Hajjaj v. Rentgrow, Inc.

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM OR, ALTERNATIVELY, TO STRIKE CLASS CLAIMS AND STATUTORY/PUNITIVE DAMAGES CLAIMS

D. Mass.May 1, 2017

4829-9819-6039.1 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS KHADIJAH HAJJAJ and CHANDEL WHITE, on behalf of herself [sic] and all others similarly situated, Plaintiffs, v. RENTGROW, INC., DBA YARDI RESIDENT SCREENING, Defendant. Case No. 1:17-cv-10076-PBS DEFENDANT RENTGROW, INC.’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, ALTERNATIVELY, TO STRIKE CLASS CLAIMS AND STATUTORY/PUNITIVE DAMAGES CLAIMS Defendant RentGrow, Inc. (“RentGrow”) hereby moves, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss Plaintiffs’ First Amended Class Action Complaint (ECF 29) (the “FAC”). This action should be dismissed because the FAC fails to state a claim under the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681e(b), or the California Investigative Consumer Reporting Agencies Act (“ICRAA”), Cal. Civ. Code § 1786.20(b). The FAC bases these claims on the allegation that RentGrow, a reseller consumer reporting agency (“CRA”), produced consumer reports on Plaintiffs Khadijah Hajjaj and Chandel White (“Plaintiffs”), a married couple, for purposes of a joint rental housing application. The FAC alleges that those reports included an allegedly inaccurate South Carolina state tax lien and that Plaintiff White’s report included a dismissed South Carolina criminal charge that was inaccurately described as “pending.” The FAC acknowledges that RentGrow obtained the allegedly inaccurate tax lien information from Experian, a national CRA, and Plaintiffs are aware that RentGrow obtained the allegedly inaccurate criminal charge information from e- Case 1:17-cv-10076-PBS Document 34 Filed 05/01/17 Page 1 of 5 4829-9819-6039.1 2 backgroundchecks.com, Inc. (“BGC”), another well-known CRA. It is well established that “[i]f a consumer reporting agency accurately . . . communicates consumer information received from a source that it reasonably believes to be reputable, and which is credible on its face, the agency does not violate § 1681e(b) or [parallel California law] simply by reporting an item of information that turns out to be inaccurate.” Grigoryan v. Experian Info. Solutions, Inc., 84 F. Supp. 3d 1044, 1067 (C.D. Cal. 2014); accord Richardson v. Fleet Bank, 190 F. Supp. 2d 81, 86 (D. Mass. 2001) (citing Henson v. CSC Credit Servs., 29 F.3d 280, 285 (7th Cir. 1994)). Because the FAC alleges no facts that might have rendered RentGrow’s reliance on Experian and BGC unreasonable here, this rule of law controls this case and is dispositive of Plaintiffs’ claims. Thus, the Court should dismiss the FAC pursuant to Rule 12(b)(6). Alternatively, RentGrow moves, pursuant to Rules 12(b)(6), 12(f), and 23(d)(1)(D), to strike from the FAC (i) all class claims and allegations;1 and (ii) all claims for statutory and/or punitive damages under 15 U.S.C. § 1681n and Cal. Civil Code § 1786.50(b), and associated allegations of willfulness.2 Plaintiffs’ class claims fail as a matter of law because the FAC does not allege any facts plausibly suggesting the existence of putative class members at all, let alone plausible Section 1681e(b) claims on behalf of other persons. See Bearbones, Inc. v. Peerless Indem. Ins. Co., 2016 U.S. Dist. LEXIS 140836 (D. Mass. Oct. 11, 2016). Pleading a class claim under Section 1681e(b) requires alleged facts plausibly showing that (i) inaccurate information was included in putative class members’ credit reports; (ii) putative class members suffered 1 Specifically, if the action is not dismissed, RentGrow respectfully requests that the Court strike all references to purported class claims or allegations, including those in the following paragraphs of the FAC: 1, 11, 50-56, 58, 61- 62, 64, 67-68, 75(a)-(c), and 76. 2 Specifically, if the action is not dismissed, RentGrow respectfully requests that the Court strike all references to purported “willful” violations and all associated claims for statutory and punitive damages, including those in the following paragraphs of the Complaint: 55, 60-62, 66-68, 74, and 75(e), (f), and (i). Case 1:17-cv-10076-PBS Document 34 Filed 05/01/17 Page 2 of 5 4829-9819-6039.1 3 injury; and (iii) such injuries were caused by the inclusion of the inaccurate entries. Not only is the FAC devoid of such alleged facts, but each of these elements requires individualized factual inquiries that would need to be addressed in mini-trials for each putative class member, which is clearly not permitted by Rule 23. Likewise, the FAC’s purported definitions of the putative class violates Rule 23 because it would require individualized fact-finding to determine who is even in the putative classes. See Shanley v. Cadle, 277 F.R.D. 63 (D. Mass. 2011). Accordingly, the class claims should be stricken. Lastly, the FAC contains no factual allegations that might support a finding of “willful” violations by RentGrow to support a claim for statutory and punitive damages under the FCRA, 25 U.S.C. § 1681n, or the ICRAA, Cal. Civil Code § 1786.50(b). RentGrow’s understanding that the FCRA permitted it to rely on Experian’s report of the tax lien and BGC’s report of the criminal charge was not “objectively unreasonable” as a matter of law, in light of the large body of case law establishing that such reliance is permitted, prior Federal Trade Commission guidance to the same effect, and the absence of any contrary authority. See Safeco Insurance Company of America v. Burr, 551 U.S. 47, 57 (2007). Accordingly, statutory and punitive damages are unavailable as a matter of law. Plaintiffs’ claims for such damages and their conclusory allegations of willfulness should be stricken. This motion is based upon the accompanying Memorandum and Unpublished Case Appendix attached thereto; the accompanying Request for Judicial Notice and the exhibits attached thereto; the pleadings and records on file in this action; and such further evidence and argument as may be presented at the hearing. Case 1:17-cv-10076-PBS Document 34 Filed 05/01/17 Page 3 of 5 4829-9819-6039.1 4 REQUEST FOR ORAL ARGUMENT Pursuant to Local Rule 7.1(d), RentGrow respectfully requests that the Court permit oral argument on this motion. RentGrow notes that a hearing on this motion has already been scheduled for June 26, 2017, at 9:00 a.m. (ECF 32.) LOCAL RULE 7.1(a)(2) CERTIFICATION The undersigned certifies that counsel have conferred and attempted in good faith to resolve or narrow the issues raised in this motion. Dated: May 1, 2017 Respectfully submitted, RENTGROW, INC. By its attorneys, /s/ Matthew J. Frankel David S. Rosenthal (BBO #429260) Matthew J. Frankel (BBO #664228) Nixon Peabody LLP 100 Summer Street Boston, MA 02110 Telephone: (617) 345-1000 Facsimile: (617) 345-1300 drosenthal@nixonpeabody.com mfrankel@nixonpeabody.com Case 1:17-cv-10076-PBS Document 34 Filed 05/01/17 Page 4 of 5 4829-9819-6039.1 5 CERTIFICATE OF SERVICE I hereby certify that this document filed through the ECF system will be sent electronically to the registered participants as identified on the Notice of Electronic Filing (NEF) and paper copies will be sent to those indicated as non-registered participants on May 1, 2017. /s/ Matthew J. Frankel______ Case 1:17-cv-10076-PBS Document 34 Filed 05/01/17 Page 5 of 5