Shepherd-Salgado v. Tyndall Fed. Credit Union

MANDRELLA C. SHEPHERD-SALGADO, Plaintiff,

v.TYNDALL FEDERAL CREDIT UNION, et al., Defendants.

CIVIL ACTION 11-0427-WS-B

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

Dated: November 7, 2011

ORDER

This matter, which was recently transferred to the undersigned's docket, comes before the Court on a raft of very similar Rule 12(b) motions, to-wit: Defendants Santander Consumer USA, Inc. and AmeriCredit Financial Services Inc.'s Motion to Dismiss (doc. 40); Defendant JPMorgan Chase Bank N.A.'s Motion to Dismiss (doc. 42); Compass Bank's Motion to Dismiss (doc. 43); Defendant Capital One Auto Finance's Motion to Dismiss (doc. 45);¹ and Tyndall Federal Credit Union's Motion to Dismiss (doc. 49). All Motions have been briefed and are now ripe for disposition.²

I. Background.

Plaintiff, Mandrella C. Shepherd-Salgado ("Salgado"), brought this action against more than a half dozen financial services firms, alleging violations of the Fair Credit Reporting Act, 15U.S.C. §§ 1681 et seq. ("FCRA"), and the Computer Fraud and Abuse Act, 18 U.S.C. §§ 1030 et seq. ("CFAA"). She has resolved her claims against one defendant, leaving as remaining defendants Tyndall Federal Credit Union, Arizona Bank, AmeriCredit Financial Services, Inc., Santander Consumer USA, Inc., Chase Auto Finance Corp., Capital One Auto Finance, Inc., and Compass Bank. The Amended Complaint (doc. 22) alleges that in April 2011, these defendants impermissibly accessed Salgado's credit report via computer without her consent and under false pretenses, all in violation of the FCRA and the CFAA, thereby lowering her credit score.

More specifically, the Amended Complaint alleges that in April 2011, Salgado went shopping for a new vehicle at a local car dealership owned by nonparty Tameron Automotive Eastern Shore, LLC ("Tameron"). (Doc. 22, ¶¶ 12, 15.) Although Salgado had arranged for preapproved financing up to $10,000, the vehicle she selected for purchase was represented to have a "total sales price" of $15,985. (Id., ¶¶ 17, 19.) In light of this gap, plaintiff understood that other financing arrangements would be necessary. "Instead of obtaining financing through a third party, Tameron extended credit directly to Plaintiff." (Id., ¶ 20.) After several hours at the dealership, Salgado was informed (and given paperwork confirming) that her lien holder would be nonparty Walls Fargo Dealer Services, Inc. (Id., ¶¶ 28-29.) After she drove off the lot in her new vehicle, "Tameron, in an effort to sell her contract, submitted Ms. Salgado's credit application, without her authorization, to the defendants herein, each of whom pulled her credit report resulting in a lowering of her credit score. This is because of the excessive inquiries from defendants." (Id., ¶ 36.)³ The Amended Complaint alleges, without elaboration, that defendants "were on notice that they were being asked to purchase an account rather than extend credit because of the date of the transaction," inasmuch as Salgado purchased her vehicle on April 9, 2011, but defendants' credit inquiries happened later in April and early May. (Id., ¶ 34.)

Based on these allegations, the Amended Complaint alleges that defendants lacked a permissible, lawful purpose for accessing her credit reports, that they obtained those reports under false pretenses, and that such conduct violated the FCRA, as well as the computer fraud provisions of the CFAA. Defendants have now moved to dismiss these claims, reasoning that even under the well-pleaded allegations of the Amended Complaint, they had a proper purpose for accessing Salgado's consumer reports, such that they did not violate the FCRA. Defendants maintain that dismissal of the FCRA claim on these grounds would likewise require dismissal of the derivative CFAA cause of action. Plaintiff contends that both of these statutory claims are cognizable against each defendant.

II. Analysis.

A. Legal Standard for Motion to Dismiss.

On a Rule 12(b)(6) motion to dismiss for failure to state a claim, "the court construes the complaint in the light most favorable to the plaintiff and accepts all well-pled facts alleged ... in the complaint as true." Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260 (11th Cir. 2009); see also Speaker v. U.S. Dep't of Health and Human Services Centers for Disease Control and Prevention, 623 F.3d 1371, 1379 (11th Cir. 2010) ("In ruling on a 12(b)(6) motion, the Court accepts the factual allegations in the complaint as true and construes them in the light most favorable to the plaintiff."); Edwards v. Prime, Inc., 602 F.3d 1276, 1291 (11th Cir. 2010) (similar).

To withstand Rule 12(b)(6) scrutiny, plaintiffs must plead "enough facts to state a claim to relief that is plausible on its face," so as to "nudge[] their claims across the line from conceivable to plausible." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citation omitted). Thus, minimum pleading standards "require[] 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. As the Eleventh Circuit has explained, Twombly/Iqbal principles require that a plaintiff plead "enough facts to state a claim to relief that is plausible on its face," whose allegations are "enough to raise a right to relief above the speculative level." Speaker, 623 F.3d at 1380 (citations omitted). The factual content of the complaint must "allow[] thecourt to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citations omitted); see also Wilchombe v. TeeVee Toons, Inc., 555 F.3d 949, 958 (11th Cir. 2009) ("A plaintiff must provide enough factual allegations, which are assumed to be true, to raise a right to relief above the speculative level.").

B. The FCRA Cause of Action.

As noted, the Amended Complaint includes allegations that defendants violated the FCRA both by obtaining Salgado's credit report without a proper purpose and by using false pretenses. These are not distinct violations of the FCRA, but are instead intertwined as a single claim for relief under the statutory scheme.⁴

"[T]he FCRA permits agencies to furnish credit reports only for certain statutorily enumerated purposes." Pintos v. Pacific Creditors Ass'n, 605 F.3d 665, 674 (9th Cir. 2010) (citation and internal quotation marks omitted). Under the terms of the statute, "[a] person shallnot use or obtain a consumer report for any purpose unless - (1) the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this section; and (2) the purpose is certified ... by a prospective user of the report through a general or specific certification." 15 U.S.C. § 1681b(f). The FCRA's proscriptions in this regard "operate to support the confidentiality of consumer reports by limiting their dissemination." Chester v. Purvis, 260 F. Supp.2d 711, 717 (S.D. Ind. 2003); see generally Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 52, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007) ("Congress enacted FCRA in 1970 to ... protect consumer privacy."); 15 U.S.C. § 1681(b) (purpose of FCRA is to require reasonable procedures "for meeting the needs of commerce for consumer credit ... information in a manner which is fair and equitable to the consumer, with regard to the confidentiality ... and proper utilization of such information").

The FCRA authorizes consumers to bring private suits for willful or negligent violations. See Harris v. Mexican Specialty Foods, Inc., 564 F.3d 1301, 1306 & n.2 (11th Cir. 2009); Levine v. World Financial Network Nat'l Bank, 554 F.3d 1314, 1318 (11th Cir. 2009) ("The Act provides civil liability for both willful violations ... and negligent violations ....") (citations omitted). Thus, "where a user either willfully or negligently obtains a consumer's credit report without a permissible purpose, the user is civilly liable to the consumer." Cappetta v. GC Services Ltd. Partnership, 654 F. Supp.2d 453, 461 (E.D. Va. 2009); see also Stergiopoulos v. First Midwest Bancorp, Inc., 427 F.3d 1043, 1046 (7th Cir. 2005) ("If an entity requests a report for a purpose not listed in the Act, the injured consumer can recover the 'actual damages' caused by negligent noncompliance ... or both actual and punitive damages caused by willful noncompliance ....").

To establish a FCRA claim of willful or negligent misuse or acquisition of a consumer report, a plaintiff must prove each of the following: (i) that there was a consumer report, (ii) that defendants used or obtained it, (iii) that they did so without a permissible statutory purpose, and (iv) that they acted with the specified culpable mental state. See Phillips v. Grendahl, 312 F.3d 357, 364 (8th Cir. 2002), abrogated on other grounds by Burr, 551 U.S. at 47; Godby v. Wells Fargo Bank, N.A., 599 F. Supp.2d 934, 938 (S.D. Ohio 2008). The critical question presented by defendants' Rule 12(b) Motions is whether Salgado's well-pleaded factual allegations give rise to a plausible inference that defendants accessed her credit report without a permissible purpose. Under the FCRA, "any consumer reporting agency may furnish a consumer report ... [t]o aperson which it has reason to believe ... intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to ... the consumer." 15 U.S.C. § 1681b(a)(3)(A) (emphasis added). To qualify under this subsection, "the 'credit transaction' must both (1) be a credit transaction involving the consumer on whom the information is to be furnished and (2) involve...