Reddy v. Medquist, Inc et al

Filing 152

ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS re 76 MOTION to Dismiss filed by Stephen R Smerek, Winston & Strawn, LLP, Neal R Marder, 150 Order, 68 MOTION to Dismiss Complaint Under FRCP 9(b), 12(b)(2), (b)(3), (b)( 6) filed by Stephen H Rusckowski, MedQuist Transcriptions, Ltd, MedQuist, Inc., CBay Systems Holdings, Ltd, 86 MOTION to Dismiss filed by Michael H Steinberg, Sullivan & Crowmell, LLP, Orly Z Elson, 84 MOTION to Dismiss filed by Philips Electronics North America Corporation, Koninklijke Philips Electronics NV. Signed by Judge Paul S. Grewal on July 18, 2013. (psglc1, COURT STAFF) (Filed on 7/19/2013)

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United States District Court
For the Northern District of California

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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KRISHNA REDDY,

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Plaintiff Krishna Reddy (“Reddy”) sued three groups of Defendants in this case: the

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Plaintiffs,
v.
MEDQUIST, INC. et al.,
Defendants.

Case No.: CV 12-01324-PSG
ORDER GRANTING DEFENDANTS’
MOTION TO DISMISS
(Re: Docket Nos. 68, 76, 84, 86)

“MedQuist entities,” consisting of MedQuist, Inc, (“MedQuist”) MedQuist Transcriptions, Ltd.,
(“MQT”), CBay Systems Holdings, Ltd. (“CBay”), Koninklijke Philips Electronics NV (“KPNV”),

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and Philips Electronics North America Corporation (“Philips”); the “MedQuist employees,”

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consisting of Stephen Rusckowski (“Rusckowski”), Kathy Pinkstaff, April Porter, Mayra Figueras,

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Russell Dunn, Steven Allen, Judy Compagno, Jason Gerster, John Quaintance, John Suender, and

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Ethan Cohen; and the “MedQuist attorneys,” consisting of Winston & Strawn LLP (“W&S”), Neal

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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

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Marder (“Marder”), Stephen Smerek (“Smerek”), Sullivan & Cromwell LLP (“S&C”), Michael

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Steinberg (“Steinberg), and Orly Elson (“Elson”). Reddy’s claims arise from her employment and

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termination at MedQuist, as well as the litigation that followed. Defendants now move to dismiss.

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The court found this matter suitable for disposition without oral argument pursuant to Civ. L.R. 7-

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1(b). Having considered the papers, the court GRANTS Defendants’ motion.

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I.

BACKGROUND1

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In September 1992, Reddy began working as a medical transcriptionist for Transcriptions,

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Limited, Inc., which later became MedQuist. In 1996, to supplement her income, Reddy began

United States District Court
For the Northern District of California

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working at a second medical transcription company (which later became MRC Group). Shortly

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thereafter, she took an additional medical transcriptionist job at yet another company, Your Office

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Genie (“YOG”), in Monrovia, California. MedQuist later acquired both MRC Group and YOG. In

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2000, Philips purchased MedQuist and took over the day-to-day operations.

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After MedQuist acquired both these latter medical transcription companies, MedQuist
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asked Reddy to work at only one branch and she chose Monrovia. Following this transition,

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Reddy’s pay fell below what she was entitled to for several reasons. First, MedQuist reduced the

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pay per line for medical transcriptionists to achieve a higher profit ratio for the company.

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MedQuist also used a different rate to pay medical transcriptionists, which resulted in a calculation

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of fewer lines per assignment as compared to the rate used to bill clients. Reddy also was paid a

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lower rate than other transcriptionists. In response, Reddy complained to management about what

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she viewed as unfair billing practices and applied for a transfer out of the Monrovia branch. In
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September 2003, Reddy was fired and marked ineligible for rehire at any MedQuist office.
In September 2006, three years after her termination, Reddy filed suit three years later

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against MedQuist, Philips, and the MedQuist employees in the District of New Jersey.2 Reddy

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Unless otherwise noted, the factual background is taken as alleged by Reddy’s complaint. See
Docket No. 1.
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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

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brought claims for violations of the RICO Act, fraud, civil conspiracy, interference with

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employment contract, breach of contract, and intentional and negligent infliction of emotional

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distress.3 On August 1, 2007 the New Jersey court dismissed all claims except for her claim for

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breach of contract.4 In January 2009, the New Jersey court granted summary judgment on the

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breach of contract claim, the sole remaining claim against MedQuist, and dismissed Reddy’s

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complaint in its entirety against all other defendants for failure to serve timely process. 5 Final

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judgment was entered on August 4, 2009; Reddy did not appeal.6
On June 19, 2009, Reddy sued MedQuist for the second time, this time in the Southern

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United States District Court
For the Northern District of California

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District of California, and adding CBay Systems as a defendant.7 Reddy’s complaint asserted the

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same set of claims as asserted in New Jersey, based on nearly identical facts.8 Because of the final

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judgment entered in Reddy’s prior New Jersey case, the court granted MedQuist’s motion to

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dismiss on res judicata grounds.9 With respect to Defendants Philips and Rusckowski, the court

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found that venue was improper and transferred the case to the Central District of California.10 The

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Central District then dismissed all claims asserted against Defendants Philips and Rusckowski for

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See Reddy v. MedQuist, Inc., Case No. 06-4410 (RBK/AMD), 2009 WL 250050 (D.N.J. Jan. 29,
2009).
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See id.

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See Docket No. 70, Ex. 1-C.

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See Docket No. 70, Ex. 1-D, Ex. 1-E.

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See Docket No. 70, Ex. 1-A.

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See Reddy v. MedQuist, Inc., Case No. 09CV1325-LBLM, 2010 WL 816154, at *1 (S.D. Cal.
Mar. 5, 2010).

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See id.

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See id. at 8.

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10

See Docket No. 70, Ex. 2-A.
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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

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lack of personal jurisdiction.11 The Central District later dismissed the complaint in its entirety

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against all remaining defendants because of Reddy’s failure to timely serve. This time, Reddy

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appealed, but the Ninth Circuit affirmed.12

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On March 16, 2012, Reddy filed the present action against MedQuist, Philips, various

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MedQuist employees and their attorneys as well as additional related corporate entities.13 Her

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claims are essentially based on the same set of factual assertions surrounding her past employment
at MedQuist and she asserts nearly identical causes of action as in her prior lawsuits.14 She brings
claims of (1) RICO Act violations, (2) Cal. Lab. Code § 2751 violations, (3) breach of written

United States District Court
For the Northern District of California

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contract, (4) breach of the covenant of good faith and fair dealing, (5) “violation of public policy,”

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(a whistleblower claim relating to the Sarbanes-Oxley Act), (6) promissory estoppel, (7) fraud,

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deceit and civil conspiracy, (8) intentional and negligent interference with contract and prospective

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economic advantage, (9) Cal. Lab. Code §§ 1050 and 1052 violations, (10) violation of civil and
constitutional rights, (11) intentional and negligent infliction of emotional distress, and (12) a new

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claim for “unconstitutional offshoring of medical information.”15
II.

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LEGAL STANDARDS

A complaint must contain “a short and plain statement of the claim showing that the pleader

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is entitled to relief.”16 If a plaintiff fails to proffer “enough facts to state a claim to relief that is

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plausible on its face,” the complaint may be dismissed for failure to state a claim upon which relief

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See Docket No. 70, Ex. 3-B.

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See Reddy v. Medquist, Inc., 467 Fed. App’x 647, 649 (9th Cir. 2012).

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See Docket No. 1.

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See id.

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Id.

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Fed. R. Civ. P. 8(a)(2).
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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

1

may be granted.17 A claim is facially plausible “when the pleaded factual content allows the court

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to draw the reasonable inference that the defendant is liable for the misconduct alleged.”18

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Accordingly, under Fed. R. Civ. P. 12(b)(6), which tests the legal sufficiency of the claims alleged

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in the complaint, “[d]ismissal can be based on the lack of a cognizable legal theory or the absence

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of sufficient facts alleged under a cognizable legal theory.”19

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On a motion to dismiss, the court must accept all material allegations in the complaint as
true and construe them in the light most favorable to the non-moving party.20 The court’s review is
limited to the face of the complaint, materials incorporated into the complaint by reference, and

United States District Court
For the Northern District of California

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matters of which the court may take judicial notice.21 However, the court need not accept as true

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allegations that are conclusory, unwarranted deductions of fact, or unreasonable inferences.22

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“Dismissal with prejudice and without leave to amend is not appropriate unless it is clear . . . that

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the complaint could not be saved by amendment.”23

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III.

DISCUSSION

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A.

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Failure to Properly Serve

As a preliminary matter, none of the MedQuist employees except MedQuist CEO

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Rusckowski have appeared in this court. Noting that Reddy tried to serve the MedQuist employees

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simply by mailing notice to MedQuist’s Tennessee headquarters, the court ordered Reddy to show

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Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).

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Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009).

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Balistreri v. Pacifica Police Dep’t., 901 F.2d 696, 699 (9th Cir. 1990).

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See Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1061 (9th Cir. 2008).

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See id. at 1061.

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See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); see also Twombly,
550 U.S. at 561 (“a wholly conclusory statement of [a] claim” will not survive a motion to
dismiss).
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Eminence Capital, LLC v. Asopeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).
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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

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cause as to why the Medquist employee defendants had not been properly served under Fed. R.

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Civ. P. 4(e).24 Rule 4(e) requires that an individual be served with the summons and complaint

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either by following state law for service in the state where the district court is located, or doing any

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of the following: (A) personal delivery, (B) leaving a copy at the individual’s dwelling or usual

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place of abode with someone of suitable age and discretion who resides there, or (C) delivering a

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copy to an agent authorized by appointment or law to receive service of process.

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None of the three specified options were satisfied here. Reddy never personally delivered

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the complaint, nor did she leave a copy at anyone’s residence or deliver to an authorized agent.

United States District Court
For the Northern District of California

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Although she claims that the person she delivered the documents to, Lisa King (“King”), was

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authorized to receive service on behalf of the MedQuist employees, the summons returned

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executed indicates King is the authorized agent for MedQuist itself, not its employees.25

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Reddy claims that her purported service was effective under California Code of Civil
Procedure sections 415.20 and 415.40 because she personally served an authorized person at the

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defendants’ business address and thereafter mailed a summons and complaint to the same address
via certified mail.26
But California law requires more. Section 415.20 states “if a copy of the summons and

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complaint cannot with reasonable diligence be personally delivered to the person to be served… a

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summons may be served by leaving a copy of the summons and complaint at the person's dwelling,

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house, usual place of abode, usual place of business, or usual mailing address other than a United
States Postal Service post office box.”27 Reddy has not demonstrated that she was not able to serve

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the MedQuist employees after exercising reasonable diligence. She also failed to mail the

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See Docket No. 150.

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See Docket No. 151.

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See id.

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Cal. Civ. Proc. Code § 415.20.
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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

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summons and the complaint to any of the employee’s usual place of business, which her complaint
itself alleges is in California, 28 instead sending copies to MedQuist’s headquarters in Tennessee.
Reddy alternatively claims that her mailings satisfied Section 415.40, which states that

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services may be made on “a person outside this state in any manner provided by this article or by

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sending a copy of the summons and of the complaint to the person to be served by first-class mail,

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postage prepaid, requiring a return receipt.”29 But neither her complaint nor her response to the

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order to show cause demonstrate that any of the MedQuist employees reside outside of California.
Because Reddy has failed show cause as to why proper service has not been executed, and

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United States District Court
For the Northern District of California

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120 days have passed since the filing of her complaint,30 Reddy’s claims against Kathy Pinkstaff,

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April Porter, Mayra Figueras, Russell Dunn, Steven E. Allen, Judy Compagno, Jason Gerster, John

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W. Guaintance, John M. Suender, and Ethan Cohen are dismissed.

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B.

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Motion to Dismiss

Defendants argue that Reddy’s claims should be dismissed on the grounds of res judicata,

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collateral estoppel, expiration of the applicable statutes of limitations, and failure to state a claim
upon which relief may be granted. The court discusses each of these bases below in turn.
1.

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Res Judicata

The doctrine of res judicata “ensures the finality of decisions” and “serves to protect

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adversaries from the expense and vexation of attending multiple lawsuits… and to foster reliance

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on judicial action.”31 Res judicata applies when the earlier suit involved (1) an identity of claims,

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See Docket No. 1, 38-47.

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Cal. Civ. Proc. Code § 415.40.

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Fed. R. Civ. P. 4(m).

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31

Americana Fabrics, Inc. v. L & L Textiles, Inc., 754 F.2d 1524, 1529 (9th Cir. 1985).
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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

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(2) a final judgment on the merits, and (3) identity or privity between parties.32 If applicable, res

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judicata “bars not only all claims that were actually litigated, but also all claims that could have

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been asserted in the prior action.”33

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Several of the claims brought by Reddy in the current suit have already been litigated on the
merits. The District of New Jersey and the Southern District of California both previously entered
final judgment in favor of MedQuist and CBay on Reddy’s claims for RICO, fraud, civil

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conspiracy, interference of employment contract, breach of contract, breach of the covenant of
good faith and fair dealing, and intentional and negligent infliction of emotional distress. In those

United States District Court
For the Northern District of California

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cases, Reddy relied on the same facts and legal rights to support her claims as she does now.34

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Specifically, she again alleges that MedQuist violated her employment contract by paying her less

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per transcription line and refusing to rehire her. The rights established by MedQuist in the New

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Jersey case and recognized in the Southern California case would be substantially impaired, if not
outright extinguished, by allowing Reddy to litigate anew legal claims that had previously been

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adjudicated.
Although final judgment on the merits was not entered in New Jersey as to Philips, the only

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allegations in the complaint against Philips stem from its ownership of MedQuist. As succeeding

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owner of MedQuist, Philips is in privity with the other MedQuist entities and receives the benefit

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of res judicata.35

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32

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See Turtle Island Restoration Network v. U.S. Dep’t of State, 673 F.3d 914, 917 (9th Cir. 2012).

Int’l Union of Operating Eng’rs-EmployersConstr. Indus. Pension, Welfare & Training Trust
Funds v. Karr, 994 F.2d 1426, 1429 (9th Cir. 1993).
34

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See Kay v. City of Rancho Palos Verdes, 504 F.3d 803, 809 (9th Cir. 2007); Turtle Island
Restoration Network, 673 F.3d at 917.

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35

See Taylor v. Sturgell, 553 U.S. 880, 894 (2006). See also Reddy, 2010 WL 816154, at *4.
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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

Reddy argues that her prior suit in New Jersey does not have preclusive effect because a

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final judgment on the merits was not in fact entered. That assertion is incorrect. Both summary

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judgment and Fed. R. Civ. P. 12(b)(6) dismissal are “judgments on the merits” that wield

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preclusive effect.36 In any event, the docket plainly shows that on August 4, 2009, the complaint

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was dismissed in its entirety and final judgment was entered.37

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2.

Collateral Estoppel

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Although final judgment on the merits was not entered as to Rusckowski in the New Jersey

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action,38 he can assert its preclusive effect under the doctrine of non-mutual issue preclusion. Issue

United States District Court
For the Northern District of California

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preclusion may also prevent Reddy from recasting the same suit under different claims, if the

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underlying issues remain the same. The Supreme Court has long recognized that the “defensive

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use of collateral estoppel precludes a plaintiff from re-litigating identical issues by merely

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switching adversaries.”39

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Issue preclusion prevents a party from re-litigating issues from a prior action if (1) there
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was a fully and fair opportunity to litigate the issue in the previous action, (2) the issue was

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actually litigated in the previous action, (3) the issue was lost as a result of a final judgment in that

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action, and (4) the person against whom collateral estoppel is asserted in the present action was a

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party or in privity with a party in the previous action.40

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Reddy alleges a number of wrongs – the MedQuist entities and employees breached her
employment contract by paying her less per transcription line, they engaged in conspiracy and

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36

See Federated Dep’t Stores v. Moitie, 452 U.S. 394, 399 n. 3 (1981); Hells Canyon Pres.
Council v. U.S. Forest Serv., 403 F.3d 683, 686 (9th Cir. 2005).
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See Docket No. 70, Ex. 1-A.

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As noted previously, the New Jersey and Central District of California both dismissed Reddy’s
claims against the MedQuist employees for procedural and jurisdictional reasons.

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Parklane Hosiery Co. Inc. v. Shore, 439 U.S. 322, 329, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979).

See In re Palmer, 207 F.3d 566, 568 (9th Cir. 2000).
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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

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fraud to do so, they unfairly terminated and refused to rehire her, misappropriated confidential

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medical information of United States citizens, and the MedQuist attorneys harassed her. With the

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exception of the medical offshoring and attorney harassment claims, the employment-related

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allegations are not new and have already been litigated. Reddy had a full and fair opportunity to

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present these issues in the New Jersey suit, in her complaint and advocacy at the motion to dismiss

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and summary judgment stages, and yet the court ruled against her. The law is clear that Reddy

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may not re-litigate these same issues in new claims against new parties. As her claims for Cal.
Lab. Code § 2751 violations, “violation of public policy,” promissory estoppel, and violations of

United States District Court
For the Northern District of California

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Cal. Lab. Code §§ 1050 and 1052 rest on the same allegations regarding her employment and

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termination at MedQuist, these claims are subject to collateral estoppel. This leaves only her tenth,

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eleventh, and twelfth claims, which allege litigation misconduct and illegal offshoring of private

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medical data.

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3.

Statute of Limitations

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Even if res judicata and collateral estoppel did not apply to Reddy’s employment-related

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claims, all of these claims are necessarily time-barred. All of the events giving rise to Reddy’s

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employment-related claims took place sometime between 1993 and 2003, the period when Reddy

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was employed at MedQuist or one of its acquisitions. Reddy filed the present action in March

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2012, more than nine years after her termination at MedQuist. The longest applicable statute of

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limitations for any of her claims arising during her employment is four years, as set forth below:

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RICO claims

four years41

California Labor Code § 2751 claim

four years42

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See Agency Holding Corp., v. Malley-Duff & Assocs., Inc., 483 U.S. 143, 156-57 (1987).

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See Cal. Code Civ. Proc. § 337.
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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

Breach of a written contract

four years 43

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Breach of the covenant of good faith and fair dealing

four years 44

3

Violation of public policy

two years45

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Promissory estoppel

two or four years46

Fraud and civil conspiracy

three years47

Intentional and negligent interference with contract and

two years48

1

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United States District Court
For the Northern District of California

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prospective economic advantage
California Labor Code sections 1050 and 1052

three years49

Intentional and negligent infliction of emotional distress

one or three years50

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Reddy argues that her claims should be tolled during the prior litigation dismissed on the

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merits, but cites no authority to support her contention. Even if Reddy were correct, her claims still
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have exceeded any applicable statute of limitations. The New Jersey action was filed in 2006

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dismissed in its entirety in 2009, totaling only three years. Even accounting for this unexplained

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tolling period, more than six years have elapsed since Reddy’s termination from MedQuist,

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43

See id.

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See Harrell v. 20th Century Ins. Co., 934 F.2d 203, 208 (9th Cir. 1991).

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45

See 18 U.S.C. § 1514A(b)(2)(A) (procedures under § 42121(b) govern SOX whistleblower
claims); 29 C.F.R. § 1980.112(a); Cal. Civ. Proc. Code § 335.1.

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46

See Cal. Code Civ. Proc. § 337; Cal. Civ. Proc. Code § 339.

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See Cal. Code Civ. Proc. § 338(d); Gardner v. UICI, 508 F.3d 559, 562 (9th Cir. 2007).

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See Cal. Code Civ. Proc. § 339.

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49

See Civ. Code Proc. § 338(a).

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50

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See Cal. Code Civ. Proc. § 335.1; Unruh-Haxton v. Regents of Univ. of Cal., 162 Cal. App. 4th
343, 356-57 (2008); Averbach v. Vnescheconombank, 280 F.Supp. 2d 945, 958, n.6 (2003).
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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

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precluding any claims based on her employment there. As any amendment would be futile, these
claims are dismissed with prejudice.
4.

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Defendants also challenge Reddy’s claims because they fail to state a claim upon which

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Failure to State a Claim Upon Which Relief Can Be Granted

relief can be granted.

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i.

Tenth Claim for Civil and Constitutional Rights Violations

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Reddy alleges civil and constitutional rights violations under 42 U.S.C. § 1985 and 18

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U.S.C. §§ 251 and 252. Sections 251 and 252 do not exist, but earlier on in Reddy’s complaint she

United States District Court
For the Northern District of California

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cites 18 U.S.C. §§ 241 and 242. Even if the court assumes this was Reddy’s intended reference,

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the sections cited are criminal statutes that do not provide a private civil cause of action.51

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Section 1985 prohibits conspiracies interfering with civil rights.52 To state a claim under
Section 1985, “a complaint must allege (1) a conspiracy, (2) to deprive any person or a class of
persons of the equal protection of the laws, or of equal privileges and immunities under the laws,

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(3) an act by one of the conspirators in furtherance of the conspiracy, and (4) a personal injury,
property damage or a deprivation of any right or privilege of a citizen of the United States.”53
Reddy alleges two factual bases for her Section 1985 claim, both of which are unavailing.

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First, she argues that Defendants indulged in “oppressive behavior that lacked basic human

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conscience or decency by intimidating” her through “oppressive name-calling.”54 Even if accepted

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51

See Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980).

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52

Sanchez v. City of Santa Ana, 936 F.2d 1027, 1039 (9th Cir. 1990).

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Jules v. Croley, Case No. CIVS07-2797LEW EFBPS, 2008 WL 1349847, at *2 (E.D. Cal. Apr.
9, 2008) (citing Sanchez, 936 F.2d at 1039).
54

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Docket No. 1 ¶ 100.
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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

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as true, “verbal harassment or abuse” or mere “name-calling” is insufficient to show that the
plaintiff suffered a constitutional deprivation.55
Second, Reddy alleges that Defendants precluded her from “seeking justice in a Court of

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law.”56 While 42 U.S.C. 1985(2) prohibits conspiracies to deter, by force, intimidation, or threat,

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any party or witness in any court of the United States from attending such court, no facts in her

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complaint support her contention that Defendants intimidated her or used physical force to prevent

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her from attending a court of law. The only statement in her complaint that could possibly be
construed to support this claim is that Defendants moved the court to declare Reddy a vexatious

United States District Court
For the Northern District of California

10

litigant, a motion which the court granted.57 That fact alone cannot sustain her claim because

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violations of 42 U.S.C. § 1985(2) must be based on conduct outside of the litigation, as opposed to

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argument within the litigation.58 Such statements are barred by the litigation privilege, which

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immunizes statements made in a judicial proceeding.59 Reddy also does not allege that she was

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hampered in her ability to present her case, as required by the statute.60

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Further, Reddy fails to allege any facts showing conspiracy, which is required under both

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1985(2) and (3). The bare assertion that Defendants engaged in a conspiracy will not suffice; the

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complaint must state a set of facts that would nudge her claims “across the line from conceivable to

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plausible.”61

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55

Oltarzewski v. Ruggiero, 830 F.2d 136, 139 (9th Cir. 1987); Jules, 2008 WL 1349847, at *2.

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56

Docket No. 1 ¶ 100.

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57

See Docket No. 121.

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58

25

See Kinnard v. Brisson, Case No. C-03-3127 MMC, 2004 WL 1465693, at *4 (N.D.
Cal. June 21, 2004)
59

See Action Apartment Ass’n Inc. v. City of Santa Monica, 41 Cal. 4th 1232, 1242 (2007).

60

See Rutledge v. Arizona Bd. of Regents, 859 F.2d 732, 735 (9th Cir. 1988).

61

Twombly, 550 U.S. at 546, 570.

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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

Because Reddy offers no basis upon which to believe any amendment would not be futile,

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and her repetitive litigation tactics demonstrate bad faith and prejudice to the opposing parties,62

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this claim is dismissed without leave to amend.

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b. Reddy’s Eleventh Claim for Intentional and Negligent Infliction of
Emotional Distress

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Reddy brings an intentional and negligent infliction of emotional distress claim against all

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defendants. As noted above, res judicata and the statute of limitations bar this claim as arising

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from Reddy’s employment. She also asserts this claim outside of the employment context against

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MedQuist, CBay, Philips, Rusckowski, and their respective attorneys, which the court now

United States District Court
For the Northern District of California

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evaluates.

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Intentional infliction of emotional distress requires the plaintiff to allege (1) outrageous

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conduct, (2) intent to cause, or reckless disregard of the probability of causing (3) severe emotional

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distress, and (4) an actual and proximate causal link between the tortious conduct and the

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emotional distress.63 For conduct to qualify as outrageous, it must be so extreme that it “goes

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beyond all possible bounds of decency so as to be regarded as atrocious and utterly intolerable in a

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civilized community.”64 Severe emotional distress means “emotional distress of such substantial

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quality or enduring quality that no reasonable [person] in civilized society should be expected to
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endure it.”65 Reddy alleges that she endured name-calling by MedQuist’s attorneys during her

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employment lawsuit. But mere name-calling cannot give rise to any plausible inference that

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Defendants acted in such a way that went “beyond all possible bounds of decency so as to be

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62

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Foman v. Davis, 371 U.S. 178, 182 (1962) (reasons for denying leave to amend include “undue
delay, bad faith or dilatory motive on the part of the movant… [and] undue prejudice to the
opposing party by virtue of allowance of the amendment).

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63

See Nally v. Grace Cmty. Church, 47 Cal. 3d 278, 300 (1988).

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64

Gomon v. TRW, 28 Cal. App. 4th 1161, 1172 (1994).

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65

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Hughes v. Pair, 46 Cal. 4th 1035, 1051, (2009).
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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

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regarded as atrocious and utterly intolerable in a civilized community.”66 “Insults, indignities,

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annoyances, petty oppressions, or other trivialities” plainly do not suffice.67 Moreover, as noted

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previously, the litigation privilege again bars allegations based on Defendants’ conduct in judicial

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proceedings.68

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As to Reddy’s claim for negligent infliction of emotional distress, she fails to plead the
basic elements of negligence. California courts have repeatedly held that negligent infliction of

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9

United States District Court
For the Northern District of California

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emotional distress is not an independent tort, but merely a variety of negligence, which requires
pleading of duty, breach, causation, and damages.69 Reddy does not do so, and so her claim is
insufficient.

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As before, because amendment would be futile and her litigation history against Defendants
show bad faith, these claims are dismissed without leave to amend.

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c. Plaintiff’s Twelfth Claim for “Unconstitutional Offshoring”

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Reddy’s final claim alleges MedQuist deprived individual citizens of their constitutional

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right to privacy when it sent private medical records to India for transcription.70 But a

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constitutional deprivation requires state action, and Reddy has not alleged any facts by which one

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might plausibly conclude that MedQuist is a state actor. 71 Reddy also cannot establish standing

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because she cannot show injury-in-fact.72 Her only allegation in support of this claim is that

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66

Gomon, 28 Cal. App. 4th at 1172.

67

Id.

68

See Action Apartment Ass’n Inc., 41 Cal. 4th at 1242.

69

See Burgess v. Superior Court, 2 Cal. 4th 1064, 1072 (1992).

70

See Docket No. 1.

71

See Whalen v. Roe, 429 U.S. 589, 598-600, n.23 (2003).

72

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).

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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT

1

MedQuist stores confidential medical records of patients outside the United States. Reddy was an

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employee, not a patient with records handled by MedQuist, evidenced by the fact that she does not

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allege her own records were improperly handled or transmitted offshore.

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5

Because of the lack of a state actor and Reddy’s inability to establish standing, this claim
cannot be cured and is dismissed without leave to amend.

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V. CONCLUSION
Reddy’s claims are dismissed without leave to amend.

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United States District Court
For the Northern District of California

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IT IS SO ORDERED.
Dated: July 18, 2013
_________________________________
PAUL S. GREWAL
United States Magistrate Judge

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Case No.: CV 12-01324-PSG
ORDER GRANTING MOTION TO DISMISS PLAINTIFFS’ COMPLAINT