SUSAN ILLSTON, District Judge.
Currently before the Court is defendant's motion to dismiss. The matter
Plaintiffs allege that on or about October 21, 2009, defendant HSBC Bank USA ("HSBC"), circulated a full-page, double-sided print advertisement ("Ad") inserted into the San Francisco Chronicle which prominently features a photograph of the "street-facing side" of plaintiffs' house ("the Property"). First Amended Complaint ("FAC") ¶ 19. On the first page of the Ad, there is a photograph showing the second and third stories of two Victorian homes. FAC, Exhibit A. Tagged onto the photograph are the words "A Mortgage To Match Your Ambitions. Wherever The World Takes You." FAC ¶ 20 & Ex. A. On the back of the Ad, HSBC advertises its "Premier Mortgage," giving details of the offer and HSBC's contact information. FAC ¶ 20. The back contains more advertising copy that reads, "Around the block or halfway around the globe, a Premier mortgage opens up a world of possibilities. Your ambitions are not limited by your latitude. No matter where you chose to call home, you need a mortgage that lets you take advantage of all the world has to offer. When you're ready to settle down, consider an HSBC Premier Mortgage." FAC, Ex. A at 2. The Ad "identifies the precise longitudinal plane on which" plaintiffs' Property is situated. FAC ¶ 20. The back of the Ad contains another, smaller, cropped picture of the top floor and roof-line of three houses, including plaintiffs' Property. See FAC, Ex. A.
Plaintiffs' Property is a "picturesque `Victorian-style' home in the Haight neighborhood" where Plaintiffs have lived for over a decade. FAC ¶ 14. The building "has a distinctive bright yellow and green exterior, with two sets of ornate green molding above two levels of bay windows, yellow and green ionic columns dividing each window pane of the bay windows and a series of yellow doric columns creating the molding in between the two main levels of the subject property." Id. ¶ 15. Plaintiffs allege that the mortgage on the Property was paid off "long ago," and that Plaintiff Robinson owns the home outright, free and clear of any mortgages or liens. Id. ¶ 16. Plaintiffs assert that they are not and never have been customers of HSBC, HSBC did not contact Plaintiffs or get their permission before publication of the Ad, and plaintiffs do not endorse or approve of HSBC's products or services. Id. ¶¶ 17, 22-23, 27-28.
After the Ad was distributed, plaintiffs began to get inquiries from neighbors, local business owners, unknown realtors, as well as tenants who live in the Property, as to their financial condition and their willingness to sell the Property. Id. ¶ 24. Plaintiffs allege that HSBC's conduct is highly offensive as it falsely implies that Plaintiffs obtained a mortgage from HSBC, are customers of HSBC, and endorse/approve of HSBC's products, services or mortgages. Id. ¶ 26. Plaintiffs explain that HSBC's conduct is particularly offensive in the "current economic climate where thousands of individuals nationwide are losing value in their homes, in part due to precisely the type of loan advertised in the HSBC flyer (Adjustable Rate Mortgage loans), when in fact Plaintiff Robinson owns the Property free of encumbrances." Id. ¶ 29.
Plaintiffs filed this action on February 19, 2010 in San Francisco County Superior Court. Defendant removed the case to this Court on April 8, 2010, on the basis of diversity jurisdiction. Plaintiffs subsequently filed a First Amended Complaint on May 17, 2010 alleging the following causes of action against HSBC: (1) violation
Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This "facial plausibility" standard requires the plaintiff to allege facts that add up to "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). While courts do not require "heightened fact pleading of specifics," a plaintiff must allege facts sufficient to "raise a right to relief above the speculative level." Twombly, 550 U.S. at 544, 555, 127 S.Ct. 1955.
In deciding whether the plaintiff has stated a claim upon which relief can be granted, the Court must assume that the plaintiff's allegations are true and must draw all reasonable inferences in the plaintiff's favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir.1987). However, the court is not required to accept as true "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir.2008).
If the Court dismisses the complaint, it must then decide whether to grant leave to amend. The Ninth Circuit has "repeatedly held that a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir.2000) (citations and internal quotation marks omitted).
Defendant first argues that plaintiffs fail to state a claim as a matter of law because each of plaintiffs' claims is preempted by the Copyright Act. According to HSBC, plaintiffs are seeking to enforce a property interest in depictions of their house and any state or common law claims regarding the depiction of their house are encompassed within the scope of the Copyright Act and preempted. Generally, "[a] state law cause of action is preempted by the Copyright Act if two elements are present. First, the rights that a plaintiff asserts under state law must be `rights that are equivalent' to those protected by the Copyright Act. . . . Second, the work involved must fall within the `subject matter' of the Copyright Act as set forth in 17 U.S.C. §§ 102 and 103." Kodadek v. MTV Networks, 152 F.3d 1209, 1212 (9th Cir.1998) (internal citations omitted).
To support its argument, HSBC relies on two cases, Leicester v. Warner Bros., 232 F.3d 1212, 1216 (9th Cir.2000) and Landrau v. Betancourt, 554 F.Supp.2d 102
In Leicester v. Warner Bros., 232 F.3d 1212, 1216 (9th Cir.2000), the Ninth Circuit explained that in passing the Architectural Works Copyright Protection Act of 1990 (AWCPA), Congress extended copyright protection for the first time to the actual structures built from architectural plans. Id. at 1216-17 (noting that prior to AWCPA, buildings had been considered to be "useful articles" not protected by the Copyright Act). However, as the Ninth Circuit also noted, in passing the AWCPA Congress specifically exempted from copyright infringement photographs of buildings taken from a public place. Id. at 1217.
Here, plaintiffs could not assert a copyright infringement claim with respect to photographs of their Property taken from a public place. Accordingly, the interests they seek to protect do not fall within the subject matter of the Copyright Act, defeating the first prong of the copyright preemption test set out in Kodadek. Nor can defendant meet the second prong of Kodadek, since the rights that plaintiffs assert under state law are not "rights that are equivalent" to those protected by the Copyright Act.
In undertaking the equivalency analysis, courts have held that statutory and common law misappropriation of likeness claims are not preempted by the Copyright Act. See, e.g., Downing v. Abercrombie & Fitch, 265 F.3d 994, 1004 (9th Cir.2001) ("The subject matter of Appellants' statutory and common law right of publicity claims is their names and likenesses. . . . A person's name or likeness is not a work of authorship within the meaning of 17 U.S.C. § 102. This is true not-withstanding the fact that Appellants' names and likenesses are embodied in a copyrightable photograph."); see also Waits v. Frito-Lay, Inc., 978 F.2d 1093, 1100 (9th Cir.1992) (misappropriation claim was not preempted by Copyright Act because claim was "for infringement of voice, not for infringement of a copyrightable subject such as sound recording or musical composition," and elements of misappropriation of the likeness of a person's voice were "different in kind" from those in a copyright infringement case challenging the unauthorized use of a song or recording); KNB Enters. v. Matthews, 78 Cal.App.4th 362, 374, 92 Cal.Rptr.2d 713 (Cal. App.2d Dist.2000) ("a section 3344 claim is preempted [] where an actor or model with no copyright interest in the work seeks to prevent the exclusive copyright holder from displaying the copyrighted work. We do not believe a section 3344 claim is preempted [] where, as here, the
HSBC has not demonstrated that plaintiffs' claims fall within the subject matter of the Copyright Act or that the rights being asserted are equivalent to those protected by the Copyright Act. The Court therefore rejects defendant's argument that plaintiffs' claims are preempted and must be dismissed on that account.
In order to sustain a common law cause of action for commercial misappropriation, a plaintiff must prove: (1) the defendant's use of the plaintiff's identity; (2) the appropriation of plaintiff's name or likeness to defendant's advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury. See Downing v. Abercrombie & Fitch, 265 F.3d 994, 1001 (9th Cir.2001). To prove the statutory cause of action under Civil Code section 3344, a plaintiff must also prove a knowing use by the defendant, as well as a direct connection between the alleged use and the commercial purpose. Id.
Section 3344 authorizes a cause of action for misappropriation where anyone "uses another's name, voice, signature, photograph, or likeness, in any manner, on or in products, merchandise, or goods, or for purposes of advertising or selling, or soliciting purchases of, products, merchandise, goods or services, without such person's prior consent." HSBC argues that plaintiffs cannot state a claim for misappropriation where a picture of plaintiffs' Property was used in the Ad because section 3344 is strictly construed to require the use of a person's name, voice, signature, photograph or likeness. Defendant notes that the Ninth Circuit in Midler v. Ford Motor Co., 849 F.2d 460 (9th Cir. 1988), rejected Bette Midler's claim for misappropriation under section 3344 where Ford used a Midler "sound alike" in a car commercial because the statute only protects against the use of a person's name, voice, signature, photograph or likeness, none of which were used in the commercial. Id. at 463.
Plaintiffs' Opposition brief does not respond to HSBC's argument under section 3344. The Court finds that as the Ad did not use plaintiffs' names, voices, signatures, photographs or likenesses—only the likeness of plaintiffs' Property—their claim falls outside the protection of section 3344.
Defendant also contends that plaintiffs fail to state a common law cause of action for misappropriation of likeness because the Ad fails to identify plaintiffs or appropriate their likenesses. Plaintiffs respond that their claim is based not only on the allegation that the Property is a unique building with distinctive molding and fixtures, but also that plaintiffs are easily identifiable by the notoriety of the Property. To support their argument that a misappropriation of likeness claim can be based upon the appropriation of the likeness of a piece of property, which in turn identifies someone, plaintiffs rely solely on Motschenbacher v. R.J. Reynolds Tobacco Co., 498 F.2d 821 (9th Cir.1974). In Motschenbacher, the plaintiff was a famous race car driver whose race cars had various unique characteristics including: a narrow white pinstripe that appeared on no other race car and which adorned the leading edges of his cars' bodies, which had uniformly been solid red; and an oval-shaped white background for his racing number, in contrast to the circular backgrounds of all other cars. Id. at 822. The
In Motschenbacher, the Ninth Circuit found that the district court's conclusion of law "to the effect that the driver is not identifiable as plaintiff is erroneous in that it wholly fails to attribute proper significance to the distinctive decorations appearing on the car," and remanded the case for further proceedings. Id. at 827. In Midler v. Ford Motor Co., 849 F.2d at 463, the Ninth Circuit explained the Motschenbacher holding as follows: "California will recognize an injury from `an appropriation of the attributes of one's identity.' . . . It was irrelevant that Motschenbacher could not be identified in the ad. The ad suggested that it was he. The ad did so by emphasizing signs or symbols associated with him." Id.
Similarly, the Ninth Circuit in Midler— after rejecting Midler's section 3344 misappropriation claim—held that a common law claim was alleged since "when a distinctive voice of a professional singer is widely known and is deliberately imitated in order to sell a product, the sellers have appropriated what is not theirs and have committed a tort in California. Midler has made a showing, sufficient to defeat summary judgment, that the defendants here for their own profit in selling their product did appropriate part of her identity." Id. at 463.
The allegations at issue here simply do not rise to the level of those in Motschenbacher or Midler. In each of those cases, the courts found that by the use of the immediately recognizable car or the use of the immediately recognizable (although impersonating) voice, Motschenbacher and Midler's identities may have been appropriated. Plaintiffs' allegation that their house is so recognizable that after the Ad ran they received inquiries from friends and strangers regarding their financial solvency and intentions with respect to the house because they were known as the owners of the home by neighbors and realtors, does not mean that plaintiffs' identities were appropriated by HSBC. Motschenbacher, 498 F.2d at 825 (common law claim affords legal protection to an "individual's proprietary interest in his own identity."). Plaintiffs do not cite any cases that support their argument that the Property—which was not constructed or designed by plaintiffs—is part of their identity.
For the foregoing reasons, plaintiffs' common law claim for misappropriation fails as a matter of law and is DISMISSED without leave to amend.
Trade libel is an intentional disparagement of the quality of property
In order to determine whether a statement is protected opinion or a false statement of fact, "[t]he court must put itself in the place of an `average reader' and decide the `natural and probable effect' of the statement." Hofmann, 202 Cal.App.3d at 398, 248 Cal.Rptr. 384 (internal quotations removed). "In addition to the language, the context of a statement must be examined. . . . The court must `look at the nature and full content of the communication and to the knowledge and understanding of the audience to whom the publication was directed.'" Id. (quoting Baker v. Los Angeles Herald Examiner, 42 Cal.3d 254, 260, 228 Cal.Rptr. 206, 721 P.2d 87 (1986)). "Whether a statement declares or implies a provably false assertion of fact is a question of law for the court to decide, unless the statement is susceptible of both an innocent and a libelous meaning, in which case the jury must decide how the statement was understood." Franklin v. Dynamic Details, Inc., 116 Cal.App.4th 375, 385, 10 Cal.Rptr.3d 429 (2004).
HSBC argues that plaintiffs' claim must be dismissed for two reasons: failure to allege falsity and failure to allege pecuniary damages. With respect to the first argument, HSBC contends that as there was no direct statement about plaintiffs' Property or financial situation whatsoever, plaintiffs cannot prove a false statement was made which disparaged the Property. Plaintiffs respond that the Ad was "a malicious implication" that plaintiffs are financially insolvent or "are in need of a mortgage because their ambitions are disproportionate to their assets." Oppo. at 6. Falsity, they argue, is satisfied by pleading that HSBC knew, or should have known, that "Plaintiffs do not hold or need an HSBC mortgage on the [] Property and that they have never done business with HSBC." Id.
Plaintiffs fail to cite any cases in support of their argument that, on the facts presented here, the Ad creates a false and disparaging "implication" of fact.
With respect to damages, plaintiffs argue that the FAC adequately alleges "special damages," as defined in California Civil Code section 48a, because plaintiffs had to procure legal representation and file this lawsuit to protect their rights. Oppo. at 6. Plaintiffs' FAC, however, is devoid of any allegation that they suffered any pecuniary or special damages. The FAC alleges only that plaintiffs suffered contempt, ridicule and pity in their community, since the Ad caused members of the community to inquire about and doubt plaintiffs' financial solvency. FAC ¶ 57. That is insufficient as a matter of law.
While plaintiffs may be able to amend with respect to their failure to plead damages, they cannot plead around the Court's conclusion that the Ad was not false or disparaging as a matter of law. Therefore,
Defendant cites persuasive authority holding that California does not recognize a stand-alone cause of action for unjust enrichment. See, e.g., Durell v. Sharp Healthcare, 183 Cal.App.4th 1350, 108 Cal.Rptr.3d 682 (2010) (finding no separate cause of action for unjust enrichment, which is synonymous with restitution); McBride v. Boughton, 123 Cal.App.4th 379, 387, 20 Cal.Rptr.3d 115 (2004) ("Unjust enrichment is not a cause of action, however, or even a remedy, but rather `a general principle, underlying various legal doctrines and remedies.'" (internal quotations omitted)). Plaintiffs, in response, cite three cases which note in passing that unjust enrichment "claims" or "theories" were pled. See, e.g., 21st Century Ins. Co. v. Superior Court, 47 Cal.4th 511, 98 Cal.Rptr.3d 516, 213 P.3d 972 (2009); Snowney v. Harrah's Entertainment, Inc., 35 Cal.4th 1054, 29 Cal.Rptr.3d 33, 112 P.3d 28 (2005); Huskinson & Brown v. Wolf, 32 Cal.4th 453, 9 Cal.Rptr.3d 693, 84 P.3d 379 (2004). Those cases, however, do not explain whether the unjust enrichment claims and theories were based on other causes of action, and in no way support their argument that unjust enrichment exists as a stand-alone cause of action.
Plaintiffs argue that they should be given leave to amend to allege a claim for "restitution" in lieu of their unjust enrichment claim. Oppo. at 7. However, plaintiffs fail to explain how "restitution" is a cause of action, as opposed to a form of relief that attaches to a cause of action. See, e.g., McBride, 123 Cal.App.4th at 388, 20 Cal.Rptr.3d 115 ("we construe [plaintiff's] purported cause of action for unjust enrichment as an attempt to plead a cause of action giving rise to a right to restitution."). There is no cause of action for restitution, but there are various causes of action that give rise to restitution as a remedy. See id. at 388-89, 20 Cal.Rptr.3d 115.
In light of HSBC's authorities, which address the issue directly and hold that there is no cause of action for "unjust enrichment," the Court DISMISSES plaintiffs' third cause of action for unjust enrichment with prejudice.
The CLRA provides protection to a specific category of consumers from damages suffered in connection with a consumer transaction.
Plaintiffs' own pleading demonstrates that plaintiffs are not and never have been customers of HSBC. FAC ¶ 17. In Opposition, plaintiffs do not argue that they ever sought to enter an transaction with HSBC, much less that they were then damaged as a result of that interaction. As such, plaintiffs cannot state a claim for violation of the CLRA and the Court DISMISSES the claim with prejudice.
As relevant to this action, the FAL prohibits "any person" with the intent to perform services or to induce the public to enter into any obligation, "to make or disseminate" any statement concerning those services "which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading." Cal. Bus. & Prof.Code § 17500.
As such, the Court DISMISSES plaintiffs' FAL claim with prejudice.
California's UCL "is written in the disjunctive, it establishes three varieties of unfair competition—acts or practices that are unlawful, or unfair, or fraudulent." Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163, 180, 83 Cal.Rptr.2d 548, 973 P.2d 527 (1999). The dismissal of plaintiffs' other causes of action with prejudice means that plaintiffs cannot claim that HSBC's actions were unlawful under the UCL. The finding that HSBC's Ad was not false or misleading means that plaintiffs cannot allege that the Ad was fraudulent under the UCL. Plaintiffs, therefore, are left with the allegation that HSBC's Ad was an unfair act of competition.
Defendant argues that plaintiffs' UCL claim must be dismissed because plaintiffs have not and cannot allege that they "lost money or property" as a result of HSBC's conduct. As the California
Plaintiffs' FAC is devoid of any factual allegations that they "lost money or property" as a result of HSBC's conduct. In their Opposition brief, plaintiffs argue only that they have spent time and money "vindicating the rights violated as a result of HSBC's unlawful publication." Oppo. at 7. That argument, however, is insufficient. Plaintiffs cannot establish standing to pursue a UCL claim based on expenses incurred in order to bring their UCL claim. If they could, the requirement that individuals show they lost money or property "as a result" of the challenged practice in order to have standing to sue under the UCL would be meaningless. Cf. Rubio v. Capital One Bank, 613 F.3d 1195 (9th Cir.2010) (noting that loss of credit or payment of extra money is sufficient to establish standing under the UCL). During oral argument, the Court asked plaintiffs' counsel exactly what "damage" plaintiffs had suffered. Counsel responded that they had suffered ridicule and questions about their solvency. That is not lost "money or property" sufficient to confer standing under the UCL.
The Court finds that plaintiffs have not and cannot allege lost "money or property" and thus have no standing. In addition, although it is not necessary to this decision, the Court has serious doubts that the challenged practice is "unfair," within the meaning of the UCL. As the Ninth Circuit recently recognized, the California appellate courts disagree on the test for an "unfair" consumer practice. Rubio, 613 F.3d at 1204-05. Under the balancing test, plaintiffs must show "that the harm to the consumer" from a defendant's practice outweighs the practice's utility. Id. The alternative test requires a plaintiff to show that a practice violates public policy as declared by "specific constitutional, statutory or regulatory provisions." See id.
Since plaintiffs cannot plead standing under the UCL, the Court DISMISSES the claim with prejudice.
For the foregoing reasons and for good cause shown, the Court hereby DISMISSES plaintiffs' First Amended Complaint with prejudice.