Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 1 of 26
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`
`
`
`
`Michael R. Reese (SBN 206773)
`Carlos F. Ramirez (pro hac vice to be filed)
`REESE LLP
`100 West 93rd Street, 16th Floor
`New York, New York 10025
`Telephone: (212) 643-0500
`Facsimile: (212) 253-4272
`Email: mreese@reesellp.com
` cramirez@reesellp.com
`
`George V. Granade (SBN 316050)
`REESE LLP
`8484 Wilshire Boulevard
`Los Angeles, California 90211
`Telephone: (212) 643-0500
`Facsimile: (212) 253-4272
`ggranade@reesellp.com
`
`
`
`
`
`
`Counsel for Plaintiff and the Proposed Class
`
`
`
`
`
`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF CALIFORNIA
`
`
`BRANDON LETIZE, individually, and on
`behalf of a class of similarly situated persons,
`
`
`Plaintiff,
`
`
`
`v.
`
`
`limited
` ELLATION, LLC, a Delaware
`liability company, and RARE BITS, INC., a
`Delaware corporation.
`
`
`Defendants
`
`
`Case No: 20-cv-3739
`
`
`CLASS ACTION COMPLAINT
`
`
`JURY TRIAL DEMANDED
`
`
`
`
`
`

`

`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 2 of 26
`
`
`
`
`
`Plaintiff Brandon Letize (“Plaintiff”), individually and on behalf of all others similarly
`
`situated (the “Class,” as defined below), brings this Class Action Complaint against Ellation LLC
`
`doing business as Crunchyroll (“Crunchyroll” or “Defendant”) and Rare Bits, Inc. (“Rare Bits” or
`
`“Defendant” and, together with Crunchyroll, “Defendants”), and respectfully alleges as follows.
`
`Plaintiff bases the allegations herein on personal knowledge as to matters related to, and known to,
`
`him. As to all other matters, he bases his allegations on information and belief, through
`
`investigation of his counsel. Plaintiff believes substantial evidentiary support exists for his
`
`allegations, and he seeks a reasonable opportunity for discovery.
`
`JURISDICTION AND VENUE
`
`Jurisdiction
`
`1.
`
`This Court has personal jurisdiction over all causes of action asserted herein pursuant
`
`to 28 U.S.C. § 1332(d) because the aggregate claims of Plaintiff and members of the Class, which
`
`exceeds 100 persons, exceed the sum or value of $5,000,000 and there is diversity of citizenship
`
`between at least one member of the Class and Defendants.
`
` Venue
`
`2.
`
`Venue is appropriate in this District pursuant to U.S.C. § 1391(a)(1) and (2) .
`
`Defendants conduct substantial business throughout California and their headquarters and principal
`
`places of business are located in this District.
`
`NATURE OF THE ACTION
`
`3.
`
`This is a proposed nationwide class action against Defendants for misleading
`
`consumers about whether, and how long, they could use the Digital Drops application or “app,” and
`
`the digital stickers and other digital collectible items purchased by consumers via that app (the
`
`“Products”).
`
`4.
`
`Digital Drops was an app that sold rare collectible digital anime stickers and other
`
`digital collectible items. Anime is the Japanese term for animation, which refers to all forms of
`
`animated media.
`
`5.
`
`Defendants launched the Digital Drops app around August 2019.
`
`-2-
`CLASS ACTION COMPLAINT
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`11
`11
`
`12
`12
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`

`

`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 3 of 26
`
`
`
`
`
`6. The Products sold via the Digital Drops app were touted by Defendants as “rare” and
`
`“highly collectible” digital stickers and other digital collectible items from dozens of anime shows.
`
`7.
`
`Once purchased, the anime digital stickers could be kept as part of a collection or
`
`traded with other persons on the Digital Drops app.
`
`8.
`
`Like any other collectible, the rarer the digital sticker the more valuable. In addition,
`
`like any other collectible, the value of rare stickers would rise over time. Defendants prominently,
`
`and frequently, touted these themes throughout the course of their marketing and advertising of
`
`Digital Drops digital collectibles.
`
`9.
`
`In addition, during the marketing and advertising of the Digital Drop app and digital
`
`collectibles, Defendants prominently and conspicuously represented that the Products, once
`
`purchased, would be online indefinitely or, at least, for a reasonable length of time from the date of
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`11
`11
`
`12
`12
`
`release.
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`10.
`
`In early February 2020, Defendants announced that on February 17, 2020 at 11:59
`
`p.m. PST, Defendants would shut down the servers running the Digital Drops app and that the
`
`Products would no longer be accessible by its owners.
`
`11.
`
`Thus, on and after February 18, 2020 —just six months after Defendants launched
`
`the Digital Drops app—Plaintiff and the Class members would no longer be able to use the Digital
`
`Drops app at all, and Defendants will have eliminated all of the collectible anime content purchased
`
`by consumers.
`
`12.
`
`As detailed below, Plaintiff brings this action on behalf of himself and the Class
`
`members, seeking an order requiring Crunchyroll to reinstate the Digital Drops app so that
`
`consumers can once again gain access to property they purchased for valuable consideration.
`
`Plaintiff prays only for injunctive relief consistent with the relief that the California Supreme Court
`
`discussed in McGill v. Citibank, N.A., 393 P.3d 85 (Cal. 2017) and the Ninth Circuit in Blair v.
`
`Rent-a-Center Inc., 928 F.3d 819 (9th Cir. 2019).
`
`-3-
`CLASS ACTION COMPLAINT
`
`

`

`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 4 of 26
`
`
`
`
`
`Plaintiff Brandon Letize
`
`PARTIES
`
`13.
`
`Plaintiff Brandon Letize resides in Vallejo, California. Plaintiff has no intention of
`
`changing his residence.
`
`Defendants Ellation LLC and Rare Bits Inc.
`
`14.
`
`Defendant Ellation LLC, is a limited liability company organized under the laws of
`
`the State of Delaware that does business under the name Crunchyroll.
`
`15.
`
`Ellation LLC’s principal executive office is located at 444 Bush Street, San
`
`Francisco, California 94108.
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`16.
`
`Defendant Rare Bits, Inc. is a corporation organized under the laws of the State of
`
`11
`11
`
`Delaware.
`
`12
`12
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`17.
`
`Rare Bits’s principal executive office is located at 239 Duncan Street, San Francisco,
`
`California 94131.
`
`ALLEGATIONS COMMON TO ALL CLAIMS
`
`18.
`
`Digital Drops was a digital anime stickers and collectibles app available for iOS and
`
`Android devices.
`
`19.
`
`Through their Digital Drops app, Defendants sold digital collectibles based on anime
`
`(Japanese animated) television shows.
`
`20.
`
`In an announcement discussing the release of the Digital Drops app and the Products,
`
`Defendants encouraged consumers to “join the chase to collect rare digital stickers from your
`
`favorite anime, including Black Clover, The Time I Got Reincarnated as a Slime, Crunchyroll-
`
`Hime, Miss Kobayashi’s Dragon Maid, and more.” Crunchyroll Press Release dated August 28,
`
`2019 (available at https://www.crunchyroll.com/anime-news/2019/08/28/crunchyrolls-latest-app-
`
`crunchyroll-digital-drops-is-now-live)(emphasis added)(last visited on June 3, 2020).
`
`21.
`
`Defendants also stated, “From iMessage to WhatsApp to Gboard, collectibles can be
`
`used as stickers in all the most popular chat applications.” Id.
`
`22.
`
`Indeed, Defendants aggressively marketed the exclusivity and rarity of the
`
`collectibles sold via the Digital Drops app and the potential growth in value of Digital Drops
`
`-4-
`CLASS ACTION COMPLAINT
`
`

`

`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 5 of 26
`
`
`
`
`
`collectibles over the course of time. To that extent, Defendants noted that, “Each collectible is
`
`individually numbered with a print number. Get lucky with mystery packs or trade with friends to
`
`lay claim to the most valuable ones.” Id. (emphasis added).
`
`23.
`
`Defendants further reinforced that theme by stating: “Super Rare - Get ‘Em Before
`
`They’re Gone. Each sticker set is limited edition - complete your collection before it sells out.” Id.
`
`(emphasis added).
`
`24.
`
`If any single theme was repeated over and over by Defendants, it was that their
`
`digital collectibles were rare and, as such, had the potential of growing in value over the course of
`
`time. In a description of the Digital Drops app in an app store, Defendants noted:
`
`
`Crunchyroll Digital Drops is our new destination for digital stickers and super
`rare e-memorabilia from your favorite series and characters in the Crunchyroll
`universe. With new content dropping regularly, join other anime fans on a chase
`to find rare, covetable digital collectibles. Each collectible is guaranteed unique
`
`-5-
`CLASS ACTION COMPLAINT
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`11
`11
`
`12
`12
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`

`

`
`
`
`
`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 6 of 26
`
`and produced in limited quantities so get in early for a chance to score the most
`valuable ones!
`
`
`Digital Drops App Listing on Apkpure Website (available at https://apkpure.com/crunchyroll-
`
`digital-drops/io.rarebits.crunchyroll)(emphasis added)(last visited on June 3, 2020).
`25.
`The advertising further stated that:
`
`26.
`
`Below is an image of Defendants’ advertising of their Digital Drops app.
`
`
`
`
`
`27.
`
`Defendant Crunchyroll, as one of the world’s largest online retailers of anime
`
`products, leveraged its reputation and brand recognition to further entice consumers to purchase its
`
`purported highly collectible anime digital content, which consumers believed would be available to
`
`them forever like any other purchased product. In connection with the above advertising,
`
`Defendants assured potential consumers of collectible e-memorabilia through the Digital Drops app
`
`that they were dealing with a legitimate company and that their purchases would, in effect, be “safe”
`
`and not subject to loss within a matter of months after purchase:
`
`
`
`
`
`-6-
`CLASS ACTION COMPLAINT
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`11
`11
`
`12
`12
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`

`

`
`
`
`
`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 7 of 26
`
`Crunchyroll is the world’s largest destination for anime and manga,
`boasting a global community of more than 40 million registered users
`and over 1 million subscribers. Fans connect through the most complete
`anime library including “Naruto Shippuden,” “Attack on Titan,” and
`“Dragon Ball Super,” events such as Crunchyroll Expo, Anime Awards,
`Crunchyroll News, and can purchase related merchandise through its
`online store. Through its app on game consoles, set-top boxes, mobile
`devices and more, Crunchyroll delivers content from leading media
`producers directly to viewers translated professionally in multiple
`languages. The service is available for free or through a premium offering
`that allows users to watch ad-free with access to simulcasts—top series
`available immediately after Japanese broadcast.
`
`
`
`This app was developed in partnership with Rare Bits, and uses the Rare
`Bits engine and platform to power our robust digital collectibles
`experience.
`
`Id. (emphasis added).
`
`28.
`
`Defendants prominently and conspicuously represented to consumers in the
`
`marketing for the Digital Drops app and the Products that they were being purchased and, thus,
`
`would have access to the Products indefinitely.
`
`29.
`
`Defendants had exclusive knowledge of the fact that they might shut down the
`
`Digital Drops app and that the Products would no longer be accessible to its purchasers. When
`
`Plaintiff and the Class members purchased the Products, they did not know that the Digital Drops
`
`app might shut down, and Defendants did not make that fact reasonably accessible to Plaintiff and
`
`the Class members because Defendants did not prominently and conspicuously disclose that fact.
`
`30.
`
`Around early February 2020, the Defendants published the following FAQs on the
`
`Crunchyroll website announcing the upcoming termination of the Digital Drops app and,
`
`consequently, the permanent loss of the Products purchased from Defendants:
` Why is the app being shut down?
`
`
`The app was created in partnership between Crunchyroll and Rare Bits, a small
`digital goods startup. Unfortunately, this partnership has ended and therefore, the app
`will be shutting down.
`
` Why was the app around for such a short time?
`
`
`-7-
`CLASS ACTION COMPLAINT
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`11
`11
`
`12
`12
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`

`

`
`
`
`
`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 8 of 26
`
`The app was being piloted to support marketing promotions around Anime Expo,
`Crunchyroll Expo, and other anime conventions. However, with the conclusion of
`the partnership, this app will no longer be supported.
`
`
` When will it be turned off?
`
`
`You can continue enjoying your stickers until Feb 17, 2020 at 11:59pm PST. Once
`the clock strikes midnight, our servers will be shut down and the app and your
`collection will no longer be accessible.
`
`
` What happens after it shuts down?
`
`
`The app will no longer function, and you will no longer be able to access your
`stickers from messaging or keyboard apps.
`
`
` What happens to all of my collectibles/stickers?
`
`
`Unfortunately, your collection will no longer be accessible, and therefore neither
`will your stickers.
`
`Digital Drops FAQs (available at https://help.crunchyroll.com/hc/en-us/articles
`
`/360039213352-What-is-happening-with-Digital-Drops-)(emphasis added)(last visited on June
`
`3, 2020).
`
`31.
`
`In an incredulous statement, Defendants attempt to assuage their consumers for their
`
`losses by equating the purchase of their Digital Drops “super rare” and “valuable” digital
`
`collectibles to the purchase of a movie ticket.
`
`What about the money I spent in the app?
`
`Just like the money spent on a movie ticket, your purchase provided you
`with an entertainment experience for a certain amount of time. Like any
`other app that is removed from the app stores, the items you have
`purchased go dark when the app does. We appreciate the time and
`resources you spent in Digital Drops, and hope to entertain you again
`soon. If you have any questions, please feel free to write in a support
`ticket.
`
`
`Id.
`
`32.
`
`The fundamental problem with Defendants’ movie ticket analogy is that when a
`
`consumer purchases a movie ticket, they do not expect to own the movie or to be able to watch it
`
`multiple times over an indefinite period of time. Indeed, without exception, all purchasers of movie
`
`-8-
`CLASS ACTION COMPLAINT
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`11
`11
`
`12
`12
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`

`

`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 9 of 26
`
`
`
`
`
`tickets know that they are only purchasing the right to watch a movie once and to do so on a
`
`given date and time. Thus, the experience that Defendants sold users of the Digital Drops app, and
`
`purchasers of the Products, is hardly comparable to the experience movie theaters sell their patrons.
`
`33.
`
`Indeed, the audacity of the Defendants’ movie ticket analogy is only surpassed by
`
`Defendants’ other statement in the FAQs section of the Crunchyroll website wherein they discuss
`
`offering consumers the ability to purchase digital content from Crunchyroll in the future;
`
`undoubtedly, at the risk of losing it just like they lost the Products they purchased from Defendants
`
`via the Digital Drops app.
` Will the app come back sometime in the future?
`
`While we currently do not have plans for Digital Drops to return as an
`app, we are looking at different options to reintroduce collectibles in the
`future for Crunchyroll users.
`
`
`
`Id. (emphasis added)
`
`34.
`
`Upon information and belief, Defendants offered Product owners an opportunity to
`
`download the Products from the Digital Drops app and save them onto a different server, however,
`
`the process for doing so was very complicated and required a high-level of technical knowledge to
`
`do so, which prevented Plaintiff and other members of the Class from being able to download and
`
`save their Products elsewhere.
`
`35. Moreover, as seen in the following Reddit post by user “darkrai848,” even
`
`purchasers of the Products with the sophistication, knowledge and/or expertise necessary to
`
`download and save the Products outside the Digital Drops app experienced problems with their
`
`ability to do so.
`
`
`darkrai848
`
`
`
`
`9 points·3 months ago
`
`Heck they lied so bad with this thing... they had them marked as digital
`Collectables and said in there facts section said that it was possible to
`send them to a crypto currency wallet using the rare bits site. I signed up
`for a rare bits account and a crypto currency wallet over a month ago to
`and fallowed the instructions in the faqs section of digital drops and hit
`a dead end in the transfer... emailed both rare bits and crunchyroll,
`-9-
`CLASS ACTION COMPLAINT
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`11
`11
`
`12
`12
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`

`

`
`
`
`
`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 10 of 26
`
`never got a response from rare bits but Crunchyroll said that the that
`function was still in the works (despite the apps faqs saying it was
`available from launch). And now the faqs section is missing in action, so
`I can’t call them on it...
`
`This is so bs... they sold the stickers as digital collectibles with the ability
`to store them in a crypto wallet if the app ever shut down. But now that
`it’s shutting down they change there toon and say it was
`“entertainment”. Needless to say I’m mad. Not that it’s shutting down,
`but how this was handled.
`
`
`
`Reddit Post by darkrai848 (available at https://www.reddit.com/r/Crunchyroll/comments
`
`/ezfqqa/digital_drops_is_shutting_down_217/)(emphasis added)(last visited on June 3, 2020).
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`
`
`11
`11
`
`12
`12
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`Defendants Harmed Plaintiff in a Manner Identical to the Manner
`
`in which Defendants Harmed the Class Members
`
`
`
`36.
`
`Between August 24, 2019 and November 16, 2019, Plaintiff purchased four (4) sets
`
`of Crunchyroll Digital Drops Pack – Tier 1 digital stickers using the Digital Drops app.
`
`37.
`
`Consumers rely on representations and information in the marketing of apps and the
`
`digital products sold via apps in making decisions about whether to download and/or purchase apps
`
`and in making decisions about whether to buy any products sold through those apps. To that extent,
`
`Defendants stated the following about the Digital Drops app and the Products:
`
`Crunchyroll Digital Drops is our new destination for digital stickers and
`super rare e-memorabilia from your favorite series and characters in the
`Crunchyroll universe. With new content dropping regularly, join other
`anime fans on a chase to find rare, covetable digital collectibles. Each
`collectible is guaranteed unique and produced in limited quantities so
`get in early for a chance to score the most valuable ones!
`
`
`
`Digital Drops App Listing on Apkpure Website (available at https://apkpure.com/crunchyroll-
`
`digital-drops/io.rarebits.crunchyroll (emphasis added)(last visited on June 3, 2020).
`
`38.
`
`In deciding to purchase Digital Drops anime stickers, Mr. Letize relied upon
`
`Defendants’ representations encouraging consumers to build a collection of “super rare e-
`
`-10-
`CLASS ACTION COMPLAINT
`
`

`

`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 11 of 26
`
`
`
`
`
`memorabilia” that would increase in value over time, and, as such, would be available for an
`
`indefinite period of time or, at least, a reasonable length of time from the date of release.
`
`39.
`
`Similarly, when each Class member purchased a Product, the Class members relied
`
`upon Defendants’ representations indicating that, “[w]ith new content dropping regularly, join other
`
`anime fans on a chase to find rare, covetable digital collectibles,” and, accordingly, the Products
`
`would be available for an indefinite period of time or, at least, a reasonable length of time from the
`
`date of release.
`
`40. Moreover, when each Class member purchased a Product, the Class member relied
`
`upon Defendants’ representations indicating that, “[e]ach collectible is guaranteed unique and
`
`produced in limited quantities so get in early for a chance to score the most valuable ones!” and,
`
`accordingly, the Products would be available for an indefinite period of time or, at least, a
`
`reasonable length of time from the date of release.
`
`41.
`
`At the time Plaintiff purchased the Products, Plaintiff reasonably expected that
`
`Defendants would not subsequently eliminate his ability to access the Products purchased by him.
`
`42.
`
`Similarly, at the time each Class member purchased the Products, the Class member
`
`reasonably expected that Defendants would not subsequently eliminate their ability to access the
`
`Products purchased by them.
`
`43.
`
`At the time Plaintiff purchased the Products, Defendants had exclusive knowledge
`
`that they might subsequently shut down the Digital Drops app and, consequently, Plaintiff would
`
`lose all access to the Products purchased by him. However, Defendants failed to disclose, or failed
`
`to disclose prominently and conspicuously, that Defendants would subsequently shut down the
`
`Digital Drops app.
`
`44.
`
`Similarly, at the time each Class member purchased a Product, Defendants had
`
`exclusive knowledge that they might subsequently shut down the Digital Drops app and,
`
`consequently, each Class member would lose all access to the Products purchased by him/her.
`
`However, Defendants failed to disclose, or failed to disclose prominently and conspicuously, that
`
`Defendants would subsequently shut down the Digital Drops app.
`
`-11-
`CLASS ACTION COMPLAINT
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`11
`11
`
`12
`12
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`

`

`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 12 of 26
`
`
`
`
`
`45. Had Plaintiff known at the time he purchased the Products that Defendants would,
`
`only several months later, shut down the Digital Drop servers that enabled him to access the
`
`Products he purchased, he would not have purchased the Product or paid the price he paid for the
`
`Product.
`
`46.
`
`Similarly, had each Class member known at the time they purchased a Product that
`
`Defendants would, only several months later, shut down the Digital Drop app servers that enabled
`
`consumers to access the Products purchased by them, each Class member would not have purchased
`
`the Product or paid the price he/she paid for the Product.
`
`47.
`
`Plaintiff and the Class members reasonably relied to their detriment on Defendants’
`
`misleading representations and omissions, which indicated that the Products would be usable in
`
`their entirety for an indefinite period of time or, at least, a reasonable length of time from the date of
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`11
`11
`
`12
`12
`
`release.
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`48.
`
`Defendants’ misleading affirmative statements about the Digital Drops app and the
`
`Products sold on the app obscured the material facts that Defendants failed to disclose, or failed to
`
`disclose prominently and conspicuously, namely, that Defendants would, only several months after
`
`their release, shut down the Digital Drops app servers that made the Digital Drops app and the
`
`Products accessible to their owners.
`
`49.
`
`As an immediate, direct, and proximate result of Defendants’ deceptive
`
`representations and omissions, Defendants injured Plaintiff and the Class members in that they:
`
`a.
`
`b.
`
`paid a sum of money for Products that were not what Defendants represented;
`
`paid a premium price for Products that were not what Defendants
`
`represented;
`
`c.
`
`were deprived of the benefit of the bargain because the Products they
`
`purchased had less value than what Defendants represented;
`
`d.
`
`did not receive Products that measured up to their expectations, which
`
`Defendants created; and
`
`e.
`
`were denied the benefit of the continuous and ongoing online access to the
`
`Products that Defendants promised.
`
`-12-
`CLASS ACTION COMPLAINT
`
`

`

`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 13 of 26
`
`
`
`
`
`50. Had Defendants not made the false, misleading, and deceptive representations and
`
`omissions, Plaintiff and the Class members would not have been willing to pay the same amount for
`
`the Products they purchased, and, consequently, Plaintiff and the Class members would not have
`
`been willing to purchase the Products.
`
`51.
`
`Plaintiff and the Class members paid for Products that would be available to its
`
`owners for an indefinite period of time or, at least, for a reasonable length of time from the date of
`
`release. However, Plaintiff and the Class members purchased Products that became unavailable
`
`after February 17, 2020 at 11:59 p.m. PST. For these reasons, the Products Plaintiff and the Class
`
`members received were worth less than the Products for which they paid.
`
`52.
`
`Based on Defendants’ misleading and deceptive representations, it was able to, and
`
`did, charge a premium price for the Products.
`
`53.
`
`Plaintiff and the Class members all paid money for the Products. However, Plaintiff
`
`and the Class members did not obtain the full value of the advertised Products due to Defendants’
`
`misrepresentations and omissions. Plaintiff and the Class members purchased the Products when
`
`they would not have done so had they know the truth about them, or, alternatively Plaintiff and the
`
`Class members paid more for the Products than they would have had they known the truth about the
`
`Products. Consequently, Plaintiff and the Class members have suffered injury in fact and lost money
`
`or property as a result of Defendants’ wrongful conduct.
`
`Defendants Will Benefit Greatly from Shutting Down Digital Drops
`
`54.
`
`Even though Defendants knew they might not allocate resources to the Digital Drops
`
`app indefinitely, Defendants engaged in a widespread marketing and advertising campaign to
`
`portray the Digital Drops app and the Products sold through the app would be available indefinitely
`
`or, at least, for a reasonable length of time from the date of release. Additionally and/or
`
`alternatively, Defendants’ marketing campaign failed to disclose prominently and conspicuously
`
`that the Products would not be available indefinitely or, at least, for a reasonable length of time from
`
`the date of release.
`
`55.
`
`Defendants engaged in this deceptive campaign to sell and/or charge a premium
`
`price for the Products.
`
`-13-
`CLASS ACTION COMPLAINT
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`11
`11
`
`12
`12
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`

`

`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 14 of 26
`
`
`
`
`
`56. Defendants had a strong motive to shut down Digital Drops app. Defendants will
`
`gain substantial financial benefits from having shut down the Digital Drops app service because it
`
`will no longer have to incur any expenses to provide and maintain the Digital Drops app and the
`
`Products, including the cost of maintaining the Digital Drops app servers 24 hours a day for seven
`
`days a week.
`
`57.
`
`Because consumers who purchased the Products will no longer be able to access the
`
`Products they purchased, the injury is substantial.
`
`CLASS ACTION ALLEGATIONS
`
`58.
`
`Pursuant to Rule 23(a) and (b)(2) of the Federal Rules of Civil Procedure, Plaintiff
`
`brings this action on behalf of himself and a proposed nationwide class defined as follows:
`
`
`The Injunctive Relief Class. All individual consumers who purchased the Products
`in the United States during the period from the release of the Digital Drops app to
`February 17, 2020. Plaintiff asks the Court to adjudicate only liability, declaratory
`relief, and injunctive relief through the Injunctive Relief Class. The Injunctive Relief
`Class does not seek any form of monetary relief.
`
`59.
`
`Excluded from the Class are: (a) Defendants, Defendants’ board members,
`
`executive-level officers, and attorneys, and immediately family members of any of the foregoing
`
`persons; (b) governmental entities; (c) the Court, the Court’s immediate family, and the Court staff;
`
`and (d) any person that timely and properly excludes himself or herself from the Class in
`
`accordance with Court-approved procedures.
`
`60.
`
`Plaintiff reserves the right to alter the Class definition as he deems necessary at any
`
`time to the full extent that the Federal Rules of Civil Procedure, the Local Rules of the U.S. District
`
`Court for the Northern District of California, and applicable precedent allow.
`
`61.
`
`Certification of Plaintiff’s claims for class-wide treatment is appropriate because
`
`Plaintiff can prove the elements of his claims on a class-wide basis using the same evidence as
`
`individual Class members would use to prove those elements in individual actions alleging the same
`
`claims.
`
`62.
`
`Numerosity; Rule 23(a)(1): The size of the Class is so large that joinder of all Class
`
`members is impracticable. Due to the nature of Defendants’ business, Plaintiff believes there are at
`
`-14-
`CLASS ACTION COMPLAINT
`
`1
`1
`
`2
`2
`
`3
`3
`
`4
`4
`
`5
`5
`
`6
`6
`
`7
`7
`
`8
`8
`
`9
`9
`
`10
`10
`
`11
`11
`
`12
`12
`
`13
`13
`
`14
`14
`
`15
`15
`
`16
`16
`
`17
`17
`
`18
`18
`
`19
`19
`
`20
`20
`
`21
`21
`
`22
`22
`
`23
`23
`
`24
`24
`
`25
`25
`
`26
`26
`
`27
`27
`
`28
`28
`
`
`
`
`
`

`

`Case 3:20-cv-03739-JCS Document 1 Filed 06/05/20 Page 15 of 26
`
`
`
`
`
`least thousands, if not tens or hundreds of thousands, of Class members geographically dispersed
`
`throughout the United States.
`
`63.
`
`Commonality; Rule 23(a)(2): There are questions of law and fact common to the
`
`Class.
`
`64.
`
`All Class members are subject to the same actions by Defendants that are at the core
`
`of this case. All Class members were exposed to Defendants’ deceptive advertising and marketing
`
`representations indicating that the Products they sold via the Digital Drops app would be available
`
`to its owners for an indefinite period of time or, at least, for a reasonable length of time from the
`
`date of their release. At the time all Class members purchased the Products, Defendants had
`
`exclusive knowledge of the material fact that it might shut down the Digital Drops app and, with
`
`that, the Class members would lose access to the app and the Products purchased by them from
`
`Defendants, and Defendants failed to disclose prominently and conspicuously that fact to each Class
`
`member. On February 17, 2020, when Defendants shut down the servers that made the Digital
`
`Drops app available, all Class members suffered the same substantial injury.
`
`65.
`
`Additional common legal and factual questions include b