13.  McAfee markets and sells subscriptions to its anti-virus computer software  products.  Generally, the subscriptions are one year in length.  Three of the software products that  McAfee has marketed and sold subscriptions to throughout the relevant time period are McAfee  AntiVirus Plus, McAfee Internet Security, and McAfee Total Protection.  These three products  are collectively referred to herein as the “McAfee Software.”      14.  McAfee represents to consumers that subscribing to McAfee Software will help  them protect their computers from hackers and other “online threats,” computer viruses, and other  computer problems.  For example, McAfee represents that its McAfee Total Protection software  will help “Guard your PC, social network, identity, family, and home network with our ultimate  protection against hackers, malware, thieves, phishing, and other online threats.”  Similarly,  McAfee represents that its McAfee AntiVirus Plus software will allow customers to “Confidently  surf, shop, and socialize online as our essential antivirus, antimalware, and firewall protect your  PC and data.”     15.  Consumers can purchase McAfee Software directly from McAfee’s website or  from a retailer authorized to sell McAfee Software, such as Amazon.com, Wal-Mart, Target, Best  Buy, or Office Depot.     16.  In addition, some consumers initially sign up for “free trial” subscriptions to  McAfee Software (e.g., for a 30-day or 60-day “trial” period), after which McAfee aggressively  encourages them, through expiration warning messages and other advertising and prompts, to  purchase a one-year paid subscription to McAfee Software, which the customer can do via  McAfee’s website or by following a purchase path provided by McAfee in their McAfee  Software.     B.  The Auto-Renewal Program    17.  For consumers who purchase a one-year subscription to McAfee Software through  McAfee’s website or through the McAfee Software itself, McAfee automatically enrolls them in  Case5:14-cv-00158-EJD   Document1   Filed01/10/14   Page4 of 44 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  1148285.3   - 5 -  54.  On October 8, 2011, Plaintiff Sam Williamson purchased a desktop computer from  a Micro Center retail store in Tustin, California.  The computer that Mr. Williamson purchased  came pre-installed with a 60-day “free trial” subscription to McAfee AntiVirus Plus.  Later that  day, Mr. Williamson activated the “free trial” subscription on his new computer by clicking an  icon on the desktop and following instructions provided by McAfee.     55.  While Mr. Williamson was in the process of activating the “free trial”  subscription, McAfee displayed advertising on his computer encouraging him to purchase a one- year paid subscription to the software.  McAfee’s prompts and advertising promised Mr.  Williamson that if he immediately purchased a one-year subscription, he would receive a discount  from McAfee’s purported regular selling price for the product.  McAfee offered to sell Mr.  Williamson a one-year subscription to McAfee AntiVirus Plus for $29.99, at a promised discount  of $20.00 from the purported regular price of $49.99.  McAfee prominently displayed both the  purported “regular” price and the representation that Mr. Williamson would supposedly save  $20.00 by making the purchase at that time.     56.  Relying on McAfee’s representations, Mr. Williamson clicked on one of McAfee’s  advertising prompts, which took him to a page in the software where he could purchase a paid  subscription to McAfee AntiVirus Plus.  On that page, McAfee again prominently represented to  Mr. Williamson that its regular selling price for a one-year subscription to McAfee AntiVirus  Plus was $49.99, and that the $29.99 price offered to Mr. Williamson that day reflected a discount  of $20.00 from the purported regular price.  Relying on McAfee’s representations, Mr.  Williamson purchased a one-year subscription to McAfee Anti-Virus Plus for $29.99 by entering  his credit card information as prompted by McAfee.     57.  The purported discount that McAfee represented to Mr. Williamson was false and  misleading, because the purported regular price of $49.99 that McAfee represented was fabricated  and failed to represent McAfee’s true regular or former price for a one-year McAfee AntiVirus  Plus subscription.  On information and belief, McAfee did not offer for sale, or make substantial  sales of, McAfee AntiVirus Plus at a price of $49.99 within a reasonable period of time before  Case5:14-cv-00158-EJD   Document1   Filed01/10/14   Page19 of 44 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  1148285.3   - 20 -  62.  Plaintiff brings this class-action lawsuit on behalf of himself and the proposed  members of the “Class” pursuant to Rule 23(b)(3) of the Federal Rules of Civil Procedure, and on  behalf of himself and the proposed members of the “Reference Price Class” pursuant to Rule  23(b)(2) of the Federal Rules of Civil Procedure.   63.  Plaintiff seeks certification of the following “Class”:   Case5:14-cv-00158-EJD   Document1   Filed01/10/14   Page21 of 44 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  1148285.3   - 22 -  78.  Plaintiff re-alleges and incorporates by reference every allegation set forth in the  preceding paragraphs as though alleged in this Count.   79.  McAfee entered into valid contractual agreements with Plaintiff and all Class  members.       80.  The material terms of McAfee’s contracts with Plaintiff and the Class members  included McAfee’s obligation that, under the Auto-Renewal program, customers enrolled in the  program would have their McAfee Software subscriptions renewed at a price no higher than the  normal, then-current price that McAfee charged other customers for the same products.     81.  Plaintiff and all Class members gave consideration that was fair and reasonable,  and have performed all conditions, covenants, and promises required to be performed under their  contracts with McAfee.   82.  McAfee has breached its contracts with Plaintiff and the Class members by  charging them prices that were higher than the normal, then-current prices that McAfee charged  other customers for the same products.   Case5:14-cv-00158-EJD   Document1   Filed01/10/14   Page27 of 44 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  1148285.3   - 28 -  85.  Plaintiff re-alleges and incorporates by reference every allegation set forth in the  preceding paragraphs as though alleged in this Count.   86.  A covenant of good faith and fair dealing is implied in every contract, including in  the contracts between McAfee and Plaintiff and the Class members.   87.  Where a contract vests one party with discretion, the duty of good faith and fair  dealing applies, and the party exercising the discretion must do so in a manner that satisfies the  objectively reasonable expectations of the other party.  A party may not perform an agreement in  a manner that would frustrate the basic purpose of the agreement and/or deprive the other party of  its rights and benefits under the agreement.     88.  It was objectively reasonable under the circumstances for Plaintiff and the Class to  expect that, when their McAfee Software subscriptions were renewed by McAfee pursuant to the  Auto-Renewal program, McAfee would charge them prices that were no higher than the normal,  then-current prices that McAfee charged other customers for the same products, and not some  special, higher price that was only charged to Auto-Renewal customers.     89.  McAfee has abused any and all power it has to impose the prices charged to  Plaintiff and the Class.  Moreover, McAfee’s conduct alleged herein is inconsistent with the  reasonable expectations of Plaintiff and the Class, and is inconsistent with what an objectively  reasonable consumer would have expected under the circumstances.  Case5:14-cv-00158-EJD   Document1   Filed01/10/14   Page28 of 44 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  1148285.3   - 29 -  94.  Plaintiff re-alleges and incorporates by reference every allegation set forth in the  preceding paragraphs as though alleged in this Count.   95.  McAfee has knowingly been enriched, at the expense of Plaintiff and the Class  members, as a result of its misconduct alleged herein.  Such enrichment includes substantial  revenues that McAfee has received from Plaintiff and the Class members for additional amounts  that McAfee charged them, over and above what McAfee should have charged them.     96.  Plaintiff’s and the Class members’ detriment, and McAfee’s enrichment, are  traceable to, and resulted directly and proximately from, the misconduct challenged in this  Complaint.   97.  It would be inequitable for, and good conscience militates against permitting,  McAfee to retain the amounts that it received as a result of its misconduct alleged herein.      Case5:14-cv-00158-EJD   Document1   Filed01/10/14   Page29 of 44 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  1148285.3   - 30 -  99.  Plaintiff re-alleges and incorporates by reference every allegation set forth in the  preceding paragraphs as though alleged in this Count.  100.  McAfee’s practices alleged herein constitute unlawful, unfair, or fraudulent  business practices in violation of California Business and Professions Code § 17200 et seq.  101.  McAfee’s misrepresentations and omissions, as alleged herein, constitute  unlawful, unfair, or fraudulent business practices in violation of California Business and  Professions Code § 17200 et seq.   102.  The misrepresentations and omissions by McAfee alleged herein were the type of  representations and omissions that are regularly considered to be material, i.e., a reasonable  person would attach importance to them and would be induced to act on the information in  making purchase decisions.  103.  As a result of the foregoing, Plaintiff and each Class member have been injured  and have lost money or property and are entitled to restitution and injunctive relief.  104.  Unless restrained by this Court, McAfee will continue to engage in unfair,  deceptive, and unlawful conduct, as alleged above, in violation of California Business &  Professions Code § 17200 et. seq.  A.  McAfee Software    Breach of the Covenant of Good Faith and Fair Dealing  (On Behalf of the Class)   Breach of Contract  (On Behalf the Class)   In The Alternative, Violations of New York General Business Law §349  134.  Plaintiff re-alleges and incorporates by reference every allegation set forth in the  preceding paragraphs as though alleged in this Count.  135.  This Count is alleged, in the alternative, on behalf of those Class members residing  in the State of New York.  136.   New York General Business Law § 349 prohibits “[d]eceptive acts or practices in  the conduct of any business, trade or commerce or in the furnishing of any service….”  137.  The misconduct by McAfee alleged in this Complaint is consumer oriented, is of a  recurring nature, is directed at consumers and the public at large, and has affected and continues  to affect at least thousands of consumers.  Case5:14-cv-00158-EJD   Document1   Filed01/10/14   Page34 of 44 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  1148285.3   - 35 -  In the Alternative, Violations of New York General Business Law § 350  144.  Plaintiff re-alleges and incorporates by reference every allegation set forth in the  preceding paragraphs as though alleged in this Count.  145.  This Count is alleged, in the alternative, on behalf of those Class members residing  in the State of New York.  146.  New York General Business Law § 350 prohibits “[f]alse advertising in the  conduct of any business, trade or commerce or in the furnishing of any service….”  147.  With respect to Class members residing in the State of New York, the false  advertising by McAfee alleged herein has occurred in the conduct of business, trade or  commerce, and/or in the furnishing of a service, in the State of New York.  Case5:14-cv-00158-EJD   Document1   Filed01/10/14   Page35 of 44 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  1148285.3   - 36 -  Unjust Enrichment  (On Behalf of the Class)   Violations of California Business & Professions Code § 17200, et. seq.   (On Behalf of the Class)   Violations of California Business & Professions Code § 17500, et. seq.   (On Behalf of the Class)  105.  Plaintiff re-alleges and incorporates by reference every allegation set forth in the  preceding paragraphs as though alleged in this Count.  Case5:14-cv-00158-EJD   Document1   Filed01/10/14   Page30 of 44 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  1148285.3   - 31 -  Violations of California’s Consumer Legal Remedies Act, California Civil Code § 1750 et.  Seq.   (On Behalf of the Class)  119.  Plaintiff re-alleges and incorporates by reference every allegation set forth in the  preceding paragraphs as though alleged in this Count.  120.  McAfee is a “person,” as defined by California Civil Code § 1761(c).  121.  Plaintiff and the Class members are “consumers,” as defined by California Civil  Code §1761(d).  122.  McAfee Software subscriptions and the Auto-Renewal program constitute “goods”  and “services,” as defined by California Civil Code §1761(a) and (b).  123.  Plaintiff’s and Class members’ purchases and renewals of McAfee Software  subscriptions constitute “transactions,” as defined by California Civil Code § 1761(e).  124.  Plaintiff and Class members purchased McAfee Software subscriptions for  personal, family, and household purposes as meant by California Civil Code § 1761(d).  Case5:14-cv-00158-EJD   Document1   Filed01/10/14   Page32 of 44 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  1148285.3   - 33 -  Violations of California Business & Professions Code §§ 17200 et seq, California Business &  Professions Code §§ 17500 et seq, and California Civil Code § 1750 et seq.   (On Behalf of the Reference Price Class)  153.  Plaintiff re-alleges and incorporates by reference every allegation set forth in the  preceding paragraphs as though alleged in this Count.  154.  Plaintiff brings this Count individually and on behalf of the proposed members of  the Reference Price Class.  Plaintiff seeks injunctive relief to enjoin McAfee from continuing to  advertise false former prices and false discounts, as alleged herein.    155.  McAfee uses its Auto-Renewal pricing scheme, alleged above, to help carry out  yet another unlawful pricing scheme—this one perpetrated by McAfee on those customers who  purchase new McAfee Software subscriptions or manually renew existing subscriptions via  McAfee’s website or their McAfee Software.    156.  To these customers, McAfee advertises two prices for McAfee Software  subscriptions: (a) the selling price; and (b) directly next to the selling price, a higher expressly- referenced former price with a line, or “slash,” through it.  McAfee also expressly represents that  Case5:14-cv-00158-EJD   Document1   Filed01/10/14   Page36 of 44 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  1148285.3   - 37 -  Violations of California Business & Professions Code § 17600 et seq.   (On Behalf of the Class)  111.  Plaintiff re-alleges and incorporates by reference every allegation set forth in the  preceding paragraphs as though alleged in this Count.  112.  Plaintiff and the Class members are “consumers” under California Business &  Professions Code § 17601(d).   113.  McAfee’s Auto-Renewal program constitutes an “automatic renewal” plan or  arrangement under California Business & Professions Code § 17601(a).  114.  McAfee’s contractual promises and representations regarding Auto-Renewal  pricing, as alleged herein, constitute “automatic renewal offer terms” under California Business &  Professions Code §§ 17601(b) and 17601(b)(3).  Case5:14-cv-00158-EJD   Document1   Filed01/10/14   Page31 of 44 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  1148285.3   - 32 - 