Congdon et al v. Uber Technologies, Inc. et al

Filing 154

ORDER by Judge Yvonne Gonzalez Rogers denying 143 Plaintiffs' Motion Regarding Punitive Damages.. Signed by Judge Yvonne Gonzalez Rogers on 6/13/2018. (ygrlc2, COURT STAFF) (Filed on 6/13/2018)

1
2
3

UNITED STATES DISTRICT COURT

4

NORTHERN DISTRICT OF CALIFORNIA

5
6

CHUCK CONGDON, ET AL.,
Plaintiffs,

7

ORDER DENYING PLAINTIFFS’ MOTION
REGARDING PUNITIVE DAMAGES1

vs.

8
9

CASE NO. 16-cv-02499-YGR

UBER TECHNOLOGIES, INC., ET AL.,

Re: Dkt. No. 143

Defendants.

10

United States District Court
Northern District of California

11
12

Now before the Court is plaintiffs’ Motion Regarding Punitive Damages.2 (Dkt. No. 143

13

(“Motion”).) Having carefully considered the papers submitted, the pleadings in this action, and

14

the admissible evidence, the Court DENIES plaintiffs’ motion.3

15

I.

16

RELEVANT BACKGROUND
The facts at issue in this case are well known to the parties and the Court. The Court

17

adopts in full the background section of its order granting plaintiffs’ motion for summary

18

judgment, denying Uber’s cross-motion, and granting plaintiffs’ motion for class certification.

19

(See Order re: Cross-Motions for Summary Judgment; Granting Plaintiffs’ Motion for Class

20

Certification (“MSJ & Class Cert. Order”) at 2–6, Dkt. No. 133.)4 The Court summarizes the

21
22

1

23

2

24
25
26
27
28

The prior version of this Order has been sealed as it was posted inadvertently.

Plaintiffs Matthew Clark, Ryan Cowden, Dominicus Rooijackers, and Jason Rosenberg
bring the instant motion on behalf of themselves and the certified class of Uber drivers they
represent.
3

In connection with their briefing on the instant motion, the parties filed administrative
motions to seal certain documents. (Dkt. Nos. 144, 148.) The Court addresses both motions to
seal in a separate order.
4

As in the Court’s MSJ & Class Cert. Order, “Uber” is used herein to refer to defendants
Uber Technologies, Inc., Rasier, LLC, Rasier-CA, LLC, Rasier-DC, LLC, and Rasier-PA, LLC,
collectively.

1

procedural background pertinent to the instant motion below.

2

On October 11, 2016, plaintiffs filed the operative complaint in this action, alleging claims

3

for breach of contract and conversion, arising out of Uber’s implementation of the so-called “Safe

4

Rides Fee’ as it relates to so-called “minimum fare rides” specifically. (See generally Amended

5

Complaint (“FAC”), Dkt. No. 49.) In that complaint, plaintiffs included a request for punitive

6

damages in their prayer for relief. (See id. ¶ 180.)

7

At the Case Management Conference held on April 10, 2017, the Court established June

8

13, 2017 as the deadline for fact discovery and set the briefing schedule for the parties’ cross-

9

motions for summary judgment and plaintiffs’ class certification motion. (See Dkt. No. 88.) The

10

United States District Court
Northern District of California

11

parties subsequently filed said motions. (See Dkt. Nos. 108, 109, 114.)
On March 8, 2018, the Court issued its order granting plaintiffs’ motion for summary

12

judgment as to their claims for breach of contract and conversion, denying Uber’s cross-motion as

13

to the same, and granting plaintiffs’ motion for class certification. (See MSJ & Class Cert. Order.)

14

On March 26, 2018, the parties filed their fourth case management conference statement in

15

this case. (Dkt. No. 139.) The parties agreed therein as to the appropriate measure of

16

compensatory damages, namely “the total amount of ‘Safe Rides Fees’ sums taken out of class

17

members’ fares on minimum fare rides, minus Uber’s then-prevailing percentage service fee

18

charge to drivers on those fares.” (Id. at 4.) The parties also described their disagreement over

19

plaintiffs’ ability to seek punitive damages (see generally id.), and each proposed a schedule for

20

the completion of discovery and for briefing anticipated motions (id. at 4–5).

21

The following day, having considered the parties’ statements regarding the scope of the

22

case, the Court set a fact and expert discovery cutoff of July 21, 2018. (See Dkt. No. 140.) In so

23

doing, the Court explicitly excluded “discovery pertaining to punitive damages” and indicated that

24

this limitation was “subject to change to the extent punitive damages are found applicable at a later

25

juncture.” (Id. at 1.)

26
27

On April 6, 2018, plaintiffs filed the instant motion, in which they seek “a determination
regarding punitive damages issues—specifically, the right to punitive damages discovery and

28
2

1

whether the proceedings should be bifurcated.” (Motion at p. ii.)5

2

II.

DISCUSSION

3

California Civil Code section 3294(a) states that “[i]n an action for the breach of an

4

obligation not arising from contract, where it is proven by clear and convincing evidence that the

5

defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual

6

damages, may recover [punitive] damages . . . .” 6 (emphasis supplied). Thus, by its own terms,

7

section 3294 applies neither to plaintiffs’ claim for breach of contract nor their claim for

8

conversion, which plaintiffs themselves have until now treated as “arising from contract.”
Plaintiffs’ own representations to the Court throughout the litigation are telling. As stated

10

in plaintiffs’ class certification motion, “[t]he core issue in this case is whether Uber breached its

11
United States District Court
Northern District of California

9

contracts with the class members.” (Plaintiffs’ Notice of Motion and Motion to Certify Damages

12

Class (“Class. Cert. Motion”) at 6, Dkt. No. 109 (emphasis supplied).) Plaintiffs’ summary

13

judgment motion similarly provides: “The premise of this case is that Uber was not contractually

14

entitled to take the money that it took out of the Driver-owned ‘fares’ on minimum-fare rides. By

15

doing so, Uber breached its contract with the Drivers and committed conversion.” (Plaintiffs’

16

Notice of Motion and Motion for Summary Judgment (“Plaintiffs’ MSJ”) at 2, Dkt. No. 109

17

(emphases supplied).) Indeed, while the section in plaintiffs’ motion concerning summary

18

judgment as to their breach of contract claim spans nine pages, the section regarding summary

19

judgment as to plaintiffs’ conversion claim consists solely of the following paragraph:

20
21
22

“[A] plaintiff must plead three elements to state a claim for conversion: (1)
ownership or right to possession of real property; (2) a defendant’s wrongful
interference with the claimant’s possession; and (3) damage to the claimant.”
Fields v. Wise Media, LLC, C 12-05160 WHA, 2013 WL 3187414, at *7 (N.D. Cal.
June 21, 2013). In light of the similarity between the Plaintiffs’ conversion and

23
24
25
26

5

Because the parties’ briefs indicate that “now neither party seeks bifurcation,” the Court
does not address that issue herein. (Plaintiffs’ Reply In Support of Motion Regarding Punitive
Damages (“Reply”) at 12, Dkt. No. 151; see also Defendants’ Opposition to Plaintiffs’ Motion
Regarding Punitive Damages (“Opposition”) at 12, Dkt. No. 149.)
6

27
28

See also Berkla v. Corel Corp., 302 F.3d 909, 917 (9th Cir. 2002) (“[P]unitive damages,
which are designed to punish and deter wrongful conduct, are not available in breach of contract
actions.”) (citing section 3294(a)).
3

2

breach of contract claims, the parties have stipulated that Uber’s liability for the
conversion claim should rise and fall with the breach of contract claim. (Dkt. 106
Stipulated Fact 4).

3

(Motion at 18 (emphasis supplied).) Based on this stipulation,7 and in light of the Court’s granting

4

of plaintiffs’ motion for summary judgment as to their breach of contract claim, the Court granted

5

plaintiffs’ motion for summary judgment as to their conversion claim. (See MSJ & Class Cert.

6

Order at 13.)

1

7

Against this backdrop of plaintiffs’ numerous statements conflating their breach of contract

8

and conversion claims, their reliance on Erlich v. Menezes, 21 Cal. 4th 543 (1999) to now argue

9

that they are entitled to punitive damages on their conversion claim is misplaced. Pursuant to
Erlich, the general rule is that tort recovery is precluded for non-insurance breach of contract cases

11
United States District Court
Northern District of California

10

unless the breach also “violates a duty independent of the contract arising from principles of tort

12

law.” Erlich, 21 Cal. 4th at 551. The California Supreme Court explained:

13
14
15
16
17
18
19

Generally, outside the insurance context, a tortious breach of contract . . . may be
found when (1) the breach is accompanied by a traditional common law tort, such
as fraud or conversion; (2) the means used to breach the contract are tortious,
involving deceit or undue coercion or; (3) one party intentionally breaches the
contract intending or knowing that such a breach will cause severe, unmitigable
harm in the form of mental anguish, personal hardship, or substantial consequential
damages. . . . Focusing on intentional conduct gives substance to the proposition
that a breach of contract is tortious only when some independent duty arising from
law is violated. . . . If every negligent breach of contract gives rise to tort damages
the limitation would be meaningless, as would the statutory distinction between tort
and contract remedies.

20

Id. at 553–54 (first alteration in original) (internal quotation marks and citations omitted). The

21

Court additionally noted that a “reason[] for denying tort recovery in contract breach cases” is “the

22

potential for converting every contract breach into a tort, with accompanying punitive damage

23

recovery[.]” Id. at 553. In light of these pronouncements by the California Supreme Court, this

24

Court finds that plaintiffs in the instant action are not entitled to an award of punitive damages for

25
7

26
27
28

Plaintiffs also cited this stipulation in their class certification motion, noting “[t]he
parties[’] agree[ment] that the Plaintiffs’ conversion claim rises and falls with their breach of
contract claim.” (Class Cert. Motion at 6 n.2; see also id. at 15 n.5 (“The parties agree that
Plaintiffs second cause of action—conversion—will rise and fall with the Plaintiffs’ breach of
contract action.”).)
4

1

a conversion claim entirely dependent upon their breach of contract claim. To hold otherwise

2

would effectively “convert[] [a] contract breach into a tort,” id. at 553, and thus render

3

“meaningless . . . the statutory distinction between tort and contract remedies,” id. at 554.8

4

Plaintiffs’ argument that Uber is attempting to “disavow its stipulation at this juncture”

5

does not persuade. First, it mischaracterizes the nature of the stipulation reached by the parties.

6

The parties did not stipulate specifically “to the ownership element [of conversion].” (Motion at

7

8; see also id. at 7.) Rather, they stipulated in general terms that “[p]laintiffs’ claim for conversion

8

will rise and fall with plaintiffs’ claim for breach of contract.” (Dkt. No. 106 Stipulated Fact 4.)

9

Second, plaintiffs misapprehend the arguments in Uber’s opposition brief. Contrary to plaintiffs’
bald assertion, Uber does not at this juncture “contend that the class members did not own the

11
United States District Court
Northern District of California

10

fares that they improperly kept.” (Reply at 8.) Rather, the essence of Uber’s argument pertaining

12

to plaintiffs’ entitlement to punitive damages is that since plaintiffs’ claims for breach of contract

13

and conversion “are identical, [p]laintiffs may not recover punitive damages for their conversion

14

claim.” (Opposition at 7.) Crucially, plaintiffs have not rebutted Uber’s claim that they “offered

15

no separate facts or briefing on their conversion claim.” (Id.) This is unsurprising given

16

plaintiffs’ numerous representations, outlined above, that their breach of contract and conversion

17
18
19
20
21
22
23
24
25
26
27
28

8

Plaintiffs’ reliance on Miller v. National American Life Insurance Company, 54 Cal.
App. 3d 331 (1974) is also misplaced as Miller involved causes of action based on contract and
fraudulent inducement. It is well settled that while “[p]unitive damages are not recoverable in an
action for breach of contract no matter how willful, malicious or fraudulent the breach . . . [,]
[t]hey may, however be awarded where a defendant fraudulently induces the plaintiff to enter into
a contract.” Walker v. Signal Cos., 84 Cal. App. 3d 982, 996 (1978); see also, e.g., Mahon v.
Berg, 267 Ca. App. 2d 588, 589–90 (1968) (affirming award of punitive damages where recovery
was based on fraudulent inducement into an unenforceable contract). Indeed, where an action
includes causes of action based on contract and fraudulent inducement, the court may properly
instruct the jury that punitive damages could be awarded only for fraud and that only
compensatory damages could be awarded for breach of contract. See Kuchta v. Allied Builders
Corp., 21 Cal. App. 3d 541, 549 (1971).
Putting aside the propriety of citing unpublished state court decisions, plaintiffs’ reliance
on Medison America, Inc. v. Badell, No. G033243, 2006 WL 148230 (Cal. Ct. App. Jan. 30, 3006)
is also misguided. As plaintiffs note, the court in Medison stated that the plaintiff was “not
precluded from recovering punitive damages just because [defendant’s] act of conversion also
constituted a breach of contract.” Id. at *3; see Reply at 6. However, the court there also noted
that “some of the equipment converted by [defendant] was not subject to the written sales
representative agreements.” Id. n.4 (emphasis supplied). Unlike in Medison, there are no
independent facts in the record unique to plaintiffs’ conversion claim.
5

1

claims are one and the same. (See supra pp. 3–4.)
In sum, plaintiffs are precluded as a matter of law from seeking punitive damages in the

2
3

instant case. Accordingly, plaintiffs are not entitled to discovery pertaining to the same, including

4

discovery pertaining to Uber’s financial condition.

5

III.

6

CONCLUSION
Because the Court finds that plaintiffs cannot seek punitive damages, their motion is

7

DENIED. Accordingly, the Court need not reach the issues raised in the parties’ briefs of whether

8

(i) plaintiffs’ request to seek discovery pertaining to punitive damages is untimely, or (ii) plaintiffs

9

must make a threshold showing of oppression, fraud, or malice before pursuing punitive

10

damages.9

United States District Court
Northern District of California

11

This Order terminates Docket Number 143.

12

IT IS SO ORDERED.

13
14

Dated: June 13, 2018
YVONNE GONZALEZ ROGERS
UNITED STATES DISTRICT COURT JUDGE

15
16
17
18
19
20
21
22
23
24
25
26
27
28

9

However, with respect to the former, the Court feels compelled to address one point
given plaintiffs’ disingenuous characterization of statements made by Uber’s counsel at oral
argument on October 31, 2017. Plaintiffs are correct that Uber’s counsel made the following
statement to the Court: “You asked the damages question. We haven’t done that in discovery
yet.” (Dkt. No. 128 at 43:16–17; see also Reply at 4.) However, plaintiffs omitted the portion of
counsel’s statement indicating that the outstanding discovery he contemplated was limited to
compensatory damages: “We have done an estimation of the 80 percent of the minimum fare rides
that 9600 opt-out class members took would come to about $1.4 million.” (Id. at 43:16–20.)
Indeed, plaintiffs’ counsel appeared to contemplate the same, explaining to the Court: “It’s a
contract construction case. . . . As far as the damages go, . . . we have not done discovery on this,
but I think Uber has indicated that they have a number already . . . .” (Id. at 35:11–14.) Moreover,
in response to the Court’s question whether plaintiffs’ counsel believed “defendants are entitled to
20 percent of the minimum fare,” id. at 21–23, plaintiffs’ counsel responded: “[I]t’s not so much
that they are entitled as is a question of how to calculate damages. But I think the short answer is
that in any reasonable damages calculation, you’d have to reduce it by 20 percent because that is
what we would have lost had they applied the contract properly.” (Id. at 43:24–44:4 (emphasis
added).) At no point during oral argument were punitive damages mentioned by either party.
6