FOR PUBLICATION
`
`UNITED STATES COURT OF APPEALS
`FOR THE NINTH CIRCUIT
`
`
`
`MICHAEL R. RATTAGAN,
`Plaintiff-Appellant,
`
`
`
`v.
`
`
`UBER TECHNOLOGIES,
`INC.,
`Defendant-Appellee.
`
`
`
`No. 20-16796
`
`D.C. No.
`3:19-CV-01988-EMC
`
`ORDER CERTIFYING
`QUESTION TO THE
`SUPREME COURT OF
`CALIFORNIA
`
`
`Filed December 6, 2021
`
`Before: Mary H. Murguia, Chief Judge, and J. Clifford
`Wallace and Morgan Christen, Circuit Judges.
`
`
`
`
`
`
`UNITED STATES COURT OF APPEALS
`FOR THE NINTH CIRCUIT
`
`
`
`MICHAEL R. RATTAGAN,
`Plaintiff-Appellant,
`
`
`
`v.
`
`
`UBER TECHNOLOGIES,
`INC.,
`Defendant-Appellee.
`
`
`
`No. 20-16796
`
`D.C. No.
`3:19-CV-01988-EMC
`
`ORDER CERTIFYING
`QUESTION TO THE
`SUPREME COURT OF
`CALIFORNIA
`
`
`Filed December 6, 2021
`
`Before: Mary H. Murguia, Chief Judge, and J. Clifford
`Wallace and Morgan Christen, Circuit Judges.
`
`
`
`
`
`
`2
`
`
`
`
`
`RATTAGAN V. UBER TECHNOLOGIES
`
`SUMMARY*
`
`California Law
`
`The panel certified to the Supreme Court of California
`the following question:
`
`for
`law, are claims
`Under California
`fraudulent concealment exempted from the
`economic loss rule?
`
`
`
`
`ORDER
`
`to determine whether fraudulent
`We are asked
`concealment claims are exempt from the economic loss rule
`under California law. This central question of state law is
`determinative of the instant case, and there is no controlling
`precedent in the California Supreme Court’s decisions. Cal.
`R. Ct. 8.548(a). Therefore, we respectfully certify this
`question of law to the California Supreme Court pursuant to
`California Rule of Court 8.548.
`
`I. Factual Background
`
`This case arises out of Uber Technologies, Inc.’s
`(“Uber”) launch of its ridesharing platform in Argentina. In
`2013, two of Uber’s wholly owned Dutch subsidiaries
`retained Plaintiff-Appellant, Michael Rattagan, a corporate
`attorney in Argentina, to provide certain legal services and
`
`* This summary constitutes no part of the opinion of the court. It
`has been prepared by court staff for the convenience of the reader.
`
`
`
`3
`
`RATTAGAN V. UBER TECHNOLOGIES
`
`
`
`serve as the Dutch entities’ legal representative in Buenos
`Aires. These Dutch entities would be the shareholders of a
`new Uber subsidiary in Argentina.
` In 2015, Uber
`representatives from the company’s headquarters in San
`Francisco
`allegedly
`assumed
`responsibility
`for
`communicating with Mr. Rattagan about the launch.
`
`In April 2016, Uber launched its platform in Argentina.
`According to Mr. Rattagan, however, Uber did so before its
`Argentine subsidiary was fully formed or registered with the
`proper tax authority. Mr. Rattagan alleges that despite
`knowing that Mr. Rattagan, as the Dutch entities’ legal
`representative, could be subject to personal liability for
`Uber’s violations of Argentine law, Uber concealed its
`launch plans from him.
`
`Within days of the launch, law enforcement authorities
`raided Mr. Rattagan’s office and the homes of his business
`colleagues. The raids occurred in connection with a charge
`that Mr. Rattagan, as an Uber representative, was illegally
`using public space for commercial gain. Mr. Rattagan also
`alleges that his offices were surrounded by protestors and
`that he and his firm received negative press in the news.
`Mr. Rattagan promptly requested that the Dutch entities
`remove him as legal representative, but the change did not
`occur until at least two months after the launch. He contends
`that, by this time, the damage to his reputation already was
`done. Mr. Rattagan later was charged with aggravated tax
`evasion for his perceived involvement with the Uber launch.
`The investigation received significant media attention,
`which Mr. Rattagan asserts harmed his reputation in his
`community.
`
`In the operative complaint, Mr. Rattagan alleged claims
`of negligence, breach of the implied covenant of good faith
`and fair dealing, fraudulent concealment, and aiding and
`
`
`
`RATTAGAN V. UBER TECHNOLOGIES
`
`4
`
`abetting fraudulent concealment. Applying California law,
`the district court concluded that Mr. Rattagan’s negligence
`and breach of the implied covenant claims were time barred.
`The district court also held that the fraudulent concealment
`claims were foreclosed by the economic loss rule—a
`doctrine that prevents a party to a contract from recovering
`economic damages resulting from breach of contract under
`tort theories of liability. Accordingly, the district court
`dismissed Rattagan’s complaint.
`
`On appeal, Mr. Rattagan challenges only the district
`court’s conclusion that his fraudulent concealment claims
`were foreclosed by the economic loss rule. Two of
`Mr. Rattagan’s arguments fail: Mr. Rattagan waived the
`argument that his claim is shielded by the special
`relationship exception, and he has not plausibly alleged that
`his relationship with Uber was non-contractual. This case
`therefore turns on Mr. Rattagan’s remaining argument:
`fraudulent concealment claims are exempt from California’s
`economic loss rule. Because the fraudulent concealment
`issue is dispositive in Mr. Rattagan’s case, because there are
`no California Supreme Court or appellate court decisions on
`point, and because federal district courts are divided on the
`issue, we certify Mr. Rattagan’s question to the California
`Supreme Court.
`
`II. Explanation of Certification
`
`Federal courts sitting in diversity, as here, apply state
`substantive law and federal procedural law. In re County of
`Orange, 784 F.3d 520, 527 (9th Cir. 2015) (citing Erie R.
`Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L.Ed. 1188
`(1938), quoting Gasperini v. Ctr. for Humanities, Inc.,
`518 U.S. 415, 427 (1996)). Application of the economic loss
`rule is substantive and thus governed by California law. See
`City of Pomona v. SQM N. Am. Corp., 750 F.3d 1036, 1050
`
`
`
`RATTAGAN V. UBER TECHNOLOGIES
`
`
`
`(9th Cir. 2014). When determining state law in the absence
`of a decision from the relevant state’s high court, this court
`may look to the state’s courts of appeal for guidance.
`Strother v. S. Cal. Permanente Med. Grp., 79 F.3d 859, 865
`(9th Cir. 1996).
`
`5
`
`The economic loss rule limits a party to a contract “to
`recover[ing] in contract for purely economic loss due to
`disappointed expectations,” rather than in tort, “unless he
`can demonstrate harm above and beyond a broken
`contractual promise.” Robinson Helicopter Co. v. Dana
`Corp., 102 P.3d 268, 272 (Cal. 2004). Stated differently, a
`party to a contract generally cannot recover for pure
`economic loss—i.e., damages that are solely monetary—that
`resulted from a breach of contract unless he can show a
`violation of some independent duty arising in tort. See
`Erlich v. Menezes, 981 P.2d 978, 983 (Cal. 1999) (“[C]ourts
`will generally enforce the breach of a contractual promise
`through contract law, except when the actions that constitute
`the breach violate a social policy that merits the imposition
`of tort remedies.” (quoting Freeman & Mills, Inc. v. Belcher
`Oil Co., 44 Cal. Rptr. 2d 420, 434 (1995))). The rule
`“prevent[s] the law of contract and the law of tort from
`dissolving one into the other.” Robinson, 102 P.3d at 273
`(alteration in original) (quoting Rich Products Corp. v.
`Kemutec, Inc., 66 F. Supp. 2d 937, 969 (E.D. Wis. 1999)).
`
`In Robinson, the California Supreme Court held that the
`economic loss rule does not bar fraud claims premised on
`affirmative misrepresentations. Id. at 274–75. The
`California Supreme Court reasoned that this species of fraud
`constitutes tortious conduct separate from a breach of the
`contract.
`
`Id. at 274.
` Because
`the affirmative
`misrepresentations were “dispositive fraudulent conduct,”
`the Court expressly declined to address whether another type
`
`
`
`RATTAGAN V. UBER TECHNOLOGIES
`
`6
`
`of fraud—intentional concealment—likewise constitutes an
`independent tort warranting an exception. Id. at 275. The
`California Supreme Court explained, “Our holding today is
`narrow in scope and limited to a defendant’s affirmative
`misrepresentations on which a plaintiff relies and which
`expose a plaintiff to liability for personal damages
`independent of the plaintiff’s economic loss.” Id. at 276. It
`reasoned that “fraud is a tort independent of the breach” of a
`contract, and moreover, “[a]llowing Robinson’s claim . . .
`discourages [affirmative misrepresentation] in the future
`while encouraging a business climate free of fraud and
`deceptive practices.” Id. at 275 (internal quotation marks
`and citation omitted).
`
`Since the Robinson decision, federal district courts have
`confronted the issue of whether fraudulent concealment also
`constitutes independent tortious conduct, warranting an
`exception to the economic loss rule. The district courts have
`reached opposing conclusions. For example, the district
`court in Goldstein v. Gen. Motors LLC, 517 F. Supp. 3d 1076
`(S.D. Cal. 2021), held that “[t]he narrowly tailored exception
`to the economic loss rule articulated in Robinson Helicopter
`does not extend to fraudulent omission claims.” Id. at 1093.
`Therefore, consumers’ claims that car manufacturers had
`knowingly failed to disclose a dangerous defect in car touch
`screens was precluded by the economic loss rule. Id. The
`district court in NuCal Foods, Inc. v. Quality Egg LLC,
`918 F. Supp. 2d 1023 (E.D. Cal. 2013), reached the opposite
`conclusion. That court refused to dismiss fraudulent
`concealment claims related to the sale of allegedly
`contaminated eggs, because it held that the Robinson opinion
`“strongly suggests no meaningful distinction exists between
`intentional concealment and intentional misrepresentation.”
`Id. at 1031.
`
`
`
`
`
`
`RATTAGAN V. UBER TECHNOLOGIES
`
`7
`
`Occasionally, such diametrically opposed holdings have
`appeared within the same litigation. For instance, the district
`court in In re Ford Motor Co. DPS6 Powershift Transmission
`Prods. Liab. Litig., No. CV1706656ABFFMX, 2019 WL
`3000646 (C.D. Cal. May 22, 2019), found that under
`Robinson, the economic loss rule did not apply to plaintiffs’
`claims for fraudulent concealment or omission. Id. at *6.
`One year later, ruling on a different plaintiff’s claim, that
`district court concluded that it was bound by the California
`Supreme Court’s decision in Robinson not to extend the
`exception to the economic loss rule to fraudulent omissions.
`In re Ford Motor Co. DPS6 Powershift Transmission Prods.
`Liab. Litig., 483 F. Supp. 3d 838, 849 (C.D. Cal. 2020).
`
`California Courts of Appeal have not addressed whether
`the Robinson exception applies to fraudulent concealment.
`Some appellate courts have suggested that Robinson extends
`to all claims of intentional, fraudulent conduct, see, e.g.,
`Frank E. Maddocks, Inc. v. Univ. Med. Prods./USA, Inc.,
`No. B172559, 2005 WL 2002396, at *3 (Cal. Ct. App. Aug.
`22, 2005) (“the [economic loss] rule does not bar fraud and
`intentional misrepresentation claims”), while others have
`declined
`to apply Robinson beyond
`the “narrow
`circumstances” presented in that case, see. e.g., United Med.
`Devices, LLC v. PlaySafe, LLC, No. B250305, 2015 WL
`920695, at *6 (Cal. Ct. App. Mar. 2, 2015), as modified on
`denial of reh’g (Mar. 30, 2015).
`
`State courts across the country have exempted fraud
`claims like the one Mr. Rattagan asserts from the economic
`loss doctrine. See, e.g., Taylor v. Taylor, 422 P.3d 1116,
`1125 (Idaho 2018), as corrected (July 31, 2018) (economic
`loss rule does not apply where unique circumstances require
`a reallocation of risk); see also Tiara Condo. Ass’n, Inc. v.
`Marsh & McLennan Cos., Inc., 110 So. 3d 399, 407 (Fla.
`
`
`
`RATTAGAN V. UBER TECHNOLOGIES
`
`8
`
`2013) (no application outside products liability context); see
`also Formosa Plastics Corp. USA v. Presidio Eng’rs &
`Contractors, Inc., 960 S.W.2d 41, 47 (Tex. 1998) (listing
`various species of fraud claims that are exempt from the
`economic loss rule).
`
`These courts, like the Robinson court, have recognized
`that the scope of the economic loss doctrine implicates two
`crucial public policy concerns: “freedom of contract and
`abhorrence of fraud.” See Milan Supply Chain Sols., Inc. v.
`Navistar, Inc., 627 S.W.3d 125, 153 (Tenn. 2021)
`(“declin[ing] to announce a broad rule either extending the
`economic loss rule to all fraud claims or exempting all fraud
`claims from the economic loss rule”). On one hand, the
`doctrine serves
`the
`important purposes of allowing
`contracting parties to “reliably allocate risks and costs during
`their bargaining” and encouraging them to “build the cost
`considerations into the contract because they will not be able
`to recover economic damages in tort.” BRW, Inc. v. Dufficy
`& Sons, Inc., 99 P.3d 66, 72 (Colo. 2004).
` But
`notwithstanding this tendency to “increase the certainty in
`contractual relationships,” applying the rule to intentional
`fraud may “encourage[e] fraudulent conduct at the expense
`of an innocent party.” Robinson, 102 P.3d at 276.
`Recovering the benefit of the bargain may afford incomplete
`relief to fraud victims since parties typically do not factor in
`the possibility of dishonesty when negotiating a contract. Id.
`at 275–76.
`
`fraudulent
`The unanswered question of whether
`concealment claims are exempted from the economic loss
`rule is dispositive in the instant case. There is no controlling
`state precedent, and the question implicates important policy
`concerns. Accordingly, after careful consideration, we
`exercise our discretion to certify this question to the
`
`
`
`RATTAGAN V. UBER TECHNOLOGIES
`
`
`
`California Supreme Court. See Cal. R. Ct. 8.548(a); see also
`Kremen v. Cohen, 325 F.3d 1035, 1037–38 (9th Cir. 2003)
`(listing the factors considered when determining whether
`certification is appropriate).
`
`9
`
`III. Certified Question
`
`We respectfully certify the following question to the
`California Supreme Court:
`
`for
`law, are claims
`Under California
`fraudulent concealment exempted from the
`economic loss rule?
`
`We will accept the decision of the California Supreme Court.
`Cal. R. Ct. 8.548(b)(2). We acknowledge that, as the
`receiving court, the California Supreme Court may restate
`the certified question. Cal. R. Ct. 8.548(f)(5).
`
`IV. Counsel Information
`
`The names and addresses of counsel or the parties, as
`required by Cal. R. Ct. 8.548(b)(1) are as follows:
`
`Andrew A. August, Esq., Steyer Lowenthal
`Boodrookas Alvarez & Smith LLP, 235 Pine
`Street, 15th Floor, San Francisco, California
`94104, for Plaintiff Michael R. Rattagan
`
`Jeffrey M. Davidson and Amy S. Heath,
`Covington & Burling, LLP, Salesforce
`Tower, 415 Mission Street, Suite 5400, San
`Francisco, CA 94105-2533, for Defendant
`Uber Technologies, Inc.
`
`
`
`10
`
`
`RATTAGAN V. UBER TECHNOLOGIES
`
`V. Conclusion
`
`The Clerk shall forward an original and ten certified
`copies of this certification order, under official seal, to the
`California Supreme Court. Cal. R. Ct. 8.548(d). The Clerk
`is also ordered to transmit copies of all relevant briefs, as
`well as any additional record materials requested by the
`California Supreme Court. Cal. R. Ct. 8.548(c).
`
`Submission of this appeal for decision is vacated and
`deferred pending the California Supreme Court’s final
`response to this certification order. The Clerk is directed to
`administratively close this docket, pending further order.
`The parties shall notify the Clerk of this court within
`fourteen days of the California Supreme Court’s acceptance
`or rejection of certification, and again, if certification is
`accepted, within fourteen days of the California Supreme
`Court’s issuance of a decision.
`
`QUESTION
`STAYED.
`
`CERTIFIED;
`
`PROCEEDINGS
`
`
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