Opinion
No. CV-06-1207-PHX-SMM.
November 2, 2006
ORDER
Pending before the Court is Defendants' Motion to Dismiss and for Judgment on the Pleadings, filed on May 22, 2006 [Doc. No. 8]. Plaintiff responded on May 31, 2006 [Doc. Nos. 14 15], and Defendant filed a Reply on June 5, 2006 [Doc. No. 16]. After considering the parties' briefs, the Court now issues the following ruling.
BACKGROUND
On May 1, 2006, Plaintiff Thomas Alan Benjamin filed suit in this Court. In his Complaint, Plaintiff alleged that Defendant Tim D. Coker unlawfully obtained copies of his Experian consumer report on three separate occasions: July 9, 2004; July 15, 2003; and, June 19, 2003. As a result of these alleged unauthorized acquisitions of his consumer report, Plaintiff brought a variety of federal and state claims against that Defendant Coker, including: (1) willful violation of the Fair Credit Reporting Act ("FCRA"); (2) negligent violation of the FCRA; (3) violation of Arizona's consumer statutes; (4) civil conspiracy; (5) invasion of privacy; and (6) intentional infliction of mental distress. In addition, Plaintiff has brought claims for willful violation of the FCRA and civil conspiracy against Defendant Sandra Hope.
According to Plaintiff, his consumer reports were obtained as part of a conspiracy between Defendant Coker and Defendant Hope. (Dkt. 1, ¶¶ 19, 30, 44) Plaintiff alleges that Defendant Coker, an attorney who regularly reports trade line information to credit reporting agencies and regularly obtains consumer reports of individuals through his subscriber rights with credit reporting agencies, provides consumer reports to Defendant Hope, a private investigator licensed by the State of Arizona. (Dkt. 1, ¶¶ 6,10,11) Plaintiff claims that the Defendant Coker did not identify, at the times he obtained Plaintiff's Experian consumer reports, the name of the "end user" as required by the FCRA and that he obtained the reports without a "permissible purpose" as that term is defined by the FCRA. (Dkt. 1, ¶¶ 20, 26, 31, 37, 39, 45, 51) Plaintiff further alleges that he only became aware that Defendant Coker acquired his consumer reports after he received a copy of his Experian report on May 18, 2005 and that he has never given Defendant Coker permission to obtain his consumer report. (Dkt. 1, ¶¶ 17,18)
As stated above, the Motion is now fully briefed and ripe for disposition by this Court.
STANDARD OF REVIEW
Defendant moves for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). Under Rule 12(c), any party may move for judgment on the pleadings "[a]fter the pleadings are closed but within such time as to not delay the trial." Where Rule 12(c) is used to raise the defense of failure to state a claim, "the motion for judgment on the pleadings faces the same test as a motion under Rule 12(b)(6)." McGlinchy v. Shell Chemical Co., 845 F.2d 802, 810 (9th Cir. 1988). Dismissal of a complaint is proper if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). When determining a motion for judgment on the pleadings, the court should assume the allegations in the complaint to be true and construe them in the light most favorable to the plaintiff. McGlinchy, 845 F.2d at 810. However, "conclusory allegations without more are insufficient to defeat a motion [for judgment on the pleadings]." Id. A complaint may be dismissed as a matter of law if there is a lack of cognizable legal theory or if there are insufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F. 2d 696, 699 (9th Cir. 1990). The court must determine whether or not it appears to a certainty under existing law that no relief can be granted under any set of facts that might be proved in support of a plaintiff's claims. De La Crux v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978), cert. denied, 441 U.S. 965 (1979).
DISCUSSION
A. Plaintiff's Federal Law Claims and the Statute of Limitations
Defendants moved to dismiss any federal claims arising out of conduct alleged in ¶¶ 28 thru 55 of Plaintiff's Complaint, arguing that these claims are time-barred under the FCRA as existed prior to the 2003 amendment. (Dkt No. 8 at 3). Plaintiff's argue that the claims are timely, citing the current version of the FCRA. (Dkt. No. 15, at 4).
Responding to the Supreme Court's decision in TRW Inc. v. Andrews, 534 U.S. 19, 122 S.Ct. 441 (2001), which refused to apply an implied general discovery exception to the FCRA because the statute already contained a limited discovery exception, Congress amended the FCRA in 2003. The 2003 amendment significantly altered the statute of limitations contained in the prior version of the FCRA by adding a general discovery rule that allows a plaintiff to bring an action for the earlier of: (1) two years after the date of discovery of a violation of the FCRA, or (2) five years after the date on which the violation occurs. 15 U.S.C. § 1681p. The earlier version of the FCRA provided only a limited discovery rule for cases involving a defendant's willful misrepresentation of material information.
Here, Plaintiff's allegations stem from three different acquisitions of his credit report, two of which occurred prior to the 2003 amendment. Without denying Defendant's argument that the claims involving actions that occurred before the effective date of the amendment to the FCRA are governed by the earlier version of the Act, the Court finds that dismissal of the federal claims arising out of the conduct alleged in ¶¶ 28 thru 55 of Plaintiff's Complaint would be improper. Plaintiff's Complaint alleges that he did not discover the events giving rise to this claim until May 18, 2005. (Dkt 1 at 4). Assuming the allegations in the Complaint are true and construing them in a light most favorable to Plaintiff, the Court finds the claims arising under the FCRA are timely because Plaintiff's Complaint was filed less than two years from the date he discovered Defendants' alleged violations and less than five years from the initial alleged violation. However, this finding does not preclude Defendant from raising the statute of limitations defense in a later motion, where additional facts may be able to establish that the unamended version of the FCRA controls Plaintiff's claims.
B. Liability Under the `End User' Theory
Defendant argues that "to the extent Plaintiff's [C]omplaint relies on the Defendants' alleged failure to disclose the `end user' as the predicate `misrepresentation' for liability under the FCRA, the FCRA allegations in the Complaint must be dismissed." (Dkt No. 8 at 4). Defendants' claim that they are neither resellers of consumer reports required to disclose end users (Dkt. 8 at 4), nor "consumer reporting agencies" obligated to disclose end users (Dkt. 16 at 2-3). Plaintiff counters by claiming that Defendant Hope and Defendant Coker both meet the definition of consumer reporting agencies based on their actions. (Dkt. 15, section D).
Based on the causes of action raised in Plaintiff's Complaint, Defendants' alleged failure to disclose the `end user' is only relevant to the second count of Plaintiff's causes of action against Defendant Coker: Negligent Violation of Fair Credit Reporting Act. (Dkt 1 at ¶¶ 61-64). Here, Plaintiff claims that Defendant Coker obtained Plaintiff's Experian consumer report in violation of 15 U.S.C. § 1681o, which imposes civil liability upon "[a]ny person who is negligent in failing to comply with any requirement imposed under [ 15 U.S.C. § 1681 et seq.] with respect to any consumer." Specifically, Plaintiff alleges that Defendant Coker negligently failed to "establish and follow reasonable procedures to assure the maximum possible accuracy of the information on his consumer report, including the name of the end user." (Dkt 1 at ¶ 62).
The required compliance procedures under the FCRA are found in 15 U.S.C. § 1681e. Plaintiff's Complaint does not specify which requirement of the FCRA Defendants negligently failed to follow. Under 15 U.S.C. § 1681e(e)(1), "a person may not procure a consumer report for purposes of reselling the report unless the person discloses to the consumer reporting agency that originally furnishes the report the identity of the end-user of the report (or information) and each permissible purpose . . . for which the report is furnished to the end-user." Defendants assumed Plaintiff was referring to this provision of the FCRA and argued that they were not liable because they did not procure Plaintiff's consumer report for purposes of reselling it. Plaintiff's response does not address the issue of whether or not Defendants procured the report for purposes of reselling it; rather, Plaintiff simply alleges that Defendants are liable because they meet the definition of "consumer reporting agencies." Based on Plaintiff's Complaint as well as his Opposition to Defendants' Motion to Dismiss, it appears that Plaintiff may be alleging a violation of 15 U.S.C. § 1681e(b) because this section applies to "consumer reporting agencies" and incorporates the exact language provided in Plaintiff's Complaint. However, this section does not refer to "end-users." Therefore, the Court will dismiss Plaintiff's claim regarding the failure to disclose the end users of the consumer reports as required by the FCRA.
15 U.S.C. § 1681e(b) provides: "Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates." Count Two of Plaintiff's Complaint alleges that Defendant Coker negligently failed to "establish and follow reasonable procedures to assure the maximum possible accuracy of the information on his consumer report, including the name of the end user." (Dkt 1 at ¶ 62).
A complaint may be dismissed as a matter of law if there is a lack of cognizable legal theory or if there are insufficient facts alleged under a cognizable legal theory. Balistreri, 901 F. 2d 696, 699. Here, the Court finds that Plaintiff has not raised a cognizable legal theory or provided enough information to support a cognizable legal theory. Plaintiff states that Defendant Coker is liable for negligent noncompliance under 15 U.S.C. § 1861o, but does not state which requirement imposed by the FCRA he negligently violated. If, as Defendant assumed, Plaintiff's negligence theory is based on 15 U.S.C. § 1681e(e)(1), then Plaintiff was required to allege that Defendant Coker procured the consumer report for purposes of reselling the report. If Plaintiff's negligence theory was based on Defendant Coker's failure to comply with 15 U.S.C. § 1681e(b), then it is unclear why Plaintiff's Complaint explicitly refers to Defendant Coker's failure to verify the name of the end user. (Dkt. 1, ¶ 62) Because the Court will not engage in speculation to resolve the ambiguities resulting from Plaintiff's imprecise pleadings, "Count Two" of Plaintiff's causes of action against Defendant Coker is dismissed.
C. Plaintiff's State Law Claims
Defendants attack Plaintiff's state law claims on a variety of grounds, arguing: (1) Plaintiff's state law claim for invasion of his right to privacy us preempted by 15 U.S.C. § 1681h(e); (2) neither defendant is a "consumer reporting agency" and therefore cannot be held liable under A.R.S. § 44-1692; (3) there is no private cause of action under A.R.S. § 44-1696; and, (4) there is no cause of action for invasion of right to privacy in Arizona. The Court will address each of Defendants' arguments in turn.
1. Plaintiff's Claim for Invasion of Right to Privacy is Not Preempted
The Court will not dismiss Plaintiff's claim for invasion of his right to privacy because this claim is not preempted by 15 U.S.C. § 1681h(e). Pursuant to 15 U.S.C. § 1681h(e), consumers may not bring state common law defamation claims "except as to false information furnished with malice or willful intent to injure" such consumers. Because Plaintiff's Complaint alleges that Defendants "willfully and knowingly" violated the FCRA, the Court finds that his claim for invasion of privacy is not preempted. (Dkt 1, at ¶¶ 19, 30, 44).
2. Defendants' Status as a Consumer Reporting Agency under A.R.S. § 44-1691
Defendants' argue that Plaintiff's claim for relief under A.R.S. § 44-1692 should be dismissed because that statute only applies to consumer reporting agencies and that neither Defendant Coker nor Defendant Hope meet the definition of "consumer reporting agency.". (Dkt 8 at 6). Plaintiff argues that the claims are appropriate because "defendants' actions accrue to them the status of a consumer reporting agency." (Dkt. 15 at section E(1)).
Assuming Plaintiff's allegations are true and construing them in a light most favorable +to him, the Court finds that Plaintiff has alleged facts sufficient to support his claim that Defendant Coker, the only defendant charged with violating A.R.S. § 44-1692, meets the definition of a "consumer reporting agency." Under A.R.S. § 44-1691(2), a "`consumer reporting agency' means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information on consumers for the purpose of furnishing consumer reports to third parties." Plaintiff's Complaint alleges that Defendant Coker "regularly reports trade line information to credit reporting agencies" and that Defendant Hope "obtains consumer report of individuals from Defendant Coker." (Dkt. 1 at ¶¶ 6, 11). Thus, Plaintiff has alleged facts sufficient to support his claim against Defendant Coker.
3. Criminal Liability Under A.R.S. § 44-1696
Defendants' argue that since A.R.S. § 44-1696 imposes criminal liability, there is no private right of action under the statute and Plaintiff's claim should be dismissed. (Dkt. 8 at 6). Plaintiff contends that general rules of interpretation as well as federal and state case law shows that a private cause of action exists. (Dkt. 15 at Section E).
Under Arizona law, whether or not an implied private cause of action exists is determined by examining the context of the statutes, the language used, the subject matter, the effects and consequences, and the spirit and purpose of the law. Transmerica Financial Corp. v. Superior Court in and For Maricopa County, 158 Ariz. 115, 116, 761 P.2d 1019 (1988). The Court finds that there is no implied private cause of action under A.R.S. § 44-1696. The private cause of action contemplated by the legislature is clearly provided under A.R.S. § 44-1695. Here, the legislature has provided a private cause of action against a consumer reporting agency, user of information or source of information who is "grossly negligent in the use or preparation of a consumer report" or "who acts willfully and maliciously with intent to harm a consumer." A.R.S. § 44-1695(C). In addition, a consumer reporting agency is liable for "any damages and attorney fees and court costs that are incurred by a consumer and that result from reporting of inaccurate information that a consumer reporting agency refuses to correct as provided in section 44-1694." A.R.S. § 44-1695(B). Therefore, the Court will dismiss Plaintiff's claims under A.R.S. § 44-1696 as a matter of law for failing to state a claim.
4. Arizona Recognizes a Cause of Action for Invasion of Privacy
Defendants' final argument that Arizona does not recognize a cause of action for invasion of privacy is incorrect and the authority they cite to support this argument contradicts this position. See Godbehere v. Phoenix Newspapers, 162 Ariz. 335, 783 P. 2d 781 (1989) (providing a detailed explanation of the development of the right of privacy in the United States as well as Arizona). In particular, Defendants fail to recognize the distinction between the constitutional right to privacy and the tort of invasion of privacy.
CONCLUSION
For the reasons set forth above,
IT IS THEREFORE ORDERED that Defendants' Motion to Dismiss and for Judgment on the Pleadings (Dkt. 8) is GRANTED IN PART and DENIED IN PART as follows:
GRANTED Without Prejudice:
Count Two (Dkt. 1, ¶¶ 61-64) of Plaintiff's Causes of Action against Defendant Coker, Negligent Violation of FCRA, and Plaintiff's claims brought under A.R.S. § 44-1696 (Dkt. 1, ¶ 66(b), "Prayer for Relief Against Defendant Coker," section (c), and "Prayer for Relief Against Defendant Hope," section (m)) are DISMISSED WITHOUT PREJUDICE and WITH LEAVE TO AMEND. If Plaintiff chooses to amend any of the foregoing Counts or paragraphs, he must file an Amended Complaint no later than November 17, 2006. DENIED: Paragraphs 28-55, paragraph 73, paragraph 66(a) and paragraph 74 properly state claims where Plaintiff may be entitled to relief and therefore Court will DENY Defendant's Motion for Judgment on the Pleadings as to those claims.