Gary Davis v. Hsbc Bank Nevada, N.A.
2012 U.S. App. LEXIS 18503
| 9th Cir. | 2012Background
- Davis sues to challenge annual fee disclosure on RZMC MasterCard issued by HSBC and Best Buy; he alleges four state-law claims (FAL, fraudulent concealment, and two UCL theories) arising from advertising and disclosure practices.
- Davis saw an online advertisement and application with limited disclosure visible; full disclosures were provided later in mail with the Cardmember Agreement and Additional Disclosure Statement.
- Davis signed the online agreement by checking a box without reviewing the full terms; he later discovered a $59 annual fee.
- Defendants moved to dismiss under Rule 12(b)(6) and moved for judicial notice of three disclosure documents referenced in the FAC; the district court incorporated those documents.
- The district court dismissed all four claims with prejudice; Davis appealed.
- The Ninth Circuit reviews de novo the Rule 12(b)(6) dismissal and analyzes incorporation by reference and safe harbor doctrines under California and federal law.
- California law governs the state-law claims as the forum state in this diversity-like posture.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court erred by incorporating disclosure documents by reference. | Davis challenges authenticity of documents not attached to FAC. | Defendants properly incorporated the documents referenced in the FAC. | Yes; incorporation proper; objection waived. |
| Whether Best Buy's advertising violated the False Advertising Law. | Advertising misled consumers by omitting the annual fee. | No reasonable consumer would be deceived; disclosure was not misleading. | No; district court proper in dismissal. |
| Whether fraudulent concealment and reliance were adequately pled. | Davis relied on advertisements/terms not disclosed. | Reliance not justifiable; plaintiff read or could have read terms; misrepresentation not actionable. | No; reliance was manifestly unreasonable. |
| Whether UCL claims against HSBC/Best Buy were barred by safe harbor under TILA/Regulation Z for online disclosures. | Disclosures should be actionable under UCL despite federal safety nets. | Online disclosure complies with TILA/Reg Z safe harbor; advertisements may not. | Online application protected by safe harbor; ads not; UCL claims dismissed. |
| Whether Regulation Z can create a safe harbor for consumer-protection claims under the UCL in this context. | Regulation Z provides safe harbor; California cases recognize regulations may create safe harbors. |
Key Cases Cited
- Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 973 P.2d 527 (Cal. 1999) (safe harbor limits under UCL when statute provides explicit permission)
- Hauk v. JPMorgan Chase Bank USA, N.A., 552 F.3d 1114 (9th Cir. 2009) (compliance with TILA disclosures provides UCL safe harbor)
- Webb v. Smart Document Solutions, LLC, 499 F.3d 1078 (9th Cir. 2007) (HIPAA-like regulations may permit conduct and thus negate unfairness)
- Knievel v. ESPN, Inc., 393 F.3d 1068 (9th Cir. 2005) (incorporation by reference doctrine and extrinsic documents)
- Marder v. Lopez, 450 F.3d 445 (9th Cir. 2006) (court may consider documents incorporated by reference)
- Ritchie v. Cty. of Maricopa, 342 F.3d 903 (9th Cir. 2003) (extrinsic documents may be incorporated by reference)
- Barrer v. Chase Bank USA, N.A., 566 F.3d 883 (9th Cir. 2009) (clarifies reliance on fine print and TILA regulations)
- Krumme v. Mercury Ins. Co., 20 Cal. Rptr. 3d 485 (Cal. Ct. App. 2004) (debates whether regulations create safe harbors under UCL)
- Lozano v. AT&T Wireless Servs., Inc., 504 F.3d 718 (9th Cir. 2007) (post-Cel-Tech consumer unfair competition framework)