Thymes v. Gillman Companies et al

Filing 14

MEMORANDUM OPINION AND ORDER dismissing with prejudice Claims (1) and (3) of 1 Complaint. (Amended Complaint due by 3/29/2018.) (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

United States District Court
Southern District of Texas

ENTERED
March 09, 2018

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
DERRICK W. THYMES

David J. Bradley, Clerk

§
§
§
§

Plaintiff,
v.

CIVIL ACTION NO. H-17-2834

§
§
§
§
§
§

GILLMAN COMPANIES AND GILLMAN
AUTOMOTIVE GROUP,
Defendants.

MEMORANDUM OPINION AND ORDER

Pending before the court is Defendant's Motion to Dismiss
Under Rules of Civil Procedure 12(b)
Dismiss")

and 9(b)

("Motion to

(Docket Entry No. 7) and the Plaintiff's Opposition to

Defendant's Motion to Dismiss
Entry

(6)

No.

10).

Plaintiff

("Plaintiff's Opposition")

brings

five

causes

of

(Docket

action:

( 1)

violations of the Federal Trade Commission ("FTC") Safeguard Rule
and

the

Gramm-Leach-Bliley

Act

( "GLBA") ;

( 2)

negligence;

( 3)

disclosure of private consumer financial information in violation
of

the GLBA;

implied

(4)

Contract. 1

identity theft and fraud;
Defendant

moves

to

and

dismiss

(5)

all

breach of
causes

action. 2

1

2

See Complaint, Docket Entry No. 1, pp. 4-10.

See Defendant's Motion to Dismiss Under Rules of Civil
Procedure 12(b) (6) and 9(b) ("Motion to Dismiss"), Docket Entry
No. 7.

of

A.

Causes of Action (1) and (3)

Having considered the arguments and authorities cited by the
parties the court concludes that the Plaintiff has no cause of
action under the GLBA,

15 U.S.C.

Safeguard Rule, 16 C.F.R.

§

§

6801 et ggg or under the FTC

314.1 et seg.

Neither the GLBA nor the

FTC Safeguards Rule authorizes a private cause of action.

Section

6805(a) of the GLBA provides an express enforcement mechanism that
states:
this subchapter and the regulations prescribed thereunder
shall be enforced by the Bureau of Consumer Financial
Protection, the Federal functional regulators, the State
insurance authorities, and the Federal Trade Commission
with respect to financial institutions and other persons
subject to their jurisdiction under applicable law . . .
15

u.s.c.

6805 (a).

§

Section 314.1 of

the

FTC Safeguard Rule

states that it "implements Sections [6801] and [6805(b) (2)] of the
Gramm-Leach-Bliley Act."

16 C.F.R.

§

314.1(a).

Courts in the

Northern District of Texas have held that the "GLBA does not create
a private right of action."
Civil Action No.
Nov. 5, 2014)

i

Hall v. Phenix Investigations, Inc.,

3:14-0665-D,

2014 WL 5697856,

at *9

(N.D.

Tex.

Borinski v. Williamson, Civil Action No. 3:02-1014,

2004 WL 433746, at *3 (N.D. Tex. March 1, 2004).

The court in Hall

explained that "[c]onsidering that Congress expressly provided for
administrative and criminal enforcement of GLBA,
improbable

that

Congress

intended private action.'"

absentmindedly
Hall,

forgot

'it is highly
to

mention

2014 WL 5697856 at *9

an

(quoting

Transamerica Mortgage Advisors, Inc. v. Lewis, 100 S. Ct. 242, 247
2

(1979)) .

Based on the plain readings of the statute and the regulation,
the court agrees with the holdings of Hall and Borinski that the
GLBA does not provide a private right of action.

Because the FTC

Safeguards Rule implements the enforcement provision of the GLBA,
and because the GLBA does not provide a private cause of action,
the court concludes that the FTC Safeguards Rule does not provide
a private cause of action.

Therefore Plaintiff's claims under the

GLBA and the FTC Safeguard Rule, causes of action number (1) and
number (3), will be dismissed.
B.

Cause of Action (2)

To state a

claim for negligence in Texas a plaintiff must

plead facts showing (1) the existence of a legal duty;

(2) a breach

of that duty; and (3) damages proximately caused by that breach.
Boudreaux v. Swift Transportation Co., Inc., 402 F.3d 536, 540-41
(5th Cir. 2005).

Accepting all of Plaintiff's factual allegations

as true the court concludes that Plaintiff has pled enough facts to
plausibly state a claim for relief for negligence.

c.

Cause of Action (4}

Defendant argues that because Plaintiff's cause of action for
identity theft and fraud

"fails

statutory claim by its elements,

to identify any common law or
[and]

does not even allege any

wrongful conduct against Gillman Subaru or the named Defendants

3

it should be dismissed. " 3
Complaint

states

that

The court agrees.

"fraudsters

have

Plaintiff's

committed a

crimes with his personal information" 4 and that
heretofore misused his personal information." 5

variety of

"criminals have

Plaintiff fails to

allege that Defendant committed any wrongful act under common law
or

Moreover,

statute.

Plaintiff

failed

requirements for a common law fraud claim.
Procedure 9 (b)
claims.

the

pleading

Federal Rule of Civil

imposes a heightened pleading standard on fraud

See United States ex rel.

Textron Inc.,

to meet

417 F.3d 450,

453

Williams v.

(5th Cir.

Bell Helicopter
A party must

2005)

state with particularity circumstances alleged to constitute fraud.
See Campbell v. Bravo Credit, Civil Action No. H-14-2794, 2015 WL
502234,

at

*5-*6

(S.D.

Tex.

Feb.

5,

2015).

"This

Circuit's

precedent interprets Rule 9(b) strictly, requiring the plaintiff to
specify the statements contended to be fraudulent,

identify the

speaker, state when and where the statements were made, and explain
why the statements were fraudulent."

Flaherty

&

Crumrine Preferred

Income Fund, Inc. v. TXU Corp., 565 F.3d 200, 207 (5th Cir. 2009)
(internal

quotation

marks

and

citations

Plaintiff has not pled the "who,
alleged fraud,

Plaintiff fails

what,

omitted) .

when,

and where" of the

to state a claim for common law

3

Motion to Dismiss, Docket Entry No. 7, p. 5.

4

Complaint, Docket Entry No. 1, p. 7

5

Id. p. 7

~

Because

32.
4

~

31.

fraud.
D.

Cause of Action (5)

Plaintiff's Complaint alleges:
that by accepting receipt of Plaintiff's personal data,
Defendants obligated themselves to securely protect and
safeguard that information from disclosure to cybercriminals, rogue employees and the like; Defendants
herein failed in their obligation to the Plaintiff. 6
Defendant argues that Plaintiff's cause of action for breach of
implied contract should be dismissed because Plaintiff has not pled
any facts that support the elements of a breach of implied contract
claim. 7

In his Opposition Defendant's Motion to Dismiss, Plaintiff

argues that "the breach of implied contract references the breach
of Defendants' duty as imposed by both the [Fair Credit Reporting
Act] and the [Texas Deceptive Trade Practices-Consumer Protection
Act] to safeguard the personal data of consumers that they have in
custody and control." 8

Plaintiff misunderstands the elements of a

claim for breach of implied contract.
"To

state

a

claim

for

breach

of

an

implied

contract,

a

plaintiff must plead the existence of a valid implied contract,
performance or tendered performance by the plaintiff, breach of the
implied contract by the defendant, and damages resulting from the

~

6

Id. p. 8

7

Motion to Dismiss, Docket Entry No. 7, p. 6.

37.

8

Plaintiff's Opposition to Defendant's Motion to Dismiss,
Docket Entry No. 10, p. 6.
5

breach."
Corp.,

Electrostim Medical Services, Inc. v. Health Care Service

614 Fed.

App'x 731,

744

(5th Cir.

2015).

To plead the

existence of a valid implied contract, a plaintiff must establish
"(1) an offer,

(2) an acceptance,

(3) a meeting of the minds,

(4)

each party's consent to the terms, and (5) execution and delivery
of the contract with the intent that it be mutual and binding."
Id.

Because Plaintiff has not pled facts that would plausibly

support the elements of a breach of implied contract,

Plaintiff

fails to state a claim upon which relief may be granted.
E.

Conclusion and Order

Because

the GLBA and the

Plaintiff

a

DISMISSED

WITH

sufficient
identity

private

PREJUDICE.

facts

theft

right

to

and

of

FTC Safeguard Rule
action,

Because

plausibly
fraud,

or

claims

Plaintiff

support
breach

a
of

(1)
does

cause
an

do not
and

give

(3)

are

not provide

of

implied

action

for

contract,

Plaintiff is ordered to amend his complaint within 20 days setting
forth the facts to support these claims.
SIGNED at Houston, Texas, on this the 9th day of March,

2018.

UNITED STATES DISTRICT JUDGE

6