3%. DURIE TANGRI LLP SONAL N. MEHTA (SBN 222086) - 1:11 smehta@durietangri.com LAURA E. MILLER (SBN 271713) lmiller@durietangri.com CATHERINE Y. KIM (SBN 308442) ckim@durietangri.com 217 Leidesdorff Street San Francisco, CA 94111 415—362—6666 Telephone: 4 1 5—23 6—6300 Facsimile: 33 aCQUNW SAN MATFO JUL 312017 31H A8 Attorneys for Defendant Facebook, Inc. XVd SUPERIOR COURT OF THE STATE OF CALIFORNIA 10 COUNTY OF SAN MATEO 11 12 SIX4THREE, LLC, 13 14 15 16 17 18 19 20 21 22 a CIV 533328 Delaware limited liability Case No. Plaintiff, Assigned for all purposes to Hon. Marie S. Weiner, Dept. 2 company, V. FACEBOOK, INC., a Delaware corporation and DOES 1-50, inclusive, Defendant. DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMMARY ADJUDICATION OF ISSUES Date: Time: Dept: Judge: September 11, 2017 9:00 am. 2 (Complex Civil Litigation) Honorable Marie S. Weiner FILING DATE: TRIAL DATE: April 10, 2015 Vacated REDACTED PUBLIC VERSION 23 24 25 C V533328 M PAS 26 633 3618 27 Memorandum of Points and Authorities in Sup; I HiMilli"1111111111111!ill 28 DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUIVIMARY ADJUDICATION OF ISSUES / CASE NO. CIV 533328 TABLE OF CONTENTS Page INTRODUCTION ........................................................................................................................... 1 II. PROCEDURAL BACKGROUND .................................................................................................. 2 III. UNDISPUTED BACKGROUND FACTS ...................................................................................... 3 A. The Facebook Platform Allows Developers to Integrate Their Applications With Facebook’s Social Graph. .................................................................................................... 3 B. SiX4Three Hoped to Build a Successful Application Utilizing Data That Facebook Made Available. ................................................................................................................... OO\IO’\ \O 3 C. There Is No Dispute That Six4Three Agreed to Facebook’s Terms of Service, Including the Limitation of Liability Contained in the SRRs .............................................. 4 D. SiX4Three Included a Similar Limitation of Liability Provision in Its Own Terms of Service. ............................................................................................................................ 5 10 11 12 ARGUMENT ................................................................................................................................... l3 A. Limitations of Liability Provisions Like That Contained in F acebook’s SRRs Are Valid and Enforceable in California. ................................................................................... 5 B. Six4Three’s Breach of Contract, Negligent Interference, and Section 17200 Claims All “Arise Out of or in Connection With” Its Contract With F acebook and Are 5 14 15 Therefore Subject to the Limitation of Liability .................................................................. 6 16 17 Six4Three’s Attempts to Escape the Consequences of the Limitation of Liability It Agreed to Are Unavailing. ................................................................................................... 7 18 l. C. The Limitation of Liability Is Not Unconscionable ................................................. 7 19 a. There Is No Procedural Unconscionability. ................................................. 7 20 b. There Is No Substantive Unconscionability. ............................................... 9 21 22 23 2. Section 1668 Does Not Prevent Application of the Limitation of Liability to Six4Three’s Breach of Contract, Negligent Interference, or Section 17200 Claims. ........................................................................................................ 10 CONCLUSION .............................................................................................................................. 24 25 26 27 28 i DEFENDANT FACEBOOK, lNC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMMARY ADIUDICATION OF ISSUES / CASE NO. CIV 533328 1 1 TABLE OF AUTHORITIES Page(s) Cases Armendariz v. Found. Health Psychcare Servs., Inc, 24 Cal. 4th 83 (2000) .............................................................................................................................. 7 AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) ............................................................................................................................ 7, 9 City ofAtascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc, 68 Cal. App. 4th 445 (1998) ................................................................................................................. 10 10 11 Darnaa, LLC v. Google, Inc, Case No. 15-cv—03221—RMW, 2015 WL 7753406 (N.D. Cal. Dec. 2, 2015) .................................. 8, 10 Farnham v. Superior Court (Sequoia Holdings, Inc.), 60 Cal. App. 4th 69 (1997) ................................................................................................................... 10 12 13 14 15 16 Food Safety Net Servs. v. Eco Safe Sys. USA, Inc, 209 Cal. App. 4th 1118 (2012) ......................................................................................................... 6, 10 Markborough Cal, Inc. v. Superior Court, 227 Cal. App. 3d 705 (1991) .................................................................................................................. 6 McQuirk v. Donnelley, 189 F.3d 793 (9th Cir. 1999) ................................................................................................................ 10 17 Nat ’1 Rural Telecommunications Coop. 18 19 20 21 22 319 F. Supp. 2d 1040 v. DIRECT V, Inc, (CD. Cal. 2003) ............................................................................................ 6, 11 Pinnacle Museum Tower Ass ’n v. Pinnacle Mkt. Dev. (US), LLC, 55 Cal. 4th 223 (2012) ........................................................................................................................ 7, 9 Simulados Software, Ltd. v. Photon Infotech Private, Ltd, 40 F. Supp. 3d 1191 (N.D. Cal. 2014) .................................................................................................... 9 23 Song ft, Inc. v. Google Inc, 72 F. Supp. 3d 53 (D.D.C. 2014) ............................................................................................................ 8 24 Tunkl v. Regents of Univ. of Cal, 60 Cal. 2d 92 (1963) ............................................................................................................................... 9 25 26 Wayne v. Staples, Inc, 135 Cal. App. 4th 466 (2006) ................................................................................................................. 8 27 28 ii DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMMARY ADIUDICATION OF ISSUES / CASE NO. CIV 533328 Statutes Cal. Bus. & Prof. Code Cal. Civ. Code § § 17200 .......................................................................................................... passim 1668 ..................................................................................................................... 1, 2, 7, 10 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 iii DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMNIARY ADIUDICATION OF ISSUES / CASE NO. CIV 533328 - INTRODUCTION I. In late 2012, Ted Kramer created Six4Three, LLC (“Six4Three”) to develop an iPhone application that would take advantage of data that Facebook provided to the developer community, subject to user privacy settings, free of charge to enhance the user experience in their mobile applications. While access to the data was free, it did not come without limitations. Rather, to access this data through the Facebook Platform, developers had to agree, F acebook’s terms of use—referred to as its Statement as Six4Three concedes it did here, to of Rights and Responsibilities (“SRRs”). Included in the SRRs is a standard limitation of liability provision that is often included in the terms of service when a company is providing its users something at no cost. The limitation expressly prohibits the 10 recovery of damages, including lost profits, that exceed $100 or the amount that a party paid Facebook. After registering 11 as a developer and agreeing to the SRRs and other developer terms, Six4Three 12 was allowed access to the data Facebook made available to developers at the time, which included 13 information about Facebook users’ friends, including photos those friends shared on Facebook. Using 14 that data, Six4Three built an application that allowed users to search through all 15 friends had shared with them on Facebook to identify pictures of women in bikinis. After spending 16 months offering the app for free in an attempt to attract customers, Six4Three only ever managed $412 in 17 total sales. of the photos that their 18 Notwithstanding that it agreed to the limitation of liability included in Facebook’s SRRs, 19 Six4Three is seeking nearly $100 million in lost profits and lost enterprise value. But as to Six4Three’s 20 breach 21 of liability that Six4Three agreed to in exchange for access to Facebook’s data. California courts have 22 long enforced this type of limitation as to these claims, particularly where it relates to 23 be clear, Facebook is not attempting to apply the limitation to all 24 Facebook seeks a narrow ruling that the limitation caps liability for Six4Three’s breach 25 negligent interference, and Section 17200 claims. of contract, negligent interference, and Section 17200 claims, there is no escaping the limitation a free service. To of Six4Three’s many claims. Rather, of contract, Any argument by Six4Three that the limitation is unconscionable or barred by Section 1668 fails 26 27 as a 28 caps matter of law. The limitation is not unconscionable. It is clearly and conspicuously presented in all within the SRRs. And the term was indisputably understood by Six4Three, as it included a similar 1 DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMIVIARY ADIUDICATION OF ISSUES / CASE NO. CIV 533328 limitation of liability in its terms of service with its own users. Facebook is not aware of a single case that has held such a limitation unconscionable under circumstances like these. Nor does Section 1668 render the limitation of liability unenforceable. Section 1668 is a narrow exception to the general rule that contractual limits on liability are to be enforced—it prohibits such limitations only with regard to intentional torts, and Facebook is not moving on any of the intentional torts alleged by Six4Three. For these reasons, Facebook requests summary adjudication that the limitation of liability contained in the SRRs—a contract Six4Three concedes it agreed to—caps all damages for Six4Three’s breach of contract claim, negligent interference claim, 11. PROCEDURAL BACKGROUND At the July 10 and Section 17200 claim. 10, 2017 case management conference and hearing in this case, Facebook requested of liability contained in the SRRs that 11 leave to move for summary adjudication based on the limitation 12 Six4Three acknowledges it agreed to in exchange for access to Facebook’s data. Six4Three had no 13 objection, and the Court ruled to allow Facebook to file the motion and set a briefing schedule in 14 consultation with the parties. After the hearing, the Court issued its Case Management Order No. 15 set a 16 contractual limitation of liability clause.” This motion is filed pursuant to the Court’s order. 17 3 and briefing schedule for Facebook’s motion for summary adjudication of issues “based upon the As the court-directed filing date for this motion, July 28, 2017, is the same day that Six4Three is 18 to file its Third Amended Complaint, Facebook references the proposed Third Amended Complaint, 19 attached as Exhibit 20 Facebook expects that the Third Amended Complaint, filed on July 28, 2017, 21 allegations and claims against Facebook as those in the proposed Third Amended Complaint, as the 22 Court granted Six4Three leave to modify the proposed Third Amended Complaint only to remove the 23 references to the proposed six individual defendants and substitute “Facebook” in the allegations 24 regarding the individual defendants. A to Six4Three’s motion for leave to amend, filed on March 20, 2017, throughout. will contain the same 25 26 27 28 2 DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF PODITS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMIVIARY ADJUDICATION OF ISSUES / CASE NO. CIV 533328 III. UNDISPUTED BACKGROUND FACTS1 The Facebook Platform Allows Developers to Integrate Their Applications With Facebook’s Social Graph. A. The Facebook Platform is a set of application programming interfaces (“APIs”) and services that Facebook makes available to third-parties that register as a Facebook developer. Declaration of Laura E. Miller in Support of Defendant F acebook, Inc.’s Motion for Summary Adjudication of Issues (“Miller Decl.”), Ex. 1 at FB-01347l68; EX. 3 at FB__0000025; Ex. 2 1H] 2, 26. The APIs and services allow developers to, among other things, retrieve data from Facebook. Id., Ex. 1 at FB—01347168; Ex. 3 at FB_0000025. This data enables developers to build more useful applications with enhanced user 10 experiences. Id, EX. 2 W 2, 26. The Facebook Platform is free for users as well as app developers like Six4Three. Id. Ex. 2 11 fl 2, App developers like Six4Three paid—and pay—nothing for access to data that F acebook 12 86—88, 90. 13 agrees to provide. Id. Facebook does, however, require that users and app developers agree to the SRRs. 14 Id., Ex. 15 provisions, a limitation 1 17 19 2o 21 22 23 24 25 26 27 fl 2, 85. The SRRs contain, among other of liability, which provides in pertinent part: WE WILL NOT BE LIABLE TO YOU FORANY LOST PROFITS OR OTHER CONSEQUENTIAL, SPECIAL, INDIRECT, OR INCIDENTAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS STATEMENT OR FA CEBOOK, EVEN IF WE HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. OUR AGGREGATE LIABILITY ARISING OUT OF THIS STATEMENT OR FACEBOOK WILL NOT EXCEED THE GREATER OF ONE HUNDRED DOLLARS ($100) OR THEAMOUNT YOUHAVE PAID US IN THE PAST TWEL VE MONTHS. 16 18 at F B—01347166; Ex. 3 at FB_0000017; Ex. 2 — _. Id., Ex. 1 B. at FB—01347168 (emphasis added); EX. 3 at FB_0000024 (emphasis added). Six4Three Hoped to Build a Successful Application Utilizing Data That Facebook Made Available. Six4Three was a startup funded with approximately Miller Decl., EX. 4; Ex. 5 at 68:10—18, 276:21—277r8. 1 The issue presented by this motion is a narrow one. Accordingly, Facebook limits its discussion of the background facts to only those relevant to the present motion. 28 3 DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMMARY ADJUDICATION OF ISSUES / CASE NO. CIV 533328 Like many other companies, Six4Three sought to make money by building an application that utilized the data offered through the Facebook Platform. Six4Three set up DJ a Facebook developer account in December 2012, agreed to Facebook’s SRRs, including the limitation of liability included in the SRRs, and in retmn, was given access to the data Pacebook made available at the time, which included GUI-b Facebook users’ fi‘iends’ photos. 161., Ex. 2 1H} 85, 96—97; Ex. 6 at 87:16—88:17, 93:6—8; Ex. 7 at 3825—7, 41: 17—21, 44:9—13. Using that data, Six4Three developed an application called “Pikinis,” which allowed users to automatically find their fiiends’ swimsuit photos on Facebook. [11,, Ex. 8; Ex. 6 at 147:9~22. Six4Three’s promotional material, which can be viewed in part at this archived web address, https://web.archive.org/web/20141004095225/http://www.pikjnis.com/, show what it offered: . ' ‘ " The iPhOne app that automatically finds swimsuit photos on. Facebook. _. Miller Decl. 1} 13. Bygeemgmacebm ' 1 Download on the App Store Id, Ex. 9 at 3. profits and “enterplise value.” C. 1 , sm— -, 179, 193; Ex. 10 at 89—90 156212. Although it cannot show more than Nonetheless, Six4Three now seeks nearly Id, Ex. 2 W _ Miller Decl., Ex. 6at 87:16—18, Six4Three had access to and utilized this fiiends' data $412 in sales. , in alleged lost (claiming— There Is No Dispute That Six4Three Agreed to Facebook’s Terms of Service, Including the Limitation of Liability Contained in the SRRs. There is no dispute that Six4Three agreed to Facebook’s terms, including the SRRs. Ex. 2 1] 85 (“On December 11, 2012, 643 entered into Facebook’s Statement Responsibilities”); see also EX. Miller Decl., of Rights and 5 at 188:14—21, 189:4—9; 192:3—5, 192:24—19427, 198:16—25; Ex. 7 at 4 DEFENDANT FACEBOOK, INC.’S IVIEMORANDW OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMNIARY ADJUDICATION OF ISSUES / CASE NO. CIV 533328 — esteeme— 44:9—133 11013—17. [d U] In fact, Tim Gildea, a member of SiX4Three and the piimaiy developer of Pikinis: he. he hhhhe-meh heeehh h no dispute that Sixzilliree was aware of, reviewed: and a greed to the SRRS, including the limitation he of liability, at the time it registered as a developer with Facebook. D. \J SiX4Three Included a Similar Limitation of Liability Provision in Its Own Terms of Service. SiX4Thi'ee included a limitation of liability—which was similar to F acebook’swin its own terms of use for Pikinis: Id? Ex. IV. 11 at SiX4Th1‘ee 000001100—01;EX. 6 at l 16:16—117110. ARGUiViENT A. Limitations of Liability Provisions Like That Contained in F acebook’s SRRs Are Valid and Enforceable in California. Limitation of liability clauses “have long been recognized as valid in California” 2 Scai‘amellino is an ex erienced tech entre reneur decade of ex erience 29:15—22. as a legitimate with a degree from Yale Law School and about a Miller DecL EX. 5 at 27:7—9, Id. at 29:15—22. mhermore, did with Six4Three. Id. at 95:3—6. D DEFENDANT FACEBOOK DECKS hiEMORANDIM OF POBGTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SIM’IARY ADIUDICATION OF ISSUES CASE NO. CIV 533328 2’ as he part of private, voluntary transactions between parties. Food Safety Net Servs. 209 Cal. App. 4th 1118, 1126 (2012) (citation omitted); see also v. v. Eco Safe Sys. USA, Inc., Nat’l Rural Telecommunications Coop. DIRECT V, Inc., 319 F. Supp. 2d 1040, 1048 (CD. Cal. 2003) (“Under California law, parties may agree by their contract to the limitation of their liability in the event of a breach”) (citation omitted). Limitation of liability provisions are particularly appropriate Where, service for free. See Markborough Cal, Inc. v. as here, one party is offering a Superior Court, 227 Cal. App. 3d 705, 714 (1991) (“limitation of liability provisions are particularly important where the beneficiary of the clause is involved in a ‘high-risk, low—compensation service’”) (citation omitted). Six4Three’s Breach of Contract, Negligent Interference, and Section 17200 Claims All “Arise Out of or in Connection With” Its Contract With Facebook and Are Therefore Subject to the Limitation of Liability. B. 10 The limitation 11 of liability that Six4Three agreed to specifically prohibits recovery of “any lost 12 profits or other consequential, special, indirect or incidental damages arising out ofor in connection 13 with this statement or Facebook.” Miller Decl., Ex. 14 FB_0000024 (emphasis added). The limitation of liability thus unquestionably applies to Six4Three’s 15 breach 16 Facebook’s breach of the agreement,” and Facebook is therefore liable for 643’s damages as a result of 17 the breach 18 the same alleged breach—Facebook’s decision to 19 Specifically, Count I, the Section 17200 claim, alleges that Facebook’s breach of the 20 Developers’ ability to build advanced photo—searching applications,” which Six4Three claims was a 21 breach 22 claims that Facebook’s alleged breach of the SRRs interfered with Six4Three’s economic relationships 23 with its users because it “end[ed] 643’s 24 gravamen of contract claim, which specifically of contract.” of the 1 at FB-01347168 (emphasis added); Ex. 3 at alleges that Six4Three “was injured as a result of Id., Ex. 2 11 193 (emphasis added). Six4Three’s other claims3 turn on exactly SRRs. Compare id. of each of these claims 11 166 with id. 11 limit developer access to certain types of data. 185. Similarly, Count access to Graph API data.” Id. SR “terminate[d] VIII, for negligent interference, 1111 241, 250, 257—59. The is that Facebook breached the SRRs and Six4Three was harmed as a 25 26 27 For the sake of clarity, Facebook is only moving for summary adjudication as to the breach of contract claim (Count II), the negligent interference claim (Count VIII), and the Section 17200 claim (Count I). 3 28 6 DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUNIMARY ADJUDICATION OF ISSUES / CASE NO. CIV 533328 of or in connection wit ”the result. The claims thus “arise out SRRs and the limitation of liability must therefore be enforced as to these claims. C. Six4Three’s Attempts to Escape the Consequences of the Limitation of Liability Agreed to Are Unavailing. It Attempting to avoid the consequences of the limitation of liability to which it agreed, SiX4Three asserts, without basis, that the provision is unconscionable, or otherwise unenforceable under California Civil Code Section 1668. Miller Decl., Ex. 2 M 190—192. Both of these arguments fail as a matter of OO\] well—established California law. 1. 10 The Limitation of Liability Is Not Unconscionable. “A finding of unconscionability requires ‘a procedural and a substantive element, the former 11 focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one— 12 sided results.” 13 Found. Health Psychcare Servs., 14 15 AT&T Mobility LLC v. Concepcion, 21. Inc, 24 563 U.S. 333, 340 (2011) (quoting Armendariz v. Cal. 4th 83, 114 (2000)). There Is No Procedural Unconscionability. With respect to procedural unconscionability, the traditional analysis looks at oppression or of negotiation and meaningful choice, 16 surprise. “Oppression occurs where a contract involves lack 17 surprise where the allegedly unconscionable provision is hidden within a prolix printed form.” Pinnacle 18 Museum Tower Ass ’n v. Pinnacle Mkt. Dev. (US), LLC, 55 Cal. 4th 223, 247 (2012) (citation omitted). 19 But Six4Three does not claim to have been oppressed or surprised by the limitation of liability. Nor 20 could they. The provision was not surprise—it appears clearly and conspicuously in all caps. See Miller 21 Decl., Ex. I at FB-01347168; EX. 22 Facebook’s SRRs when registering as a developer. 1d,, Ex. 7 at 4429—13. And furthermore, Six4Three 23 admits that its primary investor and business advisor, who graduated from Yale Law School, 24 25 26 27 28 - —). 3 at FB_0000024. In fact, Six4Three admits that it reviewed 1...,— Id, Ex. 5 at 27:7—9, 192:24—194:7 (sworn testimony from Scaramellino 7 DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMIVIARY ADIUDICATION OF ISSUES / CASE NO. CIV 533328 — _— The evidence is undisputed that Id. at 192124—194z7, 198:16—25; Ex. 7 at 110:23-111:1. And Six4Three does not claim that the term was vague or ambiguous, or that its meaning or consequences -. were a surprise. Nor could they, as Six4Three includes Id., Ex. at Six4Three 000001100—01; Ex. 6 at 116216—117210. Neither the provision nor its 11 meaning were a surprise to SiX4Three. Nor was the limitation of liability the result of oppression. It is not enough, have it, that Facebook does not negotiate the terms showing of lack of its SRRs. as Six4Threee would A finding of oppression requires a of meaningful choice, which includes the choice to reject an agreement altogether, or Inc, 72 F. Supp. 3d 53, 62 (D.D.C. 2014) 10 seek another contractual partner. Song fi, Inc. v. Google 11 (applying California law and upholding YouTube’s terms of service, including the limitation of liability, 12 because, among other things, the plaintiffs had a “meaningful choice as to whether to upload their video 13 to the YouTube website and agree to the conditions set forth by YouTube”); see also Wayne v. Staples, 14 Inc., 135 Cal. App. 4th 466, 482 (2006) (“There can be no oppression establishing procedural 15 unconscionability, even assuming unequal bargaining power and an adhesion contract, when the 16 customer has meaningful choices[.]”). Here, SiX4Three has not alleged and cannot prove that it did not 17 have a “meaningful choice” or a “legitimate opportunity” to “negotiate or reject the terms” 18 Darnaa, LLC v. Google, 19 2015), on reconsideration in part, No. 15-CV-03221-RMW, 2016 WL 6540452 (N .D. Cal. Nov. 2, 2016) 20 (emphasis added) (citation omitted); see also Song fi, 21 unconscionability in YouTube’s Terms of Service because they were not “obscured or hidden” and 22 plaintiffs “had 23 indisputably did. Six4Three did not have to register with Facebook as a developer and develop a bikini- 24 photo-finding app. It was free to reject the SRRs entirely and seek to partner with another social network 25 or photo sharing site for purposes of developing its application. In fact, Six4Three considered 26 developing its app to 27 ultimately chose to agree to the SRRs and integrate with Facebook. Miller Decl., Ex. 28 7021—6; Inc, Case No. 15-cv-03221-RMW, of the 2015 WL 7753406, at *2 (N .D. Cal. Dec. 2, —, a clear Inc, SRRs. 72 F. Supp. 3d at 63 (finding no procedural opportunity to understand the terms” and “did not lack a meaningful choice”). It but 6 at 69:11—25, Ex. 7 at 27:7—19. Unable to prove either surprise or oppression, Six4Thre cannot establish 8 DEFENDANT FACEBOOK, INC.’S IVIEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUNfMARY ADJUDICATION OF ISSUES / CASE NO. CIV 533328 procedural unconscionability, which ends the inquiry, as a showing of both procedural and substantive unconscionability are necessary to invalidate the clause. See AT&T Mobility LLC, 563 US. at 340. There Is No Substantive Unconscionability. b. As for substantive unconscionability, it is not enough that the limitation of liability protects F acebook. See Pinnacle Museum Tower Ass ’n, 55 Cal. 4th at 246 (“A contract term is not substantively unconscionable when it merely gives one side a greater benefit; rather, the term must be ‘so one—sided as to shock the conscience”) (citation omitted). In order to show substantive unconscionability, the plaintiff must prove that the contract terms are unreasonably favorable to one party such that they “shock the conscience.” Id. Indeed, California courts have consistently held that damage limiting 10 clauses are not substantively unconscionable just because they benefit a party, particularly where, as 11 here, the defendant allows 12 the plaintiff. See Simulados Software, Ltd. v. Photon Infotech Private, 13 (N .D. Cal. 2014) (“Many contracts contain 14 these clauses to be substantially unconscionable as a matter 15 argues, prevent Simulados from recovery in the event 16 expressly allows for recovery 17 unconscionable and not a contract for some recovery up to and including the amount of money it received from . . . Ltd, 40 F. limitation—of—liability clauses and courts have not found of law. The contract does not, as of a breach. The limitation-of-liability of the total amount received by Photon. As Simulados clause such, the Contract is not of adhesion”). Six4Three paid Facebook nothing for access to the data it sought. 18 Supp. 3d 1191, 1199 It built an application that it agreed to 19 achieved no more than $412 in sales. Capping its damages according to the limitation 20 hardly be considered overly harsh or one-sided, especially in light of Six4Three’s inclusion 21 term in its own user contracts. And Six4Three’s continued claim that this case involves the “public 22 interest” is of no moment. This is a business dispute between two companies that voluntary entered into 23 a 24 some perceived conflict with public policy or the public interest because, among other reasons, the 25 services provided through the Facebook Platform are not the type 26 “practical necessity for some members of the public.” Tunkl v. Regents 27 98—101 (1963). can of a similar private agreement. Six4Three cannot show that the limitation of liability should be set aside based on of “essential” services that are a of Univ. of Cal., 60 Cal. 2d 92, 28 9 DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES W SUPPORT OF ITS MOTION FOR SUMMARY ADJUDICATION OF ISSUES / CASE NO. CIV 533328 Section 1668 Does Not Prevent Application of the Limitation of Liability to Six4Three’s Breach of Contract, Negligent Interference, or Section 17200 Claims. 2. Section 1668 of the California Civil Code provides: “All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his person or property OWn fraud, or willful injury to the of another, or violation of law, whether willful or negligent, the law.” Cal. Civ. Code § 1668. By its plain terms, are against the policy of it does not prohibit enforcement of limitations of liability to breach of contract or negligence claims. In fact, “[w]ith respect to claims for breach of contract, limitation of liability clauses are enforceable unless they are unconscionable, that is, the improper result of unequal bargaining power or contrary to public policy.” Food Safety Net Servs., 209 10 Cal. App. 4th at 1126 (applying section 1668) (citation omitted). As discussed in detail above, the 11 limitation of liability provision in Facebook’s SRRs is not unconscionable. Thus Section 1688 is no bar 12 to enforcement of the limitation of liability as to Six4Three’s breach of contract claim. Nor does Section 1668 prohibit the enforcement of the limitation 13 as to Sxi4Three’s negligent 14 interference claim. See Farnham v. Superior Court (Sequoia Holdings, Inc. ), 60 Cal. App. 4th 69, 71 15 (1997) (“contractual releases 16 In cases with limitations of liability like the one we have here, courts have applied the limitation to 17 negligent interference claims as well 18 at *4—5. That is because Section 1668 operates to invalidate only those provisions that insulate a party 19 from intentional torts and negligent interference is not an intentional tort for the purposes of this 20 analysis. Farnham, 60 Cal. App. 4th at 71; see also McQuirk v. Donnelley, 189 F.3d 793, 796 (9th Cir. 21 1999) (quoting the rule from 22 Inc, 23 distinguishes actionable fraudulent deceit is the element of knowing intent to induce someone’s action to 24 his or her detriment with false representations 25 fraudulent intent, or intent to deceive, that distinguishes it from actionable negligent misrepresentation 26 and from nonactionable innocent misrepresentation. 27 actionable, irrespective of future liability for ordinary negligence as breach of contract. Farnham); City ofAtascadero See, e. g., v. 68 Cal. App. 4th 445, 482 (1998), as modified on denial of fact. Fraud . . . are generally enforceable”). Darnaa, LLC, 2015 WL 7753406, Merrill Lynch, Pierce, Fenner & ofreh ’g (Jan. 6, 1999) is an intentional tort; Smith, (“What it is the element of It is the element of intent which makes fraud of any contractual or fiduciary duty one party might owe to the other.”) (citation 28 10 DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUNIMARY ADIUDICATION OF ISSUES / CASE NO. CIV 533328 omitted). Therefore the limitation of liability also caps Six4Three’s damages as to its negligent interference claim. Finally, courts also have enforced limitation of liability provisions that, like this one, turn on an alleged breach as to Section 17200 claims of contract. In Nat ’1 Rural Telecommunications Coop, F. Supp. 2d at 1056—5 7, the parties agreed to a limitation 319 of liability that capped recovery. Nevertheless, the plaintiff asserted a Section 17200 claim alleging that DIRECTV wrongfully denied it the rights to certain channels. The court granted summary judgment for DIRECTV on the claim, and noted that “[u]nder California law, such broadly—worded provisions encompass more than contract disputes.” Id. at 1056. The court observed that the Section 17200 claim “stem[med] from the relationship of the parties embodied” in their contract. Id. Therefore, the court found “as a matter of law” 10 as ll the limitation 12 The same is true here: SiX4Three’s Section 17200 claim stems from the relationship 13 embodied by the SRRs that SiX4Three claims Facebook breached. See supra at IV.B. As such, the 14 limitation applies to Six4Three’s Section 17200 claim 15 V. of liability provisions under the parties’ agreement applied to the Section as a 17200 claim. of the parties as matter of law. CONCLUSION For the foregoing reasons, summary adjudication that the limitation of liability contained in the 16 first (Section 17200), second (breach of contract), and eighth 17 SRRs limits all damages for Six4Three’s 18 (negligent interference) causes of action to the greater of $100 or the amount Six4Three paid F acebook is 19 proper. 20 Dated: July 28, 2017 DURIE TAN GRI LLP 21 22 By: “EAURA E. MILLER 23 24 Attorney for Defendant Facebook, Inc. 25 26 27 28 11 DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUNIMARY ADJUDICATION OF ISSUES / CASE NO. CIV 533328 PROOF OF SERVICE to I am a citizen of the United States and resident of the State of California. I am employed in San Francisco County, State of California, in the office of a member of the bar of this Court. at Whose direction the service was made. My business I am over the age of eighteen years, and not a party to the within action. address is 217 Leidesdorff Street. San Francisco: CA 94111. On July ’28, 2017, I served the following documents in the manner described below: DEFENDANT FACEBOOK, INC.’S NIEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS h’IOTION FOR SUNINIARY ADJUDICATION 0F ISSUES (REDACTED PUBLIC VERSION) (BY US. MAIL) I am personally and readily familiar with the business practice of Durie Tangri LLP for collection and processing of correspondence for mailing with the United States Postal Service, and I caused such envelope(s) with postage thereon fully prepaid to be placed in the United States Postal Service at San Francisco, California. {:3 {:3 (BY MESSENGER SERVICE) by consigning the document(s) to an authorized courier andlor process server for hand delivery on this date. (BY FACSIMILE) I am personally and readily familiar with the business practice of Durie Tangri LLP for collection and processing of document(s) to be transmitted by facsimile and I caused such document(s) on this date to be transmitted by facsimile to the offices of addressee(s) at the numbers listed below. (BY OVERNIGHT MAIL) I am personally and readily familiar with the business practice of Durie Tangri LLP for collection and processing of correspondence for overnight delivery, and I caused such document(s) described herein to be deposited for delivery to a facility regularly maintained by Federal Express for overnight delivery. m BY ELECTRONIC SERVICE: By electronically mailing a true and correct copy through Durie Tangrias electronic mail system fiom jposada@durietangri.com to the email addresses set forth below. (BY PERSONAL DELIVERY) I caused such envelope to be delivered by hand to the offices of each addressee below. 12 DEFENDANT FACEBOOK, INC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMZMARY ADJUDICATION OF ISSUES f CASE NO. CIV 533328 On the following part(ies) in this action: Basil P. Fthenakis CRITERION LAW 2225 E. Bayshore Road, Suite 200 Palo Alto, CA 94303 Telephone: 650-352-8400 Facsimile: 650-352—8408 bpf@criterionlaw.com David S. Godkin James Kruzer OO\]O\ \O BIRNBAUM & GODKIN, LLP 280 Summer Street Boston, MA 02210 Telephone: 617-307-6100 godkin@bimbaumgodkin.com kruzer@bimbaumgodkin.com 10 11 12 13 Attorneys for Plaintifl Six4 Three, LLC I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed on July 28, 2017, at San Francisco, California. 14 / 15 16 Jenrflfer Posada 17 18 19 20 21 22 23 24 25 26 27 28 13 DEFENDANT FACEBOOK, 1NC.’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF ITS MOTION FOR SUMIVIARY ADIUDICATION OF ISSUES / CASE NO. CIV 533328