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Banks v. Central Refrigerated Services Inc.

United States District Court, D. Utah, Central Division

May 2, 2017

MELVIN BANKS, on behalf of himself and all other similarly situated, Plaintiff,
CENTRAL REFRIGERATED SERVICES, INC., a Utah corporation, Defendant.


          DALE A. KIMBALL United States District Judge.

         This matter is before the court on Plaintiff Melvin Banks's Amended Motion for Class Certification and on Defendant Central Refrigerated Services, Inc.'s, Motion to Dismiss for Lack of Subject Matter Jurisdiction and Central's Motion for Summary Judgment. A hearing on all three motions was held on March 28, 2017. At the hearing, Plaintiff was represented by Matthew Dooley, Stephen Bosak, and Ronald Ady. Defendant was represented by Joseph Kroeger and Mark Morris. Before the hearing, the court carefully considered the memoranda and other materials submitted by the parties. Since taking the matter under advisement, the court has further considered the law and facts relating to the matter. Now being fully advised, the court renders the following Memorandum Decision and Order.


         On March 29, 2013, Plaintiff Melvin Banks applied online for a commercial truck driver position with Defendant Central Refrigerated Services, Inc. (“Central”). In evaluating Mr. Banks's application, Central requested a report about Mr. Banks from HireRight on March 29, 2013, and from DriverFACTS on April 2, 2013. Based at least in part on Mr. Banks's purported work history contained in his DriverFACTS report, Central refused to further consider Mr. Banks's application for employment.

         By April 3, 2013, Mr. Banks learned that he was denied employment because of his DriverFACTS report through an email exchange with Ms. Joan Ivie, a Central recruiter. However, Mr. Banks claims that Central never informed him that he had a right to request a free copy of his DriverFACTS report or that he may dispute the accuracy and completeness of any information in the report with the reporting agency. Mr. Banks further claims that Central even refused to provide Mr. Banks with his DriverFACTS report after he requested it, although Mr. Banks did eventually procure a copy of his DriverFACTS report.

         Approximately one month after learning that his denial was a result of information in his DriverFACTS report, Mr. Banks filed a formal dispute and request for correction with DriverFACTS. DriverFACTS considered Mr. Banks's dispute but eventually rejected it, and Mr. Banks's DriverFACTS report remained the same.

         On March 18, 2015, Mr. Banks filed this action in the United States District Court for the Northern District of Indiana on behalf of himself and all others similarly situated against Central for violations of the Fair Credit Reporting Act (“FCRA”). On April 29, 2016, the Indiana court granted Central's motion to transfer the venue to the United States District Court for the District of Utah. On November 23, 2016, Mr. Banks filed an Amended Motion to Certify Class. On that same day, Central filed a Motion to Dismiss for Lack of Jurisdiction. On January 18, 2017, Central filed a Motion for Summary Judgment. All of the motions have been fully briefed.


         The court will first address Central's Motion to Dismiss because it questions the courts subject matter jurisdiction. The court will then address Mr. Banks's Amended Motion for Class Certification and Central's Motion for Summary Judgment.


         Central moves this court under Federal Rule of Civil Procedure 12(b)(1) to dismiss this action for lack of subject matter jurisdiction because, according to Central, Mr. Banks has not shown that he has standing. The court will address Central's arguments below.

         Standard of Review

         Central's motion to dismiss under Rule 12(b)(1) challenges Plaintiff's purported compliance with the court's limited subject matter jurisdiction. “The [standing to sue] doctrine limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress for a legal wrong.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016). Standing is “the threshold question in every federal case” because, if the plaintiff lacks standing, the federal court lacks jurisdiction. Warth v. Sedlin, 422 U.S. 490, 498 (1975). “[T]he ‘irreducible constitutional minimum' of standing consists of three elements. The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision, ” and the plaintiff bears the burden of establishing these elements. Spokeo, 136 S.Ct. at 1547. “To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest' that is ‘concrete and particularized' and ‘actual or imminent, not conjectural or hypothetical.'” Id. at 1548 (internal quotation marks and citation omitted). “A ‘concrete' injury must be ‘de facto'; that is, it must actually exist.” Id. (quoting Black's Law Dictionary 479 (9th ed. 2009)).


         In Spokeo, the Supreme Court reaffirmed that “Article III standing requires a concrete injury even in the context of a statutory violation.” Id. at 1549. A plaintiff cannot, “for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.” Id. at 1549. Specifically as it relates to this case, “[a] violation of one of the FCRA's procedural requirements may result in no harm.” Id. at 1550 (“For example, even if a consumer reporting agency fails to provide the required notice to a user of the agency's consumer information, that information may be entirely accurate.”). Although a bare procedural violation, divorced from concrete harm, may not be sufficient to satisfy Article III's injury-in-fact requirement, “the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact, ” without the plaintiff needing to “allege any additional harm beyond the one Congress has identified.” Id. at 1549 (citing cases recognizing that a “failure” or “inability to obtain information” “is a sufficient injury in fact to satisfy Article III”).

         When applying the principles in Spokeo, one of the most difficult questions to answer is when a violation of a statute that is procedural in nature rises to the level of an injury in fact in the absence of additional harm. The difficulty arises in trying to draw the line identified in Spokeo between a “bare procedural violation, ” which may not be sufficient to satisfy the injury-in-fact requirement, and the “violation of a procedural right granted by statute, ” which can be sufficient to constitute an injury in fact. The key distinction between the two categories appears to be whether or not the statute creates a right. See Warth v. Seldin, 422 U.S. 490, 514 (1975) (“Congress may create a statutory right or entitlement the alleged deprivation of which can confer standing to sue even where the plaintiff would have suffered no judicially cognizable injury in the absence of the statute.”). If a statute creates a substantive right, then a violation of that statutory right cannot be considered merely procedural. See Church v. Accretive Health, Inc., 654 Fed.Appx. 990, 995 n.2 (11th Cir. 2016) (determining that plaintiff “has not alleged a procedural violation” because “Congress provided [plaintiff] with a substantive right to receive certain disclosures and [plaintiff] has alleged that [defendant] violated that substantive right”).

         Therefore, “[t]he first task . . . is to determine from the statutory text the nature of the substantive protections that Congress intended to create in enacting those sections of the FCRA.” Thomas v. FTS USA, LLC, 193 F.Supp.3d 623, 631 (E.D. Va. 2016). In this case, Mr. Banks is alleging that Central violated Section 1681b(b)(3)(B) of the FCRA. That provision of the FCRA provides that, in the case of a consumer who is applying for “a position over which the Secretary of Transportation has the power to establish qualifications and maximum hours of service” and who has only interacted with the potential employer “in connection with that employment application . . . by mail, telephone, computer, or other similar means, ” the potential employer “must provide to the consumer to whom the [consumer] report relates . . . within 3 business days of taking [an adverse action on the employment application based in whole or in part on the report], an oral, written or electronic notification.” 15 U.S.C. § 1681b(b)(3)(B). The notification must inform the consumer that the adverse action was taken based on the report, must provide contact information for the consumer reporting agency that furnished the report, must inform the consumer that the consumer reporting agency cannot provide reasons why the adverse action was taken, and must inform the consumer that he or she may request a free copy of the report and dispute the accuracy or completeness of information in the report. 15 U.S.C. § 1681b(b)(3)(B)(i). If the consumer requests a free copy of the report from the potential employer, “then, within 3 business days of receiving the consumer's request, together with proper identification, the [potential employer] must send or provide to the consumer a copy of a report and a copy of the consumer's rights.” 15 U.S.C. § 1681b(b)(3)(B)(ii).

         The court concludes that, by enacting 15 U.S.C. § 1681b(b)(3)(B), Congress created at least two substantive rights on behalf of applicable consumers who suffered an adverse employment action based in whole or in part on a consumer report: a right to information and a right to correct inaccurate information. See Thomas v. FTS USA, LLC, 193 F.Supp.3d 623, 633 (E.D. Va. 2016) (“Congress emphasized that ‘the consumer has a right to know when he is being turned down for credit, insurance, or employment because of adverse information in a credit report and to correct erroneous information in his credit file.'” (quoting S. Rep. No. 517, 91st Cong., 1st Sess. 2)); see also Demmings v. KKW Trucking, Inc., Case No. 3:14-CV-494-SI, 2017 WL 1170856, at *9 (D. Or. Mar. 29, 2017) (“KKW assumes that § 1681b(b)(3)(B) has only one purpose: to allow prospective employees to correct inaccurate information in their consumer reports. This interpretation reads too much into Spokeo's dicta, and too little into the statutory text.”). “[I]t is well-settled that Congress may create a legally cognizable right to information, the deprivation of which will constitute a concrete injury.” Thomas, 193 F.Supp.3d at 635; see also Federal Election Com'n v. Akins, 524 U.S. 11, 21 (1998) (“”The ‘injury in fact' that [plaintiffs] have suffered consists in their inability to obtain information . . . that . . . the statute requires that [defendants] make public.”); Manuel v. Wells Fargo Bank, Nat. Ass'n, 123 F.Supp.3d 810, 818 (E.D. Va. 2015) (“It is well-established that a deprivation of information is sufficient to satisfy the injury-in-fact requirement.”). Several courts have recognized that multiple sections of the FCRA provide consumers with a right to information. See, e.g., Syed v. M-I, LLC, No. 14-17186, 2017 W: 1050586, at *4 (9th Cir. Mar. 20, 2017) (“The disclosure requirement at issue, 15 U.S.C. § 1681b(b)(2)(A)(i), creates a right to information by requiring prospective employers to inform job applicants that they intend to procure their consumer reports as part of the employment application process.”); Thomas v. FTS USA, LLC, 193 F.Supp.3d 623, 637 (E.D. Va. 2016) (“Section 1681b(b)(3), like § 1681b(b)(2)(A), provides the consumer with a legally cognizable right to specific information.”); Manuel, 123 F.Supp.3d at 818 (“Under the FCRA, . . . consumers have the right to specific information at specific times.”).

         Central's primary argument that Mr. Banks lacks standing to sue is that Mr. Banks suffered no concrete harm from Central's alleged procedural violations. In his sworn testimony, Mr. Banks does admit that he did not suffer economic, physical, or emotional harm from Central's alleged violation of the FCRA. The facts support that admission because, when Mr. Banks eventually did learn that he was rejected due to information in his DriverFACTS report, he disputed that information with DriverFACTS. DriverFACTS rejected Mr. Banks's dispute and left the same information in the report. Therefore, as Central repeatedly notes in its briefing on this issue, Mr. Banks's employment situation with Central would have been exactly the same even if Central had strictly complied with the FCRA's notice requirements.

         However, Mr. Banks is not arguing that he suffered an injury in fact based on his employment situation but is instead arguing that he suffered an informational harm by not being provided the required notices under the FCRA and by not receiving the copy of his DriverFACTS report that he requested from Central. Indeed, in this case, Central failed to inform Mr. Banks of his right to obtain a copy of and challenge his DriverFACTS report after Central took an adverse employment action against Mr. Banks allegedly based, at least in part, on information in that report. Completely failing to provide information required to be provided by the FCRA is distinguishable from having immaterial inaccuracies in the information, see, e.g., Spokeo, 136 S.Ct. at 1550 (providing “an incorrect zip code” as an example of an inaccuracy that does not “cause harm or present any material risk of harm), failing to timely provide information, see, e.g., Dutta v. State Farm Mut. Auto. Ins. Co., No. 3:14-CV-04292-CRB, 2016 WL 6524390, at *3 (N.D. Cal. Nov. 3, 2016) (dismissing an FCRA claim where the potential employer failed to provide timely information to the applicant), or providing information in the wrong format, see, e.g., Fisher c. Enter. Holdings, Inc., No. 4:15CV00372 AGF, 2016 WL 4665899, at *4 (E.D. Mo. Sept. 7, 2016) (concluding that plaintiff failed to plead concrete harm under Spokeo where only the format and conspicuousness of defendant's disclosures failed to comply with FCRA). Although some of these examples may qualify as “bare procedural violations, ” ...

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