Snell v. G4S Secure Solutions (USA) Inc.

• Decision Date: 19 December 2019
• Docket Number: 1:19-cv-00802-LJO-SAB
• Citation: 424 F.Supp.3d 892
• Court: U.S. District Court — Eastern District of California
• Parties: James SNELL, an individual on behalf of himself and others similarly situated, Plaintiff, v. G4S SECURE SOLUTIONS (USA) INC., and Does 1 through 50, inclusive, Defendants.

424 F.Supp.3d 892

James SNELL, an individual on behalf of himself and others similarly situated, Plaintiff,

v.G4S SECURE SOLUTIONS (USA) INC., and Does 1 through 50, inclusive, Defendants.

1:19-cv-00802-LJO-SAB

United States District Court, E.D. California.

Signed December 19, 2019

Eric Bryce Kingsley, Kelsey Szamet, Kingsley & Kingsley, APC, Encino, CA, Walter L. Haines, United Employees Law Group, PC, Huntington Beach, CA, for Plaintiff.

Aaron Paul Rudin, Calvin E. Davis, Gordon & Rees LLP, Los Angeles, CA, Linh Hua, Michael John Wright, Gordon Rees Scully Mansukhani, Irvine, CA, for Defendants.

MEMORANDUM DECISION AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS UNDER RULE 12(b)(6).

(ECF NO. 7)

Lawrence J. O'Neill, UNITED STATES CHIEF DISTRICT JUDGE

I. INTRODUCTION

In June 2019, Plaintiff James Snell ("Snell") brought this putative class action against his former employer and a security company, Defendant G4S Secure Solutions (USA), Inc. ("G4S"), for violations of the Fair Credit Reporting Act ("FCRA"). ECF No. 1 ¶¶ 5, 10. Specifically, Snell claims that the authorization form that G4S provided him to sign in order to perform employment-related background checks fails to satisfy the clear, conspicuous, and standalone requirements of 15 U.S.C. § 1681b(b)(2)(A). Id. ¶¶ 5, 16. Contending that the Complaint fails to allege sufficient facts to establish such statutory violations, G4S filed the instant Motion to Dismiss (the "Motion") under Federal Rule of Civil Procedure 12(b)(6) on August 2, 2019. Id. No. 7. Snell filed his Opposition on August 20, and G4S replied on August 27. Id. Nos. 10-11.

Pursuant to Local Rule 230(g), the Court finds this matter suitable for a decision on the papers. Having considered all of the arguments raised in the parties' submissions, relevant law, and record in this case, the Court DENIES the Motion.

II. BACKGROUND

The following facts are drawn from the Complaint and are accepted as true only for the purposes of this Motion to Dismiss. Cousins v. Lockyer , 568 F.3d 1063, 1067 (9th Cir. 2009). In October 2018, Snell started to work for G4S as a security officer. ECF No. 1 ¶¶ 2, 5, 11.

To complete his employment application to work for G4S, Snell signed a Disclosure and Authorization to Obtain Consumer Report and/or Investigative Consumer Report and Release form (the "disclosure form") authorizing G4S to obtain his consumer report and to verify his background and experience. Id. ¶ 4. Snell now claims that the disclosure form he signed is analogous to the ones in Gilberg v. California Check Cashing Stores, LLC , 913 F.3d 1169 (9th Cir. 2019), and Syed v. M-I, LLC , 853 F.3d 492, 500 (9th Cir.), which the Ninth Circuit found to be in violation of 15 U.S.C. § 1681b(b)(2)(A)(i). Id. ¶¶ 5, 43-45. Section 1681b(b)(2)(A)(i) requires that a FCRA disclosure form consists solely of the disclosure without any extraneous information—this is known as the "standalone requirement." Id. ¶¶ 5, 42, 44. Section 1681b(b)(2)(A)(i) also requires a FCRA disclosure form to be clear and conspicuous to a reasonable consumer—this is known as the "clear and conspicuous requirement." Id. ¶¶ 42, 45.

The Complaint asserts two causes of action. The first one is premised on the theory that G4S willfully violated the standalone, clear, and conspicuous requirements of the FCRA by including in its disclosure form not only a FCRA disclosure but also other disclosure requirements under California, Minnesota, and Oklahoma laws, which confused Snell as a reasonable consumer. Id. ¶¶ 26, 42-46; id. , Exh. 1. The second cause of action is dependent on the first. Snell claims that because G4S violated Section 1681b(b)(2)(A)(i), it did not acquire a valid consent from Snell to obtain his consumer report in violation of Section 1681b(b)(2)(A)(ii). Id. ¶¶ 54-56. By bringing this putative class action, Snell seeks statutory damages under 15 U.S.C. § 1681n(a)(1)(A), punitive damages under § 1681n(a)(2), and attorney's fees and costs under § 1681n(a)(3) for himself and all the putative class members. Id. at 12.

III. LEGAL STANDARD

A motion to dismiss under Rule 12(b)(6) challenges the legal sufficiency of the opposing party's pleadings. Dismissal of an action under Rule 12(b)(6) is proper where there is either a "lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dept. , 901 F.2d 696, 699 (9th Cir. 1990). When considering a motion to dismiss for failure to state a claim under Rule 12(b)(6), "[a]ll factual allegations in the complaint are accepted as true, and the pleadings construed in the light most favorable to the nonmoving party." Doe I v. Nestle USA, Inc. , 766 F.3d 1013, 1018 (9th Cir. 2014) (internal quotation marks and internal citation omitted). "In reviewing the sufficiency of a complaint, [courts are limited] to the complaint itself and its attached exhibits, documents incorporated by reference, and matters properly subject to judicial notice." In re NVIDIA Corp. Sec. Litig. , 768 F.3d 1046, 1051 (9th Cir. 2014) (internal citations omitted).

Rule 8(a)(2) requires a complaint to provide "only ‘a short and plain statement of the claim showing that the pleader is entitled to relief’ in order to ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ " Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson , 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) ). A sufficiently pled claim "does not need detailed factual allegations [but] a plaintiff's obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of the element of a cause of action will not do." Id. (internal citations omitted).

A claim is sufficiently pled when it is "plausible on its face," meaning that there are enough facts alleged to "allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). This determination is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937. A claim which is possible, but which is not supported by enough facts to "nudge [it] across the line from conceivable to plausible ... must be dismissed." Twombly , 550 U.S. at 570, 127 S.Ct. 1955. Rule 8 does not "unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Ashcroft , 556 U.S. at 678-79, 129 S.Ct. 1937.

IV. ANALYSIS

"The Fair Credit Reporting Act has as one of its purposes to ‘protect consumer privacy.’ "

United States v. Bormes , 568 U.S. 6, 7, 133 S.Ct. 12, 184 L.Ed.2d 317 (2012) (internal citations omitted). The FCRA "provides that ‘[a]ny person who willfully fails to comply with any requirement [of the Act] with respect to any [individual] is liable to that [individual]’ for, among other things, either ‘actual damages’ or statutory damages of $100 to $1,000 per violation, costs of the action and attorney's fees, and possibly punitive damages." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1545, 194 L.Ed.2d 635 (2016) (internal citation omitted) (emphasis added).

G4S now seeks to dismiss this action under Rule 12(b)(6) on two grounds. First, G4S argues that Snell fails to plead sufficient facts to show that its alleged violation of Section 1681b(b)(2)(A)(i) was willful. Second, G4S argues that Snell fails to allege sufficiently how the disclosure form is not clear and conspicuous. Both grounds go to Snell's first cause of action, but if the first claim fails, the second claim also fails as the later depends on the former. The Court addresses each issue in turn.

A. Willful Noncompliance Under 15 U.S.C. § 1681n

"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 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; and

(ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person."

15 U.S.C. § 1681b(b)(2)(A)(i)-(ii) (emphasis added).

"Any person who willfully fails to comply with any requirement imposed under this subchapter," such as 15 U.S.C. § 1681b(b)(2)(A), "with respect to any consumer is liable to that consumer ...." 15 U.S.C. § 1681n(a) (emphasis added). "The Supreme Court has clarified that, under Section 1681n, willfulness reaches actions taken in ‘reckless disregard of statutory duty,’ in addition to actions ‘known to violate the Act.’ " Syed , 853 F.3d at 503 (citing to Safeco Ins. Co. of America v. Burr , 551 U.S. 47, 56-57, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007) (internal citation omitted). If G4S reads and applies the FCRA in an erroneous manner, that error itself is not sufficient to establish recklessness or knowing violation of the law under Section 1681n(a). See Safeco , 551 U.S. at 69-70, 127 S.Ct. 2201. As the Supreme Court held, "a company subject to FCRA does not act in reckless disregard of it unless the action is not only a violation under a reasonable reading of the statute's terms, but shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless." Id. at 69, 127 S.Ct. 2201 (emphasis added). To paraphrase this in the Supreme Court's terms, the test is whether G4S's reading of Section 1681b(b)(2)(A)(i), "albeit erroneous, was not objectively unreasonable." Id. Notwithstanding this, willfulness may be alleged generally at the...