Ramos v. Capital One, N.A et al

Filing 28

ORDER DENYING 5 MOTION TO STAY. Signed by Judge Beth Labson Freeman on 3/7/2017. (blflc4, COURT STAFF) (Filed on 3/7/2017)

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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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JOSE ANTONIO RAMOS,

Case No. 17-cv-00435-BLF

Plaintiff,
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v.

ORDER DENYING MOTION TO STAY

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CAPITAL ONE, N.A., et al.,

[Re: ECF 5]

Defendants.

United States District Court
Northern District of California

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Before the Court is Defendants’ motion seeking a stay of this action until the California

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Court of Appeal reaches its decision in Ron Kempton, et al. v. Capital One Financial Corporation,

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No. 37-2014-00023795-CU-MC-NC (Cal. Super. Ct.) sub nom. Dalia Rojas v. HSBC Card

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Services Inc., et al., No. D071442 (Cal. App. Ct. filed Nov. 18, 2016) (the “Rojas case”). Mot.,

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ECF 5, Joinder to Mot., ECF 22. Plaintiff Jose Antonio Ramos (“Plaintiff”) opposes the motion,

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claiming that Defendants did not meet their burden of showing that a stay is warranted. Opp’n.,

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ECF 18. Pursuant to Civ. L.R. 7-1(b), the Court finds Defendants’ motion to stay suitable for

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submission without oral argument and hereby VACATES the hearing scheduled for July 27, 2017.

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As set forth below, the Court finds that the Defendants’ requested stay is not justified and hereby

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DENIES the motion.

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I.

BACKGROUND
Plaintiff alleges the following facts in his complaint. Compl., Ex A. to Notice of Removal,

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ECF 1. Plaintiff is a California resident whose wife was employed by Defendants HSBC Card

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Services Inc. (“Card Services”) at an HSBC Technology & Services (USA) Inc. (collectively,

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“HSBC”) facility in Salinas, California, from March 2009 to May 2012. Compl. ¶¶ 7, 28. As of

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May 1, 2012, Defendant Capital One Financial Corporation (“Capital One”) acquired certain

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assets of HSBC, including the Salinas facility. Plaintiff’s wife thereafter was employed by Capital

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One from May 1, 2012 through October 2013. Id. ¶ 29.
Plaintiff alleges that during the relevant time period, he had “numerous personal telephone

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communications” with Defendants’ employees, including his wife. Id. ¶¶ 30-32. According to

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Plaintiff, Defendants intentionally recorded the conversations without his consent or knowledge.

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Id. ¶¶ 32-33.
Plaintiff filed a complaint in Monterey County Superior Court asserting that Defendants

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violated the California Invasion of Privacy Act. Compl.; Cal. Penal Code §§ 632, 632.7. HSBC

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removed the case to this Court. Notice of Removal. Defendants then filed a motion to dismiss

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and a motion to stay the case. ECF 5, 7. The Court now addresses Defendants’ motion to stay.

United States District Court
Northern District of California

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II.

LEGAL STANDARD
“Granting a motion to stay is within the sound discretion of the Court.” Fuller v. Amerigas

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Propane, Inc., No. 09-2493, 2009 WL 2390358, at *1 (N.D. Cal. Aug. 3, 2009). The power to

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stay is “incidental to the power inherent in every court to control the disposition of the causes on

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its docket with economy of time and effort for itself, for counsel, and for litigants.” Id. (quoting

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Rivers v. Walt Disney Co., 980 F. Supp. 1358, 1360 (C.D. Cal. 1997) (quoting Landis v. N. Am.

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Co., 299 U.S. 248, 254 (1936) (internal quotation marks omitted)).

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“In considering whether a stay is appropriate, the Court weighs three factors: [1] the

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possible damage which may result from the granting of a stay, [2] the hardship or inequity which a

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party may suffer in being required to go forward, and [3] the orderly course of justice measured in

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terms of the simplifying or complicating of issues, proof, and questions of law which could be

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expected to result from a stay.” See Gustavson v. Mars, Inc., Case No. 13-cv-04537-LHK, 2014

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WL 6986421, at *2 (N.D. Cal. Dec. 10, 2014) (internal quotation marks and citation omitted)

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(brackets in original). These factors are drawn from the Supreme Court’s decision in Landis v.

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North American Co., 299 U.S. 248 (1936). Id. “If there is even a fair possibility that a stay will

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work damage to someone else, the stay may be inappropriate absent a showing by the moving

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party of hardship or inequity.” Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d

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1059, 1066 (9th Cir. 2007) (internal quotation marks omitted) (citing Landis, 299 U.S. at 255).
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In addition, the “proponent of a stay bears the burden of establishing its need.” Clinton v.

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Jones, 520 U.S. 681, 708 (1997) (citing Landis, 299 U.S. at 255). If there is “even a fair

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possibility” of harm to the opposing party, the moving party “must make out a clear case of

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hardship or inequity in being required to go forward.” Landis, 299 U.S. at 255.

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III.

DISCUSSION
Defendants contend that a stay of the present case pending resolution of the Rojas case on

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appeal will conserve judicial resources without prejudice to Plaintiff. A denial of stay would

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cause hardship to the parties when they have to expend time and resources litigating this case.

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Plaintiff argues that Defendants have made an insufficient showing to warrant a stay. Before

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United States District Court
Northern District of California

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turning to the merits of these arguments, the Court addresses HSBC’s request for judicial notice.
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Judicial Notice
HSBC has requested judicial notice of six documents filed in the Rojas case, attached to

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the request as Exhibits A through H: (A) HSBC’s motion for summary judgment; (B) plaintiff

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Rojas’ opposition to the summary judgment motion; (C) HSBC’s reply in support of the motion

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for summary judgment; (D) order granting HSBC’s motion for summary judgment; (E) excerpts of

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the certified reporter’s transcript for the November 4, 2016 hearing; (F) the notice of appeal., (G)

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Notice regarding fee for record on appeal; and (H) Order denying motion to stay in Nicklaus Lal v.

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Capital One N.A., et al., No. 5:16-cv-06674-BLF (N.D. Cal.) (the “Lal Stay Order”). RJN, ECF 6.

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Judicial notice is appropriate with respect to all these exhibits because they are documents

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publicly filed with the San Diego County Superior Court and this Court. See Mir v. Little Co. of

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Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988) (court may take judicial notice of matters of public

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record). Plaintiff opposed the request for judicial notice because the documents have no “direct

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relation to the matters at issue.” Opp’n 6-7. Courts “may take notice of proceedings in other

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courts, both within and without the federal judicial system, if those proceedings have a direct

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relation to matters at issue.” U.S. ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc.,

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971 F.2d 244, 248 (9th Cir. 1992). The Court finds that the facts of the Rojas case and Nicklaus

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Lal v. Capital One N.A., et al., No. 5:16-cv-06674-BLF (N.D. Cal. filed Nov. 17, 2016) (the “Lal

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case”) are very similar. In the Rojas case, the Lal case, and the case here, the plaintiffs assert the
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same causes of action arising from similar allegations concerning recording of telephone

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conversation by the defendants. Accordingly, the documents have a “direct relation to the matters

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at issue.” See Mot. 3-5.

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Plaintiff also argues that the documents to be noticed contain disputed facts and arguments

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so the Court may not take judicial notice of them to prove the truth of the contents. Opp’n 7 -8.

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However, Plaintiff’s objection to the Court taking judicial notice of the documents filed in other

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proceedings is misguided. The Court does not take judicial notice of the legal reasoning or

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disputed facts contained therein, but rather the existence of such allegations and arguments. Reply

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8-9; Lee v. City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001) (permitting a court to take
judicial notice of another court’s opinion, but not the truth of the facts recited therein). Plaintiff

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United States District Court
Northern District of California

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does not dispute the authenticity of the documents, either. As such, the request for judicial notice

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is GRANTED with respect to all the exhibits attached to HSBC’s request.

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B.

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The Court turns to the first Landis factor: possible prejudice that could arise from granting

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the stay. Defendants argue that a stay will not damage Plaintiff given that the allegations relate to

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calls made between 2009 and 2012, made over four to seven years ago. Mot. 7. According to

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Defendants, Plaintiff has not alleged any ongoing violations, confirming that a stay of causes of

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actions that are already stale would not incur any additional damages. Id.; Reply 2. Defendants

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also contend that oral argument in Rojas likely will occur by the end of the year given the briefing

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schedule. Reply 2-3. Plaintiff contends that if a stay were to be granted, evidence could be lost or

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destroyed, witness memories could fade, and witnesses might become unavailable. Opp’n 3.

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Plaintiff further argues that a stay should not be instituted because of the strong public policy

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favoring expeditious resolution of litigation. Id. at 4.

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Possible Prejudice from Granting Stay

Given that Plaintiff’s allegations were based on events that occurred more than four to

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seven years ago, additional damage from granting a stay should be relatively small in comparison

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to damage from the pre-existing delay. However, the Court finds that with passing time, there

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remains a risk of lost and destroyed evidence, as well as fading witness memories. Although

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Defendants predict that oral argument will be scheduled by the end of this year based on the
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appellate briefing schedule, it is not certain that this prediction will come to fruition. As such, the

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parties may need to wait for the state court appellate decision for an indefinite amount of time,

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which is a concern of this Court. The Court thus finds that a stay pending the state appellate court

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decision could prejudice Plaintiff.

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C.

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The Court next considers the possible harm that could arise from going forward. CMAX,

Possible Hardship or Inequity from Denying Stay

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300 F.2d at 268. Defendants argue that denial of the stay would force it to devote significant legal

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expense to the present action, which may be rendered unnecessary by the appellate decision in the

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Rojas case. Mot. 6; Reply 4-5. In addition, Defendants contend that litigating this case and the
Lal case simultaneously adds to their hardship. Reply 5. Plaintiff contends that Defendants’

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United States District Court
Northern District of California

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speculative argument on irreparable harm does not justify a stay. Opp’n 4-5.
Aside from conclusory assertions, Defendants have not provided any detail as to why

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simultaneous litigation of this case and the Lal case that have substantial overlap in their factual

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and legal issues would cause a significant burden relative to litigating only the Lal action.

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Defendants also similarly proffer no support for their argument that the “vast majority of the

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burden” will be placed on them as opposed to Plaintiff. Mot. 8. A denial of stay would require

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both parties to expend significant resources to litigation. Recognizing the potential burden for

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both parties, the potential hardship from denying the stay weighs slightly in favor of granting it.

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See, e.g., Google Inc. v. Creative Labs, Inc., No. 16-02628-JST, 2016 WL 6947564, at *2 (N.D.

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Cal. Nov. 28, 2016) (noting that there could be “potential duplication of discovery” between the

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ITC investigation and federal proceedings and ultimately finding the “hardship” factor to be

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largely neutral).

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A.

Orderly Course of Justice
The Court now addresses the third, and last, of the Landis factors—whether a stay will

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complicate or simplify the issues before it. According to Defendants, the claims dismissed by the

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trial court in the Rojas case are identical to the claims asserted here. Mot. 8-9; Reply 6.

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Defendants argue that because the order granting their summary judgment is on appeal and

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addressed the same issues in this case, the appellate decision will be important in defining and
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determining the issues presented here. Mot. 8-9. In opposition to this motion for stay, Plaintiff

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argues that the Rojas case has no bearing on this action because Plaintiff is not a party to the Rojas

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case. Opp’n 5. Plaintiff also contends that even if Defendants did not “intentionally” record the

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telephone conversations implicated in the Rojas case, this Court could still find that Plaintiff’s

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telephone conversations were “intentionally” recorded. Id.
The plaintiff in Rojas alleges that when her daughter and her friends, HSBC employees,

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called her using their work phones, her personal telephone communications with them were

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recorded without her consent. RJN, Ex. B 1, 3-4. In granting summary judgment to HSBC, the

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trial court found that the plaintiffs in the Rojas case had failed to establish a triable issue of

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material fact as to Defendants’ intent to record the phone conversations in violation of the

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United States District Court
Northern District of California

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California Invasion of Privacy Act. Id., Ex. D. Specifically, the court found no triable issue of

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material fact on whether Defendants recorded the phone calls “with the purpose or desire of

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recording a confidential conversation, or with the knowledge to a substantial certainty that his use

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of the equipment will result in the recordation of a confidential conversation,” and on whether

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Defendants “intentionally recorded” a communication involving a cell phone or cordless phone.

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Id.
Based on Plaintiff’s complaint and the exhibits discussed above, it is clear that the Rojas

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case and the present action share many similarities. However, it is less clear that an appellate

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decision from the Rojas case would affect this case. In interpreting state law, federal courts are

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not necessarily bound by intermediate appellate court decisions, unless “there is no convincing

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evidence that the state supreme court would decide differently.” Vestar Dev. II, LLC v. Gen.

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Dynamics Corp., 249 F.3d 958, 960 (9th Cir. 2001). Moreover, given the Court’s schedule, it is

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likely that this case will not be tried before the state appellate court reaches its decision.

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Accordingly, the Court finds that this third factor weighs only slightly in favor of granting a stay.

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IV.

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ORDER
In light of the above, the Court finds that Defendants fail to meet the burden of establishing

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the need for a stay. Given that the stay may last into the indefinite future, the Court finds that

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there is possible prejudice to Plaintiff in granting this stay. Although a stay might lessen the
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hardship on both parties and could potentially simplify issues in the case, these factors weigh only

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slightly in favor of granting the stay and do not outweigh the possible prejudice to Plaintiff.

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For the foregoing reasons, the Court DENIES Defendants’ motion to stay until the California

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Court of Appeal’s decision in the Rojas case.

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Dated: March 7, 2017
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BETH LABSON FREEMAN
United States District Judge

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United States District Court
Northern District of California

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