Anderson v. Wells Fargo Bank, N.A.

• Decision Date: 17 July 2017
• Docket Number: CIV. 17–5010–JLV
• Citation: 266 F.Supp.3d 1175
• Parties: Stephanie ANDERSON, Phetsamone "Mao" Dary, Moriah Demers, Chad Engelby, Thomas English, Deanna Hobbs, Ken Johnson, Brian Kruschke, Jeffrey Dallman, Kathryn Eastman, and Alan Hayden, Plaintiffs, v. WELLS FARGO BANK, N.A., Defendant.
• Court: U.S. District Court — District of South Dakota

266 F.Supp.3d 1175

Stephanie ANDERSON, Phetsamone "Mao" Dary, Moriah Demers, Chad Engelby, Thomas English, Deanna Hobbs, Ken Johnson, Brian Kruschke, Jeffrey Dallman, Kathryn Eastman, and Alan Hayden, Plaintiffs,

v.WELLS FARGO BANK, N.A., Defendant.

CIV. 17–5010–JLV

United States District Court, D. South Dakota, Western Division.

Signed July 17, 2017

Michael S. Beardsley, Steven C. Beardsley, Beardsley, Jensen & Lee, Prof. L.L.C., Rapid City, SD, for Plaintiffs.

J. Crisman Palmer, Gunderson, Palmer, Goodsell & Nelson, LLP, Rapid City, SD, Michael A. Giudicessi, Faegre Baker Daniels LLP, Des Moines, IA, for Defendant.

ORDER

JEFFREY L. VIKEN, CHIEF JUDGE

BACKGROUND

Multiple plaintiffs filed this action against defendant Wells Fargo Bank, N.A. (Docket 6). Each plaintiff was an employee of defendant who was fired in approximately the last five years because of the plaintiff's criminal background information. Id. at pp. 3, 6, 12, 16, 22, 23, 25, 29–30, 32–33, 36 & 39–40; see Docket 12 at p. 8. Plaintiffs' complaint¹ advances 31 claims against defendant. Id. The court has jurisdiction pursuant to 28 U.S.C. § 1332 because there is complete diversity between the parties and the amount in controversy exceeds $75,000. Id. at p. 2. Federal question jurisdiction pursuant to 28 U.S.C. § 1331 provides the court with jurisdiction over plaintiffs' claims grounded in federal law. Id.

The complaint includes several state law causes of action. Each plaintiff alleges a fraud and deceit claim. Id. at pp. 4–5, 10–11, 14–15, 18–19, 21–24, 27–28, 30–31, 34–35, 37–38 & 41–42. Aside from Mr. Engelby, each plaintiff brings a claim for punitive damages. Id. at pp. 5–6, 11, 15, 19–20, 24–25, 28, 21–32, 35, 39 & 43. Five plaintiffs assert promissory estoppel claims against defendant: Ms. Anderson, Mr. Dary, Ms. Demers, Ms. Eastman and Mr. Hayden. Id. at pp. 4, 8, 17, 37 & 41. Only Mr. Dary alleges fraudulent inducement and fraudulent concealment claims against defendant. Id. at pp. 8–10.

The complaint also sets forth violations of federal law in connection with each plaintiff. Plaintiffs collectively allege defendant violated the Fair Credit Reporting Act ("FCRA") because it "failed to comply with the procedural protections and requirements of the FCRA when it used the consumer reports of Plaintiffs, and thousands of other employees, to make adverse employment decisions resulting in their termination." Id. at p. 43. The plaintiffs claim defendant's conduct in firing them violated the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c), and constituted a conspiracy to violate RICO, 18 U.S.C. § 1962(d). Id. at pp. 49–68. The core of plaintiffs' RICO claims is defendant fired them for the "purpose of terminating employees en masse, reducing payroll, eliminating earned and accrued employee bonuses and benefits, and depressing the relevant job market, all under the fraudulent pretext of compliance with federal regulation." Id. at p. 61.

Defendant filed a motion to dismiss some of plaintiffs' claims. (Docket 11). Defendant asserts the court should dismiss plaintiffs' FCRA claim under Federal Rule of Civil Procedure 12(b)(1) because plaintiffs lack standing to bring their FCRA claim. Id. at p. 3. Defendant argues plaintiffs' FCRA and RICO claims should be dismissed under Rule 12(b)(6) because they are time-barred. Id. According to defendant, Mr. English and Mr. Dallman's state law claims are also time-barred, warranting Rule 12(b)(6) dismissal. Id. Aside from timeliness, defendant argues the court should dismiss plaintiffs' RICO claims under Rule 12(b)(6) because they fail to state a claim upon which the court can grant relief. Id. Defendant alternatively moves the court to strike plaintiffs' complaint under Rule 12(f) to the extent it "fails to contain a short and plain statement of the claims upon which the Plaintiffs are seeking relief...." Id. at p. 4 (citing Fed. R. Civ. P. 8(a) ).

DISCUSSION

I. Rule 12(b)(1) motion to dismiss

"[S]tanding is an essential and unchanging part of the case-or-controversy requirement of Article III [of the United States Constitution.]" Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). "Standing ... is a jurisdictional requirement, and thus 'can be raised by the court sua sponte at any time during the litigation.' " Pucket v. Hot Springs Sch. Dist. No. 23-2, 526 F.3d 1151, 1156–57 (8th Cir. 2008) (quoting Delorme v. United States, 354 F.3d 810, 815 (8th Cir. 2004) ). "The [standing] doctrine limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong. In this way, the law of Article III standing ... serves to prevent the judicial process from being used to usurp the powers of the political branches, and confines the federal courts to a properly judicial role...." Spokeo, Inc. v. Robins, ––– U.S. ––––, 136 S.Ct. 1540, 1547, 194 L.Ed.2d 635 (2016) (internal citations omitted) (internal quotation marks omitted).

"The 'irreducible constitutional minimum' of standing consists of three elements." Id. (quoting Lujan, 504 U.S. at 560, 112 S.Ct. 2130 ). "The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision." Id. (citations omitted). "Where, as here, a case is at the pleading stage, the plaintiff must 'clearly ... allege facts demonstrating' each element." Id. (quoting Warth v. Seldin, 422 U.S. 490, 518, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) ). "In assessing a plaintiff's Article III standing, we must 'assume that on the merits the plaintiffs would be successful in their claims.' " Am. Farm Bureau Fed'n v. U.S. Envtl. Prot. Agency, 836 F.3d 963, 968 (8th Cir. 2016) (quoting Muir v. Navy Fed. Credit Union, 529 F.3d 1100, 1106 (D.C. Cir. 2008) ).

The second and third elements of standing tend to be straightforward, but the injury element is harder to pin down. The United States Supreme Court recently ruled on the injury element in Spokeo. Spokeo clarified the requirements that the injury suffered is "concrete and particularized...." Spokeo, 136 S.Ct. at 1548 (citing Lujan, 504 U.S. at 560, 112 S.Ct. 2130 ) (internal quotation marks omitted). A particularized injury "affect[s] the plaintiff in a personal and individual way[,]" as opposed to an injury affecting an undifferentiated collection of people. Id. (citations omitted). A concrete injury is one that "actually exist[s]." Id. It can be a tangible injury, such as physical pain, or it can be intangible, like curtailing someone's right to free speech. Id. at 1549 (citing Pleasant Grove City v. Summum, 555 U.S. 460, 129 S.Ct. 1125, 172 L.Ed.2d 853 (2009) ). Spokeo acknowledged Congress can create statutes providing people rights, which, if violated, may result in an Article III injury. Id.; see, e.g., Fed. Election Comm'n v. Akins, 524 U.S. 11, 20–25, 118 S.Ct. 1777, 141 L.Ed.2d 10 (1998) (holding that certain voters' "inability to obtain information" Congress chose to make accessible to them yielded an Article III injury). However, Spokeo held "Article III standing requires a concrete injury even in the context of a statutory violation.... [A plaintiff] could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III." Spokeo, 136 S.Ct. at 1549.

Defendant argues the court should dismiss plaintiffs' FCRA claim because they lack standing. (Dockets 19 at pp. 18–23). For the FCRA allegation, the core issue is whether plaintiffs set forth violations of substantive rights sufficient to constitute a concrete injury or whether he asserts "a bare procedural violation, divorced from any concrete harm...." Spokeo, 136 S.Ct. at 1549.

The court notes this precise issue divides many United States District Courts. Compare Thomas v. FTS USA, LLC, 193 F.Supp.3d 623, 629–37 (E.D. Va. 2016) ; Banks v. Cent. Refrigerated Servs., Inc., No. 2:16-CV-356, 2017 WL 1683056, at *3 (D. Utah May 2, 2017), with In re Michaels Stores, Inc., Fair Credit Reporting Act (FCRA) Litigation, MDL No. 2615, 2017 WL 354023, at *4–11 (D.N.J. Jan. 24, 2017) ; Fisher v. Enterprise Holdings, Inc., No. 15-CV-00372, 2016 WL 4665899, at *2–4 (E.D. Mo. Sept. 7, 2016).² In Thomas and Banks, the courts concluded the FCRA violations before them set forth concrete injuries because they involved substantive rights. See Thomas, 193 F.Supp.3d at 637 ("Section 1681b(b)(3), like § 1681b(b)(2)(A), provides the consumer with a legally cognizable right to specific information."); Banks, 2017 WL 1683056, at *3 (noting "[s]everal courts have recognized that multiple sections of the FCRA provide consumers with a [substantive] right to information"). In contrast, the courts in In re Michaels Stores and Fisher determined the FCRA claims did not constitute more than procedural rights, which alone do not amount to concrete injuries. See In re Michaels Stores, Inc., 2017 WL 354023, at *7 ("I respectfully disagree with Thomas's conclusion that the disclosure requirements set forth in § 1681b(b)(2)(A)(i) are substantive rather than procedural."); Fisher, 2016 WL 4665899, at *4–5.

In reaching its conclusion about the nature of the rights the FCRA confers, Thomas started, "as Spokeo instructs, [by] look[ing] to the common law and to the judgment of Congress, as reflected in the FCRA, to determine whether the violations of that statute alleged by [the plaintiff] constitute concrete injuries that satisfy the case or controversy requirement." Thomas, 193 F.Supp.3d at 631.

The Spokeo Court itself explained the background of Congress passing the FCRA:

The FCRA seeks to ensure "fair and accurate credit reporting." § 1681(a)(1). To achieve this end, the Act regulates the creation and the use of "consumer report[s]"³ by "consumer reporting agenc[ies]"⁴ for certain specified purposes, including credit

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