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Time Backgroud Checks Occur
Berrellez v. Pontoon Sols., Inc.
Central District of California, United States District Court
J. ROBERT BERRELLEZ
PONTOON SOLUTIONS, INC. ET AL.
On March 13, 2015, plaintiff J. Robert Berrellez filed this putative class action against defendants Pontoon Solutions, Inc. (“Pontoon”), Adecco USA, Inc. (“Adecco”), Rose International, Inc. (“Rose”), Bank of America, N.A, and Does 1–50 inclusive. (“BANA”). Dkt. 1. Plaintiff alleges that defendants violated the Fair Credit Reporting Act (“FCRA”) by: (1) obtaining plaintiff’s consumer report without providing a FCRA-compliant disclosure form; and (2) obtaining plaintiff’s investigative consumer report without providing him a summary of his rights under the FCRA. Id.
On May 8, 2015, defendant BANA filed a motion to dismiss plaintiff’s complaint, dkt. 27, which was joined by defendants Pontoon, Adecco, and Rose on the same date, dkts. 28, 29. On May 18, 2015, plaintiff filed his first amended complaint against Pontoon, Adecco, Rose, BANA, and Does 1–10, inclusive. Dkt. 32 (“FAC”). In the FAC, plaintiff raises the same two FCRA claims and he alleges that defendants failed to make disclosures required by the Investigative Consumer Reporting Agencies Act (“ICRAA”), Cal. Civ. Code § 1786 et seq., and the Consumer Credit Reporting Agencies Act (“CCRAA”), Cal. Civ. Code § 1785 et seq. In light of the filing of the FAC, on May 20, 2015, the Court ruled that defendants’ pending motions to dismiss were moot. Dkt. 34.
On June 7, 2016, defendants filed motions for summary judgment. Dkts. 52, 53, 54. Plaintiff filed his opposition to defendants’ motions on August 22, 2016. Dkt 61. (“Opp’n”). Defendants filed their replies on August 29, 2016. Dkts. 69, 72, 74. Having carefully considered the parties’ arguments, the Court finds and concludes as follows.
A. Relationship between the Parties
The following facts are not in dispute.
In June 2009, BANA entered into a contingent labor management agreement (“CLMA”) with Adecco. Dkt. 54-1 at 2 (“Pontoon/Adecco MSJ). Under the CLMA, Adecco acted as a Master Service Provider (“MSP”) of contract labor for BANA. Id. Adecco also contracted with suppliers of contract workers, including Rose, to staff BANA projects. Id. In January 2011, Adecco spun off its MSP business under the name Adecco Solutions, Inc. Id. Beginning on March 31, 2011, Adecco Solutions was the MSP under the CLMA. Id. On December 21, 2012, Adecco Solutions changed its name to Pontoon Solutions. Id.
On June 26, 2016, Rose made an offer of employment to plaintiff with the expectation that he would be assigned, through Pontoon/Adecco, to work on a BANA assignment. Dkt 62 at 3.
B. Forms and Background Checks
The following facts are not in dispute.
After receiving an offer of employment from Rose, plaintiff received a Background Authorization and Release form (“Release”) in a packet of pre-employment paperwork that was sent to him by Rose. Dkt. 62 at 3. See dkt. 52-5, Fulwilder Decl. Ex. 3 (“Release”). Plaintiff never signed the Release. Dkt. 63 at 7. Plaintiff does not contend that any defendant procured a consumer report of any kind on the basis of the Release.
Plaintiff was also directed to a web-based tool called “Apply Direct,” operated by a First Advantage, that prompted plaintiff to fill out two other forms: a “Consent Form” and an “Authorization Form for Consumer Reports.” See dkt. 52-3, Prebil Decl. Ex 5 (“Consent Form”), Ex. 6 (“Authorization Form”). BANA required plaintiff to complete these forms as part of BANA’s criminal background check process. See dkt. 52-1 at 5 (“BANA MSJ”). The Consent Form includes, inter alia, a statement that federal law requires BANA to ensure that individuals placed on assignment with BANA do not have certain disqualifying criminal convictions; several statements of consent, including consent to be fingerprinted, consent to the preparation of an investigative consumer report, and consent to BANA’s request of a consumer report about prior employment; and releases of liability for communications with third parties to verify the applicant’s information. Prebil Decl. Ex 5; see also dkt. 62 at 5. Plaintiff received and electronically signed the Consent Form on June 22, 2012. Dkt. 62 at 8. The Authorization Form authorizes the disclosure of information for the purpose of procuring consumer reports or investigative consumer reports. Prebil Decl. Ex 6. Plaintiff signed the Authorization Form on June 22, 2012. Dkt. 62 at 11.
After plaintiff completed and signed the Consent and Authorization Forms, First Advantage arranged for plaintiff to be fingerprinted and First Advantage conducted criminal background checks of plaintiff against several federal databases. BANA MSJ at 6; dkt 62 at 13–14. These background checks did not involve plaintiff’s credit standing, worthiness, or capacity, and did not involve personal interviews. BANA MSJ at 6; dkt 62 at 15*
* BANA and plaintiff dispute whether BANA, in procuring criminal background checks, procured a “consumer report” under FCRA. BANA argues that its criminal background checks are not covered by FCRA’s definition of a “consumer report” pursuant to 15 U.S.C. §§ 1681a(d)(2) and (y)(1). BANA MSJ at 15–16. Therefore, BANA argues, it is not subject to FCRA’s disclosure requirements. Id. Section 1681a(d)(2) excludes from FCRA’s definition of “consumer report” those communications that satisfy the elements of § 1681a(y)(1). 15 U.S.C. § 1681a(d)(2). Section 1681a(y)(1) excludes reports that are: (A) “made to an employer in connection with an investigation of-- (i) suspected misconduct relating to employment; or (ii) compliance with Federal, State, or local laws and regulations, the rules of a self regulatory organization, or any preexisting written policies of the employer;” (B) “not made for the purpose of investigating a consumer’s credit worthiness, credit standing, or credit capacity;” and (C) not provided to any person except the employer or an agent of the employer, government agencies or officials, or a regulatory organization. 15 U.S.C. § 1681a(y)(1). BANA contends that its background checks on plaintiff were “‘in connection’ with ‘an investigation’ into ‘compliance’ with federal law and the Bank’s own written policies.” Id. at 16. Plaintiff disagrees. See Opp’n at 17–18. In a prior lawsuit, BANA made substantially the same argument and the court concluded that similar reports procured by BANA in connection with its background screenings were “consumer reports” and subject to FCRA’s disclosure requirements. Newton v. Bank of Am., No. 2:14-cv-03714-CBM-MRW, 2015 WL 10435907, at *5 (C.D. Cal. May 12, 2015) appeal docketed, No. 15-55781 (9th Cir. May 22, 2015).
The parties dispute whether Pontoon/Adecco and Rose played any role in causing the criminal background check to be procured. Pontoon/Adecco contends that it did not provide a FCRA disclosure or authorization to plaintiff and that it did not procure a consumer report with respect to plaintiff. Pontoon/Adecco MSJ at 3. Plaintiff disputes this assertion, alleging that a Pontoon/Adecco employee requested the criminal background checks facilitated by First Advantage. Dkt. 63 at 5. Rose avers that it did not obtain a background check of any kind on plaintiff. See dkt 53-1 at 4–5 (“Rose MSJ”). Plaintiff provides contradictory responses to this assertion. In his statement of genuine disputes of material fact in opposition to BANA’s statement of undisputed material facts, plaintiff does not dispute BANA’s assertion that “[a]t no point before, during, or after Plaintiff’s employment with Rose did Rose conduct or obtain a background check of any kind on Plaintiff.”2 Dkt. 62 at 4. However, in contravention of this undisputed statement, plaintiff states, in opposition to Rose’s statement of undisputed material facts, that he disputes Rose’s assertion that “[p]rior to, during, or after Plaintiff’s employment with Rose, Rose did not obtain a background check of any kind of plaintiff.” Dkt. 64 at 8. Rose sent an email to plaintiff that contained a link to the Apply Direct online tool operated by First Advantage, which prompted plaintiff to complete the Consent and Authorization forms. Id.; dkt. 75 at 2
** Plaintiff captioned both dkt. 62 and dkt. 63 as: “Plaintiff’s Statement of Genuine Disputes of Material Fact in Opposition to Defendant Pontoon Solutions, Inc. and Adecco USA, Inc.’s Separate Statement of Disputed Material Facts and Supporting Evdence in Support of their Motion for Summary Judgment.” However, it appears that dkt. 62 responds to BANA and dkt. 63 responds to Pontoon/Adecco.
B. Plaintiff’s Claims
In the FAC, plaintiff does not raise any claim against defendants arising from the Consent Form or the Authorization Form. All of plaintiff’s claims are based on the language contained in the Release. On the basis of the Release, plaintiff raises claims under FCRA, ICRAA, and CCRAA. First, plaintiff alleges that defendants procured or caused to be procured for plaintiff and class members consumer reports that lacked a written disclosure as required by Section 1681b(b)(2)(A) of FCRA. FAC 41. Section 1681b(b)(2)(A) provides in relevant part:
[A] person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless- - (i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and (ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.
15 U.S.C. § 1681b(b)(2)(A) (emphasis added). According to plaintiff, the Release included a disclosure that a consumer report may be obtained for employment purposes, but also included “other extraneous information.” FAC 35, 40. Plaintiff therefore contends that the Release violated FCRA’s disclosure provision because the disclosure was not provided on its own and was not “clear and conspicuous.” Id. 40. Plaintiff avers that defendants maintained a pattern and practice of failing to provide written disclosures in compliance with FCRA and that they willfully violated Section 1681b(b)(2)(A). Id. 41–42.
Second, plaintiff alleges that defendants procured or caused to be procured investigative consumer reports for plaintiff and class members in violation of Section 1681d(a) of FCRA because defendants failed to inform plaintiff and class members of their right to request a written summary of their rights. Id. 43. Section 1681d(a)(1)(B) provides in relevant part:
A person may not procure or cause to be prepared an investigative consumer report on any consumer unless-- (1) it is clearly and accurately disclosed to the consumer that an investigative consumer report including information as to his character, general reputation, personal characteristics, and mode of living, whichever are applicable, may be made, and such disclosure (A) is made in a writing mailed, or otherwise delivered, to the consumer, not later than three days after the date on which the report was first requested, and (B) includes a statement informing the consumer of his right to request the additional disclosures provided for under subsection (b) of this section and the written summary of the rights of the consumer prepared pursuant to section 1681g(c) of this title[.] 15 U.S.C. § 1681d(a)(1) (emphases added).
In addition to his claims under FCRA, plaintiff raises claims under California law. Plaintiff alleges that defendants violated ICRAA in two ways: (1) the Release included a disclosure that a consumer report may be obtained for employment purposes, but also included “other extraneous information,” id. 57; and (2) the Release failed to include required information (e.g., the name and address of the investigative consumer reporting agency conducting the investigation), id. 60. ICRAA provides in relevant part:
The person procuring or causing the report to be made provides a clear and conspicuous disclosure in writing to the consumer at any time before the report is procured or caused to be made in a document that consists solely of the disclosure, that: (i) An investigative consumer report may be obtained. (ii) The permissible purpose of the report is identified. (iii) The disclosure may include information on the consumer's character, general reputation, personal characteristics, and mode of living. (iv) Identifies the name, address, and telephone number of the investigative consumer reporting agency conducting the investigation. (v) Notifies the consumer in writing of the nature and scope of the investigation requested, including a summary of the provisions of Section 1786.22.
Cal. Civ. Code § 1786.16(B). Lastly, plaintiff alleges that defendants violated CCRAA because the Release did not identify a specific statutory basis for use of any credit report ultimately produced as a result of the Release. CCRAA provides in relevant part: Prior to requesting a consumer credit report for employment purposes, the user of the report shall provide written notice to the person involved. The notice shall inform the person that a report will be used, and shall identify the specific basis under subdivision (a) of Section 1024.5 of the Labor Code for use of the report
Cal. Civ. Code § 1785.20.5(a). As a result of the alleged violations of FCRA, ICRAA, and CCRAA, plaintiff contends that he and class members have been injured because their privacy and statutory rights were invaded. FAC 45, 63, 78. Specifically, plaintiff alleges that he had a infraction record from 1999 that he considers private and that he does not want this fact to be disclosed to the public. Dkt. 68, Berrellez Decl. 3.
D. Defendants’ Arguments
Each defendant argues that plaintiff does not have Article III standing to raise his claims because plaintiff has not alleged an injury in fact––a concrete and particularized harm. See BANA MSJ at 9–11, Rose MSJ 5–7; Pontoon/Adecco MSJ at 4–7. Each defendant also argues that it did not violate FCRA, ICRAA, or CCRAA because (for reasons specific to each defendant) it did not procure or cause to be procured a credit or background report on plaintiff for employment purposes. See BANA MSJ at 11–21, Rose MSJ 7–8; Pontoon/Adecco MSJ at 7–8. BANA argues that all of plaintiff’s claims are barred by the applicable statutes of limitations. BANA MSJ at 23–25. Rose contends that it should not be held liable for the acts of the other defendants under a theory of joint employment or agency because, according to Rose, it is a separate and independent business entity. Rose MSJ 9–10. Lastly, Pontoon/Adecco argues that Adecco may not be held liable because it was not a party to the CLMA during plaintiff’s employment. Pontoon/Adecco MSJ at 8–9.
III. LEGAL STANDARD
Summary judgment is appropriate where “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party bears the initial burden of identifying relevant portions of the record that demonstrate the absence of a fact or facts necessary for one or more essential elements of each claim upon which the moving party seeks judgment. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party meets its initial burden, the opposing party must then set out specific facts showing a genuine issue for trial in order to defeat the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); see also Fed. R. Civ. P. 56(c), (e). The nonmoving party must not simply rely on the pleadings and must do more than make “conclusory allegations [in] an affidavit.” Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888 (1990); see also Celotex, 477 U.S. at 324. Summary judgment must be granted for the moving party if the nonmoving party “fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Id. at 322; see also Abromson v. Am. Pac. Corp., 114 F.3d 898, 902 (9th Cir. 1997). In light of the facts presented by the nonmoving party, along with any undisputed facts, the Court must decide whether the moving party is entitled to judgment as a matter of law. See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 631 & n.3 (9th Cir. 1987). When deciding a motion for summary judgment, “the inferences to be drawn from the underlying facts . . . must be viewed in the light most favorable to the party opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citation omitted); Valley Nat’l Bank of Ariz. v. A.E. Rouse & Co., 121 F.3d 1332, 1335 (9th Cir. 1997). Summary judgment for the moving party is proper when a rational trier of fact would not be able to find for the nonmoving party on the claims at issue. See Matsushita, 475 U.S. at 587.
A. Plaintiff Lacks Standing to Raise his Claims
“In essence the question of standing is whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues.” Warth v. Seldin, 422 U.S. 490, 498 (1975). From a constitutional standpoint, standing addresses the question of whether the plaintiff has made out a case or controversy between himself and the defendant. Id. A plaintiff must demonstrate three elements that constitute the “irreducible minimum” of Article III standing: First, the plaintiff must have suffered an “injury in fact”—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of—the injury has to be fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992) (citations and quotation marks omitted). Plaintiff contends in his complaint that, as a result of the alleged deficiencies in the Release, he and class members were injured because their privacy and statutory rights were invaded. The Court finds that plaintiff has not adequately established standing because he has not demonstrated that defendants’ conduct––as alleged in the complaint––caused him harm. Plaintiff alleges that defendants violated FCRA, CCRAA, and ICRAA on the basis of language in the Release. However, based on undisputed material facts, plaintiff never signed the Release and defendants did not take any action as a result of the Release. Therefore, defendants’ alleged failures with respect the Release could not have, and did not, cause plaintiff’s alleged injury. Absent Article III standing, the Court may not exercise jurisdiction over plaintiff’s claims, including his state law claims. See Lee v. Am. Nat. Ins. Co., 260 F.3d 997, 1001–02 (9th Cir. 2001) (“Article III of the Constitution . . . limits the jurisdiction of the federal courts to ‘cases and controversies,’ a restriction that has been held to require a plaintiff to show, inter alia, that he has actually been injured by the defendant’s challenged conduct. So a plaintiff whose cause of action is perfectly viable in state court under state law may nonetheless be foreclosed from litigating the same cause of action in federal court, if he cannot demonstrate the requisite injury.”).
B. Plaintiffs Claims are Time-Barred by the Applicable Statutes of Limitations
Even if plaintiff had standing, his claims are time-barred under the applicable twoyear statutes of limitations. Cf. Orr v. Peterson, No. 3:14-cv-00833-AC, 2015 WL 2239590, at *5 (D. Or. May 12, 2015) (concluding that plaintiff lacked standing to pursue his claim and finding, in the alternative, that plaintiff failed to support the claim with any evidence). FCRA establishes a limitations period of either: “(1) 2 years after the date of discovery by the plaintiff of the violation that is the basis for such liability; or (2) 5 years after the date on which the violation that is the basis for such liability occurs.” 15 U.S.C. § 1681p. The CCRAA provides, in relevant part, that “[a]n action to enforce any liability created under this chapter may be brought in any appropriate court of competent jurisdiction within two years from the date the plaintiff knew of, or should have known of, the violation of this title, but not more than seven years from the earliest date on which liability could have arisen.” Cal. Civ. Code § 1785.33. An action to enforce liability created under ICRAA “may be brought in any appropriate court of competent jurisdiction within two years from the date of discovery.” Cal. Civ. Code § 1786.52. BANA argues that plaintiff discovered or should have discovered the alleged violations at the time that plaintiff signed the Consent and Authorization Forms in June 2012. BANA MSJ 23–24. Furthermore, BANA contends that plaintiff also should have known that BANA obtained a background check on him when he started his assignment at BANA, because the Consent form stated that federal law required BANA to ensure that individuals placed on assignment do not have an disqualifying convictions. Id. At 24. Plaintiff argues that he is not time barred for two reasons. First, plaintiff argues that he did not discover the violation when he signed the Consent and Authorization Forms because a violation of FCRA occurs only after a consumer report is obtained. Opp’n at 23. Therefore, according to plaintiff, at the time he signed the forms he was not aware that a violation occurred––i.e., that the forms were defective and a report was obtained––because he was not mailed a copy of the report that was generated. Id. The Court finds that plaintiff’s action is barred by the applicable statutes of limitations. These statutes began to run at whichever date is earlier: (1) June 22, 2012, when plaintiff signed the Consent and Authorization Forms, or (2) the date on which plaintiff received the Release in the mail, which preceded the start of plaintiff’s assignment with BANA (though neither party has identified the date of receipt). Certainly, at the very latest, the statutes of limitations began to run when plaintiff began his assignment with BANA on July 16, 2012. In any of those three cases, plaintiff’s claims are time-barred. “[T]he law effectively presumes that everyone who signs a contract has read it thoroughly, whether or not that is true.” Roldan v. Callahan & Blaine, 219 Cal. App. 4th 87, 93 (2013)); see also Restatement (Second) of Contracts § 157 cmt. b (2016) (“Generally, one who assents to a writing is presumed to know its contents and cannot escape being bound by its terms merely by contending that he did not read them; his assent is deemed to cover unknown as well as known terms.”). The Content Form provides, inter alia: Bank of America is required to confirm that the employees of vendors placed on assignment at the Bank have no disqualifying criminal convictions in their backgrounds. To fulfill this requirement, the Bank has established a background screening procedure for individuals who will be assigned to work at the Bank. As a part of this procedure, you have been asked to disclose past criminal convictions. . . . Accordingly, I agree to be fingerprinted if requested by Bank of America or required by applicable law in connection with beginning a placement on assignment providing services to the Bank or at any time during a placement on assignment providing services to the Bank. . . . I hereby give Bank of America permission to request the preparation of an investigative consumer report that may include information relating to my criminal record and my character in connection with my placement on assignment or my eligibility to continue an ongoing assignment. Prebil Decl. Ex 5. The Authorization Form provides, inter alia: In connection with your application for employment (including contract for services), understand that consumer reports or investigative consumer reports which may contain public record information may be requested or made on you including consumer credit, criminal records, driving record, education, prior employment verification, workers compensation claims and others. Further, understand that information from various Federal, State, local and other agencies which contain your past activities will be requested. . . . By signing below, you hereby authorize without reservation, any party or agency contacted by this employer to furnish the above mentioned information. Your further authorize ongoing procurement of the above mentioned reports at any time during your employment (or contract). Prebil Decl. Ex 6. Because plaintiff signed both the Consent and the Authorization Forms, the Court presumes that he read those documents and was aware that a background check would be procured before he began his assignment with BANA. Therefore, plaintiff was on notice of any defects found in the Consent and the Authorization Forms in June 2012. Furthermore, the Court agrees with BANA that by the time plaintiff began his assignment with BANA, plaintiff had constructive notice that BANA had procured a background check. The Court is particularly swayed by the fact that plaintiff does not dispute that First Advantage facilitated the submission of plaintiff’s fingerprints to the Federal Bureau of Investigation. Dkt. 62 at 12. Even construing the facts in a light most favorable to plaintiff, a rational trier of fact would not be able to find that plaintiff––having had his fingerprints taken––was unaware that BANA had procured a background check. Second, plaintiff avers that, pursuant to American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), the class claims in this case were tolled by a previous lawsuit against BANA, Newton v. Bank of America, 2:14-cv-03714-CBM-MRW. Opp’n at 23–24. BANA argues that Newton did not toll plaintiff’s class claims because the proposed class in Newton excluded plaintiff. BANA Reply at 17. In the original complaint in Newton, the putative class was defined as: “All persons who executed online authorization forms permitting Defendant to obtain a consumer report as part of an employment application at any time on or after May 14, 2009 (the ‘Class’).” Newton, Complaint ¶ 8 (dkt 1). Plaintiff would qualify as a member of that class. However, the Newton plaintiff amended her complaint and redefined the class. The Newton putative class was redefined as: “All prospective employees or employees of Defendant residing in the United States who were the subject of a consumer report which was procured by Defendant within the period by FCRA, 15 U.S.C. § 1681p, prior to the filing of this action.” Newton, First Amended Complaint ¶ 47 (dkt 20) (emphasis added). Thus, whether plaintiff is a member of the Newton putative class depends on whether BANA was plaintiff’s employer. Plaintiff alleges that he was jointly employed by all defendants, FAC ¶ 5, while BANA contends it was not plaintiff’s employer. BANA Reply at 17. Because FCRA does not provide a definition of “employer,” the Court looks to the definition provided by the Fair Labor Standards Act (“FLSA”). See Erlenbaugh v. United States, 409 U.S. 239, 243–44 (1972) (“The rule of in pari materia . . . is a reflection of practical experience in the interpretation of statutes: a legislative body generally uses a particular word with a consistent meaning in a given context. Thus, for example, a later act can . . . be regarded as a legislative interpretation of (an) earlier act . . . in the sense that it aids in ascertaining the meaning of the words as used in their contemporary setting, and is therefore entitled to great weight in resolving any ambiguities and doubts.” (quotation marks omitted)). The FLSA defines “employ” as “to suffer or permit to work.” 29 U.S.C. § 203(g). It defines “employer” as “any person acting directly or indirectly in the interest of an employer in relation to an employee.” Id. § 203(d). The determination of whether an employer-employee relationship exists depends on the “economic reality” of the situation. Torres–Lopez v. May, 111 F.3d 633, 639 (9th Cir.1997) (quoting Bonnette v. Cal. Health & Welf. Agency, 704 F.2d 1465, 1470 (9th Cir.1983)). While this determination does not depend on “isolated factors,” Boucher v. Shaw, 572 F.3d 1087, 1090–91 (9th Cir. 2009) (quoting Rutherford Food Corp. v. McComb, 331 U.S. 722, 730 (1947)), courts in this Circuit frequently rely on factors set forth in Bonnette, 704 F.2d at 1470, and Torres–Lopez, 111 F.3d at 640, to guide their analysis. See, e.g., Moreau v. Air France, 356 F.3d 942, 946–47 (9th Cir. 2003); see also 29 CFR § 791.2 (stating that the joint employer determination “depends on all the facts in a particular case”). The Bonnette factors assess whether the entity asserted to be a joint employer “(1) had the power to hire and fire the employees, (2) supervised and controlled employee work schedules or conditions of employment, (3) determined the rate and method of payment, and (4) maintained employment records.” 704 F.2d at 1470; see also In re Enterprise Rent–A–Car Wage & Hour Employment Practices Litig., 683 F.3d 462, 469 (3d Cir. 2012) (applying a four-factor test similar to the Bonnette factors).
The Torres–Lopez factors supplement, but do not replace, the Bonnette factors. They assess: (1) whether the work was a specialty job on the production line, (2) whether responsibility under the contracts between a labor contractor and an employer pass from one labor contractor to another without material changes, (3) whether the premises and equipment of the employer are used for the work, (4) whether the employees had a business organization that could or did shift as a unit from one [worksite] to another, (5) whether the work was piecework and not work that required initiative, judgment or foresight, (6) whether the employee had an opportunity for profit or loss depending upon [the alleged employee’s] managerial skill, (7) whether there was “permanence [in] the working relationship, and (8) whether the service rendered is an integral part of the alleged employer’s business. 111 F.3d at 640 (internal quotations and citations omitted). Plaintiff alleges no facts that demonstrate that BANA was plaintiff’s employer under the Bonnette or Torres-Lopez tests. Moreover, plaintiff does not dispute BANA’s factual statements tending to show BANA was not plaintiff’s employer. For example, plaintiff does not dispute that “[t]he contract personnel who worked on Bank assignments pursuant to this arrangement were directly employed by Rose and not the Bank or Adecco/Pontoon.” Dkt. 62 at 3 (emphasis added). Plaintiff does not dispute Rose’s statement that “Plaintiff was employed by Rose from July 16, 2012 to January 8, 2013. Plaintiff was assigned to work on Bank assignment during his entire period of employment with Rose.” Dkt 64 at 8. Lastly, plaintiff does not dispute that “there is no common ownership or financial control between Rose and the Bank or Rose and Adecco/Pontoon,” or that “there is no interrelation of operations between Rose, the Bank, and Adecco/Pontoon.” Id. at 7. The Court therefore concludes that plaintiff was not an employee of BANA. As a result, plaintiff was not a member of the putative class in Newton and he is not entitled to any tolling of the statutes of limitations under American Pipe
The Court thus concludes that plaintiff’s claims are time-barred by the applicable two-year statutes of limitations. In light of its conclusion that plaintiff lacks standing, and is in any event barred by the applicable statutes of limitations, the Court does not reach defendants’ other arguments made in support of defendants’ motion for summary judgment.
In accordance with the foregoing, defendants’ motions for summary judgment are hereby GRANTED.
IT IS SO ORDERED.
Background Checks Time Limit
MARIO RUIZ V. SHAMROCK FOODS COMPANY
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
MARIO RUIZ; RAUL GUERRERO; ROBERT TORRES, et al.,
SHAMROCK FOODS COMPANY, an Arizona corporation,
Dilligent Employees Would Find
Drew v. Equifax Information Services, LLC
Date published: Aug 7, 2012
CERTIFIED FOR PUBLICATION:
July 23th, 2020
Eric Robert DREW,
EQUIFAX INFORMATION SERVICES, LLC;
Experian Information Solutions, Inc.;
Bank of America Home Loans;
Fleet Credit Card Services;
Bank One Cardmember Services;
First USA Bank, N.A.;
AT & T Universal Card Services;
Citibank (South Dakota) N.A.,
and Chase Bank USA;
FIA Card Services, N.A.,
690 F.3d 1100 (9th Cir. 2012)
12 Cal. Daily Op. Serv. 8943
2012 Daily Journal D.A.R. 10915
John B. Keating, Woodside, CA, for the plaintiff-appellant. George G. Weickhardt, Susan H. Handelman, Ropers Majeski Kohn & Bentley, San Francisco, CA, for defendant-appellee Chase Bank USA, N.A.
John B. Keating, Woodside, CA, for the plaintiff-appellant. George G. Weickhardt, Susan H. Handelman, Ropers Majeski Kohn & Bentley, San Francisco, CA, for defendant-appellee Chase Bank USA, N.A.
Margaret M. Grignon, Felicia Y. Yu, Zareh Agob Jaltorossian, Kasey J. Curtis, Reed Smith LLP, Los Angeles, CA, for defendant-appellee FIA Card Services.
Appeal from the United States District Court for the Northern District of California, Susan Illston, District Judge, Presiding. D.C. No. 3:07–cv–00726–SI.
Before: M. MARGARET McKEOWN and N. RANDY SMITH, Circuit Judges, and ROGER T. BENITEZ, District Judge.
The Honorable Roger T. Benitez, United States District Judge for the Southern District of California, sitting by designation.
McKEOWN, Circuit Judge:
This case lends credence to the old adage that bad things come in threes. Eric Drew is a cancer survivor, who required experimental leukemia treatment. During his treatment, Drew's identity was stolen by a hospital worker. Finally, when Drew attempted to remedy the identity theft, the banks and credit rating agencies were allegedly uncooperative, and continued to report the fraudulently opened accounts, and in the case of one bank, the thief's address was tagged as Drew's.
The district court granted summary judgment in favor of Chase Bank on Drew's false-reporting claims under the Fair Credit Reporting Act, 15 U.S.C. § 1681s–2(b) (FCRA). Because issues of material fact remain as to Chase's alleged violations of the FCRA, we reverse the judgment as to these claims. We also reverse the district court's dismissal of similar claims against FIA Card Services (“FIA”) on statute of limitations grounds. We affirm the denial of Drew's motion to amend to reinstate his claims under California law.
A portion of the record is under seal. This Opinion does not reference any of the sealed materials.
Nearly a decade ago, in September 2003, Eric Drew began receiving experimental treatment for leukemia in Seattle. After this treatment was unsuccessful, Drew was hospitalized in Minnesota from July 2004 to January 2005 for an experimental program that proved effective. Soon after starting his treatment in Seattle, Drew received letters and calls from banks and other financial institutions, which initially thanked him for recent credit application requests, but soon began demanding payments on Seattle-based accounts he had never opened. Drew filed a police report alleging identity theft with the police department in Santa Clara, California, where he resided. The identity thief, who was a phlebotomist at a Seattle hospital, was arrested and convicted a few months later, after news media publicized Drew's predicament.
Ordinarily we would not need to recount each date with such precision. We do so here because the timing matters both to the claims and FIA's statute of limitations defense.
Unfortunately for Drew, his saga was not at an end. Drew had to close bank accounts, block credit reporting, and get Automated Consumer Dispute Verification forms (ACDVs) issued to various banks that furnished information regarding the fraudulent accounts the thief had opened. Drew's claims relate to only two actors in this credit dispute: Chase Bank and FIA Card Services.
I. Interactions With Chase
Along with other banks, Chase sent a letter to Drew at his California address thanking him for applying for the credit card, and issued him a card on November 12, 2003. Drew called Chase to dispute the account in late November 2003. A fraud department employee informed Drew that the account had not yet been opened or reported, and that Chase would contact other issuing banks and credit reporting agencies (“CRAs”) so that Drew would not be associated with the fraudulent Seattle address and the fraudulent accounts. Chase immediately closed the account and reported it to the credit agencies as lost or stolen. It is undisputed that as a result, no charges could be added to the account. Chase also faxed a copy of the fraudulent application to the police.
In the meantime, Drew reviewed his credit report in mid-January 2004. He discovered multiple fraudulent accounts had been opened in his name. On January 20, 2004, he contacted various CRAs to report the fraudulent accounts. The next day, TransUnion, one of the credit agencies, deleted various accounts, including the Chase account, from its credit file. TransUnion also forwarded a block notice communication to the various banks, including Bank One, Chase and Citibank, advising them that the accounts were presumed to be fraudulent and that the banks must contact the consumer and take measures to block any future reporting of the accounts. Chase did not take any action in response to the block notice from TransUnion. The remaining banks blocked reporting of the account.
In early 2005, Drew returned to California, ordered and obtained an Old Republic Credit Services credit report (“Old Republic Report”), and discovered that Chase had continued to report the account as lost or stolen in Fall 2004. He again complainedto the CRAs. The second time was the charm: Chase deleted the account in February 2005, and sent a notice to the CRAs to delete the account. However, in October 2005, Chase also followed up with letters sent to the thief's address with the account number, and allegedly re-reported the identity thief's Seattle address as Drew's address.
II. Interactions With FIA
FIA first issued a card in Drew's name on January 6, 2004, and so did not receive the January 21, 2004 TransUnion block notice. Drew wrote to TransUnion to dispute the FIA account on March 4, 2004. TransUnion forwarded notice of the dispute to FIA on March 8, 2004; FIA received the dispute on March 11, and verified the account the very next day. Drew claims he was not aware, until January 2005, of FIA's investigation and verification of the account, nor that the account was still being reported to CRAs.
The card was issued by Fleet prior to its merger with Bank of America, FIA's predecessor in interest. We refer to FIA's predecessors in interest as FIA for the sake of simplicity.
In April and May 2004 Drew received several collection calls and account statements from FIA concerning the fraudulent account; he called FIA on April 21, May 6 and July 14, 2004, to dispute the account as fraudulent. In May, FIA informed Drew that an investigation had begun, but that the account could not be closed pending investigation. In a July 14 conversation with FIA, Drew alleges that he was promised that collection efforts would stop, the fraudulent account would be deleted, and all records corrected if he completed a fraud affidavit form and sent it to the bank. FIA received the fraud affidavit from Drew on July 19, 2004 and closed the account on July 28, 2004, crediting the charges.
From July 2004 to January 2005, Drew was hospitalized in Minnesota. Upon reviewing the Old Republic Report, Drew discovered that the FIA account was reported as a derogatory item, and his credit score had been affected. Drew disputed the account again. FIA discontinued reporting the account in October 2005, but one CRA continued reporting the account. Drew disputed it once more, but FIA again verified the account as belonging to Drew with the thief's address as Drew's former address. As of February 19, 2008, FIA's computer system continued to list the thief's phone number as the home phone number for Drew.
III. Procedural History
Drew's First Amended Complaint alleged violations of the FCRA as well as various California law claims with respect to Chase and FIA. Upon challenge from the banks, Drew dropped certain California law claims early in the litigation. In 2009, the district court initially denied the banks' motions for summary judgment on the FCRA claims. Drew then sought to revive his California law claims and Chase and FIA filed motions for reconsideration. In 2010, the court reversed course and granted the banks' motions for summary judgment, but denied Drew's motion for leave to amend. Drew appeals both rulings.
As evidenced by the district court's change of heart, the issues in this appeal are complex and present close questions of first impression, primarily because of disputed factual issues. “We review the district court's grant of summary judgment de novo,” and reverse. Vander v. United States Dep't of Justice, 268 F.3d 661, 663 (9th Cir.2001) (citation omitted). We affirm the court's denial of leave to amend, which we review for abuse of discretion. Jackson v. Bank of Hawaii, 902 F.2d 1385, 1387 (9th Cir.1990).
I. FCRA Claims Against Chase
Drew claims that Chase fell short of its FCRA duties by reporting an account that was actually fraudulent as a “lost or stolen account” that belonged to Drew. He argues that Chase should have blocked reporting of the account altogether. Drew also alleges that Chase reported the thief's address as his own.
The FCRA sets out a series of procedures that dictate how a furnisher must investigate and correct erroneous information. Upon being notified of a dispute by a CRA, a furnisher must investigate and, if necessary, correct the information it reports. Failure to do so renders it liable to the consumer for damages. Here, Chase's duties were triggered by the January 2004 block notice from TransUnion. Although Chase's investigation was sufficient, factual issues remain as to whether reporting the account as lost or stolen may have violated the FCRA. An issue of fact also remains as to whether Chase violated the FCRA by allegedly misreporting the identity thief's address as belonging to Drew. A. Triggering Notice from TransUnion
For Chase to owe any duty to Drew, Chase must be notified through the appropriate channels under the FCRA. Chase first disputes whether its duties were triggered at all, because it never received proper notification of Drew's dispute as required by subsection (b). 15 U.S.C. § 1681s–2(b). This question is one of first impression.
Chase's duties under subsection (b) are triggered only after “receiving notice pursuant to” § 1681i(a)(2), under which a CRA provides a “notification” to a furnisher which includes “all relevant information” regarding the dispute. Thus, Drew's direct complaint to Chase in November 2003 would not have triggered any duty since it was unaccompanied by CRA notification. See Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1154 (9th Cir.2009) (“These duties arise only after the furnisher receives notice of dispute from a CRA; notice of a dispute received directly from the consumer does not trigger furnishers' duties under subsection (b).”). Chase, however, received a notice from TransUnion, a CRA, in January 2004 that would have triggered its statutory duties. Chase disputes that this was a triggering notice, claiming that it was simply a “fraud block notification” rather than an “automated consumer dispute verification,” and TransUnion “did not expect” Chase to perform any action. Unlike Chase, the statute appears more concerned with substance than nomenclature. Section 1681i concerns the duty of a CRA if a consumer disputes information in a report. In particular, § 1681i(a)(2)(A) provides:
Before the expiration of the 5–business–day period beginning on the date on which a consumer reporting agency receives notice of a dispute from any consumer or a reseller ... the agency shall provide notification of the dispute to any person who provided any item of information in dispute [in this case, Chase], at the address and in the manner established with the person. The notice shall include all relevant information regarding the dispute that the agency has received from the consumer or reseller.
What Chase disparagingly refers to as TransUnion's “fraud block notification” was just that—a “notification” within the meaning of § 1681i(a)(2), sufficient to trigger Chase's FCRA duty. TransUnion's letter to Chase stated that Drew “has advised our office that a fraudulent application was submitted to your company with the consumer's identification, but without, his/her knowledge and consent.” Even if the statute required the notification to tell Chase what TransUnion “expect[ed]” Chase to do-which it does not-the letter noted that TransUnion had blocked the account, and suggested that Chase should do the same: “You ... must ensure that the account is unblocked only if ... [i]t was blocked due to fraud [or] [t]he consumer agrees that the blocked information was blocked in error. Additionally, please take all of the necessary steps to ensure that this account is not reported by you....” (emphasis added). Ultimately, as we have noted in Gorman, an inadequate CRA notification may limit the scope of a furnisher's § 1681s–2(b) duty, for example, by excusing a more limited investigation; it does not, however, eliminate the duty altogether. Gorman, 584 F.3d at 1157 n. 11. Accordingly, although Drew's communication with Chase had no statutory impact, TransUnion's notification was sufficient to trigger Chase's duties under the FCRA. B. Statutory Duties
Chase's statutory duties required it to engage in an investigation. If the investigation found a problem with the previously reported information, the FCRA then dictates that Chase must rectify past misreporting by informing the CRAs of the problem. The statute also obligates Chase to prevent future misreporting by modifying, deleting, or blocking the inaccurate item, as appropriate. Each of these duties is laid out in a separate subparagraph of § 1681s–2(b)(1):
After receiving notice pursuant to section 1681i(a)(2) of this title of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the [furnisher] shall
(A) conduct an investigation with respect to the disputed information;
(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis; and
(E) if an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation under paragraph (1), for purposes of reporting to a consumer reporting agency only, as appropriate, based on the results of the reinvestigation promptly
(i) modify that item of information;
(ii) delete that item of information; or
(iii) permanently block the reporting of that item of information.
Drew claims that Chase failed in its duties because: (1) its investigation in response to the TransUnion notification was deficient; (2) Chase continued to report the account as belonging to Drew, albeit as lost or stolen, instead of blocking it; and (3) Chase reported the thief's address as Drew's. The first of these claims fails as a matter of law but, as to the remaining two allegations, Drew has sufficiently raised material factual issues that permit his claim to survive summary judgment.
Chase's investigation was legally sufficient under subparagraph (A). Drew had already spoken directly to Chase about the fraud in November 2003; Chase conducted an investigation and was already one step ahead of TransUnion by the time it received the fraud notification in January 2004. Chase's investigation had in fact yielded the correct result—the bank concluded that the account was fraudulent and reported the fraud to the police. TransUnion's report did not “indicat[e] ... that the initial investigation lacked reliability or that new information was available to discover,” and therefore, Chase was under no duty to repeat its investigation. Gorman, 584 F.3d at 1160. Thus, Chase complied with its investigatory duties under subparagraph (A).
The most thorough investigation means nothing, however, if the results of the investigation are not put to good use. Subparagraphs (D) and (E) of § 1681s–2(b)(1) required Chase to rectify past misreporting and prevent future misreporting of information that is “incomplete” and “inaccurate.” Drew raises a material issue of fact as to whether reporting that the fraudulent account was lost or stolen constituted “incomplete” and “inaccurate” reporting in violation of subparagraphs (D) and (E).
“[A]n item on a credit report can be ‘incomplete or inaccurate’ ... ‘because it is patently incorrect, or because it is misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions.’ ” Carvalho v. Equifax Info. Svcs., LLC, 629 F.3d 876, 890 (9th Cir.2010) (quoting Gorman, 584 F.3d at 1163) (emphasis added). Although we have never squarely addressed the issue, our precedent suggests that, at the very least, information that is inaccurate “on its face,” is “patently incorrect.” Id. at 891 (noting that there was no “ patent error” because the information reported was “correct on its face”); see also Koropoulos v. The Credit Bureau, Inc., 734 F.2d 37, 40 (D.C.Cir.1984) (suggesting that under § 1681e, a CRA is liable for reporting information that is “technically untrue,” as well as in various other circumstances). A jury may well find that reporting the fraudulently opened account as a lost or stolen account belonging to Drew was untrue or facially inaccurate.
The district court's dismissal of Drew's claim appears to flow largely from its exclusion as hearsay of a key piece of evidence, the Old Republic Report, which shows that Chase reported the item as Drew's lost or stolen account. Without this report, there was scant evidence that Chase had engaged in misreporting. However, the court's ruling was in error.
In Gorman, MBNA Bank asserted that a credit report offered in support of plaintiff Gorman's claim regarding the bank's failure to report a dispute was hearsay. As we explained:
Gorman does not rely on the credit reports for the truth of the matter asserted therein; in fact, as he notes, he disputes the truth of their contents. Instead, Gorman offers them to prove that no statement noticing the dispute was made. ‘If the significance of an offered statement lies solely in the fact that it was made ... the statement is not hearsay.’
584 F.3d at 1164 (quoting United States v. Dorsey, 418 F.3d 1038, 1044 (9th Cir.2005) (ellipsis in original)). Similarly here, Drew offers the report only to show that the “statement ... was made” rather than for its truth. Like Gorman, Drew claims the report is inaccurate. Finally, even if the report were inadmissible, like the plaintiff in Gorman, Drew represents that “he had reviewed [the] ... report[ ]” and discovered the disputed information; under Gorman, Drew's “statement [itself] is admissible evidence” of the misreporting. Id.
Chase asks us to ignore the error in the district court's ruling because Drew failed to make his hearsay argument below and on appeal. Chase is mistaken. The argument was made both before the district court and in Drew's opening brief to this court.
A jury may also conclude that reporting the identity thief's address as Drew's violated Chase's duty under the statute to correct inaccurate reporting. Subparagraph (E) requires Chase to modify, block or delete any inaccurate “information.”Nothing in the statute suggests that an incorrect address falls outside the purview of the “information” that must be verified and corrected. Indeed, the statute elsewhere recognizes the sensitivity of a consumer's address. In 15 U.S.C. § 1681c(h), Congress provides that if a CRA receives a “request [that] includes an address for the consumer that substantially differs from the addresses in the file of the consumer ... the consumer reporting agency shall notify the requester of the existence of the discrepancy,” and goes on to prescribe regulation requirements so that the user of the report can confirm the identity of the consumer. C. Damages
Although Chase challenges the evidence Drew offers, it does not challenge two letters Chase sent to the identity thief's address in October 2005, which discuss the credit inquiries into the account, and note that Chase “sent a request to each Credit Reporting Agency that we report information to,” regarding the inquiry. This evidence is sufficient to raise a material issue of fact as to Chase's liability under § 1601s–2(b)(1)(E).
Finally, Chase paradoxically faults Drew for failing to allege sufficient damages under the statute, while at the same time admitting that Drew provides evidence of his emotional distress due to the alleged misreporting. The FCRA permits “recovery for emotional distress and humiliation.” Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir.1995). As Drew and his psychological expert explained, the identity theft caused Drew grave post-traumatic stress due to his weakened condition and his continued association with the fraudulent accounts exacerbated his condition. Because Drew supplies evidence of emotional distress experienced as a result of the misreporting, we therefore decline to dismiss on this ground. Chase also disputes Drew's claim that repeated inquiries about his account may have affected his credit score. Because we conclude that Drew has alleged sufficient cognizable damages to survive summary judgment, we leave this issue for the district court to resolve.
We conclude that TransUnion's notification triggered Chase's duties under the FCRA, that material issues of fact remain as to whether Chase violated those duties, and that Drew's claim of emotional damages is cognizable under the FCRA.
II. Claims Against FIA and the Statute of Limitations
Instead of arguing, like Chase, that it satisfied its statutory duties, FIA raises a statute of limitations defense. Section 1681p(1) of the FCRA, a deceptively simple provision, sets the statute of limitations at “2 years after the date of discovery [or constructive discovery] by the plaintiff of the violation that is the basis for such liability.” 15 U.S.C. § 1681p; see Merck & Co., Inc. v. Reynolds, ––– U.S. ––––, 130 S.Ct. 1784, 1794, 176 L.Ed.2d 582 (2010) (constructive discovery generally read into discovery statutes). The statute also provides that all claims arising from the alleged violation will repose “5 years after the date on which the violation that is the basis for such liability occurs.” 15 U.S.C. § 1681p(2).
There is no dispute about the date of filing or the length of the limitations period after tolling. Drew filed his action on December 18, 2006. He was hospitalized from July 2004 to January 2005. Accordingly, “drawing all reasonable inferences” in his favor, the district court tolled the statute of limitations for 5.5 months, a ruling that FIA does not challenge.
The harder question centers around when Drew's cause of action arose. For Drew's action to have been timely, his cause of action could not have arisen more than 2 years and 5.5 months before December 18, 2006, that is, before June 3, 2004. Drew offers two routes to support the timeliness of his action. First, he argues that he did not discover the alleged violation before June 3, 2004. Alternatively, he suggests that the statute of limitations was restarted by independent violations FIA committed in 2005. Because we hold that Drew could not have discovered the violations before June 3, 2004, we do not consider Drew's alternate argument or FIA's claim that Drew waived this second argument.
“[T]he ultimate burden is on the defendant to demonstrate that a reasonably diligent plaintiff would have discovered the facts constituting the violation.... [FIA must] demonstrate how a reasonably diligent plaintiff ... would have discovered the violations.” Strategic Diversity, Inc. v. Alchemix Corp., 666 F.3d 1197, 1206 (9th Cir.2012). Summary judgment is defeated if FIA fails to meet this burden and material issues of fact remain as to “whether plaintiffs knew or had reason to know of the specific” violation. Norman–Bloodsaw v. Lawrence Berkeley Lab., 135 F.3d 1260, 1266 (9th Cir.1998).
In March 2004, after Drew disputed the FIA account, TransUnion contacted FIA to inform it of the fraud, and FIA incorrectly verified the account in response. FIA must show that Drew knew before June 2004 that FIA had failed to comply with its duties under the FCRA, in particular, its duty to investigate.
As Gorman explains, an FCRA violation is tied to the reasonableness of an investigation rather than the accuracy of its results. In Gorman, over a furnisher's objection, we held that upon receiving notice of a dispute from a CRA, a furnisher's investigation must be “reasonable.” 584 F.3d at 1155–57. In so concluding, we did not hold the furnisher to an impossible standard that rendered it liable anytime its investigation did not reach the correct result. We recognized that factors beyond a furnisher's control may doom the most conscientious investigation to an erroneous result: for example, we noted that in Gorman, a CRA had provided the furnisher with “scant information,” to carry out the investigation. Id. We therefore concluded that the furnisher's inaccurate reporting after an investigation was not dispositive proof that its investigation was unreasonable, as despite reasonable efforts, it may not have been given sufficient information to reach the correct conclusion despite reasonable efforts. Id. at 1157. In short, “[a]n investigation is not necessarily unreasonable because it results in a substantive conclusion unfavorable to the consumer, even if that conclusion turns out to be inaccurate.” Id. at 1161. Thus, Gorman imposes fault, not for an investigation that produces incorrect results, but for an unreasonable investigation.
Gorman's approach, which favored the furnisher in that case, cuts against FIA here. Drew notes that he had no knowledge of what TransUnion relayed to FIA, or “even if the credit agency passed on the relevant information.” Even if the CRA had “passed on the relevant information,” Drew did not know what information was available to the bank for its investigation, and had no basis in June 2004 to judge whether the investigation was reasonable. In fact, the record falls short of showing even that Drew knew that FIA's investigation had concluded.
According to FIA's chronology, Drew must have discovered the violations between April 21 and June 3, 2004, because on April 21, and again in May, Drew received collection calls from FIA, and in those calls, Drew disputed the accounts on which FIA sought collection. FIA argues that these calls should have made Drew aware both that an investigation was completed, and that the investigation was faulty. Yet, the record does not show how Drew could have known either fact. In April, Drew received his first collection call; in May, Drew was informed only that the charges could not be removed from his account “until [the] investigation [was] ov[e]r.” There is no indication that Drew could have divined from these calls that a previous investigation had already occurred and been completed when he was told there was an ongoing investigation. Drew says as much, noting that he “was unaware of the prior investigation.” Indeed, Drew could have reasonably concluded that the May investigation was an ongoing response to TransUnion's March correspondence as the record suggests that three months would not have been an unreasonable time for an investigation: the May investigation itself only concluded in July.
FIA takes this argument as an equitable estoppel argument. However, this is not Drew's argument: his point is simply that, because he believed that an investigation was ongoing, his claim did not accrue at least until he had reason to believe the investigation was over.
Thus, FIA does not show how Drew should have guessed that its previous, undisclosed investigation failed to meet Gorman's reasonableness standard. This is not to say that a plaintiff may never become aware of facts allowing him to conclude that an investigation was insufficient. As Drew noted, by 2005, Drew had provided FIA with relevant information himself; since he knew that FIA had this information, he also knew by that time that incorrect results could only be attributable to an unreasonable investigation.
FIA fails to meet its burden to conclusively show that Drew knew or should have known of the deficiencies in FIA's investigation before June 3, 2004. Because material factual disputes remain, the district court erred in barring Drew's claim under the statute of limitations.
III. Leave to Amend
In his initial complaint, Drew made a false start and alleged a violation under a non-existent California law subsection, Cal. Civ.Code § 1785.25(5). He then dropped this claim in June 2007, because he incorrectly believed that it was precluded by district court precedent that held that the FCRA preempted state law. In 2009, Drew advised the district court of our holding in Gorman in which we held that the FCRA did not preempt certain state claims, but he did not seek to amend his complaint to reinstate the claim. In fact, he made no effort to amend until the eve of the then-trial date. The district court's denial of Drew's motion to amend was not an abuse of discretion.
AFFIRMED in part; REVERSED in part. Each party shall bear its own costs on appeal.
Background Constructive Notice
Drew v. Equifax Information Services, LLC
Catrina R. RODRIGUEZ, on Behalf of Herself,
All Others Similarly Situated, Plaintiff,
U.S. HEALTHWORKS, INC.,
a Delaware Corporation, et al.,
Case No. 17-cv-06924-KAW
Fort Collins, Colorado 80524
Background Check Starts When Not SignedColeman v. Kohl's Dept Store, Inc.
KAYONIE COLEMAN, et al.,
KOHL'S DEPARTMENT STORES, INC.,
Case No. 15-cv-02588-JCS
ORDER DENYING MOTION TO TRANSFER VENUE AND GRANTING MOTION TO DISMISS
Re: Dkt. Nos. 31, 32
Plaintiffs Kayonie Coleman and Diane Pemberton bring this putative class action against Defendant Kohl's Department Stores, Inc. ("Kohl's"), alleging that Kohl's violated certain state and federal credit reporting statutes in the course of conducting pre-employment background checks. Kohl's moves to transfer venue and also to dismiss the First Amended Complaint ("FAC") pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons discussed below, the Motion to Transfer Venue is DENIED, and the Motion to Dismiss is GRANTED.
Plaintiffs are former hourly, non-exempt employees of Kohl's Department Stores. Kohl's employed Coleman in a California store location from October 2012 to June 2013. Kohl's employed Pemberton in a Kissimmee, Florida store location from mid-2014 to January 15, 2014.
Plaintiffs allege, on behalf of themselves and all others similarly situated, that Kohl's unlawfully acquired applicants' consumer reports in the course of the hiring process. Specifically, they allege that Kohl's provided two forms for the application process—a document entitled "Employment Application," and another document entitled "Consent and Disclosure for Acquisition of Consumer Report(s)" ("Consent and Disclosure Form"). Declaration of Jennifer Turzenski ("Turzenski Decl."), Dkt. No. 31, Ex. 1 ("Pemberton App."), Ex. 3 ("Coleman App.").
Kohl's has provided Plaintiffs' Employment Application and Consent and Disclosure Forms as exhibits to its dismissal motion brief. While the Court would ordinarily be limited to only the complaint in deciding a Rule 12(b)(6) motion, additional documents may be considered under certain circumstances. A court may consider evidence on which a complaint "necessarily relies," if "(1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion." Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006) (citations omitted); see also Rubio v. Capital One Bank, 613 F.3d 1195, 1199 (9th Cir. 2010) (permitting a court to consider a document submitted "'whose contents are alleged in [the] complaint and whose authenticity no party questions'" (citation omitted)). Here, first, Plaintiffs' FAC refers to the documents. The FAC refers to an "Exhibit A" (presumably the Employment Application) and an "Exhibit B" (presumably the Consent and Disclosure Form); however, it does not have any exhibits attached. Second, the documents form a central component in Plaintiffs' theories of liability against Kohl's. And third, neither Kohl's, who provided the exhibits, nor Plaintiffs, who refer to the exhibits in their Opposition brief, has contested the authenticity of the documents. Accordingly, the Court finds it proper to consider the exhibits provided.
Both Plaintiffs received identical Employment Applications. The document consists of two pages presented in landscape format. The title, "Employment Application," appears at the top of the first page of the document, and both pages have the form code, "AR-017E," listed in the lower right hand corner. The first page of the Employment Application requires the applicant to fill out identifying information (e.g., name, address, telephone number, age), the employment position sought, shift availability, and information related to the applicant's employment history. The second page requests the applicant to disclose his or her criminal history, if any. At the bottom of this second page, above the applicant signature line, the Employment Application contains the following "Applicant's Statement" regarding Kohl's pre-employment check:
I have read and fully understand the questions asked in this application. I certify that all of the answers I have given are true, accurate and complete. I understand that the omission and/or misrepresentation of any fact from or on this application or during any interview will result in immediate rejection of my application or if I am hired will be cause for immediate dismissal. Unless I noted otherwise, I authorize the Company to contact all my employment references and personal references, as well as the education institutions I have attended. I further authorize the Company to inquire about, investigate and obtain copies of any records which relate to me from my former employers and educational institutions. I hereby release Kohl's and all affiliated persons and entities, as well as any person or institution that provides Kohl's with any lawful information about me, from any and all liability whatsoever resulting from any such lawful inquiry, investigation or
If hired, I agree to abide by all of the rules and regulations of the Company. I understand and agree that nothing in this application shall constitute an offer, a contract or a guarantee of employment for a specific period of time. If hired, I understand that my employment is at-will and may be terminated with or without cause and with or without notice at any time, at the option of either Kohl's or myself. I further understand that no representative or agent of the Company, other than the Senior Vice President of Human Resources, has the authority to enter into any agreement for employment for any specific period of time, or to make an agreement contrary to the foregoing. I also understand that any agreement modifying my at-will employment status must be in writing and signed by the Senior Vice President of Human Resources. In addition, I understand that the Company and all plan administrators shall have the maximum discretion permitted by law to administer, interpret, modify, discontinue, enhance or otherwise change all policies, procedures, benefits or other terms and conditions of employment. I understand that any hiring decision is contingent upon my successful completion of all of the Company's lawful pre-employment checks, which may include a background check. I agree to execute any consent forms necessary for the Company to conduct its lawful pre-employment checks.
Pemberton App. at 1; Coleman App. at 1 (emphasis added). The Applicant's Statement includes a release of liability resulting from injuries sustained in connection with the pre-employment check. Pemberton's and Coleman's signatures appear on the signature line below this Applicant's Statement, and are dated June 11, 2013 and October 15, 2012, respectively.
Next, Plaintiffs were also given a Consent and Disclosure Form. Turzenski Decl., Ex. 2 ("Pemberton Form"); Ex. 4 ("Coleman Form"). Pemberton's Consent and Disclosure Form differed slightly from Coleman's; however, they are substantively identical. The title, "Consent and Disclosure for Acquisition of Consumer Report(s), All States Except CA/NY," appears at the top of Pemberton's form. The form code, "AR-019 NonEx," appears in the lower right-hand corner of this document. In contrast, Coleman's Consent and Disclosure Form was intended for California applicants, and is entitled, "Consent and Disclosure for Acquisition of Investigative Consumer Report—California." Likewise, the form code, "AR-019 NonEx CA," appears in the lower right hand portion of Coleman's form.
Pemberton's Consent and Disclosure Form was intended for applicants applying to Kohl's store locations in all states except California and New York.
For both Pemberton and Coleman, their Consent and Disclosure Forms consist of one page, and is presented in portrait layout. In the upper boxed portion of the document, the form requests the applicant's identifying information (e.g., name, date of birth, social security number, driver's license number, and present and previous addresses). The lower boxed portion discloses certain information (the "disclosure statement"): (1) that Kohl's would use a consumer reporting agency to obtain consumer reports or investigative consumer reports on the applicant; (2) that the report could include personal information such as criminal history, past employment, personal references, drug offenses, and sex offender status; (3) the name, address, and contact information for the consumer reporting agency; (4) the method by which the applicant may dispute the report; (5) and that Kohl's may rely, in whole or in part, on the information gathered in the report to make hiring decisions. Pemberton's and Coleman's signatures appear on the signature line below this disclosure, dated June 11, 2013 and October 15, 2012, respectively.
On April 3, 2015, Pemberton filed a complaint against Kohl's in the Middle District of Florida alleging violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681-1681x. Pemberton v. Kohl's Dep't Stores, Inc., No. 15-cv-1037-EAK (AEP), Dkt. No. 1. On July 10, 2015, Coleman separately filed a complaint against Kohl's in the Northern District of California alleging similar claims in addition to state claims. Dkt. No. 1 (Compl.). Pemberton voluntarily dismissed her Florida lawsuit on July 21, 2015, and two days later on July 23, 2015, Coleman filed the present FAC adding Pemberton as a plaintiff. Dkt. No. 21. The five-count FAC pled FCRA claims in Counts One, Two, and Three; a California Investigative Consumer Reporting Agencies Act ("ICRAA"), Cal. Civ. Code §§ 1786 et seq., claim in Count Four; and a California Consumer Credit Reporting Agencies Act ("CCRAA"), Cal. Civ. Code §§ 1785.1 et seq., claim in Count Five. Kohl's filed a Motion to Transfer Venue and a Motion to Dismiss for failure to state a claim on August 7, 2015. Dkt. Nos. 31, 32. The Court held a hearing on the Motions on September 25, 2015.
During argument on the Motion, Plaintiffs conceded that Count Five was subject to dismissal. Accordingly, Count Five is dismissed with prejudice.
III. MOTION TO TRANSFER VENUE
Kohl's moves to transfer venue to the Eastern District of Wisconsin, or in the alternative, to the Middle District of Florida. Dkt. No. 31. For the reasons stated on the record at the hearing, the Motion to Transfer Venue is DENIED.
IV. MOTION TO DISMISS
Kohl's moves to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted.
A. Legal Standard Under Rule 12(b)(6)
"The purpose of a Rule 12(b)(6) motion to dismiss is to test the legal sufficiency of the complaint." N. Star Int'l v. Ariz. Corp. Comm'n, 720 F.2d 578, 581 (9th Cir. 1983). The complaint need only satisfy the Rule 8(a) standard, which requires a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). A plaintiff need not plead a prima facie case in order to survive a motion to dismiss pursuant to Rule 12(b)(6). Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514-15 (2002). However, the complaint must "contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory. " Bell Atl. Corp. v. Twombly, 550 U.S. 544, 562 (2007) (citing Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)); Prosser v. Navient Solutions, Inc., No. 15-cv-01036-SC, 2015 U.S. Dist. LEXIS 118018, at *5-7 (N.D. Cal. Sept. 3, 2015) ("The allegations made in a complaint must be 'sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively' and 'must plausibly suggest an entitlement to relief such that 'it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.'" (quoting Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011)). In ruling on a Rule 12(b)(6) motion to dismiss, the court analyzes the complaint and takes "all allegations of material fact as true and construe[s] them in the light most favorable to the non-moving party." Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995).
B. Statute of Limitations
As an initial matter, Kohl's argues that Coleman's claims are barred under the applicable statute of limitations. For the reasons that follow, the Court declines to dismiss Coleman's claims on limitations grounds.
Kohl's does not assert that Pemberton's claims are untimely.
1. Statute of Limitations as a Defense in a Rule 12(b)(6) Motion
If the expiration of the applicable statute of limitations is apparent from the face of the complaint, the defendant may raise a statute of limitations defense in a Rule 12(b)(6) motion to dismiss. Jablon v. Dean Witter & Co., 614 F.2d 677, 682 (9th Cir. 1980). This is true even though expiration of the limitations period is an affirmative defense, because Federal Rule of Civil Procedure 9(f) "makes averments of time and place material for the purposes of testing the sufficiency of a complaint." Suckow Borax Mines Consol. v. Borax Consol., 185 F.2d 196, 204 (9th Cir. 1950). When a motion to dismiss is based on the running of the statute of limitations, "it can be granted only if the assertions of the complaint, read with the required liberality, would not permit the plaintiff to prove that the statute was tolled." Jablon, 614 F.2d at 682. In contrast, where the statute of limitations question turns on factual issues that may be disputed, the question is more appropriately addressed at a later stage of the proceeding. See id.
2. Kohl's Has Not Met Its Burden to Show That Coleman's Claims Are Time-Barred.
Kohl's asserts that Coleman's claims in the FAC should be dismissed because they are barred under the applicable statute of limitations. To prevail on this argument, Kohl's must establish that it is apparent from the face of the FAC both that the limitations period has passed and that Coleman could not prove that the respective statutes were tolled. Kohl's has not met that burden.
An action under the FCRA may be brought "not later than the earlier of (1) 2 years after the date of discovery by the plaintiff of the violation that is the basis for such liability; or (2) 5 years after the date on which the violation that is the basis for such liability occurs." 15 U.S.C. § 1681p. Similarly, under the ICRAA, "[a]n action to enforce any liability created under this title may be brought in any appropriate court of competent jurisdiction within two years from the date of discovery." Cal. Civ. Code § 1786.52.
Here, it is not obvious from the face of the FAC that Coleman's claims are barred by the applicable limitations periods. Kohl's argues that Coleman became aware of the facts constituting the alleged violations on the date she signed the Employment Application and Consent and Disclosure Form in October 2012, and contends she was therefore required to sue within two years of that "date of discovery." But, Kohl's did not necessarily violate the FCRA or the ICRAA on the date Coleman signed those forms. Both statutes make it unlawful to "procure" a report without first providing the proper disclosure and receiving the consumer's written authorization. Therefore Kohl's could not have violated those statutes until it procured a report on Coleman.
The FAC does not make clear when Kohl's procured the relevant report. Rather, the FAC and exhibits provided by Kohl's refer only to October 15, 2012, the date Coleman signed her forms. That date does not necessarily start the clock on her claims. Accordingly, the motion to dismiss on statute of limitations grounds is denied. See Supermail Cargo, Inc. v. United States, 68 F.3d 1204, 1207 (9th Cir. 1995) ("[A] complaint cannot be dismissed [on limitations grounds] unless it appears beyond doubt that the plaintiff can prove no set of facts that would establish the timeliness of the claim.").
C. FCRA Claims (Counts One, Two, and Three)
Plaintiffs seek statutory damages for Kohl's alleged FCRA violations under 15 U.S.C. § 1681n. To withstand a motion to dismiss, therefore, Plaintiffs must sufficiently plead that an FCRA violation existed, and that the violation was willful.
In the FAC, Plaintiffs initially appeared to also seek actual damages under 15 U.S.C. § 1681o. FAC 45 (Count One) ("In the alternative to Plaintiffs' allegation that these violations were willful, Plaintiffs allege that the violations were negligent and seek the appropriate remedy, if any, under 15 U.S.C. § 1681o, including actual damages and attorneys' fees and costs."), 55 (Count Two) (same), 62 (Count Three) (same). However, Plaintiffs have conceded in their reply brief that they no longer seek relief under § 1681o. Reply at 11 ("Here, because Plaintiff has alleged only statutory damages, the applicable standard is willfulness.").
1. Count One (Failure to Make Proper Disclosures)
Count One of the FAC alleges that the forms Kohl's provided Plaintiffs to obtain consumer reports violated § 1681b(b)(2)(A)(i) of the FCRA. That provision reads as follows:
(A) In general. Except as provided in subparagraph (B), a person may not procure a consumer report, or cause a consumer report to be
procured, for employment purposes with respect to any consumer, unless—
(i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and
(ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.
15 U.S.C. § 1681b(b)(2) (emphasis added). Therefore, § 1681b(b)(2)(A)(i) requires that before seeking a consumer report, Kohl's must first give "a clear and conspicuous" disclosure that it may obtain such a report for employment purposes, "in a document that consists solely of the disclosure" (the "standalone requirement").
Plaintiffs' theory is that the Employment Application and Consent and Disclosure Form are, in actuality, one document as "part of the same employment packet." As a result, they argue, this document violates § 1681b(b)(2)(A)(i) because the disclosure contained in the Consent and Disclosure Form now appears together with "other extraneous information" in the Employment Application, such as a release of liability provision. Plaintiffs argue that this violates the "clear and conspicuous" and standalone requirements in § 1681b(b)(2)(A)(i). Kohl's disputes this characterization and argues that the documents cannot be read together because they are two separate forms serving two separate functions in the company's applicant screening process. In support, Kohl's argues that the forms contain different and distinct formatting, as well as separate titles identifying the different function each serves.
Based on the pleadings presented, the Court finds that Plaintiffs have not sufficiently alleged Kohl's failure to comply with the statute. To an extent, Plaintiffs themselves acknowledge in their FAC that the Employment Application and Consent and Disclosure Form comprise "two separate documents." See FAC 29. In addition, the exhibits attached to Kohl's motion papers also support this interpretation. Each form separately bears Pemberton's and Coleman's signature. The Employment Application is formatted in landscape, bears a separate title, and contains a separate form code. More importantly, the Employment Application appears to serve a different and distinct function. It requests certain employment-related information about the applicant such as basic identifying information, criminal history, and authorization and release for the company to "contact . . . employment references and personal references, as well as education institutions." In contrast, the Consent and Disclosure Form is formatted in portrait, and bears a distinct title and form code. Neither party disputes that the purpose of this document relates to consumer reports only. It contains a disclosure and authorization provision, and also identifies other relevant information such as the consumer reporting agency and the consumer's right to review the report obtained. Accordingly, on the face of these pleadings, Kohl's appears to have provided two separate documents to Plaintiffs, in compliance with the FCRA.
Plaintiffs also argue that the Employment Application and the Consent and Disclosure Form comprise one document because they were presented together at the same time. However, the Court is not aware of any authority supporting this contention that merely presenting these documents together violates § 1681b(b)(2)(A)(i), and the two cases to which Plaintiffs cite lend no support either. Opp. at 1, 2, 18 (citing Speer v. Whole Food Mkt. Grp., Inc., No. 8:14-CV-3035-T-26TBM, 2015 U.S. Dist. LEXIS 40462 (M.D. Fla. Mar. 30, 2015) and Avila v. NOW Health Grp., Inc., No. 14 C 1551, 2014 U.S. Dist. LEXIS 99178 (N.D. Ill. July 17, 2014)). In both of those cases, the employer presented a release of liability with either a disclosure or authorization provision together in the same document. See Speer, 2015 U.S. Dist. LEXIS 40462 at *2-3; Avila, 2014 U.S. Dist. LEXIS 99178 at *5-6. Here, in contrast, the disclosure and authorization provisions appear in one document (the Consent and Disclosure Form) while a release of liability appears in a separate document (the Employment Application). Plaintiffs have not cited cases addressing the facts presented here, and neither Speer nor Avila lends support for their assertion.
For these reasons, the Court finds that Plaintiffs have not set forth sufficient factual allegations that Kohl's violated § 1681b(b)(2)(A)(i) of the FCRA. Kohl's Motion to Dismiss Count One is therefore GRANTED with leave to amend the FAC, if Plaintiffs can show that the forms presented here violated the FCRA.
2. Count Two (Failure to Obtain Proper Authorization)
Count Two alleges that Kohl's violated § 1681b(b)(2)(A)(ii) of the FCRA because it failed to obtain proper authorization to request Plaintiffs' consumer reports. Plaintiffs' argument is that because the Employment Application and Consent and Disclosure Form were defective (for the reasons they allege in Count One), so too were their signatures authorizing Kohl's to request consumer reports. As discussed above however, Plaintiffs fail to sufficiently allege that those forms violated the FCRA. Accordingly, Plaintiffs also fail to sufficiently allege that the authorizations were defective. Kohl's Motion to Dismiss Count Two is therefore GRANTED with leave to amend.
3. Count Three (Failure to Give Proper Summary of Rights)
In Count Three, Plaintiffs allege that Kohl's violated the FCRA provisions contained in 15 U.S.C. § 1681d(a). It provides in relevant part:
(a) Disclosure of fact of preparation. A person may not procure or cause to be prepared an investigative consumer report on any consumer unless—
(1) it is clearly and accurately disclosed to the consumer that an investigative consumer report including information as to his character, general reputation, personal characteristics and mode of living, whichever are applicable, may be made, and such disclosure (A) is made in a writing mailed, or otherwise delivered, to the consumer, not later than three days after the date on which the report was first requested, and (B) includes a statement informing the consumer of his right to request the additional disclosures provided for under subsection (b) of this section and the written summary of the rights of the consumer prepared pursuant to section 609(c) [15 U.S.C. § 1681g(c).]
Thus, § 1681d(a) requires, among other things, that whenever an employer requests a consumer report, it must notify the consumer in writing within three days of the request. It also requires that the notification include a "written summary of . . . rights," that discloses certain information detailed in § 1681g(c). That written summary of rights must contain certain disclosures, such as the consumer's right to obtain a copy of the consumer report, dispute information contained in the report, and obtain a credit score from the consumer reporting agency. See generally 15 U.S.C. § 1681g(c).
Here, Plaintiffs have not set forth sufficient factual allegations to withstand dismissal. To prevail on their claim, Plaintiffs need to specifically allege that Kohl's violated the statutes in question, and did so willfully. 15 U.S.C. § 1681n; see Ashcroft v. Iqbal, 556 U.S. 662, 662 (2009); Fed. R. Civ. P. 8(a). However, the extent of Plaintiffs' allegations with respect to § 1681d(a)(1) consists of the following one sentence: "Defendants [sic] did not comply with Section 1681d(a)(1)." FAC 58. Likewise, their allegations with respect to § 1681g(c) consist of the following one sentence: "Defendant did not comply with 1681g(c)." FAC 60. As to the willfulness element, Plaintiffs fail to allege any facts at all. These assertions are insufficient to survive dismissal, and Kohl's Motion to Dismiss is therefore GRANTED with leave to amend.
D. Count Four (Failure to Make Proper Disclosures in Violation of the ICRAA)
Count Four brings a claim on behalf of "Coleman only and the ICRAA Class," alleging that Kohl's violated § 1786.16(a)(2)(B) of the ICRAA. FAC 63, 72-75, 79; see also Cal. Civ. Code § 1786.50 (creating an ICRAA cause of action). The relevant portions of § 1786.16(a)(2)(B) require disclosures to be "clear and conspicuous" and stand alone in a document, similar to the disclosure requirements set forth in § 1681b(b)(2)(A)(i) of the FCRA. They provide as follows:
(2) If, at any time, an investigative consumer report is sought for employment purposes other than suspicion of wrongdoing or misconduct by the subject of the investigation, the person seeking the investigative consumer report may procure the report, or cause the report to be made, only if all of the following apply:
. . . .
(B) The person procuring or causing the report to be made provides a clear and conspicuous disclosure in writing to the consumer at any time before the report is procured or caused to be made in a document that consists solely of the disclosure . . . .
. . . .
(C) The consumer has authorized in writing the procurement of the report.
Cal. Civ. Code § 1786.16(a) (emphasis added).
Similar to their disclosure allegations in Count One, here in Count Four, Plaintiffs allege that the disclosure forms Kohl's provided contained both a disclosure statement and "other extraneous information," in violation of the "clear and conspicuous" and standalone requirements in § 1786.16(a)(2)(B). Id. 72-74. For the same reasons discussed in Count One, the Court finds that Plaintiffs' disclosure allegations here under the ICRAA do not survive a motion to dismiss because they have not set forth sufficient factual allegations that Kohl's violated the statute. Rather, on the face of the pleadings, Kohl's appears to have provided forms to Plaintiffs that complied with the ICRAA. Accordingly, the Motion to Dismiss Count Four is GRANTED, with leave to amend.
In addition, Plaintiffs also allege in Count Four that the forms failed to disclose certain information required under §§ 1786.16(a)(2)(B)(iv) and (vi) of the ICRAA. During argument on the motion, however, Plaintiffs conceded that to the extent Count Four rested on alleged violations of those specific ICRAA statutory provisions, they are subject to dismissal. Those claims are therefore dismissed.
§ 1786.52 of the ICRAA provides an election of remedies provision. Cal. Civ. Code § 1786.52(a). To the extent Plaintiffs submit a second amended complaint that alleges both FCRA and ICRAA claims stemming from the same act or omission, § 1786.52 bars those ICRAA claims. The Court is mindful of a contrary holding with respect to an analogous election of remedies provision in the CCRAA. See Ramirez v. Trans Union, LLC, 899 F. Supp. 2d 941, 944-45 (N.D. Cal. 2012) (discussing Cisneros v. U.D. Registry, Inc., 39 Cal. App. 4th 548 (1995)); Guillen v. Bank of Am. Corp., No. 5:10-cv-05825 EJD (PSG), 2011 U.S. Dist. LEXIS 98860, at *13-14 (N.D. Cal. Aug. 31, 2011) (same). Cf. Drew v. Equifax Info. Scvs., LLC, No. C 07-0726 SI, 2009 U.S. Dist. LEXIS 18965, at *36-37 (N.D. Cal. Mar. 5, 2009). The Court respectfully declines to follow Ramirez and Guillen, which dealt with a different statutory provision than the one here. --------
For the reasons discussed above, the Motion to Transfer Venue is DENIED. The Motion to Dismiss is GRANTED with leave to amend as to Counts One, Two, Three, and Four. The Motion to Dismiss is GRANTED without leave to amend as to Count Five.
IT IS SO ORDERED. Dated: October 5, 2015
JOSEPH C. SPERO
Chief Magistrate Judge
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