Skiles v. Tesla, Inc.

Background

Wayne Skiles alleged that, when he visited a Tesla showroom in August 2015, a Tesla employee asked for his driver’s license to verify that he could operate a vehicle. Skiles alleged that Tesla instead used the license information to obtain an Experian “Mosaic score,” a marketing report based on aggregate data. He alleged that he was not given an opportunity to consent to that use.

Skiles asserted claims under the Fair Credit Reporting Act (FCRA). The defendants moved to dismiss his Second Amended Complaint under Federal Rule of Civil Procedure 12(b)(6), which requires dismissal when a complaint does not adequately state a legally valid claim. The court had previously dismissed an earlier complaint with permission to amend. The Second Amended Complaint was Skiles’s third attempt to state a claim.

Consumer-report and consumer-reporting-agency allegations

The FCRA defines a “consumer report” to include information about a consumer’s creditworthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, but only when the information is used, expected to be used, or collected in whole or in part for certain purposes, including determining credit eligibility.

The court had previously found that Skiles adequately alleged the first part of this definition. In this order, however, the court held that he did not adequately allege the second part: that Experian expected the Mosaic score to be used for individual credit-eligibility decisions. The materials incorporated into the complaint described Mosaic primarily as a marketing tool used to target audiences, analyze consumer behavior, and improve customer engagement. The court said that identifying potential credit-card applicants was not the same as determining whether a particular consumer was eligible for credit.

The court also noted that the Mosaic score was based on aggregate statistics and that Skiles did not identify an instance in which Tesla or another business used a Mosaic score to make a credit-eligibility decision. Skiles stated in his opposition that he was not claiming Tesla actually used the score to determine his credit eligibility. The court found his allegations about Tesla’s financing services, the integration of Experian’s systems with Tesla’s applications, and the cost of Tesla vehicles too attenuated to make the claim plausible.

Because Skiles did not adequately allege that the Mosaic score was a consumer report, his related FCRA claim failed. The court also held that he did not adequately allege that Experian Marketing Services was a “consumer reporting agency.” The complaint largely assumed that Experian was such an agency because the Mosaic score was a consumer report, and it did not adequately allege that this Experian entity regularly provided consumer reports to third parties.

Section 1681e claim

Section 1681e requires every consumer reporting agency to maintain reasonable procedures to avoid certain FCRA violations and to limit the furnishing of consumer reports to permitted purposes. The court held that this claim failed because Skiles had not adequately alleged that the Mosaic score was a consumer report or that there was a violation of the related FCRA provision governing permitted uses.

The court further held that Skiles provided no facts about Experian’s procedures or efforts to verify that Tesla’s certified uses complied with the FCRA. His attempt to rely on the allegations supporting his other FCRA claim was insufficient to state a separate Section 1681e claim.

Willfulness

The court separately held that Skiles had not adequately alleged a willful violation. A willful FCRA violation requires knowing conduct or reckless disregard of the statute’s requirements. The court found that the law was not clear enough to show that the defendants necessarily knew the Mosaic score was a consumer report or that Experian was a consumer reporting agency. Skiles pleaded no additional facts suggesting that either defendant acted willfully.

Rulings and disposition

Judge William Orrick granted Tesla’s and Experian Marketing Services’ motions to dismiss. Because this was Skiles’s third attempt to state a claim and the allegations showed that he could not state a claim for relief, the court dismissed the Second Amended Complaint with prejudice and stated that judgment would be entered accordingly.

The court also granted Skiles’s request for judicial notice and motion for leave to file a sur-reply. It granted Experian’s request for judicial notice to the extent the court relied on the materials and otherwise denied that request as moot.