Hennessey v. Pendrick Capital Partners LLC

• Court: District Court, W.D. Washington
• Decided: March 3, 2025
• Docket: 3:24-cv-05942
• Status: Unknown

Opinion

1 2 3

4 5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON AT TACOMA 7 JANICE HENNESSEY, Case No. 3:24-cv-05942 8 Plaintiff, ORDER GRANTING IN PART AND 9 DENYING IN PART DEFENDANTS’ v. MOTION TO DISMISS 10 PENDRICK CAPITAL PARTNERS LLC ET 11 AL, 12 Defendant. 13

14 I. INTRODUCTION 15 Before the court is Defendants Pendrick Capital Partners LLC and Pendrick Capital 16 Partners Asset Management LLC’s motion to dismiss. Dkt. 18. For the following reasons, the 17 motion is GRANTED in part and DENIED in part. Plaintiff Janice Hennessey is also granted 18 leave to amend her complaint no later than March 24, 2025. 19 II. BACKGROUND 20 The following facts are those alleged in the second amended complaint. Dkt. 17. The 21 Court takes the factual allegations as true and construes them in the light most favorable to 22 Ms. Hennessey as required on a 12(b)(6) motion. See Retail Prop. Tr. v. United Bhd. of 23 Carpenters & Joiners of Am., 768 F.3d 938, 945 (9th Cir. 2014). 24 1 Around May 28, 2024, Ms. Hennessey reviewed her consumer credit reports from three 2 major agencies and found an unfamiliar entry by “Pendrick Capital Partners.” Dkt. 17 ¶ 39. After 3 examining her TransUnion credit report, Ms. Hennessey discovered that Defendants had pulled

4 her credit report on May 18, 2024, and placed an inquiry on her consumer file. Id. ¶ 40. 5 Ms. Hennessey alleges that Defendants obtained her credit report “without a permissible 6 credit transaction, court order, a permissible purpose, permissible account or without her 7 knowledge or consent.” Id. Specifically, Ms. Hennessey asserts that she did not initiate any credit 8 transactions, nor was she involved in any credit transactions with Defendants. Id. ¶¶ 25–26. 9 Ms. Hennessey also alleges that she is not aware of any collection accounts acquired by 10 Defendants and does not have any existing credit transactions that were subject to collection 11 efforts by Defendants. Id. ¶¶ 27–28. She did not engage Defendants for an employment 12 relationship or any insurance benefits. Id. ¶¶ 29–30.

13 Since Ms. Hennessey has not conducted any business transactions with Defendants or 14 incurred financial obligations to Defendants, she alleges Defendants had no permissible purpose 15 to obtain her credit report information. Id. ¶¶ 32–34. Ms. Hennessey further asserts that because 16 TransUnion requires Defendants to certify a permissible purpose prior to providing the credit 17 report, Defendants were on notice that they were seeking unauthorized access to her personal 18 information. Id. ¶¶ 23, 36. 19 On June 17, 2024, Ms. Hennessey sent Defendants a Pre-Litigation Notice informing 20 them that she would be initiating a lawsuit. Id. ¶ 43. On November 5, 2024, Ms. Hennessey filed 21 an Identity Theft report with the Federal Trade Commission and a complaint with the Consumer 22 Protection Financial Bureau regarding Defendants’ actions. Id. ¶¶ 46–47. Ms. Hennessey

23 subsequently filed her lawsuit in Thurston County and Defendants removed the case to this Court 24 based on federal question jurisdiction. Id. ¶ 45; See Dkt. 1 at 1. Ms. Hennessey twice amended 1 her complaint, see Dkt. 7; Dkt. 17, and now brings seven claims against Defendants: violations 2 of the Fair Credit Reporting Act, 15 U.S.C. § 1681b, § 1681q (“FCRA”), violation of the 3 Washington Fair Credit Reporting Act, RCW 19.182.020 (“WFCRA”), violation of the

4 Washington Consumer Protection Act, RCW 19.86.020 (“CPA”), identity theft, RCW 9.35.020, 5 and invasion of privacy by intrusion upon seclusion. Dkt. 17 ¶¶ 63–166. 6 Defendants moved to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6), 7 Dkt 18, and Ms. Hennessey responded, Dkt. 19. The motion is ripe for the Court’s consideration. 8 III. DISCUSSION 9 A. Legal Standard Federal Rule of Civil Procedure 8(a)(2) requires that a complaint contain “a short and 10 plain statement of the claim showing that the pleader is entitled to relief.” Under Federal Rule of 11 Civil Procedure 12(b)(6), the Court may dismiss a complaint for “failure to state a claim upon 12 which relief can be granted.” Complaints may be dismissed under Rule 12(b)(6) for either the 13 lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable 14 legal theory. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010) 15 (citation omitted). 16 To survive a Rule 12(b)(6) motion, the complaint “does not need detailed factual 17 allegations,” Twombly, 550 U.S. at 555, but “must contain sufficient factual matter, accepted as 18 true, to ‘state a claim to relief that is plausible on its face.’” Boquist v. Courtney, 32 F.4th 764, 19 773 (9th Cir. 2022) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, (2009)). “A claim is facially 20 plausible ‘when the plaintiff pleads factual content that allows the court to draw the reasonable 21 inference that the defendant is liable for the misconduct alleged.’” Id. (quoting Iqbal, 556 U.S. at 22 678). “[A] plaintiff’s obligation to provide the grounds of his entitlement to relief requires more 23 24 1 than labels and conclusions, and a formulaic recitation of the elements of a cause of action will 2 not do.” Twombly, 550 U.S. at 555 (internal quotations omitted). 3 The Court “must accept as true all factual allegations in the complaint and draw all

4 reasonable inferences in favor of the nonmoving party.” Retail Prop. Tr., 768 F.3d at 945. But 5 the Court is “not bound to accept as true a legal conclusion couched as a factual allegation.” 6 Twombly, 550 U.S. at 555. “Threadbare recitals of the elements of a cause of action, supported 7 by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. 8 B. Fair Credit Reporting Act Claims 9 1. Ms. Hennessey’s complaint states a plausible claim for relief. “Congress enacted the FCRA in 1970 to promote efficiency in the Nation’s banking 10 system and to protect consumer privacy.” TRW Inc. v. Andrews, 534 U.S. 19, 23 (2001) (citing 11 15 U.S.C § 1681(a)). “Those two goals lie in tension, and the FCRA strikes a balance between 12 them.” Pintos v. Pac. Creditors Ass’n, 605 F.3d 665, 674 (9th Cir. 2010). The Act authorizes 13 credit reporting agencies to furnish consumer reports because they “have assumed a vital role in 14 assembling and evaluating consumer credit and other information on consumers.” Id. “At the 15 same time, the FCRA . . . permits agencies to furnish credit reports only for ‘certain statutorily 16 enumerated purposes.’” Id. (quoting Andrews, 534 U.S. at 19). 17 “[A plaintiff] has standing to vindicate her right to privacy under the FCRA when a third- 18 party obtains her credit report without a purpose authorized by the statute, regardless [of] 19 whether the credit report is published or otherwise used by that third-party.” Nayab v. Cap. One 20 Bank (USA), N.A., 942 F.3d 480, 491, 493 (9th Cir. 2019) (reasoning that a harm caused by “a 21 violation of § 1681b(f)(1) of the FCRA is closely related to—if not the same as—a harm that has 22 traditionally been regarded as providing a basis for a lawsuit: intrusion upon seclusion (one form 23 of the tort of invasion of privacy).”). Here, Ms. Hennessey alleges Defendants obtained her credit 24 1 report without an authorized purpose and thus has standing to bring this suit. See generally 2 Dkt. 17. 3 Section 1681b(a) enumerates the set of permissible purposes for which a credit reporting

4 agency can provide a consumer credit report to a third party and includes: 5 (3) To a person which it has reason to believe—

6 (A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and 7 involving the extension of credit to, or review or collection of an account of, the consumer; or 8 (B) intends to use the information for employment purposes; or 9 (C) intends to use the information in connection with the underwriting of 10 insurance involving the consumer; or

11 (D) intends to use the information in connection with a determination of the consumer’s eligibility for a license or other benefit granted by a 12 governmental instrumentality required by law to consider an applicant’s financial responsibility or status; or 13 (E) intends to use the information, as a potential investor or servicer, or 14 current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with, an existing credit obligation; or 15 (F) otherwise has a legitimate business need for the information-- 16 (i) in connection with a business transaction that is initiated by the 17 consumer; or

18 (ii) to review an account to determine whether the consumer continues to meet the terms of the account. 19 15 U.S.C. § 1681b(a)(3)(A)–(F). Importantly, the FCRA prohibits not only credit 20 reporting agencies from furnishing credit reports absent a permissible purpose; it also prohibits 21 third parties from using or obtaining consumer reports without an enumerated purpose. See 15 22 U.S.C. § 1681b(f) (“A person shall not use or obtain a consumer report for any purpose 23 24 1 unless . . . the consumer report is obtained for a purpose for which the consumer report is 2 authorized to be furnished under [§ 1681b(a)].”). 3 Defendants argue that Ms. Hennessey’s FCRA claim fails because “[a]s a debt collector,

4 Pendrick had a permissible purpose to access Plaintiff’s credit report in connection with the debt 5 collection process as a matter of law.” Dkt. 18 at 4. Defendants further dismiss as irrelevant 6 Ms. Hennessey’s allegations that she neither consented to Pendrick accessing her consumer 7 report nor engaged in any business transactions with Pendrick. Id. at 6. Defendants then conclude 8 that Ms. Hennessey’s FCRA claim is insufficiently pled and “provides virtually no factual detail 9 and fails to show how the FCRA even applies in this action.” Id. at 7 (citation omitted). 10 This argument is unpersuasive. To start, “a plaintiff need allege only facts giving rise to a 11 reasonable inference that the defendant obtained his or her credit report in violation of 12 § 1681b(f)(1) to meet their burden of pleading.” Nayab, 942 F.3d at 493 (citing Iqbal, 556 U.S.

13 at 678)). Here, Ms. Hennessey asserts that despite having no credit relationship with Defendants 14 as specified in 15 U.S.C. § 1681b(a)(3)(A)–(F), she discovered Defendants had submitted an 15 inquiry to TransUnion and obtained her credit report. Dkt. 17 ¶¶ 5–6, 40. These factual 16 allegations sufficiently give rise to a reasonable inference that Defendants acquired her credit 17 report without a permissible purpose. See Nayab, 942 F.3d at 496–97 (“These allegations, 18 together with Nayab’s allegation that Capital One, in fact, obtained her report, state a plausible 19 claim for relief. These are not simply bare conclusions devoid of facts supporting them.”). 20 2. Defendants bear the burden of proving they had a permissible purpose. 21 “[T]he general rule of statutory construction [is] that the burden of proving justification 22 or exemption under a special exception to the prohibitions of a statute generally rests on one who

23 claims its benefits.” Id. at 494 (citation omitted). In other words, “exceptions to the general 24 prohibition in § 1681b(f) are not elements of [the plaintiff’s] prima facie case which she must 1 negat[e] to state a claim, rather they are affirmative defenses for which [Defendants] bear[] the 2 burden.” Id. at 499 (citing Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037, 1044 (9th 3 Cir. 2017)).

4 While “plaintiffs ordinarily need not plead on the subject of an anticipated affirmative 5 defense . . . [w]hen an affirmative defense is obvious on the face of a complaint, however, a 6 defendant can raise that defense in a motion to dismiss.” Rivera v. Peri & Sons Farms, Inc., 735 7 F.3d 892, 902 (9th Cir. 2013) (internal citations omitted). Thus, “[d]ismissal under Rule 12(b)(6) 8 on the basis of an affirmative defense is proper only if the defendant shows some obvious bar to 9 securing relief on the face of the complaint.” ASARCO, LLC v. Union Pac. R. Co., 765 F.3d 999, 10 1004 (9th Cir. 2014) (collecting cases). 11 Defendants bear the burden of pleading and proving that they had a permissible purpose 12 to obtain Ms. Hennessey’s credit report. See Nayab, 942 F.3d at 499. But Defendants have not

13 brought a summary judgment motion or presented evidence to prove their affirmative defense. 14 See Dkt. 18. Nor does Defendants’ motion address their burden or the legal authority discussed 15 above. See id. 5. If the affirmative defense was obvious from the face of Ms. Hennessey’s 16 complaint, then Defendants may have raised their permissible purpose defense in a motion to 17 dismiss. See Rivera, 735 F.3d at 902. But nothing in the complaint itself shows that Defendants 18 had a permissible purpose. See generally Dkt. 17. On the contrary, the complaint alleges that 19 Ms. Hennessey did not have any credit transaction or accounts that were purchased by 20 Defendants as debt collectors that would allow Defendants to obtain her credit report. See 21 Dkt. 17 ¶¶ 25–28 (“Plaintiff did not initiate any credit transaction with the Defendants”; 22 “Plaintiff was not involved in any credit transaction with the Defendants involving the extension

23 of credit to, or review or collection of an account of, the consumer”; “Plaintiff is not aware of 24 any collection accounts, including any accounts or credit transaction that were purchased or 1 acquired by Defendants”; “Plaintiff does not have any existing credit transactions that were 2 subject to collection efforts by Defendants.”). 3 While Defendants might ultimately prevail on this defense at a later stage of the

4 litigation, they cannot do so under the legal standard of Rule 12(b)(6). The Court therefore 5 DENIES the motion to dismiss the FCRA claims. 6 C. Washington Fair Credit Reporting and Consumer Protection Act Claims 7 Like the FCRA, the WFCRA enumerates a set of circumstances that permit credit 8 reporting agencies to furnish consumer credit reports to third parties. See RCW 19.182.020(1). 9 The state law also prohibits any person from procuring credit reports “for employment purposes” 10 without complying with disclosure and use restrictions. RCW 19.182.020(2)(b)–(d). 11 “The CPA provides that ‘unfair or deceptive acts or practices in the conduct of any trade 12 or commerce’ are unlawful.” Indus. Indem. Co. of the Nw., Inc. v. Kallevig, 114 Wn.2d 907, 920,

13 792 P.2d 520 (1990) (citing RCW 19.86.020). To bring a CPA claim, the plaintiff “must show 14 (1) an unfair or deceptive act or practice, (2) in trade or commerce, (3) that impacts the public 15 interest, (4) which causes injury to the party in his business or property, and (5) which injury is 16 causally linked to the unfair or deceptive act.” Id. at 920–21 (citing Hangman Ridge Training 17 Stables, Inc. v. Safeco Title Ins. Co., 105 Wash.2d 778, 784–85, P.2d 531 (1986)). “A violation 18 of [WFCRA] is an unfair or deceptive act in trade or commerce and an unfair method of 19 competition for the purpose of applying the consumer protection act.” RCW 19.182.150; see 20 Leavitt v. Credit Cent., LLC, 23-CV-01817-RAJ, 2024 WL 4839360, at *3 (W.D. Wash. Nov. 21 20, 2024) (“RCW 19.182.150 explicitly makes a violation of the WFCRA a violation of the 22 WCPA.”) (citation omitted).

23 Defendants argue that the WFCRA applies only to conduct by a consumer reporting 24 agency, and because Pendrick is a debt collector, the provisions are inapplicable to Defendants. 1 Dkt. 18 at 9. As a general matter, this is incorrect. While the provisions of RCW 2 19.182.020(2)(a) apply specifically to consumer reporting agencies, RCW 19.182.020(2)(b)–(d) 3 restricts the ways in which any person, including a debt collector, can acquire and use a

4 consumer’s credit report. 5 Here, however, Ms. Hennessey has not asserted factual allegations that would state a 6 WFCRA claim. Acquiring credit reports under WFCRA is prohibited when they are obtained by 7 an employer without informing the employee. RCW 19.182.020(2)(b). The WFCRA also forbids 8 employers from using information from credit reports that bears on an employee’s 9 creditworthiness, credit standing, or credit capacity for employment purposes unless the 10 information is substantially job related and disclosed in writing or is required by law. RCW 11 19.182.020(2)(b)–(c). But Ms. Hennessey alleges several times in the complaint that she has 12 never “made [an] application for employment” with Defendant. Dkt. 17 ¶ 80; see also id. ¶¶ 29,

13 101, 116, 128. Without any allegations of an employment relationship, Ms. Hennessey cannot 14 plead a WFCRA claim. And because she has not pled a WFCRA claim, her CPA claim premised 15 on a violation of WFCRA also fails. The Court therefore GRANTS Defendants’ motion to 16 dismiss Ms. Hennessey’s WFCRA and CPA claims. These claims are DISMISSED without 17 prejudice. 18 D. Invasion of Privacy and Identity Theft Claims 19 Defendants next argue that Ms. Hennessey’s claims of invasion of privacy and identity 20 theft under RCW 9.35.020 should be dismissed because they are preempted by the FCRA. 21 Dkt. 18 at 7. Defendants assert that Section 1681t(b)(1)(F) of the FCRA is a total preemption 22 provision which provides, “[n]o requirement or prohibition may be imposed under the laws of

23 any State . . . with respect to any subject matter regulated under . . . section 1681s–2 of this title, 24 relating to the responsibilities of persons who furnish information to consumer reporting 1 agencies[.]” 15 U.S.C. § 1681t(b)(1)(F); see Dkt. 18 at 7–8. Defendants contend, “[t]he district 2 courts read the FCRA’s preemption clause to preclude all state common law and statutory 3 claims, to effect Congress’ intent to limit a plaintiff’s recovery against furnishers of credit

4 information to only the remedies provided under the FCRA.” Dkt 18. at 8 (quoting Miller v. 5 Bank of Am., Nat. Ass’n, 858 F. Supp. 2d 1118, 1124 (S.D. Cal. 2012)). Since “Plaintiff’s state 6 law claims are all derived from the same core contention, i.e., that Pendrick accessed Plaintiff’s 7 consumer credit report without a ‘permissible purpose,’” Defendants conclude they should be 8 dismissed. Id. 9 Defendants correctly assert that state law claims premised on “the responsibilities of 10 persons who furnish information to consumer reporting agencies” are preempted by the FCRA. 11 15 U.S.C. § 1681t(b)(1)(F); see Dkt. 18 at 7–8. But as Defendants themselves point out, 12 Ms. Hennessey’s claims are not based on Defendants’ actions as entities furnishing information

13 to consumer reporting agencies, but instead as debt collectors acquiring credit reports from 14 consumer reporting agencies. See Hennessey v. Radius Glob. Sols. LLC, 3:24-CV-05654-DGE, 15 2024 WL 5119824, at *12 (W.D. Wash. Dec. 16, 2024) (emphasis added) (“As these common 16 law claims are not premised on RGS’s conduct relating to a furnisher’s responsibilities to 17 provide accurate information and conduct reasonable investigations following a dispute, they are 18 not preempted.”) (cleaned up). 19 Therefore, Ms. Hennessey’s claims of invasion of privacy and identity theft are not 20 preempted by the FCRA. Since preemption is Defendants’ sole argument for dismissal of these 21 claims, the Court DENIES the motion to dismiss the invasion of privacy and identity theft 22 claims.

23 24 1 E. Claims Against Pendrick Capital Partners Asset Management, LLC 2 Finally, Defendants argue that Ms. Hennessey’s complaint fails to distinguish which 3 Pendrick Defendant reviewed her credit report. Dkt. 18 at 10. They explain that the “correct and

4 sole defendant in this matter should only be Pendrick Capital Partners, LLC” and argue that 5 “Pendrick Capital Partners Asset Management, LLC, which is a separate and unrelated entity, 6 should be separately dismissed outright.” Id. From the face of Ms. Hennessey’s complaint, 7 drawing all inferences in her favor, she has plausibly alleged that both defendants were 8 responsible for the challenged conduct. If the Defendants wish to clarify which entity is 9 responsible, they may file a partial summary judgment motion supported by evidence, or they 10 may present that evidence to Ms. Hennessey and seek agreement to dismiss the incorrect party 11 through a stipulated motion. But the Court cannot do so based on the standards of Rule 12(b)(6). 12 F. Leave to Amend Ms. Hennessey requests leave to amend her complaint to correct any deficiencies the 13 Court identifies. Dkt 19 at 11. 14 “Leave to amend shall be freely given when justice so requires, and this policy is to be 15 applied with extreme liberality.” Bacon v. Woodward, 104 F.4th 744, 753 (9th Cir. 2024) 16 (quoting Desertrain v. City of Los Angeles, 754 F.3d 1147, 1154 (9th Cir. 2014)). The Ninth 17 Circuit has repeatedly held that “[e]ven if a complaint is deficient . . . ‘a district court should 18 grant leave to amend even if no request to amend the pleading was made, unless it determines 19 that the pleading could not be cured by the allegation of other facts.’” Id. (quoting Lopez v. 20 Smith, 203 F.3d 1122, 1130 (9th Cir. 2000)) (emphasis in original). 21 Ms. Hennessey has twice amended her complaint. See Dkt. 7; Dkt. 17. Still, because it 22 remains a possibility that the defects in the WFCRA and CPA claims could be cured by the 23 allegation of other facts, the Court GRANTS Ms. Hennessey leave to amend her complaint. If 24 l Ms. Hennessey chooses to file an amended complaint, she must do so no later than March 24, 2 3 IV. CONCLUSION 4 For the foregoing reasons, the Court ORDERS as follows:

5 e Defendants’ motion to dismiss Ms. Hennessey’s FCRA claims under 15 U.S.C.

6 §§ 1681b, 1681q is DENIED.

7 e Defendants’ motion to dismiss Ms. Hennessey’s claims brought under WFCRA, 8 RCW 19.182.020(1), and the CPA, RCW 19.86.020, is GRANTED. These claims 9 are DISMISSED without prejudice. 10 e Defendant’s motion to dismiss Ms. Hennessey’s claims for invasion of privacy 11 and identity theft, RCW 9.35.020, is DENIED. 12 e Ms. Hennessey’s request for leave to amend is GRANTED. Ms. Hennessey may 13 file an amended complaint no later than March 24, 2025. 14 The Clerk is directed to send uncertified copies of this Order to all counsel of record and 15 || to any party appearing pro se at said party’s last known address. 16 17 Dated this 3rd day of March, 2025. 18 A - CC 19 Tiffany. Cartwright United States District Judge 20 21 22 23 24