Opinion
Case No. EDCV 14-02362-VAP (SPx)
04-28-2015
CARLOS ROBLES, ETC., Plaintiff, v. AMPAM PARKS MECHANICAL, INC., ETC., ET AL, Defendants.
ORDER GRANTING MOTION TO DISMISS (DOC. NO. 32)
[Motion filed on March 30, 2015]
Plaintiff Carlos Robles applied for a job with AMPAM Parks Mechanical, Inc. ("AMPAM") on December 11, 2013. (Doc. No. 31 ("FAC") ¶ 4.) To assist it in deciding whether to offer him employment, AMPAM obtained his background report from A-Check Global, Inc. ("A-Check"). (FAC ¶ 9.)
Plaintiff alleges A-Check violated the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681 et seq., when it furnished his and other job applicants' background reports to AMPAM, because A-Check did not first obtain the proper certifications and disclosures. (Id. ¶ 37.)
A-Check filed the instant Motion to Dismiss Plaintiff's First Amended Complaint on March 30, 2015. (See Doc. No. 32 ("Motion").) The matter came before the Court for hearing on April 27, 2015. After considering the papers filed in support of, and in opposition to, the Motion, and the arguments put forth at the hearing, the Court GRANTS the Motion and DISMISSES Plaintiff's FAC WITH PREJUDICE.
I. BACKGROUND
A. Procedural Background
Plaintiff filed a class action complaint against Defendants AMPAM and A-Check on November 17, 2014. (Doc. No. 1 ("Complaint").) Plaintiff later agreed to submit his claims against AMPAM to arbitration and dismissed AMPAM from this lawsuit. (Doc. Nos. 23-24.)
The remaining Defendant, A-Check, filed a motion to dismiss Plaintiff's Complaint. (Doc. No. 12.) The Court granted that motion because Plaintiff only sought damages for willful violations of the FCRA but failed to allege willfulness. (See Doc. No. 26 ("MTD I Order") at 4-5.) The Court also granted Plaintiff leave to amend to allege willfulness. (Id. at 6.)
On March 16, 2015, Plaintiff filed the FAC. On March 30, 2015, A-Check filed the instant Motion. Plaintiff opposed (see Doc. No. 33 ("Opposition")), and A-Check replied (see Doc. No. 36 ("Reply")).
B. Documents Not Attached to the Complaint
A-Check relies in the instant Motion on exhibits it attached to its prior motion to dismiss. (See Doc. Nos. 18, 35.) "A district court ruling on a motion to dismiss may consider documents 'whose contents are alleged in a complaint and whose authenticity no party questions, but which are not physically attached to the plaintiff's pleading.'" Parrino v. FHP, Inc., 146 F.3d 699, 705 (9th Cir. 1998), superseded by statute on other grounds as stated in Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 681-82 (9th Cir. 2006).
Originally, these exhibits appeared at Doc. No. 18 on the docket. The Court ordered this document stricken because the exhibits contained "Plaintiff's sensitive information, including his home addresses and the results of his background check." (Doc. No. 34.) The Court provided A-Check two days to re-file the exhibits with appropriate redactions. (Id.) The exhibits now appear on the docket at Doc. No. 35.
A-Check provides the FCRA certifications and disclosures that form the basis of Plaintiff's legal claims as support for its Motion. (See Doc. No. 35, Exhs. A, B.) Plaintiff alleged the contents of these exhibits in his FAC (FAC ¶¶ 15, 16), and he does not dispute their authenticity (see Opposition at 6-7 (citing and quoting from them)). Therefore, the Court considers these exhibits in deciding the Motion.
C. Allegations in the FAC
Plaintiff applied for a job with AMPAM on December 11, 2013. (FAC ¶ 4.) Shortly after, AMPAM requested Plaintiff's background report from A-Check to assist it in deciding whether or not to offer Plaintiff employment. (Id. ¶ 4.)
A-Check has a two-step process for furnishing background reports. Businesses seeking background reports from A-Check, like AMPAM, must first sign A-Check's "FCRA Compliance Agreement." (Id. ¶ 15.) This Compliance Agreement requires a business requesting a background report to certify, inter alia, that,
(A) [b]efore requesting each employment report
from A-Check America:
(i) a clear and conspicuous disclosure will be made in writing to the consumer who is the subject of the report to be procured in a document that consists solely of the disclosure, that a Consumer Report may be procured for the employment decision; and
(Id. ¶ 15; Doc. No. 18, Exh. A ("Compliance Agreement") at 2.) The Compliance Agreement states it "constitutes all conditions of service and of reporting, present and future, and applies to all reports made by A-Check." (Id.) Businesses sign the Compliance Agreement once, at the start of their relationship with A-Check.(ii) the consumer has authorized in writing the procurement of the Consumer Report by the requester.
AMPAM signed the Compliance Agreement on April 20, 2005. (Compliance Agreement at 1-2; FAC ¶ 15.)
A-Check has a second step before it furnishes a specific person's background report. Businesses request a specific person's background report through A-Check's Website. (FAC ¶ 16.) That Website requires a business to "click a box indicating that they agree that the information will be used in compliance with the FCRA." (Id.) Only then does A-Check furnish the background report. (Id.) Specifically, the Website states, and the requesting business agrees,
[t]he information [sought] is to be used in compliance with the [FCRA] and all other applicable laws. Particularly, [the person is]
requesting this information under guidelines of Section 604 and all of its requirements.(Doc. No. 18, Exh. B ("Website").)
Although AMPAM signed the Compliance Agreement and clicked the box on the Website, Plaintiff alleges AMPAM did not comply with the FCRA's disclosure requirements. (FAC ¶¶ 17-18.) AMPAM required Plaintiff and other prospective employees to sign a background report disclosure form contravening the FCRA's requirement that this form "consist[] solely of the disclosure." (Id. ¶ 17 (citing 15 U.S.C. § 1681b(b)(2)(A)(ii)).)
II. LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(6) allows a party to bring a motion to dismiss for failure to state a claim upon which relief can be granted. Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires only a short and plain statement of the claim showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2); Conley v. Gibson, 355 U.S. 41, 47 (1957) (holding that the Federal Rules require that a plaintiff provide "'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests" (quoting Fed. R. Civ. P. 8(a)(2))); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). When evaluating a Rule 12(b)(6) motion, a court must accept all material allegations in the complaint -- as well as any reasonable inferences to be drawn from them -- as true and construe them in the light most favorable to the non-moving party. See Doe v. United States, 419 F.3d 1058, 1062 (9th Cir. 2005); ARC Ecology v. U.S. Dep't of Air Force, 411 F.3d 1092, 1096 (9th Cir. 2005); Moyo v. Gomez, 32 F.3d 1382, 1384 (9th Cir. 1994).
"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (citations omitted). Rather, the allegations in the complaint "must be enough to raise a right to relief above the speculative level." Id.
To survive a motion to dismiss, a plaintiff must allege "enough facts to state a claim to relief that is plausible on its face." Twombly, 550 U.S. at 570; Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it stops short of the line between possibility and plausibility of 'entitlement to relief.'" Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556). The Ninth Circuit has clarified that (1) a complaint must "contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively," and (2) "the factual allegations that are taken as true 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." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011).
III. DISCUSSION
Plaintiff alleges (1) A-Check breached the FCRA's certification and disclosure requirement, and (2) did so willfully. The FCRA provides a private right of action against businesses like A-Check that furnish background reports but fail to comply with its terms. Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 53 (2007). "If a violation [of the FCRA] is negligent, the affected consumer is entitled to actual damages. If willful, however, the consumer may have actual damages, or statutory damages ranging from $100 to $1,000, and even punitive damages." Id. (citations omitted). Plaintiff only alleges A-Check's violation of the FCRA was willful.
The Court holds Plaintiff has failed to plead sufficiently that A-Check willfully breached the FCRA. It therefore GRANTS the Motion.
The question of whether a defendant's conduct was willful can be a factual one. See Syed v. M-I LLC, No. 14-742, 2014 WL 5426862, at *2 n.1 (E.D. Cal. Oct. 23, 2014). Here, however, the Court asks whether A-Check's reading of the FCRA was willful, as in whether it was "objectively unreasonable." Id. at *2 (citing Safeco, 551 U.S. at 71). The question is therefore a question of law this Court can decide on a motion to dismiss. Id.
A. Any Breach by A-Check Was Not Willful
Under the FCRA, A-Check could furnish Plaintiff's background report "only if" AMPAM had certified to A-Check that it "has complied" with the disclosure requirement. 15 U.S.C. § 1681b(b)(1)(A)(i). The FCRA disclosure requirement reads as follows:
The relevant part of the FCRA reads,
A consumer reporting agency may furnish a consumer report for employment purposes only if15 U.S.C. § 1681b(b)(1)(A)(i). Plaintiff alleges, and A-Check does not dispute, that the following FCRA definitions apply in this case: • AMPAM and other employers are a "person," 15 U.S.C. § 1681a(b); • A-Check is a "consumer reporting agency," 15 U.S.C. § 1681a(f); • Plaintiff is a "consumer," 15 U.S.C. § 1681a(c); • and the background report A-Check furnished AMPAM is a "consumer report," 15 U.S.C. § 1681a(d). (FAC ¶ 8.)
(A) the person who obtains such report from the agency certifies to the agency that
(i) the person has complied with [the disclosure requirement] . . . .
[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 --15 U.S. C. § 1681b(b)(2)(A)(i) (emphasis added).
(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 . . . .
Whether AMPAM failed to meet the disclosure requirement is not at issue here. The only issue is whether A-Check obtained the proper certification from AMPAM that it complied with the disclosure requirement before furnishing Plaintiff's background report.
The Court does not understand Plaintiff to argue that A-Check is liable for AMPAM's alleged failure to comply with the FCRA. Even if Plaintiff were making that argument, it is foreclosed by the statute.
"The second and third subsections [of 15 U.S.C. § 1681b(b)] both affect users. On the other hand, the first subsection, at issue here, sets forth obligations that an agency must satisfy before furnishing a consumer report." Obabueki v. Int'l Bus. Machines Corp., 145 F. Supp. 2d 371, 393 (S.D.N.Y. 2001) (citation omitted).
As an agency that furnished a consumer report, A-Check can only be liable under the first subsection. See id. at 394.
The key here is the term "has complied." 15 U.S.C. § 1681b(b)(1)(A)(i). Plaintiff argues it was "objectively unreasonable for A-Check to rely upon" the Compliance Agreement as "a one-time prospective, blanket certification" of the FCRA's disclosure requirement. (FAC ¶ 25.) AMPAM cannot certify it "has complied" with the FCRA prospectively. Instead, A-Check must have obtained the required certification from AMPAM each time AMPAM requested a new background report. (Id. ¶ 26.)
Plaintiff's reading of the FCRA is correct. "Prospective certification . . . runs counter to § 1681b(b)(1)'s use of the phrase 'has complied,' which . . . refer[s] retrospectively to an action already taken. It makes no sense for [AMPAM] to certify that it 'has complied' with the FCRA before having done so . . . ." See Syed v. M-I LLC, No. 14-742, 2014 WL 5426862, at *4 (E.D. Cal. Oct. 23, 2014). AMPAM needed to have complied with the FCRA's disclosure requirement as to each background report before certifying that it "has complied" with the FCRA. Id.
A-Check argues that the language on its Website, which AMPAM agreed to before obtaining each new background report, meets this requirement. (Motion at 7-8.) Alternatively, A-Check argues this language shows it did not willfully violate the FCRA. (Id. at 8-9.)
Plaintiff only alleges A-Check's violation of the FCRA was willful. (FAC ¶¶ 23-26.) Therefore, even assuming the Website's language contravened the FCRA, a finding that this contravention was not willful disposes of this lawsuit.
In Safeco, the Supreme Court held that the FCRA's use of the term "willfully" requires a plaintiff to show that the defendant's conduct was intentional or reckless. 551 U.S. at 57. Recklessness, the Court held, consists of an "action entailing an unjustifiably high risk of harm that is either known or so obvious that it should be known." Id. at 68 (citation and internal quotation marks omitted). Therefore, A-Check did not act in reckless disregard of the FCRA "unless the action is not only a violation under a reasonable reading of the statute's terms, but . . . [it] ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless." Id. at 69; see also Kirchner v. Shred-it USA, Inc., No 14-1437, 2014 WL 6685210, at *1 (E.D. Cal. Nov. 25, 2014) ("A defendant's violation of the FCRA is not reckless simply because its understanding of a statutory obligation is erroneous; instead, a plaintiff must allege, at a minimum, that the defendant's reading of the FCRA is objectively unreasonable.").
Plaintiff cannot show A-Check willfully breached the FCRA. A-Check required AMPAM to certify on its Website each time AMPAM requested a new background report that it had complied with the FCRA in general, and specifically the guidelines of Section 604.
Plaintiff points out "Section 604 refers to [a] lengthy section of the FCRA." (Opposition at 7-8.) Plaintiff does not deny, however, that this Section includes the disclosure requirement at issue here. (Id.) A-Check therefore required AMPAM to certify it "has complied" with the disclosure requirement before furnishing the background report.
Plaintiff has not shown how the Website's language "ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless." Safeco, 551 U.S. at 69. Plaintiff's reliance on Syed and Kirchner is misplaced. First, whatever guidance these cases provide, they could not have done so at the time A-Check furnished Plaintiff's background report because they were decided in 2014. Second, both are distinguishable. In Syed, the defendant obtained only a "prospective, blanket certification." 2014 WL 5426862, at *4. The second certification A-Check obtained on its Website was not present in Syed. In Kirchner, the Court relied only on the allegations in the plaintiff's pleading because plaintiff disputed the authenticity of the certification the defendant provided. See 2014 WL 6685210, at *3.
Here, in contrast, A-Check used a two-step certification. First, A-Check used the Compliance Agreement, which mirrored the statutory language. Second, at the time AMPAM was obtaining a background report, A-Check's Website required it to certify that it had complied with the FCRA's various requirements, including the disclosure requirement.
Plaintiff can point to no authority suggesting A-Check's certification process was an objectively unreasonable reading of the FCRA. The statutory language, while requiring certification for each background report, does not indicate how much detail each successive certification must have. A-Check's additional certification through its Website may not be the most specific, but its placement does not constitute an objectively unreasonable reading of the FCRA's requirements.
The Court need not address what certification the FCRA actually requires because the certification that A-Check obtained did not evince a willful breach of the FCRA. The Court therefore GRANTS the Motion.
B. The Court DENIES Leave to Amend
If the Court determines that a complaint or certain claims should be dismissed, it must then decide whether to grant leave to amend. Under Rule 15(a) of the Federal Rules of Civil Procedure, leave to amend "shall be freely given when justice so requires," bearing in mind "the underlying purpose of Rule 15 to facilitate decisions on the merits, rather than on the pleadings or technicalities." Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc) (internal quotation marks and alterations omitted). When dismissing a complaint for failure to state a claim, "a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Id. at 1130 (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995) (internal quotation marks omitted)). Accordingly, leave to amend generally shall be denied only if allowing amendment would unduly prejudice the opposing party, cause undue delay, or be futile, or if the moving party has acted in bad faith. Leadsinger, Inc. v. BMG Music Publ'g, 512 F.3d 522, 532 (9th Cir. 2008).
Plaintiff "requests the opportunity to allege additional facts in order to cure any pleading defects the Court identifies." (Opposition at 8.) Plaintiff has now had two chances to allege a willful violation of the FCRA, and he has failed both times. Plaintiff has not identified any facts that would enable him to successfully allege willfulness. Alleging willfulness in this case is therefore futile.
Accordingly, the Court finds granting Plaintiff leave to amend would be futile and cause undue delay, and therefore, DENIES Plaintiff leave to amend.
IV. CONCLUSION
The Court DISMISSES the FAC WITH PREJUDICE.
IT IS SO ORDERED. Dated: April 28, 2015
/s/_________
VIRGINIA A. PHILLIPS
United States District Judge