Ryals v. Strategic Screening Solutions, Inc. et al, No. 3:2014cv00643 - Document 31 (E.D. Va. 2015)
Court Description: MEMORANDUM OPINION. Signed by District Judge Robert E. Payne on 07/30/2015. (walk, )
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Ryals v. Strategic Screening Solutions, Inc. et al Doc. 31 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division lL JAMES RYALS, JR., on behalf of himself and all others similarly situated, JUL 3 0 20l5 CL.ERK, U.S. DISTRICT COURT RICHMOND, VA Plaintiff, v. Civil Action No. 3:14cv643 STRATEGIC SCREENING SOLUTIONS, INC., et al., Defendants. MEMORANDUM OPINION This case is before the Court on the Defendants' DISMISS FIRST AMENDED CLASS 12 (b) ( 1) (Docket No. 23) . ACTION COMPLAINT MOTION TO PURSUANT TO RULE For the reasons set for th below, this motion will be denied. BACKGROUND Plaintiff, employment 2014. 5, at James with GCA Ryals, Services Jr. Group, ("Ryals") Inc. First Amended Class Act ion Complaint 35). ("GCA"} ( "FAC"} As a part of the employment process, applied in March for of (Docket No. GCA obtained a background report that was prepared by the Defendants, which, according to the FAC, Id. Cj(CI[ 37, 19-21. are consumer reporting agencies. at Ryals received several letters during the hiring Dockets.Justia.com process that informed him that GCA was reviewing his application for employment based on from the One of those letters contained a Id. at 'JI'JI 46-51. Defendants. collected information copy of a consumer report that is alleged to ref le ct dismissed charges that were too old to be lawfully included in a consumer Id. at 'JI'JI 38-43, report. In early April of 2014, 49-50. Ryals was notified that GCA had decided not to offer him a position based, at least in part, on adverse information provided in the background reports. Defendants denial and Id. at 52-54. contend, offered however, employment that to GCA "reconsidered Plaintiff" in May of its 2014. Memorandum in Support of Motion to Dismiss First Amended Class Action Complaint Pursuant to Rule 12(b) (1), (hereafter "Defendants' Docket No. Opening Br." at 3.) . 24, at 3 They assert that Ryals "never responded to GCA's offer, which was communicated by a GCA employee to Plaintiff in multiple voicemail messages that same month." No. to 24-6 Mr. ("I personally communicated GCA' s Ryals employment Ryals' Id.; see also Declaration of Staci Hoover 1 , by telephone application. I at the left number four or Docket offer of employment he five provided in his messages on Mr. voicemail, each indicating that he had been selected for 1 The Court may rely on the pleadings, documents referenced in the complaint, and "other evidence in the record without converting the [subject matter jurisdiction challenge] ... to one for summary judgment." Al Ahimari v. CACI Premier Tech., Inc., 758 F.3d 516, 531 (4th Cir. 2014) (quotations omitted). 2 employment and requesting Ryals orientation.") telephone behalf calls of to Rule contact that he messages Plaintiff's Motion to he "denies voicemail GCA. " Defendants' Pursuant or that Dismiss 12(b) (1), Docket from or in 27, schedule received GCA any anyone Opposition Amended No. to ever Response First me Class at 5 on to Complaint (hereafter "Plaintiff's Response Br." at 5.). In three the FAC, Ryals provisions Docket No. 5. of alleges the Fair In Count I, violated 15 U.S.C. 15 Reporting Act violated ( "FCRA") . by including "adverse items of the Id. at 12. violated Defendants Ryals alleges that the Defendants information ... which antedated Defendants the Credit §1681c(a) (5) than seven years." that report on Plaintiff by more In Count II, Ryals alleges that U.S.C. §1681g(a) by "systematically failing to provide a complete copy of all information in class member files within its mandated disclose the actual sources reports", and failing "to disclosure", of include failing information within the explanation Id. at 17. disclosures mandated" by the FCRA. of "to [the] rights In Count III, Ryals alleges that the Defendants violated 15 U.S.C. §168lk by "failing fact adverse to notify public and consumers criminal at the record time ... of the information [was] that being provided to employers or prospective employers" and failing to maintain strict procedures. Id. at 19. 3 Ryals has acknowledged that his actual "nominal." damages stemming from the above facts are Id. at t121. DISCUSSION Defendants argue that Ryals lacks Article III standing to pursue his FCRA claims because cognizable injury-in-fact. 2 standing, he has not alleged a If the plaintiff does legallynot have this Court lacks subject matter jurisdiction and can go no further in evaluating this case, and it must be dismissed. Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006). I. Legal Standard The United States Cons ti tut ion's "case-or-controversy" requirement limits the jurisdiction of the federal court system. U.S. Const. Art jurisdiction, a §2. limits Constitution's III and plaintiff In thus suing order the in standing to pursue his or her claim. to federal federal fall within court court the system's must have If a named plaintiff in a putative class action cannot establish that he has standing to pursue a claim or claims, then 2 the entire action must be The Supreme Court of the United States has granted a writ of certiorari in the case of Spokeo, Inc. v. Robins, which it will hear next term. That case asks "whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm, and who therefore could not otherwise invoke the jurisdiction of a federal court, by authorizing a private right of action based on a bare violation of a federal statute." 4 t dismissed as to the claim or claims lacking. Doe v. Obama, 631 F.3d 157, 161 (4th Cir. 2011). Over the years, as to which standing the law of standing has been developed in such a way that it now consists of three elements. plaintiff must have suffered an of a legally protected particularized and hypothetical. is (b) Second, 'injury-in-fact' interest actual which is or imminent, (a) not "First, the - an invasion concrete and conjectural or there must be a causal connection between the asserted injury and the asserted wrongful conduct in that the injury has to be fairly traceable to the challenged action of the defendants and not the result of the independent action of some third party not before the court. 'likely', as opposed to merely 'speculative', will be redressed by a favorable decision." of Wildlife, omitted). 504 The U.S. party 555, Third, 560-61 invoking ( 1992) federal it must be that the Lujan v. (internal injury Defenders quotations jurisdiction bears the burden of proving that these three requirements are satisfied. Id. at 560; Warth v. Seldin, 42 U.S. 490, 518 (1975). II. Position of the Parties Defendants because he has argue not that Ryals suffered an does In support of this argument, 5 have injury-in-fact, suffered a bare violation of a statute. at 5-6. not standing here but only Defendants' has Opening Br. Defendants point to the Fourth Circuit's opinion in David v. Cir. 2013}. In David, the Alphin, Fourth 704 F.3d 327 Circuit ruled (4th that participants in a defined benefits plan did not have standing to sue under the Employee Retirement ("ERISA"}. 704 F. 3d at 333-39. Income Security Act of 1975 The Court of Appeals explained that it was \\undisputed that [Plaintiffs had] statutory standing to assert claims ... on behalf of the Pension Plan under ERISA", it stated also the that \'must Plaintiffs constitutional standing under Article III." also have Id. at 333. Ultimately, the Fourth Circuit held that the Plaintiffs did not have constitutional standing because they could not show that they had suffered an injury-in-fact as a direct result of the Defendants' actions. Id. at 339. of Appeals explained "that In particular, a participant in a the Court defined benefit pension plan has an interest in his fixed future payments only, not the assets of the pension fund." Aircraft Co. v. Jacobson, 525 Id. U.S. a 338 432, {citing Hughes 439-40 {1999}}. Therefore, "the risk that [Plaintiffs'] pension benefits will at some point in the future be adversely affected as a result of the present alleged ERISA violations is too speculative to give rise to because, Article under speculative and, III the for standing." alleged that facts, reason, 6 Id. the the That, of injury, course, if Plaintiffs was any, was failed the That scenario is injury-in-fact test. not presented here and thus that part of David is not applicable here. The Court of Appeals also held that the mere fact that the Plaintiffs were afforded statutory rights in accordance with ERISA did not confer constitutional standing if the Plaintiffs could not establish that way. they had been actually harmed in any Id. The Defendants argue that Ryals has suffered no cognizable injury as a result of any FCRA violation and thus cannot satisfy the constitutional with reference to injury-in-fact the Section Specifically requirement. 1681g claim in Count II, the Defendants argue that Ryals "did not suffer any harm ... [because] he was provided request." with Id. at 8. in Count III, a full copy of his latest report upon With reference to the Section 1681k claim Defendants argue that Ryals has failed "to allege that any of the reported information was inaccurate" and thus has not alleged an injury-in-fact. 3 3 Defendants also argue that Ryals lacks standing to pursue Count I under §1681c. However, both parties agree that further discovery is necessary to fully develop this argument. Plaintiff's Response Br. at 14; Docket No. 30 at 2. It is settled in this circuit that, "when the jurisdictional facts are inextricably intertwined with those central to the merits, the court should resolve the relevant factual disputes only after appropriate discovery." Kerns v. United States, 585 F. 3d 187 (4th Cir. 2009} Because the jurisdictional and factual issues are inextricably intertwined here, the Defendants' Motion to Dismiss Ryals' § 1681c claim in Count I will be denied. 7 Ryals responds that "the ERISA claims in that case [David] were different a involved from the claims here ... [because] suit by plan members who ... were recover individually." provides FCRA that an not permitted to Plaintiff's Response Brief at 11. individual who they fiduciary its violates ERISA requirements is "liable to the retirement plan itself" and not to those u.s.c. individuals Thus, §1109. enforcement who are members of the plan. Id. ; 29 the private right of action is merely an mechanism and does not create an individualized right to whatever recovery could be secured. That, is not the case in actions under the FCRA. of course, And, says Ryals, David does not control FCRA cases. Ryals also argues that he has suffered an injury-in-fact and because the Section 1681g and Section 1681k claims challenge the Defendants' disclosures, And, alleged and says Ryals, failure notifications to in provide compliance information, with the FCRA. "the denial of a right to certain information to which the plaintiff has a right." Id. at 8. "Informational injury" of this sort is recognized within the Fourth Circuit and elsewhere. Justice, Akins, Inc. v. Id. 491 U.S. 524 U.S. Long, Institute v. {citing 440, 11, 752 Public Citizen v. U.S. 449 Election 24-25 F. Leavitt, (1989); (1998); Comm'n of v. Project Vote/Voting For Am., Supp. 2d 697, 440 F.3d 156, 8 Fed. Department 703 159 (E.D. Va. (4th Cir. 2010); 2006); Salt Am. Canoe Ass'n, F. 3d 536, 387 Inc. 542 952 1541, 2003); n.5 1543 City of Louisa Water & Sewer Comrn'n, (6th Cir. (5th Cir. 947, v. (7th (D.C. 2004); Grant v. Heartwood v. Cir. Cir. 2000); Gilbert, U.S. Pub. 324 F.3d 383, Forest Serv., Citizen 389 v. 230 869 FTC, 1989); Alvarez v. Longboy, F.3d F.2d 697 F.2d 1333, 1338 (9th Cir. 1983)). In making his argument, decision of Dreher v. 6834867 that (E.D. the Va. because Congress violation of Experian 2014). plaintiffs In "[had] created which Ryals a Dreher, standing legal Court which part, on the Inc., 2014 WL the district to right constitutes precedent in Solutions, Info. an constitutional standing purposes." Supreme relies, pursue under held claims [FCRA], the sufficient Id. at *3. established their the injury court for The Court cited that "Congress may create a statutory right or entitlement the alleged deprivation of which would can have confer suffered absence of statute." U.S. 490, 514 standing no Id. (1975)). determined that the through the FCRA, to sue judicially at *4 Based Plaintiff even where cognizable on had that makes sense the Seldin, 422 in part, the Court because, "Congress created rights to consumers and the in Dreher also when in precedent, standing, plaintiff injury (quoting Warth v. cause of action to ensure them under the Act." The Court the noted that its alongside the considered 9 Id. "conclusion also recognition of informational injuries." It stated that, under the FCRA, Id. "consumers have the right to receive certain information from consumer reporting agencies ... The alleged failure of [Defendant] to provide the ... information violated that right." Court found that this fact was also "enough to Id. The satisfy the injury-in-fact requirement of constitutional standing." Id. Defendants argue that Dreher is distinguishable from this case. Specifically, they take the view that the Dreher plaintiff "suffered an actual harm under §1681g" because "the CRA allegedly deliberately misrepresented the source of negative credit account plaintiff "injured information for the a copy named of after his a request consumer plaintiff by by and file," forcing him the that to named this expend a substantial amount of effort in correcting his consumer file and disrupting his efforts to 'save' his federal clearance." security Defendants' Opening Br. at 8, fn 4. III. Analysis Ryals has sufficiently alleged an injury-in-fact and thus has standing to pursue his FCRA claims in federal court. To begin, it is important to note that the Defendants' argument is predicated on an assertion of fact that is disputed. Specifically, the Defendants say that "(t]he only actual injury that Plaintiff claims . . . [in Counts I and II] was the loss of 10 Defendants' Opening Br. an employment opportunity [with GCA)." at 7. And, say the Defendants, because GCA actually reconsidered its initial rejection of Ryals' application and offered him a Defendants' Opening Br. at job, there can be no actual injury. 7-8. That argument fails because Ryals has adequately disputed that he was ever offered employment by GCA. Defendants do not dispute that, if Ryals' And, of course, the version is accepted, he has suffered what they call an "actual" injury. Nor could they. Even if subsequently GCA had had reconsidered offered Ryals a its job, standing to prosecute Counts I and II. 168lg and 168lk guarantee information at certain times. Section 168lg entitles consumer's file" a early he still a certain Specifically, have "all kind of in relevant part, information if and when it is requested, the information" in the file, would and That is because Sections consumers consumer rejection in the "the sources of the "identification of each person that procured a consumer report" during certain time periods, "a summary of information, rights" together with and a "statement that a other rights-related consumer reporting agency is not required to remove accurate derogatory information from the file of a consumer, unless the information is outdated ... or cannot be verified." notification "of the Section 168lk entitles a consumer either a fact that 11 public record information is being reported ... together person to whom maintenance such of with the information "strict name is procedures and of the reported" being address or the designed whenever public record information which is to insure that likely to have an adverse effect on a consumer's ability to obtain employment is reported it is complete and up to date." In this case, several pieces entitled. Ryals alleges that he has been deprived of of information to which he is, by statute, As to Section 1681g, Ryals claims that he was denied "a complete copy of all information in [his] filed within [the) mandated disclosures", "the actual sources of information within the reports", and "the explanation mandated by" Section 1681g (c}. 1681k, Ryals alleges that information was reported, FAC at he required by Section 1681k(a} (1} of was <JI not rights 89 . disclosures As to Section provided the notice "at the time" the public record nor was he given the name and address of the recipient of that information. In other words, he is alleging that he did not receive the required information at the required time, as required by the FCRA. Those fact and reasons. allegations are create standing First, as sufficient to sue in to federal explained in Dreher 4 , 4 allege an court injury-infor two "Congress created a Contrary to the Defendants 1 arguments, the decision in Dreher that the Plaintiff had standing to sue was not based on the 12 legal right under the [FCRA], the violation of which constituted an injury sufficient statutory constitutional standing purposes." It is well-established that "Congress may create Dreher at *3. a for right or entitlement the alleged deprivation of which can confer standing to sue even where the plaintiff would have suffered no judicially cognizable injury in the absence of the statute." Warth, 422 U.S. at Congress has clearly 514. created rights on the individual consumer level through the FCRA and has also created a indi victual §1681n (a) consumers private right of can enforce their action through which {"Any person who willfully fails requirement imposed under this See 15 U.S.C. rights. to comply with any subchapter with respect to any consumer is liable to that consumer ... "). David does not control this Although case. caution that a court should not "conflate [] with constitutional standing", its holding particularities of the ERISA statute. In David, statute, Id. at itself." David does statutory standing speaks David, 704 only to the F. 3d at 338. the plaintiffs were permitted to sue under the ERISA but they were "not permitted to recover individually." 332. Id. Instead, Thus, "all relief [had to] go to the Plan the plaintiffs did not have an individual private right of action to redress the injury alleged. Instead, plaintiff's efforts to correct his records. Rather, it was based on the fact that he alleged violations of the FCRA and that he alleged a violation of his right to certain information. 13 they could only sue to secure redress to another entity: plan. In addition, the the Fourth Circuit clearly stated that the plaintiffs in David had not suffered any injury because it was the plan, and not mismanagement. Ryals its members, that would bear the burden of That situation is unlike the one presented here. is asserting his own rights through a action conferred on consumers and, private right of under a statute that allows consumers to recover damages if they are successful. Thus, the allegation that his FCRA rights were violated is sufficient to allege an injury-in-fact. Also, alleged in facts, David, the the Fourth Plaintiffs' Circuit claim found was that, on speculative. the That simply is not the case here and thus David is inapplicable for that additional reason. Additionally, Ryals has demonstrated an injury-in-fact through his allegations that he was deprived of the appropriate type of information at the appropriate time. It is well- established that the allegation of a deprivation of information is sufficient Fed. to satisfy the injury-in-fact Election Comm'n v. Atkins, the FCRA, 524 U.S. 11, requirement. 22 (1998}. See Under Ryals and other consumers have the right to specific information at specific times. failed to provide that The allegations that Defendants information, information after it was or that they provided the required are sufficient to posit \\an 14 invasion of a legally protected interest which is and particularized and or hypothetical." 560-61. (b) actual or imminent, Lujan v. (a) accurate not conjectural Def enders of Wildlife, 504 U.S. at Thus, Ryals satisfies the "injury-in-fact" component of the accepted standing calculus. Moreover, Congress is presumed to be aware of the Supreme Court's jurisprudence when it enacts statutes. Langley, 62 F.3d 602, 605 (4th Cir. 1995) United States v. ("Thus, it is proper to consider that Congress acts with knowledge of existing law, and that absent a newly-enacted or with existing quotation clear revised law and omitted); 503 Marine Corp., its U.S. Chicago, 441 U.S. statute see Protection Corp., 498 manifestation 19, 677, 32 v. 267-68, (1990); 696-97 to be intent, Securities (1992); Cannon v. (1979). The a harmonious construction.") Holmes 258, contrary presumed judicial also U.S. is of (internal Investor Miles v. Apex University of law of standing enjoys no exemption from that presumption. It would be passing strange for Congress to have created the FCRA, a rather extensive set of private rights the violation of which gives rise to damages that are available to individual consumers and also to rely on the so-called "private attorneygeneral concept" for leave the holders them. Indeed, of enforcement of the statutory rights, those rights without Congress did no 15 such but standing to enforce thing because the FCRA provides for actual and punitive damages. The concept that even award of nominal actual damages can support an award of punitive damages is no stranger v. to the Beaufort, Inc. Aetna Cas. (4th Cir. 1992} ("The district law. Insurance And Sur. court Co., in some circumstances, punitive damages."} And, injury even if the F.2d 847, of 853 should also consider that nominal damages can, an 966 Services support an award of the deprivation of a right is itself injury is slight or nominal. That certainly is true of the rights at issue in Counts I and II of the FAC. Congress struck a limited statutory balance damages in FCRA cases by also allowing because often injury from deprivation of an FCRA right often can be hard to prove. Harris v. Mexican 2009} Cir. Specialty ("This court Foods, has Inc., 564 recognized F.3d that See 1301 even the (11th though statutory damages may be used in cases where no actual damages were incurred, they are also often employed where damages are difficult or impossible to calculate.") ; Corp., 434 [under the example,] that F.3d 948, FCRA], a modest information [Because the] 953 if (7th Cir. any, are Murray v. 2006} likely ("[I]ndividual losses to concern about privacy would actual leak out loss and is GMAC Mortg. be [or] lead small to small a [for slight chance identity and theft. hard to qualify ... statutes such as the Fair Credit Reporting Act provide 16 for modest damages without proof of injury."); Sons, Law of Fin Privacy <Jil. 09 ( 2) (2014) A. S. Pratt & ("It often is di ff icul t for a plaintiff to establish actual damages under the FCRA, and the failure to recover any monetary award can also preclude a plaintiff from recovering court costs and attorney's fees, if the FCRA, plaintiff As a can result, establish a plaintiffs negligent violation even of the frequently will allege willful violations of the FCRA in an effort to secure minimum statutory damages and the possibility of punitive damages, qualify for Congress afforded incentive court for for relief CRA' s incurring damages fees costs to from obey redress to violation the consumers entitled under the FCRA. difficult attorney's law as fees.") of the well prove, rights to the and an risk of and attorneys' which they are If individual consumers did not have violations the of Thereby, right as (even though not always great) depriving standing to and and thereby to of the purposes frustrated. 17 FCRA where damages of the FCRA would are be CONCLUSION For DISMISS 12(b) (1) the reasons set forth above, FIRST AMENDED CLASS ACTION Defendants' COMPLAINT MOTION TO PURSUANT TO RULE (Docket No. 23) is DENIED with prejudice as to Count II and Count III of the First Amended Complaint. The Defendants' MOTION TO DISMISS FIRST AMENDED CLASS ACTION COMPLAINT PURSUANT TO RULE 12 {b) ( 1} (Docket No. 23) is DENIED without prejudice as to Count I of the First Amended Complaint. It is so ORDERED. /s/ Robert E. Payne Senior United States District Judge Richmond, Virginia Date: July -1>J2.._, 2015 18
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