Opinion
Case No. 19-cv-02663-JSW
2019-12-12
Daniel KNIGHT, Plaintiff, v. WELLS FARGO BANK NA, Defendant.
Lilia Bulgucheva, Bulgucheva Law, p.C., Danville, CA, for Plaintiff. Amanda Semaan, Ellen E. Boshkoff, Faegre Drinker Biddle & Reath LLP, Los Angeles, CA, for Defendant.
Lilia Bulgucheva, Bulgucheva Law, p.C., Danville, CA, for Plaintiff.
Amanda Semaan, Ellen E. Boshkoff, Faegre Drinker Biddle & Reath LLP, Los Angeles, CA, for Defendant.
ORDER GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS, WITH LEAVE TO AMEND, AND SETTING CASE MANAGEMENT CONFERENCE
Re: Dkt. No. 8
JEFFREY S. WHITE, United States District Judge
Now before the Court is the motion to dismiss the complaint filed by Defendant Wells Fargo Bank, N.A. ("Wells Fargo"). Having carefully reviewed the parties' papers, considered their arguments and the relevant legal authority, the Court hereby GRANTS, IN PART, AND DENIES, IN PART, Wells Fargo's motion.
BACKGROUND
Plaintiff, Daniel Knight ("Knight"), asserts claims against Wells Fargo for violation of his civil rights under 42 U.S.C. section 1981 (" Section 1981") and for intentional infliction of emotional distress. Knight's claims arise out of an incident that occurred on May 31, 2017. On that day, Knight visited a Wells Fargo bank branch located at 5859 Lone Tree Way in Antioch, California. Knight intended to cash two checks, which were issued to him by a Wells Fargo account holder named Lee. (See Compl. ¶¶ 8, 9.) Knight alleges that he was told he needed to provide two forms of identification in order to cash the checks because he was not an account holder at Wells Fargo. Knight alleges he was aware of that process because he had cashed checks at Wells Fargo in the past and alleges he had two forms of identification ready. (Id. ¶¶ 9 8.) When he reached the teller with his identification, the teller told Knight that the bank required verification of the checks by the issuer, Mr. Lee. (Id. ¶ 9.) When the teller was unable to reach Mr. Lee, she indicated that she was not able to cash the checks. (Id. ) Knight spoke with a manager at the bank and explained that, in the past, he had been able to cash similar checks issued by Mr. Lee. However, the manager still refused to cash the checks. (Id. ¶ 10.) Knight contacted Mr. Lee, who eventually called the bank himself. Knight alleges that Mr. Lee stated that he had never been called before when his white or Asian acquaintances went to the bank to cash his checks. (Id. ¶ 11.) Upon then verifying the checks, the manager still refused to cash them and told Knight to return to the line to have the teller assist him. (Id. ¶ 12.)
Knight alleges that the manager threatened to call the police and was "intentionally and willfully aggressive and demeaning in nature, in furtherance of his racial discrimination against [Knight]." (Id. ) Knight waited in the line while the manager and a security guard stood behind him "in a threatening manner." (Id. ¶ 13.) When Knight reached the teller and provided his two forms of identification for a second time, he was able to cash the checks. (Id. ) Knight alleges that "[t]he encounter with the bank manager took nearly an hour and caused unnecessary pain, embarrassment and frustration[.]" (Id. ¶ 14.)
The Court shall address additional relevant facts in the remainder of this order.
ANALYSIS
A. Legal Standard Governing Motion to Dismiss.
A motion to dismiss is proper under Federal Rule of Civil Procedure 12(b)(6) where the pleadings fail to state a claim upon which relief can be granted. The Court's "inquiry is limited to the allegations in the complaint, which are accepted as true and construed in the light most favorable to the plaintiff." Lazy Y Ranch LTD v. Behrens , 546 F.3d 580, 588 (9th Cir. 2008). Even under the liberal pleading standard of Federal Rule of Civil Procedure 8(a)(2), "a plaintiff's obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citing Papasan v. Allain , 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ).
Pursuant to Twombly , a plaintiff must not merely allege conduct that is conceivable but must instead allege "enough facts to state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ). If the allegations are insufficient to state a claim, a court should grant leave to amend, unless amendment would be futile. See, e.g., Reddy v. Litton Indus., Inc. , 912 F.2d 291, 296 (9th Cir. 1990) ; Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv., Inc. , 911 F.2d 242, 246-47 (9th Cir. 1990).
B. The Court Grants, in Part, Defendant's Motion to Dismiss.
1. The Section 1981 Claim.
Section 1981 provides, in relevant part, that "[a]ll persons within the jurisdiction of the United States shall have the same right ... to make and enforce contracts ... and to the full and equal benefit of all laws and proceedings for the security of persons and property as is enjoyed by white citizens ...." 42 U.S.C. § 1981(a). The term " ‘make and enforce contracts’ includes the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship." Id. § 1981(b). "Although Section 1981 does not itself use the word ‘race,’ " the Supreme Court "has construed the section to forbid all ‘racial’ discrimination in the making of private as well as public contracts." Saint Francis College v. Al-Khazraji , 481 U.S. 604, 609, 107 S.Ct. 2022, 95 L.Ed.2d 582 (1987) (citing Runyon v. McCrary , 427 U.S. 160, 168, 174-75, 96 S.Ct. 2586, 49 L.Ed.2d 415 (1976) ).
To state a claim under Section 1981, a plaintiff must identify an impaired "contractual relation" by showing that intentional racial discrimination prevented the creation of a contractual relationship or impaired an existing contractual relationship. Id. To make that showing, Knight must allege (1) he is a member of a protected class, (2) he attempted to contract for certain services, and (3) he was denied a right enumerated in Section 1981, i.e. the right to make or enforce a contract. See, e.g., Lindsey v. SLT Los Angeles, LLC , 447 F.3d 1138, 1145 (9th Cir. 2006) ; Merritt v. Wells Fargo Bank, N.A. , No. SACV 18-1960 JVS (JDEx), 2019 WL 1951608, at *4 (C.D. Cal. Mar. 15, 2019).
Wells Fargo argues that Knight fails to satisfy the third element because Knight alleges that he eventually cashed the checks and completed his transaction. "Courts have repeatedly held that there is no actual loss of a contract interest if a customer is ultimately served, even if there is a delay based on racial discrimination." York v. JPMorgan Chase Bank, N.A. , No. CV-18-04039-PHX-SPL, 2019 WL 3802535, at *3 (D. Ariz. Aug. 13, 2019) (citing cases); see also Jeffrey v. Home Depot U.S.A., Inc. , 90 F. Supp. 2d 1066, 1069 (S.D. Cal. 2000). For example, in Lopez v. Target Corporation , the plaintiff, who was Hispanic, alleged a cashier twice told him her window was closed and emphasized it was closed to him but then proceed to serve white customers. 676 F.3d 1230, 1231-32 (11th Cir. 2012). The court held the plaintiff failed to state a violation of Section 1981 because he was able to complete the transaction at another register and was able to buy "his desired goods at the same price and using the same payment method as any other customer." Id. at 1234. In reaching its conclusion, the court stated that it was "not faced ... with circumstances where a customer ... was required to contract on different terms" than other patrons. Id. at 1235. That situation was presented to the court in Bobbitt v. Rage, Inc. , 19 F. Supp. 2d 512 (W.D.N.C. 1998).
In Bobbitt , two sets of plaintiffs brought Section 1981 claims against the defendant based on their experiences dining at its restaurants. One set of plaintiffs alleged they waited to be seated and after a waitress put two tables together to accommodate them had to seat themselves, while white customers were promptly waited on by defendant's staff. 19 F. Supp. 2d at 514-15. The second set of plaintiffs, who ate at a different restaurant location, were seated promptly but had to wait thirty to forty minutes for their food and alleged white customers were served promptly. Those plaintiffs also alleged they were approached by police officers who told them the manager informed the police officers the plaintiffs would be required to prepay for their food because the day before African-American teenagers left the restaurant without paying. Id. at 514. The defendant's staff did not ask either set of plaintiffs to leave the restaurants and each set of plaintiffs eventually were served. Id. at 514-15.
The court concluded that the former set of plaintiffs failed to state a claim under Section 1981 because their allegations demonstrated nothing more than delayed and poor service. Id. at 517-18. However, it found the latter set of plaintiffs did state a claim, reasoning that the distinguishing factor was that the manager "changed an essential term of the customer/restaurateur contract because of race" by requiring them to pre-pay in order to receive service. Id. at 518, 520.
A district court in Oregon reached a similar conclusion in Craig v. US Bancorp , No. Civ. 03-1680-AA, 2004 WL 817149 (D. Ore. 2004). In that case the plaintiff attempted to cash a check from his attorney, who was one of the defendant's account holders. The plaintiff did not hold an account at the bank. Id. , 2004 WL 817149, at *1. The plaintiff gave the teller proper identification and alleged the teller refused to cash the check. The teller told the plaintiff that his attorney's account was subject to a fraud investigation and said she would call the attorney to "find out what was happening." Id. The plaintiff waited for an hour before the teller returned and once again refused to cash his check. The plaintiff then called his attorney, who called the bank himself and then advised the plaintiff that the issue had been resolved. The plaintiff was eventually able to cash the check, and the attorney later sent two Caucasian clients to try and cash checks at the same branch. They were able to do so "without incident, delay, or any mention of a ‘fraud’ investigation." Id. The court concluded that the plaintiff stated a claim under Section 1981, notwithstanding the fact that he was able to complete his transaction.
The court acknowledged the "general ‘rule’ that a mere delay in service" will not demonstrate an actual contract loss. Id. , 2004 WL 817149, at *3. It noted, however, that "an exception to the general ‘rule’ regarding substandard service exists if and when additional terms are imposed on the terms or benefits of contract formation." Id. (citing, inter alia, Bobbitt , 19 F. Supp. 2d 512 ). The court noted that the defendant completed "service only after effectively requiring a phone call from [the plaintiff's] attorney." Id. The court reasoned those allegations were sufficient to state a claim under Section 1981 because they showed "contract formation that was burdened in its initial phase by additional conditions that were not imposed on other clients." Id. ; but see Arguello v. Conoco, Inc. , 330 F.3d 355, 361 (5th Cir. 2003) (dismissing Section 1981 claims and finding there were "no allegations of discriminatory contract terms" where plaintiff alleged she was singled out by being asked for identification to use credit card).
Knight alleges Mr. Lee stated that he had never been called when his white or Asian acquaintances attempted to cash checks at Wells Fargo. The Court concludes those allegations are analogous the allegations in the Bobbitt case regarding the need to pre-pay to obtain service and to the allegations in the Craig case and that like the plaintiffs in those cases, Knight has alleged something more than delayed or poor service. Instead, Knight puts forth allegations that suggest that Wells Fargo imposed a condition on Knight during contract formation that was not imposed on its other customers. Knight also alleges he is African American, thereby satisfying the first element. Wells Fargo contends that Knight will not be able to show it acted with discriminatory animus but focused its motion on the third element. (See Mot. at 8 n.2.) In light of the allegations that Mr. Lee stated he was never called when white or Asian acquaintances attempted to cash his checks, the Court concludes Knight sufficiently alleges facts to show he was treated differently on account of his race.
Accordingly, the Court concludes Knight has set forth facts that are sufficient to allege a violation of Section 1981, and it DENIES Wells Fargo's motion to dismiss that claim.
2. The IIED Claim.
Wells Fargo also argues the facts are insufficient to state a claim for IIED, which requires Knight to allege: (1) extreme and outrageous conduct by Wells Fargo; (2) with the intent to cause emotional distress; (3) that Knight in fact suffered severe or extreme emotional distress; and (4) which was proximately caused by Wells Fargo's outrageous conduct. See, e.g., Cole v. Fair Oaks Fire Protection Dist. , 43 Cal. 3d 148, 155-56 n.7, 233 Cal.Rptr. 308, 729 P.2d 743 (1987) ; Merritt , 2019 WL 1951608, at *6. The tort of IIED imposes liability for "conduct exceeding all bounds usually tolerated by a decent society, of a nature which is especially calculated to cause, and does cause, mental distress." Cole , 43 Cal. 3d at 155-56 n.7, 233 Cal.Rptr. 308, 729 P.2d 743 ; see also Cochran v. Cochran , 65 Cal. App. 4th 488, 496, 76 Cal.Rptr.2d 540 (1998) (stating outrageous conduct is conduct "so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community").
According to Wells Fargo, the facts are insufficient to show its conduct was "extreme or outrageous." As currently drafted, the Court agrees. In Merritt , the plaintiffs brought a claim for IIED based on their experiences attempting to obtain a loan at one of the defendant's bank branches. They alleged that an employee treated them with "hostility, impatience, intolerance, and distrust." 2019 WL 1951608, at *1. By way of example, the plaintiffs alleged that defendant's employee interrupted one of the plaintiffs, Mitchell, who was attempting to assist her son, Merritt, the other plaintiff, who had a speech impediment. Id. Mitchell alleged that the defendant's employee, jabbed "fingers in her face while sneering that she only wanted to" speak Merritt, who was the account holder. The employee also accused Mitchell of "abusing her ‘incompetent’ son by using him to open a credit line in his name so that she could steal the money for herself." Id. The plaintiffs also alleged that the defendant called the police and accused Mitchell of financially exploiting Merritt. Id. , 2019 WL 1951608, at *2. The court concluded the employee's conduct was "insulting" but found the allegations insufficient to state a claim. It reasoned that "IIED liability ‘does not extend to mere insults, indignities, threats, annoyances, petty oppressions, or other trivialities." Id. , 2019 WL 1951608, at *6 (quoting Hughes v. Pair , 46 Cal. 4th 1035, 1051, 95 Cal.Rptr.3d 636, 209 P.3d 963 (2009) ).
The Merritt court considered the plaintiff's argument that the use of a racial slur can, at times, constitute extreme and outrageous conduct but noted those cases usually arise in the employment context, rather than in the context of a retail or commercial transaction. The court also reasoned that the California Supreme Court has stated that the use of a racial epithet combined with "aggravating circumstances" could give rise to a claim. Id. (citing Alcorn v. Anbro Engineering, Inc. , 2 Cal. 3d 493, 498-99, 86 Cal.Rptr. 88, 468 P.2d 216 ). In Alcorn , those aggravating circumstances were that the defendants stood "in a position or relation of authority over plaintiff, [were] aware of his particular susceptibility to emotional distress, ... and for the purpose of causing plaintiff to suffer such distress, intentionally humiliated plaintiff, insulted his race, ignored his union status, and terminated his employment." 2 Cal. 3d at 498, 86 Cal.Rptr. 88, 468 P.2d 216. The Merritt court concluded that the plaintiffs failed to allege facts supporting any aggravating factors. Therefore, it determined that the use of a racial slur and refusing to proceed with Merritt's loan application did not state a claim for IIED. Merritt , 2019 WL 1951608, at *6-*7.
Unlike the plaintiffs in the Merritt case, Knight does not allege that either the teller or the manager used a racial slur or race based insult during the course of the transaction. Knight argues that the facts alleged do qualify as "aggravating circumstances", but the Court concludes they are analogous to the remaining facts at issue in Merritt and are insufficient to state a claim for IIED. Accordingly, the Court GRANTS Wells Fargo's motion to dismiss that claim. Because the Court cannot say it would be futile, it will grant Knight leave to amend if he can, in good faith and in compliance with his obligations under Federal Rule of Civil Procedure 11, allege additional facts that would show conduct that can be considered "extreme and outrageous."
CONCLUSION
For the foregoing reasons, the Court GRANTS, IN PART, AND DENIES, IN PART, Wells Fargo's motion to dismiss. If Knight chooses to amend his claim for IIED, he shall do so by no later than January 10, 2020. Wells Fargo shall answer or otherwise respond by no later than January 31, 2020. The parties shall appear for an initial case management conference on February 21, 2020 at 11:00 a.m., and they shall file a joint case management conference statement by February 14, 2020.