Skiles v. Tesla, Inc.

440 F.Supp.3d 1012

Wayne SKILES, Plaintiff,

v.TESLA, INC., et al., Defendants.

Case No. 17-cv-05434-WHO

United States District Court, N.D. California.

Signed February 19, 2020

Seyed Abbas Kazerounian, Kazerouni Law Group, APC, Joshua B. Swigart, Hyde & Swigart, San Diego, CA, Emily C. Headlee, Nicholas Ryan Barthel, Kazerouni Law Group, APC, Costa Mesa, CA, Jason A. Ibey, Kazerouni Law Group, APC, St. George, UT, S. Mohammed Kazerounian, Kazerouni Law Group, APC, Santa Ana, CA, for Plaintiff.

Jeffrey Gutkin, Michael Graham Rhodes, Kyle Christopher Wong, Cooley LLP, San Francisco, CA, John A. Vogt and Ryan D. Ball, Jones Day, Irvine, CA, for Defendants.

ORDER GRANTING DEFENDANTS' MOTIONS TO DISMISS

William H. Orrick, United States District Judge

Plaintiff Wayne Skiles files this putative class action against defendants Tesla, Inc. ("Tesla") and Experian Information Solutions, Inc. ("Experian"), alleging that they violated the Fair Credit Reporting Act ("FCRA") when Experian provided Tesla with a "Mosaic score" at the time that Skiles visited Tesla's showroom. Skiles alleges that when he provided Tesla with his driver's license in order to test drive a car, Tesla sent his personal information to Experian without his consent, and Experian provided a report categorizing him according to likely income, spending habits, and other characteristics. Pursuant to Local Rule 7–1(b), I find this matter suitable for determination without oral argument and VACATE the hearing currently noticed for February 19, 2020. Skiles has failed to adequately allege that the report sent by Experian was a consumer report or that it was not used for a permissible purpose pursuant to the FCRA. However, amendment would not be futile. Accordingly, the defendants' motions are GRANTED WITH LEAVE TO AMEND.

BACKGROUND

Skiles first filed this action on September 19, 2017 and filed an amended complaint ("FAC") on December 22, 2017. Dkt. Nos. 1, 61. Skiles alleges that in August of 2015, he visited a Tesla vehicle showroom in Newport Beach, California. Dkt. No. 61 ("FAC") ¶ 17. A Tesla employee approached him and offered to let him test drive a Tesla car. Skiles stated that he was interested. Id. ¶¶ 18-19. The Tesla employee then requested Skiles's driver's license, which Skiles believed was for the purpose of verifying that he was permitted to operate a motor vehicle, but which Tesla in fact used to obtain a report from Experian called a "Mosaic score." Id. ¶¶ 20-31. Skiles was not provided an opportunity to consent to this use of his driver's license. Id. ¶ 34. Skiles alleges that his Mosaic score was based on his personal information and used by Tesla for sales and marketing purposes and to evaluate his credit worthiness. Id. ¶¶ 30-31, 62.

Tesla filed a motion to dismiss and to compel arbitration on January 24, 2018. Dkt. No 64. I granted Tesla's motion to compel arbitration and stayed the case. Dkt. No. 76. After the arbitrator found that Skiles's claims were not subject to arbitration, I granted Skiles's request to lift the stay. Dkt. No. 98. The parties subsequently resumed briefing on Tesla's original motion to dismiss the FAC filed in 2017, and Experian re-filed a motion to dismiss on November 27, 2019. Dkt. Nos. 64, 99. In his oppositions, Skiles did not oppose Experian's or Tesla's motions to dismiss his claims under the Electronic Communications Privacy Act and the Driver's Privacy Protection Act, but requests dismissal without prejudice. Dkt. No. 102 at 21; Dkt. No. 103 at 9.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible when the plaintiff pleads facts that "allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). There must be "more than a sheer possibility that a defendant has acted unlawfully." Id. While courts do not require "heightened fact pleading of specifics," a plaintiff must allege facts sufficient to "raise a right to relief above the speculative level." Twombly , 550 U.S. at 555, 570, 127 S.Ct. 1955.

In deciding whether the plaintiff has stated a claim upon which relief can be granted, the Court accepts the plaintiff's allegations as true and draws all reasonable inferences in favor of the plaintiff. Usher v. City of Los Angeles , 828 F.2d 556, 561 (9th Cir. 1987). However, the court is not required to accept as true "allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences." In re Gilead Scis. Sec. Litig. , 536 F.3d 1049, 1055 (9th Cir. 2008) (citation omitted). If the court dismisses the complaint, it "should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Lopez v. Smith , 203 F.3d 1122, 1127 (9th Cir. 2000) (citation omitted). In making this determination, the court should consider factors such as "the presence or absence of undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party and futility of the proposed amendment." Moore v. Kayport Package Express , 885 F.2d 531, 538 (9th Cir. 1989).

DISCUSSION

I. REQUESTS FOR JUDICIAL NOTICE

Skiles filed a request for judicial notice along with his oppositions requesting notice of publicly available documents from the Federal Trade Commission ("FTC") and various publicly available documents published by Experian. Dkt. No. 104. I need not rely on the FTC materials because the cases cited by the parties and in this opinion are dispositive of the matters at issue. I have considered the Experian web pages cited in the FAC under the doctrine of incorporation by reference, but the remaining Experian materials have been cited by the parties for their substance and bear on factual matters not appropriate in resolving a motion to dismiss. Skiles's request is DENIED except as noted.

II. FCRA CLAIM

A. Whether the Mosaic score is a "consumer report" under the FCRA

Tesla and Experian first argue that the Mosaic score is not a "consumer report" as defined by the FCRA because (i) it is not used to establish credit eligibility and (ii) it provides household and not individual consumer data. Dkt. No. 64 at 21; Dkt. No. 99 at 10-12. The FCRA defines "consumer report" as "any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living," which is "used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for -- (A) credit or insurance to be used primarily for personal, family, or household purposes...[or] (C) any other purpose authorized under section 1681b of this title." 15 U.S.C.A. § 1681a(d)(1).

The FAC alleges that the Mosaic score is a consumer report because "[i]n generating a ‘Mosaic’ score for Tesla, Experian took into consideration factors bearing on Plaintiff's credit worthiness, personal characteristics, and mode of living, among other things." FAC ¶¶ 86-87. It cites Experian's webpage, which states that Mosaic "is a household-based consumer lifestyle segmentation that empowers marketers with the insights needed to anticipate the behavior, attitudes and preferences of their most profitable customers and reach them in the most effective channels with the best messages." Id. ¶ 87. Listed "key benefits" include "[c]onsumer database of 126 million households" and "[p]redictive insights, property characteristics and summarized credit and automotive data." Id.

Tesla and Experian argue that Skiles's allegations with respect to the first aspect of the "consumer report" definition are conclusory. Dkt. No. 64 at 22; Dkt. No. 99 at 11-12. I disagree. Skiles's citation to Experian's website provides facts that plausibly support a claim that the Mosaic score contains information relating to "a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living." 15 U.S.C.A. § 1681a(d)(1).

Both Tesla and Experian also argue that the Mosaic score is limited to household data, and not individual data as required by the statute. Dkt. No. 106 at 7; Dkt. No. 107 at 5. While it is true that the FCRA defines a "consumer" as an individual and not a business or group of people, 15 U.S.C.A. § 1681a(c), a consumer report need only "bear on" an individual's creditworthiness or reputation. The household data as pleaded here—which is allegedly prepared for individuals and based upon information from those individuals, see FAC ¶ 3, 30—satisfies this standard. Skiles has identified sufficient facts to allege that a Mosaic score "bears on" an individual's creditworthiness such that it is a consumer report.

Skiles asserts that after satisfying the first portion of the definition of "consumer report," he need only allege that the report could be used in connection with a "business transaction" with a consumer. Dkt. No. 102 at 8-9. However, in citing Greenway v. Info. Dynamics, Ltd. , 399 F. Supp. 1092 (D. Ariz. 1974), aff'd , 524 F.2d 1145 (9th Cir. 1975), Skiles conflates Section 1681a of the FCRA (concerning definition of "consumer report") with Section 1681b (concerning permissible use of consumer reports). Section 1681b states that a credit reporting agency may permissibly provide a consumer report to a person that it has reason to believe "has a...