Cole v. American Family Mut. Ins. Co.
| Decision Date | 11 August 2004 |
| Docket Number | No. CIV.A. 04-2073-CM.,CIV.A. 04-2073-CM. |
| Citation | 333 F.Supp.2d 1038 |
| Parties | Karen S. COLE, Plaintiff, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, et al., Defendants. |
| Court | U.S. District Court — District of Kansas |
Dale K. Irwin, Slough, Connealy, Irwin & Madden, Kansas City, MO, for Plaintiff.
Hillary L. Hayes, Blackwell, Sanders, Peper, Martin LLP., Kansas City, MO, Randall E. Fisher, Newton, KS, for Defendants.
Plaintiff brought suit against defendants American Family Mutual Insurance Company ("American Family"), Gary Cole, and Leroy Adler for violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. This matter comes before the court on Defendant Leroy Adler's Motion to Dismiss for Lack of Personal Jurisdiction (Doc. 20), and Defendant American Family Mutual Insurance Company's Motion to Dismiss for Failure to State a Claim Upon Which Relief Can be Granted (Doc. 21).
Defendant American Family is a Wisconsin entity with its principal place of business in Madison, Wisconsin. Defendant Adler, a Wisconsin resident, has been employed by American Family in Wisconsin since 1976 as a Farm/Ranch Underwriting Specialist, which enables him to access credit reports. Adler has not lived in Kansas, transacted other business in Kansas, or visited Kansas within the past five years.
Defendant Cole resides in Kansas and was employed by American Family from 1977 until 2003. Cole is plaintiff's ex-husband and a friend of Adler.
In September 2002, Cole requested that, as a favor to him, Adler obtain plaintiff's credit report. Adler obtained plaintiff's credit report for Cole without the permission of plaintiff or American Family. In February 2003, Cole again asked Adler to obtain plaintiff's credit report, and again, without permission from plaintiff or American Family, Adler obtained plaintiff's credit report for Cole.
American Family received notice in March 2003 that plaintiff's credit reports were obtained without her permission. Following this notification, American Family investigated the situation and discovered Adler's and Cole's role in the matter. Accordingly, American Family terminated Cole's employment with the company and disciplined Adler.
The court will dismiss a cause of action for failure to state a claim only when it appears beyond a doubt that the plaintiff can prove no set of facts in support of the theory of recovery that would entitle him or her to relief, Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Maher v. Durango Metals, Inc., 144 F.3d 1302, 1304 (10th Cir.1998), or when an issue of law is dispositive. Neitzke v. Williams, 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989). The court accepts as true all well-pleaded facts, as distinguished from conclusory allegations, Maher, 144 F.3d at 1304, and all reasonable inferences from those facts are viewed in favor of the plaintiff. Swanson v. Bixler, 750 F.2d 810, 813 (10th Cir.1984). The issue in resolving a motion such as this is not whether the plaintiff will ultimately prevail, but whether he or she is entitled to offer evidence to support the claims. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974), overruled on other grounds, Davis v. Scherer, 468 U.S. 183, 104 S.Ct. 3012, 82 L.Ed.2d 139 (1984).
A plaintiff opposing a motion to dismiss for lack of personal jurisdiction bears the burden of showing that the court's exercise of personal jurisdiction over the defendant is proper. Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 456 (10th Cir.1996). If the motion to dismiss is submitted prior to trial on the basis of affidavits and other written materials, the plaintiff need only make a prima facie showing to avoid dismissal for lack of personal jurisdiction. Id. Although the plaintiff will be required to prove the factual basis for jurisdiction by a preponderance of the evidence at trial, on a pretrial motion to dismiss, all factual disputes are resolved in favor of the plaintiff. Id. If the plaintiff makes the required prima facie showing that personal jurisdiction exists, "a defendant must present a compelling case demonstrating `that the presence of some other considerations would render jurisdiction unreasonable.'" OMI Holdings, Inc. v. Royal Ins., 149 F.3d 1086, 1091 (10th Cir.1998)(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)).
In the instant case, the court must determine that the exercise of jurisdiction comports with due process and that an applicable statute potentially confers jurisdiction by authorizing service of process. Peay v. BellSouth Med. Assistance Plan, 205 F.3d 1206, 1209 (10th Cir.2000). The Kansas long-arm statute is construed liberally to allow jurisdiction to the full extent permitted by due process; therefore, the court proceeds directly to the constitutional analysis. Federated Rural Elec. Ins. Corp. v. Kootenai Elec. Co-op., 17 F.3d 1302, 1305 (10th Cir.1994).
Under the due process analysis, the "constitutional touchstone" is "whether the defendant purposely established `minimum contacts' in the forum state." Burger King, 471 U.S. at 474, 105 S.Ct. 2174 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). A nonresident party creates minimum contacts by some act or actions in which it purposefully avails itself of the privilege of conducting activities in the forum state. Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). The purposeful availment requirement ensures that a defendant will not be sued in a foreign jurisdiction solely as a result of the unilateral activity of another party. Burger King, 471 U.S. at 475, 105 S.Ct. 2174.
Consistent with due process, specific jurisdiction may be conferred over a nonresident defendant where the court's exercise of jurisdiction directly arises from a defendant's forum-related activities. To determine whether specific jurisdiction is appropriate, the court must first decide whether the defendant has such minimum contacts within the forum state "that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). Second, the court must then consider whether the exercise of personal jurisdiction offends "traditional notions of fair play and substantial justice." Asahi Metal Indus. Co. v. Superior Court of Calif., Solano County, 480 U.S. 102, 113, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987).
American Family contends that it is not liable under the FCRA for violations of the Act by American Family's employees. Plaintiff responds that American Family is directly liable for obtaining her credit report and indirectly liable for the actions of its employees, Adler and Cole, who accessed her credit report.
In 1968 Congress, recognizing the importance of an accurate and fair credit reporting system, enacted the FCRA. In particular, Congress found that "[t]here is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy." 15 U.S.C. § 1681(a)(4). The FCRA, therefore, provides an exhaustive list of permissible uses of credit reports, including, among others, by written permission of the consumer, § 1681b(a)(2); in connection with the extension of credit, § 1681b(a)(3)(A), or other business transaction; and, in connection with the underwriting of insurance, § 1681b(a)(3)(C).
Violators of the FCRA are subject to both civil liability and criminal penalty. As originally implemented, the FCRA provided for a civil action against "[a]ny consumer reporting agency or user of information" which negligently or willfully fails to comply with any requirement of the Act. See Omnibus Consolidated Appropriations Act, 1997, Pub.L. No. 104-208, Div. A., Title II, § 2412(a), (c), (d) (emphasis added). Subsequently, Congress amended the FCRA through the Consumer Credit Reporting Reform Act of 1996 to impose civil liability on "[a]ny person who" willfully or negligently violates the Act. Id. at § 2401; 15 U.S.C. §§ 1681n, 1681o. The term "person" is defined as "any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity." 16 U.S.C. § 1681a(b).
Pursuant to §§ 1681n and 1681o, an aggrieved plaintiff may bring an action against a corporation that fails to comply with the FCRA. Because a corporation can only act through its officers and directors, violations of the FCRA committed by these individuals results in the corporation being directly liable under the Act. See, e.g., Comeau v. Rupp, 762 F.Supp. 1434, 1441 (D.Kan.1991).
Plaintiff initially contends that American Family should be held directly liable due to the actions of Adler and Cole. However, plaintiff does not allege that either Adler or Cole were officers, directors, or even supervisory employees of American Family. Consequently, plaintiff has not pled the proper standards to hold American Family directly liable.
A principal may be liable under the doctrine of respondeat superior or vicarious liability for the misconduct of its agent. First, a principal may be vicariously liable for an agent's tortious conduct if the principal expressly or implicitly authorized the conduct. Schraft v. Leis, 236 Kan. 28, 686 P.2d 865, 874 (1984). Second, a principal is also liable for the torts of its agent committed within the scope of the agent's authority and course of employment. Russell v. Am. Rock Crusher Co., 181 Kan. 891, 317 P.2d 847, 849 (1957). Third, a principal may...
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