DENISE COTE, District Judge.
On February 13, 2015, Mary Simmons ("Simmons"), Jodi Foster ("Foster"), and members of the putative class (collectively, "plaintiffs") filed a motion for class certification. The motion was fully submitted on May 14, when defendant Author Solutions, LLC ("AS"), with the Court's permission, filed a surreply. For the following reasons, the motion is denied.
The background of this action is described in an Opinion ruling on a motion to dismiss.
AS is a "supported self-publishing" company that sells services to authors who desire to self-publish. AS offers a variety of services, which can be separated into three primary categories: publishing, editorial, and marketing. These services are sold to authors by AS's salesforce, made up of Publishing Consultants, Editorial Consultants, and Marketing Consultants.
Many of the imprints are designed to appeal to authors with different motivations. Some authors choose to publish with AS because they could not secure a traditional publishing deal; others want a book to give to family members. Some hope to get picked up by a traditional publisher or even aspire to become the next best-selling author, while others simply want to see their names in print on their bookshelves.
AS markets its services to authors primarily online through its various imprints' websites. Authors initiate contact with AS, typically by completing a form on an imprint's website, thus becoming a "lead" for that imprint. Publishing Consultants first contact authors after they have become a lead for the imprint. Editorial Consultants and Marketing Consultants contact the authors at later stages of the publishing process. AS's salesforce often makes contact by telephone, and sales of AS services are made almost exclusively by telephone, typically after multiple calls. The consultants are trained to engage authors in dialogue to discern their individual publishing goals and needs. Because these goals and needs vary by author, no sales script is used during sales calls. If these sales calls result in a sale, the author and AS enter into a contractual agreement. The services that AS offers and the service agreements through which they are delivered vary across the AS imprints, as do the websites and representations used to advertise those services.
One of the imprints that AS owns, and the only imprint at issue here, is iUniverse.
iUniverse offers three recognition programs — Editor's Choice, Rising Star, and Star — the first two of which are unique to iUniverse and provide part of the incentive for authors to publish with iUniverse. Earning the Editor's Choice designation is a prerequisite to earning the Rising Star designation, which is geared toward rewarding and recognizing books with high marketing potential.
Plaintiffs' application for certification of a class currently rests on three representations on AS's websites about its marketing programs.
Similarly, iUniverse's marketing and publicity services webpage states:
Finally, another iUniverse webpage proclaims:
In addition to these three statements on which plaintiffs principally rely, AS made several other statements related to its marketing program. AS made disclaimers that it did not guarantee book sales, and reinforced the message that marketing has much to do with the author's own efforts. For instance, iUniverse's online marketing tips webpage states that "the most crucial piece to your book's online marketing plan is you." Following that observation, the online marketing tips webpage advertises that "[i]f you need a little help . . . then iUniverse can make it happen. Contact your marketing consultant today on [telephone number]."
Moving from the general to the specific, according to the website of the Bookstore Premier Pro package, purchased by both of the named plaintiffs, it offers services that are
The webpage for iUniverse's recognition programs invites authors to "[a]mp up your opportunity for retail success," explaining that the recognition programs "open the door to more opportunities for retail presentation and placement." And the Rising Star webpage touts that the designation "provides authors with enhanced opportunities for exposure on local, regional and national levels." The webpage goes on to explain that Rising Star books "are presented to major retailers, such as Barnes & Noble, Books-A-Million and Borders." The Rising Star program simply entails AS shipping books and a sell-sheet to Barnes & Noble's press department.
According to the deposition testimony of the Global Director of Author Marketing Services at AS, book sales is "not one of the goals of [AS's] marketing services." In fact, she said, "[I]t would be unrealistic for us to think that we could market our author's books. Assisted self-publishing is marketing — assisted marketing." AS employs no salesperson to sell authors' books to the general public through the retail channel. The salespeople it does employ are not required to have marketing or publishing experience, and they focus their efforts on selling AS products to authors.
Foster purchased a Bookstore Premier Pro package in March 2010. The package included various services and made her eligible for Editor's Choice and Rising Star. Foster received the Rising Star designation. She asserts that she later purchased marketing services because she was told that if she did not, she would lose her Rising Star designation.
Simmons purchased a Bookstore Premier Pro package in May 2011. On or around December 13, 2012, Simmons also purchased marketing services.
On April 24, 2013, Kelvin James ("James"), Terry Hardy ("Hardy"), and Foster filed, on behalf of themselves and all others similarly situated, a complaint naming as defendants Penguin Group (USA) Inc. ("Penguin"), which is AS's parent corporation, and AS. In response to a motion to dismiss, on July 19 the plaintiffs filed an amended complaint. The defendants again moved to dismiss. In a September 5 Order, the plaintiffs were given one final opportunity to amend their pleadings.
On September 27, the plaintiffs filed a second amended complaint ("SAC") that removed Hardy as a class representative and added Simmons as a new class representative. The SAC, which is the operative complaint in this action, included eight claims. The first alleged breach of contract for failure to pay royalties at the promised rate. The second alleged unjust enrichment for retention of royalties and for receipt of money without providing promised services. The third, fourth, fifth, and sixth claims alleged consumer fraud and false advertising under California's Unfair Competition Law ("UCL") and Fair Advertising Law ("FAL"). Cal. Bus. & Prof. Code §§ 17200, 17500. The seventh claim alleged consumer deception under New York law. N.Y. Gen. Bus. L. § 349. And the eighth claim alleged fraudulent omissions under the Colorado Consumer Protection Act ("CCPA"). Colo. Rev. Stat. § 6-1-105(1)(u).
The defendants moved to dismiss the SAC, and, on April 11, 2014, the motion was granted in part: Penguin was dismissed as a defendant from the action and the unjust enrichment claim against AS based on unpaid royalties was also dismissed.
Plaintiffs move to certify a class to bring claims for alleged misrepresentations by AS about the marketing services offered by iUniverse. In their reply brief they appear to define the class as all persons who, during the period September 1, 2007 through the present, purchased marketing services from iUniverse in conjunction with their written work(s), including through the purchase of a Premier, Premier Pro, Bookstore Premier Pro, or Book Launch Premier package.
Plaintiffs seek to certify two subclasses, one for California residents with a class period running from April 24, 2009, and one for Colorado residents with a class period from September 27, 2010.
As discussed in more detail below, a substantial portion of plaintiffs' motion can be denied without resort to the strictures of Fed. R. Civ. P. 23. Plaintiffs do not seek to certify their breach of contract claim, and, as discussed below, the unjust enrichment claim cannot be certified, because it is precluded by the existence of an agreement. Additionally, the CCPA claim cannot be certified as requested here, because the statute does not permit money damages claims in class actions. Because the Colorado subclass would bring only the unjust enrichment claim and the CCPA claim, neither of which can be certified, and because plaintiffs have no further opportunity to amend, a Colorado subclass may not be certified.
All that remains for Rule 23 analysis, then, is the California subclass.
One of the claims on which plaintiffs seek certification is their claim that AS was unjustly enriched by retaining payments for marketing services that were not provided. Plaintiffs have limited the putative class to only those authors with iUniverse contracts, which, by their terms, are governed by Indiana law.
Under Indiana law, "[w]hen the rights of parties are controlled by an express contract, recovery cannot be based on a theory implied in law," such as unjust enrichment.
Here, the iUniverse contracts provide that "[i]n the event AUTHOR purchases additional services . . . than those described in this Agreement, the Terms and Conditions available on the iUniverse website at [web address] will take precedence." In other words, any marketing services that plaintiffs claim were not fulfilled properly would have been covered by an iUniverse contract, either standing alone or in conjunction with the terms and conditions on the iUniverse website. In the face of such contractual terms and conditions, plaintiffs' unjust enrichment claim cannot be certified.
As relief for the alleged CCPA violation, plaintiffs seek monetary damages. But the CCPA does not permit monetary damages in class actions. Pursuant to the CCPA:
Colo. Rev. Stat. § 6-1-113(2)(a) (emphasis added). The Colorado Supreme Court has not spoken on the issue, but, as noted by a federal district court in Colorado in
Against this conclusion, plaintiffs cite a number of unhelpful cases. They rely most heavily on
Plaintiffs cite
Moreover,
Second,
It remains to be analyzed whether the California subclass can be certified. The California subclass would assert both FAL and UCL claims. Foster would be the class representative.
Plaintiffs assert that AS violated California law by fraudulently holding itself out — principally through the three postings on its websites described above — as a publisher capable of and invested in helping authors sell their books, when its business was actually designed to make money for AS instead of selling authors' books. Plaintiffs assert that class members would not have purchased AS services but for its website descriptions of its marketing programs and identify the following question as common to all class members: Did AS engage in a fraudulent scheme to sell worthless marketing services? Plaintiffs seek a refund of all payments for marketing services made by each class member to AS.
A party seeking certification of a class must "affirmatively demonstrate" compliance with each of the requirements of Rule 23,
Fed. R. Civ. P. 23(a).
If the above Rule 23(a) criteria are satisfied, an action may be maintained as a class action only if it also qualifies under at least one of the categories provided in Rule 23(b). Fed. R. Civ. P. 23(b);
Fed. R. Civ. P. 23(b);
"To certify a class, a district court must make a definitive assessment of Rule 23 requirements, notwithstanding their overlap with merits issues, must resolve material factual disputes relevant to each Rule 23 requirement, and must find that each requirement is established by at least a preponderance of the evidence."
The Rule 23 analysis described above requires an understanding of the elements of the claims that would be certified in the California subclass. "California's Unfair Competition Law (UCL) bans `unlawful, unfair or fraudulent business act[s] or practice[s] and unfair, deceptive, untrue or misleading advertising.'"
The FAL provides in relevant part:
Cal. Bus. & Prof. Code § 17500. "Whether an advertisement is `misleading' must be judged by the effect it would have on a reasonable consumer. A reasonable consumer is the ordinary consumer acting reasonably under the circumstances. To prevail under this standard, [plaintiffs] must show that members of the public are likely to be deceived by the advertisement."
As the Ninth Circuit has explained:
Even assuming that all of the Rule 23(a) requirements are satisfied and that Rule 23(b)'s superiority condition is met, the California subclass cannot be certified, because predominance is lacking under Rule 23(b). Predominance is established where "the legal or factual questions that qualify each class member's case as a genuine controversy can be achieved through generalized proof and . . . these particular issues are more substantial than the issues subject only to individualized proof."
Here, the question whether AS's representations are likely to deceive a reasonable consumer is not subject to generalized proof. Following the above-reproduced passage from
Plaintiffs offer no evidence that members of the California subclass, other than Foster, were exposed to the representations about which they complain. As such, class-wide exposure cannot be presumed.
A lack of evidence of exposure is not the only reason that predominance is lacking here. Even where there might be evidence of exposure, the subject of that exposure is nebulous at best: The representations about which plaintiffs complain (the most damning of which are quoted above) are by any measure soft. AS's statements about its marketing services straddle the line between representation and puffery, making it all the more difficult to conclude that generalized proof could demonstrate that these statements would likely deceive a member of the public.
The interactions between AS and authors came through a combination of internet information, conversations (often by telephone) with salespeople, and written agreements. Plaintiffs allege no misrepresentations in the contract terms themselves, and, due to the lack of a sales calls script, do not base their theory of class-wide liability on individual conversations either; plaintiffs are left with only the website representations. Those representations, however, hardly drive the conclusion that a uniform scheme to defraud victimized the class. It would be easier to find predominance if, say, plaintiffs offered evidence that everyone with an iUniverse Bookstore Premier Pro publishing package was victim to misrepresentations in the contracts they all shared.
It is unsurprising, however, that plaintiffs do not take this tack. Tellingly, the relevant contracts are nearly silent on the issue of marketing services. Under her contract, Foster granted AS the right to market her work, but notably absent is any accompanying obligation by AS to do so. Similarly, the portion of the agreement devoted to Rising Star sets out the eligibility requirements that Foster had to meet, but imposes no specific marketing duties on AS.
Against the conclusion that predominance is lacking, plaintiffs rely on
The instant case, by contrast, does not provide the same "extensive and longterm fraudulent advertising campaign."
Plaintiffs also contend that AS uses its website as a "script" during conversations with customers and prospective customers, thus increasing the chances that class members were uniformly exposed to the relevant representations. Plaintiffs' only support for this contention, however, is vague deposition testimony from the Senior Vice President of Marketing at AS. At one point, the deponent testified that certain marketing services would first be posted on the website and then, "[d]epending on the imprint, depending on the event, we also might do a promotional e-mail from the marketing department." And later, he explained that when a salesperson is discussing a marketing service with a customer or potential customer, "[f]or some services, there are what we would call template e-mails that they are supposed to use. But in most cases, they are supposed to point people to the website." On its face, this testimony does not substantiate plaintiffs' claim that website representations about iUniverse's marketing services were repeated to a large number of class members as a "script." Plaintiffs cannot show the uniformity necessary to make out predominance here.
Aware of this substantial obstacle to class-wide relief, plaintiffs pivot and contend that their claims are not actually premised on each class member's reliance on a particular misrepresentation. Indeed, they contend that a class may be certified because every class member was subject to a common deceptive scheme. Plaintiffs rely on
471 F.3d 977, 992 (9th Cir. 2006). In
AS raises several other substantial defects in plaintiffs' application for certification of a class. Because those discussed above are fatal to plaintiffs' application, it is unnecessary to discuss the remaining arguments addressed in the parties' briefs.
Plaintiffs' February 13 motion for class certification is denied.
SO ORDERED:
On May 21, 2015, plaintiffs requested that the majority of AS's sur-reply be stricken, or alternatively that they be given leave to file a sur-sur-reply, contending that several sections of AS's sur-reply do not respond to the new arguments in plaintiffs' reply brief, which was the purpose for which the sur-reply was permitted. Plaintiffs' May 21 request is denied. AS's sur-reply was, in fact, directed to that which shifted between plaintiffs' opening and reply briefs.
