Case v. Hertz Corporation, No. 5:2015cv02707 - Document 95 (N.D. Cal. 2016)

Court Description: ORDER GRANTING 77 MOTION TO DISMISS WITHOUT PREJUDICE. Signed by Judge Beth Labson Freeman on 11/21/2016.(blflc2S, COURT STAFF) (Filed on 11/21/2016)
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1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 NORTHERN DISTRICT OF CALIFORNIA 8 SAN JOSE DIVISION 9 10 JAMES CASE, Case No. 15-cv-02707-BLF Plaintiff, 11 United States District Court Northern District of California v. ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE 12 13 HERTZ CORPORATION, [Re: ECF 77] Defendant. 14 15 Plaintiff James Case filed a Second Amended Complaint (“SAC”) on behalf of himself and 16 17 similarly situated persons against Defendant The Hertz Corporation (“Hertz”), alleging that the 18 employment application forms Hertz used in the course of its hiring process violated the “stand- 19 alone requirement” of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681b(b)(2)(A)(i). 20 Hertz now moves under Fed. R. Civ. P. 12(b)(1) and 12(h)(3) to dismiss this case in its entirety for 21 lack of subject matter jurisdiction, based on the U.S. Supreme Court’s recent decision in Spokeo v. 22 Robins, 136 S. Ct. 1540 (2016). Mot., ECF 77. For the reasons set forth below, the Court 23 GRANTS Defendant’s motion and dismisses the action without prejudice. 24 25 I. BACKGROUND In early 2015, Case used Hertz’s online application form (the “Online Job Application”) to 26 apply for employment with Hertz. SAC ¶ 23, ECF 74; Ex. 1 to SAC, ECF 74-1. Hertz reviewed 27 the application and conditionally offered Case a position as a “transporter,” pending the 28 completion of a “background report.” SAC ¶¶ 9, 26. Hertz asked Case to fill out a form entitled 1 “Request for Sterling Background Check” (the “Sterling Form”) to allow Hertz’s third-party 2 consumer reporting agency, Sterling InfoSystems, Inc. (“Sterling”), to conduct a background 3 report on Case. Id. ¶¶ 9, 27–28, Ex. 2 to SAC, ECF 74-2. Case filled out the application materials 4 and Hertz procured a background check for Plaintiff from Sterling. SAC ¶¶ 24, 27–28. After 5 receiving the background check, Hertz hired Case for the transporter position. Compl, ¶ 22. Case alleges that the disclosures on the Online Job Application and the Sterling Form 6 violated the FCRA’s stand-alone requirement because they fail to provide “a clear and 8 conspicuous disclosure made in writing, in a document consisting solely of the disclosure, that a 9 consumer report may be obtained for employment purposes.” SAC ¶ 64; see also id. ¶¶ 7–9, 29– 10 39. Moreover, he alleges that Hertz’s conduct in using these documents in the course of its hiring 11 United States District Court Northern District of California 7 process amounted to a willful violation of the FCRA. Id. ¶¶ 43–54, 65. Case does not make any 12 allegations regarding the accuracy or contents of the report.1 13 Case originally filed this action on June 17, 2015, and filed a First Amended Complaint on 14 August 28, 2015. ECF 1, 21. Thereafter, Hertz filed a motion to dismiss, or, alternatively, to stay 15 the action pending the Supreme Court’s issuance of its decision in Spokeo. ECF 25, 27. The 16 Court denied Hertz’s motion to dismiss, but granted Hertz’s motion to stay over Plaintiff’s 17 opposition. ECF 64. After the Supreme Court decided Spokeo, Case filed the operative complaint 18 on behalf of himself and all other similarly situated persons. To address the Supreme Court’s 19 decision in Spokeo, Case advances two theories of standing: (1) invasion of privacy and (2) 20 informational injury. 21 II. 22 LEGAL STANDARD A. Rule 12(b)(1) Pursuant to Federal Rule of Civil Procedure 12(b)(1), a party may seek dismissal of an 23 24 action for lack of subject matter jurisdiction. Under Article III of the U.S. Constitution, the Court 25 has subject matter jurisdiction only if the party bringing the action has standing, an inquiry that 26 addresses whether the plaintiff is the proper party to bring the matter to the court for adjudication. 27 1 28 The Court previously detailed the contents of these forms. See Order Denying Def.’s Mot. to Dismiss & Granting Def.’s Mot. to Stay 2–4, ECF 64. 2 1 Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010) (citation 2 omitted). When a defendant moves to dismiss under Rule 12(b)(1), the plaintiff, as the party 3 seeking to invoke the court’s jurisdiction by filing the complaint, bears the burden of establishing 4 subject matter jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 5 (1994). A defendant may attack the court’s jurisdiction as it appears on the face of the complaint 6 or by presenting affidavits and other evidence. See White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 7 2000). For a facial attack, the court must “accept all allegations in the complaint as true and 8 construe them in the light most favorable to the plaintiff[ ].” Id. 9 10 B. Spokeo and Standing In Spokeo, the Supreme Court reaffirmed that to have Article III standing, a plaintiff must United States District Court Northern District of California 11 have “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the 12 defendant, and (3) that is likely to be redressed by a favorable judicial decision.” 136 S. Ct. at 13 1547 (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992)). Here, it is undisputed that 14 the alleged statutory violations are traceable to Hertz’s conduct, and that the alleged violations are 15 redressable by statutory damages. Accordingly, the remainder of the discussion on the standing 16 issue is addressed solely to the requirement of injury in fact. 17 To establish injury in fact, a plaintiff must have suffered “‘an invasion of a legally 18 protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or 19 hypothetical.’” Id. at 1548 (citing Lujan, 504 U.S. at 560). To be “particularized,” an injury 20 “must affect the plaintiff in a personal and individual way.” Id. (citing Lujan, 504 U.S. at 560 21 n.1). Here, it is undisputed that Case has alleged a particularized injury. 22 The Supreme Court in Spokeo distilled several “general principles” from its prior cases 23 with respect to concreteness. Id. at 1549–50. A concrete injury is one that is “‘real,’ and not 24 ‘abstract.’” Id. at 1548 (citation omitted). Tangible injuries plainly satisfy this requirement. Id. at 25 1549. Nevertheless, intangible injuries may also be concrete. Id. In evaluating whether an 26 intangible injury satisfies the “concreteness” requirement, the Spokeo Court identified two 27 important considerations (1) “whether an alleged intangible harm has a close relationship to a 28 harm that has traditionally been regarded as providing a basis for a lawsuit in English or American 3 1 courts” and (2) the judgment of Congress, which “‘has the power to define injuries and articulate 2 chains of causation that will give rise to a case or controversy where none existed before.’” Id. 3 (quoting Lujan, 504 U.S. at 580 (Kennedy, J., concurring in part and concurring in judgment)). 4 The Supreme Court then elaborated on the connection between statutory standing and 5 concrete injury. First, the Court explained that “Article III standing requires a concrete injury 6 even in the context of a statutory violation[.]” Id. (citing Summers v. Earth Island Inst., 555 U.S. 7 488, 496 (2009)). Therefore, “[a plaintiff] could not, for example, allege a bare procedural 8 violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article 9 III.” Id. At the same time, the Court observed, in cases where “harms may be difficult to prove or 10 United States District Court Northern District of California 11 measure[,]” “the violation of a procedural right granted by statute can be sufficient . . . [and] a 12 plaintiff in such a case need not allege any additional harm beyond the one Congress has 13 identified.” Id. (citing FEC v. Akins, 524 U.S. 11, 20–25 (1998); Pub. Citizen v. Dep’t of Justice, 14 491 U.S. 440, 449 (1989)). The Supreme Court noted that although one of the FCRA’s purposes 15 is to protect against inaccurate credit reporting, “not all inaccuracies cause harm or present any 16 risk of harm.” Id. at 1550. 17 C. The FCRA 18 In relevant part, the FCRA provides that an employer must, in advance, provide a 19 consumer with a clear and conspicuous written disclosure, and obtain the consumer’s consent to 20 procure a consumer report: 21 22 23 24 25 [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. 26 § 1681b(b)(2). The purpose of this and other provisions of the FCRA is to ensure fair and 27 accurate credit reporting, protect consumer privacy, and promote efficiency in the banking system. 28 See Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52 (2007); 15 U.S.C. § 1681 (congressional 4 1 findings and statement of purpose). 2 III. DISCUSSION Case brings this claim for improper disclosure under section 1681b(b)(2), which forbids a 3 4 person from procuring a consumer report without obtaining the consumer’s express written 5 consent in advance. Under the statute, the consumer’s consent must be made on a single 6 document that contains only required information that is “clear and conspicuous.” Case claims 7 that Hertz violated section 1681b(b)(2) by giving him two documents—the Online Job 8 Application and Sterling Form—that contained extraneous information in addition to the required 9 disclosures. Hertz argues that Case has no standing to pursue this claim because he seeks statutory 10 United States District Court Northern District of California 11 damages based solely on Hertz’s bare procedural violation of the FCRA, divorced from any 12 concrete harm. Mot. 1. Case responds that Spokeo did not alter constitutional requirements for 13 standing, and that he has alleged two concrete injuries: violation of his right to privacy and an 14 informational injury. Opp’n 1, ECF 79; SAC ¶¶ 55–56. 15 A. Right to Privacy Plaintiff alleges that Defendant invaded Plaintiff’s and class members’ right to privacy by 16 17 procuring their background reports without complying with the FCRA’s stand-alone disclosure 18 requirement. SAC ¶ 55. Hertz argues that Case did not suffer an invasion of privacy because he 19 knew that Hertz would procure a background check, and consented to the procurement of this 20 report by voluntarily signing or electronically accepting multiple authorizations.2 Mot. 9. Citing 21 Thomas v. FTS USA, LLC, No. 13-cv-825, 2016 WL 3653878 (E.D. Va. June 30, 2016), Case 22 contends that his signed authorization for Hertz to procure his background report was not 23 “informed,” and thus, it was “illegal” for Hertz to obtain Case’s consumer report for employment 24 purposes. Opp’n 9; see also id. at 1, 4, 6, 17, 21. Therefore, Case’s position is that Hertz’s 25 26 27 28 2 Hertz also argues that Case does not allege that the information obtained for the background report was private. Mot. 10. Case contends that it is irrelevant that some of the information comes from public sources, because the act of consolidating it and providing it to a potential employer implicates privacy concerns. Opp’n 7. Because the Court agrees that Case consented to the background check, it declines to address this issue. 5 1 procurement of the background report in violation of the FCRA was an invasion of privacy. Id. at 2 9. In reply, Hertz correctly distinguishes Thomas from the case at hand. Reply ISO Mot. 7–8, 3 4 ECF 82. In Thomas, the plaintiff alleged that his former employer procured his and other class 5 members’ consumer reports without first providing the required written disclosure or obtaining the 6 consumers’ written consent, as required by the FCRA. 2016 WL 3653878, at *1. The plaintiff 7 later learned that his employer had received his consumer report when he was denied continued 8 employment based upon the inaccurate information contained in the report. Id. at *3. Here, in 9 contrast, Case does not allege that the disclosure he received prevented him from understanding that he was authorizing Hertz to procure a background report or that had he would not have 11 United States District Court Northern District of California 10 authorized Hertz to a background report had he received an FCRA-compliant disclosure. See 12 Reply ISO Mot. 7. Indeed, there is no indication that Case could plausibly allege those facts. 13 Instead, the crux of Case’s complaint is that the consent form did not technically comply with the 14 requirements of the FCRA. This is the kind of bare procedural violation that the Supreme Court 15 described in Spokeo. See, e.g., Nokchan v. Lyft, Inc., No. 15-cv-3008, 2016 WL 5815287, at *4 16 (N.D. Cal. Oct. 5, 2016); Larroque v. First Advantage LNS Screening Sols., Inc., No. 15-cv-4684, 17 2016 WL 4577257, at *4–5 (N.D. Cal. Sept. 2, 2016). 18 19 B. Informational Injury Case’s alleged informational injury is also based on the consent form containing 20 extraneous information. In support of his informational injury claim, Case relies on Public 21 Citizen, 491 U.S. 440, and Akins, 524 U.S. 11. SAC ¶ 56. Both of these cases were cited by the 22 Supreme Court in Spokeo as examples of a concrete harm being suffered when information 23 authorized by statute was not supplied. In Public Citizen, the harm was the inability of the 24 plaintiff to monitor the judiciary because the ABA refused to release documents that congressional 25 statutes made open records. In Akins, the harm was an inability to obtain information regarding 26 the American Israel Public Affairs Committee’s membership, contributions, and expenditures that 27 the plaintiffs believed were required by law. 28 Hertz attempts to distinguish Akins and Public Citizen by arguing that both cases involved 6 1 challenges to the government’s failure to comply with a statutory obligation to disclose 2 information of public concern.3 Mot. 11–13. Case rejects this interpretation, and instead suggests 3 that both cases support standing here because in Akins and Public Citizen, the Supreme Court 4 rejected the idea that plaintiffs who were deprived of information they were entitled to receive had 5 to demonstrate an additional injury—the deprivation of information itself sufficed to constitute the 6 required injury for purposes of Article III. Opp’n 13. In reply, Hertz again emphasizes that Akins 7 and Public Citizen involved government records. Reply ISO Mot. 11. Hertz also attempts to 8 distinguish the cases Plaintiff cites, because there, the plaintiffs were actually deprived of 9 information to which they were legally entitled whereas here, Case was provided with the information required by the FCRA, albeit along with other alleged extraneous information. Reply 11 United States District Court Northern District of California 10 ISO Mot. 12; see, e.g., Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982) (plaintiff was 12 deprived of information to which she was legally entitled); Church v. Accretive Health, Inc., No. 13 15-15708, 2016 WL 3611543, at *3 (11th Cir. July 6, 2016) (same). The Court agrees that the deprivation of statutorily mandated information can cause an 14 15 intangible but concrete harm, if that harm is of the type Congress sought to prevent. Case, 16 however, has not alleged that Hertz’s disclosure form did not contain the information required by 17 the FCRA. Cf. Akins, 524 U.S. at 21 (“[A] plaintiff suffers an ‘injury in fact’ when the plaintiff 18 fails to obtain information which must be publicly disclosed pursuant to a statute.” (citing Pub. 19 Citizen, 491 U.S. at 449)). Instead, Case claims that the disclosure was not in the format required 20 by the statute because it contained “extraneous” information. Further, Case was offered 21 employment by Hertz. Absent some additional allegation of harm, the Court cannot find an 22 informational injury based on the current record. In light of the foregoing, the Court concludes that under Spokeo and the specific facts of 23 24 this case, Plaintiff has failed to establish that he meets Article III’s injury-in-fact requirement, and 25 the motion to dismiss is GRANTED. Accordingly, the complaint is dismissed without prejudice 26 27 28 3 Hertz also attempts to draw a distinction based on the purported importance of the rights at issue in Akins and Public Citizen. Mot. 12. However, such a determination is not essential to this motion, so the Court declines to make this distinction. 7 1 to refiling this action in state court.4 IT IS SO ORDERED. 2 3 Dated: November 21, 2016 ______________________________________ BETH LABSON FREEMAN United States District Judge 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 4 28 At the hearing, the parties agreed that where a federal court lacks subject matter jurisdiction over an action due to lack of Article III standing, dismissal without prejudice is appropriate. 8