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Ostella v. IRBSearch, LLC

United States District Court, Third Circuit

October 24, 2013

IRBSearch, LLC, et al.



Plaintiffs in this action, Lisa Ostella, Lisa Liberi, Brent Liberi, Frank M. Ostella and Philip J. Berg, [1] allege that defendants IRBSearch, LLC and Lexis Nexis Risk Data Management, Inc.[2] (LNRDMI), through an account belonging to defendants Todd Sankey and The Sankey Firm, Inc., provided defendant Neil Sankey with plaintiffs’ allegedly personal and confidential information even though Neil Sankey did not have a permitted purpose for use of that information. See Compl. ¶¶ 70-85. Plaintiffs contend that, with Neil Sankey’s assistance, non-party Orly Taitz used this personal and confidential information “to harm and harass” them. Id. ¶ 69. Now before me are: (1) LNRDMI’s motion to dismiss and to transfer venue as to any remaining claims (Dkt. No. 21); (2) a motion to dismiss for lack of jurisdiction filed by Neil Sankey, Todd Sankey and The Sankey Firm[3] (Dkt. No. 22); and (3) IRBSearch’s motion to dismiss for failure to state a claim and to transfer venue as to any remaining claims (Dkt. No. 25). Upon consideration of defendants’ motions, all responses and replies thereto, after oral argument on defendants’ motions[4] and for the reasons that follow, I will dismiss plaintiffs’ claims against LNRDMI and the Sankey defendants and will deny IRBSearch’s motion to dismiss and to transfer venue.


I. Plaintiffs’ Complaint

Plaintiffs’ complaint, filed on December 14, 2012, alleges eight counts: (1) against all defendants, violation of the Driver’s Privacy Protection Act (DPPA), 18 U.S.C. § 2721, et seq.; and against defendants LNRDMI and IRBSearch, (2) defamation; (3) defamation by innuendo; (4) violation of § 1798.53 of the California Information Practices Act; (5) violation of § 1798.85 of the California Information Practices Act; (6) invasion of privacy; (7) unfair and deceptive business/trade practices; and (8) gross/willful negligence. Compl. ¶ 86-165.

Plaintiffs allege that in 2009, non-party Orly Taitz contacted Neil Sankey, a private investigator, and asked him to perform background checks on plaintiffs and their families. Id. at ¶ 69. Plaintiffs contend that in March, April and May, 2009, Neil Sankey, using the Sankey Firm’s IRBSearch account, obtained private information about plaintiffs. Id. at ¶ 63. The private information, including plaintiffs’ names, Social Security numbers, birthdates, addresses, employment histories and phone numbers was allegedly obtained from Accurint reports compiled by LNRDMI. Id. at ¶ 72. Plaintiffs assert that IRBSearch obtains driver and vehicle registration information through LNRDMI, who obtains the information pursuant to contracts it entered into with the departments of motor vehicles in, inter alia, California, New Jersey, New Mexico, North Carolina and Pennsylvania. Id. at ¶¶ 22, 36, 89. Plaintiffs contend that IRBSearch obtained the private information from LNRDMI without having a permissible purpose to use the information. Id. at ¶ 71. They further contend that the Sankey defendants did not have a permissible purpose to use the information and that neither IRBSearch nor LNRDMI appropriately verified that the Sankey defendants would use the information for a permissible purpose. Id. at ¶¶ 66-68. Plaintiffs allege that Neil Sankey “knowingly obtained Plaintiffs[’] confidential reports, including Accurint Reports from IRB governed by the DPPA to injure and harm the Plaintiffs on behalf of Orly Taitz.” Id. at ¶ 70. They further allege that their “personal and confidential information has been disseminated throughout the Internet, mail, 3rd party outreach, to millions of individuals and businesses, including internationally, and over radio broadcasts with call outs to followers and supporters [of Orly Taitz] to harm and harass the Plaintiffs.” Id. at ¶ 69. Plaintiffs allege that as a result of the distribution of the information sourced by Neil Sankey through IRBSearch and LNRDMI, they have suffered various injuries including, inter alia, identity theft, stalking, harassment, “cardiac complications and other health complications requiring numerous paramedic visits and hospitalization, ” “lost time off work, ” loss of business clientele and a loss of property value “when they were forced to sell [a home] and move in a hurry to protect their family.” Id. at ¶ 76. Plaintiffs seek damages as a result of their alleged injuries. See, e.g., id. at p. 54-55. They also seek injunctive relief requiring, inter alia, “the removal of all of Plaintiffs[’] private information and false allegations posted all over the Internet . . . .” Compl. at p. 56.

II. The Prior Litigation[5]

On May 4, 2009, certain of the plaintiffs in the instant action – Lisa Liberi, Philip Berg and Lisa Ostella – and along with other plaintiffs filed a complaint in this Court against, inter alia, Orly Taitz, a Taitz political organization, Neil Sankey, The Sankey Firm and Sankey Investigations, Inc. See Liberi v. Taitz, No. 09-cv-1898 (E.D. Pa.). On June 23, 2010, responding to the plaintiffs’ emergency motion to transfer venue, my colleague, Judge Eduardo Robreno, severed that case into two separate actions, transferring the claims pending against Taitz, the Taitz political organization, Neil Sankey, The Sankey Firm and Sankey Investigations, Inc. to the Central District of California. See Liberi v. Taitz, No. 09-cv-1898, at Dkt. No. 124 (E.D. Pa. June 23, 2010). The plaintiffs filed an amended complaint in the California action on June 17, 2011. See Liberi v. Taitz, No. 11-cv-485 at Dkt. No. 231 (C.D. Cal. June 17, 2011). The amended complaint added new defendants, including LexisNexis Seisint, Inc. Id. LNDRMI contends that no such entity ever existed, but the parties proceeded as if the California amended complaint had named as a defendant LNRDMI, formerly known as Seisint, Inc. Dkt. No. 22-1 at ECF p. 9.[6]

The plaintiffs’ claims in the California amended complaint were based on their allegations that in 2009: (1) Orly Taitz contacted Neil Sankey, a private investigator, to conduct background checks on Liberi and Ostella. Cal. Am. Compl., Dkt. No. 22-10 at ¶¶ 31, 66-67, 135; (2) without the plaintiffs’ permission, and without a permissible purpose, Neil Sankey obtained Accurint reports regarding the plaintiffs from a company called Intelius, Inc., id. at ¶ 155; (3) Intelius obtained information in the Accurint reports from LNRDMI without a permissible purpose and without the plaintiffs’ permission, id. at ¶¶ 152, 155-164; (4) before selling the information to the Sankey defendants, neither Intelius nor LNRDMI verified that the Sankey defendants would not use the information for an illegal purpose, id.; (5) the information contained in the materials supplied by Intelius and LNRDMI, which had been sourced from a wide range of public records, constituted a “consumer report” under the Fair Credit Reporting Act, id. at ¶ 146-151; and (6) Neil Sankey and Taitz improperly publicly distributed the information. Id. at 139-140. The California plaintiffs claimed that they and their families were harmed by the improper distribution of their allegedly private information. See, e.g., id. at ¶¶ 140-141.

In their lengthy California amended complaint, the plaintiffs asserted claims for intrusion upon seclusion, public disclosure, false light, defamation per se, slander, libel per se, intentional and negligent infliction of emotional distress, res ipsa loquitur negligence, and violations of the California Information Privacy Act, the California Business and Professions Code, the Fair Credit Reporting Act (FCRA) and its California state law analogue, the California Consumer Credit Reporting Agencies Act (CCRA). See Dkt. Nos. 22-10 and 22-11. On October 17, 2011, the District Court for the Central District of California granted in part a motion to dismiss filed on behalf of LNRDMI (and related parties), dismissing the non-FCRA/CCRA claims[7] against them, holding that the dismissed claims were preempted by the FCRA and the CCRA and further, that even if the plaintiffs sought to avoid preemption by dismissing their FCRA claims, the plaintiffs’ claims would be barred pursuant to the Communications Decency Act, 47 U.S.C. § 230 et seq. See Dkt No 22-12 at ECF p. 22.

On December 21, 2011, the California District Court denied the California plaintiffs’ request for leave to file a motion for leave to file a second amended complaint. Dkt. No. 22-13. It explained that “[a]ny such amendments should have been made long ago. This case has been pending since May 2009. Trial is fast approaching in June 2012 . . . . The Court finds that filing a Second Amended Complaint at this late date would delay rather than promote the efficient resolution of this case.” Id.

LNRDMI (and related parties) then moved for summary judgment on the California plaintiffs’ remaining claims against them, arguing that the Accurint reports at issue in the case were not consumer reports under the FCRA and the CCRA. On May 22, 2012, the California District Court granted summary judgment in favor of LNRDMI on the California plaintiffs’ claims under FCRA and analogous state law. Dkt. No. 22-18.[8] The California District Court held that the plaintiffs’ claims failed because the LexisNexis defendants “did not operate as a consumer credit reporting agency regarding the specific transactions at issue” and there was “not sufficient evidence that the LexisNexis Defendants provided the [relevant] report for a FCRA purpose, or that the reports were actually used for a FCRA purpose.” Id. at ECF p. 11, 13.

On May 29, 2012, the California plaintiffs sought leave to file a motion for relief from the California District Court’s October 17, 2011 order. Dkt. No. 22-19. The California District Court denied their motion on May 31, 2012, finding “nothing justifying relief under any of the reasons under Rule 60.” Dkt. No. 22-20. It explained

that the main impetus for the [California plaintiffs’] Request appears to be Plaintiffs’ late sought discovery, and the Court’s own factual findings leading it to grant summary judgment relief for the Reed Defendants on their remaining claims. But there is no reason why Plaintiffs could not have conducted this discovery before, or otherwise discovered the cited facts with reasonable diligence.


On June 6, 2012, the California plaintiffs filed a request “for Leave to File a Motion to Amend the First Amended Complaint, seeking to join IRBSearch, LLC . . . .” Dkt. No. 22-21. The California District Court denied the request, explaining that the plaintiffs had “ample time to conduct discovery [and] bring any motions to compel . . . .” Id.

Plaintiffs filed the instant action on December 14, 2012. Dkt. No. 1.


Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss all or part of an action for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). When reviewing a motion to dismiss, “courts accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009) (internal quotations omitted). The question is not whether plaintiffs will ultimately prevail. Watson v. Abington Twp., 478 F.3d 144, 150 (3d Cir. 2007). Instead, for plaintiffs’ claims to survive defendants’ motions to dismiss, their “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).


I. Claims Against LNRDMI

LNRDMI asserts that plaintiffs’ claims against it must be dismissed, arguing that “Plaintiffs are trying to relitigate in this Court claims that they already have litigated (and) lost in California.” Dkt. No. 32 at ECF p. 2; see also Dkt. No. 22-1 at ECF p. 8 (arguing plaintiffs’ claims against LNRDMI are “barred by the doctrine of res judicata”). I agree.

Res judicata[9] bars claims or defenses that were or could have been raised in a prior proceeding. See Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981). “Although res judicata is an affirmative defense for a defendant to plead, . . . dismissal [under Rule 12(b)(6)] may be appropriate when it is obvious, either from the face of the pleading or from other court records, that an affirmative defense such as res judicata will necessarily defeat the claim.” Shah v. United States, No. 13-2383, 2013 WL 5421992, at *2 (3d Cir. Sept. 30, 2013), citing Fed.R.Civ.P. 8(c); Jones v. Bock, 549 U.S. 199, 215 (2007).

Claim preclusion precludes relitigation of “all grounds for, or defenses to, recovery that were previously available to the parties, regardless of whether they were asserted or determined in the prior proceeding.” Brown v. Felsen, 442 U.S. 127, 131 (1979). It “gives dispositive effect to a prior judgment if a particular issue, although not litigated, could have been raised in the earlier proceeding.” CoreStates Bank, N.A. v. Huls Am. Inc., 176 F.3d 187, 194 (3d Cir. 1999) (emphasis in original) (citation omitted). The purpose of claim preclusion is to “relieve parties of the cost and vexation of multiple lawsuits, conserve judicial resources, and, by preventing inconsistent decisions, encourage reliance on adjudication.” Allen v. McCurry, 449 U.S. 90, 94 (1980). “The preclusive effect of a federal-court judgment is determined by federal common law.” Taylor v. Sturgell, 553 U.S. 880, 891 (2008). To prevail on a motion seeking to invoke the doctrine of claim preclusion, defendants must show “(1) a final judgment on the merits in a prior suit involving (2) the same parties or their privies and (3) a subsequent suit based on the same cause of action.” Duhaney v. Att’y Gen., 621 F.3d 340, 347 (3d Cir. 2010) (citations omitted).

A. Final Judgment

LNRDMI first asserts that “there can be no question that LNRDMI obtained valid final judgments on the merits as to all the claims against [it] in the California Action.” Dkt. No. 22-1 at ECF p. 14. A “dismissal for failure to state a claim under [Rule] 12(b)(6) is a judgment on the merits” for purposes of claim preclusion. Federated Dep’t Stores, 452 U.S. at 399 n.3 (internal quotations and citations omitted). It is also “clear that summary judgment is a final judgment on the merits sufficient to raise the defense of res judicata in a subsequent action between the parties.” Hubicki v. ACF Indus., Inc. 484 F.2d 519, 524 (3d Cir. 1973).

Plaintiffs contend that because “[t]he California District Court [d]ismissed all counts except for the FCRA claims [by finding that] the other Causes of Action were preempted by the FCRA . . ., these claims were dismissed by a technicality and not based on the merits.” Dkt. No. 27 at ECF p. 11 (emphasis omitted). I disagree. Contrary to plaintiffs’ contention, for purposes of claim preclusion I find that the California District Court’s dismissal of their non-FCRA and non-CCRA claims on preemption grounds is sufficient to constitute a final judgment on the merits. See, e.g., Selkridge v. United of Omaha Life Ins. Co., 360 F.3d 155, 172 (3d Cir. 2004) (finding there was a final judgment on the merits for purposes of claim preclusion where state law claims had been dismissed as preempted by ERISA). The California District Court held that even if the plaintiffs had been permitted to amend their complaint to avoid FCRA preemption by dropping their FCRA claims, their claims would have still been barred under the Communications Decency Act. Dkt. No. 22-12 at ECF p. 18-22 (“[T]he Court now finds there is no possible way for Plaintiffs to cure the deficiencies in the dismissed allegations.”). LNRDMI has met its burden to establish a final judgment on the merits on the claims litigated against it in the California action.

B. Same Parties or Parties in Privity

LNRDMI also contends that, for purposes of claim preclusion, there “can be no dispute that the same parties were involved in the California action.” Dkt. No. 22-1 at ECF p. 14. Lisa Ostella, Lisa Liberi and Phillip J. Berg were named as plaintiffs in the California Action. Plaintiffs do not dispute that LNRDMI, although misidentified, was a defendant in the California Action, as were the Sankey defendants. They do note that “IRB was not named in the California Case as a Defendant . . . nor were Brent Liberi [(Lisa Liberi’s husband)] and Dr. Frank Ostella [(Lisa Ostella’s husband)] named as Plaintiffs.” Dkt. No. 27 at 12.

“[T]he claims of a person who was not party to a prior suit may be barred when that person stands in privity with a party in the prior suit.” Seamon v. Bell Tel. Co. of Pa., 576 F.Supp. 1458, 1460-61 (W.D. Pa. 1983), aff’d, 740 F.2d 958 (3d Cir. 1984) (citations omitted). “Privity ‘is merely a word used to say that the relationship between one who is a party on the record and another is close enough to include that other within the res judicata.’” Marran v. Marran, 376 F.3d 143, 151 (3d Cir. 2004), quoting E.E.O.C. v. U.S. Steel Corp., 921 F.2d 489, 493 (3d Cir. 1990). The addition of the spouse-plaintiffs – Brent Liberi and Frank Ostella – as plaintiffs is thus not sufficient to bar preclusion of plaintiffs’ claims as against LNRDMI. Nor is the addition of IRBSearch as a defendant. “The essence of the cause of action . . . is not altered by the addition of more parties.” Gregory v. Chehi, 843 F.2d 111, 119 (3d Cir. 1988).

C. Same Cause of Action

LNRDMI argues that in this action, plaintiffs are “attempt[ing] to re-litigate claims that already have been litigated in the California action.” Dkt. No. 22-1 at ECF p. 15. Plaintiffs counter that “[t]his case solely pertains to violations of the DPPA” and that “the California case has nothing at all to do with the within Action or DPPA violations by the LNRDMI and the other Defendants.” Dkt. No. 27 at 13.

For purposes of determining whether claim preclusion applies, the Court “take[s] a ‘broad view’ of what constitutes the same cause of action.” Sheridan v. NGK Metals Corp., 609 F.3d 239, 261 (3d Cir. 2010) (citations omitted). “Rather than resting on the specific legal theory invoked, res judicata generally is thought to turn on the essential similarity of the underlying events giving rise to the various legal claims, although a clear definition of that requisite similarity has proven elusive.” Davis v. U.S. Steel Supply, Div. of U.S. Steel Corp., 688 F.2d 166, 171 (3d Cir. 1982); see also Duhaney, 621 F.3d at 348 (same). Relevant considerations include “whether the acts complained of were the same, whether the material facts alleged in each suit were the same and whether the witnesses and documentation required to prove such allegations were the same.” United States v. Athlone, Indus., Inc., 746 F.2d 977, 984 (3d Cir. 1984); see also Duhaney, 621 F.3d at 348 (same). “[T]he mere inclusion of a new cause of action in a ...

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