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Giron v. HSBC Bank USA, N.A.

United States District Court, C.D. California

July 20, 2017

HSBC BANK USA, N.A.; and DOES 1 through 100, inclusive, Defendants.




         The parties in this action are in the process of completing discovery, and Defendant HSBC USA, N.A. (“HBUS”) has taken issue with Magistrate Judge Chooljian's discovery order issued on June 20, 2017. (See ECF No. 108.) The order in question requires HBUS to produce unredacted spreadsheets disclosing the names and information of individuals whose wire transfers went through HBUS as an intermediary to Hong Kong. (ECF No. 108.) Not wanting to comply with the order, HBUS moves this Court to reconsider the Magistrate Judge's decision. (ECF No. 116.) For the reasons discussed below, the Court DENIES HBUS's motion.[1]


         This case arises from a pyramid scheme where investors were allegedly defrauded. (See generally Third Am. Compl. (“TAC”), ECF No. 54.) After United States authorities shut down the operation, the schemers began directing investors to wire money to Hong Kong instead. (Id. ¶¶ 25-26.) As a result, Plaintiffs sued the Hong Kong and United States banks that they allege participated in those wire transfers. The case is a putative class action with three named plaintiffs: Ramiro Giron, Nicolas J. Herrera, and Orlando Antonio Mendez. (TAC ¶¶ 6-8.)

         The Court dismissed the Hong Kong-based bank on October 21, 2016, for lack of jurisdiction. (ECF No. 72.) As discovery progressed following the dismissal, HBUS claims that the named Plaintiffs discovered that none of their wire transfers used HBUS as an intermediary. (Mot. 1.) Plaintiffs recently sought to discover HBUS's records of wire transfers to Hong Kong bank accounts. (See Id. at 2.) HBUS argues that this request for production is aimed only at impermissibly “fishing” for new class representatives whose wire transfers used HBUS as an intermediary, unlike the named plaintiffs. (Id.) Plaintiffs claim that the reason for requesting the records is much broader and is intended to bolster class certification efforts by helping to establish that a viable class exists. (See Opp'n 4, ECF No. 120.) After Judge Chooljian ordered HBUS to produce the records, HBUS filed the instant motion seeking this Court's reconsideration.


         A district court has authority to modify or vacate a magistrate judge's order where it has been shown that the order is “clearly erroneous or contrary to law.” 28 U.S.C. § 636(b)(1)(A); see also Fed. R. Civ. P. 72(a). The “clearly erroneous” standard applies to the magistrate judge's findings of fact, and it is “significantly deferential, requiring a definite and firm conviction that a mistake has been committed.” Concrete Pipe & Prods. V. Constr. Laborers Pension Tr., 508 U.S. 602, 623 (1993) (internal quotation marks omitted). The second part of the standard in 28 U.S.C. § 636(b)(1)(A), “contrary to law, ” “permits independent review of purely legal determinations by the magistrate judge.” Crispin v. Christian Audigier, Inc., 717 F.

         Supp. 2d 965, 971 (C.D. Cal. 2010).


         The Court determines that the portion of Magistrate Judge Chooljian's discovery order at issue constitutes a question of law. As such, the Court reviews de novo whether Plaintiffs are entitled to information relating to individuals whose wire transfers to Hong Kong used HBUS as an intermediary.

         A. The Parties' Arguments

         In their original motion to compel, Plaintiffs argue that the requested information will establish the existence of a class. (Mot. 2, ECF No. 106.) They note that failing to allow such precertification discovery has been considered an abuse of discretion in the Ninth Circuit. (Id.); see Kamm v. Cal. City Dev. Co., 509 F.2d 205, 209 (9th Cir. 1975). Specifically, Plaintiffs claim that they are searching for information to help them satisfy the Federal Rule of Civil Procedure 23 factors of ascertainability, commonality, and typicality. (Mot. 4.) Plaintiffs also cite cases demonstrating that discovery of the names and contact information of putative class members is generally permissible even prior to certification. (Mot. 3); see, e.g., Putnam v. Eli Lilly & Co., 508 F.Supp.2d 812, 814 (C.D. Cal. 2007); Gulf Oil Co. v. Bernard, 452 U.S. 89, 101-02 (1981).

         HBUS, in contrast, insists that Plaintiffs' only basis for seeking this information is to search for new class representatives given that the current named plaintiffs did not execute wire transfers using HBUS as an intermediary. (Opp'n 2, ECF No. 107.) HBUS makes its argument on relevance grounds, contending that the requested information is irrelevant because the only purpose it would serve is an impermissible one: to identify potential new class representatives. (Id.) In its motion for reconsideration, HBUS cites cases it argues hold that class representatives without standing cannot use discovery to recruit replacement class representatives. See, e.g., Hatch v. Reliance Ins. Co., 758 F.2d 409, 416 (9th Cir. 1985). However, the Court notes that the decision in Hatch held that denying a ...

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