United States District Court, N.D. California, San Jose Division
ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO
DISMISS [Re: ECF 27, 28]
LAB SON FREEMAN, United States District Judge
Nicklaus Lal (“Lal”) brings this suit against
Defendants, the former employers of his wife, for allegedly
recording personal phone calls between him and his wife on
the company phone. Before the Court are Defendants'
motions to dismiss Lal's First Amended Complaint
(“FAC”). HSBC Mot., ECF 28; Cap Mot., ECF 27.
After reviewing the parties briefing and holding a hearing on
April 6, 2017, the Court hereby rules on the motions as
alleges the following facts in his first amended complaint
(“FAC”). Plaintiff is a California resident whose
wife was employed by Defendants HSBC Card Services Inc.
(“Card Services”) and HSBC Technology &
Services (USA) Inc. (collectively, “HSBC”) at a
facility in Salinas, California, from March 2009 to May 2012.
First Am. Compl. ¶¶ 7, 28, ECF 22. As of May 1,
2012, Defendant Capital One Financial Corporation
(“Capital One”) acquired certain assets of HSBC,
including the Salinas facility. Lal's wife ceased working
for Card Services and thereafter was employed by Capital One
from May 1, 2012 through October 2013. Id. ¶
the relevant time period, Lal had “numerous personal
telephone communications” with Defendants'
employees, including his wife. Id. ¶¶ 31,
33. According to Lal, Defendants intentionally recorded,
intercepted, or received the conversations without his
consent or knowledge. Id. ¶¶ 28-39.
Defendants also required their employees to keep their
“policies, procedures, and internal activities
confidential and prohibited employees from disclosing such
information.” Id. ¶ 28. Lal alleges that
at the time he had no reason to believe that his personal
telephone calls were being recorded. Id. ¶ 17,
August 28, 2015, a plaintiff filed a case in San Diego
Superior Court, alleging similar claims and the same causes
of actions against Defendants as those here. Id.
¶ 13 (citing Ron Kempton, et al. v. Capital One
Financial Corporation, No. 37-2014-00023795-CU-MC-NC
(Cal. Super. Ct.) sub nom. Dalia Rojas v. HSBC Card
Services Inc., et al., No. D071442 (Cal.App. Ct. filed
Nov. 18, 2016) (the “Rojas case”)). On
September 28, 2015, HSBC agreed to withdraw the confidential
designation for the recordings produced in the Rojas
case. FAC ¶ 14. Thereafter, only after the confidential
designation was withdrawn and after Lal's wife was
contacted as a potential witness in the Rojas case
did Lal learn about the recording of his conversations by
HSBC. Id. ¶¶ 15-16.
further alleges that his claims were tolled during the
pendency of two class actions because he was a member of the
proposed classes. Id. ¶ 21. On June 4, 2012,
plaintiff representatives Terry J. Fanning and Tatiana Jabbar
filed a class action complaint against HSBC for violation of
the California Invasion of Privacy Act (“CIPA”).
FAC ¶ 22; Fanning v. HSBC Card Servs. Inc., No.
12-00885-JVS-RNB (C.D. Cal. June 4, 2012) (the
“Fanning case”). On July 29,
2014, Gail Medeiros, along with other plaintiffs, filed a
class action lawsuit against HSBC and its successor, Capital
One, also asserting CIPA violations, in the Southern District
of California but that case was later transferred to the
Central District as a case related to the Fanning
case. FAC ¶¶ 23-25. Medeiros v. HSBC Card
Servs. Inc., et al., Case No. 15-9093-JVS-AFM (C.D. Cal.
Nov. 21, 2014) (the “Medeiros case”). A
motion for preliminary approval of class action settlement
was filed in both of these cases on August 26, 2016. FAC
September 26, 2016, Lal filed a complaint in Monterey County
Superior Court asserting that Defendants violated the CIPA.
Compl., Ex. A to Notice of Removal, ECF 1; Cal. Penal Code
§§ 632, 632.7. Pursuant to the CIPA, Lal asserts a
first cause of action based on California Penal Code §
632, and a second cause of action based on Penal Code §
632.7. Compl.; FAC ¶¶ 41-51. Lal further requests
damages in the amount $5, 000.00 per violation or three times
the amount of actual damages sustained, and preliminary and
permanent injunction to restrain Defendants from violating
CIPA. Id. ¶¶ 45, 46, 50, 51. HSBC removed
the case to this Court, to which Capital One consented.
Notice of Removal. Defendants then filed motions to dismiss
the case. ECF 13, 15, 17, 18. Instead of opposing the motions
to dismiss, Plaintiff filed a first amended complaint, which
Defendants now move to dismiss.
motion to dismiss under Federal Rule of Civil Procedure
12(b)(6) for failure to state a claim upon which relief can
be granted ‘tests the legal sufficiency of a
claim.'” Conservation Force v. Salazar,
646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro
v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). When
determining whether a claim has been stated, the Court
accepts as true all well-pled factual allegations and
construes them in the light most favorable to the plaintiff.
Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681,
690 (9th Cir. 2011). However, the Court need not
“accept as true allegations that contradict matters
properly subject to judicial notice” or
“allegations that are merely conclusory, unwarranted
deductions of fact, or unreasonable inferences.” In
re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th
Cir. 2008) (internal quotation marks and citations omitted).
While a complaint need not contain detailed factual
allegations, it “must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief
that is plausible on its face.'” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is
facially plausible when it “allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.” Id.
the damages sought are not recoverable as a matter of law,
the damages claim may be removed from the complaint pursuant
to Rule 12(b)(6). Johnson v. Napa Valley Wine Train,
Inc., No. 15-04515-TEH, 2016 WL 493229, at *13 (N.D.
Cal. Feb. 9, 2016) (citing Whittlestone, Inc. v.
Handi-Craft Co., 618 F.3d 970, 974-95 (9th Cir. 2010)).
turning to the merits of the parties' arguments, the
Court addresses their requests for judicial notice.
support of its motion to dismiss, HSBC has requested judicial
notice of eight documents, attached to the request as
Exhibits A through H: (A) Fanning v. HSBC Card Servs.
Inc., et al., No. 12-00885-JVS-RNB (C.D. Cal. June 4,
2012), ECF No. 1 (the “Fanning Complaint”); (B)
the First Amended Complaint filed in the Medeiros
case (the “Medeiros FAC”); (C) Order Granting
Joint Motion To Consolidate the Fanning case and
Lindgren with the Medeiros case, filed in
Medeiros, ECF No. 83 (the “Consolidation Order”),
pursuant to which the Fanning and Medeiros actions were
consolidated for settlement purposes; (D) Order Conditionally
Certifying A Settlement Class for Settlement in the
Medeiros case, the Fanning case, and
Lindgren v. HSBC Card Servs. Inc., et al., filed in
Fanning case, ECF No. 364 (the “Preliminary
Approval Order”); (E) Order granting HSBC's motion
for summary judgment in the Rojas case (the
“Rojas MSJ Order”); (F) excerpts of the
certified reporter's transcript for the November 4, 2016
hearing in the Rojas case; (G) Order in
Yevgeniya Grania v. Eddie Bauer, LLC, No. BC569111,
slip. op. (Cal. Super. Ct. L.A. Cty. Dec. 2, 2015); (H) Order
in Furman v. Station Casinos LLC, No.
56-2013-00446134-CU-BT-VTA (Cal. Super. Ct. Ventura Cty. Mar.
11, 2014). HSBC RJN, ECF 29.
notice is appropriate with respect to Exhibits A to H because
they are documents publicly filed with either state or
federal courts. See Mir v. Little Co. of Mary Hosp.,
844 F.2d 646, 649 (9th Cir. 1988) (court may take judicial
notice of matters of public record). Plaintiff objects to the
exhibits attached to this request only to the extent that the
facts and statements recited in the exhibits are taken as
true or accurate. ECF 40. However, the Court does not take
judicial notice of the legal reasoning or disputed facts
contained therein, but rather the existence of such
allegations and arguments. Lee v. City of Los
Angeles, 250 F.3d 668, 690 (9th Cir. 2001) (permitting a
court to take judicial notice of another court's opinion,
but not the truth of the facts recited therein). As such, it
would not be improper to judicially notice the exhibits that
are public filings in other courts.
also submitted two exhibits in support of his sur-replies.
ECF 53, 54. Although Lal does not formally request judicial
notice of these two exhibits, the Court construes the
submission as such a request. ECF 53, 54. The two exhibits
are (A) Confidential Communications: Disclosure, Hearing
Before the Senate Committee on Public Safety, A.B. 1671,
2015-2016 Reg. Sess. (Cal. June 28, 2016) (Hearing Notes,
Sen. Loni Hancock, Chair) (the “June 28 Hearing
Notes”); and (B) Confidential Communications:
Disclosure, Hearing Before the Senate Committee On
Appropriations, A.B. 1671, 2015-2016 Reg. Sess. (Cal. August
8, 2016) (Hearing Notes, Sen. Ricardo Lara, Chair) (the
“August 8 Hearing Notes”). Exs. A and B to
Raymond Decl., ECF 53-1, 54-1.
objects to these two exhibits submitted by Lal on the grounds
that they are irrelevant, and lack foundation and personal
knowledge. HSBC Obj., ECF 56. Specifically, HSBC points out
that the relevant issue here is how the 2017 amendment
affects the interpretation of the CIPA statute. Id.
at 1. HSBC argues that the Senate Committee's hearing
notes are not relevant because they pre-date the proposed
amendment which was introduced on August 30, 2016.
Id. at 2. HSBC further argues that the hearing notes
discuss criminal penalties related to violation of Penal Code
§ 632, and do not discuss the civil statutory damages
relevant to this case. Id. at 3. Finally, HSBC
argues that there is an inadequate showing that Ms. Raymond
has personal knowledge regarding the legislative history
attached as exhibits to her declaration and how the exhibits
were located. Id. Without foundation and personal
knowledge, HSBC requests that the exhibits be stricken.
even though these Senate hearing notes pre-date the
introduction of the amendment, they can still provide the
Senate's perspective on the statute's meaning prior
to the amendment and the potential purpose of the amendment.
Second, such records of “[l]egislative history is
properly a subject of judicial notice.” Anderson v.
Holder, 673 F.3d 1089, 1094 n.1 (9th Cir. 2012); see
also Perkins v. Linkedin Corp., 53 F.Supp.3d 1222, 1241
(N.D. Cal. 2014). As such, the Court grants the request for
judicial notice of these exhibits. The Court agrees with HSBC
that these documents have limited relevance to the later
amendment here at issue, and thus the Court will give these
documents the weight they deserve.
support of HSBC's objections to Lal's sur-reply, HSBC
also requests judicial notice of nine documents, attached as
exhibits A to I: (A) A.B. 1671, 2015-2016 Reg. Sess. (Cal.
Jan. 15, 2016) (as introduced by Assembly Member Gomez); (B)
A.B. 1671, 2015-2016 Reg. Sess. (Cal. Mar. 17, 2016) (as
amended in Assembly); (C) A.B. 1671, 2015-2016 Reg. Sess.
(Cal. Apr. 12, 2016) (as amended in Assembly); (D) A.B. 1671,
2015-2016 Reg. Sess. (Cal. Apr. 25, 2016) (as amended in
Assembly); (E) A.B. 1671, 2015-2016 Reg. Sess. (Cal. May 18,
2016) (as amended in Assembly); (F) A.B. 1671, 2015-2016 Reg.
Sess. (Cal. Aug. 2, 2016) (as amended in Senate); (G) A.B.
1671, 2015-2016 Reg. Sess. (Cal. Aug. 16, 2016) (as amended
in Senate); (H) A.B. 1671, 2015-2016 Reg. Sess. (Cal. Aug.
30, 2016) (as amended in Senate); (I) A.B. 1671, 2015-2016
Reg. Sess. (Cal. 2016) (as enacted).
like the California Senate Committee hearing notes provided
by Lal in support of his sur-reply, these exhibits contain
legislative history, which is judicially noticeable.
Anderson, 673 F.3d at 1094 n.1. The parties do not
dispute the authenticity of these exhibits. As such, the
request for judicial notice is GRANTED with respect to the
exhibits attached to HSBC's objections to Lal's