Romero et al v. Securus Technologies, Inc.

Filing 37

ORDER Granting Defendant's 31 Motion to Dismiss Portions of Plaintiffs' Third Amended Complaint. As Plaintiffs have had multiple attempts to adequately plead fraud based on information conveyed to the Sheriff and have not been able to do so, the court's order is without leave to amend. Signed by Judge Jeffrey T. Miller on 3/29/2017. (rlu)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

SOUTHERN DISTRICT OF CALIFORNIA

10
11

13

JUAN ROMERO, FRANK TISCARENO,
and KENNETH ELLIOTT, on behalf of
themselves, and all others similarly
situated,

14

Plaintiffs,

12

15

ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS PORTIONS
OF PLAINTIFFS’ THIRD
AMENDED COMPLAINT

v.

16

Case No.: 16cv1283 JM (MDD)

SECURUS TECHNOLOGIES, INC.,

17

Defendant.

18
19

Defendant Securus Technologies moves to dismiss portions of the fourth cause of

20

action in the third amended class action complaint (“TAC”) of Plaintiffs Juan Romero,

21

Frank Tiscareno, and Kenneth Elliott. Specifically, Defendant seeks dismissal of

22

Plaintiffs’ allegations of fraud based on statements Defendant made to the San Diego

23

County Sheriff’s Office (“the Sheriff”). (Doc. No. 31.) Plaintiffs oppose the motion.

24

The court finds the matter appropriate for decision without oral argument pursuant to

25

Local Rule 7.1(d)(1) and, for the following reasons, grants Defendant’s motion.

26

BACKGROUND

27

Plaintiffs are two former inmates and a criminal defense attorney, all of whom

28

used Defendant’s telephone systems to make calls to and from certain correctional
1
16cv1283 JM (MDD)

1

facilities in California.

2

In July 2016, Plaintiffs filed a first amended complaint against Defendant alleging

3

seven causes of action: (1) violation of the California Invasion of Privacy Act, Cal. Penal

4

Code § 636; (2) violation of California Business & Professions Code section 17200; (3)

5

fraudulent concealment/omission; (4) fraudulent misrepresentation; (5) negligence;

6

(6) unjust enrichment; and (7) conversion. (Doc. No. 8.) All seven counts stemmed from

7

Defendant’s allegedly improper recording of attorney-client calls.

8
9

Defendant filed a motion to dismiss the first amended complaint, which the court
granted in part and denied in part. (Doc. No. 21.) The court dismissed the seventh cause

10

of action without leave to amend and dismissed the fourth cause of action with leave to

11

amend. The court denied the remainder of Defendant’s motion.

12

Plaintiffs amended the fourth cause of action and filed a second amended

13

complaint in November 2016. Defendant filed another motion to dismiss. The court

14

granted the motion in part and denied it in part, dismissing Plaintiffs’ claim that related to

15

information conveyed to the Sheriff. (Doc. No. 29.) The court invited Plaintiffs to

16

further amend their complaint if they could satisfy federal pleading standards and

17

California law in alleging specific misrepresentations that Defendant made to the Sheriff.

18

Plaintiffs accepted the court’s invitation and filed the TAC on February 8, 2017.

19

(Doc. No. 30.) Defendant now moves, once again, to dismiss the portion of Plaintiffs’

20

fourth cause of action that relates to statements to the Sheriff.

21

LEGAL STANDARDS

22

A Rule 12(b)(6) motion to dismiss for failure to state a claim challenges the legal

23

sufficiency of the pleadings. Generally, to overcome such a motion, the complaint must

24

contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl.

25

Corp. v. Twombly, 550 U.S. 544, 570 (2007). Federal Rule of Civil Procedure 9(b)

26

provides, however, that “[i]n alleging fraud or mistake, a party must state with

27

particularity the circumstances constituting fraud or mistake.” Although malice, intent,

28

knowledge, and other conditions of a person’s mind may be alleged generally under Rule
2
16cv1283 JM (MDD)

1

9(b), “a plaintiff alleging fraud must still allege facts from which it can be inferred that

2

the defendant’s representations or assurances were false when made.” Am. Shooting

3

Ctr., Inc. v. Secfor Int’l, 2015 WL 1914924, at *6 (S.D. Cal. Apr. 27, 2015) (citing

4

Electric Prop. East, LLC v. Marcus & Millichap Co., 751 F.3d 990 (9th Cir. 2014)). In

5

other words, “although the language of Rule 9 poses no barrier in itself to general

6

pleading of fraudulent [state of mind], Twombly . . . must still be applied to test

7

complaints that contain claims of fraud.” Eclectic Properties, 751 F.3d at 995 n.5 (9th

8

Cir. 2014).

9
10

DISCUSSION
In California, the elements of fraud are: “(1) a misrepresentation (false

11

representation, concealment, or nondisclosure); (2) knowledge of falsity (or scienter);

12

(3) intent to defraud, i.e., to induce reliance; (4) justifiable reliance; and (5) resulting

13

damage.” Robinson Helicopter Co. v. Dana Corp., 34 Cal. 4th 979, 990 (2004). In

14

addition, the principle of indirect fraud provides “that a defendant cannot escape

15

liability if he or she makes a representation to one person while intending or having

16

reason to expect that it will be repeated to and acted upon by the plaintiff (or someone in

17

the class of persons of which plaintiff is a member).” Shapiro v. Sutherland, 64 Cal.

18

App. 4th 1534, 1548 (1998). Employing this principle, Plaintiffs allege that Defendant

19

made three fraudulent representations to the Sheriff.

20

First, Plaintiffs point to section 8.1 of an August 2012 written agreement between

21

the Sheriff and Defendant in which “Kristopher Alderman, Dennis Reinhold, and Robert

22

Pickens of Securus represented to one or more persons at the Sheriff’s office, including

23

without limitation Frank Clamser and Keith Spears (the manager of the Sheriff’s Contract

24

Division) that Securus, ‘shall at all times perform its obligations hereunder in compliance

25

with all applicable federal, State, and County laws and regulations.’” (Doc. No. 30 at 37–

26
27
28
3
16cv1283 JM (MDD)

1

38, ¶ 149.)1 Second, Plaintiffs point to an addendum to that same August 2012

2

agreement, in which “Securus confirmed to one or more persons at the Sheriff’s office,

3

including without limitation Captain Clamser and Keith Spears, that calls made from the

4

free telephones in the detention facility booking areas, including calls made to attorneys

5

or other numbers on the ‘do not record’ list[,] were not being recorded.” (Id. at 38, ¶

6

150.) Third, Plaintiffs point to an August 2012 email in which Securus Project Manager

7

Becky Hill told Captain Clamser that “if the call is private, even if we set to record from

8

off-hook, there won’t be a recording for a private call . . . duh . . . L So, a call record for

9

the call but no actual call recording. So, that leaves me at, what can we get you or how

10

can we help you ease the mind of the attorney’s that are concerned?” (Id. ¶ 151 (all

11

punctuation and grammar in original).)
Later in the TAC, Plaintiffs allege that Securus “knew that its representations and

12
13

suggestions were false and/or misleading when made, or made the representations and

14

suggestions recklessly and without regard for their truth.” (Id. at 43, ¶ 167.) Plaintiffs

15

provide scant factual support for this allegation of knowledge, however. They state that

16

an internet article reported that improper recording began in December 2011, (Doc. Nos.

17

30 at 7, ¶ 22; 33 at 10 n.4), but they provide nothing to indicate that Defendant

18

employees Kristopher Alderman, Dennis Reinhold, Robert Pickens, and Becky Hill had

19

any knowledge of those improper recordings in August 2012, much less enough specific

20

knowledge to make their representations to the Sheriff knowingly false when made.2

21
22
23
24
25
26
27
28

1

In addition to the reasons discussed below, the allegation regarding section 8.1 is also
subject to dismissal because there is no “special reason to expect” that a pledge to follow
all laws, Shapiro, 64 Cal. App. 4th at 1548, included in a contract between Defendant and
the Sheriff, would be communicated by the Sheriff to others. Yet this requirement must
be met to successfully plead indirect fraud.
2
The court acknowledges that in the last go-round on this cause of action, it was willing
to accept an identically worded allegation of knowledge with respect to Defendant’s CEO
Richard A. Smith. (See Doc. No. 29 at 4.) Resolving all inferences in Plaintiffs’ favor,
and in light of Plaintiffs’ claim that the improper recording began in December 2011, the
court determined it was plausible that the CEO of the company would know about the
4
16cv1283 JM (MDD)

1

Instead, the TAC indicates in painstaking fashion that those Securus employees who

2

interacted with the Sheriff were put on notice of the improper recordings in the spring

3

and summer of 2014—nearly two years later. (See Doc. No. 30 at 11–17.)

4

In sum, the TAC “alleges facts that support—at best—a possible basis to believe”

5

that Kristopher Alderman, Dennis Reinhold, Robert Pickens, and Becky Hill knew their

6

representations were false when made, “not a plausible one.” Eclectic Properties, 751

7

F.3d at 999 n.8. Because a mere possibility based on speculation alone does not meet

8

Twombly’s requirements, the court dismisses Plaintiffs’ claim for fraud based on

9

Defendant’s statements to the Sheriff.

10

CONCLUSION

11

For the foregoing reasons, the court grants Defendant’s motion to dismiss. As

12

Plaintiffs have had multiple attempts to adequately plead fraud based on information

13

conveyed to the Sheriff and have not been able to do so, the court’s order is without leave

14

to amend.

15

IT IS SO ORDERED.

16
17
18

DATED: March 29, 2017
JEFFREY T. MILLER
United States District Judge

19
20
21
22
23
24
25
26
27
28

recordings, and therefore know that his May 2012 “Customer Integrity Pledge” was false
when made. Without more factual support, however, the court is not willing to reach the
same conclusion with respect to individual, seemingly non-executive-level Securus
employees.
5
16cv1283 JM (MDD)