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Mendoza v. Microsoft, Inc.

United States District Court, W.D. Washington, Seattle

September 11, 2014

MANUEL MENDOZA, et al., Plaintiffs,


MARSHA J. PECHMAN, Chief District Judge.

This matter comes before the Court on Defendant Microsoft Inc.'s motion to dismiss. (Dkt. No. 50.) Having reviewed the motion, response (Dkt. No. 54), reply (Dkt. No. 56), and all related papers, the Court GRANTS the motion.


Defendant Microsoft owns and operates a well-known gaming portal called Xbox LIVE, which provides streaming video via internet access, online gaming services, online video rental services, and online video services. (Dkt. No. 1 at 1.) Plaintiffs are former subscribers to X-Box LIVE. (Id. at 14-15.) They allege Microsoft retained and disclosed "their names, addresses, credit information, billing addresses, and video programming viewing histories after cancellation of their membership services with Microsoft's X-Box LIVE Gaming System." (Id. at 2.) The Complaint further claims:

This information [personally identifiable information] is sold by Microsoft for profit, shared with other vendors, sold to data mining companies, and used to populate Microsoft's new Search engine known as "Bing" with data, data markers, metrics, demographic information, and custom-tailored search results and advertising.

(Id. at 3.) Plaintiffs also contend that Microsoft's privacy policy is "unclear" and "located piecemeal in various sections of its corporate website and hidden in a third-level webpage not usually seen by consumers." (Id. at 6-10.) Plaintiffs do not identify when these alleged events occurred, how the disclosures happened, to whom the information was disclosed/sold, or even that Plaintiffs' own information was disclosed and personal knowledge of such disclosure and retention. (Id. at 1-15.)

Plaintiffs claim Microsoft's practices violated the Video Privacy Protection Act ("VPPA"), California Customer Records Act ("CCRA"), California Unfair Competition Law ("UCL"), and Texas Deceptive Trade Practices Act ("DTPA"). They seek to certify a national class action comprised of "all individuals and entities in the United States and its territories that have cancelled their subscriptions to Microsoft's services." (Id. at 15.)

B. Procedural Posture

Plaintiffs filed this lawsuit in the United States District Court for the Western District of Texas. (Dkt. No. 1.) Microsoft initially moved for dismissal under 28 U.S.C. ยง 1406(a) or to transfer to this District. (Dkt. No. 23 at 10.) Microsoft withdrew its motion to dismiss before the Texas District Court reached the merits. The Court granted the motion to transfer. (Id.)

Microsoft now moves to dismiss on two theories: (1) the Court lacks jurisdiction where Plaintiffs fail to satisfy Article III's standing requirements and should be dismissed under Fed.R.Civ.P. 12(b)(1); and (2) the complaint fails to state a claim. (Dkt. No. 50.) Plaintiffs counter that the complaint is sufficient to establish standing. (Dkt. No. 54.) The Court does not reach Plaintiffs' other argument-that the Fed.R.Civ.P. 12(b)(6) motion is procedurally improper- because the Court dismisses the Complaint under Fed.R.Civ.P. 12(b)(1).


I. Legal Standard Motion to Dismiss Under 12(b)(1)

Federal courts are courts of limited jurisdiction. Gunn v. Minton, ___ U.S. ___ , 133 S.Ct. 1059, 1064 (2013) (citation omitted). As such, this Court is to presume "that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377 (1994) (citations omitted). A Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction may be either "facial" or "factual." Safe Air for Everyone v. Meyer , 373 F.3d 1035, 1038 (9th Cir. 2004). A facial attack on subject matter jurisdiction is based on the assertion that the allegations contained in the complaint are insufficient to invoke federal jurisdiction. Id . "A jurisdictional challenge is factual where 2017the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.'" Pride v. Correa , 719 F.3d 1130, 1133 n. 6 (9th Cir. 2013) (quoting Safe Air for Everyone , 373 F.3d at 1039)).

Microsoft's jurisdictional challenge is to Plaintiffs' standing under Article III. To establish Article III standing, a plaintiff must show (1) a concrete injury that is actual or imminent and not hypothetical; (2) fairly traceable to the defendant's allegedly wrongful conduct; (3) that is likely to be redressed by a favorable decision. Lujan v. Defenders of Wildlife , 504 U.S. 555, 560-61 (1992). "A plaintiff must demonstrate standing for each claim" and "for ...

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