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Banga v. Allstate Insurance Co.

September 22, 2009



Presently pending for decision before this court are: (1) the motion of defendant Allstate Insurance Company to dismiss plaintiff's complaint, Dckt. No. 13; and (2) the motion of plaintiff for leave to file a Second Amended Complaint, Dckt. No. 22.*fn1 These matters were submitted for decision on the papers. Dckt. Nos. 16, 28.


The following procedural matters require initial consideration. After filing her original complaint, and in response to defendant's motion to dismiss, plaintiff filed a First Amended Complaint. Dckt. No. 14. The First Amended Complaint makes de minimis changes to the original complaint (e.g., breaking larger paragraphs into subparts, dropping a dollar amount in plaintiff's claim for punitive damages, and adding general references to the California Consumer Credit Reporting Agencies Act), but is premised on the same factual allegations and causes of action. The court ordered that plaintiff's First Amended Complaint be disregarded pending the court's decision on defendant's motion to dismiss, and directed plaintiff to file an opposition on or before October 1, 2008. Dckt. No. 15. Two problems beset this order. First, the order failed to acknowledge plaintiff's right to file an amended complaint, "as a matter of course," prior to being served with a responsive pleading. See Fed. R. Civ. P. 15(a)(1)(A) (plaintiff may amend her complaint "once as a matter of course before being served with a responsive pleading"), and Rule 7(a) (motion to dismiss is not a responsive pleading for purposes of Rule 15(a)). To correct this problem, the portion of the October 1, 2008 Order that states the amended complaint will be "disregarded" is vacated.

The second problem is that on October 6, 2008, plaintiff requested a ten-day extension of time within which to file her opposition to defendant's motion to dismiss, Dckt. No. 22, and on October 10, 2008, she filed her opposition, Dckt. No. 23, which is premised on her motion for leave to file a Second Amended Complaint (together with her proposed Second Amended Complaint), Dckt. No. 22.*fn2 Given that Rule 15(a) permits the procedure that plaintiff followed, simply amending her complaint as a "matter of course," apparently in an attempt to moot the motion, and that she acted promptly to seek an extension of time following the court's order of October 2, 2008, plaintiff's request for an additional ten days for filing her opposition to the motion to dismiss is reasonable and is hereby granted. See Fed. R. Civ. P. 6(b)(1)(B) ("the court may, for good cause, extend the time . . . on motion made after the time has expired if the party failed to act because of excusable neglect"); Pioneer Inv. Services Co. v. Brunswick Assoc. Ltd. P'ship, 507 U.S. 380, 391-392, 395 (1993) (in "determining what sorts of neglect will be considered 'excusable,' . . . the determination is at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission"). Accordingly, the time for filing plaintiff's opposition is extended through the date that it was filed, October 10, 2009. Additionally, her motion for leave to file a Second Amended Complaint, filed the same day, shall be considered in conjunction with her opposition to the motion to dismiss.

Finally, the First Amended Complaint, which is substantively identical to plaintiff's original complaint, shall be the operative complaint for purposes of evaluating the instant motion to dismiss.


Plaintiff's allegations rest on the fact that on September 8, 2006, defendant Allstate Insurance Company ("Allstate"), upon renewing plaintiff's homeowner's policy, increased plaintiff's premium from $1477 to $2124. Plaintiff's principal allegation, pursuant to the Fair Credit Reporting Act, 15 U.S.C. §§1681 et seq., is that Allstate took an "adverse action" in underwriting plaintiff's renewal policy, based on information contained in a consumer report, and without providing notice to plaintiff.*fn3 Plaintiff alleges the same facts pursuant to her claim under Cal. Bus. & Prof. Code § 17200. Plaintiff seeks "economic, compensatory, exemplary and punitive damages and all the relief as provided by law, attorney's fees if plaintiff retains an attorney during the pendency of this action, equitable relief, [and] the costs and disbursements of this action." First Amended Complaint ("FAC"), at 4.

Defendant moves to dismiss for failure to state a claim, on the ground that plaintiff's claims fail to provide a private right of action.


On a motion to dismiss, the court construes the pleading in the light most favorable to plaintiff and resolves all doubts in plaintiff's favor. Parks School of Business, Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). The complaint's factual allegations are accepted as true. Church of Scientology of California v. Flynn, 744 F.2d 694 (9th Cir. 1984). The court may, without converting a motion to dismiss into a motion for summary judgment, consider facts established by exhibits attached to the complaint. Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987); United States v. Ritchie, 342 F. 3d 903, 907-908 (9th Cir. 2003). The court may also consider facts which may be judicially noticed, Mullis v. United States Bankruptcy Ct., 828 F.2d 1385, 1388 (9th Cir. 1987); and matters of public record, including pleadings, orders, and other papers filed with the court, Mack v. South Bay Beer Distributors, 798 F.2d 1279, 1282 (9th Cir. 1986).

To survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), a complaint must contain more than a "formulaic recitation of the elements of a cause of action;" it must contain factual allegations sufficient to "raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 1965 (2007). "'The pleading must contain something more than a statement of facts that merely creates a suspicion of a legally cognizable right of action.'" Id., quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed. 2004) (internal punctuation omitted). Rather, a complaint must plead "enough facts to state a claim to relief that is plausible on its face." Weber v. Department of Veterans Affairs, 521 F.3d 1061, 1065 (9th Cir. 2008) (quoting Bell, at 127 S.Ct. at 1974). Factually unsupported claims framed as legal conclusions, and mere recitations of the legal elements of a claim, do not give rise to a cognizable claim for relief. See Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1951 (May 18, 2009) (citing Twombly, 550 U.S. at 555).

The court is mindful of plaintiff's pro se status. Pro se pleadings are held to a less stringent standard than those drafted by lawyers. Haines v. Kerner, 404 U.S. 519, 520-21 (1972). Unless it is clear that no amendment can cure its defects, a pro se litigant is entitled to notice and an opportunity to amend the complaint before dismissal. Lopez v. Smith, 203 F.3d 1122, 1127-28 (9th Cir. 2000) (en banc); Noll v. Carlson, 809 F.2d 1446, 1448 (9th Cir. 1987). However, although the court has an obligation to construe the pleadings of a pro se litigant liberally, Bretz v. Kelman, 773 F.2d 1026, 1027 n.1 (9th Cir. 1985) (en banc), the court's liberal interpretation of a pro se complaint may not supply essential elements of a claim that are not plead. Pena v. Gardner, 976 F.2d 469, 471 (9th Cir. 1992); Ivey v. Bd. of Regents of Univ. of Alaska, 673 F.2d 266, 268 (9th Cir. 1982). Furthermore, "[t]he court is not required to accept legal conclusions cast in the form of factual allegations if those conclusions cannot reasonably be drawn from the facts alleged." Clegg v. Cult Awareness Network, 18 F.3d 752, 754-55 (9th Cir. 1994). Neither need the court accept unreasonable inferences, or unwarranted deductions of fact. Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981).


1. Fair Credit Reporting Act, 15 U.S.C. § 1681m

Plaintiff's first cause of action alleges that Allstate "took an adverse action" by increasing her homeowner's policy premium based on information contained in a consumer report, and then "willfully failed to notify plaintiff of the adverse action." FAC, at 3, ¶¶ 13, 14. Both matters are alleged to be in violation of 15 U.S.C. § 1681m of the Fair Credit Reporting Act ("FCRA"). Based on these allegations, plaintiff seeks damages pursuant to 15 U.S.C. § 1681n, which sets forth the parameters for assessing a consumer's actual and punitive damages based on willful noncompliance with the FCRA, as well as costs and attorney fees.

The only applicable provision of Section 1681m is subdivision "(a)," which sets forth the "[d]uties of users taking adverse actions on basis of information contained in consumer reports." An "adverse action" is defined to include "a denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, existing or applied for, in connection with the underwriting of insurance." 15 U.S.C. §1681a(k)(1)(B)(I). The duties associated with taking an adverse action require that the "user" of consumer reports provide notice to the consumer of the adverse action and of the consumer's right to obtain a copy of the subject report and to dispute the report with the consumer reporting agency. 15 U.S.C. § 1681m(a).*fn4

However, as defendant contends, there appears to be no federal private right of action pursuant to 15 U.S.C. § 1681m, based on the express preclusion of 15 U.S.C. § 1681m(h)(8).*fn5 See Perry v. First Nat'l Bank, 459 F.3d 816, 823 (7th Cir. 2006) ("The unambiguous language of § 1681m(h)(8) demonstrates that Congress intended to preempt private causes of action to enforce § 1681m"); id. at 822 ("every district court considering this issue -- save one -- has found that 15 U.S.C. § 1681m(h)(8) bars private enforcement of § 1681m in its entirety"). Although the Ninth Circuit has not addressed this issue, the majority of decisions by this Circuit's district courts are consistent in concluding that Section 1681m provides no private cause of action. See, e.g., Putkowski v. Irwin Home Equity Corp., 423 F. Supp.2d 1053, 1061-1062 (N.D. Cal. 2006) ("§1681m(h)(8) . . . expressly provides that there is no private right of action for violations of § 1681m") (citing, inter alia, Phillips v. New Century Financial Corp., 2006 WL 517653, 4 (C.D. Cal. 2006) ("Congress eliminated the private right of action under section 1681m through the passage of FACTA [Fair and Accurate Credit Transactions Act of 2003]"); White v. E-Loan, Inc., 409 F. Supp.2d 1183, 1184-1187 (N.D. Cal. 2006) (all private right of action under Section 1681m barred by Section 1681m(h)(8))); see also Grab v. American Lawyers Co., 2007 WL 842045 (D. Hawai'i, 2007) (assuming without deciding that there is no private right of action under Section 1681m, pursuant to retroactivity analysis); Hogan v. PMI Mortg. Ins. Co., 2006 WL 1310461 (N.D. Cal. 2006) (same); but see Kubbany v. Trans Union, LLC, 2009 WL 1844344, 2 (N.D. Cal. 2009) (construed "use of 'section' instead of 'subsection' in § 1681m(h)(8) was a drafting error," thus only private actions under § 1681m(h) are precluded).

The court is persuaded by the reasoning set out in this growing weight of authority and concludes that plaintiff has no private right of action pursuant to 15 U.S.C. § 1681m. Accordingly, the first cause of action in plaintiff's First Amended Complaint should be dismissed with prejudice.

2. California Business & Professions Code § 17200

Plaintiff's second cause of action alleges that "Allstate's failure to provide a notice of adverse action is an unlawful, unfair, fraudulent practice that constitutes unfair business practice under [California] Business and Professions Code Section 17200." FAC, at 4, ¶ 19. Section 17200 of the California Business and Professions Code generally proscribes unfair business practices in California.*fn6 The Ninth Circuit has made clear, however, that this statutory tort cause of action must be premised on an otherwise cognizable claim that defendant has violated a law, or engaged in conduct which is in inherently unscrupulous or injurious to the public. As explained by the Ninth Circuit in Glenn K. Jackson, Inc. v. Roe, 273 F.3d 1192, 1203 (9th Cir. 2001):

In Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal.4th 163 [](1999), the court held that § 17200 "does not proscribe specific practices. Rather . . . it defines 'unfair competition' to include 'any unlawful, unfair or fraudulent business act or practice.' . . . Its coverage is 'sweeping, embracing anything that can properly be called a business practice and that at the same time is forbidden by law.' " Id. at 180 []. The tort encompasses practices which offend established public policy or that are immoral, unethical, oppressive, unscrupulous or substantially injurious to consumers. Podolsky v. First Healthcare Corp., 50 Cal. App. 4th 632 [] (1996). The Cel-Tech Court warned, however, that the breadth of § 17200 does not give a plaintiff license to "plead around" the absolute bars to relief contained in other possible causes of action by recasting those causes of action as ones for unfair competition. Cel-Tech at 182 [].

Thus, in order to state a claim pursuant to § 17200, plaintiff must allege conduct that comes within the prohibition of the statute. Roe, 273 F.3d at 1203. As explained in Webb v. Smart Document Solutions, LLC, 499 F.3d 1078, 1082 (9th Cir. 2007), "[s]section 17200 [] is a broad statute designed to remedy violations of other laws, both state and federal." Id. (emphasis added).*fn7 See also Textron Financial Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 118 Cal.App.4th 1061, 593-594 (2004), and cases cited therein (Section 17200 claim is not cognizable based upon conduct that otherwise fails to give rise to a private right of action under the state Unfair Insurance Practices Act).

Pursuant to these authorities, plaintiff does not state a claim under § 17200. The only predicate claim she asserts is Section 1681m of the FCRA, for which there is no private right of action. Accordingly, plaintiff fails to state a claim under Section 17200 and the second, and last, cause of action in plaintiff's First Amended Complaint must also be dismissed.

3. California Consumer Credit Reporting Agencies Act

Finally, although not presented as a separate cause of action, plaintiff alleges generally that defendant "willfully and knowingly violated plaintiff's rights" under the California Consumer Credit Reporting Agencies Act. FAC, at 4; see also id. at 1 ("[t]his lawsuit involves the . . . California Consumer Credit Reporting ...

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