Nayab v. Capital One Bank, N.A.

Filing 12

Dismissal with Prejudice [Doc. No. #9 ]. Signed by Judge Cathy Ann Bencivengo on 6/23/2017. (lrf)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 FRESHTA Y. NAYAB, Case No.: 3:16-CV-3111-CAB-MDD Plaintiff, 12 13 v. 14 DISMISSAL WITH PREJUDICE CAPITAL ONE BANK, N.A., [Doc. No. 9] Defendant. 15 16 17 This matter is before the Court on a motion to dismiss the first amended complaint 18 (“FAC”) for failure to state a claim or in the alternative to strike the class actions therein. 19 As discussed below, the motion has merit and the FAC does not state a claim on which 20 relief can be granted. However, the Court finds that Plaintiff lacks Article III standing. 21 Therefore, the Court lacks subject matter jurisdiction and must dismiss the FAC on that 22 basis. Moreover, because the FAC fails to state a claim and because by her own admission 23 Plaintiff lacks information to state such a claim, any amendment to allege facts sufficient 24 to give Plaintiff standing would still be subject to dismissal for failure to state a claim. 25 Accordingly, the FAC is dismissed with prejudice. 26 I. 27 Plaintiff filed this lawsuit on December 30, 2016. 28 Background According to the original complaint, on June 20, 2016, Plaintiff Freshta Nayab discovered that Defendant Capital 1 3:16-CV-3111-CAB-MDD 1 One Bank, N.A. (“Capital One”) had made several inquiries on her Experian credit report. 2 Nayab alleged that she “never conducted any business nor incurred any additional financial 3 obligations to” Capital One [Doc. No. 1 at ¶ 20], and that as a result, the inquiries violated 4 the Fair Credit Reporting Act. The original complaint asserted one claim for violation of 5 the FCRA on behalf of Nayab and national classes including everyone with a United States 6 address “whose consumer credit report . . . reflects an unauthorized consumer credit report 7 inquiry by Defendant within the past” two years and five years, respectively. [Doc. No. 1 8 at ¶ 32.] 9 Capital One moved to dismiss the original complaint under Federal Rule of Civil 10 Procedure 12(b)(6) for failure to state a claim. In the alternative, Capital One moved to 11 strike the class allegations under Rule 12(f). Instead of opposing the motion, Nayab filed 12 the FAC, which is now the operative complaint. In the FAC, instead of the more general 13 allegation from the complaint, Nayab more specifically cites various permissible purposes 14 for obtaining a credit report under the FCRA to allege that Capital One did not have any of 15 those permissible purposes to make inquiries on her credit report. [Doc. No. 7 at ¶¶ 23- 16 35.] The FAC is silent as to Capital One’s actual purpose for making the inquiries on her 17 credit report. 18 The FAC also changes the language of the class definitions to include persons whose 19 consumer reports were accessed by Capital One “at a time when [Capital One] did not have 20 a credit relationship with said person of the kind specified in 15 U.S.C. section 21 1681b(a)(3)(A)-(F).” [Id. at ¶ 47.] Like the original complaint, the FAC includes only one 22 claim for violation of the FCRA. 23 II. 24 “The requirement that jurisdiction be established as a threshold matter is inflexible 25 and without exception; for jurisdiction is power to declare the law, and without jurisdiction 26 the court cannot proceed at all in any cause.” Ruhrgas AG v. Marathon Oil Co., 526 U.S. 27 574, 577 (1999) (citing Steel Co. v. Citizens for Better Env’t, 523 U.S. 83, 93-95 (1998)) 28 (internal brackets, ellipses, citations and quotation marks omitted). The court has an Article III Standing 2 3:16-CV-3111-CAB-MDD 1 “independent obligation to determine whether subject-matter jurisdiction exists, even in 2 the absence of a challenge from any party.” Arbaugh v. Y&H Corp., 546 U.S. 500, 514 3 (2006). “A suit brought by a plaintiff without Article III standing is not a ‘case or 4 controversy,’ and an Article III federal court therefore lacks subject matter jurisdiction over 5 the suit.” Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004). 6 This standing to sue doctrine is derived from Article III’s limitation of the judicial 7 power of federal courts to “actual cases or controversies.” Spokeo, Inc. v. Robins, 136 S. 8 Ct. 1540, 1547 (2016) (citing Raines v. Byrd, 521 U.S. 811, 818 (1997)). “The doctrine 9 limits the category of litigants empowered to maintain a lawsuit in federal court to seek 10 redress for a legal wrong.” Id. “[T]he ‘irreducible constitutional minimum’ of standing 11 consists of three elements. The plaintiff must have (1) suffered an injury-in-fact, (2) that 12 is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be 13 redressed by a favorable judicial decision.” Id. (citing Lujan v. Defenders of Wildlife, 504 14 U.S. 555, 560-61 (1992)). 15 The first element, injury-in-fact, “is a constitutional requirement, and ‘it is settled 16 that Congress cannot erase Article III’s standing requirements by statutorily granting the 17 right to sue to a plaintiff who would not otherwise have standing.’” Id. at 1547-48 (quoting 18 Raines, 521 U.S. at 820, n.3). “To establish injury in fact, a plaintiff must show that he or 19 she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ 20 and ‘actual or imminent, not conjectural or hypothetical.’” Id. at 1548 (quoting Lujan, 504 21 U.S. at 560). “‘For an injury to be “particularized,’ it ‘must affect the plaintiff in a personal 22 and individual way.’” Id. (quoting Lujan, 504 U.S. at 560, n.1). Meanwhile, “[a] ‘concrete’ 23 injury must be ‘de facto’; that is, it must actually exist.” Id. (citing Black’s Law Dictionary 24 479 (9th ed. 2009)). Therefore, a plaintiff does not “automatically satisf[y] the injury-in- 25 fact requirement whenever a statute grants a person a statutory right and purports to 26 authorize that person to sue to vindicate that right. Article III standing requires a concrete 27 injury even in the context of a statutory violation.” Id. at 1549. A “bare procedural 28 violation, divorced from any concrete harm,” does not satisfy the injury-in-fact requirement 3 3:16-CV-3111-CAB-MDD 1 of Article III. Id. 2 Here, the FAC does not allege an injury-in-fact attributable to the alleged FCRA 3 violation. Rather, the FAC essentially alleges that the FCRA violation was itself the injury. 4 Thus, the FAC amounts to a claim of a bare procedural violation of the FCRA, divorced 5 from concrete harm, meaning Nayab lacks standing. 6 The FAC alleges, “on information and belief” that Capital One’s violation caused 7 Nayab’s “credit score to drop directly impacting [her] credit availability and finances.” 8 [Doc. No. 7 at ¶ 43.] It does not, however, allege that Nayab has been denied credit as a 9 result of a lowering of her credit score due to Capital One’s inquiries. This conjectural and 10 hypothetical future injury does not satisfy the requirements for Article III standing. 11 Spokeo, 136 S.Ct. at 1548. 12 The FAC’s allegation that Capital One “increased the risk that Plaintiff and the class 13 members will be injured if there is a data breach on [Capital One’s] computer systems” [Id. 14 at ¶ 44] is even more speculative and conjectural. Indeed, the allegation itself concedes 15 that Nayab has not yet been injured in this manner and only that she might be injured in 16 the future if there is a data breach. Nayab’s “speculative fear of identity theft is not the 17 ‘credible,’ ‘real and immediate’ threat of harm required for Article III standing in data 18 breach cases in the Ninth Circuit.” 19 SACV151871JVSPLAX, 2016 WL 2626801, at *4 (C.D. Cal. May 6, 2016). Patton v. Experian Data Corp., No. 20 Nayab also alleges that when she realized Capital One had pulled her credit report 21 “she felt that her privacy had been invaded and that her personal and private information 22 had been disclosed to [Capital One].” [Doc. No. 7 at ¶ 42.] Invasion of privacy, however, 23 is a tort, not an injury itself. Injury is merely an element of an invasion of privacy claim. 1 24 25 26 27 28 1 See Simmons v. Countrywide Home Loans, Inc., No. 09CV1245 JAH, 2010 WL 2635220, at *6 (S.D. Cal. June 29, 2010) (“The essential elements of a claim for invasion of privacy are: (1) the defendant intentionally intruded upon the solitude or seclusion, private affairs or concerns of the plaintiff; (2) the intrusion was substantial, and of a kind that would be highly offensive to an ordinarily reasonable person; and (3) the intrusion caused plaintiff to sustain injury, damage, loss or harm.”). 4 3:16-CV-3111-CAB-MDD 1 The FAC does not allege any injury as a result of the alleged invasion of privacy. Instead 2 of alleging how Capital One’s actual use of her credit report caused her harm, Nayab 3 merely alleges that because Capital One pulled her credit report without a permissible 4 purpose under the FCRA, she was injured. The existence of a FCRA violation, however, 5 does not automatically mean that Nayab was injured or that her privacy was invaded. 6 Spokeo, 136 S.Ct. at 1549. 7 The allegation that Nayab felt that her privacy was invaded is also insufficient to 8 demonstrate Article III standing because even if Capital One’s credit inquiries were 9 impermissible under the FCRA, “absent disclosure to a third party or an identifiable harm 10 from the statutory violation, there is no privacy violation.” Bultemeyer v. CenturyLink, 11 Inc., No. CV-14-02530-PHX-SPL, 2017 WL 634516, at *4 (D. Ariz. Feb. 15, 2017) 12 (dismissing FCRA claim for lack of Article III standing because the plaintiff had alleged a 13 bare procedural violation without identifying any concrete harm); see also In re Sony 14 Gaming Networks & Customer Data Sec. Breach Litig., 996 F. Supp. 2d 942, 961–62 (S.D. 15 Cal. 2014) (citing Ninth Circuit cases where courts declined to find standing based solely 16 on a plaintiff “alleging that his personal information was collected without his consent”); 17 In re Google, Inc. Privacy Policy Litig., No. C 12-01382 PSG, 2012 WL 6738343, at *5 18 (N.D. Cal. Dec. 28, 2012) (“[N]othing in the precedent of the Ninth Circuit or other 19 appellate courts confers standing on a party that has brought statutory or common law 20 claims based on nothing more than the unauthorized disclosure of personal information, let 21 alone an unauthorized disclosure by a defendant to itself.”). 22 In sum, Nayab has alleged that Capital One “violated a statutory procedure by 23 accessing her credit report without a permissible purpose, without identifying any concrete 24 injury in fact. [Nayab] has failed to make ‘a factual showing of perceptible harm.’ She 25 lacks standing.” Bultemeyer, 2017 WL 634516, at *4 (quoting Lujan, 504 U.S. at 566). 26 27 28 5 3:16-CV-3111-CAB-MDD 1 2 III. Motion to Dismiss A. Legal Standard 3 A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) challenges the 4 sufficiency of a complaint as failing to allege “enough facts to state a claim to relief that is 5 plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The facial 6 plausibility standard is not a “probability requirement” but mandates “more than a sheer 7 possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678 8 (2009) (internal quotations and citations omitted). For purpose of ruling on a Rule 12(b)(6) 9 motion, the court “accept[s] factual allegations in the complaint as true and construe[s] the 10 pleadings in the light most favorable to the non-moving party.” Manzarek v. St. Paul Fire 11 & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). “[D]ismissal may be based on 12 either a lack of a cognizable legal theory or the absence of sufficient facts alleged under a 13 cognizable legal theory.” Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th 14 Cir. 2008) (internal quotations and citations omitted). 15 Even under the liberal pleading standard of Rule 8(a)(2), which requires only that a 16 party make “a short and plain statement of the claim showing that the pleader is entitled to 17 relief,” a pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the 18 elements of the cause of action will not do.’” Iqbal, 556 U.S. at 678 (quoting Twombly, 19 550 U.S. at 555); see also Adams v. Johnson, 355 F.3d 1179, 1189 (9th Cir. 2004) 20 (“[C]onclusory allegations of law and unwarranted inferences are insufficient to defeat a 21 motion to dismiss.”). The complaint must “plead factual content that allows the court to 22 draw the reasonable inference that the defendant is liable for the misconduct alleged.” 23 Iqbal, 556 U.S. at 678. “Determining whether a complaint states a plausible claim for relief 24 . . . [is] a context-specific task that requires the reviewing court to draw on its judicial 25 experience and common sense.” Id. at 679. 26 B. Discussion 27 Even assuming Nayab adequately alleges a concrete injury sufficient to give her 28 standing to assert a claim for an FCRA violation, the FAC is subject to dismissal under 6 3:16-CV-3111-CAB-MDD 1 Rule 12(b)(6) for failure to state a claim. “The FCRA imposes civil liability on any person 2 who obtains a consumer report for an impermissible purpose.” Thomas v. Fin. Recovery 3 Servs., No. EDCV 12-1339 PSG (Opx), 2013 WL 387968, at *3 (C.D. Cal. Jan. 31, 2013); 4 see also 15 U.S.C. § 1681b. Thus, to survive a motion to dismiss on a section 1681b claim, 5 “the plaintiff must allege facts that, if proven, would establish that the defendant did not 6 have a permissible purpose for obtaining the credit report at issue.” Thomas, 2013 WL 7 387968 at *4. “[B]are allegations that the defendant did not have a permissible purpose 8 for obtaining a credit report, without more, are insufficient.” Id. “Merely reciting each of 9 the permissible circumstances and denying that they apply is similarly inadequate.” Id. 10 Yet, this is exactly what the FAC does here. 11 The FAC does not allege that Capital One had any specific purpose for obtaining 12 Nayab’s credit report. Instead, the FAC essentially alleges that because she did not 13 expressly permit Capital One to access her report and is not aware of any business 14 relationship or financial transaction between her and Capital One, Capital One’s credit 15 inquiries must have been impermissible. In her opposition, Nayab even contends that she 16 need only allege that her credit report was accessed, with the burden on Capital One to 17 prove as an affirmative defense that it had a permissible purpose for obtaining her report. 18 Nayab offers no authority for this burden shifting argument, and the Court rejects it. 19 Because the burden is on Nayab to prove that Capital One accessed her credit report for an 20 impermissible purpose, she must allege facts that would demonstrate that Capital One’s 21 purpose was not permissible. To state a claim therefore, Nayab must allege Capital One’s 22 actual purpose for obtaining her credit report and not simply the legal conclusion that 23 Capital One’s purpose was not among those listed in section 1681b. 24 In her opposition, Nayab even admits that “the only information available to [her] is 25 that her credit report was pulled by [Capital One] on numerous occasions, and each time 26 under certification by [Capital One] that [Capital One] was pulling her credit report and 27 certifying that it was doing so for a permissible purpose as enumerated under 15 U.S.C. 28 section 1681b.” [Doc. No. 10 at 8.] These are the only facts known to Nayab. That Nayab 7 3:16-CV-3111-CAB-MDD 1 does not know the purpose for Capital One pulling her credit report does not mean that 2 Capital One’s purpose was impermissible. Thus, the facts alleged in the FAC do not state 3 a claim for violation of the FCRA. 4 Nayab argues that her allegations that she and Capital One had no relationship of the 5 kinds listed in section 1681b and that Capital One was not trying to collect a debt are 6 sufficient to state a claim. “However, a credit report can be accessed without a consumer’s 7 permission for other ‘permissible purposes’ under the FCRA.” Jones v. Best Serv. Co., 8 No. CV 14-9872 SS, 2017 WL 490902, at *8 (C.D. Cal. Feb. 6, 2017); see also Perretta v. 9 Capital Acquisitions & Mgmt. Co., No. C-02-05561 RMW, 2003 WL 21383757, at *5 n.7 10 (N.D. Cal. May 5, 2003) (noting that “section 1681b does not appear to require the 11 existence of a debtor-creditor relationship for a party to lawfully acquire a consumer 12 report”). Thus, Nayab’s lack of a prior relationship or debt with Capital One does not make 13 it plausible that Capital One’s purpose for pulling her credit report was impermissible, 14 notwithstanding Capital One’s certification to the contrary. Further, the FAC’s list of the 15 various permissible purposes for obtaining a credit report along with allegations that as far 16 as Nayab knows, such circumstances did not exist, amount to legal conclusions, not facts. 17 Thomas, 2013 WL 387968, at *5. 18 Because the FAC “offers no factual basis to infer what purpose—permissible or 19 impermissible—[Capital One] had in making” inquiries on her credit report, it does not 20 allege a plausible claim that Capital One’s purpose for obtaining her credit report was 21 impermissible. Perez v. Portfolio Recovery Assocs., LLC, No. CIV. 12-1603 JAG, 2012 22 WL 5373448, at *2 (D.P.R. Oct. 30, 2012); see also Twombly, 550 U.S. at 570. Moreover, 23 because Nayab admits she has no information as to Capital One’s actual purpose for 24 obtaining her credit report, any amendment would be futile. Accordingly, even if Nayab 25 has adequately alleged standing (or could amend her complaint to satisfy Article III 26 standing requirements), dismissal with prejudice for failure to state a claim is warranted. 27 28 8 3:16-CV-3111-CAB-MDD 1 IV. 2 Because she has not alleged a concrete injury traceable to an alleged FCRA 3 violation, Nayab lacks standing under Article III. The FAC is therefore subject to dismissal 4 on this ground. Moreover, because the FAC fails to state a claim under Rule 12(b)(6), and 5 because, in light of Nayab’s admission that she has no information as to Capital One’s 6 purpose for pulling her credit report, any amendment to the FAC to allege a concrete injury 7 to support standing would still fail to state a claim for an FCRA violation, the FAC is 8 DISMISSED WITH PREJUDICE. 9 10 Conclusion It is SO ORDERED. Dated: June 23, 2017 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 3:16-CV-3111-CAB-MDD

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