You are on page 1of 20

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 1 of 20 Page ID #:13395

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

JAMES F. McCABE (CA SBN 104686) JMcCabe@mofo.com MORRISON & FOERSTER LLP 425 Market Street San Francisco, California 94105-2482 Telephone: 415.268.7000 Facsimile: 415.268.7522 MICHAEL B. MILLER (Pro Hac Vice) MBMiller@mofo.com MORRISON & FOERSTER LLP 1290 Avenue of the Americas New York, New York 10104-0050 Telephone: 212.468.8009 Facsimile: 212.468.7900 Attorneys for Reed Elsevier Inc., LexisNexis Risk and Information Analytics Group Inc., LexisNexis, Inc., LexisNexis Risk Solutions, Inc., LexisNexis ChoicePoint, Inc., LexisNexis Seisint, Inc., d/b/a Accurint, and LexisNexis Group Inc. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION LISA LIBERI, et al., Plaintiffs, v. ORLY TAITZ, et al., Defendants. Case No. CV11-00485 AG (AJWx) LEXISNEXIS DEFENDANTS REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT Date: Time: Judge: Place: May 21, 2012 10:00 a.m. Hon. Andrew J. Guilford Courtroom 10D

LEXISNEXIS DEFS. REPLY ISO MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 2 of 20 Page ID #:13396

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 B.

TABLE OF CONTENTS Page TABLE OF AUTHORITIES .................................................................................... ii I. II. INTRODUCTION ...........................................................................................1 LEGAL ARGUMENT ....................................................................................2 A. The LexisNexis Defendants Are Entitled to Summary Judgment Pursuant to The FCRA Order Because They Could Not Have Expected the Reports to Be Used in a Manner That Might Make Them Consumer Reports. ..................................................................2 Even Under the Newly Alleged Facts, the Sankey Defendants Did Not Use the Reports at Issue for a Permissible Purpose Under the FCRA....................................................................................6 Plaintiffs Cannot Defeat Summary Judgment By Relying on the Conduct of Other LexisNexis Companies. .........................................13

C.

CONCLUSION........................................................................................................15

LEXISNEXIS DEFS. REPLY ISO MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 3 of 20 Page ID #:13397

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 CASES

TABLE OF AUTHORITIES Page(s) Adams v. LexisNexis Risk & Info. Analytics Grp., Inc., No. 08-4708, 2010 WL 1931135 (D.N.J. May 12, 2010) ................................5, 6 Banga v. Natl Credit Union Admin., No. C-08-3015 MMC, 2009 U.S. Dist. LEXIS 93449 (N.D. Cal. Oct. 6, 2009) ....................................13 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)..............................................................................................6 Chester v. Purvis, 260 F. Supp. 2d 711 (S.D. Ind. 2003).................................................................11 Cook v. Equifax Info. Sys., Inc., No. HAR 92-927, 1992 WL 356119 (D. Md. Nov. 20, 1992) ...........................13 Dunmire v. Morgan Stanley DW, Inc., 475 F.3d 956 (8th Cir. 2007) ..............................................................................10 Forrest v. Secured Funding Corp. No. 05-C-1324, 2007 WL 81878 (E.D. Wis. Jan 8, 2007)...........................12, 13 Gomon v. TRW, Inc., 28 Cal. App. 4th 1161 (1994) .............................................................................13 Houghton v. N.J. Mfrs. Ins. Co., 795 F.2d 1144 (3d Cir. 1986) ...............................................................................9 In the Matter of Reed Elsevier, Inc. & Seisint Inc. Corps., FTC File No. 052-3094.......................................................................................14 Individual Reference Servs. Grp., Inc. v. Fed. Trade Commn, 145 F. Supp. 2d 6 (D.D.C. 2001)........................................................................14 Mende v. Dun & Bradstreet, Inc., 670 F.2d 129 (9th Cir. 1982)...........................................................................8, 12 Mone v. Dranow, 945 F.2d 306 (9th Cir. 1991) ..........................................................................9, 10
MPA IN SUPPORT OF LEXISNEXIS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

ii

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 4 of 20 Page ID #:13398

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

Nissho Iwai Am. Corp. v. Kline, 845 F.3d 1300 (5th Cir. 1988) ..............................................................................5 Phillips v. Grendahl, 312 F.3d 357 (8th Cir. 2002), overruled in part on different grounds by Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) ...........................................11 Pintos v. Pac. Creditors Assn, 605 F.3d 665 (9th Cir. 2010), cert. denied sub nom. Experian Info. Solutions v. Pintos, 131 S. Ct. 900 (2011)............................................8, 9, 10, 11 Pit River Home & Agric. Coop. Assn v. United States, 30 F.3d 1088 (9th Cir. 1994) ................................................................................3 Robins v. Spokeo, Inc., No. CV10-05306, 2011 WL 1793334 (C.D. Cal. May 11, 2011) ........................6 Trans Union Corp. v. Fed. Trade Commn, 245 F.3d 809 (D.C. Cir. 2001)............................................................................12 Yaeger v. TRW, Inc., 961 F. Supp. 161 (E.D. Tex. 1997).....................................................................13 Yang v. Govt Emps. Ins. Co., 146 F.3d 1320 (11th Cir. 1998) ..........................................................................12 STATUTES & RULES 15 U.S.C. 1681 et seq. ........................................................................................................1 1681b........................................................................................................5, 6, 15 1681b(a)(1) ........................................................................................................6 1681a(d) .............................................................................................................1 1681a(d)(1) ....................................................................................................5, 8 1681b(a)(3)(A)...............................................................................................5, 9 Fed. R. Civ. P. Rule 56(c)(1)(A) ...................................................................................................4 Rule 56(e)(2).........................................................................................................5

MPA IN SUPPORT OF LEXISNEXIS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

iii

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 5 of 20 Page ID #:13399

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

OTHER AUTHORITIES FTC, 40 Years of Experience With the Fair Credit Reporting Act, July 2011, at 22, available at http://www.ftc.gov/os/2011/07/110720fcrareport.pdf..........................................3 FTC Letter dated July 29, 2008, available at www.ftc.gov/os/caselist/0523094/080801reedrotenbergletter.pdf.....................14

MPA IN SUPPORT OF LEXISNEXIS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

iv

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 6 of 20 Page ID #:13400

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

I.

INTRODUCTION In their attempt to raise a genuine issue of material fact sufficient to defeat

the LexisNexis Defendants motion for summary judgment, plaintiffs try the scattergun approach, and inject as many facts, arguments, and inaccuracies as possible, relevant or not. Although they take many pages to fail to do so, Plaintiffs ultimately do not raise a single genuine issue of material fact as to the only question that is necessary to resolve the LexisNexis Defendants motion for summary judgment in its totality are the searches or reports purchased by the Sankey Defendants consumer reports within the meaning of the Fair Credit Reporting Act (15 U.S.C. 1681 et seq. (FCRA); 15 U.S.C. 1681a(d)) and related state law? The remaining claims all lie only with respect to such reports. This Courts Order Granting Defendant Intelius Motion for Summary Judgment on the FCRA claims (the FCRA Order), provides the analysis necessary to answer that question. As this Court held in the FCRA Order, the key question is whether [the LexisNexis Defendants] expect[ed] the user to use the report for a purpose permissible under the FCRA, without regard to the ultimate purpose to which the report is actually put. FCRA Order at 12 (quoting Comeaux v. Brown & Williamson Tobacco Co., 915 F.2d 1264, 1273-74 (9th Cir. 1990) (emphasis in original). This motion is far simpler than might be guessed from Plaintiffs encyclopedic Opposition. Plaintiffs have not offered any competent evidence disputing the fact that the contract between IRBSearch, LLC (IRB) and the LexisNexis entity that licensed IRB to gain access to the Accurint database provided explicitly and in great detail that any Accurint report that might be furnished was not a consumer report and would not be used for the kinds of eligibility determinations that define consumer reports. Plaintiffs have not offered any competent evidence disputing the fact that the contract between Sankey
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 7 of 20 Page ID #:13401

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

and IRB included similar express provisions. Plaintiffs have not offered any competent evidence disputing the fact that the agreement used by the LexisNexis Defendants for their direct sales included the same restriction, as did the Accurint website. The facts make clear that the LexisNexis Defendants prohibited these reports from being used in a manner that would classify them as consumer reports under the FCRA, and thus that none of the LexisNexis Defendants expected or intended or could have expected or intended the reports to be so used. As a result, they are not consumer reports within the meaning of the FCRA. This is all one needs to look at to resolve all remaining claims against the LexisNexis Defendants. Even if one were to look at the ultimate purpose to which the report is actually put, there is no issue in this case that the reports provided to the Sankey Defendants were not put to any ultimate purpose covered by the FCRA. Indeed, plaintiffs entire case is premised on the notion that the Sankey and Taitz Defendants did not use the reports for a purpose permissible under the FCRA. (First Amended Complaint (FAC) 348), but instead intended to and did use them as part of some alleged campaign of harassment. (Id. 343). The net result of Plaintiffs Opposition is to simply confirm that this case has nothing to do with the FCRA. That means there is no genuine issue of material fact that prevents the Court from granting summary judgment to the LexisNexis Defendants on all remaining claims against them. II. LEGAL ARGUMENT A. The LexisNexis Defendants Are Entitled to Summary Judgment Pursuant to The FCRA Order Because They Could Not Have Expected the Reports to Be Used in a Manner That Might Make Them Consumer Reports.

Plaintiffs Opposition (the Oppn Br.) scrupulously avoids any mention whatsoever of the FCRA Order, which dismissed all remaining FCRA claims against the Intelius Defendants on the ground that any reports provided by them were not consumer reports within the meaning of the FCRA. On the one hand,
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 8 of 20 Page ID #:13402

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

Plaintiffs failure to mention the FCRA Order is surprising because it concerns precisely the legal question at issue here and closely analogous facts.1 On the other hand, Plaintiffs omission is not surprising at all, because there is no way to escape the conclusion that the FCRA Order requires that the LexisNexis Defendants are entitled to summary judgment. As recognized by this Court in the FCRA Order, the key question is whether [the LexisNexis Defendants] expect[ed] the user to use the report for a purpose permissible under the FCRA, without regard to the ultimate purpose to which the report is actually put. FCRA Order at 12 (quoting Comeaux, 915 F.2d at 1273-74 (emphasis in original). This is exactly the same position taken by the FTC and other federal courts.2 (See Opening Br. at 11-12.) Where a report provider did not expect the user to use the report for a purpose permissible under the FCRA, then the report is not a consumer report and the FCRA does not apply. (FCRA Order at 12.) Plaintiffs do not really dispute the fundamental facts necessary to conclude that the LexisNexis Defendants did not and could not have expected that the reports at issue here could have been used for a purpose permissible under the FCRA: In the Reseller Agreement, IRB was limited to selling Accurint Servicers to the private investigative industry, bail bondsmen and physical asset repossession companies. (UF No. 42.) IRB was not The law of the case doctrine provides that a decision on a factual or legal issue must be followed in all subsequent proceedings in the same case in the trial court or on a later appeal in the appellate court. Pit River Home & Agric. Coop. Assn v. United States, 30 F.3d 1088, 1096 (9th Cir. 1994) (quoting Moore v. Jas. H. Matthews & Co., 682 F.2d 830, 833-34 (9th Cir. 1982)). If plaintiffs wanted to dispute the Courts FCRA Order, they needed to do so before the FCRA Order became final. 2 As the FTC explained, where the furnisher of information has taken reasonable steps to insure that the report is not used for an FCRA permissible purpose, and if it neither knows of, nor can reasonably anticipate such use, the report should not be deemed a consumer report by virtue of uses beyond the entitys control. FTC, 40 Years of Experience With the Fair Credit Reporting Act, July 2011, at 22, available at http://www.ftc.gov/os/2011/07/110720fcrareport.pdf.
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292
1

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 9 of 20 Page ID #:13403

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

authorized to sell Accurint Services to typical consumer report users such as lenders, insurance underwriters or employers who make decisions regarding a consumers eligibility for credit, insurance or employment. (UF No. 42.) The LexisNexis Defendants required IRB to get agreements from IRBs users that they would not so use reports generated from the Accurint database. (UF No. 40.) IRB did exactly that. IRBs contract with The Sankey Firm contained that required use restriction. (UF No. 44.) The Accurint website included an express warning that Accurint reports do not constitute consumer reports, and make clear that the Accurint service may not be used in whole or in part as a factor in determining eligibility for credit, insurance, employment or for other eligibility determination purposes that would qualify the service as a consumer report under the FCRA. (UF No. 35.) For those who purchase reports directly from the LexisNexis Defendants, in the form subscription agreement used with direct endusers, end-users agree that the Accurint reports do not constitute consumer reports, and that the end-user will not use the Accurint report in whole or in part as a factor in determining eligibility for credit, insurance, employment or another permissible purpose under the FCRA. (UF No. 35.) Plaintiffs do not challenge the actual substance of any of these facts. They do not identify particular parts of materials in the record (Fed. R. Civ. P. 56(c)(1)(A)) that show any fact to be disputed they instead dispute every fact with an unexplained list of citations to record material having no apparent bearing on the issues presented. The Court may thus conclude that there is no genuine issue of material fact that the LexisNexis Defendants did not expect and could not have
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 10 of 20 Page ID #:13404

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

expected that the reports in question in this lawsuit were going to be used (or actually were used) for a purpose that would characterize the report as a consumer report as defined in the FCRA. Fed. R. Civ. P. 56(e)(2); see also Nissho Iwai Am. Corp. v. Kline, 845 F.3d 1300, 1307 (5th Cir. 1988) (decided under prior version of Rule 56 and finding that reference to entire deposition does not satisfy requirement that nonmovant designate specific facts to defeat summary judgment and rejecting assumption that the entire record in the case must be searched and found bereft of a genuine issue of material fact before summary judgment may be properly entered). As the FCRA Order puts beyond any reasonable dispute, that means that the reports are not consumer reports within the meaning of the FCRA and Plaintiffs remaining FCRA claims against the LexisNexis Defendants must be dismissed. The LexisNexis Defendants expectations were particularly reasonable in this case, given that the reports at issue were sold by IRB solely to the private investigative industry, bail bondsmen and physical asset repossession companies. (UF No. 42.) Plaintiffs highlight their failure to provide any actual evidence creating a genuine issue of material fact by citing to Adams v. LexisNexis Risk & Info. Analytics Grp., Inc., No. 08-4708, 2010 WL 1931135 (D.N.J. May 12, 2010). In Adams, the District Court denied a motion on the pleadings prior to discovery because, after taking Plaintiffs allegations as true, as the Court must at this stage (id. at *6), the court concluded that use of an Accurint report to decide whether to pursue a debtor for the collection of an account might constitute an eligibility determination embraced by the consumer report definition.3 Id. at *8-9. The Certain communications constitute consumer reports if they are used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumers eligibility for . . (A) credit or insurance, . . (B) employment purposes, or (C) any other purpose authorized under [15 U.S.C. 1681b]. 15 U.S.C. 1681a(d)(1). Debt collectors are permitted, under 15 U.S.C. 1681b(a)(3)(A), to obtain consumer reports in connection with a credit transaction involving the consumer on whom the information is to be furnished and
(Footnote continues on next page.) REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292
3

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 11 of 20 Page ID #:13405

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

LexisNexis Defendants motion for summary judgment is procedurally and factually different from Adams. The ruling in Adams was on a motion for judgment on the pleadings on which the plaintiffs allegations were presumed to be true. Here, plaintiffs are entitled to no such presumption.4 More importantly, the analysis in Adams was specific to a report on the plaintiff that she alleged was sold to a debt collector for use in collecting a debt, a purpose for which a consumer report may be obtained. Here, as is explained more fully below, plaintiffs allege precisely the opposite. Adams is thus completely inapposite. B. Even Under the Newly Alleged Facts, the Sankey Defendants Did Not Use the Reports at Issue for a Permissible Purpose Under the FCRA.

Even if one were to ignore the LexisNexis Defendants undisputed evidence as to their expectations and examine instead the use to which the challenged reports were put, one still comes to the conclusion that the relevant reports were not consumer reports under the FCRA, and thus that the LexisNexis Defendants
(Footnote continued from previous page.)

involving the extension of credit to, or review or collection of an account of, the consumer. Lexis Nexis argued in Adams that the reference to section 1681b in subpart (C) of consumer report definition was, like subparts (A) and (B), modified by the phrase eligibility for, and that the structure and history of the statute indicated that the statute embraced reports prepared to assess the consumers eligibility for some transaction or benefit (e.g., credit, insurance, employment) that a consumer might desire. Lexis Nexis also argued that section 1681b includes a number of permissible purposes for use of a consumer report that cannot be conceived of as determinations of the consumers eligibility for a benefit. Thus, reports intended for a permissible purpose use that does not involve benefit determinations (e.g., response to a federal grand jury subpoena (15 U.S.C. 1681b(a)(1))) do not make a communication a consumer report. Lexis Nexis argued that debt collection is not a benefit, and hence that a report prepared for use in debt collection is not a consumer report. The Adams court agreed that a communications characterization as a consumer report was predicated on its preparation for an eligibility determination, but concluded that a bankruptcy indicator could indicate a consumers eligibility to be the subject of collection efforts. The Adams case was settled before this determination could be reviewed. 4 For the same reason, Plaintiffs reliance on Robins v. Spokeo, Inc., No. CV10-05306 (ODW AGRx), 2011 WL 1793334 (C.D. Cal. May 11, 2011), is misplaced. There, the court considered whether plaintiffs pleading was sufficient to raise a plausible inference under the Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) pleading standard.
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 12 of 20 Page ID #:13406

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

motion for summary judgment should be granted. The undisputed facts show that the purchaser of the Accurint reports here (the Sankey Defendants, through IRB) neither intended to nor did use the reports for any purpose that would cause them to be characterized as consumer reports under the FCRA. The simple reality is that whatever else this case might be about, it has nothing whatsoever to do with the terms of or the policy underlying the FCRA. For several reasons, this means that the LexisNexis Defendants are entitled to summary judgment. First, the gravamen of Plaintiffs First Amended Complaint as it relates to the LexisNexis Defendants is that the Sankey and Taitz Defendants did not use the relevant reports for a permissible purpose identified in the FCRA. (See, e.g., FAC 149 (alleging that the LexisNexis Defendants disclosed personal identifying information to unauthorized third parties with no permissible purpose(s) for receiving and using such information) (emphasis in original); 348, 355 (disclosed the foregoing consumer reports without any permissible purpose(s) therefor[e]); and 156 (that the Sankey and Taitz Defendants did not have permissible purpose for receiving and/or using Plaintiffs[] information).) It is thus more than a little odd for Plaintiffs to now argue that the reports qualify as consumer reports because they were provided for a purpose for which consumer reports are permitted to be used.5

If one were to accept Plaintiffs brand new argument and ignore the FCRA Order, the LexisNexis Defendants would still be entitled to summary judgment on causation and damages grounds. The theory of liability in the First Amended Complaint is that the Sankey and Taitz Defendants had no permissible purpose to receive the report, and thus it should not have been provided to them. All of Plaintiffs alleged damages flow from this alleged FCRA violation. But if the Sankey and Taitz Defendants had a permissible purpose to obtain the report, then they were entitled to receive and use the report, and Plaintiffs cannot claim any damages from the fact that they did so. Plaintiffs lose whichever of their mutually exclusive arguments one chooses to believe. If there was no permissible purpose, the conduct is not covered by the FCRA; if there is a permissible purpose, Plaintiffs claims disappear.
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 13 of 20 Page ID #:13407

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

Second, putting aside the fact that such evidence would directly contradict their First Amended Complaint, Plaintiffs cannot provide any evidence that the reports in question were actually used for an eligibility determination of a type that would cause them to be characterized as consumer reports under the statute. Plaintiffs basis in their Opposition for claiming that they were so used is not entirely clear. They seem to rely on two points: (i) that Neil Sankey went on radio programs claiming Liberi owed people in San Bernardino County a lot of money and that is why he obtained the personal reports on Liberi and that Defendant Taitz falsely claimed Liberi and Ostella stole approximately Ten Thousand [$10,000] Dollars from her, and Neil Sankey obtained the private reports on the Plaintiffs as a result thereof, so Taitz could recoup and collect her money (Oppn Br. 19); and (ii) that the Sankey Defendants stated their permissible purpose under the Graham Leach Bliley Act (the GLBA) was that they held a legal or beneficial interest relating to the consumer (id. (emphasis omitted)). Neither set of allegations change the result compelled by the FRCA Order. With respect to the first set of allegations, Plaintiffs nowhere explain how these statements bear in any way on whether the Taitz or Sankey Defendants obtained the reports for the purpose of serving as a factor in establishing the consumers eligibility for credit, insurance, employment or for any other benefit that would qualify the communication as a consumer report. 15 U.S.C. 1681a(d)(1) (emphasis supplied). That, of course, is the relevant statutory question under the FCRA. As reflected in the FCRA Order itself and in cases cited by Plaintiffs in their Opposition Brief, the mere fact that information relates in some way to a consumers debt is not sufficient to come within the scope of the FCRA. See, e.g., Mende v. Dun & Bradstreet, Inc., 670 F.2d 129, 133 (9th Cir. 1982); Pintos v. Pac. Creditors Assn, 605 F.3d 665, 675 (9th Cir. 2010), cert. denied sub nom. Experian Info. Solutions v. Pintos, 131 S. Ct. 900 (2011). Similarly, the fact that debt collectors, insurance companies, or employers purchase
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 14 of 20 Page ID #:13408

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

other reports from defendants (see Oppn Br. 20), as asserted by Plaintiffs counsel, is not enough to bring the reports here those sold by IRB to Defendant Sankey within the FCRAs definition of a consumer report. The FCRA requires more than merely that a report is used in some general way by individuals in the credit, insurance, or employment industries, and it is well established that a use for something other than eligibility does not establish that a communication is a consumer report within the meaning of the FCRA. See, e.g., Houghton v. N.J. Mfrs. Ins. Co., 795 F.2d 1144, 1148 (3d Cir. 1986) (report provided to insurance company was not a consumer report because [t]he request concerned only the genuineness of [the consumers] personal injury claim and not her eligibility for credit or insurance ... or employment). In addition, Sankeys supposed efforts to investigate Plaintiffs because he believed they owed people money or had stolen money would not provide a permissible purpose for use of a consumer report. Consumer reports can be used in service of collecting a debt only where that debt arose out of a credit transaction involving the consumer. 15 U.S.C. 1681b(a)(3)(A). Thus, the Ninth Circuit has held that a consumer report may not be used to collect charges arising from police-directed towing of the consumers car. Pintos, 605 F.3d at 667. The Ninth Circuit concluded that [t]o qualify under 1681b(a), the credit transaction must both (1) be a credit transaction involving the consumer on whom the information is to be furnished and (2) involve the extension of credit to, or review or collection of an account of, the consumer. Id. at 674. Relying on Mone v. Dranow, 945 F.2d 306 (9th Cir. 1991), the Court held that the towing charge debt did not result from a credit transaction involving the consumer. Mone involved the procurement of an acknowledged credit report by an adverse party in litigation for the purpose of determining whether the consumer could satisfy a judgment. 945 F.2d at 307. Quoting from the legislative history of the FCRA, the court held that [d]etermining whether an adverse party in litigation will be able to satisfy a
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 15 of 20 Page ID #:13409

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

judgment is plainly a purpose unrelated to an individuals eligibility for credit, insurance or employment. Id. at 308 (quoting Cong. Rec. 36,572 (1970) (Statement of Rep. Sullivan)). The court concluded that the defendant lacked a permissible purpose for obtaining the credit report. The purposes for which Sankey is now alleged to have procured Accurint reports about the plaintiffs do no constitute permissible purposes under the FCRA. Finally, Plaintiffs present absolutely no evidence supporting their new theory that the Taitz and Sankey Defendants were in fact seeking to collect on any debt. Plaintiffs second argument, regarding the Sankey Defendants stated GLBA permissible purpose, is irrelevant. The FCRAs definition of consumer report makes no reference to eligibility determinations based on GLBA permissible purposes, only FCRA permissible purposes. The fact that someone has a legal or beneficial interest relating to the consumer does not permit that person to use a consumer report. Plaintiffs appear to spend a portion of their Opposition suggesting that the Sankey Defendants or the LexisNexis Defendants violated the GLBA (see Opp. Br. at 15-16), but they do not bring any GLBA claims. Nor could they, as that statute does not include a private right of action. Dunmire v. Morgan Stanley DW, Inc., 475 F.3d 956, 960 (8th Cir. 2007). Third, Plaintiffs cite to a number of cases without really explaining what they have to do with their argument or this motion for summary judgment. For example, plaintiffs cite Pintos, arguing that the provisions in both the LexisNexis entitys agreement with IRB and IRBs agreement with Sankey that Accurint reports would not be used for FCRA uses that would qualify them as consumer reports should be disregarded. This is wrong. There, the defendant Experian argued that because it had a blanket certification from the user that an acknowledged credit report would be used only for permissible purposes, Experian was immunized from liability for providing a consumer report for an impermissible use. Pintos, 605 F.3d at 677. The Court held that the certification alone did not immunize Experian, and
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

10

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 16 of 20 Page ID #:13410

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

that while Experian did not have to verify PCAs request for Pintoss credit report individually (id. at 677 n.3) it did have to verify the subscribers uses of reports generally. Id. The court explained its holding in part by distinguishing district court cases in which the credit bureau had a blanket certification and the plaintiff failed to adduce evidence on her summary judgment motion that the credit bureau defendant had notice of conduct inconsistent with the certification. Id. (citing Davis v. Asset Servs., 46 F. Supp. 2d 503, 508 (M.D. La. 1998) (defendant complied with the requirements of 1681e(a) because it obtained a blanket certification and because the plaintiff did not submit any evidence to prove that the [defendant] knew or should have had reason to know that [the subscriber] would access the report for an impermissible purpose) and Boothe v. TRW Credit Data, 557 F. Supp. 66, 71 (S.D.N.Y. 1982) (finding no violation where the primary business of the requesting entity used reports for a permissible purpose and there was no showing that TRW knew of the improper purpose for the report issued)). Here, the certification is precisely to the contrary Sankey assured IRB and IRB assured the Lexis Nexis Defendants that Accurint reports would not be used for a permissible purpose. Even if Sankey procured an Accurint report for an FCRA permissible purpose, Plaintiffs have made no showing that the LexisNexis Defendants knew that. None of the other cases cited or discussed in the Opposition Brief help Plaintiffs in the slightest. For the most part, Plaintiffs cite cases in which it was undisputed that the reports being provided were consumer reports under the FCRA, and the question was whether they were properly used for a permissible purpose.6 By contrast, this case involves a situation (i) in which the LexisNexis See, e.g., Chester v. Purvis, 260 F. Supp. 2d 711, 717-18 (S.D. Ind. 2003) (claim stated under the FCRA when consumer report originally obtained for a permissible purpose was later provided to lawyer for use in deposition); Phillips v. Grendahl, 312 F.3d 357, 366 (8th Cir. 2002) (report was a consumer report because it was provided by consumer reporting agency with the expectation that it
(Footnote continues on next page.) REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292
6

11

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 17 of 20 Page ID #:13411

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

Defendants did not intend to supply a consumer report and (ii) in which Plaintiffs contend that the report so provided was not used as a consumer report under the FCRA. This is precisely why the LexisNexis Defendants are entitled to summary judgment on each of the remaining FCRA claims. Plaintiffs attempt to distinguish two of the cases cited in the LexisNexis Defendants opening brief is similarly unavailing. Mende v. Dun & Bradstreet, Inc., 670 F.2d 129 (9th Cir. 1982), is relevant because it focuses on Dun & Bradstreets expectations for use when it provided the report (they expected that it would be used to evaluate the credit worthiness of a business rather than an individual), and disregards the fact that the report on that business includes information that could be used to evaluate the credit worthiness of certain individuals involved with that business. Mende agrees with the analysis included in the FCRA Order, that the key question is whether [the provider of the report] expect[ed] the user to use the report for a purpose permissible under the FCRA, without regard to the ultimate purpose to which the report is actually put. FCRA Order, at 12. Likewise, Plaintiffs misinterpret Forrest v. Secured Funding Corp. No. 05-C1324, 2007 WL 81878 (E.D. Wis. Jan 8, 2007). In Forrest, the district court ruled that the report at issue was not a consumer report because the provider of the report, did not expect the reports to be used for purposes of credit eligibility, nor
(Footnote continued from previous page.)

would be used for a statutory purpose no matter how it was intended to be used), overruled in part on different grounds by Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007); Trans Union Corp. v. Fed. Trade Commn, 245 F.3d 809, 812-13, 815 (D.C. Cir. 2001) (upholding FTC finding that the information Trans Union sold was collected in whole or in part by [Trans Union] with the expectation that it would be used by credit grantors for the purpose of serving as a factor in establishing the consumers eligibility for one of the transactions set forth in the FCRA); Yang v. Govt Emps. Ins. Co., 146 F.3d 1320, 1325 (11th Cir. 1998) (report was a consumer report even though not used for a permissible purpose because Equifax compiles the information contained in [the relevant reports] for credit-related purposes, and expects [those reports] to be used for such purposes).
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

12

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 18 of 20 Page ID #:13412

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

did it collect the information for that purpose. Id. at *2. Again, this is the same analysis that was applied in the FCRA Order. Plaintiffs try to contrast the contents of the Forrest report with the report attached here, but their unsupported speculation on this issue is simply wrong. As is the case with the reports at issue in this case, the reports at issue in Forrest did not contain any of the credit-based information typically found in consumer reports, such as credit scores, trade lines (i.e., past and present credit accounts) and payment history on those trade lines, and did not contain the applicants FICO score and detailed information on the applicants credit history and trade lines, including revolving credit accounts such as credit cards. Id. at *1. As was the case for the defendant in Forrest, the LexisNexis Defendants are entitled to summary judgment. C. Plaintiffs Cannot Defeat Summary Judgment By Relying on the Conduct of Other LexisNexis Companies.

Plaintiffs final argument is essentially that the reports at issue in this case must be consumer reports governed by the FCRA because affiliates of the LexisNexis Defendants sell reports that constitute consumer reports under the FCRA. (Oppn Br. at 22-23.) The LexisNexis Defendants moving papers described the operation of their affiliates in their opening brief. (See, e.g., UF Nos. 28, 46, 54.) To the extent that Plaintiffs are arguing that the mere fact that affiliates or other divisions of the LexisNexis Defendants engaged in FCRA-related conduct, their argument finds no support in the law and is in fact contradicted by a legion of cases. See FCRA Order at 11; Yaeger v. TRW, Inc., 961 F. Supp. 161 (E.D. Tex. 1997) (granting summary judgment in favor of nationwide credit reporting agency where specific report in question was not a consumer report under the FCRA); Gomon v. TRW, Inc., 28 Cal. App. 4th 1161, 1168 (1994) (same); Cook v. Equifax Info. Sys., Inc., No. HAR 92-927, 1992 WL 356119 (D. Md. Nov. 20, 1992) (same); Banga v. Natl Credit Union Admin., No. C-08-3015 MMC, 2009 U.S. Dist. LEXIS 93449, at *11-12 (N.D. Cal. Oct. 6, 2009) (same);
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

13

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 19 of 20 Page ID #:13413

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

see also Individual Reference Servs. Grp., Inc. v. Fed. Trade Commn, 145 F. Supp. 2d 6, 16 (D.D.C. 2001) ([t]he FCRA does not regulate the disclosure of all information that CRAs receive from financial institutions). Indeed, Plaintiffs have overlooked the fact that they cited to an FTC matter in their opposition papers in which the FTC concluded after investigation that the Accurint reports like the ones at issue in this case are not consumer reports covered by the FCRA. That matter arose out of security breaches to subscribers networks that resulted in unauthorized access to Accurint products in 2005. The Federal Trade Commission, the agency charged with enforcement of the FCRA, brought a complaint with respect to this breach in 2008 under section 5 of the FTC Act. See In the Matter of Reed Elsevier, Inc. & Seisint Inc. Corps., FTC File No. 052-3094 (Docket No. C-4226), available at http://www.ftc.gov/os/caselist/0523094/080801reedcomplaint.pdf. The FTC investigated Accurint for almost three years, and ultimately entered into a consent decree with Seisint and Reed Elsevier Inc. settling the complaint. FTC File No. 052-3094, Agreement Containing Consent Order, available at http://www.ftc.gov/os/caselist/0523094/080327agreement.pdf. In the public comment period following publication of the consent decree, an objector criticized the settlement for not including civil penalties under the FCRA. See FTC Letter dated July 29, 2008, available at www.ftc.gov/os/caselist/0523094/080801reedrotenbergletter.pdf. The FTC responded to the comment in a letter included in the record of the proceeding explaining that the FTC could not obtain FCRA penalties in the settlement because the current matter [i.e., Accurint] [does] not involve [consumer] reports. Id. Plaintiffs do not demonstrate that any of the other LexisNexis entities or divisions, or the conduct allegedly engaged in by them, have anything whatsoever to do with the reports procured by defendant Sankey as alleged in the First Amended Complaint. Without such a showing, Plaintiffs cannot rely on this
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

14

Case 8:11-cv-00485-AG-AJW Document 515 Filed 05/07/12 Page 20 of 20 Page ID #:13414

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

unrelated activity to prove that the reports at issue in this case and that relate to the Plaintiffs are consumer reports governed by the FCRA. Thus, the LexisNexis Defendants are entitled to summary judgment on all remaining FCRA claims asserted against them.7 CONCLUSION For each of the reasons set forth above, the LexisNexis Defendants respectfully request that the Court grant its Motion for Summary Judgment as to all remaining claims against them.

Dated: May 7, 2012

JAMES F. McCABE MORRISON & FOERSTER LLP

By: /s James F. McCabe James F. McCabe Attorneys for Reed Elsevier Inc., LexisNexis Risk and Information Analytics Group Inc., LexisNexis, Inc., LexisNexis Risk Solutions, Inc., LexisNexis ChoicePoint, Inc., LexisNexis Seisint, Inc., d/b/a Accurint, and LexisNexis Group Inc.

As the LexisNexis Defendants noted in their opening brief, the fact that the Sankey Defendants obtained the reports in question from IRB rather than the LexisNexis Defendants is enough to compel summary judgment on the Thirteenth and Fourteenth Cause of Action, which allege that LexisNexis provided credit reports to unauthorized third parties without a permissible purpose in violation of 15 U.S.C. 1681b. (FAC 341-64.) Plaintiffs have not created any genuine issue of material fact as to this issue, and thus the LexisNexis Defendants are entitled to summary judgment on the Thirteenth and Fourteenth Causes of Action for this reason as well.
REPLY MPA IN SUPPORT OF LN DEFS MSJ CASE NO. CV11-00485 AG (AJWx) sf-3137292

15