Opinion
6:21-cv-01801-MK
06-06-2023
BRIAN ECKELMAN Plaintiff, v. RENTGROW, INC.; and CLEARA, LLC, Defendants.
FINDINGS AND RECOMMENDATION
MUSTAFA T. KASUBHAI (HE / HIM) UNITED STATES MAGISTRATE JUDGE
Plaintiff Brian Eckelman filed this action against Defendants RentGrow, Inc. (“RentGrow”) and CLEARA, LLC (“CLEARA”) alleging violations of the Fair Credit Reporting Act (“FCRA”). Second Am. Compl. ¶ 1, ECF No. 54. Plaintiff alleges harm due to Defendant CLEARA's report of a previously expunged criminal record sent to Defendant RentGrow. Now before the Court is CLEARA's Motion to Dismiss Plaintiff's Second Amended Complaint for lack of Personal Jurisdiction. For the reasons below, CLEARA's Second Amended Complaint for lack of Personal Jurisdiction (ECF No. 62) should be GRANTED.
PROCEDURAL BACKGROUND
Plaintiff filed this action in December 2021 against Defendants CLEARA and RentGrow. ECF No. 1. In July 2022, CLEARA moved to dismiss for lack of personal jurisdiction, arguing that CLEARA did not have sufficient minimum contacts with Oregon for this Court to exercise personal jurisdiction. ECF No. 35. In a Findings and Recommendation dated November 28, 2022-and adopted December 22, 2022-the District Court granted CLEARA'S motion to dismiss for lack of personal jurisdiction but granted Plaintiff leave to amend. ECF Nos. 50, 53. Plaintiff filed a Second Amended Complaint on January 6, 2023. ECF No. 54. CLEARA has now again moved to dismiss for lack of personal jurisdiction. ECF No. 62.
BACKGROUND
Plaintiff Brian Eckelman lived in Oregon at the time of the alleged wrongful conduct by Defendants CLEARA and RentGrow. Second Am. Compl. ¶¶ 14-15, ECF No. 54. Around November 2021, Plaintiff's spouse received a prospective employment opportunity as a property manager in Michigan. Id. at ¶ 14-16. While living in Oregon, Plaintiff and his spouse filed a rental application for an apartment complex in Michigan. Id. at ¶ 19, 21. Plaintiff alleges the apartment complex and his spouse's prospective employer were “affiliated” with one another. Id. at ¶ 22. On November 8, 2021, Plaintiff received a “Denial Letter” from the apartment complex. Id. at ¶ 30. The Denial Letter informed Plaintiff his rental application was declined as a result of criminal history. Id. at ¶¶ 30-33. Plaintiff's spouse lost her job opportunity because of the affiliation between her potential employer and the apartment complex. Id. at ¶¶ 69, 70.
Defendant CLEARA is a Pennsylvania limited liability corporation and maintains its principal place of business in Maryland. Decl. of Joseph Davidson in Supp. of CLEARA, LLC's Mot. to Dismiss Pl.'s Second Am. Compl. (“Davidson Decl.”) ¶ 3, ECF No. 63. CLEARA provides wholesale background data to various entities, including RentGrow. Id. at ¶ 7, 11. Defendant RentGrow is a consumer reporting agency with a principal place of business in Massachusetts. Def.‘s Answer to Pl.‘s Second Am. Compl. ¶ 8, ECF No. 55. Plaintiff alleges that RentGrow “assembles and merges information contained in the database of another consumer reporting agency,” and provides its clients with tenant screening reports. Second Am. Compl. ¶ 8. Plaintiff alleges that CLEARA knew it was the “RentGrow-designated vendor for background checks of Oregon residents.” Id. at ¶ 58.
The Denial Letter notified Plaintiff that the information about his criminal history was based on a tenant screening report provided to the apartment complex by RentGrow. Id. at ¶ 33. RentGrow's tenant screening report was in turn based on a consumer report provided to RentGrow by CLEARA. Id. at ¶ 43. Plaintiff alleges that RentGrow “commissioned CLEARA to use Plaintiff's Oregon addresses in its search for criminal records” such that “the Oregon addresses were part and parcel of the background check itself.” Id. at ¶¶ 52, 53. CLEARA's report, and in turn RentGrow's tenant screening report, disclosed an expunged criminal conviction to his prospective apartment complex. Id. at ¶ 38-42.
STANDARD OF REVIEW
When ruling on a motion to dismiss for lack of personal jurisdiction brought under Rule 12(b)(2), the plaintiff bears the burden of proving that the court's exercise of jurisdiction is proper. SeeSchwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004). When resolving such a motion on written materials, rather than after an evidentiary hearing, the court need “only to inquire into whether the plaintiff's pleadings and affidavits make a prima facie showing of personal jurisdiction.” Id. (brackets omitted). Uncontroverted allegations in a complaint must be taken as true, but a plaintiff cannot simply rest on the bare allegations in the complaint. AMA Multimedia, LLC v. Wanat, 970 F.3d 1201, 1207 (9th Cir. 2020); CollegeSource, Inc. v. AcademyOne, Inc., 653 F.3d 1066, 1073 (9th Cir. 2011) (“Where not directly controverted, plaintiff's version of the facts is taken as true for the purposes of a 12(b)(2) motion[.]”). “[D]isputed allegations in the complaint that are not supported with evidence or affidavits cannot establish jurisdiction[.] AMA Multimedia, 970 F.3d at 1207 (citing In re BoonGlob. Ltd., 923 F.3d 643, 650 (9th Cir. 2019)). Conflicts between facts contained in declarations or affidavits are resolved in the plaintiff's favor. Mattel, Inc. v. Greiner & Hausser GmbH, 354 F.3d 857, 861-62 (9th Cir. 2003).
DISCUSSION
I. Personal Jurisdiction Over CLEARA
“Federal courts ordinarily follow state law in determining the bounds of their jurisdiction over [defendants].” Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015) (quoting Daimler AG v.Bauman, 571 U.S. 117, 125 (2014)). Oregon law authorizes personal jurisdiction over defendants to the full extent permitted by the United States Constitution. See Or. R. Civ. P. 4 L; Gray & Co.v. Firstenberg Mach. Co., Inc., 913 F.2d 758, 760 (9th Cir. 1990) (“Oregon's long-arm statute confers jurisdiction to the extent permitted by due process.”). Federal courts must therefore inquire whether their exercise of jurisdiction over a defendant “comports with the limits imposed by federal due process.” Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015) (quoting Daimler, 571 U.S. at 125).
“Due process requires that the defendant have certain minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Picot, 780 F.3d at 1211 (internal quotations and citation omitted). “The strength of contacts required depends on which of the two categories of personal jurisdiction a litigant invokes: specific jurisdiction or general jurisdiction.” Ranza, 793 F.3d at 1068.
Specific jurisdiction depends on an affiliation between the forum state and the underlying controversy. Walden v. Fiore, 571 U.S. 277, 284 n.6 (2014). For a federal court to exercise jurisdiction in a forum state over a non-resident, the Ninth Circuit employs the following three-prong test to determine if a defendant has sufficient minimum contacts:
Plaintiff previously conceded that general jurisdiction is inapplicable to CLEARA. ECF No. 39 at 9.
(1) The non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable.Picot, 780 F.3d at 1211 (emphasis added) (quoting Schwarzenegger, 374 F.3d at 802). The plaintiff bears the burden of satisfying the first two prongs. CollegeSource, Inc., 653 F.3d at 1076. If the plaintiff does so, the burden then shifts to the moving defendant to present “a ‘compelling case' that the exercise of jurisdiction would not be reasonable.” Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-78 (1985)).
“The exact form of [a court's] jurisdictional inquiry depends on the nature of the claim at issue.” Picot, 780 F.3d at 1212. For claims sounding in contract, courts in the Ninth Circuit “generally apply a ‘purposeful availment' analysis and ask whether a defendant has ‘purposefully avail[ed] [themself] of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'” Id. (quoting Schwarzenegger, 374 F.3d at 802). For claims sounding in tort, courts “apply a ‘purposeful direction' test and look to evidence that the defendant has directed his actions at the forum state, even if those actions took place elsewhere.” Id.
The Ninth Circuit uses a three-part test (the “effects test”) based on the Supreme Court's decision in Calder v. Jones, 465 U.S. 783 (1983), to evaluate purposeful direction. PanavisionInt'l v. Toeppen, 141 F.3d 1316, 1321 (9th Cir. 1998). “Under this test, the defendant allegedly must have (1) committed an intentional act, (2) expressly aimed at the forum state, (3) causing harm that the defendant knows is likely to be suffered in the forum state.” Brayton Purcell, 606 F.3d at 1129 (first alteration in original; citations omitted) (quoting Schwarzeneggar, 374 F.3d at 805). In a prior Findings and Recommendation, the Court found that the first and third elements of the test were met, but that Defendant could not show CLEARA's acts were “expressly aimed at the forum state” as required to meet the second element. ECF No. 50 at 10. The Court granted Plaintiff leave to amend his First Amended Complaint to address its deficiencies. Id. at 12. Despite Plaintiff's amendments, he has not demonstrated that CLEARA expressly aimed its conduct at Oregon and therefore has not met the second element of the effects test.
Plaintiff alleges in his Second Amended Complaint that: “RentGrow selects its venders based on jurisdiction” and that CLEARA was the “RentGrow-designated vender for background checks of Oregon residents...” Second Am. Compl. ¶¶ 57, 58, ECF No. 54. However, Plaintiff produced no evidence in support of these allegations. By contrast, CLEARA produced evidence that it granted RentGrow a general license and this license was not state specific. Davidson Decl. ¶¶ 8, 10, ECF No. 63. CLEARA also produced evidence that it provides data to RentGrow in Massachusetts, has no control over its customers' use of the database, and “did not take any action to specifically target Oregon when contracting with RentGrow.” Id. at ¶12. “[D]isputed allegations in the complaint that are not supported with evidence or affidavits cannot establish jurisdiction[.]” AMA Multimedia, 970 F.3d at 1207. Accordingly, these bare allegations by Plaintiff cannot establish jurisdiction in the face of uncontroverted evidence to the contrary from CLEARA.
Plaintiff also argues that CLEARA's knowledge that Plaintiff was an Oregon resident, and CLEARA's use of an Oregon address, demonstrates CLEARA “expressly aimed” its conduct at Oregon. ECF No. 74. However, knowledge that a plaintiff has a connection to the forum state is an approach to minimum contacts that “impermissibly allows a plaintiff's contacts with the defendant and the forum to drive the jurisdictional analysis.” Walden, 571 U.S. at 289. Furthermore, “[t]he plaintiff cannot be the only link between the defendant and the forum. Rather, it is the defendant's conduct that must form the necessary connection with the forum [s]tate that is the basis of its jurisdiction over him.” Id. at 285. CLEARA's use of Plaintiff's Oregon address to conduct a background check establishes only CLEARA's knowledge of Plaintiff's connection to Oregon, not CLEARA's own connection to Oregon. SeeAxiom Foods,Inc. v. Acerchem Int'l, Inc., 874 F.3d 1064, 1070 (9th Cir. 2017) (a court “must look to the defendant's ‘own contacts' with the forum, not to the defendant's knowledge of a plaintiff's connections to a forum”) (citing Walden, 571 U.S. at 288). These allegations are therefore insufficient to establish that CLEARA expressly aimed conduct at Oregon.
In sum, CLEARA provided a general service to RentGrow and did not seek out or conduct business expressly aimed at Oregon. CLEARA's knowledge of Plaintiff's Oregon address is insufficient to meet the “express aiming” element of the effects test. Because that element is required to establish purposeful direction, Plaintiff cannot meet the first requirement of the “minimum contacts” test as to CLEARA, and this Court does not have personal jurisdiction over CLEARA.
Because Plaintiff cannot meet the first requirement of the minimum contacts test, the Court does not address the remaining two requirements.
II. Dismissal with Prejudice
Plaintiff did not seek leave to amend in the event of dismissal pursuant to CLEARA's motion. See Pl.'s Resp., ECF No. 74. Even if he had, a “district court's discretion to deny leave to amend is broad where a Plaintiff previously has amended complaint.” World Wide Rush, LLCv. City of L.A., 606 F.3d 676, 690 (9th Cir. 2010). Here, this Court has already afforded Plaintiff the opportunity to amend his complaint to address personal jurisdiction over CLEARA, but for the reasons set forth above he failed to do so. Therefore, Plaintiff's claims against CLEARA should be dismissed with prejudice.
RECOMMENDATION
For the reasons explained above, Defendant's Motion to Dismiss (ECF No. 62) should be GRANTED. All claims against CLEARA should be dismissed with prejudice.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Federal Rule of Appellate Procedure 4(a)(1) should not be filed until entry of the district court's judgment or appealable order. The parties shall have fourteen (14) days from the date of service of a copy of this recommendation within which to file specific written objections with the court. Thereafter, the parties shall have fourteen (14) days within which to file a response to the objections. Failure to timely file objections to any factual determination of the Magistrate Judge will be considered as a waiver of a party's right to de novo consideration of the factual issues and will constitute a waiver of a party's right to appellate review of the findings of fact in an order or judgment entered pursuant to this recommendation.
IT IS SO ORDERED.