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Demmings v. KKW Trucking, Inc.

United States District Court, D. Oregon

March 29, 2017

RODERICK DEMMINGS, on behalf of himself and all others similarly situated, Plaintiff,
v.
KKW TRUCKING, INC., Defendant.

          Justin M. Baxter, Baxter & Baxter, LLP, Matthew A. Dooley and Anthony R. Pecora, O'Toole, McLaughlin, Dooley & Pecora, LPA, Of Attorneys for Plaintiff.

          Dennis G. Woods and Andrew T. Gust, Scheer Law Group, Of Attorneys for Defendant.

          OPINION AND ORDER

          MICHAEL H. SIMON UNITED STATES DISTRICT JUDGE

         Plaintiff Roderick Demmings filed a putative class action lawsuit against Defendant KKW Trucking, Inc. (“KKW”). Plaintiff alleges that KKW violated the Fair Credit Reporting Act (“FCRA”)[1] when KKW procured Plaintiff's consumer information from two consumer reporting agencies without providing Plaintiff proper notice and, for one report, without his consent. Plaintiff also alleges that KKW ultimately used one of Plaintiff's consumer reports as a basis for taking an adverse employment action against him, again without providing the statutorily mandated notifications.

         Plaintiff filed a First Amended Complaint on June 12, 2015. ECF 25. The Court granted the parties' joint motion to stay the case until the Supreme Court decided the case of Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016), which potentially implicated Plaintiff's standing in this case. ECF 33. After Spokeo was decided, KKW filed a motion to dismiss Plaintiff's First Amended Complaint. ECF 35. At oral argument, it became apparent that the First Amended Complaint did not clearly delineate which facts were applicable to Plaintiff and which were applicable to Mr. Neil C. Scott, a former plaintiff who was voluntarily dismissed from the case. Accordingly, the Court ordered Plaintiff to file a Second Amended Complaint and denied KKW's motion to dismiss without prejudice and with leave to renew. ECF 49.

         Plaintiff then filed his Second Amended Complaint. ECF 50. KKW filed a renewed motion to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), asserting that the Court lacks subject matter jurisdiction because Plaintiff does not allege a concrete and particularized injury, and thus does not have Article III standing. For the reasons discussed below, KKW's motion to dismiss is denied.

         STANDARDS

         A. Article III Standing

         The U.S. Constitution confers limited authority on the federal courts to hear only active cases or controversies brought by persons who demonstrate standing. See Spokeo, 136 S.Ct. at 1546-47; Already, LLC v. Nike, Inc., 133 S.Ct. 721, 726 (2013). Standing “limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong.” Spokeo, 136 S.Ct. at 1547.

         To have standing, a plaintiff must have “personal interest . . . at the commencement of the litigation.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189 (2000). The required personal interest must satisfy three elements throughout the litigation: (1) an injury in fact, i.e., an invasion of a legally protected interest that is concrete and particularized, as well as actual or imminent; (2) a causal connection between the injury-in-fact and the defendant's challenged behavior; and (3) likelihood that the injury-in-fact will be redressed by a favorable ruling. Id. at 180-81, 189; see also Spokeo, 136 S.Ct. at 1547 (reiterating that the “irreducible constitutional minimum” of standing consists of “an injury in fact . . . fairly traceable to the challenged conduct of the defendant, and . . . likely to be redressed by a favorable judicial decision”).

         An injury is “particularized” if it “affect[s] the plaintiff in a personal and individual way.” Spokeo, 136 S.Ct. at 1548 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 n.1 (1992)). An injury is “concrete” if it is “‘de facto'; that is it must actually exist, ” meaning that it is “‘real' and not ‘abstract.'” Id. “‘Concrete' is not, however, necessarily synonymous with ‘tangible.' Although tangible injuries are perhaps easier to recognize, [the Supreme Court has] confirmed in many . . . previous cases that intangible injuries can nevertheless be concrete.” Id. at 1549.

         1. Standing Conferred by Statute

         Although Article III's injury requirement cannot be displaced by statute, when a statute creates a legal right, the invasion of that legal right may create standing. See Spokeo, 136 S.Ct. at 1549 (noting that Congress “is well positioned to identify intangible harms that meet minimum Article III requirements” and “has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before, ” but emphasizing that “Article III standing requires a concrete injury even in the context of a statutory violation”); Edwards v. First Am. Corp., 610 F.3d 514, 517 (9th Cir. 2010) (noting that standing can exist by virtue of “statutes creating legal rights, the invasion of which creates standing”). This is sometimes referred to as “statutory standing.”

         The relevant question for statutory standing is “whether the constitutional or statutory provision on which the claim rests properly can be understood as granting persons in the plaintiff's position a right to judicial relief.” Edwards, 610 F.3d at 517. This can be established by pleading a violation of a right conferred by statute so long as the plaintiff alleges “a distinct and palpable injury to himself, even if it is an injury shared by a large class of other possible litigants.” Warth v. Seldin, 422 U.S. 490, 501 (1975). A “violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact. In other words, a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified.” Spokeo, 136 S.Ct. at 1549 (emphasis in original). A plaintiff cannot, however, “allege a bare procedural violation [of a statute], divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.” Spokeo, 136 S.Ct. at 1549 (providing, by way of example of a procedural violation that would not likely present any material risk of harm, an allegation that a credit reporting agency disseminated a report containing an incorrect zip code). Additionally, in statutorily created causes of action, the plaintiff must demonstrate that he or she is within the “zone of interests” protected by the law invoked in order to have standing to sue for a violation of the statute. See Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377, 1388-89 (2014). Whether a plaintiff has stated a basis for statutory standing is generally tested under Rule 12(b)(6) rather than Rule 12(b)(1). See Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011).

         2. Standing in Class Action Context

         In the class action context, “standing is satisfied if at least one named plaintiff meets the[se] [three] requirements.” Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007). A plaintiff carries that burden by putting forth “the manner and degree of evidence required” by whatever stage of litigation the case has reached. Lujan, 504 U.S. at 561.[2] “At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we ‘presum[e] that general allegations embrace those specific facts that are necessary to support the claim.'” Id. at 561 (alteration in original) (quoting Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 889 (1990)); see also Barnum Timber Co., 633 F.3d at 899 (noting that at the motion to dismiss stage, Article III standing is adequately demonstrated through allegations of “specific facts plausibly explaining” why the standing requirements are met).

         B. Motion to Dismiss Under Rule 12(b)(1)

         Federal courts are courts of limited jurisdiction. Gunn v. Minton, 133 S.Ct. 1059, 1064 (2013) (quotation marks omitted). As such, a court is to presume “that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted); see also Robinson v. United States, 586 F.3d 683, 685 (9th Cir. 2009); Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of “subject-matter jurisdiction, because it involves a court's power to hear a case, can never be forfeited or waived.” United States v. Cotton, 535 U.S. 625, 630 (2002). An objection that a particular court lacks subject matter jurisdiction may be raised by any party, or by the court on its own initiative, at any time. Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006); Fed.R.Civ.P. 12(b)(1). The Court must dismiss any case over which it lacks subject matter jurisdiction. Fed.R.Civ.P. 12(h)(3).

         A Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction may be either “facial” or “factual.” See Safe Air for Everyone, 373 F.3d at 1039. A facial attack on subject matter jurisdiction is based on the assertion that the allegations contained in the complaint are insufficient to invoke federal jurisdiction. Id. “A jurisdictional challenge is factual where ‘the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.'” Pride v. Correa, 719 F.3d 1130, 1133 n.6 (9th 2013) (quoting Safe Air for Everyone, 373 F.3d at 1039)). When a defendant factually challenges the plaintiff's assertion of jurisdiction, a court does not presume the truthfulness of the plaintiff's allegations and may consider evidence extrinsic to the complaint. See Terenkian v. Republic of Iraq, 694 F.3d 1122, 1131 (9th Cir. 2012); Robinson, 586 F.3d at 685; Safe Air for Everyone, 373 F.3d at 1039. A factual challenge “can attack the substance of a complaint's jurisdictional allegations despite their formal sufficiency.” Dreier v. United States, 106 F.3d 844, 847 (9th Cir. 1996) (citation and quotation marks omitted).

         C. Motion to Dismiss Under Rule 12(b)(6)

         Lack of statutory standing requires dismissal for failure to state a claim. See Maya, 658 F.3d at 1067. A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts alleged in the complaint and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint “may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).

         A complaint must contain sufficient factual allegations to “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, 652 F.3d at 1216. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).

         D. Fair Credit Reporting Act

         The FCRA seeks to ensure “fair and accurate credit reporting.” 15 U.S.C. § 1681(a)(1). “To achieve this end, [the FCRA] regulates the creation and use of consumer report[s].” Spokeo, Inc., 136 S.Ct. at 1545 (quotation marks omitted). The FCRA permits consumer reporting agencies to furnish consumer reports, as relevant here, to employers “to use the information for employment purposes.” § 1681b(a)(3)(B). The FCRA also imposes certain restrictions on employers' use of consumer reports for employment purposes. See § 1681b(b).

         The restrictions at issue in this case are set forth in §§ 1681b(b)(2)(B) and 1681b(b)(3)(B). Specifically, § 1681b(b)(2)(B) requires notice to, and consent from, certain job applicants before an employer's procurement of the applicant's consumer report, and § 1681b(b)(3)(B) requires an employer to provide certain notifications to the applicant after the employer has obtained the applicant's consumer information and taken adverse action against the applicant on the basis, at least in part, of that information.

         In relevant part, § 1681b(b)(2)(B) provides:

If a consumer described in subparagraph (C) applies for employment by mail, telephone, computer, or other similar means, at any time before a consumer report is procured or caused to be procured in connection with that application-
(i) the person who procures the consumer report on the consumer for employment purposes shall provide to the consumer, by oral, written, or electronic means, notice that a consumer report may be obtained for employment purposes, and a summary of the consumer's rights under section 1681m(a)(3)[3] of this title; and
(ii) the consumer shall have consented, orally, in writing, or electronically to the procurement of the report by that person.

         The notice and consent requirements of § 1681b(b)(2)(B) only apply if, as relevant here, “the consumer is applying for a position over which the Secretary of Transportation has the power to establish qualifications and maximum hours of service”[4] and “as of the time at which the person procures the report or causes the report to be procured the only interaction between the consumer and the [employer] has been by mail, telephone, computer, or other similar means.” § 1681b(b)(2)(C).

         Under § 1681b(b)(3)(B):

(i) If a consumer described in subparagraph (C) applies for employment by mail, telephone, computer, or other similar means, and if a person who has procured a consumer report on the consumer for employment purposes takes adverse action on the employment application based in whole or in part on the report, then the person must provide to the consumer to whom the report relates, in lieu of the notices required under subparagraph (A) of this section and under section ...

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