Preview
1 Colby B. Springer (CA Bar No. 214868)
cspringer@polsinelli.com
2 Barrington Dyer (CA Bar No. 264762) ELECTRONICALLY
3 bdyer@polsinell.com F I L E D
Miya Yusa (CA Bar No. 314563) Superior Court of California,
County of San Francisco
4 myusa@polsinelli.com
Joshua L. Rayes (CA Bar No. 316208) 05/27/2020
5 Clerk of the Court
jrayes@polsinelli.com BY: EDNALEEN ALEGRE
POLSINELLI LLP Deputy Clerk
6 Three Embarcadero Center, Suite 2400
7 San Francisco, CA 94111
Telephone: 415-248-2100
8 Facsimile: 415-248-2101
9 Attorneys for Defendant
YOUAPPI INC.
10
SUPERIOR COURT OF THE STATE OF CALIFORNIA
11
COUNTY OF SAN FRANCISCO
12
13 UBER TECHNOLOGIES, INC., a Delaware Case No. CGC-19-576493
corporation,
14
Three Embarcadero Center, Suite 2400
DEFENDANT YOUAPPI INC.’S
Plaintiff, REPLY TO UBER TECHNOLOGIES,
15
San Francisco, CA 94111
INC.’S OPPOSITION TO YOUAPPI,
v. INC.’S DEMURRER TO PLAINTIFF’S
(415) 248-2100
16
Polsinelli LLP
FIRST AMENDED COMPLAINT
HYDRANE SAS, a foreign corporation,
17 BIDMOTION INC, a Delaware corporation,
TAPTICA LTD, a foreign corporation, Hon. Anne-Christine Massullo
18 TAPTICA INC., a Delaware corporation, Date Filed: June 5, 2019
YOUAPPI INC., a Delaware corporation, Trial Date: May 17, 2021
19 ADACTION INTERACTIVE LLC, a Colorado
limited liability company, AND
20 DOES 1 THROUGH 100.
21 Defendants.
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YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER
CASE NO. CGC-19-576493
1 I. INTRODUCTION
2 Uber’s claims are barred by its first suit with Fetch, and they remain deficient despite
3 guidance from the Court pointing out the inadequate allegations. While Uber argues YouAppi is
4 the only defendant asserting claim preclusion and that YouAppi’s argument is inconsistent with
5 its nonjoinder argument, Uber is incorrect. Opp. at 6. First, all defendants joined YouAppi’s
6 demurrer and claim preclusion argument. Second, consistent with its position in the first
7 demurrer, YouAppi’s position here is Uber’s claims are barred—but under a rule of law not yet
8 addressed by the Court. The claims in the First Amended Complaint (FAC) are barred because
9 Uber seeks to relitigate claims adjudicated to a final determination in Uber I. The FAC adds
10 detail further demonstrating Uber could have and should have asserted its claims against
11 YouAppi in Uber I, and because Uber settled those claims, they are precluded by res judicata.
12 While the Court need not press forward if it finds this case is barred by the earlier one,
13 Uber’s fraudulent concealment and unfair competition claims remain deficient, adding another
14 reason for dismissal. Uber’s fraudulent concealment claim is doomed because the FAC still fails
Three Embarcadero Center, Suite 2400
15 to show YouAppi concealed or had knowledge of material facts. Instead, the FAC and the
San Francisco, CA 94111
(415) 248-2100
16 Opposition reaffirm that YouAppi neither generated, modified, or received “transparency
Polsinelli LLP
17 reports,” nor decided ad attribution. The FAC alleges these acts were performed by TUNE and
18 Fetch, and is fatal to Uber’s claim. Moreover, Uber concedes its unfair competition claim falls
19 with the fraudulent concealment claim. So the two go down together. Whether barred by res
20 judicata or found deficient, Uber’s claims should be dismissed with prejudice.
21 II. UBER’S CLAIMS IN THE FAC ARE BARRED BY CLAIM PRECLUSION
22 Claim preclusion applies because (1) Uber alleges the same fraud, negligence and unfair
23 competition claims for the same harm in the same ad campaign as Uber I; (2) Uber I resulted in
24 court-approved settlement of Uber’s claims; and (3) Uber is a party in both proceedings. See
25 Boeken v. Philip Morris USA, Inc. (2010) 48 Cal. 4th 788, 797. Although YouAppi was not a
26 named defendant in Uber I, Uber pulled YouAppi into the case through discovery. See Dem. at
27 8. More importantly, because YouAppi’s “liability is entirely derivative from [Fetch,] a party in
28 an earlier action, claim preclusion bars the second action because [YouAppi] stands in privity
YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER
CASE NO. CGC-19-576493
1 with [Fetch].” Cal Sierra Dev., Inc. v. George Reed, Inc. (2017) 14 Cal. App. 5th 663, 673.
2 Without Fetch’s agreement with YouAppi, Uber has no claim against YouAppi. Any alleged
3 duty YouAppi owed Uber arises exclusively from Fetch’s subcontract with YouAppi. YouAppi
4 is inexorably in privity with Fetch for claim preclusion.
5 In an effort to avoid this result, Uber argues the Court should construe each of the three
6 claim preclusion elements narrowly. But claim preclusion is far broader than Uber suggests and
7 is guided by three key principles of res judicata. First, “[r]es judicata precludes piecemeal
8 litigation by splitting a single cause of action or relitigation of the same cause of action on a
9 different legal theory or for different relief.” Mycogen Corp. v. Monsanto Co. (2002) 28 Cal. 4th
10 888, 897. Second, “res judicata precludes parties or their privies from relitigating . . . [a]ny issue
11 necessarily decided in [a prior] litigation . . . [even] if it is involved in a subsequent lawsuit on a
12 different cause of action.” Thibodeau v. Crum (1992) 4 Cal. App. 4th 749, 754-55. Third, “the
13 rule is that the prior judgment is res judicata on matters which were raised or could have been
14 raised, on matters litigated or litigable.” Id. at 755.
15 Uber fails to show why it could not have asserted its claims against YouAppi in Uber I,
16 and because the three elements of claim preclusion are met, Uber’s claims are prohibited.
17 A. Uber Asserts the Same Claims and Harm From the Same Campaign
18 Uber’s duplicative allegations in the two lawsuits triggers the first prong of claim
19 preclusion. Uber alleged fraud, negligence and unfair competition in Uber I, Dem. Ex. 3, and is
20 “alleging causes of action for fraud, negligence, and unfair competition” against YouAppi here.
21 Opp. at 2. The claims involve the same ad campaign, the same right to “legitimate mobile ads”
22 and the same harm—“a materials percentage of” $70-80 million in fees paid for “nonexistent,
23 nonviewable, and/or fraudulent mobile inventory.” Dem. Ex. 3, ¶¶ 79, 115; FAC ¶¶ 76, 84.
24 Uber attempts to distinguish its claims from Uber I, arguing, first, YouAppi and Fetch
25 had different duties, and second, the fraudulent concealment claim is a different cause of action
26 than the fraud claim. Both arguments fail. First, Uber hired Fetch to place ads for its campaign,
27 Fetch subcontracted YouAppi to place the ads, and Uber seeks recovery in both cases for ads it
28 contends were fraudulently placed. Id. It does not matter whether Uber proceeds in this suit “on
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YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER
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1 a different legal theory or for different relief.” Mycogen, 28 Cal. 4th at 897. “[A] ‘cause of
2 action’ is based upon the harm suffered, as opposed to the particular theory asserted by the
3 litigant,” and here, the same harm is alleged. Slater v. Blackwood (1975) 15 Cal. 3d 791, 795.
4 Second, and more importantly, the Court of Appeal rejected identical arguments in Cal
5 Sierra. Cal Sierra, like Uber, argued its lawsuit was not barred because the defendant in the
6 second case had separate duties from the defendant in the first. 14 Cal. App. 5th at 676. Cal
7 Sierra alleged trespass against Western in arbitration, and, after losing, sued Reed for trespass.
8 In rejecting the “separate duties” argument, the Court found that although Reed’s duties arose
9 from a different contract than Western’s, the harm alleged was the same in both cases, i.e.,
10 trespass, and Cal Sierra “failed to show how its rights or defendants’ duties differed from those
11 resolved in the arbitration.” Id. Uber’s argument likewise fails. It does not matter whether
12 Fetch’s duties arose from one contract and YouAppi’s from another, the same harm is alleged.
13 Cal Sierra also argued, like Uber, that it was asserting different causes of action by
14 alleging an interference with contract claim against Reed; a claim not resolved in the arbitration.
15 Rejecting this argument, the court found the arbitration resolved whether Western trespassed on
16 Cal Sierra’s mining rights when Reed installed an asphalt plant, and the interference claims in
17 the lawsuit were premised on Reed trespassing by installing the plant. Id. at 677-78. The Court
18 held Cal Sierra’s right to enjoy its mining right was at issue in both proceedings. The same logic
19 applies here. Whether labeled “fraud” or “fraudulent concealment,” Uber claims the same right
20 to “legitimate mobile ads attributable to installations” placed on its behalf. Dem. Ex. 3 ¶ 115;
21 FAC ¶ 84. Further, Uber makes no distinction between its negligence and unfair competition
22 claims here and those in Uber I. Because Uber I resolved whether ads placed on Uber’s behalf
23 violated its rights and caused harm, and Uber alleges identical rights and harm in this case, the
24 claims are the same for preclusion.
25 B. The Court-Approved Uber-Fetch Settlement is a Final Judgment
26 The second prong is triggered because Uber’s “court-approved settlement in [the] prior
27 suit precludes subsequent litigation on the same cause of action.” Villacres v. ABM Industries
28 Inc. (2010) 189 Cal. App. 4th 562, 569. Uber concedes a court-approved settlement may serve
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YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER
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1 as a final judgment for claim preclusion, but argues the rule should not apply here because (1) its
2 release did not pertain to a class action and (2) its release of one “joint” tortfeasor is not a release
3 of the remaining “joint” tortfeasors under CCP section 877.6. Both arguments are amiss.
4 First, Villacres does not limit the preclusive effect of a good faith settlement to class
5 actions lawsuits, and Uber gives no reason for doing so. Second, section 877.6 applies to joint-
6 defendants in a single lawsuit; it does not contemplate unnamed parties or later lawsuits. See
7 also Lippert v. Bailey (1966) 241 Cal. App. 2d 376, 381-384 (finding section 877 inapplicable
8 and claims precluded where alleged right and harm are the same). That Uber may have
9 preserved its rights against Phunware, by, for example, suing Phunware in Uber I (rather than in
10 a later lawsuit) does not alter the preclusive effect of the Fetch settlement on later litigation.
11 Third, Uber subpoenaed YouAppi in Uber I, showing its awareness of YouAppi’s campaign
12 involvement. But it deprived YouAppi of the “notice” protections of section 877.6 by choosing
13 not to pursue its claims against YouAppi in Uber I, and instead, settled those claims with Fetch,
14 thereby prohibiting Uber from relitigating them now. Claim preclusion bars piecemeal litigation,
15 not joint litigation. Section 877.6 neither prevents Uber’s court-approved settlement from being
16 a final judgment, nor shields Uber’s later lawsuit from dismissal for res judicata. The court-
17 approved settlement of Uber’s claims ends Uber’s reassertion here.
18 C. YouAppi’s Liability is Entirely Derivative from Fetch
19 The third prong is triggered because the parties or their privies are the same in both cases.
20 Uber is a plaintiff in both suits, and YouAppi, a party for purposes of discovery in Uber I,
21 derives liability in the second suit entirely from its contract with Fetch—a party in Uber I.
22 “When a defendant’s liability is entirely derivative from that of a party in an earlier action, claim
23 preclusion bars the second action because the second defendant stands in privity with the earlier
24 one.” Cal Sierra, 14 Cal. App. 5th at 673 (quoting DKN Holdings LLC v. Faerber (2015) 61 Cal.
25 4th 813, 827-28 but distinguishing its holding). “‘Privity’ as used in the context of res judicata .
26 . . does not embrace relationships between persons or entities, but rather it deals with a person’s
27 relationship to the subject matter of the litigation.” Id. at 674. Without Fetch’s agreement with
28 YouAppi, Uber has no claim against YouAppi; the claims are predicated on Fetch’s agreement
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YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER
CASE NO. CGC-19-576493
1 with, and instructions to, YouAppi. Any alleged duty YouAppi owed Uber arose from Fetch’s
2 subcontract with YouAppi to place ads. FAC ¶¶ 29-32. YouAppi is in privity for claim
3 preclusion because its relationship to this litigation draws exclusively from Fetch—a defendant
4 in the first suit—and because the subject matter of the two lawsuits is the same.
5 Uber argues, first, YouAppi and Fetch are independent tortfeasors, and second, Fetch did
6 not act as YouAppi’s “virtual representative” in Uber I. Cal Sierra is again on point and rejected
7 these arguments. Cal Sierra, like Uber, argued Reed’s liability was not entirely derivative of
8 Western’s liability because Reed independently infringed on Cal Sierra’s property rights when
9 installing an asphalt plant. Cal Sierra, 14 Cal. App. 5th at 674-75. The Court, in rejecting this
10 independent tortfeasor argument, explained Reed’s liability was “derivative of that of Western
11 Aggregates because Reed acted only pursuant to [a] license agreement with Western Aggregates
12 in installing the asphalt plant.” Id. Here, YouAppi’s liability is derivative of its actions pursuant
13 to an agreement with Fetch in placing ads. Indeed, Uber does not deny “Fetch held control,
14 responsibility, and supervision over the Uber Campaign and YouAppi acted pursuant to Fetch’s
15 directions, for example, through Fetch-provided Insertion Orders (‘IO’).” Dem. at 8. Nor does
16 Uber allege YouAppi “committed independent torts outside the scope of the [IO] agreement such
17 that its liability is not derivative.” Cal Sierra, 14 Cal. App. 5th at 675. Just the opposite. Uber
18 alleges tortious conduct solely because of Fetch’s agreement with YouAppi.
19 Uber, relying on DKN Holdings, further argues “YouAppi and Fetch are independent
20 tortfeasors, and each is liable for injuries caused to Uber by its own conduct,” but Uber’s
21 allegations in Uber I and in the FAC show just the opposite. See Dem., Ex. 3, ¶ 82 (“Had Uber
22 known of the extent of fraud . . ., it would have . . . den[ied] approval for Fetch to purchase
23 mobile inventory from networks and publishers like Phunware . . . and/or terminat[ed] its
24 relationship with Fetch and the networks and publishers it engaged for the [Uber] Campaign.”);
25 FAC ¶ 78 (nearly identical). More importantly, no allegation in the FAC supports Uber’s post
26 hoc argument that YouAppi and Fetch are independent tortfeasors. See Opp. at 8. Further,
27 unlike in DKN Holdings—where the lease agreement at issue explicitly provided that multiple
28 parties who signed as lessors or lessees “shall have joint and several responsibility” to comply
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YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER
CASE NO. CGC-19-576493
1 with the lease terms—the agreements at issue here do not include such language and the FAC
2 does not allege it. For these same reasons, the Court of Appeal in Cal Sierra distinguished DKN
3 Holdings in finding claim preclusion applied.
4 Uber’s second argument, that YouAppi’s liability is not derivative because Fetch did not
5 serve as YouAppi’s virtual representative, also fails because derivative liability supersedes
6 “virtual representation.” Thibodeau v. Crum further confirms this result. 4 Cal. App. 4th 749
7 (1992). There, plaintiff-homeowners hired a general contractor to construct a single-family
8 home, and the contractor hired defendant-subcontractor to construct the driveway. Id. at 752-53.
9 After moving into the home, plaintiffs complained of construction deficiencies and initiated
10 arbitration proceedings against the general contractor. Id. Following the arbitration, plaintiffs
11 sued the subcontractor for defects in the driveway. Id. at 754. In concluding res judicata barred
12 the later suit, the Court of Appeal found that if the defective driveway was “not encompassed
13 within the . . . arbitration, [it] most certainly should have been” because plaintiffs were aware of
14 the defects and complained about them long before the arbitration. Id. at 756.
15 Here, in the same sense as the Thibodeau plaintiff, Uber hired Fetch as its general
16 contractor to build an advertising campaign; Fetch subcontracted YouAppi to assist in building
17 the campaign; and YouAppi contracted with suppliers (Publishers) to purchase ad space to build
18 the campaign. Fetch maintained control, responsibility, and supervision over the campaign as
19 the general contractor of the project. See Dem. at 7-8. Uber’s contract with Fetch provided that
20 Fetch would subcontract with Networks, and Uber was fully aware of the alleged acts of Fetch
21 and Networks long before this suit. Dem., Ex. 3, ¶¶ 16-24, 71-82. Indeed, Uber’s allegations
22 against Phunware, a Network like YouAppi, confirms Uber knew of the allegations against
23 Networks such as YouAppi. And Uber’s subpoena on YouAppi in Uber I and YouAppi’s
24 compliance shows Uber knew of the specific allegations it now brings against YouAppi. Uber
25 was aware of its claims before settling with Fetch, and because the other two prongs are met,
26 claim preclusion bars this suit.
27 In simple terms, claim preclusion prohibits do-overs and double-recovery. Uber attempts
28 both here. Dismissing Uber’s duplicative claims relieves the parties of the cost and vexation of
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YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER
CASE NO. CGC-19-576493
1 multiple suits, preserves judicial economy, and encourages reliance on adjudication. Allowing
2 Uber to relitigate, on the other hand, encourages successive litigation of the same claims,
3 promotes misuse of court resources, and undermines CCP section 877.6’s “notice” protections.
4 III. UBER IS UNABLE TO FIX ITS FRAUDULENT CONCEALMENT CLAIM
5 Uber has full information about the facts of its claim. In addition to having YouAppi’s
6 responses to discovery requests in both cases, Uber also has information that YouAppi does not,
7 such as information from TUNE and Fetch. While fully informed, Uber remains unable, even on
8 its second try, to address the deficiencies of its fraudulent concealment claim found by the Court
9 and reiterated in YouAppi’s Demurrer. Rather than bolstering Uber’s claim, the FAC and the
10 Opposition reaffirm the following facts and allegations that are fatal to Uber’s claim:
11 (1) YouAppi did not generate, modify, or receive transparency reports for the Uber
12 Campaign (see FAC ¶ 35; Opp. at 10);
13 (2) Only Fetch prepared transparency reports and only Uber received such reports (see
FAC ¶ 27; Opp. at 3);
14
(3) Only TUNE awarded attribution for app installs; YouAppi neither decided nor
15 controlled attribution (see FAC ¶¶ 23-24);
16 (4) Uber permitted ad tracking without the use of Device IDs (i.e., Fingerprinting)—
17 even though it decreased YouAppi’s likelihood of being awarded attribution—
because mobile websites cannot track Device IDs (see FAC ¶¶ 23-24, 40c; Opp. at
18 4:28-5:1);
19 (5) “Postback reports,” received only after TUNE awarded attribution credit, differ
from “transparency reports” (see FAC ¶ 35); and
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(6) Uber, through Fetch, did not provide a “blacklist” of prohibited sites until August
21 9, 2016, more than 1.5 years into the 2-year Uber Campaign (see FAC ¶ 31 (citing
22 Aug. 9, 2016 email attaching “blacklist”)).
A. No Knowledge and Concealment of Material Facts
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Uber’s alleged and admitted facts demonstrate YouAppi did not know of, or try to
24
conceal accurate information from Uber. Uber, nevertheless, suggests for the first time that
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YouAppi knew of concealed information because it compiled transparency reports. Opp. at 10-
26
11. Uber’s own allegations contradict this assertion, however. See, e.g., FAC ¶ 27; Order on
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YouAppi’s Dem. (“Order”) at 10-11 (“[T]he complaint still fails to allege how YouAppi knew or
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YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER
CASE NO. CGC-19-576493
1 would know that the number of daily reported clicks being reported on any one ad was false. . . .
2 [T]he complaint states that ‘TUNE track[ed] clicks on ads.”). Not only did YouAppi not prepare
3 or “compile” transparency reports, YouAppi never even received such reports. The FAC
4 explains TUNE, not YouAppi, (1) “track[ed] which network, website, or app generated clicks;”
5 (2) “collect[ed] information about mobile advertising impressions (i.e., views) of, and clicks on,
6 mobile ads;” and (3) “award[ed] credit to the publisher, network, or mobile advertising agency
7 that . . . placed the ad responsible for the last click attribution.” FAC ¶¶ 23-24. Moreover,
8 Fetch, not YouAppi, “prepared reports aggregating the information reported by Defendants for
9 Uber to assess the quality of networks participating in the Uber Campaign (‘transparency
10 reports’).” FAC ¶ 27. That is, YouAppi was not responsible for tracking clicks or collecting
11 information about ad impressions, which makes sense; Uber did not give YouAppi any control
12 over how credit was awarded for an ad, and instead hired TUNE to track and credit attribution.
13 To the extent Uber suggests YouAppi knew of allegedly concealed facts by receiving
14 “‘postback’ reports,” Uber is wrong. First, the FAC explains YouAppi received “‘postback’
15 reports” only after TUNE awarded attribution credit. See FAC ¶ 35. Second, the FAC
16 differentiates between “‘postback’ reports” received by YouAppi, on the one hand, and
17 “transparency reports” received by Uber, on the other. See id., ¶¶ 27, 35, 53. The two reports are
18 not the same and only “transparency reports” are alleged to contain concealed facts. See id., ¶¶
19 27, 35, 53. Consequently, the FAC simply does not adequately allege YouAppi knew of
20 reporting errors by TUNE because YouAppi did not get the same reports as Uber.
21 Uber’s fraudulent concealment claim is further doomed because Uber alleges no facts
22 supporting a cover-up by YouAppi. The FAC neither raises an inference that YouAppi actively
23 concealed or made misleading representations in reporting Device IDs and daily active users
24 (DAU), nor an inference that YouAppi manipulated or altered information in reports prepared by
25 TUNE and Fetch. YouAppi could not have falsified, withheld, or corrected information in
26 reports prepared by others and received exclusively by Uber. Moreover, Uber allowed for
27 tracking without Device IDs, and any unrecorded IDs were because of this allowance or because
28 TUNE did not capture them from Publishers. See FAC ¶¶ 23-24; Order 10-11. Further, the FAC
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YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER
CASE NO. CGC-19-576493
1 is careful not to allege YouAppi provided DAU information, because it did not; it came from a
2 third-party. YouAppi could not have falsified, withheld, or corrected information from a third-
3 party. “Thus, the complaint fails to state facts from which the Court can infer active
4 concealment . . . or any misleading representation on the part of YouAppi.” Order at 11.
5 B. No Factual Allegations of Harm
6 As the Court found before, “[e]ven if the number of clicks did exceed the number of
7 daily active users, . . . neither YouAppi nor the publishers were paid for clicks that did not lead
8 to installation of the app.” Order at 11. Even under the “less specificity” standard, the FAC still
9 does “not support a cause of action for fraudulent concealment” because “it is unclear the harm
10 that resulted from concealment of the facts alleged.” Id. Uber, nevertheless, argues for the first
11 time that it was harmed by YouAppi allegedly placing ads on “blacklisted” websites and by
12 using “pop-under” publishers. According to Uber, this alleged conduct somehow resulted in
13 YouAppi receiving payments exceeding what it actually earned, but neither the FAC nor the
14 Opposition explains how that could be. Opp. at 1. Uber’s inability to allege harm provides an
15 independent ground for sustaining the demurrer.
16 C. Allegations Mislabeled as Fraudulent Concealment
17 The Demurrer explains the FAC’s three new theories of fraudulent concealment—(1)
18 placing ads on prohibited adult sites; (2) using “blacklisted” publishers; and (3) rebrokering with
19 other networks—do not support the claim, and each is deficient on its own and in combination.
20 Uber argues “YouAppi knew sites it reported in transparency reports” were prohibited adult sites
21 because YouAppi saw them in “postback reports.” Opp. at 14. But contrary to this assertion, the
22 FAC alleges only that such information was “reported to Uber in transparency reports,” not in
23 postback reports. Id. (citing FAC ¶ 54). And as established by the FAC, YouAppi did not
24 generate, modify, or receive transparency reports—so there is no basis to infer YouAppi’s
25 awareness of a discrepancy in transparency reports it did not receive. See FAC ¶¶ 35, 54.
26 Uber uses the same flawed logic in asserting YouAppi used prohibited publisher
27 PropellerAds and rebrokered with co-Defendant AdAction (YouAppi did not). Uber’s
28 arguments are again futile. Uber, for one, alleges YouAppi was not given a publisher “blacklist”
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YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER
CASE NO. CGC-19-576493
1 until a year-and-a-half into the two-year campaign, and does not even endeavor to allege
2 YouAppi used a “blacklisted” publisher after receiving the blacklist, see FAC ¶ 31, and, for two,
3 Uber points to transparency reports as indicating concealment of rebrokering, but as established
4 by the FAC, YouAppi never received such reports. See id., ¶¶ 35, 56, Fig. 10. A court simply
5 cannot infer knowledge of wrongdoing based on haphazard pleading of this sort.
6 Because the FAC alleges fraudulent concealment in a conclusory manner, and fails to
7 allege (1) underlying facts of YouAppi’s concealment of a material fact (e.g., YouAppi’s
8 knowledge or cover-up), (2) Uber’s unawareness of such a fact (e.g., transparency reports
9 showing Uber’s awareness of clicks/installs by allegedly prohibited publishers), or (3) a harm
10 resulting from any concealment, YouAppi’s Demurrer should be sustained. The allegations—
11 establishing (1) YouAppi never received, generated, or modified transparency reports; (2) Uber
12 received transparency reports showing clicks/installs by allegedly prohibited publishers; and (3)
13 Uber only paid for clicks that resulted in installs—fall far short of fraudulent concealment claims
14 sufficient to survive a demurrer.
15 II. UBER’S UNFAIR COMPETITION CLAIM REMAINS DEFICIENT
16 Uber’s UCL claim rises and falls with its fraud claim. Consistent with the Court’s order,
17 “Uber’s UCL claim under the ‘unlawful’ and ‘fraudulent’ prong cannot stand on its claim that
18 defendants’ fraudulently concealed facts from Uber because fraudulent concealment has not
19 been adequately pled.” Id. Like before, “Uber has not sufficiently pled facts showing that
20 defendants concealed from Uber the true source of its inventory, or even how that occurs, Uber’s
21 UCL claim states insufficient facts to state a cause of action under the unfair prong.” Id. Since
22 the same deficiencies remain, Uber’s UCL claim should be dismissed alongside its fraud claim.
23 III. CONCLUSION
24 Uber cannot cure the preclusive effect of Uber I. Leave to amend should be denied on
25 this ground alone. But in addition, Uber’s inability to cure the other defects identified by the
26 Court and YouAppi’s Demurrer—despite information discovered from YouAppi, TUNE, and
27 Fetch—is further reason why further amendment would be futile. For the foregoing reasons, the
28 Court should sustain YouAppi’s Demurrer and dismiss Uber’s claims with prejudice.
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YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER
CASE NO. CGC-19-576493
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Dated: May 27, 2020 POLSINELLI LLP
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3 /s/ Joshua L. Rayes
By: Joshua L. Rayes
4 Colby B. Springer
Barrington Dyer
5 Miya Yusa
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Attorneys for Defendant
7 YOUAPPI INC.
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YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER
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1
PROOF OF SERVICE
I, Maria Diazgranados, declare:
2
I am a citizen of the United States, am over the age of eighteen years, and am not a party to or
3 interested in the within entitled cause. My business address is Three Embarcadero Center, Suite 2400,
San Francisco, CA 94111.
On May 27, 2020, I served the following document(s) on the parties in the within action:
4
DEFENDANT YOUAPPI INC.’S REPLY TO UBER TECHNOLOGIES, INC.’S OPPOSITION
TO YOUAPPI, INC.’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT
5
6
VIA FILE & SERVE: By causing a true and correct copy thereof to be served through
7 xx File & ServeXpress addressed to all parties appearing on the File & ServeXpress Serve
electronic service list.
8
VIA E-MAIL: I attached the above-described document(s) to an e-mail message, and
9 invoked the send command to transmit the e-mail message to the person(s) at the e-mail
xx
address(es) listed below. My email address is mdiazgranados@polsinelli.com
10
11
John P. Flynn
Boris Feldman
12
Dylan Savage
WILSON SONSINI GOODRICH & ROSATI
13 One Market Plaza
Spear Tower, Suite 3300
San Francisco, CA 94105
14 T: (415) 947-2000 Counsel for Defendants
Email: jflynn@wsgr.com TAPTICA LTD. and TAPTICA, INC.
boris.feldman@wsgr.com
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Paul T. Llewellyn
16 John F. Frost
LEWIS & LLEWELLYN LLP
505 Montgomery Street, Suite 1300
17 San Francisco, CA 94111
T: (415) 800-0590
Email: pllewellyn@lewisllewellyn.com Counsel for Defendant
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jfrost@lewisllewellyn.com ADACTION INTERACTIVE
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1 Mathis A. Kamber
Christopher S. Sun
Keeker Van Nest & Peters LLP
2 633 Battery Street
San Francisco, CA 94111
3 T: 415-391-5400 Counsel for Defendant
Email: mkamber@keker.com BIDMOTION, INC. AND HYDRANE SAS
csun@keker.com
4 John Bovich
Seth B. Herring
REED SMITH LLP
5 101 Second Street, Suite 1800
San Francisco, CA 94105-3659
6 T: +1 415 543 8700
Email: jbovich@reedsmith.com Counsel for Plaintiff
sherring@reedsmith.com UBER TECHNOLOGIES, INC.
7
Randall D. Haimovici
Angela B. Johnson
8 Ariel F. Ruiz
Uber Technologies, Inc.
9 1455 Market Street, Floor 4
San Francisco, CA 94103-1355
Telephone: +1 415 533-7652
10 Email: ariel.ruiz@uber.com
angelaj@uber.com
rhaimovici@uber.com Counsel for Plaintiff
11 UBER TECHNOLOGIES, INC.
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I declare under penalty of perjury under the laws of the State of California that the foregoing is a
true and correct statement and that this Certificate was executed on May 27, 2020.
14
15 By
Maria Diazgranados
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1 Colby B. Springer (CA Bar No. 214868) cspringer@polsinelli.com 2 Barrington Dyer (CA Bar No. 264762) ELECTRONICALLY 3 bdyer@polsinell.com F I L E D Miya Yusa (CA Bar No. 314563) Superior Court of California, County of San Francisco 4 myusa@polsinelli.com Joshua L. Rayes (CA Bar No. 316208) 05/27/2020 5 Clerk of the Court jrayes@polsinelli.com BY: EDNALEEN ALEGRE POLSINELLI LLP Deputy Clerk 6 Three Embarcadero Center, Suite 2400 7 San Francisco, CA 94111 Telephone: 415-248-2100 8 Facsimile: 415-248-2101 9 Attorneys for Defendant YOUAPPI INC. 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA 11 COUNTY OF SAN FRANCISCO 12 13 UBER TECHNOLOGIES, INC., a Delaware Case No. CGC-19-576493 corporation, 14 Three Embarcadero Center, Suite 2400 DEFENDANT YOUAPPI INC.’S Plaintiff, REPLY TO UBER TECHNOLOGIES, 15 San Francisco, CA 94111 INC.’S OPPOSITION TO YOUAPPI, v. INC.’S DEMURRER TO PLAINTIFF’S (415) 248-2100 16 Polsinelli LLP FIRST AMENDED COMPLAINT HYDRANE SAS, a foreign corporation, 17 BIDMOTION INC, a Delaware corporation, TAPTICA LTD, a foreign corporation, Hon. Anne-Christine Massullo 18 TAPTICA INC., a Delaware corporation, Date Filed: June 5, 2019 YOUAPPI INC., a Delaware corporation, Trial Date: May 17, 2021 19 ADACTION INTERACTIVE LLC, a Colorado limited liability company, AND 20 DOES 1 THROUGH 100. 21 Defendants. 22 23 24 25 26 27 28 YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER CASE NO. CGC-19-576493 1 I. INTRODUCTION 2 Uber’s claims are barred by its first suit with Fetch, and they remain deficient despite 3 guidance from the Court pointing out the inadequate allegations. While Uber argues YouAppi is 4 the only defendant asserting claim preclusion and that YouAppi’s argument is inconsistent with 5 its nonjoinder argument, Uber is incorrect. Opp. at 6. First, all defendants joined YouAppi’s 6 demurrer and claim preclusion argument. Second, consistent with its position in the first 7 demurrer, YouAppi’s position here is Uber’s claims are barred—but under a rule of law not yet 8 addressed by the Court. The claims in the First Amended Complaint (FAC) are barred because 9 Uber seeks to relitigate claims adjudicated to a final determination in Uber I. The FAC adds 10 detail further demonstrating Uber could have and should have asserted its claims against 11 YouAppi in Uber I, and because Uber settled those claims, they are precluded by res judicata. 12 While the Court need not press forward if it finds this case is barred by the earlier one, 13 Uber’s fraudulent concealment and unfair competition claims remain deficient, adding another 14 reason for dismissal. Uber’s fraudulent concealment claim is doomed because the FAC still fails Three Embarcadero Center, Suite 2400 15 to show YouAppi concealed or had knowledge of material facts. Instead, the FAC and the San Francisco, CA 94111 (415) 248-2100 16 Opposition reaffirm that YouAppi neither generated, modified, or received “transparency Polsinelli LLP 17 reports,” nor decided ad attribution. The FAC alleges these acts were performed by TUNE and 18 Fetch, and is fatal to Uber’s claim. Moreover, Uber concedes its unfair competition claim falls 19 with the fraudulent concealment claim. So the two go down together. Whether barred by res 20 judicata or found deficient, Uber’s claims should be dismissed with prejudice. 21 II. UBER’S CLAIMS IN THE FAC ARE BARRED BY CLAIM PRECLUSION 22 Claim preclusion applies because (1) Uber alleges the same fraud, negligence and unfair 23 competition claims for the same harm in the same ad campaign as Uber I; (2) Uber I resulted in 24 court-approved settlement of Uber’s claims; and (3) Uber is a party in both proceedings. See 25 Boeken v. Philip Morris USA, Inc. (2010) 48 Cal. 4th 788, 797. Although YouAppi was not a 26 named defendant in Uber I, Uber pulled YouAppi into the case through discovery. See Dem. at 27 8. More importantly, because YouAppi’s “liability is entirely derivative from [Fetch,] a party in 28 an earlier action, claim preclusion bars the second action because [YouAppi] stands in privity YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER CASE NO. CGC-19-576493 1 with [Fetch].” Cal Sierra Dev., Inc. v. George Reed, Inc. (2017) 14 Cal. App. 5th 663, 673. 2 Without Fetch’s agreement with YouAppi, Uber has no claim against YouAppi. Any alleged 3 duty YouAppi owed Uber arises exclusively from Fetch’s subcontract with YouAppi. YouAppi 4 is inexorably in privity with Fetch for claim preclusion. 5 In an effort to avoid this result, Uber argues the Court should construe each of the three 6 claim preclusion elements narrowly. But claim preclusion is far broader than Uber suggests and 7 is guided by three key principles of res judicata. First, “[r]es judicata precludes piecemeal 8 litigation by splitting a single cause of action or relitigation of the same cause of action on a 9 different legal theory or for different relief.” Mycogen Corp. v. Monsanto Co. (2002) 28 Cal. 4th 10 888, 897. Second, “res judicata precludes parties or their privies from relitigating . . . [a]ny issue 11 necessarily decided in [a prior] litigation . . . [even] if it is involved in a subsequent lawsuit on a 12 different cause of action.” Thibodeau v. Crum (1992) 4 Cal. App. 4th 749, 754-55. Third, “the 13 rule is that the prior judgment is res judicata on matters which were raised or could have been 14 raised, on matters litigated or litigable.” Id. at 755. 15 Uber fails to show why it could not have asserted its claims against YouAppi in Uber I, 16 and because the three elements of claim preclusion are met, Uber’s claims are prohibited. 17 A. Uber Asserts the Same Claims and Harm From the Same Campaign 18 Uber’s duplicative allegations in the two lawsuits triggers the first prong of claim 19 preclusion. Uber alleged fraud, negligence and unfair competition in Uber I, Dem. Ex. 3, and is 20 “alleging causes of action for fraud, negligence, and unfair competition” against YouAppi here. 21 Opp. at 2. The claims involve the same ad campaign, the same right to “legitimate mobile ads” 22 and the same harm—“a materials percentage of” $70-80 million in fees paid for “nonexistent, 23 nonviewable, and/or fraudulent mobile inventory.” Dem. Ex. 3, ¶¶ 79, 115; FAC ¶¶ 76, 84. 24 Uber attempts to distinguish its claims from Uber I, arguing, first, YouAppi and Fetch 25 had different duties, and second, the fraudulent concealment claim is a different cause of action 26 than the fraud claim. Both arguments fail. First, Uber hired Fetch to place ads for its campaign, 27 Fetch subcontracted YouAppi to place the ads, and Uber seeks recovery in both cases for ads it 28 contends were fraudulently placed. Id. It does not matter whether Uber proceeds in this suit “on 2 YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER CASE NO. CGC-19-576493 1 a different legal theory or for different relief.” Mycogen, 28 Cal. 4th at 897. “[A] ‘cause of 2 action’ is based upon the harm suffered, as opposed to the particular theory asserted by the 3 litigant,” and here, the same harm is alleged. Slater v. Blackwood (1975) 15 Cal. 3d 791, 795. 4 Second, and more importantly, the Court of Appeal rejected identical arguments in Cal 5 Sierra. Cal Sierra, like Uber, argued its lawsuit was not barred because the defendant in the 6 second case had separate duties from the defendant in the first. 14 Cal. App. 5th at 676. Cal 7 Sierra alleged trespass against Western in arbitration, and, after losing, sued Reed for trespass. 8 In rejecting the “separate duties” argument, the Court found that although Reed’s duties arose 9 from a different contract than Western’s, the harm alleged was the same in both cases, i.e., 10 trespass, and Cal Sierra “failed to show how its rights or defendants’ duties differed from those 11 resolved in the arbitration.” Id. Uber’s argument likewise fails. It does not matter whether 12 Fetch’s duties arose from one contract and YouAppi’s from another, the same harm is alleged. 13 Cal Sierra also argued, like Uber, that it was asserting different causes of action by 14 alleging an interference with contract claim against Reed; a claim not resolved in the arbitration. 15 Rejecting this argument, the court found the arbitration resolved whether Western trespassed on 16 Cal Sierra’s mining rights when Reed installed an asphalt plant, and the interference claims in 17 the lawsuit were premised on Reed trespassing by installing the plant. Id. at 677-78. The Court 18 held Cal Sierra’s right to enjoy its mining right was at issue in both proceedings. The same logic 19 applies here. Whether labeled “fraud” or “fraudulent concealment,” Uber claims the same right 20 to “legitimate mobile ads attributable to installations” placed on its behalf. Dem. Ex. 3 ¶ 115; 21 FAC ¶ 84. Further, Uber makes no distinction between its negligence and unfair competition 22 claims here and those in Uber I. Because Uber I resolved whether ads placed on Uber’s behalf 23 violated its rights and caused harm, and Uber alleges identical rights and harm in this case, the 24 claims are the same for preclusion. 25 B. The Court-Approved Uber-Fetch Settlement is a Final Judgment 26 The second prong is triggered because Uber’s “court-approved settlement in [the] prior 27 suit precludes subsequent litigation on the same cause of action.” Villacres v. ABM Industries 28 Inc. (2010) 189 Cal. App. 4th 562, 569. Uber concedes a court-approved settlement may serve 3 YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER CASE NO. CGC-19-576493 1 as a final judgment for claim preclusion, but argues the rule should not apply here because (1) its 2 release did not pertain to a class action and (2) its release of one “joint” tortfeasor is not a release 3 of the remaining “joint” tortfeasors under CCP section 877.6. Both arguments are amiss. 4 First, Villacres does not limit the preclusive effect of a good faith settlement to class 5 actions lawsuits, and Uber gives no reason for doing so. Second, section 877.6 applies to joint- 6 defendants in a single lawsuit; it does not contemplate unnamed parties or later lawsuits. See 7 also Lippert v. Bailey (1966) 241 Cal. App. 2d 376, 381-384 (finding section 877 inapplicable 8 and claims precluded where alleged right and harm are the same). That Uber may have 9 preserved its rights against Phunware, by, for example, suing Phunware in Uber I (rather than in 10 a later lawsuit) does not alter the preclusive effect of the Fetch settlement on later litigation. 11 Third, Uber subpoenaed YouAppi in Uber I, showing its awareness of YouAppi’s campaign 12 involvement. But it deprived YouAppi of the “notice” protections of section 877.6 by choosing 13 not to pursue its claims against YouAppi in Uber I, and instead, settled those claims with Fetch, 14 thereby prohibiting Uber from relitigating them now. Claim preclusion bars piecemeal litigation, 15 not joint litigation. Section 877.6 neither prevents Uber’s court-approved settlement from being 16 a final judgment, nor shields Uber’s later lawsuit from dismissal for res judicata. The court- 17 approved settlement of Uber’s claims ends Uber’s reassertion here. 18 C. YouAppi’s Liability is Entirely Derivative from Fetch 19 The third prong is triggered because the parties or their privies are the same in both cases. 20 Uber is a plaintiff in both suits, and YouAppi, a party for purposes of discovery in Uber I, 21 derives liability in the second suit entirely from its contract with Fetch—a party in Uber I. 22 “When a defendant’s liability is entirely derivative from that of a party in an earlier action, claim 23 preclusion bars the second action because the second defendant stands in privity with the earlier 24 one.” Cal Sierra, 14 Cal. App. 5th at 673 (quoting DKN Holdings LLC v. Faerber (2015) 61 Cal. 25 4th 813, 827-28 but distinguishing its holding). “‘Privity’ as used in the context of res judicata . 26 . . does not embrace relationships between persons or entities, but rather it deals with a person’s 27 relationship to the subject matter of the litigation.” Id. at 674. Without Fetch’s agreement with 28 YouAppi, Uber has no claim against YouAppi; the claims are predicated on Fetch’s agreement 4 YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER CASE NO. CGC-19-576493 1 with, and instructions to, YouAppi. Any alleged duty YouAppi owed Uber arose from Fetch’s 2 subcontract with YouAppi to place ads. FAC ¶¶ 29-32. YouAppi is in privity for claim 3 preclusion because its relationship to this litigation draws exclusively from Fetch—a defendant 4 in the first suit—and because the subject matter of the two lawsuits is the same. 5 Uber argues, first, YouAppi and Fetch are independent tortfeasors, and second, Fetch did 6 not act as YouAppi’s “virtual representative” in Uber I. Cal Sierra is again on point and rejected 7 these arguments. Cal Sierra, like Uber, argued Reed’s liability was not entirely derivative of 8 Western’s liability because Reed independently infringed on Cal Sierra’s property rights when 9 installing an asphalt plant. Cal Sierra, 14 Cal. App. 5th at 674-75. The Court, in rejecting this 10 independent tortfeasor argument, explained Reed’s liability was “derivative of that of Western 11 Aggregates because Reed acted only pursuant to [a] license agreement with Western Aggregates 12 in installing the asphalt plant.” Id. Here, YouAppi’s liability is derivative of its actions pursuant 13 to an agreement with Fetch in placing ads. Indeed, Uber does not deny “Fetch held control, 14 responsibility, and supervision over the Uber Campaign and YouAppi acted pursuant to Fetch’s 15 directions, for example, through Fetch-provided Insertion Orders (‘IO’).” Dem. at 8. Nor does 16 Uber allege YouAppi “committed independent torts outside the scope of the [IO] agreement such 17 that its liability is not derivative.” Cal Sierra, 14 Cal. App. 5th at 675. Just the opposite. Uber 18 alleges tortious conduct solely because of Fetch’s agreement with YouAppi. 19 Uber, relying on DKN Holdings, further argues “YouAppi and Fetch are independent 20 tortfeasors, and each is liable for injuries caused to Uber by its own conduct,” but Uber’s 21 allegations in Uber I and in the FAC show just the opposite. See Dem., Ex. 3, ¶ 82 (“Had Uber 22 known of the extent of fraud . . ., it would have . . . den[ied] approval for Fetch to purchase 23 mobile inventory from networks and publishers like Phunware . . . and/or terminat[ed] its 24 relationship with Fetch and the networks and publishers it engaged for the [Uber] Campaign.”); 25 FAC ¶ 78 (nearly identical). More importantly, no allegation in the FAC supports Uber’s post 26 hoc argument that YouAppi and Fetch are independent tortfeasors. See Opp. at 8. Further, 27 unlike in DKN Holdings—where the lease agreement at issue explicitly provided that multiple 28 parties who signed as lessors or lessees “shall have joint and several responsibility” to comply 5 YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER CASE NO. CGC-19-576493 1 with the lease terms—the agreements at issue here do not include such language and the FAC 2 does not allege it. For these same reasons, the Court of Appeal in Cal Sierra distinguished DKN 3 Holdings in finding claim preclusion applied. 4 Uber’s second argument, that YouAppi’s liability is not derivative because Fetch did not 5 serve as YouAppi’s virtual representative, also fails because derivative liability supersedes 6 “virtual representation.” Thibodeau v. Crum further confirms this result. 4 Cal. App. 4th 749 7 (1992). There, plaintiff-homeowners hired a general contractor to construct a single-family 8 home, and the contractor hired defendant-subcontractor to construct the driveway. Id. at 752-53. 9 After moving into the home, plaintiffs complained of construction deficiencies and initiated 10 arbitration proceedings against the general contractor. Id. Following the arbitration, plaintiffs 11 sued the subcontractor for defects in the driveway. Id. at 754. In concluding res judicata barred 12 the later suit, the Court of Appeal found that if the defective driveway was “not encompassed 13 within the . . . arbitration, [it] most certainly should have been” because plaintiffs were aware of 14 the defects and complained about them long before the arbitration. Id. at 756. 15 Here, in the same sense as the Thibodeau plaintiff, Uber hired Fetch as its general 16 contractor to build an advertising campaign; Fetch subcontracted YouAppi to assist in building 17 the campaign; and YouAppi contracted with suppliers (Publishers) to purchase ad space to build 18 the campaign. Fetch maintained control, responsibility, and supervision over the campaign as 19 the general contractor of the project. See Dem. at 7-8. Uber’s contract with Fetch provided that 20 Fetch would subcontract with Networks, and Uber was fully aware of the alleged acts of Fetch 21 and Networks long before this suit. Dem., Ex. 3, ¶¶ 16-24, 71-82. Indeed, Uber’s allegations 22 against Phunware, a Network like YouAppi, confirms Uber knew of the allegations against 23 Networks such as YouAppi. And Uber’s subpoena on YouAppi in Uber I and YouAppi’s 24 compliance shows Uber knew of the specific allegations it now brings against YouAppi. Uber 25 was aware of its claims before settling with Fetch, and because the other two prongs are met, 26 claim preclusion bars this suit. 27 In simple terms, claim preclusion prohibits do-overs and double-recovery. Uber attempts 28 both here. Dismissing Uber’s duplicative claims relieves the parties of the cost and vexation of 6 YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER CASE NO. CGC-19-576493 1 multiple suits, preserves judicial economy, and encourages reliance on adjudication. Allowing 2 Uber to relitigate, on the other hand, encourages successive litigation of the same claims, 3 promotes misuse of court resources, and undermines CCP section 877.6’s “notice” protections. 4 III. UBER IS UNABLE TO FIX ITS FRAUDULENT CONCEALMENT CLAIM 5 Uber has full information about the facts of its claim. In addition to having YouAppi’s 6 responses to discovery requests in both cases, Uber also has information that YouAppi does not, 7 such as information from TUNE and Fetch. While fully informed, Uber remains unable, even on 8 its second try, to address the deficiencies of its fraudulent concealment claim found by the Court 9 and reiterated in YouAppi’s Demurrer. Rather than bolstering Uber’s claim, the FAC and the 10 Opposition reaffirm the following facts and allegations that are fatal to Uber’s claim: 11 (1) YouAppi did not generate, modify, or receive transparency reports for the Uber 12 Campaign (see FAC ¶ 35; Opp. at 10); 13 (2) Only Fetch prepared transparency reports and only Uber received such reports (see FAC ¶ 27; Opp. at 3); 14 (3) Only TUNE awarded attribution for app installs; YouAppi neither decided nor 15 controlled attribution (see FAC ¶¶ 23-24); 16 (4) Uber permitted ad tracking without the use of Device IDs (i.e., Fingerprinting)— 17 even though it decreased YouAppi’s likelihood of being awarded attribution— because mobile websites cannot track Device IDs (see FAC ¶¶ 23-24, 40c; Opp. at 18 4:28-5:1); 19 (5) “Postback reports,” received only after TUNE awarded attribution credit, differ from “transparency reports” (see FAC ¶ 35); and 20 (6) Uber, through Fetch, did not provide a “blacklist” of prohibited sites until August 21 9, 2016, more than 1.5 years into the 2-year Uber Campaign (see FAC ¶ 31 (citing 22 Aug. 9, 2016 email attaching “blacklist”)). A. No Knowledge and Concealment of Material Facts 23 Uber’s alleged and admitted facts demonstrate YouAppi did not know of, or try to 24 conceal accurate information from Uber. Uber, nevertheless, suggests for the first time that 25 YouAppi knew of concealed information because it compiled transparency reports. Opp. at 10- 26 11. Uber’s own allegations contradict this assertion, however. See, e.g., FAC ¶ 27; Order on 27 YouAppi’s Dem. (“Order”) at 10-11 (“[T]he complaint still fails to allege how YouAppi knew or 28 7 YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER CASE NO. CGC-19-576493 1 would know that the number of daily reported clicks being reported on any one ad was false. . . . 2 [T]he complaint states that ‘TUNE track[ed] clicks on ads.”). Not only did YouAppi not prepare 3 or “compile” transparency reports, YouAppi never even received such reports. The FAC 4 explains TUNE, not YouAppi, (1) “track[ed] which network, website, or app generated clicks;” 5 (2) “collect[ed] information about mobile advertising impressions (i.e., views) of, and clicks on, 6 mobile ads;” and (3) “award[ed] credit to the publisher, network, or mobile advertising agency 7 that . . . placed the ad responsible for the last click attribution.” FAC ¶¶ 23-24. Moreover, 8 Fetch, not YouAppi, “prepared reports aggregating the information reported by Defendants for 9 Uber to assess the quality of networks participating in the Uber Campaign (‘transparency 10 reports’).” FAC ¶ 27. That is, YouAppi was not responsible for tracking clicks or collecting 11 information about ad impressions, which makes sense; Uber did not give YouAppi any control 12 over how credit was awarded for an ad, and instead hired TUNE to track and credit attribution. 13 To the extent Uber suggests YouAppi knew of allegedly concealed facts by receiving 14 “‘postback’ reports,” Uber is wrong. First, the FAC explains YouAppi received “‘postback’ 15 reports” only after TUNE awarded attribution credit. See FAC ¶ 35. Second, the FAC 16 differentiates between “‘postback’ reports” received by YouAppi, on the one hand, and 17 “transparency reports” received by Uber, on the other. See id., ¶¶ 27, 35, 53. The two reports are 18 not the same and only “transparency reports” are alleged to contain concealed facts. See id., ¶¶ 19 27, 35, 53. Consequently, the FAC simply does not adequately allege YouAppi knew of 20 reporting errors by TUNE because YouAppi did not get the same reports as Uber. 21 Uber’s fraudulent concealment claim is further doomed because Uber alleges no facts 22 supporting a cover-up by YouAppi. The FAC neither raises an inference that YouAppi actively 23 concealed or made misleading representations in reporting Device IDs and daily active users 24 (DAU), nor an inference that YouAppi manipulated or altered information in reports prepared by 25 TUNE and Fetch. YouAppi could not have falsified, withheld, or corrected information in 26 reports prepared by others and received exclusively by Uber. Moreover, Uber allowed for 27 tracking without Device IDs, and any unrecorded IDs were because of this allowance or because 28 TUNE did not capture them from Publishers. See FAC ¶¶ 23-24; Order 10-11. Further, the FAC 8 YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER CASE NO. CGC-19-576493 1 is careful not to allege YouAppi provided DAU information, because it did not; it came from a 2 third-party. YouAppi could not have falsified, withheld, or corrected information from a third- 3 party. “Thus, the complaint fails to state facts from which the Court can infer active 4 concealment . . . or any misleading representation on the part of YouAppi.” Order at 11. 5 B. No Factual Allegations of Harm 6 As the Court found before, “[e]ven if the number of clicks did exceed the number of 7 daily active users, . . . neither YouAppi nor the publishers were paid for clicks that did not lead 8 to installation of the app.” Order at 11. Even under the “less specificity” standard, the FAC still 9 does “not support a cause of action for fraudulent concealment” because “it is unclear the harm 10 that resulted from concealment of the facts alleged.” Id. Uber, nevertheless, argues for the first 11 time that it was harmed by YouAppi allegedly placing ads on “blacklisted” websites and by 12 using “pop-under” publishers. According to Uber, this alleged conduct somehow resulted in 13 YouAppi receiving payments exceeding what it actually earned, but neither the FAC nor the 14 Opposition explains how that could be. Opp. at 1. Uber’s inability to allege harm provides an 15 independent ground for sustaining the demurrer. 16 C. Allegations Mislabeled as Fraudulent Concealment 17 The Demurrer explains the FAC’s three new theories of fraudulent concealment—(1) 18 placing ads on prohibited adult sites; (2) using “blacklisted” publishers; and (3) rebrokering with 19 other networks—do not support the claim, and each is deficient on its own and in combination. 20 Uber argues “YouAppi knew sites it reported in transparency reports” were prohibited adult sites 21 because YouAppi saw them in “postback reports.” Opp. at 14. But contrary to this assertion, the 22 FAC alleges only that such information was “reported to Uber in transparency reports,” not in 23 postback reports. Id. (citing FAC ¶ 54). And as established by the FAC, YouAppi did not 24 generate, modify, or receive transparency reports—so there is no basis to infer YouAppi’s 25 awareness of a discrepancy in transparency reports it did not receive. See FAC ¶¶ 35, 54. 26 Uber uses the same flawed logic in asserting YouAppi used prohibited publisher 27 PropellerAds and rebrokered with co-Defendant AdAction (YouAppi did not). Uber’s 28 arguments are again futile. Uber, for one, alleges YouAppi was not given a publisher “blacklist” 9 YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER CASE NO. CGC-19-576493 1 until a year-and-a-half into the two-year campaign, and does not even endeavor to allege 2 YouAppi used a “blacklisted” publisher after receiving the blacklist, see FAC ¶ 31, and, for two, 3 Uber points to transparency reports as indicating concealment of rebrokering, but as established 4 by the FAC, YouAppi never received such reports. See id., ¶¶ 35, 56, Fig. 10. A court simply 5 cannot infer knowledge of wrongdoing based on haphazard pleading of this sort. 6 Because the FAC alleges fraudulent concealment in a conclusory manner, and fails to 7 allege (1) underlying facts of YouAppi’s concealment of a material fact (e.g., YouAppi’s 8 knowledge or cover-up), (2) Uber’s unawareness of such a fact (e.g., transparency reports 9 showing Uber’s awareness of clicks/installs by allegedly prohibited publishers), or (3) a harm 10 resulting from any concealment, YouAppi’s Demurrer should be sustained. The allegations— 11 establishing (1) YouAppi never received, generated, or modified transparency reports; (2) Uber 12 received transparency reports showing clicks/installs by allegedly prohibited publishers; and (3) 13 Uber only paid for clicks that resulted in installs—fall far short of fraudulent concealment claims 14 sufficient to survive a demurrer. 15 II. UBER’S UNFAIR COMPETITION CLAIM REMAINS DEFICIENT 16 Uber’s UCL claim rises and falls with its fraud claim. Consistent with the Court’s order, 17 “Uber’s UCL claim under the ‘unlawful’ and ‘fraudulent’ prong cannot stand on its claim that 18 defendants’ fraudulently concealed facts from Uber because fraudulent concealment has not 19 been adequately pled.” Id. Like before, “Uber has not sufficiently pled facts showing that 20 defendants concealed from Uber the true source of its inventory, or even how that occurs, Uber’s 21 UCL claim states insufficient facts to state a cause of action under the unfair prong.” Id. Since 22 the same deficiencies remain, Uber’s UCL claim should be dismissed alongside its fraud claim. 23 III. CONCLUSION 24 Uber cannot cure the preclusive effect of Uber I. Leave to amend should be denied on 25 this ground alone. But in addition, Uber’s inability to cure the other defects identified by the 26 Court and YouAppi’s Demurrer—despite information discovered from YouAppi, TUNE, and 27 Fetch—is further reason why further amendment would be futile. For the foregoing reasons, the 28 Court should sustain YouAppi’s Demurrer and dismiss Uber’s claims with prejudice. 10 YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER CASE NO. CGC-19-576493 1 Dated: May 27, 2020 POLSINELLI LLP 2 3 /s/ Joshua L. Rayes By: Joshua L. Rayes 4 Colby B. Springer Barrington Dyer 5 Miya Yusa 6 Attorneys for Defendant 7 YOUAPPI INC. 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 YOUAPPI INC.’S REPLY TO UBER’S OPPOSITION TO DEMURRER CASE NO. CGC-19-576493 1 PROOF OF SERVICE I, Maria Diazgranados, declare: 2 I am a citizen of the United States, am over the age of eighteen years, and am not a party to or 3 interested in the within entitled cause. My business address is Three Embarcadero Center, Suite 2400, San Francisco, CA 94111. On May 27, 2020, I served the following document(s) on the parties in the within action: 4 DEFENDANT YOUAPPI INC.’S REPLY TO UBER TECHNOLOGIES, INC.’S OPPOSITION TO YOUAPPI, INC.’S DEMURRER TO PLAINTIFF’S FIRST AMENDED COMPLAINT 5 6 VIA FILE & SERVE: By causing a true and correct copy thereof to be served through 7 xx File & ServeXpress addressed to all parties appearing on the File & ServeXpress Serve electronic service list. 8 VIA E-MAIL: I attached the above-described document(s) to an e-mail message, and 9 invoked the send command to transmit the e-mail message to the person(s) at the e-mail xx address(es) listed below. My email address is mdiazgranados@polsinelli.com 10 11 John P. Flynn Boris Feldman 12 Dylan Savage WILSON SONSINI GOODRICH & ROSATI 13 One Market Plaza Spear Tower, Suite 3300 San Francisco, CA 94105 14 T: (415) 947-2000 Counsel for Defendants Email: jflynn@wsgr.com TAPTICA LTD. and TAPTICA, INC. boris.feldman@wsgr.com 15 Paul T. Llewellyn 16 John F. Frost LEWIS & LLEWELLYN LLP 505 Montgomery Street, Suite 1300 17 San Francisco, CA 94111 T: (415) 800-0590 Email: pllewellyn@lewisllewellyn.com Counsel for Defendant 18 jfrost@lewisllewellyn.com ADACTION INTERACTIVE 19 20 21 -1- 22 PROOF OF SERVICE 23 1 Mathis A. Kamber Christopher S. Sun Keeker Van Nest & Peters LLP 2 633 Battery Street San Francisco, CA 94111 3 T: 415-391-5400 Counsel for Defendant Email: mkamber@keker.com BIDMOTION, INC. AND HYDRANE SAS csun@keker.com 4 John Bovich Seth B. Herring REED SMITH LLP 5 101 Second Street, Suite 1800 San Francisco, CA 94105-3659 6 T: +1 415 543 8700 Email: jbovich@reedsmith.com Counsel for Plaintiff sherring@reedsmith.com UBER TECHNOLOGIES, INC. 7 Randall D. Haimovici Angela B. Johnson 8 Ariel F. Ruiz Uber Technologies, Inc. 9 1455 Market Street, Floor 4 San Francisco, CA 94103-1355 Telephone: +1 415 533-7652 10 Email: ariel.ruiz@uber.com angelaj@uber.com rhaimovici@uber.com Counsel for Plaintiff 11 UBER TECHNOLOGIES, INC. 12 13 I declare under penalty of perjury under the laws of the State of California that the foregoing is a true and correct statement and that this Certificate was executed on May 27, 2020. 14 15 By Maria Diazgranados 16 17 18 19 20 21 -2- 22 PROOF OF SERVICE 23