Rattagan v. Uber Technologies, Inc. ( 2020 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 MICHAEL R. RATTAGAN, Case No. 19-cv-01988-EMC 8 Plaintiff, ORDER GRANTING DEFENDANT’S 9 v. MOTION TO DISMISS AND DISMISSING CASE WITH 10 UBER TECHNOLOGIES, INC., PREJUDICE 11 Defendant. Docket No. 67 12 13 14 I. INTRODUCTION 15 Michael Rattagan (“Plaintiff” or “Mr. Rattagan”) is a lawyer based in Argentina. 16 Defendant is Uber Technologies, Inc. (“Uber Technologies” or “Defendant”). The operative 17 complaint is Mr. Rattagan’s Third Amended Complaint, through which he asserts four causes of 18 action—fraudulent concealment, negligence, breach of the implied covenant of good faith and fair 19 dealing, aiding and abetting fraudulent concealment—stemming from allegations that Defendant 20 Uber Technologies, Inc. retained him to provide legal support for the launch of new operations in 21 Buenos Aires, proceeded without engaging his services, and subjected him to intense public 22 backlash and ultimately criminal prosecution. Uber moves to dismiss the Third Amended 23 Complaint with prejudice. 24 II. BACKGROUND 25 Factual Background 26 Plaintiff alleges as follows. Mr. Rattagan is “a prominent lawyer in Buenos Aires.” Third 27 Amended Complaint (“TAC”) ¶ 1, Docket No. 64. In February 2013, Uber Technologies decided 1 hire Rattagan to reserve the name, form and register a local Buenos Aires entity, and provide legal 2 advice on the process.” Id. Uber Technologies “also directed the two entities to use Rattagan as 3 their formal legal representative and his business address as their local domicile.” Id. ¶ 2. 4 Mr. Rattagan alleges that the “Dutch entities were merely agents controlled by their 5 principal, [Uber Technologies], with respect to all substantive decisions, communications and 6 activities vis-à-vis Mr. Rattagan and the Rattagan firm.” Id. Moreover, Uber Technologies 7 “exercised such complete dominion and control over the Dutch entities that but for their existence, 8 [Uber Technologies] would have had to perform the identical ‘services’ provided by the Entities,” 9 such that “even in 2013, [Uber Technologies] as principal effectively hired Rattagan. As a result 10 of this agency/principal relationship, [Uber Technologies] is responsible for all of the actions of 11 the Dutch entities.” Id. 12 “2014 was a period of relative inactivity between the Dutch entities and Rattagan. 13 Beginning in early 2015, however, the situation changed dramatically.” Id. ¶ 3. Mr. Rattagan 14 alleges that Uber Technologies’ efforts to launch operations in Buenos Aires accelerated at that 15 time, and that Uber Technologies itself—rather than the Dutch subsidiaries—“hired Rattagan to 16 provide a slew of new legal services and advice regarding the formation of multiple Argentine 17 entities that would enable UTI to provide Uber Ridesharing in Argentina.” Id. In support of that 18 contention, Mr. Rattagan alleges that all of the directives about the scope of his work “came 19 directly from [Uber Technologies’] legal department in San Francisco” and that all his work 20 product was provided directly to that same department. Id. He contends that a direct attorney- 21 client relationship was established between himself and Uber Technologies by February 2015. Id. 22 Several months later, toward the end of 2015, Uber began to plan the specifics of its launch 23 in Buenos Aires. Id. ¶ 4. However, it concealed that fact and its planning process (which 24 involved hiring a different attorney and a public relations firm and holding meetings with 25 government officials in Argentina) from Mr. Rattagan. Id. When Uber ridesharing officially 26 launched in April 2016, Mr. Rattagan contends that it did so “without first removing Rattagan 27 from harm’s way, . . . [and] knowing that it was doing so in blatant disregard of the local 1 “any prior notice or forewarning to Rattagan” and with “absolute certainty” that the launch “would 2 be met with [and] immediate and adverse reaction.” Id. ¶ 6. 3 Mr. Rattagan alleges: 4 The response to UTI’s Uber Ridesharing launch was swift and predictable: thousands of local taxi drivers stormed both the local 5 government transportation offices and Rattagan’s law offices in protest. Within a couple of days, law enforcement authorities 6 targeted the only public faces of Uber in Argentina: Rattagan and his colleagues who he had introduced to UTI to be interim managers of 7 the then “in formation” local entity (after formation, UTI was to substitute permanent managers in their place). Buenos Aries police 8 raided their offices and homes, they were vilified in the media and subjected to scorn and ridicule in social and professional gatherings. 9 In 2017, after the authorities completed their investigation of UTI’s launch, they summoned Mr. Rattagan to the local prosecutor where 10 he was fingerprinted, had his mug shots taken and was charged with various crimes, including aggravated tax evasion. 11 12 Id. ¶ 7. Although Uber Technologies had been paying Mr. Rattagan’s criminal defense fees 13 related to his prosecution for aggravated tax evasion, it ceased doing so when he filed this lawsuit. 14 Id. ¶ 8. 15 Procedural Background 16 In his original complaint, Mr. Rattagan named three Uber entities as defendants: the U.S.- 17 based Uber Technologies, Inc. as well as Uber International, BV (“UIBV”) and Uber International 18 Holdings, BV (“UIHBV”), companies formed under the laws of the Netherlands with their 19 principal place of business in Amsterdam. Docket No. 1 ¶ 5. (UIBV and UIHBV are hereinafter 20 collectively referred to as the “Uber International Entities” or the “international Uber entities.”) 21 He alleged that “[Uber Technologies] controls UIBV and UIHBV, and [Uber Technologies] 22 directed and authorized all of UIBV’s and UIHBV’s operational decisions . . . from Uber 23 [Technologies’] San Francisco headquarters.” Id. The complaint explained that Mr. Rattagan was 24 hired as the “legal representative of certain Uber subsidiaries in [Argentina],” id. ¶ 1, apparently 25 referring to the Uber International Entities which became foreign shareholders (“Shareholders”) of 26 the Argentinian Subsidiary, Docket No. 1 ¶¶ 14–15. However, the remainder of the allegations in 27 that complaint were directed simply at “Uber” generally, without differentiation between the three 1 Shortly after Mr. Rattagan initiated this suit, the three Uber entities notified his counsel of 2 their belief that that the complaint contained a “fatal jurisdictional defect,” namely that “[d]iversity 3 jurisdiction does not encompass a foreign plaintiff, such as Mr. Rattagan, suing foreign 4 defendants,” such as the Uber International Entities. Sanctions Mot. at 2; see Docket No. 27-1 ¶ 8. 5 Mr. Rattagan thereafter filed a First Amended Complaint (“FAC”), removing the Uber 6 International Entities as defendants and redefining “Uber” to mean only Uber Technologies. FAC 7 at 1. Otherwise, the FAC was largely unchanged from the original complaint with one exception – 8 Mr. Rattagan had removed the part of the original complaint that explained “Uber International, 9 BV (‘UIBV’) is a company formed under the laws of the Netherlands with its principal place of 10 business in Amsterdam. Uber International Holdings, BV (‘UIHBV’) is a company formed under 11 the laws of the Netherlands with its principal place of business in Amsterdam. On information 12 and belief, UTI controls UIBV and UIHBV, and UTI directed and authorized all of UIBV’s and 13 UIHBV’s operational decisions relevant hereto from Uber’s San Francisco headquarters.” Docket 14 No. 1, ¶ 5; Docket No. 15, ¶ 5. The import of the amendment was that all of the allegations 15 previously directed at the three Uber entities collectively were now asserted solely against Uber 16 Technologies. 17 Uber Technologies attacked Rattagan’s FAC in two ways. First, it moved for sanctions 18 against Rattagan, contending that his claims were based on a factual premise—that there was an 19 attorney-client and contractual relationship between Rattagan and Uber Technologies—that was 20 false, because it was Uber’s international subsidiaries that retained and contracted with Rattagan. 21 See Docket No. 27. Second, Uber Technologies moved to dismiss the FAC under Rule 12(b)(6), 22 arguing that even taking Rattagan’s allegations as true, they failed to state a claim. See Docket 23 No. 23. The Court did not reach the merits of Uber’s Motion to Dismiss the FAC because it 24 agreed that “Rattagan presented the Court with a complaint that was inaccurate and misleading.” 25 See Docket No. 36 at 8. Rather than advancing a legal theory pursuant to which Uber 26 Technologies “was somehow legally responsible based on its indirect control over Uber 27 International Entities with whom Mr. Rattagan contracted (whether via an alter ego or other 1 imply a direct relationship with Uber Technologies.” Id. The Court granted Uber Technologies’ 2 Motion for Sanctions after concluding that the company had met its burden to show that the 3 complaint was “factually baseless from an objective perspective.” Id. Mr. Rattagan was permitted 4 leave to amend. Id. at 10. 5 Mr. Rattagan then filed a Second Amended Complaint on September 18, 2019. See 6 Docket No. 38. But just one day prior to Uber Technologies’ deadline to file a motion to dismiss, 7 Mr. Rattagan’s counsel filed a motion to withdraw as attorney. See Docket No. 46. The Court 8 extended Uber Technologies’ deadline to respond to the Second Amended Complaint, and, after 9 replacement counsel was identified, the Court granted Mr. Rattagan’s attorney’s motion to 10 withdraw in January 2020. See Docket Nos. 48, 51. In February, Mr. Rattagan’s new counsel 11 sought leave to file a Third Amended Complaint. See Docket No. 54. Uber Technologies 12 opposed, but the Court—relying on the Ninth Circuit’s guidance that Rule 15 should be applied 13 with “extreme liberality”—granted Mr. Rattagan’s motion for leave to file a Third Amended 14 Complaint. See Docket No. 63. On June 19, 2020, Uber Technologies filed a Motion to Dismiss 15 the Third Amended Complaint. See Docket No. 67 (“MTD”). Briefing completed on July 30, 16 2020, and a hearing took place by Zoom on August 13, 2020. See Docket Nos. 67, 71. 17 III. DISCUSSION 18 Legal Standard 19 Under Rule 12(b)(6), a party may move to dismiss a complaint that fails to state a claim 20 upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). In considering such a motion, a 21 court must accept all allegations of material fact as true and construe them in the light most 22 favorable to the nonmoving party, although “conclusory allegations of law and unwarranted 23 inferences are insufficient to avoid a Fed. R. Civ. P. 12(b)(6) dismissal.” Cousins v. Lockyer, 568 24 F.3d 1063, 1067 (9th Cir. 2009). While “a complaint need not contain detailed factual 25 allegations,” “it must plead ‘enough facts to state a claim to relief that is plausible on its face.’” 26 Id. at 1067–68. “A claim has facial plausibility when the plaintiff pleads factual content that 27 allows the court to draw the reasonable inference that the defendant is liable for the misconduct 1 U.S. 544, 556 (2007). “The plausibility standard is not akin to a ‘probability requirement,’ but it 2 asks for more than sheer possibility that a defendant acted unlawfully.” Iqbal, 556 U.S. at 678. 3 Discussion 4 Uber challenges the four counts asserted in Mr. Rattagan’s Third Amended Complaint on 5 several grounds. Because the Court concludes that two grounds (the statute of limitations and the 6 economic loss doctrine) dispose of all of Mr. Rattagan’s claims, it does not address the alternative 7 grounds for dismissal advanced by Uber Technologies. 8 1. Counts Two and Three Are Time-Barred 9 Uber contends that Mr. Rattagan’s claim for negligence (Count Two) and breach of the 10 implied covenant of good faith and fair dealing (Count Three) are time-barred. See MTD at 9. 11 Claims for negligence are subject to a two-year statute of limitations. See Cal. Civ. Proc. Code § 12 335.1. Where a breach of the implied covenant of good faith and fair dealing is based on an oral 13 or implied contract, as is Mr. Rattagan’s alleged contract with Uber Technologies,1 it is also 14 subject to a two-year limitations period. See Cal. Civ. P. Code § 335.1; see also Leon v. Wells 15 Fargo Bank, N.A., No. 17-CV-03371-BLF, 2018 WL 3474182, at *3 (N.D. Cal. July 19, 2018). 16 “The statute of limitations usually commences when a cause of action ‘accrues,’ and it is generally 17 said that ‘an action accrues on the date of injury.’ Alternatively, it is often stated that the statute 18 commences ‘upon the occurrence of the last element essential to the cause of action.’” Vaca v. 19 Wachovia Mortg. Corp., 198 Cal. App. 4th 737, 743 (2011) (quoting Bernson v. Browning–Ferris 20 Industries, 7 Cal. 4th 926, 931 (1994)). 21 The parties here agree that the statute of limitations began to run when Rattagan suffered 22 injury from Uber’s alleged actions. They disagree, however, as to when the operative injury 23 occurred. In Uber Technologies’ telling, Rattagan’s claims accrued “on April 15, 2016, the date 24 on which Rattagan alleges that Uber’s purported misconduct first injured him,” i.e., when 25 Argentine authorities raided his offices. MTD at 10 (citing TAC ¶¶ 68–69). This would mean that 26 the claims expired on April 15, 2018 (prior to the filing of this lawsuit on April 12, 2019). Mr. 27 1 Rattagan, on the other hand, asserts that the operative injury did not occur until November 2017, 2 when he was arrested for aggravated tax evasion. Opp. at 14. 3 Under California law, “the limitations period starts to run when the plaintiff suffers actual 4 and appreciable harm, however uncertain in amount.” Crowley v. Peterson, 206 F. Supp. 2d 1038, 5 1042 (C.D. Cal. 2002) (citing Davies v. Krasna, 14 Cal. 3d 502, 514 (1975)). Specifically, “[i]t is 6 uncertainty as to the fact of damage, rather than to its amount, which negates the existence of a 7 cause of action.” Id. (citing Walker v. Pac. Indem. Co., 6 Cal. Rptr. 924, 926 (Cal. Ct. App. 8 1960)) (emphasis added). “The California courts have not expressly defined the phrase ‘actual 9 and appreciable harm.’” Id. However, even cases relied upon by Mr. Rattagan have concluded 10 that “[r]ead in context . . . Davies’s ‘actual and appreciable harm’ test should be seen as simply a 11 restatement of the traditional rule that a cause of action for negligence is complete and the statute 12 begins to run when the plaintiff suffers any compensable injury.” Id. at 1044 (emphasis added); 13 see also id. at 1045 (“Most of the California decisions since Davies have interpreted ‘actual and 14 appreciable harm’ as synonymous with ‘actionable’ or ‘compensable’ harm.”).2 Under Davies, the 15 statute of limitations runs when “events have developed to a point where plaintiff is entitled to a 16 legal remedy, not merely a symbolic judgment such as an award of nominal damages.” Davies, 14 17 18 2 Crowley identifies DeRose v. Carswell, 196 Cal. App. 3d 1011 (1987) as one of the “few cases since Davies [to] have suggested that the actual and appreciable harm test requires something 19 more than a showing of any compensable harm.” Crowley, 206 F. Supp. 2d at 1045. However, it found DeRose’s analysis of Davies “not persuasive” and declined to follow its conclusion. Id. at 20 1046. In reaching that conclusion, the Crowley court first noted that “the entire discussion of Davies [by the DeRose court] was dicta” because although the DeRose court discussed whether an 21 injury had to be “significant enough to justify a lawsuit” in order to run the statute of limitations, the DeRose court concluded that the plaintiff’s injury was sufficiently significant; thus, its 22 discussion of whether such significance was necessary was dicta. Crowley, 206 F. Supp. 2d at 1046. Second, the Crowley court noted that “the DeRose Court provided no authority to support 23 its view that ‘nominal’ could not reasonably be interpreted as meaning one dollar,” but instead means “too insignificant to justify a lawsuit.” Id. at 1046, 1047. 24 Crowley also notes that only two other case have followed DeRose’s interpretation of Davies. Id. 25 at 1046 n.7 (citing Miller v. Lakeside Village Condo. Ass’n Inc., 1 Cal. App. 4th 1611 (1991); Sanderson v. Int’l Flavors & Fragrances, Inc., 1996 WL 529274 (C.D. Cal. July 11, 1996)). 26 However, neither case “analyzed whether DeRose’s interpretation of Davies was correct or analyzed the Davies holding in light of the cases the California Supreme Court relied on [in 27 rendering the Davies decision]”; thus, the Crowley court concluded that the two cases “do not 1 Cal. 3d at 513. As Crowley explained, “any compensable injury will, by definition, give rise to 2 damages that are more than nominal.” Crowley, 206 F. Supp. 2d at 1045. 3 Here, Mr. Rattagan disclaims any harm prior to November 2017, when he was arrested for 4 aggravated tax evasion. Opp. at 14. However, his Third Amended Complaint tells a different 5 story. For example: 6 • In the immediate aftermath of the Uber launch on April 12, 2016, “taxi drivers 7 surrounded the office building and protesters blocked its exits, preventing 8 employees and clients from entering or exiting for hours. Additionally, local media 9 outlets were filled with angry interviews and negative coverage concerning ‘Uber’ 10 and all those associated with it, including Rattagan and his firm.” TAC ¶ 66. 11 • Several days after the launch, “police raided Rattagan’s offices armed with an 12 ‘acta’ (a search warrant) and issued an order to shut down ‘Uber.’ According to the 13 warrant, the raid was the result of a charge that Rattagan, as the legal representative 14 of ‘Uber,’ was using public space for commercial gain, without a permit. 15 Television cameras filmed the police raid. The prime-time news programs 16 displayed the Rattagan firm logo and reported that his offices were the location of 17 Uber’s illegal activities, which included tax evasion.” Id. ¶ 69. 18 • That same day, Mr. Rattagan asked to be replaced as legal representative of the 19 international Uber entities, and when Uber’s Head Counsel for Latin America 20 Operations failed to act immediately, Mr. Rattagan resigned. However, his TAC 21 notes that, at that point, “the damage was done.” Id. ¶ 68 (emphasis added). 22 • After the launch, “[t]axi drivers, labor unions, and politicians had a local public 23 face to direct their ire and Rattagan was it. He was smeared in the local media for 24 his alleged role in UTI’s launch of Uber Ridesharing.” Id. ¶ 81. 25 • On May 26, 2016, Mr. Rattagan spoke with General Counsel and Corporate 26 Secretary for Uber Technologies and asked her “to promptly designate someone he 27 could coordinate with to hand over his ‘Uber’-related files in an orderly manner 1 Rattagan’s name and from using his offices as legal domicile in any future 2 communications with the Argentine government (national, provincial or city levels) 3 or with any third parties without Rattagan’s prior written consent.” Id. ¶ 73. He 4 alleges that, at that time, Uber Technologies’ General Counsel acknowledged that 5 Uber Technologies “was responsible to Rattagan for the harm caused by the 6 unlawful launch.” Id. (emphasis added). 7 In attempting to explain why he did not experience “actual or appreciable harm” until his arrest in 8 November 2017, Mr. Rattagan asserts that the arrest prohibited him from traveling abroad and also 9 damaged his professional reputation. Opp. at 15. While the 2017 arrest may have exacerbated his 10 harm, the Complaint clearly alleges damage to Mr. Rattagan’s professional reputation as early as 11 April 2016 in the immediate aftermath of Uber’s launch; as noted above, the local media ran 12 negative coverage of Rattan and his firm, TAC ¶ 66, and prime-time news programs showed 13 footage of the police raid on Rattagan’s firm and “reported that his offices were the location of 14 Uber’s illegal activities, which included tax evasion,” id. ¶ 69. As the TAC alleges, by then “the 15 damage was done.” Id. at ¶ 68. Thus, even if Mr. Rattagan ultimately experienced additional 16 reputational harm after being arrested in November 2017, the very harm he claims to have suffered 17 as a result of that arrest clearly began in April 2016. He allegedly suffered “compensable injury” 18 – “actual and appreciable harm.” Thus, the statute of limitations on Counts Two and Three began 19 to run in April 2016. 20 Mr. Rattagan attempts to avoid that conclusion by further asserting that his claims accrued 21 in 2017 due to “continuing-wrong accrual principles.” Opposition to Motion to Dismiss TAC 22 (“MTD Opp.”) at 14, Docket No. 70. “There are two main branches” of continuing-wrong 23 principles: “the continuing violation doctrine and the theory of continuous accrual.” Aryeh v. 24 Canon Bus. Sols., Inc., 55 Cal. 4th 1185, 1197 (2013). The former “aggregates a series of wrongs 25 or injuries for purposes of the statute of limitations, treating the limitations period as accruing for 26 all of them upon commission or sufferance of the last of them.” Id. at 1192. It is animated by the 27 concern that “[s]ome injuries are the product of a series of small harms, any one of which may not 1 viewed as each triggering its own limitations period, such that a suit for relief may be partially 2 time-barred as to older events but timely as to those within the applicable limitations period.” Id. 3 at 1192. 4 What is critical is that both the continuing violation and continuous accrual doctrines are 5 triggered by ongoing acts by the defendant. See Richards v. CH2M Hill, Inc., 26 Cal. 4th 798, 812 6 (2001) (“[T]he continuing violation doctrine comes into play when [a plaintiff] raises a claim 7 based on conduct that occurred in part outside the limitations period.”); Aryeh, 55 Cal. 4th at 1199 8 (“[Continuous accrual applies whenever there is a continuing or recurring obligation: When an 9 obligation or liability arises on a recurring basis, a cause of action accrues each time a wrongful 10 act occurs, triggering a new limitations period.”) (citation and internal quotation marks omitted). 11 It is not enough that the plaintiff merely suffers ongoing injury. As California courts have 12 explained, “if continuing injury from a completed act generally extended the limitations 13 periods, those periods would lack meaning. Parties could file suit at any time, as long as their 14 injuries persisted. This is not the law.” Vaca, 198 Cal. App. 4th at 745. 15 The alleged misconduct by Uber Technologies did not extend into the two-year limitations 16 period, which reached back to April 12, 2017. For example, Mr. Rattagan complains that Uber 17 kept him as Uber’s representative in Argentina for more than two months after the launch even 18 though he requested immediate replacement. TAC ¶¶ 68, 71. But even if his causes of action 19 accrued two months after the launch, that would place the trigger date at mid-June of 2016 (and 20 generate a filing deadline of June 2018, well before the date in 2019 when Mr. Rattagan filed this 21 lawsuit). Similarly, Mr. Rattagan recounts an occasion when Uber delivered a letter to City 22 officials that showed Mr. Rattagan’s law firm office address and name, falsely implying his 23 ongoing association with Uber. Id. ¶¶ 71–72. But that incident, too, occurred within the two 24 months after Uber’s launch. 25 Mr. Rattagan also argues that Uber Technologies “continuously breached the duties owed 26 to Rattagan after the launch, and these breaches culminated in Rattagan’s arrest for aggravated tax 27 evasion in November 2017.” MTD Opp. at 16. Specifically, in April 2017, Mr. Rattagan was 1 November 2017, he was charged with aggravated tax evasion. Id. ¶ 78. He alleges the tax evasion 2 charge arose from the fact that Uber had failed to pay appropriate sales tax prior to the launch, and 3 it was deemed aggravated “due to the uninterrupted and increasing volume of Uber Ridesharing’s 4 sales in the year after the launch.” Id. ¶¶ 77–79. Under this theory, Uber’s continued 5 noncompliance with the law (up through November 2017, when Rattagan was charged with 6 aggravated tax evasion) was an ongoing act that triggers continuing-wrong accrual principles. 7 However, Mr. Rattagan was replaced as Uber’s legal representative approximately two 8 months after Uber’s launch in Buenos Aires in 2016, TAC ¶ 68, and his TAC does not explain 9 how he would be held criminally responsible for Uber’s continued non-compliance in the year 10 after he was replaced as the company’s legal representative. Instead, the TAC alleges only: “The 11 alleged tax evasion charges were aggravated due to the uninterrupted and increasing volume of 12 Uber Ridesharing’s sales in the year after the launch.” Id. ¶ 79. Because Mr. Rattagan’s role as 13 Uber’s legal representative terminated in mid-2016, Uber’s continuing noncompliance in the time 14 between Mr. Rattagan’s removal as the company’s legal representative and his arrest for 15 aggravated tax evasion is not the kind of continuing conduct to which the continuous accrual 16 doctrine applies. Mr. Rattagan cites no persuasive case law involving similar facts. 17 To the extent that Mr. Rattagan contends that Uber’s wrongful act was not just mere 18 noncompliance, but instead the company’s failure to “inform authorities that Rattagan was 19 unaware of and uninvolved in the launch,” Mr. Rattagan has pointed to no case law indicating that 20 the company actually owed Mr. Rattagan an affirmative duty to publicize the fact that he was no 21 longer the company’s representative. For one thing, Mr. Rattagan alleges that he was replaced as 22 the company’s legal representative in Argentina within two months of the launch. Id. ¶ 68. His 23 replacement was a matter of public record. Id. ¶¶ 68, 75. As of two months after the launch, 24 official records would have indicated that he was no longer the legal representative of Uber in 25 Argentina. 26 Finally, the continuing violation doctrine does not apply for an independent reason. That 27 doctrine applies where there is “a series of small harms, any one of which may not be actionable 1 discrete wrongful acts which caused injury to the plaintiff sufficient to give rise to a legal claim. 2 Although allegations of “a pattern of reasonably frequent and similar acts may . . . justify treating 3 the acts as an indivisible course of conduct actionable in its entirety, notwithstanding that the 4 conduct occurred partially outside and partially inside the limitations period,” that is not the case 5 where a plaintiff alleges “a series of discrete, independently actionable alleged wrongs.” Id. at 6 1198. 7 Accordingly, the Court GRANTS the motion to dismiss Mr. Rattagan’s negligence claim 8 (Count Two) and breach of the implied covenant of good faith and fair dealing claim (Count 9 Three) on statute of limitations grounds. 10 2. Counts One and Four Are Barred by the Economic Loss Doctrine 11 Defendant also contends that Mr. Rattagan’s claims for fraudulent concealment (Count 12 One), negligence (Count Two) and aiding and abetting fraudulent concealment (Count Four) are 13 barred by the economic loss doctrine. See MTD at 11. As Count Two has already been dismissed 14 on statute of limitations grounds, it is not discussed further in this section. 15 Summarized briefly, the economic loss rule limits a party to a contract “to recover[ing] in 16 contract for purely economic loss due to disappointed expectations,” rather than in tort, “unless he 17 can demonstrate harm above and beyond a broken contractual promise.” Robinson Helicopter Co. 18 v. Dana Corp., 34 Cal. 4th 979, 988 (2004). The rule “serves to prevent every breach of a contract 19 from giving rise to tort liability” and “prevents the law of contract and the law of tort from 20 dissolving one into the other.” JMP Sec. LLP v. Altair Nanotechnologies Inc., 880 F. Supp. 2d 21 1029, 1042–43 (N.D. Cal. 2012) (quoting Robinson, 34 Cal. 4th at 988). In short, generally one 22 cannot recover tort damages for breach of contract. Here, Uber Technologies argues that Mr. 23 Rattagan “alleges only economic loss—e.g., reputational harm, lost revenues—not physical injury 24 or injury to property. Such economic losses are recoverable, if at all, in contract. Consequently, 25 his tort claims must be dismissed.” MTD at 12 (citing TAC ¶¶ 65–66, 69, 80–81, 87, 91, 96, 102). 26 Mr. Rattagan offers three arguments in response. 27 First, Mr. Rattagan argues that the economic loss doctrine should not apply because it 1 possible.” MTD Opp. at 17 (quoting Rowland v. JPMorgan Chase Bank, N.A., WL 992005, at 2 *10 (N.D. Cal. Mar. 12, 2014)). Because he “was not a purchaser nor is this . . . a products 3 liability or construction defect case,” he contends that the doctrine does not bar his claims. Id. 4 However, the economic loss rule has been applied outside of the products liability and 5 construction defect contexts. MTD Reply at 5 (collecting cases); see also Sorensen v. New 6 Koosharem Corp., No. CV1501088RGKPJWX, 2015 WL 12826460, at *3 (C.D. Cal. June 29, 7 2015) (applying the economic loss doctrine to bar fraud claims in the context of claims related to 8 an executive employment contract). There is no per se rule limiting the economic loss doctrine to 9 products liability or construction defect cases. 10 Second, Mr. Rattagan alleges that “[t]he economic loss rule does not apply for the 11 additional reason that Rattagan alleges fraud in the inducement.” MTD Opp. at 18. However, Mr. 12 Rattagan’s TAC actually alleges “fraudulent concealment,” which involves non-disclosure after 13 the contractual relationship arose; it does not allege fraud in inducing Mr. Rattagan into the 14 contract. Although there is some conflict in this area of the law, the weight of authority counsels 15 in favor of applying the economic loss doctrine to fraudulent concealment, but not to fraudulent 16 inducement. Sloan v. Gen. Motors LLC, No. 16-CV-07244-EMC, 2020 WL 1955643, at *24 17 (N.D. Cal. Apr. 23, 2020); compare United Guar. Mortg. Indem. Co. v. Countrywide Fin. Corp., 18 660 F. Supp. 2d 1163, 1188 (C.D. Cal. 2009)) (“The economic loss rule poses no barrier to a 19 properly pled fraudulent inducement claim: ‘[I]t has long been the rule that where a contract is 20 secured by fraudulent representations, the injured party may elect to affirm the contract and sue for 21 fraud.’”); with Traba v. Ford Motor Co., No. 218CV00808SVWGJS, 2018 WL 6038302, at *4 22 (C.D. Cal. June 27, 2018) (holding that economic loss doctrine applies to and bars plaintiffs’ 23 allegations of fraudulent concealment). 24 Moreover, to get around the economic loss doctrine, the fraud must be based on an 25 affirmative misrepresentation. In Robinson Helicopter Co. v. Dana Corp., 102 P.3d 268 (2004), 26 the key California case on this subject, the California Supreme Court explained: “The economic 27 loss rule requires a purchaser to recover in contract for purely economic loss due to disappointed 1 34 Cal. 4th at 988 (internal citations and quotation marks omitted). It concluded that “the 2 economic loss rule does not bar . . . fraud and intentional misrepresentation claims . . . [that] were 3 independent of [defendant’s] breach of contract.” Id. at 991. However, the Robinson court based 4 that determination on the defendant’s “affirmative intentional misrepresentations of fact”: “Our 5 holding today is narrow in scope and limited to a defendant’s affirmative misrepresentations on 6 which a plaintiff relies and which expose a plaintiff to liability for personal damages independent 7 of the plaintiff's economic loss.” Id. at 993 (emphasis added). Numerous courts have since relied 8 on Robinson in holding that affirmative representations are required for exceptions to the 9 economic loss rule to apply. See, e.g., Stewart v. Electrolux Home Prod., Inc., 304 F. Supp. 3d 10 894, 902 (E.D. Cal. 2018); Zagarian v. BMW of N. Am., LLC, No. CV 18-4857-RSWL-PLA, 2019 11 WL 6111731, at *3 (C.D. Cal. Oct. 23, 2019); Traba, 2018 WL 6038302, at *4. 12 Here, Mr. Rattagan’s fraudulent concealment allegations do not contain assertions that 13 Uber Technologies or the international Uber entities made any affirmative misrepresentations. 14 See, e.g., TAC ¶ 84 (“UTI directly and as principal of the Dutch Entities knowingly and 15 intentionally failed to disclose, concealed and/or suppressed material facts from Rattagan . . . .”); 16 id. ¶ 98 (similar allegations against the international Uber entities); id. ¶ 86 (“Rattagan is informed 17 and believes and thereon alleges that UTI directly and as principal of the Dutch Entities 18 intentionally concealed these facts from Rattagan because it knew that its actions would be 19 deemed unlawful under Argentine law and did not want Rattagan taking any steps that might 20 interfere with or delay the launch of Uber Ridesharing in Buenos Aires.”); id. ¶ 101 (“UTI aided 21 and abetted the Dutch Entities’ fraudulent nondisclosure as set forth herein. UTI knew that the 22 Dutch Entities’ conduct constituted a breach of their duty of disclosure to Rattagan and UTI 23 provided substantial assistance and/or encouragement to the Dutch Entities to engage in the 24 fraudulent conduct described herein. Rattagan is informed and believes and thereon alleges that 25 UTI expressly or impliedly directed the Dutch Entities to conceal these facts from Rattagan 26 because it knew that its actions would be deemed unlawful under Argentine law and did not want 27 Rattagan taking any steps that might interfere with or delay the launch of Uber Ridesharing in 1 operate to bar the application of the economic loss doctrine against his first and fourth claims. 2 Finally, Mr. Rattagan asserts that “the crux of [his] claims is based on [Uber 3 Technologies’] tortious conduct (and that of the Foreign Shareholders), not on their failure to pay 4 him for services rendered (i.e., the failure to make good on contractual promises). In fact, 5 Rattagan does not even allege breach of contract.” MTD Opp. at 18. In other words, he argues 6 that he is not “attempt[ing] to recast a breach of contract claim as tort claims based on an alleged 7 failure to make good on contractual promises” and therefor that the economic loss doctrine should 8 not apply. Id. But here, too, Mr. Rattagan’s complaint tells a different story. 9 In alleging his fraudulent concealment claim (Count I), Mr. Rattagan asserts that Uber 10 Technologies “owed Rattagan a duty to disclose all facts known to [Uber Technologies] that were 11 material to both Rattagan’s legal representation and his role as legal representative of the Foreign 12 Entities,” and that this duty was “[b]ased on the direct attorney-client relationship between [Uber 13 Technologies] and Rattagan.” TAC ¶ 83; see also id. ¶ 94 (“UTI and Rattagan were in express 14 and/or implied contractual relationships arising from UTI and Rattagan’s direct attorney-client 15 relationship starting in 2015.”). Likewise, in alleging his aiding and abetting fraudulent 16 concealment claim (Count 4), Mr. Rattagan states: “Because of the Dutch Entitie[s’] confidential, 17 attorney-client relationship with Rattagan, the Dutch Entities owed a duty to Rattagan to disclose 18 these material facts.” Id. ¶ 99. The attorney-client relationship is undoubtedly a contractual one. 19 See, e.g., Sky Valley Ltd. P’ship v. ATX Sky Valley, Ltd., 150 F.R.D. 648, 651 (N.D. Cal. 1993) 20 (“[T]he attorney-client relationship can be formed . . . only by contract, express or implied.”); Fox 21 v. Pollack, 181 Cal. App. 3d 954, 959 (1986) (“Except for those situations where an attorney is 22 appointed by the court, the attorney-client relationship is created by some form of contract, 23 express or implied, formal or informal.”). 24 The California Supreme Court has recognized that “a party’s contractual obligation may 25 create a legal duty and that a breach of that duty may support a tort action.” Robinson, 34 Cal. 4th 26 at 989. However, “conduct amounting to a breach of contract becomes tortious only when it also 27 violates a duty independent of the contract arising from principles of tort law.” Erlich v. Menezes, 1 alleges: 2 Based on the direct attorney-client relationship between UTI and Rattagan starting in 2015, UTI’s principal/agent relationship in 2013 3 and Rattagan’s role as legal representative of the Foreign Shareholders at the request and for the benefit of UTI directly and as 4 principal, UTI both directly and as principal owed Rattagan a duty to disclose all facts known to UTI that were material to both 5 Rattagan’s legal representation and his role as legal representative of the Foreign Entities. 6 7 TAC ¶ 83. Here, the duty of disclosure allegedly owed by Uber in its capacity as Mr. Rattagan’s 8 client is rooted in the contractual relationship. Mr. Rattagan alleges that Uber Technologies 9 breached its “duty to disclose all facts known to [Uber Technologies] that were material to both 10 Rattagan’s legal representation and his role as legal representative,” and that this duty was “based 11 on” the “direct attorney-client relationship between” Uber Technologies and Mr. Rattagan. Id. 12 Likewise, as to the international Uber entities, Mr. Rattagan alleges that they breached their “duty 13 of disclosure to Rattagan,” TAC ¶ 101, and that this duty existed “[b]ecause of the Dutch 14 Entitie[s’] confidential, attorney-client relationship with Rattagan.” Id. ¶ 99. These allegations 15 are squarely inconsistent with his now-raised assertion that Uber Technologies breached a duty 16 that was “independent of the contract.” See Erlich, 21 Cal. 4th at 551. 17 In his briefing and at the hearing, Mr. Rattagan presented the following hypothetical in 18 support of his position: 19 A lawyer is handed a box by his client to deliver to the client’s business partner. The client conceals from his lawyer that illegal 20 contraband is in the box. The lawyer is arrested and charged with possession. Under UTI’s view of the law, the lawyer has no 21 recourse against the client. 22 Opp. at 11 n.10. However, as the distinction in Erlich makes clear, such an action clearly 23 “violates a duty independent of the contract arising from principles of tort law.” Erlich, 21 Cal. 24 4th at 551. That conclusion is underscored by the fact that any person who hands any other person 25 a box containing illegal contraband puts the unknowing recipient in harm’s way. No contract 26 between the parties is needed for that to be true; it does not matter whether the recipient is a 27 lawyer or the neighbor next door. The hypothetical proves nothing. 1 IV. CONCLUSION 2 In light of the foregoing analysis, the Court DISMISSES the Third Amended Complaint. 3 The dismissal is with prejudice because Mr. Rattagan has demonstrated, through multiple 4 iterations of his allegations, many of which exemplify shifting and often inconsistent and 5 contradictory allegations and theories, that his claims suffer from deficiencies that cannot be cured 6 by further amendment. 7 This order disposes of Docket No. 67. The Clerk is directed to enter judgment and close 8 this case. 9 IT IS SO ORDERED. 10 11 Dated: August 19, 2020 12 13 ______________________________________ EDWARD M. CHEN 14 United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27