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Gallo v. Unknown Number of Identity Thieves

United States District Court, N.D. California, San Jose Division

May 31, 2017

DAVID J. GALLO, Plaintiff,
v.
UNKNOWN NUMBER OF IDENTITY THIEVES, et al., Defendants.

          ORDER GRANTING MOTION TO REMAND Re: Dkt. No. 754

          LUCY H. KOH United States District Judge

         Plaintiff David Gallo (“Gallo”) brings this case against an “Unknown Number of Identity Thieves”; Anthem Blue Cross Life and Health Insurance Company (“Anthem Blue Cross”); Compass Bank; American Express Company; Paypal, Inc.; Powerpay, LLC; and Does 1-100 (collectively, “Defendants”). Before the Court is Plaintiff's motion to remand the case to the Superior Court of California, County of San Diego (“San Diego County Superior Court”). ECF No. 754.

         Having considered the submissions of the parties, the relevant law, and the record in this case, the Court GRANTS Plaintiff's motion to remand the case to San Diego County Superior Court.

         I. BACKGROUND

         A. Factual Background

         Defendant David Gallo is a solo practitioner attorney based in the state of California. Compl. ¶¶ 3, 11. In 1995, Gallo obtained health insurance through the State Bar of California Group Health Insurance Program (“State Bar”) from Blue Cross of California. Id. 12. “[I]n or around the late 1990s, ” the State Bar stopped offering group insurance plans, and so Gallo purchased an individual plan. Id. ¶ 14. At some point, Gallo alleges that Blue Cross of California became Anthem Blue Cross, which Gallo alleges has been located in Del Mar, California since 1998. Id. ¶¶ 15, 20.

         On December 28, 2016, Gallo's offices were contacted by an attorney who stated that his American Express Credit Card contained an unwarranted $4, 000 charge to Gallo's law offices. Id. ¶¶ 22-23. After Gallo investigated the incident, a company known as “LawPay” informed Gallo that unknown identity thieves had opened a credit card merchant account in Gallo's name using Gallo's correct residence address, business address, and social security number. Id. ¶ 28. The identity thieves had used this account to defraud LawPay and numerous victims of thousands of dollars. Id. Gallo called Compass Bank, where the merchant account was located, to report that this account was fraudulent, but Compass Bank has refused to confirm or deny that any account was opened in Gallo's name. Id. ¶ 29-30.

         In January 2017, Gallo was contacted by Powerpay, who informed Gallo that identity thieves had opened a credit card merchant account with “one of Powerpay's fictitious business account names” using Gallo's personal data. Id. ¶ 33. On January 10, 2017, Gallo was contacted by another victim who claimed that he had been charged $415.00 by Gallo's office through Paypal. Id. ¶ 35. On January 22, 2017, Paypal stated that a fraudulent Paypal account had been created for Gallo, but Paypal concluded that the fraud was “perpetrated by a member of Plaintiff's family.” Id. ¶ 36. Gallo instead alleges that this account was created by the unknown identity thieves. Id.

         In January 2017, Gallo was also contacted by an attorney who told Gallo that a fraudulent LawPay account had been set up for the attorney using the attorney's personal information. Id. ¶ 43. The attorney also stated that she believed that her personal information had been stolen during the hack of Anthem and Anthem affiliates. Id. Gallo alleges that this is the first time that he learned that Anthem or any of its affiliates had been hacked. Id. ¶ 44. Gallo alleges that this hack was the source of his personal information used by the identity thieves to open the fraudulent accounts. Id. ¶ 45.

         B. Procedural History

         Gallo filed the complaint in this case on January 23, 2017. ECF No. 1-2. The complaint asserts six causes of action under California law: (1) an injunction pursuant to California Business & Professions Code §§ 17200, et seq., against the identity thieves; (2) a common law claim for invasion of privacy against the identity thieves; (3) a claim for common law negligence against Anthem Blue Cross; (4) a claim for violation of Civil Code §§ 1798.80 against Anthem Blue Cross; (5) a claim for declaratory relief against Compass Bank, American Express, Paypal, and Powerpay; and (6) a claim for common law negligence against Compass Bank, American Express, Paypal, and Powerpay. Id.

         On February 21, 2017, Defendant Anthem Blue Cross removed this action to the United States District Court for the Southern District of California. ECF No. 1. In the notice of removal, Anthem Blue Cross proffered two bases for subject matter jurisdiction in federal court: (1) federal question jurisdiction under 28 U.S.C. § 1331 based on the fact that “Plaintiff's state law claims implicate substantial federal interests” based on national security interests and the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”); and (2) federal question jurisdiction under 28 U.S.C. § 1331 and the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001, et seq. Id. at 5-7.

         On March 21, 2017, Gallo filed the instant motion to remand. ECF No. 24. On April 5, 2017, Anthem Blue Cross filed an opposition to the motion to remand in the Multi-District Litigation, In re Anthem, Inc. Data Breach Litigation, Case No. 5:15-MD-02617-LHK, before the undersigned judge (“Anthem MDL”). ECF No. 774.[1] On April 12, 2017, Gallo filed a reply. ECF No. 31.

         II. LEGAL STANDARD

         A suit may be removed from state court to federal court only if the federal court would have had subject matter jurisdiction over the case in the first instance. 28 U.S.C. § 1441(a); see Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (“Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant.”). “In civil cases, subject matter jurisdiction is generally conferred upon federal district courts either through diversity jurisdiction, 28 U.S.C. § 1332, or federal question jurisdiction, 28 U.S.C. § 1331.” Peralta v. Hispanic Bus., Inc., 419 F.3d 1064, 1068 (9th Cir. 2005). If it appears at any time before final judgment that the federal court lacks subject matter jurisdiction, the federal court must remand the action to state court. 28 U.S.C. § 1447(c).

         The party seeking removal bears the burden of establishing federal jurisdiction. Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009). “The removal statute is strictly construed, and any doubt about the right of removal requires resolution in favor of remand.” Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009) (citing Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992)).

         III. DISCUSSION

         In their notice of removal, Anthem Blue Cross asserted two grounds for removal: (1) federal question jurisdiction under 28 U.S.C. § 1331 based on the fact that “Plaintiff's state law claims implicate substantial federal interests” because the Anthem data breach implicates national security interests and the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”); and (2) federal question jurisdiction under 28 U.S.C. § 1331 and the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001, et seq. ECF No. 1, at 5-7. However, in their opposition to the motion to remand, Anthem Blue Cross abandons its ERISA preemption argument. The opposition also raises for the first time the argument that “it is only because Plaintiff (either intentionally or inadvertently) named the wrong entity as a defendant that this Court lacks diversity jurisdiction over Plaintiff's claims.” ECF No. 774, at 3.

         The Court first considers the issue of diversity jurisdiction. The Court then considers the issues of national security interests, ERISA, and HIPAA in turn. Finally, the Court considers Gallo's argument that he is entitled to attorney's fees under 28 U.S.C. § 1447(c) because Anthem Blue ...


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