Sequeira v. United States Department of Homeland Security

Background

The court considered two requests by Defendant Western Union Financial Services, Inc. Western Union sought permission to file a motion asking the court to reconsider parts of its March 21, 2024 order, which had granted in part and denied in part the defendants’ motions to dismiss the First Amended Complaint. Western Union also sought permission to file a reply supporting its request for reconsideration.

Under Civil Local Rule 7-9, a party seeking reconsideration of an interlocutory order—an order issued before the court has resolved all claims and parties—must first obtain permission. The party must show reasonable diligence and one of the circumstances listed in the rule, including new facts or law, a change in law, or the court’s manifest failure to consider material facts or dispositive legal arguments previously presented.

Discussion

Western Union argued that the court had failed to consider two sets of arguments. First, it argued that the First Amended Complaint did not plausibly allege that Western Union was a “consumer finance institution” because providing lending services was not shown to be a core function or purpose of its business. Second, it argued that its disclosures were protected by the Annunzio-Wylie Act’s safe harbor or by statutory exemptions under Cal. FIPA.

The court held that the first argument was moot. In the Second Amended Complaint, the plaintiffs removed the allegation that Western Union provided lending services and re-alleged their claim under the RFPA against Western Union only to preserve the claim for appeal. The court therefore found no need to reconsider the issue.

As to the Annunzio-Wylie Act and Cal. FIPA defenses, the court found that it had considered Western Union’s arguments but had concluded that they were insufficient to support dismissal of the plaintiffs’ UCL claim as a matter of law. Dismissal under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint adequately states a claim, is proper based on an affirmative defense only when the defense presents an obvious bar to relief on the face of the complaint. If the complaint or judicially noticeable materials raise disputed factual issues, dismissal under that rule is improper.

The court identified factual issues concerning Western Union’s defenses. The authorities Western Union cited involved disclosures compelled by mandatory legal process, such as congressional or grand-jury subpoenas. Here, according to the complaint, Western Union entered into a settlement agreement with the Arizona Attorney General after the Arizona Supreme Court ruled that the original warrant requesting the documents was unconstitutional. The court concluded that these allegations prevented Western Union from establishing its affirmative defenses with certainty based only on the pleadings. The court stated that Western Union’s disagreement with that conclusion did not justify reconsideration.

The court also rejected Western Union’s argument that the UCL claim should be reconsidered as to only disclosures made pursuant to an HSI customs summons. Western Union cited no authority establishing that it could attack portions of one claim through a motion to dismiss. The court explained that the plaintiffs had pleaded one plausible UCL claim under the “unlawful” prong and had not separately pleaded distinct bases that would require the court to analyze each alleged category of conduct separately.

Finally, the court denied permission to file the proposed reply. It found that the reply raised no arguments Western Union could not have raised in its original motion and that, even if considered, the arguments would not change the result.

Disposition

Judge Haywood S. Gilliam, Jr. denied Western Union’s motion for leave to file a motion for reconsideration and denied its motion for leave to file a reply in support of that request. The order did not reconsider or alter the earlier ruling that declined to dismiss the plaintiffs’ UCL claim on the stated defenses.