One Chance to Amend|Software Class Claim

     FRESNO, Calif. (CN) – Software provider LogMeIn will at least briefly escape class-action claims that it did not properly inform customers that its free remote-access app could be replaced by a paid-for app, a federal judge ruled.
     U.S. Magistrate Judge Jennifer Thurston dismissed lead plaintiff Darren Handy’s false-advertising and unfair-competition claims, with leave to amend.
     (LogMeIn faces a second class action on different claims; see below.)
     LogMeIn at one point provided two products that allowed customers to remotely access their desktop computers through a virtual private network. LogMeInFree, the company’s free app, allowed access from another laptop or desktop computer, while its paid app, Ignition, allowed access from a tablet or smart phone.
     Plaintiff Handy said he installed LogMeInFree and then purchased Ignition for $29.99 in 2010. Ignition was advertised as “one app to control all your information,” he said.
     Handy says he thought the app was a premium supplement to LogMeInFree.
     In early 2014, LogMeIn introduced a third product, LogMeInPro, which required a subscription and annual fee, and provided additional features such as remote printing and file sharing.
     LogMeIn posted on its website that it was planning to migrate users of Ignition and the free app to the new product. It told customers it would unify its portfolio of free and premium remote access products into the paid-only offering.
     Handy says he never saw this message, but learned that LogMeInFree was no longer supported when he tried to log in and received a message that he would need to buy a subscription to LogMeIn Pro for remote access.
     Handy says he believed this meant he could also no longer use the Ignition app.
     In July 2014, LogMeIn informed customers by email that the Ignition app would continue to work, but it would no longer receive updates or bug fixes.
     Because updates and bug fixes are necessary components to any smart phone app, LogMeIn’s decision rendered the app obsolete, Handy claims.
     He says he would not have purchased Ignition had he known the company would stop updating it and known that LogMeInFree would be terminated.
     Handy’s second assertion is defeated by the fact that ads for Ignition did not mention LogMeInFree or advertise the paid app as a companion to the free app, the judge ruled.
     Handy acknowledged in his complaint that LogMeIn advertised Ignition as one app to manage everything.
     “(T)he advertisements could not possibly have encouraged a reasonable consumer to believe that by buying Ignition, the purchaser also bought assurances related to the continuation of the LogMeInFree app,” Thurston wrote in the July 24 order of dismissal.
     Although many users might have needed both products to control their desktop from another computer and/or a tablet or smartphone, both apps were standalone products that could be used independently, the judge said.
     “Given this, plaintiff’s conclusion that any communication by defendant as to either product by necessity applied to both is unsupported in the second amended complaint,” Thurston wrote.
     Handy’s claim that LogMeIn acted unfairly when it did not inform Ignition purchasers that it would eventually stop providing software updates and bug fixes also failed.
     There is no evidence that when Handy bought the Ignition app in 2010 LogMeIn knew it would stop providing updates and bug fixes or that it would migrate its users to a subscription-only plan.
     “To the contrary, the fact that plaintiff received four years of updates and bug fixes undercuts this claim as well as the claim that defendant acted unfairly,” Thurston said.
     LogMeIn was under no obligation to tell Ignition purchasers how long the company planned to provide the LogMeInFree app; and even if it was, LogMeIn posted the information on its website, the judge pointed out.
     LogMeIn must use Handy’s user name and password for his LogMeInFree account to determine whether Handy accepted the “Terms and Conditions” of the app. The company must also try to determine whether every user of the free app was required to accept the terms during the period that Handy obtained LogMeInFree.
     Handy must review this information to determine whether he has a basis to file an amended complaint. This will be his final chance to fix his claims, Thurston said.
     Another federal class action was filed against LogMeIn at the end of June. In that case, a customer said his account was renewed without his permission and that LogMeIn continued to charge his credit card exponentially higher amounts.
     Lead plaintiff Britt Stoker said LogMeIn drained his account of nearly $1,500 one year after his $200 subscription ran out.
     Both Stoker and Handy are represented by Todd Friedman, who did not immediately respond to a request for comment.
     Brian Glennon, counsel for LogMeIn on both cases, said the company is pleased with Thurston’s ruling.
     “She took the time and made the effort to really dig into the record in order to reach the right decision. We do not believe either case – Handy or Stoker – has any merit and the company intends to vigorously defend itself in both actions,” said Glennon, with Lathan & Watkins based in Los Angeles.
     On Friday, shares of LogMeIn went up about 11 percent after the company reported second quarter revenue of $64.8 million. The reported revenue is up 18 percent from the second quarter in 2014.
     The company said it expects third quarter revenue to fall in the range of $68.8 million to $69.3 million.

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