Ryals v. Strategic Screening Solutions, Inc.

• Decision Date: 30 July 2015
• Docket Number: Civil Action No. 3:14cv643.
• Citation: 117 F.Supp.3d 746
• Court: U.S. District Court — Eastern District of Virginia
• Parties: James RYALS, Jr., on behalf of himself and all others similarly situated, Plaintiff, v. STRATEGIC SCREENING SOLUTIONS, INC., et al., Defendants.

117 F.Supp.3d 746

James RYALS, Jr., on behalf of himself and all others similarly situated, Plaintiff,

v.STRATEGIC SCREENING SOLUTIONS, INC., et al., Defendants.

Civil Action No. 3:14cv643.

United States District Court, E.D. Virginia, Richmond Division.

Signed July 30, 2015.

Leonard Anthony Bennett, Susan Mary Rotkis, Consumer Litigation Associates, William Leonard Downing, The Consumer and Employee Rights Law Firm PC, Christopher Colt North, Newport News, VA, for Plaintiff.

Charles Michael Sims, Leclairryan, A Professional Corporation, Richmond, VA, Ryan Christopher Day, Leclairryan PC, Alexandria, VA, for Defendants.

MEMORANDUM OPINION

ROBERT E. PAYNE, Senior District Judge.

This case is before the Court on the Defendants' MOTION TO DISMISS FIRST AMENDED CLASS ACTION COMPLAINT PURSUANT TO RULE 12(b)(1) (Docket No. 23). For the reasons set forth below, this motion will be denied.

BACKGROUND

Plaintiff, James Ryals, Jr. ("Ryals") applied for employment with GCA Services Group, Inc. ("GCA") in March of 2014. First Amended Class Action Complaint ("FAC") (Docket No. 5, at ¶ 35). As a part of the employment process, GCA obtained a background report that was prepared by the Defendants, which, according to the FAC, are consumer reporting agencies. Id. at ¶¶ 37, 19–21. Ryals received several letters during the hiring process that informed him that GCA was reviewing his application for employment based on information collected from the Defendants. Id. at 55 46–51. One of those letters contained a copy of a consumer report that is alleged to reflect dismissed charges that were too old to be lawfully included in a consumer report. Id. at ¶¶ 38–43, 49–50. In early April of 2014, Ryals was notified that GCA had decided not to offer him a position based, at least in part, on adverse information provided in the background reports. Id. at 52–54.

Defendants contend, however, that GCA "reconsidered its denial and offered employment to Plaintiff" in May of 2014. Memorandum in Support of Motion to Dismiss First Amended Class Action Complaint Pursuant to Rule 12(b)(1), Docket No. 24, at 3 (hereafter "Defendants' Opening Br." at 3.). They assert that Ryals "never responded to GCA's offer, which was communicated by a GCA employee to Plaintiff in multiple voicemail messages that same month." Id.; see also Declaration of Staci Hoover¹, Docket No. 24–6 ("I personally communicated GCA's offer of employment to Mr. Ryals by telephone at the number he provided in his employment application. I left four or five messages on Mr. Ryals' voicemail, each indicating that he had been selected for employment and requesting that he contact me to schedule orientation.") Ryals "denies that he ever received any telephone calls or voicemail messages from GCA or anyone on behalf of GCA." Plaintiff's Response in Opposition to Defendants' Motion to Dismiss First Amended Class Complaint Pursuant to Rule 12(b)(1), Docket No. 27, at 5 (hereafter "Plaintiff's Response Br." at 5.).

In the FAC, Ryals alleges that the Defendants violated three provisions of the Fair Credit Reporting Act ("FCRA"). Docket No. 5. In Count I, Ryals alleges that the Defendants violated 15 U.S.C. § 1681c(a)(5) by including "adverse items of information ... which antedated the report on Plaintiff by more than seven years." Id. at 12. In Count II, Ryals alleges that Defendants violated 15 U.S.C. § 1681g(a) by "systematically failing to provide a complete copy of all information in class member files within its mandated disclosure", failing "to disclose the actual sources of information within [the] reports", and failing "to include the explanation of rights disclosures mandated" by the FCRA. Id. at 17. In Count III, Ryals alleges that the Defendants violated 15 U.S.C. § 1681k by "failing to notify consumers at the time ... of the fact that adverse public and criminal record information [was] being provided to employers or prospective employers" and failing to maintain strict procedures. Id. at 19. Ryals has acknowledged that his actual damages stemming from the above facts are "nominal." Id. at ¶ 121.

DISCUSSION

Defendants argue that Ryals lacks Article III standing to pursue his FCRA claims because he has not alleged a legally-cognizable injury-in-fact.² If the plaintiff does not have standing, this Court lacks subject matter jurisdiction and can go no further in evaluating this case, and it must be dismissed. Arbaugh v. Y & H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006).

I. Legal Standard

The United States Constitution's "case-or-controversy" requirement limits the jurisdiction of the federal court system. U.S. Const. Art III § 2. In order to fall within the Constitution's limits and thus the federal court system's jurisdiction, a plaintiff suing in federal court must have standing to pursue his or her claim. If a named plaintiff in a putative class action cannot establish that he has standing to pursue a claim or claims, then the entire action must be dismissed as to the claim or claims as to which standing is lacking. Doe v. Obama, 631 F.3d 157, 161 (4th Cir.2011).

Over the years, the law of standing has been developed in such a way that it now consists of three elements. "First, the plaintiff must have suffered an ‘injury-in-fact’—an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the asserted injury and the asserted wrongful conduct in that the injury has to be fairly traceable to the challenged action of the defendants and not the result of the independent action of some third party not before the court. Third, it must be ‘likely’, as opposed to merely ‘speculative’, that the injury will be redressed by a favorable decision." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (internal quotations omitted). The party invoking federal jurisdiction bears the burden of proving that these three requirements are satisfied. Id. at 560, 112 S.Ct. 2130 ; Warth v. Seldin, 422 U.S. 490, 518, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975).

II. Position of the Parties

Defendants argue that Ryals does not have standing here because he has not suffered an injury-in-fact, but has only suffered a bare violation of a statute. Defendants' Opening Br. at 5–6. In support of this argument, Defendants point to the Fourth Circuit's opinion in David v. Alphin, 704 F.3d 327 (4th Cir.2013). In David, the Fourth Circuit ruled that participants in a defined benefits plan did not have standing to sue under the Employee Retirement Income Security Act of 1975 ("ERISA"). 704 F.3d at 333–39. The Court of Appeals explained that it was "undisputed that [Plaintiffs had] statutory standing to assert claims ... on behalf of the Pension Plan under ERISA", it also stated that the Plaintiffs "must also have constitutional standing under Article III." Id. at 333.

Ultimately, the Fourth Circuit held that the Plaintiffs did not have constitutional standing because they could not show that they had suffered an injury-in-fact as a direct result of the Defendants' actions. Id. at 339. In particular, the Court of Appeals explained "that a participant in a defined benefit pension plan has an interest in his fixed future payments only, not the assets of the pension fund." Id. at 338 (citing Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 439–40, 119 S.Ct. 755, 142 L.Ed.2d 881 (1999) ). Therefore, "the risk that [Plaintiffs'] pension benefits will at some point in the future be adversely affected as a result of the present alleged ERISA violations is too speculative to give rise to Article III standing." Id. That, of course, was because, under the alleged facts, the injury, if any, was speculative and, for that reason, the Plaintiffs failed the injury-in-fact test. That scenario is not presented here and thus that part of David is not applicable here.

The Court of Appeals also held that the mere fact that the Plaintiffs were afforded statutory rights in accordance with ERISA did not confer constitutional standing if the Plaintiffs could not establish that they had been actually harmed in any way. Id.

The Defendants argue that Ryals has suffered no cognizable injury as a result of any FCRA violation and thus cannot satisfy the constitutional injury-in-fact requirement. Specifically with reference to the Section 1681g claim in Count II, the Defendants argue that Ryals "did not suffer any harm ... [because] he was provided with a full copy of his latest report upon request." Id. at 8. With reference to the Section 1681k claim in Count III, Defendants argue that Ryals has failed "to allege that any of the reported information was inaccurate" and thus has not alleged an injury-in-fact.³

Ryals responds that "the ERISA claims in that case [David ] were different from the FCRA claims here ... [because] they involved a suit by plan members who ... were not permitted to recover individually." Plaintiff's Response Brief at 11. ERISA provides that an individual who violates its fiduciary requirements is "liable to the retirement plan itself" and not to those individuals who are members of the plan. Id.; 29 U.S.C. § 1109. Thus, the private right of action is merely an enforcement mechanism and does not create an individualized right to whatever recovery could be secured. That, of course, is not the case in actions under the FCRA. And, says Ryals, David does not control FCRA cases.

Ryals also argues that he has suffered an injury-in-fact and because the Section 1681g and Section 1681k claims challenge the Defendants' alleged failure to provide information, disclosures, and notifications in compliance with the FCRA. And, says Ryals, "the denial of a right to certain information to which the plaintiff has a right." Id. at 8. "Informational injury" of this sort is recognized within the Fourth Circuit and elsewhere. Id. (citing Public Citizen v. U.S. Department of...