DOE 1 et al v. Uber Technologies, Inc., No. 3:2015cv04670 - Document 68 (N.D. Cal. 2016)

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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 JANE DOE 1, et al., Case No. 15-cv-04670-SI Plaintiffs, 8 v. 9 10 UBER TECHNOLOGIES, INC., Defendant. ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS Re: Dkt. Nos. 49, 52 United States District Court Northern District of California 11 12 13 Now before the Court is defendant Uber Technologies, Inc.’s motion to dismiss the 14 Amended Complaint. Docket No. 49. This matter came on for hearing on April 1, 2016. For the 15 reasons set forth below, the Court hereby GRANTS in part and DENIES in part defendant’s 16 motion. 17 BACKGROUND 18 19 Plaintiffs Jane Doe 1 and Jane Doe 2 bring this tort suit against Uber Technologies, Inc. 20 (“Uber”) for sexual assaults that plaintiffs allege they suffered at the hands of Uber drivers. The 21 following allegations are drawn from plaintiffs’ Amended Complaint. 22 Since 2010, Uber has operated as a “transportation network company.” Docket No. 46, 23 Amended Complaint (“AC”) ¶ 23. Individuals download Uber’s smartphone application and then 24 use the “App” to make a transportation request. Id. ¶¶ 1, 23. “They are then matched with an 25 Uber driver who picks them up and drives them to a destination. App users must pay for the ride 26 through the App with a credit card. Uber pays the driver a share of the fare collected, and retains 27 the remainder.” Id. ¶ 23. 28 Uber solicits and retains non-professional drivers to provide the car rides that customers 1 order through the Uber App. Id. ¶ 25. One who wishes to drive for Uber applies online and 2 uploads photos of a driver’s license, vehicle registration, and proof of insurance. Id. ¶53. Uber 3 then performs a background check through a third party company. Id. ¶¶ 58, 66. This check runs 4 the driver’s social security number through a database, capturing information dating back seven 5 years. Id. ¶¶ 59, 66. Once Uber approves a driver, that driver is available to the public to provide 6 transportation services through the App. Id. ¶ 25. Neither drivers nor riders pay a fee to download 7 the Uber App. Id. ¶ 29. “Uber’s sole source of revenue is from charges to riders for trips taken.” 8 Id. In February 2015, in Boston, Massachusetts, Doe 1 and her friends used the Uber App to 10 arrange a car ride after they had gone to dinner and then to a party. Id. ¶¶ 82-84. Uber driver 11 United States District Court Northern District of California 9 Abderrahim Dakiri confirmed that he was on his way, and picked up Doe 1 and her friends. Id. 12 ¶¶ 11, 85. After Dakiri dropped off Doe 1’s friends first, Doe 1 gave Dakiri the address of her 13 destination. Id. ¶ 86. Dakiri then began to sexually assault Doe 1. Id. ¶¶ 88-92. Dakiri did not 14 take a direct route to Doe 1’s destination but drove more than 15 minutes off route “in order to 15 increase his opportunity to sexually assault her.” Id. ¶ 93. Dakiri parked the car in a remote area 16 and continued to sexually assault Doe 1 until she was able to unlock the car door and run away. 17 Id. ¶¶ 96-97. 18 In August 2015, in Charleston, South Carolina, Doe 2 and a group of friends got a ride 19 from Uber driver Patrick Aiello, after Doe 2’s friend arranged the ride using Uber’s App. Id. 20 ¶¶ 12, 111-114. Aiello drove the group to a bar. Id. ¶ 119. He commented that he would like to 21 give the group a ride home, and someone in the group asked Aiello if he would agree to pick them 22 up later. Id. ¶¶ 122. The group later saw Aiello enter that same bar and observed him sitting at 23 the bar during the night. Id. ¶¶ 123, 125. 24 At the end of the evening, Aiello drove Doe 2 and a friend from the group back to her 25 friend’s apartment. Id. ¶ 128. During the ride, Doe 2 mentioned that she could not find her phone 26 and wanted to look for it at the apartment. Id. ¶ 129. Doe 2 “intended to collect her phone from 27 her friend’s apartment and walk the two blocks home to her apartment.” Id. ¶ 130. After looking 28 for her phone for five to ten minutes, Doe 2 left for her own apartment. Id. ¶ 131. 2 “When Ms. Doe 2 went outside, Aiello said he would drive her home.” Id. ¶ 132. “[S]till 2 believing that Aiello was acting in his capacity as an Uber driver,” Doe 2 got into the car and gave 3 Aiello her home address. Id. ¶ 133. Shortly thereafter, Doe 2 realized that Aiello was driving the 4 wrong way. Id. ¶ 134. When she pointed this out, Aiello asked, “How are you going to pay me?” 5 and told Doe 2 that she owed him a blow job. Id. ¶¶ 135-136. Doe 2 tried to get out of the car, but 6 Aiello had locked the doors. Id. ¶ 137. Aiello drove the car to a remote parking lot off a highway 7 area where he “proceeded to viciously rape her and threaten her with harm multiple times.” Id. 8 ¶¶ 138-139. Afterwards, Doe 2 “was able to get onto the highway, crossed to the median, and 9 then started running alongside the highway away from the parking lot.” Id. ¶ 140. A car hit Doe 10 2’s arm while she was waving for help. Id. ¶ 141. The car then stopped and called 911. Id. 11 United States District Court Northern District of California 1 Police took Doe 2 to the hospital, where she became suicidal and was transferred to a psychiatric 12 unit for three days. Id. ¶¶ 141, 143. 13 The Amended Complaint alleges that Uber’s background check system dates back seven 14 years. Id. ¶¶ 58-59, 66. After her assault, Doe 1 learned that Dakiri had resided in the United 15 States for less than three years. Id. ¶ 100. Aiello had a previous domestic violence arrest, 16 resulting in an assault conviction in April 2003. Id. ¶¶ 115, 117. Aiello applied to become a 17 driver for Uber in 2015. Id. ¶¶ 117-118. 18 On October 8, 2015, Doe 1 and Doe 2 filed this lawsuit against Uber. Docket No. 1. The 19 Court has jurisdiction based on diversity jurisdiction under 28 U.S.C. § 1332. Id. ¶ 15. Uber 20 moved to dismiss the complaint on December 3, 2015. Docket No. 34. On January 20, 2016, 21 plaintiffs filed their Amended Complaint, thereby mooting Uber’s motion. Docket Nos. 46, 48. 22 In their Amended Complaint, plaintiffs bring six claims for relief: (1) negligence and negligent 23 hiring, supervision, and retention; (2) fraud; (3) battery; (4) assault; (5) false imprisonment; and 24 (6) intentional infliction of emotional distress. 1 AC ¶¶ 248-300. Plaintiffs bring claims 3 through 25 6 against Uber under a theory of respondeat superior. Id. ¶¶ 269, 276, 284, 291. Plaintiffs seek 26 27 28 1 Plaintiffs include language under the IIED claim that more properly supports a claim for negligence. See AC ¶¶ 296-298. At the hearing, plaintiffs confirmed that they bring this claim under a theory of intentional infliction of emotional distress. 3 1 declaratory and injunctive relief, damages (including punitive damages), and attorneys’ fees and 2 costs. Id. at 54-55. 3 Uber now moves to dismiss the Amended Complaint for failure to state a claim under 4 Federal Rule of Civil Procedure 12(b)(6). Docket No. 49, Motion to Dismiss (“Mot.”). Uber 5 argues that plaintiffs have failed to state a claim for relief as to all six of their claims. Uber asks 6 that the Court dismiss plaintiffs’ prayer for punitive damages. Uber also seeks to seal an exhibit 7 filed in support of its motion. Docket No. 52. 8 Following the hearing on April 1, 2016, Uber sought leave to file a supplemental brief. 9 Docket No. 61. The Court granted both parties leave to file supplemental briefs, which they filed 10 on April 8, 2016. Docket Nos. 62, 66, 67. United States District Court Northern District of California 11 LEGAL STANDARD 12 13 Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint 14 if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to 15 dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its 16 face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This “facial plausibility” standard 17 requires the plaintiff to allege facts that add up to “more than a sheer possibility that a defendant 18 has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While courts do not require 19 “heightened fact pleading of specifics,” a plaintiff must allege facts sufficient to “raise a right to 20 relief above the speculative level.” Twombly, 550 U.S. at 555, 570. 21 In deciding whether a plaintiff has stated a claim upon which relief can be granted, the 22 court must assume that the plaintiff’s allegations are true and must draw all reasonable inferences 23 in the plaintiff’s favor. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). 24 However, the court is not required to “accept as true allegations that are merely conclusory, 25 unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 26 F.3d 1049, 1055 (9th Cir. 2008). 27 If the court dismisses the complaint, it must then decide whether to grant leave to amend. 28 The Ninth Circuit has “repeatedly held that a district court should grant leave to amend even if no 4 1 request to amend the pleading was made, unless it determines that the pleading could not possibly 2 be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) 3 (citations and internal quotation marks omitted). 4 DISCUSSION 5 6 I. Claims Relying on Respondeat Superior Theory Uber urges the Court to dismiss plaintiffs’ claims 3 through 6, which rely on a theory of 8 respondeat superior. Uber argues that plaintiffs have not alleged sufficient facts to establish that 9 there is an employment relationship between Uber and drivers Dakiri and Aiello. Mot. at 4. Uber 10 alternatively argues that it cannot be vicariously liable because, it claims, sexual assault falls 11 United States District Court Northern District of California 7 outside the scope of an employee’s duties. Id. at 9. Uber also disputes plaintiffs’ assertion that 12 Uber is a “common carrier.” Id. at 13. 13 14 A. Employer-Employee Relationship 15 Under California law, “an employer may be held vicariously liable for torts committed by 16 an employee within the scope of employment.” Mary M. v. City of Los Angeles, 54 Cal. 3d 202, 17 208 (1991) (citation omitted). The parties dispute whether Uber drivers are employees of Uber; 18 plaintiffs allege that they are and defendants argue that they are not employees but are independent 19 contractors. See, e.g., AC ¶¶ 36-51; Mot. at 6; Docket No. 55, Reply at 4. Whether an individual 20 is classified as an employee or as an independent contractor depends on “whether the person to 21 whom service is rendered has the right to control the manner and means of accomplishing the 22 result desired.” S.G. Borello & Sons, Inc. v. Dep’t of Indus. Relations, 48 Cal. 3d 341, 350 (1989) 23 (citations omitted); see also Bradley v. Cal. Dep’t of Corrs. and Rehab., 158 Cal. App. 4th 1612, 24 1626 (2008) (“The prevailing view is to consider the totality of the circumstances, reflecting upon 25 the nature of the work relationship between the parties, and placing emphasis on the control 26 exercised by the employer over the employee’s performance of employment duties.”) (citing 27 Vernon v. State, 116 Cal. App. 4th 114, 124-25 (2004)). 28 5 1 While control is the key factor, California courts have recognized other indicia as relevant 2 to defining employment status. Derived from the Restatement (Second) of Agency § 220,2 these 3 considerations include: 4 9 (a) whether the one performing services is engaged in a distinct occupation or business; (b) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the principal or by a specialist without supervision; (c) the skill required in the particular occupation; (d) whether the principal or the worker supplies the instrumentalities, tools, and the place of work for the person doing the work; (e) the length of time for which the services are to be performed; (f) the method of payment, whether by the time or by the job; (g) whether or not the work is a part of the regular business of the principal; and (h) whether or not the parties believe they are creating the relationship of employer-employee. 10 S.G. Borello, 48 Cal. 3d at 351 (citations omitted). Additionally, “[s]trong evidence in support of 11 an employment relationship is the right to discharge at will, without cause.” 12 (citations omitted). “The parties’ label is not dispositive and will be ignored if their actual conduct 13 establishes a different relationship.” Estrada v. FedEx Ground Package Sys., Inc., 154 Cal. App. 14 4th 1, 10-11 (2007). 5 6 7 United States District Court Northern District of California 8 Id. at 350-51 15 As this multiple-factor approach suggests, a person's status as an employee or independent 16 contractor is a question of fact, but may be determined as a matter of law “if from all the facts only 17 a single inference and one conclusion may be drawn . . . .” Borello, 48 Cal. 3d at 367 (citations 18 omitted); see also Serv. Employees Int’l Union, 225 Cal. App. 3d 761, 771 (1990) (“[T]he 19 question whether one is an independent contractor, agent or employee is largely one of fact 20 depending on all the circumstances of the relations of the parties.”) (quoting Housewright v. 21 Pacific Far East Line, Inc., 229 Cal. App. 2d 259, 265 (1964)). 22 Here, plaintiffs have alleged sufficient facts to claim plausibly that an employment 23 relationship exists. In support of this assertion, plaintiffs have alleged that Uber sets fare prices 24 without driver input and that drivers may not negotiate fares. AC ¶ 39. If a driver takes a 25 circuitous route, Uber may modify the charges to the customer. Id. ¶ 40. Uber retains control 26 2 27 28 Although the Restatement (Second) of Agency has now been superseded by the Restatement (Third) of Agency, the factors continue to be used by the courts and remain largely identical, save replacing the terms “master” and “servant” with “employer” and “employee.” See Schmidt v. Burlington N. & Santa Fe Ry. Co., 605 F.3d 686, 690 n.3 (9th Cir. 2010). 6 1 over customer contact information. Id. ¶ 42. Uber’s business model depends upon having a large 2 pool of non-professional drivers. Id. ¶ 25. There are no apparent specialized skills needed to 3 drive for Uber. Id. ¶¶ 36-38, 53-66. Uber retains the right to terminate drivers at will. Id. ¶ 43. 4 Uber also controls various aspects of the manner and means by which drivers may offer 5 rides through the Uber App. Among these, plaintiffs have alleged that Uber requires drivers to 6 accept all ride requests when logged into the App or face potential discipline. Id. ¶ 44. The 7 Amended Complaint also asserts that Uber requires drivers to: 8 dress professionally; send the customer who has ordered a ride a text message when the driver is 1-2 minutes away from the pickup location; keep their radios either off or on “soft jazz or NPR;” open the door for the customer; and pick up the customer on the correct side of the street where the customer is standing. 9 10 United States District Court Northern District of California 11 Id. ¶ 45. 12 Certain factors, as alleged, support Uber’s assertion that drivers are independent 13 contractors, though not enough to convert the question into a matter of law. See Borello, 48 Cal. 14 3d at 367. These include that the drivers generally do not receive a salary but are paid by the ride 15 and that the drivers supply their own cars and car insurance. AC ¶¶ 41, 50-51. Even these factors, 16 however, are not necessarily dispositive. See Estrada, 154 Cal. App. at 1, 5 (finding drivers for 17 FedEx to be employees even where drivers supplied their own trucks and maintained their own car 18 insurance);3 see also AC ¶¶ 47-48 (alleging that in certain cities Uber drivers may receive a 19 guaranteed minimum rate, “tantamount to a salary,” and that in January 2016 Uber announced that 20 drivers will have guaranteed earnings, thereby—in plaintiffs’ view—giving “Uber drivers 21 everywhere . . . essentially guaranteed salaries . . . .”). It matters not whether Uber’s licensing 22 agreements label drivers as independent contractors, if their conduct suggests otherwise. See 23 Estrada, 154 Cal. App. at 10-11 (citations omitted); Mot. at 6-7. 24 25 26 27 28 3 Uber cites a similar case for the opposite proposition, but, as discussed further infra, Uber draws from the dissenting and not the majority opinion. See Mot. at 9 (citing Elijahjuan v. Super. Ct., 210 Cal. App. 4th 15, 31-32 (2012)). 7 1 Other judges in this district have ruled likewise in similar cases. In O’Connor v. Uber 2 Technologies, Inc., Judge Chen found that plaintiff Uber drivers had sufficiently alleged the 3 existence of an employment relationship.4 The complaint in that case alleged that drivers: 4 are required to follow a litany of detailed requirements imposed on them by Uber and they are graded, and are subject to termination, based on their failure to adhere to these requirements (such as rules regarding their conduct with customers, the cleanliness of their vehicles, their timeliness in picking up customers and taking them to their destination, what they are allowed to say to customers, etc.)[.] 5 6 7 O’Connor v. Uber Techs., Inc., No. 13-cv-3826, 2013 WL 6354534, at *6 (N.D. Cal. Dec. 5, 9 2013). In Cotter v. Lyft, Inc., Judge Chhabria denied a summary judgment motion brought by 10 software app operator Lyft. Judge Chhabria refused to find as a matter of law that drivers who 11 United States District Court Northern District of California 8 used the Lyft app were independent contractors, where the evidence showed that “Lyft retains a 12 good deal of control over how [the drivers] proceed.” Cotter v. Lyft, Inc., 60 F. Supp. 3d 1067, 13 1078 (N.D. Cal. 2015). This included rules such as not talking on the phone with passengers 14 present, not requesting tips, and not asking for a passenger’s contact information, with Lyft 15 reserving the right to penalize or terminate drivers who did not comply with the rules. Id. at 1078- 16 79. 17 It may be that facts will ultimately be revealed that disprove plaintiffs’ allegations or that 18 tilt the scales toward a finding that Uber drivers are independent contractors. However, taking the 19 allegations in the Amended Complaint as true, plaintiffs have alleged sufficient facts that an 20 employment relationship may plausibly exist. 21 22 B. Acts within the Scope of Employment 23 Uber argues in the alternative that it cannot be vicariously liable for Aiello and Dakiri’s 24 acts because “sudden sexual assaults by employees are outside the scope of an employee’s duties 25 and cannot support employer liability.” Mot. at 9. This is not necessarily so under California law. 26 27 28 4 The Court notes that the plaintiffs have filed a motion for preliminary approval of a class action settlement in that case. O’Connor, No. 13-cv-3826, Docket No. 518. The hearing on the motion is set for June 2, 2016. Id. 8 “For the doctrine of respondeat superior to apply, the plaintiff must prove that the 2 employee’s tortious conduct was committed within the scope of employment.” Mary M., 54 Cal. 3 3d at 209. This analysis asks whether “in the context of the particular enterprise an employee’s 4 conduct is not so unusual or startling that it would seem unfair to include the loss resulting from it 5 among other costs of the employer’s business.” Id. (quoting Perez v. Van Groningen & Sons, Inc., 6 41 Cal. 3d 962, 968 (1986)). This “foreseeability” analysis looks not to “statistical frequency, but 7 [to the] relationship between the nature of the work involved and the type of tort committed.” 8 Lisa M. v. Henry Mayo Newhall Mem’l Hosp., 12 Cal. 4th 291, 302 (1995). As guidance, courts 9 in California consult three policy goals underlying the respondeat superior doctrine: “preventing 10 future injuries, assuring compensation to victims, and spreading the losses caused by an enterprise 11 United States District Court Northern District of California 1 equitably . . . .” Id. at 304. Whether an employee was acting within the scope of employment is a 12 question of fact, unless “the facts are undisputed and no conflicting inferences are possible.” 13 Mary M., 54 Cal. 3d at 213 (quoting Perez, 41 Cal. 3d at 968). 14 With respect to sexual misconduct by an employee, the California Supreme Court has not 15 declared, as Uber would have it, that such acts always bar vicarious liability on the part of the 16 employer. See, e.g., Lisa M., 12 Cal. 4th at 297 n.3, 300 (noting that causal nexus to the 17 employee’s work is required, that such acts are not per se unforeseeable, and that California has 18 abandoned the “motive-benefit” test that would preclude vicarious liability for most sexual 19 assaults). In Mary M., the California Supreme Court held the city of Los Angeles liable when a 20 police officer, after detaining a woman during a traffic stop, followed the woman to her home and 21 raped her. Mary M., 54 Cal. 3d at 207. Several years later, however, in Lisa M., the court found 22 that an ultrasound technician was not acting within the scope of his employment when he molested 23 a patient during an examination. Distinguishing its prior holding in Mary M., the court explained 24 that the ultrasound technician “had no legal or coercive authority over plaintiff.” Lisa M., 12 Cal. 25 4th at 303. Rather, “[h]is subsequent battery of the patient was independent of the narrow purpose 26 for which plaintiff was asked to trust him.” Id. at 304. In Xue Lu v. Powell, 621 F.3d 944 (9th 27 Cir. 2010), the Ninth Circuit navigated the tension between the decisions in Mary M. and Lisa M., 28 explaining that “[t]he liability of a private employer in California does not turn on the 9 1 vulnerability of the victim but on the extent to which the tort of the employee is incident to his 2 employment.” Xue Lu, 621 F.3d at 949. After assessing questions of foreseeability and the policy 3 goals underlying respondeat superior, the appeals court found that an asylum officer was acting 4 within the scope of his employment when he molested applicants for asylum. See id. at 947-48. In this case, which is only at the pleading stage, foreseeability and policy rationales weigh 6 in favor of allowing the complaint to move forward on the scope of employment question. It may 7 be that sexual assault by a taxi driver (or a taxi-like driver, as the case may be) “is not so unusual 8 or startling that it would seem unfair to include the loss resulting from it among other costs of the 9 employer’s business.” See Lisa M., 12 Cal. 4th at 299 (citations omitted). Assaults of this nature 10 are exactly why customers would expect taxi companies to perform background checks of their 11 United States District Court Northern District of California 5 drivers. 12 superior, including 13 Unlike in cases of sexual harassment, for instance, plaintiffs in this case do not have separate 14 remedies under Title VII or California’s Fair Employment and Housing Act. See Farmers Ins. 15 Group v. County of Santa Clara, 11 Cal. 4th 992, 1019-1020 (1995) (finding on summary 16 judgment that sexual harassment was outside scope of employment, such that harasser could not 17 seek indemnity from the county as his employer). Arguably, though perhaps more tenuously, it is 18 possible that allowing liability would more equitably spread the losses caused by the enterprise of 19 shuttling customers in private cars. Holding Uber liable could also forward the underlying policy goals of respondeat prevention of future injuries and assurance of compensation to victims. 20 Uber singles out the allegations against driver Aiello in particular, arguing that plaintiffs 21 have failed to allege that Aiello was using the Uber App at the time that he assaulted Doe 2 and 22 therefore that he can’t have been acting within the scope of employment. Mot. at 11-13. The 23 Amended Complaint states that Doe 2’s friend used the Uber App to arrange the initial pick-up 24 from Aiello to a bar but is silent as to whether the App was used to summon Aiello at the end of 25 the night. See AC ¶¶ 113-114. The Amended Complaint alleges that someone in the group asked 26 Aiello at the end of the initial car ride whether he would agree to pick them up later. Id. ¶ 122. 27 Plaintiffs also allege that Doe 2 got back into Aiello’s car at the end of the night, after he dropped 28 off her friend, “still believing that Aiello was acting in his capacity as an Uber driver . . . .” Id. ¶¶ 10 1 128-133. It is no longer a principle under California law that an employer may be vicariously liable 3 for an employee’s assault only when the assault was committed to further the interests of the 4 employer. Lisa M., 12 Cal. 4th at 297 n. 3 (“[T]he ‘motive-benefit’ test, which would preclude 5 respondeat superior liability for most sexual assaults, has been ‘abandoned’ in California.”) (citing 6 LeGrand & Leonard, Civil Suits for Sexual Assault: Compensating Rape Victims, 8 Golden Gate 7 L. Rev. 479, 507 (1979)). The same principles regarding prevention of future injuries, assurance 8 of compensation to victims, and equitably spreading the losses caused by Uber’s business model 9 apply with regard to Aiello. A finder of fact could determine that Aiello was acting within the 10 scope of his employment where he was summoned using the Uber App, even if rides were offered 11 United States District Court Northern District of California 2 and received later that night without the use of the App. Taking the allegations in the light most 12 favorable to plaintiffs, as is required at this stage of the case, it is plausible that the rides Doe 2 13 took at the end of the night came about only because of Aiello’s affiliation with Uber. 14 In sum, the Court cannot determine -- as Uber effectively argues -- that as a matter of law 15 sexual assault by Uber drivers is always outside the scope of employment, if the drivers are in fact 16 ultimately found to be employees. The California Supreme Court has left this question open. See 17 Mary M., 54 Cal. 3d at 218 n.11. Like a police officer who rapes a detained woman, an employee 18 who throws a hammer at a fellow worker in a fit of irritation, or an asylum officer who abuses his 19 role to corner female immigrants and molest them, sexual assault by an Uber driver may be 20 incidental to the operation of its business. See Xue Lu, 621 F.3d at 948-49 (citing, inter alia, Carr 21 v. Wm. C. Crowell Co., 28 Cal. 2d 652 (1946)). At the very least, the pleadings present a close 22 enough call that the Court finds no reason to deviate from the ordinary rule that “the determination 23 whether an employee has acted within the scope of employment presents a question of fact . . . .” 24 See Mary M., 54 Cal. 3d at 213. For the purpose of surviving a motion to dismiss, plaintiffs have 25 plausibly alleged that drivers Dakiri and Aiello were acting within the scope of employment when 26 they assaulted plaintiffs. 27 28 11 1 C. Common Carrier 2 Plaintiffs seek to hold Uber liable as a common carrier with respect to claims 3 through 6. 3 AC ¶¶ 269, 276, 284, 291. They state that “[a]s a common carrier, Defendant is vicariously liable 4 for its employees’ and agents’ intentional and negligent torts, whether or not such acts were 5 committed within the scope of employment.” Id. For the purposes of tort claims, California law defines “common carrier” as follows: 7 “Every one who offers to the public to carry persons, property, or messages, excepting only 8 telegraphic messages, is a common carrier of whatever he thus offers to carry.” Cal. Civ. Code 9 § 2168; see also Squaw Valley Ski Corp. v. Super. Ct., 2 Cal. App. 4th 1499, 1507 (1992). 10 “Hence, a common carrier within the meaning of Civil Code section 2168 is any entity which 11 United States District Court Northern District of California 6 holds itself out to the public generally and indifferently to transport goods or persons from place to 12 place for profit.” Id. at 1508. 13 In their briefs and at the hearing, Uber has argued that it is not a common carrier but that it 14 is a “broker” of transportation services. The Court is not persuaded by this argument. Uber cites 15 to two cases in support of this proposition. One involved a defendant which was found, on 16 summary judgment, not to be a common carrier but to be a property broker. Reply at 7-8 (citing 17 Chubb Group v. H.A. Transp. Sys., Inc., 243 F. Supp. 2d 1064, 1070 (C.D. Cal. 2002)). There, the 18 broker had contracted with a transportation company, which had then subcontracted with a 19 trucking company, for the transportation of cigarettes; the cigarettes were eventually stolen from a 20 truck while the truck was parked at a restaurant. Chubb Group, 243 F. Supp. 2d at 1066-67. 21 Factually, this little resembles the situation at hand. Uber also argues that it is a transportation 22 broker by presenting the dissent of a California Court of Appeal decision as the majority holding. 23 See Mot. at 9 (citing Elijahjuan v. Superior Court, 210 Cal. App. 4th 15, 31-32 (2012)). The 24 majority opinion stated, “The sole substantive issue on appeal is whether the parties agreed to 25 arbitrate their dispute.” Uber’s reliance on this case is therefore misplaced. See also O’Connor, 26 82 F. Supp. 3d at 1137-38, 1141-45 (granting summary judgment against Uber over Uber’s 27 arguments that it was “a ‘technology company,’ not a ‘transportation company’”). 28 12 Uber also argues that a common carrier finding “would merely . . . impose a heightened 2 duty of care; it would not displace the rule that an employer cannot be liable for employee 3 misconduct outside the scope of employment.” Mot. at 13. Many of the cases that Uber cites rely 4 on a negligence theory. 5 common carrier bus company owed a higher degree of care to its passengers and was not immune 6 from liability when passengers injured other passengers on the bus. See Lopez v. S. California 7 Rapid Transit Dist., 40 Cal. 3d 780, 783 (1985). In San Francisco v. Superior Court, the Court of 8 Appeal noted that a common carrier “must use the utmost care and diligence for [the] safe carriage 9 [of its passengers].” City & Cty. of San Francisco v. Super. Ct., 31 Cal. App. 4th 45, 47-49 10 (1994). The reason the bus company was not held liable for a passenger’s attack in that case was 11 United States District Court Northern District of California 1 because no amount of care or diligence by the bus driver could have prevented the sudden 12 stabbing of a passenger, when the assailant gave “no warning or cause for alarm” until he pulled 13 out a knife seconds beforehand. Id. In Lopez, for instance, the California Supreme Court held that the 14 A different analysis is required when the assailant is the common carrier’s own employee. 15 In Berger v. Southern Pacific Co., 144 Cal. App. 2d 1 (1956), the California Court of Appeal 16 found that the jury was properly instructed that the Pullman Company could be liable for the rape 17 that its porter committed upon a passenger. Berger, 144 Cal. App. 2d at 9. Quoting from a 18 treatise, the court explained, “The liability of a common carrier for an assault by one of its 19 employees on a passenger is not dependent on the question as to whether the employee was acting 20 within the scope of his authority or in the line of his duty, but is based upon its broad duty as a 21 common carrier to protect its passengers from assault.” Id. at 7. 22 When given an opportunity to brief the matter further, Uber argued the Berger decision "is 23 at odds with Supreme Court authority, ignores comparable cases decided before it, and violates 24 modern tort principles.” Docket No. 66, Def.’s Suppl. Br. at 1. However, Uber relied largely on 25 cases addressing negligence or passenger-on-passenger assault, and on a case decided by the New 26 York Court of Appeals. These cases simply are not analogous to the present facts, where plaintiffs 27 have alleged that an employee intentionally sexually assaulted a passenger. 28 13 1 Plaintiffs have alleged sufficient facts to plausibly claim that Uber is a common carrier. 2 Looking beyond any conclusory assertions, plaintiffs have alleged critical underlying facts: that 3 Uber’s services are available to the general public and that Uber charges customers standardized 4 fees for car rides. AC ¶ 24. Though plaintiffs allege that drivers may have their driving privileges 5 revoked, plaintiffs do not allege, nor does defendant counter, that an Uber customer may lose 6 riding privileges. See AC ¶ 43. Plaintiffs’ allegations support the claim that Uber “offers to the 7 public to carry persons,” thereby bringing it within California’s definition of common carrier for 8 tort purposes. See Cal. Civ. Code § 2168; see also Squaw Valley, 2 Cal. App. 4th at 1508 (finding 9 defendant to be a common carrier because it “indiscriminately offers its . . . chair lift to the public 10 to carry skiers at a fixed rate”). United States District Court Northern District of California 11 Plaintiffs may, or may not, ultimately prevail on their vicarious liability claims. As Judge 12 Chhabria noted when analyzing the claims of Lyft drivers, “The test the California courts have 13 developed over the 20th Century for classifying workers isn’t very helpful in addressing this 21st 14 Century problem.” Cotter, 60 F. Supp. 3d at 1081. To the extent that these are close questions, 15 the Court finds that they are more appropriately resolved at a later stage of the litigation. For now, 16 plaintiffs have sufficiently alleged the claims, and accordingly, the Court DENIES Uber’s motion 17 to dismiss claims 3 through 6. 18 19 II. Claim for Negligent Hiring, Supervision, and Retention 20 In addition to suing Uber vicariously for the torts of Dakiri and Aiello, plaintiffs also seek 21 to hold Uber directly liable for negligent hiring, supervision, and retention. See AC at 46. Setting 22 aside the arguments regarding employment status that the Court has already addressed, Uber’s key 23 argument is that no claim for relief may lie where plaintiffs have not plausibly alleged that Uber 24 knew or should have known that Dakiri and Aiello posed any danger. Mot. at 14. 25 Under California law, an employer may be held directly liable for the behavior of an unfit 26 employee where the employer was negligent in the hiring, training, supervising, or retaining of 27 that employee. Delfino v. Agilent Techs., Inc., 145 Cal. App. 4th 790, 815 (2006). Negligence 28 liability will be imposed upon the employer if it knew or should have known that hiring the 14 1 employee created a particular risk or hazard and that particular harm then materializes. As such, 2 California follows the rule set forth in the Restatement (Second) of Agency Section 213, which 3 provides in pertinent part: “A person conducting an activity through servants or other agents is 4 subject to liability for harm resulting from his conduct if he is negligent or reckless . . . in the 5 employment of improper persons or instrumentalities in work involving risk of harm to others.” 6 Liability may be imposed “either on the basis of . . . action -- for example, the negligent hiring of 7 an agent -- or . . . inaction -- for example, the failure to provide adequate supervision of the agent's 8 work.” Far West Financial Corp. v. D & S Co., 46 Cal. 3d 796, 812 (1988). As to driver Aiello, plaintiffs allege as follows. When Aiello signed up as an Uber driver, 10 Uber used a background check company called Accurate Background, Inc. AC ¶ 58. Accurate 11 United States District Court Northern District of California 9 would run a potential driver’s social security number “through records databases similar to those 12 held by credit agencies, which only go back for a period of seven years and do not capture all 13 arrests and/or convictions.” Id. ¶ 59. Aiello had previously been arrested for domestic violence 14 and was ultimately convicted of assault in 2003. Id. ¶¶ 115, 117. The background check did not 15 capture this conviction. Id. ¶ 118. Plaintiffs allege that Uber knew or should have known that 16 Aiello “would be a danger to passengers and lead to a risk of the very type of danger and harm that 17 occurred on . . . August 9, 2015.” Id. ¶ 250. 18 Uber does not directly dispute these allegations but characterizes Aiello’s prior conviction 19 as a “12-year-old disorderly-persons offense that could have been expunged.” Mot. at 15. Uber 20 supports its claim with an exhibit, asking the Court to incorporate the exhibit by reference or to 21 take judicial notice of it.5 See Docket Nos. 50, 51 ¶ 7, Ex. 5. Plaintiffs oppose this request. 22 Docket No. 54, Opposition at 17 n.9. It is not apparent at this time that the document Uber 23 presents is the same offense to which the Amended Complaint refers. The Court therefore 24 25 26 27 28 5 Uber has separately filed a motion to seal this exhibit, the state court record of Aiello’s 2003 conviction. Docket No. 52. Uber concedes that this document is a matter of public record. Reply at 11 n.3. At the hearing, Uber stated that it did not think the Court required the document in order to dispose of the motion and indicated that it would withdraw the document. Given that Uber has filed no notice of withdrawal to date, and finding the document inappropriate for sealing, the Court hereby DENIES the motion to seal. 15 1 DENIES Uber’s request for incorporation by reference and judicial notice.6 Taking the facts in the 2 Amended Complaint as true, the Court finds that plaintiffs have sufficiently alleged that Uber 3 should have known about Aiello’s criminal history such that Uber may be liable for negligent 4 hiring, supervision and retention. 5 therefore DENIED as to Aiello. The motion to dismiss plaintiffs’ first claim for relief is Plaintiffs fail, however, to make such allegations as to driver Dakiri. The Amended 7 Complaint alleges that Dakiri had been in the country for less than three years when he assaulted 8 Doe 1 and that Uber used Accurate Background, Inc. to run a background check. AC ¶¶ 58-59, 9 100. The relevant allegations end there. Plaintiffs do not allege that anything existed in Dakiri’s 10 background that Uber knew or should have known and that should have prevented Uber’s 11 United States District Court Northern District of California 6 approval of Dakiri as a driver. The motion to dismiss plaintiffs’ claim of negligent hiring, 12 supervision, and retention is therefore GRANTED as to Dakiri. The Court grants the motion 13 without prejudice to a later request to amend this claim to add Dakiri back in should further 14 information come to light. 15 16 III. Claim for Fraud 17 For allegations of fraud or mistake, a complaint must meet the heightened pleading 18 standard of Rule 9(b), which requires a plaintiff to “state with particularity the circumstances 19 constituting fraud or mistake.” Fed. R. Civ. P. 9(b). A claim for fraud must have the following 20 elements: “(1) a misrepresentation (false representation, concealment, or nondisclosure); (2) 21 knowledge of falsity (or ‘scienter’); (3) intent to defraud, i.e., to induce reliance; (4) justifiable 22 reliance; and (5) resulting damage.” Anderson v. Deloitte & Touche LLP, 56 Cal. App. 4th 1468, 23 1474 (1997) (citation omitted); see also In re Glenfed, Inc. Sec. Litig., 42 F.3d 1541, 1548 (9th 24 Cir. 1994) (“[A] plaintiff must set forth what is false or misleading about a statement, and why it 25 is false.”). “Averments of fraud must be accompanied by the ‘who, what, where, and how’ of the 26 6 27 28 Plaintiffs do not challenge Uber’s request with respect to Exhibits 1 through 4. Finding no opposition and no reason to doubt that the documents are what they purport to be, the Court GRANTS Uber’s request for judicial notice of Exhibits 1 through 4 of the Cohen declaration. See Docket No. 51. 16 1 misconduct charged.” Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir. 2003) 2 (quoting Cooper v. Pickett,137 F.3d 616, 627 (9th Cir. 1997)). Rule 9(b) is satisfied if the 3 allegations “identif[y] the circumstances constituting fraud (or mistake) so that the defendant can 4 prepare an adequate answer from the allegations.” Moore v. Kayport Package Express, Inc., 885 5 F.2d 531, 540 (9th Cir. 1989). “Rule 9(b)’s particularity requirement applies to state-law causes 6 of action.” Vess, 317 F. 3d at 1103. 7 Plaintiffs base their second claim for relief on fraud. They assert that Uber made false 8 statements that riders would be safe taking rides through Uber, while knowing that Uber “had not 9 adequately screened its drivers.” AC ¶¶ 259-260. They also assert that Uber fraudulently misrepresented its ability to track its drivers “and ensure that the drivers were taking the most 11 United States District Court Northern District of California 10 direct routes to Plaintiffs’ destinations, instead of going far off-route.” Id. ¶ 261. Uber argues that 12 plaintiffs have failed to plead their fraud claim with particularity, in that: (1) they fail to identify 13 what is false about Uber’s statements regarding driver background checks; (2) they fail to identify 14 what is false about Uber’s ability to track drivers’ routes, and about when, where, or how Uber 15 made such statements; and (3) they fail to establish reliance. Mot. at 16-17. 16 The Amended Complaint is replete with allegations regarding the falsity of Uber’s claims. 17 Plaintiffs describe in detail the process by which individuals become drivers for Uber and how 18 Uber screens those applicants. AC ¶¶ 36-38, 53-66. They include extensive quotes that plaintiffs 19 challenge as false, including ones that plaintiffs pulled from Uber’s website and from a report 20 commissioned by Uber and Mothers Against Drunk Driving. Id. ¶¶ 2-3, 70-71, 74-76, 236. Uber 21 clearly appears to understand what statements plaintiffs are challenging, as Uber summarizes and 22 refutes those allegations in its motion. See Mot. at 16-17. There is more than enough information 23 for Uber to “prepare an adequate answer from the allegations.” 24 Moreover, plaintiffs cite to statements that Uber should readily have in its possession and be able 25 to identify. See Susilo v. Wells Fargo Bank, N.A., 796 F. Supp. 2d 1177, 1191 (C.D. Cal. 2011) 26 (“While the already heightened pleading standard is further heightened when a party pleads fraud 27 against a corporation, . . . the requirement is relaxed where ‘the defendant must necessarily 28 17 Moore, 885 F.2d at 540. 1 possess full information concerning the facts of the controversy,’ . . . or ‘when the facts lie more in 2 the knowledge of the opposite party[.]’”) (citations omitted). The Amended Complaint also alleges that plaintiffs “actually and reasonably relied on the 4 false facts and misrepresentations provided by Defendant when they agreed to utilize Uber’s 5 services.” AC ¶ 264. At this stage of the case, the Court must draw all reasonable inferences in 6 favor of the non-moving party. See Usher, 828 F.2d at 561. It is reasonable for the Court to infer 7 from the allegations in the complaint that Doe 1 and Doe 2 assert that they accepted rides from 8 Uber drivers in reliance on the statements Uber made regarding rider safety. Uber further argues 9 that Doe 2 in particular could not have relied on Uber’s statements if she was not using the App 10 when she rode with Aiello. Mot. at 17; Reply at 13. If Uber is correct that Doe 2 rode with Aiello 11 United States District Court Northern District of California 3 without using the Uber App, it is reasonable for the Court to infer that she did so because she 12 relied on Uber’s stamp of approval that Aiello was a safe person from whom to obtain a ride. Accordingly, Uber’s motion to dismiss plaintiffs’ fraud claim is DENIED. 13 14 15 IV. Punitive Damages 16 Lastly, Uber seeks dismissal of the request for punitive damages. Under California law, a 17 plaintiff may recover punitive damages in connection with a non-contractual claim if she 18 establishes by clear and convincing evidence that the defendant is guilty of (1) fraud, (2) 19 oppression or (3) malice. Cal. Civil Code § 3294(a). For an employer to be liable for those 20 damages, it must have “had advance knowledge of the unfitness of the employee and employed 21 him or her with a conscious disregard of the rights or safety of others or authorized or ratified the 22 wrongful conduct . . . or [been] personally guilty of oppression, fraud, or malice.” Id. § 3294(b) 23 (emphasis added). 24 Uber’s argument focuses on the first portion of Section 3294(b), whether Uber had 25 advance knowledge of Dakiri or Aiello’s unfitness. Mot. at 18-19. Uber ignores that punitive 26 damages may also be appropriate under that same subsection if Uber itself is found guilty of fraud. 27 See Cal. Civil Code § 3294(b). At the pleadings stage, a plaintiff need not plead all of the 28 elements of a claim for punitive damages but need only plead such facts as could plausibly support 18 1 the underlying claim of fraud that will support a punitive damages award. See Susilo, 796 F. 2 Supp. 2d at 1196-97.7 Because plaintiffs have successfully pleaded a fraud claim, § III, supra, the 3 Court DENIES Uber’s motion to dismiss the claim for punitive damages. 4 CONCLUSION 5 For the foregoing reasons and for good cause shown, the Court hereby: GRANTS Uber’s 7 motion to dismiss the negligent hiring, supervision, and retention claim (claim 1) as it relates to 8 Dakiri, without prejudice, but DENIES the motion as it relates to Aiello; DENIES the motion to 9 dismiss plaintiffs’ fraud claim (claim 2); DENIES Uber’s motion to dismiss claims brought under 10 a respondeat superior theory (claims 3 through 6); and DENIES Uber’s motion to dismiss requests 11 United States District Court Northern District of California 6 for punitive damages. The Court also DENIES Uber’s motion to seal Exhibit 5 to the Cohen 12 declaration. See Docket No. 52. 13 14 15 IT IS SO ORDERED. Dated: May 4, 2016 ______________________________________ SUSAN ILLSTON United States District Judge 16 17 18 19 20 21 22 23 24 25 7 26 27 28 Susilo was later called into question by another district court in Crisanto v. Cty. of Tulare, No. 15-cv-1527, 2015 WL 7188165 (C.D. Cal. Nov. 16, 2015). Crisanto questioned whether the court in Susilo correctly applied the legal standard to strike a claim for punitive damages under Rule 12(f). Crisanto, 2015 WL 7188165, at *6 n.5. Because Uber seeks the dismissal of plaintiffs’ punitive damages claim here under Rule 12(b)(6), the Court finds that the Susilo analysis applies. 19