Wittbecker v. Cupertino Electric, No. 5:2020cv06217 - Document 23 (N.D. Cal. 2021)

Court Description: ORDER GRANTING 19 PLAINTIFFS MOTION TO REMAND. Signed by Judge Beth Labson Freeman on 4/14/2021. (blflc2S, COURT STAFF) (Filed on 4/14/2021)
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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 8 ROY WITTBECKER, on behalf of himself, and all others similarly situated, and the general public, Plaintiff, 9 v. 10 United States District Court Northern District of California 11 12 Case No. 20-cv-06217-BLF ORDER GRANTING PLAINTIFF’S MOTION TO REMAND [Re: ECF 19] CUPERTINO ELECTRIC, INC., a Delaware corporation; and DOES 1 through 50, inclusive, Defendants. 13 14 15 Plaintiff Roy Wittbecker brings this putative class action against Defendant Cupertino 16 Electric, Inc. and Does 1 through 50, inclusive (“collectively referred to as Defendants”) for 17 alleged violations of the Fair Credit Reporting Act (the “FCRA”) and similar California laws. See 18 Ex. A to Notice of Removal (“Compl.”), ECF 1. Defendant removed the action to this Court on 19 the ground that Plaintiff’s claim for relief invokes federal law and thus federal jurisdiction is 20 established per 28 U.S.C. § 1331. Notice of Removal 2, ECF 1. Before the Court is Plaintiff’s 21 Motion to Remand to state court. Mot., ECF 19. Pursuant to Civil Local Rule 7-1(b), the Court 22 finds that this motion is appropriate for determination without oral argument, and the July 8, 2021 23 hearing is VACATED. For the reasons stated below, the Court GRANTS Plaintiff’s Motion and 24 REMANDS the case to the Superior Court of California, Santa Clara County. 25 I. BACKGROUND 26 Plaintiff alleges that he was employed by Defendant from approximately March 6, 2019 27 until July 8, 2019. Compl. ¶ 21. When Plaintiff applied for employment, Defendant performed a 28 background investigation on him. Id. ¶ 22. According to Plaintiff, Defendant failed to provide 1 legally compliant disclosure and authorization forms to Plaintiff and the putative class. Id. ¶ 23. 2 Plaintiff further alleges that Defendant routinely acquires consumer, investigative consumer, 3 and/or consumer credit reports (collectively “credit and background reports”) to conduct 4 background checks on Plaintiff and other prospective, current, and former employees and uses 5 information from credit and background reports in connection with its hiring process without 6 providing proper disclosures or obtaining proper authorization in compliance with the FCRA. 7 Compl. ¶ 2. United States District Court Northern District of California 8 Plaintiff alleges that Defendant’s “credit and background reports” are “consumer reports” 9 within the meaning of section 1681a(d)(1) of the FCRA. Compl. ¶ 35. Plaintiff further alleges that 10 Defendant’s “credit and background reports” violated Section 1681b(b)(2)(A) of the FCRA, which 11 establishes the conditions upon which employers may furnish and use consumer reports— 12 specifically, requiring the employer to provide “[a written] clear and conspicuous disclosure” that 13 “consists solely of the disclosure” and receive a written authorization from the prospective 14 employee. See Compl. ¶ 37 (citing 15 U.S.C.A. § 1681b(b)(2)(A)’s “standalone requirement”). 15 According to Plaintiff, Defendant’s disclosures violated the FCRA because they “are embedded 16 with extraneous information, and are not clear and unambiguous disclosures in stand-alone 17 documents.” Id. ¶ 41. 18 Plaintiff alleges two instances of “extraneous information” in the disclosures in violation 19 of the stand-alone disclosure requirement of FCRA. First, the disclosures that Plaintiff received 20 included state-specific disclosure applicable to California, Massachusetts, Minnesota, and 21 Oklahoma applicants or employees. Compl. ¶ 23. Second, Defendant required a “liability release” 22 in the disclosure form, which the Federal Trade Commission (“FTC”) has found to be in violation 23 of the FCRA § 1681b(b)(2)(A). See Compl. ¶¶ 45, 48. Plaintiff alleges that Defendant acted “in 24 deliberate or reckless disregard of their obligations and the rights of applicants and employees” 25 because (1) Defendant is a large corporation with access to legal advice; (2) Defendant requires 26 authorization to perform credit and background checks in its employment application process; (3) 27 the statute’s language is clear as to the requirements for the disclosures; and (4) the FTC statement 28 regarding impermissibility of “liability waiver” in disclosures predates Defendant’s conduct. Id. ¶ 2 1 47. As a result of Defendant’s “unlawful procurement of credit and background reports by way United States District Court Northern District of California 2 3 of their inadequate disclosures,” Plaintiff alleges that Plaintiff and other similarly situated 4 individuals were injured by, “having their privacy and statutory rights invaded in violation of the 5 FCRA.” Compl. ¶ 51. Accordingly, Plaintiff seeks to recover “statutory damages and/or actual 6 damages, punitive damages, injunctive and equitable relief and attorneys’ fees and costs.” Id. ¶ 52; 7 see also Prayer for Relief. 8 On July 27, 2020, Plaintiff filed this putative class action against Defendant in the Superior 9 Court of California, Santa Clara County. See Compl. The Complaint alleges nine causes of action: 10 (1) violation 15 U.S.C. §§ 1681b(b)(2)(A) of the FCRA; (2) failure to provide meals under Lab. 11 Code §§ 204, 223, 226.7, 512, 1198; (3) failure to provide rest periods under Lab. Code §§ 204, 12 223, 226.7, 1198; (4) failure to pay hourly wages under Lab. Code §§ 223, 510, 1194, 1194.2, 13 1997.1, 1198; (5) failure to pay vacation wages under Lab. Code § 227.3; (6) failure to indemnify 14 under Lab. Code § 2802; (7) failure to provide accurate written wage statements under Lab. Code 15 § 226(a); (8) failure to timely pay all final wages under Lab. Code §§ 201, 202, 203; and (9) unfair 16 competition under Bus. & Prof. Code §§ 17200 et seq. Id. On September 2, 2020, Defendant 17 removed this action to Federal Court because Plaintiff brought a federal claim arising under the 18 FCRA. See Notice of Removal. Plaintiff moves this Court to remand this action to California state court because there is no 19 20 Article III standing since the background check claims brought by Plaintiff under the Fair Credit 21 Reporting Act “does not assert that he incurred any economic or otherwise concrete injury as 22 required for Article III’s standing and federal court jurisdiction.” Mot. 2-3. Plaintiff requests this 23 Court refuse to exercise supplemental jurisdiction over the remaining state law claims in the 24 interest of judicial economy, convenience, fairness, and comity. Mot. 2. 25 II. LEGAL STANDARD 26 A. 27 “A suit may be removed from state court to federal court only if the federal court would 28 Removal have had subject matter jurisdiction over the case.” Orpilla v. Schenker, Inc., No. 19-CV-083923 1 BLF, 2020 WL 2395002, at *2 (N.D. Cal. May 12, 2020); 28 U.S.C. § 1441(a); see Caterpillar 2 Inc. v. Williams, 482 U.S. 386, 392 (1987) (“Only state-court actions that originally could have 3 been filed in federal court may be removed to federal court by the defendant.”). If it appears at any 4 time before final judgment that the federal court lacks subject matter jurisdiction, the federal court 5 must remand the action to state court. 28 U.S.C. § 1447(c). 6 7 Gov’t of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009). “The removal 8 statute is strictly construed, and any doubt about the right of removal requires resolution in favor 9 of remand.” Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009) (citation 10 11 United States District Court Northern District of California The party seeking removal bears the burden of establishing federal jurisdiction. Provincial omitted). When the Court determines that it lacks subject matter jurisdiction over an action that has 12 been removed to federal court, the Court must remand the case to state court. Polo v. Innoventions 13 Int’l LLC, 833 F.3d 1193, 1196 (9th Cir. 2016) (“Remand is the correct remedy because a failure 14 of federal subject-matter jurisdiction means only that the federal courts have no power to 15 adjudicate the matter. State courts are not bound by the constraints of Article III.”) 16 B. 17 “In Spokeo, the Supreme Court reaffirmed that to have Article III standing, a plaintiff must Article III Standing 18 have ‘(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the 19 defendant, and (3) that is likely to be redressed by a favorable judicial decision.’” Orpilla, 2020 20 WL 2395002, at *2; see Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (citing Lujan v. 21 Defs. of Wildlife, 504 U.S. 555, 560–61 (1992)). Here, for the purposes of this Motion, neither 22 party disagrees that Plaintiff has alleged facts showing that the alleged statutory violations of the 23 FCRA are traceable to Defendant’s conduct, and that the alleged violations are redressable by 24 statutory damages. Appropriately, the remainder of the discussion on the standing issue is 25 addressed solely to the requirement of injury in fact. 26 To establish injury in fact, a plaintiff must have suffered “‘an invasion of a legally 27 protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or 28 hypothetical.’” Spokeo, 136 S. Ct. at 1548 (citing Lujan, 504 U.S. at 560). To be “particularized,” 4 United States District Court Northern District of California 1 an injury “must affect the plaintiff in a personal and individual way.” Spokeo, 136 S. Ct. at 1548 2 (citing Lujan, 504 U.S. at 560 n.1). The Supreme Court in Spokeo distilled several “general 3 principles” from its prior cases with respect to concreteness. Spokeo, 136 S. Ct. at 1550. A 4 concrete injury is one that is “‘real,’ and not ‘abstract.’” Id. at 1548 (citation omitted). Tangible 5 injuries plainly satisfy this requirement. Id. at 1549. Nonetheless, intangible injuries may also be 6 concrete. Id. In evaluating whether an intangible injury satisfies the “concreteness” requirement, 7 the Spokeo Court identified two important considerations: (1) “whether an alleged intangible harm 8 has a close relationship to a harm that has traditionally been regarded as providing a basis for a 9 lawsuit in English or American courts” and (2) the judgment of Congress, which “‘has the power 10 to define injuries and articulate chains of causation that will give rise to a case or controversy 11 where none existed before.’” Id. (quoting Lujan, 504 U.S. at 580 (Kennedy, J., concurring in part 12 and concurring in judgment)). The Supreme Court then explained the connection between statutory standing and concrete 13 14 injury. First, the Court clarified that “Article III standing requires a concrete injury even in the 15 context of a statutory violation[.]” Spokeo, 136 S. Ct. at 1549. (citing Summers v. Earth Island 16 Inst., 555 U.S. 488, 496 (2009)). Therefore, “[a plaintiff] could not, for example, allege a bare 17 procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement 18 of Article III.” Spokeo, 136 S. Ct. at 1549. At the same time, the Supreme Court observed, in cases 19 where “harms may be difficult to prove or measure[,]” “the violation of a procedural right granted 20 by statute can be sufficient ... [and] a plaintiff in such a case need not allege any additional harm 21 beyond the one Congress has identified.” Id. (citing FEC v. Akins, 524 U.S. 11, 20-25 (1998); 22 Pub. Citizen v. Dep’t of Justice, 491 U.S. 440, 449 (1989)). The Supreme Court noted that 23 although one of the FCRA’s purposes is to protect against inaccurate credit reporting, “not all 24 inaccuracies cause harm or present any risk of harm.” Spokeo, 136 S. Ct. at 1550. 25 III. 26 27 28 DISCUSSION A. Request for Judicial Notice The Court may take judicial notice of documents referenced in the complaint and matters in the public record. See Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir. 2001), 5 1 overruled on other grounds by Galbraith v. County of Santa Clara, 307 F.3d 1119, 1125-26 (9th 2 Cir. 2002). Additionally, the Court may take judicial notice of matters that are either “generally 3 known within the trial court’s territorial jurisdiction” or “can be accurately and readily determined 4 from sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). Public 5 records, including judgments and other court documents, are proper subjects of judicial notice. 6 See, e.g., United States v. Black, 482 F.3d 1035, 1041 (9th Cir. 2007). However, “[j]ust because 7 the document itself is susceptible to judicial notice does not mean that every assertion of fact 8 within that document is judicially noticeable for its truth.” Khoja v. Orexigen Therapeutics, Inc., 9 899 F.3d 988, 999 (9th Cir. 2018). In support of its opposition to Plaintiff’s Motion, Defendant requests that the Court take United States District Court Northern District of California 10 11 judicial notice of a document called “A Summary of Your Rights Under the Fair Credit Reporting 12 Act,” which is a publication of the Consumer Financial Protection Bureau, currently available at 13 https://files.consumerfinance.gov/f/201504_cfpb_summary_your-rights-under- fcra.pdf. See 14 Defendant’s Request for Judicial Notice, Ex. A., ECF 21-1. Plaintiff has not objected to 15 Defendant’s request. Because these documents are public records, the Court GRANTS 16 Defendant’s request and takes judicial notice of Exhibit A at ECF 21-1. 17 B. Article III Standing 18 Plaintiff moves to remand this case to state court on one ground: relying on Spokeo, 19 Plaintiff argues that “while the complaint contains claims under the Federal Fair Credit Reporting 20 Act, there is no subject matter jurisdiction over those claims because there is no Article III 21 standing.” Mot. 5. In response, Defendant argues that Plaintiff has Article III standing because he 22 suffered a concrete injury when “(1) he expressly alleges – in his own words – that he suffered and 23 seeks to recover ‘actual damages,’ ‘compensatory damages,’ ‘lost money or property,’ and 24 ‘restitution,’ all of which go beyond a ‘bare procedural violation;’ and (2) he alleges an 25 informational deprivation under the FCRA that establishes concrete injury in of itself.” Opp’n 4, 26 ECF 20. 27 28 First, Defendant argues that Plaintiff has alleged a concrete injury because he “expressly alleges…he suffered economic injury.” Opp’n 5-6. Specifically, Plaintiff alleges that “he suffered 6 United States District Court Northern District of California 1 ‘lost money or property’ as a result of the purported FCRA and UCL violations and seeks 2 “restitution.” Compl. ¶¶ 88, 90, 91, 97. Plaintiff additionally seeks “actual damages” and 3 “compensatory damages,” which according to Defendant, constitute “injury-in-fact.” Opp’n 5-9. 4 This Court disagrees. Plaintiff merely making boilerplate statements in his complaint that he 5 suffered “actual damages”—when legally, he did not—does not automatically constitute a 6 concrete injury to satisfy Article III standing. “[A]n unexplained reference to “lost money or 7 property,” and a request for “restitution” – are insufficient to describe a concrete and 8 particularized harm.” Moore v. United Parcel Serv., Inc., No. 18-CV-07600-VC, 2019 WL 9 2172706, at *1 (N.D. Cal. May 13, 2019); see also Arroyo v. J.R. Simplot Co., No. 18-CV-07187- 10 LHK, 2019 WL 2338518, at *3 (N.D. Cal. June 3, 2019) (finding insufficient allegations that 11 “Plaintiff and other class members have been injured, including but not limited to, having their 12 privacy and statutory rights invaded in violation of the FCRA”). As was the case in Arroyo, 13 Defendant “is unable to point to any decision in which a court held that conclusory allegations of 14 harm to ‘privacy and statutory rights’ resulting from a failure to comply with the FCRA’s 15 disclosure requirements suffice to allege Article III standing.” Arroyo, 2019 WL 2338518, at *3. 16 Plaintiff also clarified in his reply that allegations of “lost money or property” and the “prayer for 17 restitution” pertain to the wage and hour claims asserted under the California Labor Code. Reply 18 4. Here, the Court looks only to Plaintiff’s federal claim under the FCRA to find Article III 19 standing. 20 Next, Defendant’s argument that Plaintiff’s “informational injuries” constitutes an injury in 21 fact is misplaced. Defendant relies heavily on Perez v. Ensign Servs., Inc., No. 8:16-CV-1914 JLS 22 JCGX, 2017 WL 8181145, at *2 (C.D. Cal. Jan. 19, 2017), for the proposition that the failure to 23 make the required disclosures under §§ 1681d(a)(1) and 1681g(c) is sufficient to demonstrate a 24 concrete injury. Opp’n 7. However, here, Plaintiff asserts an FCRA violation under § 25 1681b(b)(2)(A). See Compl. ¶¶ 32-53. In Perez, the Court concluded that “the mere existence of 26 extraneous information in a disclosure made under Section 1681b(b)(2)(A) is insufficient to 27 establish a concrete injury.” Perez, 2017 WL 8181145, at *2. That same conclusion applies to the 28 present case. Similar to the plaintiff in Perez, Plaintiff here identifies the extraneous information 7 1 by including six paragraphs of text from the disclosure and authorization forms in his complaint. 2 Compl. ¶ 23. Plaintiff claims that by including this extraneous information, Defendant caused his 3 injury. Id. ¶ 51. However, Plaintiff does not specifically allege what the injury was in his 4 complaint. The Court finds these allegations insufficient to establish concrete harm. United States District Court Northern District of California 5 In Rodriguez v. U.S. Healthworks, the Ninth Circuit found that the plaintiff “did not suffer 6 informational injury because the record contains no allegation or evidence that she was confused 7 by the disclosure statement and would not have signed it if it were sufficiently clear.” See 813 F. 8 App’x 315, 316 (9th Cir. 2020); cf. Syed v. M-I, LLC, 853 F.3d 492, 499–500 (9th Cir. 2017) 9 (concluding that there was a concrete injury and Article III standing because the plaintiff was 10 confused by the inclusion of the liability waiver with the disclosure and would not have signed it 11 had it contained a sufficiently clear disclosure, as required in the statute.). Here, Plaintiff noted in 12 his reply that he did not face difficulty in obtaining a summary of his rights because it is a publicly 13 available document found online and did not otherwise suffer a risk of material harm to any 14 concrete interest. Reply 4; cf. Ramirez v. TransUnion LLC, 951 F.3d 1008, 1030 (9th Cir. 2020) 15 (finding that Defendant’s conduct posed a serious risk that consumers not only would be unaware 16 that labels such as “terrorists, drug dealers, and threats to national security” were on their credit 17 reports, but also would be completely in the dark about how they could get the label off their 18 reports.). 19 In sum, while procedural violations that have resulted in real harm—or even a risk of real 20 harm—may be sufficient to meet the “injury in fact” requirement of Article III, Plaintiff here has 21 alleged no such injury. Instead, the root of Plaintiff’s complaint is that the disclosure form did not 22 technically comply with the requirements of the FCRA. This is the kind of bare procedural 23 violation that the Supreme Court described in Spokeo as insufficient. Specifically, Plaintiff alleges 24 that when he applied for employment, Defendant performed a background investigation on him— 25 containing a liability waiver and other extraneous information in violation of the FCRA. Compl. 26 ¶¶ 23, 51. Plaintiff does not allege that he was “confused” by the disclosure or that he would not 27 have signed the authorization had it been presented separately from the liability waiver or other 28 extraneous information. Cf. Syed, 853 F.3d at 499-500. Plaintiff does not allege that he was 8 1 unaware that he was authorizing a background check when he was presented with the disclosures. 2 Nor does Plaintiff allege that he was unaware he was releasing liability. Plaintiff does not allege 3 that he was denied employment based on the consumer report that Defendant allegedly procured— 4 in fact, he alleges that he was hired by Defendant. Compl. ¶ 21. Nor does Plaintiff allege that the 5 consumer report was inaccurate. Accordingly, because Plaintiff has not alleged any concrete harm, 6 he lacks Article III standing to assert his FCRA claim in this Court. 7 C. Additionally, Plaintiff asserts eight California state law claims. Compl. ¶¶ 14-28. Since 8 United States District Court Northern District of California State Law Claims 9 these are state law claims, the Court has subject matter jurisdiction over them only if they are “so 10 related to the claims in the action within [the Court’s] original jurisdiction that they form part of 11 the same case or controversy under Article III.” 28 U.S.C. § 1367(a). “A state law claim is part of 12 the same case or controversy when it shares a ‘common nucleus of operative fact’ with the federal 13 claims and the state and federal claims would normally be tried together.” Bahrampour v. 14 Lampert, 356 F.3d 969, 978 (9th Cir. 2004). Here, Defendant did not assert in its removal papers that these claims independently give 15 16 rise to jurisdiction. See Notice of Removal ¶ 5. Moreover, it is not apparent that any of Plaintiff’s 17 claims meets the amount in controversy requirement for diversity jurisdiction under 28 U.S.C. § 18 1332(a). Without federal question jurisdiction over Plaintiff’s FCRA claim, this Court could not 19 (and in any event would not, in its discretion) exercise supplemental jurisdiction over the state law 20 claims. *** 21 In conclusion, the Court holds that it lacks subject matter jurisdiction to hear this case 22 23 because Plaintiff’s complaint fails to establish Article III standing. 24 // 25 // 26 // 27 // 28 // 9 1 IV. ORDER For the foregoing reasons, Plaintiff’s Motion to Remand at ECF 19 is GRANTED. The 2 Clerk shall remand this action to the Superior Court of California, Santa Clara County 3 IT IS SO ORDERED. 4 5 Dated: April 14, 2021 6 7 8 ______________________________________ BETH LABSON FREEMAN United States District Judge 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 28 10