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Russell v. Avid Life Media, Inc.

United States District Court, D. Maryland

September 11, 2015

CHRISTOPHER RUSSELL, individually and on behalf of all other similarly situated, Plaintiff,
v.
AVID LIFE MEDIA, INC. and AVID DATING LIFE, INC. d/b/a ASHLEY MADISON, Defendants.

         CLASS ACTION COMPLAINT

          WHITFIELD BRYSON & MASON, LLP Gary E. Mason Esfand Y. Nafisi CUNEO GILBERT & LADUCA, LLP Charles LaDuca Brendan Thompson THE BRAUNSTEIN LAW FIRM, PLLC Michael L. Braunstein Counsel for Plaintiff.

          JURY TRIAL DEMANDED

         Plaintiff Christopher Russell (“Plaintiff” or “Russell”), on behalf of himself and all others similarly situated, by his undersigned counsel, alleges against Avid Life Media, Inc. and Avid Dating Life, Inc. d/b/a Ashley Madison (collectively “Ashley Madison” or “Defendants”), the following upon personal knowledge as to his own acts, and upon information and belief, based on the investigation conducted by his counsel, as to all other allegations:

         SUMMARY OF THE ACTION

         1. Defendants operate the Ashley Madison dating site: AshleyMadison.com. Defendants operate AshleyMadison.com to help individuals find other individuals looking for sexual encounters and target married individuals for their matchmaking services. Ashley Madison's slogan is “Life is short. Have an Affair” and Defendants proclaim that “Ashley Madison is the most famous name in infidelity and married dating.”

         2. In July 2015, Defendants learned that their databases and computer systems had been hacked. A week later, the hackers, calling themselves the “Impact Team, ” revealed hacking Ashley Madison servers, downloading all of the users' personal information, and threatened to release the users' personal information if the site was not shut down. On August 20, 2015, after Defendants did not shut down their site, the hacked data and information was released.

         3. The released information demonstrates that Ashley Madison went to extreme measures to fraudulently lure in and profit from customers. Defendants fraudulent and deceitful actions include, but are not limited to:

• Marketing that the site had 5.5 million female profiles, when only a small percentage of the profiles belonged to actual women who used the site;
• Hiring employees whose jobs were to create thousands of fake female profiles; and
• Creating over 70, 000 female bots to send male users millions of fake messages.

         4. Defendants' fraudulent and deceitful acts were designed to willfully and knowingly mislead customers into signing the customer agreement, joining the website and spending money.

         5. Defendants' deceit and fraud succeeded. According to Defendants, Ashley Madison has approximately 37 million registered users. It is ranked by visits among the top 500 websites in the world, top 30 amongst adult websites, and had 124.5 million visits in June 2015. Ashley Madison substantially contributed to the $115 million in gross revenue for Defendant Avid Life Media in 2014, resulting in pretax profits of $55 million.

         6. Defendants' deceptive and fraudulent conduct has damaged Plaintiff and the Class, and unjustly enriched Defendants.

         PARTIES

         7. Plaintiff Christopher Russell is an adult individual and a resident and citizen of Maryland. Mr. Russell brings this proceeding in an individual capacity and on behalf of all others similarly situated.

         8. Defendant Avid Life Media, Inc. is a corporation organized and existing under the laws of Ontario, Canada, with its principal place of business and headquarters in Toronto, Canada. Defendant Avid Life Media owns and operates various companies that operate online dating websites including the website operated under the trademark of Ashley Madison.

         9. Defendant Avid Dating Life, Inc. d/b/a Ashley Madison is a corporation organized and existing under the laws of Ontario, Canada, with its principal place of business in Toronto, Canada. Defendant Avid Dating Life owns and is regularly engaged in the business of operating online dating websites, including AshleyMadison.com.

         JURISDICTION AND VENUE

         10. This Court may assert diversity jurisdiction under 28 U.S.C. § 1332 because the matter in controversy exceeds $75, 000, exclusive of interest and costs, and Plaintiff resides in Maryland and Defendants are Canadian business entities.

         11. This Court may assert jurisdiction under the Class Action Fairness Act because the acts occurred in Maryland, Plaintiff is a citizen of the State of Maryland, Defendants are not citizens of the State of Maryland and the amount in controversy exceeds $5, 000, 000.

         12. The case is properly brought in this district because Defendants engage in business in the district.

         13. To the extent Defendants claim an individual arbitration requirement exists, such requirement is unconscionable and unenforceable because Defendants fraudulently induced Plaintiff and the Class into entering the agreement and Plaintiff and the class cannot vindicate their rights in individual arbitrations.

         FACTUAL BACKGROUND AND SUBSTANTIVE ALLEGATIONS

         A. Background

         14. AshleyMadison.com is owned by Avid Life Media, a privately-held Canadian corporation founded by its CEO Noel Biderman, which owns various companies in business of operating online dating websites, including CougarLife.com and EstablishedMen.com.

         15. Defendants operate AshleyMadison.com to facilitate sexual encounters for people who are married or are in committed relationships. Defendants market AshleyMadison.com with the slogan, “Life is short. Have an Affair” and target married/involved people for their matchmaking services. Defendants proclaim that “Ashley Madison is the most famous name in infidelity and married dating” and “the most successful website for finding an affair and cheating partners.” Defendants represent that “[t]housands of cheating wives and cheating husbands sign up everyday looking for an affair.”

         16. Defendants market AshleyMadision.com to United States consumers and those outside the United States. The website has over 37 million users in 46 countries. It is rated the twentieth most popular adult website in the United States. It is ranked by visits among the top 500 websites in the world and had 124.5 million visits in June 2015. Defendants market the website through television, radio, billboard, and internet advertisements, many of which include its founder and CEO Noel Biderman as the website's spokesperson.

         17. Ashley Madison's revenue model relies upon the purchase of “credits” by users that are used to interact with one another, as opposed to a subscription-based model. To initiate a conversation with another user, one must “pay” five credits. Users buy credits from the website and enter their credit or debit card information to buy credits. Various means of interacting with other users, such as having instant messaging, online chats, or sending messages to prospective matches, cost different amounts of credits.

         18. Ashley Madison substantially contributed to the $115 million in gross revenue for Defendant Avid Life Media in 2014, resulting in pretax profits of $55 million.

         B. Defendants Represent Having Numerous Active Female Members

         19. Defendants represent that:

a) “Ashley Madison is the most famous name in infidelity and married dating;”
b) It is “the most successful website for finding an affair and cheating partners;”
c) “Thousands of cheating wives and cheating husbands signup everyday looking for an affair;” and
d) Ashley Madison had 5.5 million women members.

         C. The Hacking Of Ashley Madison Reveals It Created Fake Female Profiles And Communication For Virtually All Of Its Purported Female Users To Fraudulently Induce Customers To Join And Spend Money

         i. Ashley Madison Gets Hacked

         20. On July 12, 2015, Defendants learned that their computer systems had been hacked by notification on each of their employees' internal computers greeting screen.

         21. Included in the on-screen message was the statement that “[w]e have taken over all systems in your entire office and production domains, all customer information databases, source code repositories, financial records, emails.”

         22. On or about July 19, 2015, a third party calling themselves the “Impact Team” issued an online announcement that it had hacked into the Ashley Madison servers and downloaded the personal information of approximately all users of Ashley Madison, ...


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