Smith v. Rack Room Shoes, Inc.

Summary

The United States District Court for the Northern District of California partially granted and partially denied Rack Room Shoes, Inc.'s motion to dismiss and denied its motion to strike. The court held that plaintiffs plausibly stated claims under the California Comprehensive Computer Data and Access Fraud Act and the federal Wiretap Act, but dismissed their California Unfair Competition Law and Consumers Legal Remedies Act claims without leave to amend. The court also granted plaintiffs' motion to extend the deadline to amend the pleadings.

Holdings

1. Plaintiffs plausibly alleged compensable damage or loss under CDAFA by alleging that Rack Room and third parties unjustly profited from plaintiffs' personally identifiable information and online activity, including through targeted advertising.
2. Plaintiffs failed to state UCL and CLRA claims because generalized allegations concerning the value of web-browsing data and unjust enrichment did not establish UCL loss of money or property or the CLRA's required tangible increased cost or burden.
3. Plaintiffs plausibly alleged that Rack Room intentionally used intercepted communications and that the Wiretap Act's crime-tort exception applied because Rack Room allegedly had an independent tortious purpose beyond interception itself.
4. The motion to strike was denied because the challenged allegations concerning third-party trackers could bear on plaintiffs' claims and Rack Room's intent, and the proposed nationwide class challenge was premature before class certification.

Questions Presented

1. Whether the Second Amended Complaint plausibly alleged compensable damage or loss under CDAFA through a theory that Rack Room and third parties unjustly profited from plaintiffs' personal information.
2. Whether plaintiffs adequately alleged injury in fact and loss of money or property under the UCL and a tangible increased cost or burden under the CLRA.
3. Whether plaintiffs plausibly alleged that Rack Room intentionally used intercepted communications and that the Wiretap Act's crime-tort exception defeated the party exception.
4. Whether allegations concerning additional third-party trackers and the proposed nationwide Wiretap Act class should be stricken under Rule 12(f).

Disposition

other