Rattagan v. Uber Technologies, Inc.

324 Cal.Rptr.3d 433

553 P.3d 1213

Michael R. RATTAGAN, Plaintiff and Appellant,

v.UBER TECHNOLOGIES, INC., Defendant and Respondent.

S272113

Supreme Court of California.

August 22, 2024

Ninth Circuit, 20-16796, Northern District of California, 3:19-CV-01988-EMC

Steyer Lowenthal Boodrookas Alvarez & Smith, Andrew A. August, Allan Steyer, San Francisco, Jill K. Cohoe; Greines, Martin, Stein & Richland, Cynthia E. Tobisman, Alana H. Rotter, Jeffrey E. Raskin, Los Angeles, and Laura G. Lim for Plaintiff and Appellant.

Strategic Legal Practices, Payam Shahian, Tionna Dolin, Los Angeles, and Caitlin J. Scott for Leslie Spellman as Amicus Curiae on behalf of Plaintiff and Appellant.

Knight Law Group, Roger R. Kimos, Lauren A. Ungs and Christopher Swanson, Los Angeles, as Amicus Curiae on behalf of Plaintiff and Appellant.

Covington & Burling, Beth S. Brinkmann, Clara J. Shin, Jeffrey M. Davidson and Amy S. Heath, San Francisco, for Defendant and Respondent.

Horvitz & Levy, Jeremy B. Rosen, Lisa Perrochet, Burbank, Rebecca G. Powell and Cameron Fraser for the Chamber of Commerce of the United States of America as Amicus Curiae on behalf of Defendant and Respondent.

Opinion of the Court by Corrigan, J.

At the request of the United States Court of Appeals for the Ninth Circuit, we consider a question expressly left open in Robinson Helicopter v. Dana Corp. (2004) 34 Cal.4th 979, 22 Cal.Rptr.3d 352, 102 P.3d 268 (Robinson). Under California law, may a plaintiff assert a tort claim for fraudulent concealment arising from or related to the performance of a contract?¹ The answer to the question is a qualified yes. A plaintiff may assert a fraudulent concealment cause of action based on conduct occurring in the course of a contractual relationship if the elements of the claim can be established independently of the parties’ contractual rights and obligations, and the tortious conduct exposes the plaintiff to a risk of harm beyond the reasonable contemplation of the parties when they entered into the contract.

I. BACKGROUND

A. Factual Allegations

This case comes to us following dismissal of Michael R. Rattagan’s third amended complaint (TAG) without leave to amend. (Fed. Rules of Civ. Proc., rule 12(b)(6).) In answering the Ninth Circuit’s question, we assume all factual allegations in the TAG to be true. (Ixchel Pharma, LLC v. Biogen, Inc. (2020) 9 Cal.5th 1130, 1137-1138, 266 Cal.Rptr.3d 665, 470 P.3d 571.) Rattagan is a citizen of Argentina and describes himself as "one of the top and most renowned business lawyers in Buenos Aires." He is licensed to practice law in Argentina and the State of New York. At all relevant times, he was the managing partner of Rattagan Macchiavello Arocena, a law firm that "counsels large multinational companies in various business matters, with an emphasis on transactions, investments and interests in Argentina."

In February 2013, a representative of two Dutch subsidiaries of defendant Uber Technologies, Inc. (Uber) contacted Rattagan.² Uber was considering launching its ridesharing platform in Argentina and sought local counsel to assist with the process. Under the direction of Uber’s legal department in San Francisco, the Dutch subsidiaries retained Rattagan and his firm to provide specific legal services, including reserving the corporate name "Uber Argentina, S.A." (Uber SA); registering the Dutch subsidiaries as Uber SA’s foreign shareholders; creating all the corporate formation documents for Uber SA; and registering Uber SA with the Buenos Aires Office of Corporations (the Inspection General de Justicia or IGJ). The complaint alleges the Dutch subsidiaries were merely acting as agents for their principal, Uber, when Rattagan was retained in 2013, making Uber responsible for all the actions of the Dutch subsidiaries based on an agency relationship.

Rattagan also agreed to act as the Dutch subsidiaries’ registered legal representative in Argentina. He characterizes this arrangement as being "separate and apart from the legal services provided." According to the TAG, any foreign compa- ny intending to do business in Argentina must register with the IGJ and submit certain required documents, including details about the foreign company’s shareholders, Additionally, the foreign shareholders must be represented by a "local resident registered with the IGJ" who acts as the "human face of that entity in Argentina." Before taking on this additional role, Rattagan expressly warned Uber in writing of the "full potential personal exposure" he might face as legal representative if the Dutch subsidiaries violated Argentinian law.

Rattagan and the Dutch subsidiaries also entered into indemnity agreements. The agreements provide that the subsidiaries would hold Rattagan "harmless from any action, suit or proceeding, pending or threatened, whether civil, criminal, administrative or investigative … by reason of the fact that the Legal Representative is or was legal representative of the Company" and "indemnifie[d] … against any and all liabilities and expenses (including reasonable attorneys’ fees and expenses), payable by [Rattagan] in connection with the defense or settlement of any such action, suit or proceeding, or any appeal with respect thereto Additionally, the agreements state, "[t]he Company acknowledges that the Legal Representative was not, is not and will not become familiar with the day-to-day operations of the Company or of Uber Argentina S.A. and was not, is not and will not be required to undertake any executive or managerial responsibilities with respect thereto." Rattagan prepared papers reflecting that he would act as the Dutch subsidiaries’ legal representative and registered with the IGJ using his firm’s address.

Rattagan and his colleagues provided legal advice and drafts of corporate formation documents to the Dutch subsidiaries throughout 2013. In 2014, there was a "period of relative inactivity." In February 2015, efforts once again ramped up to form a corporation in Argentina, but this time Uber began managing Rattagan’s work directly through its San Francisco-based paralegals, Ryan Black and Shirin Schokrpur, Rattagan claims it was at this point Uber established a direct attorney-client relationship with him. Rattagan and his firm continued providing incorporation services to Uber throughout 2015 into 2016. By then, Uber had changed direction and decided to create two Argentine entities, Uber S.R.L. and Hinter Argentina, S.R.L. Rattagan’s firm began the process of forming and registering these new entities with the IGJ while he continued to act as the Dutch subsidiaries’ registered legal representative.

Between December 2015 and April 12, 2010, Rattagan contends that, unbeknownst to him, Uber representatives repeatedly met with Buenos Aires city officials. On December 17, 2015, Gonzalo Araujo, Uber’s Head of Public Policy and Government Affairs in South America, met with Juan Jose Méndez, the Secretariat of Transportation for the City of Buenos Aires. Méndez rejected Uber’s position that it was a technology company, not subject to local regulations governing transportation providers. Two additional meetings took place in January and February 2016 with city officials and Carl Meacham, Uber’s Head of Public Policy and Government Relations based in Washington D.C. City officials warned Meacham against launching Uber’s ridesharing platform in Buenos Aires unless all its drivers had professional driver’s licenses and commercial insurance coverage, and all their vehicles were examined and approved by the city.

In March 2016, the IGJ requested that Rattagan provide certain changes to Uber S.R.L.’s bylaws describing its corporate purpose. On March 22, 2016, Leonardo Orlanski, a Buenos Aires lawyer retained by Uber to handle government relations, told Rattagan not to file the modifications requested by the IGJ until Orlanski could "check some implications on the regulatory front." Rattagan contends at some point before that conversation, Uber had secretly decided to launch its ridesharing platform in Buenos Aires sometime in April 2016. They did not inform him of that decision, even though the local corporate entities were still in formation and had not yet been registered with local or federal tax authorities. Over the next few weeks, Rattagan exchanged several emails and phone calls with Orlanski, Black, Schokrpur, and Enrique Gonzalez, Uber’s Head Counsel for Latin American Operations. He alleges they intentionally concealed Uber’s launch plans even though they knew local government authorities would consider the launch to constitute "a legally non-compliant and tax evasive transportation business" and Rattagan would consequently be exposed to "grave personal consequences" given his position as the Dutch subsidiaries’ registered legal representative.

Uber officially launched its ridesharing platform in Buenos Aires on April 12, 2016. Rattagan learned about it "like everyone else — through an email blast." Public reaction was immediate and hostile, sparking violent demonstrations in the streets of Buenos Aires. Rattagan’s office was at one point surrounded by protesters who blocked the exits for hours. The day after the launch, Rattagan contacted Head Counsel Gonzalez and offered to "smooth things over" with local government officials on Uber’s behalf, while also hoping to avoid further damage to himself and his colleagues. Gonzalez declined the offer and instead instructed Rattagan to continue with the incorporation process of Uber S.R.L. and Hinter Argentina, S.R.L.

Several key events took place on April 15, three days after the launch. Rattagan emailed Gonzalez asking to be replaced as the Dutch subsidiaries’ legal representative. According to Rattagan, Gonzalez failed to act immediately on his request and more than two months elapsed before Uber removed him as the Dutch subsidiaries’ legal representative. Also on April 15, a Buenos Aires city inspector came to Rattagan’s offices...