BOONE v. T-MOBILE USA INC.
Filing
41
OPINION. Signed by Judge Kevin McNulty on 01/26/2018. (ek)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
DEAN BOONE, individually and on
behalf of aU others similarly
situated,
Civ. No. 17-378-KM-MAH
Plaintiff,
OPINION
vs.
T-MOBILE USA INC.,
Defendant.
KEVIN MCNULTY. U.S.D.J.:
Plaintiff Dean Boone (“Boone”) alleges that defendant T-Mobile USA Inc.
(“T-Mobile”) obtained his credit report through a “hard” credit inquiry without
his consent. He brings a class action on behalf of himself and all others
similarly situated for purported violations of the Fair Credit Reporting Act, 15
U.S.C.
§ 1681, et seq. (“FCRA”) and the New Jersey Fair Credit Reporting Act,
N.J. Stat. Ann. 56:11-28, etseq. (“NJ FCRA”). T-Mobile seeks to dismiss
Boone’s second amended complaint. (ECF no. 33). Boone opposes this motion
and seeks leave to submit a third amended complaint. (ECF no. 36). T-Mobile
opposes Boone’s motion to amend. (ECF no. 39).
1
I.
BACKGROUND’
A. Factual History
Mr. Boone resides in Mahwah, New Jersey. (2AC
¶
5). T-Mobile is a
corporation that provides telephone and data services throughout the country.
(2AC
¶
6). Boone seeks to certify nationwide and New Jersey classes based on
T-Mobile’s purported violations of the ECRA and NJ FCRA.
On or about April 21, 2016, Boone went to a T-Mobile store in Paramus,
New Jersey, and asked a T-Mobile employee about available cell phone plans
and rates. (2AC
¶
11). Boone made it clear that he did not want his credit
report accessed if a “hard” credit inquiry would be required. (2AC
¶
12).
According to Boone, “hard” inquiries result in the disclosure of unauthorized
personal information to T-Mobile and also lower the prospective customers’
credit scores; “soft” inquiries, by contrast, involve less disclosure of information
and do not affect credit scores. (2AC
¶
21). The employee confirmed that
T-Mobile would conduct a soft inquiry and not a hard inquiry. (2AC
¶
15).
Boone did not sign any agreement, did not agree to any services, and did not
provide written consent for a hard inquiry. (2AC ¶116-17). Nonetheless,
T-Mobile obtained his credit report through a hard credit inquiry. (2AC
¶
17).
All facts and inferences are made in favor of the nonmoving party on a motion
to dismiss. Citations to the record are abbreviated as follows:
“2AC”
=
Second Amended Class Action Complaint (ECF no. 31)
“Def. Br.” = Memorandum of Law in Support of Motion to Dismiss Second
Amended Class Action Complaint (ECF no. 33-1)
“3AC”
=
Proposed Third Amended Class Action Complaint (ECF no. 36-1)
“P1. Br.” = Plaintiff Dean Boone’s Brief in Opposition to Defendant T-Mobile’s
Motion to Dismiss and Brief in Support of Plaintiffs Cross-Motion to
Amend (ECF no. 36-4)
“Def. Reply” = Reply Memorandum of Law in Support of Motion to Dismiss
Second Amended Class Action Complaint and Opposition to Plaintiffs
Cross-Motion to Amend (ECF no. 39)
2
T-Mobile has “routinely and systematically” obtained such hard inquiries
on prospective customers without a permissible purpose or written consent.
(2AC
¶
20). Those prospective customers form the putative classes.
B. Putative Class Action
Boone seeks to represent classes of prospective T-Mobile customers who,
like him, were allegedly subject to improper hard credit inquiries. In his second
amended complaint, Boone defines two putative classes of putative customers
for whom T-Mobile conducted hard inquiries on “false pretenses”:
FCRA False Pretense Class: All persons within the United States who
•
had a hard credit inquiry performed on his or her credit by [T-MobileJ
who had not previously authorized a hard inquin’ within the five years
prior to the filing of the Complaint until the date of final judgment in this
action. (2AC
¶
27).
NJ False Pretense Class: All persons within New Jersey who had a hard
•
credit inquiry performed on his or her credit by [T-Mobilej who had not
previously authorized a hard inquiry within the five years prior to the
filing of the Complaint until the date of final judgment in this action.
(2AC
¶
28).
In his proposed third amended complaint, Boone proposes two additional
classes of prospective customers for whom T-Mobile sought hard inquiry credit
reports for an “impermissible purpose”;
•
FCRA Impermissible Purpose Class: All persons within the United
States who had a hard credit inquiry performed on his or her credit by
[T-Mobile,] who had not authorized a hard inquiry, thereby obtaining a
persons’ credit report without any permissible purpose, within the five
years prior to the filing of the Complaint until the date of final judgment
in this action. (3AC ¶ 27).
•
NJ FCRA Impermissible Purpose Class: All persons within New Jersey
who had a hard credit inquiry performed on his or her credit by
[T-Mobilej, who had not authorized a hard inquiry, thereby obtaining a
3
persons’ credit report without any permissible purpose, within the five
years prior to the filing of the Complaint until the date of final judgment
in this action. (3AC
¶
29).2
As the titles suggest, any FCRA class would seek relief under the federal FCRA,
while any NJ FCRA class would seek relief under the NJ FCRA. (2AC
3AC
¶
¶
38-51;
40-53).
C. Procedural History
On January 19, 2017, Boone filed a complaint against T-Mobile in this
Court. (ECF no. 1). T-Mobile moved to dismiss the complaint on February 27,
2017. (ECF no 10). On March 17, 2017, Boone filed an amended complaint.
(ECF no. 13). T-Mobile moved to dismiss the amended complaint on April 14,
2017. (ECF no. 19).
On June 15, 2017, Boone and T-Mobile attended a scheduling
conference before the Honorable Michael A. Hammer. (P1. Br. 4). At the
scheduling conference, T-Mobile consented to Boone’s filing a second amended
complaint. (P1. Br. 4).
Boone filed that second amended complaint on June 28, 2017. (ECF no.
31). On July 26, 2017, T-Mobile filed this motion to dismiss the second
amended complaint for failure to state a claim and for lack of standing. (ECF
no. 33). On August 24, 2017, Boone sought leave to file a third amended
complaint. (ECF no. 36). T-Mobile, which this time did not consent (P1. Br. 4),
opposes that motion. (ECF no. 39).
II.
LEGAL STANDARDS
A. 12(b)(1) Motion to Dismiss for Lack of Jurisdiction
Motions to dismiss for lack of subject matter jurisdiction pursuant to
Federal Rule of Civil Procedure 12(b)(1) maybe raised at any time. Iwanowa v.
Ford Motor Co., 67 F. Supp. 2d 424, 437-38 (D.N.J. 1999). “[B]ecause subject
The addition of these two putative classes is the only difference between
Boone’s second and third amended complaints. (P1. Br. 26; Def. Reply 11; 2AC; 3AC).
2
4
matter jurisdiction is non-waivable, courts have an independent obligation to
satisfy themselves of jurisdiction if it is in doubt. See Mt. Healthy City Sch. Dist.
Rd. of Educ. v. Doyle, 429 U.S. 274, 278 (1977). A necessary corollary is that
the court can raise sua sponte subject-matter jurisdiction concerns.” Nesbit a
Gears Unlimited, Inc., 347 F.3d 72, 76-77 (3d Cir. 2003).
Rule 12(b)(l) challenges may be either facial or factual attacks. See
2 Moore’s Federal Practice
§ 12.30[4j (3d ed. 2007); Mortensen v. First Fed. Sat’.
& Loan Ass’n, 549 F.2d 884, 891 (3d Cir. 1977). A facial challenge asserts that
the complaint does not allege sufficient grounds to establish subject matter
jurisdiction. Iwanowa, 67 F. Supp. 2d at 438. A court considering such a facial
challenge assumes that the allegations in the complaint are true. Cardio-Med.
Assoc., Ltd. v. Crozer-Chester Med. Ctr., 721 F.2d 68, 75 (3d Cir. 1983);
Iwanowa, 67 F. Supp. 2d at 438. It “review[s] only whether the allegations on
the face of the complaint, taken as true, allege facts sufficient to invoke the
jurisdiction of the district court.” Common Cause of Penn. v. Pennsylvania, 558
F.3d 249, 257 (3d Cir. 2009) (quoting Taliaferro a Darby Twp. Zoning Rd., 458
F.3d 181, 188 (3d Cir. 2006)).
A factual attack, on the other hand, permits the Court to consider
evidence extrinsic to the pleadings. Gould Elecs. Inc. v. United States, 220 F.3d
169, 178 (3d Cir. 2000), holding modffied on other grounds by Simon v. United
States, 341 F.3d 193 (3d Cir. 2003). Such a factual attack “does not provide
plaintiffs the procedural safeguards of Rule l2(b)(6), such as assuming the
truth of the plaintiffs allegations.” CNA a United States, 535 F.3d 132, 144 (3d
Cir. 2008).
The burden of establishing federal jurisdiction rests with the
party asserting its existence. [citing DaimlerChnjsler Corp. v. Cuno,
547 U.S. 332, 342 n.3 (2006).] “Challenges to subject matter
jurisdiction under Rule 12(b)(l) may be facial or factual.” [citing
Common Cause of Pa. v. Pennsylvania, 558 F.3d 249, 257 (3d Cir.
2009) (quoting Taliafen-o v. Darby Twp. Zoning Rd., 458 F.3d 181,
188 (3d Cir. 2006)).] A facial attack “concerns ‘an alleged pleading
deficiency’ whereas a factual attack concerns ‘the actual failure of
5
[a plaintiffs] claims to comport [factually] with the jurisdictional
prerequisites.” [citing CNA v. United States, 535 F.3d 132, 139 (3d
Cir. 2008) (alterations in original) (quoting United States cx ret.
Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 514 (3d Cir.2007)).]
“In reviewing a facial attack, the court must only consider
the allegations of the complaint and documents referenced therein
and attached thereto, in the light most favorable to the plaintiff.”
[citing Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir.
2000).] By contrast, in reviewing a factual attack, “the court must
permit the plaintiff to respond with rebuttal evidence in support of
jurisdiction, and the court then decides the jurisdictional issue by
weighing the evidence. If there is a dispute of a material fact, the
court must conduct a plenary hearing on the contested issues
prior to determining jurisdiction.” [citing McCann v. Newman
Irrevocable Trust, 458 F.3d 281, 290 (3d Cir. 2006) (citations
omitted).]
Lincoln Ben. Life Co. v. AEI Life, LLC, 800 F.3d 99, 105 (3d Cir. 2015) (footnotes
omitted; case citations in footnotes inserted in text).
Since T-Mobile does not challenge the validity of any of Boone’s factual
claims as part of its motion, it brings a facial challenge. It argues that the
allegations in the operative version of the complaint, even accepted as true, are
insufficient to establish Boone’s Article III standing, an FCRA claim, or a NJ
FCRA claim. In reviewing facial challenges to standing, Courts “apply the same
standard as on review of a motion to dismiss under Rule l2(b)(6).” Id.; see In re
Horton Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625, 632-33 (3d Cir.
2017); Petruska v. Gannon Univ., 462 F.3d 294, 299 n.1 (3d Cir. 2006).
B. 12(b)(6) Motion to Dismiss for Failure to State a Claim
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a
complaint, in whole or in part, if it fails to state a claim upon which relief can
be granted. The moving party bears the burden of showing that no claim has
been stated. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In
deciding a motion to dismiss under Rule 12(b)(6), a court must take all
allegations in the complaint as true and view them in the light most favorable
to the plaintiff. See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels &
6
Casino Resorts, Inc. v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998);
see also Phillips v. County of Allegheny, 515 F.3d 224, 231 (3d Cir. 2008).
Federal Rule of Civil Procedure 8(a) does not require that a complaint
contain detailed factual allegations. Nevertheless, “a plaintiffs obligation to
provide the ‘grounds’ of his ‘entitlement to relief requires more than labels and
conclusions, and formulaic recitation of the elements of a cause of action will
not do.” Bell AtI. Corp. v. Twombly, 550 U.s. 544, 555 (2007). The factual
allegations must be sufficient to raise a plaintiffs right to relief above a
speculative level, such that it is “plausible on its face.” See id. at 570; see also
Umland u. PLANCO Fin. Seru., Inc., 542 F.3d 59, 64 (3d Cir. 2008). A claim has
“facial plausibility when the plaintiff pleads factual content that allows the
court to draw the reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556). While “[t]he plausibility standard is not akin to a
‘probability requirement’
...
it asks for more than a sheer possibility.” Iqbal, 556
U.S. at 678.
The United States Court of Appeals for the Third Circuit has explicated
the Twombly/Iqbal standard on several occasions. See, e.g., Argueta v. U.S.
Immigration & Customs Enforcement, 643 F.3d 60, 70-73 (3d Cir. 2011);
Santiago v. WanninsterTwp., 629 F.3d 121, 129-30 (3d Cir. 2010). In doing so,
it has provided a three-step process for evaluating a Rule l2(b)(6) motion:
To determine whether a complaint meets the pleading standard,
our analysis unfolds in three steps. First, we outline the elements
a plaintiff must plead to a state a claim for relief. See [Iqbal, 556
U.S.] at 675; Argueta, 643 F.3d at 73. Next, we peel away those
allegations that are no more than conclusions and thus not
entitled to the assumption of truth. See Iqbal, 556 U.S. at 679;
Argueta, 643 F.3d at 73. Finally, we look for well-pled factual
allegations, assume their veracity, and then “determine whether
they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S.
at 679; Argueta, 643 F.3d at 73. This last step is “a context-specific
task that requires the reviewing court to draw on its judicial
experience and common sense.” Iqbal, 556 U.S. at 679.
7
Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012).
“In deciding a Rule 12(b)(6) motion, a court must consider only the
complaint, exhibits attached to the complaint, matters of the public record, as
well as undisputedly authentic documents if the complainant’s claims are
based upon these documents.” Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir.
2010); see also In re Asbestos Prods. Liability Litig. (No. VI), 822 F.3d 125, 134
& n.7 (3d Cir. 2016); Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d
Cir. 2006) (“In evaluating a motion to dismiss, we may consider documents
that are attached to or submitted with the complaint, and any matters
incorporated by reference or integral to the claim, items subject to judicial
notice, matters of public record, orders, and items appearing in the record of
the case.”).
Ill.
DISCUSSION
T-Mobile argues that (A) Boone lacks Article III standing, (B) Boone fails
to state a claim under the FCRA or the NJ FCRA, and (C) Boone’s request to
submit a third amended complaint should be denied.
A. Article III Standing
“The Constitution confers limited authority on each branch of the Federal
Government.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1546 (2016). Under
Article III, the federal courts are endowed with “[tjhe judicial Power of the
United States,” which is limited to “Cases” and “Controversies.” U.S. Const. art.
III
§
1, 2; see Lujan v. Defenders of Wildlife, 504 U.S. 555, 559 (1992). Courts
ensure that Article III standing exists in order to maintain the proper
separation of powers. Lujan, 504 U.S. at 559-60. In fact, “[nb
principle is more
fundamental to the judiciary’s proper role in our system of government than
the constitutional limitation of federal-court jurisdiction to actual cases or
controversies.” Spokeo, 136 S. Ct. at 1547 (citing Raines v. Byrd, 521 U.S. 811,
818 (1997)).
Standing “serves to identify those disputes which are appropriately
resolved through the judicial process.” Whitmore v. Arkansas, 495 U.S. 149,
8
154-55 (1990). While some of the elements of standing embody prudential
considerations, “the core component of standing is an essential and
unchanging part of the case-or-controversy requirement of Article III.” Lujan,
504 U.S. at 560 (citing Allen v. Wright, 468 U.S. 737, 751 (1984)).
There are three elements of Article III standing: (1) First, a plaintiff must
have an “injury in fact”—i.e., an “invasion of a legally protected interest” that is
“concrete,” “particularized,” and “actual or imminent, not ‘conjectural’ or
‘hypothetical.”’ Lujan, 504 U.S. at 560. (2) Second, a plaintiff must show a
“causal connection between the injury and the conduct complained oP such
that the injury is “fairly trace[able] to the challenged action of the defendant,
and not
...
th[e] result [ofl the independent action of some third party not
before the court.” Id. (citations omitted). (3) Third, there must be a likelihood
“that the injury will be ‘redressed by a favorable decision.’” Id. at 561 (citation
omitted). These requirements are known as injury in fact, causation, and
redressability.
“The requirements for standing do not change in the class action
context.” In re Horizon Healthcare Servs. ma Data Breach Litig., 846 F.3d 625,
634 (3d Cir. 2017). The named plaintiff must allege and show Article III
standing in order to maintain a putative class action. Id. “[lJf none of the
named plaintiffs purporting to represent a class establishes the requisite of a
case or controversy with the defendants, none may seek relief on behalf of
himself or any other member of the class.” O’shea v. Littleton, 414 U.S. 488,
494 (1974); see Horizon, 846 F.3d at 634. However, the named plaintiff does
not have to show that unidentified members of the putative class members
have suffered an injury in order to proceed. See Horizon, 846 F.3d at 634; see
also Lewis v. Casey, 518 U.S. 343, 357 (1996); Warth
502 (1975).
9
iS’.
Seldin, 422 U.S. 490,
1.
Injury-in-fact Requirement
To show an injury in fact, a plaintiff must allege an “invasion of a legally
protected interest” that is (a) “concrete,” (b) “particularized,”3 and (c) “actual or
imminent, not ‘conjectural’ or ‘hypothetical.” Lujan, 504 U.S. at 560. I will
address these elements separately.
(a) Concrete
For the following reasons, I conclude that Boone’s injury as alleged is
concrete.
For an injun’ to be “concrete,” it must be “defacto’; that is, it must
actually exist.” Spokec, 136 S. Ct. at 1548 (citing Black’s Law Dictionary 479
(9th ed. 2009)). It must be “real,” but does not necessarily need to be “tangible.”
fri. at 1548-49; see, e.g., Pleasant Grove City v. Summum, 555 U.S. 460 (2009)
(free speech); Church of Lukumi Babalu Aye, Inc. v. Hialeah, 508 U.S. 520
(1993) (free exercise).
Spokeo holds that a plaintiff cannot satisfy Article III standing’s
injury-in-fact requirement “by alleging a bare procedural violation.” 136 5. Ct.
at 1550. For instance, the dissemination of an incorrect zip code, without
more, is not a concrete harm. Id. An FCRA plaintiff must show that “the
particular procedural violations alleged
...
entail a degree of risk sufficient to
meet the concreteness requirement.” Id. Spokeo remanded the case to the
Ninth Circuit without delineating the precise boundaries of Article III standing
with regard to the FCRA.
Spokeo explained that the “concrete and particularized” analysis involves two
separate inquiries. Spokeo, 136 S. Ct. at 1548. Prior to this, “concrete and
particularized” were generally discussed together. See, e.g., Lujan, 504 U.S. at 561,
563-67. Given the Court’s language in Spokeo, I will discuss concreteness and
particularization separately. I therefore divide the injury-in-fact analysis not into two
parts but three: concreteness, particularization, and actual or imminent harm.
The Supreme Court remanded the case because “the Ninth Circuit failed to fully
appreciate the distinction between concreteness and particularization.” 136 S. Ct. at
1550. The Court did not take a position on whether the plaintiff adequately alleged an
injury in fact. Id.
4
10
Boone posits that T-Mobile’s behavior caused two injuries that meet the
concreteness requirement: (1) T-Mobile, by conducting a hard credit inquiry,
caused the unauthorized disclosure of his personal information; and
(ii) T-Mobile’s hard credit inquiry negatively impacted his credit score.
(i) The unauthorized disclosure of personal information satisfies the
injury-in-fact’s concreteness requirement. In re Horizon Healthcare Sen’s. Inc.
Data Breach Litig., 846 F.3d 625, 638-4 1 (3d Cir. 2017). Privacy violations can
give rise to standing. In In re Google Inc. Cookie Placement Consumer Privacy
Litigation, plaintiff internet users sued advertising providers, alleging that their
placement of “cookies” (i.e., small files with identifying information left by a
web
server on users’ browsers) violated a number of state and federal statutes,
including the Stored Communications Act (“SCA”). 806 F.3d 125, 133 (3d Cir.
2005). The Third Circuit found that plaintiffs, although they had not suffered
an economic loss, had standing. So long as an injury “affect[sj the plaintiff in a
personal and individual way,” the plaintiff need not “suffer any particular type
of harm to have standing” or “show actual monetary loss.” Id. (internal
quotation marks and citation omitted). Instead, “the actual or threatened injury
required by Art[icle] III may exist solely by virtue of statutes creating legal
rights, the invasion of which creates standing.” Id. (internal quotation marks
and citation omitted).
In re Nickelodeon Consumer Privacy Litigation reaffirmed Google’s holding.
In that case, plaintiffs alleged that Viacom and Google unlawfully collected
plaintiffs’ personal information on the internet, including the identification of
webpages they visited and videos they watched. 827 F.3d 262, 267 (3d Cir.
2016). The Third Circuit found that plaintiffs had standing. Id. “[Wihen it
comes to laws that protect privacy, a focus on economic loss is misplaced.” Id.
at 272-73 (internal quotation marks omitted). Rather, “the unlawful disclosure
of legally protected information” constitutes “a clear defacto injury.” Id. at 274.
The Court noted, “Congress has long provided plaintiffs with the right to seek
11
redress for unauthorized disclosures of information that, in Congress’s
judgment, ought to remain private.” Id.
Defendants argue that the Supreme Court’s Spokeo decision
dramatically altered the doctrine of standing in such circumstances. The Third
Circuit, speaking post-Spokeo, disagrees: “[W]e do not believe that the [Spoked
Court so intended to change the traditional standard for the establishment of
standing. As we noted in Nickelodeon, ‘[tihe Supreme Court’s recent decision in
Spokeo
...
does not alter our prior analysis in Google.” See Horizon, 846 F.3d at
637-38 (citing Nickelodeon, 827 F.3d at 273).
Spokeo does, however, erect certain guideposts. First, “intangible injuries
can
...
be concrete.” Spokeo, 136 S. Ct. at 1549 (citing Pleasant Grove City v.
Summum, 555 U.S. 460 (2009); Church of Lukumi Babalu Aye, Inc. v. Hialeah,
508 U.S. 520 (1993)). To determine if an injury, though intangible, is
nevertheless concrete, it is instructive to “consider whether an alleged
intangible harm has a close relationship to a harm that has traditionally been
regarded as providing a basis for a lawsuit in English or American courts.” Id.
(citing Vermont Agency of Nat’lRes. v. United States ex rel. Stevens, 529 U.S.
765, 775-77 (2000)). Nonetheless, even if a cause of action did not exist at
common law, “Congress has the power to define injuries and articulate chains
of causation that will give rise to a case or controversy where none existed
before.” Id. (citing Lujan, 504 U.S. at 580 (Kennedy, J., concurring in part and
concurring in judgment)).
Second, a plaintiff does not necessarily satisfy the injury-in-fact
requirement “whenever a statute grants a person a statutory right and
purports to authorize that person to sue to vindicate that right.” Id. For
instance, “a bare procedural violation, divorced from any concrete harm,” does
not satisfy the Article III injury-in-fact requirement. Id.; see Summers v. Earth
Island Inst., 555 U.S. 488, 496 (2009) (“[D]eprivation of a procedural right
without some concrete interest that is affected by the deprivation—a procedural
right in vacuo—is insufficient to create Article III standing. Only a person who
12
has been accorded a procedural right to protect his concrete interests can
assert that right without meeting all the normal standards for redressability
and immediacy.” (internal quotation marks omitted)); see also Lujan, 504 U.s.
at 572.
Third, a “risk of real harm” can satisfy the concreteness requirement.
Spokeo, 136 S. Ct. at 1549. For example, victims of slander and libel have long
been permitted recovery even through their harms are often difficult to prove or
measure. Id. (citing Restatement (First) of Torts,
§ 569, 570). Congress can
also identify certain procedural rights that constitute an injury in fact. In
Federal Election Commission v. Akins, a group of voters’ “inability to obtain
information” that Congress had decided to make public qualified as an injury
in fact. 542 U.S. 11,20-25(1998). In Public Citizen
ii.
Department of Justice,
two advocacy organizations’ failure to obtain information subject to disclosure
under the Federal Advisory Committee Act “constitute[d] a sufficiently distinct
injury to provide standing to sue.” 491 U.S. 440, 449 (1989); see also Spokeo,
136 S. Ct. at 1549-50.
In sum, Spokeo clarifies that “Congress plainly sought to curb the
dissemination of false information by adopting procedures designed to decrease
that risk.” 136 S. Ct. at 1550. Spokeo does not wholly revamp the injury-in-fact
requirement by any means. Horizon, 846 F.3d at 648. Congress still “has the
power to define injuries
...
that were previously inadequate at law.” Id. (citing
Spokeo, 136 S. Ct. at 1549 (internal quotation marks and citations omitted).
However, a “bare procedural violation,” such as disseminating an incorrect zip
code (without any other harm), does not satisfy injury-in-fact’s concreteness
requirement. Spokeo, 136 S. Ct. at 1550 & n.8. Congress can proscribe
intangible harms, but it does not follow that a plaintiff “automatically” satisfies
the injury-in-fact requirement because of a statutory right to sue, Horizon, 846
F.3d at 638 (citing Spokeo, 136 S. Ct. at 1549).
In Horizon, the Third Circuit affirmed that “‘unauthorized disclosures of
information’ have long been seen as injurious.” Id. (citing Nickelodeon, 827 F.3d
13
at 274). The unauthorized disclosure of information does not precisely
correspond to a common law tort, but it is analogous to certain privacy torts
have that traditionally provided a basis for suit in English or American courts.
Id. at 638-40. The FCRA elevates this harm to a statutory right and establishes
that “the unauthorized dissemination of personal information by a credit
reporting agency causes an injury in and of itself—whether or not the
disclosure of that information increased the risk of identity theft or some other
future harm.” Id. at 639. Accordingly, the Third Circuit found that the
unauthorized dissemination of the Horizon plaintiffs’ information constituted a
concrete harm. Id. at 640.
In this case, Boone alleges a similar concrete harm—i.e., the
unauthorized dissemination of personal information. A hard credit inquiry
“contains substantially more information (that is confidential and personal)
than a ‘soft’ inquiry.” (2AC
¶ 13); see 15 U.S.C. § 1681b(c);
Vanaman a
NationstarMortg., LLC, No. 15-cv-906, 2017 WL 1097189, at *1 (D. Nev. Mar.
22, 2017) (“A soft pull does not provide individual account or tradeline
information found on a full consumer report obtained for a ‘hard pull’ for the
extension of credit.”); Cooper v. Press/er & Press/er, LLP, 912 F. Supp. 2d 178,
187 n.10 (D.N.J. 2012) (“[A] soft pull [is] a request for updated address
information only.” (internal quotation marks and citation omitted)). Boone
alleges that he did not provide consent for T-Mobile to obtain a hard credit
inquiry and that T-Mobile had no permissible purpose to obtain his credit
report. (2AC
12-18); see 15 U.S.C.
§ 1681b(a)(2)—(3). Thus, T-Mobile
allegedly caused the unauthorized dissemination of Boone’s personal
information.
T-Mobile argues that Boone’s case is distinguishable from Horizon. (Def.
Br. 7 n.2). The Horizon plaintiffs’ information, it says, fell into the hands of
thieves as a result of inadequate protections, while Boone’s information was
obtained pursuant to Boone’s own “consent to conduct an inquiry of his
credit.” (Def. Br. 7 n.2). This argument is unavailing. First, the outcome of
14
Horizon case did not turn on how or to whom the information was
subsequently disseminated. The harm was that plaintiffs’ personal information
was negligently made available to outsiders without plaintiffs’ consent. See
Horizon, 846 F.3d at 639-40. Second, although T-Mobile had Boone’s consent,
that consent was allegedly limited to a soft credit inquiry. For a hard credit
inquiry, written consent or a permissible purpose would have been required. 15
§
U.S.C.
1681b(a)(2)—(3); seeKelchnerv. Sycamore Manor Health Ctr., 305 F.
Supp. 2d 429, 433-35 (M.D. Pa. 2004). Moreover, Boone specifically told
T-Mobile he did not want them to conduct a hard credit check. (2AC ¶112-17).
In the circumstances as alleged, the unauthorized disclosure of personal
information constitutes a concrete injury within the meaning of Spokeo and
Horizon.
(ii) The alleged negative impact on Boone’s credit score is also a concrete
injury. First, it is important to not conflate issues: whether an allegation
satisfies the concreteness requirement of the injury-in-fact requirement is
separate from whether that allegation states plausible damages.5 See Bell v.
Hood, 327 U.S. 678, 682 (1946) (“Jurisdiction
...
is not defeated
...
by the
possibility that the averments might fail to state a cause of action on which [the
plaintiffi could actually recover. For it is well settled that the failure to state a
proper cause of action calls for a judgment on the merits and not for a
dismissal for want of jurisdiction.”); see also Davis v. Wells Fargo, 824 F.3d
333, 349-50 (3d Cir. 2016). I will discuss the issue of damages in relation to
Boone’s credit score in subsection 111.3.1(e).
Boone alleges that each hard credit inquiry decreases a credit score.
(2AC
¶
13). Several courts have found that a depleted credit score constitutes
T-Mobile cites Slack v. Suburban Propane Partners, L.P. for the proposition that
a damaged credit score is not a concrete injury for purposes of Article III standing.
(Def. Br. 7). Slack concerns a motion to dismiss. No. 10-2548, 2010 WL 3810870
(D.N.J. Sept. 21, 2010). Slack found that that a damaged credit score, on its own, does
not constitute “actual damages” for purposes of a motion to dismiss. Id. This is not
relevant to the Article III standing analysis.
5
15
an injury in fact. The Northern District of Illinois elaborated in Santangelo v.
Comcast Corp.:
Credit scores are of great importance in our economy, and a
depleted credit score could affect a consumer in numerous ways,
inflicting harm that often may be difficult to prove or quantify.
Congress has the power to discourage the needless depletion of
consumers’ credit scores even when the depleted score cannot be
neatly tied to a financial harm. While discovery may well show that
[plaintiff] did not suffer any actual damages as a result of his lower
credit score, at this preliminary stage, his allegations are sufficient
to establish Article III injury-in-fact.
162 F. Supp. 3d 691, 698 (N.D. Ill. 2016). Adams v. Fifth Third Bank also held
that a decreased credit score is an injury-in-fact. No. 3:16-cv-218, 2017 WL
561336, at *3 (W.D. Ky. Feb. 10, 2017). Harm to one’s credit score might make
it more difficult or more expensive to obtain credit cards, auto loans, and
mortgages. Id.; see also Green v. RentGrow, Inc., No. 2:16-cv-42l, 2016 WL
7018564 (E.D. Va. Nov. 10, 2016) (report and recommendation of magistrate
judge), adopted by 2016 WL 7031287 (Nov. 30, 2016); cf Dieddch a Ocwen
Loan Servicing, LLC, 839 F.3d 583, 590-9 1 (7th Cir. 2016) (holding that
plaintiffs’ allegations, including a damaged credit score and the denial of credit,
constituted an injury in fact).
Spokeo provides that a “bare procedural violation” of the FCRA does not
satisfy the injury-in-fact requirement. However, a depleted credit score is more
than that. It is not akin to “the dissemination of an incorrect zip code.” Spokeo,
136 5. Ct. at 1550. It can impair one’s ability to obtain and use credit.
Therefore, Boone has adequately stated an injury in fact on the grounds that
his credit score was depleted.
(b) Particularized
Boone’s alleged injury is particularized. For an injury to be
“particularized,” it “must affect the plaintiff in a personal and individual way.”
Lujan, 504 U.S. at 560 n.1; see DaimlerChnjsler Corp. v. Cuno, 547 U.S. 332,
333 (2006) (“[P]laintiff must allege personal injury.”). The hard credit inquiry
16
affected Boone personally and as an individual. This is not a generalized
grievance that is dispersed among the population; Boone does not seek relief
“that no more directly and tangibly benefits him than it does the public at
large.” Lujan, 504 U.S. at 573-74; see also Warth v. Selthn, 422 U.S. 490, 507
& niB (1975).
Both of Boone’s alleged injuries—i.e., the dissemination of personal
information and the damage to his credit score—affected him in a personal and
individual way. His personal information was allegedly disseminated; his credit
score was allegedly damaged. He thus satisfies the particularization
requirement.
(c) Actual or Imminent Harm
Boone has adequately shown an “actual or imminent” harm for the
purpose of Article III standing’s injury-in-fact requirement. This element
requires that the harm must be “actual or imminent, not ‘conjectural’ or
‘hypothetical.”’ Lujan, 504 U.S. at 560. For instance, a concerned citizen’s
hypothetical plans to “some day” visit the site of an environmental harm does
not support a finding of “actual or imminent” injun’ to that citizen. Id. at 564.
In this case, the alleged dissemination of information and damage to Boone’s
credit rating is actual, not hypothetical.
In sum, Boone sufficiently alleges an injury in fact. I will now turn to
causation and redressability.
2.
Causation
Causation is the second Article Ill standing requirement. A plaintiff must
prove “a causal connection between the injury and the conduct complained
of—i.e., the injury has to be ‘fairly
...
trace[able] to the challenged action of the
defendant, and not... th[el result [ofi the independent action of some third party
not before the court.” Lujan, 504 U.S. at 560-61 (citing Simon v. E. Ky. Welfare
Rights Org., 426 U.S. 26, 4 1-42 (1976)).
“Causation in the context of standing is not the same as proximate
causation from tort law.” Constitution Party of Pa. v. Aichele, 757 F.3d 347, 366
17
(3d Cir. 2014); see Pub. Interest Research Cip. of N.J., Inc. v. Powell Duffryn
Terminals Inc., 913 F.2d 64, 72 (3d Cir. 1990). In fact, “an indirect causal
relationship will suffice, so long as there is a fairly traceable connection.”
Aichele, 757 F.3d at 366 (citing Toll Bros., Inc. v. Twp. of Readinyton, 555 F.3d
131, 142 (3d Cir. 2009)).
Boone satisfies the causation requirement by alleging that T-Mobile’s
hard inquiry lowered his credit score and disseminated his personal
information. These allegations do not prove Boone’s claim, but standing
involves a lower standard than that applied at a motion to dismiss, summary
judgment, or trial. See Toll Bros., Inc., 555 F.3d at 142; Pub. Interest Research
Gip. of N.J., Inc., 913 F.2d at 72. Whether, for instance, Boone’s credit score
was actually lowered because of T-Mobile’s actions (as opposed to, say, the
actions of some other party’) is a merits question, not a standing one.
3.
Redressability Requirement
The third Article III standing requirement is a showing of redressability—
i.e., “a likelihood that the requested relief will redress the alleged injury.” Steel
Co. v. CitizensforaBetterEnu’t, 523 U.S. 83, 103 (1998). “[I]t must be ‘likely,’
as opposed to merely ‘speculative,’ that the injun’ will be ‘redressed by a
favorable decision.’” Lujan, 504 U.S. at 561 (citing Simon, 426 U.S. at 38, 43).
The Supreme Court addressed this requirement in Lujan, where
concerned citizens sued to prevent the government from funding projects
abroad that would threaten listed species. 504 U.S. at 562-63. The plaintiffs
did not prove redressability because they “produced nothing to indicate that
the projects they have named will either be suspended, or do less harm to
listed species,” if the government funding was terminated. Id. at 569-71.
In this case, Boone seeks statutory damages under the FCRA, punitive
damages, costs, and attorneys’ fees. (2AC
¶
43-45). I express no opinion as to
The plaintiffs specifically alleged that the government had violated a statute
requiring funding agencies to consult with the Secretary of Interior. However, their
intent was to stop the projects. Id. at 557 59.
6
18
what relief, if any, is appropriate. Nonetheless, damages have traditionally been
awarded for privacy torts, and the harm to a credit rating is self-evidently
economic in nature. If a FCRA violation is established, damages would
plausibly address that violation. Boone therefore satisfies the redressability
requirement.
Boone has established Article III standing. He has shown injury in fact,
causation, and redressabilitv. Boone has standing to assert his NJ FCRA
claims for the same reasons. The elements of the NJ FCRA are fundamentally
the same as the FCRA elements; the NJFCRA claims assert the same injury
and same method of causation; and they seek the same redress.
I will now turn to the question of whether Boone states a claim on which
relief can be granted.
B. Motion to Dismiss the Second Amended Complaint
T-Mobile moves to dismiss Boone’s second amended complaint for failure
to state a claim under the FCRA and the NJ FCRA.
1.
FCRA Claims
T-Mobile argues that Boone fails to state a claim under the FCRA.
Specifically, T-Mobile avers that (a) civil false pretenses claims cannot be
asserted against corporate entities; (b) Boone’s complaint should be dismissed
for failure to cite the specific subsection authorizing private rights of action
under the FCRA; (c) T-Mobile had permissible purposes for obtaining Boone’s
credit report; and (d) there are no allegations that T-Mobile made a calculated
attempt to mislead anyone in connection with obtaining credit reports. I will
also address (e) whether Boone fails to plead damages flowing from harm to his
credit report.
(a) Suits Against Corporate Entities
An individual can pursue a false-pretenses private right of action under
the FCRA, and such an action can be pursued against corporate entities like
19
T-Mobile. That much is apparent from a plain reading of the statute. The
relevant section of 15 U.S.C.
§ 168 ln(a) provides as follows:
Any 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 the sum of—
(1) (A) any actual damages sustained by the consumer as a
result of the failure or damages of not less than $100 and not more
than $1,000; or
(B) in the case of liability of a natural person for obtaining a
consumer report under false pretenses or knowingly without a
permissible purpose, actual damages sustained by the consumer
as a result of the failure or $1,000, whichever is greater.
I separately analyze section 1681n(a)(1)(A) and section 1681n(a)(l)(B).
Section 168 ln(a)(lflA) provides that “[a]ny person” who fails to comply
with the FCRA “is liable” for “any actual damages sustained by the consumer
as a result of the failure or damages of not less than $100 and not more than
$1,000.” 15 U.S.C.
§ 168ln(a)(1)(A). “Person” is defined as “any individual,
partnership, corporation, trust, estate, cooperative, association, government or
governmental subdivision or agency, or other entity.” 15 U.S.C.
§ 168 la(b). It
follows that a corporation can be held liable under section 1681n(a)(l)(A). See
Massachusetts Mut. Ljfe Ins. Co. v. Orenyo, No. Civ. 96-5234, 1998 WL
1297799, at *12 (D.N.J. July 24, 1998) (“[Ijf Mass Mutual willfully obtained the
credit report under false pretenses or for an improper purpose, it may be civilly
liable to Orenyo under the FCRA.”); Daley z’. Haddonfleld Lumber Inc., 943 F.
Supp. 464, 466-68 (D.N.J. 1996) (finding that a corporation could be held
liable for obtaining a credit report under false pretenses).7 T-Mobile, a
corporation, is therefore a “person” who can be held liable under the FCRA.
Mass Mutual and Daley both interpret an earlier version of the FCRA that did
not include an equivalent to section 168 ln(a)(l)(B). Regardless, as discussed in this
subsection, the addition of section 168 ln(a)(1)(B) merely creates a carve-out provision
for “natural person[s” who obtain credit reports under “false pretenses or knowingly
without a permissible purpose.” 15 U.S.C. § 168ln(a)(l)(B). It does not eliminate
section 168 ln(a)(l)(A)’s cause of action against corporate entities and does not limit a
7
20
Section 1681n(a)(1)(B) provides, alternatively, that if”a natural person” is
liable “for obtaining a consumer report under false pretenses or knowingly
without a permissible purpose,” he or she is liable for “actual damages
sustained by the consume?’ or $1,000, whichever is greater. 15 U.S.C.
§ 168ln(a)(1)(B).
Essentially, section 1681n(a)(l)(A) provides a general rule for FCRA
liability; section 168 ln(a)(1)(B) then provides an different rule for a subset of
possible defendants: “natural person[sj” who violate the FCRA “under false
pretenses or knowingly without a permissible purpose.” Section
168 ln(a)(1)(B)’s mention of “any natural person” cannot naturally be read to
limit 1681n(a)(1)(A). It would make 1681n(a)(1)(A)’s use of the term “[ajny
person,” if not nonsensical, then superfluous. Reading sections 1681n(a)(1)(A)
and 1681n(a)(1)(B) as providing distinct private rights of action gives effect to
both terms: “[a]ny person” and “natural person.” And it gives both (a) and (b) a
purpose. See Hibbs v. Winn, 542 U.S. 88, 101 (2004) (“A statute should be
construed so that effect is given to all its provisions, so that no part will be
inoperative or superfluous, void or insignificant....” (citation omitted)).
Read in this way, as an independent alternative, 168 ln(a)(1)(B) does not
eliminate “false pretenses” or “knowingly without a permissible purpose”
liability for corporations. Section 1681n(a)(1)(3) is specific to the liability of
“natural person[s].” It provides different rules for a private right of action when
a “natural person” violates the FCRA by “false pretenses” or “knowingly without
a permissible purpose.” It does not limit corporate liability under section
1681n(a)(l)(A).8
plaintiffs ability to seek “false pretenses” or “impermissible purpose” actions against
corporate entities.
T-Mobile cites a Southern District of Ohio case, Burghy, which held that a
FCRA private right of action for false pretenses exists only under section
1681n(a)(l)(B). See Burghy v. Dayton Racquet Club, Inc., 695 F. Supp. 2d 689, 706
(S.D. Ohio 2010). T-Mobile also cites a Western District of Oklahoma case that agrees
in dicta. See Frazier v. Vintage Stoc&, Inc., No. CIV-15-550-D, 2016 WL 6952316, at *5,
n.2 (W.D. Olda. Nov. 28, 2016). I respectfully disagree with this reading of the FCRA
8
21
To summarize: section 1681n(a)(l)(B) provides specific rules for private
rights of actions against a “natural person” who obtains a credit report under
“false pretenses” or “knowingly without a permissible purpose.” It does not
eliminate section 168 in(a)(1)(A)’s private right of action for FCRA violations,
which can be asserted against corporations.
(b) Citing the Correct Subsection
Second, Boone’s complaint will not be dismissed for failure to cite the
specific FCRA subsection authorizing private rights of action. Count I asserts a
§ 1681 et seq. That count refers to a false
pretenses claim under 15 U.S.C. § 1681b, 1681q. (2AC ¶ 41). Section 1681b
violation of the FCRA, 15 U.S.C.
establishes rules for obtaining credit reports and notifying consumers of
actions on their credit report. 15 U.S.C.
§ 1681b. Section 1681q provides that
“Any person who knowingly and willfully obtains information on a consumer
from a consumer reporting agency under false pretenses shall be fined under
Title 18, imprisoned for not more than 2 years, or both.” 15 U.S.C.
§ 1681q.
The citation is inaccurate, as T -Mobile says. It is actually Section
1681n(a)(1)(B) that imposes civil liability for noncompliance with sections
1681b and 1681q. See Cushman v. Trans Union Corp., 115 F.3d 220, 223 (3d
Cir. 1997) (“Sections 1681n and 1681o of Title 15 respectively provide private
rights of action for willful and negligent noncompliance with any duty imposed
by the FCRA and allow recovery for actual damages and attorneys’ fees and
costs, as well as punitive damages in the case of willful noncompliance.”).
The intent of Count I is clear enough, however. The title of that Count,
for example, cites the statute in its entirety: “Violation of the Fair Credit
Reporting Act 15 U.S.C.
U.S.C.
§ 1681
et seq.” (2AC). And the body of Count I citesi5
§ 168 lb and 1681q, the source of the standard for whose violate §
168 in provides a civil remedy. This does not warrant dismissal.
for the reasons stated above. I agree with my fellow District of New Jersey judges in
finding that the FCRA provides a private tight of action against corporations. See
Orenyo, 1998 WL 1297799, at *12; Daley, 943 F. Supp. at 466-68.
22
The Second Circuit seemingly agrees. In Northrop v. Hoffman of Simsbunj,
Inc., 134 F.3d 41, 45 (2d Cir. 1997), the defendant in an FCRA case sought
dismissal because the plaintiff alleged a violation of 1681q, but failed to cite
section 168 in. The Second Circuit found dismissal unwarranted:
[Plaintiffs] failure to cite the correct section of the FCRA does not
require us to affirm the dismissal of her complaint so long as she
has alleged facts sufficient to support a meritorious legal claim.
Under the liberal pleading principles established by Rule 8 of the
Federal Rules of Civil Procedure, in ruling on a 12(b)(6) motion
“[t]he failure in a complaint to cite a statute, or to cite the correct
one, in no way affects the merits of a claim. Factual allegations
alone are what matters.” Albert v. Carovano, 851 F.2d 561, 571 n.3
(2d Cir.1988) (in banc) (citing Newman v. Silver, 713 F.2d 14, 15
n.1 (2d Cir. 1983)).
Northrop, 134 F.3d at 45-46.
Courts do not generally dismiss complaints for failure to cite to a specific
subsection of a statute. A complaint must include only “a short and plain
statement of the claim showing that the pleader is entitled to relief,” such that
the statement “give[s] the defendant fair notice of what the plaintiffs claim is
and the grounds upon which it rests.” Swierkiewicz v. Sorema N.A., 534 U.S.
506, 512 (2002). “[Wje may not affirm the dismissal of the [plaintiffs’] complaint
because they have proceeded under the wrong theonr ‘so long as [they havej
alleged facts sufficient to support a meritorious legal claim.tm Hack v. President
& Fellows of Yale College, 237 F.3d 81, 89 (2d Cir. 2000) (citing Northrop, 134
F.3d at 45-46), abrogated on other grounds by Swierkiewicz v. Sorema N.A., 534
U.s. 506 (2002); see Gutierrez v. TDBank, No. 11-cv-5533, 2012 WL 272807,
at *11 (D.N,J. Jan. 27, 2012) (“Courts will not dismiss counts of a complaint for
failure to state a claim merely because the complaint mischaracterizes legal
theories or does not point to an appropriate statute or law to raise a claim for
relief.”); see also see Wynder v. MeMahon, 360 F.3d 73, 77 (2d Cir. 2004);
Bartholet
ii.
ReishauerA.G. (Zürich), 953 F.2d 1073, 1078 (7th Cir. 1992); White
v. WMCMortg. Corp., No. 1-1427, 2001 WL 1175121, at *1 (E.D. Pa. July 31,
23
2001) (permitting plaintiffs claim despite plaintiff citing to the wrong section of
the statute in her complaint); Mount v. LaSalle Bank Lake View, 926 F. Supp.
759, 763 (ND. 111. 1996).
T-Mobile had fair notice of Boone’s claim and the grounds upon which
Boone’s claim rests. It was not prejudiced; indeed T-Mobile itself cites the
relevant subsection, section 168 in, in the course of criticizing Boone for failure
to cite it. (Def. Br. 10-il). See Mycone Dental Supply Co., No. 1 1-cv-4380, 2012
WL 3599368, at *3 & n.3 (D.N.J. Aug. 17, 2012) (finding that defendants were
not prejudiced by plaintiffs failure to cite a statute’s relevant subsection where
they were able to respond to the claims effectively). There can be no claim of
insufficient notice.
Whether the facts alleged are suffice to state a claim will be discussed
herein. The motion to dismiss based on mere failure to cite a specific
subsection, however, will be denied.
(c) Permissible Purpose
The complaint adequately alleges that T-Mobile did not have a
permissible purpose for obtaining Boone’s credit report.
A defendant is liable for false pretenses under the FCRA if it (i) does not
have a permissible purpose under section 168 lb and (ii) made “a calculated
attempt to mislead another in order to obtain information.” Daley u.
Haddonfield Lumber, Inc., 943 F. Supp. 464, 467 (D.N.J. 1996). A defendant,
however, does not have to state the permissible purpose to the defendant. As
long as the defendant had some permissible purpose, it does not have liability:
[A] misrepresentation is non-actionable if the FCRA would permit
the requesting party to receive the credit report for an albeit
unstated but permissible purpose. This result derives from the fact
that the requesting party’s legal right to the information renders
immaterial any misrepresentation Ishel may have committed in
obtaining [the credit information,] as the consumer reporting
agency was authorized to disclose the report regardless.
24
fri. at 467-68 (internal quotation marks and citations omitted); see Galligan u.
Commonwealth Modg. Assurance Co., No. 93-3 129, 1994 WL 263351, at *4 3
(E.D. Pa. June 14, 1994); Allen v. Kirkland & Ellis, No. 91-C-8271, 1992 WL
206285, at *2 n.3 (N.D. Ill. Aug. 17, 1992).
T-Mobile, citing section 1681b, alleges two permissible purposes for
obtaining Boone’s credit information.
The first alleged permissible purpose is that T-Mobile obtained the report
“in connection with a business transaction that [was] initiated by the
consumer” and for a “legitimate business need.” 15 U.S.C.
§ 168 lb(a)(3)(F)(i).
The complaint does not establish, however, that Boone initiated a business
transaction. Rather, Boone alleges that he made a “general inquiry about the
availability of cell phone plans and rates,” made it clear that he did not want
his consumer report to be accessed if a hard credit
inquiry was
required, “did
not initiate a transaction,” and “never signed any agreement and never agreed
to any services from [T-Mobilej.” (2AC
9 11-12, 16-17). Those actions do not
amount to a “business transaction
initiated by the consumer.” The Federal
...
Trade Commission (“FtC”) agrees. See Vt C Advisory Opinion on the Fair credit
Reporting Act, 1998 WL 34323748, at *1 (Feb. 11, 1998) [hereinafter “FTC
Letter”].
“LA] request for general information about products and prices offered
does not involve a business transaction initiated by the consumer.” Id. For
instance, a consumer who asks a car dealer to “test drive” a car, or asks
questions about pricing and financing, “is not necessarily indicating an intent
to purchase or lease a vehicle from that particular dealer.” Id. Conducting a
hard credit inquiry is therefore inappropriate at this stage. Id.
Moreover, T-Mobile did not have a “legitimate business need” to obtain
Boone’s credit report. He asked only about prices and financing. According to
the FTC:
Only in those circumstances where it is clear both to the consumer
and to the dealer that the consumer is actually initiating the
purchase or lease of a specific vehicle and, in addition, the dealer
25
has a legitimate business need for consumer report information
may the dealer obtain a report without written permission.
Id. at *2. Such circumstances were not present according to Boone’s
allegations. T-Mobile had no legitimate business need, under the facts alleged,
to access Boone’s credit report. Therefore, T-Mobile’s first alleged permissible
purpose will not warrant dismissal of the complaint.
Neither is T-Mobile’s second alleged permissible purpose established by
the allegations of the complaint. T-Mobile alleges that it “intend[edj to use the
information in connection with a credit transaction involving the customer on
whom the information is to be furnished and involving the extension of credit
to, or review or collection of an account of, the consumer.” 15 U.S.C.
§ 168 lb(a)(3)(A); see also Huertas v. Gitigroup, Inc., No. 13-cv-2050, 2014 WL
10748338, at *3 (D.N.J. Aug. 21, 2014) (“An entity that intends to use a credit
report to inform a potential extension of credit has a permissible purpose to
access a consumer’s report. This is especially true when the credit transaction
was initiated by the consumer himself.” (internal citation omitted)).
Section 168 lb(a)(3)(A) “requires that the entity must be engaged in a
credit transaction in which the consumer is participating.” Stergiopoulos &
Invelisse Castro u. First Midwest Bancorp, Inc., 427 F,3d 1043, 1047 (7th Cir.
2005). “An entity may rely on [section 168 lb(a)(3)(A)j only if the consumer
initiates the transaction. A third party cannot troll for reports, nor can it
request a report on a whim. Rather, there must be a direct link between a
consumer’s search for credit and the bank’s credit report request.” Id. T-Mobile
did not have a credit account with Boone and was not close to extending credit
to Boone. According to the complaint, Boone was essentially window shopping.
Furthermore, Boone’s contact with T-Mobile did not involve the extension
of credit under the FCRA. The term “credit” is defined in the FCRA as it is
defined in the Equal Credit Opportunity Act, 15 U.S.C.
See 15 U.S.C.
§ 1691 et seq. (“ECOA”).
§ 1681a(r)(5) (“The terms ‘credit’ and ‘creditor’ have the same
meanings as in section 1691a of this title.”). Thus, “credit” means “the right
26
granted by a creditor to a debtor to defer payment of debt or to incur debts and
defer its payment or to purchase property or services and defer payment
therefor.” 15 U.S.C.
169 la(d). ‘P-Mobile was not extending Boone the right to
§
defer payment on a transaction or debt. Boone had not initiated a transaction
or sought to create a debt; he merely asked for price quotes.
The Third Circuit has found a “permissible purpose” under section
168 lb(a)(3)(A) where a consumer owes a debt or applies for credit. In Huedas
tO’.
Citigroup, Inc., the court held that “[section] 168 lb(a)(3)(A) authorizes access to
a consumer’s credit report ‘when the consumer applies for credit[.]” 639 F.
App’x 798, 801 (3d Cir. 2016). In Huertas v. Galaxy Asset Management, the
Court that a creditor had a permissible purpose under section 168 lb(a)(3)(A)
when a consumer sought credit, received credit, and accumulated debt. 641
F.3d 28, 34 (3d Cir. 2011). The complaint alleges that matters had not gone
nearly that far. Boone did not apply for credit and did not accumulate debt
with T-Mobile.
Interpreting the allegations of the complaint in the light most favorable to
Boone, I must find that T-Mobile did not have a permissible purpose under
section 1681b(a)(3)(A).
(d) Calculated Attempt to Mislead
Boone has sufficiently pled that T-Mobile made “a calculated attempt to
mislead another in order to obtain the [credit report].” That is a requirement for
false pretenses liability. See Daley v. Haddonfield Lumber Inc., 943 F. Supp.
464, 467 (D.N.J. 1996); see also 15 U.S.C.
§
1681q.
According to the second amended complaint, Boone “made clear” that he
did not want T-Mobile to conduct a hard inquiry; the T-Mobile representative
assured him that T-Mobile would not conduct a hard inquiry; and T-Mobile
In Huertas u. Citigroup, Inc., the consumer argued that section 168 lb(a)(3)(A)
applied only when the consumer initiated the transaction (and did not apply when the
creditor sent the consumer solicitations). 639 F. App’x at 800-0 1. The Third Circuit
rejected this argument. Id.
27
went ahead and obtained Boone’s credit report through a hard inquiry anyway.
(2AC
¶
12, 15, 17). These allegations is plausibly plead a “calculated attempt
to mislead.”
(e) Damages
Harm to a credit report may or may not cause actual damages. One case
in this district held that a plaintiff who alleged a reduction in his credit score,
without any other harms, “failed to raise the possibility of relief above the
speculative level.” Slack v. Suburban Propane Partners, L.P., No. 10-cv-2548,
2010 WL 3810870, at *8 (D.N.J. Sept. 21, 2010) (citing Bell Atl. Corp. v.
Twombly, 550 U.S. 554, 555 (2007)). Other courts, however, have disagreed.
The U.S. District Court for the Eastern District of Pennsylvania denied
summary judgment despite defendant’s argument that “damages in the form of
lost credit opportunities, harm to credit reputation and credit score, and
emotional distress” were not cognizable under the FCRA. Hillis v. Trans Union,
No. 2:13-cv-2203, 2014 WL 2581094, at *35 (E.D. Pa. June 10, 2014). And the
Third Circuit vacated summary judgment for the defendant in Seamans v.
Temple University, where plaintiff alleged damages under the FCRA in the form
of “lost credit opportunities, harm to credit reputation and credit score, and
emotional distress.” 744 F.3d 853, 860, 869 (3d Cir. 2014).
Accordingly, I cannot find at this, the pleading stage, that Boone has not
alleged actual damages under the FCRA as a matter of law. The motion to
dismiss on these grounds is denied.
2.
NJ FCRA Claims
As to Boone’s NJ FCRA claims T-Mobile makes arguments similar to
those it made in opposition to the federal PCRA claims. Specifically, T-Mobile
contends that (a) the NJ FCRA section Boone cites does not provide a right of
action against a corporate entity like T-Mobile; (b) T-Mobile had permissible
purposes for obtaining Boone’s credit report; and (c) there are no allegations
that T-Mobile attempted to mislead Boone or anyone else in connection with
28
obtaining a credit report. However, I find that Boone has stated a claim under
the NJ FCRA. T-Mobile’s motion to dismiss the NJ FCRA claims is denied.
(a) First, a private right of action exists against corporate entities under
the NJ FCRA. NJ FCRA section 56:11-38 tracks the language of FCRA section
1681(a)(1)(A). N.J. Stat. Ann.
§ 56:11-38. Similar to sections 1681n(a)(1)(A) and
1681n(a)(1)(B), section 56:1 1-38(a)(1)(a) provides for liability against “[a]ny
person” who violates the credit reporting laws; section 56:1 1-38(a)(1)(b)
provides a specific rule for liability regarding “natural person[sj” who obtain a
credit report “under false pretenses or knowingly without a permissible
purpose.” Id. For the same reasons stated in subsection 111.3.1(a), Boone can
assert a private right of action under the NJ FCRA against T-Mobile.
(b) Second, T-Mobile did not have permissible purposes to obtain Boone’s
credit report through a hard inquiry. T-Mobile claims the same permissible
purposes under the NJ FCRA—that T-Mobile intended to use the information in
connection with a credit transaction involving Boone; and that T-Mobile
obtained Boone’s credit report in connection with a business transaction
initiated by Boone. (Def. Br. 14). The NJ FCRA lists the same permissible
purposes I discussed previously regarding the FCRA. See N.J. Stat. Ann.
§ 56:11-31. For the reasons addressed in subsection 111.3.1(c), neither of these
are permissible purposes under the NJ FCRA.
(c) Third, as discussed in subsection l1I.B.1(d), Boone has alleged that
T-Mobile attempted to mislead consumers in connection with obtaining a credit
report. Boone allegedly “made clear” that he did not want T-Mobile to conduct a
hard inquiry, T-Mobile’s representative “agreed” that it would not conduct a
hard inquiry, and T-Mobile obtained Boone’s credit report through a hard
inquiry nonetheless. (2AC
¶J 12, 15, 17). These facts suggest that the T-Mobile
representative misled Boone in connection with obtaining a credit report.
Boone has stated a claim under the NJ FCRA. T-Mobile’s motion to
dismiss Boone’s NJ FCRA claims is denied.
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C. Motion to File the Third Amended Complaint
Federal Rule of Civil Procedure 15(a) provides that a “court should freely
give leave [to amendj when justice so requires.” See In re Burlington Coat
Factory Sec. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997). The grant or denial of
an opportunity to amend is within the discretion of the District Court; denial of
leave to amend, however, requires a stated justification. Fonnan v. Davis, 371
U.s. 178, 182 (1962). A district court may deny leave to amend a complaint
where it is apparent from the record that (1) the amendment would prejudice
the other party, (2) the amendment would be futile, or (3) the moving party has
demonstrated undue delay, bad faith or dilatory motives. Luciani v. City of
Philadelphia, 643 F. App’x 109, 111 (3d Cir. 2016) (citing United States ex rd.
Schumann v. AstrazenecaPharm. L.P., 769 F.3d 837, 849 (3d Cir. 2014)).
However, “delay alone is an insufficient ground to deny leave to amend.” Id.
(citing Cureton v. Nat’l Collegiate Athletic Ass’n, 252 F.3d 267, 273 (3d Cir.
2001)).
Boone’s proposed third amended complaint makes one change: it adds
two proposed classes. The second amended complaint asserts a “FCRA False
Pretense Class” and a “NJ FCRA False Pretense” class. (2AC
¶
27-28). The
third amended complaint adds a “FCRA Impermissible Purpose” class and a
“NJ FCRA Impermissible Purpose” class. (3AC
¶
27-30). Otherwise, the
complaints allege the same facts and assert the same legal theories.
I will grant Boone permission to file the third amended complaint.
(1) “[Pjrejudice to the non-moving party is the touchstone for the denial of an
amendment.” Lorenzv. CSX Corp., 1 F.3d 1406, 1413-14 (3d Cir. 1993).
Boone’s proposed amendments do not threaten to prejudice T-Mobile. These
amendments would not require reopening of discovery to find additional facts.
See Glassman v. Computervision Corp., 90 F.3d 617, 622 n.9 (1st Cir. 1996). T
Mobile would not need additional time to change its litigation strategy. See id.
T-Mobile has already raised permissible-purpose arguments in its motion to
dismiss. (Def. Br. 2, 11-14). These are refinements, not surprise legal
30
arguments that would fundamentally affect defendant’s strategy or response.
See Luciani, 643 F. App’x at 111-12. Rather, Boone’s amendments align the
class allegations with legal arguments that have already been raised.
(2) Second, the amendment would not be futile. Boone aligns the
putative classes with the legal theories under which he seeks relief. The third
amended complaint will not delay a determination of the motion to dismiss.
Boone has standing, has a private right of action, and states a claim upon
which relief can be granted. T-Mobile’s futility arguments are unavailing.
(3) Third, while Boone’s repeated amendments have caused some delays,
it does not appear that the third amended complaint will cause any further
serious postponements. The third amended complaint, because it leaves the
factual allegations and causes of actions intact, is not likely to restart the
motion to dismiss process, engender further delays, or waste more judicial
resources. In fact, T-Mobile concedes that “[Boone’s] putative class definitions
have no relevance to [the motion to dismiss] inquinr.” (Def. Reply 12). “If and
only if [Boone] states a plausible claim [for] relief, then the court and the
parties can turn their attention to the issue of class certification.” (Def. Reply
12). I agree.’° The structure of the putative classes will need to be addressed as
this case moves fonvard. Regardless, as stated before, “delay alone is an
insufficient ground to deny leave to amend.” Luciani, 643 F. App’x at 111 (citing
ureton, 252 F.3d at 273).
T-Mobile expresses an understandable concern that its motion to dismiss the
second amended complaint could be terminated, leaving it in the position of refiling its
motion with respect to the third amended complaint. That concern is obviated by
sections III.A—B. I have addressed the merits of T-Mobile’s motion.
tO
31
IV.
CONCLUSION
For the foregoing reasons, I find that Boone has established Article III
standing and has adequately stated claims under the FCRA and the NJ FCRA.
The motion to dismiss is therefore denied. I will grant Boone leave to file the
third amended complaint.
Dated: January 26, 2018
KEVIN MCNULTY
United States District Judge
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