Case 2:19-cv-08972-CBM-FFM Document 21 Filed 12/06/19 Page 1 of 38 Page ID #:321
`
`MARCELLUS MCRAE, SBN 140308
`mmcrae@gibsondunn.com
`GIBSON, DUNN & CRUTCHER LLP
`333 South Grand Avenue
`Los Angeles, CA 90071-3197
`Telephone: 213.229.7000
`Facsimile: 213.229.7520
`
`ASHLEY E. JOHNSON, pro hac vice application forthcoming
`ajohnson@gibsondunn.com
`GIBSON, DUNN & CRUTCHER LLP
`2001 Ross Avenue
`Suite 2100
`Dallas, TX 75201-2911
`Telephone: 214.698.3100
`Facsimile: 214.571.2900
`Attorneys for AT&T MOBILITY, LLC
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`WESTERN DIVISION
` CASE NO. 2:19-CV-8972 (CBM)
`DEFENDANT AT&T MOBILITY
`LLC’S NOTICE OF MOTION AND
`MOTION TO DISMISS THE
`COMPLAINT; MEMORANDUM OF
`POINTS AND AUTHORITIES IN
`SUPPORT THEREOF
`[[Proposed] Order lodged concurrently
`herewith]
`
`Action Filed: October 17, 2019
`
`Hearing:
`Date:
`Time:
`Place:
`
`
`Judge:
`
`
`SETH SHAPIRO,
`
`Plaintiff,
`
`v.
`AT&T MOBILITY, LLC,
`Defendant.
`
`February 18, 2020
`10:00 a.m.
`350 West 1st Street, 8th Floor
`Courtroom 8B
`Los Angeles, CA 90012
`Hon. Consuelo B. Marshall
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`Case 2:19-cv-08972-CBM-FFM Document 21 Filed 12/06/19 Page 2 of 38 Page ID #:322
`
`
`NOTICE OF MOTION
`TO ALL PARTIES AND THEIR COUNSEL OF RECORD:
`PLEASE TAKE NOTICE that at 10:00 a.m. on February 18, 2020, before the
`Honorable Consuelo B. Marshall, United States District Court Judge, in Courtroom 8B,
`at 350 West 1st Street, 8th Floor, Los Angeles, California 90012, Defendant AT&T
`Mobility LLC (“AT&T” or “Defendant”) will and hereby does move, pursuant to Rule
`12(b)(6) of the Federal Rules of Civil Procedure, to dismiss Plaintiff Seth Shapiro’s
`complaint.
`AT&T moves to dismiss all claims for the following reasons:
`1.
`As to all claims, Mr. Shapiro has failed to plausibly allege proximate cause;
`2.
`Claim 3 (California constitutional right to privacy) fails to allege an
`egregious breach of social norms and fails to plead the required reasonable expectation
`of privacy;
`3.
`Claims 4 and 5 (negligence) are foreclosed by the economic loss doctrine;
`4.
`Claim 6 (Consumer Legal Remedies Act) does not plead the required notice
`and opportunity to cure; does not plead that Mr. Shapiro read the documents he alleges
`he relied upon; and does not plead that any misrepresentation occurred before his
`transaction with AT&T;
`5.
`Claim 7 (Computer Fraud and Abuse Act) does not plead that Mr. Shapiro
`suffered a recoverable loss;
`AT&T also moves to dismiss Mr. Shapiro’s request for punitive damages because
`Mr. Shapiro has not pled any involvement by an “officer, director or managing agent”
`of AT&T in any challenged conduct and has not pled the required malice, fraud or
`oppression.
`The Motion is based on this Notice of Motion, the Memorandum of Points and
`Authorities that follows, all pleadings and records on file in this action, and any other
`arguments and evidence presented to this Court at or before the hearing on the Motion.
`
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`Case 2:19-cv-08972-CBM-FFM Document 21 Filed 12/06/19 Page 3 of 38 Page ID #:323
`
`
`This Motion is made following the conference of counsel pursuant to Civil
`Local Rule 7-3, which took place on November 27, 2019.
`
`
`Dated: December 6, 2019
`
`
`
`
`
`Respectfully submitted,
`GIBSON, DUNN & CRUTCHER LLP
`
`By: /s/ Marcellus A. McRae
`Marcellus A. McRae
`Attorney for Defendant
`AT&T MOBILITY LLC
`
`
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`Case 2:19-cv-08972-CBM-FFM Document 21 Filed 12/06/19 Page 4 of 38 Page ID #:324
`
`TABLE OF CONTENTS
`
`Page
`Introduction .......................................................................................................... 1
`I.
`Facts ...................................................................................................................... 2
`II.
`Standard of Review .............................................................................................. 3
`III.
`IV. Argument .............................................................................................................. 3
`A. Mr. Shapiro Failed To Adequately Allege Proximate Causation for
`Any of His Claims. ..................................................................................... 3
`1. Mr. Shapiro Does Not Allege How Accessing His Phone
`Number Led to the Loss of $1.8 Million. ........................................ 4
`2. Mr. Shapiro’s Allegations Fail Because They Rely on
`Unforeseeable Criminal Acts. .......................................................... 7
`B. Mr. Shapiro’s Right to Privacy Claim Under the California
`Constitution Should Be Dismissed (Count III). ......................................... 8
`1. Mr. Shapiro Does Not Plead an Egregious Breach of Social
`Norms. .............................................................................................. 9
`2. Mr. Shapiro Does Not Specifically Allege What Information
`AT&T Disclosed. ........................................................................... 10
`C. Mr. Shapiro’s Claims for Negligence and Negligent Supervision
`and Entrustment (Counts IV and V) Should Be Dismissed. .................... 12
`1.
`The Economic Loss Doctrine Bars Mr. Shapiro’s Negligence
`and Negligent Supervision and Entrustment Claims. .................... 12
`The Special Relationship Exception Is Not Available
`Because AT&T and Mr. Shapiro Are in Direct Contractual
`Privity. ............................................................................................ 14
`Even if the Special Relationship Exception Is Available, Mr.
`Shapiro Does Not Adequately Plead It. ......................................... 16
`D. Mr. Shapiro’s CLRA Claim (Count VI) Should Be Dismissed. .............. 18
`1. Mr. Shapiro Fails To Plead Actual Reliance. ................................ 18
`2.
`All of the Alleged Misrepresentations Occurred After Mr.
`Shapiro’s Transaction with AT&T. ............................................... 20
`3. Mr. Shapiro Fails To Plead that He Provided the Required
`Written Notice. ............................................................................... 21
`E. Mr. Shapiro’s Claim Under The Computer Fraud and Abuse Act
`(Count VII) Should Be Dismissed for Failure To Plead a Qualifying
`Loss. ......................................................................................................... 21
`
`3.
`
`2.
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`Case 2:19-cv-08972-CBM-FFM Document 21 Filed 12/06/19 Page 5 of 38 Page ID #:325
`
`TABLE OF CONTENTS
`(continued)
`
`Page
`F. Mr. Shapiro’s Request for Punitive Damages Should Be Stricken. ........ 23
`Conclusion .......................................................................................................... 25
`
`V.
`
`
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`Case 2:19-cv-08972-CBM-FFM Document 21 Filed 12/06/19 Page 6 of 38 Page ID #:326
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Page(s)
`
`Aas v. Super. Ct.,
`24 Cal. 4th 627 (2000) .............................................................................................. 17
`Advantage Ambulance Grp., Inc. v. Lugo,
`2009 WL 839085 (E.D. Pa. Mar. 30, 2009) ............................................................. 23
`Albin v. Trustmark Ins. Co.,
`2013 WL 12191722 (C.D. Cal. Nov. 25, 2013) ....................................................... 11
`Align Tech., Inc. v. Miller,
`2005 WL 3445623 (N.D. Cal. Dec. 14, 2005) ......................................................... 25
`Antman v. Uber Techs., Inc.,
`2015 WL 6123054 (N.D. Cal. Oct. 19, 2015) ............................................................ 6
`Antman v. Uber Techs., Inc.,
`2018 WL 2151231 (N.D. Cal. May 10, 2018) ............................................................ 6
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) ................................................................................................ 3, 4
`Audigier Brand Mgmt. v. Perez,
`2012 WL 5470888 (C.D. Cal. Nov. 5, 2012) ........................................................... 12
`Backhaut v. Apple, Inc.,
`74 F. Supp. 3d 1033 (N.D. Cal. 2014) ...................................................................... 18
`Bell Atl. Corp. v. Twombly,
`550 U.S. 544 (2007) .................................................................................................... 3
`Belluomini v. Citigroup, Inc.,
`2013 WL 3855589 (N.D. Cal. July 24, 2013) .......................................................... 11
`Biakanja v. Irving,
`49 Cal. 2d 647 (1958) ............................................................................................... 15
`Body Jewelz, Inc. v. Valley Forge Ins. Co.,
`241 F. Supp. 3d 1084 (C.D. Cal. 2017) .................................................. 12, 13, 14, 15
`
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`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`Brousseau v. Jarrett,
`73 Cal. App. 3d 864 (1977) ...................................................................................... 25
`California v. Super. Ct.,
`150 Cal. App. 3d 848 (1984) .............................................................................. 3, 5, 6
`Carnegie Strategic Design Eng’rs v. Cloherty,
`2014 WL 896636 (W.D. Pa. Mar. 6, 2014) .............................................................. 23
`Castillo v. Seagate Tech., LLC,
`2016 WL 9280242 (N.D. Cal. Sept. 14, 2016) ......................................................... 13
`Cattie v. Wal-Mart Stores, Inc.,
`504 F. Supp. 2d 939 (S.D. Cal. 2007) ...................................................................... 21
`Citizens Bank of Pa. v. Reimbursement Techs., Inc.,
`2014 WL 2738220 (E.D. Pa. June 17, 2014) .......................................................... 7, 8
`Clayton v. Landsing Pac. Fund, Inc.,
`2002 WL 1058247 (N.D. Cal. May 9, 2002) ............................................................ 19
`Clinton Plumbing & Heating of Trenton, Inc. v. Ciaccio,
`2010 WL 4224473 (E.D. Pa. Oct. 22, 2010) ............................................................ 21
`Clinton Plumbing & Heating of Trenton, Inc. v. Ciaccio,
`2011 WL 6088611 (E.D. Pa. Dec. 7, 2011) ............................................................. 22
`Cruz v. HomeBase,
`83 Cal. App. 4th 160 (2000) ..................................................................................... 24
`Daugherty v. Am. Honda Motor Co., Inc.,
`144 Cal. App. 4th 824 (2006) ................................................................................... 20
`Dep’t of Water & Power of L.A. v. ABB Power T&D Co.,
`902 F. Supp. 1178 (C.D. Cal. 1995) ......................................................................... 15
`DocMagic, Inc. v. Ellie Mae, Inc.,
`745 F. Supp. 2d 1119 (N.D. Cal. 2010) .................................................................... 22
`Durell v. Sharp Healthcare,
`183 Cal. App. 4th 1350 (2010) ................................................................................. 18
`
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`TABLE OF AUTHORITIES
`(continued)
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`Page(s)
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`Durkee v. Ford Motor Co.,
`2014 WL 4352184 (N.D. Cal. Sept. 2, 2014) ........................................................... 20
`Ehrlich v. BMW of N. Am., LLC,
`801 F. Supp. 2d 908 (C.D. Cal. 2010) ...................................................................... 18
`Elsayed v. Maserati N. Am., Inc.,
`215 F. Supp. 3d 949 (C.D. Cal. 2016) ...................................................................... 14
`Fabreeka Int’l Holdings, Inc. v. Haley,
`2015 WL 7253019 (E.D. Mich. Nov. 17, 2015) ....................................................... 22
`Foley v. Interactive Data Corp.,
`47 Cal. 3d 654 (1988) ............................................................................................... 15
`Gordon v. Chipotle Mexican Grill, Inc.,
`344 F. Supp. 3d 1231 (D. Colo. 2018) ..................................................................... 13
`Gregorian v. Nat’l Convenience Stores, Inc.,
`174 Cal. App. 3d 944 (1985) ...................................................................................... 7
`Greystone Homes, Inc. v. Midtec, Inc.,
`168 Cal. App. 4th 1194 (2008) ................................................................................. 16
`Hall v. Time Inc.,
`158 Cal. App. 4th 847 (2008) ................................................................................... 18
`Hammond Enters. Inc. v. ZPS Am. LLC,
`2013 WL 5814505 (N.D. Cal. Oct. 29, 2013) .......................................................... 13
`Handy v. LogMeIn, Inc.,
`2015 WL 4508669 (E.D. Cal. July 24, 2015) ........................................................... 18
`Hensley–Maclean v. Safeway, Inc.,
`2014 WL 1364906 (N.D. Cal. Apr. 7, 2014) ............................................................ 20
`Hill v. Nat’l Collegiate Athletic Ass’n,
`7 Cal. 4th 1 (1994) ...................................................................................................... 9
`In re iPhone Application Litig.,
`6 F. Supp. 3d 1004 (N.D. Cal. 2013) ........................................................................ 19
`
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`TABLE OF AUTHORITIES
`(continued)
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`Page(s)
`
`In re iPhone Application Litig.,
`844 F. Supp. 2d 1040 (N.D. Cal. 2012) ................................................................ 9, 13
`J’Aire v. Gregory,
`24 Cal. 3d 799 (1979) ......................................................................................... 14, 15
`Jesse v. Malcmacher,
`2016 WL 9450683 (C.D. Cal. Apr. 5, 2016) ........................................................ 7, 17
`Johnson v. Nw. Airlines, Inc.,
`2010 WL 5564629 (N.D. Cal. May 5, 2010) .............................................................. 4
`Kalitta Air, LLC v. Cent. Tex. Airborne Sys., Inc.,
`315 F. App’x 603 (9th Cir. 2008) ............................................................................. 12
`Kearns v. Ford Motor Co.,
`567 F.3d 1120 (9th Cir. 2009) .................................................................................... 3
`Kelley v. Corr. Corp. of Am.,
`750 F. Supp. 2d 1132 (E.D. Cal. 2010) .............................................................. 23, 25
`Laster v. T-Mobile USA, Inc.,
`407 F. Supp. 2d 1181 (S.D. Cal. 2005) .................................................................... 21
`Lavine v. Jessup,
`161 Cal. App. 2d 59 (1958) ...................................................................................... 25
`In re LinkedIn User Privacy Litig.,
`932 F. Supp. 2d 1089 (N.D. Cal. 2013) .................................................................... 19
`Low v. LinkedIn Corp.,
`900 F. Supp. 2d 1010 (N.D. Cal. 2012) .................................................................. 8, 9
`Martinez v. Pac. Bell,
`225 Cal. App. 3d 1557 (1990) ................................................................................ 4, 7
`Mega RV Corp. v. HWH Corp.,
`225 Cal. App. 4th 1318 (2014) ................................................................................. 17
`Modisette v. Apple Inc.,
`30 Cal. App. 5th 136 (2018) ....................................................................................... 6
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`TABLE OF AUTHORITIES
`(continued)
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`Page(s)
`
`Moore v. Apple, Inc.,
`73 F. Supp. 3d 1191 (N.D. Cal. 2014) ...................................................................... 20
`O’Keefe v. Inca Floats, Inc.,
`1997 WL 703784 (N.D. Cal. Oct. 31, 1997) .............................................................. 7
`Oce N. Am., Inc. v. MCS Servs., Inc.,
`748 F. Supp. 2d 481 (D. Md. 2010) .......................................................................... 22
`Oki Am., Inc. v. Microtech Int’l, Inc.,
`872 F.2d 312 (9th Cir. 1989) ................................................................................... 15
`Oracle USA, Inc. v. XL Glob. Servs., Inc.,
`2009 WL 2084154 (N.D. Cal. July 13, 2009) .......................................................... 12
`Ott v. Alfa–Laval Agri, Inc.,
`31 Cal. App. 4th 1439 (1995) ................................................................................... 16
`Outboard Marine Corp. v. Superior Court,
`52 Cal. App. 3d 30 (Ct. App. 1975) ......................................................................... 21
`Perez v. Auto Tech. Co.,
`2014 WL 12588644 (C.D. Cal. July 14, 2014) ........................................................ 25
`R Power Biofuels, LLC v. Chemex LLC,
`2016 WL 6663002 (N.D. Cal. Nov. 11, 2016) ......................................................... 15
`Robinson Helicopter Co. v. Dana Corp.,
`34 Cal. 4th 979 (2004) .............................................................................................. 12
`Rojas-Lozano v. Google, Inc.,
`159 F. Supp. 3d 1101 (N.D. Cal. 2016) .............................................................. 18, 19
`Ruiz v. Gap, Inc.,
`540 F. Supp. 2d 1121 (N.D. Cal. 2008) ...................................................................... 9
`Sanbrook v. Office Depot, Inc.,
`2008 WL 1994884 (N.D. Cal. May 5, 2008) ............................................................ 21
`Sateriale v. R.J. Reynolds Tobacco Co.,
`697 F.3d 777 (9th Cir. 2012) .................................................................................... 18
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`TABLE OF AUTHORITIES
`(continued)
`
`Page(s)
`
`In re Sony Gaming Networks & Customer Data Sec. Breach Litigation,
`996 F. Supp. 2d 942 (S.D. Cal. 2014) .................................................... 13, 16, 17, 18
`State Dep’t of State Hosps. v. Super. Ct.,
`61 Cal. 4th 339 (2015) ................................................................................................ 6
`Stearns v. Select Comfort Retail Corp.,
`2009 WL 1635931 (N.D. Cal. June 5, 2009) ............................................................ 21
`SuccessFactors, Inc. v. Softscape, Inc.,
`544 F. Supp. 2d 975 (N.D. Cal. 2008) ...................................................................... 23
`Sunbelt Rentals, Inc. v. Victor,
`43 F. Supp. 3d 1026 (N.D. Cal. 2014) ................................................................ 10, 11
`In re Target Corp. Data Sec. Breach Litig.,
`66 F. Supp. 3d 1154 (D. Minn. 2014)....................................................................... 13
`Tasion Commc’ns, Inc. v. Ubiquiti Networks, Inc.,
`2013 WL 4530470 (N.D. Cal. Aug. 26, 2013) ......................................................... 13
`Teva Pharm. USA, Inc. v. Sandhu,
`291 F. Supp. 3d 659 (E.D. Pa. 2018) ........................................................................ 23
`Tomaselli v. Transamerica Ins. Co.,
`25 Cal. App. 4th 1269 (1994) ................................................................................... 24
`Torralbo v. Davol, Inc.,
`2017 WL 5664993 (C.D. Cal. Oct. 19, 2017) .......................................................... 25
`UMG Recordings, Inc. v. Glob. Eagle Entm’t, Inc.,
`117 F. Supp. 3d 1092 (C.D. Cal. 2015) ...................................................................... 3
`Vu v. Cal. Comm. Club, Inc.,
`58 Cal. App. 4th 229 (1997) ....................................................................................... 3
`Weeks v. Baker & McKenzie,
`63 Cal. App. 4th 1128 (1998) ................................................................................... 24
`White v. Ultramar, Inc.,
`21 Cal. 4th 563 (1999) .............................................................................................. 24
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`TABLE OF AUTHORITIES
`(continued)
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`Page(s)
`
`In re Yahoo Mail Litig.,
`7 F. Supp. 3d 1016 (N.D. Cal. 2014) ........................................................................ 10
`In re Yahoo! Inc. Customer Data Sec. Breach Litig.,
`2017 WL 3727318 (N.D. Cal. Aug. 30, 2017) ..................................................... 7, 19
`Zamora v. Shell Oil Co.,
`55 Cal. App. 4th 204 (1997) ..................................................................................... 15
`Zbitnoff v. Nationstar Mortg., LLC,
`2014 WL 1101161 (N.D. Cal. Mar. 18, 2014) ......................................................... 11
`Statutes
`18 U.S.C. § 1030(c)(4)(A)(i)(I) ..................................................................................... 21
`18 U.S.C. § 1030(e)(11) ................................................................................................. 21
`18 U.S.C. § 1030(g) ....................................................................................................... 21
`Cal. Civ. Code § 1780(a) ............................................................................................... 20
`Cal. Civ. Code § 1782(a) ............................................................................................... 21
`Cal. Civ. Code § 3294(a) ............................................................................................... 25
`Cal. Civ. Code § 3294(b) ............................................................................................... 24
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`Case 2:19-cv-08972-CBM-FFM Document 21 Filed 12/06/19 Page 13 of 38 Page ID #:333
`
`
`I.
`Introduction
` Criminals stole cryptocurrency from Seth Shapiro. Mr. Shapiro blames AT&T
`for the theft, but he is wrong, and his complaint states no viable claim against AT&T
`under any theory.
` Instead, Mr. Shapiro’s complaint hinges on the bare-thin conclusion that the
`alleged transfer of his phone number to another phone (a “SIM swap”) controlled by
`criminals set into motion a lengthy, complex, unspecified chain of events that somehow
`permitted the same or other criminals access to Mr. Shapiro’s various accounts—
`accounts that AT&T itself could not have accessed. Nothing that he alleges connects
`the alleged SIM swap to myriad other events that were necessary predicates for the
`criminals to steal his cryptocurrency.
`Mr. Shapiro’s complaint is based on inference. He wants the Court to believe
`that, because he experienced a SIM swap and a theft, the SIM swap must not only have
`been necessary for that theft to occur, but also the theft’s proximate cause. But it is
`equally plausible that the SIM swap had nothing to do with the thefts, because the SIM
`swap and the thefts reflect that criminals must have had pre-existing knowledge of Mr.
`Shapiro’s holdings and his personal information, yet the complaint lacks any allegations
`to explain how the SIM swap contributed to that pre-existing knowledge. Mr. Shapiro
`certainly has not pled that the alleged SIM swap was a proximate cause of any theft, and
`could not credibly do so because his causation chain depends not only on the criminal
`acts of third parties, but also on entirely undisclosed intervening steps that cannot even
`be examined to determine whether they were tenuous or unforeseeable. For instance,
`Mr. Shapiro does not explain what security protected his funds; what information the
`criminals required to circumvent that security; or what, if any, of that information was
`obtained independent of the alleged SIM swap. When the theory of causation requires
`the Court to indulge a guess as to how the alleged misconduct caused the alleged harm,
`the complaint fails to plead proximate cause.
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`In addition to his failure to plead proximate cause, Mr. Shapiro’s claims also have
`additional flaws that require dismissal. Each of these flaws is set forth in the Notice of
`Motion and discussed below in more detail.
`In short, Mr. Shapiro’s complaint overreaches at every turn in his attempt to blame
`AT&T for conduct that it did not control, and for harm that should be assigned to the
`intentional misconduct of third-party hackers or, potentially, to Mr. Shapiro’s own
`negligence, if any loss occurred at all. The complaint should be dismissed in its entirety.
`II.
`Facts1
`According to the allegations in the complaint, Mr. Shapiro entered into a wireless
`contract with AT&T in 2006. Compl. ¶ 10. On May 16, 2018, Mr. Shapiro noticed that
`his cell phone was no longer connected to the AT&T network. Compl. ¶ 31. He later
`learned that the wireless number associated with his SIM card had been assigned to
`another SIM card in a phone controlled by third-party criminal hackers. Compl. ¶¶ 36,
`47–48. Mr. Shapiro alleges that the hackers used the SIM swap to take control of his
`phone number and, without further explanation, that the hackers were able to access
`eleven cryptocurrency accounts and transfer funds from an unspecified number of these
`accounts. Compl. ¶¶ 39–40, 42–44.
`While hackers were allegedly gaining access to Mr. Shapiro’s cryptocurrency
`accounts, Mr. Shapiro called AT&T customer service and later visited an AT&T retail
`location and purchased a new phone. Compl. ¶¶ 33, 35. AT&T representatives at the
`retail store purportedly told Mr. Shapiro that “they had noted the SIM swap activity in
`his account,” but that his “SIM card would not be swapped again without his
`authorization.” Compl. ¶ 36. He alleges that a few minutes later, another unauthorized
`SIM swap occurred, and that while he was waiting to speak to another AT&T
`representative, hackers
`transferred and stole roughly $1.8 million from his
`cryptocurrency accounts. Compl. ¶¶ 39, 42. He alleges that two more swaps occurred
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`1 For this motion only, AT&T assumes the truth of the well-pled allegations in Mr.
`Shapiro’s complaint.
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`over the following year, but does not allege that he lost funds from those swaps. Compl.
`¶¶ 65, 68. Mr. Shapiro then filed this action.
`III. Standard of Review
`“To survive a motion to dismiss, a complaint must contain sufficient factual
`matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
`v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
`570 (2007)). A claim is plausible “when the plaintiff pleads factual content that allows
`the court to draw the reasonable inference that the defendant is liable for the misconduct
`alleged.” Iqbal, 556 U.S. at 678. A “pleading that offers labels and conclusions or a
`formulaic recitation of the elements of a cause of action will not do.” Id. (internal
`quotation marks and citations omitted). If a complaint “pleads facts that are ‘merely
`consistent with’ a defendant’s liability, it ‘stops short of the line between possibility and
`plausibility of entitlement to relief.’” Id. (quoting Twombly, 550 U.S. at 557).
`Moreover, claims that sound in fraud “must meet the heightened pleading
`requirements of Rule 9(b).” UMG Recordings, Inc. v. Glob. Eagle Entm’t, Inc., 117 F.
`Supp. 3d 1092, 1106 (C.D. Cal. 2015) (internal citation omitted). “Rule 9(b)’s
`heightened pleading standards apply to claims for violations of the CLRA” where those
`claims sound in fraud. Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009).
`IV.
` Argument
`A. Mr. Shapiro Failed To Adequately Allege Proximate Causation for Any of
`His Claims.
`Under California law, “causation of damages” in tort cases “requires that the
`damages be proximately caused by the defendant’s breach, and that their causal
`occurrence be at least reasonably certain.” Vu v. Cal. Comm. Club, Inc., 58 Cal. App.
`4th 229, 233 (1997). Proximate cause “is that cause which, in natural and continuous
`sequence, unbroken by any efficient intervening cause, produced the [alleged] injury . . .
`and without which such result would not have occurred.” California v. Super. Ct., 150
`Cal. App. 3d 848, 857 (1984) (internal citation and quotation marks omitted); see also
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`Johnson v. Nw. Airlines, Inc., 2010 WL 5564629, at *8 (N.D. Cal. May 5, 2010). A
`defendant’s liability does not extend “to damage suffered as a proximate result of the
`independent intervening acts of others.” Martinez v. Pac. Bell, 225 Cal. App. 3d 1557,
`1565 (1990). Mr. Shapiro has not adequately pled proximate cause for any of his claims.
`1. Mr. Shapiro Does Not Allege How Accessing His Phone Number Led
`to the Loss of $1.8 Million.
`Mr. Shapiro alleges that inadequate security measures led to the theft of his
`cryptocurrency. But these allegations are bare conclusions, lacking any explanation of
`the sequence of events leading to his claimed loss. Iqbal, 556 U.S. at 662. While Mr.
`Shapiro alleges four SIM swaps, only one of these allegedly led to any loss. Compl.
`¶ 39. Importantly, a SIM swap by itself does not provide knowledge of or access to a
`cryptocurrency or other account. At most, a SIM swap transfers control of a phone
`number. See Compl. ¶¶ 20–24. To gain access to cryptocurrency, one would need to
`also have account information—where the funds were located, who controlled the
`accounts in which they were held, and how to circumvent security to access those funds.
`Mr. Shapiro alleges that, after executing a single SIM swap, hackers took control
`of eleven different cryptocurrency accounts, Compl. ¶ 40, “four email addresses,” and
`his “Evernote” and “PayPal” accounts, Compl. ¶ 44. Yet Mr. Shapiro fails to plausibly
`allege how the purported swap of his SIM card was in any way necessary or sufficient
`to achieve these actions. Indeed, Mr. Shapiro admits that the mobile number would be
`“one of the factors” protecting account access and that the person who had control over
`his number also would have needed to “steal[] [his] password.” Compl. ¶ 120. Yet he
`pleads nothing about any of these issues, instead summarily alleging that the hackers
`used control over his phone number to transfer roughly $1.8 million from some portion
`of eleven different cryptocurrency accounts. Compl. ¶¶ 38, 39.
`Mr. Shapiro’s allegations raise far more questions than they answer. How did the
`hackers find out what Mr. Shapiro’s wireless number was or that he was an AT&T
`customer? How did the hackers know Mr. Shapiro had money stored in eleven different
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`cryptocurrency accounts, which cryptocurrency accounts he held, or what his user names
`or passwords were for those cryptocurrency accounts? What other information did the
`alleged hackers have that was used to access these accounts? How did hackers obtain
`that information? Did Mr. Shapiro’s cryptocurrency accounts req