Noye v. Pennell & Associates, Inc. et al

BRIEF IN OPPOSITION re MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

M.D. Pa.July 10, 2017

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF PENNSYLVANIA T JASON NOYE, Plaintiff, v. PENNELL & ASSOCIATES, INC. and MONTY PENNELL, Defendants. CIVIL ACTION NO. 17-cv-00299 MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANTS’ PENNELL & ASSOCIATES, INC. AND MONTY PENNELL’S MOTION TO STRIKE PUNITIVE DAMAGE CLAIMS AND MONTY PENNELL AS INDIVIDUAL DEFENDANT, AND TO DISMISS COUNT II AND COUNT III OF PLAINTIFF’S COMPLAINT James A Francis John Soumilas David A. Searles FRANCIS & MAILMAN, P.C. Land Title Building, 19th Floor 100 South Broad Street Philadelphia, PA 19110 T. (215) 735-8600 Marielle Macher COMMUNITY JUSTICE PROJECT 118 Locust Street Harrisburg, PA 17101 717-236-9486, ext. 214 Attorneys for Plaintiff Date: July 10, 2017 Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 1 of 24 i TABLE OF CONTENTS TABLE OF AUTHORITIES .................................................................................... ii I. SUMMARY OF ARGUMENT ....................................................................... 1 II. STATEMENT OF ISSUES INVOLVED ....................................................... 1 III. FACTUAL AND PROCEDURAL BACKGROUND .................................... 2 A. Defendants’ Practices as a Consumer Reporting Agency ..................... 2 B. Factual Background as to Plaintiff ........................................................ 3 C. Procedural Background ......................................................................... 6 IV. LEGAL STANDARD ..................................................................................... 6 V. ARGUMENT ................................................................................................... 8 A. Defendants’ Motion to Strike Plaintiff’s Punitive Damages Allegations Must be Denied .................................................................. 8 1. Defendants have demonstrated no basis for striking punitive damages allegations from the pleadings ....................... 8 2. Plaintiff properly pleads a demand for punitive damages .......... 9 B. Plaintiff Properly States Claims Against Mr. Pennell ......................... 14 C. Plaintiff Adequately States a Claim Under 15 U.S.C. § 1681k(a)(1) ....................................................................................... 16 VI. CONCLUSION .............................................................................................. 16 Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 2 of 24 ii TABLE OF AUTHORITIES Page(s) CASES Allen v. Miller, 1993 WL 121311 (D. Or. Apr. 12, 1993) ........................................................... 15 Asufrin v. Roundpoint Mortg. Servicing Corp., 2016 WL 1056669 (N.D. Ill. Mar. 17, 2016) ..................................................... 11 Avila v. NOW Health Grp., Inc., 2014 WL 3537825 (N.D. Ill. July 17, 2014) ...................................................... 11 Cisco v. United Parcel Servs. Inc., 476 A.2d 1340 (Pa. Super. 1984) ......................................................................... 6 Cortez v. Trans Union, LLC, 617 F.3d 688 (3d Cir. 2010) ......................................................................... 10, 13 Dennis v. Trans Union, LLC, 2014 WL 5325231 (E.D. Pa. Oct. 20, 2014) ...................................................... 10 Hillis v. Trans Union, LLC, 2014 WL 2581094 (E.D. Pa. June 10, 2014) ...................................................... 10 Krisa v. Equitable Life Assur. Soc., 109 F. Supp. 2d 316 (M.D. Pa. 2000) ................................................................... 8 Markowitz v. Ne. Land Co., 906 F.2d 100 (3d Cir. 1990) ................................................................................. 7 McInerney v. Moyer Lumber & Hardware, Inc., 244 F. Supp. 2d 393 (E.D. Pa. 2002) .................................................................... 9 Milgram v. Advanced Cellular Sys., Inc., 1990 WL 50546 (E.D. Pa. Apr. 18, 1990) .......................................................... 15 Noye v. Yale Assocs., Inc., 2016 WL 6276609 (M.D. Pa. Oct. 27, 2016) ......................................... 10, 11, 12 Ritchie v. N. Leasing Sys., Inc., 14 F. Supp. 3d 229 (S.D.N.Y. 2014) .................................................................. 15 Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 3 of 24 iii Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) .................................................................................... 9, 12, 13 Seamans v. Temple Univ., 744 F.3d 853 (3d Cir. 2014) ..................................................................... 9, 10, 13 Sheffer v. Experian Info. Sols., Inc., 2003 WL 21710573 (E.D. Pa. July 24, 2003) .................................................... 13 Smith v. HireRight Sols., Inc., 711 F. Supp. 2d 426 (E.D. Pa. 2010) .................................................................. 11 Strausbaugh v. Bank of Am., 2013 WL 416260 (S.D. Miss. Feb. 1, 2013) ...................................................... 15 Taylor v. Screening Reports, Inc., 2015 WL 4052824 (N.D. Ill. July 2, 2015) ........................................................ 11 Wincovitch v. Edwin A. Abrahamsen & Assocs., 2013 WL 1909578 (M.D. Pa. May 8, 2013) ..................................................... 7, 8 Wirt v. Bon-Ton Stores, Inc., 2015 WL 5738006 (M.D. Pa. Oct. 1, 2015) ......................................................... 7 STATUTES Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. .......................................passim 15 U.S.C. § 1681a(b) ..................................................................................... 15 15 U.S.C. § 1681a(f) .................................................................................. 2, 15 15 U.S.C. § 1681e ............................................................................................ 1 15 U.S.C. § 1681e(b) ..................................................................... 3, 11, 12, 15 15 U.S.C. § 1681k(a) ............................................................................... 11, 15 15 U.S.C. § 1681k(a)(1) ......................................................1, 2, 11, 15, 16, 17 15 U.S.C. § 1681k(a)(2) .................................................................................. 3 15 U.S.C. § 1681n ...................................................................................... 9, 16 Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 4 of 24 iv 15 U.S.C. § 1681n(a) ..................................................................................... 15 15 U.S.C. § 1681o .......................................................................................... 16 15 U.S.C. § 1681o(a) ..................................................................................... 15 18 P.S. § 106 .............................................................................................................. 5 18 P.S. § 106(c) .......................................................................................................... 5 18 P.S. § 9122(b)(3)(i) ............................................................................................... 5 18 P.S. § 9125 ............................................................................................................ 5 18 Pa. C.S.A. § 6501 .................................................................................................. 5 18 Pa. C.S.A. § 6708 .................................................................................................. 5 18 Pa. C.S.A. § 6905 .................................................................................................. 5 FEDERAL RULES Fed. R. Civ. P. 12(b)(6) .............................................................................................. 7 Fed. R. Civ. P. 12(f) ............................................................................................... 7, 8 Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 5 of 24 I. SUMMARY OF ARGUMENT Defendants Monty Pennell’s (“Mr. Pennell”) and Pennell & Associates, Inc.’s (“Pennell & Associates”) (together, “Defendants”) Motion to Strike and to Dismiss must be denied. First, Defendants’ Motion to Strike Punitive Damages Claims is meritless, both because Defendants fail to state any legitimate basis for striking Plaintiff’s allegations and because Plaintiff more than adequately alleges that Defendants acted willfully. Specifically, Plaintiff’s Complaint is clear that Defendants violated 15 U.S.C. § 1681e and 15 U.S.C. § 1681k(a)(1) of the Fair Credit Reporting Act (“FCRA”) by failing to develop or follow policies compliant with the FCRA, not through human error. Next, Defendants’ Motion to Strike Monty Pennell as an Individual Defendant must be denied, because the FCRA’s statutory scheme allows for individual liability. Contrary to Defendants’ apparent assumption, Plaintiff’s claims against Mr. Pennell have nothing to do with piercing the corporate veil. Finally, Defendants’ Motion to Dismiss Count II of Plaintiff’s Complaint is utterly baseless. The entirety of Defendants’ argument—that Plaintiff did not plead negligence—is false. Plaintiff’s Complaint clearly and unequivocally pleads negligence. Accordingly, Defendants’ Motion must be denied in full. II. STATEMENT OF ISSUES INVOLVED 1. Must Defendants’ Motion to Strike Punitive Damages Claims be denied, where Defendants have not provided a legitimate justification for seeking to Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 6 of 24 2 strike Plaintiff’s allegations and Plaintiff has alleged in detail that Defendants acted willfully? SUGGESTED ANSWER: Yes 2. Must Defendants’ Motion to Strike Monty Pennell as an Individual Defendant be denied, where Plaintiff has alleged individual liability pursuant to the FCRA’s statutory provisions and not under a veil piercing theory? SUGGESTED ANSWER: Yes 3. Must Defendants’ Motion to Dismiss be Denied, where Defendants argue only that Plaintiff did not plead negligence and Plaintiff’s Complaint plainly alleges negligence? SUGGESTED ANSWER: YES III. FACTUAL AND PROCEDURAL BACKGROUND A. Defendants’ Practices as a Consumer Reporting Agency Defendants operate as consumer reporting agencies (“CRAs”), as defined by § 1681a(f) of the FCRA, by compiling and selling files on consumers on a nationwide basis. Compl. ¶ 2, Dkt. 1. Defendants’ business model is to sell consumer reports and furnish them to other CRAs, who rebrand them and sell them to the potential employers of consumers. Compl. ¶ 2. Defendants do not reveal to the consumer during this process that they generated the original report. Compl. ¶ 2. As explained in the Complaint, CRAs are subject to a number of statutory duties under the FCRA. Compl. ¶¶ 3, 5. Under 15 U.S.C. § 1681k(a)(1), when a CRA furnishes a consumer report for employment purposes, and compiles and reports items of information on consumers which are matters of public record and Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 7 of 24 3 are likely to have an adverse effect upon a consumer’s ability to obtain employment, the CRA must notify the consumer of the fact that public record information is being reported by the CRA at the time the public record information is reported. Compl. ¶ 5. Alternatively, under 15 U.S.C. § 1681k(a)(2), the CRA must maintain strict procedures designed to insure that whenever public record information that is likely to have an adverse effect on a consumer’s ability to obtain employment is reported, that information is accurate, complete, and up to date. Compl. ¶ 5. Under 15 U.S.C. § 1681e(b), a CRA is also required to follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates. Compl. ¶ 3. Defendants fail to adhere to these statutory requirements. As alleged in the Complaint, Defendants fail to follow reasonable procedures to assure maximum possible accuracy of the information they report. Compl. ¶ 22. Defendants also fail to notify consumers contemporaneously with reporting public record information or to maintain strict procedures to insure that such information is accurate, complete, and up to date. Compl. ¶¶ 30, 33. B. Factual Background as to Plaintiff In February 2015, Plaintiff T Jason Noye applied for a position as an Operations Supervisor with Johnson & Johnson (“J&J”) through Kelly Services, Inc. (“Kelly”), an employment staffing firm. Compl. ¶ 14. On February 11, 2015, Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 8 of 24 4 Plaintiff was tentatively offered the job in writing pending his background check. Compl. ¶ 14. Plaintiff accepted the offer the same day. Compl. ¶ 14. At Kelly’s request, Plaintiff then filled out Kelly’s online application, wherein he accurately indicated that he had been convicted of one misdemeanor. Compl. ¶ 15. Kelly responded that it needed more information regarding the conviction, but that the conviction would not necessarily bar him from employment with Kelly and J&J. Compl. ¶ 15. Plaintiff promptly supplied Kelly all of the requested information regarding his conviction. Compl. ¶ 16. As part of Kelly’s application process, Kelly also purchased a consumer background report from Yale Associates, Inc. (“Yale”). Compl. ¶ 17. Yale contracted with Defendants to perform a criminal history search concerning Plaintiff to pass along to Kelly. Compl. ¶ 18. Mr. Pennell personally gathered and compiled Plaintiff’s criminal history information for Defendants’ report to Yale. Compl. ¶ 20. Due to Defendants’ failure to maintain reasonable procedures in collecting Plaintiff’s criminal history information, however, Defendants misreported Plaintiff’s criminal history to Yale so as to grossly inflate the severity of Plaintiff’s criminal background. Compl. ¶¶ 23- 29. Specifically, although Plaintiff has only one misdemeanor conviction, Defendants misreported him to Yale as having five misdemeanor convictions by Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 9 of 24 5 misclassifying summary offenses – the lowest level offenses under Pennsylvania law – as misdemeanors. Compl. ¶ 24. One of the misreported summary offenses, for example, was a citation that Plaintiff received because the grass on his tenant’s lawn exceeded local height limitations. Compl. ¶ 24. In addition to misreporting summary offenses as misdemeanors, Defendants also misreported three other summary offenses relating to vacant land structures or maintenance as “safety” violations, an offense grading level not even recognized under Pennsylvania law. Compl. ¶ 25; see also 18 P.S. § 106. Defendants’ inaccurate reporting was serious, because Pennsylvania law treats summary offenses very differently from misdemeanors and felonies. Compl. ¶ 26. Summary offenses are the least significant offenses under Pennsylvania law, 18 P.S. § 106(c), and include a variety of minor infractions, such as attaching a nail or tack to a utility pole, littering, or returning a library book more than 30 days late. 18 Pa. C.S.A. § 6905; 18 Pa. C.S.A. § 6501; 18 Pa. C.S.A. § 6708. Although felony and misdemeanor convictions can almost never be expunged in Pennsylvania, summary offense convictions can be expunged after the defendant has been free of arrest or prosecution for five years following the conviction for that offense. 18 P.S. § 9122(b)(3)(i). Likewise, Pennsylvania law permits prospective employers to consider felonies and misdemeanor convictions to the extent that they relate to a job applicant’s suitability for a job, 18 P.S. § 9125, but an employer cannot consider Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 10 of 24 6 summary offenses. See Cisco v. United Parcel Servs. Inc., 476 A.2d 1340, 1343 (Pa. Super. 1984). As a result of Defendants’ misreporting of his summary offenses, on March 13, 2015, Kelly informed Plaintiff that J&J would not be hiring him. Compl. ¶ 19. This adverse action was based on the background report that Kelly obtained from Yale, which contained criminal history information requested and purchased from Defendants. Compl. ¶ 19. C. Procedural Background As Plaintiff lost a job opportunity based on Defendants’ misreporting of his summary offenses, Plaintiff filed a Complaint raising FCRA claims against Defendants on February 17, 2017. See Dkt. 1. Defendants moved to dismiss Plaintiff’s Complaint on June 13, 2017 and filed a brief in support of their Motion on June 27, 2017. Dkts. 14, 16. Plaintiff now hereby opposes Defendants’ Motion.1 IV. LEGAL STANDARD With regard to Defendants’ Motion to Strike Punitive Damage Claims and Monty Pennell as an Individual Defendant, a court may “strike from a pleading an 1 Plaintiff’s Complaint also included a common law negligence claim, at Count III. Compl. ¶¶ 48-53. On July 7, 2017, Plaintiff stipulated to withdraw Count III of his Complaint without prejudice, and Defendants agreed that Defendants’ Motion to Dismiss Count III of Plaintiff’s Complaint would be denied as moot. Thus, Plaintiff does not respond to Defendants’ Motion to Dismiss Count III of Plaintiff’s Complaint in this brief. Stip. ¶¶ 1-2, Dkt. 18. Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 11 of 24 7 insufficient defense or any redundant, immaterial, impertinent, or scandalous matter” under Federal Rule of Civil Procedure 12(f). “[M]otions to strike are disfavored and should be denied unless the allegations have no possible relation to the controversy, may cause prejudice to one of the parties, or confuse the issues.” Wincovitch v. Edwin A. Abrahamsen & Assocs., No. 3:12-CV-01846, 2013 WL 1909578, at *1 (M.D. Pa. May 8, 2013) (quoting Hanselman v. Olsen, No. 4:05-CV- 1834, 2006 WL 47655, at *1 (M.D. Pa. Jan. 9, 2006)). See also, Wirt v. Bon-Ton Stores, Inc., No. 14-cv-1755, 2015 WL 5738006, * 3 (M.D. Pa. Oct. 1, 2015) (same). With regard to Defendants’ Motion to Dismiss Count II, in deciding a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), this Court must “accept as true the facts alleged in the complaint and all reasonable inferences that can be drawn from them.” Markowitz v. Ne. Land Co., 906 F.2d 100, 103 (3d Cir. 1990). Dismissal is appropriate only in “those instances where it is certain that no relief could be granted under any set of facts that could be proved.” Id. (citing Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988)). Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 12 of 24 8 V. ARGUMENT A. Defendants’ Motion to Strike Plaintiff’s Punitive Damages Allegations Must be Denied 1. Defendants have demonstrated no basis for striking punitive damages allegations from the pleadings As an initial matter, Defendants have failed to establish any proper basis for striking Plaintiff’s demand for punitive damages. As discussed in Section IV supra, motions to strike can be granted only to “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). Motions to strike are rarely granted and considered a “drastic remedy,” in “[p]art[] because of the practical difficulty of deciding cases without a factual record.” Krisa v. Equitable Life Assur. Soc., 109 F. Supp. 2d 316, 319 (M.D. Pa. 2000) (quoting United States v. Consolidation Coal Co., No. CIV. A. 89-2124, 1991 WL 333694, at *1 (W.D. Pa. July 5, 1991)). Thus, as explained in Section IV supra, motions to strike should not be granted “unless the allegations have no possible relation to the controversy, may cause prejudice to one of the parties, or confuse the issues.” Wincovitch, No. 2013 WL 1909578, at *1 (quoting Hanselman, 2006 WL 47655, at *1). Here, Defendants have made no attempt whatsoever to show a proper basis for striking Plaintiff’s punitive damages allegations. Defendants make no claim of Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 13 of 24 9 prejudice, and Plaintiff’s allegations regarding punitive damages plainly relate to the controversy and cause no confusion of the issues. Indeed, the only apparent purpose of Defendants’ Motion to Strike is to attempt to foreclose the possibility of punitive damages before Plaintiff has even had the opportunity to take meaningful discovery. That, unfortunately for Defendants, is not a proper basis for striking allegations from a pleading. Instead, the parties should ordinarily be allowed to take discovery before damages issues are considered. See, e.g., McInerney v. Moyer Lumber & Hardware, Inc., 244 F. Supp. 2d 393, 402 (E.D. Pa. 2002). Thus, on this basis alone, Defendants’ Motion to Strike must be denied. 2. Plaintiff properly pleads a demand for punitive damages In any event, Plaintiff properly pleads allegations in support of punitive damages. Under 15 U.S.C. § 1681n, a defendant is liable for punitive damages if it willfully failed to comply with the FCRA. As the Third Circuit has explained, “[l]iability for willful violations will lie not only in the case of knowing violations of the statute but also if a defendant acts with ‘reckless disregard’ of the statute’s terms.” Seamans v. Temple Univ., 744 F.3d 853, 868 (3d Cir. 2014) (quoting Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 69 (2007)). The CRA’s “‘subjective bad faith’ is irrelevant—the test is whether the actor’s conduct was ‘objectively unreasonable.’” Id. at 868 (quoting Fuges v. Sw. Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 14 of 24 10 Fin. Servs., Ltd., 707 F.3d 241, 248–49 (3d Cir. 2012)). “A credit reporting agency may … willfully violate the FCRA by adopting a policy with reckless disregard of whether it contravenes a plaintiff’s rights under the FCRA.” Cortez v. Trans Union, LLC, 617 F.3d 688, 721 (3d Cir. 2010). This may include “objectively unreasonable actions with respect to a particular consumer’s account” or unreasonable “[b]lanket policies.” Seamans, 744 F.3d at 868. In considering whether the CRA acted unreasonably, courts in this circuit take into account that the FCRA is “a remedial statute that must be read in a liberal manner in order to effectuate the congressional intent underlying it,” and thus seek to avoid “allow[ing] a company that traffics in the reputations of ordinary people a free pass to ignore the requirements of the FCRA each time it creatively incorporates a new piece of personal consumer information in its reports.” Id. (quoting Cortez, 617 F.3d at 721-23). Moreover, the question of willfulness generally should not be decided at preliminary stages, particularly at the pleading stage before discovery. See, e.g., Noye v. Yale Assocs., Inc., No. 1:15-CV-2253, 2016 WL 6276609, at *4 (M.D. Pa. Oct. 27, 2016) (denying motion to dismiss due to the “fact-intensive nature of determining” willfulness); Dennis v. Trans Union, LLC, No. CIV.A. 14-2865, 2014 WL 5325231, at *9 (E.D. Pa. Oct. 20, 2014) (denying motion to dismiss where allegations allowed an inference of willfulness); Hillis v. Trans Union, LLC, No. 2:13-CV-02203, 2014 WL 2581094, at *5 (E.D. Pa. June 10, 2014) (question of Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 15 of 24 11 willfulness is “best left for a jury to decide”); Asufrin v. Roundpoint Mortg. Servicing Corp., No. 15 C 9077, 2016 WL 1056669, at *5 (N.D. Ill. Mar. 17, 2016) (at the pleading stage, a plaintiff need only “plausibly suggest” willfulness) (quoting Iosello v. Leiblys, Inc., 502 F. Supp. 2d 782, 784–85 (N.D. Ill. 2007)). As Defendants do not and cannot dispute, failing to maintain procedures to distinguish between summary offenses and more serious misdemeanors, without sending notice under § 1681k(a)(1), violates both § 1681k(a) and § 1681e(b) of the FCRA. See, e.g., Smith v. HireRight Sols., Inc., 711 F. Supp. 2d 426, 439 (E.D. Pa. 2010) (denying the defendant’s motion to dismiss where the defendant CRA reported the plaintiff’s one criminal record item multiple times, making it appear more serious than it was in violation of § 1681k(a) and § 1681e(b)); Noye, 2016 WL 6276609, at *3 (denying motion to dismiss in Plaintiff’s case against Yale with similar factual allegations). To establish that these violations are willful, a plaintiff may allege that the CRA reported inaccurate information due to policies or practices inconsistent with the FCRA, despite having many years since the FCRA’s passage to come into compliance. See, e.g., Smith, 711 F. Supp. 2d at 439; Taylor v. Screening Reports, Inc., No. 13 C 02886, 2015 WL 4052824, at *6 (N.D. Ill. July 2, 2015); Avila v. NOW Health Grp., Inc., No. 14 C 1551, 2014 WL 3537825, at *3 (N.D. Ill. July 17, 2014). Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 16 of 24 12 Here, the Complaint plainly alleges more than enough to establish that Defendants acted willfully. As explained in Plaintiff’s Complaint, Defendants are required to maintain reasonable procedures designed to assure the maximum possible accuracy of the information that they report regarding consumers, under 15 U.S.C. § 1681e(b). Compl. ¶ 22. Defendants utterly failed to maintain or follow such reasonable procedures on a systemic level, resulting in Defendants misreporting not just one but four of Plaintiff’s summary offenses as misdemeanors. Compl. ¶ 24. Defendants also misreported three other summary offenses as “safety” violations, an offense grade level not recognized under Pennsylvania law. Compl. ¶ 24. This is despite the fact that the FCRA was enacted in 1970, and Defendants thus have had decades to develop compliant procedures, but have failed to do so. Compl. ¶ 32. These allegations are plainly enough to establish Defendants’ willfulness. In fact, under very similar facts, this Court denied the defendant’s motion to strike punitive damages allegations in Plaintiff’s separate FCRA case against Yale. See Noye, 2016 WL 6276609, at *4. Defendants’ arguments to the contrary are meritless. Defendants are wrong in insisting that Plaintiff must show that they acted both knowingly and intentionally in conscious disregard for the rights of others, or that they acted on the order of willful concealment or misrepresentation. Nowhere in their brief do Defendants even mention, let alone analyze, either the Supreme Court’s decision in Safeco or Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 17 of 24 13 the subsequent Third Circuit decisions discussed above. See, e.g., Cortez, 617 F.3d at 721 (recognizing the reckless disregard standard set forth in Safeco); Seamans, 744 F.3d at 868. Likewise, Defendants’ reliance on Sheffer v. Experian Info. Sols., Inc., No. CIV.A. 02-7407, 2003 WL 21710573, at *3 (E.D. Pa. July 24, 2003), is equally unhelpful to Defendants and instead demonstrates that Plaintiff’s allegations show willfulness. Most importantly, although the court noted in Sheffer that an isolated instance of human error is not enough to show willfulness at the summary judgment stage, the court denied the CRA’s motion for summary judgment because the plaintiff presented evidence that the CRA acted according to a practice that contravened the FCRA, rather than according to an isolated mistake. Sheffer, 2003 WL 21710573, at *3. As in Sheffer, Plaintiff alleges that Defendants acted pursuant to a systemic practice that violated the FCRA, not to human error. Indeed, Defendants’ suggestion that what happened to Plaintiff was an isolated instance thoroughly belies any normal reading of the Complaint. Specifically, as discussed above, the Complaint is clear in alleging that Defendants misreported Plaintiff’s summary offenses as misdemeanors because Defendants fail to maintain or follow reasonable procedures for reporting criminal history information. Compl. ¶ 22. As a result of Defendants’ failure to maintain or to follow reasonable procedures, as discussed above, Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 18 of 24 14 Defendants misreported four of Plaintiff’s summary offenses as misdemeanors and three of his others as “safety” violations for a total of seven misreported summary offenses – a number virtually unimaginable through mere human error.2 Accordingly, Defendants’ attempt to mischaracterize Plaintiff’s Complaint as an isolated instance fails, and Defendants’ Motion to Strike Plaintiff’s punitive damages allegations must be denied. B. Plaintiff Properly States Claims Against Mr. Pennell Next, Plaintiff properly pleads claims against Mr. Pennell individually. Although Defendants argue at length that Plaintiff has not made sufficient allegations to pierce the corporate veil, Plaintiff’s claims against Mr. Pennell have nothing to do with veil piercing.3 2 Defendants’ argument that “the reported safety violations are not a crime recognized in Pennsylvania” misses the point. Defs.’ Mem. of Law at 4, Dkt. 16. Plaintiff received several summary offense citations related to vacant structures or land maintenance – extremely minor infractions. Compl. ¶ 25. Apparently unaware of the different offense levels under Pennsylvania law, Defendants instead reported these infractions as “safety” violations. Compl. ¶ 25. An ordinary reader of Plaintiff’s consumer report could easily interpret a “safety” violation as more serious than a summary. But even more importantly, Defendants’ lack of understanding of the basic categories of offenses under Pennsylvania law makes clear that Defendants were not following reasonable procedures for assuring the accuracy of the information that they were reporting. 3 As the Complaint has just been filed, Plaintiff reserves the right to amend the Complaint to add veil piercing allegations in the future should discovery warrant such an amendment. Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 19 of 24 15 Rather, the FCRA’s statutory language allows for individual liability here. Under 15 U.S.C. § 1681e(b) and 15 U.S.C. § 1681k(a), a plaintiff may sue any CRA. The FCRA defines a CRA, in relevant part, as “any person which … regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties.” 15 U.S.C. § 1681a(f) (emphasis added). The sections of the FCRA delineating its private cause of action likewise state that “[a]ny person” who violates the FCRA can be liable. 15 U.S.C. § 1681n(a); 15 U.S.C. § 1681o(a). The FCRA defines “person” as including “any individual.” 15 U.S.C. § 1681a(b) (emphasis added). Accordingly, the FCRA’s statutory language plainly allows for individual defendants to be liable. See, e.g., Ritchie v. N. Leasing Sys., Inc., 14 F. Supp. 3d 229, 243 (S.D.N.Y. 2014) (holding that individual defendants can be liable under the FCRA); Allen v. Miller, No. CIV. 92-6284-FR, 1993 WL 121311, at *3 (D. Or. Apr. 12, 1993) (same); see also Strausbaugh v. Bank of Am., No. 1:12-CV-00317-HSO, 2013 WL 416260, at *3 (S.D. Miss. Feb. 1, 2013); Milgram v. Advanced Cellular Sys., Inc., No. CIV. A. 88-5544, 1990 WL 50546, at *1 (E.D. Pa. Apr. 18, 1990). As alleged in Plaintiff’s Complaint, Mr. Pennell qualifies as a CRA because he “compiles and sells files on consumers on a nationwide basis” to third parties, i.e. other CRAs. Compl. ¶ 2. He also personally gathered and compiled the report on Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 20 of 24 16 Plaintiff. Compl. ¶ 20. He is thus a proper defendant under the FCRA, regardless of veil piercing. Accordingly, Defendants’ Motion to Strike as to claims against Mr. Pennell is meritless and must be denied. C. Plaintiff Adequately States a Claim Under 15 U.S.C. § 1681k(a)(1) Finally, Defendants’ bizarre argument for dismissing Plaintiff’s claim under 15 U.S.C. § 1681k(a)(1) must be rejected. As an initial matter, although Defendants are correct that the FCRA encompasses both willful and negligent violations under 15 U.S.C. §§ 1681n-o, Plaintiff has more than adequately alleged a willful violation of § 1681k(a)(1), as discussed in Section V(A)(2), supra. This alone is enough to dispose of Defendants’ Motion. But on top of that, Defendants’ bald assertion that Plaintiff did not also plead a negligent violation of § 1681k(a)(1) is simply false. Plaintiff’s Complaint is crystal clear that Plaintiff alleges both negligent and willful violations of § 1681k(a)(1). Compl. ¶¶ 30-31. The entirety of Defendants’ argument is thus utterly baseless and must be rejected. VI. CONCLUSION Defendants’ Motion to Strike fails to provide any basis for striking Plaintiff’s claim for punitive damages or Mr. Pennell as an individual defendant. Likewise, Defendants’ Motion to Dismiss fails to offer any coherent reason for dismissing Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 21 of 24 17 Plaintiff’s claim under § 1681k(a)(1). Accordingly, Defendants’ Motion must be denied in full. Dated: July 10, 2017 Respectfully submitted, By: s/ James A. Francis James A. Francis John Soumilas David A. Searles FRANCIS & MAILMAN, P.C. Land Title Building, Suite 1902 100 South Broad Street Philadelphia, PA 19110 T. (215) 735-8600 Marielle Macher Megan Lovett COMMUNITY JUSTICE PROJECT 118 Locust Street Harrisburg, PA 17101 T. (717) 236-9486, ext. 214 Attorneys for Plaintiff Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 22 of 24 18 CERTIFICATE OF CONFORMANCE WITH M.D. PA. LOCAL RULE 7.8(b)(2) I hereby certify pursuant to Local Rule 7.8(b) that the foregoing Memorandum of Law in Opposition to Defendant’s Pennell & Associates, Inc. and Monty Pennell’s Motion to Strike Punitive Damages Claims and Monty Pennell as Individual Defendant, and to Dismiss Count II and Count III of Plaintiff’s Complaint does not exceed 5,000 words. Specifically, the word count function of my firm’s word- processing software indicates that the text and footnotes in the body of this Memorandum comprise 3,687 words. s/ James A. Francis James A. Francis Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 23 of 24 19 CERTIFICATE OF SERVICE I hereby certify that on July 10, 2017, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system, which will send notification of such filing to counsel or parties of record electronically by CM/ECF. s/ James A. Francis James A. Francis Case 1:17-cv-00299-SHR Document 19 Filed 07/10/17 Page 24 of 24 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF PENNSYLVANIA T JASON NOYE, Plaintiff, v. PENNELL & ASSOCIATES, INC. and MONTY PENNELL, Defendants. CIVIL ACTION NO. 17-cv-00299 ORDER AND NOW, on this ____ day of ________________ 2017, IT IS HEREBY ORDERED THAT Defendants Pennell & Associates, Inc.’s and Monty Pennell’s Motion to Strike Punitive Damage Claims and Monty Pennell as Individual Defendant and to Dismiss Count II of Plaintiff’s Complaint is DENIED. ___________________________ The Hon. Sylvia H. Rambo United States District Court Middle District of Pennsylvania Case 1:17-cv-00299-SHR Document 19-1 Filed 07/10/17 Page 1 of 1