business can assert California consumer protection claims against platform

Gaby’s Bags, LLC v. Mercari, Inc., No. C 20-00734 WHA, 2020
WL 7664455 (N.D. Cal. Dec. 25, 2020)

After the court dismissed
plaintiff’s Lanham Act false advertising claims against a platform because the
plaintiff was a customer and not a competitor
, the plaintiff sought to
amend to assert California consumer protection law (and related) claims. The
court agreed that leave to amend was justified.

Mercari allegedly promoted its web platform as a venue where
“anyone can sell.” Plaintiff opened a Mercari account and began selling
handbags, making nearly $400,000 over a two-year period until Mercari
terminated plaintiff’s account for violating its TOS, which barred “business
accounts.”

Mercari argued that the word “anyone” clearly indicated any
individual, but the court wasn’t so sure. Plaintiff seemed to be a consumer who
had been harmed by reliance on the alleged misrepresentation, which was enough
to allow the amended complaint under the circumstances, which included the
court’s own invitation to replead when it dismissed the Lanham Act claim.

Mercari also argued that California law didn’t apply, but
the complaint sufficiently alleged that the misconduct originated in
California, tethering the alleged harm to Mercari’s headquarters in California.
Plus,

Mercari’s terms of service foisted
a California choice-of-law provision onto plaintiff, which was the basis for
dismissing plaintiff’s Florida consumer protections claims. Mercari argued that
plaintiff cannot invoke Florida law because of the California choice-of-law
provision. Now, when plaintiff does just that, Mercari flips flops and says
plaintiff cannot invoke California law. Apparently, in Mercari’s universe,
plaintiff is simply without any recourse. This absurd result will not be
tolerated.

A negligent misrepresentation claim, however, would not be
allowed, because plaintiff failed to plead anything other than an arms-length
relationship between the parties, not the extra duty required.

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