Opinion
6:21-cv-01134-MK
02-03-2022
OTTO GALVEZ, Plaintiff, v. FIRST PREMIER BANK; and DOES 1 THROUGH 100, Defendants.
FINDINGS AND RECOMMENDATION
KASUBHAI, UNITED STATES MAGISTRATE JUDGE
Plaintiff Otto Galvez brings this action against Defendants Equifax Information Services, LLC, (“Equifax”), First Premier Bank (“Premier”), and Does 1 through 100, under the Fair Credit Reporting Act (the “FCRA”), 15 U.S.C. §§ 1681s-2(b), 1681e(b), 1681i(a)(2)(A), 1681i(a)(4), and 1681i(a)(5)(A). See Compl., ECF No. 1. Premier has filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(2). Def.'s Mot. Dismiss, ECF No. 13. For the reasons below, Premier's motion should be GRANTED.
BACKGROUND
Plaintiffs account with Premier was fully satisfied and legally paid in full in approximately July 2016. Compl., ¶ 10, ECF No. 1. On January 18, 2021, Plaintiff ordered a three-bureau credit report from Experian. Id. at ¶ 53. Plaintiff found that Premier continued to report Plaintiffs account as a “charge off.” Id. at ¶ 68. A “charge off” is a notation that a creditor has “changed the outstanding debt from receivable to a loss in its own account books.” Anderson v. Credit One Bank, N.A., 884 F.3d 382, 385 (2nd Cir. 2018).
Plaintiff alleges the continuous reporting of a “charge off” artificially reduced Plaintiffs Fair Isaac Corporation (“FICO”) score, which “mislead[s] in such a way as to adversely affect credit decisions.” Compl. ¶ 69. On February 22, 2021, Plaintiff sent a dispute letter to Equifax, which Plaintiff maintains Equifax forwarded to Premier. Id. ¶¶ 55, 59. On March 30th, 2021, “Plaintiff ordered a three-bureau credit report from Experian to determine if his accounts were updated.” Id. ¶ 60. Plaintiff alleges that despite Premier having actual knowledge of the discrepancies on his account, Premier did not update the information nor investigate whether Plaintiffs account was previously settled. Id. ¶¶ 62, 63.
STANDARD OF REVIEW
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(2) allows a defendant to move for dismissal on the grounds that the court lacks personal jurisdiction. The plaintiff bears the burden of establishing that the district court has personal jurisdiction over a defendant. Harris Rutsky & Co. Ins. Servs. v. Bell & Clements Ltd., 328 F.3d 1122, 1128 (9th Cir. 2003). “Personal jurisdiction over each defendant must be analyzed separately.” Id. at 1130; Brainerd v. Governors of the Univ. of Alta., 873 F.2d 1257, 1258 (9th Cir. 1989).
When a defendant's motion to dismiss is based on written materials rather than an evidentiary hearing, as is the case here, the plaintiff “need only make a prima facie showing of jurisdiction to avoid the defendant's motion to dismiss.” Id. at 1129. All factual disputes are resolved in favor of the plaintiff Lake v. Lake, 8th F.2d 1416, 1420 (9th Cir. 1987). A plaintiff cannot “simply rest on the bare allegations of its complaint, ” however, uncontroverted allegations in the complaint must be taken as true. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004) (quoting Amba Mktg Sys., Inc. v. Jobar Int'l, Inc., 551 F.2d 784, 787 (9th Cir. 1977)).
DISCUSSION
I. Personal Jurisdiction Over Premier
“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.”). Courts must therefore inquire whether its 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 (quoting Int l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). “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 is sometimes referred to as “case-specific” or “case-linked” jurisdiction, meaning it depends on an affiliation between the forum state and the underlying controversy, whereas general jurisdiction is sometimes referred to as “all-purpose” jurisdiction, meaning the court may assert jurisdiction over a defendant based on a forum connection unrelated to the underlying lawsuit (e.g., domicile, place of incorporation, or principal place of business). Walden v. Fiore, 571 U.S. 277, 284 n.6 (2014).
For a state to exercise specific jurisdiction over a non-resident, the Ninth Circuit employs the following three-prong test to determine if a defendant has sufficient minimum contacts:
(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. v. AcademyOne, Inc., 653 F.3d 1066, 1076 (9th Cir. 2011). 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.
For a state to exercise general jurisdiction over a non-resident, the defendant's business activities within the forum state must be “continuous and systematic” or “substantial” enough to “approximate physical presence” in the forum state. Schwarzenegger, 374 F.3d at 801 (quoting Perkins v. Benguet Consol. Mining Co., 352 U.S. 437, 445 (1952). To determine whether a nonresident business defendant's contacts are sufficiently substantial, continuous, and systematic, a court usually considers their “longevity, continuity, volume, economic impact, physical presence, and integration into the state's regulatory or economic markets.” Tuazon v. R.J. Reynolds Tobacco Co., 433 F.3d 1163, 1172 (9th Cir. 2006). “This is an exacting standard, as it should be, because a finding of general jurisdiction permits a defendant to be haled into court in the forum state to answer for any of its activities anywhere in the world.” Schwarzenegger, 374 F.3d at 801 (9th Cir. 2004)
Premier argues that the Court lacks personal jurisdiction over it with respect to this lawsuit. Plaintiff counters this Court has “general jurisdiction over all the credit reporting agenc[ies] listed as defendants in this case.” Pl.'s Opp'n Premier's Mot. Dismiss 2, ECF No. 18.
Plaintiffs argument regarding the Court's general jurisdiction over all credit reporting agencies fails for two reasons. First, the Complaint does not allege that Premier is a credit reporting agency. The FRCA defines credit reporting agencies as:
[A]ny 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 or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.15 U.S.C. § 1681a(f). Nowhere in the Complaint does Plaintiff allege that Premier engages in any of the conduct listed in the statute. Instead, the Complaint alleges that Premier is a “furnisher” under the FCRA. Compl. ¶ 59. Furnishers are not credit reporting agencies-they are “the sources that provide credit information to [credit reporting agencies].” Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009). The only claim in this case brought against Premier is brought under 15 U.S.C. § 1681s-2(b), which applies to furnishers and not to credit reporting agencies themselves. See Compl. ¶¶ 94-106.
Second, beyond the conclusory assertion that Premier “conducts sufficient business within the forum state, ” the Complaint fails to allege facts that would establish that Premier's business activities within the state of Oregon are “continuous and systematic” or “substantial” enough to “approximate physical presence” in the forum state. Schwarzenegger, 374 F.3d at 801 (quoting Perkins v. Benguet Consol. Mining Co., 352 U.S. 437, 445 (1952).
To the extent Plaintiff makes arguments relating to Defendant Equifax, the arguments are not relevant to whether the Court has personal jurisdiction over Premier because “[personal jurisdiction over each defendant must be analyzed separately.” Harris, 328 F.3d at 1130. In other words, even if the Court were to find it had general jurisdiction over Defendant Equifax, personal jurisdiction cannot be imputed from one defendant to another.
In sum, the Complaint fails to allege facts that would allow the Court to find that Premier's activities within the state of Oregon are sufficient to exercise general jurisdiction over Premier. As such, the Court should find that it does not have personal jurisdiction over Premier.
II. Leave to Amend
Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend “shall be freely given when justice so requires.” Leave is not, however, “to be granted automatically.” Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir. 1990). Courts consider “the following five factors to assess whether to grant leave to amend: ‘(1) bad faith, (2) undue delay, (3) prejudice to the opposing party, (4) futility of amendment; and (5) whether plaintiff has previously amended his complaint.'” In re W. States Wholesale Nat. Gas Antitrust Litig., 715 F.3d 716, 738 (9th Cir. 2013) (quoting Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990)). Considering those factors here, the Court should find that the Complaint may be curable through amendment. Id. Plaintiff should be given leave to file an amended complaint 30 days from the date of the district judge's ruling on this Findings and Recommendation.
RECOMMENDATION
For the reasons explained above, Defendant's motion to dismiss (ECF No. 13) should be GRANTED and the Complaint should be DISMISSED without prejudice. Plaintiff should be allowed 30 days to file an amended complaint to cure, if possible, the deficiencies outlined above. Defendants' request for oral argument is DENIED as unnecessary. See LR 7-1(d)(1).
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 Findings and Recommendation will be referred to a district judge. Objections to this Findings and Recommendation, if any, are due fourteen (14) days from today's date. See Fed.R.Civ.P. 72. Failure to file objections within the specified time may waive the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153, 1157 (9th Cir. 1991).
IT IS SO ORDERED.