United States District Court, D. Nevada
July 18, 2014
MATTHEW ALEXANDER, Plaintiff,
GOLDEN NUGGET, INC., and GNLV, CORP., Defendants.
LLOYD D. GEORGE, District Judge.
The plaintiff, Matthew Alexander, moves to amend his complaint, removing Golden Nugget, Inc., as a defendant, and adding Landry's, Inc., Landry's Management, L.P. (collectively "Landry's"), and GNL, Corp., as additional defendants (#24). He also seeks to add additional factual allegations. The defendants do not oppose removing Golden Nugget, Inc., and adding GNL, Corp., but oppose adding Landry's (#31). The Court will grant the motion to amend as to removing Golden Nugget, Inc., and adding GNL, Corp., but will deny the motion as to adding Landry's. Insofar as the plaintiff seeks to add new factual allegations relating to GNLV or GNL, the motion will be granted. Insofar as the plaintiff seeks to add factual allegations relating to Landry's, the motion will be denied.
Motion to Amend
When a plaintiff's motion for leave to amend has been brought pursuant to Fed.R.Civ.P. 15(a)(1), "[t]he court should freely give leave when justice so requires." However, "[a] motion for leave to amend may be denied if it appears to be futile or legally insufficient." Miller v. Rykoff-Sexton, Inc., 845 F.2d 209 (9th Cir. 1988). "... [A] proposed amendment is futile only if no set of facts can be proved under the amendment to the pleadings that would constitute a valid and sufficient claim or defense." Id. In establishing this standard, the Ninth Circuit cited Moore's Federal Practice for the proposition that the "proper test to be applied when determining the legal sufficiency of a proposed amendment is identical to the one used when considering the sufficiency of a pleading challenged under Rule 12(b)(6)." See 3 J. Moore, Moore's Federal Practice ¶ 15.08 (2d ed. 1974). The defendants, citing a recent case from the District of Nevada, argue that the modern test for determining futility should therefore be the plausibility standard presently applied by courts to Rule 12(b)(6) motions (#31, 3:1-5); Sequoia Elec., LLC v. Trustees of Laborers Joint Trust Fund, 2013 WL 321661 (D. Nev. 2013).
Under this standard, as summarized by the Supreme Court, a plaintiff must allege sufficient factual matter, accepted as true, "to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Nevertheless, while a complaint "does not need detailed factual allegations, a plaintiff's obligation to provide the grounds' of his entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555 (citations omitted). In deciding whether the factual allegations state a claim, the court accepts those allegations as true, as "Rule 12(b)(6) does not countenance... dismissals based on a judge's disbelief of a complaint's factual allegations." Neitzke v. Williams, 490 U.S. 319, 327 (1989). Further, the court "construe[s] the pleadings in the light most favorable to the nonmoving party." Outdoor Media Group, Inc. v. City of Beaumont, 506 F3.d 895, 900 (9th Cir. 2007).
However, bare, conclusory allegations, including legal allegations couched as factual, are not entitled to be assumed to be true. Twombly, 550 U.S. at 555. "[T]he tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations." Id. at 679. Thus, this court considers the conclusory statements in a complaint pursuant to their factual context.
To be plausible on its face, a claim must be more than merely possible or conceivable. "[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not show[n]'-that the pleader is entitled to relief." Id. (citing Fed.R.Civ.P. 8(a)(2)). Rather, the factual allegations must push the claim "across the line from conceivable to plausible." Twombly. 550 U.S. at 570. Thus, allegations that are consistent with a claim, but that are more likely explained by lawful behavior, do not plausibly establish a claim. Id. at 567.
Under this standard, the Court finds that the addition of Landry's to the instant complaint is futile.
Both the original complaint and the proposed amended complaint are brought under the Fair and Accurate Credit Transactions Act (FACTA), which amended the Fair Credit Reporting Act (FCRA), and which states, "No person that accepts credit cards or debit cards for the transaction of business shall print more than the last five digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of sale or transaction." 15 U.S.C. § 1681c(g). The statute provides for statutory damages if this provision is violated willfully. 15 U.S.C. § 1681n(a). In the original complaint, the plaintiff's primary goal was to sufficiently allege that the defendants were aware of FACTA's provision, because the Supreme Court has held that willful violations in this context included both knowing violations and objectively reckless violations. Safeco Insurance Co. v. Burr, 551 U.S. 47, 57 (2007). In the proposed amended complaint, the plaintiff argues further that Landry's was not only aware of FACTA's provisions, but attempted to follow its provisions. The plaintiff makes the following factual allegations regarding Landry's:
35. Landry's senior management understood FACTA and attempted to implement FACTA compliance across its various retail point of sale businesses.
38.... Landry's, Inc. and Landry's Management, L.P. implemented the point of sale hardware and software used at the Golden Nugget Hotel & Casino in Las Vegas and the Golden Nugget Hotel & Casino in Laughlin. For these retail locations, Landry's Inc. and Landry's Management, L.P. determined the measures necessary to ensure compliance with FACTA and attempted to implement FACTA-compliant point of sale receipts. (#24, Exhibit A)
In Safeco, the Supreme Court held that "a company subject to FCRA does not act in reckless disregard of it unless the action is not only a violation under a reasonable reading of the statute's terms, but shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless." Safeco 551 U.S. at 69.
Several district courts have held that being aware of FACTA, and yet doing nothing to implement its provisions, is sufficient to demonstrate a wilful violation. Other district courts have held that simply being aware of FACTA is insufficient to demonstrate a wilful violation. The allegations in the plaintiff's proposed amended complaint do not fall easily within either category. Rather, the allegations appear similar to the situation in Vidoni v. Acadia Corp., 2012 WL 1565128 (D. Maine 2012). In Vidoni, a plaintiff alleged that a defendant corporation had been made aware of FACTA's provisions through the wide publicity surrounding the act, and had brought some of its locations into compliance with the act, but nevertheless printed the plaintiff's credit card expiration date on a receipt at one of their restaurants. The court held that "[m]erely being aware of a statute... is insufficient to state a claim for willfulness. In cases where the Defendant is aware of a statute's requirements, the Plaintiff must also allege that there was something more than a negligent violation, i.e. a voluntary, deliberate, or intentional violation." Id. at 4, citing McLaughlin v. Richland Shoe Co., 486 U.S. 128, 132-33 (1988). "The only reasonable inference from the Defendant's failure to implement FACTA at one of its locations and not others is that the Defendant's failure was inadvertant... The Defendant's conduct may have been negligent, but, on the facts alleged in the complaint, it was not willful." Id. at 4.
The same logic applies to the plaintiff's proposed amended complaint. Accepting the plaintiff's allegations as true, Landry's did not knowingly violate FACTA. On the contrary, according to the plaintiff's allegations, Landry's was attempting to comply with FACTA. Similarly, the plaintiff's proposed amended complaint does not allege that Landry's incompletely implemented FACTA's provisions due to a careless reading of the statute, let alone that the attempted implementation "ran a risk of violating the law substantially greater" than carelessness. Therefore, the plaintiff has not alleged a reckless violation of FACTA. As in Vidoni, the "only reasonable inference" to be drawn from the plaintiff's allegations is that Landry's failure to comply with FACTA was inadvertent; negligent, perhaps, but not wilful.
THE COURT ORDERS that Plaintiff's Motion to File under Seal Plaintiff's Reply (#34) is GRANTED;
THE COURT FURTHER ORDERS that Plaintiff's Motion for Leave to File Amended Complaint (#24) is GRANTED as to the removal of Golden Nugget, Inc., the addition of GNL, Corp., and the addition of allegations relating to these parties, and is DENIED as to the addition of Landry's, Inc., and Landry's Management, L.P., and the addition of any allegations relating to those parties.
THE COURT FURTHER ORDERS that Plaintiff may file an Amended Complaint within the contours of this Order within fifteen (15) days.
THE COURT FURTHER ORDERS that Defendants' Motion to Dismiss (#13) is DENIED as moot.