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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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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FRESHTA Y. NAYAB,

Case No.: 3:16-CV-3111-CAB-MDD
Plaintiff,

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v.

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DISMISSAL WITH PREJUDICE

CAPITAL ONE BANK, N.A.,

[Doc. No. 9]
Defendant.

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This matter is before the Court on a motion to dismiss the first amended complaint

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(“FAC”) for failure to state a claim or in the alternative to strike the class actions therein.

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As discussed below, the motion has merit and the FAC does not state a claim on which

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relief can be granted. However, the Court finds that Plaintiff lacks Article III standing.

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Therefore, the Court lacks subject matter jurisdiction and must dismiss the FAC on that

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basis. Moreover, because the FAC fails to state a claim and because by her own admission

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Plaintiff lacks information to state such a claim, any amendment to allege facts sufficient

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to give Plaintiff standing would still be subject to dismissal for failure to state a claim.

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Accordingly, the FAC is dismissed with prejudice.

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I.

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Plaintiff filed this lawsuit on December 30, 2016.

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Background
According to the original

complaint, on June 20, 2016, Plaintiff Freshta Nayab discovered that Defendant Capital
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One Bank, N.A. (“Capital One”) had made several inquiries on her Experian credit report.

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Nayab alleged that she “never conducted any business nor incurred any additional financial

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obligations to” Capital One [Doc. No. 1 at ¶ 20], and that as a result, the inquiries violated

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the Fair Credit Reporting Act. The original complaint asserted one claim for violation of

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the FCRA on behalf of Nayab and national classes including everyone with a United States

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address “whose consumer credit report . . . reflects an unauthorized consumer credit report

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inquiry by Defendant within the past” two years and five years, respectively. [Doc. No. 1

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at ¶ 32.]

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Capital One moved to dismiss the original complaint under Federal Rule of Civil

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Procedure 12(b)(6) for failure to state a claim. In the alternative, Capital One moved to

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strike the class allegations under Rule 12(f). Instead of opposing the motion, Nayab filed

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the FAC, which is now the operative complaint. In the FAC, instead of the more general

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allegation from the complaint, Nayab more specifically cites various permissible purposes

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for obtaining a credit report under the FCRA to allege that Capital One did not have any of

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those permissible purposes to make inquiries on her credit report. [Doc. No. 7 at ¶¶ 23-

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35.] The FAC is silent as to Capital One’s actual purpose for making the inquiries on her

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credit report.

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The FAC also changes the language of the class definitions to include persons whose

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consumer reports were accessed by Capital One “at a time when [Capital One] did not have

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a credit relationship with said person of the kind specified in 15 U.S.C. section

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1681b(a)(3)(A)-(F).” [Id. at ¶ 47.] Like the original complaint, the FAC includes only one

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claim for violation of the FCRA.

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II.

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“The requirement that jurisdiction be established as a threshold matter is inflexible

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and without exception; for jurisdiction is power to declare the law, and without jurisdiction

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the court cannot proceed at all in any cause.” Ruhrgas AG v. Marathon Oil Co., 526 U.S.

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574, 577 (1999) (citing Steel Co. v. Citizens for Better Env’t, 523 U.S. 83, 93-95 (1998))

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(internal brackets, ellipses, citations and quotation marks omitted). The court has an

Article III Standing

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“independent obligation to determine whether subject-matter jurisdiction exists, even in

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the absence of a challenge from any party.” Arbaugh v. Y&H Corp., 546 U.S. 500, 514

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(2006). “A suit brought by a plaintiff without Article III standing is not a ‘case or

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controversy,’ and an Article III federal court therefore lacks subject matter jurisdiction over

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the suit.” Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004).

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This standing to sue doctrine is derived from Article III’s limitation of the judicial

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power of federal courts to “actual cases or controversies.” Spokeo, Inc. v. Robins, 136 S.

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Ct. 1540, 1547 (2016) (citing Raines v. Byrd, 521 U.S. 811, 818 (1997)). “The doctrine

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limits the category of litigants empowered to maintain a lawsuit in federal court to seek

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redress for a legal wrong.” Id. “[T]he ‘irreducible constitutional minimum’ of standing

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consists of three elements. The plaintiff must have (1) suffered an injury-in-fact, (2) that

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is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be

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redressed by a favorable judicial decision.” Id. (citing Lujan v. Defenders of Wildlife, 504

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U.S. 555, 560-61 (1992)).

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The first element, injury-in-fact, “is a constitutional requirement, and ‘it is settled

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that Congress cannot erase Article III’s standing requirements by statutorily granting the

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right to sue to a plaintiff who would not otherwise have standing.’” Id. at 1547-48 (quoting

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Raines, 521 U.S. at 820, n.3). “To establish injury in fact, a plaintiff must show that he or

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she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’

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and ‘actual or imminent, not conjectural or hypothetical.’” Id. at 1548 (quoting Lujan, 504

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U.S. at 560). “‘For an injury to be “particularized,’ it ‘must affect the plaintiff in a personal

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and individual way.’” Id. (quoting Lujan, 504 U.S. at 560, n.1). Meanwhile, “[a] ‘concrete’

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injury must be ‘de facto’; that is, it must actually exist.” Id. (citing Black’s Law Dictionary

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479 (9th ed. 2009)). Therefore, a plaintiff does not “automatically satisf[y] the injury-in-

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fact requirement whenever a statute grants a person a statutory right and purports to

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authorize that person to sue to vindicate that right. Article III standing requires a concrete

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injury even in the context of a statutory violation.” Id. at 1549. A “bare procedural

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violation, divorced from any concrete harm,” does not satisfy the injury-in-fact requirement
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of Article III. Id.

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Here, the FAC does not allege an injury-in-fact attributable to the alleged FCRA

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violation. Rather, the FAC essentially alleges that the FCRA violation was itself the injury.

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Thus, the FAC amounts to a claim of a bare procedural violation of the FCRA, divorced

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from concrete harm, meaning Nayab lacks standing.

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The FAC alleges, “on information and belief” that Capital One’s violation caused

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Nayab’s “credit score to drop directly impacting [her] credit availability and finances.”

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[Doc. No. 7 at ¶ 43.] It does not, however, allege that Nayab has been denied credit as a

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result of a lowering of her credit score due to Capital One’s inquiries. This conjectural and

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hypothetical future injury does not satisfy the requirements for Article III standing.

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Spokeo, 136 S.Ct. at 1548.

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The FAC’s allegation that Capital One “increased the risk that Plaintiff and the class

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members will be injured if there is a data breach on [Capital One’s] computer systems” [Id.

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at ¶ 44] is even more speculative and conjectural. Indeed, the allegation itself concedes

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that Nayab has not yet been injured in this manner and only that she might be injured in

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the future if there is a data breach. Nayab’s “speculative fear of identity theft is not the

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‘credible,’ ‘real and immediate’ threat of harm required for Article III standing in data

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breach cases in the Ninth Circuit.”

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SACV151871JVSPLAX, 2016 WL 2626801, at *4 (C.D. Cal. May 6, 2016).

Patton v. Experian Data Corp., No.

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Nayab also alleges that when she realized Capital One had pulled her credit report

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“she felt that her privacy had been invaded and that her personal and private information

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had been disclosed to [Capital One].” [Doc. No. 7 at ¶ 42.] Invasion of privacy, however,

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is a tort, not an injury itself. Injury is merely an element of an invasion of privacy claim. 1

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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.”).

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The FAC does not allege any injury as a result of the alleged invasion of privacy. Instead

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of alleging how Capital One’s actual use of her credit report caused her harm, Nayab

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merely alleges that because Capital One pulled her credit report without a permissible

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purpose under the FCRA, she was injured. The existence of a FCRA violation, however,

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does not automatically mean that Nayab was injured or that her privacy was invaded.

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Spokeo, 136 S.Ct. at 1549.

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The allegation that Nayab felt that her privacy was invaded is also insufficient to

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demonstrate Article III standing because even if Capital One’s credit inquiries were

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impermissible under the FCRA, “absent disclosure to a third party or an identifiable harm

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from the statutory violation, there is no privacy violation.” Bultemeyer v. CenturyLink,

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Inc., No. CV-14-02530-PHX-SPL, 2017 WL 634516, at *4 (D. Ariz. Feb. 15, 2017)

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(dismissing FCRA claim for lack of Article III standing because the plaintiff had alleged a

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bare procedural violation without identifying any concrete harm); see also In re Sony

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Gaming Networks & Customer Data Sec. Breach Litig., 996 F. Supp. 2d 942, 961–62 (S.D.

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Cal. 2014) (citing Ninth Circuit cases where courts declined to find standing based solely

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on a plaintiff “alleging that his personal information was collected without his consent”);

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In re Google, Inc. Privacy Policy Litig., No. C 12-01382 PSG, 2012 WL 6738343, at *5

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(N.D. Cal. Dec. 28, 2012) (“[N]othing in the precedent of the Ninth Circuit or other

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appellate courts confers standing on a party that has brought statutory or common law

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claims based on nothing more than the unauthorized disclosure of personal information, let

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alone an unauthorized disclosure by a defendant to itself.”).

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In sum, Nayab has alleged that Capital One “violated a statutory procedure by

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accessing her credit report without a permissible purpose, without identifying any concrete

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injury in fact. [Nayab] has failed to make ‘a factual showing of perceptible harm.’ She

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lacks standing.” Bultemeyer, 2017 WL 634516, at *4 (quoting Lujan, 504 U.S. at 566).

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III.

Motion to Dismiss
A.

Legal Standard

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A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) challenges the

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sufficiency of a complaint as failing to allege “enough facts to state a claim to relief that is

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plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The facial

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plausibility standard is not a “probability requirement” but mandates “more than a sheer

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possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal, 556 U.S. 662, 678

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(2009) (internal quotations and citations omitted). For purpose of ruling on a Rule 12(b)(6)

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motion, the court “accept[s] factual allegations in the complaint as true and construe[s] the

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pleadings in the light most favorable to the non-moving party.” Manzarek v. St. Paul Fire

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& Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). “[D]ismissal may be based on

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

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cognizable legal theory.” Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121 (9th

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Cir. 2008) (internal quotations and citations omitted).

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Even under the liberal pleading standard of Rule 8(a)(2), which requires only that a

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party make “a short and plain statement of the claim showing that the pleader is entitled to

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relief,” a pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the

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elements of the cause of action will not do.’” Iqbal, 556 U.S. at 678 (quoting Twombly,

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550 U.S. at 555); see also Adams v. Johnson, 355 F.3d 1179, 1189 (9th Cir. 2004)

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(“[C]onclusory allegations of law and unwarranted inferences are insufficient to defeat a

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motion to dismiss.”). The complaint must “plead factual content that allows the court to

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draw the reasonable inference that the defendant is liable for the misconduct alleged.”

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Iqbal, 556 U.S. at 678. “Determining whether a complaint states a plausible claim for relief

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. . . [is] a context-specific task that requires the reviewing court to draw on its judicial

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experience and common sense.” Id. at 679.

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B.

Discussion

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Even assuming Nayab adequately alleges a concrete injury sufficient to give her

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standing to assert a claim for an FCRA violation, the FAC is subject to dismissal under
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Rule 12(b)(6) for failure to state a claim. “The FCRA imposes civil liability on any person

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who obtains a consumer report for an impermissible purpose.” Thomas v. Fin. Recovery

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Servs., No. EDCV 12-1339 PSG (Opx), 2013 WL 387968, at *3 (C.D. Cal. Jan. 31, 2013);

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see also 15 U.S.C. § 1681b. Thus, to survive a motion to dismiss on a section 1681b claim,

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“the plaintiff must allege facts that, if proven, would establish that the defendant did not

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have a permissible purpose for obtaining the credit report at issue.” Thomas, 2013 WL

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387968 at *4. “[B]are allegations that the defendant did not have a permissible purpose

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for obtaining a credit report, without more, are insufficient.” Id. “Merely reciting each of

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the permissible circumstances and denying that they apply is similarly inadequate.” Id.

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Yet, this is exactly what the FAC does here.

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The FAC does not allege that Capital One had any specific purpose for obtaining

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Nayab’s credit report. Instead, the FAC essentially alleges that because she did not

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expressly permit Capital One to access her report and is not aware of any business

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relationship or financial transaction between her and Capital One, Capital One’s credit

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inquiries must have been impermissible. In her opposition, Nayab even contends that she

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need only allege that her credit report was accessed, with the burden on Capital One to

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prove as an affirmative defense that it had a permissible purpose for obtaining her report.

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Nayab offers no authority for this burden shifting argument, and the Court rejects it.

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Because the burden is on Nayab to prove that Capital One accessed her credit report for an

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impermissible purpose, she must allege facts that would demonstrate that Capital One’s

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purpose was not permissible. To state a claim therefore, Nayab must allege Capital One’s

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actual purpose for obtaining her credit report and not simply the legal conclusion that

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Capital One’s purpose was not among those listed in section 1681b.

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In her opposition, Nayab even admits that “the only information available to [her] is

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that her credit report was pulled by [Capital One] on numerous occasions, and each time

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under certification by [Capital One] that [Capital One] was pulling her credit report and

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certifying that it was doing so for a permissible purpose as enumerated under 15 U.S.C.

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section 1681b.” [Doc. No. 10 at 8.] These are the only facts known to Nayab. That Nayab
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does not know the purpose for Capital One pulling her credit report does not mean that

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Capital One’s purpose was impermissible. Thus, the facts alleged in the FAC do not state

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a claim for violation of the FCRA.

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Nayab argues that her allegations that she and Capital One had no relationship of the

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kinds listed in section 1681b and that Capital One was not trying to collect a debt are

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sufficient to state a claim. “However, a credit report can be accessed without a consumer’s

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permission for other ‘permissible purposes’ under the FCRA.” Jones v. Best Serv. Co.,

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No. CV 14-9872 SS, 2017 WL 490902, at *8 (C.D. Cal. Feb. 6, 2017); see also Perretta v.

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Capital Acquisitions & Mgmt. Co., No. C-02-05561 RMW, 2003 WL 21383757, at *5 n.7

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(N.D. Cal. May 5, 2003) (noting that “section 1681b does not appear to require the

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existence of a debtor-creditor relationship for a party to lawfully acquire a consumer

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report”). Thus, Nayab’s lack of a prior relationship or debt with Capital One does not make

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it plausible that Capital One’s purpose for pulling her credit report was impermissible,

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notwithstanding Capital One’s certification to the contrary. Further, the FAC’s list of the

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various permissible purposes for obtaining a credit report along with allegations that as far

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as Nayab knows, such circumstances did not exist, amount to legal conclusions, not facts.

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Thomas, 2013 WL 387968, at *5.

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Because the FAC “offers no factual basis to infer what purpose—permissible or

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impermissible—[Capital One] had in making” inquiries on her credit report, it does not

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allege a plausible claim that Capital One’s purpose for obtaining her credit report was

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impermissible. Perez v. Portfolio Recovery Assocs., LLC, No. CIV. 12-1603 JAG, 2012

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WL 5373448, at *2 (D.P.R. Oct. 30, 2012); see also Twombly, 550 U.S. at 570. Moreover,

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because Nayab admits she has no information as to Capital One’s actual purpose for

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obtaining her credit report, any amendment would be futile. Accordingly, even if Nayab

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has adequately alleged standing (or could amend her complaint to satisfy Article III

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standing requirements), dismissal with prejudice for failure to state a claim is warranted.

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IV.

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Because she has not alleged a concrete injury traceable to an alleged FCRA

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violation, Nayab lacks standing under Article III. The FAC is therefore subject to dismissal

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on this ground. Moreover, because the FAC fails to state a claim under Rule 12(b)(6), and

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because, in light of Nayab’s admission that she has no information as to Capital One’s

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purpose for pulling her credit report, any amendment to the FAC to allege a concrete injury

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to support standing would still fail to state a claim for an FCRA violation, the FAC is

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DISMISSED WITH PREJUDICE.

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Conclusion

It is SO ORDERED.
Dated: June 23, 2017

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