United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
Lindsay United States District Judge.
the court is Defendants’ Joint Motion to Dismiss
Plaintiff’s Third Amended Complaint (Doc. 27); and RELX
Inc.’s Motion to Dismiss Third Amended Complaint (Doc.
26). Both motions were filed January 28, 2019. After
considering the motions, briefs, pleadings, and applicable
law, the court grants Defendants’
Joint Motion to Dismiss Plaintiff’s Third Amended
Complaint (Doc. 27); grants RELX
Inc.’s Motion to Dismiss Third Amended Complaint (Doc.
26); and dismisses with prejudice all claims
and requests for relief asserted and requested by Plaintiff
against Defendants in this action.
Factual and Procedural Background
Phoneternet, LLC d/b/a Maestro (“Plaintiff” or
“Phoneternet”) originally brought this action
against Defendant LexisNexis Risk Solutions, Inc.
(“LexisNexis”) on June 5, 2018. After the case
was removed to federal court, Plaintiff amended its pleadings
to add RELX Inc. (“RELX”) as a defendant. The
court refers to LexisNexis and RELX collectively as
Third Amended Complaint (“Complaint”) (Doc. 25),
Plaintiff alleges that, in early 2017, “the Lexus
Division of the Toyota Motor Corporation (hereinafter,
Toyota) approached [it] to provide [its] personal assistant
service, ‘MyStar’ to its Lexus Division under the
‘Lexus’ brand”; that “Toyota and
Phoneternet immediately entered into extensive negotiations,
demos, and marketing creation to finalize the deal”;
and that consummation of the deal was contingent on
Phoneternet having a “clean business report” as
determined by Toyota’s procurement department.
Pl.’s Compl. 2-3. Plaintiff further alleges that Toyota
obtained a business report from Experian Business Credit
Services (“Experian”), as well as LexisNexis, and
was unhappy with what both reports revealed about
Phoneternet’s business credit rating and informed
At this point since all we have to go on is Experian and
LexisNexis information and as I pointed out yesterday we need
to protect our brand at all costs. Once you have worked out
any potential changes please reach back out to me and we can
then have risk management re-evaluate at that point.
Id. at 4.
alleges that, after it notified Experian by letter on July
20, 2017, regarding discrepancies in the Experian business
credit advantage report obtained by Toyota, Experian updated
Phoneternet’s credit report on August 23, 2017, which
raised Phoneternet’s business credit score. Plaintiff
alleges that, on July 21, 2017, it similarly notified
LexisNexis regarding 15 discrepancies and errors in the
LexisNexis database related to Phoneternet, provided
supporting documentation, and requested LexisNexis to correct
the incorrect information, but LexisNexis did not respond
until October 6, 2017.
to Plaintiff, LexisNexis stated in a letter on this date that
it had “modified ‘the data as requested, ’
when in fact LexisNexis only changed one of the fifteen
discrepancies” identified by Phoneternet. Id.
at 6. Plaintiff alleges that it subsequently:
began to contact LexisNexis at least three times a week at
its phone number of 1-800-382-6228 which is for the
LexisNexis Small Business Advocacy Center (SBAC). Plaintiff
spoke with the LexisNexis customer service team, managers and
supervisors on numerous occasions who each assured Plaintiff
that Plaintiff’s information would be updated in the
database. Plaintiff was informed more than once that the
issue of Phoneternet’s data had been passed upon by
senior decision makers at LexisNexis and would be fixed
promptly. But the promised action never materialized.
alleges that, on November 16, 2017, it was informed that
Toyota had decided to not use Phoneternet because of the
issues with its business report. Plaintiff further alleges
that it sent LexisNexis a final letter on January 2, 2018, to
again request that LexisNexis correct the incorrect
information in its database regarding Phoneternet; that
LexisNexis notifed Plaintiff, on February 12, 2018, that it
had made one additional change to Phoneternet’s
business report but failed to explain why the other requested
changes had not been made; and that, to date, LexisNexis has
failed to correct these errors in its database. Plaintiff
alleges that, as a result of these errors and the failure to
correct errors brought to its attention, it lost the contract
with Toyota, and its future business prospects with other
business partners will be negatively effected if the errors
are not corrected.
alleges various Texas tort claims against Defendants for
negligence; business disparagement; negligent
misrepresentation; tortious interference with prospective
business relations; and negligent breach of special duty.
Plaintiff also asserts a claim for equitable relief based on
promissory estoppel and seeks injunctive relief. Plaintiff
alleges that RELX, as the parent company of LexisNexis, is
jointly reliable for LexisNexis’s conduct based on
alter ego and joint enterprise theories of liability. On
January 28, 2019, Defendants moved, pursuant to Federal Rule
of Civil Procedure 12(b)6), to dismiss all claims asserted
Rule 12(b)(6) Standard
defeat a motion to dismiss filed pursuant to Rule 12(b)(6) of
the Federal Rules of Civil Procedure, a plaintiff must plead
“enough facts to state a claim to relief that is
plausible on its face.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007); Reliable
Consultants, Inc. v. Earle, 517 F.3d 738, 742 (5th Cir.
2008); Guidry v. American Pub. Life Ins. Co., 512
F.3d 177, 180 (5th Cir. 2007). A claim meets the plausibility
test “when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged. 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.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(internal citations omitted). While a complaint need not
contain detailed factual allegations, it must set forth
“more than labels and conclusions, and a formulaic
recitation of the elements of a cause of action will not
do.” Twombly, 550 U.S. at 555 (citation
omitted). The “[f]actual allegations of [a complaint]
must be enough to raise a right to relief above the
speculative level . . . on the assumption that all the
allegations in the complaint are true (even if doubtful in
fact).” Id. (quotation marks, citations, and
footnote omitted). When the allegations of the pleading do
not allow the court to infer more than the mere possibility
of wrongdoing, they fall short of showing that the pleader is
entitled to relief. Iqbal, 556 U.S. at 679.
reviewing a Rule 12(b)(6) motion, the court must accept all
well-pleaded facts in the complaint as true and view them in
the light most favorable to the plaintiff. Sonnier v.
State Farm Mutual Auto. Ins. Co., 509 F.3d 673, 675 (5th
Cir. 2007); Martin K. Eby Constr. Co. v. Dallas Area
Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004);
Baker v. Putnal, 75 F.3d 190, 196 (5th Cir. 1996).
In ruling on such a motion, the court cannot look beyond the
pleadings. Id.; Spivey v. Robertson, 197
F.3d 772, 774 (5th Cir. 1999). The pleadings include the
complaint and any documents attached to it. Collins v.
Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th
Cir. 2000). Likewise, “‘[d]ocuments that a
defendant attaches to a motion to dismiss are considered part
of the pleadings if they are referred to in the
plaintiff’s complaint and are central to [the
plaintiff’s] claims.’” Id.
(quoting Venture Assocs. Corp. v. Zenith Data Sys.
Corp., 987 F.2d 429, 431 (7th Cir. 1993)). In this
regard, a document that is part of the record but not
referred to in a plaintiff’s complaint and not
attached to a motion to dismiss may not be considered by the
court in ruling on a 12(b)(6) motion. Gines v. D.R.
Horton, Inc., 699 F.3d 812, 820 & n.9 (5th Cir.
2012) (citation omitted). Further, it is well-established and
‘“clearly proper in deciding a 12(b)(6) motion
[that a court may] take judicial notice of matters of public
record.”’ Funk v. Stryker Corp., 631
F.3d 777, 783 (5th Cir. 2011) (quoting Norris v. Hearst
Trust, 500 F.3d 454, 461 n.9 (5th Cir. 2007) (citing
Cinel v. Connick, 15 F.3d 1338, 1343 n.6 (5th Cir.
ultimate question in a Rule 12(b)(6) motion is whether the
complaint states a valid claim when it is viewed in the light
most favorable to the plaintiff. Great Plains Trust Co.
v. Morgan Stanley Dean Witter, 313 F.3d 305, 312 (5th
Cir. 2002). While well-pleaded facts of a complaint are to be
accepted as true, legal conclusions are not “entitled
to the assumption of truth.” Iqbal, 556 U.S.
at 679 (citation omitted). Further, a court is not to strain
to find inferences favorable to the plaintiff and is not to
accept conclusory allegations, unwarranted deductions, or
legal conclusions. R2 Invs. LDC v. Phillips, 401
F.3d 638, 642 (5th Cir. 2005) (citations omitted). The court
does not evaluate the plaintiff’s likelihood of
success; instead, it only determines whether the plaintiff
has pleaded a legally cognizable claim. United States ex
rel. Riley v. St. Luke’s Episcopal Hosp., 355 F.3d
370, 376 (5th Cir. 2004). Stated another way, when a court
deals with a Rule 12(b)(6) motion, its task is to test the
sufficiency of the allegations contained in the pleadings to
determine whether they are adequate enough to state a claim
upon which relief can be granted. Mann v. Adams Realty
Co., 556 F.2d 288, 293 (5th Cir. 1977); Doe v.
Hillsboro Indep. Sch. Dist., 81 F.3d 1395, 1401 (5th
Cir. 1996), rev’d on other grounds, 113 F.3d
1412 (5th Cir. 1997) (en banc). Accordingly, denial of a
12(b)(6) motion has no bearing on whether a plaintiff
ultimately establishes the necessary proof to prevail on a
claim that withstands a 12(b)(6) challenge. Adams,
556 F.2d at 293.
RELX’s Motion to Dismiss
moves to dismiss all claims against it, contending that, as a
matter of law, it cannot be held liable for
LexisNexis’s alleged conduct under the alter ego or
joint enterprise theories alleged by Plaintiff. RELX contends
that, under the Texas Business Organizations Code, “a
defendant who owns a corporation is not liable for ‘any
contractual obligation of the corporation or any matter
relating to or arising from the obligation on the basis that
. . . [the defendant] . . . is or was the alter ego of the
corporation.” RELX Mot. 3-4 (quoting Tex. Bus. Orgs.
Code Ann. § 21.223(a)(2)). RELX asserts that, “if
an obligation falls within the purview of Section 21.223(a),
then the statute is the only mechanism for imputing liability
onto a corporation’s owner, and all other theories are
preempted” because section 21.224 provides that section
21.223 “is exclusive and preempts any other liability
imposed for that obligation under common law or
otherwise.” RELX Mot. 3.
therefore, argues that Plaintiff’s claims against it,
that are based on alter ego and joint enterprise theories,
are barred by statute. In addition, RELX contends that the
“joint enterprise” theory of liability “has
been rejected by the Texas Supreme Court and the Texas
Legislature.” Id. at 5 (citing SSP
Partners v. Gladstrong Inv. Corp., 275 S.W.3d 444, 456
(Tex. 2008), for the proposition that “‘[t]he
single business enterprise liability theory is fundamentally
inconsistent with the approach taken by the Legislature in
Section 21.223.”). RELX also contends that
Plaintiff’s allegations are insufficient to bring its
claims within the statutory exception of actual fraud, which
requires a plaintiff to plead that “the defendant used
the corporation for the purpose of perpetrating, and did
perpetrate, an actual fraud on the plaintiff primarily for
the defendant’s direct personal benefit.” RELX
Mot. 4 (citing Tex. Bus. Orgs. Code Ann. § 21.223(b);
Shandong Yinguang Chem. Indus. Joint Stock Co., Ltd. v.
Potter, 607 F.3d 1029, 1035 (5th Cir. 2010); and
Saeed v. Bennett-Fouch Assoc., LLC, No.
3:11-CV-1134-F, 2012 WL 13026741, at *4 (N.D. Tex. Aug. 28,
concedes in response to RELX’s Motion to Dismiss that
its claims, to the extent based on an alter ego theory, are
barred by statute and acknowledges that the fraud exception
does not apply because it has not pleaded a fraud-based
theory of piercing the corporate veil. Phoneternet,
nevertheless, maintains that its joint enterprise theory of
liability survives because the statute does not expressly bar
claims based on this theory, and the Texas Supreme Court in
SSP Partners concluded that the “single
business enterprise liability theory” was inconsistent
with the statute, not the joint enterprise theory relied on
disagrees with the latter contention and argues that the
statute applies “‘whatever label might be
given’ to a plaintiff’s attempt to treat
corporate entities as a single entity.” RELX Reply 2
(quoting Southern Union Co. v. City of Edinburg, 129
S.W.3d 74, 87 (Tex. 2003), for the proposition that
“the predecessor to Section 21.224 controls, and is the
‘exclusive means for imposing liability on a
corporation for the obligations of another corporation in
which it holds shares’”). RELX asserts that the
court in Biliouris v. Sundance Resources,
Incorporated, No. 3:07-CV-1591-N, 2010 WL 11515566 (N.D.
Tex. Aug. 11, 2010), reached the same result and concluded
that it could not “impose joint and several liability
based on the joint enterprise theory without a finding of
actual fraud, as required by section 21.223(b).” RELX,
thus, contends that the joint enterprise theory of liability
under Texas common law is likewise barred by sections 21.223
and 21.224 of the Texas Business Organizations Code, and any
claim by Plaintiff against it on this theory or an alter ego
theory should be dismissed with prejudice. The court agrees.
law on this issue is quite clear. Accordingly, based on the
authority in RELX’s motion and reply brief, the court
determines that Plaintiff’s claims against RELX that
are premised on alter ego and joint enterprise theories of
liability fail as a matter of law, as they are barred by the
Texas Business Organizations Code and Texas case law
interpreting the statute. Moreover, as noted, Phoneternet
concedes that its alter ego theory is barred by the statute,
and it acknowledges that the fraud exception is inapplicable.
Accordingly, the court will grant RELX’s Motion to
Dismiss and dismiss will prejudice all claims by Phoneternet
against RELX. Thus, in addressing Defendants’ Joint
Motion to Dismiss, the court will only consider whether,
under Rule 12(b)(6), Plaintiff has stated any valid claims
against LexisNexis upon which relief can be granted.
Defendants’ Joint Motion to Dismiss
elements of a negligence claim under Texas common law are the
existence of a duty; a breach of that duty; and damages
proximately caused by that breach. Kroger Co. v.
Elwood, 197 S.W.3d 793, 794 (Tex. 2006) (citations
omitted). The threshold issue in any negligence case is
whether the defendant owed a duty to the plaintiff.
Pagayon v. Exxon Mobil Corp., 536 S.W.3d 499, 503
(Tex. 2017) (footnote and citations omitted).
Whether a duty exists is “a question of law for the
court to decide from the facts surrounding the occurrence in
question.” Id. (footnote and citations
Complaint includes the following list of acts or omissions
that form the bases for its negligence claim:
a. Providing false, misleading, and out-of-date information
about Plaintiff to third parties, including Toyota and
b. Failing to maintain up-to-date and correct data to be sold
to third parties, including Toyota and Plaintiff;
c. Selling information and data about Plaintiff without
conducting due diligence or making updates and corrections;
d. Failing to promptly respond to Plaintiff’s initial
and subsequent “fix requests” for correcting
errors in the data that rendered its use false and
e. Intentionally delaying the correction of the false
f. Failing to timely correct false data and information;
g. Failing to inform Plaintiff of the status of the
corrections to the data;
h. Failing and knowingly refusing to fix or correct errors in
the data prove[d] to be incorrect by the Plaintiff;
i. Failing to maintain Plaintiff’s public records which
[LexisNexis] claims to possess for third parties correctly;
j. Failing to notify Plaintiff of reasons why [LexisNexis]
failed to fix its errors;
k. Failing to notify Toyota that it had been informed and
knew that the report it furnished to Toyota ...