Littlejohn v. Phoenix Title Loans LLC ( 2021 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Jennifer Littlejohn, No. CV-18-04250-PHX-SMB 10 Plaintiff, ORDER 11 v. 12 Phoenix Title Loans LLC, 13 Defendant. 14 15 16 Pending before the Court is Defendant Phoenix Title Loans LLC’s Motion to 17 Dismiss Plaintiff’s Second Amended Complaint. (Doc. 47, “SAC”; Doc. 48, “Mot.”) 18 Plaintiff Jennifer Littlejohn responded, (Doc. 49, “Resp.”), and Defendant replied. (Doc. 19 50, “Reply”.) Neither party requested oral argument and the Court elects to resolve the 20 motion without it. See LRCiv. 7.2(f). Having considered the pleading and applicable law, 21 the Court will grant the motion. 22 I. BACKGROUND 23 Ms. Littlejohn received a $700.00 car title loan from Defendant for unidentified 24 personal, family or household purposes around April 24, 2018. (SAC ¶¶ 15-17.) The loan’s 25 terms required that she repay the borrowed amount by May 24, 2018. (Doc. 47-1 at 2.) The 26 one-month loan agreement also included Truth in Lending Act (“TILA”) disclosures. (Id.) 27 It listed the amount financed as $700, a 156% annual percentage rate, $118.30 finance 28 charge, and $791.00 as the total of payments, but provided no payment schedule. (Id.; SAC 1 ¶¶ 20-21.) 2 Based on these disclosures, Ms. Littlejohn initially brought two TILA claims under 3 15 U.S.C. § 1638(a)(5) and (6). (See Doc. 1 ¶¶ 23-30.) The Court dismissed this initial 4 complaint with leave to amend because it “allege[d] no concrete harm, or material risk of 5 harm, caused by Defendant’s violation of the disclosure requirements at issue.” See 6 Littlejohn v. Phoenix Title Loans LLC, No. CV-18-04250-PHX-SMB, 2020 WL 209936, 7 at *2-5 (D. Ariz. Jan. 14, 2020). The Court reasoned that it “only alleges Defendant’s 8 disclosure statement violated the TILA’s disclosure requirements. Nothing more.” Id. at 9 *4. As a result, “[w]ithout any sort of allegations of concrete harm or material risk of harm 10 to Plaintiff’s informed use of credit by Defendant’s disclosure violations, Plaintiff’s 11 Complaint [fell] short of alleging a concrete injury and the Court lack[ed] subject matter 12 jurisdiction to hear the case.” Id. at *4. 13 After Plaintiff filed her First Amended Complaint (“FAC”), (Doc. 40), the Court 14 again dismissed Plaintiff’s FAC with leave to amend. Littlejohn v. Phoenix Title Loans 15 LLC, No. CV-18-04250-PHX-SMB, 2020 WL 2527017, at *2-*7 (D. Ariz. May 15, 2020). 16 In that order, this Court concluded that, “Absent allegations establishing how Defendant’s 17 TILA violations harmed or created a material risk of harm to [Plaintiff’s] informed use of 18 credit, the Court finds that these bare procedural violations allege no concrete injury.” Id. 19 at *6. Thus, the Court concluded that Plaintiff did not have Article III standing to bring her 20 claims and once again allowed Plaintiff leave to amend to fix the deficiencies in the FAC. 21 Id. at *7. 22 Ms. Littlejohn now once again brings the same three claims as in her FAC. (See 23 SAC ¶¶ 46-60.) Notably, Plaintiff’s SAC contains new allegations, including an alternative 24 theory of liability. (Id. ¶¶ 16, 22, 23, 24, 25, 26, 27, 28, 41, 43, 44, 45, 49, & 50.) The 25 alternative theory of liability in Plaintiff’s SAC states that “Defendant’s TILA disclosure 26 statement does not accurately describe the terms of Plaintiff’s loan.” (Id. ¶ 27.) Plaintiff 27 alleges the actual terms of the loan required Plaintiff to make twelve monthly payments of 28 $118.30 beginning in May 24, 2018, resulting in a total payment of $1,419.34. (Id. ¶¶ 29- 1 31.) In other words, Plaintiff’s alternative theory of liability alleges that Defendant’s TILA 2 disclosure grossly understated the finance charge and total payments on Plaintiff’s loan. 3 (Id. ¶¶ 32-35.) 4 II. LEGAL STANDARD 5 Under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss for 6 lack of subject matter jurisdiction. See Carijano v. Occidental Petroleum Corp., 643 F.3d 7 1216, 1227 (9th Cir. 2011) (“Article III standing is a species of subject matter 8 jurisdiction.”). Article III of the United States Constitution “endows the federal courts with 9 the ‘judicial Power of the United States.’” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 10 (2016) (quoting U.S. Const. art. III, § 1). “The judicial Power of the United States” only 11 extends to “Cases” and “Controversies.” U.S. Const. art. III, §§ 1-2. “No principal is more 12 fundamental to the judiciary’s proper role in our system of government than the 13 constitutional limitation of federal-court jurisdiction to actual cases or controversies.” 14 Raines v. Byrd, 521 U.S. 811, 818 (1997). 15 “Standing to sue is a doctrine rooted in the traditional understanding of a case or 16 controversy . . . [that] developed in our case law to ensure that federal courts do not exceed 17 their authority as it has been traditionally understood.” Spokeo, 136 S.Ct. at 1547 (citing 18 Raines, 521 U.S. at 820). Plaintiff has the responsibility of establishing standing, Lujan v. 19 Defs. of Wildlife, 504 U.S. 555, 560–61 (1992), and must do so for each claim brought as 20 well as the type of relief sought. Summers v. Earth Island Inst., 555 U.S. 488, 493 (2009). 21 To do this for each claim, “plaintiff must have (1) suffered an injury in fact, (2) that is fairly 22 traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed 23 by a favorable judicial decision. Id. “[A]t the pleading stage, the plaintiff must ‘clearly . . . 24 allege facts demonstrating’ each element.” Spokeo, 136 S.Ct. at 1547. 25 III. DISCUSSION 26 As mentioned above, Plaintiff’s SAC contains several new allegations, which 27 purport to confer her with standing to bring suit for her three TILA claims. Defendant 28 disagrees arguing Plaintiff “has not suffered an injury in fact, that is fairly traceable to 1 [Defendant] or that will likely be redressed by a favorable decision.” (Mot. at 1.) As a 2 result, it requests dismissal under Rule 12(b)(1) for lack of Article III standing. (Id. at 9.) 3 Once again, Defendant is correct that Plaintiff lacks standing to bring her claims. 4 An injury in fact is “an invasion of a legally protected interest which is (a) concrete 5 and particularized and (b) actual or imminent, not conjectural or hypothetical.” Lujan, 504 6 U.S. at 560 (internal quotation marks, citations, and footnote omitted). A plaintiff does not 7 “automatically satisf[y] the injury-in-fact requirement whenever a statute grants a person a 8 statutory right and purports to authorize that person to sue to vindicate that right.” Spokeo, 9 136 S.Ct. at 1549; see also Summers, 555 U.S. at 496 (“[D]eprivation of a procedural right 10 without some concrete interest that is affected by the deprivation . . . is insufficient to create 11 Article III standing.”). “In other words, even when a statute has allegedly been violated, 12 Article III requires such violation to have caused some real—as opposed to purely legal— 13 harm to the plaintiff.” Robins v. Spokeo, Inc., 867 F.3d 1108, 1112 (9th Cir. 2017). 14 As discussed at length in the Court’s previous order, TILA procedural violations 15 alone do not themselves convey standing absent some other injury to Plaintiff. See 16 Littlejohn, 2020 WL 2527017, at *3-*5. As the Court previously pointed out, “the question 17 here is ‘whether the specific procedural violations alleged in this case actually harm, or 18 present a material risk of harm to, [Ms. Littlejohn’s informed use of credit].’” Id. at *5 19 (quoting Robins v. Spokeo, Inc., 867 F.3d 1108, 1112 (9th Cir. 2017)). 20 As to the first cause of action, the SAC alleges that Defendant disclosed no payment 21 schedule. (SAC ¶¶ 46-51.) As the Court previously noted, “[i]t is difficult to imagine how 22 Defendant’s failure to include a payment schedule on Ms. Littlejohn’s one-month loan 23 harmed or created a risk of real harm to her informed use of credit.” Id. However, Plaintiff 24 also advances an alternative theory of liability for this claim.1 (Id. ¶¶ 27-45.) Plaintiff’s 25 alternate theory of liability posits that “Defendant’s TILA Disclosure statement does not 26 accurately describe the terms of Plaintiff’s loan.” (Id. ¶ 27.) Instead, Plaintiff alleges that 27 1 Federal Rule of Civil Procedure 8 “allows parties to plead inconsistent factual allegations 28 in the alternative.” Wi-LAN v. LG Electronics, Inc., 382 F.Supp.3d 1012, 1023 (S.D. Cal. 2019) (citing Fed. R. Civ. P. 8(d)(2)). 1 the “actual terms of the loan called for Plaintiff to repay the loan in eleven monthly 2 payments of $118.30 beginning May 24, 2018, one final payment of $118.04 due April 24, 3 2019.” (Id. ¶ 29.) Even taking the allegations as true, which the Court must, the Court still 4 fails to see how the failure to include a payment schedule created a material risk of harm 5 to Plaintiff’s informed use of credit. See Robins, 867 F.3d at 1113 (“we thus ask: (1) 6 whether the statutory provisions at issue were established to protect his concrete interests 7 (as opposed to procedural rights), and if so, (2) whether the specific procedural violations 8 alleged in this case actually harm, or present a material risk of harm to, such interests.”). 9 The SAC once again contains no allegations of harm or material risk of harm to Plaintiff. 10 Plaintiff never states that she would have sought other options had Defendants disclosed a 11 payment schedule or that she would have changed her behavior in any other way had the 12 TILA disclosure contained a payment schedule. Instead, the SAC simply states that she 13 was confused about the terms of the loan due to the lack of a disclosure and that due to her 14 confusion, she made a late payment. (Id. ¶¶ 41-44.) However, Plaintiff alleges no harm due 15 to the late payment such as a late charge, default, negative credit mark, or any other 16 repercussion. Thus, the new allegations in the SAC falter from the same defect that was 17 present in the Court’s most recent order. See Littlejohn, 2020 WL 2527017, at *5. 18 Accordingly, the Court finds Plaintiff has not shown a concrete injury or a material risk of 19 injury to confer standing. 20 The SAC’s second claim alleges that Defendant violated 15 U.S.C. § 1638(a)(5) by 21 misstating the sum of the amount financed and the finance charge, which together are 22 referred to as the ‘total of payments.’ (Id. ¶¶ 52-56.) The Court previously rejected the 23 theory in Plaintiff’s FAC that Plaintiff had suffered an injury to confer standing where 24 Plaintiff alleged that the total of payments in the TILA disclosure should have been $818.30 25 instead of $791.00, a difference of $27.30. Littlejohn, 2020 WL 2527017, at *5. The Court 26 stated that, “This allegation belies any contrary claim that this incorrect listing harmed or 27 presented a serious risk of harm to Ms. Littlejohn’s informed use of credit.” Id. (citing 28 Robins, 867 F.3d at 1113.). The Court will follow its previous ruling on that issue. Id. 1 Plaintiff’s alternative theory of liability alleges that the TILA disclosure given to Plaintiff 2 does not accurately describe the terms of Plaintiff’s loan, and that the actual terms of the 3 loan required Plaintiff to incur a total payment of $1,419.34. (Id. ¶¶ 27-34.) However, this 4 allegation again suffers from the same defect as the first theory: Plaintiff never describes 5 how this disclosure failure injured her. Plaintiff alleges that because of the error “she does 6 not have an accurate TILA disclosure statement with which to shop for further credit 7 transactions with other potential lenders or with Defendant.” However, she never states 8 that she actually would have changed her behavior had Defendant given her an accurate 9 TILA disclosure. Accordingly, the SAC has not alleged a concrete injury or risk of such an 10 injury adequately to grant her Article III standing for her second claim. 11 The third and final claim in Plaintiff’s SAC alleges that Defendant violated 15 12 U.S.C. § 1638(a)(3) by failing to disclose the correct “Finance Charge.” (Id. ¶¶ 57-60.) 13 Plaintiff’s first theory under this claim alleges that the actual finance charge on the TILA 14 should be $91.00, not the $118.30 actually listed on the TILA disclosure given to Plaintiff. 15 (Id. ¶¶ 25-26.) However, as the Court decided in its latest order, these allegations are 16 insufficient to show that Plaintiff was injured. See id. at 6. Indeed, the Court cannot 17 imagine, nor does Plaintiff show in the SAC, how the overstatement of a finance charge 18 could have injured Plaintiff. Although Plaintiff claims that the overstated finance charge 19 created the material risk that she would overpay her loan, the Court does not accept this as 20 a plausible injury to confer standing. (Id. ¶ 45.) Plaintiff’s alternative theory of liability 21 suffers from a similar defect. The SAC’s alternative theory of liability explains that 22 Defendant’s TILA disclosure statement which was given to Plaintiff does not accurately 23 describe the terms of Plaintiff’s loans, and that the actual terms of the agreement required 24 Plaintiff to incur a total finance charge of $719.34, not the $118.30 on the TILA disclosure. 25 However, once again, Plaintiff alleges no harm that resulted from the alleged 26 understatement of the finance charge. Absent such allegations, the Court finds that Plaintiff 27 has not alleged an injury from Defendant’s third claim under which to grant her standing. 28 In sum, Plaintiff has not alleged any injury besides mere procedural violations. She has not alleged that she would have evaluated the terms of her loan differently, made a different choice, or “‘in any way behaved other than she did had [D]efendant not committed its alleged violations of [TILA].’” /d. at 6 (alterations original) (citations omitted). Further, 4|| the SAC does not allege that Plaintiff suffered any financial harm or setbacks (such as late 5 || fees or negative credit marks) due to her alleged late payment. Accordingly, the Court finds || that Plaintiff has alleged no concrete injury to confer her with Article HI standing. As the || Court has now given Plaintiff two opportunities to amend its complaints to fix the standing 8 || defect, it will now dismiss the case with prejudice under Rule 12(b)(1), Fed. R. Civ. P. IV. CONCLUSION 10 For the reasons discussed above, 11 IT IS ORDERED granting Defendant’s Motion to Dismiss and dismissing this 12 || action with prejudice under Fed. R. Civ. P. 12(b)(1). (Doc. 47.) 13 IT IS FURTHER ORDERED directing the Clerk of the Court to terminate this case. 15 Dated this 13th day of January, 2021. 16 —— 18 Aonorable Susan M, Brnovich 19 United States District Judge 20 21 22 23 24 25 26 27 28 -7-