Jacques vs. Bank of America Corporation, et al.

Filing 12

ORDER GRANTING 8 Early Warning's Motion to Dismiss; ORDER VACATING the June 25, 2012 Hearing on this Motion; and ORDER GRANTING Plaintiff Leave to Amend signed by District Judge Lawrence J. O'Neill on 6/12/2012. Amended Complaint due by 7/12/2012. (Jessen, A)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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TROY JACQUES,

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CASE NO. CV-F-12-821 LJO DLB
Plaintiff,

ORDER ON EARLY WARNING’S MOTION
TO DISMISS (Doc. 8)

vs.
BANK OF AMERICA CORP., FIRST
ADVANTAGE BACKGROUND SERVICES,
and EARLY WARNING SERVICES,
Defendants.
/

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INTRODUCTION

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Defendant Early Warning Services (“Early Warning”) moves to dismiss plaintiff Troy Jacques’

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(“Mr. Jacques’”) complaint pursuant to Fed. R. Civ. P. 12(b)(6). Early Warning argues that it must be

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dismissed from this action because Mr. Jacques’ defamation claim fails to allege that Early Warning

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reported, published, or used any information about Mr. Jacques. In addition, Early Warning contends

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that Mr. Jacques cannot cure the defect, because his defamation claim is preempted by the Fair Credit

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Reporting Act, 15 U.S.C. §1681, et seq. (“FCRA”). Mr. Jacques failed to oppose this motion. Having

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considered Early Warning’s moving papers and the applicable case law, this Court finds this motion

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suitable for a decision without a hearing and VACATES the June 25, 2012 hearing on this motion

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pursuant to Local Rule 230(c) and (g). For the following reasons, this Court DISMISSES Early Warning

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from this action but GRANTS Mr. Jacques leave to amend.
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BACKGROUND

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Mr. Jacques asserts a defamation claim against defendants Bank of America Corporation (“Bank

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of America”), First Advantage Background Services Corporation (“First Advantage”), and Early

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Warning. Mr. Jacques alleges that he was fired by Wells Fargo based on the defamatory statements

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Bank of America made about him that were subsequently published by First Advantage to Wells Fargo.

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Mr. Jacques alleges that defendants made these defamatory statements about him with malice and in bad

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faith. He further asserts that the statements are defamatory per se because they ascribe characteristics

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to Mr. Jacques that are incompatible with his business and profession and injure his professional

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reputation.

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Mr. Jacques was employed with Bank of America beginning December 5, 2005. He began

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working at Wells Fargo on October 8, 2009. He was subsequently fired from Wells Fargo on April 15,

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2012 based on the defamatory statements made by defendants to Wells Fargo.

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Mr. Jacques first learned of the defamatory statements on April 8, 2011, when he received a “Pre-

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Adverse Action Notification” from Wells Fargo. In that notice, he was informed that a decision

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concerning his continued employment was pending review of Mr. Jacques’ consumer report. The notice

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further advised that should Mr. Jacques believe that any of the information contained in the consumer

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report to be inaccurate or incomplete, he should contact First Advantage to correct the information

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before Wells Fargo takes further action based on the reported information.

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Wells Fargo provided Mr. Jacques with the consumer report with the April 8, 2012 notice. The

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consumer report was provided to Wells Fargo by First Advantage and contained information reported

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by Bank of America. That report published highly defamatory allegations made by Bank of America

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that there was an “internal fraud match.” The report indicated that the alleged “internal fraud match”

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incident occurred on September 29, 2008 and has a “severity” of 100.

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Wells Fargo notified Mr. Jacques on April 15, 2011 that he was no longer eligible for

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employment based on the consumer report that Wells Fargo received from First Advantage and the

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defamatory statements contained therein. Subsequently, Mr. Jacques engaged in reasonable actions to

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remove the defamatory statements without success. In addition, Wells Fargo, First Advantage, and Early

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Warning refuse to correct the false information.
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Mr. Jacques filed his complaint against defendants on February 23, 2012. First Advantage

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removed the action to this Court on May 18, 2012. On May 25, 2012, First Advantage and Early

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Warning separately moved to dismiss the complaint. Mr. Jacques failed to oppose Early Warning’s

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motion to dismiss. As set forth above, this Court vacates the June 25, 2012 hearing on this motion and

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issues the following order.

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STANDARD OF REVIEW

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A motion to dismiss pursuant to Fed R. Civ. P. 12(b)(6) is a challenge to the sufficiency of the

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pleadings set forth in the complaint. A Fed. R. Civ. P. 12(b)(6) dismissal is proper where there is either

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a “lack of a cognizable legal theory” or “the absence of sufficient facts alleged under a cognizable legal

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theory.” Balisteri v. Pacifica Police Dept., 901 F.2d 696, 699 (9th Cir. 1990). In considering a motion

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to dismiss for failure to state a claim, the court generally accepts as true the allegations of the complaint,

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construes the pleading in the light most favorable to the party opposing the motion, and resolves all

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doubts in the pleader's favor. Lazy Y. Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).

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To survive a motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief

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that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1974 (2007).

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“A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw

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the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 129

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S. Ct. 1937, 1949 (2009). “The plausibility standard is not akin to a ‘probability requirement,’ but it

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asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550

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U.S. at 556). “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability,

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it ‘stops short of the line between possibility and plausibility for entitlement to relief.” Id. (quoting

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Twombly, 550 U.S. at 557).

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“While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual

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allegations, a plaintiff’s obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more

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than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”

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Twombly, 550 U.S. 554,127 S. Ct. 1955, 1964-65 (internal citations omitted).

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assertions...amounting to nothing more than a ‘formulaic recitation of the elements’...are not entitled to

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an assumption of truth.” Iqbal, 129 S. Ct. at 1951 (quoted in Moss v. United States Secret Serv.,572 F.3d
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Thus, “bare

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962, 969 (9th Cir. 2009)). A court is “free to ignore legal conclusions, unsupported conclusions,

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unwarranted inferences and sweeping legal conclusions cast in the form of factual allegations.” Farm

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Credit Services v. American State Bank, 339 F.3d 765, 767 (8th Cir. 2003) (citation omitted). In

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practice, a counterclaim “must contain either direct or inferential allegations respecting all the material

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elements necessary to sustain recovery under some viable legal theory.” Twombly, 550 U.S. at 562.

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DISCUSSION

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Early Warning argues that Mr. Jacques fails to allege any element of a libel claim against it in

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the complaint. “Under California law, ‘[l]ibel is a false and unprivileged publication...which exposes

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any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or

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which has a tendency to injure him in his occupation.’” Gorman v. Wolpoff & Abramson, LLP, 584 F.3d

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1147, 1167-68 (9th Cir. 2009) (quoting Cal. Civ. Code §45).

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Mr. Jacques’ complaint includes only two allegations about Early Warning. Mr. Jacques alleges

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that after he was employed with Bank of America, “Bank of America, First Advantage, and Early

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Warning Services caused to be published, and/or republished such false and defamatory statements

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about” him which caused him damage. Compl., ¶14. Mr. Jacques also alleges that he “engaged in

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reasonable actions to remove the defamatory statements made” by Bank of America, First Advantage,

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and Early Warning. Id. at ¶10.

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Early Warning argues that these allegations are conclusory in nature and provide no indication

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as to what Early Warning did or what statements Early Warning allegedly published. Early Warning

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argues that this Court is “free to ignore legal conclusions, unsupported conclusions, unwarranted

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references, and sweeping legal conclusions cast in the form of factual allegations.” Farm Credit, 339

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F.3d at 767. Early Warning concludes that because the complaint lacks allegations of wrongdoing

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against Early Warning, it must be dismissed from the complaint.

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The general factual allegations of the complaint detail the alleged wrongdoing of Bank of

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America and First Advantage, but not Early Warning. The complaint makes clear that Wells Fargo

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provided the false information to the credit reporting agencies and that First Advantage provided the

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consumer report to Wells Fargo. There are no factual allegations related to Early Warning. From the

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complaint, this Court cannot determine whether Early Warning published information about Mr. Jacques
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how, or to whom.

Accordingly, the factual allegations about Early Warning are “bare

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assertions...amounting to nothing more than a ‘formulaic recitation of the elements.’” Iqbal, 129 S. Ct.

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at 1951. These allegations are “not entitled to the truth” and are subject to a motion to dismiss. Id.

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Because the allegations against Early Warning are insufficient to state a claim against it, Early Warning

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is dismissed from the complaint.

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Next this Court must determine whether to grant leave to amend the complaint. Pursuant to Fed.

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R. Civ. P. 15, this Court should grant leave to amend freely. To the extent that the pleadings can be

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cured by the allegation of additional facts, the plaintiff should be afforded leave to amend. Cook, Perkiss

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and Liehe, Inc. v. Northern California Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir.1990) (citations

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omitted). Here, Mr. Jacques could cure the defect of his defamation claim against Early Warning by

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including specific allegations against Early Warning.

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Early Warning argues that the defects of the complaint cannot be cured because, even if Mr.

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Jacques were to add specific allegations against Early Warning, his defamation claim would be

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preempted by the FCRA. Early Warning argues that the FCRA is applicable because Mr. Jacques’

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defamation claim against Early Warning “is based exclusively on statements made in a consumer report

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regarding his eligibility for employment.”

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This argument is based on the assumption that Mr. Jacques’ specific allegations against Early

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Warning fall within the FCRA. This Court cannot make this assumption at this stage. The complaint

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alleges only that Early Warning is a limited liability corporation. Based on the complaint, this Court

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cannot determine whether Early Warning is a consumer reporting agency or a furnisher of information.

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Because, this Court cannot determine at this stage whether the FCRA is applicable to Early Warning,

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this Court cannot dismiss Early Warning with prejudice.

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Moreover, Early Warning argues that “no matter what allegations Jacques makes, the FCRA

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preempts his defamation claim against Early Warning” because Mr. Jacques failed to plead specific

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allegations of malice. “Even if [a plaintiff’s] libel claim is not preempted by §1681t(b)(1)(F), it is still

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subject to §1681h(e), and so he must prove, in addition to the common law elements of libel, that the

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information was ‘false’ and ‘furnished with malice or willful intent to injure.’” Gormon, 584 F.3d at

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1168. Assuming without ruling that this section applies to Early Warning, this Court agrees that the
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allegations of malice in the complaint are insufficient as they are a mere “formulaic recitation of the

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elements of the cause of action.” Twombly, 550 U.S. at 555. This defect, however, could be cured by

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amendment. Accordingly, Mr. Jacques is granted leave to amend.

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CONCLUSION

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For the foregoing reasons, this Court:

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VACATES the June 25, 2012 hearing on this motion;

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GRANTS Early Warning’s motion to dismiss; and

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GRANTS Mr. Jacques leave to amend. Mr. Jacques will have one opportunity to

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amend his complaint to allege a claim against Early Warning sufficiently. An amended

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complaint, if any, shall be filed no later than July 12, 2012.

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IT IS SO ORDERED.
Dated:
b9ed48

June 12, 2012

/s/ Lawrence J. O'Neill
UNITED STATES DISTRICT JUDGE

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