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Davis v. Chase Bank U.S.A.


April 14, 2010


The opinion of the court was delivered by: Dean D. Pregerson United States District Judge


This matter comes before the Court on a Motion for Review of Magistrate Judge's Order Filed February 25, 2010, filed by the defendant Chase Bank U.S.A., N.A. ("Chase"). After reviewing the papers submitted by the parties and considering the arguments therein, the Court denies the motion and adopts the following Order.


The plaintiff Gary Davis ("Plaintiff") filed this putative class action against Chase on behalf of cardholders of the Chase Circuit City Rewards Card, alleging that Chase used fraudulent and unfair business practices to charge cardholders finance charges in connection with their Circuit City purchases.

On January 21, 2010, Plaintiff filed a motion to compel, seeking the names and contact information of 1,200 putative class members out of 402,000 whom Chase has admitted it can identify. In addition, the motion to compel sought a sampling of the documents Chase used to identify these potential class members.

On February 25, 2010, Magistrate Judge Walsh issued a minute order granting Plaintiff's motion. The minute order directed Chase to produce discovery relating to a sampling of 1,200 potential class members, including the names, addresses, telephone numbers, e-mail addresses, and billing records for at least 150 cardholders for each year from 2002 through 2010, subject to the stipulated protective order previously entered. It also directed Chase to submit a declaration setting forth how the 1,200 cardholders were selected. Finally, it provided that after Chase's production of this information, Plaintiff would use a third-party administrator to contact the putative class members to provide them the option to opt out of being contacted by Plaintiff's counsel.

Chase filed this motion challenging Magistrate Judge Walsh's Order on March 11, 2010. Chase argues that the underlying order impinges on cardholders' privacy, misapplies California law, and erroneously provides for an opt-out rather than opt-in procedure for contacting putative class members. In addition, Chase argues that the documents at issue are not relevant or reasonably calculated to lead to the discovery of admissible evidence. Plaintiff filed an opposition on March 22, 2010.


Federal Rule of Civil Procedure 72 and 28 U.S.C. § 636(b)(1)(A) govern the authority of magistrate judges to enter non-dispositive discovery orders and the review of those orders. Grimes v. City and County of San Francisco, 951 F.2d 236, 240 (9th Cir. 1991). Section 636(b)(1)(A) provides that a district court judge "may reconsider any pretrial matter . . . where it has been shown that the magistrate's order is clearly erroneous or contrary to law." 28 U.S.C. § 636 (2005); see Fed. R. Civ. P. 72(a) ("The district judge in the case must consider timely objections and modify or set aside any part of the [nondispositive] order that is clearly erroneous or is contrary to law.").

"The 'clearly erroneous' standard applies to the magistrate judge's factual determinations and discretionary decisions . . . ." Computer Econ., Inc. v. Gartner Group, Inc., 50 F. Supp. 2d 980, 983 (S.D. Cal. 1999). "Under this standard, the district court can overturn the magistrate judge's ruling only if the district court is left with the definite and firm conviction that a mistake has been made." Id. (internal quotation marks and citation omitted). The "contrary to law" standard, on the other hand, "applies to the magistrate judge's legal conclusions, which are reviewed de novo." China Nat'l Metal Prods. Import/ Export Co. v. Apex Digital, Inc., 155 F. Supp. 2d 1174, 1177 (C.D. Cal. 2001).


A. Cardholders' Privacy

Chase argues that the magistrate judge's Order misapplies California law and compromises cardholders' privacy rights. As an initial matter, the Court notes that Chase has standing to assert the privacy interests of its cardholders' in the identifying information they gave to Chase on credit card applications. Pioneer Elecs. (USA), Inc. v. Super. Ct., 150 P.3d 198, 202 (Cal. 2007); see also Valley Bank of Nev. v. Super. Ct., 542 P.2d 977, 980 (Cal. 1975).

In Hill v. Nat'l Collegiate Athletic Ass'n, 865 P.2d 633, 654-55 (Cal. 1994), the California Supreme Court "set forth in detail the analytic framework for assessing claims of invasion of privacy under the state Constitution." Pioneer, 150 P.3d at 204. First, the claimant must establish that he possesses a "'legally protected privacy interest.'" Id. (quoting Hill, 865 P.2d at 654). Second, the claimant "must possess a reasonable expectation of privacy under the particular circumstances, including 'customs, practices, and physical settings surrounding particular activities.'" Id. (quoting Hill, 865 P.2d at 654). Third, "the invasion of privacy complained of must be 'serious' in nature, scope, and actual or potential impact to constitute an 'egregious' breach of social norms, for trivial invasions afford no cause of action." Id. (quoting Hill, 865 P.2d at 655). Finally, "[a]ssuming that a claimant has met the foregoing Hill criteria for invasion of a privacy interest, that interest must be measured against other competing or countervailing interests in a 'balancing test.'" Id. (quoting Hill, 865 P.2d at 655).

1. Legally Protected Privacy Interest

In Hill, the California Supreme Court recognized that "an interest in 'precluding the dissemination or misuse of sensitive and confidential information (informational privacy)'" is a legally protected privacy interest. Hill, 865 P.2d at 654 (internal citations omitted). Under Hill, this class of information is deemed private "when well-established social norms recognize the need to maximize individual control over its dissemination and use to prevent unjustified embarrassment or indignity." Pioneer, 150 P.3d at 204. Additionally, Hill recognized the interest "in making intimate personal decisions or conducting personal activities without observation, intrusion, or interference ('autonomy privacy')." Id.

It is clear that personal identifying information and billing records relating to credit card transactions are entitled to some privacy protection. See id. at 205.

2. Reasonable Expectation of Privacy

Because California privacy laws "extend[] to one's confidential financial affairs . . . a bank customer's reasonable expectation is that, absent compulsion by legal process, the matters he reveals to the bank will be utilized by the bank only for internal banking purposes." Id. at 203 (internal quotation marks and citations omitted) (emphasis in original). In Pioneer, although the Court recognized that customers had a reasonable expectation of privacy in their personal identifying information, it concluded that they "did not have a reasonable expectation that the information would be kept private unless they affirmatively consented . . . ." 150 P.3d at 205 (emphasis in original).

In this case, Magistrate Judge Walsh concluded that "[t]he putative class members already provided [their contact information] to Defendant, and it is reasonable to assume that most of this information is publically available on the web, including addresses, phone numbers, etc." The Court agrees. Although the putative class members in this case clearly have some expectation of privacy in their identifying information and billing records, that privacy interest is subject to balancing against competing interests.

3. Serious Invasion of Privacy

"Contact information regarding the identity of potential class members is generally discoverable, so that the lead plaintiff may learn the names of other persons who might assist in prosecuting the case." Id. "Such disclosure involves no revelation of personal or business secrets, intimate activities, or similar private information, and threatens no undue intrusion into one's personal life, such as mass-marketing efforts or unsolicited sales itches." Id. at 206. Of course, "reasonable steps should be taken to notify bank customers of the disclosure of their identifying information." Id. at 205 (internal quotation marks and citation omitted). Such a "limited disclosure" does not "unduly interfere with either form of privacy [informational or autonomy privacy], given that the affected persons readily may submit objections if they choose." Id.

Here, the magistrate judge noted that the disclosure of names, addresses, telephone numbers, and email addresses is not as serious an invasion of privacy as, for example, the disclosure of "medical records or the like, which might cause the average person to be particularly sensitive about information being released." (Minute Order Dkt. No. 159.) Furthermore, Magistrate Judge Walsh ordered Plaintiff to employ the services of a third-party administrator who would contact the putative class members and give them the option to opt out of being contacted. (Id.) Although disclosure of billing records is more intrusive than the revelation of contact information, such records are subject to the protective order in this case, which lessens the degree of intrusion.

The Court therefore concludes that Magistrate Judge Walsh did not err in concluding that Chase failed to demonstrate a sufficiently serious invasion of privacy to preclude disclosure.

4. Balancing Opposing Interests

Chase's failure to demonstrate each of the above elements could end the inquiry, "as these elements are essential to any breach of privacy cause of action under Hill before any balancing of interests is necessary." Pioneer, 150 P.3d at 206 (citation omitted). However, balancing cardholders' privacy interest against Plaintiff's interest in disclosure reinforces the Court's conclusion that the underlying order should not be set aside.

First, "[f]rom the standpoint of fairness to the litigants in prosecuting or defending the forthcoming class action, [the defendant] would possess a significant advantage if it could retain for its own exclusive use and benefit the contact information of those customers" who form the putative class. Id. "Were plaintiff also able to contact these customers and learn of their experiences, he could improve his chances of marshalling a successful class action . . . thus perhaps ultimately benefitting some, if not all, those customers." Id.

Second, requiring the type of "opt-in" notice suggested by Chase was rejected in Pioneer because such an approach "could have potentially adverse effects in cases brought to redress a variety of social ills, including consumer rights litigation." Id. "[P]reventing or substantially delaying identification of witnesses and potential class members could make it more difficult to obtain class certification, thereby reducing the effectiveness of class actions as a means to provide relief in consumer protection cases." Id. at 207.

Third, Chase's argument that Plaintiff must make a showing of "compelling need" has been rejected by the California Supreme Court in similar circumstances. Hill, 865 P.2d at 654 ("[N]ot every assertion of a Constitutional privacy interest need be overcome by a compelling interest.").

Given (1) the protective order and (2) the use of a third party to administer an "opt-out" notice procedure, the Court concludes that the balance weighs in favor of disclosure.

B. Relevance

Finally, Chase argues that Magistrate Judge Walsh erred in ordering disclosure of documents dating to 2002 because Chase did not own the Circuit City portfolio until May 25, 2004. (Mot. 18:16-19.) Chase argues that "Plaintiff is judicially estopped from asserting liability against Chase based on the pre-May 2004 portfolio." (Id. 19:13-15.)

However, relevance under Rule 26(b)(1) "has been construed broadly to encompass any matter that bears on, or that reasonably could lead to other matter that could bear on, any issue that is or may be in the case." Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 (1978) (citation omitted). Furthermore, discovery is not "limited to the merits of a case, for a variety of fact-oriented issues may arise during litigation that are not related to the merits." Id.; see also id. at 351 n.13 ("Similarly, discovery often has been used to illuminate issues upon which a district court must pass in deciding whether a suit should proceed as a class action under Rule 23, such as numerosity, common questions, and adequacy of representation.").

In light of the broad standard of relevance in the discovery context, the Court cannot say that Magistrate Judge Walsh abused his discretion in concluding that the scope of the disclosure should records dating to 2002. Geophysical Sys. Corp. v. Raytheon Co., Inc., 117 F.R.D. 646, 647 (C.D. Cal. 1987) (Tashima, J.) (holding that determinations of relevance in the discovery context are reviewed under "the clearly implicit standard of abuse of discretion.").


For the foregoing reasons, Chase's motion for review is DENIED.



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