Vennerholm II v. GEICO Casualty Company

[7] 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 MARK EDWARD VENNERHOLM II, Case No.: 21-CV-806-GPC REANNA ANN VENNERHOLM, AND [11] KATHLEEN BALDWIN, individually ORDER: 12 and on behalf of a class of similarly situated individuals, (1) GRANTING DEFENDANTS’ [13] MOTION TO STAY ACTION Plaintiff, 14 PURSUANT TO FIRST-TO-FILE v. RULE; [15] GEICO CASUALTY COMPANY; 16 (2) STAYING THIS ACTION AND GEICO INDEMNITY COMPANY; VACATING OPERATIVE 17 GEICO GENERAL INSURANCE SCHEDULING ORDER AND COMPANY, AND GOVERNMENT 18 PRETRIAL DEADLINES; AND EMPLOYEES INSURANCE 19 COMPANY, (3) DIRECTING PARTIES TO FILE 20 Defendants. STATUS REPORT EVERY 90 DAYS [21] [ECF No. 40] [22] 23 / / 24 / / 25 / / 26 / / 27 / / [28] 1 INTRODUCTION 2 Before the Court is Defendants’ Motion to Stay or Transfer Pursuant to the First3 to-File Rule. ECF No. 40-1. Plaintiffs filed a response in opposition to the motion. ECF 4 No. 42. Defendants replied in support of the motion. ECF No. 44. For the reasons stated 5 below, the Court hereby GRANTS Defendants’ motion to stay this action pending the 6 result of the litigation in the Eastern District of New York. 7 BACKGROUND 8 Defendants move to stay this action pursuant to the first-to-file rule, or in the 9 alternative, to transfer this action to the Eastern District of New York. ECF No. 40-1. As 10 Defendants set forth in their moving papers, this action filed by Plaintiffs is one of five 11 putative class actions related to the same alleged data breach of GEICO’s online sales 12 system in early 2021. See ECF No. 40-1 at 6. 13 After GEICO announced the data security incident in 2021, five putative class 14 action lawsuits were brought by Plaintiffs in three different district courts. See id. The 15 first action, Mirvis et al. v. Berkshire Hathaway et al., No. 21 Civ. 2210 (KAM) (RML) 16 was filed in the Eastern District of New York on April 21, 2021. Plaintiffs in this action 17 filed this lawsuit on April 23, 2021. See ECF No. 1. Thereafter, two additional class 18 actions were filed in the Eastern District of New York,1 and a fifth lawsuit was filed in 19 the Southern Division of the District of Maryland.2 20 On June 29, 2021, Defendants moved the Judicial Panel on Multidistrict Litigation 21 to transfer and centralize the pending actions in the Eastern District of New York for 22 management of pre-trial proceedings, pursuant too 28 U.S.C. 1407. See ECF No. 20; In 23 re GEICO, MDL No. 3013. The JPML declined to consolidate and transfer the pending 24 actions to the Eastern District of New York, but agreed with Defendants that the cases [26] 27 1 Brody v. Berkshire Hathaway, Inc. and GEICO, No. CV 21-02481 (KAM) (RML) (“the Brody Action”) and Viscardi v. GEICO et al., No. CV 21-02481 (KAM) (RML) (“the Viscardi Action”). [28] 1 “share common issues of fact, including how the GEICO breach occurred, what security 2 measures were in place at the time of the breach, and what steps were taken by GEICO in 3 response to the breach.” See ECF No. 33 at 1. In the wake of the JPML order, the 4 plaintiffs in the Viscardi, Brody, and Connelly actions either voluntarily transferred or 5 consented to the transfer of their cases to the Eastern District of New York, under District 6 Judge Matsumoto, presiding over the litigation under the name GEICO Customer Data 7 Breach Litigation. See ECF No. 40-1 at 8. In this case, Plaintiffs have not agreed to 8 voluntarily transfer the case to the Eastern District of New York, and they oppose 9 Defendants’ motion. ECF No. 42. 10 DISCUSSION 11 The first-to-file rule is a “recognized doctrine of federal comity which permits a 12 district court to decline jurisdiction over an action when a complaint involving the same 13 parties and issues has already been filed in another district.” Pacesetter Sys., Inc. v. 14 Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982) (citing Church of Scientology of Cal. 15 v. U.S. Dep’t of Army, 611 F.2d 738 , 749 (9th Cir. 1989)). The Ninth Circuit has said that 16 when an action concerning similar parties and issues is already pending, “no purpose 17 would be served by proceeding with a second action.” Pacesetter Sys., 678 F.2d at 93 . “If 18 the case meets the requirements of the first-to-file rule, the court has discretion to 19 transfer, stay, or dismiss the action.” Youngevity Int’l, Inc. v. Renew Life Formulas, Inc., [20] 42 F. Supp. 3d 1377, 1381 (S.D. Cal. 2014). The court considers three factors to 21 determine whether to apply the first-to-file rule: (1) the chronology of the two actions; (2) 22 the similarity of the parties; and (3) the similarity of the issues. Kohn Law Grp., Inc. v. 23 Auto Parts Mfg. Mississippi, Inc., 787 F.3d 123 , 1240 (9th Cir. 2015). The Ninth Circuit 24 strongly counsels that the first-to-file rule is within the district court’s discretion, but 25 “should not be disregarded lightly,” id., because “courts should be driven to maximize 26 ‘economy, consistency, and comity.’” Id. at 1239-40. 27 In this case, it is clear that the Mirvis action filed on April 21, 2021 in the Eastern 28 District of New York was the first-filed action. As to the second factor, the parties in the 1 cases at issue need not be identical. See Kohn, 787 F.2d at 1240. Here, the proposed 2 classes represented by Plaintiffs and by the plaintiffs in the Mirvis action, are 3 substantially similar because the Mirvis class (“all individuals residing in the United 4 States whose Personal Identifiable Information was compromised in the data breach….) 5 completely subsumes the proposed Vennerholm class (“All individuals residing in 6 California whose personal or financial information was accessed, compromised or stolen 7 in the Data Breach.”). As such, if certified, the Mirvis class would also represent the 8 members of the proposed Vennerholm class, making the classes duplicative. 9 The final factor considers whether the actions involve similar issues. In opposing 10 the motion, Plaintiffs argue that the facts underlying the California state-law claims, 11 including those under the California Privacy Protection Act (CCPA), differ from the 12 Mirvis action, making transfer is inappropriate. ECF No. 42, Opp., at 16. Upon the 13 Court’s review of the other four actions, it is true that none asserts a California state-law 14 claim, but each raises breach or invasion of privacy under New York state law or the 15 Driver’s Privacy Protection Act, 18 U.S.C. § 2721 et seq. 16 Defendants counter that Plaintiffs’ California state-law claims, including the 17 CCPA claims, are not a sufficient basis to defeat Defendants’ motion, because the 18 underlying facts of the cases are substantially similar, and require resolution of the same 19 legal and factual issues—most critically, whether Defendants’ security measures prior to 20 the breach, and the response following the breach, were sufficient. ECF No. 44, Reply, at 21 4. Defendants cite to a recent case from the Central District of California, in which 22 Plaintiff alleged a data breach violated California common law, the CCPA, California’s 23 Unfair Competition Law, among other claims. Mullinix v. US Fertility, LLC, 2021 WL 24 4935976 (C.D. Cal. June 8, 2021). In that case, a parallel action based on the same data 25 breach was filed in Nevada, asserting Nevada state-law claims. Id. *2. The district court 26 held that, despite the distinct state laws under which plaintiffs brought claims, including 27 the CCPA, “the core theory for both cases is the same, as the plaintiffs allege that US 28 fertility failed to adequately safeguard its patients’ sensitive information leading to 1 personal and financial harm to the plaintiffs and their personal information” and the key 2 issue to be litigated—whether Defendant took adequate steps to protect patient 3 information—was the key issue to be litigated in both actions. Id. *3. As such, the Court 4 granted the defendant’s motion to transfer. Id. 5 This case is very similar to the Mullinix case, and the Court adopts that court’s 6 reasoning to resolve this motion. Because “[t]his factor does not require total uniformity 7 of claims but rather focuses on the underlying factual allegations,” Zimmer v. Domestic 8 Corp., 2018 WL 1135634 , at *4 C.D. Cal. Dec. 22, 2018), the core theory is what drives 9 the analysis. Id. Here, the five pending actions all implicate questions of how the GEICO 10 breach occurred, the security measures in place at the time of the breach, and how 11 GEICO responded to the breach. As the JPML held, these actions “share common issues 12 of fact.” ECF No. 33 at 1. Notwithstanding the differences between the CCPA and the 13 New York General Business Law and analogous claims asserted in the other four actions, 14 the factual allegations are substantially similar, and allowing this case to continue in this 15 district would be “duplicative litigation” that threatens “the possibility of conflicting 16 judgments,” which the first-to-file rule seeks to avoid. Church of Scientology of Cal. v. 17 U.S. Dep’t of Army, 611 F.2d 738, 750 (9th Cir. 1979). Accordingly, Defendants have 18 demonstrated that the first-to-file rule applies to the instant action, and that no recognized 19 exceptions apply. 20 As discussed above, when the first-to-file rule properly applies, the district court 21 has discretion to stay or transfer the case. Staying this case pending resolution of the 22 other four actions would conserve judicial resources and promote efficiency, the over23 arching aims of the Federal Rules of Civil Procedure. See Fed. R. Civ. P. 1. As this case 24 is the undisputed later-filed case, and the GEICO Consumer Data Breach Litigation has 25 proceeded in the Eastern District of New York following the voluntary transfer of the 26 individual cases to that district, the Court finds that it would be most appropriate and 27 prudent to stay the Vennerholm Action, pending resolution of the factual and legal issues 28 in the consolidated litigation. 1 The Court hereby STAYS this Action pending the resolution of the GEICO 2 ||Consumer Data Breach Litigation in the Eastern District of New York. The Parties are 3 || DIRECTED to file a status report describing the progress of the consolidated litigation 4 ||every 90 days. The Court further VACATES the operative scheduling order and all 5 || pending pretrial deadlines. 6 IT IS SO ORDERED. 7 Dated: May 26, 2022 8 Hon. athe Ck 9 United States District Judge