On September 11, 2020, the California Court of Appeal issued a published decision that will hopefully put a nail in the coffin of no-injury class actions brought under California’s Automatic Renewal Law (ARL). In Mayron v. Google, Case No. H044592, the panel for the Sixth Appellate District held that the ARL does not provide a private right of action, and that the plaintiff could not state a claim under California’s Unfair Competition Law (UCL) unless Google’s automatic renewal practices actually injured the plaintiff.
History of ARL Litigation
Over the past several years, dozens of cases have been filed against companies for allegedly failing to provide specific disclosures required by the ARL. (The disclosure requirements are described in detail here.) In general, the plaintiffs in these suits have not alleged that they unknowingly enrolled in subscription programs whereby their credit cards would be automatically charged each month. Instead, the cases tend to be based on “gotcha” claims for technical violations of the ARL, such as that certain disclosures be included “in visual proximity” to the check-out button, or that the retailer send an acknowledgement after the subscription is confirmed restating the subscription terms. These suits have targeted the spectrum of businesses – from startups to large companies alike, and the lack of defenses to the technical violations usually result in immediate settlements.
Mayron v. Google
Mayron involved Google Drive, Google’s cloud storage system, which allows registered users to remotely store up to 15 gigabytes of electronic data for free, but charges a $1.99 monthly fee if users upgrade to 100 gigabytes of storage. Plaintiff claimed that the Google Drive plan violates the ARL because Google did not provide the required disclosures, did not obtain affirmative consent for the automatic monthly fees, and did not sufficiently explain how to cancel them. Mayron asserted two causes of action—alleged violations of both the ARL and the UCL. Google filed a demurrer to the complaint, arguing there is no private right of action under the ARL and that Mayron did not claim any actual injury. The trial court sustained the demurrer without leave to amend.
On appeal, the court considered three questions, the first two decided in Google’s favor, and the third it did not decide:
Question 1: Does the ARL provide a private right of action? The court answered this question in the negative. This answer is unsurprising, given that the panel at the hearing (attended by the author) dismissed plaintiff’s efforts to argue this point. Citing Lu v. Hawaiian Gardens Casino, the court explained that a statute must include a “‘clear, understandable, unmistakable' indication of intent to allow a private right of action” in order for such a right to be read into the statute. “It is not enough that the statutory text suggests such a right.” The court held that the ARL’s “somewhat imprecise phrasing”—“all available civil remedies that apply to a violation of this article may be employed”—is not sufficiently clear to conclude that a private individual may sue for a violation.
Question 2: Does the UCL Provide Standing to Sue Based on Purely Technical Violations of the ARL? Under the UCL, an action can be brought only “by a person who has suffered injury in fact and has lost money or property as a result of the unfair competition.” (§ 17204.) The court held that plaintiff lacked standing because he did not allege any loss caused by Google’s allegedly non-compliant disclosures:
The statutory violations alleged by plaintiff are that Google did not provide required disclosures and did not make it easy enough to cancel the subscribed service. To establish standing, plaintiff would also need to allege that he ordered increased Google Drive storage but would not have done so had the disclosures been provided, or that he would have cancelled the additional storage had it been easier to do so.  But plaintiff makes no such allegation, which suggests he would have purchased and maintained the added Google Drive capacity even if Google had complied with the automatic renewal law. The complaint therefore does not show a causal link between plaintiff’s payments and Google’s alleged violations.
Mayron argued that he could establish economic loss through the ARL’s “gift provision,” which allows a consumer to keep “any goods, wares, merchandise, or products” sent under a continuous service agreement that is not in compliance with the law. (§ 17603.) He argued that because he paid for something the law deems a “gift,” he lost money.
The court, both at the hearing and in its order, rejected this argument as conflating plaintiff’s standing requirements—which need to be satisfied before a suit is filed—with remedies—which are determined once a violation is established. As the opinion explained, “A consequence imposed on a defendant for violating a statute is not the same thing as a loss caused by the defendant’s conduct.” In reaching this decision, the court rejected the Ninth Circuit’s holding in Johnson v. Pluralsight, LLC (9th Cir. 2018) 728 Fed.Appx. 674, 676–677 to the extent that decision suggested that UCL standing could be established through the gift provision.
Question 3: Is Google Drive Subject to the ARL’s Gift Provision? A third question, not reached by the court, is whether the gift provision applies only to tangible goods and not to a data storage plan like Google Drive. The lower court held that “[T]his section only applies to tangible goods or products... in other words, a consumer could keep a good or product that is sent in violation of the Automatic Renewal Law, but there is nothing to keep when it is only a service that is provided.” Mayron v. Google, Inc., 2016 WL 1059373, at *3. Although this issue took up a substantial portion of the oral argument, it was mooted by the court’s conclusion that the gift provision does not confer UCL standing.
While Mayron v. Google certainly offers protection from no-injury class actions, it is not a silver bullet excusing retailers from the ARL’s requirements. Indeed, state and local prosecutors have recently brought civil actions under the ARL. Moreover, in cases where consumers do in fact suffer economic injury—such as where they unknowingly signed up for a subscription—those consumers would have standing to bring private claims under the UCL. Observers note, however, that liability under that scenario was what the statute was intended to protect against in the first place. As subscription programs continue to grow in popularity, businesses that use them should ensure fair disclosures so that consumers do not fall into a subscription program unknowingly, and for businesses that use such programs for California consumers, they would be wise to still ensure compliance with the technical requirements of the ARL.