Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-01207/USCOURTS-azd-2_06-cv-01207-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1681 Fair Credit Reporting Act

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Thomas Alan BENJAMIN, 

Plaintiff, 

v.

Tim COKER, et al., 

Defendants.

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No. CV-06-1207-PHX-SMM

ORDER

Pending before the Court is Defendants' Motion to Dismiss and for Judgment on the

Pleadings, filed on May 22, 2006 [Doc. No. 8]. Plaintiff responded on May 31, 2006 [Doc.

Nos. 14 & 15], and Defendant filed a Reply on June 5, 2006 [Doc. No. 16]. After

considering the parties' briefs, the Court now issues the following ruling.

BACKGROUND

On May 1, 2006, Plaintiff Thomas Alan Benjamin filed suit in this Court. In his

Complaint, Plaintiff alleged that Defendant Tim D. Coker unlawfully obtained copies of his

Experian consumer report on three separate occasions: July 9, 2004; July 15, 2003; and, June

19, 2003. As a result of these alleged unauthorized acquisitions of his consumer report,

Plaintiff brought a variety of federal and state claims against that Defendant Coker,

including: (1) willful violation of the Fair Credit Reporting Act ("FCRA"); (2) negligent

violation of the FCRA; (3) violation of Arizona's consumer statutes; (4) civil conspiracy; (5)

invasion of privacy; and (6) intentional infliction of mental distress. In addition, Plaintiff has

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brought claims for willful violation of the FCRA and civil conspiracy against Defendant

Sandra Hope. 

According to Plaintiff, his consumer reports were obtained as part of a conspiracy

between Defendant Coker and Defendant Hope. (Dkt. 1, ¶¶ 19, 30, 44) Plaintiff alleges that

Defendant Coker, an attorney who regularly reports trade line information to credit reporting

agencies and regularly obtains consumer reports of individuals through his subscriber rights

with credit reporting agencies, provides consumer reports to Defendant Hope, a private

investigator licensed by the State of Arizona. (Dkt. 1, ¶¶ 6,10,11) Plaintiff claims that the

Defendant Coker did not identify, at the times he obtained Plaintiff's Experian consumer

reports, the name of the "end user" as required by the FCRA and that he obtained the reports

without a "permissible purpose" as that term is defined by the FCRA. (Dkt. 1, ¶¶ 20, 26, 31,

37, 39, 45, 51) Plaintiff further alleges that he only became aware that Defendant Coker

acquired his consumer reports after he received a copy of his Experian report on May 18,

2005 and that he has never given Defendant Coker permission to obtain his consumer report.

(Dkt. 1, ¶¶ 17,18)

As stated above, the Motion is now fully briefed and ripe for disposition by this Court.

STANDARD OF REVIEW

Defendant moves for judgment on the pleadings pursuant to Federal Rule of Civil

Procedure 12(c). Under Rule 12(c), any party may move for judgment on the pleadings

"[a]fter the pleadings are closed but within such time as to not delay the trial." Where Rule

12(c) is used to raise the defense of failure to state a claim, "the motion for judgment on the

pleadings faces the same test as a motion under Rule 12(b)(6)." McGlinchy v. Shell Chemical

Co., 845 F.2d 802, 810 (9th Cir. 1988). Dismissal of a complaint is proper if "it appears

beyond doubt that the plaintiff can prove no set of facts in support of his claim which would

entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). When determining a

motion for judgment on the pleadings, the court should assume the allegations in the

complaint to be true and construe them in the light most favorable to the plaintiff.

McGlinchy, 845 F.2d at 810. However, "conclusory allegations without more are insufficient

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to defeat a motion [for judgment on the pleadings]." Id. A complaint may be dismissed as

a matter of law if there is a lack of cognizable legal theory or if there are insufficient facts

alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F. 2d 696,

699 (9th Cir. 1990). The court must determine whether or not it appears to a certainty under

existing law that no relief can be granted under any set of facts that might be proved in

support of a plaintiff's claims. De La Crux v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978), cert.

denied, 441 U.S. 965 (1979). 

DISCUSSION

A. Plaintiff's Federal Law Claims and the Statute of Limitations

Defendants moved to dismiss any federal claims arising out of conduct alleged in ¶¶

28 thru 55 of Plaintiff's Complaint, arguing that these claims are time-barred under the FCRA

as existed prior to the 2003 amendment. (Dkt No. 8 at 3). Plaintiff's argue that the claims are

timely, citing the current version of the FCRA. (Dkt. No. 15, at 4). 

Responding to the Supreme Court's decision in TRW Inc. v. Andrews, 534 U.S. 19,

122 S.Ct. 441 (2001), which refused to apply an implied general discovery exception to the

FCRA because the statute already contained a limited discovery exception, Congress

amended the FCRA in 2003. The 2003 amendment significantly altered the statute of

limitations contained in the prior version of the FCRA by adding a general discovery rule that

allows a plaintiff to bring an action for the earlier of: (1) two years after the date of discovery

of a violation of the FCRA, or (2) five years after the date on which the violation occurs. 15

U.S.C. §1681p. The earlier version of the FCRA provided only a limited discovery rule for

cases involving a defendant's willful misrepresentation of material information. 

Here, Plaintiff's allegations stem from three different acquisitions of his credit report,

two of which occurred prior to the 2003 amendment. Without denying Defendant's argument

that the claims involving actions that occurred before the effective date of the amendment

to the FCRA are governed by the earlier version of the Act, the Court finds that dismissal of

the federal claims arising out of the conduct alleged in ¶¶ 28 thru 55 of Plaintiff's Complaint

would be improper. Plaintiff's Complaint alleges that he did not discover the events giving

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rise to this claim until May 18, 2005. (Dkt 1 at 4). Assuming the allegations in the Complaint

are true and construing them in a light most favorable to Plaintiff, the Court finds the claims

arising under the FCRA are timely because Plaintiff's Complaint was filed less than two

years from the date he discovered Defendants' alleged violations and less than five years

from the initial alleged violation. However, this finding does not preclude Defendant from

raising the statute of limitations defense in a later motion, where additional facts may be able

to establish that the unamended version of the FCRA controls Plaintiff's claims.

B. Liability Under the 'End User' Theory

Defendant argues that "to the extent Plaintiff's [C]omplaint relies on the Defendants'

alleged failure to disclose the 'end user' as the predicate 'misrepresentation' for liability under

the FCRA, the FCRA allegations in the Complaint must be dismissed." (Dkt No. 8 at 4).

Defendants' claim that they are neither resellers of consumer reports required to disclose end

users (Dkt. 8 at 4), nor "consumer reporting agencies" obligated to disclose end users (Dkt.

16 at 2-3). Plaintiff counters by claiming that Defendant Hope and Defendant Coker both

meet the definition of consumer reporting agencies based on their actions. (Dkt. 15, section

D). 

Based on the causes of action raised in Plaintiff's Complaint, Defendants' alleged

failure to disclose the 'end user' is only relevant to the second count of Plaintiff's causes of

action against Defendant Coker: Negligent Violation of Fair Credit Reporting Act. (Dkt 1 at

¶¶61-64). Here, Plaintiff claims that Defendant Coker obtained Plaintiff's Experian

consumer report in violation of 15 U.S.C. § 1681o, which imposes civil liability upon "[a]ny

person who is negligent in failing to comply with any requirement imposed under [15 U.S.C.

§ 1681 et seq.] with respect to any consumer." Specifically, Plaintiff alleges that Defendant

Coker negligently failed to "establish and follow reasonable procedures to assure the

maximum possible accuracy of the information on his consumer report, including the name

of the end user." (Dkt 1 at ¶ 62). 

The required compliance procedures under the FCRA are found in 15 U.S.C. § 1681e.

Plaintiff's Complaint does not specify which requirement of the FCRA Defendants

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15 U.S.C. § 1681e(b) provides: "Whenever a consumer reporting agency prepares a

consumer report it shall follow reasonable procedures to assure maximum possible accuracy

of the information concerning the individual about whom the report relates." Count Two of

Plaintiff's Complaint alleges that Defendant Coker negligently failed to "establish and follow

reasonable procedures to assure the maximum possible accuracy of the information on his

consumer report, including the name of the end user." (Dkt 1 at ¶ 62).

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negligently failed to follow. Under 15 U.S.C. § 1681e(e)(1), "a person may not procure a

consumer report for purposes of reselling the report unless the person discloses to the

consumer reporting agency that originally furnishes the report the identity of the end -user

of the report (or information) and each permissible purpose...for which the report is furnished

to the end-user." Defendants assumed Plaintiff was referring to this provision of the FCRA

and argued that they were not liable because they did not procure Plaintiff's consumer report

for purposes of reselling it. Plaintiff's response does not address the issue of whether or not

Defendants procured the report for purposes of reselling it; rather, Plaintiff simply alleges

that Defendants are liable because they meet the definition of "consumer reporting agencies."

Based on Plaintiff's Complaint as well as his Opposition to Defendants' Motion to Dismiss,

it appears that Plaintiff may be alleging a violation of 15 U.S.C. § 1681e(b) because this

section applies to "consumer reporting agencies" and incorporates the exact language

provided in Plaintiff's Complaint.1

 However, this section does not refer to "end-users."

Therefore, the Court will dismiss Plaintiff's claim regarding the failure to disclose the end

users of the consumer reports as required by the FCRA. 

A complaint may be dismissed as a matter of law if there is a lack of cognizable legal

theory or if there are insufficient facts alleged under a cognizable legal theory. Balistreri, 901

F. 2d 696, 699. Here, the Court finds that Plaintiff has not raised a cognizable legal theory

or provided enough information to support a cognizable legal theory. Plaintiff states that

Defendant Coker is liable for negligent noncompliance under 15 U.S.C. § 1861o, but does

not state which requirement imposed by the FCRA he negligently violated. If, as Defendant

assumed, Plaintiff's negligence theory is based on 15 U.S.C. § 1681e(e)(1), then Plaintiff was

required to allege that Defendant Coker procured the consumer report for purposes of

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reselling the report. If Plaintiff's negligence theory was based on Defendant Coker's failure

to comply with 15 U.S.C. § 1681e(b), then it is unclear why Plaintiff's Complaint explicitly

refers to Defendant Coker's failure to verify the name of the end user. (Dkt. 1, ¶ 62) Because

the Court will not engage in speculation to resolve the ambiguities resulting from Plaintiff's

imprecise pleadings, "Count Two" of Plaintiff's causes of action against Defendant Coker is

dismissed. 

C. Plaintiff's State Law Claims

Defendants attack Plaintiff's state law claims on a variety of grounds, arguing: (1)

Plaintiff's state law claim for invasion of his right to privacy us preempted by 15 U.S.C. §

1681h(e); (2) neither defendant is a "consumer reporting agency" and therefore cannot be

held liable under A.R.S. § 44-1692; (3) there is no private cause of action under A.R.S. § 44-

1696; and, (4) there is no cause of action for invasion of right to privacy in Arizona. The

Court will address each of Defendants' arguments in turn. 

1. Plaintiff's Claim for Invasion of Right to Privacy is Not Preempted

The Court will not dismiss Plaintiff's claim for invasion of his right to privacy because

this claim is not preempted by 15 U.S.C. § 1681h(e). Pursuant to 15 U.S.C. § 1681h(e),

consumers may not bring state common law defamation claims "except as to false

information furnished with malice or willful intent to injure" such consumers. Because

Plaintiff's Complaint alleges that Defendants "willfully and knowingly" violated the FCRA,

the Court finds that his claim for invasion of privacy is not preempted. (Dkt 1, at ¶¶ 19, 30,

44). 

2. Defendants' Status as a Consumer Reporting Agency under A.R.S. § 44-1691

Defendants' argue that Plaintiff's claim for relief under A.R.S. § 44-1692 should be

dismissed because that statute only applies to consumer reporting agencies and that neither

Defendant Coker nor Defendant Hope meet the definition of "consumer reporting agency.".

(Dkt 8 at 6). Plaintiff argues that the claims are appropriate because "defendants' actions

accrue to them the status of a consumer reporting agency." (Dkt. 15 at section E(1)).

Assuming Plaintiff's allegations are true and construing them in a light most favorable

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to him, the Court finds that Plaintiff has alleged facts sufficient to support his claim that

Defendant Coker, the only defendant charged with violating A.R.S. § 44-1692, meets the

definition of a "consumer reporting agency." Under A.R.S. § 44-1691(2), a "'consumer

reporting agency' means any person which, for monetary fees, dues, or on a cooperative

nonprofit basis, regularly engages in whole or in part in the practice of assembling or

evaluating consumer credit information on consumers for the purpose of furnishing consumer

reports to third parties." Plaintiff's Complaint alleges that Defendant Coker "regularly reports

trade line information to credit reporting agencies" and that Defendant Hope "obtains

consumer report of individuals from Defendant Coker." (Dkt. 1 at ¶¶6, 11). Thus, Plaintiff

has alleged facts sufficient to support his claim against Defendant Coker.

3. Criminal Liability Under A.R.S. § 44-1696

Defendants' argue that since A.R.S. § 44-1696 imposes criminal liability, there is no

private right of action under the statute and Plaintiff's claim should be dismissed. (Dkt. 8 at

6). Plaintiff contends that general rules of interpretation as well as federal and state case law

shows that a private cause of action exists. (Dkt. 15 at Section E). 

Under Arizona law, whether or not an implied private cause of action exists is

determined by examining the context of the statutes, the language used, the subject matter,

the effects and consequences, and the spirit and purpose of the law. Transmerica Financial

Corp. v. Superior Court in and For Maricopa County, 158 Ariz. 115, 116, 761 P.2d 1019

(1988). The Court finds that there is no implied private cause of action under A.R.S. § 44-

1696. The private cause of action contemplated by the legislature is clearly provided under

A.R.S. § 44-1695. Here, the legislature has provided a private cause of action against a

consumer reporting agency, user of information or source of information who is "grossly

negligent in the use or preparation of a consumer report" or "who acts willfully and

maliciously with intent to harm a consumer." A.R.S. § 44-1695(C). In addition, a consumer

reporting agency is liable for "any damages and attorney fees and court costs that are

incurred by a consumer and that result from reporting of inaccurate information that a

consumer reporting agency refuses to correct as provided in section 44-1694." A.R.S.§ 44-

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1695(B). Therefore, the Court will dismiss Plaintiff's claims under A.R.S. § 44-1696 as a

matter of law for failing to state a claim. 

4. Arizona Recognizes a Cause of Action for Invasion of Privacy

Defendants' final argument that Arizona does not recognize a cause of action for

invasion of privacy is incorrect and the authority they cite to support this argument

contradicts this position. See Godbehere v. Phoenix Newspapers, 162 Ariz. 335, 783 P. 2d

781 (1989) (providing a detailed explanation of the development of the right of privacy in

the United States as well as Arizona). In particular, Defendants fail to recognize the

distinction between the constitutional right to privacy and the tort of invasion of privacy.

CONCLUSION

For the reasons set forth above,

IT IS THEREFORE ORDERED that Defendants' Motion to Dismiss and for

Judgment on the Pleadings (Dkt. 8) is GRANTED IN PART and DENIED IN PART as

follows: 

GRANTED Without Prejudice:

Count Two (Dkt. 1, ¶¶ 61-64) of Plaintiff's Causes of Action against Defendant Coker,

Negligent Violation of FCRA, and Plaintiff's claims brought under A.R.S. § 44-1696 (Dkt.

1, ¶ 66(b), "Prayer for Relief Against Defendant Coker," section (c), and "Prayer for Relief

Against Defendant Hope," section (m)) are DISMISSED WITHOUT PREJUDICE and

WITH LEAVE TO AMEND. If Plaintiff chooses to amend any of the foregoing Counts or

paragraphs, he must file an Amended Complaint no later than November 17, 2006.

//

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DENIED: Paragraphs 28-55, paragraph 73, paragraph 66(a) and paragraph 74 properly

state claims where Plaintiff may be entitled to relief and therefore Court will DENY

Defendant's Motion for Judgment on the Pleadings as to those claims. 

DATED this 2nd day of November, 2006.

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