O'Leary v. TrustedID, Inc.

Brady O'Leary, on behalf of himself and all others similarly situated, Plaintiff, v. TrustedID, Inc., Defendant.

C. A. No. 3:20-cv-02702-SAL

United States District Court, D. South Carolina, Columbia Division

September 9, 2021

OPINION & ORDER

Sherri A. Lydon United States District Judge.

This matter is before the court on Defendant TrustedID, Inc.'s (“Defendant”) Motion to Dismiss Plaintiff Brady O'Leary's (“Plaintiff”) First Amended Complaint (“Motion to Dismiss”) and Plaintiff's Motion to Remand or Determine Subject Matter Jurisdiction (“Motion to Remand”). [ECF Nos. 20 44.] For the reasons set forth below, the court denies Plaintiff's Motion to Remand and grants Defendant's Motion to Dismiss.

BACKGROUND

This matter surrounds Defendant's “Look Up Tool”-an online tool created following the 2017 Equifax, Inc. (“Equifax”) data breach.^[1] The tool provided a mechanism for individuals to determine “whether they were ‘impacted' by Equifax's data breach.” [ECF No. 20, Am. Compl. at ¶ 10.] To use the tool, an individual would visit Defendant's website (https://trustedidpremier. com) and enter six digits of his/her social security number. Id. at ¶¶ 10-11. In return, the individual would receive a message stating whether the individual's data was or was not impacted by the Equifax breach. Id. at ¶ 11.

In this case, Plaintiff used the Look Up Tool in 2019-two years after the data breach-and learned that his data was “not impacted” by the breach. Id. He thereafter filed this action against Defendant in the South Carolina Court of Common Pleas, alleging the Look Up Tool's access requirement violates South Carolina's Financial Identity Fraud and Identity Theft Protection Act, SC Code Ann. § 37-20-110 et seq. (“SCITPA”) and constitutes a common law invasion of privacy. [ECF No. 1-1.] On July 22 2020, Defendant removed the action to this court on the basis of 28 U.S.C. § 1332(d), the Class Action Fairness Act. [ECF No. 1.]

After removal, Defendant moved to dismiss Plaintiff's Complaint, and Plaintiff filed his Amended Complaint.^[2] [ECF Nos. 15, 20.] Plaintiff reasserted his statutory cause of action and the common law invasion of privacy claim, and he added a common law negligence cause of action. [ECF No. 20, Am. Compl.] Defendant moved to dismiss the Amended Complaint on October 23, 2020. [ECF No. 29.] Plaintiff responded to the Motion to Dismiss on November 20 2020, and Defendant submitted a reply on December 10, 2020. [ECF Nos. 32, 37.] On August 10, 2021, the court issued a notice of hearing, setting the Motion to Dismiss for a September 7, 2021 hearing. [ECF No. 43.]

On August 23, 2021, Plaintiff filed the Motion to Remand. [ECF No. 44.] The court issued a text order directing the parties to be prepared to argue the remand issue at the September 7 2021 hearing. [ECF No. 45.] Defendant filed its response in opposition to the Motion to Remand on the morning of September 7, 2021. [ECF No. 46.] The parties presented their arguments on both motions at the 2:00 PM hearing. [ECF No. 47.] With both motions fully briefed and heard, they are ripe for resolution by the court.

STANDARDS

I. Article III Standing's Injury-in-Fact Requirement: Motion to Remand.

Jurisdiction in federal courts is limited to those cases where there is a “case” or “controversy” within the meaning of Article III. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60 (1992). In that regard, “standing is an essential and unchanging part of the case-or-controversy requirement of Article III.” Id. at 560; see also Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (“Standing to sue is a doctrine rooted in the traditional understanding of a case or controversy.”). It contains three elements: “The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, 136 S.Ct. at 1547.

As to the first element, a plaintiff must have “suffered ‘an invasion of a legally protected interest' that is ‘concrete and particularized' and ‘actual or imminent, not conjectural or hypothetical.'” Id. at 1548 (citing Lujan, 504 U.S. at 560). An injury is particularized when it affect[s] the plaintiff in a personal and individual way.'” Id. (citing Lujan, 504 U.S. at n.1). An injury is concrete when it is “‘de facto'; that is, it [] actually exist[s].” Id. (citing Black's Law Dictionary 479 (9th ed. 2009)).

Standing is so important that it may be raised at any time and by any party, including the court on its own initiative. See Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006) (“The objection that a federal court lacks subject-matter jurisdiction . . . may be raised by a party, or by a court on its own initiative, at any stage in the litigation, even after trial and the entry of judgment.”); Hodges v. Abraham, 300 F.3d 432, 443 (4th Cir. 2002) (“[S]tanding to sue is a jurisdictional issue of constitutional dimensions, and it may be raised and addressed for the first time on appeal.”). And while “[t]he party invoking federal jurisdiction bears the burden of establishing [the] elements, ” “each element must be supported . . . “with the manner and degree of evidence required at the successive stages of the litigation.” Lujan, 5 U.S. at 561.

II. Rule 12(b)(6): Motion to Dismiss.

A party may move to dismiss a complaint based on its “failure to state a claim upon which relief may be granted.” Fed.R.Civ.P. 12(b)(6). “The purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint.” Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). To survive a Rule 12(b)(6) motion, a complaint must have “enough facts to state a claim to relief that is plausible on its face, ” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007), and contain more than “an unadorned, the-defendant-unlawfully-harmed-me accusation, ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In considering a motion to dismiss for failure to state a claim, a plaintiff's well-pled allegations are taken as true, and the complaint and all reasonable inferences are liberally construed in the plaintiff's favor. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993).

DISCUSSION

Before the court addresses the merits of Defendant's Motion to Dismiss, it must satisfy itself that it has subject-matter jurisdiction over this case. If it does not, it cannot reach the merits of Defendant's Motion. If it does, the case may proceed so long as the court remains satisfied that the requirements of Article III are met.

I. Motion to Remand Analysis.

Just over one year after Defendant removed^[3] this case to federal court, Plaintiff filed a Motion to Remand. [ECF No. 44.] Therein, Plaintiff concedes that the requirements for jurisdiction pursuant to the Class Action Fairness Act are met, but argues that “the notice of removal makes no reference to the ‘irreducible constitutional minimum' of Article III standing.” Id. at pp.1-2. Pointing to the United States Supreme Court's June 25, 2021 opinion in TransUnion LLC v. Ramirez, 141 S.Ct. 2190 (2021), Plaintiff asks the court to “inquire before reaching the merits into whether it has subject matter jurisdiction.” Id. at p.2. At the same time, Plaintiff notes that he is “tak[ing] no position as to whether or not [the court] has jurisdiction.” Id. Plaintiff submits, however, that if the court decides subject-matter jurisdiction is lacking, it must remand the case. Id. at p.3 (citing 28 U.S.C. § 1447(c)).

In response, Defendant argues that Ramirez does not apply to this case, it properly removed the case based on the allegations in Plaintiff's Complaint, and there is no contradiction if the court finds Plaintiff's Complaint alleges a concrete injury and then dismisses for failure to adequately plead damages for a specific cause of action. [ECF No. 46.] The court agrees with Defendant.

Before reaching Ramirez, however, it is important to set forth some well-established principles regarding Article III's standing requirement. First, the general rule: To have standing to sue in federal court, a plaintiff must have suffered an injury in fact, that is fairly traceable to defendant's conduct, and that is likely to be redressed by a favorable decision. Spokeo, 136 S.Ct. at 1547. As the Seventh Circuit Court of Appeals recently recognized, “[t]he injury analysis often occurs at the pleading stage, where we are limited to the complaint's ‘general factual allegations of injury resulting from the defendant's conduct' to evaluate standing.” Wadsworth v. Kross, Lieberman & Stone, Inc., No. 19-1400, 2021 WL 3877930, at *2 (7th Cir. Aug. 31, 2021) (citing Lujan, 504 U.S. at 561). The typical example is a challenge to subject-matter jurisdiction through a Defendant's Rule 12(b)(1) motion.

The present case differs procedurally from the typical example because this action was not filed in federal court in the first instance, and the plaintiff is not facing a defendant's Rule 12(b)(1) challenge. Instead, the case was removed to this court, and Plaintiff is challenging whether his own pleading (and arguably Defendant's notice of removal) satisfies the injury-in-fact requirement such that Defendant can keep this case in federal court. This situation, while not the most common, is also not unprecedented. See, e.g., Michaeli v. Kentfield Rehab. Hosp. Found., No. 21-cv-03035, 2021 WL 2817162 (N.D. Cal. July 7, 2021) (considering motion to remand based on lack of Article III standing following removal). Regardless, because this matter is in its early pleading stages, the court is left with the Complaint's “general factual allegations of injury” to evaluate standing. Wadsworth, 2021 WL 3877930, at *2.

With that general background in mind, the...