Premium Mortgage Corp. v. Equifax Inc., No. 08-5317 (2d Cir. 2009)

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08-5317-cv Premium Mortgage Corp. v. Equifax Inc. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 UNITED STATES COURT OF APPEALS F OR THE S ECOND C IRCUIT August Term, 2008 (Argued: September 11, 2009 Decided: October 5, 2009 Amended: October 14, 2009) Docket No. 08-5317-cv P REMIUM M ORTGAGE C ORP., on behalf of itself and all others similarly situated, Plaintiff-Appellant, v. E QUIFAX, I NC., a Georgia corporation, T RANS U NION LLC, a Delaware limited liability company, E XPERIAN I NFORMATION S OLUTIONS, I NC., an Ohio corporation, and E QUIFAX I NFORMATION S ERVICES, LLC, a Georgia limited liability company, Defendants-Appellees, C REDIT P LUS, I NC., a Maryland corporation, individually and as a Representative of similarly situated defendants, Defendant. Before: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 P ARKER and W ESLEY, Circuit Judges, and R ESTANI, * Judge. Appeal from an order of the United States District Court for the Northern District of New York (Telesca, J.), entered on September 30, 2008, dismissing all claims against Equifax, Inc., Trans Union LLC, Experian Information Solutions, Inc., and Equifax Information Services, LLC. A FFIRMED. L OUIS B. C RISTO, Trevett Lenweaver & Salzer P.C., Rochester, New York, for Plaintiff-Appellant. M EIR F EDER, Jones Day, New York, New York (Christopher R. Lipsett and David Sapir Lesser, Wilmer Cutler Pickering Hale & Dorr LLP, New York, New York, David Cooper and Victoria Dorfman, Jones Day, New York, New York, Craig E. Bertschi and Cindy D. Hanson, Kilpatrick Stockton LLP, Atlanta, Georgia, on the brief), for Defendants-Appellees. J AMES C HAREQ, Hudson Cook, LLP, Washington, DC, for Amicus Curiae Consumer Data Industry Association. P ER C URIAM: Plaintiff Premium Mortgage Corp. commenced this 33 putative class action on behalf of itself and similarly 34 situated mortgage lenders, bringing nine state-law claims 35 against several consumer credit reporting agencies * The Honorable Jane A. Restani, Chief Judge of the United States Court of International Trade, sitting by designation. 2 1 defendants Equifax Inc., Trans Union LLC, Experian 2 Information Solutions, Inc., and Equifax Information 3 Services, LLC (collectively, the Credit Bureau defendants ) 4 and Credit Plus, Inc. ( Credit Plus ), an intermediate 5 reseller of consumer credit information. 6 States District Court for the Northern District of New York 7 (Telesca, J.), dismissed plaintiff s claims against the 8 Credit Bureau defendants on preemption grounds, and granted 9 plaintiff permission to file this partial appeal pursuant to 10 Rule 54(b) of the Federal Rules of Civil Procedure. 1 Background 11 12 The United Plaintiff s claims relate to defendants sale of 13 mortgage trigger leads to third-party lenders. Trigger 14 leads are generated during the process by which mortgage 15 brokers such as plaintiff evaluate consumer loan 16 applications; according to plaintiff, these leads indicate 17 that, within the past 24 to 48 hours, a particular 18 individual [has] expressed a desire to [a] mortgage bank to 19 obtain a loan. In order to assess an applicant s 1 Credit Plus did not join the Credit Bureau defendants motion to dismiss, it is not a party to this appeal, and plaintiff s claims against it remain pending in the district court. 3 1 creditworthiness after receiving a loan application, 2 plaintiff purchases an aggregated credit report from an 3 intermediate reseller of consumer credit information, such 4 as Credit Plus. 5 credit reports from each of the Credit Bureau defendants and 6 bundles the information for use by plaintiff. 7 The reseller, in turn, purchases individual The Fair Credit Reporting Act ( FCRA ), 15 U.S.C. § 8 1381 et seq. requires a mortgage broker seeking to purchase 9 a credit report to disclose the reason for its purchase. 10 relevant in this case, plaintiff s requests for consumer 11 credit reports are motivated by the fact that a consumer 12 recently applied for a loan. 13 information to the reseller, and ultimately to the Credit 14 Bureau defendants, generates a trigger lead. 15 As The disclosure of this The crux of this dispute is plaintiff s challenge to 16 defendants practice of permitting other lenders to purchase 17 pre-screened consumer reports, see 15 U.S.C. § 1681b(c), 18 (e), that, in essence, contain trigger leads. 19 plaintiff, these trigger leads constitute its proprietary 20 customer information because such information is not 21 readily known in the industry and it cannot be obtained 22 except through extraordinary effort . . . . 4 According to However, the 1 prescreened reports in question use the information conveyed 2 by a trigger lead as a screening criterion in order to 3 generate a list of consumers who are in the market for 4 mortgages and other loan facilities. 5 these lists then compete with plaintiff and similarly 6 situated mortgage brokers by offering terms on loans to the 7 customers. 8 9 The lenders purchasing Based on these allegations, plaintiff brought nine state-law claims, including misappropriation of trade 10 secrets, fraud, unfair competition, tortious interference 11 with contractual or prospective business relations, breach 12 of contract of which class members were intended 13 beneficiaries, and unjust enrichment. 14 defendants moved to dismiss plaintiff s claims against them, 15 arguing that the claims are preempted by the FCRA, and, 16 alternatively, that the allegations in the Amended Class 17 Action Complaint (the complaint ) fail to state a claim. 18 Judge Telesca granted the motion and held that the FCRA 19 expressly preempts each of plaintiff s claims against the 20 Credit Bureau defendants. The Credit Bureau Plaintiff appeals. 21 Discussion 22 We review de novo a district court s application of 5 1 preemption principles. See, e.g., Drake v. Lab. Corp. of 2 Am. Holdings, 458 F.3d 48, 56 (2d Cir. 2006). 3 addressing questions of express or implied pre-emption, we 4 begin our analysis with the assumption that the historic 5 police powers of the States are not to be superseded by the 6 Federal Act unless that was the clear and manifest purpose 7 of Congress. 8 543 (2008) (internal quotation omitted). 9 the existence of preemption turns on Congress s intent, we When Altria Group, Inc. v. Good, 129 S. Ct. 538, However, [s]ince 10 are to begin as we do in any exercise of statutory 11 construction[,] with the text of the provision in question, 12 and move on, as need be, to the structure and purpose of the 13 Act in which it occurs. 14 N.J., 414 F.3d 352, 371 (2d Cir. 2005) (quoting N.Y. State 15 Conference of Blue Cross & Blue Shield Plans v. Travelers 16 Ins. Co., 514 U.S. 645, 655 (1995)). McNally v. Port Auth. of N.Y. & 17 Applying these standards, we affirm Judge Telesca s 18 conclusion with respect to the bulk of plaintiff s state 19 common-law claims. 20 the purpose of this analysis is 15 U.S.C. § 1681t(b)(1)(A), 21 which states: The operative provision of the FCRA for [N]o requirement or prohibition may be 6 1 imposed under the laws of any State . . . with respect to 2 any subject matter regulated under . . . subsection (c) or 3 (e) of section 1681b of this title, relating to the 4 prescreening of consumer reports . . . . 5 1681t(b)(1)(A) (emphases added). 2 6 Id. § Plaintiff s allegations relate[] to the prescreening 7 of consumer reports. Id. As plaintiff acknowledges, 8 third-party lenders obtain trigger leads from the Credit 9 Bureau defendants by purchasing prescreened consumer 10 reports. See id. § 1681b(c), (e). Trigger leads are simply 11 one of the constituent parts of these consumer report[s]. 12 Id. § 1681a(d)(1). 13 within § 1681a(d)(1), irrespective of whether the 14 allegations in the complaint focus more narrowly on the 15 resulting uses of the trigger lead information obtained 16 through this practice. 17 plaintiff s argument that its claims are not preempted 18 because the trigger leads themselves are not consumer 19 reports under the FCRA. Consequently, plaintiff s claims fall Therefore, there is no merit to 2 Because Judge Telesca s analysis was based on § 1681t(b)(1)(A), any perceived tension between 15 U.S.C. § 1681h(e) and § 1681t(b)(1)(F), see, e.g., Prakash v. Homecomings Fin., No. 05 Civ. 2895, 2006 WL 2570900, at *5-7 (E.D.N.Y. Sept. 5, 2006), is of no moment in this appeal. 7 1 Plaintiff s distinction between statutory and common- 2 law claims under this section of the FCRA s express 3 preemption provision is likewise unpersuasive. 4 [n]o requirement or prohibition sweeps broadly and 5 suggests no distinction between positive enactments and 6 common law; to the contrary, those words easily encompass 7 obligations that take the form of common-law rules. 8 Cipollone v. Liggett Group, Inc., 505 U.S. 504, 521 (1992) 9 (plurality opinion); see also Riegel v. Medtronic, Inc., 128 The phrase 10 S. Ct. 999, 1007-08 (2008). 11 plaintiff s common-law claims are predicated on the 12 existence of a duty allegedly owed by defendants to 13 mortgage brokers such as plaintiff to keep confidential 14 the fact that a consumer has recently applied for a 15 mortgage. 16 require that such an obligation must yield to the FCRA under 17 the Supremacy Clause. 18 claims for misappropriation of trade secrets, unfair 19 competition, and unjust enrichment were properly dismissed. 20 21 The complaint makes clear that The terms used by Congress in § 1681t(b)(1)(A) Therefore, plaintiff s common-law Relying on Cipollone, plaintiff argues that its sixth and seventh causes of action (for breach of contract and 8 1 tortious interference with contract, respectively) are not 2 preempted because they are based, in whole or in part, upon 3 contractual obligations. 4 (plurality opinion) ( [A] common-law remedy for a 5 contractual commitment voluntarily undertaken should not be 6 regarded as a requirement . . . imposed under State law . 7 . . . (emphasis omitted)); but see id. at 551 (Scalia, J., 8 concurring in the judgment in part and dissenting in part) 9 ( When liability attaches to a particular promise or See Cipollone, 505 U.S. at 526 10 representation, it attaches by law. ). Similarly, plaintiff 11 asserts that its fraud claim evades preemption under Good 12 and Cipollone because the claim, in plaintiff s view, is 13 based on a more general duty not to make fraudulent 14 statements. 15 505 U.S. at 529 (plurality opinion). 16 motion to dismiss and again in this appeal, the Credit 17 Bureau defendants also argue that plaintiff s claims are 18 inadequately pleaded. 19 agree. 20 preemption argument as to these causes of action and affirm 21 the decision below on this properly preserved alternative Good, 129 S. Ct. at 549; see also Cipollone, However, in their For the reasons discussed below, we Therefore, we decline to reach plaintiff s 9 1 ground. See, eg., Palmer v. Occidental Chem. Corp., 356 2 F.3d 235, 236 (2d Cir. 2004). 3 In New York, the elements of a claim for tortious 4 interference with a contract include, inter alia, the 5 existence of a valid contract between the plaintiff and a 6 third party, and an intentional procurement of the third- 7 party s breach of the contract without justification . . . 8 . 9 424, 668 N.E.2d 1370, 1375 (N.Y. 1996). 3 Lama Holding Co. v. Smith Barney Inc., 88 N.Y.2d 413, Tortious 10 interference with prospective economic relations requires an 11 allegation that plaintiff would have entered into an 12 economic relationship but for the defendant s wrongful 13 conduct. 14 23 (1st Dep t 2002). 15 Vigoda v. DCA Prods. Plus Inc., 741 N.Y.S.2d 20, The complaint fails to sufficiently plead these 16 elements. Plaintiff has not identified the legal basis for 17 the Credit Bureau defendants alleged duty and obligation 3 Although we need not resolve the application of the relevant preemption reasoning in Cipollone, which related to a claim for breach of an express warranty, 505 U.S. at 525, we note in passing that a claim for tortious interference with contract is, as its name indicates, a tort that encompasses interfering with an existing contract. Such a claim not based on a breach of any contract would appear to impose a state-law requirement, 15 U.S.C. § 1681t(b)(1)(A), under Cipollone because the plaintiff seeks not to enforce a set of mutual promises between private parties but rather to sanction an act by a non-party that allegedly impaired those promises. 10 1 to maintain the confidentiality of trigger leads, and there 2 are no allegations in the complaint capable of supporting a 3 reasonable inference that any Credit Bureau defendant acted 4 with the sole purpose of harming the plaintiff or used 5 dishonest, unfair, or improper means, Nadel v. Play-By-Play 6 & Novelties, Inc., 208 F.3d 368, 382 (2d Cir. 2000) 7 (emphasis added). 8 interference with prospective business relations are even 9 more attenuated. Plaintiff s allegations of tortious Therefore, the allegations in support of 10 plaintiff s sixth cause of action are insufficient as a 11 matter of law. 12 Plaintiff s seventh cause of action is also defective. 13 A non-party to a contract governed by New York law lacks 14 standing to enforce the agreement in the absence of terms 15 that clearly evidence[] an intent to permit enforcement by 16 the third party in question. 17 Interstate Wrecking Co., 66 N.Y.2d 38, 45, 485 N.E.2d 208 18 (1985). 19 as to this element, and we find them facially implausible. 20 Finally, plaintiff s fraud claim is also inadequately 21 pleaded. Fourth Ocean Putnam Corp. v. The complaint presents only conclusory allegations The elements of fraud under New York law are: [1] 11 1 a misrepresentation or a material omission of fact which was 2 false and known to be false by defendant, [2] made for the 3 purpose of inducing the other party to rely upon it, [3] 4 justifiable reliance of the other party on the 5 misrepresentation or material omission, and [4] injury. 6 Lama Holding, 88 N.Y. 2d at 421. 7 action, such a claim must be pleaded with particularity. 8 See Fed. R. Civ. P. 9(b). 9 misrepresentations or material omissions by any Credit In a federal diversity Plaintiff failed to identify 10 Bureau defendant, and the complaint provides no basis to 11 support an inference of justifiable reliance. 12 that are conclusory or unsupported by factual assertions are 13 insufficient. 14 F.3d 87, 99 (2d Cir. 2007). 15 dismissal of plaintiff s fraud claim because it is 16 inadequately pleaded. 17 Allegations ATSI Commc ns, Inc. v. Shaar Fund, Ltd., 493 Therefore, we affirm the Plaintiff s fourth, sixth, and seventh causes of action 18 present little more than unadorned, the-defendant[s]- 19 unlawfully-harmed-me accusation[s]. 20 S. Ct. 1937, 1949 (2009). 21 insufficient to state a claim upon which relief may be Ashcroft v. Iqbal, 129 These allegations are 12 1 granted. 2 fourth, sixth, and seventh causes of action on this 3 alternative ground. Conclusion 4 5 Therefore, we affirm the dismissal of plaintiff s The Court has reviewed plaintiff s remaining arguments 6 and finds them to be without merit. 7 district court s order of September 30, 2008 is hereby 8 AFFIRMED. 13 Accordingly, the

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