Rattagan v. Uber Technologies, Inc.

Background

Michael R. Rattagan, whom the opinion describes as a lawyer based in Argentina, alleged that Uber Technologies, Inc. retained him to help launch Uber’s operations in Buenos Aires. He alleged that Uber Technologies and its international entities asked him to reserve and register a local entity, provide legal advice, and serve as a legal representative. He further alleged that Uber Technologies directly directed his work through its legal department in San Francisco and that a direct attorney-client relationship began in 2015.

Rattagan alleged that Uber concealed its plans to launch ridesharing operations in Buenos Aires, including its work with another attorney and a public-relations firm. After the April 2016 launch, taxi drivers protested, police raided Rattagan’s offices, media reports associated him with Uber’s allegedly illegal activities, and authorities later charged him with crimes including aggravated tax evasion. Rattagan alleged that Uber had paid his criminal-defense fees but stopped doing so after he filed this lawsuit.

The Third Amended Complaint asserted four causes of action: fraudulent concealment, negligence, breach of the implied covenant of good faith and fair dealing, and aiding and abetting fraudulent concealment. Uber moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim for relief.

Statute of Limitations

The court held that the negligence claim in Count Two and the implied-covenant claim in Count Three were barred by California’s two-year statute of limitations. The parties agreed that the limitations period began when Rattagan suffered injury, but disagreed about whether the operative injury occurred in April 2016, when his offices were raided and his reputation was publicly damaged, or in November 2017, when he was arrested and charged with aggravated tax evasion.

The court concluded that the complaint alleged compensable, actual harm by April 2016. It pointed to allegations that protesters blocked access to Rattagan’s office, media outlets reported negatively about him and his firm, police raided his offices, and television coverage associated his firm with Uber’s alleged illegal activities. The court therefore concluded that the two-year limitations period began in April 2016, making the claims untimely when Rattagan filed suit in April 2019.

The court rejected Rattagan’s argument that continuing-wrong doctrines delayed accrual until 2017. Those doctrines can extend or restart the limitations period when the defendant commits ongoing or recurring wrongful acts, but continuing injury from a completed act is not enough. The court found that Uber’s alleged conduct occurred outside the relevant two-year period. It also rejected the argument that Uber’s continued legal noncompliance after Rattagan was replaced as legal representative constituted continuing conduct attributable to him.

The court therefore granted the motion to dismiss Count Two, negligence, and Count Three, breach of the implied covenant of good faith and fair dealing, on statute-of-limitations grounds.

Economic Loss Doctrine

The court next addressed Uber’s argument that Counts One and Four—fraudulent concealment and aiding and abetting fraudulent concealment—were barred by the economic-loss doctrine. That doctrine generally prevents a party to a contract from recovering purely economic losses through tort claims unless the plaintiff alleges harm independent of the contractual failure.

The court rejected Rattagan’s argument that the doctrine applies only to products-liability or construction-defect cases. It also rejected his characterization of the claims as fraudulent inducement. The court explained that the complaint alleged fraudulent concealment, involving nondisclosure after the contractual relationship arose, rather than fraudulent inducement, involving misrepresentations that cause someone to enter a contract.

The court further concluded that the exception recognized for certain fraud claims did not apply because Rattagan alleged concealment and nondisclosure, not affirmative misrepresentations. The court determined that the alleged duties to disclose arose from the attorney-client relationships, which are contractual relationships. Because the alleged duties were rooted in those contractual relationships rather than an independent tort duty, the economic-loss doctrine barred the claims.

The court did not address Uber’s other alternative grounds for dismissal because the statute-of-limitations and economic-loss rulings disposed of all claims.

Disposition

Judge Edward M. Chen granted Uber Technologies’ motion to dismiss. The court dismissed the Third Amended Complaint with prejudice, stating that Rattagan’s multiple amended pleadings contained shifting, inconsistent, and contradictory allegations showing that the deficiencies could not be cured by further amendment. The Clerk was directed to enter judgment and close the case.