Jia v. Weee! Inc.

• Court: District Court, N.D. California
• Decided: January 19, 2024
• Docket: 4:23-cv-02314
• Status: Unknown

Opinion

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8 9 HELEN JIA, Case No. 23-cv-02314-DMR

10 Plaintiff, ORDER ON MOTION TO DISMISS OR 11 v. TRANSFER

12 WEEE! INC., Re: Dkt. No. 18 13 Defendant.

14 Plaintiffs Helen Jia, Tingting Ding, Haoquan Liang, and Xiaofang Mei filed this putative 15 class action against Defendant Weee! Inc. as the result of a February 2023 data breach. Defendant 16 filed a motion to dismiss or transfer the case to the United States District Court for the Southern 17 District of New York under the first-to-file rule, or in the alternative, to dismiss the amended 18 complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). [Docket No. 18.] 19 This matter is suitable for resolution without a hearing. Civ. L.R. 7-1(b). For the following 20 reasons, the case is transferred to the Southern District of New York. 21 I. BACKGROUND 22 A. The Instant Action 23 Plaintiff Jia filed the complaint against Defendant on May 11, 2023. She filed an amended 24 consolidated complaint (“FAC”) on July 28, 2023 in which she added additional putative class 25 representatives Ding, Liang, and Mei. [Docket No. 17 (FAC).] 26 The FAC alleges that Defendant is “one of the largest national grocers for Asian American 27 [sic].” Id. at ¶ 1. Plaintiffs are California citizens and consumers who “entrusted their personally 1 safeguard and protect their PII, and publicly disclos[ed] their PII without authorization.” Id. at ¶ 2 ¶¶ 4-6, 12. Specifically, hackers stole Defendants’ customers’ first and last names, email 3 addresses, phone numbers, device types, order notes, and other information and began leaking the 4 data on a hacking and data breach forum in February 2023. Id. at ¶¶ 13, 14. The data breach 5 affected 1.1 million customers who placed orders after July 12, 2021, including Plaintiffs. Id. at ¶ 6 14. Plaintiffs allege that Defendant’s security failures enabled the theft and put their “personal and 7 financial information at serious and ongoing risk” and that Defendant “failed to uncover and 8 disclose the extent of the [data] [b]reach and notify” affected customers in a timely manner. Id. at 9 ¶¶ 15, 17. They further allege that they face an “immediate and substantial risk of identity theft, 10 identity fraud, and records, fraudulent credit card activity” and other harms as a result of the 11 breach. Id. at ¶ 18. 12 Plaintiffs seek to represent a national class comprised of “[a]ll customers in the United 13 States whose PII was compromised in the Data Breach” and a California subclass comprised of 14 “[a]ll customers in California whose PII was compromised in the Data Breach.” Id. at ¶¶ 49, 50. 15 They assert the following 13 claims: 1) intrusion upon seclusion; 2) violation of the California 16 Constitution’s right to privacy; 3) violation of California’s Unfair Competition Law; 4) violation 17 of the California Customer Records Act; 5) violation of the California Information Practices Act; 18 6) breach of confidentiality; 7) constructive fraud; 8) breach of express contract; 9) breach of 19 implied contract; 10) unjust enrichment; 11) declaratory relief; 12) negligence; and 13) violation 20 of the California Consumer Privacy Act. 21 B. The Liau Case 22 On February 10, 2023, Tyson Liau and Richard Teng filed a putative class action in the 23 United States District Court for the Southern District of New York on behalf of themselves and 24 “[a]ll persons residing in the United States who registered an account with Weee! e-grocery 25 service at any time from June 21, 2021 through February 6, 2023 (the ‘National Class’),” alleging 26 claims against Defendant arising out of the same data breach as that alleged in the instant case. 27 1 Liau v. Weee! Inc., Case No. 23-cv-01177-PAE (S.D.N.Y., filed Feb. 10, 2023) (the “Liau case”).1 2 In their second amended complaint (Docket No. 17, “Liau SAC”) Liau and Teng allege claims for 3 breach of implied contract and violation of the New York Deceptive Acts and Practices Law. 4 Defendant moved to dismiss the Liau SAC in June 2023; that motion remains pending. 5 Defendant now moves to dismiss or transfer the instant case to the Southern District of 6 New York under the first-to-file rule, or in the alternative, to dismiss the FAC. 7 II. LEGAL STANDARD 8 The first-to-file rule “is a generally recognized doctrine of federal comity which permits a 9 district court to decline jurisdiction over an action when a complaint involving the same parties 10 and issues has already been filed in another district.” Pacesetter Sys., Inc. v. Medtronic, Inc., 678 11 F.2d 93, 94-95 (9th Cir. 1982). A district court has discretion to dismiss, stay, or transfer the 12 second-filed case. Cedars-Sinai Medical Center v. Shalala, 125 F.3d 765, 769 (9th Cir. 1997). 13 “The first-to-file rule is intended to ‘serve[ ] the purpose of promoting efficiency well and should 14 not be disregarded lightly.’” Kohn L. Grp., Inc. v. Auto Parts Mfg. Mississippi, Inc., 787 F.3d 15 1237, 1239 (9th Cir. 2015) (quoting Alltrade, Inc. v. Uniweld Prods. Inc., 946 F.2d 622, 625 (9th 16 Cir. 1991)). 17 In determining whether the rule applies, courts analyze: (1) the chronology of the lawsuits, 18 (2) the similarity of the parties involved, and (3) “the similarity of the issues at stake.” See 19 Alltrade, 946 F.2d at 625. Regarding the second factor, “the first-to-file rule does not require 20 exact identity of the parties . . . [r]ather, the first-to-file rule requires only substantial similarity of 21 parties.” Kohn Law Grp., 787 F.3d at 1240 (citations omitted). With respect to the third factor, 22 “[t]he issues in both cases also need not be identical, only substantially similar. . . . [t]o determine 23 whether two suits involve substantially similar issues, [courts] look at whether there is substantial 24 overlap between the two suits.” Id. at 1240-41 (quotation marks and citations omitted). 25

26 1 The court sua sponte takes judicial notice of the proceedings and operative complaint in Liau. Federal courts may “take notice of proceedings in other courts, both within and without the federal 27 judicial system, if those proceedings have a direct relation to the matters at issue.” U.S. ex rel III. ANALYSIS 1 Plaintiffs do not dispute that first-to-file factors one and two, chronology of the lawsuits 2 and similarity of the parties involved, are satisfied here. Opp’n 5. However, they argue that the 3 two cases “lack the requisite similarity” and “are not substantially similar” under the third factor. 4 Id. (emphasis in original). According to Plaintiffs, the instant case pleads additional “conduct and 5 class members” based on “Defendant’s provision of PII to Wechat.” Id. (citing FAC ¶ 1372). In 6 relevant part, the FAC alleges that “[m]any of those who use Weee! to purchase groceries use 7 social media application Wechat . . . and Plaintiff is informed, and believes, that Weee! is thus, 8 otherwise improperly sharing PII with Wechat, and indirectly other unauthorized companies, and 9 government entities.” 10 Plaintiffs’ argument is not persuasive. The third factor “does not require total uniformity 11 of claims but rather focuses on the underlying factual allegations.” Mullinix v. US Fertility, LLC, 12 No. SACV 21-00409-CJC(KESx), 2021 WL 4935976, at *3 (C.D. Cal. June 8, 2021) (quoting 13 Zimmer v. Dometic Corp., No. CV 2:17-cv-06913 ODW (MRWx), 2018 WL 1135634, at *4 (C.D. 14 Cal. Feb. 22, 2018)). Courts examine whether “the core theory for both cases is the same,” and 15 “[t]he fact that the two cases involve claims under different state laws does not preclude 16 application of the first-to-file rule.” Mullinix, 2021 WL 4935976, at *3. Here, both cases involve 17 identical allegations that Defendants failed to adequately secure and safeguard its customers’ PII, 18 and that these failures enabled hackers to steal the putative class members’ PII and put them at 19 risk. Compare FAC ¶¶ 15, 16 with Liau SAC ¶¶ 4, 5. They also contain identical allegations that 20 “Defendant failed to uncover and disclose the extent of the Breach and notify its affected 21 customers of the Breach in a timely manner” and thus “prevented Class members from protecting 22 themselves from the Breach.” FAC ¶ 17; Liau SAC ¶ 6. The core theory and factual allegations 23 giving rise to the claims are the same. The fact that this action contains a passing reference to 24 Defendant’s alleged sharing of information with WeChat does not change this conclusion. 25 Plaintiffs also argue that even if the three factors of the first-to-file rule are satisfied, the 26 27 1 court may exercise its discretion and decline to apply the rule for equitable reasons. Opp’n 5. 2 “Exceptions to the first-to-file rule include where the filing of the first suit evidences bad 3 faith, anticipatory suits, and forum shopping.” Therapy Stores, Inc. v. JGV Apparel Grp., LLC, 4 No. 4:16-CV-02588-YGR, 2016 WL 4492583, at *3 (N.D. Cal. Aug. 26, 2016) (citing Alltrade, 5 946 F.2d at 628). Plaintiffs argue that “it is not clear whether the New York action has been 6 brought in good faith, nor is it clear that the New York action is being competently prosecuted.” 7 Opp’n 5. Plaintiffs’ counsel submits a declaration in which they state, “[w]e have attempted to 8 communicate with plaintiff’s counsel in the New York action, but have been unable to reach him,” 9 and that “defense counsel . . . has conceded that Counsel in the New York action is not responsive 10 to him (nor was he responsive to Plaintiffs’ counsel in this action to discuss potential coordination 11 and the appropriate venue for both actions).” [Docket No. 28-1 (Lindemann Decl. Oct. 2, 2023 ¶ 12 5.] Plaintiffs’ speculation is insufficient to demonstrate bad faith, which “is evident when the 13 plaintiff in the first action induces the other party to rely, in good faith, on representations made by 14 the plaintiff that it will not file first in order to preempt the other party from filing a suit in its 15 preferred forum.” Therapy Stores, 2016 WL 4492583, at *5 (citing Girafa. com, Inc., v. Alexa 16 Internet, Inc., No. C-08-02745 RMW, 2008 WL 4500858, at *7 (N.D. Cal. Oct 6, 2008)). As 17 Plaintiffs make no such allegations here, the court declines to apply the bad faith exception to the 18 first-to-file rule. 19 Having determined that the first-to-file rule applies, the court finds that transfer of this case 20 to the Southern District of New York is appropriate here because “it will minimize the risk of 21 inconsistent judgments[,] conserve judicial resources and allow discovery to be managed by a 22 single court.” See Mullinix, 2021 WL 4935976, at *3.3 Accordingly, it does not reach the merits 23 of Defendant’s motion to dismiss the FAC pursuant to Rules 12(b)(1) and 12(b)(6). 24

25 3 Plaintiffs also argue that this district is a “more ‘desirable’ and ‘convenient’ for[u]m for this class action case” based on the location of evidence and witnesses. Opp’n 6. The Ninth Circuit has 26 held that an argument regarding “the respective convenience of the two courts” should normally “be addressed to the court in the first-filed action,” and that “[t]he court in the second-filed action 27 is not required to duplicate this inquiry.” Alltrade, 946 F.2d at 628 (quoting Pacesetter, 678 F.2d IV. CONCLUSION For the foregoing reasons, Defendant’s motion to transfer the case to the Southern District 2 of New York is granted. The Clerk shall close the file. ASS DISTR 3 Sy SO ‘ ay IT ISSO ORDERED. & DERED □ Dated: January 19, 2024 5 I 6 ” yA jene Ryu TE 7 A □□ \ Meta YS BP NP oo cao TC we 8 a □□ 9 SD K OY LORTRICE 10 11 a 12

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