Limon v. Circle K Stores Inc.

• Decision Date: 25 October 2022
• Docket Number: F082289, F082929
• Citation: 84 Cal.App.5th 671,300 Cal.Rptr.3d 572
• Parties: Ernesto LIMON, Plaintiff and Appellant, v. CIRCLE K STORES INC., Defendant and Respondent.
• Court: California Court of Appeals

84 Cal.App.5th 671

300 Cal.Rptr.3d 572

Ernesto LIMON, Plaintiff and Appellant,

v.CIRCLE K STORES INC., Defendant and Respondent.

F082289, F082929

Court of Appeal, Fifth District, California.

Filed October 25, 2022

Kingsley & Kingsley, Eric B. Kingsley, Encino, Ari J. Stiller, and Jessica L. Adlouni, for Plaintiff and Appellant.

McDermott Will & Emery, Maria C. Rodriguez, Christopher A. Braham, and Amanda D. Murray, Los Angeles, for Defendant and Respondent.

SNAUFFER, J.

INTRODUCTION

Appellant Ernesto Limon appeals from a judgment of dismissal entered in favor of respondent Circle K Stores Inc. (Circle K) and against Limon after the trial court sustained Circle K's demurrer to Limon's CLASS ACTION COMPLAINT (complaint) without leave to amend. We affirm the judgment.

Briefly summarized, Limon's complaint alleges Circle K violated the Fair Credit Reporting Act (FCRA) ( 15 U.S.C. § 1681 et seq. )¹ by failing to provide him with proper FCRA disclosures when it sought and received his authorization to obtain a consumer report² about him in connection with his application for employment, and by actually obtaining the consumer report in reliance on that authorization.

Prior to filing his complaint in state court, Limon brought suit in federal district court on the same substantive claims.³ The district court dismissed the federal action without prejudice in connection with a motion for summary judgment and related motion for reconsideration brought by Circle K, finding Limon lacked standing under article III, section 2 of the United States Constitution.

When Limon filed his complaint in state court, Circle K demurred to each cause of action on grounds Limon (1) lacked legal capacity to sue; (2) was not a real party in interest; and (3) lacked standing to sue. The basis for each of these contentions was that Limon did not allege or suffer any resulting, cognizable harm or injury. The court sustained the demurrer without leave to amend and entered a judgment of dismissal in favor of Circle K.

On appeal, Limon argues no injury is required to pursue his causes of action under the FCRA. In the alternative, he argues he has been injured as a result of Circle K's alleged FCRA violations.

FACTUAL AND PROCEDURAL BACKGROUND

I. Factual Background

"In reviewing a judgment of dismissal entered after the sustaining of a demurrer, we accept as true the factual allegations of the complaint" ( Whittemore v. Owens Healthcare-Retail Pharmacy, Inc. (2010) 185 Cal.App.4th 1194, 1197, 111 Cal.Rptr.3d 227 ) and " ‘ "consider matters which may be judicially noticed." ' "⁴ ( Evans v. City of Berkeley (2006) 38 Cal.4th 1, 6, 40 Cal.Rptr.3d 205, 129 P.3d 394.) The facts recited below are alleged in Limon's complaint, or are judicially noticeable. We also set forth some of Limon's related contentions for context. However, we do not assume the truth of those contentions. ( People ex rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 300–301, 58 Cal.Rptr.2d 855, 926 P.2d 1042.)

Circle K operates gas stations and convenience stores in California. Limon was employed by Circle K from June 29, 2018, through July 31, 2018. To gain employment with Circle K, Limon was required to complete a consent form purporting to authorize Circle K "to obtain a consumer report verifying [Limon's] background and experience." Limon alleges the consent form utilized by Circle K violates the FCRA.

Limon alleges, on information and belief, Circle K required all job applicants to sign the same consent form purportedly allowing Circle K to obtain consumer reports for those applicants. The practice is alleged to have been ongoing for at least five years prior to the filing of the complaint. Limon brought his action "on behalf of himself and all others similarly situated as a class action pursuant to [section] 382 of the Code of Civil Procedure." The complaint contains numerous allegations directed at class certification. Those allegations are not material to Limon's appeal.⁵

Limon alleges the consent form used by Circle K contains "extraneous provisions" in violation of the FCRA and related regulatory guidance from the Federal Trade Commission. In particular, Limon alleges Circle K's consent form violates subdivision (b)(2)(A)(i) of section 1681b which provides:

"Conditions for furnishing and using consumer reports for employment purposes [¶] ...[¶] (2) Disclosure to consumer [¶] (A) In general [¶] Except as provided in subparagraph (B),^{[6 ]} 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—[¶] (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[.]" (§ 1681b(b)(2)(A)(i).)

Limon further alleges Circle K's use of its consent form to obtain consumer reports for its job applicants violates subdivision (b)(2)(A)(ii) of section 1681b. That provision prohibits an employer from obtaining a consumer report on a job applicant "unless—[¶] ... [¶] ... the consumer has authorized in writing (which authorization may be made on the [disclosure] document ...) the procurement of the report by that person." (§ 1681b(b)(2)(A)(ii).)

Provisions in Circle K's consent form include a "liability release" and "state disclosures" which Limon alleges violate the " ‘standalone’ disclosure and ‘clear and conspicuous’ requirements" of section 1681b, subdivision (b)(2)(A)(i). Specifically, Circle K's consent form contains the following language (with the provisions Limon contends are violative of the FCRA in bold type):

" ‘I authorize, without reservation, any person or entity contacted by Circle K ... or its agent(s) to furnish the above stated information, and I release any such person or entity from any liability for furnishing such information; ’

" ‘Copy: If you are applying for a job in or live in California, Minnesota, or Oklahoma you may request a copy of the report by checking this box .’ " (Bold type added.)

Limon alleges Circle K's "failure to provide a compliant disclosure, and failure to obtain proper authorization, deprived [Limon] and others similarly situated of the right to information and the right to privacy guaranteed by ... [section] 1681b(b)(2)(A)."

In his first cause of action, Limon alleges Circle K's standard consent form is unlawful because it "violates the [FCRA's] ‘standalone’ disclosure requirement" and "violates the [FCRA's] ‘clear and conspicuous disclosure’ requirement" contained in subdivision (b)(2)(A)(i) of section 1681(b) ; Circle K knew the consent forms violated the FCRA; and Circle K's violations of the FCRA were willful and in "deliberate disregard of its obligations and the rights" of Limon and the proposed class members.

In his second cause of action, Limon alleges he "was confused regarding the nature of his rights under the FCRA and did not give valid authorization for [Circle K] to procure a consumer report in violation" of section 1681b, subdivision (b)(2)(A)(ii); his purported authorization for Circle K to obtain his consumer report, and those executed by proposed class members, were invalid; and Circle K obtained his and proposed class members' consumer reports notwithstanding this alleged invalidity. Limon reiterates that Circle K's violations of the FCRA were willful and that it acted in "deliberate disregard of its obligations and the rights" of Limon and proposed class members.

Limon contends he and all proposed class members are entitled to "statutory damages of not less than $100 and not more than $1,000 for every willful violation of the FCRA," as well as punitive damages, and an award of costs and attorney fees, pursuant to subdivisions (a)(1)(A), (2), and (3) of section 1681n. Subdivision (a) of section 1681n provides, in relevant part:

"Any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to the sum of—[¶] (1)(A) any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000; ... [¶] ... [¶] (2) such amount of punitive damages as the court may allow; and [¶] (3) in the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney's fees as determined by the court." (§ 1681n(a)(1)(A), (2), (3).)

II. Procedural Background

A. Federal Court Proceedings

Limon "initially filed an action alleging the violations [contained in his complaint] in the United States District Court for the Eastern District of California" (i.e., the federal action) on December 11, 2018.

Circle K moved for summary judgment in the federal action. When the federal district court denied the motion, Circle K moved for reconsideration. The court granted the motion for reconsideration.

On reconsideration, the federal district court, relying on Ruiz v. Shamrock Foods Co. (9th Cir. 2020) 804 Fed.Appx. 657, noted "demonstrating a concrete injury for Article III standing purposes as defined in ... Syed [v. M-I, LLC (9th Cir. 2017) 853 F.3d 492 ( Syed )] ... requires not just evidence of confusion about an FCRA authorization form, but also evidence that a plaintiff ‘would not have signed [the form] had it contained a sufficiently clear disclosure.' " Because the court found "there was no evidence in the record demonstrating that [Limon] would not have signed Circle K's FCRA Consent form had it been ‘sufficiently clear,’ i.e., had it not contained the liability waiver," it gave Limon an opportunity to "supplement the record with evidence sufficient to establish Article III standing[.]"

In a written response to the federal district court's invitation to provide supplemental evidence, Limon stated he " ‘does not believe that it will be possible to supplement...