Online Dating Services Must Give California Users a "Cooling Off" Period--Howell v. Grindr

Online Dating Services Must Give California Users a “Cooling Off” Period–Howell v. Grindr

Screen Shot 2016-01-06 at 6.56.57 PMCalifornia has a statute applicable to dating contracts that gives consumers the right to cancel within 3 days of signing up. Companies must advise clients of this and provide a cancellation mechanism and a full refund. Grindr, an online dating app, allegedly failed to address this in its terms of service. A plaintiff signed up for Grindr Xtra (the monthly fee-based version of its site), cancelled and did not receive a full refund (for the remainder of the month). He sued on behalf of a putative class, alleging violations of California’s Dating Service Contract Act and other claims.

Standing: the court first tackles standing and says that it’s not adequately alleged here. While plaintiff alleged a violation of the statute, he did not tie that violation to his own injury. Specifically, the court says that, although he cancelled and did not receive a refund, the complaint lacks details about the cancellation. The court cites to cases under California’s “Shine the Light” statute and says that there’s no cause of action for a mere failure to comply with the statute. “Rather . . . [statutory standing] requires an injury resulting from a violation.” In the STL cases, plaintiffs alleged a failure of companies to post relevant information to request a privacy policy, but did not necessarily try to request or information or allege that they would have had they known where to direct the query. These turn out to be insufficient allegations. Similarly, the court says that here plaintiff fails to allege how he cancelled the contract and whether he did so in accordance with the statute.

Applicability of the DSCA: Grindr said the statute did not apply to it. The statute was enacted in 1989 and did not envision online communities, much less smartphone apps. Grindr argued that the statute was prompted by high-pressure in-person sales tactics and vendors’ potential to take undue advantage of consumers. The court disagrees. Citing to a California Supreme Court looking at applicability of the Song-Beverly Credit Card Act and applicability to download transactions (answer: no), the court says that it should employ a practical, flexible approach:

[i]n construing statutes that predate their possible applicability to new technology, courts have not relied on wooden construction of their terms. Fidelity to legislative intent does not ‘make it impossible to apply a legal text to technologies that did not exist when the text was created. . . . Drafters of every era know that technological advances will proceed apace and that the rules they create will one day apply to all sorts of circumstances they could not possibly envision.’

Under this approach, the statute applies to online sites.

Grindr also argued that there was an element of the consumer being able to take advantage of the site by using the services and then requesting a full refund, but the court says that the legislature already considered this issue. By providing a full, rather than a pro rata refund, the legislature evinced its intent to place the costs from cooling off/cancellation on the business rather than the consumer.

The court dismisses the UCL claim as the plaintiff did not offer substantive arguments in response to Grindr’s arguments. It also punts on the Article III standing issue, given that it dismissed for failure to allege statutory standing. The court does grant leave to amend.

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Wow, the California legislature gets in the weeds. That California regulates dating service contracts specifically came as news to me, as well as I’m guessing to others. The court’s decision on applicability of the statute, which wasn’t strictly necessary to the ruling, is a zinger to Grindr and to the numerous other online dating sites that offer subscriptions. For what it’s worth, Tinder’s terms contain a cancellation provision that appears tailored to this statute and the statutes of several other states.

The court’s decision on causation and standing scrutinizes plaintiff’s allegations very carefully. As in the STL cases, perhaps the court got its radar up when it sensed a lawsuit that was driven by a technical violation of the statute, rather than real economic harm. Perhaps the court was influenced by the subscription in question (i.e., rather than a year or months-long subscription, the service appeared to bill monthly).

NB: plaintiffs did file an amended complaint.

Eric’s Comment: The core issue in this case is whether an online service like Grindr qualifies as a “dating service” as defined in a statute written for a different era. This is a perennial cyberlaw issue, or more accurately, a classic “old law and new technology” question. Here, Grindr had good policy arguments that the assumptions embedded into a statute governing high-pressure face-to-face sales should not apply to an online-only process. Still, it had no good arguments to bypass the statute’s plain language.

This reminded me a lot of the debates around eBay in the 1990s. eBay would have been toast if it had to satisfy the statutory regulations applicable to “auctionhouses” because those laws assumed the intermediary took possession of sellers’ goods as part of the transaction. Fortunately, cooler heads prevailed, and everyone realized than an online auction service like eBay is unquestionably different than a statutorily regulated “auctionhouse.” It’s a good cautionary tale for the regulation of any online marketplace seeking to disrupt traditional offline intermediaries governed by different rules because the laws of physics applicable to the offline world are, in fact, different online.

I understand why the court was less charitable to Grindr here. The legal regulation isn’t as niche-crushing as the auctionhouse laws would have been to eBay, and perhaps online daters’ fears and susceptibilities are not that different online and off. Still, the emergence of online dating sites might be a good prompt for the legislature to reconsider the law and ensure its regulatory scope tracks the modern concerns.

I disagree a little with Venkat about the likelihood Grindr was blindsided by this law. “Cooling off” laws are well-known in the dating industry and pretty well-known outside of it, so I expect (or, at least, hope) Grindr had some clue. More generally, if you’re an online vendor hoping to usurp an industry that has extensive offline regulations, you would be well-served to bone up on that regulatory scheme and, if you’re not going to comply with it, develop a clear explanation of why you think it doesn’t apply to you.

Case citation: Howell v. Grindr, LLC, 2015 U.S. Dist. LEXIS 167669 (S.D. Cal. Dec. 15, 2015)

Related cases:

Ninth Circuit Turns Out The Lights on California ‘Shine the Light’ Case

Men’s Journal Beats Lawsuit Alleging Violation of California’s “Shine the Light” Privacy Statute — Boorstein v. Men’s Journal

Bad Idea: Overdisclosing People’s Positive STD Status–Doe v. Successfulmatch

9th Circuit Says Plaintiff Had Standing to Sue Spokeo for Fair Credit Reporting Violations

Is Sacramento The World’s Capital of Internet Privacy Regulation? (Forbes Cross-Post)

Online Dating App Grindr Isn’t Liable For Underage ‘Threesome’ (Forbes Cross-Post)

Online Dating Websites Aren’t Required To Warn That Some Members May Be Murderers (Forbes Cross-Post)

Lovelorn Plaintiffs Strike Out Against Match.com – Robinson v. Match.com

It’s Illegal For Offline Retailers To Collect Email Addresses–Capp v. Nordstrom

California Supreme Court: Retail Privacy Statute Doesn’t Apply to Download Transactions – Apple v Superior Court (Krescent)

CA Court Confirms that Pineda v Williams-Sonoma (the Zip-Code-as-PII Case) Applies Retrospectively — Dardarian v. OfficeMax