Phoneternet, LLC v. LexisNexis Risk Sols.

PHONETERNET, LLC d/b/a MAESTRO, Plaintiff, v. LEXISNEXIS RISK SOLUTIONS, INC. and RELX, INC., Defendants.

Civil Action No. 3:18-CV-1719-L

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION

September 30, 2019

MEMORANDUM OPINION AND ORDER

Before the court is Defendants' Joint Motion to Dismiss Plaintiff's Third Amended Complaint (Doc. 27); and RELX Inc.'s Motion to Dismiss Third Amended Complaint (Doc. 26). Both motions were filed January 28, 2019. After considering the motions, briefs, pleadings, and applicable law, the court grants Defendants' Joint Motion to Dismiss Plaintiff's Third Amended Complaint (Doc. 27); grants RELX Inc.'s Motion to Dismiss Third Amended Complaint (Doc. 26); and dismisses with prejudice all claims and requests for relief asserted and requested by Plaintiff against Defendants in this action.

I. Factual and Procedural Background

Plaintiff Phoneternet, LLC d/b/a Maestro ("Plaintiff" or "Phoneternet") originally brought this action against Defendant LexisNexis Risk Solutions, Inc. ("LexisNexis") on June 5, 2018. After the case was removed to federal court, Plaintiff amended its pleadings to add RELX Inc. ("RELX") as a defendant. The court refers to LexisNexis and RELX collectively as "Defendants."

In its Third Amended Complaint ("Complaint") (Doc. 25), Plaintiff alleges that, in early 2017, "the Lexus Division of the Toyota Motor Corporation (hereinafter, Toyota) approached [it] to provide [its] personal assistant service, 'MyStar' to its Lexus Division under the 'Lexus' brand"; that "Toyota and Phoneternet immediately entered into extensive negotiations, demos, and marketing creation to finalize the deal"; and that consummation of the deal was contingent on Phoneternet having a "clean business report" as determined by Toyota's procurement department. Pl.'s Compl. 2-3. Plaintiff further alleges that Toyota obtained a business report from Experian Business Credit Services ("Experian"), as well as LexisNexis, and was unhappy with what both reports revealed about Phoneternet's business credit rating and informed Plaintiff:

At this point since all we have to go on is Experian and LexisNexis information and as I pointed out yesterday we need to protect our brand at all costs. Once you have worked out any potential changes please reach back out to me and we can then have risk management re-evaluate at that point.

Id. at 4.

Plaintiff alleges that, after it notified Experian by letter on July 20, 2017, regarding discrepancies in the Experian business credit advantage report obtained by Toyota, Experian updated Phoneternet's credit report on August 23, 2017, which raised Phoneternet's business credit score. Plaintiff alleges that, on July 21, 2017, it similarly notified LexisNexis regarding 15 discrepancies and errors in the LexisNexis database related to Phoneternet, provided supporting documentation, and requested LexisNexis to correct the incorrect information, but LexisNexis did not respond until October 6, 2017.

According to Plaintiff, LexisNexis stated in a letter on this date that it had "modified 'the data as requested,' when in fact LexisNexis only changed one of the fifteen discrepancies" identified by Phoneternet. Id. at 6. Plaintiff alleges that it subsequently:

began to contact LexisNexis at least three times a week at its phone number of 1-800-382-6228 which is for the LexisNexis Small Business Advocacy Center (SBAC). Plaintiff spoke with the LexisNexis customer service team, managers andsupervisors on numerous occasions who each assured Plaintiff that Plaintiff's information would be updated in the database. Plaintiff was informed more than once that the issue of Phoneternet's data had been passed upon by senior decision makers at LexisNexis and would be fixed promptly. But the promised action never materialized.

Id.

Plaintiff alleges that, on November 16, 2017, it was informed that Toyota had decided to not use Phoneternet because of the issues with its business report. Plaintiff further alleges that it sent LexisNexis a final letter on January 2, 2018, to again request that LexisNexis correct the incorrect information in its database regarding Phoneternet; that LexisNexis notifed Plaintiff, on February 12, 2018, that it had made one additional change to Phoneternet's business report but failed to explain why the other requested changes had not been made; and that, to date, LexisNexis has failed to correct these errors in its database. Plaintiff alleges that, as a result of these errors and the failure to correct errors brought to its attention, it lost the contract with Toyota, and its future business prospects with other business partners will be negatively effected if the errors are not corrected.

Plaintiff alleges various Texas tort claims against Defendants for negligence; business disparagement; negligent misrepresentation; tortious interference with prospective business relations; and negligent breach of special duty. Plaintiff also asserts a claim for equitable relief based on promissory estoppel and seeks injunctive relief. Plaintiff alleges that RELX, as the parent company of LexisNexis, is jointly reliable for LexisNexis's conduct based on alter ego and joint enterprise theories of liability. On January 28, 2019, Defendants moved, pursuant to Federal Rule of Civil Procedure 12(b)6), to dismiss all claims asserted against them.

II. Rule 12(b)(6) Standard

To defeat a motion to dismiss filed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007); Reliable Consultants, Inc. v. Earle, 517 F.3d 738, 742 (5th Cir. 2008); Guidry v. American Pub. Life Ins. Co., 512 F.3d 177, 180 (5th Cir. 2007). A claim meets the plausibility test "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citations omitted). While a complaint need not contain detailed factual allegations, it must set forth "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citation omitted). The "[f]actual allegations of [a complaint] must be enough to raise a right to relief above the speculative level . . . on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. (quotation marks, citations, and footnote omitted). When the allegations of the pleading do not allow the court to infer more than the mere possibility of wrongdoing, they fall short of showing that the pleader is entitled to relief. Iqbal, 556 U.S. at 679.

In reviewing a Rule 12(b)(6) motion, the court must accept all well-pleaded facts in the complaint as true and view them in the light most favorable to the plaintiff. Sonnier v. State Farm Mutual Auto. Ins. Co., 509 F.3d 673, 675 (5th Cir. 2007); Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004); Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996). In ruling on such a motion, the court cannot look beyond the pleadings. Id.; Spivey v. Robertson, 197F.3d 772, 774 (5th Cir. 1999). The pleadings include the complaint and any documents attached to it. Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000). Likewise, "'[d]ocuments that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to [the plaintiff's] claims.'" Id. (quoting Venture Assocs. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431 (7th Cir. 1993)). In this regard, a document that is part of the record but not referred to in a plaintiff's complaint and not attached to a motion to dismiss may not be considered by the court in ruling on a 12(b)(6) motion. Gines v. D.R. Horton, Inc., 699 F.3d 812, 820 & n.9 (5th Cir. 2012) (citation omitted). Further, it is well-established and '"clearly proper in deciding a 12(b)(6) motion [that a court may] take judicial notice of matters of public record."' Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir. 2011) (quoting Norris v. Hearst Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007) (citing Cinel v. Connick, 15 F.3d 1338, 1343 n.6 (5th Cir. 1994)).

The ultimate question in a Rule 12(b)(6) motion is whether the complaint states a valid claim when it is viewed in the light most favorable to the plaintiff. Great Plains Trust Co. v. Morgan Stanley Dean Witter, 313 F.3d 305, 312 (5th Cir. 2002). While well-pleaded facts of a complaint are to be accepted as true, legal conclusions are not "entitled to the assumption of truth." Iqbal, 556 U.S. at 679 (citation omitted). Further, a court is not to strain to find inferences favorable to the plaintiff and is not to accept conclusory allegations, unwarranted deductions, or legal conclusions. R2 Invs. LDC v. Phillips, 401 F.3d 638, 642 (5th Cir. 2005) (citations omitted). The court does not evaluate the plaintiff's likelihood of success; instead, it only determines whether the plaintiff has pleaded a legally cognizable claim. United States ex rel. Riley v. St. Luke's Episcopal Hosp., 355 F.3d 370, 376 (5th Cir. 2004). Stated another way, when a court deals with a Rule 12(b)(6) motion,its task is to test the sufficiency of the allegations contained in the pleadings to determine whether they are adequate enough to state a claim upon which relief can be granted. Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir. 1977); Doe v. Hillsboro Indep. Sch. Dist., 81 F.3d 1395, 1401 (5th Cir. 1996), rev'd on other grounds, 113 F.3d 1412 (5th Cir. 1997) (en banc). Accordingly, denial of a 12(b)(6) motion has...