1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 ERNESTO LIMON, an individual, on No. 1:18-cv-01689-SKO behalf of himself and others similarly 12 situated, 13 Plaintiff, ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT OR, 14 v. IN THE ALTERNATIVE, PARTIAL SUMMARY JUDGMENT 15 CIRCLE K STORES INC., and DOES 1 through 50, inclusive, (Doc. 27) 16 Defendants. 17
18 19 This matter is before the Court on Defendant Circle K Stores, Inc. (“Circle K”)’s motion 20 for summary judgment or, in the alternative, partial summary judgment, filed November 20, 2019. 21 (Doc. 27.) Plaintiff Ernesto Limon filed his opposition to the motion on December 4, 2019 (Doc. 22 33), and Circle K filed its reply on December 11, 2019. (Doc. 34.) The Court reviewed the parties’ 23 papers and all supporting material and found the matter suitable for decision without oral argument 24 pursuant to Local Rule 230(g). The hearing set for December 18, 2019, was therefore vacated. 25 (Doc. 35.) 26 Having considered the parties’ briefing, and for the reasons set forth below, the Court shall 27 deny the motion. 28 /// 1 I. BACKGROUND 2 A. Factual Background 3 On June 21, 2018, Plaintiff completed a Circle K Employment Application. (Doc. 33-1, 4 Statement of Undisputed Material Facts (“SUMF”) at 3; Doc. 27-4, Deposition of Ernesto Limon 5 (“Limon Dep.”), Ex. 4.) In the Application, when asked whether he “[w]ould . . . be willing to 6 submit to a background check, prior to being hired,” Plaintiff checked “yes.” (Id. at 4; Limon Dep. 7 86:12–25 and Ex. 4.) Plaintiff testified at his deposition that when he checked “yes” in the 8 employment application, he knew he was informing Circle K of his willingness to submit to a 9 background check prior to being hired. (SUMF at 5; Limon Dep. 87:1–7.) 10 In conjunction with the Employment Application, Plaintiff also signed a document titled 11 “Fair Credit Reporting Act (FCRA) Consent.” (SUMF at 6; Limon Dep. 89:7–90:12 and Ex. 5.) 12 The FCRA Consent informed Plaintiff that a consumer report containing his credit history, criminal 13 records, education history, and other information would be obtained for employment purposes. 14 (Limon Dep. Ex. 5.) The FCRA Consent authorized Circle K to obtain Plaintiff’s consumer report 15 for “legally authorized and mandated purposes.” (Id.) It also authorized any person or entity 16 contacted by Circle K to provide Plaintiff’s consumer report and released “any such person or entity 17 from liability for furnishing such information.” (Id.; SUMF at 10.) Plaintiff checked a box on the 18 FCRA Consent confirming his electronic signature on it and his “agreement to [the document’s] 19 use in such manner.” (Id.; Limon Dep. 89:7–90:12.) He also checked a box on the FCRA Consent 20 to request a copy of the consumer report, and he received a copy of the report on June 28, 2018. 21 (Id.; Limon Dep. 90:24–92:8 and Ex. 6; SUMF at 9.) Plaintiff was thereafter hired by Circle K as 22 a customer service representative. (Limon Dep. 35:21–22.) 23 Plaintiff states in his declaration that he was “confused by the language” in Circle K’s 24 FCRA Consent form and “did not understand everything in the form.” (Doc. 33-4, Declaration of 25 Ernesto Limon (“Limon Decl.”) ¶ 7.) Plaintiff explains that he “was confused and did not 26 understand what [he] was authorizing because the form language mentioned language about release 27 of liability and multiple other states that were not applicable to me.” (Id. ¶ 8.) He states that he 28 “did not understand that by signing [he] was waiving [his] rights in relation to Circle K and any 1 other person or entity providing background check information.” (Id. ¶ 9.) Plaintiff further testified 2 in his deposition that “a certain portion of the application contract . . . gets a little confusing and 3 misleading, where . . . by signing that portion, it pretty much would waive a certain right or release.” 4 (Limon Dep.114:2–7.) 5 B. Procedural Background 6 Seeking to represent a class of similarly situated applicants, Plaintiff brings two claims 7 under the Fair Credit Reporting Act (“FCRA”): (1) for failure to provide proper disclosure that a 8 consumer report may be obtained in violation of 15 U.S.C. § 1681b(b)(2)(A)(i), Doc. 1 (“Compl.”) 9 ¶¶ 51–56, and (2) for failure to obtain proper authorization to obtain such a report in violation of 10 15 U.S.C. § 1681b(b)(2)(A)(ii), Compl. ¶¶ 57–62. Specifically, Plaintiff alleges that Circle K’s 11 inclusion of the liability release in its FCRA Consent form violated the statutory requirement that 12 the disclosure document consist “solely” of the disclosure, which thereby rendered his written 13 authorization invalid, Compl. ¶¶ 21–22, 25–24. See 15 U.S.C. §§ 1681b(b)(2)(A)(i), (ii). Plaintiff 14 contends that Circle K’s purported violations were willful and that he and the putative class are 15 therefore entitled to statutory and punitive damages under 15 U.S.C. § 1681n(a)(1)(A). (Compl. 16 ¶¶ 33, 37, 53, 59, 60.) He also seeks attorney’s fees and costs under the statute. (Id. ¶¶ 21–22, 56, 17 62.) 18 Circle K moves for summary judgment, or in the alternative, partial summary judgment, on 19 three grounds: (1) Plaintiff cannot establish Article III standing; (2) Circle K’s alleged statutory 20 violations were not willful as a matter of law; and (3) Plaintiff cannot prevail on his second FCRA 21 claim because he provided Circle K a signed written authorization. (Doc. 27.) 22 II. LEGAL STANDARDS FOR SUMMARY JUDGMENT 23 The “purpose of summary judgment is to pierce the pleadings and to assess the proof in 24 order to see whether there is a genuine need for trial.” Matsushita Elec. Indus. Co. Ltd. v. Zenith 25 Radio Corp., 475 U.S. 574, 587 (1986) (citation omitted). Summary judgment is appropriate when 26 there is “no genuine dispute as to any material fact and the movant is entitled to judgment as a 27 matter of law.” Fed. R. Civ. P. 56(a). In addition, Rule 56 allows a court to grant summary 28 adjudication, or partial summary judgment, when there is no genuine issue of material fact as to a 1 claim or portion of that claim. Fed. R. Civ. P. 56(a); see also Lies v. Farrell Lines, Inc., 641 F.2d 2 765, 769 n.3 (9th Cir. 1981) (“Rule 56 authorizes a summary adjudication that will often fall short 3 of a final determination, even of a single claim ...”) (internal quotation marks and citation omitted). 4 The standards that apply on a motion for summary judgment and a motion for summary 5 adjudication are the same. See Fed. R. Civ. P. 56 (a), (c); Mora v. Chem-Tronics, 16 F.Supp.2d 6 1192, 1200 (S.D. Cal. 1998). 7 Summary judgment, or summary adjudication, should be entered “after adequate time for 8 discovery and upon motion, against a party who fails to make a showing sufficient to establish the 9 existence of an element essential to that party’s case, and on which that party will bear the burden 10 of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the 11 “initial responsibility” of demonstrating the absence of a genuine issue of material fact. Celotex, 12 477 U.S. at 323. An issue of fact is genuine only if there is sufficient evidence for a reasonable 13 fact finder to find for the non-moving party, while a fact is material if it “might affect the outcome 14 of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); 15 Wool v. Tandem Computers, Inc., 818 F.2d 1422, 1436 (9th Cir. 1987). A party demonstrates 16 summary adjudication is appropriate by “informing the district court of the basis of its motion, and 17 identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions 18 on file, together with affidavits, if any,’ which it believes demonstrates the absence of a genuine 19 issue of material fact.” Celotex, 477 U.S. at 323 (quoting Fed. R. Civ. P. 56(c)). 20 If the moving party meets its initial burden, the burden then shifts to the opposing party to 21 present specific facts that show there is a genuine issue of a material fact. Fed R. Civ. P. 56(e); 22 Matsushita, 475 U.S. at 586. An opposing party “must do more than simply show that there is 23 some metaphysical doubt as to the material facts.” Id. at 587. The party is required to tender 24 evidence of specific facts in the form of affidavits, and/or admissible discovery material, in support 25 of its contention that a factual dispute exits. Id. at 586 n.11; Fed. R. Civ. P. 56(c). Further, the 26 opposing party is not required to establish a material issue of fact conclusively in its favor; it is 27 sufficient that “the claimed factual dispute be shown to require a jury or judge to resolve the parties’ 28 differing versions of the truth at trial.” T.W. Electrical Serv., Inc. v. Pacific Elec. Contractors 1 Assoc., 809 F.2d 626, 630 (9th Cir. 1987). However, “failure of proof concerning an essential 2 element of the nonmoving party’s case necessarily renders all other facts immaterial.” Celotex, 3 477 U.S. at 323. 4 The Court must apply standards consistent with Rule 56 to determine whether the moving 5 party demonstrated there is no genuine issue of material fact and judgment is appropriate as a matter 6 of law. Henry v. Gill Indus., Inc., 983 F.2d 943, 950 (9th Cir. 1993). In resolving a motion for 7 summary judgment, the Court can only consider admissible evidence. Orr v. Bank of America, NT 8 & SA, 285 F.3d 764, 773 (9th Cir. 2002) (citing Fed. R. Civ. P. 56(e); Beyene v. Coleman Sec. 9 Servs., Inc., 854 F.2d 1179, 1181 (9th Cir. 1988)). Further, evidence must be viewed “in the light 10 most favorable to the nonmoving party” and “all justifiable inferences” must be drawn in favor of 11 the nonmoving party. Orr, 285 F.3d at 772; Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th 12 Cir. 2000). 13 III. DISCUSSION 14 A. Evidence Before the Court 15 In evaluating a motion for summary judgment, the Court examines the evidence provided 16 by the parties, including pleadings, deposition testimony, answer to interrogatories, and admissions 17 on file. See Fed. R. Civ. P. 56(c). On a motion for summary judgment, “[a] party may object that 18 the material cited to support or dispute a fact cannot be presented in a form that would be admissible 19 in evidence.” Fed. R. Civ. P. 56(c)(2). The Court has reviewed each of the evidentiary objections 20 identified by the parties related to the motion and opposition briefing. (See Doc. 33-5; Doc. 34-2.) 21 However, the Court declines to address each of the individual objections identified by the parties. 22 See Capitol Records, LLC v. BlueBeat, Inc., 765 F. Supp. 2d 1198, 1200 n.1 (C.D. Cal. 2010) 23 (observing “it is often unnecessary and impractical for a court to methodically scrutinize each 24 objection and give a full analysis of each argument raised”). 25 To the extent Circle K objects to evidence on the grounds of relevance (see Doc. 34-2), such 26 objections are inappropriate because the Court must determine whether a fact is relevant and 27 material as part of “the summary judgment standard itself.” Burch v. Regents of the Univ. of Cal., 28 433 F. Supp. 2d 1110, 1119 (E.D. Cal. 2006). To that end, any evidence deemed irrelevant was 1 omitted from the Court’s summary of the facts and contentions above. Further, the Court, as a 2 matter of course, has not factored into its analysis any statements identified by either party that are 3 speculative or represent a legal conclusion. See Burch, 433 F. Supp.2d at 1119 (“statements in 4 declarations based on speculation or improper legal conclusions, or argumentative statements, are 5 not facts and likewise will not be considered on a motion for summary judgment.”) (citation 6 omitted, emphasis in original). Thus, the Court has relied upon only evidence it has deemed 7 admissible. In addition, the Court will consider only those facts that are supported by admissible 8 evidence and to which there is no genuine dispute. 9 B. Plaintiff Has Established Article III Standing 10 1. Applicable Law 11 a. Spokeo 12 “[T]he irreducible constitutional minimum of [Article III] standing” contains three 13 elements, namely, “[t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable 14 to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable 15 judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016) (citing Lujan v. Defs. of 16 Wildlife, 504 U.S. 555, 560 (1992)). The burden of proof for establishing standing, which rests 17 with the party seeking federal jurisdiction, must be met with adequate support at each stage of the 18 litigation. Lujan, 504 U.S. at 561. In particular, at the summary judgment stage, “the plaintiff can 19 no longer rest on . . . ‘mere allegations,’ but must ‘set forth’ by affidavit or other evidence ‘specific 20 facts’” to demonstrate standing. Id. 21 The Supreme Court has described the “injury in fact” requirement, at issue in this case, as 22 the “‘[f]irst and foremost’ of standing’s three elements.” Spokeo, 136 S. Ct. at 1547 (quoting Steel 23 Co. v. Citizens for Better Environment, 523 U.S. 83, 103 (1998)). “To establish injury in fact, a 24 plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is 25 ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’” Id. at 1548 26 (quoting Lujan, 504 U.S. at 560). 27 In Spokeo, the Court emphasized that concreteness and particularization are separate 28 requirements. “For an injury to be ‘particularized,’ it ‘must affect the plaintiff in a personal and 1 individual way.’” Id. at 1548 (quoting Lujan, 504 U.S. at 560 n.1). Even where this requirement 2 is met, however, the injury-in-fact requirement will not be satisfied unless the injury is also 3 concrete. Id. “A ‘concrete’ injury must be ‘de facto’; that is, it must actually exist.” Id. (citing 4 BLACK’S LAW DICTIONARY 479 (9th ed. 2009)). An injury may be “concrete” even if it is 5 intangible, the Spokeo Court explained, and “in determining whether an intangible harm constitutes 6 injury in fact, both history and the judgment of Congress play important roles.” Id. at 1549. With 7 respect to history, the Court said, “it is instructive to consider 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.” Id. (citing Vermont Agency of Natural Resources v. United 10 States ex rel. Stevens, 529 U.S. 765, 775–777 (2000)). The judgment of Congress is also 11 “instructive and important” because “Congress is well positioned to identify intangible harms that 12 meet minimum Article III requirements.” Id. Thus, “Congress has the power to define injuries and 13 articulate chains of causation that will give rise to a case or controversy where none existed before.” 14 Id. (quoting Lujan, 504 U.S. at 580 (Kennedy, J., concurring)). 15 Nonetheless, “Congress’ role in identifying and elevating intangible harms does not mean 16 that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a 17 person a statutory right and purports to authorize that person to sue to vindicate that right.” Spokeo, 18 136 S. Ct. at 1549. Thus, while a procedural violation “can be sufficient in some circumstances to 19 constitute injury in fact,” for example, where there is a “risk of real harm,” a “bare procedural 20 violation, divorced from any concrete harm” does not “satisfy the injury-in-fact requirement of 21 Article III.” Id. (emphasis added). 22 The Court in Spokeo addressed the injury-in-fact requirement in the context of an alleged 23 FCRA violation. The plaintiff, Robins, alleged that Spokeo, a “people search engine,” had violated 24 Section 1681 of the FCRA by providing inaccurate information about him in a generated report. 25 Id. at 1544. Specifically, it was alleged that “[a]t some point in time, someone (Robins’ complaint 26 does not specify who) made a Spokeo search request for information about Robins, and Spokeo 27 trawled its sources and generated a profile. By some means not detailed in Robins’ complaint, he 28 became aware of the contents of that profile and discovered that it contained inaccurate 1 information.” Id. at 1546. 2 The Ninth Circuit held that Robins had adequately alleged an injury in fact because he had 3 alleged a “particularized” injury, namely, violation of his statutory rights under the FCRA, but the 4 Court found that the Ninth Circuit’s analysis was incomplete because it had failed to consider 5 whether that injury satisfied the “concreteness” requirement. Id. at 1545, 1548. The Court 6 remanded the case for consideration of whether Robins had met that requirement, taking “no 7 position as to whether the Ninth Circuit’s ultimate conclusion—that Robins adequately alleged an 8 injury in fact—was correct.” Id. at 1550. While the Court did not reach the question of whether the 9 plaintiff’s allegations were sufficient to demonstrate a concrete injury, it offered examples of FCRA 10 violations that likely would not satisfy the concreteness requirement, opining as follows: 11 On the one hand, Congress plainly sought to curb the dissemination of false information by adopting procedures designed to decrease that risk. On the 12 other hand, Robins cannot satisfy the demands of Article III by alleging a 13 bare procedural violation. A violation of one of the FCRA’s procedural requirements may result in no harm. For example, even if a consumer 14 reporting agency fails to provide the required notice to a user of the agency’s consumer information, that information regardless may be entirely accurate. 15 In addition, not all inaccuracies cause harm or present any material risk of harm. An example that comes readily to mind is an incorrect zip code. It 16 is difficult to imagine how the dissemination of an incorrect zip code, 17 without more, could work any concrete harm. 18 Id. at 1550. 19 b. Syed 20 In Syed v. M-I, LLC, the Ninth Circuit applied the test for standing set forth in Spokeo to the 21 FCRA requirements at issue in this case. 853 F.3d 492, 499 (9th Cir. 2017). Section 1681b(b), 22 which governs consumer reports obtained for employment purposes, contains a disclosure 23 requirement, which “creates a right to information by requiring prospective employers to inform 24 job applicants that they intend to procure their consumer reports as part of the employment 25 application process.” Id. at 499 (citing 15 U.S.C. § 1681b(b)(2)(A)(i)). It also contains an 26 authorization requirement, which “creates a right to privacy by enabling applicants to withhold 27 permission to obtain the report from the prospective employer, and a concrete injury when 28 1 applicants are deprived of their ability to meaningfully authorize the credit check.” Id. (citing 15 2 U.S.C. § 1681b(b)(2)(A)(ii)). The Ninth Circuit explained that Section 1681b(b)(2)(A) “furthers 3 Congress’s overarching purposes of ensuring accurate credit reporting, promoting efficient error 4 correction, and protecting privacy.” Id. at 496-497 (citation omitted). It continued, “in addition to 5 securing job applicants’ privacy rights by enabling them to withhold authorization to obtain their 6 consumer reports, the provision promotes error correction by providing applicants with an 7 opportunity to warn a prospective employer of errors in the report before the employer decides 8 against hiring the applicant on the basis of information contained in the report.” Id. Thus, it 9 concluded that “[b]y providing a private cause of action for violations of Section 1681b(b)(2)(A), 10 Congress has recognized the harm such violations cause, thereby articulating a ‘chain [ ] of 11 causation that will give rise to a case or controversy.’” Id. at 499 (citing Spokeo, 136 S. Ct. at 1549 12 (quoting Lujan, 504 U.S. at 580 (1992) (Kennedy, J., concurring))). 13 In Syed, the plaintiff alleged that the authorization he had signed when he commenced 14 employment, which authorized his employer to obtain consumer reports about him for employment 15 purposes, violated the FCRA because it also included a liability waiver, in violation of a 16 requirement under the FCRA that a disclosure statement should only include the required 17 disclosures. Id. at 497-498 (citing 15 U.S.C. § 1681b(b)(2)(A)). He further alleged that he 18 “discovered [the employer’s] violation(s) within the last two years when he obtained and reviewed 19 his personnel file from [his employer] and discovered that [the employer] had procured and/or 20 caused to be procured a ‘consumer report’ regarding him for employment purposes based on the 21 illegal disclosure and authorization form.” Id. at 500. The court found that for pleading purposes: 22 This allegation is sufficient to infer that Syed was deprived of the right to information and the right to privacy guaranteed by Section 23 1681b(b)(2)(A)(I)–(ii) because it indicates that Syed was not aware that he was signing a waiver authorizing the credit check when he signed it. 24 Drawing all reasonable inferences in favor of the nonmoving party, we can fairly infer that Syed was confused by the inclusion of the liability waiver 25 with the disclosure and would not have signed it had it contained a 26 sufficiently clear disclosure, as required in the statute. 27 Id. at 500–501. For this reason, the court held, the plaintiff had adequately alleged standing under 28 1 Article III. Id. at 501 (citing Thomas v. FTS USA, LLC, 193 F.Supp.3d 623, 628–638 (E.D. Va. 2 2016)). The court noted in a footnote, however, that “what suffices at the Rule 12(b)(6) stage may 3 not suffice at later stages of the proceedings when the facts are tested.” Id. at 499 n.4. 4 2. Analysis 5 “Under Syed, a plaintiff who is confused by a disclosure form, does not understand that he 6 is authorizing his employer to obtain a consumer report, and nevertheless has such a report procured 7 suffers a concrete injury to the plaintiff’s rights to information and privacy sufficient to establish 8 Article III standing.” Brown v. Core-Mark Int’l, Inc., No. 18-CV-07451-JCS, 2019 WL 2076708, 9 at *4 (N.D. Cal. May 10, 2019). See also Limson v. Bridge Prop. Mgmt. Co., No. 19-CV-02795- 10 JCS, 2019 WL 4645174, at *12 (N.D. Cal. Sept. 24, 2019) (“District courts that have applied 11 Spokeo to FCRA claims based on disclosures that are alleged to be unclear or otherwise out of 12 compliance with the FCRA as to the form of the disclosure have generally held that in order to have 13 standing the consumer must allege some actual harm, such as being confused or misled by the 14 improperly formatted disclosure.”) (internal quotations omitted). Plaintiff has met that standard: 15 he has provided evidence in the form of his declaration and deposition testimony that he was 16 confused by the liability release in Circle K’s FCRA Consent form, did not understand that by 17 signing the FCRA Consent he was authorizing Circle K to obtain his background check, and 18 nevertheless had a background check report procured.1 (Limon Decl. ¶¶ 7–9; Limon Dep. 90:24– 19 92:8, 114:2–7.) 20 Ruiz v. Shamrock Foods Co. and Pitre v. Wal-Mart Stores, cases that Circle K cites granting 21 summary judgment on FCRA claims for lack of standing, are both distinguishable.2 In Ruiz, the
22 1 Plaintiff asserts for the first time in his opposition papers that he was also confused about the inclusion of “references 23 to other states not applicable to him” in Circle K’s FCRA Consent form. (See Doc. 33 at 6–7; Limon Decl. ¶ 8.) Plaintiff did not make such allegation in his complaint and cannot now expand his FRCA claims. See Padron v. Lara, No. 1:16-CV-00549-SAB, 2018 WL 2213462, at *3 (E.D. Cal. May 11, 2018) (“As the complaint frames the issues on 24 summary judgment and “the issues in the complaint guide the parties during discovery and put the defendant on notice of what evidence is necessary to defend against the allegations, courts routinely hold that a plaintiff cannot oppose 25 summary judgment based on a new theory of liability because it would essentially blindside the defendant with a new legal issue after the bulk of discovery has likely been completed.’”) (quoting Cole v. CRST, Inc., 150 F.Supp.3d 1163, 26 1169 (C.D. Cal. 2015)). The Court therefore disregards Plaintiff’s newly-raised argument and evidence for the purposes of deciding Circle K’s summary judgment motion. 27 2 Lee v. Hertz Corporation, a case that Circle K cites dismissing under Rule 12(b)(6) an FCRA claim for lack of standing, predates Syed and is also distinguishable from the facts at hand. Case No. 15-CV-04562-BLF, 2016 WL 28 7034060 (N.D. Cal. Dec. 2, 2016). There, the plaintiffs did “not allege that the disclosures they received prevented 1 court found that, unlike Syed, the plaintiffs “lack[ed] facts to allow the [c]ourt to make an inference 2 that they were confused by the inclusion of a liability waiver with the disclosure or would not have 3 signed the authorization form had it contained a sufficiently clear disclosure.” Case No. 2:17-cv- 4 06017-SVW-AFM, 2018 WL 5099509, at *5 (C.D. Cal. Aug. 22, 2018). In Pitre, that court found 5 that the plaintiffs “consented to the background check process.” Case No. SA CV 17-01281-DOC- 6 DFMx, 2019 WL 5294397, at *7 (C.D. Cal. Oct. 18, 2019). Here, while it is undisputed that 7 Plaintiff informed Circle K of his willingness to submit to a background check at some point prior 8 to being hired, see SUMF at 4–5, Plaintiff has shown that, at the time his consent to the background 9 was actually sought by Circle K, he was confused by the inclusion of the liability waiver in the 10 FCRA Consent form such that he was unaware that by signing it he was consenting to the 11 background check, see Limon Decl. ¶¶ 7–9; Limon Dep. 114:2–7.3 Cf. Limson v. Bridge Prop. 12 Mgmt. Co., Case No. 19-cv-02795-JCS, 2019 WL 4645174, at *13 (N.D. Cal. Sept. 24, 2019) 13 (finding no standing to bring a claim under Section 1681d(a)(1) of the FCRA, which requires 14 disclosures to consumers must be made “clearly and accurately,” where the plaintiffs did “not allege 15 that they misunderstood the authorization that they signed, or that they agreed to the release of their 16 information only because they were confused by the disclosures” and therefore they “consented to 17 the release of their information.”). Moreover, to the extent Circle K suggests that in order to 18 demonstrate standing Plaintiff must establish, in addition to his confusion, that he would not have 19 signed the FCRA Consent form had it omitted the liability waiver, such is contrary to case law, 20 including that on which Circle K relies. See, e.g., Pitre, 2019 WL 5294397, at *6 (observing that 21 “[w]hen job applicants have not claimed (1) that the disclosure forms had impaired their 22 understanding, or (2) that, had the disclosure complied with the FCRA, they would not have 23 authorized the background check, courts have determined that the alleged injury, per Spokeo, did
24 them from understanding that they were authorizing Hertz to procure a background report.” Id. at *5. As set forth above, here Plaintiff not only alleges, but submits evidence that he was confused by Circle K’s FCRA Consent form 25 and did not understand that Circle would be requesting a background check. 3 Ruiz is further distinguishable because the only purported evidence of confusion in that case consisted of “sham 26 affidavits,” which “directly contracted” the plaintiffs’ deposition testimony and “lack[ed] evidentiary value.” Ruiz, 2018 WL 5099509, at *5 and n.4. Here, there is no contradiction between Plaintiff’s deposition testimony that he was 27 willing to submit to a background check prior to being hired by Circle K (Limon Dep. 86:12–87:7) and the statements in his declaration that he was confused by the form that Circle K used to procure his authorization of a background 28 check (Limon Decl. ¶¶ . 1 not exceed a bare procedural violation, and did not support standing.”) (citing Williams v. Nichols 2 Demos, Inc., Case No. 5:17-cv-7101-EJD, 2018 WL 3046507, at *5 (N.D. Cal. June 20, 2018)) 3 (emphasis added); Ruiz, 2018 WL 5099509, at *5 (“Plaintiffs lack facts to allow the Court to make 4 an inference that they were confused by the inclusion of a liability waiver with the disclosure or 5 would not have signed the authorization form had it contained a sufficiently clear disclosure.”) 6 (emphasis added). See also, e.g., Rotor v. Signature Consultants, LLC, Case No. 18-cv-07526-JST, 7 2019 WL 3246535, at *4 (N.D. Cal. July 19, 2019) (“Applying Syed to alleged violations of that 8 same provision, numerous courts from this district have concluded that Syed ‘requires some 9 allegation of actual harm, e.g., that plaintiff was ‘confused’ by the disclosure or that she would not 10 have signed the authorization had it been presented in a FCRA-compliant format.’”) (citations 11 omitted) (emphasis added); Williams v. Vitas Healthcare Corp. of Cal., No. 18-cv-02096-JSW, 12 2018 WL 7253633, at *3 (N.D. Cal. Aug. 6, 2018) (finding no concrete injury where plaintiff gave 13 “no indication that she was misled by the Forms’ format or that she would not have signed the 14 Forms if she understood their effect”) (emphasis added). 15 Plaintiff’s proffered evidence demonstrates he was confused by the liability waiver in Circle 16 K’s FCRA Consent form and did know what he was authorizing a background check when he 17 signed it, such that he was deprived of “the right to information and the right to privacy guaranteed 18 by [FCRA] Section 1681b(b)(2)(A)(i)–(ii).” See Syed, 853 F.3d at 499. See also Nayab v. Capital 19 One Bank (USA), N.A., 942 F.3d 480, 490 (9th Cir. 2019) (“[T]he invasion of the interest at issue— 20 the right to privacy in one’s consumer credit report—confers standing.”) (citing Syed, 853 F.3d 21 499–500.) He has therefore set forth “specific facts,” Lujan, 504 U.S. at 561, showing a concrete 22 injury sufficient to establish Article III standing under Spokeo. Cf. Mitchell v. WinCo Foods, LLC, 23 743 F. App’x 889, 889 (9th Cir. 2018) (“To the extent Mitchell argues that she was confused by 24 the FCRA waiver and authorization, Mitchell’s pleadings do not allege facts sufficient to support 25 an inference of confusion. The district court therefore correctly concluded that her pleadings failed 26 to establish standing.”); Brown, 2019 WL 2076708, at *4 (finding a concrete injury where 27 plaintiff’s allegations of “confusion regarding the nature of the disclosure and a consumer report 28 obtained without valid authorization” were analogous to Syed); Marchioli v. Pre-Employ.com, 1 EDCV 16-2305 JGB (DTBx), 2017 WL 7049527, at *9-10 (C.D. Cal. June 30, 2017) (granting 2 motion to dismiss plaintiff’s FCRA claim and distinguishing Syed because plaintiff failed to allege 3 that technical violations of Section 1681b deprived him of the ability to understand his rights or 4 meaningfully authorize the procurement of a credit report on him, and therefore failed to adequately 5 allege a plausible nexus between the alleged violation of disclosure and authorization requirements 6 and plaintiff’s asserted informational injury). Accordingly, Circle K’s motion for summary 7 judgment on the issue of standing is denied. 8 C. Circle K is Not Entitled to Summary Judgment on the Issue of Willfulness 9 Plaintiff claims that the inclusion of a liability waiver in Circle K’s FCRA Consent form 10 violates Section 1681b(b)(2)(A) of the FCRA. (Compl. ¶ 21, 31, 52.) Plaintiff seeks statutory and 11 punitive damages only, not actual damages. (Id. ¶ 54.) Statutory and punitive damages are 12 available under the FCRA only where a defendant “willfully fails to comply” with the statute. 15 13 U.S.C. § 1681n(a). 14 The liability waiver at issue reads: “I authorize, without reservation, any person or entity 15 contacted by Circle K Stores Inc. or its agent(s) to furnish the above stated information, and I release 16 any such person or entity from any liability for furnishing such information.” (SUMF at 10; Limon 17 Dep. Ex. 5.) Circle K contends that it is entitled to summary judgment because the inclusion of 18 this self-described “limited third-party waiver” in its FCRA Consent form cannot constitute a 19 willful violation of Section 1681b(b)(2)(A) of the FCRA. 20 As mentioned above, Section 1681b(b)(2)(A)(i) provides that: 21 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 22 respect to any consumer, unless-- (i) a clear and conspicuous disclosure has been 23 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 24 report may be obtained for employment purposes. 25 15 U.S.C. § 1681b(b)(2)(A)(i) (emphasis added). “The Supreme Court has clarified that, under 26 Section 1681n, willfulness reaches actions taken in ‘reckless disregard of statutory duty,’ in 27 addition to actions ‘known to violate the Act.’” Syed, 853 F.3d at 503 (citing to Safeco Ins. Co. of 28 1 America v. Burr, 551 U.S. 47, 56–57 (2007) (internal citation omitted). A party subject to FCRA 2 does not act in reckless disregard of it “unless the action is not only a violation under a reasonable 3 reading of the statute’s terms, but shows that the company ran a risk of violating the law 4 substantially greater than the risk associated with a reading that was merely careless.” Id. 5 Circle K contends that, even if it violated the statute by procuring Plaintiff’s consumer 6 report, it is entitled to summary judgment because its interpretation of Section 1681b(b)(2)(A) was 7 not so erroneous that its non-compliance was willful within the meaning of Section 1681n. (Doc. 8 34 at 5–6.) The Court disagrees. In Syed, the issue presented was whether the inclusion of a liability 9 waiver in the same document as the FCRA mandated disclosure was a violation of Section 10 1681b(b)(2)(A). Syed, 853 F.3d at 496. The Ninth Circuit found in the affirmative, holding “the 11 FCRA unambiguously bars a prospective employer from including a liability waiver on a disclosure 12 document provided a job applicant pursuant to Section 1681b(b)(2)(A).” Id. at 503. The Court 13 further found that because subsection (i) is “not subject to a range of plausible interpretations,” an 14 employer who includes a liability waiver on a disclosure document willfully violates that provision 15 “as a matter of law,” regardless of their subjective interpretation of the statute. Id. at 505. 16 Circle K had the benefit of guidance from Syed, published in 2016, when its FCRA Consent 17 form was given to Plaintiff in June 2018. Significantly, Syed emphasized that the construction of 18 the language “solely of the disclosure” in the FCRA “is not a case where we must rationalize two 19 plainly inconsistent subsections, or smooth over a mistake in draftsmanship.” Id. at 500 (internal 20 quotation marks and citation omitted). “The FCRA’s employment disclosure provision ‘says what 21 it means and means what it says,’” and the inclusion of extraneous information, such as, for 22 example, “a liability waiver on the same document as a disclosure,” was a willful violation of 23 Section 1681b(b)(2)(A)(i). Id. at 507. The Ninth Circuit further held that there was no implicit 24 authorization in the language of the FCRA to permit the inclusion of a liability waiver or other 25 extraneous information. Id. at 502. A reasonable person who provided a disclosure form to 26 Plaintiff, therefore, “should have interpreted ‘solely of the disclosure’ to mean only the disclosure 27 required by the FCRA—exclusive of any other kind of disclosure under a different federal law or 28 state law.” Snell v. G4S Secure Solutions (USA) Inc., 1:19-cv-00802-LJO-SAB, 2019 WL 1 6918285, at *5 (E.D. Cal. Dec. 19, 2019). 2 To support its reading of Section 1681b(b)(2)(A), Circle K argues that Syed’s holding is 3 confined to the type of liability waiver issue in that case (which applied to the prospective 4 employer) and does not apply to a limited release of third parties who procure consumer reports on 5 Circle K’s behalf, which it describes as “synonymous with authorization.” (See Doc. 27-1 at 11; 6 Doc. 34 at 6.) Given that this latter type of release “has never been adjudicated” and in view of the 7 lack of “administrative guidance regarding whether this type of release is permissible under the 8 FCRA,” Circle K argues that it cannot be deemed to have willfully violated the FCRA. (Doc. 27- 9 1 at 11.) 10 Circle K reads Syed too narrowly. Syed held that the FCRA “unambiguously bars the 11 inclusion of a liability waiver on the same document as a disclosure made pursuant to 15 U.S.C. § 12 1681b(b)(2)(A).” 853 F.3d at 507. Nothing in Syed limited the holding to the employment liability 13 waiver at issue in that case, and Circle K has not shown any meaningful distinction between the 14 “limited third party waiver” in the FCRA Consent form and the liability waiver found to violate the 15 FCRA in Syed. Indeed, the Syed court explicitly rejected the argument, which Circle K makes here, 16 that a liability waiver is “synonymous with authorization.” See 853 F.3d at 502 (rejecting argument 17 that “a liability waiver is one type of authorization” because such interpretation is “inconsistent 18 with the plain meaning of the term ‘authorize.’”). But even if the liability waiver Circle K’s FCRA 19 Consent form could be distinguished from that in Syed, a “lack of guidance” regarding the propriety 20 of the waiver does not itself render Circle K’s interpretation reasonable. See Syed, 853 F.3d at 504. 21 Unlike in Safeco where the Supreme Court found that while it disagreed with Safeco’s position, it 22 “recognize[d] that [Safeco’s] reading ha[d] a foundation in the statutory text and a sufficiently 23 convincing justification,” Safeco, 551 U.S. at 69, Circle K points to no text in the FCRA to support 24 its interpretation of the statute to read “the disclosure” requirement of Section 1681b(b)(2)(A)(i) to 25 include the “limited third-party waiver” contained in its FCRA Consent form. 26 In the Court’s view, Syed’s holding is clear.4 Yet, even if not crystal clear to Circle K, it 27 4 Other district courts within this Circuit have similarly concluded. See, e.g., Mitchell v. Winco Foods, LLC, 379 F. 28 Supp. 3d 1093, 1099 (D. Idaho 2019) (describing the Syed decision as “unambiguous”). 1 was clear enough that Circle K’s “risk of violating the law [was] substantially greater than the risk 2 associated with a reading that was merely careless.” Safeco, 551 U.S. at 69. Circle K could have 3 easily provided the third-party liability waiver to Plaintiff in a separate document, but it took the 4 risk of not doing so. See, e.g., Marquez v. Bank of America, Case No. 17-cv-00555-CW, 2018 WL 5 1948864, at *5 (N.D. Cal., Apr. 25, 2018) (finding that providing a liability release document 6 together with a separate disclosure document does not violate Section 1681b(b)(2)(A)); Coleman 7 v. Kohl’s Dep’t Stores, Inc., Case No. 15-cv-02588-JCS, 2015 WL 5782352, at *6 (N.D. Cal. Oct. 8 5, 2015) (holding that presenting an employee with disclosure and authorization document together 9 with a separate release of liability document does not violate Section 1681b(b)(2)(A)). By taking 10 the risk, Circle K must now accept the result of this action. 11 In sum, whereas Syed found willful violation of the standalone requirement based solely on 12 the objectively unreasonable interpretation of “consist[ ] solely of the disclosure,” id. at 504–05, 13 the facts presented here are much stronger against Circle K. Not only was Circle K’s interpretation 14 of Section 1681b(b)(2)(A) objectively unreasonable based on the plain reading of the statutory text, 15 it also had the benefit of guidance from Syed to warn “it away from the view it took,” Safeco, 551 16 U.S. at 70. For the reasons stated above, the Court denies summary judgment in favor of Circle K 17 on Plaintiff’s claim for willful violation of Section 1681b(b)(2)(A).5 18 D. Genuine Issues of Material Fact Preclude Summary Judgment on Plaintiff’s Second Cause of Action 19 20 Plaintiff’s second cause of action alleges that Circle K procured a background check relating 21 to him without proper authorization, in violation of Section 1681b(b)(2)(A)(ii) of the FCRA.6 22 (Compl. ¶ 21–22, 58.) Circle K asserts that it is entitled to summary judgment on this cause of 23 action because Plaintiff admits he signed the FCRA Consent form and, under Cunha v. IntelliCheck, 24 LLC, this admission “necessarily defeats his claim under Section 1681b(b)(2)(A)(ii).” (Doc. 27-1 25 5 In his opposition, Plaintiff appears to invite the Court to find affirmatively that Circle K willfully violated the FCRA. 26 (See Doc. 33 at 19.) The Court declines to do so at this time. See Taylor v. First Advantage Background Servs. Corp, 207 F. Supp. 3d 1095, 1110-11 (N.D. Cal. 2016) (“Courts in this circuit have found that ‘[w]illfullness under the FCRA 27 is generally a question of fact for the jury.’”) (internal citations omitted). 6 That section requires that a consumer authorize in writing the procurement of a consumer report relating to them prior 28 to the procurement of the report for employment purposes. See 15 U.S.C. § 1681b(b)(2)(A)(ii). 1 at 12.) 2 Circle K’s reliance on Cunha is misplaced. In that case, critically, the plaintiff did not 3 contend that he was confused by the prospective employer’s authorization form or he did not know 4 that by signing the form he was authorizing a consumer report. Instead, the plaintiff alleged in his 5 pleading only that he had signed an authorization form. 254 F. Supp. 3d at 1130. Based on these 6 allegations, the court found that plaintiff gave written authorization for the prospective employer 7 to procure a consumer report on him and dismissed his claim under Section 1681b(b)(2)(A)(ii). Id. 8 Here, in contrast to Cunha, Plaintiff has put forth evidence that he was “confused by the 9 language” in the FCRA Consent form, “did not understand what [he] was authorizing,” and, 10 specifically, that he “did not understand that by signing [he] was waiving [his] rights in relation to 11 Circle K and any other person or entity providing background check information.” (Limon Decl. 12 ¶¶ 7–9.) Thus, while it is undisputed that Plaintiff signed Circle K’s FCRA Consent form (SUMF 13 at 6), Plaintiff’s evidence gives rise to a genuine issue of material fact as to whether he in fact 14 authorized the background check sought to be procured by the form, see 15 U.S.C. § 15 1681b(b)(2)(A)(ii). Cf. Speer v. Whole Food Mkt. Group, Inc., No. 14-CV-3035, 2015 WL 16 1456981, at *3 (M.D. Fla. Mar. 30, 2015) (concluding at the motion to dismiss stage, that “[t]he 17 inclusion of authorization information in a disclosure document that violates § 1681b(b)(2)(A)(i) 18 also violates § 1681b(b)(2)(A)(ii).”)). Summary judgment on Plaintiff’s second cause of action is 19 therefore inappropriate. 20 IV. CONCLUSION 21 For the reasons set forth above, Defendant’s motion for summary judgment or, in the 22 alternative, partial summary judgment (Doc. 27) is DENIED. 23 IT IS SO ORDERED. 24
Sheila K. Oberto 25 Dated: January 10, 2020 /s/ . UNITED STATES MAGISTRATE JUDGE 26
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