Panzer v. Swiftships, LLC et al

Filing 27

ORDER & REASONS: ORDERED that Defendants' Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(1) (Rec. Doc. 10) is DENIED. FURTHER ORDERED that Plaintiff's Motion for Leave to File Surreply in Further Opposition to Motion to Dismiss (Rec. Doc. 26) is DENIED as moot. Signed by Judge Carl Barbier on 10/23/15. (sek)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

PAUL PANZER

CIVIL ACTION

VERSUS

NO: 15-2257

SWIFTSHIPS, LLC ET AL.

SECTION: “J”(1)
ORDER & REASONS

Before the Court is a Motion to Dismiss Pursuant to Fed. R.
Civ. P. 12(b)(1) (Rec. Doc. 10) filed by Defendants, Swiftships
LLC,

Swiftships

Shipbuilders

LLC,

Swift

Group

LLC,

ICS

Nett

Inc., and ICS Marine Inc.; an opposition thereto (Rec. Doc. 16)
filed by Plaintiff, Paul Panzer; and a reply (Rec. Doc. 25)
filed

by

Defendants.

Having

considered

the

motion

and

legal

memoranda, the record, and the applicable law, the Court finds
that the motion should be DENIED.
FACTS AND PROCEDURAL BACKGROUND
This litigation derives from Defendants’ decision to deny
Plaintiff employment based on information obtained in a consumer
report. Plaintiff initially applied to work for Defendants in
May

2015.

(Rec.

Doc.

13,

at

4.)

As

part

of

that

process,

Plaintiff emailed his resume to the email address provided on
Defendants’

website.

Id.

After

interviewing,

Plaintiff

was

advised that he had been hired and was told to report to work on
June 1, 2015. Id. at 4-5. However, upon reporting for work,
Plaintiff was informed that he would not be hired. Id. at 5.

Shortly thereafter, Plaintiff received a letter from a company
called

“SentryLink,”

background
Plaintiff

check

on

believes

which

stated

Plaintiff
that

he

to

was

that

one

it

of

denied

had

the

provided

Defendants.

employment

a
Id.

because

of

erroneous information obtained in the background check. Id. at
6.

Specifically,

Plaintiff

claims

that

the

background

check

incorrectly stated that he had been arrested or convicted of a
crime. Id.
On June 21, 2015, Plaintiff filed suit on behalf of himself
and

all

failed

others

to

similarly

adhere

to

the

situated,

alleging

disclosure

that

requirements

Defendants

of

the

Fair

Credit Reporting Act (“FCRA”). (Rec. Doc. 1, at 1.) Plaintiff
subsequently amended his complaint on September 15, 2015, to
assert additional claims based on Defendants’ failure to provide
him

with

a

copy

of

the

consumer

report

and

allow

him

the

opportunity to contest the inaccurate information contained in
the report prior to denying him employment. (Rec. Doc. 13, at
11-12.)
Plaintiff’s Amended Complaint asserts two class-based and
individual
Defendants

causes

of

willfully

action.

First,

violated

the

Plaintiff
FCRA,

alleges
15

that

U.S.C.

§

1681b(b)(2)(A), by obtaining consumer reports on Plaintiff and
other job applicants for employment purposes without providing
the

required

disclosures

and

notifications.

2

Id.

at

10-11.

Second, Plaintiff alleges that Defendants willfully violated the
FCRA, 15 U.S.C. § 1681b(b)(3)(A), by using consumer reports to
make

adverse

employment

decisions

without

providing

Plaintiff

and other job applicants with a copy of the report and a summary
of their rights under the FCRA. Id. at 11-12. For these alleged
violations, Plaintiff seeks statutory and punitive damages, as
well as attorney’s fees and costs. Id. In addition, with regard
to the second cause of action, Plaintiff seeks actual damages.
Id. at 12.
Defendants filed the instant Motion to Dismiss Pursuant to
Fed. R. Civ. P. 12(b)(1) (Rec. Doc. 10) on September 8, 2015,
prior

to

the

date

Plaintiff

responded

Defendants

replied

Plaintiff
in
to

filed

opposition

Plaintiff’s

the
on

Amended

Complaint.

October

opposition

13,

on

2015.

October

21,

2015.
PARTIES’ ARGUMENTS
Defendants

contend

that

Plaintiff

lacks

Article

III

standing to invoke the subject matter jurisdiction of this Court
because

Plaintiff

has

not

alleged,

and

cannot

establish,

an

injury in fact. (Rec. Doc. 10-1, at 2.) Defendants argue that
Plaintiff has not alleged any actual harm and, instead, merely
alleges

eligibility

for

statutory

damages

for

a

purported

violation of a statutory notice provision. Id. at 3. Defendants
maintain

that

mere

allegations

3

of

violations

of

a

federal

statute,

without

insufficient

to

any

accompanying

establish

an

concrete

injury

in

harm,

fact.

Id.

are

at

6.

Therefore, Defendants assert that Plaintiff lacks standing to
invoke this Court’s jurisdiction. Id.
In

response,

opposition
Plaintiff

to

Plaintiff

Defendants’

explains

that

sets

forth

motion.

several

As

Defendants

an

filed

arguments

initial

the

in

matter,

current

motion

prior to Plaintiff filing the Amended Complaint. (Rec. Doc. 16,
at 4.) For this reason, Plaintiff argues that Defendants’ motion
should be denied as moot. Id. at 5-6. Second, Plaintiff contends
that

he

has

Plaintiff,
putative

alleged

the

an

Amended

class

have

actual

injury

Complaint

suffered

the

in

fact.

alleges

According

that

following

he

actual,

and

to
the

concrete

injuries: (1) deprivation of information, also referred to as an
“informational

injury,”

in

the

form

of

being

deprived

of

a

disclosure to which they were entitled; (2) invasion of privacy;
and

(3)

failure

lost
to

employment

abide

by

opportunities

the

notice

and

caused

by

Defendants’

opportunity-to-contest

provisions of the FCRA before denying them employment. Id. at 45,

7.

Third,

Plaintiff

maintains

that

Congress

may

create

statutory rights, the deprivation of which confers standing on
the persons to whom the right was granted. Id. at 8-11. Because
he

specifically

because

he

alleged

seeks

that

statutory

he

suffered

damages

4

actual

authorized

by

injury

and

Congress,

Plaintiff argues that he has standing to pursue his claims on
behalf of himself and the proposed class. Id. at 6-7.
In their reply, Defendants point out that the Fifth Circuit
has withdrawn the authority on which Plaintiff relies for the
proposition that this Circuit recognizes an “information injury”
as a sufficient injury in fact for purposes of standing. (Rec.
Doc.

25,

at

1.)

In

addition,

Defendants

dispute

Plaintiff’s

allegation that he suffered an invasion of privacy. According to
Defendants, Plaintiff explained that Congress enacted the FCRA
to

prevent

privacy

in

an

undue

the

invasion

collection

of
and

an

“individual’s

dissemination

right
of

of

credit

information.” Id. at 2. Defendants argue that Plaintiff has not
raised

any

issue

regarding

credit

information

and

he

has

no

right of privacy in matters of public record. Id.
LEGAL STANDARD
In deciding a motion to dismiss for lack of subject matter
jurisdiction

under

Federal

Rule

of

Civil

Procedure

12(b)(1),

“the district court is ‘free to weigh the evidence and resolve
factual disputes in order to satisfy itself that it has the
power to hear the case.’” Krim v. pcOrder.com, Inc., 402 F.3d
489, 494 (5th Cir. 2005). The party asserting jurisdiction must
carry the burden of proof for a Rule 12(b)(1) motion to dismiss.
Randall D. Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 762
(5th Cir. 2011). The standard of review for a facial challenge

5

to a motion to dismiss under Rule 12(b)(1) is the same as that
for a motion to dismiss pursuant to Rule 12(b)(6). United States
v. City of New Orleans, No. 02-3618, 2003 WL 22208578, at *1
(E.D. La. Sept. 19, 2003); see also 13 Charles Alan Wright &
Arthur R. Miller, Federal Practice and Procedure § 3522 (3d ed.
2008). If a court lacks subject matter jurisdiction, it should
dismiss without prejudice. In re Great Lakes Dredge & Dock Co.,
624 F.3d 201, 209 (5th Cir. 2010).
To survive a Rule 12(b)(6) motion to dismiss, the plaintiff
must plead enough facts to “state a claim to relief that is
plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). A claim is facially plausible when the plaintiff pleads
facts that allow the court to “draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Id. A
court must accept all well-pleaded facts as true and must draw
all reasonable inferences in favor of the plaintiff. Lormand v.
U.S. Unwired, Inc., 565 F.3d 228, 232-33 (5th Cir. 2009); Baker
v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). The court is not,
however, bound to accept as true legal conclusions couched as
factual

allegations.

allegations

or

Iqbal,

legal

556

U.S.

conclusions

at

678.

masquerading

“[C]onclusory
as

factual

conclusions will not suffice to prevent a motion to dismiss.”

6

Taylor v. Books A Million, Inc., 296 F.3d 376, 378 (5th Cir.
2002).
DISCUSSION
“Article III of the Constitution limits the jurisdiction of
federal courts to ‘Cases’ and ‘Controversies.’” Susan B. Anthony
List v. Driehaus, 134 S. Ct. 2334, 2341 (2014) (citing U.S.
Const. art. III, § 2). “‘One element of the case-or-controversy
requirement’ is that plaintiffs ‘must establish that they have
standing to sue.’” Clapper v. Amnesty Int'l USA, 133 S. Ct.
1138, 1146 (2013) (quoting Raines v. Byrd, 521 U.S. 811, 818
(1997)). Standing is the determination of whether a specific
person is the proper party to bring a matter to the court for
adjudication. The United States Supreme Court has declared that
“[i]n essence the question of standing is whether the litigant
is entitled to have the court decide the merits of the dispute
or of particular issues.” Warth v. Seldin, 422 U.S. 490, 498
(1975). This inquiry “often turns on the nature and source of
the claim asserted.” Id. at 500.
In

its

constitutional

dimension,

standing

concerns

justiciability. “As an aspect of justiciability, the standing
question is whether the plaintiff has ‘alleged such a personal
stake

in

the

outcome

of

the

controversy’

as

to

warrant

his

invocation of federal-court jurisdiction and to justify exercise
of the court's remedial powers on his behalf.” Id. at 498-99. A

7

federal

court's

jurisdiction

can

be

invoked

only

when

the

plaintiff himself has suffered “some threatened or actual injury
resulting from the putatively illegal action.” Id. at 499.
“To establish Article III standing, a plaintiff must show
(1) an ‘injury in fact,’ (2) a sufficient ‘causal connection
between the injury and the conduct complained of,’ and (3) a
‘likel[ihood]’ that the injury ‘will be redressed by a favorable
decision.’” Susan B. Anthony List, 134 S. Ct. at 2341 (quoting
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)).
The

injury-in-fact

plaintiff

has

a

requirement
“personal

helps

stake

to

in

the

ensure

that

the

of

the

outcome

controversy.” Id. (quoting Warth, 422 U.S. at 498). An injury
sufficient

to

satisfy

Article

III

must

be

“concrete

and

particularized” and “actual or imminent, not ‘conjectural’ or
‘hypothetical.’” Id. (quoting Lujan, 504 U.S. at 560).
Article
federal

court

III

standing

case.

is

Because

a

threshold

standing

is

a

question
matter

in
of

every

subject

matter jurisdiction, a motion to dismiss for lack of standing is
properly brought pursuant to Rule 12(b)(1) of the Federal Rules
of Civil Procedure. See Lujan, 504 U.S. at 561. As the party
invoking federal jurisdiction, the plaintiff bears the burden of
establishing standing. Id.
It is well established that Congress may not erase Article
III’s standing requirements by statutorily granting the right to

8

sue

to

an

individual

who

would

not

otherwise

have

standing.

Raines, 521 U.S. at 820 n.3. Congress may, however, create legal
rights by statute, the alleged deprivation of which can confer
standing

to

threatened

sue.

injury

Warth,

422

U.S.

at

by

Art.

III

required

500
may

(“The

actual

or

exist

solely

by

virtue of ‘statutes creating legal rights, the invasion of which
creates standing . . . .’”).
The FCRA, the statute at issue here, was the product of
Congressional

concern

over

abuses

in

the

credit

reporting

industry. The legislative history of the FCRA indicates that its
purpose is to protect a consumer from inaccurate or arbitrary
information about himself in a consumer report that is being
used as a factor in determining the individual's eligibility for
credit,

insurance,

or

employment. 1

S.

Rep.

No.

91-517,

at

1

(1969). The FCRA recognizes that “the consumer has a right to
know when he is being turned down for credit, insurance, or
employment because of adverse information in a credit report and
to correct any erroneous information in his credit file.” Id. at
2.

For

example,

whenever

an

individual

is

rejected

for

employment because of an adverse credit report, the individual
1

For purposes of the FCRA, the term “consumer” means individual and the term
“consumer report” means “any written, oral, or other communication of any
information by a consumer reporting agency bearing on a consumer's credit
worthiness, credit standing, credit capacity, character, general reputation,
personal characteristics, or mode of living which is used or expected to be
used or collected in whole or in part for the purpose of serving as a factor
in establishing the consumer's eligibility for . . . employment purposes.” 15
U.S.C. § 1681a(c)-(d)(1).

9

is given the right to be told the name of the agency making the
report. Id. at 1. Following disclosure, the individual is given
an opportunity to correct inaccurate or misleading information
in his credit file. Id.
Plaintiff
violation

of

asserts
the

FCRA

causes

of

requirements

action

for

regarding

Defendants’

disclosure

to

consumers and conditions on use of consumer reports for adverse
actions. Section 1681b(b)(2)(A) guarantees consumers a certain
kind of disclosure before a person procures a consumer report
containing

their

information.

15

U.S.C.

§

1681b(b)(2)(A).

Specifically, it promises a consumer “a clear and conspicuous
disclosure . . . made in writing . . . before the report is
procured or caused to be procured, in a document that consists
solely of the disclosure, that a consumer report may be obtained
for employment purposes.” Id.
Section 1681b(b)(3)(A) requires that, “in using a consumer
report for employment purposes, before taking any adverse action
based in whole or in part on the report, the person intending to
take such adverse action shall provide to the consumer to whom
the

report

relates

(i)

a

copy

of

the

report;

and

(ii)

a

description in writing of the rights of the consumer under this
subchapter.” Id. § 1681b(b)(3)(A). The FCRA defines an “adverse
action” as “a denial of employment or any other decision for

10

employment

purposes

that

adversely

affects

any

current

or

prospective employee.” Id. § 1681a(k)(1)(B)(ii).
In the instant case, Plaintiff claims that he suffered an
“informational injury” because he was deprived of information to
which he was entitled. In Federal Election Commission v. Akins,
the Supreme Court held that Congress, by statute, could create a
right to information and that the denial of such information was
an injury sufficient to satisfy the injury-in-fact requirement
of standing. 524 U.S. 11, 21 (1998). Likewise, the Fifth Circuit
has recognized such “informational injuries.” See Grant ex rel.
Family Eldercare v. Gilbert, 324 F.3d 383, 387 (5th Cir. 2003)
(“The ‘inability to obtain information’ required to be disclosed
by

statute

constitutes

a

sufficiently

concrete

and

palpable

injury to qualify as an Article III injury-in-fact.” (citing
Akins, 524 U.S. at 21)). Under the FCRA, Plaintiff and other
consumers have the right to specific information at specific
times. Here, Plaintiff is alleging that Defendants failed to
provide the required disclosure before they obtained a consumer
report on Plaintiff for employment purposes. The allegation that
Defendants failed to provide that information is sufficient to
show

“an

invasion

of

a

legally

protected

interest”

that

is

“concrete and particularized” and “actual or imminent.” Lujan,
504 U.S. at 560. Accordingly, Plaintiff has alleged a sufficient
injury for purposes of Article III standing.

11

Defendants’
damages

in

argument

order

to

that

establish

Plaintiff

must

an

in

injury

allege

fact

is

actual
without

merit. By enacting the FCRA, Congress gave consumers the legal
right
action

to

obtain

through

certain
which

information

individual

and

a

consumers

private
can

right

enforce

of

their

rights. Notably, the statutory cause of action does not require
a

showing

of

actual

harm

when

a

plaintiff

sues

for

willful

violations. Under § 1681n(a), “[a]ny person who willfully fails
to comply with any requirement imposed under this subchapter
with respect to any consumer is liable to that consumer in an
amount equal to . . . damages of not less than $100 and not more
than $1,000.” 15 U.S.C. § 1681n(a). “Because ‘actual damages’
represent an alternative form of relief and because the statute
permits a recovery when there are no identifiable or measurable
actual damages, this subsection implies that a claimant need not
suffer

(or

allege)

consequential

damages

to

file

a

claim.”

Beaudry v. TeleCheck Servs., Inc., 579 F.3d 702, 705-06 (6th
Cir. 2009).
Of course, the Constitution limits the power of Congress to
confer

standing.

See

Lujan,

504

U.S.

at

577.

However,

the

Constitution does not prohibit Congress from “elevating to the
status

of

legally

cognizable

injuries

concrete,

de

facto

injuries that were previously inadequate in law.” Id. at 578. In
Robins v. Spokeo, Inc., the Ninth Circuit considered whether a

12

mere violation of the FCRA confers Article III standing on a
consumer whose right under the FCRA is violated. 742 F.3d 409
(9th Cir. 2014) cert. granted, 135 S. Ct. 1892 (Apr. 27, 2015)
(No.

13-1339). 2

The

court

identified

two

constitutional

limitations on congressional power to confer standing. First, a
plaintiff must be “among the injured,” in the sense that he
alleges the defendants violated his statutory rights. Id. at 413
(quoting Beaudry, 579 F.3d at 707). Second, “the statutory right
at

issue

must

protect

against

‘individual,

rather

than

collective, harm.’” Id. The court determined that the plaintiff
satisfied both requirements. Id. at 413-14. Therefore, the court
held that the plaintiff’s allegations that a website operator
willfully violated his rights under the FCRA were sufficient to
satisfy the injury-in-fact requirement of standing, even though
he failed to allege any actual damages. Id.
Here, the two constitutional requirements are met. First,
Plaintiff alleges that Defendants violated his statutory rights,
not just the statutory rights of others, so he is “among the
injured.”

Second,

the

FCRA

liability

provision

does

not

authorize suits by members of the public at large, but creates a

2

The United States Supreme Court has granted a writ of certiorari in the case
of Spokeo, Inc. v. Robins, which is set for oral argument on November 2,
2015. The question presented asks, “Whether Congress may confer Article III
standing upon a plaintiff who suffers no concrete harm, and who therefore
could not otherwise invoke the jurisdiction of a federal court, by
authorizing a private right of action based on a bare violation of a federal
statute.”

13

sufficient nexus between the individual plaintiff and the legal
violation. The liability provision states that any person who
willfully fails to comply with the provisions of the FCRA with
respect to any consumer “is liable to that consumer.” 15 U.S.C.
§ 1681n(a) (emphasis added). Therefore, the alleged violations
of Plaintiff’s statutory rights are sufficient to satisfy the
injury-in-fact requirement of Article III.
Other courts considering this issue have likewise held that
similar alleged violations of statutory rights were sufficient
to

satisfy

the

injury-in-fact

requirement

of

Article

III

standing. See Mabary v. Home Town Bank, N.A., 771 F.3d 820, 82324 (5th Cir. 2014) (holding that consumer’s allegation that bank
failed to post external notice of fees on its ATMs, in violation
of

EFTA,

was

sufficient

to

allege

injury

in

fact),

opinion

withdrawn (Jan. 8, 2015) 3; Hammer v. Sam's E., Inc., 754 F.3d
492, 499 (8th Cir. 2014) (holding that customers’ claims that
retailer printed more than last five digits of their credit card
numbers on receipts, in violation of FACTA, was sufficient to
allege injury in fact); Beaudry, 579 F.3d at 705 (holding that
consumer’s

allegation

that

companies

3

providing

check

The Fifth Circuit’s opinion in Mabary v. Home Town Bank, N.A. has been
withdrawn at the parties’ request while the petition for rehearing was
pending and, therefore, is not binding precedent. However, a court may
examine a withdrawn opinion to consider the persuasiveness of its reasoning.
See Likens v. Hartford Life & Acc. Ins. Co., 688 F.3d 197, 200 n.1 (5th Cir.
2012). Although the Fifth Circuit’s decision in Mabary is no longer binding
on this Court, the Court finds its reasoning to be persuasive.

14

verification services failed to account for change in numbering
system

used

by

state

driver’s

license

system,

which

led

to

inaccurate report in violation of FCRA, was sufficient to allege
injury in fact); Manuel v. Wells Fargo Bank, Nat. Ass'n, No.
3:14CV238,
(holding

2015

WL

that

inadequate
screening

4994538,

consumer’s

disclosure
for

at

to

employment

*6

(E.D.

allegation
him

at

in

Va.

Aug.

that

bank

connection

bank,

in

19,

with

violation

2015)

provided
background

of

FCRA,

was

sufficient to allege injury in fact); Jones v. Experian Info.
Solutions,

Inc.,

982

F.

Supp.

2d

268,

271

(S.D.N.Y.

2013)

(holding that consumer’s allegation that credit reporting agency
failed to perform a reasonable investigation into the accuracy
of

a

credit

report

once

consumer

disputed

certain

items,

in

violation of FCRA, was sufficient to allege injury in fact).
Moreover,
under

§

Plaintiff

1681b(b)(3)(A).

Plaintiff’s

allegations

seeks

actual

Defendants’
that

damages

arguments

Defendants

for
do

violated

his
not

the

claim

address
FCRA

by

using a consumer report to make an adverse employment decision
without first providing Plaintiff with a copy of the report and
a

summary

of

his

rights.

Plaintiff

claims

that

Defendants’

violation of § 1681(b)(3)(A) caused him to suffer an actual,
concrete injury in the form of a lost employment opportunity. As
mentioned above, the FCRA gives an individual the right to know
when he is being turned down for employment because of adverse

15

information in a credit report and the right to correct any
erroneous information in his credit file. S. Rep. No. 91-517, at
2

(1969).

Plaintiff

alleges

that

Defendants

deprived

him

of

these rights, which caused him actual harm in the form of a lost
employment

opportunity.

Therefore,

Defendants’

argument

that

Plaintiff has not alleged any actual harm must fail.
In

addition

to

injury

in

fact,

Article

III

standing

requires causation and redressability. Susan B. Anthony List,
134 S. Ct. at 2341. Where statutory rights are asserted, courts
have

described

the

standing

inquiry

as

“boiling

down

to

‘essentially’ the injury-in-fact prong.” Spokeo, 742 F3d at 414.
When the injury in fact is the violation of a statutory right,
causation and redressability will usually be satisfied. Braatz,
LLC v. Red Mango FC, LLC, No. 3:14-CV-4516-G, 2015 WL 1893194,
at *3 (N.D. Tex. Apr. 27, 2015) (quoting Spokeo, 742 F3d at
414). First, there is little doubt that a defendant’s alleged
violation of a statutory provision “caused” the violation of a
right created by that provision. Id. Second statutes frequently
provide for monetary damages, which redress the violation of
statutory rights. Id.
Plaintiff
redressability

has
in

adequately
this

case.

pleaded
First,

the

causation
violations

and
of

Plaintiff’s rights created by the FCRA are fairly traceable to
Defendants’ alleged violations of the FCRA’s provisions. Second,

16

the FCRA provides for monetary damages to redress violations of
the rights created by the statute. Moreover, Defendants’ motion
does not appear to dispute that Plaintiff has properly pleaded
the elements of causation and redressability.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Defendants’ Motion to Dismiss
Pursuant to Fed. R. Civ. P. 12(b)(1) (Rec. Doc. 10) is DENIED.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Leave to
File Surreply in Further Opposition to Motion to Dismiss (Rec.
Doc. 26) is DENIED as moot.
New Orleans, Louisiana this 23rd day of October, 2015.

CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

17