." ECF No. 279-1 ("Cert. Opp'n") at 12. The ORS is disclosed — though the amount of the fee is not provided — in the Terms and Conditions and House Rules.
The third mandatory fee at issue is the Business Continuity Services fee ("BCS"). The BCS is a mandatory fee charged upon the client's departure for services such as answering phone calls and forwarding mail. The BCS is disclosed in the Terms and Conditions and House Rules; those disclosures, however, merely indicate that the BCS is "three months of the Virtual Office fee," without providing the amount of the Virtual Office fee. Mot. for Cert. at 9.
The final fee in dispute is the amount that Regus charges clients for taxes on certain services.
The content and form of Regus's invoices for telephone services are also at issue in this case. Specifically, Plaintiffs allege that the invoices that Regus provides for telephone services do not comply with California Public Utilities Code ("CPUC") section 2890, which sets forth a number of requirements for the contents of telephone bills.
Circle Click is a California company with its principal place of business in San Francisco, California. Circle Click executed an OSA with Regus for two offices in San Francisco for a period starting in May 2011 and ending in May 2012. Prior to entering into the OSA, Circle Click's principal viewed Regus's website and allegedly relied on Regus's advertisements indicating Regus offered fully-equipped office space for a single low monthly price. Before signing the OSA online, Circle Click's principal opened and read the Terms and Conditions linked to the OSA on her computer. Although the OSA indicated that Circle Click's total monthly payment was to be $2,461, Regus invoiced Circle Click for significantly more than that due to additional fees that were not listed on the OSA.
CTNY is a Connecticut company doing business in New York. CTNY entered into a Regus OSA for New York office space in May 2012. Prior to entering into the OSA, CTNY's principal viewed Regus's website and allegedly relied on Regus's advertisements indicating Regus offered fully-equipped office space for a single low monthly price. CTNY also allegedly relied on oral representations made by Regus's sales representatives that the monthly payment per the list price included all the required charges and constituted the total monthly payment. While reviewing the OSA online, CTNY's principal was unable to open a link to Regus's Terms and Conditions. Nevertheless, CTNY's principal confirmed that he had read and understood the Terms and Conditions. Soon after executing the agreement, CTNY complained about the KAF and other services it allegedly thought were included in the OSA price. CTNY moved out of the Regus space within a few weeks of moving in.
In July 2012, Plaintiffs filed this action against Defendants in California state court. ECF No. 1. The action was subsequently removed, and several rounds of pleading followed. The gravamen of Plaintiffs' Second Amended Complaint ("2AC"), Plaintiffs' operative pleading, is that Regus and the other Defendants routinely assessed Plaintiffs for charges that were not disclosed in the OSA. ECF No. 65 ("2AC"). For example, according to Plaintiffs' complaint, the monthly fee listed in Circle Click's OSA was $2,461, but Circle Click received monthly invoices ranging from $2,559.67 to $6,653.79.
The Court's April 22, 2013 Order, ECF No. 77 ("4/22/13 MTD Order"), dismissed several of Plaintiffs' claims with prejudice. The following causes of action were left undisturbed: violation of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200, et seq.; violation of California's False Advertising Law ("FAL"),
Regus asserted a variety of counterclaims in their Answer. After the Court dismissed those counterclaims with leave to amend, Regus filed a Second Amended Counterclaim. ECF No. 101 ("SACC"). Regus's SACC alleges that CTNY breached the OSA by: (1) failing to make its full monthly office payments, plus applicable taxes, in an amount of $12,209.01; (2) failing to pay the KAF, plus applicable taxes, in an amount of $391.92; (3) failing to pay the office set-up fee, plus applicable taxes, in an amount of $81.66; (4) failing to pay the BCS fee in an amount of $987; (5) failing to pay the ORS fee, plus applicable taxes, in an amount of $239.45; and (6) failing to pay late payment fees. SACC ¶¶ 33-38. With the exception of the basic monthly office fee, none of these fees are described in the OSA. In its prayer for relief, Regus sought, among other things, damages and attorney's fees. In its December 10, 2014 Order, however, the Court dismissed with prejudice Regus's request for attorney's fees, as well as Regus's breach of contract counterclaim to the extent that it was predicated on CTNY's failure to pay a BCS fee.
Pursuant to Federal Rule of Civil Procedure 12(b)(1), Regus moves the Court to dismiss Plaintiffs' case for lack of subject matter jurisdiction on the grounds that Plaintiffs lack standing. First, Regus argues that Plaintiffs lack standing to assert their claims under Cal. Bus. & Prof. §§ 17200, 17500, and 17509 because Circle Click is neither a consumer nor Regus's competitor. Second, Regus argues that Plaintiffs' unjust enrichment claim should be dismissed because it is duplicative of its UCL and FAL claims.
Standing is an element of subject matter jurisdiction. Therefore, Regus moves to dismiss for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1).
Generally, on a 12(b)(1) motion, a court need not defer to a plaintiff's factual allegations regarding jurisdiction. But the Supreme Court has held that where a 12(b) motion to dismiss is based on lack of standing, the Court must defer to the plaintiff's factual allegations and must "presume that general allegations embrace those specific facts that are necessary to support the claim."
Regus first asks the Court to dismiss Plaintiffs' UCL and FAL claims. Regus argues that because the UCL and FAL were enacted to protect consumers and competitors, Circle Click, which is neither a consumer nor Regus's competitor, lacks standing.
Not so. California's UCL and FAL apply to any "person who has suffered injury in fact and has lost money or property as a result" of the alleged wrongful conduct.
Regus relies on the following language from
Here, by contrast, the proposed class of plaintiffs is not so uniformly sophisticated and capable of seeking relief against Regus. Plaintiff Circle Click, for example, is comprised of only two individuals. In addition, this action deals with form contracts, not individually negotiated contracts between sophisticated entities. The due process concerns raised in
The UCL claim in this case also differs from the cases cited by Regus insofar as the allegedly unfair, deceptive, and unlawful acts committed by Regus are not limited to the parties' contractual relationship.
As to Plaintiffs' FAL claim, Regus's only argument as to why Plaintiffs do not have standing is that the Court in a prior Order dismissed a similar claim alleged pursuant to the laws of New York State — specifically, N.Y. Gen. Bus. Law §§ 349-350.
Accordingly, Regus's motion to dismiss Plaintiffs' claims under the UCL and FAL for lack of standing is DENIED.
Regus argues that Circle Click's unjust enrichment claim fails because it is duplicative of its UCL and FAL claims and, even if it is not duplicative, it cannot survive as a standalone claim. As the Court already found in its January 3, 2013 Order: "[C]laims for restitution or unjust enrichment may survive the pleading stage when pled as an
Regus claims that Circle Click did not suffer any harm as a result of being charged allegedly unauthorized fees. As a result, Regus asserts that (1) Plaintiffs lack standing under Article III to bring any claims based on those fees, and (2) Plaintiffs lack standing to bring claims under the UCL and FAL pursuant to California Proposition 64 which requires named plaintiffs to show individualized harm.
To establish Article III standing, a plaintiff must show (1) a legally recognizable injury (i.e. "injury-in-fact"), (2) caused by the named defendant, (3) that is capable of legal or equitable redress."
Since the passage of Proposition 64 in November 2004, "only plaintiffs who have suffered actual damage may pursue a private UCL action. A private plaintiff must make a twofold showing: he or she must demonstrate injury in fact and a loss of money or property caused by unfair competition." Cal. Bus. & Prof. Code § 17204;
Plaintiffs have pleaded and provided evidence showing that they have suffered injury-in-fact as a result of the alleged UCL and FAL violations. For example, they note that Regus deducted certain amounts from Plaintiffs' retainers for unpaid fees, that Plaintiffs in fact paid the fees in question, and that Plaintiffs would not have entered into the OSA's with Regus if not for Regus's allegedly deceptive acts. ECF Nos. 295 ("MTD Opp'n") at 4; 296 ¶¶ 69, 87; 251 ¶ 41. Accordingly, the Court finds that Plaintiffs have demonstrated injury-in-fact sufficient to establish Article III standing.
For the same reasons, Plaintiffs have also demonstrated a loss of money or property caused by unfair competition. Contrary to Defendants' argument, therefore, Plaintiffs do not lack standing pursuant to California Proposition 64.
Thus, Defendants' motion to dismiss claims based on allegedly "unauthorized" fees is DENIED.
Finally, Regus argues that Plaintiffs lack standing to seek injunctive relief because they have not alleged a threat of future harm. Specifically, Defendants point to the fact that Plaintiffs have not alleged that they intend to rent office space from Regus in the future.
In
2011 U.S. Dist. LEXIS 41077, 2011 WL 1362188, at *19-20 (C.D. Cal. Apr. 11, 2011). For the same reasons, the Court finds Plaintiffs have met the requirements for standing and may seek injunctive relief in this action. Defendants' motion as to Plaintiffs' prayer for injunctive relief is therefore DENIED.
For the foregoing reasons, Defendants' Motion to Dismiss is DENIED.
The Court now turns to Regus's Motion for Summary Judgment on its counterclaim for breach of contract against CTNY.
Entry of summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "In order to carry its burden of production, the moving party must either produce evidence negating an essential element of the nonmoving party's claim or defense or show that the nonmoving party does not have enough evidence of an essential element to carry its ultimate burden of persuasion at trial."
Regus argues that the Court should enter summary judgment in its favor on its breach of contract counterclaim against CTNY because (1) a valid contract exists between Regus and CTNY, (2) Regus fully performed its obligations under the contract, and (3) CTNY breached its obligations under the contract by failing to pay all amounts due. Regus brings its counterclaim under New York law.
Plaintiffs make various arguments as to why Regus's motion ought to be denied. The Court focuses on one in particular. As an affirmative defense, CTNY asserts that it was fraudulently induced into signing the OSA. To establish fraud in the inducement, a plaintiff must demonstrate each of the following elements: (1) the defendant made a representation; (2) as to a material fact; (3) which was false; (4) and known to be false by the defendant; (5) for the purpose of inducing the other party to rely on it; (6) the other party rightfully relied on it; (7) in ignorance of its falsity; and (8) to his or her injury.
CTNY has presented evidence that Regus employees made oral representations during CTNY's walkthrough of the property that the monthly payment per the list price included all the required charges and constituted the total monthly payment. ECF No. 251 ("Fullerton Decl.") ¶ 15. Accordingly, there are genuine issues of material fact as to whether CTNY was fraudulently induced into signing the OSA — specifically, (1) whether those representations were false, (2) whether they were known to be false by Regus, (3) whether the representations were made by Regus for the purpose of inducing CTNY to enter into the OSA, and (4) whether CTNY rightfully relied on the foregoing representations.
Although there may be other issues of material fact, the Court need not address them. For the forgoing reasons, the Court DENIES Defendants' Motion for Summary Judgment.
Plaintiffs ask the Court to certify two proposed classes "consisting of a California class pursuing claims on all . . . causes of action and a New York class pursuing the unjust enrichment cause of action." Mot. for Cert. at 1. The California class is defined as:
Mot. for Cert. at 11. The New York class is defined as:
These classes, according to Plaintiffs, satisfy the prerequisites of Rule 23(a) and fulfill the requirements for class certification under Rule 23(b)(3).
All class actions must meet the four criteria set forth in Federal Rule of Civil Procedure 23(a). In addition, the class must meet one of the three categories of Rule 23(b).
Rule 23(a) provides four threshold criteria which must be met in order for a class to be certified: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a). These requirements are generally referred to as numerosity, commonality, typicality, and adequacy of representation.
Rule 23(b)(3) provides that a class action may be maintained if Rule 23(a) is satisfied and if: "(3) the court finds that questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3).
Plaintiffs have the burden of proving that the Rule 23 requirements have been met.
As a preliminary matter, the Court addresses the parties' evidentiary objections styled as a Motion for Sanctions and a Motion to Exclude Expert Reports filed by Regus and Plaintiffs, respectively.
On a motion for class certification, the court makes no findings of fact and announces no ultimate conclusions on Plaintiffs' claims. As a result, "the Federal Rules of Evidence take on a substantially reduced significance, as compared to a typical evidentiary hearing or trial."
Further, on a motion for class certification, the court may consider evidence that may not be admissible at trial.
Regus filed a Motion for Sanctions under Rule 37 to exclude from evidence eight declarations filed in support of Plaintiffs' Motion for Class Certification.
Declarants' testimony adds very little value to Plaintiffs' Motion for Class Certification. Cited testimony from these former Regus tenants includes that it was the declarants' understanding that they would be provided "with a fully furnished office," that they expected their contract to be "a simple one page document," and that they "were shocked by [Regus's] unfair charges and unfair business practices." Mot. for Sanc. at 4. None of these statements have any relevance to the key legal and factual issues being considered by the Court on Plaintiffs' Motion for Class Certification. Because the Court has not relied on any of the disputed testimony in making its decision, Regus's Motion for Sanctions is DENIED AS MOOT. The parties will pay their own costs associated with this Motion.
Plaintiffs filed a Motion to Exclude the Expert Reports of Mark Vogel and James Pampinella. Plaintiffs claim that Mr. Vogel's declaration should be excluded because it is "(1) irrelevant to the issues presented at the class certification stage; and (2) based on unsound methodologies and applied to unverified survey results and opinions. . . . Accordingly, Defendants cannot establish that the opinions of Mark Vogel are relevant and reliable as required by Rule 702." Mot. to Excl. at 1. Plaintiffs claim that Mr. Pampinella's declaration should be excluded because his opinions regarding whether the proposed class members are similarly situated "consist of legal conclusions relating to Plaintiffs' Motion for Class Certification (namely, commonality) and are based on an unreliable data sample."
Having reviewed the reports of Regus's experts, the Court finds that they meet the criteria for admissibility at this stage in the proceedings. To the extent Plaintiffs point to material that could be inadmissible at a trial, their objections are OVERRULED. Where an expert's opinion is being presented to a judge rather than a jury, the judge's gatekeeper role is "significantly diminished . . . because . . . there is no risk of tainting the trial by exposing a jury to unreliable evidence."
Accordingly, Plaintiffs' Motion to Exclude is DENIED.
Rule 23(a) requires numerosity, commonality, typicality, and adequacy of representation.
Federal Rule of Civil Procedure 23(a)(1) requires that the proposed classes be "so numerous that joinder of all members is impracticable." Generally, "classes of forty or more are considered sufficiently numerous."
Commonality requires that "there are questions of law or fact common to the class." Fed. R. Civ. P. 23(a)(2). The Supreme Court noted that this requirement is easy to misread, "since `[a]ny competently crafted class complaint literally raises common questions.'"
The Court need not address this issue. Rule 23(b)(3) includes a related, but additional, requirement that these common questions predominate over questions affecting only individual class members. "The commonality preconditions of Rule 23(a)(2) are less rigorous than the companion requirements of Rule 23(b)(3)."
Typicality requires that "the claims or defenses of the representative parties are typical of the claims or defenses of the class." Fed. R. Civ. P. 23(a)(3). The Ninth Circuit has interpreted the typicality requirement permissively. For example, although class representatives' claims must be "reasonably co-extensive with those of absent class members[,] they need not be substantially identical."
Plaintiffs argue that the claims of the named plaintiffs are typical of the class because, like the absent class members, named Plaintiffs entered into an OSA, were subject to mandatory fees without adequate notice, were misled by the representations on Regus's website, and suffered injury from Regus's allegedly unfair tax practices. The Court agrees with Plaintiffs as to most of its claims. As explained below, however, neither Circle Click nor CTNY are typical as to Plaintiffs' claim that the font size of the Terms and Conditions constitutes a fraudulent business practice.
As Regus points out, Plaintiffs are alleging that Regus was unjustly enriched, in part, because Plaintiffs "were deceived because they were unable to read the miniscule font used in Defendants' Terms and Conditions." Mot. for Cert. at 17, 22. However, Circle Click's principal admits to reading the Terms and Conditions after enlarging the font on her computer.
Per California's Proposition 64, named plaintiffs in a UCL action must demonstrate individualized reliance, deception, and injury.
This requirement ensures that plaintiff "will fairly and adequately protect the interests of the class." Fed. R. Civ. P. 23(a)(4). The Ninth Circuit applies a two-part test to determine the adequacy of class representation. First, the representative plaintiffs and their counsel must not have conflicts of interest with other class members. Second, the representative plaintiffs and their counsel must prosecute the action vigorously on behalf of the class.
Regus argues that CTNY is not an adequate representative because it is facing over $10,000 in potential liability from Regus's counterclaims. It is well established, however, that "counterclaims do not defeat class certification."
There is no indication that named plaintiffs or their counsel have any conflicts of interest or that they will not prosecute this action vigorously on behalf of the class as they have for about three years now. Further, one of the principal attorneys involved has extensive class action litigation and unfair business practices experience. Accordingly, the Court finds that named plaintiffs and their counsel will provide adequate representation.
Rule 23(b)(3) requires the Court to find that "questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods. . . ." Fed. R. Civ. P. 23(b)(3).
"The predominance test of Rule 23(b)(3) is `far more demanding' than the commonality test under Rule 23(a)(2)."
In their motion, Plaintiffs organize the common issues important in this case according to the categories of claims that survived the Court's April 22, 2013 Order on Regus's Motion to Dismiss for failure to state a claim.
In its April 22, 2013 Order, the Court found that Plaintiffs' allegations that Plaintiffs "were deceived because they were unable to read the miniscule font used in Defendants' Terms and Conditions. . . are sufficient to state a claim for fraudulent practices under the UCL." 4/22/13 MTD Order at 12-13.
To state a claim under the fraudulent prong of the UCL, Plaintiffs need to demonstrate that members of the public were likely to be deceived by the business practice at issue.
Plaintiffs argue that common questions of law and fact predominate with respect to this claim because "[a]ll class members received the tiny type Terms and Conditions in which the complained of fees are either mentioned for the first time in the contract documents (ORS and BCS) or omitted entirely (KAF)." Mot. for Cert. at 17.
Regus argues that common questions do not predominate because many of the proposed class members had no trouble viewing the Terms and Conditions, did not even attempt to view the Terms and Conditions (for example, because they did not download them when completing an online version of the OSA), or were able to enhance the size of the font if viewing the Terms and Conditions from their computer. Further, Regus has presented evidence that some of the OSA's disclosed the mandatory fees at issue in the comments section of the OSA itself, making the font size of the Terms and Conditions irrelevant.
Regus's argument that common questions do not predominate because at least some class members read the Terms and Conditions is unavailing because whether printing the Terms and Conditions in small font is
Regus's second argument — that the font size of the Terms and Conditions could not have been a fraudulent business practice with regard to OSA's that disclosed the mandatory fees in the comments section of the OSA — is more promising. Plaintiffs claim that the small font size of the Terms and Conditions was fraudulent because the Terms and Conditions disclosed mandatory fees or referred customers to other documents which disclosed mandatory fees. Insofar as the mandatory fees were disclosed on the face of the OSA itself, however, the font size of the Terms and Conditions is irrelevant to whether class members were deceived. Plaintiffs' proposed class definitions are therefore overbroad insofar as they encompass OSA's that disclosed mandatory fees in the comments section of the OSA itself. For that reason, common questions of fact and law do not predominate as to this claim.
In its April 22, 2013 Order, the Court found that Plaintiffs' allegations that Defendants failed to adequately disclose certain fees without justification states a claim for violation of the unfairness prong of the UCL. 4/22/13 MTD Order at 14.
"The test of whether a business practice is unfair involves an examination of [that practice's] impact on its alleged victim, balanced against the reasons, justifications and motives of the alleged wrongdoer."
Plaintiffs argue that common questions of fact and law predominate on this issue because "[w]hatever justification Regus had [if any] for its practice of hiding fees in the . . . Terms and Conditions . . . would apply equally to all class members." Mot. for Cert. at 19.
Regus counters that common questions do not predominate because some of the OSA's signed by potential class members — albeit a minority — disclosed one or more of the mandatory fees in the comments section of the OSA. The Court agrees with Regus for the same reasons provided in the Court's discussion in the previous section: Plaintiffs' class definitions are overbroad because they encompass potential class members whose OSA disclosed the mandatory fees in the comments section of the OSA itself. Accordingly, the Court finds that common issues of law and fact do not predominate as to this claim.
In its April 22, 2013 Order, the Court found that Plaintiffs' allegations that Regus failed to comply with the requirements set forth in CPUC section 2890 for the contents of telephone bills states a claim for violation of the unlawful prong of the UCL. 4/22/13 MTD Order at 14-15.
Plaintiffs argue that common questions of law and fact predominate as to this claim because whether Regus's standard invoicing system complied with the CPUC is a matter of law that would apply equally to all class members.
As Plaintiffs acknowledge, however, "not all class members purchased phone service and so not all of them were damaged by the claimed practice." Mot. for Cert. at 20. As a result, the Court finds that Plaintiffs' proposed classes are overbroad as to this claim insofar as they encompass potential class members who were not exposed to the allegedly unlawful telephone bills.
In its April 22, 2013 Order, the Court found that the representations allegedly made on Regus's website "that their Office Agreements are one page, their offices are fully equipped, and their bills are all inclusive" may be false and misleading in violation of Cal. Bus. & Prof. Code section 17500. 4/22/13 MTD Order at 20-21. The Court further found that Regus would have violated Cal. Bus. and Prof. Code section 17509 if it "advertised office space [on its website] while failing to disclose that renters would also be required to purchase kitchen amenities, office restoration, and business continuity service in connection with that office space."
In the context of false or misleading advertisement claims, a class definition will be considered overbroad insofar as it is not "defined in such a way as to include only members who were exposed to [the allegedly deceptive] advertising. . . ."
Plaintiffs argue that common questions of fact and law predominate on this claim because "Plaintiffs evidence regarding the Regus web site is inherently applicable to the whole class." Mot. for Cert. at 21. Regus counters that the proposed class is hopelessly overbroad because it includes individuals who never saw Regus's website. The Court agrees with Regus.
Plaintiffs point out that where a named plaintiff alleges exposure to a long-term advertising campaign,
Here, Plaintiffs admit that many members of the proposed class did not see the alleged representations on Regus's website. Further, Regus has presented evidence that none of the alleged misrepresentations were on the website between December 2007 to March 2009 and from December 2010 to June 2014.
The final Rule 23(b)(3) requirement is that a class action is superior to other available methods for fairly and effectively adjudicating the controversy. Relevant to determining the superiority of the class action are: (a) the class members' interests in individually controlling the prosecution or defense of separate actions; (b) the extent and nature of any litigation concerning the controversy already begun by or against class members; (c) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (d) the likely difficulties in managing a class action. Fed. R. Civ. P. 23;
Here, the individual claims are expected to be less than $3,000 each and the expected recovery in an individual action would likely not be more than available through a class action. In addition, because of the small size of each claim compared to the costs of litigating the issues, having the matter handled in a single forum has distinct economies of scale. Further, it is desirable for all parties to have a single adjudication of the legal question so multiple suits would not be advantageous to either side.
At present, the Court is unaware of any other litigation concerning the issues raised by this case. No other cases, therefore, influence the Court's decision of whether a class action is the preferable method of handling the issues presented.
There are limited class management issues in this case. The amount each class member paid and for what fees, the identity and address of each class member, and most of the relevant evidence is in Regus's records. Thus, the large size of the class does not create significant management issues.
For the foregoing reasons, the Court concludes that a class action is superior to other available methods for fairly and effectively adjudicating this controversy.
For the reasons detailed in Part IV.C.2.a on predominance and Part IV.C.1.c on typicality, the Court cannot certify Plaintiffs' proposed classes as currently defined. As a result, Plaintiffs' Motion for Class Certification is DENIED WITHOUT PREJUDICE. Plaintiffs may, if they choose, file a revised motion for class certification within thirty (30) days of this order. The revised motion and class definitions cannot be overbroad, and the claims of the named Plaintiffs must be typical of the class as a whole.
Regus has moved the Court for an order requiring out-of-state Plaintiff CTNY to furnish a written undertaking in the amount of $76,825 to secure an award of costs. This amount was calculated by doubling the taxable costs Regus has incurred to date in defending this lawsuit, which Regus claims is "a reasonable estimate of the total amount of costs Regus will incur should this case proceed to trial." Mot. for Sec. at 3.
The Ninth Circuit has addressed the framework for the relief sought herein:
Here, the Court is guided by California Code of Civil Procedure section 1030. Section 1030 provides,
"The purpose of the statute is to enable a California resident sued by an out-of-state resident to secure costs in light of the difficulty of enforcing a judgment for costs against a person who is not within the court's jurisdiction and to prevent out-of-state residents from filing frivolous lawsuits against California residents."
A defendant seeking to require a plaintiff to file a bond must establish a "reasonable possibility that the moving defendant will obtain judgment in the action or special proceeding." Cal. Code of Civ. Proc. § 1030(b). The "reasonable possibility" standard is relatively low.
As the Ninth Circuit has noted, "`[w]hile it is neither unjust nor unreasonable to expect a suitor to put his money where his mouth is, toll-booths cannot be placed across the courthouse doors in a haphazard fashion.'"
First, as detailed in Part II, the Court rejects Regus's argument that Plaintiffs lack standing to assert their claims. Second, to the extent that the parties dispute whether Regus adequately disclosed the mandatory fees at issue, Regus has shown a possibility of success on the merits. However, "this possibility appears no greater on this record than any other case where the parties' proffered facts are mutually disputed."
Finally, while not expressly articulated in section 1030, the Court finds significant the fact that Regus has not demonstrated that there is a risk that it would be unable to recover costs from Plaintiff CTNY in the event it prevails in this action.
Accordingly, Defendants Motion for Security Costs is DENIED.
For the forging reasons, the Court finds as follows:
