Ramos v. Capital One, N.A et al, No. 5:2017cv00435 - Document 42 (N.D. Cal. 2017)

Court Description: ORDER GRANTING IN PART AND DENYING IN PART 7 , 23 MOTIONS TO DISMISS. Signed by Judge Beth Labson Freeman on 7/27/2017. (blflc4, COURT STAFF) (Filed on 7/27/2017)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7 8 JOSE ANTONIO RAMOS, Plaintiff, 9 v. 10 United States District Court Northern District of California 11 Case No. 17-cv-00435-BLF CAPITAL ONE, N.A., et al., Defendants. 12 ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS [Re: ECF 7, 23] 13 Plaintiff Jose Antonio Ramos (“Ramos”) brings this suit against Defendants HSBC and 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Caiptal One, former employers of his wife, for allegedly recording personal phone calls between him and his wife on the company phone. Before the Court are Defendants’ motions to dismiss Ramos’ First Amended Complaint (“FAC”). HSBC Mot., ECF 7; Cap. Mot., ECF 23. After reviewing the parties briefing, the Court hereby rules on the motions as follows. I. BACKGROUND Ramos alleges the following facts in his first amended complaint (“FAC”). Notice of Removal 29 et seq., First Am. Compl., ECF 1. Plaintiff Ramos is a California resident whose wife was employed by Defendants HSBC Card Services Inc. (“Card Services”) and HSBC Technology & Services (USA) Inc. (collectively, “HSBC”) at a facility in Salinas, California, from March 2009 to May 2012. FAC ¶¶ 7, 28. As of May 1, 2012, Defendant Capital One Financial Corporation (“Capital One”) acquired certain assets of HSBC, including the Salinas facility. Ramos’ wife ceased working for Card Services and thereafter was employed by Capital One from May 1, 2012 through October 2013. Id. ¶¶ 28-29. During the relevant time period, Ramos had “numerous personal telephone 1 communications” with Defendants’ employees, including his wife. Id. ¶¶ 30-31. According to 2 Ramos, Defendants intentionally recorded, intercepted, or received the conversations without his 3 consent or knowledge. Id. ¶¶ 28-39. Defendants also required their employees to keep their 4 “policies, procedures, and internal activities confidential and prohibited employees from 5 disclosing such information.” Id. ¶ 29. Ramos alleges that at the time he had no reason to believe 6 that his personal telephone calls were being recorded. Id. ¶¶ 17, 19. 7 On August 28, 2015, a plaintiff filed a case in San Diego Superior Court, alleging similar claims and the same causes of actions against Defendants as those here. Id. ¶ 13 (citing Ron 9 Kempton, et al. v. Capital One Fin. Corp., No. 37-2014-00023795-CU-MC-NC (Cal. Super. Ct.) 10 sub nom. Dalia Rojas v. HSBC Card Services Inc., et al., No. D071442 (Cal. App. Ct. filed Nov. 11 United States District Court Northern District of California 8 18, 2016) (the “Rojas case”)). On September 28, 2015, HSBC agreed to withdraw the confidential 12 designation for the recordings produced in the Rojas case. Id. ¶ 14. Thereafter, only after the 13 confidential designation was withdrawn and after Ramos’ wife was contacted as a potential 14 witness in the Rojas case did Ramos learn about the recording of his conversations by HSBC. Id. 15 ¶¶ 15-16. 16 Ramos further alleges that his claims were tolled during the pendency of two class actions 17 because he was a member of the proposed classes. Id. ¶ 21. On June 4, 2012, plaintiff 18 representatives Terry J. Fanning and Tatiana Jabbar filed a class action complaint against HSBC 19 for violation of the California Invasion of Privacy Act (“CIPA”). FAC ¶ 22; Fanning v. HSBC 20 Card Servs. Inc., No. 12-00885-JVS-RNB (C.D. Cal. June 4, 2012) (the “Fanning case”). On July 21 29, 2014, Gail Medeiros, along with other plaintiffs, filed a class action lawsuit against HSBC and 22 its successor, Capital One, also asserting CIPA violations, in the Southern District of California 23 but that case was later transferred to the Central District as a case related to the Fanning case. 24 FAC ¶¶ 23-25. Medeiros v. HSBC Card Servs. Inc., et al., Case No. 15-9093-JVS-AFM (C.D. 25 Cal. Nov. 21, 2014) (the “Medeiros case”). An order preliminarily approving class action 26 settlement was issued in both of those cases on October 19, 2016. FAC ¶ 26. Ramos asserts that 27 he intends to opt out of the settlement class. Id. 28 On November 18, 2016, Ramos filed a complaint in Monterey County Superior Court, and 2 1 later a first amended complaint, asserting that Defendants violated CIPA. Compl., Ex. A to Notice 2 of Removal, ECF 1; Cal. Penal Code §§ 632, 632.7. Pursuant to CIPA, Ramos asserts a first cause 3 of action based on California Penal Code § 632, and a second cause of action based on Penal Code 4 § 632.7. FAC ¶¶ 41-51. Ramos further requests damages in the amount $5,000.00 per violation 5 or three times the amount of actual damages sustained, and preliminary and permanent injunction 6 to restrain Defendants from violating CIPA. Id. ¶¶ 45, 46, 50, 51. HSBC removed the case to this 7 Court based on diversity jurisdiction. Notice of Removal. Defendants then filed motions to 8 dismiss the case. ECF 7, 23. 9 10 II. LEGAL STANDARD “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a United States District Court Northern District of California 11 claim upon which relief can be granted ‘tests the legal sufficiency of a claim.’” Conservation 12 Force v. Salazar, 646 F.3d 1240, 1241–42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 13 729, 732 (9th Cir. 2001)). When determining whether a claim has been stated, the Court accepts 14 as true all well-pled factual allegations and construes them in the light most favorable to the 15 plaintiff. Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). However, the 16 Court need not “accept as true allegations that contradict matters properly subject to judicial 17 notice” or “allegations that are merely conclusory, unwarranted deductions of fact, or 18 unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) 19 (internal quotation marks and citations omitted). While a complaint need not contain detailed 20 factual allegations, it “must contain sufficient factual matter, accepted as true, to ‘state a claim to 21 relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. 22 Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the 23 court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. 24 Where the damages sought are not recoverable as a matter of law, the damages claim may 25 be removed from the complaint pursuant to Rule 12(b)(6). Johnson v. Napa Valley Wine Train, 26 Inc., No. 15-04515-TEH, 2016 WL 493229, at *13 (N.D. Cal. Feb. 9, 2016) (citing Whittlestone, 27 Inc. v. Handi-Craft Co., 618 F.3d 970, 974-95 (9th Cir. 2010)). 28 3 1 III. JUDICIAL NOTICE Before turning to the merits of the parties’ arguments, the Court addresses their requests 2 for judicial notice. 3 In support of its motion to dismiss, HSBC has requested judicial notice of eight 4 documents, attached to the request as Exhibits A through H: (A) the complaint in Fanning v. 5 HSBC Card Servs. Inc., et al., No. 12-00885-JVS-RNB (C.D. Cal. June 4, 2012), ECF No. 1 (the 6 7 8 “Fanning Complaint”); (B) the First Amended Complaint filed in the Medeiros case (the “Medeiros FAC”); (C) Order Granting Joint Motion To Consolidate the Fanning case and Lindgren with the Medeiros case, filed in Medeiros, ECF No. 83 (the “Consolidation Order”), 9 pursuant to which the Fanning and Medeiros actions were consolidated for settlement purposes; 10 (D) Order Conditionally Certifying A Settlement Class for Settlement in the Medeiros case, the 11 United States District Court Northern District of California Fanning case, and Lindgren v. HSBC Card Servs. Inc., et al., filed in Fanning case, ECF No. 364 12 (the “Preliminary Approval Order”); (E) The Order granting HSBC’s Motion for Summary 13 Judgment in Ron Kempton, et al. v. Capital One Financial Corporation, No. 37-2014-0002379514 CU-MC-NC (Cal. Super. Ct. Aug. 5, 2016) sub nom. Dalia Rojas v. HSBC Card Services Inc., et 15 16 al., No. D071442 (Cal. App. Ct. filed Nov. 18, 2016) (the “Rojas MSJ Order”) (F) excerpts of the certified reporter’s transcript for the November 4, 2016 hearing in the Rojas case; (G) Order in 17 Yevgeniya Grania v. Eddie Bauer, LLC, No. BC569111, slip. op. (Cal. Super. Ct. L.A. Cty. Dec. 18 2, 2015); (H) Order in Furman v. Station Casinos LLC, No. 56-2013-00446134-CU-BT-VTA 19 (Cal. Super. Ct. Ventura Cty. Mar. 11, 2014). HSBC RJN, ECF 8. 20 Judicial notice is appropriate with respect to Exhibits A to H because they are documents 21 publicly filed with either state or federal courts. See Mir v. Little Co. of Mary Hosp., 844 F.2d 22 646, 649 (9th Cir. 1988) (court may take judicial notice of matters of public record). Ramos 23 objects to these documents to the extent HSBC seeks to have the Court take judicial notice of the 24 truth or accuracy of the facts and statements recited in these documents. Opp’n 21, ECF 18. The 25 Court does not take judicial notice of the legal reasoning or disputed facts contained therein, but 26 rather the existence of such allegations and arguments. Lee v. City of Los Angeles, 250 F.3d 668, 27 690 (9th Cir. 2001) (permitting a court to take judicial notice of another court’s opinion, but not 28 4 1 the truth of the facts recited therein). As such, it would not be improper to judicially notice the 2 exhibits that are public filings in other courts. 3 Ramos has submitted two exhibits in support of his sur-reply to HSBC’s motion and his 4 opposition to Capital One’s motion. ECF 29-1, 30. Although Ramos does not formally request 5 judicial notice of these two exhibits, the Court construes the submission as such a request. The 6 two exhibits are (A) Confidential Communications: Disclosure, Hearing Before the Senate 7 Committee on Public Safety, A.B. 1671, 2015-2016 Reg. Sess. (Cal. June 28, 2016) (Hearing 8 Notes, Sen. Loni Hancock, Chair) (the “June 28 Hearing Notes”); and (B) Confidential 9 Communications: Disclosure, Hearing Before the Senate Committee On Appropriations, A.B. 1671, 2015-2016 Reg. Sess. (Cal. August 8, 2016) (Hearing Notes, Sen. Ricardo Lara, Chair) (the 11 United States District Court Northern District of California 10 “August 8 Hearing Notes”). Exs. A and B to Raymond Decl., ECF 29-1. 12 HSBC objects to these two exhibits submitted by Ramos on the grounds that they are 13 irrelevant, and lack foundation and personal knowledge. HSBC Obj., ECF 32. Specifically, 14 HSBC points out that the relevant issue here is how the 2017 amendment affects the interpretation 15 of the CIPA statute. Id. at 1. HSBC argues that the Senate Committee’s hearing notes are not 16 relevant because they pre-date the proposed amendment which was introduced on August 30, 17 2016. Id. at 2. HSBC further argues that the hearing notes discuss criminal penalties related to 18 violation of Penal Code § 632, and do not discuss the civil statutory damages relevant to this case. 19 Id. at 3. Finally, HSBC argues that there is an inadequate showing that Ms. Raymond has personal 20 knowledge regarding the legislative history attached as exhibits to her declaration and how the 21 exhibits were located. Id. Without foundation and personal knowledge, HSBC requests that the 22 exhibits be stricken. Id. 23 First, even though these Senate hearing notes pre-date the introduction of the amendment, 24 they can still provide the Senate’s perspective on the statute’s meaning prior to the amendment 25 and the potential purpose of the amendment. Second, such records of “[l]egislative history is 26 properly a subject of judicial notice.” Anderson v. Holder, 673 F.3d 1089, 1094 n.1 (9th Cir. 27 2012); see also Perkins v. Linkedin Corp., 53 F. Supp. 3d 1222, 1241 (N.D. Cal. 2014). As such, 28 the Court grants the request for judicial notice of these exhibits. The Court agrees with HSBC that 5 1 these documents have limited relevance to the later amendment here at issue, and thus the Court 2 will give these documents the weight they deserve. 3 In support of HSBC’s objections to Ramos’s sur-reply, HSBC also requests judicial notice 4 of nine documents, attached as exhibits A to I: (A) A.B. 1671, 2015-2016 Reg. Sess. (Cal. Jan. 15, 5 2016) (as introduced by Assembly Member Gomez); (B) A.B. 1671, 2015-2016 Reg. Sess. (Cal. 6 Mar. 17, 2016) (as amended in Assembly); (C) A.B. 1671, 2015-2016 Reg. Sess. (Cal. Apr. 12, 7 2016) (as amended in Assembly); (D) A.B. 1671, 2015-2016 Reg. Sess. (Cal. Apr. 25, 2016) (as 8 amended in Assembly); (E) A.B. 1671, 2015-2016 Reg. Sess. (Cal. May 18, 2016) (as amended in 9 Assembly); (F) A.B. 1671, 2015-2016 Reg. Sess. (Cal. Aug. 2, 2016) (as amended in Senate); (G) A.B. 1671, 2015-2016 Reg. Sess. (Cal. Aug. 16, 2016) (as amended in Senate); (H) A.B. 1671, 11 United States District Court Northern District of California 10 2015-2016 Reg. Sess. (Cal. Aug. 30, 2016) (as amended in Senate); (I) A.B. 1671, 2015-2016 12 Reg. Sess. (Cal. 2016) (as enacted). ECF 33. 13 Just like the California Senate Committee hearing notes provided by Ramos in support of 14 his sur-reply, these exhibits contain legislative history, which is judicially noticeable. Anderson, 15 673 F.3d at 1094 n.1. The parties do not dispute the authenticity of these exhibits and Ramos did 16 not file an objection to these documents. As such, the request for judicial notice is GRANTED 17 with respect to the exhibits attached to HSBC’s objections to Ramos’ sur-reply. 18 19 20 IV. DISCUSSION Generally, HSBC and Capital One seek dismissal on the following grounds: 1) the action is 21 barred by the one-year statute of limitations and Ramos has failed to allege facts to support 22 delayed discovery or tolling; 2) Ramos has failed to state a claim for violations of Penal Code §§ 23 632 or 632.7; and 3) Ramos’ request for statutory damages “per violation” under § 637.2 is 24 improper and, instead, limited to $5,000 per action. The Court will assess Defendants’ motions to 25 dismiss Ramos’ request for statutory damages before addressing the other issues because the 26 damages amount bears on this Court’s subject matter jurisdiction. Sinochem Int'l Co. Ltd. v. 27 Malaysia Int'l Shipping Corp., 549 U.S. 422, 430-31 (2007) (holding that a “federal court 28 generally may not rule on the merits of a case without first determining that it has jurisdiction over 6 1 the category of claim in suit (subject-matter jurisdiction) and the parties (personal jurisdiction)”). 2 A. 3 In the FAC, Ramos requests statutory damages of $5,000 “per violation” under California Statutory Damages 4 Penal Code § 637.2, the section governing damages for CIPA civil suits. FAC ¶¶ 45, 50. 5 Defendants move to dismiss or strike Ramos’ claims for statutory damages because the statutory 6 damages are limited to $5,000 “per action” and not “per violation.” HSBC Mot. 20; Cap. Mot. 15- 7 16. According to Defendants, the January 2017 amendment to § 637.2 adding “per violation” 8 demonstrates that the legislature intended the prior statute to limit statutory damage to $5,000 per 9 action. HSBC Reply 10-11, ECF 21; Cap. Reply 11-12, ECF 34. In opposition, Ramos contends that ample case law supports an award of damages on a “per violation” basis and the authorities 11 United States District Court Northern District of California 10 relied upon by Defendants are inapposite to the present case. Opp’n 19-20, ECF 181 (citing Ades 12 v. Omni Hotels Mgmt. Corp., 46 F. Supp. 3d 999, 1018 (C.D. Cal. 2014); Lieberman v. KCOP 13 Television, Inc., 110 Cal. App. 4th 156, 167 (2003)). Ramos further argues that the January 2017 14 amendment does not change his proffered interpretation as the amendment only sought to clarify 15 the statute’s meaning. Sur-Reply 1-2, ECF 29. 16 Prior to the amendment, California Penal Code § 637.2(a) provided: 17 (a) Any person who has been injured by a violation of this chapter may bring an action against the person who committed the violation for the greater of the following amounts: 18 19 1) Five thousand dollars ($5,000). 20 2) Three times the amount of actual damages, if any, sustained by the plaintiff. 21 22 Pursuant to the amendment effective January 1, 2017, California Penal Code § 637.2(a) provides: 23 (a) Any person who has been injured by a violation of this chapter may bring an action against the person who committed the violation for the greater of the following amounts: 24 25 1) Five thousand dollars ($5,000) per violation. 26 27 28 1 As Ramos’ opposition to HSBC’s papers are almost identical to his opposition to Capital One’s motion, references to Ramos’ argument apply equally to both Defendants and the Court’s citations to Ramos’ opposition or sur-reply reference Ramos’ papers to HSBC’s, unless otherwise noted. 7 1 2 3 2) Three times the amount of actual damages, if any, sustained by the plaintiff. Cal. Penal Code § 637.2(a) (2016) (effective January 1, 2017). In interpreting a state statute, a federal court must follow the state’s rules of statutory 4 interpretation in order to determine the meaning the state’s highest court would give to the law. 5 Bass v. Cty. of Butte, 458 F.3d 978, 981-82 (9th Cir. 2006) (citations omitted). “As in any case 6 involving statutory interpretation, our fundamental task is to determine the Legislature’s intent so 7 as to effectuate the law’s purpose.” Id. A court begins by first “examining the statute’s words, 8 giving them a plain and commonsense meaning” and “construing them in context.” Id.; Martinez 9 v. Combs, 49 Cal. 4th 35, 51 (2010). “If the words themselves are not ambiguous, [courts] presume the Legislature meant what it said, and the statute’s plain meaning governs.” Martinez, 11 United States District Court Northern District of California 10 49 Cal. 4th at 51. However, where the language is ambiguous, the court may “turn to extrinsic 12 aids to assist in interpretation,” including legislative history, public policy, contemporaneous 13 construction by administrative agencies, and the overall statutory scheme, as well as maxims of 14 statutory construction. Murphy v. Kenneth Cole Prods., Inc., 40 Cal. 4th 1094, 1103, 1105 (2007); 15 Wells v. One2One Learning Found., 39 Cal. 4th 1164, 1190 (2006). 16 Here, the parties agree that the version of the statute prior to the 2017 amendment governs 17 this case but disagree whether the 2017 amendment clarifies or changes the law. Sur-Reply 1-3. 18 “While an intention to change the law is usually inferred from a material change in the language of 19 the statute, a consideration of the surrounding circumstances may indicate, on the other hand, that 20 the amendment was merely the result of a legislative attempt to clarify the true meaning of the 21 statute.” Martin v. Cal. Mut. Bldg. & Loan Ass’n, 18 Cal. 2d 478, 484 (1941) (citations omitted). 22 Where “a statute merely clarifies, rather than changes existing law,” it does not operate 23 retrospectively even if applied to transactions predating its enactment. W. Sec. Bank v. Superior 24 Court, 15 Cal. 4th 232, 243 (1997). Before determining retroactivity, the Court will analyze the 25 statute as it existed prior to the effective date of the amendment to determine its meaning and 26 whether the amendment changed the existing law. See Satyadi, 232 Cal. App. 4th at 1029. 27 28 i. Language of the Statute A “plain and commonsense” reading of the statute is that a plaintiff “may bring an action 8 against a person who committed the [CIPA] violation for the greater” of $5,000 or “[t]hree times 2 the amount of actual damages if any, sustained by the plaintiff.” Cal. Penal Code § 637.2(a). 3 Nowhere in the statute does it recite “per violation” to modify the statutory damages of up to 4 $5,000. See People v. One 1940 Chrysler Convertible Coupe, 48 Cal. App. 2d 546, 549 (1941) 5 (holding that “[t]he ordinary rules of grammar should be followed if by applying them such 6 interpretation does not lead to an absurdity”). This Court would “presume the Legislature 7 intended everything in a statutory scheme, and [would] not read statutes to . . . include omitted 8 language.” Jurcoane v. Superior Court, 93 Cal. App. 4th 886, 894 (2001). In In re Sandoval, the 9 court’s determination on a parallel penal code provision, § 593d, is instructive here. 341 B.R. 282, 10 292 (Bankr. C.D. Cal. 2006). The claimant cable company claimed statutory damages for each of 11 United States District Court Northern District of California 1 the debtor’s alleged violations of the anti-piracy and anti-signal theft statute. Id. California Penal 12 Code § 593d(f) sets forth: “Any person who violates this section shall be liable in a civil action to 13 the multichannel video or information services provider for the greater of the following amounts:” 14 (1) $5,000 or “[t]hree times the amount of actual damages if any, sustained by the plaintiff.” Cal. 15 Penal Code § 593d(f). The court disagreed with the claimant and held that “§ 593d(f) does not 16 provide for $5,000 in statutory damages for each violation. It only provides a single $5,000 17 liability for “[a]ny person who violates this section.” In re Sandoval, 341 B.R. at 287. Given the 18 similarity of the language between §§ 593d(f) and 637.2(a), In re Sandoval’s holding is consistent 19 with this Court’s determination not to read “per violation” into § 637.2(a). See also Nevarrez v. 20 San Marino Skilled Nursing & Wellness Ctr., 221 Cal. App. 4th 102, 130 (2013) (declining to 21 “read the phrase ‘per violation’ into [California Health & Safety Code] § 1430, subdivision (b)” 22 because courts “are not permitted to insert qualifying provisions not included in the statute, nor 23 edit it to conform to an assumed intention which does not appear from its language”) (internal 24 quotation marks omitted). 25 26 ii. Case Law on California Penal Code § 637.2 The state of the law prior to the Legislature’s amendment of California Penal Code § 637.2 27 does not persuade this Court otherwise. The California Supreme Court in Ribas v. Clark 28 considered this statute in a case that concerned only one instance of CIPA violation, where the 9 1 defendant eavesdropped on a telephone conversation between the plaintiff and the plaintiff’s wife, 2 who were undergoing an acrimonious divorce proceeding. 38 Cal. 3d 355, 358 (1985). Among 3 various reasons in support of a reversal of the lower court’s dismissal on a demurrer, the court held 4 that actual injury need not be proven because the statute authorized civil statutory awards. Id. 5 The court then stated without further analysis that the statute authorized “civil awards of $3,000 6 for each violation of the Privacy Act despite a party’s inability to prove actual injury.” Id. In Lieberman v. KCOP Television, Inc., the court also considered the statute in response to 8 the defendant’s argument that a plaintiff may not recover damage without showing actual injuries 9 caused by the violation. 110 Cal. App. 4th 156, 166 (2003). In reaching its conclusion that actual 10 injuries were not necessary, the Lieberman court stated that a plaintiff may recover up to $5000 in 11 United States District Court Northern District of California 7 statutory damages “for each incident,” citing to Ribas v. Clark. Id. at 167 (citing 38 Cal. 3d at 12 358). See also Ades v. Omni Hotels Mgmt. Corp., 46 F. Supp. 3d 999, 1018 (C.D. Cal. 2014) (in 13 response to the defendant’s argument that the plaintiffs could not demonstrate that they suffered an 14 injury to sustain a CIPA action, holding that the statutory damages were “for each violation of 15 CIPA”) (citing Lieberman, 110 Cal. App. 4th at 167); CashCall, Inc. v. Superior Court, 159 Cal. 16 App. 4th 273, 293 n.11 (2008) (on a motion for precertification discovery, stating in a footnote 17 without citation that the statute provides for damages of not less than $5,000 per violation).2 Although Ramos proffered the above-cited cases as interpreting § 637.2 to permit statutory 18 19 damages of up to $5,000 per violation, these cases were in fact silent on the matter. The cases 20 analyzed whether a plaintiff would need to allege or prove actual injuries caused by the CIPA 21 violation and did not analyze the statute for the purpose of determining whether the statutory 22 damages should be assessed per violation versus per action. These cases thus are “not authority 23 for propositions neither considered nor discussed in the opinion.” Hager v. Cty. of Los Angeles, 24 228 Cal. App. 4th 1538, 1551 (2014) (citing In re Muszalski, 52 Cal. App. 3d 500, 504 (1975)); 25 2 26 27 28 Ramos also cites Flanagan v. Flanagan but this opinion has been depublished and is not citable. 77 Cal. App. 4th 122, 91 Cal. Rptr. 2d 422, 429 (1999), review granted, superseded, and rev’d , 27 Cal. 4th 766 (2002). Before California Rules of Court 8.1105(e) was amended on July 1, 2016, “[a]n opinion [was] no longer considered published if the Supreme Court grants review and may not be relied on or cited.” People v. Kennedy, 209 Cal. App. 4th 385, 400 (2012) (citing Cal. R. Ct. 8.1105). 10 1 see also Satyadi v. W. Contra Costa Healthcare Dist., 232 Cal. App. 4th 1022, 1030-31 (2014) (in 2 determining whether a statutory amendment changed the exhaustion requirement, considering the 3 holdings in Lloyd but not those in Campbell because Lloyd “squarely confronted the argument” 4 presented). 5 iii. Legislative History Given that the statute is not ambiguous, this Court need not resort to legislative history as 6 7 an extrinsic aid. See Murphy, 40 Cal. 4th at 1103 (noting that “[o]nly when the statute’s language 8 is ambiguous or susceptible of more than one reasonable interpretation, may the court turn to 9 extrinsic aids to assist in interpretation). Nonetheless, the legislative history surrounding the January 1, 2017 amendment further supports the conclusions that § 637.2 did not provide statutory 11 United States District Court Northern District of California 10 damages “per violation” prior to the 2017 amendment; and that the amendment in fact changed the 12 law, and did not merely clarify it, as argued by Ramos. The parties did not provide the Court with 13 any legislative history regarding enactment of the prior law applicable in this case.3 As a preliminary matter, the January 1, 2017 amendment inserting “per violation” is 14 15 consistent with this Court’s conclusion that prior to the amendment, the statute did not permit 16 recovery of damages “per violation.” “Where the Legislature makes express statutory distinctions, 17 [this Court] must presume it did so deliberately, giving effect to the distinctions, unless the whole 18 scheme reveals the distinction is unintended.” Jurcoane, 93 Cal. App. 4th at 894. Further, the 19 Legislative Counsel’s Digest relevant to this amendment specifies that the bill was to amend § 20 637.2 and explicitly states that “this bill would provide that the monetary damages be imposed per 21 violation” in the context of a civil suit. Ex. H to HSBC’s RJN ISO Objections, Legislative 22 Counsel’s Digest for Assem. B. No. 1671 (2016-16 Reg. Sess.) (amended Aug. 30, 2016), ECF 23 33-1; Jones v. Lodge at Torrey Pines P’ship, 42 Cal. 4th 1158, 1170 (2008) (noting that 24 “[a]lthough the Legislative Counsel’s summaries are not binding they are entitled to great 25 weight”). Since this legislative history shows that the legislators intended to amend the code 26 3 27 28 The Court has reviewed the Summary Digest of chapter 1509 of the statutes of 1967, the enacting legislation, which states only that the bill “provides for enforcement by civil actions for injunctions or damages . . . .” Legislative Counsel’s Digest for Assem. B. No. 860 (1967 Reg. Sess.) 2 Stats. 1967, Summary Dig., p. 5219. 11 1 section to impose monetary damages per violation, the amendment actually changed § 637.2 and 2 did not merely clarify it. 3 The legislative history submitted by Ramos from the California Senate Committee on Public Safety does not demonstrate otherwise. First, the Committee’s notes pre-date the 5 amendment in question and thus cannot be interpreted as giving meaning to a non-existent 6 proposal. Second, the notes from the Senate Committee on Public Safety state that the purpose of 7 the bill was to “make it a wobbler to intentionally distribute or aid and abet the distribution of, a 8 confidential communication with a health care provider that was obtained unlawfully.” Ex. A to 9 Raymond Decl. 2, 5, ECF 30-1. It goes on to state this “bill clarifies the prohibition on recording 10 a confidential communication applies to each violation.” See also Ex. B to Raymond Decl. 1-2, 11 United States District Court Northern District of California 4 ECF 30-1. The notes are entirely in the context of criminal penalties and make no reference to the 12 statutory damages in civil suits, and rightly so, as the notes are clear in stating that the purpose 13 was to make the crime an alternate felony-misdemeanor offense. Id. Accordingly, these 14 legislative notes proffered by Ramos are not squarely on point and do not change this Court’s 15 conclusion. 16 Having determined that the January 2017 amendment changed the law and did not merely 17 clarify it, the Court now turns to the issue of retroactivity. On the issue of retroactivity, the parties 18 do not dispute that the version of the statute prior to the amendment governs this case, and the 19 general proposition that “a new statute is presumed to operate prospectively absent an express 20 declaration of retrospectivity or a clear indication that the electorate, or the Legislature, intended 21 otherwise,” Tapia v. Superior Court, 53 Cal. 3d 282, 287 (1991); HSBC Reply 10-11; Sur-Reply 22 1-3 (citing Satyadi, 232 Cal. App. 4th at 1028) (noting the “well-established presumption that 23 statutes apply prospectively in the absence of a clearly expressed contrary intent”) (citation 24 omitted)). If the amendment does not operate retroactively, the addition of “per violation” would 25 not apply to the present case. There is no clearly expressed intent by the legislature to provide 26 retroactive application of this amendment and on that basis, the Court concludes that it is 27 prospective only. Accordingly, the Court GRANTS Defendants’ motion to dismiss the claims for 28 statutory damages on a “per violation” basis. The claim for statutory damages totaling $5,000 is 12 1 proper. 2 B. 3 The Court now turns to Defendants’ others grounds for dismissing Ramos’ claims. First, 4 Defendants argue that the CIPA claims are untimely because the allegations are insufficient and 5 without specificity to show that the statute of limitations period should be tolled. “In California, 6 the discovery rule postpones accrual of a claim until ‘the plaintiff discovers, or has reason to 7 discover, the cause of action.’” Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1024 (9th Cir. 8 2008) (quoting Norgart v. Upjohn Co., 21 Cal. 4th 383, 397 (1999)). To satisfy the pleading 9 requirement on the discovery rule, Ramos must specifically plead facts showing “(1) the time and Tolling of the Statute of Limitations manner of discovery and (2) the inability to have made earlier discovery despite reasonable 11 United States District Court Northern District of California 10 diligence.” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th 797, 808 (2005); id. at 815 (holding 12 that “[a] plaintiff seeking to utilize the discovery rule must plead facts to show his or her inability 13 to have discovered the necessary information earlier despite reasonable diligence”). 14 Here, the FAC sufficiently alleges facts demonstrating that Ramos’ claims did not accrue 15 until September 2015. FAC ¶¶ 14-16. Ramos’ wife was employed by Card Services from March 16 23, 2009 to about May 1, 2012, and by Capital One from about May 1, 2012 through October 17 2013. Id. ¶¶ 28-29. Ramos did not file his suit until November 18, 2016. However, HSBC did 18 not remove the confidential designation from the transcripts of recording in the Rojas case until 19 September 2015, and his wife was only contacted as a potential witness thereafter. Id. ¶¶ 14-16. 20 Ramos then learned about the recording and his wife being contacted as a potential witness in or 21 around November 2015. Id. ¶¶ 16-17. Prior to November 2015, Ramos had no reason to believe 22 that his personal telephone calls were recorded, received, or intercepted by Defendants. Id. ¶ 17. 23 Defendants fault Ramos for not alleging reasons why he could not have discovered the alleged 24 CIPA violation from his wife earlier than November 2015, who had been Defendants’ employee 25 and would have been privy to Defendants’ recording practices. However, the Court finds that the 26 FAC has plausibly alleged that Ramos had no reason to suspect that his phone conversations were 27 recorded and would not be subject to an inquiry notice to question his wife in regards to 28 Defendants’ recording practices. Accordingly, the Court DENIES the motions to dismiss on the 13 1 2 3 ground that the claims are untimely. C. Sufficiency of the Allegations for Count I for Violation of California Penal Code § 632 Defendants further contend that the FAC is devoid of any facts regarding their purported 4 5 6 7 intent to record Ramos’s personal conversations because merely installing a recording device on company phones does not meet the “intentional” requirement of Cal. Pen. Code § 632. HSBC Mot. 14-15; Cap. Mot. 12-13. Defendants argue that the California Supreme Court’s ruling in People v. Superior Court of Los Angeles Cty. (“Smith”) controls. 70 Cal. 2d 123, 133 (1969). 8 Defendants submit that under Smith, Ramos must allege facts showing that Defendants intended to 9 record his personal conversations. Defendants further rely on a California Superior Court ruling in 10 the Rojas case. Exs E and F to HSBC’s RJN. Ramos counters that he has alleged sufficient facts 11 United States District Court Northern District of California to support his claim. 12 The defendant in Smith moved to suppress evidence in a criminal action brought against 13 him because the evidence was obtained in violation of CIPA. 70 Cal. 2d at 125. The defendant 14 15 16 17 18 hired a private investigator “to install a recording system which was voice activated and which tape recorded all conversations, including telephone conversations, in all of defendant’s offices” to try to “expose the source of substantial annual losses to his companies caused by an internal ‘leak.’” Id. at 126. The private investigator installed the recording system, and left it in “automatic mode” to test its performance, which later automatically recorded conversations 19 between the defendant and other individuals. Id. These taped recordings were subsequently 20 delivered to a law enforcement officer and used “to refresh the memories” of the persons who 21 participated in the conversations with the defendant. Id. at 126-27. Finding no violation of CIPA, 22 the court reasoned that intention to start the equipment without more did not satisfy the 23 24 25 26 requirement of intent under the statute. Id. at 132. The court also noted that the “statute does not isolate the actor’s intent from the object to which it is directed, namely the confidential communication; the two are inextricably bound together.” Id. at 133. As such, the Smith case appears to support the proposition that the “intentional” element could not be met by merely 27 placing a recording device without a specific intention to record or intercept a conversation of a 28 14 1 target person. However, even if this Court were to wholly accept this interpretation of 2 “intentional,” proffered by Defendants, the Court is satisfied that Plaintiff has alleged sufficient 3 facts to state his claim. As such, the Court DENIES Defendants’ motion to dismiss Count I. 4 5 D. Sufficiency of the Allegations for Count II for Violation of California Penal Code § 632.7 California Penal Code § 632.7 makes unlawful conduct by any person who, without 6 consent, “intercepts or receives and intentionally records” personal communications transmitted 7 between telephones. Defendants reiterate the same argument as those set forth for Count I that the 8 FAC fails to allege that they “intentionally” recorded Ramos’ personal conversation. HSBC Mot. 9 15; Cap. Mot. 13. Defendants also contend that the statute only prohibits interception or reception 10 by a third party and they are not considered such third parties since Ramos voluntarily called or United States District Court Northern District of California 11 12 13 received calls from Defendants’ phones. HSBC Mot. 16-19; Cap Mot. 13-14. As to Defendants’ argument on the requirement that the interception or reception of communication be “intentional,” the Court DENIES their motions to dismiss for the same reasons 14 as set forth in the discussion on Count I above. 15 With respect to Defendants’ argument that the recording or the interception occurred on 16 their phone lines and that they are not considered third-parties under the statute, the Court finds 17 that the statute could still apply to them. In Simpson v. Best W. Int’l, Inc., the court was 18 confronted with this exact same issue and held that § 632.7 applies to parties to the 19 communications as well as third parties. No. 12-04672-JCS, 2012 WL 5499928, at *8 (N.D. Cal. 20 Nov. 13, 2012). The plaintiff in Simpson called Best Western’s reservation center to make hotel 21 reservations, and her calls were allegedly recorded without her knowledge or consent. Id. at *3. 22 The defendant argued on a motion to dismiss that the claim fails because it was a party to the 23 alleged communications. Id. at *6. After examining the case law and the legislative history, the 24 court concluded that the law prohibits any party, not just third parties, to a confidential 25 communication from recording that communication without knowledge or consent of the other 26 party. Id. at *7-8. Young v. Hilton Worldwide, Inc., cited by Defendants, does not change 27 Simpson’s analysis as the Young court was only concerned with a § 632 claim, and not § 632.7. 28 15 1 No. 12-01788, 2014 WL 3434117, at *2 (C.D. Cal. July 11, 2014) (holding that “to any extent that 2 Hilton received such calls, it had the consent from the caller”). Simpson is thus more persuasive to 3 the Court with respect to § 632.7. The Court is satisfied that Ramos has adequately pled this 4 claim. Defendants’ motions to dismiss Count II are DENIED. 5 E. 6 This Court may assert subject matter jurisdiction over a case when the amount in Jurisdiction 7 controversy exceeds $75,000 and the parties are citizens of different states. 28 U.S.C. § 1332. 8 There is a strong presumption against the exercise of removal jurisdiction. Gaus v. Miles, Inc., 9 980 F.2d 564, 566 (9th Cir. 1992). If it is unclear from the complaint what amount of damages plaintiff seeks, “the defendant bears the burden of actually proving the facts to support 11 United States District Court Northern District of California 10 jurisdiction, including the jurisdictional amount.” Id. The Court may raise the issue of subject 12 matter jurisdiction sua sponte. Galt G/S v. Hapag–Lloyd AG, 60 F.3d 1370, 1373 (9th Cir. 1995). 13 “Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first 14 instance.” Gaus, 980 F.2d at 566. 15 As the removing parties invoking the Court’s diversity jurisdiction, Defendants bear the 16 burden of establishing by a preponderance of the evidence that the amount in controversy exceeds 17 $75,000. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). In its notice of 18 removal, Defendants solely referenced the allegations directed to statutory damages in support of 19 the amount in controversy. Notice of Removal 2-3, ECF 1. Now that the Court has dismissed 20 Ramos’ statutory damages claim alleged on a “per violation” basis, the statutory damages can no 21 longer meet the jurisdictional amount. 22 Ramos also seeks “three times the amount of actual damages” but only conclusorily pleads 23 “loss of privacy, loss of security, shock, upset, fear, anger, sadness, and other forms of emotional 24 distress” in support of actual damages. FAC ¶¶ 39, 45, 50. Ramos in opposition also proffers no 25 additional facts in support of the claim for actual damages. The vagueness of actual damages 26 sought in Ramos’ FAC is not sufficient to satisfy the jurisdictional amount. Sanchez, 102 F.3d at 27 404 (holding that “the relevant standard in the Ninth Circuit is whether given the absence of 28 specifics and the record, is it more likely than not that the amount in controversy exceeds 16 1 $75,000”). Thus, it is not “facially apparent” from the notice of removal, the FAC, and even 2 Ramos’ opposition papers, that the jurisdictional amount could be satisfied. Singer v. State Farm 3 Mut. Auto., Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997). 4 F. 5 In deciding whether to grant leave to amend, the Court must consider the factors set forth Leave to Amend 6 by the Supreme Court in Foman v. Davis, 371 U.S. 178 (1962), and discussed at length by the 7 Ninth Circuit in Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048 (9th Cir. 2009). A district 8 court ordinarily must grant leave to amend unless one or more of the Foman factors is present: (1) 9 undue delay, (2) bad faith or dilatory motive, (3) repeated failure to cure deficiencies by amendment, (4) undue prejudice to the opposing party, and (5) futility of amendment. Eminence 11 United States District Court Northern District of California 10 Capital, 316 F.3d at 1052. Here, having granted Defendants’ motions to dismiss Ramos’ requests for statutory 12 13 damages on a “per violation” basis, the case now lacks sufficient pleading to support a claim 14 meeting the required monetary amount in controversy to invoke this Court’s jurisdiction. The 15 Court recognizes that the burden is on Defendants to demonstrate the sufficiency of the 16 jurisdictional amount. Nonetheless, the Court grants Ramos leave to amend the allegations 17 directed to actual damages to show that at least $75,000 is in controversy, in the event Ramos 18 desires an opportunity to make such an amendment. Because this Court has denied Defendants’ 19 motions to dismiss on the remainder of the grounds submitted, there is no leave to amend any 20 other part of the complaint. 21 22 23 V. ORDER For the foregoing reasons, the Court GRANTS IN PART Defendants’ motions to dismiss 24 claims of statutory damages on a “per violation” basis with leave to amend only allegations 25 directed to actual damages; 26 27 28 The Court DENIES IN PART Defendants’ motions to dismiss Counts I and II based on the statute of limitations and a failure to state a claim. If desired, Ramos shall file an amended complaint by August 24, 2017. Failure to meet the 17 1 deadline to file an amended complaint would result in the remand of this case without further 2 notice. 3 4 5 6 IT IS SO ORDERED. Dated: July 27, 2017 ______________________________________ BETH LABSON FREEMAN United States District Judge 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18

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