IN RE EASYSAVER REWARDS LITIGATION

nd savings. Id. ¶ 70. The Complaint also alleges the terms are unconscionable and unenforceable. Id. ¶ 71.

EMI argues that, by her own admission, Hunt entered her email address and clicked the acceptance button; therefore, Hunt accepted the terms in the Offer Details which informed her that her credit card or PayPal information would be transferred and used to secure the $1.95 activation fee and subsequent monthly membership fee. Id. ¶ 19 (quoting Offer Details on EasySaver Rewards sign up screen); id. ¶ 28 (Hunt entered her email address and zip code and clicked the green acceptance button). EMI argues the Court can disregard Hunt's conclusory allegation that she did not know she was signing up for the program because it is flatly contradicted by the express terms of the offer, which are displayed on the same webpage. EMI's Mot. Br. at 8.

This argument ignores that Plaintiff Hunt pleads the contract claim in the alternative to her claim that she did not knowingly enter into a contract with EMI. Moreover, Plaintiffs allege that to the extent they are bound by the terms of the rewards program, they never received the promised benefits and savings. E.g., Compl. ¶¶ 21, 24, 70. That alone suffices to state a breach of contract claim against EMI. Accordingly, the Court DENIES EMI's motion the breach of contract claim.

EMI argues, as a matter of law, that Hunt could not have been deceived because by clicking the acceptance button, she is bound by the statement that she "read and accepted" the Offer Details. That text is not in the Complaint, but even if the Court had not stricken the exhibit, the Court would deny the Rule 12(b)(6) motion. Hunt's alleged confusion is plausible.

IV. BREACH OF IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING

The Fifth cause of action alleges that Provide breached the implied covenant of good faith and fair dealing. Compl. ¶¶ 70-91. Provide argues the claim must be dismissed as duplicative because it does not allege conduct different from the breach of contract claim. Careau Co. v. Security Pac. Bus. Credit, Inc., 222 Cal. App. 3d 1371, 1392-95 (1990).

Here, the Complaint alleges that Provide, by sharing consumers' financial account numbers with EMI, "unfairly interfered with Plaintiffs and Class members' rights to receive the security and privacy benefits they were entitled to under the contract." Compl. ¶ 82. Construing the factual allegations in the light most favorable to Plaintiffs, the Court concludes Plaintiffs have satisfied the pleading requirement of alleging Provide unfairly frustrated a benefit of the contract, that is, the confidentiality of the financial information they used to buy flowers on the internet. Guz v. Bechtel Nat'l Inc., 24 Cal. 4th 317, 349 (2000) ("The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made.") (emphasis omitted). Plaintiffs also allege the online contract was written by Provide in ambiguous terms that could not be modified by the customer and therefore constitutes a contract of adhesion. Finally, the claim is not duplicative of the contract claim because it seeks tort recovery of punitive damages. Celador Int'l Ltd. v. Walt Disney Co., 347 F. Supp. 2d 846, 852 (C.D. Cal. 2004) (citing Careau, 222 Cal. App. 2d at 1395).

The Court DENIES Provide's motion to dismiss this cause of action.

V. DECLARATORY RELIEF

Defendant Provide is named as the defendant in the second claim for declaratory relief, while Defendant EMI is named in the fourth claim by Plaintiff Hunt and proposed sub-class B. Compl. ¶¶ 60-66, 73-78. Plaintiffs ask the Court to declare that the Defendants' putative contracts are void on the ground that they are unconscionable. Id. ¶¶ 64, 78.

Both Defendants argue the request for declaratory relief duplicates Plaintiffs' other causes of action and is therefore unnecessary. The law, however, permits a plaintiff to seek declaratory relief as to the rights and validity of a contract. Cal. Civ. P. Code § 1060; 28 U.S.C. § 2201. Plaintiffs are permitted to plead alternative theories of relief. Fed.R.Civ.P. 8(d)(2). Unlike the decisions cited by Defendants, the Court concludes Plaintiffs' request for declaratory relief is appropriate because it is premised on other, surviving claims. Fed.R.Civ.P. 57 ("The existence of another adequate remedy does not preclude a declaratory judgment that is otherwise appropriate."); California v. Kinder Morgan Energy Partners, L.P., 569 F. Supp. 2d 1073, 1090 (S.D. Cal. 2008) (refusing to dismiss declaratory relief claim which was "properly premised on the other, valid claims" in complaint).

The Court DENIES Provide's and EMI's motions to dismiss the request for declaratory relief.

VI. FRAUD CLAIMS

Plaintiffs plead several tort and statutory claims against Defendant Provide that are grounded in fraud and deceit by misrepresenting and concealing material facts. The Sixth cause of action alleges negligent misrepresentation and the Seventh cause of action is for intentional fraud. Compl. ¶¶ 92-121. The Eighth cause of action alleges violations of California's Consumers Legal Remedies Act ("CLRA"). Compl. ¶¶ 122-141. That statute prohibits deceptive practices in consumer transactions. Cal. Civ. Code § 1770(a). Plaintiffs' false advertising claim is based upon California's Unfair Practices Act. Cal. Bus. Prof. Code § 17500. The Fourteenth claim is brought pursuant to California's Unfair Competition Law, which prohibits "unlawful, unfair or fraudulent business act or practice" and "unfair, deceptive, untrue or misleading advertising." Cal. Bus. Prof. Code § 17200.

A. Rule 9(b): Pleading Fraud with Particularity

Provide argues the allegations in these fraud-based claims do not satisfy the heightened pleading standard required by Rule 9(b). "Rule 9(b) requires the identification of the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations." Odom, 486 F.3d at 553 (quotations and citations omitted). "The pleader must state the time, place, and specific content of the false representations as well as the identities of the parties to the misrepresentations." Id. (quotations and citations omitted).

First, Provide argues the Complaint does not identify a single actionable statement, but instead relies on vague allegations that the rewards program was "legitimate" and the gift was "free." Provide's Br. at 19. The Court, however, concludes the Complaint contains the details required by Rule 9(b) so that Provide can respond to the fraud claims. The alleged misrepresentations were made when Plaintiffs purchased flowers on Provide's website. The claims are straightforward. They rely on two primary misrepresentations/concealments. First, the Complaint alleges that Provide promised "it would not disclose their Private Payment Information to Encore unless authorized to do so," yet Provide concealed the fact that it intended to transmit Plaintiffs' financial information to EMI regardless of whether it had authorization to do so. Compl. ¶ 93; id. ¶¶ 32-35; id. ¶ 94 (negligent misrepresentation); id. ¶ 104-05 (fraud); id. ¶ 132-34 (CLRA); id. ¶ 144 (false advertising); id. ¶ 175-76 (unfair competition/unlawful business practices). The other central claim is that Provide characterized the EasySaver Reward program as legitimate (under the guise of offering a free gift code to use with their next purchase), when it knew it was a sham. Id. ¶ 93; id. ¶¶ 32-35; id. ¶ 95 (negligent misrepresentation); id. ¶ 106-07, 112 (fraud); id. ¶ 132-34 (CLRA); id. ¶ 144 (false advertising); id. ¶ 176 (unfair competition/unlawful business practices). Plaintiffs have explained why the statements are allegedly false and misleading. E.g., id. ¶¶ 1-4, 31, 107, 118, 138, 144 (Provide entices customers with free gift, transmits debit card information under that guise, and unwittingly enrolls customers in an illusory savings programs that they would not have joined absent the subterfuge). Provide has ample "notice of the particular misconduct . . . so that they can defend against the charge." Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009).

Provide next argues that the Complaint lumps the two co-defendants together so that Provide cannot identify the statements it is alleged to have made from those made by EMI. The Court rejects this argument. The Complaint alleges that part of the deceptive quality of EasySaver Rewards program is that it is difficult for consumers to determine when they have be re-directed from Provide's webpage to EMI's separate website. E.g., Compl. ¶ 28. The customers were redirected to EMI's webpage with Provide's assistance since they were visiting the ProFlowers website. Id. ¶ 32. Any ambiguity in the pleading is attributable to Defendants' description of their partnership on the webpages. E.g., id. ¶ 32 (quoting EasySaver Rewards Policy). In addition, the Complaint contains facts, see supra footnotes 4 7, that support the Plaintiffs' allegations of joint liability. Compl. ¶¶ 14-16 (alleging aiding and abetting, joint venture, and conspiracy). Plaintiffs have not yet conducted discovery on the true nature of the business relationship between Provide and EMI. In the interim, the Court finds the pleading sufficient to support the allegation that the two defendants were acting in concert to their mutual benefit.

In their briefs, Defendants refer to each others' "partner" websites. Provide states that it "promotes" EasySaver Rewards, but describes EMI as the "administrator" of the program pursuant to "a confidential marketing agreement." Provide's Br. at 3; EMI's Br. at 1.
Provide also argues that language omitted from the Complaint clearly refutes this allegation. Provide relies on the statement on the pop-up that clicking the link "connects you to our Rewards Policy partner" and a statement on the Enrollment page that EMI is the "offerer and administrator" of the rewards program. The Court is not persuaded this additional language would dispel the confusion Plaintiffs claim they experienced when the pop-up window appeared on ProFlowers' webpage. For the purpose of this motion, the Court accepts the truth of the allegations that customers thought they were dealing with ProFlowers as they completed their purchase of flowers and offered a coupon on their next purchase.

In sum, Plaintiffs have satisfied Rule 9(b). Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1400-01 (9th Cir. 1986).

B. Elements of Common Law Fraud Claims

The elements required to establish Plaintiffs' common law fraud claims are the same, with the exception that intent is not required for negligent misrepresentation. The elements of an action for fraud or deceit are (1) misrepresentation (false misrepresentation, concealment, or nondisclosure); knowledge of falsity; (3) intent to defraud; (4) justifiable reliance; and (5) resulting damage. 5 Witkin, Summary of Cal. Law. Torts § 772 (10th ed. 2005). "The elements of an action for fraud and deceit based on concealment are: (1) the defendant must have concealed or suppressed a material fact, (2) the defendant must have been under a duty to disclose the fact to the plaintiff, (3) the defendant must have intentionally concealed or suppressed the fact with the intent to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and would not have acted as he did if he had known of the concealed or suppressed fact, and (5) as a result of the concealment or suppression of the fact, the plaintiff must have sustained damage." Blickman Turkus, L.P. v. MF Downtown Sunnyvale, LLC, 162 Cal. App. 4th 858, 868 (2008) (citations and quotation omitted).

Provide characterizes the statements as opinions about future events, which were dependent upon the actions of third parties. The Court does not agree that the alleged misstatements fall within the category of an non-actionable opinion. Gentry v. eBay, Inc., 99 Cal. App. 4th 816, 718-19 (2002) (distinguishing statement of past or existing fact from opinion).

Provide also argues the Complaint fails to identify when during the transactions the Plaintiffs saw these materials prior to placing the ProFlowers order. Plaintiffs had to give their credit or debit card information to purchase flowers so Defendant contends the Privacy Policy (if Plaintiffs read it) did not impact that decision. The EasySaver Rewards window did not pop-up until after Plaintiffs completed their flower order. On these facts, Provide argues Plaintiffs cannot establish the element of reliance. Bank of St. Helena v. Lilienthal-Brayton Co., 89 Cal. App. 258, 263 (1928) ("there can be no reliance on statements which do not come to the knowledge of the contracting party until after he has consummated the transaction").

Plaintiffs argue that reliance can be presumed. The Court rejects this argument. The cases Plaintiffs cite for this proposition dealt with motions to certify a class. E.g., Vasquez v. Superior Court, 4 Cal. 3d 800 (1971). The California Supreme Court has expressly stated that "[i]t is settled that a plaintiff, to state a cause of action for deceit based on a misrepresentation, must plead that he or she actually relied on the misrepresentation." Mirkin v. Wasserman, 5 Cal. 4th 1082, 1088 (1993). The Supreme Court held that plaintiffs must plead actual reliance on both negligent misrepresentations and omissions. Id. at 1088-93 n. 2 The plaintiffs in Mirkin conceded they had never read the alleged misrepresentations. Id. at 1088.
A fair reading of the Complaint indicates that Plaintiffs have alleged both misrepresentations and concealment. Thus, the Court does not address Plaintiffs' argument about the differences between pleading these two types of fraud.

It is unclear from the Complaint when and where the Privacy Policy appears on Provide's webpage. The Court reads the Complaint, however, to allege that the Privacy Policy was part of the underlying contract between Plaintiffs and Provide to buy flowers. Whether or not Plaintiffs read the Privacy Policy or had adequate notice of it is a question of fact that cannot be determined in a Rule 12(b)(6) motion. See Specht v. Netscape Commc'ns Corp., 306 F.3d 17, 29-32 (2d Cir. 2002) (Sotomayor, J.) (applying California law to arbitration clause on website and finding consumers did not manifest assent to terms only accessible by using scroll bar). The Complaint further alleges the consumer is deceived by the tactic of offering a discount on their next ProFlowers purchase, but that they never receive the $15 gift code. Taken as a whole, the Court finds the Complaint fulfills the requirement of pleading reliance.

C. Procedural Requirements of Consumer Legal Remedies Act

Defendant Provide argues Plaintiffs' Consumer Legal Remedies Act ("CLRA") claim fails because they did not comply with two of the statute's pre-conditions of notice. "The CLRA's notice requirement is not jurisdictional, but compliance with this requirement is necessary to state a claim." Cattie v. Wal-Mart Stores, Inc., 504 F. Supp. 2d 939, 949 (S.D. Cal. 2007).

First, the statute requires a plaintiff to file an affidavit of proper venue. Cal. Civ. Code § 1780(d). Provide complains that when Plaintiffs filed the original complaint, Bobbi Sledge submitted the affidavit, but she is no longer one of the named Plaintiffs. Provide argues the Court must dismiss the CLRA claim.

The Court rejects this argument. The purpose of the rule has been satisfied. When this putative class action commenced, Provide was notified that Sledge was complaining on her own behalf and all others similarly situated. Norton Decl. Ex. A at 1. The notice identified the facts showing that the action was properly commenced in San Diego County. The Consolidated Complaint accurately states that the declaration establishing venue "was submitted and previously attached to the original complaint filed in this case." Compl. ¶ 131.

Second, before a lawsuit can be filed, the CLRA requires the consumer to notify the defendant of "the particular alleged violations" and demand that they be corrected. Cal. Civ. Code § 1782(a). Provide argues that Plaintiffs' pre-filing notice was defective because it did not describe Plaintiff Hunt's circumstances, that is, consumers who entered their email addresses and clicked the acceptance button, but who did not want to enroll in the EasySaver Rewards program. Provide also argues the letter did not give notice of two particular sub-sections of the statute. Plaintiffs allege in the Complaint that Provide violated § 1770(a)(13) by "making false or misleading statements of fact concerning reasons for, existence of, or amounts of price reductions" and § 1770(a)(19) by "inserting an unconscionable provision in the contract." Compl. ¶ 133(d) (g). Provide argues the CLRA claims as to Plaintiff Hunt and subclass B and § 1770(a)(13) and (19) should be dismissed.

The Court finds Plaintiffs' notice letter satisfies the pre-filing notice requirement because it explicitly alleges violations of CLRA. Strickrath, 527 F. Supp. 2d at 1001-02 (rejecting "assertion that the notice failed to describe the alleged violations with the requisite specificity" when purpose of giving defendant "sufficient notice of alleged defects to permit appropriate corrections" had been met). The first page of the letter explains in plain language the conduct that Plaintiffs allege violates the statute. The second page lists five sub-sections of the CLRA, and asks for specific

corrections and remedies. The content of the letter suffices to put Provide on notice of the alleged CLRA violations. Id.

As to the particular circumstances of Plaintiff Hunt's experience on the web page, the Court is not persuaded that the omission is fatal. The notice letter describes those consumers who "declined" the EasySaver Rewards Offer, the unauthorized debit charges, and the illusory nature of the promised rewards. Norton Decl. Ex. A at 1. Hunt's experience on the webpage, though slightly different, is well within the scope of those complaints; thus, the purpose of the notice letter was satisfied. Provide was given an opportunity to correct the alleged wrongs thirty days before Plaintiffs filed their lawsuit. Morgan v. AT T Wireless Serv., Inc., 177 Cal. App. 4th 1235, 1260-61 (2009). By contrast, in the cases cited by Provide, the plaintiff failed to write a letter, or sent the letter after filing the complaint. Cattie, 504 F. Supp. 2d at 950 (collecting cases).

Therefore, the Court DENIES Provide's motion to dismiss for failure to comply with the notice requirement.

VII. CONVERSION

Plaintiffs allege Defendant Provide wrongfully converted their Private Payment Information and the money charged to enroll them in the EasySaver Rewards program. Compl. ¶ 149. Plaintiffs define "Private Payment Information" as the consumers' credit card, debit card and/or PayPal account information. Compl. ¶ 1. Provide argues that neither the intangible financial information nor the fees ($1.95 to enroll and $14.95 monthly membership charge) qualify as "property" that can be converted.

Conversion is the "wrongful exercise of dominion over personal property of another." 5 Witkin, Summary of Cal. Law, Torts § 699 (2005); Farmers Ins. Exch. v. Zerin, 53 Cal. App. 4th 445, 451-52 (1997) (setting forth elements). Historically, the tort was limited to tangible property and did not apply to intangible property (with an exception for intangible property represented by documents, such as stock certificates). 5 Witkin, §§ 701-702. Modern courts, however, have permitted conversion claims against intangible interests such as checks and customer lists. Acme Paper Co. v. Goffstein, 125 Cal. App. 2d 175, 179 (1954); Palm Springs-La Quinta Dev. Co. v. Kieberk Corp., 46 Cal. App. 2d 234 (1941) (conversion of index cards with information on potential customers, including their financial standing); see Thrifty-Tel, Inc. v. Bezenek, 46 Cal. App. 4th 1559 (1996) (leaving open question whether confidential codes to gain computer access could be converted because trespass to personal property claim existed); see generally Kremen v. Cohen, 337 F.3d 1024, 1030 (9th Cir. 2003) (noting modern rejection of hard line between tangible and intangible property and holding plaintiff could state conversion claim as to internet domain name).

Similarly, the original tort did not apply to money. Witkin, Torts § 703 ("Money cannot be the subject of conversion unless a specific identifiable sum is involved."); Baxter v. King, 81 Cal. App. 192, 194 (1927) ("where the money or fund is not identified as a specific thing the action is to be considered as one upon contract or for debt and not for conversion"). Courts created an exception when an agent accepts an identifiable sum of money to be paid to another but fails to make that payment. PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil Shapiro, LLP, 150 Cal. App. 4th 384, 396 (2007) ("California cases permitting an action for conversion of money typically involve those who have misappropriated, commingled, or misapplied specific funds held for the benefit of others."); e.g., Haigler v. Donnelly, 18 Cal. 2d 674, 681 (1941) ("defendant, acting as agent for plaintiffs, received stipulated sum of money belonging to plaintiffs and refused to account for it after a proper demand."); McKell v. Washington Mut., Inc., 142 Cal. App. 4th 1457, 1491 (2006); Farmers Ins., 53 Cal. App. 4th at 452; Weiss v. Marcus, 51 Cal. App. 3d 590, 599 (1975).

Although there is no clear authority, the Court concludes that Plaintiffs may state a conversion claim based upon the misappropriation of their Private Payment Information, which was then used to make allegedly unauthorized debits from their financial accounts. Possession of the debit card or PayPal account information is similar to the intangible property interest in a check. Acme Paper, 125 Cal. App. 2d at 179. Plaintiffs assert the right to control the use of their Private Payment Information, which can be used to withdraw funds from their bank accounts. See In Re Checking Account Overdraft Litig., 694 F. Supp. 2d 1302, 1323 (S.D. Fla. 2010) (applying California law, holding that conversion action is available for wrongful debiting of funds from customer's account because it interfered with plaintiffs' right to possess and use those funds).

Provide argues Plaintiffs have not shown their exclusive right to control the payment information on the theory that Plaintiffs authorized Provide to transmit the information to EMI. This conclusory statement however directly contradicts the allegations in the Complaint that the consumers did not knowingly or affirmatively authorize Provide to transmit their banking information to EMI. Plaintiffs contend that no reasonable consumer would know that entry of their email address would permit Provide to give the Plaintiffs' financial information to EMI.

Plaintiffs' conversion claim is arguably based upon certain sums of money (namely a $1.95 enrollment fee and subsequent monthly membership fees of $14.95). California courts have loosened the historic restrictions on the tort, such that "it is not necessary that each coin or bill be earmarked." Haigler, 18 Cal.2d at 681.

The Court DENIES Provide's motion to dismiss the conversion claim for failure to state a claim upon which relief can be granted.

VIII. UNJUST UNRICHMENT

Plaintiffs name both Defendants Provide and EMI in the unjust enrichment claim. Compl. ¶¶ 155-58.

Defendants argue that California does not recognize a cause of action for unjust enrichment. Provide cites two unpublished district court decisions for that statement; however, California courts permit a plaintiff to invoke the doctrine of unjust enrichment. E.g., First Nationwide Sav. v. Perry, 11 Cal. App. 4th 1657, 1663-64 (1992) (restitution available when defendant unjustly enriched at expense of plaintiff). Defendants also argue that the claim duplicates that Plaintiffs' request for restitution. Plaintiffs, however, are permitted to seek alternative remedies in their complaint. Id.

The Court DENIES Defendants' motions to dismiss the unjust enrichment claim.

IX. ELECTRONIC FUNDS TRANSFER ACT

Plaintiffs allege both Defendants violated the federal Electronic Funds Transfer Act ("EFTA"). This consumer rights statute establishes the rights, liabilities, and responsibilities of participants (consumers, financial institutions, and intermediaries) in electronic fund transfer systems. 15 U.S.C. § 1693. It governs, for example, automatic direct payroll deposits, transactions at automated teller machines, and debit card purchases at retail or online shops. See id. § 1693a(6), (7). Plaintiffs Hunt, Romero, and the members of proposed sub-class C allege that Defendants engaged in "unauthorized" transfers by debiting their bank accounts for the activation fee and monthly membership charges for the EasySaver Rewards program. Compl. ¶¶ 21, 29, 161-62. Plaintiffs contend the electronic fund transfers were made without their permission, without obtaining prior written authorization, without providing copies of their purported authorizations, and without providing reasonable notice of the amount to be transferred or the scheduled date of the transfer. Id. ¶¶ 5, 165

A. Defendant Provide

Provide moves for dismissal on the ground that the facts alleged establish it did not engage in unauthorized billing. Cf. Azose v. Washington Mut. Bank, 588 F. Supp. 2d 366, 372 (E.D.N.Y. 2008) (owner of automatic teller machine was not liable for the bank's violations of EFTA and vice versa).

This argument has merit. Plaintiffs do not allege the electronic funds transfer to pay Provide for the flowers violated EFTA; instead, Plaintiffs challenge the transactions to pay EMI for the EasySaver Rewards program. The facts state that EMI was the party who charged Plaintiffs' debit cards. E.g., Compl. ¶¶ 21, 24, 26, 29, 31.

Plaintiffs offer no case law to support their theory that this federal statute applies to one who aids and abets another's violation. Cf. Schulz v. Neovi Data Corp., 152 Cal. App. 4th 86, 93-97 (2007) (applying aider and abettor liability to California's unfair competition statute). Plaintiffs fail to identify any such language in the statute, regulations, or official commentary. "Congress has not enacted a general civil aiding and abetting statute." Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 182 (1994). Consequently, "when Congress enacts a statute under which a person may sue and recover damages from a private defendant for the defendant's violation of some statutory norm, there is no general presumption that the plaintiff may also sue aiders and abetters." Id. at 175-77 181-85 (holding federal securities laws do not allow claims based upon aiding and abetting a primary violation because statute was silent and Congress "knew how to impose aiding and abetting liability when it chose to do so"). The Court concludes the EFTA does not reach those who aid and abet a statutory violation.

Therefore, the Court GRANTS Provide's motion to dismiss it from the EFTA claim. The dismissal is with prejudice because the claim cannot be amended to overcome this legal problem.

B. Defendant EMI

Defendant EMI attacks the EFTA claims of two named Plaintiffs based upon their specific circumstances. 1. Plaintiff Romero

As to Plaintiff Romero, EMI argues the facts supporting his claim do not meet the definition of an "account." Romero alleges he "did not want to become a member of EasySaver Rewards and did not provide his email address and zip code to receive the $15.00 Gift Code. Nor did he click the green acceptance button. Instead he clicked on the `X' at the top right corner of the webpage to close the window." Compl. ¶ 20. Nonetheless, EMI charged fees on Romero's debit card. Id. ¶ 21. EMI argues Romero "never entered into an online agreement with EMI" therefore he cannot state a claim under the EFTA. EMI Br. at 12. "Indeed, if, as Romero alleges, there was no agreement with EMI to charge his debit card the provisions of the EFTA by their very nature could not be applicable." Id. at 15.

The statute and the governing regulations define "account" similarly as "a demand deposit (checking), savings, or other consumer asset account (other than an occasional or incidental credit balance in a credit plan) held directly or indirectly by a financial institution and established primarily for personal, family, or household purposes." 12 C.F.R. § 205.2(b)(1); accord 15 U.S.C. 1693a(2). The regulations further state that the Act applies "to any electronic fund transfer that authorizes a financial institution to debit or credit a consumer's account." 12 C.F.R. § 205.3(a).

The Board of Governors of the Federal Reserve System drafted the regulations that enforce the EFTA. 12 C.F.R. § 205.1 (20100 (also known as "Regulation E"). In addition, the Board of Governors designated its Director of Consumer and Community Affairs to issue official staff interpretations of the regulations. This "official commentary" is published in Appendix C, Supplement I to Part 205 of the Code of Federal Regulations.

EMI's argument is based upon an official staff interpretation of the statute and its regulations. That commentary concerns "accounts covered" by the regulations: "The requirements of the regulation apply only to an account for which an agreement for EFT services to or from the account has been entered into between (i) [t]he consumer and the financial institution (including an account for which an access device has been issued to the consumer, for example); (ii) [t]he consumer and a third party (for preauthorized debits or credits, for example), when the account-holding institution has received notice of the agreement and the fund transfers have begun." Id. app. C, supp. I, ¶ 3(a) (emphasis added). Defendant EMI asserts Romero cannot satisfy the definition because he admits he did not agree that EMI could transfer funds from his debit card to pay for the EasySaver Rewards program.

This counterintuitive argument fails. The Complaint alleges that $1.95 was electronically transferred from Romero's financial institution to EMI on February 14, 2009. Compl. ¶ 21. "Then one month later, on March 17, 2009, Encore [EMI] charged $14.95 to Plaintiff Romero's debit card." Id. The electronic transfer of funds by consumers to purchase goods (at brick and mortar stores or over the internet) falls within the plain language of the statute and its governing regulations. Nordberg v. Trilegiant Corp., 445 F. Supp. 2d 1082, 1087-88 1093-95 (N.D. Cal. 2006) (on similar fact pattern, internet customers may state EFTA claim against marketer who allegedly failed to obtain written or proper authorization for electronic transfers of enrollment and membership fees); see Friedman v. 24 Hour Fitness USA, Inc., 580 F. Supp. 2d 985, 989 995-96 (C.D. Cal. 2008) (plaintiffs stated EFTA claim against fitness center that allegedly withdrew membership fees from customers' bank accounts without authorization after members cancelled their membership). Plaintiffs are allowed to plead alternative theories that EMI received these funds electronically from Romero's financial institution either with pre-authorization but without proper notice or without proper authorization in violation of § 1693e of the EFTA. See § 1693m; § 1693a(11), § 1693f(f)(1); 12 C.F.R. § 205, app. C, supp. I, ¶ 10(b).

In addition, Plaintiffs allege EMI continued to withdraw funds from their financial institutions even after they called to cancel membership. Compl. ¶¶ 22, 27. Such charges would be unauthorized and without the permission of Plaintiffs. 2. Plaintiff Hunt

EMI also challenges the viability of Plaintiff Hunt's EFTA claim.

Hunt's claim is pled in the alternative depending upon whether she "preauthorized" the debit card transfers or whether EMI's transfers were "unauthorized." Hunt alleges she did not want to become a member of the EasySaver Rewards program, but completed the pop-up screen because she thought the information was required to complete her purchase of flowers from Provide. Compl. ¶ 28. Hunt did not "knowingly consent to join any rewards program or pay any fees associated" but "discovered unauthorized billing to her debit card by [EMI]." Id. ¶¶ 28-29. EMI argues the facts alleged by Hunt do not state a claim under the EFTA because she "agreed" to the activation fee and membership "charges by entering her email address and zip code and clicking the green acceptance button." EMI Br. at 12. EMI cites the provision of the official staff commentary that permits consumers to provide "written" authorization "electronically." 12 C.F.R. § 205.10, app. C, supp. I, ¶ 10(b)(5).

This argument relies on Vistaprint (the unpublished decision discussed above), in which the district court dismissed an EFTA claim because the facts did not support an unauthorized transfer. The Court discussed its reasons for rejecting that unpublished decision above and the same ruling applies here. The Court instead follows the published Nordberg decision, where the Northern District of California held that (with amendment to specify the correct sub-section of the statute) plaintiffs had stated an EFTA claim against a similar internet rewards program. Nordberg, 445 F. Supp. 2d at 1088 ("the named plaintiffs allege that defendants debited amounts from their credit or debit card accounts without the prior approval of the plaintiffs"). That Court, like this Court, accepts as true the Plaintiffs' allegations that the electronic fund transfers were "unauthorized" within the meaning of the statute. Id. at 1093-95.

The EFTA claim also survives for a separate reason. Plaintiff Hunt alleges EMI did not provide her with a copy of the purported authorization to deduct funds from her bank account. Compl. ¶¶ 29, 165. This is a separate violation of the EFTA's notice and disclosure provisions. 15 U.S.C. § 1693e(a) ("A preauthorized electronic fund transfer from a consumer's account may be authorized by the consumer only in writing, and a copy of such authorization shall be provided to the consumer when made."); 12 C.F.R. § 205.10(b) ("The person that obtains the [electronic or written] authorization shall provide a copy to the consumer."); 12 C.F.R. § 205.10, app. C, supp. I, ¶ 10(b)(5) (same).

The Court DENIES EMI's motion to dismiss Plaintiffs' EFTA cause of action.

X. ELECTRONIC COMMUNICATIONS PRIVACY ACT

The Thirteenth Claim alleges both Defendants violated the Electronic Communications Privacy Act. Compl. ¶¶ 167-72. This federal statute (which amended the federal Wiretap Act) prohibits the intentional interception and disclosure of electronic communications, such as an electronic transfer of funds in a financial institution. 18 U.S.C. §§ 2510, 2511; Konop v. Hawaiian Airlines, Inc., 302 F.3d 868, 874 (9th Cir. 2002) (purpose of Act is "to afford privacy protection to electronic communications"). Plaintiffs base this claim on their transmission of data from their computers to Provide for the purpose of buying flowers only, and their allegation that EMI intercepted it without Plaintiffs' knowledge or consent. Compl. ¶ 170. Plaintiffs allege that Provide and EMI committed the unlawful conduct in the "joint operation" of the EasySaver Rewards program and that both Defendants profited from the unauthorized charges. Id.

Defendant Provide moves to dismiss the claim on the ground that Plaintiffs cannot meet the statutory definition of the term "intercept." Konop, 302 F.3d at 878 (Congress narrowly defined "intercept" to limit reach of Act). Provide argues it did not "intercept" any communication because Plaintiffs voluntarily sent information to Provide, which then conveyed that information to a third party. Crowley v. CyberSource Corp., 166 F. Supp. 2d 1263, 1269 (N.D. Cal. 2001) (when plaintiff purchased goods on Amazon website, Amazon merely received the information but did not "intercept" it, even though Amazon transmitted information to third party to verify identity of customer using credit card).

This argument has merit. The statute expressly states that it does not apply to a person who "is a party to the communication." 18 U.S.C. § 2511(2)(c). Like the Defendant Amazon in Crowley, 166 F. Supp. 2d at 1269, Provide merely received information from the Plaintiffs. The Complaint establishes that Provide was the intended, direct recipient of the information. Compl. ¶ 170; Conte v. Newsday, Inc., ___ F. Supp. 2d ___, 2010 WL 1257887, at * 9 (E.D.N.Y. Mar. 25, 2010) (dismissing claim as to direct party to email). Because Plaintiffs would be unable to amend the Complaint to save this statutory claim, the Court DISMISSES it as to Defendant Provide with prejudice. See Crowley, 166 F. Supp. 2d at 1268-69 (statute "does not provide a civil action against one who aids and abets a violation the Wiretap Act") (citing Peavy v. WFAA-TV, Inc., 221 F.3d 158, 168-69 (5th Cir. 2000) (when Congress amended Wiretap Act to delete civil liability on any other person who "procures" an interception of communication, it limited civil action to person who "engaged" in the violation)).

For its part, Defendant EMI argues the alleged facts do not satisfy the Act because EMI did not interrupt the transmission from Plaintiffs to Provide; therefore, the information was not "acquired during transmission." Konop, 302 F.3d at 878. EMI highlights the language in the Complaint that states the EasySaver Rewards offer was introduced only after Plaintiffs completed their flower purchase. Plaintiffs seek to avoid dismissal by arguing that they have alleged EMI intercepted the information "while" Plaintiffs were in the "process" of transmitting information to Provide. Plaintiffs distinguish the timing of the alleged interception from the undisputed facts in the cases cited by the Defendants. In reply, EMI asks the Court to disregard the factual allegations that refer to interceptions "during transmission."

As noted above, the Complaint is ambiguous as to whether the alleged interception of information occurred during the course of the transaction with Provide or after Plaintiffs completed that purchase. Compare Compl. ¶ 1 ("While customers are in the process of transmitting their Private Payment Information to Provide," EMI "intercepts the information") with ¶ 19 ("After Plaintiffs and Class members completed the purchase transaction" with Provide, they were directed to EMI's webpage). Because the Court must accept as true Plaintiffs' allegations of fact, and the Court must construe the allegations in the light most favorable to Plaintiffs, the Court rejects EMI's argument. EMI's argument raises factual disputes that should be addressed in a summary judgment motion. Plaintiffs have not yet conducted discovery and do

not have access to the information needed to determine when or how the information was intercepted by the alleged interloper.

EMI states that it offered technical evidence to Plaintiffs that could be reviewed by an expert, but the Court cannot consider extrinsic evidence in a motion to dismiss.

The Complaint alleges plausible facts that, if true, state a statutory violation against EMI; namely, that some Plaintiffs closed the pop-up window without accepting the gift code offer, yet EMI intercepted the Private Payment Information that these Plaintiffs were in the process of sending to Provide. Compl. ¶¶ 20-21 (Romero), 23-24 (Kenyon), 32 ("Plaintiffs and Class Members never gave Encore their Private Payment Information."); 34, 36. Plaintiffs provide facts that take their case beyond a "formulatic recitation of the elements of a cause of action" and "more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 129 S.ct. at 1949.

Accordingly, the Court GRANTS Provide's motion, but DENIES EMI's motion to dismiss the Electronic Communication Privacy Act claim.

CONCLUSION

For the reasons stated herein, the Court:

(1) DENIES Defendant Provide's request for Judicial Notice [Doc. No. 34-2];

(2) GRANTS Plaintiffs' Motion to strike EMI's exhibits [Doc. No. 48];

(3) GRANTS, with the limitations noted above, Plaintiffs' supplemental request for judicial notice [Doc. No. 57];

(4) DENIES Defendant EMI's motion to dismiss [Doc. No. 38]; and

(5) GRANTS IN PART AND DENIES IN PART Defendant Provide's motion to dismiss [Doc. No. 34]. Plaintiff's twelfth cause of action (Electronic Fund Transfer Act) and thirteenth cause of action (Electronic Communications Privacy Act) are dismissed with prejudice.

IT IS SO ORDERED.

DATED: August 13, 2010