In a case arising from Uber’s foray into Argentina, an appellate panel certified a damages question to California’s high court explaining that the issue is central to the state law case and no controlling decisions provide the requisite guidance. In particular, the panel wants to know, under California law, whether claims for fraudulent concealment are exempted from the economic loss rule.
In 2013, two Uber subsidiaries retained an Argentinian corporate attorney, Michael Rattagan, to help set up the business. Allegedly, Uber launched the product prematurely. In particular, its ride-hailing services started up before the Argentinian entity was fully formed and registered with the proper tax authority.
Rattagan alleges that Uber, despite knowing that he, as the subsidiaries’ legal representative, could be subject to personal liability for Uber’s violations of Argentine law, hid its launch plans from him. Within days of the launch, law enforcement authorities reportedly raided Rattagan’s office and the homes of his business colleagues. Additionally, protesters surrounded his office. Rattagan alleges that he incurred wide reputational harm and was eventually charged with aggravated tax evasion.
The South American attorney sued Uber, claiming negligence, breach of the implied covenant of good faith and fair dealing, and fraudulent concealment. Applying California law, the district court reportedly found that Rattagan’s negligence and breach of the implied covenant claims were time barred. The district court also ruled that he could not pursue his fraudulent concealment claims due to 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.”
Rattagan appealed the latter part of the decision. The Ninth Circuit did away with two of his three arguments leaving one that now presents the question of whether fraudulent concealment claims are exempt from California’s economic loss rule.