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Ridenour v. Multi-Color Corp.

United States District Court, E.D. Virginia, Norfolk Division

November 30, 2015

JEFFREY SCOTT RIDENOUR, on behalf of himself and others similarly situated, Plaintiff,
v.
MULTI-COLOR CORPORATION, and STERLING INFOSYSTEMS, INC., Defendants

          For Jeffrey Ridenour, Individually and on behalf of all others similarly situated, Plaintiff: Leonard Anthony Bennett, Susan Mary Rotkis, LEAD ATTORNEYS, Consumer Litigation Associates, Newport News, VA; David Anthony Searles, James Arthur Francis, PRO HAC VICE, Francis & Mailman PC, Philadelphia, PA.

         For Multi-Color Corporation, Defendant: Edmund M O'Toole, Hillary Profita, PRO HAC VICE, Venable LLP (NY-NA), New York, NY; Kishka-Kamari Ford McClain, Venable LLP (Vienna), Tysons Corner, VA.

         For Sterling Infosystems, Inc., Defendant: Ahmed Jamal Davis, LEAD ATTORNEY, Fish & Richardson PC (DC), Washington, DC.

         MEMORANDUM ORDER

         Mark S. Davis, UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), filed by defendant Sterling Infosystems, Inc. (" Sterling" ). ECF No. 21. Sterling's motion asserts that the civil complaint, filed by Jeffery Scott Ridenour (" Ridenour" or " Plaintiff" ), fails to state a claim against Sterling for a violation of the Fair Credit Reporting Act (" FCRA" ). As set forth below, the pending motion to dismiss is GRANTED in part, and DENIED in part.

         Plaintiff's complaint asserts that, in December of 2012, Ridenour applied for full-time employment with defendant Multi-Color Corporation (" MCC" ). Compl. ¶ ¶ 31-32, ECF No. 1. As part of the application process, Plaintiff was required to undergo a background check. Id. Sterling, a consumer reporting agency (" CRA" ), was hired by MCC to produce a background report on Ridenour, to include his criminal record. Id. ¶ 32. Sterling provided such report to MCC; however, Ridenour asserts that Sterling misclassified a prior conviction for a traffic offense as a criminal offense. Id. ¶ ¶ 36, 42. Plaintiff further alleges that Sterling's report was both incomplete and misleading to the point of inaccuracy, as it was " impossible to determine the date, nature, disposition or other information about the so-called crime - which was, in fact, a misdemeanor traffic offense." Id. ¶ ¶ 11, 55.

         MCC ultimately refused to hire Ridenour as a result of the background report provided by Sterling. Id. 51 48. Ridenour thereafter filed the instant action asserting that Sterling and MCC committed violations of the FCRA associated with both the creation of the background report and the failure to timely notify Ridenour of the reliance on such information. Sterling subsequently filed the instant motion to dismiss.

         Neither party's briefing calls into question the well-established 12(b)(6) standard of review, which permits dismissal of a complaint, or a claim within a complaint, based on a plaintiff's " failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A motion to dismiss must be read in conjunction with Rule 8(a), which requires only " a short and plain statement of the claim showing that the pleader is entitled to relief," Fed.R.Civ.P. 8(a)(2), so as to " 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests,'" Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (omission in original) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). While Twombly held that a complaint must include enough facts for a claim to be " plausible on its face" and thereby " raise a right to relief above the speculative level," district courts are required to assume that all well-pled factual allegations " are true (even if doubtful in fact)." Id. at 555, 570 (internal citations omitted). District courts must also " 'draw all reasonable inferences in favor of the plaintiff,'" taking care to avoid any invitation to resolve factual disputes at the pleading stage. Kensington Volunteer Fire Dep't v. Montgomery County, 684 F.3d 462, 467 (4th Cir. 2012) (internal quotation marks and citation omitted). Applying the above, the ultimate determination as to whether a complaint states a plausible claim is a " context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

         A. Counts One and Two - 15 U.S.C. § 1681b(b)(3)

         Sterling seeks dismissal of Counts One and Two of the complaint on the ground that Plaintiff failed to allege that Sterling, as a CRA that created Ridenour's background report, also " use[d]" such report to take an " adverse [employment] action" against Ridenour. 15 U.S.C. § 1681b(b)(3). After conducting a case-specific analysis, the Court finds that Plaintiff has stated a plausible claim against Sterling in Counts One and Two.

         First, the Court rejects Sterling's contention that dismissal is warranted because the allegations in the complaint are factually inaccurate. This Court is required to analyze the pending motion without resolving factual disputes, and the Court is thus prohibited from granting Sterling's motion based on the Court's " 'disbelief of [the] complaint's factual allegations.'" Iqbal, 556 U.S. at 696 (quoting Neitzke v. Williams, 490 U.S. 319, 327, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989)). Although Sterling's 12(b)(6) briefing strongly contests the accuracy of Ridenour's claim that Sterling played an active role in MCC's employment decisions, Sterling's facts must play no part in the decisional process at this stage of the case.[1]

         Second, the Court rejects Sterling's motion to the extent it seeks dismissal because Ridenour bases some of his allegations on " information and belief." A plaintiff is generally permitted to plead facts based on " information and belief" if such plaintiff is in a position of uncertainty because the necessary evidence is controlled by the defendant. See Raub v. Bowen, 960 F.Supp.2d 602, 615 (E.D. Va. 2013) (noting that although " information and belief" pleadings are " tenuous at best," such practice is permitted under Rule 8(a) when relying " on second-hand information to make a good-faith allegation of fact" ); Arista Records, LLC v. Doe 3, 604 F.3d 110, 120 (2d Cir. 2010) (" The Twombly plausibility standard . . . does not prevent a plaintiff from pleading facts alleged 'upon information and belief' where the facts are peculiarly within the possession and control of the defendant" ) (internal quotation marks and citation omitted); 2-8 Moore's Federal Practice § 8.04[4] (3d ed.) (" Nothing in the Twombly plausibility standard prevents a plaintiff from pleading on information and belief." ). A plaintiff is also permitted to plead claims in the alternative, and claims may be pled without regard to consistency. Fed.R.Civ.P. 8(d); see C. Wright & A. Miller, 5 Federal Practice and Procedure Civil § 1285 (3d ed.) (explaining that the Federal Rules permit a plaintiff to allege alternative factual allegations, but indicating that a plaintiff should do so only if " after a reasonable inquiry, the pleader legitimately is in doubt about the factual background . . . or is otherwise justified in pleading in this fashion" (emphasis added)). Critically, a district court must take care at the 12(b)(6) stage to avoid conflating the question of whether the asserted facts state a plausible claim with the question of whether such facts are accurate and/or pled in good-faith.[2]

         Here, viewing the well-pled factual matters in Plaintiff's favor, Ridenour asserts that Sterling produced a background report containing incomplete and/or inaccurate information and that either MCC, Sterling, or both, used such report to reject Ridenour's employment application. While other allegations in the complaint plainly suggest that MCC is the party that actually " use[d]" Sterling's report to take an " adverse action" against Ridenour, Plaintiff's " information and belief" allegations against Sterling are not prohibited because the current record suggests that the details of the relationship between Sterling and MCC are known only to defendants. Although Ridenour's allegations would undoubtedly be more compelling if the complaint detailed the evidence supporting the claimed " belief" that Sterling took an active role in the employment decision process, " the facts on which the pleader's belief is founded" are not required to be alleged in a complaint governed by Rule 8(a), as requiring such factual detail appears to be " inconsistent with the philosophy of the federal pleading rules." Wright & Miller, 5 Fed. Prac. & Proc. Civ. § 1224.[3]

         Accordingly, drawing on this Court's " judicial experience and common sense," Iqbal, 556 U.S. at 679, and considering the factual allegations located throughout the complaint, the Court finds that Counts One and Two survive Sterling's 12(b)(6) motion even though the allegations against Sterling are strongly contested. Subsumed within such finding, the Court rejects Sterling's separate contention that, under any set of facts, Sterling cannot have " use[d]" the report to take an adverse employment action because Sterling is the CRA that created such report. See Goode v. LexisNexis Risk & Info. Analytics Grp., Inc.,848 F.Supp.2d 532, 542 (E.D. Pa. 2012) (finding that a CRA could qualify as a " person" that uses a consumer report to take an adverse employment action as contemplated by § 1681b(b)(3)); Henderson v. Infomart Inc., No. 1:14cv1609, slip op. at 19-30 (N.D.Ga. Aug. 15, 2014) (R& R subsequently adopted without change by the district judge reaching the same conclusion); see also Kingery v. Quicken Loans, Inc.,629 ...


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