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Seale v. Peacock.

No. 21-1144. D.Colo. Judge McHugh. Motion to Dismiss for Failure to State a Claim—Motion to Amend Complaint—Standing—Stored Communications Act.

April 27, 2022

Plaintiff and defendant Peacock were real estate agents who were married to each other, and Peacock worked for plaintiff. The parties divorced in May 2017, and plaintiff terminated Peacock’s employment in June 2018.

In November and December 2017, an unidentified person sent anonymous letters to plaintiff’s acquaintances that included statements about plaintiff’s dating and sexual activity, explicit photographs, his profile from a dating website, and references to plaintiff’s business. Subsequently, four of plaintiff’s real estate agents left his employ, and three clients and two nonprofit agencies stopped doing business with him. Additionally, plaintiff discovered that someone other than himself had logged into his CTM account (software used by real estate professionals) 19 times in December 2018. Plaintiff determined that at least some of the access went through IP addresses that were available to Peacock.

Plaintiff filed suit against Peacock and unnamed John Doe and/or Jane Doe defendants in Colorado state court. Peacock removed the action to the US District Court based on diversity jurisdiction. Plaintiff then filed an amended complaint alleging statutory civil theft, violation of the Stored Communications Act (SCA), and invasion of privacy. The magistrate judge dismissed the case with prejudice.

On appeal, plaintiff contended that the magistrate judge erred in dismissing the SCA claim for failure to state a claim under Fed. R. Civ. P. 12(b)(6) because plaintiff could recover statutory damages regardless of whether he alleged actual damages. The Tenth Circuit determined that plaintiff had standing to bring the SCA claim because the SCA provides recourse for invasions of privacy in the realm of electronic communications, and plaintiff’s alleged harms were closely connected to the harms protected by traditional privacy claims where the unauthorized intrusion is itself actionable. On the merits, a plaintiff must show actual damages to be eligible to recover statutory damages under the SCA. Here, none of plaintiff’s alleged losses are connected to the alleged unauthorized access of his CTM account because the anonymous person mailed the letters more than one year before defendant Peacock allegedly accessed the CTM account without authorization. The amended complaint is therefore insufficient to support an inference that plaintiff suffered actual damages caused by the CTM account access, so the magistrate judge correctly dismissed the SCA claim.

Plaintiff also argued that the magistrate judge erred by dismissing his claims with prejudice. Here, the statutory civil theft claim did not allege the intent to permanently deprive plaintiff of property, so it did not support the necessary elements for statutory civil theft. Accordingly, any amendment would be futile, so the magistrate judge did not err. However, because the SCA authorizes plaintiffs to recover punitive damages regardless of whether they suffered actual damages, plaintiff could remedy his SCA claim by amending the complaint to expressly request punitive damages. Additionally, plaintiff could remedy the deficiency in his invasion of privacy claim by including factual support about the mental anguish he allegedly suffered therefrom. Therefore, the magistrate judge erred by dismissing these claims with prejudice.

Plaintiff further contended that the magistrate judge abused her discretion in denying his motion to further amend the complaint to substitute Peacock for the unknown defendants because she incorrectly applied the good cause standard. Plaintiff maintained that the magistrate judge had previously extended the amendment deadline in the scheduling order such that only Rule 15(a)(2) applied, which contains no good cause requirement. However, a party must show good cause to extend a deadline in a scheduling order. Here, plaintiff never attempted to show good cause to extend the time to amend the pleadings or join parties. Accordingly, the magistrate judge’s interpretation of the order was not a clear abuse of discretion.

The dismissal of plaintiff’s SCA claim under Rule 12(b)(6) and the dismissal with prejudice of the statutory civil theft claim were affirmed. The dismissal with prejudice of the SCA claim and the invasion of privacy by appropriation of name or likeness claims were reversed and the case was remanded with instructions to dismiss these claims without prejudice. The order denying plaintiff’s motion to amend was affirmed.

Official US Court of Appeals for the Tenth Circuit proceedings can be found at the US Court of Appeals for the Tenth Circuit website.

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