Am. Video Duplicating Inc. v. Citigroup Inc.

• Decision Date: 16 November 2020
• Docket Number: Case No. 2:20-CV-03815-ODW (AGRx)
• Court: U.S. District Court — Central District of California
• Parties: AMERICAN VIDEO DUPLICATING INC. et al., Plaintiffs, v. CITIGROUP INC. et al., Defendants.

AMERICAN VIDEO DUPLICATING INC. et al., Plaintiffs, v. CITIGROUP INC. et al., Defendants.

Case No. 2:20-CV-03815-ODW (AGRx)

United States District Court Central District of California

November 16, 2020

ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS [83] [117]

I. INTRODUCTION

Before the Court are (1) Defendant Citibank, N.A.'s ("Citibank") Motion to Dismiss ("Citibank's Motion") the First Amended Complaint ("FAC"), and (2) a joint Motion to Dismiss the FAC ("Joint Motion") filed by Defendants U.S. Bank National Association; JPMorgan Chase Bank, N.A.; Wells Fargo Bank, N.A.; Bank of America, N.A.; Live Oak Banking Company; and Harvest Small Business Finance (collectively, "Defendants").¹ (Citibank's Mot., ECF No. 83; Joint Mot., ECF No. 117.) For the following reasons, the Court GRANTS Defendants' motions to dismiss the FAC with leave to amend.²

II. BACKGROUND

Plaintiffs American Video Duplicating, Inc. ("AVD"), Tush Law, Ltd. ("TLL"), and Kenneth M. Hahn dba Cal State Financial ("CSF") (collectively, "Plaintiffs") provide consulting, legal, accounting and tax preparation services. (FAC ¶¶ 1-3, ECF No. 80.) They bring this action on behalf of themselves and a putative class, seeking "agent fees" from lenders under the Payment Protection Program ("PPP"), which was established by the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), Pub. L. No. 116-136, § 1102, 134 Stat. 281, 286-294 (Mar. 27, 2020). (See generally FAC.)

Plaintiffs allege they assisted clients in securing PPP loans from Defendants, and Defendants were therefore required to pay Plaintiffs "agent fees" under the PPP. (Id. ¶¶ 45-51.) Upon information and belief, Plaintiffs allege Defendants received lender fees from the federal government and funded PPP loans for borrowers, some of whom Plaintiffs represented, yet Defendants failed and refused to pay Plaintiffs any agent fees. (Id. ¶¶ 43-44.) Plaintiffs claim that Defendants' refusals to pay agent fees constitute "unlawful actions" from which Plaintiffs suffered financial harm. (Id. ¶¶ 53-54.) Based only on these general allegations, Plaintiffs assert three causes of action against Defendants for: (1) declaratory relief; (2) violation of California Business and Professions Code section 17200; and (3) unjust enrichment. (See id. ¶¶ 66-96.)

III. REQUESTS FOR JUDICIAL NOTICE

Both parties request the Court take judicial notice of various documents that are publicly available on official government websites. (Plaintiffs' RJN, ECF No. 124; Defendants' RJN, ECF No. 117-3.) Both requests stand unopposed. The Court may take judicial notice of "matters of public record" that are not "subject to reasonable dispute." Lee v. City of Los Angeles, 250 F.3d 668, 689 (9th Cir. 2001); accord Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998-99 (9th Cir. 2010) ("It is appropriate to take judicial notice of this information, as it was made publiclyavailable by government entities . . . and neither party disputes the authenticity of the web sites or the accuracy of the information displayed therein."); United States v. 14.02 Acres of Land More or Less in Fresno Cnty., 547 F.3d 943, 955 (9th Cir. 2008) ("Judicial notice is appropriate for records and 'reports of administrative bodies.'"). Thus, both Plaintiffs' and Defendants' requests are GRANTED to the extent that the Court relies on the submitted documents.

IV. LEGAL STANDARDS

Federal Rule of Civil Procedure ("Rule") 12(b)(1) provides for dismissal of a complaint for lack of subject matter jurisdiction. The Article III case or controversy requirement limits a federal court's subject matter jurisdiction, which includes the requirement that plaintiffs have standing to bring their claims. Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1121-22 (9th Cir. 2010). Rule 12(b)(1) jurisdictional attacks can be either facial or factual. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). When a motion to dismiss attacks subject matter jurisdiction on the face of the complaint, the court assumes the factual allegations in the complaint are true and draws all reasonable inferences in the plaintiff's favor. Doe v. Holy See, 557 F.3d 1066, 1073 (9th Cir. 2009). Moreover, the standards set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), apply with equal force to Article III standing when it is being challenged on the face of the complaint. See Terenkian v. Republic of Iraq, 694 F.3d 1122, 1131 (9th Cir. 2012). Thus, in terms of Article III standing, the complaint must allege "sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570).

A court may also dismiss a complaint under Rule 12(b)(6) for lack of a cognizable legal theory or insufficient facts pleaded to support an otherwise cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1988). To survive a dismissal motion, a complaint need only satisfy the minimal notice pleading requirements of Rule 8(a)(2)—a short and plain statement ofthe claim. Porter v. Jones, 319 F.3d 483, 494 (9th Cir. 2003). The factual "allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555. Thus, again, the complaint must "contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Iqbal, 556 U.S. at 678 (internal quotation marks omitted).

The determination of whether a complaint satisfies the plausibility standard is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679. A court is generally limited to the pleadings and must construe all "factual allegations set forth in the complaint . . . as true and . . . in the light most favorable" to the plaintiff. Lee, 250 F.3d at 679. However, a court need not blindly accept conclusory allegations, unwarranted deductions of fact, and unreasonable inferences. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001).

Where a district court grants a motion to dismiss, it should generally provide leave to amend unless it is clear the complaint could not be saved by any amendment. See Fed. R. Civ. P. 15(a); Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). Leave to amend may be denied when "the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency." Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986). Thus, leave to amend "is properly denied . . . if amendment would be futile." Carrico v. City and Cty. of San Francisco, 656 F.3d 1002, 1008 (9th Cir. 2011).

V. DISCUSSION

Defendants move to dismiss Plaintiffs' FAC under Rule 12(b)(1) for lack of standing and under Rule 12(b)(6) for failure to state a claim. (Citibank's Mot. 7; Joint Mot. 1.) The Court addresses each ground in turn.

A. Article III Standing

First, whether Plaintiffs have standing to bring their claims is a threshold matter. "[T]he irreducible constitutional minimum of standing" consists of three elements: (1) an injury in fact; (2) a causal connection between the injury and the conduct complained of; and (3) it must be likely that the injury will be redressed by a favorable decision. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992). The injury-in-fact element requires a plaintiff to show "'an invasion of a legally protected interest' that is 'concrete and particularized' and 'actual or imminent, not conjectural or hypothetical.'" Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1548, as revised (May 24, 2016) (quoting Lujan, 504 U.S. at 560). And the alleged injury must be "fairly traceable to the challenged conduct of the defendant." Id. at 1547. "The party invoking federal jurisdiction bears the burden of establishing these elements." Lujan, 504 U.S. at 561.

Defendants insist Plaintiffs lack standing because Plaintiffs' conclusory allegations fail to allege an injury-in-fact traceable to any Defendant's alleged conduct, and "Plaintiffs fail to identify even a single PPP loan application with which they assisted and that was submitted to and approved by any of the Defendants." (Joint Mot. 8-9; see Citibank's Mot. 8-9.)³

Plaintiffs appear to acknowledge the FAC does not identify a PPP loan applicant or application for which any specific Defendant failed to pay agent fees, but they contend nonetheless that (1) the FAC adequately sets out the role each Defendant played in the alleged general harm; and (2) Plaintiffs provided more specific allegations after filing the FAC, as reflected in a Declaration by TLL's CEO filed concurrently with Plaintiffs' Opposition to Citibank's Motion. (Opp'n to Citibank'sMot. 5-7, ECF No. 95 ("While the Complaint standing alone is sufficient to establish standing . . . Plaintiffs offered to provide Citi[bank] with the very information it claims is missing from the Complaint." (citations omitted)); see also Opp'n to Joint Mot. 5-6, ECF No. 122;⁴ Decl. of Alan S. Turlington, ("TLL Decl."), ECF No. 95-2.) Plaintiffs thus contend they have established standing "both through the allegations in the Complaint and the information Plaintiffs subsequently offered to provide to Citi." (Opp'n to Citibank's Mot. 6.)

What matters here, however, is that the allegations in the FAC are too conclusory to say Plaintiffs' alleged injuries are "fairly traceable to the challenged conduct" of any given Defendant. See Spokeo, 136 S. Ct. at 1547. The FAC does not inform any Defendant of its particular role in the alleged general harm; it relies merely on generalized, conclusory allegations. Plaintiffs improperly try to retroactively bolster their allegations with more specific claims in their Oppositions and accompanying TLL Declaration. Indeed, such specific allegations would have perhaps helped demonstrate a...