Jacques vs. Bank of America Corporation, et al., No. 1:2012cv00821 - Document 119 (E.D. Cal. 2014)
Court Description: FINDINGS and RECOMMENDATIONS recommending that Early Warning Services, LLC's, Motion to Dismiss, document 107 , be GRANTED, and that plaintiff's claims against Early Warning be DISMISSED without leave to amend. Matter referred to Judge Lawrence J. O'Neill with objections due within fourteen days of service of this order. Order signed by Magistrate Judge Stanley A. Boone on 12/18/2014. (Rooney, M)
Download PDF
<![CDATA[
1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 TROY JACQUES, Plaintiff, 12 FINDINGS AND RECOMMENDATIONS RECOMMENDING THAT DEFENDANT EARLY WARNING SERVICES, LLC’S MOTION TO DISMISS BE GRANTED v. 13 14 Case No. 1:12-cv-0821-LJO-SAB BANK OF AMERICA CORPORATION, et al., ECF NO. 107 15 Defendants. OBJECTIONS DUE WITHIN FOURTEEN (14) DAYS 16 17 18 On October 10, 2014, Defendant Early Warning Services, LLC (“Early Warning”) filed a 19 motion to dismiss in this action. (ECF No. 107.) Plaintiff Troy Jacques (“Plaintiff”) filed an 20 opposition on December 3, 2014. (ECF No. 116.) Early Warning filed a reply on December 10, 21 2014. (ECF No. 117.) The hearing on the motion took place on December 17, 2014. Holly 22 Gaudreau appeared on behalf of Early Warning. Peter Bradley appeared telephonically on behalf 23 of Plaintiff. 24 For the reasons set forth below, the Court recommends that Early Warning’s motion to 25 dismiss be granted and Plaintiff’s claims against Early Warning be dismissed without leave to 26 amend. 27 / / / 28 / / / 1 1 I. 2 BACKGROUND 3 The operative complaint in this action is the Fifth Amended Complaint filed on 4 September 3, 2014. (ECF No. 96.) The Fifth Amended Complaint names Bank of America 5 Corporation (“Bank of America”), Early Warning, and Does 1 through 50 as defendants in this 6 action. (Fifth Am. Compl. ¶¶ 2-4.) Plaintiff alleges that he was employed by Bank of America 7 since 2005, first in a call center and later as a personal banker in the Tower District branch. 8 (Fifth Am. Compl. ¶¶ 5-6.) Plaintiff’s manager was Danny Villacis (“Mr. Villacis”). (Fifth Am. 9 Compl. ¶ 6.) 10 Plaintiff alleges that when he was a personal banker one of his job duties was to open 11 new accounts. (Fifth Am. Compl. ¶ 7.) Plaintiff further alleges that he was instructed to activate 12 online accounts for the bank so that his branch would receive “credit” for customers opening 13 online accounts. (Fifth Am. Compl. ¶ 7.) Accordingly, to ensure that online accounts were 14 activated by customers and the branch received credit for the activation, Plaintiff would suggest 15 to the customer that they use the password “Password One” for their online account so that 16 Plaintiff could activate the online account for the customer, then instruct the customer to change 17 the password later. (Fifth Am. Compl. ¶ 8.) 18 Plaintiff later applied for employment at Wells Fargo Bank and started working there on 19 October 8, 2009. (Fifth Am. Compl. ¶ 9.) A few days prior to leaving Bank of America, 20 Plaintiff was advised that an investigation was conducted regarding account openings. (Fifth 21 Am. Compl. ¶ 10.) However, at the meeting regarding this investigation, Plaintiff advised 22 someone else that he would be leaving Bank of America soon, and Plaintiff was told that he did 23 not have to participate and was excused. (Fifth Am. Compl. ¶ 10.) 24 On April 8, 2011, Plaintiff received a “Pre-Adverse Action Notification” from Wells 25 Fargo. (Fifth Am. Compl. 12.) Plaintiff was informed that his employment status was under 26 review due to information in a security report. (Fifth Am. Compl. ¶ 12.) Plaintiff alleges that the 27 security report publishes highly defamatory allegations made by Bank of America regarding an 28 “internal fraud match.” (Fifth Am. Compl. ¶ 13.) The report indicated that Plaintiff committed a 2 1 “severe type” fraud and “was not suitable for employment in any institution in which trust, 2 honesty, integrity, and fidelity were paramount.” (Fifth Am. Compl. ¶ 13.) Plaintiff was 3 informed that he would be terminated from employment with Wells Fargo on April 15, 2011. 4 (Fifth Am. Compl. ¶ 14.) Plaintiff contends that Bank of America never gave Plaintiff any 5 opportunity to contest the claims of wrongdoing. (Fifth Am. Compl. ¶ 18.) Plaintiff alleges that 6 the fraud allegations were made by Bank of America in retaliation for Plaintiff’s employment 7 with Wells Fargo. (Fifth Am. Compl. ¶ 25.) Plaintiff further alleges that he requested his 8 employee file from Bank of American and the file contained no record of any wrongdoing. 9 (Fifth Am. Compl. ¶ 24-26.) Although the employee file contained no record of wrongdoing, 10 Plaintiff believes that the wrongdoing allege arose from Plaintiff’s practice of accessing 11 customers’ online banking accounts to ensure they were activated and the branch received credit 12 for the activation, which was a procedure Plaintiff followed at the instruction of his supervisors. 13 (Fifth Am. Compl. ¶ 28.) Plaintiff contends that he was made a “scapegoat” by his superiors 14 after his superiors learned that the procedure was in violation of Bank of America’s corporate 15 policies. (Fifth Am. Compl. ¶ 28.) 16 Plaintiffs’ Fifth Amended Complaint raises causes of action under California Labor Code 17 § 1050, et seq. (Blacklisting), defamation, intentional infliction of emotional distress, negligent 18 infliction of emotional distress, interference with contract, breach of the covenant of good faith, 19 violation of 15 U.S.C. § 1681s-2 (Fair Credit Reporting Act) and seeks a permanent injunction 20 and declaratory relief. 21 Early Warning’s motion to dismiss seeks to dismiss all claims against Early Warning. 22 Early Warning contends that Plaintiff fails to state a claim and Plaintiff’s claims are barred by 23 the statute of limitations. 24 II. 25 LEGAL STANDARDS 26 Under Federal Rule of Civil Procedure 12(b)(6), a party may file a motion to dismiss on 27 the grounds that a complaint “fail[s] to state a claim upon which relief can be granted.” A 28 complaint must contain “a short and plain statement of the claim showing that the pleader is 3 1 entitled to relief.” Fed. R. Civ. P. 8(a)(2). “[T]he pleading standard Rule 8 announces does not 2 require ‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant3 unlawfully harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell 4 Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In assessing the sufficiency of a 5 complaint, all well-pleaded factual allegations must be accepted as true. Iqbal, 556 U.S. at 6786 79. However, “[t]hreadbare recitals of the elements of a cause of action, supported by mere 7 conclusory statements, do not suffice.” Id. at 678. 8 III. 9 DISCUSSION 10 A. 11 At the hearing, the Court inquired about the applicability of Federal Rule of Civil Federal Rule of Civil Procedure 41(a)(1)(B) 12 Procedure 41(a). Rule 41(a) states: 13 (a) Voluntary Dismissal. (1) By the Plaintiff. (A) Without a Court Order. Subject to Rules 23(e), 23.1(c), 23.2, and 66 and any applicable federal statute, the plaintiff may dismiss an action without a court order by filing: (i) a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment; or (ii) a stipulation of dismissal signed by all parties who have appeared. (B) Effect. Unless the notice or stipulation states otherwise, the dismissal is without prejudice. But if the plaintiff previously dismissed any federal- or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits. 14 15 16 17 18 19 20 In this case, Early Warning has been voluntarily dismissed from this action twice by 21 22 Plaintiff. On October 26, 2012, Plaintiff filed a notice of voluntary dismissal with respect to 23 Early Warning, which the Court granted on October 29, 2012. (ECF Nos. 32, 33.) Plaintiff filed 24 a Second Amended Complaint on November 21, 2012, which unambiguously named Early 25 Warning as a defendant.1 (ECF No. 39.) Soon thereafter, on November 28, 2012, Plaintiff filed 26 27 28 1 At the hearing, Plaintiff’s current counsel argued that the Second Amended Complaint was ambiguous with respect to whether Early Warning was named as a defendant because Early Warning was named in the caption but no allegations were alleged against Early Warning. Plaintiff’s counsel further argued that the second voluntary dismissal was “ministerial” in nature and filed merely to clarify that Early Warning was not a defendant in the Second Amended Complaint. Significantly, Plaintiff’s current counsel was not counsel of record when the Second 4 1 a second notice of voluntary dismissal of Early Warning. (ECF No. 40.) Early Warning was 2 absent from this action for approximately 21 months, since November 28, 2012 and until the 3 Fifth Amended Complaint adding them back into this action was filed on September 3, 2014. 4 In the second notice of voluntary dismissal, Plaintiff stated that Early Warning was 5 dismissed without prejudice. However, the Ninth Circuit has said: “...the label a plaintiff 6 attaches to a second Rule 41(a)(1) dismissal is irrelevant if a subsequent action is filed ‘based on 7 or including the same claim,’ because Rule 41(a)(1) itself instructs that such a dismissal 8 ‘operates as an adjudication upon the merits.’” Commercial Space Management Co., Inc. v. 9 Boeing Co., Inc., 193 F.3d 1074, 1080 (9th Cir. 1999). 10 The Court finds that under Rule 41(a)(1)(B), the second voluntary dismissal of Early 11 Warning operated as an adjudication on the merits. Accordingly, Plaintiff is barred from 12 prosecuting the same claims against Early Warning in its Fifth Amended Complaint. 13 B. 14 Early Warning also argues that Plaintiff’s claims are barred by the statute of limitations. Statute of Limitations 15 Plaintiff does not dispute Early Warning’s arguments that the statute of limitations for Plaintiff’s 16 claims are either one or two years long. Early Warning argues that the conduct alleged in the 17 complaint took place in April 2011, whereas Plaintiff filed the Fifth Amended Complaint adding 18 Early Warning as a defendant on September 3, 2014. 19 Early Warning was named as a defendant in original complaint filed in state court on 20 February 23, 2012 and removed to this Court on May 18, 2012. (ECF No. 1.) The Court granted 21 Early Warning’s motion to dismiss the claims against it on June 13, 2012 and granted Plaintiff 22 leave to amend those claims. (ECF No. 12.) Plaintiff filed an amended complaint on July 12, 23 2012. (ECF No. 15.) Early Warning filed a motion to dismiss on October 1, 2012. (ECF No. 24 18.) However, as noted above, before the motion to dismiss was ruled upon, Plaintiff filed a 25 and Third Amended Complaints were filed, having substituted into this action in August 2013. Accordingly, 26 Plaintiff’s counsel’s arguments appear to be speculating as to the intent of Plaintiff’s prior counsel in filing the second voluntary dismissal. Further, Plaintiff’s counsel appears to confuse the Second Amended Complaint with the 27 Third Amended Complaint, as the Second Amended Complaint clearly named Early Warning as a defendant, whereas the Third Amended Complaint was the pleading that was ambiguous with respect to whether any claims 28 were raised against Early Warning. 5 1 stipulation to dismiss the claims against Early Warning, which the Court granted on October 29, 2 2012. (ECF Nos. 32, 33.) Plaintiff filed a Second Amended Complaint on November 21, 2012. (ECF No. 39.) The 3 4 Second Amended Complaint named Early Warning as a defendant. However, Plaintiff soon 5 after filed a notice of voluntary dismissal of the claims against Early Warning. (ECF No. 40.) Plaintiff filed a Third Amended Complaint on April 4, 2013. (ECF No. 59.) Although 6 7 Early Warning was listed in the caption of the Third Amended Complaint, no claims were 8 asserted against it. Plaintiff filed a Fourth Amended Complaint on June 25, 2013. (ECF No. 72.) 9 The Fourth Amended Complaint did not state any claims against Early Warning. Plaintiff argues that his claims against Early Warning are not barred by the statute of 10 11 limitations because the Fifth Amended Complaint “relates back” to the earlier pleadings for 12 purposes of determining whether the statute of limitations applies. Relation back is governed by 13 Federal Rule of Civil Procedure 15(c) which states: 14 (c) Relation Back of Amendments. (1) When an Amendment Relates Back. An amendment to a pleading relates back to the date of the original pleading when: (A) the law that provides the applicable statute of limitations allows relation back; (B) the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out--or attempted to be set out--in the original pleading;2 or (C) the amendment changes the party or the naming of the party against whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if, within the period provided by Rule 4(m) for serving the summons and complaint, the party to be brought in by amendment: (i) received such notice of the action that it will not be prejudiced in defending on the merits; and (ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party's identity. 15 16 17 18 19 20 21 22 Early Warning argues that the claims against Early Warning raised in the Fifth Amended 23 24 Complaint cannot relate back to the earlier pleadings because Early Warning was named as a 25 defendant in the prior claims and dismissed by Plaintiff. 26 / / / 27 2 Plaintiff makes no argument that Federal Rule Civil Procedure 15(c)(1)(B) applies. Accordingly, the Court will 28 not address the issue. 6 1 Plaintiff argues that relation back applies under subparagraph (A) because California law 2 provides for relation back. See Butler v. National Community Renaissance of California, 766 3 F.3d 1191, 1200 (9th Cir. 2014). Specifically, Plaintiff argues that Early Warning was named as 4 a “Doe” defendant in the original complaint, and the Fifth Amended Complaint relates back 5 because it substitutes Early Warning as the “Doe” defendant in the original complaint. 6 Plaintiff relies upon Parker v. Robert E. McKee, Inc., 3 Cal. App. 4th 512 (1992), in 7 support of his argument. In Parker, the court recognized that under California Code of Civil 8 Procedure Section 474, a plaintiff may sue a defendant by a fictitious designation, such as “Doe.” 9 Id. at 515-16. Moreover, where a defendant is sued by a fictitious designation “...amendment [of 10 the complaint] is permitted, even though the plaintiff knew a defendant’s name, if plaintiff was 11 ignorant of the facts giving rise to a cause of action against that defendant.” Id. at 516 (citing 12 Mishalow v. Horwald, 231 Cal. App. 2d 517, 521-522 (1964); Wallis v. Southern Pac. 13 Transportation Co., 61 Cal. App. 3d 782, 786 (1976)). “If the amended pleading involves the 14 same general set of facts, it relates back to the filing of the original complaint so as to satisfy the 15 statute of limitations.” Id. (citing Barrows v. American Motors Corp., 144 Cal. App. 3d 1, 7 16 (1983)). 17 In Parker, the court recognized that relation back can apply even when the plaintiff 18 named the defendant in the prior complaint, but “...when the plaintiff later discovered that a 19 person whose name was known had a different legal capacity.” Parker, 3 Cal. App. 4th at 518 20 (citing Larson v. Barnett, 101 Cal. App. 2d 282, 289 (1950)). However, the pleadings in this 21 case do not show that Plaintiff discovered that Early Warning had a different legal capacity. 22 In this case, the original complaint did not state cognizable claims against Early Warning, 23 as found by the Court in its order granting Early Warning’s May 25, 2012 motion to dismiss. 24 The original complaint only vaguely alleged that Early Warning “caused to be published, and/or 25 republished ... false and defamatory statements....” (See Order on Early Warning’s Motion to 26 Dismiss 4:12-15.) The Court determined that this vague allegation was insufficient to support a 27 claim. 28 / / / 7 1 The First Amended Complaint filed on July 12, 2012 alleges that Bank of America 2 falsely accused Plaintiff of fraud, reported the fraud to Early Warning, and Early Warning 3 published a report pertaining to the fraud, which were accessible to subscribers of Early 4 Warning’s services. (Am. Compl. for Damages for Defamation ¶¶ 15-18. 21, ECF No. 15.) 5 Plaintiff contends that he was ignorant of pertinent facts regarding Early Warning’s 6 connection to Plaintiff’s claims. Specifically, Plaintiff argues that he did not know that Early 7 Warning “was the author and fabricator of the claim that Jacques had a rating of ‘Severity – 100’ 8 with respect to his alleged fraudulent activity.” (Pl.’s Opp’n to Def. Early Warning Services, 9 LLC’s Mot. to Dismiss 9:17-20.) However, the Court finds this newly discovered fact does not 10 trigger the relation back doctrine because this fact does not change Early Warning’s legal 11 capacity. Plaintiff’s claims against Early Warning in the Fifth Amended Complaint are identical 12 to Plaintiff’s claims against Early Warning raised in the prior pleadings. The fact that Early 13 Warning authored the severity rating does not change the nature of the claim, it only provides an 14 additional factual detail that is not inconsistent with Plaintiff’s theory against Early Warning 15 raised in the earlier pleadings. 16 Plaintiff also contends that Early Warning has not met its burden in demonstrating that 17 Plaintiff had knowledge of the relevant facts pertaining to the claims against Early Warning. The 18 Court disagrees. As noted above, the facts alleged in Plaintiff’s earlier pleadings are sufficient to 19 establish Plaintiff’s knowledge of the facts relevant to the claims against Early Warning. The 20 gist of Plaintiff’s claims is that Early Warning published reports accusing Plaintiff of fraudulent 21 activities and identified Plaintiff as a security risk. This is the same legal theory and general set 22 of facts presented by Plaintiff in the earlier pleadings. 23 Finally, Plaintiff argues that Early Warning republished the allegedly defamatory 24 statements against Plaintiff, thereby restarting the statute of limitations. Generally, under 25 California law, the single publication rule states that publication generally occurs on the first 26 general distribution of the publication to the public and the cause of action accrues at that time, 27 regardless of when Plaintiff became aware of the publication. Canatella v. Van De Kamp, 486 28 F.3d 1128, 1133 (9th Cir. 2007); see also Cal. Civ. Code § 3425.3. However, “[u]nder the 8 1 single-publication rule, the statute of limitations is reset when a statement is republished.” 2 Yeager v. Bowlin, 693 F.3d 1076, 1082 (9th Cir. 2012). “A statement in a printed publication is 3 republished when it is reprinted in something that is not part of the same ‘single integrated 4 publication.’” Id. (quoting Christoff v. Nestle USA, Inc., 47 Cal. 4th 468, 477 (2009)). 5 Plaintiff argues that he was subjected to further and new injury when he was denied 6 employment at Chase Banking. However, being subjected to new or continued injury is not the 7 relevant test under the single publication rule. The relevant inquiry is whether the statement was 8 republished by Early Warning in something that was not part of the same “single integrated 9 publication” that was allegedly made in 2011. Plaintiff alleges no facts in the Fifth Amended 10 Complaint supporting the conclusion that Early Warning republished the defamatory report. 11 Whether Early Warning’s actions constitute republication under California law is a conclusion of 12 law which need not be accepted as true at the pleading stage. Ashcroft v. Iqbal, 556 U.S. 662, 13 678 (2009) (“tenet that a court must accept as true all of the allegations contained in a complaint 14 is inapplicable to legal conclusions.”); see also Christoff v. Nestle USA, Inc., 47 Cal. 4th 468, 15 477 (2009) (analyzing legal issue of what constitutes a “single integrated publication” in context 16 of single-publication rule). 17 The Court finds that Plaintiff’s claims against Early Warning raised in the Fifth Amended 18 Complaint do not relate back under Rule 15(c)(1)(A). The Court further finds that the Fifth 19 Amended Complaint does not allege facts which support the conclusion that Early Warning 20 republished the allegedly defamatory statements. Accordingly, the Court finds that Plaintiff’s 21 claims are barred by the statute of limitations. Plaintiff’s Blacklisting Claim (Cal. Labor Code § 1050, et seq.) 22 B. 23 Early Warning argues that Plaintiff fails to state a cognizable claim for blacklisting under 24 California Labor Code Section 1050, et seq. Early Warning argues that it is not a proper 25 defendant for this claim. 26 27 28 Section 1050 states: Any person, or agent or officer thereof, who, after having discharged an employee from the service of such person or after an employee has voluntarily left such service, by any 9 1 misrepresentation prevents or attempts to prevent the former employee from obtaining employment, is guilty of a misdemeanor. 2 3 Cal. Labor Code § 1050. 4 Early Warning argues that Section 1050, by its own terms, only applies to 5 misrepresentations made by employers regarding former employees. Early Warning contends 6 that since Plaintiff was never an employee of Early Warning, no claim is stated. 7 Plaintiff argues that Section 1050’s reference to “any person” means that Section 1050 is 8 not limited to employers. The Court does not accept Plaintiff’s statutory interpretation. 9 Section 1050’s reference to “any person” does support the conclusion that Section 1050 10 applies to Early Warning. However, that does not end the inquiry because, while Section 1050 11 may apply to Early Warning, it does not necessarily follow that Early Warning violated Section 12 1050 by the conduct alleged in Plaintiff’s complaint. 13 14 15 16 Substituting “Early Warning” for “any person” in the language of the statute, it reads: Early Warning ... who, after having discharged an employee from the service of Early Warning, or after an employee has voluntarily left such service, by any misrepresentation prevents or attempts to prevent the former employee from obtaining employment, is guilty of a misdemeanor. 17 Plaintiff’s complaint does not allege that Early Warning discharged an employee and thereafter 18 made misrepresentations preventing that discharged employee from obtaining employment. 19 Accordingly, while Early Warning may be subject to Section 1050’s requirements because they 20 are “any person,” Plaintiff’s complaint does not allege facts which support the conclusion that 21 Section 1050 has been violated. 22 Plaintiff cites Smith v. SEIU United Healthcare Workers W., No. C 05-2877 VRW, 2006 23 WL 2038209 (N.D. Cal. Jul. 19, 2006), as his “best case” for the proposition that Section 1050 24 can apply against a non-employer. However, as Plaintiff’s counsel appears to have 25 acknowledged during the hearing, this case is not persuasive to the facts of this case. Plaintiff 26 contends that Smith involved a plaintiff who was an employee of one union suing a sister union 27 under Section 1050. However, the opinion states that the defendants in the action were SEIU 28 United Healthcare Workers West (“Local 250”) and Sal Roselli, and the opinion clearly states 10 1 that the plaintiff “was employed for 18 years by Local 250” and “Roselli was the president of 2 Local 250 and one of [the plaintiff’s] supervisors.” Id. at *1. Further, the lawsuit arose from 3 Roselli’s letter to the international president of the SEIU, which the plaintiff contends violated 4 Section 1050. Moreover, none of the parties even raised the issue of whether Section 1050 could 5 apply to non-employers, most likely due to the fact that that was not an issue under the facts of 6 that case. The Court’s discussion of Section 1050 was limited to the plaintiff’s argument that 7 Section 10533 applied to the facts alleged by the plaintiff. Accordingly, Smith does not support 8 Plaintiff’s argument that Early Warning can be held liable for a violation of Section 1050 for 9 their conduct with respect to Plaintiff, when there was no employer-employee relationship 10 between Early Warning and Plaintiff. At the hearing, Plaintiff argued that the clause “or after an employee has voluntarily left 11 12 such service” supports the interpretation that Section 1050 applies to non-employers. In other 13 words, Plaintiff argues that “any person” may be liable for blacklisting, if it were done “after an 14 employee has voluntarily left such service.” Plaintiff’s interpretation ignores that plain meaning 15 of the phrase “such service.” The phrase “such service” in Section 1050 clearly refers to the 16 employment relationship identified at the beginning of the statute, namely employment with the 17 “any person” identified in the statute. Thus, Section 1050 applies both in situations where the 18 employer fires the employee from service and where the employee voluntarily leaves service 19 with the employer. Both situations require a preexisting employment relationship between the 20 plaintiff and the defendant. None is alleged in this case. The Court finds that the plain language of Section 1050 states that it applies only to 21 22 conduct taken by “any person” against a former employee. Since Plaintiff does not allege that 23 Early Warning took any action against a former employee, Plaintiff fails to state a claim for a 24 violation of Section 1050. 25 3 26 27 28 California Labor Code § 1053 states, in pertinent part: Nothing in this chapter shall prevent an employer or an agent, employee, superintendent or manager thereof from furnishing, upon special request therefor, a truthful statement concerning the reason for the discharge of an employee or why an employee voluntarily left the service of the employer.... 11 Alternatively, Plaintiff argues that Early Warning can be liable for aiding and abetting 1 2 Bank of America’s violation of Section 1050. However, this theory is not alleged in the Fifth 3 Amended Complaint. Accordingly, the Court need not address this argument at this time. Plaintiff’s Defamation Claim 4 C. 5 Early Warning argues that Plaintiff has not alleged sufficient facts to support a claim for 6 defamation. Early Warning contends that Plaintiff did not allege the publication of a defamatory 7 statement by Early Warning to a third party since the Fifth Amended Complaint alleges that the 8 allegedly defamatory statement that led to Plaintiff’s termination at Wells Fargo was based upon 9 a report from First Advantage. Under California law, the elements for a claim for defamation are 1) a publication, 2) that 10 11 is false, 3) defamatory, and 4) unprivileged, and 5) that has a natural tendency to injure or that 12 causes special damage. Taus v. Loftus, 40 Cal.4th 683, 720 (2007). The Fifth Amended Complaint alleges that Early Warning published reports that 13 14 Plaintiff’s internal fraud score was “Severity-100” and was a high security risk. 15 calculated by Defendant EARLY WARNING SERVICES.” (Fifth Am. Compl. 16.) 16 17 “Plaintiff also has learned that the “Severity-100” ranking is a fraud score that was “Plaintiff has undertaken to remove the false and defamatory statements made by BANK 18 OF AMERICA which have appeared in reports from First Advantage and also from Early 19 Warning Services, LLC, to no avail.” (Fifth Am. Compl. ¶ 17.) 20 “EARLY WARNING SERVICES’ actions were undertaken to promote its own business 21 for profit. Although Plaintiff engaged in no wrongful conduct, EARLY WARNING 22 SERVICES has not only published that he engaged in internal security fraud but that his 23 conduct had a severity of 100, clearly communicating that Plaintiff was a most high 24 security risk.” (Fifth Am. Compl. ¶ 21.) 25 “The reports of BANK OF AMERICA were ultimately reported by First Advantage and 26 EARLY WARNING SERVICES, the latter being supplemented with false allegations of 27 “severity-100”, were either made or authorized by these Defendants to prevent Plaintiff 28 from continuing employment in the banking industry.” (Fifth Am. Compl. ¶ 34.) 12 1 “Subsequent to Plaintiff’s employment with Defendant BANK OF AMERICA, BANK 2 OF AMERICA and EARLY WARNING SERVICES caused to be published and/or 3 republished such false and defamatory statements about Plaintiff, thereby causing 4 Plaintiff economic and non-economic damage.” (Fifth Am. Compl. ¶ 38.) 5 “Defendants BANK OF AMERICA and EARLY WARNING SERVICES published the 6 false and defamatory publication to others knowing that subsequent republication to 7 persons interested in Plaintiff’s past employment history was reasonably foreseeable.” 8 (Fifth Am. Compl. ¶ 39.) 9 The Court finds that these vague allegations do not meet the plausibility standard 10 established in Ashcroft v. Iqbal, 556 U.S. 662 (2009). Plaintiff has merely provided labels and 11 conclusions in support of its claims against Early Warning. There is little to no factual detail 12 regarding precisely what Early Warning stated in their reports or who the reports were directed 13 to. 14 The vagueness of Plaintiff’s factual allegations with respect to Early Warning implicate 15 several issues with respect to defamation causes of action under California law. As set forth 16 above, two elements of a defamation claim are publication and an unprivileged communication. 17 Plaintiff’s failure to identify to whom Early Warning’s reports were published or communicated 18 to equates to a failure to establish either element. Since it is unclear who received Early 19 Warning’s reports, it is unclear if the reports were “published” or “unprivileged” as a matter of 20 law. 21 With respect to privileged communications, California Civil Code § 47 states that 22 privileged communications include “a communication, without malice, to a person interested 23 therein...who is requested by the person interested to give the information.” Since Plaintiff fails 24 to identify the recipient of Early Warning’s report, it is impossible for the Court to conclude that 25 the reports were unprivileged. However, it is worth noting that, presumably, Early Warning 26 provides security reports to clients such as banks regarding the trustworthiness of applicants or 27 employees. Therefore, Early Warning’s reports appear to fall within the privilege provided 28 under Section 47. 13 1 Moreover, the Court further notes that Plaintiff alleges no facts which plausibly support 2 the conclusion of malice on Early Warning’s part. The lack of apparent malice on Early 3 Warning’s part can be contrasted with the allegations of malice with respect to Bank of America. 4 Plaintiff alleged that Bank of America maliciously used Plaintiff as a scapegoat to cover-up Bank 5 of America’s practice of activating online customer accounts to boost their statistics for new 6 customer account activations. In contrast, Plaintiff alleges no plausible theory of malice on Early 7 Warning’s part. Plaintiff alleges that Early Warning’s business involved the identification of 8 security threats, but it does not follow that Early Warning would have any incentive to 9 incorrectly identify Plaintiff as a security threat via fraudulent reports. 10 Plaintiff also alleged that Bank of America’s personnel file for Plaintiff contained no 11 evidence of wrongdoing. However, it does not follow that Early Warning acted maliciously 12 simply because Bank of America lacked sufficient evidence of wrongdoing. Plaintiff alleges no 13 facts which show that Early Warning knew that Bank of America possessed no evidence of 14 wrongdoing. Plaintiff does allege that Early Warning’s reports were not based on any 15 “reasonable investigation.” However, the Court finds that the allegations do not support the 16 conclusion that Early Warning’s actions were “malicious” within the meaning of Section 47. 17 See Hailstone v. Martinez, 169 Cal. App. 4th 728, 740 (2008) (“...malice is established by a 18 showing that the publication was motivated by hatred or ill will toward the plaintiff or by a 19 showing that the defendant lacked reasonable grounds for belief in the truth of the publication 20 and therefore acted in reckless disregard of the plaintiff’s rights.”). Plaintiff’s allegation that 21 Early Warning failed to conduct a “reasonable investigation” does not establish malice, as there 22 is no indication that the failure to conduct an independent investigation constituted malice, 23 particularly where Early Warning was simply reporting on reports it received from Bank of 24 America. 25 Additionally, Plaintiff’s allegations regarding precisely what Early Warning published in 26 their reports are also vague. Plaintiff does not provide any specific allegations regarding the 27 content of the Early Warning reports, other than the vague allegation that Plaintiff “engaged in 28 internal security fraud” (Fifth Am. Compl. ¶ 21.) and that Early Warning authored a “Severity- 14 1 100” ranking. This is particularly significant, since if Early Warning merely published a report 2 that stated that Bank of America had accused Plaintiff of fraudulent activities, Early Warning 3 statements would not be false and therefore could not support a defamation action. 4 Finally, the Court notes that under California law, a claim for defamation must be based 5 upon a statement of fact which is “provably false.” Nygard, Inc. v. Uusi-Kerttula, 159 Cal. App. 6 4th 1027, 1048 (2008) (citing Seelig v. Infinity Broadcasting Corp., 97 Cal. App. 4th 798, 809 7 (2002)). “Whether challenged statements convey the requisite factual imputation is ordinarily a 8 question of law for the court.” Nygard, Inc., 159 Ca. App. 4th at 1049 (citing Seelig, 97 Cal. 9 App. 4th at 810). Plaintiff’s allegation that Early Warning published a report indicating that 10 Plaintiff presented a security risk appears to be a statement that is not provably false, as it 11 appears to be an opinion regarding Plaintiff’s trustworthiness. Plaintiff’s vague allegation that 12 Early Warning’s report states that Plaintiff “engaged in internal security fraud” is too vague to 13 determine whether the statement is provably false. It is unclear what “internal security fraud” 14 means. 15 Based upon the foregoing, the Court finds that Plaintiff fails to state a cognizable claim 16 for defamation against Early Warning. Plaintiff’s Negligent Infliction of Emotional Distress Claim 17 D. 18 Early Warning argues that Plaintiff’s Fourth Cause of Action for “negligent infliction of 19 emotional distress” fails to state a claim because “negligent infliction of emotional distress” is 20 not an independent tort under California law and is otherwise duplicative of Plaintiff’s 21 defamation claim, as Plaintiff merely alleged that Early Warning breached a duty to not publish 22 defamatory statements regarding Plaintiff. Plaintiff argues that he brings a claim for general 23 negligence, and that the “duty” at issue is Early Warning’s duty not to commit defamation 24 against Plaintiff. 25 Plaintiff cites no case which recognizes the existence of a legal duty, in the context of a 26 simple negligence cause of action, apart from Early Warning’s duty to not commit acts which 27 would give rise to a cause of action for defamation under California law. Put differently, 28 Plaintiff cites no case which recognizes a claim for negligence in factual circumstances that fall 15 1 short of a claim for defamation. Accordingly, Plaintiff’s negligence cause of action is 2 duplicative of his defamation cause of action and the Court recommends that the claim be 3 dismissed. Plaintiff’s Tortious Interference With Contract Claim 4 E. 5 Early Warning argues that Plaintiff fails to state a cognizable claim for tortious 6 interference with contract because, under California law, such a claim cannot lie if the contract is 7 “at-will.” In opposition, Plaintiff contends that he can state a claim for tortious interference with 8 prospective business advantage. In reply, Early Warning argues that Plaintiff cannot state a 9 claim for tortious interference with prospective business advantage because Plaintiff has not 10 plead “an independently wrongful act” by Early Warning. 11 “[I]n California, the law is settled that ‘a stranger to a contract may be liable in tort for 12 intentionally interfering with the performance of the contract.’” Reeves v. Hanlon, 33 Cal. 4th 13 1140, 1148 (2004) (citing Pacific Gas & Electric Co. v. Bear Stearns & Co., 50 Cal. 3d 1118, 14 1126 (1990)). “To prevail on a cause of action for intentional interference with contractual 15 relations, a plaintiff must plead and prove (1) the existence of a valid contract between the 16 plaintiff and a third party; (2) the defendant’s knowledge of that contract; (3) the defendant’s 17 intentional acts designed to induce a breach or disruption of the contractual relationship; (4) 18 actual breach or disruption of the contractual relationship; and (5) resulting damage.” Id. (citing 19 Pacific Gas & Electric Co., 50 Cal. 3d at 1126). Under California law, “interference with an 20 existing contract receives greater solicitude than does interference with prospective economic 21 advantage.” Quelimane Co. v. Stewart Title Guaranty Co., 19 Cal. 4th 26, 55 (1998) (citing 22 Della Penna v. Toyota Motor Sales, U.S.A., Inc., 11 Cal. 4th 376, 392 (1995)). Therefore, in a 23 claim for intentional interference with an existing contract, “it is not necessary that the 24 defendant’s conduct be wrongful apart from the interference with the contract itself.” Id. (citing 25 LiMandri v. Judkins, 52 Cal. App. 4th 326, 343 (1997)). 26 In Reeves, the California Supreme Court held that the tort of interference with contractual 27 relations may be predicated upon interference with an at-will contract. Reeves, 33 Cal. 4th at 28 1148. “A third party’s ‘interference with an at-will contract is actionable interference with the 16 1 contractual relationship’ because the contractual relationship is at the will of the parties, not at 2 the will of outsiders.” Id. (citing Pacific Gas & Electric Co., 50 Cal. 3d at 1127). However, the 3 California Supreme Court went on to state that “an interference with an at-will contract properly 4 is viewed as an interference with a prospective economic advantage....” Id. at 1152. Therefore, 5 “to recover for a defendant’s interference with an at-will employment relation, a plaintiff must 6 plead and prove that the defendant engaged in an independently wrongful act-i.e., an act 7 ‘proscribed by some constitutional, statutory, regulatory, common law, or other determinable 8 legal standard’” Id. (quoting Korea Supply Co. v. Lockheed Martin Corp., 29 Cal. 4th 1134, 9 1159 (2003)). 10 Presumably, Plaintiff alleges that Early Warning engaged in an independently wrongful 11 act, namely defamation. However, since Plaintiff fails to allege sufficient facts to support a 12 claim for defamation, the Court finds that Plaintiff’s intentional interference claim fails for the 13 same reason. Plaintiff’s Fair Credit Reporting Act Claim 14 F. 15 Early Warning argues that Plaintiff’s claim under the Fair Credit Reporting Act 16 (“FCRA”) fails because the FCRA does not apply to Early Warning. 17 Plaintiff’s seventh cause of action alleged a violation of 15 U.S.C. § 1681s-2, which 18 states, in pertinent part: 19 20 21 22 23 24 25 26 27 28 (a) Duty of furnishers of information to provide accurate information (1) Prohibition (A) Reporting information with actual knowledge of errors A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate. (B) Reporting information after notice and confirmation of errors A person shall not furnish information relating to a consumer to any consumer reporting agency if-(i) the person has been notified by the consumer, at the address specified by the person for such notices, that specific information is inaccurate; and (ii) the information is, in fact, inaccurate. (C) No address requirement A person who clearly and conspicuously specifies to the consumer an address for notices referred to in subparagraph (B) shall not be subject to subparagraph (A); however, nothing in subparagraph (B) shall require a person to specify such an address. 17 (D) Definition For purposes of subparagraph (A), the term “reasonable cause to believe that the information is inaccurate” means having specific knowledge, other than solely allegations by the consumer, that would cause a reasonable person to have substantial doubts about the accuracy of the information. 1 2 3 4 5 Plaintiff contends that a “furnisher” is a source that provides credit information to a credit 6 reporting agency, citing Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 7 2009). However, the Fifth Amended Complaint contains no factual allegations that Early 8 Warning was a source that provides credit information to a credit reporting agency. 9 Accordingly, Plaintiff’s claim under Section 1681s-2 fails. 10 Plaintiff alternatively argues that Early Warning is a credit reporting agency or consumer 11 reporting agency that can be liable under 15 U.S.C. § 1681e for providing a “technically 12 accurate” report that “misleads” third parties. Plaintiff also argues that Early Warning could be 13 liable under Section 1681i for failing to conduct a reasonable investigation regarding disputed 14 information in Plaintiff’s record. However, the Fifth Amended Complaint does not raise any 15 claims under Section 1681e or 1681i and, therefore, Plaintiff’s argument is immaterial. 16 Moreover, “consumer reporting agency” is defined as: ...any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports. 17 18 19 20 21 15 U.S.C. § 1681a(f). The Fifth Amended Complaint contains no factual allegations that Early 22 Warning is a “consumer reporting agency” within the meaning of the Fair Credit Reporting Act. 23 Accordingly, Plaintiff’s claim would fail even if the Fifth Amended Complaint could be 24 construed as raising a claim under Section 1681e or Section 1681i. Plaintiff’s Requests for Equitable Relief 25 G. 26 Early Warning argues that Plaintiff is not entitled to equitable relief under the Fair Credit 27 Reporting Act. In response, Plaintiff does not dispute Early Warning’s contention and instead 28 argues that equitable relief is appropriate under Plaintiff’s other causes of action. Since, for the 18 1 reasons discussed above, the Court finds that Plaintiff fails to state any cognizable claims for 2 relief, Plaintiff’s request equitable relief will be dismissed as well. 3 H. 4 “Generally, Rule 15 advises the court that ‘leave [to amend the complaint] shall be freely Leave to Amend 5 given when justice so requires.’ This policy is ‘to be applied with extreme liberality.’” 6 Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th Cir. 2003) (quoting Owens v. 7 Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001)). The factors the Court 8 should consider in deciding whether to grant leave to amend include undue delay, bad faith or 9 dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments 10 previously allowed, undue prejudice to the opposing party by virtue of allowance of the 11 amendment, and futility of the amendment. Id. at 1052. 12 In this case, the Court finds undue delay, bad faith and dilatory motive on the part of 13 Plaintiff. Incredibly, this case has been pending in this Court since May 2012 (and was filed in 14 state court in February 2012) and has not moved past the pleading stage despite the six 15 complaints filed by Plaintiff. From the Court’s review of the six complaints, little to no progress 16 was made in discovery or in the prosecution of these claims, as Plaintiff the material facts 17 alleged in the six complaints has changed very little over the years. Moreover, on two prior 18 occasions, Plaintiff filed voluntary dismissals of the claims against Early Warning, only to 19 inexplicably revive those claims later on. The third and fourth amended complaints raised no 20 claims against Early Warning, yet Plaintiff dragged Early Warning back into this action in the 21 Fifth Amended Complaint, after Early Warning was absent from litigation for approximately ten 22 months. 23 Moreover, any further leave to amend appears to be futile. As discussed above, 24 Plaintiff’s claims are barred under Rule 41(a) because Plaintiff voluntarily dismissed his claims 25 against Early Warning on two prior occasions and the second occasion operated as a dismissal on 26 the merits. Moreover, Plaintiff’s claims appear to be barred by the statute of limitations. 27 Based upon Plaintiff’s dilatory conduct, undue delay and the futility of amendment, the 28 Court finds that Plaintiff should not be given leave to amend its claims against Early Warning. 19 1 IV. 2 CONCLUSION AND RECOMMENDATION Based upon the foregoing, the Court finds that the claims against Early Warning in the 3 4 Fifth Amended Complaint are barred by the statute of limitations. The Court further finds that 5 Plaintiff fails to state any cognizable claims against Early Warning. Finally, the Court finds that 6 leave to amend should be denied due to Plaintiff’s dilatory conduct, undue delay and bad faith 7 conduct as well as the futility of any amendment. 8 Accordingly, it is HEREBY RECOMMENDED that: 9 1. Early Warning’s motion to dismiss be GRANTED; and 10 2. Plaintiff’s claims against Early Warning be DISMISSED without leave to amend. 11 These findings and recommendations are submitted to the district judge assigned to this 12 action, pursuant to 28 U.S.C. § 636(b)(1)(B) and this Court’s Local Rule 304. Within fourteen 13 (14) days of service of this recommendation, any party may file written objections to these 14 findings and recommendations with the Court and serve a copy on all parties. Such a document 15 should be captioned “Objections to Magistrate Judge’s Findings and Recommendations.” The 16 district judge will review the magistrate judge’s findings and recommendations pursuant to 28 17 U.S.C. § 636(b)(1)(C). The parties are advised that failure to file objections within the specified 18 time may result in the waiver of rights on appeal. Wilkerson v. Wheeler, __ F.3d __, __, No. 1119 17911, 2014 WL 6435497, at *3 (9th Cir. Nov. 18, 2014) (citing Baxter v. Sullivan, 923 F.2d 20 1391, 1394 (9th Cir. 1991)). 21 IT IS SO ORDERED. 22 23 Dated: December 18, 2014 UNITED STATES MAGISTRATE JUDGE 24 25 26 27 28 20
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
