Quesada et al-v-Bank of America Corporation
Filing
26
ORDER GRANTING 21 MOTION TO DISMISS, WITH LEAVE TO AMEND. Signed by Judge Jeremy Fogel on 9/8/2011. (jflc2, COURT STAFF) (Filed on 9/13/2011)
1
2
**E-Filed 9/13/2011**
3
4
5
6
7
8
IN THE UNITED STATES DISTRICT COURT
9
FOR THE NORTHERN DISTRICT OF CALIFORNIA
10
SAN JOSE DIVISION
11
12
ELWOOD QUESADA, JAMES DeROSA, and All
Others Similarly Situated,
13
Plaintiffs,
14
15
16
v.
Case No. 5:11-cv-1703 (HRL)
ORDER1 GRANTING MOTION TO
DISMISS, WITH LEAVE TO AMEND
[Re: Docket No. 21]
BANK OF AMERICA INVESTMENT
SERVICES, INC., NKA MERRILL LYNCH,
PIERCE, FENNER & SMITH, INC.
17
Defendant.
18
19
20
Pursuant to Fed. R. Civ. P. 12 (b)(6), Defendant Merrill Lynch, Pierce, Fenner & Smith
21
Inc. (“Merrill Lynch”) moves to dismiss the complaint of Plaintiffs Elwood Quesada and James
22
DeRosa (collectively, “Plaintiffs”) for failure to state a legally cognizable claim. Merrill Lynch
23
contends that the applicable statute of limitations bars this action and that Plaintiffs have failed to
24
allege sufficient facts to support a claim under California’s Invasion of Privacy Act, Cal. Pen.
25
Code §§ 630, et seq.
26
The Court has considered the moving and responding papers and the oral arguments of
27
28
1
This disposition is not designated for publication in the official reports.
Case No. 5:11-cv-1703
ORDER GRANTING MOTION TO DISMISS, WITH LEAVE TO AMEND
(JFEX3)
1
counsel at the hearing on August 19, 2011. For the reasons discussed below, the motion will be
2
granted, with leave to amend.
3
4
I. BACKGROUND
In January 2010, a Merrill Lynch employee called Quesada and DeRosa to discuss their
5
brokerage accounts with the firm. (FAC ¶ 23-24) Neither Plaintiff expected the calls to be
6
recorded, and neither consented to any recording. (Id.) Nonetheless, Plaintiffs discovered
7
approximately one year later that Merrill Lynch had recorded the calls. (FAC ¶ 25)
8
9
Plaintiffs filed this putative class action in the Santa Clara Superior Court on February 7,
2011, seeking statutory damages for violation of the Privacy Act. Merrill Lynch subsequently
10
removed the action to this Court and moved to dismiss. In response, Plaintiffs filed the FAC on
11
May 11, 2011.
12
II. LEGAL STANDARD
13
The Court may dismiss a complaint when it does not allege facts sufficient to state a
14
claim for which the law provides relief. See, e.g., Kelly v. Arizona, 409 Fed. Appx. 124, 126 (9th
15
Cir. 2010). Therefore, a plaintiff must allege “factual content that allows the court to draw the
16
reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal,
17
129 S. Ct. 1937, 1949 (2009), citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007). As it
18
evaluates a Rule 12(b)(6) challenge, the Court must take the plaintiff’s allegations as true and
19
construe them most favorably toward him. See Gompper v. VISX, Inc., 298 F.3d 893, 896 (9th
20
Cir. 2002). Conclusions of law posing as factual allegations, however, will not pass the test.
21
Anderson v. Clow (In re Stac Elecs. Sec. Litig.), 89 F.3d 1399, 1403 (9th Cir. 1996) (citation
22
omitted).
23
The Court may not dismiss a complaint without leave for the plaintiff to amend unless it
24
is clear that no amount of amending can save the complaint. Gompper, 298 F.3d at 898, citing
25
Polich v. Burlington Northern, Inc., 942 F.2d 1467, 1472 (9th Cir. 1991).
26
27
28
2
Case No. 5:11-cv-1703
ORDER GRANTING MOTION TO DISMISS, WITH LEAVE TO AMEND
(JFEX3)
1
2
3
III. DISCUSSION
A. Invasion of Privacy Act
The Invasion of Privacy Act generally prohibits the intentional recording of a confidential
4
communication without consent. See Cal. Penal Code §§ 632. Merrill Lynch contends that
5
Plaintiffs have failed to allege sufficient facts to support any of the three elements of this claim.
6
Plaintiffs allege that Merrill Lynch carried out a concerted effort to call its customers in
7
California and that it “planned . . . and implemented” a system to record phone calls such as
8
those made to Quesada and DeRosa. (FAC ¶¶ 9-10) They also allege that Merrill Lynch failed
9
to train its employees, including the employee who allegedly called Plaintiffs, “to inform its
10
clients that [Merrill Lynch] was recording the calls.” (FAC ¶ 11) Plaintiffs contend that a
11
reasonable inference may be drawn from those allegations that Merrill Lynch intentionally
12
recorded the calls. (Opp’n to Mot. to Dismiss, 5:13-6:7) The Court agrees.
13
Plaintiffs also allege that the communications were confidential and therefore protected
14
by the Invasion of Privacy Act. A telephone call is confidential for purposes of the Act only if a
15
party has an objectively reasonable belief that the discussion is not being recorded. Flanagan v.
16
Flanagan, 27 Cal. 4th 766, 768 (2002). Here, Plaintiffs assert that neither of them “had a
17
reasonable expectation” that their calls would be recorded. (FAC ¶¶ 23-24) They allege that
18
Merrill Lynch called them to discuss personal financial matters but made no effort to notify them
19
or members of the putative class of the recording. (FAC ¶¶ 11, 23-24). Given the common
20
business practice of informing customers that their calls may be monitored in an effort to ensure
21
quality customer service, it is at least plausible that the absence of such a disclaimer would create
22
a reasonable expectation on Plaintiffs’ part that their calls would not be monitored. Because
23
Plaintiffs also allege their lack of consent to the recordings, the FAC sufficiently states a claim
24
for violation of the Invasion of Privacy Act.
25
B. Statute of Limitations
26
Generally, plaintiffs seeking statutory damages must comply with the one-year statute of
27
limitations set forth in Cal. C. C. P. § 340(a). See Montalti v. Catanzariti, 191 Cal. App. 3d 96,
28
98 (1987). However, time does not begin to run on such actions brought under the Invasion of
3
Case No. 5:11-cv-1703
ORDER GRANTING MOTION TO DISMISS, WITH LEAVE TO AMEND
(JFEX3)
1
Privacy Act until the plaintiff discovers or should have discovered his injury. Id. at 99; see also
2
Kuschner v. Nationwide Credit, Inc., 256 F.R.D. 684, 690 (E.D. Cal. 2009) (given the nature of
3
secret recording, “it would defy logic” to deny plaintiffs discovery-rule exception).
4
“In order to rely on the discovery rule . . . , ‘[a] plaintiff whose complaint shows on its
5
face that his claim would be barred without the benefit of the discovery rule must specifically
6
plead facts to show (1) the time and manner of discovery and (2) the inability to have made
7
earlier discovery despite reasonable diligence.’” Fox v. Ethicon Endo-Surgery, Inc., 35 Cal. 4th
8
797, 808 (2005) at 808 (quoting McKelvey v. Boeing North American, Inc., 74 Cal. App. 4th 151,
9
160 (1999)); see also, Grisham v. Philip Morris U.S.A., Inc., 40 Cal. 4th 623, 638 (2007)
10
(holding that smoker must plead facts showing her inability to discover her addiction to tobacco
11
earlier); Rhynes v. Stryker Corp., 2011 WL 2149095 (N.D. Cal. 2011) (denying exception
12
because complaint stated only that “plaintiff was unaware of the injury from the defect” until
13
after the expired statute of limitations period).
14
Here, Plaintiffs allege only that they “discovered Defendant’s surreptitious recording . . .
15
approximately one year later . . . .” (FAC ¶ 25) They do not provide any specific facts that
16
explain how they made this discovery or why they were unable to do so earlier. Accordingly,
17
their claim is subject to dismissal as untimely. Because it appears that Plaintiffs may be able to
18
allege sufficient facts to satisfy the requirements of the delayed discovery rule, leave to amend
19
will be granted.
20
IV. ORDER
21
Good cause therefor appearing, the motion to dismiss is GRANTED. Any amended
22
complaint shall be filed within twenty (20) days of the date of this order.
23
24
IT IS SO ORDERED.
25
26
Dated: 9/8/2011
JEREMY FOGEL
United States District Judge
27
28
4
Case No. 5:11-cv-1703
ORDER GRANTING MOTION TO DISMISS, WITH LEAVE TO AMEND
(JFEX3)
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?