Dutta v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 13 July 2018
• Docket Number: No. 16-17216,16-17216
• Parties: Bobby S. DUTTA, Plaintiff-Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

895 F.3d 1166

Bobby S. DUTTA, Plaintiff-Appellant,

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant-Appellee.

No. 16-17216

United States Court of Appeals, Ninth Circuit.

Submitted March 14, 2018^* San Francisco, California

Filed July 13, 2018

James A. Francis, David A. Searles, John Soumilas, and Jordan M. Sartell, Francis & Mailman P.C., Philadelphia, Pennsylvania; Deborah L. Raymond, Law Offices of Deborah L. Raymond, Del Mar, California; Robert S. Sola, Robert S. Sola P.C., Portland, Oregon; Micah S. Adkins, The Adkins Firm P.C., Birmingham, Alabama; for Plaintiff-Appellant.

Tiffany L. Powers, Lisa H. Cassilly, and Brooks A. Suttle, Alston & Bird LLP, Atlanta, Georgia; Douglas R. Hart and Jennifer B. Zargarof, Sidley Austin LLP, Los Angeles, California; for Defendant-Appellee.

Before: Richard A. Paez and Sandra S. Ikuta, Circuit Judges, and Eric N. Vitaliano,^** District Judge.

VITALIANO, District Judge:

Bobby S. Dutta appeals the district court’s grant of summary judgment to State Farm Mutual Automobile Insurance Company ("State Farm") on his claim that State Farm violated provisions of the Fair Credit Reporting Act of 1970 ("FCRA"). The relevant FCRA provisions require a prospective employer to provide a job applicant with a copy of his consumer credit report, notice of his FCRA rights, and an opportunity to challenge inaccuracies in the report "before taking any adverse action based in whole or in part on the report." 15 U.S.C. § 1681b(b)(3)(A). In granting State Farm’s motion for summary judgment, the district court did not reach the merits of Dutta’s claim because it determined that Dutta failed to establish an injury-in-fact, and, as a consequence, lacked Article III standing. Dutta argues that the district court erroneously applied relevant case law regarding Article III standing and also erred in relying upon facts set forth only in a declaration that State Farm submitted as an exhibit to its reply brief. We disagree with both arguments and affirm.

I.

FCRA was enacted in 1970 "to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy." Safeco Ins. Co. of Am. v. Burr , 551 U.S. 47, 52, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007). By 1996, though, Congress became concerned that FCRA had so enabled "employers to obtain consumer reports on current and prospective employees" that employees might be "unreasonably harm[ed] ... if there [were] errors in their reports." S. Rep. No. 104-185, at 35 (1995); see also S. Rep. No. 108-166, at 5–6 (2003) (noting that in 1996 Congress recognized "the significant amount of inaccurate information that was being reported by consumer reporting agencies and the difficulties that consumers faced getting such errors corrected"). Responding to these concerns, Congress adopted remedial amendments requiring employers to provide job applicants with a copy of their credit report and to afford job applicants the opportunity to respond to the report before taking any adverse action based on it. See S. Rep. No. 104-185, at 35. The relevant amendment is codified at 15 U.S.C. § 1681b(b)(3)(A), and reads, in pertinent part:

[I]n using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates—

(i) a copy of the report; and

(ii) a description in writing of the rights of the consumer under this subchapter, as prescribed by the Bureau [of Consumer Financial Protection] under section 1681g(c)(3) of this title.

FCRA provides, further, that "[a]ny person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer." 15 U.S.C. § 1681n(a).

Dutta’s sole claim against State Farm falls squarely within the confines of the amendment. On March 3, 2014, Dutta applied for employment with State Farm through the company’s Agency Career Track ("ACT") hiring program. As a preliminary step on the ACT pathway to hiring, Dutta was required to, and did, sign an authorization permitting State Farm to obtain his consumer credit report. Consumer credit reports are a critical component in State Farm’s decision-making process when evaluating applications in the ACT program. State Farm examines the 24-month credit history of every ACT applicant, viewing it as an indicator of the applicant’s practical ability to market financial and insurance-related products and services. As relevant here, if the applicant’s credit report indicates a charged-off account greater than $1000 or three or more 90-day late payments, the applicant is disqualified from continuing in the ACT program.¹

There is no dispute that Dutta was denied admission to the ACT program and that his poor credit history was the cause of his disqualification. Dutta’s grievance is that the credit report obtained by State Farm contained errors, which State Farm considered without providing him sufficient notice under FCRA. He claims that, on March 11, 2014, State Farm employee Roberta Thomas phoned him and told him that, because of a charged-off debt and two loan delinquencies, his employment application was rejected and that the decision was final.² Three days later, on March 14, 2014, Dutta received a pre-adverse action notice, dated March 11, 2014 ("Statutory Notice"), which enclosed a copy of the credit report. The cover letter instructed Dutta to contact State Farm "within five days" if the report contained any inaccurate or incomplete information. Dutta followed those instructions by contacting State Farm on March 17, 2014, to dispute the report’s accuracy. Specifically, he stated that although the charged-off debt listed in the report was dated February 28, 2014, which would be within State Farm’s 24-month look back period, he had not made a payment on that debt since 2010—well outside the 24-month period. He also explained that the past delinquencies were modified mortgage loans and that he had made trial payments "much earlier than what was reported in the credit report." The next day, on March 18, 2014, a State Farm employee informed Dutta by email that he was now deemed withdrawn from the ACT program.

Dutta subsequently brought this action for damages, alleging that State Farm denied his employment application based on his credit report without providing him sufficient notice under FCRA. State Farm moved for summary judgment on July 25, 2016, and later attached the Declaration of Bridgette Beasley ("Beasley Declaration"), a State Farm employee, to its reply papers. Dutta did not object in the district court to the consideration of the Beasley Declaration nor did he request an opportunity to file a sur-reply to it. Relying on facts in the Beasley Declaration, the district court granted summary judgment to State Farm. The court concluded that, in the absence of "an injury in fact," Dutta lacked standing to sue on the FCRA violation he had alleged. Dutta timely appealed.

II.

The district court had jurisdiction under 28 U.S.C. § 1331 and 15 U.S.C. § 1681p.³ We have jurisdiction under 28 U.S.C. § 1291. This court reviews de novo the district court’s decision to grant summary judgment. Bergt v. Ret. Plan for Pilots Employed by MarkAir, Inc. , 293 F.3d 1139, 1142 (9th Cir. 2002).

III.

A. The Propriety of the Record

Dutta takes level aim at the district court’s consideration of and reliance upon the Beasley Declaration, which was the only source of admissible proof as to why Dutta’s credit report would have disqualified him from acceptance in the ACT program. Dutta contends that the district court’s reliance on the Beasley Declaration was improper under Ninth Circuit precedent since the declaration was attached to State Farm’s summary judgment reply papers and he was given no opportunity to respond to it. We disagree.

It is a basic principle that a party appearing before a court is charged with the understanding of that court’s rules of procedure. The district court’s rules of practice permit the filing of affidavits and declarations in reply to opposition papers. N.D. Cal. Civ. L. R. 7-3(c). Where the opposing party believes he has been unfairly disadvantaged by a new factual matter included in a reply affidavit or declaration, the practice rules provide a mechanism to seek relief. The district court’s Rule 7-3(d) provides the aggrieved party with the opportunity to object to the district court’s consideration of the newly submitted evidence or to request leave to file a sur-reply opposition to it. N.D. Cal. Civ. L. R. 7-3(d).⁴

Plainly, the practice rules recognize the potential inequities that might flow from the injection of new matter at the last round of briefing. At the same time, the fact that a ground to object to that new matter is available does not command that the objection be sustained. Indeed, in the context of summary judgment, it may be in the interests of judicial economy to overrule an objection to late-filed dispositive evidence. In such circumstances, a sustained objection does not dispose of the new matter for all time. Rather, the new matter will likely hibernate until it winds its way back at trial. Understanding the potential for unfairness inherent in an unusual submission of new factual matter, the practice rules contemplate relief for the opposing party, but such relief is not limited to simply striking the new matter from consideration. Mitigation of any unfairness, following objection, may take the form of granting the objecting party leave to file a sur-reply opposition to the new matter. See Provenz v. Miller , 102 F.3d 1478, 1483 (9th Cir. 1996) ("[W]here new evidence is presented in a reply to a motion for summary judgment, the district court should not consider the new evidence without giving the [non-]movant an opportunity to respond.") (alteration in original) (citation omitted); SEC v. Sabrdaran , 252 F.Supp.3d 866, 889 (N.D. Cal. 201...