Judge Denies One Motion to Dismiss, Grants Another in Patreon Fraud Case

U.S. Chief Magistrate Judge Joseph Spero denied without prejudice Patreon’s motion to dismiss a first amended privacy complaint based on its alleged sharing of user data with Facebook via Meta Pixel code, said a Friday order (docket 3:22-cv-03131) in U.S. District Court for Northern California in San Francisco. Spero granted Patreon’s motion to dismiss the claims with leave to amend.

Patreon moved to dismiss the complaint on the grounds that the Video Privacy Protection Act (VPPA) “facially violates the First Amendment” and the plaintiffs haven't met the “heightened pleading standard” applicable to their state law claims sounding in fraud.

The rulings followed a Feb. 10 hearing in which the court defended the constitutionality of the VPPA. Considering “the sensitivity and significance of the interests presented in clashes between First Amendment and privacy rights,” Spero referenced Boelter v. Advance Magazine in ruling Patreon’s facial challenge is “premature” on a motion to dismiss. In that case, the court said even if publisher Conde Nast’s disclosures didn’t fit within the core of commercial speech, “the combination of the transactional context, the conveyance of ‘strictly private affairs,’ and the motivations of both speaker and audience lead [to the conclusion] that the speech should still be afforded reduced constitutional protection.”

For the fraud claims, Spero cited Rule 9(b) of the Federal Rules of Civil Procedure that set a heightened pleading standard for claims based on fraud, saying a plaintiff “must state with particularity the circumstances constituting fraud or mistake," citing a 1993 9th Circuit Court of Appeals ruling. Those include “the who, what, when, where, and how” of the alleged misconduct, he said.

The plaintiffs base their California Consumers Legal Remedies Act and Unfair Competition Law fraud claims on a “theory of omission,” Spero said: That Patreon failed to disclose how it shared user data with Meta. Without allegations that plaintiffs actually read Patreon’s terms of use and other documents containing purportedly misleading partial representations, their amended complaint “does not sufficiently support an inference that their misunderstanding of how Patreon used their data was caused by Patreon’s failure to disclose that information in conjunction with its purported partial representations,” Spero said.