NOT FOR PUBLICATION FILED
MAR 28 2017
UNITED STATES COURT OF APPEALS
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
KEVIN PARK, on behalf of himself and all No. 15-56079
others similarly situated,
D.C. No.
Plaintiff-Appellant, 3:12-cv-01380-LAB-JMA
v. MEMORANDUM*
WEBLOYALTY.COM, INC., et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of California
Larry A. Burns, District Judge, Presiding
Argued and Submitted February 17, 2017
Pasadena, California
Before: M. SMITH and OWENS, Circuit Judges, and KORMAN,** District Judge.
After Kevin Park bought a gift certificate for his minor son Matthew from
Gamestop.com, he saw a coupon for $10.00 on the Gamestop.com purchase
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Edward R. Korman, Senior District Judge for the U.S.
District Court for the Eastern District of New York, sitting by designation.
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confirmation page. He clicked on the link for the coupon, and then, thinking that he
was entering his email address to claim the aforementioned coupon, clicked a
confirmation button. Two years later, he discovered $264 in what he believed to be
unauthorized charges from Webloyalty, Inc., a company that was unfamiliar to him.
Park filed a class action lawsuit against Webloyalty, including claims for
violations of the Electronic Funds Transfer Act (“EFTA”), the Electronic
Communications Privacy Act (“ECPA”), and various California and Connecticut
laws. The complaint alleges that Webloyalty duped Park into agreeing to a fee-based
membership program called Complete Savings without realizing it, by (1) using
what appeared to be a coupon on Gamestop.com to entice him to visit the Webloyalty
enrollment page with the expectation of receiving the promised coupon, and (2)
using the “data pass” method of acquiring his billing information directly from
Gamestop.com, rather than by asking Park to provide it, depriving him of notice of
entering a new financial relationship with an unfamiliar company. The district judge
granted Webloyalty’s motion to dismiss, based in part on exhibits proffered by
Webloyalty, of which judicial notice was improper, and in part on his finding that
Park’s allegations were “conclusory.” Park now appeals.
I. Park’s EFTA Allegations Were Plausible
Park alleges violations of two sections of EFTA. The first is that Webloyalty
initiated an “unauthorized electronic fund transfer”—that is, “an electronic fund
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transfer from a consumer’s account initiated by a person other than the consumer
without actual authority to initiate such transfer and from which the consumer
receives no benefit . . . .” 15 U.S.C. § 1693a(12) (emphasis supplied). The
allegations in the Second Amended Complaint (“SAC”) regarding Park’s reliance
on the $10.00 coupon, and the deceptive nature of the “data pass” method of
acquiring his billing information, were sufficiently detailed to make out an EFTA
claim based on an “unauthorized electronic fund transfer.” Webloyalty’s reliance
on the Second Circuit’s dismissal of a somewhat similar EFTA claim in L.S. v.
Webloyalty.com, Inc. is misplaced, because in that case, the plaintiff “[did] not allege
that he relied on the coupon offer in enrolling for the program.” L.S. v.
Webloyalty.com, Inc., No. 15-3751, 2016 WL 7402617, at *2 (2d Cir. Dec. 20, 2016)
(unpublished) (emphasis supplied).
Under California agency law, applicable here, “actual authority” could only
have been created either “intentionally,” or by negligently allowing Webloyalty to
believe that it possessed such authority. CAL. CIV. CODE § 2316. Park pled that he
did not realize he was dealing with a company other than Gamestop, and that he “had
no idea that he . . . authorized Webloyalty to charge his debit card for monthly
membership fees.” Park also pled that Webloyalty used the “data pass” method to
obtain his billing information in order to avoid “alert[ing] him that he was entering
a separate financial transaction with a third party.” Drawing all inferences in Park’s
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favor, the SAC adequately alleged that Webloyalty sought to avoid alerting Park of
the need to inquire into whether he was entering an agency relationship with a third-
party. Indeed, according to a United States Senate Report incorporated by reference
into the complaint, a Webloyalty employee admitted that “at least 90% of our
members don’t know anything about the membership.” Ex. 1 to the SAC at 6, Park
v. Webloyalty.com, Inc., No. 12-cv-1380 (S.D. Cal. Sept. 29, 2014), ECF No. 24-1.
Moreover, with respect to the “receipt of benefits” element of the § 1693a(12)
cause of action, Park pled that he was unaware that he had enrolled in Complete
Savings, making it impossible for him to get any benefit from the coupons associated
with the program. The finding of the Senate Report, that “[m]ost consumers enrolled
in the clubs cancel their memberships when they discover the monthly charge and
never receive any benefit from their club membership,” lent additional plausibility
to this allegation. Id. (emphasis supplied).
The second subsection of EFTA at issue here requires that a consumer must
be provided with a copy of the electronic fund transfer authorization. See 15 U.S.C.
§ 1693e(a). Park’s allegations regarding his lack of knowledge of the purported
authorization, and Webloyalty’s failure to provide a copy of such authorization, were
sufficient on their face. Although the district judge’s reliance on Webloyalty’s
exhibits tainted his analysis of the entire complaint, here it was the only ground upon
which he relied to overcome the sufficiency of these allegations. See Park v.
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Webloyalty.com, Inc., No. 12-cv-1380, 2014 WL 4829465, at *8. As the Second
Circuit observed in L.S., whether or not these documents were accurate and authentic
“was a determination properly made on summary judgment, not in response to a
motion to dismiss.” 2016 WL 7402617, at *5.
II. Park’s ECPA Claim and California Privacy Claims Must Be Dismissed
The Electronic Communication Privacy Act (“ECPA”) imposes liability on
anyone who “intentionally intercepts . . . or procures any other person to intercept”
any electronic communication. 18 U.S.C. § 2511(1)(a). Park admitted that
Webloyalty was the intended recipient of the billing information he claims was
intercepted. The fact that Gamestop sent the information to Webloyalty, even if Park
did not want it to, means that Webloyalty did not “intercept” it. The district court
also properly dismissed Park’s privacy-based claims, because Park failed to allege
“conduct by defendant constituting a serious invasion of privacy.” Hill v. Nat’l
Collegiate Athletic Ass’n, 7 Cal. 4th 1, 40 (1994) (emphasis supplied).
III. Other State Law Claims
With the exception of the privacy-based state law claims just discussed, the
district court’s dismissal of Park’s other state law claims depended on its erroneous
holding that Park had not pled facts to show the EFT was unauthorized. Moreover,
Park’s allegations supported claims against Webloyalty, under California’s and
Connecticut’s similar unfair trade practices statutes, independent of whether there
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was an unauthorized transfer. Cf. L.S., 2016 WL 7402617, at *2–3. These
allegations aside, the California and Connecticut unfair trade practices statutes at
issue “borrow[] violations of other laws and treat[] them as unlawful practices
that . . . [they] make[] independently actionable.” Cel-Tech Commc’ns, Inc. v. L.A.
Cellular Tel. Co., 973 P.2d 527, 539–40 (Cal. 1999); see also Ventres v. Goodspeed
Airport, LLC, 881 A.2d 937, 969 (Conn. 2005). One of those “other laws” is 15
U.S.C. § 8402—also known as the Restore Online Shoppers’ Confidence Act
(“ROSCA”). While the parties have briefed the retroactive effect of ROSCA, there
is no need for us to resolve that issue at this time, because Park’s unfair trade
practices claims survive dismissal on other grounds.
IV. Conclusion
We REVERSE the dismissal of Park’s various federal and state causes of
action, with the exception of his ECPA claim and privacy-based state law claims,
which we AFFIRM. Park’s SAC was also dismissed because his EFTA claims were
time-barred. The district court held that the proposed Third Amended Complaint
had cured this problem. Nevertheless, it denied the motion to amend because it
dismissed the complaint on other grounds. We therefore VACATE the district
court’s order denying leave to amend.
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