Mora v. Harley-Davidson Credit Corp., No. 1:2008cv01453 - Document 24 (E.D. Cal. 2009)
Court Description: ORDER GRANTING motion to dismiss and strike plaintiff's claims as they relate to alleged false and/or inaccurate reporting by defendant to credit reporting agency 7 ; motion terminated; order signed by Judge Oliver W. Wanger on 7/7/2009. (Rooney, M)
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Mora v. Harley-Davidson Credit Corp. Doc. 24 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT 8 EASTERN DISTRICT OF CALIFORNIA 9 10 11 1:08-cv-01453 OWW GSA LUIS MANUEL MORA, INDIVIDUALLY AND ON BEHALF OF THE CLASS, Plaintiff, 12 v. 13 HARLEY-DAVIDSON CREDIT CORP., A CORPORATION, AND DOES 1 THROUGH 10, INCLUSIVE, 14 15 ORDER ON DEFENDANT’S MOTION TO DISMISS, OR IN THE ALTERNATIVE, MOTION TO STRIKE (DOC. 8) Defendants. 16 17 18 19 20 21 22 23 24 25 26 27 I. INTRODUCTION. Plaintiff Luis Manuel Mora (“Mora”) filed this class action lawsuit against Defendant Harley-Davidson Credit Corporation (“HDCC”) in the Superior Court of the State of California, County of Merced, on August 19, 2008. Plaintiff alleges HDCC violated California’s Rees-Levering Automobile Sales Finance Act (“ASFA”), California Civil Code § 2981 et seq., and Unfair Competition Law, California Business and Professions Code § 17200 et seq., when it sent customers notices of its intent to dispose of repossessed vehicles that were defective under California law and attempted to collect deficiencies from debtors that were legally prohibited 28 1 Dockets.Justia.com 1 because HDCC failed to strictly comply with ASFA’s notice 2 provisions. 3 of removal pursuant to 28 U.S.C. §§ 1332, 1441, and 1446 and the 4 Class Action Fairness Act of 2005 (“CAFA”). 5 On September 26, 2008, Defendant HDCC filed a notice Before the court for decision is Defendant’s motion to 6 dismiss, or in the alternative, motion to strike Plaintiff’s 7 claims to the extent they are based on alleged false reporting to 8 credit reporting agencies. 9 that such claims are expressly preempted by the Fair Credit The motions are based on the ground 10 Reporting Act (“FCRA”), codified at 15 U.S.C. § 1681 et seq. 11 Plaintiff opposes, arguing FCRA does not preempt the claims and 12 Plaintiff’s state claims are based on state consumer protection 13 laws that are unrelated to FCRA. 14 15 16 II. BACKGROUND. Plaintiff entered into a conditional sales contract to 17 purchase a new 2006 Harley-Davidson motorcycle with financing 18 arranged through Defendant HDCC. 19 vehicle, Plaintiff asserts this transaction is controlled 20 exclusively in California by ASFA. 21 assigned its interest in the sales contract to lienholder HDCC. 22 Plaintiff contends that the motorcycle was plagued by defects 23 that the dealer was unable to repair after numerous attempts. 24 voluntarily surrendered it to HDCC in August 2007. 25 As a financed sale of a motor The selling dealer sold and He Plaintiff alleges that on September 4, 2007, HDCC sent 26 Plaintiff a notice of intent to dispose of a repossesed vehicle 27 that failed to comply with ASFA and applicable provisions of the 28 California Commercial Code. Plaintiff argues that, under ASFA, 2 1 if a lender fails to give a legally compliant notice before it 2 sells or disposes of a repossessed or surrendered vehicle, it 3 loses its right to any deficiency owed from the buyer and is 4 prohibited from claiming or asserting any deficiency. 5 Accordingly, Plaintiff claims HDCC has no legal right to attempt 6 to collect any claimed deficiency from him and a purported class 7 of similarly situated former owners of Harley-Davidson 8 motorcycles financed by HDCC. 9 and successfully collected a claimed deficiency from Plaintiff. 10 HDCC has both attempted to collect Plaintiff seeks to represent a class of “all persons from 11 whom HDCC and its associates, affiliates, and subsidiaries claims 12 it is owed a deficiency that was invalid due to HDCC’s defective 13 NOTICE(S) and its failure to comply with the notice requirements 14 of Rees-Levering.” 15 asserts that the allegedly defective notice he received is a 16 standard notice HDCC sends as a matter of common business 17 practice to persons claimed to be liable to HDCC under its 18 conditional sales contract covering HDCC repossessed vehicles. 19 (Id. at 7.) 20 the date of his complaint, HDCC has regularly collected and 21 attempted to collect deficiencies from proposed class members in 22 violation of ASFA. 23 precise number of potential members of the proposed class because 24 that information is in the sole possession of HDCC.” 25 Plaintiff believes the size of the proposed class is “at least in 26 the hundreds.” 27 28 (Doc. 1-2, Complaint at 8.) Plaintiff Plaintiff asserts that, at least four years prior to (Id.) Plaintiff is “unable to state the (Id. at 8.) (Id.) Plaintiff seeks: 1) a declaration that HDCC did not comply with AFSA and has no right to assert any deficiency claim against 3 1 any class member, 2) damages in the form of recovery for all 2 class members of payments made to HDCC on the deficiency claims, 3 compensation for damage to the credit records of class members, 4 and actual damages, 3) an injunction prohibiting HDCC from future 5 collection efforts and forcing it to disgorge profits, 4) to set 6 aside judgments HDCC successfully sought and obtained against 7 class members who it claimed owed a deficiency, and 5) attorney’s 8 fees. 9 III. LEGAL STANDARD. 10 11 12 A. Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6). A motion to dismiss under Rule 12(b)(6) tests the legal 13 sufficiency of the complaint. Novarro v. Black, 250 F.3d 729, 14 732 (9th Cir. 2001). 15 12(b)(6) motion to dismiss does not need detailed factual 16 allegations, it is required to contain "more than labels and 17 conclusions, and a formulaic recitation of the elements of a 18 cause of action will not do. 19 to raise a right to relief above the speculative level, on the 20 assumption that all the allegations in the complaint are true 21 (even if doubtful in fact)." 22 U.S. 544, 127 S.Ct. 1955, 1964-65 (2007); see also Gilligan v. 23 Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997) (issue is not 24 whether plaintiff will ultimately prevail, but whether claimant 25 is entitled to offer evidence to support the claim). 26 is warranted under Rule 12(b)(6) where the complaint lacks a 27 cognizable legal theory or where the complaint presents a 28 cognizable legal theory yet fails to plead essential facts under While a complaint attacked by a Rule Factual allegations must be enough Bell Atlantic Corp. v. Twombly, 550 4 Dismissal 1 that theory. 2 530, 534 (9th Cir. 1984). 3 court accepts as true all material factual allegations in the 4 complaint and construes them in the light most favorable to the 5 plaintiff. 6 (9th Cir. 2002). 7 Robertson v. Dean Witter Reynolds, Inc., 749 F.2d In deciding a motion to dismiss, the See Newman v. Sathyavaglswaran, 287 F.3d 786, 788 The court need not accept as true allegations that 8 contradict facts which may be judicially noticed. See Mullis v. 9 United States Bankruptcy Ct., 828 F.2d 1385, 1388 (9th Cir. 10 1987). For example, matters of public record may be considered, 11 including pleadings, orders, and other papers filed with the 12 court or records of administrative bodies, see Mack v. South Bay 13 Beer Distributors, Inc., 798 F.2d 1279, 1282 (9th Cir. 1986), 14 while conclusions of law, conclusory allegations, unreasonable 15 inferences, or unwarranted deductions of fact need not be 16 accepted. 17 988 (9th Cir. 2001); see also Branch v. Tunnell, 14 F.3d 449, 453 18 (9th Cir. 1994) (“[A] document is not ‘outside’ the complaint if 19 the complaint specifically refers to the document and if its 20 authenticity is not questioned.”). 21 may be disregarded if contradicted by facts established by 22 exhibits attached to the complaint. 23 Thus when ruling on a motion to dismiss, the court may consider 24 facts alleged in the complaint, documents attached to the 25 complaint, documents relied upon but not attached to the 26 complaint when authenticity is not contested, and matters of 27 which the court may take judicial notice. 28 146 F.3d 699, 705-06 (9th Cir. 1988). See Sprewell v. Golden State Warriors, 266 F.3d 979, 5 Allegations in the complaint Sprewell, 266 F.3d at 988. Parrino v. FHP, Inc., 1 2 B. Motion to Strike Pursuant to Fed. R. Civ. P. 12(f). Rule 12(f) provides that “redundant, immaterial, 3 impertinent, or scandalous matter” may be stricken from any 4 pleading. 5 to pleadings. 6 885 (9th Cir. 1983). 7 infrequently granted. 8 Spectrolab, Inc., 744 F.Supp. 945, 947 (C.D. Cal. 1990), 9 abrogated on other grounds by Stanton Road Assocs. v. Lohrey Fed. R. Civ. P. 12(f). A motion to strike is limited Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, Motions to strike are disfavored and Pease & Curren Refining, Inc. v. 10 Enters., 984 F.2d 1015 (9th Cir. 1993). Such motions should be 11 granted only where it can be shown that none of the evidence in 12 support of the allegation is admissible. Id. 13 IV. DISCUSSION. 14 15 Defendant moves to dismiss Plaintiff’s claims to the extent 16 they are based on allegations relating to Defendant’s duties as a 17 furnisher of information to credit reporting agencies. 18 makes a number of allegations in his complaint related to HDCC’s 19 conduct in reporting information to credit reporting agencies. 20 First, Plaintiff alleges: 21 22 23 24 Plaintiff Plaintiff is informed and believes that HDCC and/or its agents regularly report or communicate to consumer credit reporting organizations that purported deficiencies following disposition of repossessed vehicles pursuant to the unlawful practices described herein are bad debts when, in fact, Plaintiff and other similarly-situated persons are not liable for said deficiencies as a matter of law, as set forth above. 25 (Doc. 1-2, Complaint at ¶12.) Plaintiff also contends that one 26 of the questions of law and fact common to the proposed class is 27 “whether HDCC falsely reported deficiencies as valid debts to 28 6 1 credit reporting organizations.” (Id. at ¶17.) Finally, 2 Plaintiff asserts that class members “who have been subject to 3 efforts by HDCC or its agents or successors to collect the 4 invalid debts or who have had negative information on the invalid 5 debts reported to credit reporting agencies are entitled to 6 compensation for damage to their credit and/or other damages.” 7 (Id. at ¶21.) 8 related to furnishers of information to credit reporting agencies 9 and their responsibilities. Defendant argues FCRA preempts any state claims 10 11 A. Federal Pre-emption State law is pre-empted under the Supremacy Clause of 12 13 Article VI of the United States Constitution in three 14 circumstances. 15 to which its enactments pre-empt state law. See Shaw v. Delta 16 Air Lines, Inc., 463 U.S. 85, 95-98 (1983). Pre-emption 17 fundamentally is a question of congressional intent, see 18 Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 299 (1988), and 19 “when Congress has made its intent known through explicit 20 statutory language, the courts' task is an easy one.” 21 General Elec. Co., 496 U.S. 72, 78-79 (1990). First, Congress can define explicitly the extent English v. Second, in the absence of explicit statutory language, state 22 23 law is pre-empted where it regulates conduct in a field that 24 Congress intended the Federal Government to occupy exclusively. 25 Id. 26 regulation ... so pervasive as to make reasonable the inference 27 that Congress left no room for the States to supplement it,” or 28 where an Act of Congress “touch[es] a field in which the federal Such an intent may be inferred from a “scheme of federal 7 1 interest is so dominant that the federal system will be assumed 2 to preclude enforcement of state laws on the same subject.” 3 v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947). 4 Supreme Court has emphasized that where the field Congress is 5 said to have pre-empted includes areas that have “been 6 traditionally occupied by the States,” congressional intent to 7 supersede state laws must be “‘clear and manifest.’” 8 Rath Packing Co., 430 U.S. 519, 525 (1977) (quoting Rice v. Santa 9 Fe Elevator Corp., 331 U.S. at 230). 10 Rice The Jones v. Finally, state law is pre-empted to the extent that it 11 actually conflicts with federal law. 12 pre-emption where it is impossible for a private party to comply 13 with both state and federal requirements, see Florida Lime & 14 Avocado Growers, Inc. v. Paul, 373 U.S. 132, 142-143 (1963), or 15 where state law “stands as an obstacle to the accomplishment and 16 execution of the full purposes and objectives of Congress.” Hines 17 v. Davidowitz, 312 U.S. 52, 67 (1941). The Supreme Court has found 18 19 20 21 B. As Applied to FCRA. FCRA sets forth its relationship to state law in § 1681t, entitled “Relation to State laws”: 22 (a) In general 23 Except as provided in subsections (b) and (c) of this section, this subchapter does not annul, alter, affect, or exempt any person subject to the provisions of this subchapter from complying with the laws of any State with respect to the collection, distribution, or use of any information on consumers, or for the prevention or mitigation of identity theft, except to the extent that those laws are inconsistent with any provision of this subchapter, and then only to the extent of the inconsistency. 24 25 26 27 28 8 1 15 U.S.C. § 1681t(a). 2 FCRA provides for general exceptions to § 1681t(a) in § 3 1681t(b): 4 5 6 (b) General exceptions. No requirement or prohibition may be imposed under the laws of any State– (1) with respect to any subject matter regulated under– (F) section 1681s-2 of this title, relating to the responsibilities of persons who furnish information to consumer reporting agencies, except that this paragraph shall not apply– 7 8 9 (i) with respect to section 54A(a) of chapter 93 of the Massachusetts Annotated Laws (as in effect on September 30, 1996); or (ii) with respect to section 1785.25(a) of the California Civil Code (as in effect on September 30, 1996). 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15 U.S.C. § 1681t(b)(1)(F). From these sections, it is clear that while generally the FCRA does not preempt state law, it sets forth exceptions that do provide for preemption in certain cases. Specifically, no “requirement or prohibition” under state law can be imposed regarding the subject matter regulated under 15 U.S.C. § 1681s-2, which relates to “the responsibilities of persons who furnish information to consumer reporting agencies.” 15 U.S.C. § 1681s-2 reads in part: (a) Duty of furnishers of information to provide accurate information (1) Prohibition (A) Reporting information with actual knowledge of errors A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable 9 cause to believe that the information is inaccurate. 1 2 3 Plaintiff contends that the FCRA was not intended to pre- 4 empt the field. It is evident field pre-emption does not apply 5 from § 1681t(a)’s command that “this subchapter does not annul, 6 alter, affect, or exempt any person subject to the provisions of 7 this subchapter from complying with the laws of any State” 8 relating to collecting or distributing information on consumers 9 except to the extent state laws are inconsistent with § 1681t. 10 See Credit Data of Arizona, Inc. v. State of Arizona, 602 F.2d 11 195, 197 (9th Cir. 1979). 12 plainly limits its preemption of state regulations “only to the 13 extent of the inconsistency” with those regulations. 14 inaccurate. 15 preempts any state law relating to the duties of furnishers of 16 information to consumer reporting agencies. 17 15 U.S.C. §§ 1681t(b)(1)(F)(i) and (ii) exempt a specific 18 Massachusetts law and California Civil Code § 1785.25(a) from 19 such preemption, Plaintiff does not assert any claims under 20 Massachusetts law or California Civil Code § 1785.25(a) and thus 21 no exception applies here to the express pre-emption of state law 22 relating to furnishers of information to consumer reporting 23 agencies. Plaintiff further argues that FCRA This is The plain language of § 1681t(b)(1)(F) expressly In addition, while 24 Here Plaintiff seeks damages for harm to class members’ 25 credit and possible injunctive relief, although the complaint is 26 unclear as to the latter. 27 specifically requires furnishers of credit information to provide 28 accurate information. Title 15 U.S.C. § 1681s-2(a) Plaintiff alleges HDCC provided false 10 1 and/or inaccurate reporting of class members’ deficiencies to 2 credit reporting agencies. 3 provision of accurate information to credit agencies and Congress 4 intended this to be exclusive, any state claim with respect to 5 false or inaccurate reporting is pre-empted. 6 Because FCRA regulates furnishers’ Plaintiff argues FCRA does not pre-empt state consumer 7 statutes that are unrelated to credit reporting, like ASFA and 8 the UCL. 9 seeks relief under ASFA or the UCL, allegations of false Here Plaintiff misses the point. Whether Plaintiff 10 reporting to credit agencies relate to “the responsibilities of 11 persons who furnish information to consumer reporting agencies” 12 as regulated under 15 U.S.C. § 1681s-2. 13 asserts claims based on HDCC’s alleged false reporting, such 14 claims are expressly pre-empted by FCRA. 15 To the extent Plaintiff No Ninth Circuit or other circuit authority has been located 16 that is directly on point. However, in dicta in Gorman, the 17 Ninth Circuit took the position that all state law claims related 18 to furnishers’ reporting duties are expressly pre-empted: 19 “Although § 1681t(b)(1)(F) appears to preempt all state law 20 claims based on a creditor’s responsibilities under § 1681s-2, § 21 1681h(e) suggests that defamation claims can proceed against 22 creditors as long as the plaintiff alleges falsity and malice.” 23 Gorman v. Wolpoff & Abramson, LLP, 552 F.3d 1008, 1026 (9th Cir. 24 2009). 25 conclusion. 26 1144 (N.D. Cal. 2005) (finding UCL claim preempted because 27 “Congress intended the FCRA to preempt state laws regarding the 28 duties of furnishers and the remedies available against them, A number of district courts have reached the same See Howard v. Blue Ridge Bank, 371 F.Supp.2d 1139, 11 1 rather than allowing different liabilities for furnishers 2 depending on the state of suit”); Roybal v. Equifax, 405 3 F.Supp.2d 1177, 1181 (E.D. Cal. 2005) (finding UCL claim, among 4 others, pre-empted and stating “[o]n its face, the FCRA precludes 5 all state statutory or common law causes of action that would 6 impose any “requirement or prohibition” on the furnishers of 7 credit information”); Jaramillo v. Experian Information 8 Solutions, Inc., 155 F.Supp.2d 356, 361-62 (E.D. Pa.2001) (“it is 9 clear from the face of section 1681t(b)(1)(F) that Congress 10 wanted to eliminate all state causes of action ‘relating to the 11 responsibilities of persons who furnish information to consumer 12 reporting agencies' ”); Hasvold v. First USA Bank, 194 F.Supp.2d 13 1228, 1239 (D. Wyo. 2002) (“federal law under the FCRA preempts 14 plaintiff's claims [for defamation and invasion of privacy] 15 against the defendant relating to it as a furnisher of 16 information”); Riley v. General Motors Acceptance Corp., 226 17 F.Supp.2d 1316, 1322 (S.D. Ala. 2002) (finding preemption of 18 state tort claims for negligence, defamation, invasion of privacy 19 and outrage, and acknowledging that “there is no question that 20 the statutory prohibition precludes suits under state consumer 21 protection laws”). 22 V. CONCLUSION. 23 For the reasons set forth above, Defendant’s motion to 24 25 dismiss and strike Plaintiff’s claims as they relate to alleged 26 /// 27 /// 28 /// 12 1 false and/or inaccurate reporting by Defendant to credit 2 reporting agencies is GRANTED. 3 4 IT IS SO ORDERED. 5 Dated: July 7, 2009 emm0d6 /s/ Oliver W. Wanger UNITED STATES DISTRICT JUDGE 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13
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