SIDNEY A. FITZWATER, Chief District Judge.
Defendants move to dismiss under Fed. R. Civ. P. 12(b)(1), 12(b)(2), and/or 12(b)(6), presenting issues of subject matter jurisdiction based on the Rooker-Feldman doctrine, in personam jurisdiction, and whether plaintiffs have stated federal-law claims on which relief can be granted. For the reasons explained, the court denies the jurisdictional challenges, grants the motions to dismiss under Rule 12(b)(6) for failure to state any federal-law claims on which relief can be granted, declines to exercise supplemental jurisdiction over plaintiffs' state-law claims, and grants plaintiffs leave to replead.
This is an action by plaintiffs Kelly Hall ("Hall") and John Crowder, Jr. ("Crowder") against defendants Phenix Investigations, Inc. ("Phenix") and Carroll Family Investments, Ltd. ("Carroll"), and Wood, Thacker & Weatherly, P.C. ("Wood, Thacker"), Samuel B. Burke, R. William Wood, C. Jane Thacker, Jared Zenth, and Carl Mason (collectively, "WTW"). Hall and Crowder assert claims under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq.; the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq.; the Gramm-Leach-Bliley Act ("GLBA"), 15 U.S.C. § 6801 et seq.; and Texas 4 law.
The instant lawsuit arises from two prior suits. According to plaintiffs,
Hall and Crowder allege that, after they produced their financial records in the Transfer Lawsuit, unidentified individuals placed telephone calls to two banks at which Hall and Crowder maintain accounts, and, during these calls, impersonated them in order to obtain their private financial information. Hall and Crowder also assert that Carroll and WTW hired Phenix to investigate their financial holdings; that, shortly after the fraudulent telephone calls occurred, Phenix produced three investigative reports ("the Reports") detailing its findings; and that Phenix made these calls on behalf of Carroll and WTW.
Based on the alleged participation of Carroll, WTW, and Phenix in a scheme to fraudulently obtain and improperly use plaintiffs' financial records, Hall and Crowder sue defendants, alleging that they violated FCRA, FDCPA, GLBA, and Texas law. Phenix moves to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction, and under Rule 12(b)(2) for lack of personal jurisdiction. Phenix, Carroll, and WTW move to dismiss under Rule 12(b)(6) for failure to state a claim on which relief can be granted. Hall and Crowder oppose the motions.
The court first considers Phenix's motion to dismiss under Rule 12(b)(1) for lack of subject matter jurisdiction.
"Federal courts are courts of limited jurisdiction, and absent jurisdiction conferred by statute, lack the power to adjudicate claims." Stockman v. Fed. Election Comm'n, 138 F.3d 144, 151 (5th Cir. 1998). "The burden of proof for a Rule 12(b)(1) motion to dismiss is on the party asserting jurisdiction. Accordingly, the plaintiff constantly bears the burden of proof that jurisdiction does in fact exist." Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001) (per curiam) (citations omitted).
Phenix contends that the Rooker-Feldman doctrine precludes this court from exercising subject matter jurisdiction. It maintains that the instant suit is plaintiffs' backdoor attempt to challenge the state court's adverse discovery ruling in the Transfer Lawsuit.
The Rooker-Feldman doctrine "precludes a United States district court from exercising subject-matter jurisdiction in an action" where "the losing party in state court filed suit in federal court after the state proceedings ended, complaining of an injury caused by the state-court judgment and seeking review and rejection of that judgment." Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 291 (2005). The rationale that underlies Rooker-Feldman is that a district court lacks jurisdiction to hear an appeal of a state case. See id. at 284-85. The Supreme Court is the only federal court with "appellate authority `to reverse or modify' a state-court judgment." Id. at 284 (quoting Rooker v. Fid. Trust Co., 263 U.S. 413, 416 (1923)).
Where the federal case was filed before the state proceedings ended, the existence of the state case does not strip the federal court of subject matter jurisdiction. See id. at 292 ("[N]either Rooker nor Feldman supports the notion that properly invoked concurrent jurisdiction vanishes if a state court reaches judgment on the same or related question while the case remains sub judice in a federal court."). Rather, if the state adjudication finishes before the federal adjudication, then preclusion principles, which are not jurisdictional, govern. See id. at 293. The Transfer Lawsuit was filed in Texas state court in 2012, and a final judgment has not yet been entered. Plaintiffs filed the instant suit in 2014. Because plaintiffs filed this lawsuit before the Transfer Lawsuit concluded, the Rooker-Feldman doctrine is inapplicable. And because there has been no final judgment in the Transfer Lawsuit, preclusion principles are also inapposite. Moreover, the instant case is not one in which Hall and Crowder are seeking review and rejection of a judgment in the Transfer Lawsuit.
Accordingly the court denies Phenix's motion to dismiss for lack of subject matter jurisdiction.
The court now turns to Phenix's Rule 12(b)(2) motion to dismiss for lack of in personam jurisdiction.
"When a nonresident defendant presents a motion to dismiss for lack of personal jurisdiction, the plaintiff[s] bear[] the burden of establishing the district court's jurisdiction over the nonresident." Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985) (citing Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1165 (5th Cir. 1985)). The determination whether a federal district court has in personam jurisdiction over a nonresident defendant is bipartite. The court first decides whether the long-arm statute of the state in which it sits confers personal jurisdiction over the defendant. If it does, the court then resolves whether the exercise of jurisdiction is consistent with due process under the United States Constitution. See Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir. 1999). Because the Texas long-arm statute extends to the limits of due process, the court need only consider whether exercising jurisdiction over Phenix would be consistent with the Due Process Clause of the Fourteenth Amendment. See id.; Alpine View Co. v. Atlas Copco AB, 205 F.3d 208, 214 (5th Cir. 2000).
Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999) (footnotes omitted). To determine whether exercising jurisdiction would satisfy traditional notions of fair play and substantial justice, the court examines (1) the defendant's burden, (2) the forum state's interests, (3) the plaintiffs' interests in convenient and effective relief, (4) the judicial system's interest in efficient resolution of controversies, and (5) the states' shared interest in fundamental social policies. Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 421 (5th Cir. 1993).
A defendant's contacts with the forum may support either specific or general jurisdiction over the defendant. Mink, 190 F.3d at 336. "For the court properly to assert specific personal jurisdiction, the defendant must have `purposefully directed' his activities at residents of the forum, and the litigation must result from alleged injuries that `arise out of or relate to' the defendant's activities directed at the forum." Archer & White, Inc. v. Tishler, 2003 WL 22456806, at *2 (N.D. Tex. Oct. 23, 2003) (Fitzwater, J.) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985); Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)). "General jurisdiction exists when a defendant's contacts with the forum state are unrelated to the cause of action but are `continuous and systematic.'" Mink, 190 F.3d at 336 (quoting Wilson v. Belin, 20 F.3d 644, 647 (5th Cir. 1994)). Hall and Crowder allege that the court has both general and specific jurisdiction over Phenix. The court need only decide, however, whether it has specific jurisdiction.
The court is deciding Phenix's Rule 12(b)(2) motion to dismiss without holding an evidentiary hearing.
Latshaw, 167 F.3d at 211 (footnotes omitted). The question thus presented is whether, applying the controlling procedure stated above, Hall and Crowder have made a prima facie showing (1) that Phenix purposefully directed its activities at them in the forum state of Texas, and (2) that this litigation results from alleged injuries that arise out of or relate to Phenix's activities directed at the forum.
In their amended complaint, Hall and Crowder allege, in pertinent part, that Phenix violated FCRA by preparing the Reports without any permissible FCRA purpose, Am. Compl. ¶ 36; that the Reports were prepared by assembling financial records of Hall and Crowder from numerous financial institutions located mostly in Dallas County or Collin County, Texas, id. at ¶ 37; that the Reports were used against Hall and Crowder in the Transfer Lawsuit to wrongfully obtain injunctive relief, and all the defendants (i.e., including Phenix) knew of the unlawful circumstances surrounding the improper creation of the Reports and for what improper purposes the Reports would be used by defendants, id. at ¶ 38; and that their FCRA claim results from alleged injuries that arise out of or relate to Phenix's activities directed at the forum, see id. (alleging that Reports were used against Hall and Crowder in Transfer Lawsuit to wrongfully obtain injunctive relief) and ¶ 40 (alleging that Hall and Crowder have suffered damages due to defendants' willful violation of FCRA). These allegations are supported by assertions found elsewhere in the amended complaint. For example, the amended complaint alleges that Phenix provides litigation support services, see id. at ¶ 35, and that the Reports were prepared for such litigation support services, id. at ¶ 36, which would support a prima facie showing that Phenix prepared the Reports with the intention that they be used against Hall and Crowder in Texas, for an improper purpose under FCRA.
In support of Phenix's motion to dismiss, it relies on the declaration of Brian Bauer ("Bauer"), its President, who makes the following two pertinent assertions:
Phenix 5/8/2014 App. 4-5. But these assertions (and others that the court does not quote) do not controvert Hall and Crowder's prima facie showing that Phenix purposefully directed its activities at them in the forum state of Texas, and that the instant litigation results from alleged injuries that arise out of or relate to Phenix's activities directed at the forum. This is so because, even assuming that Phenix performed its services and work within the state of Indiana, neither paragraph controverts the allegations of the amended complaint that Phenix directed these activities toward Hall and Crowder in the state of Texas—that is, they do not controvert the allegations that the Reports were used against Hall and Crowder in the Transfer Lawsuit to wrongfully obtain injunctive relief, and that all the defendants (i.e., including Phenix) knew of the unlawful circumstances surrounding the improper creation of the Reports and for what improper purposes the Reports would be used.
"A single act by a defendant can be enough to confer personal jurisdiction if that act gives rise to the claim being asserted." Lewis v. Fresne, 252 F.3d 352, 358-59 (5th Cir. 2001) (citing Brown v. Flowers Indus., Inc., 688 F.2d 328, 332-33 (5th Cir. 1982)). "The number of contacts with the forum state is not, by itself, determinative. What is more significant is whether the contacts suggest that the nonresident defendant purposefully availed himself of the benefits of the forum state." Brown, 688 F.2d at 333 (citing Quasha v. Shale Dev. Corp., 667 F.2d 483, 488 (5th Cir. 1982); Prod. Promotions, Inc. v. Cousteau, 495 F.2d 483, 495 (5th Cir. 1974)) (internal citations and footnotes omitted). The court holds that Hall and Crowder have made a prima facie showing that Phenix purposefully availed itself of the benefits of the forum state of Texas by directing toward Hall and Crowder, in the state of Texas, Reports that were used against them in the Transfer Lawsuit to wrongfully obtain injunctive relief, knowing the unlawful circumstances surrounding the improper creation of the Reports and for what improper purposes the Reports would be used. Where "intentional conduct is intended to cause injury in a specific state, that is sufficient to give specific jurisdiction to the courts of that state." Kwik-Kopy Corp. v. Byers, 37 Fed. Appx. 90, 2002 WL 1021889, at *6 (5th Cir. 2002) (citing Calder v. Jones, 465 U.S. 783, 791 (1984)).
The court next considers whether exercising specific jurisdiction satisfies traditional notions of fair play and substantial justice.
Phenix does not attempt to demonstrate that the exercise of jurisdiction in this case would offend such notions, relying instead only on the absence of sufficient minimum contacts to establish specific jurisdiction. Phenix certainly has not made a compelling case that other considerations render jurisdiction unreasonable. Although Phenix is an Indiana corporation, there is no indication that it will suffer any undue burden. Texas has an interest in protecting persons located here from being subjected to unlawful debt collection practices and fraudulent credit reporting actions and in providing a remedy for tortious actions directed to the state. Plaintiffs have an interest in obtaining convenient and effective relief in the state where they allegedly suffered damages. The judicial system's interest in efficient resolutions of controversies, and the states' shared interest in fundamental social policies, neither support nor undercut the exercise of jurisdiction here. The court therefore holds that the exercise of personal jurisdiction over Phenix comports with traditional notions of fair play and substantial justice.
Accordingly, the court denies Phenix's motion to dismiss for lack of personal jurisdiction.
Phenix, Carroll, and WTW each move to dismiss plaintiffs' claims under Rule 12(b)(6) for failure to state a claim on which relief can be granted. Because defendants' motions rest on substantially the same grounds, the court considers them together.
"In deciding a Rule 12(b)(6) motion to dismiss, the court evaluates the sufficiency of plaintiffs' amended complaint by `accepting all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'" Bramlett v. Med. Protective Co. of Fort Wayne, Ind., 855 F.Supp.2d 615, 618 (N.D. Tex. 2012) (Fitzwater, C.J.) (quoting In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (internal quotation marks and alteration omitted)). To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556); see also Twombly, 550 U.S. at 555 ("Factual allegations must be enough to raise a right to relief above the speculative level[.]"). "[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 `shown'—`that the pleader is entitled to relief.'" Iqbal, 556 U.S. at 679 (quoting Rule 8(a)(2)) (alteration omitted). "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 678.
The court turns first to plaintiffs' FCRA claims.
The purpose of FCRA is to "require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information." 15 U.S.C § 1681(b). "[FCRA] imposes civil liability on any `person' (which includes any corporation or other entity who willfully or negligently fails to `comply with any requirement imposed' under the Act." Ausherman v. Bank of Am. Corp., 352 F.3d 896, 899 (4th Cir. 2003) (internal citations omitted) (quoting 15 U.S.C. §§ 1681n, 1681o).
Plaintiffs allege that defendants violated § 1681b by assembling and using the Reports for an impermissible purpose, and violated § 1681d by failing to disclose that an investigative consumer report would be made. Defendants contend, inter alia, that plaintiffs have failed to state a FCRA claim because they have failed to allege there was a "consumer report," as defined by FCRA.
To state a claim under § 1681b or § 1681d, plaintiffs must allege that defendants created, used, or obtained a "consumer report," as that term is defined by FCRA. See 15 U.S.C. §§ 1681b(a), 1681d(a); see also Norman v. Lyons, 2013 WL 655058, at *2 (N.D. Tex. Feb. 22, 2013) (Boyle, J.) (holding that to state claim under § 1681b, plaintiff must allege that there was consumer report).
FCRA defines "consumer report" as
15 U.S.C. § 1681a(d)(1). Section 1681b includes such purposes as employment purposes, underwriting insurance involving the consumer, using the information to determine a consumer's eligibility for a license, etc. Id. § 1681b(a)(3). A report containing credit information about an individual is treated as a "consumer report" only when it is collected for one of the purposes described in § 1681a(d). See St. Paul Guardian Ins. Co. v. Johnson, 884 F.2d 881, 885 (5th Cir. 1989) ("[T]he purpose for which the information was collected governs whether that report is a `consumer report' under the FCRA.").
Hall and Crowder allege that defendants either created or commissioned the creation of the Reports for "litigation support purposes." Am. Compl. ¶ 36. This is not one of the purposes outlined in § 1681a(d) or § 1681b. Nowhere in the amended complaint do plaintiffs allege that the Reports were created for any of the purposes outlined in § 1681a or § 1681b. Accordingly, plaintiffs' claims under FCRA fail as a matter of law.
Plaintiffs cite St. Paul to argue that, because defendants have focused on the use to which they put the Reports, rather than on the purpose for which they commissioned the Reports, defendants' argument fails. Despite defendants' reliance on the word "use" in their motions to dismiss, it is clear that their focus is also on the purpose for which the Reports were obtained. See WTW Mot. to Dismiss ¶ 34 ("Plaintiffs fail to allege that the WTW Lawyers used or expected to use the alleged reports for the purpose of establishing Plaintiffs' eligibility for credit, employment, insurance, or similar purposes.") (emphasis added). And plaintiffs have failed to allege that the Reports were created for any of the purposes necessary to qualify as a "consumer report" under FCRA.
The court therefore dismisses plaintiffs' FCRA claims against defendants under Rule 12(b)(6).
Defendants also move to dismiss plaintiffs' FDCPA claims.
"The purpose of the [FDCPA] is to `eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses.'" McMurray v. ProCollect, Inc., 687 F.3d 665, 668 (5th Cir. 2012) (quoting 15 U.S.C. § 1692(e)).
Hunsinger v. SKO Brenner Am., Inc., 2014 WL 1462443, *3 (N.D. Tex. Apr. 15, 2014) (Fitzwater, C.J.) (alterations omitted) (quoting Browne v. Portfolio Recovery Assocs., Inc., 2013 WL 871966, at *4 (S.D. Tex. Mar. 7, 2013).
Plaintiffs allege that WTW and Carroll violated FDCPA by falsely representing the character, amount, or legal status of any alleged debts to secure a state-court temporary injunction precluding the free transfer of plaintiffs' personal funds. They also aver that Phenix violated FDCPA by making false representations or using deceptive means to collect or attempt to collect any debt (namely, that Phenix impersonated plaintiffs in making telephone calls to obtain account information from plaintiffs' financial institutions). WTW moves to dismiss, contending that an attorney's pursuit of a lawsuit on behalf of a client is not a violation of FDCPA as a matter of law. Carroll moves to dismiss plaintiffs' FDCPA claims on the ground that Carroll's pursuit of a debt collection lawsuit is not a violation of FDCPA as a matter of law. Phenix moves to dismiss on the grounds that plaintiffs have failed to allege that Phenix is a statutory debt collector under FDCPA, and have failed to allege a consumer debt, as required to bring an action under FDCPA.
Because the court concludes that plaintiffs have failed to allege the existence of a consumer debt, as required to state a claim under FDCPA, the court need not consider the remaining grounds on which defendants rely. FDCPA defines "debt" or "consumer debt" as "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes[.]" 15 U.S.C. § 1692a(5). "FCRA does not apply to reports used in a consumer's business transactions, even those involving the consumer's personal credit information." Matise v. Trans Union Corp., 1998 WL 872511, *2 (N.D. Tex. Nov. 30, 1998) (Fitzwater, J.) (citing Yeager v. TRW, Inc., 961 F.Supp. 161, 162 (E.D. Tex. 1997)). Therefore, to state a claim under FDCPA, plaintiffs must allege that the debt at issue arose out of a transaction primarily for personal, family, or household purposes. Plaintiffs have not done so.
The alleged debt at issue arose from the lawsuit filed by CSC1 against TWI, Inc. and TWI XVIII, Inc. Although the amended complaint is not clear in this respect, plaintiffs appear to allege that the first state-court lawsuit dealt with some kind of business-related sale of assets. But the amended complaint is devoid of any allegation that the debt at issue arose from transactions related primarily to personal, family, or household purposes. In fact, even viewing the allegations of the amended complaint in the light most favorable to plaintiffs, the only reasonable inference the court can draw is that the debt at issue is not primarily for personal, family, or household purposes.
Therefore, the court grants defendants' motions in this respect and dismisses plaintiffs' FDCPA claims under Rule 12(b)(6).
Defendants also move to dismiss plaintiffs' GLBA claims.
GLBA provides that it is illegal for any person to obtain or attempt to obtain the financial information of another person through fraud. See 15 U.S.C. § 6821(a). Defendants contend that plaintiffs' GLBA claims must be dismissed because GLBA does not provide a private right of action. Plaintiffs respond that there is no provision in GLBA that specifically precludes a private right of action.
"The touchstone for determining whether there is an implied private right of action is Congressional intent, which is best determined by the text of the provision at issue." Price v. Am.'s Servicing Co., 2013 WL 1914939, at *3 (N.D. Tex. May 9, 2013) (Fitzwater, C.J.) (citing Alexander v. Sandoval, 532 U.S. 275, 286-87 (2001)). The text of GLBA indicates that Congress likely did not intend to afford a private right of action for violations of this law. Section 6822 provides that, "[e]xcept as provided in subsection (b) of this section, compliance with this subchapter shall be enforced by the Federal Trade Commission[.]" 15 U.S.C. § 6822(a). Subsection (b) permits enforcement by other agencies, but nowhere provides that private plaintiffs can pursue relief. See id. § 6822(b). Section 6823 provides a criminal penalty for violations of GLBA, and § 6805 provides that "the Bureau of Consumer Financial Protection, the Federal functional regulators, the State insurance authorities, and the Federal Trade Commission" shall enforce subchapter I of GLBA. See id. §§ 6823, 6805. Considering that Congress expressly provided for administrative and criminal enforcement of GLBA, "it is highly improbable that `Congress absentmindedly forgot to mention an intended private action.'" Transamerica Mortg. Advisors, Inc. (TAMA) v. Lewis, 444 U.S. 11, 20 (1979) (quoting Cannon v. Univ. of Chi., 441 U.S. 677, 742 (1979) (Powell, J., dissenting)) (holding that where Congress expressly provided for administrative and criminal remedies, court would not imply private right of action). The court holds that GLBA does not create a private right of action. See Borinski v. Williamson, 2004 WL 433746, at *3 (N.D. Tex. Mar. 1, 2004) (Boyle, J.) (holding that GLBA does not provide private right of action); Lacerte Software Corp. v. Prof'l Tax Servs., L.L.C., 2004 WL 180321, at *2 (N.D. Tex. Jan. 6, 2004) (Sanders, J.) (same); Dunmire v. Morgan Stanley DW, Inc., 475 F.3d 956, 960 (8th Cir. 2007) (same); Menton v. Experian Corp., 2003 WL 21692820, at *3 (S.D.N.Y. July 21, 2003) (same).
Accordingly, the court grants defendants' motions to dismiss plaintiffs' GLBA claims.
Plaintiffs also assert state-law claims for abuse of process, invasion of privacy, negligence per se, and civil conspiracy. The court declines to address the merits of plaintiffs' pendent state-law claims at this time. Although this court can exercise supplemental jurisdiction over these state-law claims under 28 U.S.C. § 1367(a), "[t]he court may decline to exercise such jurisdiction where the claims that permitted original jurisdiction have dropped out of the case." Kibby v. Chief Auto Parts, Inc., 1999 WL 135261, at *6 (N.D. Tex. Mar. 4, 1999) (Fitzwater, J.). "[W]hen all federal claims are dismissed or otherwise eliminated from a case prior to trial, [the Fifth Circuit has] stated that [its] `general rule' is to decline to exercise jurisdiction over the pendent state law claims." McClelland v. Gronwaldt, 155 F.3d 507, 519 (5th Cir. 1998) (citing Wong v. Stripling, 881 F.2d 200, 204 (5th Cir. 1989)), overruled on other grounds by Arana v. Ochsner Health Plan, 338 F.3d 433, 440 (5th Cir. 2003) (en banc). Having dismissed plaintiffs' federal-law claims, the court in its discretion declines at this time to exercise supplemental jurisdiction over their state-law claims.
Accordingly, plaintiffs' claims for abuse of process, invasion of privacy, negligence per se, and civil conspiracy are dismissed without prejudice.
Although the court is granting defendants' motions to dismiss under Rule 12(b)(6), it will permit plaintiffs to replead. See, e.g., In re Am. Airlines, Inc., Privacy Litig., 370 F.Supp.2d 552, 567-68 (N.D. Tex. 2005) (Fitzwater, J.) (noting that district courts often afford plaintiffs at least one opportunity to cure pleading deficiencies before dismissing case, unless it is clear that defects are incurable or plaintiffs advise court that they are unwilling or unable to amend in a manner that will avoid dismissal). Because there is no indication that plaintiffs cannot, or are unwilling to, cure the defects that the court has identified, the court grants them leave to file a second amended complaint within 28 days of the date this memorandum opinion and order is filed.
For the reasons explained, the court denies Phenix's motions to dismiss under Rules 12(b)(1) and 12(b)(2), grants defendants' Rule 12(b)(6) motions as to plaintiffs' federal-law claims, and declines to exercise supplemental jurisdiction over their state-law claims.
A Rule 12(b)(1) motion can mount either a facial or factual challenge. See, e.g., Hunter v. Branch Banking & Trust Co., 2013 WL 607151, at *2 (N.D. Tex. Feb. 19, 2013) (Fitzwater, C.J.) (citing Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. May 1981)). When a party makes a Rule 12(b)(1) motion without including evidence, the challenge to subject matter jurisdiction is facial. Id. The court assesses a facial challenge as it does a Rule 12(b)(6) motion in that it "looks only at the sufficiency of the allegations in the pleading and assumes them to be true. If the allegations are sufficient to allege jurisdiction, the court must deny the motion." Id. at *2 (citation omitted) (citing Paterson, 644 F.2d at 523).
