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Hutton v. National Board of Examiners In Optometry, Inc.

United States District Court, D. Maryland

March 22, 2017

RHONDA L. HUTTON, O.D. et al.., Plaintiffs
v.
NAT'L BD. OF EXAM'RS IN OPTOMETRY, INC., Defendant NICOLE MIZRAHI, Plaintiff
v.
NAT'L BD. OF EXAM'RS IN OPTOMETRY, INC., Defendant

          MEMORANDUM

          James K. Bredar United States District Judge.

         I. Background

         Two cases before the Court rest upon similar allegations by different Plaintiffs, and they are the subjects of nearly identical defense motions. Both cases seek to represent the same class of similarly situated individuals. The causes of action overlap between the cases, with some differences in state-law theories of recovery. Plaintiffs allege the Defendant, National Board of Examiners in Optometry, Incorporated (“NBEO”), suffered a data breach sometime before July 23, 2016, that the personally identifiable information (“PII”) Plaintiffs had supplied to NBEO to register for exams in order to obtain an optometry license was stolen, and that they have incurred damage as a result. (16-3025, Compl., ECF No. 1; 16-3146, Compl., ECF No. 1.)

         Now pending before the Court are NBEO's motions to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)6) or, in the alternative, motions to strike pursuant to Rules 12(f) and 23(d)(1)(D). (16-3025, ECF No. 11; 16-3146, ECF No. 9.) Plaintiffs have also filed motions to consolidate the two cases. (16-3025, ECF No. 12; 16-3146, ECF No. 10.) NBEO does not object to the latter motion as long as the motions to dismiss are addressed first. The Court agrees it is appropriate to decide the potentially dispositive motions first. The motions have been briefed and are ripe for decision. No hearing is necessary. Local Rule 105.6 (D. Md. 2016). NBEO's motions will be granted pursuant to Rule 12(b)(1) for lack of standing. As a result, the Court will find moot NBEO's motions to the extent they are premised on other rules. Concomitantly, the Court will find moot Plaintiffs' motions to consolidate.

         II. Standard for Dismissal under Rule 12(b)(1)

         The burden of proving subject-matter jurisdiction is on the plaintiff. A challenge to jurisdiction may be either facial, i.e., the complaint fails to allege facts upon which subject-matter jurisdiction can be based, or factual, i.e., jurisdictional allegations of the complaint are not true. Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982). See also Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009) (same); Richmond, Fredericksburg & Potomac Ry. Co., 945 F.2d 765, 768 (4th Cir. 1991) (same). In the case of a factual challenge, it is permissible for a district court to “consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Richmond, Fredericksburg, 945 F.2d at 768 (citing Adams, 697 F.2d at 1219).

         III. Standing

         In a class action, the Court must “analyze standing based on the allegations of personal injury made by the named plaintiffs.” Beck v. McDonald, 848 F.3d 262, 269 (4th Cir. 2017). To have standing, one must claim “injury in fact” (1) that is concrete and particularized, and either actual or imminent, (2) that has a causal connection to defendant's conduct, and (3) that is likely redressable by a favorable judicial decision. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). To establish standing at the motion-to-dismiss stage, a plaintiff must allege “sufficient ‘factual matter'” to render a claim of standing “‘plausible on its face.'” Beck, 848 F.3d at 270 (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). As with any motion to dismiss premised upon the question of sufficiency of the pleading, “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). “A pleading that offers ‘labels and conclusions' or ‘a formulaic recitation of the elements of a cause of action will not do.' . . . Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 555, 557). Although when considering a motion to dismiss a court must accept as true all factual allegations in the complaint, this principle does not apply to legal conclusions couched as factual allegations. Twombly, 550 U.S. at 555.

         IV. Allegations of the Complaint

         Plaintiff Rhonda L. Hutton, O.D., is a Kansas resident who submitted her PII to NBEO in 1998. (16-3025 Compl. ¶ 5.) Plaintiff Tawny P. Kaeochinda, O.D., is a California resident who submitted her PII to NBEO in 2006-2008. (Id. ¶ 6.) Hutton and Kaeochinda are the two named Plaintiffs in 16-3025. In 16-3146, the named Plaintiff is Nicole Mizrahi, O.D., who is a New York resident and who alleges she supplied her PII to NBEO, but does not say when that occurred. (16-3146 Compl. ¶ 9.) The PII is defined by Hutton[1] as “including but not limited to names, birth dates, Social Security numbers, addresses, and credit card information.” (16-3025 Compl. ¶ 1.)

         The context for Plaintiffs' complaints is provided in the following paragraphs from Hutton's complaint:

2. On or around July 23, 2016, optometrists from around the country began to notice that fraudulent Chase accounts were being opened in their names. They started discussing it on various Facebook groups and soon realized they were all victims of the same type of fraud. In particular, many optometrists learned that a Chase Amazon Visa credit card had been applied for in their name, or some other line of credit, and all within a few days of one another. The optometrists soon realized that the only common source amongst them and to which they had all given their Personal Information that included Social Security numbers and dates of birth (information necessary to apply for new lines of credit, among other things), was the NBEO, where every graduating optometry student has to submit their Personal Information to sit for board-certifying exams. This also affected optometrists who served as examiners or committee members for NBEO and optometrists who later sat for additional NBEO competency exams well after graduating from optometry school. Individuals that submitted their Personal Information to NBEO even more than fifteen years ago have been affected, and the fraud has expanded from only Chase accounts to other means.
3. The NBEO denied its responsibility for the fraud for several days, but on August 4, 2016, it issued a statement on its website stating that it had “decided further to investigate whether personal data was stolen from [its] information systems to ...

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