Lewis E. McNack v. Richard F. Smith et al

Filing 28

MINUTES (IN CHAMBERS) by Judge Christina A. Snyder: The Court GRANTS WITHOUT PREJUDICE the motion to dismiss the complaint as to defendant Richard F. Smith 18 . In addition, the Court GRANTS plaintiff's motion for leave to file an amended complaint 25 . Plaintiff shall file an amended complaint within 30 days, failure to file an amended complaint may result in dismissal of plaintiffs case with prejudice. Court Reporter: Not Present. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

‘O’

Case No.

2:14-cv-04810-CAS(SPx)

Title

LEWIS E. MCNACK V. RICHARD F. SMITH, ET AL.

Present: The Honorable

Date

November 16, 2015

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Not Present
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

(IN CHAMBERS): DEFENDANT RICHARD F. SMITH’S
MOTION TO DISMISS
PLAINTIFF LEWIS E. MCNACK’S MOTION FOR LEAVE TO
FILE AN AMENDED COMPLAINT

The Court finds this motion appropriate for decision without oral argument. See
Fed. R. Civ. P. 78; C.D. Cal. Local Rule 7-15. Accordingly, the hearing date of
November 16, 2015, is vacated, and the matter is hereby taken under submission.
I.

INTRODUCTION

On February 19, 2015, plaintiff, Lewis E. McNack (“McNack”), proceeding pro
se, filed the instant action against defendants Richard F. Smith (“Smith”), the CEO of
Equifax Information Services (“Equifax”), and Siddharth Mehta (“Mehta”), the CEO of
TransUnion Corporation (“TransUnion”) (collectively, “defendants”). Compl. In the
complaint, plaintiff asserts claims against defendants for violations of 15 U.S.C. § 1681,
the Fair Credit Reporting Act (“FCRA”). Id. In brief, plaintiff alleges that Equifax and
Transunion wrongfully provided plaintiff’s personal+ information to a third party, Capital
One Bank (“Capital One”), in violation of the FCRA.
On September 21, 2015, defendant Smith filed a motion to dismiss the complaint
pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). Dkt. 18. Plaintiff
initially did not file an opposition. On November 2, 2015, Smith filed a reply to
plaintiff’s non-opposition. Dkt. 23. On November 3, 2015, plaintiff submitted a motion
for leave to file an amended complaint to the Court. Dkt. 25. In addition, plaintiff
submitted an opposition to defendant’s motion to dismiss. Dkt. 26.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:14-cv-04810-CAS(SPx)

Title

LEWIS E. MCNACK V. RICHARD F. SMITH, ET AL.

II.

Date

‘O’

November 16, 2015

BACKGROUND

The Complaint alleges the following facts: Equifax and TransUnion are credit
reporting agencies. Compl. ¶ 3. In this regard, Equifax and TransUnion regularly
prepare consumer credit information on consumers, such as plaintiff, and furnish
consumer reports to third-parties. Id. On August 22, 2013, plaintiff received a copy of
his credit report from Equifax. Id. ¶ 4. According to plaintiff, this report revealed that
Equifax had released plaintiff’s credit report to Capital One on June 27, 2013. Id.
However, plaintiff has never had any contact or financial dealings with Capital One. Id. ¶
5.
According to plaintiff, Capital One received a credit card application from an
individual who identified himself with plaintiff’s name, “Lewis McNack.” Id. Ex. C.
The credit application also included a Social Security Number that was identical to
plaintiff’s Social Security Number with the exception of the last digit. Id. In accordance
with Capital One’s standard business practices, Capital One forwarded the information in
this application to three major credit reporting agencies, Experian, Equifax, and
TransUnion. Id. Capital One requested that these companies provide it with the credit
report associated with the individual identified in the application. Id. Plaintiff contends
that, despite the discrepancy in the Social Security Number, both Equifax and
TransUnion matched the information in the application with plaintiff’s credit report and
released his credit report to Capital One. Id.
Plaintiff contends that the initial credit card application received by Capital One
was the product of identity theft and therefore it was an error for Equifax and TransUnion
to release his credit report. Id. ¶ 13. Accordingly, plaintiff now asserts that Equifax and
TransUnion conduct in releasing his credit report to Capital One violated numerous
provisions of the FCRA.
III.

LEGAL STANDARD
A.

Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(2)

When a defendant moves to dismiss for lack of personal jurisdiction under Federal
Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of demonstrating that the
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:14-cv-04810-CAS(SPx)

November 16, 2015

Title

LEWIS E. MCNACK V. RICHARD F. SMITH, ET AL.

court may properly exercise personal jurisdiction over the defendant. Pebble Beach Co.
v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). Where, as here, a court decides such a
motion without an evidentiary hearing, the plaintiff need only make a prima facie
showing of jurisdictional facts to withstand the motion to dismiss. Ballard v. Savage, 65
F.3d 1495, 1498 (9th Cir. 1995); Doe v. Unocal Corp., 27 F. Supp. 2d 1174, 1181 (C.D.
Cal. 1998), aff’d, 248 F.3d 915 (9th Cir. 2001). Plaintiff’s version of the facts is taken as
true for purposes of the motion if not directly controverted, and conflicts between the
parties’ affidavits must be resolved in plaintiff’s favor for purposes of deciding whether a
prima facie case for personal jurisdiction exists. AT & T v. Compagnie Bruxelles
Lambert, 94 F.3d 586, 588 (9th Cir. 1996); Unocal, 27 F. Supp. 2d at 1181. If the
defendant submits evidence controverting the allegations, however, the plaintiff may not
rely on its pleadings, but must “come forward with facts, by affidavit or otherwise,
supporting personal jurisdiction.” Scott v. Breeland, 792 F.2d 925, 927 (9th Cir.1986)
(quoting Amba Mktg. Servs., Inc. v. Jobar Int’l, Inc., 551 F.2d 784, 787 (9th Cir.1977)).
Generally, personal jurisdiction exists if (1) it is permitted by the forum state’s
long-arm statute and (2) the “exercise of that jurisdiction does not violate federal due
process.” Pebble Beach, 453 F.3d at 1154-55 (citing Fireman’s Fund Ins. Co. v. Nat’l
Bank of Coops., 103 F.3d 888, 893 (9th Cir. 1996). California’s long-arm jurisdictional
statute is coextensive with federal due process requirements, so that the jurisdictional
analysis under state and federal law are the same. Cal. Civ. Proc. Code § 410.10; Roth v.
Garcia Marquez, 942 F.2d 617, 620 (9th Cir. 1991). The Fourteenth Amendment’s Due
Process Clause requires that a defendant have “minimum contacts” with the forum state
so that the exercise of jurisdiction “does not offend traditional notions of fair play and
substantial justice.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Depending
on the nature of the contacts between the defendant and the forum state, personal
jurisdiction is characterized as either general or specific.
A court has general jurisdiction over a nonresident defendant when that
defendant’s activities within the forum state are “substantial” or “continuous and
systematic,” even if the cause of action is “unrelated to the defendant’s forum activities.”
Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 446-47 (1952); Data Disc, Inc. v.
Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1287 (9th Cir. 1977). The standard for
establishing general jurisdiction is “fairly high” and requires that the defendant’s contacts
be substantial enough to approximate physical presence. Bancroft & Masters, Inc. v.
Augusta Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:14-cv-04810-CAS(SPx)

November 16, 2015

Title

LEWIS E. MCNACK V. RICHARD F. SMITH, ET AL.

A court may assert specific jurisdiction over a claim for relief that arises out of a
defendant’s forum-related activities. Rano v. Sipa Press, Inc., 987 F.2d 580, 588 (9th Cir.
1993). The test for specific personal jurisdiction has three parts:
(1) The non-resident defendant must purposefully direct his activities
or consummate some transaction with the forum or resident thereof; or
perform some act by which he purposefully avails himself of the
privilege of conducting activities in the forum, thereby invoking the
benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the
defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and
substantial justice, i.e. it must be reasonable.
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004) (citing
Lake v. Lake, 817 F.2d 1416, 1421 (9th Cir. 1987)); see also Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 475-76 (1985).
B.

Motion to Dismiss Pursuant to Federal Rule of Civil Procedure 12(b)(6)

A motion pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal
sufficiency of the claims asserted in a complaint. Under this Rule, a district court
properly dismisses a claim if “there is a ‘lack of a cognizable legal theory or the absence
of sufficient facts alleged under a cognizable legal theory.’ ” Conservation Force v.
Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balisteri v. Pacifica Police Dep’t,
901 F.2d 696, 699 (9th Cir. 1988)). “While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to
provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and
conclusions, and a formulaic recitation of the elements of a cause of action will not do.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). “[F]actual allegations must
be enough to raise a right to relief above the speculative level.” Id.

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:14-cv-04810-CAS(SPx)

November 16, 2015

Title

LEWIS E. MCNACK V. RICHARD F. SMITH, ET AL.

In considering a motion pursuant to Rule 12(b)(6), a court must accept as true all
material allegations in the complaint, as well as all reasonable inferences to be drawn
from them. Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir. 1998). The complaint must be
read in the light most favorable to the nonmoving party. Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001). However, “a court considering a motion to
dismiss can choose to begin by identifying pleadings that, because they are no more than
conclusions, are not entitled to the assumption of truth. While legal conclusions can
provide the framework of a complaint, they must be supported by factual allegations.”
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009); see Moss v. United States Secret Service,
572 F.3d 962, 969 (9th Cir. 2009) (“[F]or a complaint to survive a motion to dismiss, the
non-conclusory ‘factual content,’ and reasonable inferences from that content, must be
plausibly suggestive of a claim entitling the plaintiff to relief.”). Ultimately,
“[d]etermining whether a complaint states a plausible claim for relief will . . . be a
context-specific task that requires the reviewing court to draw on its judicial experience
and common sense.” Iqbal, 556 U.S. at 679.
Unless a court converts a Rule 12(b)(6) motion into a motion for summary
judgment, a court cannot consider material outside of the complaint (e.g., facts presented
in briefs, affidavits, or discovery materials). In re American Cont’l Corp./Lincoln Sav. &
Loan Sec. Litig., 102 F.3d 1524, 1537 (9th Cir. 1996), rev’d on other grounds sub nom
Lexecon, Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998). A court
may, however, consider exhibits submitted with or alleged in the complaint and matters
that may be judicially noticed pursuant to Federal Rule of Evidence 201. In re Silicon
Graphics Inc. Sec. Litig., 183 F.3d 970, 986 (9th Cir. 1999); see Lee v. City of Los
Angeles, 250 F.3d 668, 689 (9th Cir. 2001).
As a general rule, leave to amend a complaint which has been dismissed should be
freely granted. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when “the
court determines that the allegation of other facts consistent with the challenged pleading
could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture
Co., 806 F.2d 1393, 1401 (9th Cir. 1986).

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:14-cv-04810-CAS(SPx)

Title

LEWIS E. MCNACK V. RICHARD F. SMITH, ET AL.
C.

Date

‘O’

November 16, 2015

Motion for Leave to File an Amended Complaint

Federal Rule of Civil Procedure 15 provides that after a responsive pleading has
been filed, “a party may amend its pleading only with the opposing party’s written
consent or the court’s leave. The court should freely give leave when justice so requires.”
Fed. R. Civ. P. 15(a). Where leave to amend is required, the decision whether to grant
leave to amend “is entrusted to the sound discretion of the trial court.” Jordan v. County
of Los Angeles, 669 F.2d 1311, 1324 (9th Cir. 1982), vacated on other grounds, 459 U.S.
810 (1982). “Five factors are taken into account to assess the propriety of a motion for
leave to amend: bad faith, undue delay, prejudice to the opposing party, futility of
amendment, and whether the plaintiff has previously amended the complaint.” Johnson
v. Buckley, 356 F.3d 1067, 1077 (9th Cir. 2004) (citing Nunes v. Ashcroft, 348 F.3d 815,
818 (9th Cir.2003)). Some factors may be weighted more heavily than others; for
example, “[s]ome courts have stressed prejudice to the opposing party as the key factor.”
Texaco v. Ponsoldt, 939 F.2d 794, 798 (9th Cir. 1991).
IV.

ANALYSIS
A.

Motion to Dismiss Pursuant to Rules 12(b)(2) and 12(b)(6)

Plaintiff asserts several claims for violation of 15 U.S.C. section 1681(b) of the
FCRA. “The Fair Credit Reporting Act has as one of its purposes to ‘protect consumer
privacy.’ ” U.S. v. Bomes, 133 S.Ct. 12, 15 (2012); see also Safeco Ins. Co. of America
v. Burr, 551 U.S. 47, 52 (2007) (“Congress enacted [the] FCRA, in 1970 to ensure fair
and accurate credit reporting, promote efficiency in the banking system, and protect
consumer privacy.”). Pursuant to section 1681(b), consumer reporting agencies, such as
Equifax and TransUnion, are required to “adopt reasonable procedures for meeting the
needs of commerce for consumer credit, personnel, insurance, and other information in a
manner which is fair and equitable to the consumer, with regard to the confidentiality,
accuracy, relevancy, and proper utilization of such information.”
Plaintiff asserts that TransUnion and Equifax wrongfully released his credit report
to Capital One after receiving a credit card application with an inaccurate Social Security
Number. See generally Compl. Accordingly, plaintiff may have colorable claims for
violation of the FCRA against TransUnion and Equifax. However, at present, plaintiff
has not named either TransUnion or Equifax as defendants in this action. See generally,
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:14-cv-04810-CAS(SPx)

November 16, 2015

Title

LEWIS E. MCNACK V. RICHARD F. SMITH, ET AL.

Compl. Rather, he has named the CEO’s of those companies as the defendants’ in this
action. Id.
“[T]he mere fact that a corporation is subject to local jurisdiction does not
necessarily mean its nonresident officers, directors, agents, and employees are suable
locally as well.’ ” Winery v. Graham, 2007 WL 963252, *5 (N.D. Cal. Mar. 29, 2007)
(citing Colt Studio, Inc. v. Badpuppy Enterprise, 75 F. Supp. 2d 1104, 1111 (C.D.
Cal.1999)). Rather, courts have found a corporate officer’s contacts on behalf of a
corporation sufficient to subject the officer to personal jurisdiction “where the officer is a
‘primary participant’ in the alleged wrongdoing or had ‘control of, and direct
participation in the alleged activities.’ ” Allstar Marketing Grp., LLC v. Your Store
Online, LLC, 666 F. Supp. 2d 1109,1120 (C.D. Cal. 2009).
Similarly, the general rule is that “individual defendants cannot be held liable
solely because they are the chief executive officers for the corporate defendants.” Sloan
v. TransUnion, LLC, 2010 WL 1949621, at *2 (E.D. Mich. Apr. 22, 2010). Instead,
“[c]ases which have found personal liability on the part of corporate officers have
typically involved instances where the defendant was the ‘guiding spirit’ behind the
wrongful conduct . . . or the ‘central figure’ in the challenged corporate activity.” Davis
v. Metro Productions, Inc., 885 F.2d 515, 532 n.10 (9th Cir. 1989) (citing Escude Cruz v.
Ortho Pharmaceutical Corp., 619 F.2d 902, 907 (1st Cir.1980)); see also, Hahn v. Star
Bank, 190 F.3d 708, 714 (6th Cir. 1999) (“[A]n employee of a corporation has no
personal liability for the torts of the corporation unless the individual personally
participated in the challenged actions.”).
Here, apart from being named in the caption of plaintiff’s complaint, the complaint
contains no allegations against either Smith or Mehta. Rather, the complaint refers
exclusively to conduct by Equifax and TransUnion as corporations. Without any
allegations suggesting that either Smith or Mehta in some way participated or were
involved in the conduct alleged in the complaint, the Court cannot find that it has
personal jurisdiction over either of these defendants. Nor can the Court find that plaintiff
has alleged sufficient facts to impose personal liability against either of these defendants.1

1

Likewise, the Court cannot find that it has general jurisdiction over Smith who is
domiciled in Georgia. Harris Decl. ¶ 6. See Goodyear Dunlop Tires Operations, S.A. v.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

‘O’

Case No.

2:14-cv-04810-CAS(SPx)

November 16, 2015

Title

LEWIS E. MCNACK V. RICHARD F. SMITH, ET AL.

Accordingly, the Court GRANTS WITHOUT PREJUDICE defendant Smith’s
motion to dismiss pursuant to both Federal Rules of Civil Procedure 12(b)(2) and
12(b)(6).
B.

Motion for Leave to File an Amended Complaint

Plaintiff has requested that the Court grant him leave to file an amended complaint.
Dkt. 25. Pursuant to Federal Rule of Civil Procedure 15, a district court should freely
grant leave to amend when justice so requires. Here, it appears that plaintiff has named
the wrong defendants in the caption of his complaint. In plaintiff’s motion for leave to
file an amended complaint he states: “the defendant in this Complaint has been
misrepresented as the CEO Richard F. Smith of Equifax Info. Services, LLC, instead of
the true defendant Equifax Info. Services, LLC.” Dkt. 25, at 1. Accordingly, in
plaintiff’s motion for leave to file an amended complaint he proposes that he will file an
amended complaint naming Equifax and TransUnion as defendants as opposed to Smith
and Mehta. Id.
This amendment directly addresses the defects in plaintiff’s current complaint
discussed supra and therefore the Court finds that granting plaintiffs request to file an
amended complaint is wholly appropriate in this case. Accordingly, the Court GRANTS
plaintiff’s motion for leave to file an amended complaint.2

Brown, 131 S. Ct. 2846, 2853 (2011) (“For an individual, the paradigm forum for the
exercise of general jurisdiction is the individual’s domicile.”).
2

In addition, the Court finds that it is appropriate to grant plaintiff’s motion
without receiving an opposition from defendants. The Ninth Circuit has instructed that
the policy in favor of granting leave to amend “is to be applied with extreme liberality.”
Owens v. Kaiser Found. Health Plan, 244 F.3d 708, 712 (9th Cir.2001) (quoting
Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir.1990)). And, in
any event, the Court grants defendant Smith’s motion to dismiss without prejudice to
filing an amended complaint.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

2:14-cv-04810-CAS(SPx)

Title

LEWIS E. MCNACK V. RICHARD F. SMITH, ET AL.

V.

Date

‘O’

November 16, 2015

CONCLUSION

In accordance with the foregoing, the Court GRANTS WITHOUT PREJUDICE
the motion to dismiss the complaint as to defendant Smith. In addition, the Court
GRANTS plaintiff’s motion for leave to file an amended complaint. Plaintiff shall file
an amended complaint within thirty (30) days, failure to file an amended complaint may
result in dismissal of plaintiff’s case with prejudice.
IT IS SO ORDERED.
00
Initials of Preparer

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CMJ

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