United States District Court, District of Columbia
June 30, 2015
Ethel Austin-Spearman, Plaintiff,
AARP and AARP Services Inc., Defendants.
KETANJI BROWN JACKSON, District Judge.
A. Plaintiff's Allegations
In late 2010, longtime Facebook member and an experienced internet user Austin-Spearman navigated to www.aarp.org to learn about AARP membership. ( See Am. Compl. ¶¶ 72-73.) The AARP is an organization that advocates for people over the age of 50; the fee that one pays to become an AARP member supports the organization's lobbying and litigation efforts, and AARP members also have access to "discounts on shopping, dining, and travel as well as financial and insurance-related products and services." ( Id. ¶ 1.) A person who is 50 years of age or older can become a member of the AARP by mailing in a paper form along with the requisite membership fee, or by purchasing a membership online, through the AARP's website. ( See id. ¶¶ 19, 23.) Paid AARP members may then opt to establish an online account with the organization, which is accomplished by creating login credentials-a user name and password-and also by "enter[ing] their demographic information (first name, last name, country, zip code, and birthday) on AARP's website." ( Id. ¶ 23.) Notably, the AARP's website is set up such that any person can create an online AARP account without first becoming an AARP member; however, AARP members must register online if they wish to access certain discounts and special offers that are available to AARP members only through the member's AARP online account. ( See id. ¶¶ 2, 20.)
[w]hen you join AARP, we collect basic information such as your name, contact information, preferences and date of birth. We collect information about your participation in AARP activities, including member services and discounts obtained by using your membership card.
AARP also collects information on our website. We collect both information that identifies you as a particular individual ("personally identifiable information") and anonymous information that is not associated with a specific individual ("nonpersonally identifiable information"). When you visit our website, some information may be collected automatically as part of the site's operation. We also collect information we receive from you during online registration and when you complete other forms.
We may allow third-party analytics companies, research companies or ad networks to collect nonpersonally identifiable information on our website. These companies may use tracking technologies, including cookies and Web beacons, to collect information about users of our site in order to analyze, report on or customize advertising on our site or on other sites. For information about how to opt-out of the customization of advertising from many ad networks, you can visit here.
B. Procedural History
On November 10, 2014, Defendants filed the instant motion to dismiss Austin-Spearman's amended complaint. ( See Mot. to Dismiss Am. Compl. with Prejudice ("Defs.' Mot."), ECF No. 24.) Defendants primarily argue that Austin-Spearman lacks an injury-in-fact that would support Article III standing to bring these claims, and thus, that her complaint must be dismissed pursuant to Rule 12(b)(1) for lack of subject matter jurisdiction. ( See Def.'s Mem. in Supp. of Def.'s Mot. ("Def.'s Mem."), ECF No. 24-1, at 24-30.) Defendants also contend that Austin-Spearman has failed to state a claim upon which relief can be granted for various reasons. ( See id. at 30-48.) This Court held a hearing on Defendants' motion on May 28, 2015. ( See Minute Entry dated May 28, 2015.)
II. LEGAL STANDARDS
A. Article III Standing
Article III of the United States Constitution limits judicial power to "cases" and "controversies." U.S. Const. art. III § 2, cl. 1. "The concept of standing is part of this limitation[, ]" Simon v. E. Kentucky Welfare Rights Organization, 426 U.S. 26, 37 (1976); therefore, "[a] showing of standing is an essential and unchanging' predicate to any exercise of [federal court] jurisdiction[, ]" Florida Audubon Soc. v. Bentsen, 94 F.3d 658, 663 (D.C. Cir. 1996) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). See also Allen v. Wright, 468 U.S. 737, 752 (1984) ("[T]he law of Art. III standing is built on a single basic idea-the idea of separation of powers."). Consequently, "[e]very plaintiff in federal court bears the burden of establishing the three elements that make up the irreducible constitutional minimum' of Article III standing: injury-in-fact, causation, and redressability." Dominguez v. UAL Corp., 666 F.3d 1359, 1362 (D.C. Cir. 2012) (quoting Lujan, 504 U.S. at 560-61).
It is well established that an injury-in-fact is "an invasion of a legally protected interest that is both (a) concrete and particularized and (b) actual or imminent, as opposed to merely conjectural or hypothetical." Humane Soc'y of United States v. Vilsack, 19 F.Supp. 3d 24, 34 (D.D.C. 2013). Although "[e]conomic harm... is a canonical example of injury[-]in[-]fact sufficient to establish standing[, ]" N. Carolina Fisheries Ass'n, Inc. v. Gutierrez, 518 F.Supp.2d 62, 82 (D.D.C. 2007), "[m]erely asking for money does not establish an injury[-]in[-]fact[, ]" Rivera v. Wyeth-Ayerst Labs., 283 F.3d 315, 319 (5th Cir. 2002). Rather, a cognizable overpayment injury ordinarily relates to the harm that results from there being a "difference between what [plaintiff] contracted for and what she actually received[, ]" Sanchez v. Wal-Mart Stores, Inc., No. 06-cv-2573, 2008 WL 3272101, at *3 (E.D. Cal. Aug. 6, 2008); see also Tae Hee Lee v. Toyota Motor Sales, U.S.A., Inc., 992 F.Supp.2d 962, 972 (C.D. Cal. 2014) ("There can be no serious dispute that a purchaser of a product who receives the benefit of his bargain has not suffered an Article III injury-in-fact traceable to the defendant's conduct.").
B. Federal Rule of Civil Procedure 12(b)(1)
"In reviewing the standing question" in the context of a motion to dismiss under Rule 12(b)(1), a court "must be careful not to decide the questions on the merits for or against the plaintiff, and must therefore assume that on the merits the plaintiffs would be successful in their claims.'" In re Navy Chaplaincy, 534 F.3d 756, 760 (D.C. Cir. 2008) (quoting City of Waukesha v. EPA, 320 F.3d 228, 235 (D.C. Cir. 2003)). The court must also accept as true all factual allegations in the complaint, and must "construe the complaint liberally, granting plaintiff the benefit of all inferences that can be derived from the facts alleged." Thomas v. Principi, 394 F.3d 970, 972 (D.C. Cir. 2005). However, "the court need not accept factual inferences drawn by plaintiffs if those inferences are not supported by facts alleged in the complaint, nor must the Court accept plaintiff's legal conclusions." Disner v. United States, 888 F.Supp.2d 83, 87 (D.D.C. 2012) (internal quotation marks and citation omitted). Moreover, and importantly, "[u]nder Rule 12(b)(1), the Court may dispose of the motion on the basis of the complaint alone, or it may consider materials beyond the pleadings as it deems appropriate to resolve the question whether it has jurisdiction to hear the case.'" Neighborhood Assistance Corp. of Am. v. Consumer Fin. Prot. Bureau, 907 F.Supp.2d 112, 121 (D.D.C. 2012) (quoting Scolaro v. D.C. Bd. of Elections & Ethics, 104 F.Supp.2d 18, 22 (D.D.C. 2000)).
C. Federal Rule of Civil Procedure 12(b)(6)
When evaluating a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6), a court looks for sufficient facts alleged in the complaint "to raise a right to relief above the speculative level[.]" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation marks and citation omitted). "[D]etailed factual allegations" are not necessary to withstand a Rule 12(b)(6) motion, id., but a plaintiff must plead enough facts to make the claim seem plausible on its face, see Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In evaluating the plausibility of Plaintiff's claim, the court must accept as true all factual allegations in the complaint, and the plaintiff should receive the benefit of all inferences that can be derived from the facts alleged. See Iqbal, 556 U.S. at 678; see also Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000). "While the complaint is to be construed liberally in plaintiff's favor, the Court need not accept inferences drawn by the plaintiff if those inferences are unsupported by facts alleged in the complaint; nor must the Court accept plaintiff's legal conclusions." Kramer v. United States, 460 F.Supp.2d 108, 110 (D.D.C. 2006) (citing Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994)). Accordingly, "legal conclusions cast in the form of factual allegations' are insufficient to survive a motion to dismiss." Henok v. Chase Home Fin., LLC, 915 F.Supp.2d 109, 114 (D.D.C. 2013) (quoting Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002)).
Second, it is clear on the facts as alleged in Austin-Spearman's complaint that Austin-Spearman actually received the benefit of her bargain with AARP. See Sanchez v. Wal-Mart Stores, Inc., 2008 WL 3272101, at *3 (explaining that a plaintiff only has standing to bring a breach of contract action based on alleged economic injury where she can plausibly allege that she did not receive the benefit of her bargain with the defendant). The complaint explains that the AARP is a membership organization that advocates for people over the age of 50, and that website usage-including the discounts that are only available online-is but one part of the benefits that accrue to members. ( See Am. Compl. ¶¶ 1-2.) The complaint does not (and apparently cannot) contend that website usage is the primary benefit of an AARP membership, nor that it is even an essential part of the bundle of rights that are conferred to AARP members, and this flaw is fatal to Austin-Spearman's economic injury theory of standing. See, e.g., Birdsong v. Apple, Inc., 590 F.3d 955, 961 (9th Cir. 2009) (dismissing complaint partly on standing grounds because "[t]he plaintiffs' alleged injury in fact is premised on the loss of a safety' benefit that was not part of the bargain to begin with"); Williams v. Purdue Pharma Co., 297 F.Supp.2d 171, 176 (D.D.C. 2003) (dismissing complaint on standing grounds because "[a]lthough the plaintiffs allege a benefit of the bargain theory of injury, they do not allege that [defendant's pain relief drug] failed to provide them effective pain relief" and therefore "it must be assumed that [defendant's pain relief drug] worked for plaintiffs and that consequently they got what they paid for" (internal quotation marks and citations omitted)).
To be sure, the instant complaint struggles valiantly to convey that AARP-website usage was subjectively important to Austin-Spearman herself. ( See Am. Compl. ¶ 76 ("[A]t the time [Austin-Spearman] paid for her membership, Austin-Spearman valued her personal privacy and expected that AARP would not permit third parties to collect her PII without first obtaining her permission to do so[.]"); id. ¶ 82 ("Had AARP informed Austin-Spearman that it allows third parties to collect member PII... she either (i) would not have paid for an AARP membership in the first place or (ii) would not have used the AARP website at all[.]").) But conclusory statements regarding a plaintiff's own beliefs and expectations are not sufficient to support an alleged "overpayment" injury; rather, a plaintiff must allege facts that demonstrate that the breached term was objectively essential to the contract at issue, such that the violation effectively robbed the plaintiff of her payment because what she received was not what the parties agreed she had purchased. In other words, a plaintiff is not entitled to demand perfect realization of every hope and dream with respect to contract performance; instead, the plaintiff has received the benefit of her bargain where the defendant has substantially performed on the contract. See Schneider v. Dumbarton Developers, Inc., 767 F.2d 1007, 1013 (D.C. Cir. 1985); see also Sununu v. Philippine Airlines, Inc., 638 F.Supp.2d 35, 39 (D.D.C. 2009) (noting that "[s]ubstantial performance' is generally considered to exist when a contracting party has failed to render full performance but any defects in performance are considered minor"). Thus, to sustain her claim that she has standing based on her overpayment for the AARP membership, Austin-Spearman must plausibly allege that Defendants failed to render substantial performance of the AARP membership contract. Compare, e.g., Lozano v. AT&T Wireless Servs., Inc., 504 F.3d 718, 733 (9th Cir. 2007) (holding that the plaintiff was denied the benefit of the bargain, and therefore had standing, where plaintiff did not receive the full number of agreed-upon minutes he purchased in a wireless cellular phone service agreement) with Rivera v. WyethAyerst Labs., 283 F.3d 315, 319-21 (5th Cir. 2002) (holding that the plaintiff was not denied the benefit of the bargain, and therefore lacked standing, where plaintiff had bought a prescription painkiller that was later withdrawn from the market but plaintiff found the painkiller to be effective and did not suffer harmful side effects).
The analysis and holding of In re Science Applications International Corp. Backup Tape Data Theft Litigation ("S.A.I.C."), 45 F.Supp. 3d 14 (D.D.C. 2014), make clear that Austin-Spearman has failed to mount this standing hurdle. After an unknown thief stole the plaintiffs' personal information and medical records from a technology company that handles data for the federal government, the plaintiffs in S.A.I.C. (who were members of the U.S. military enrolled in certain health care plans) filed a complaint against their health insurance company, the Department of Defense, and several others. See id at 19. The complaint asserted approximately 20 causes of action, including breach of contract, and with respect to Article III standing, the plaintiffs claimed that the theft had caused them to suffer an economic injury-in-fact due to the diminution in the value of their insurance premiums-in plaintiffs' view, the premiums were tendered in part as consideration for the defendant's promise of keeping their personal health information secure, and thus plaintiffs had paid for a service they did not receive. See id. at 30. The Court rejected plaintiffs' economic injury argument, reasoning that the plaintiffs had "allege[d] that they were paying for health and dental insurance[, ]'" and did not "claim that they were denied coverage or services in any way whatsoever[, ]" id. at 30, and they also "ha[d] not alleged facts that show that the market value of their insurance coverage (plus security services) was somehow less than what they paid[, ]" id. Consequently, despite the plaintiffs' suggestion that "some indeterminate part of their premiums went toward paying for security measures" and that the value of their premiums were diminished as a result of the security breach, the Court concluded that the plaintiffs had failed to demonstrate that they had suffered an economic injury that gave rise to standing to sue. Id. (adding that "[n]othing in the [c]omplaint makes a plausible case that Plaintiffs were cheated out of their premiums[, ]" and "[a]s a result, no injury lies").
So it is here. Much like the plaintiffs in S.A.I.C., Austin-Spearman alleges that she paid for an AARP membership- and also that she got one. ( See Def.'s Mot. at 28 ("Plaintiff does not allege that she was denied any membership benefit or service for which she paid when purchasing her AARP membership.").) AARP members purchase a set of benefits that includes supporting the AARP's advocacy efforts ( see Am. Compl. ¶ 1; Hr'g Tr. at 19:15-16); getting a subscription to the AARP magazine ( see Hr'g Tr. at 19:19-20); and accessing "discounts on shopping, dining, and travel as well as financial and insurance-related products and services" (Am. Compl. ¶ 1). Austin-Spearman does not allege that she was denied any of these things; instead, she merely alleges that AARP's privacy protections were not as stringent as she believed they would be. ( See, e.g., Am. Compl. ¶¶ 83, 108, 123, 135, 138, 156.) This Court finds that, having not established that she actually lost any of the value of her membership, Austin-Spearman has not plausibly claimed that she overpaid for the AARP membership agreement such that she was injured economically and now has standing to sue.
Accordingly, as set forth in the separate order accompanying this memorandum opinion, AARP's motion to dismiss is GRANTED, and Austin-Spearman's complaint is dismissed. See Gen. Motors Corp. v. E.P.A., 363 F.3d 442, 448 (D.C. Cir. 2004) ("As a court of limited jurisdiction, we begin, and end, with an examination of our jurisdiction.").