1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 Case No. 22-cv-01194-DMS-MSB AARON RENDON, individually 11 and on behalf of others similarly ORDER DENYING MOTION situated, TO DISMISS FIRST AMENDED 12 COMPLAINT Plaintiff, 13 v. 14

CHERRY CREEK MORTGAGE,

15 LLC, 16 Defendant. 17 18 19 Pending before the Court is Defendant’s motion to dismiss Plaintiff’s First 20 Amended Complaint based on lack of subject matter jurisdiction (ECF No. 17). 21 Plaintiff filed an opposition (ECF No. 18), and Defendant filed a reply (ECF No. 22 20). For the following reasons, Defendant’s motion to dismiss is denied. 23 I. 24 BACKGROUND 25 On or around July 6, 2022, Plaintiff received notice from Credit Karma that 26 Cherry Creek Mortgage (“CCM”) conducted a credit inquiry on Plaintiff’s credit 27 file, and his credit score decreased. (First Amended Complaint (FAC) at ¶ 15.) 1 Defendant to obtain his credit report. (Id. at ¶ 16.) Thereafter, Plaintiff spoke with 2 Defendant on the phone and learned Defendant had a “technical issue” which 3 resulted in Defendant conducting a credit inquiry. (Id. at ¶ 19.) On or around July 4 25, 2022, Defendant sent Plaintiff a letter advising Plaintiff there was a “technical 5 issue” within CCM’s system which resulted in CCM ordering Plaintiff’s credit 6 report. (Id. at ¶ 21.) In a letter dated July 26, 2022, Defendant stated the credit 7 “inquiry was made without proper authorization” and Defendant advised Plaintiff it 8 contacted Equifax, Experian and TransUnion to remove the inquiry from Plaintiff’s 9 file. (Id. at ¶¶ 23-24.) Defendant advised Plaintiff it would send Plaintiff a check 10 for $350 to “offset the inconvenience.” (Id. at ¶ 22.) On August 15, 2022, Plaintiff 11 filed this action. (ECF No. 1.) 12 Plaintiff brings putative class claims arising from the above conduct. Plaintiff 13 alleges Defendant violated the California Consumer Credit Reporting Agencies Act 14 (“CCRAA”), specifically Cal. Civ. Code § 1785.31(a)(3), and the Fair Credit 15 Reporting Act (“FCRA”), specifically 15 U.S.C. § 1681b(f) (referred to herein as “§ 16 1681b(f)”). The parties jointly sought leave to amend the complaint (ECF No. 9), 17 and the Court granted leave (ECF No. 10). Plaintiff filed a FAC. (ECF No. 13.) 18 Defendant now moves to dismiss the FAC based on lack of subject matter 19 jurisdiction. (ECF No. 17.) 20 II. 21 LEGAL STANDARD 22 A. Federal Rule of Civil Procedure 12(b)(1) 23 A motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(1) 24 is a challenge to the court’s subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). 25 A jurisdictional attack under Rule 12(b)(1) can be either “facial” or “factual.” White 26 v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000) (citation omitted). “A ‘facial’ attack 27 accepts the truth of the plaintiff’s allegations but asserts that they ‘are insufficient 1 1121 (9th Cir. 2014) (citation omitted). “A ‘factual’ attack, by contrast, contests the 2 truth of the plaintiff’s factual allegations.” Id. In a facial attack, as is here, the Court 3 may look beyond the complaint and consider other evidence. McCarthy v. United 4 States, 850 F.2d 558, 560 (9th Cir. 1988). 5 A Plaintiff need only satisfy the good-faith pleading requirements set forth in 6 Rule 11 of the Federal Rules of Civil Procedure. Sierra Club v. Union Oil Co. of 7 California, 853 F.2d 667, 669 (9th Cir. 1988). The plaintiff’s allegations must be 8 based on good-faith beliefs, “formed after reasonable inquiry,” that are “well 9 grounded in fact.” Id. (citing Fed. R. Civ. P. 11). Plaintiff, as the party asserting 10 subject matter jurisdiction, “bears the burden of proving its existence.” Chandler v. 11 State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010) (citing 12 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). At this stage, 13 the Court accepts as true all factual allegations in the complaint and construes them 14 in the light most favorable to the Plaintiff. Eichenberger v. ESPN, Inc., 876 F.3d 15 979, 981 (9th Cir. 2017). 16 B. Standing 17 Standing consists of three elements. The plaintiff must show “(1) it has 18 suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or 19 imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the 20 challenged action of the defendant; and (3) it is likely, as opposed to merely 21 speculative, that the injury will be redressed by a favorable decision.” Friends of 22 the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 180-81 (2000) (citing 23 Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). When a case is at the 24 pleading stage, “the plaintiff must ‘clearly . . . alleged facts demonstrating each 25 element.” Spokeo Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (quoting Warth v. 26 Seldin, 422 U.S. 490, 298 (1975)). This case concerns the first element. 27 Specifically, whether the injury in fact is concrete. 1 III. 2 DISCUSSION 3 In the Ninth Circuit, there is a “two-step framework to determine whether 4 alleged violations of FCRA provisions are sufficiently concrete to confer standing: 5 ‘(1) whether the statutory provisions at issue were established to protect [a plaintiff's] 6 concrete interests (as opposed to purely procedural rights), and if so, (2) whether the 7 specific procedural violations alleged in this case actually harm, or present a material 8 risk of harm to, such interests.’” Tailford v. Experian Info. Sols., Inc., 26 F.4th 1092, 9 1099 (9th Cir. 2022) (alteration in original) (quoting Robins v. Spokeo, Inc. (Spokeo 10 III), 867 F.3d 1108, 1113 (9th Cir. 2017)). This is known as the Spokeo III 11 framework. Defendant insists this framework no longer controls in light of the 12 Supreme Court's decision in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021). 13 (See generally ECF No. 17.) The Court is unpersuaded. 14 Defendant asserts the Spokeo III framework is no longer tenable because it is 15 based on the Second Circuit’s framework set forth in Strubel v. Comenity Bank, 842 16 F.3d 181 (2d Cir. 2016). Earlier this year, the Second Circuit denounced the Strubel 17 framework in light of TransUnion. Harty v. West Point Realty, Inc., 28 F.4th 435, 18 443 (2d Cir. 2022) (explaining the “material risk” standard is no longer viable 19 because “in a suit for damages mere risk of future harm, standing alone, cannot 20 qualify as a concrete harm”). There are two issues with this assertion. First, the 21 framework in Spokeo III is slightly different from the one in Strubel. Spokeo III 22 states courts must consider whether the alleged violations “actually harm, or present 23 a material risk of harm to” a plaintiff’s concrete interests. 867 F.3d at 1113 24 (emphasis added). Since the Spokeo III framework includes the language “actual 25 harm,” rather than only “material risk” it survives TransUnion. Second, the Ninth 26 Circuit has not denounced the Spokeo III framework. This is clear based on recent 27 Ninth Circuit precedent. See, e.g., Tailford, 26 F.4th at 1099-1101 (utilizing the 1 violations constitute a concrete injury in fact). 2 Plaintiff implicitly relies on the Spokeo III standing framework given his 3 reliance on Nayab v. Capital One Bank (USA), N.A., 942 F.3d 480 (9th Cir. 2019) 4 and Wakefield v. ViSalus, Inc., 51 F.4th 1109 (9th Cir. 2022). In Nayab, the plaintiff 5 alleged the defendant, a bank, accessed her credit report without authorization in 6 violation of 15 U.S.C. § 1681b(f)(1). Nayab v. Capital One Bank N.A., 16-cv-3111, 7 2017 WL 2721982, at *2-3. (S.D. Cal. June 23, 2017). Plaintiff alleged this credit 8 check resulted in a decrease in credit score, which directly impacted her credit 9 availability. Id. at *2. Using the Spokeo III framework, the Ninth Circuit determined 10 the plaintiff had standing based on an alleged § 1681b(f) violation. Nayab, 942 F.3d 11 at 493. Expounding on Spokeo III, it held that in order to survive a motion to dismiss, 12 a consumer need only allege facts giving rise to a reasonable inference that defendant 13 obtained his or her credit report for a purpose not authorized by the FCRA. Id. at 14 490. 15 Defendant argues Nayab is irreconcilable with TransUnion because the Ninth 16 Circuit held “Nayab has standing to vindicate her right to privacy under the FCRA 17 when a third-party obtains her credit report without a purpose authorized by statute, 18 regardless whether the credit report is published or otherwise by that third-party.” 19 Id. at 493. Nayab concerned § 1681b(f) and compared the injury alleged by the 20 plaintiff to the injury from the tort of intrusion upon seclusion, where publication to 21 a third-party is irrelevant. Id. at 490. TransUnion concerned 15 U.S.C. § 1681e(b) 22 and compared the injury alleged by Plaintiffs to the injury from the tort of 23 defamation, where publication to a third-party is relevant. 141 S. Ct. at 2208. Given 24 that publication to a third-party is irrelevant to § 1681b(f) and intrusion upon 25 seclusion, Nayab remains precedential. Based on the similar allegations in this case, 26 Nayab is instructive. 27 Plaintiff’s allegations here meet both prongs of Spokeo III. Congress’ 1 exercise their grave responsibilities with fairness, impartiality, and a respect for the 2 consumer’s right to privacy.” Nayab, 942 F.3d at 492. Thus, Congress passed the 3 FCRA with the intention of protecting consumers’ information. Plaintiff here 4 alleges violations of § 1681b(f). (FAC at ¶¶ 3, 23-27, 56-63.) The privacy interest 5 protected by § 1681b(f) is the “right to keep private the sensitive information about 6 his or her person.” Nayab, 942 F.3d at 492. Section 1681b(f)(1) does not merely 7 describe a procedure to follow, rather, it protects the consumers substantive privacy 8 interest. Id. at 490. Thus, “obtaining a credit report for a purpose not authorized 9 under the FCRA violates a substantive provision of the FCRA.” Id. (emphasis in 10 original). As such, privacy interests protected by § 1681b(f)(1) are harmed when a 11 credit report is obtained for a purpose not authorized under the FCRA. Both prongs 12 of Spokeo III are therefore satisfied. 13 Nayab also makes clear that in assessing whether an intangible harm 14 constitutes an injury in fact, courts must consider the history and judgment of 15 Congress. 942 F.3d at 487. This was further reinforced by TransUnion. 141 S. Ct. 16 at 2205 (reiterating a statutory violation on its own is not sufficient to confer 17 standing). Plaintiff alleges an intangible injury here—a violation of his privacy 18 interests. TransUnion “strengthens the principle that an intangible injury is 19 sufficiently ‘concrete’ when (1) Congress created a statutory cause of action for the 20 injury, and (2) the injury has a close historical or common law analog.” Wakefield 21 v. ViSalus, Inc., 51 F.4th 1109, 1118 (9th Cir. 2022) (quoting TransUnion, 141 S. 22 Ct. at 2204-07). 23 Here, Congress created a statutory cause of action for consumers when 24 consumers’ credit reports are accessed without a permissible purpose. See 15 U.S.C. 25 § 1681b(f). In assessing whether Plaintiff’s alleged injury has a close historical or 26 common-law analog, it is undisputed that an “exact duplicate” is not required. 27 TransUnion, 141 S. Ct. at 2204. The close common-law tort here is intrusion upon 1 to intrusion upon seclusion). The parties diverge on whether Plaintiff’s allegations 2 are sufficiently close to the tort of intrusion upon seclusion. Defendant contends 3 because Plaintiff does not, and cannot, allege intent, this comparator tort is 4 unavailable to Plaintiff. (See ECF No. 17 at 6-11.) The Court disagrees for two 5 reasons. 6 First, Plaintiff does indeed allege Defendant’s conduct was intentional. In the 7 FAC, Plaintiff alleges that “[a]ny violations by Defendant were knowing, willful, 8 and intentional.” (ECF No. 13 at 3.) Throughout the FAC, Plaintiff details 9 conversations with Defendant in the complaint and quotes the language used by 10 Defendant. For example, “Plaintiff learned that a ‘technical issue’ occurred which 11 resulted in Defendant ‘conducting a credit inquiry on Plaintiff’s credit file.’” (Id.) 12 Additionally, “[t]he letter explained that Defendant ‘discovered we had a technical 13 issue within our system which resulted in Cherry Creek Mortgage (CCM) ordering 14 the consumer’s credit report.’” (Id. at 4-5.) Defendant argues Plaintiff’s use of 15 Defendant’s own words shows Plaintiff concedes Defendant’s conduct was not 16 intentional. However, nowhere in the complaint does Plaintiff allege Defendant’s 17 conduct was not intentional. Thus, whether Defendant intended to conduct the credit 18 inquiry is a factual dispute not appropriate for a motion to dismiss. 19 Second, the focus of this inquiry is on the type of harm, not intent. 20 TransUnion, 141 S. Ct. at 2204. Defendant relies heavily on Hunstein v. Preferred 21 Collection and Management Services, Inc., 48 F.4th 1236 (11th Cir. 2022), to 22 support its argument that, without intent, Plaintiff’s harm is not similar to intrusion 23 upon seclusion. (ECF No. 17 at 12-14; ECF No. 20 at 5-6.) Its reliance on Hunstein 24 is misplaced. In Hunstein, the plaintiff alleged a debt collector sent information 25 about his debt to a commercial mail vendor. 48 F.4th at 1240. The plaintiff alleged 26 this violated a provision of the Fair Debt Collection Practices Act (FDCPA), thereby 27 harming him. Id. The plaintiff compared his alleged harm to that of a victim of the 1 explained private disclosure and public disclosure are qualitatively different, (id. at 2 1248-49), and the harm alleged by the Hunstein plaintiff was private. Id. at 1242. 3 The harm alleged in Hunstein was private because the plaintiff’s personal 4 information was allegedly disclosed in the course of business, and not widely 5 publicized to the public at large, as is required for there to be harm in the tort of 6 public disclosure of private facts. Id. at 1246. Because the plaintiff failed to allege 7 wide publication of private information, the Eleventh Circuit determined the harm 8 alleged by the plaintiff versus the harm from public disclosure of private facts 9 were distinct. Id. at 1245-47. Thus, the Hunstein plaintiff lacked standing. Id. at 10 1250. The distinction between public and private disclosure discussed in Hunstein 11 relates to the kind of harm alleged. Thus, Hunstein reinforces that the focus 12 of this inquiry is on the type of harm. 13 Defendant next argues Plaintiff suffered a “qualitatively different harm” from 14 the harm suffered by intrusion upon seclusion. (ECF No. 17 at 15.) It relies on 15 Perez v. McCreary, Veselka, Bragg & Allen, P.C., 45 F.4th 816 (5th Cir. 2022), to 16 support this contention. Perez dealt with a plaintiff who received a letter which 17 allegedly caused her to be misled and confused. Id. at 824. The Fifth Circuit 18 explained for the tort of fraudulent misrepresentation, the traditional harm is 19 “pecuniary loss,” and confusion is not a similar harm “in kind.” Id. at 824-25. Perez 20 reiterates that the focus on the type of harm alleged must be “similar in kind to a 21 type of harm that the common law has recognized as actionable.” Id. at 822. 22 Contrary to Defendant’s assertions otherwise, Perez and Hunstein support 23 Plaintiff’s position. Plaintiff’s private information—i.e., his credit report—was 24 allegedly accessed without a permissible purpose. A party complaining of intrusion 25 upon seclusion is likewise harmed when their private information is accessed. The 26 harm here is the same. Whether or not the intrusion was intentional does not impact 27 the severity of harm. Accordingly, the alleged harm suffered by Plaintiff is sufficient 1 Applying the frameworks set forth in Nayab and TransUnion to the facts of 2 ||this case, Plaintiff has alleged a concrete injury in fact. Under Nayab, there are two 3 ||steps. First, § 1681b(f)(1), was established to protect Plaintiff's concrete 4 ||privacy interest. Second, as alleged, once Defendant ran Plaintiffs credit report 5 || without a permissible purpose, Plaintiff's privacy interest was harmed. Under 6 □□ TransUnion, there are also two _ steps. First, Congress created a 7 |\statutory action permitting Plaintiff to sue. See § 1681b(f). Second, Plaintiff 8 |lasserted an injury with a close historical and common-law □□□□□□□ 9 |/intrusion upon seclusion. As such, Plaintiff has Article III standing. 10 IV. 1] CONCLUSION AND ORDER 12 For the reasons set out above, Defendant’s motion to dismiss is DENIED. 13 IT IS SO ORDERED. 14 || Dated: December 20, 2022 : Dron 6s 16 en Yn: Ma Hon. Dana M. Sabraw, Chief Judge 17 United States District Court 18 19 20 21 22 23 24 25 26 27 28