Elizabeth Alvarado et al v. University of Southern California

Filing 28

IN CHAMBERS - RULING ON DEFENDANT UNIVERSITY OF SOUTHERN CALIFORNIA'S MOTION TO DISMISS COMPLAINT 16 by Judge George H. Wu remanding case to SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES, Case number BC658703: The case is ordered remanded back to state court forthwith. Please refer to the Court's order for further details. (Case Terminated. Made JS-6.) (cr)

REMAND JS-6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 17-3671-GW(AJWx)

Title

Elizabeth Alvarado, et al. v. University of Southern California

Present: The Honorable

Date

September 22, 2017

GEORGE H. WU, UNITED STATES DISTRICT JUDGE

Javier Gonzalez

None Present

Deputy Clerk

Court Reporter / Recorder

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

None Present

None Present

PROCEEDINGS:

IN CHAMBERS - RULING ON DEFENDANT UNIVERSITY OF
SOUTHERN CALIFORNIA’S MOTION TO DISMISS COMPLAINT
[16]

Attached hereto is the Court’s Final Ruling on the above-entitled motion. The case is ordered remanded
back to state court forthwith.

:
Initials of Preparer
CV-90 (06/04)

CIVIL MINUTES - GENERAL

JG
Page 1 of 1

Alvarado v. Univ. of S. California; Case No. 2:17-cv-3671-GW-(AJWx)
Ruling on Defendant’s Motion to Dismiss
The Court adopts its Tentative Ruling as its final decision on Defendant’s motion to
dismiss. However, defense counsel made an argument at the hearing on the motion which is
address herein.
Defendant at oral argument contended that the Ninth Circuit’s decision in the Spokeo
case − i.e., Robins v. Spokeo, 867 F.3d 1108 (9th Cir. 2017) (“Spokeo I”) upon remand from the
Supreme Court (i.e., Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (“Spokeo II”) − mandates a
holding here that there is Article III standing in this case even though the Plaintiffs have
conceded that there is none under the present facts and law. Defendant is mistaken.
First, the Spokeo cases dealt with a provision in the Fair Credit and Reporting Act of
1970 (“FCRA”) that required consumer reporting agencies to follow reasonable procedures for
assuring maximum possible accuracy of consumer reports (see 15 U.S.C. § 1681e(b)), and
imposed liability on “‘[a]ny person who willfully fails to comply with any requirement [of the
Act] with respect to any’ individual, §1681n(a).” Spokeo II, 136 S. Ct. at 1542. In this lawsuit,
Plaintiffs bring this action pursuant to the Fair and Accurate Credit Transactions Act of 2003
(“FACTA”), an amendment to the FCRA − specifically 15 U.S.C. § 1681c(g), which prohibits
the electronic printing of more than the last five digits of a credit/debit card or its expiration date
on any receipt provided to the cardholder at the point of sale. See Complaint ¶ 3, Docket No. 1-1
at 4 of 17. Thus, the statutory provisions are not the same.
Second, the Ninth Circuit’s decision in Spokeo I does not support the conclusion that
there is Article III standing in this case. In Spokeo I, the Ninth Circuit ultimately concluded that
the plaintiff had alleged “injuries that are sufficiently concrete for the purposes of Article III.”
867 F.3d at 1118. In reaching that conclusion, it was observed that:
In Spokeo II, the Supreme Court made clear that a plaintiff
does not “automatically satisf[y] the injury-in-fact requirement
whenever a statute grants a person a statutory right and purports to
authorize that person to sue to vindicate that right.” 136 S. Ct. at
1549. Even then, “Article III standing requires a concrete injury.”
Id. To establish such an injury, the plaintiff must allege a statutory
violation that caused him to suffer some harm that “actually
exist[s]” in the world; there must be an injury that is “real” and not
“abstract” or merely “procedural.” Id. at 1548-49 (internal
quotation marks omitted). In other words, even when a statute has
allegedly been violated, Article III requires such violation to have
caused some real − as opposed to purely legal − harm to the
plaintiff.
*
*
*
*
Accordingly, while [plaintiff] may not show an injury-infact merely by pointing to a statutory cause of action, the Supreme
Court also recognized that some statutory violations, alone, do
establish concrete harm. As the Second Circuit has summarized,
Spokeo II “instruct[s] that an alleged procedural violation [of a
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statute] can by itself manifest concrete injury where Congress
conferred the procedural right to protect a plaintiff’s concrete
interests and where the procedural violation presents ‘a risk of real
harm’ to that concrete interest.” Strubel v. Comenity Bank, 842
F.3d 181, 190 (2d Cir. 2016) (quoting Spokeo II, 136 S.Ct. at
1549).
*
*
*
*
We have little difficulty concluding that these interests
protected by FCRA’s procedural requirements are “real,” rather
than purely legal creations. To begin, the Supreme Court seems to
have assumed that, at least in general, the dissemination of false
information in consumer reports can itself constitute a concrete
harm . . . . Moreover, given the ubiquity and importance of
consumer reports in modern life − in employment decisions, in
loan applications, in home purchases, and much more − the realworld implications of material inaccuracies in those reports seem
patent on their face.
Id. at 1112-14.
Here, as Defendant itself has argued, Plaintiffs have not sufficiently alleged any actual
concrete harm to themselves as a result of Defendant’s printing more than the last five digits of
their credit/debit card numbers on their receipts. In the Spokeo cases, the consumer reports with
the misinformation as to the plaintiff had been disseminated and were available to the public. In
considering the adequacy of the plaintiff’s averments as to injury, the Ninth Circuit analogized
the situation to cases involving harm to one’s reputation “like libel and slander per se” (id. at
1112) and concluded that:
[T]he relevant point is that Congress has chosen to protect against
a harm that is at least closely similar in kind to others that have
traditionally served as the basis for lawsuit. See In re Horizon
Healthcare, 846 F.3d at 638-41. Courts have long entertained
causes of action to vindicate intangible harms caused by certain
untruthful disclosures about individuals, and we respect Congress’s
judgment that a similar harm would result from inaccurate credit
reporting.
Id. at 1115.
In the present situation regarding the statutory prohibition against the inclusion of more
than five digits from a credit/debit card on electronically generated receipts, the danger (that was
the concern of Congress) is identity theft. See Stelmachers v. Verifone Systems, Inc., Case No.
5:14-cv-04912-EJD, 2017 WL 3968871 *1 (Sept. 9, 2017, N.D. Cal.) (FACTA’s “purpose was
to assist in the prevention of identity theft, which Congress recognized had by that time reached
‘epidemic proportions.’ H.R. Rep. No. 108-263, at 25 (2003).”). However, as held by the
Supreme Court in Spokeo II, “Congress’ role in identifying and elevating intangible harms does
not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute
grants a person a statutory right and purports to authorize that person to sue to vindicate that
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right.” 136 S. Ct. at 1549. In other words, Congress’ judgment that there should be a legal
remedy for the violation of the statute does not mean each statutory violation creates an Article
III injury. See Meyers v. Nicolet Restaurant of De Pere, LLC, 843 F.3d 724, 727 (7th Cir. 2016).
Unlike the public dissemination of false information in consumer reports in the Spokeo cases, the
handing over of a credit card receipt with the offending excess number of digits to the cardholder
does not create a  sufficient risk of harm to the underlying concrete interest Congress sought to
protect, but merely a speculative one. See generally Stelmachers, 2017 WL 3968871 at *3.
That is not to say that it would be absolutely impossible for the Plaintiffs to actually
allege such concrete injury. However, Plaintiffs appear to have conceded that, under the
applicable federal law, they cannot do so. The discussion of this issue in Stelmachers is
instructive:
[T]he basic factual allegations [are]: Plaintiff took a cab ride, paid
with a credit card, and was given a receipt displaying more than
the last five digits of his credit card number. Plaintiff still has the
receipt . . . . Plaintiff does not allege that anyone saw the receipt he
was given. Plaintiff, and no one else, “received” it.
Some factual allegations have been added. As context for
his awareness of FACTA’s requirements, Plaintiff states he is
employed “in the sales of electronic point-of-sale devices.” SAC,
at ¶ 20. Because of this specialized knowledge, Plaintiff alleges
“he is aware of the risks that arise from the use of point-of-sale
devices, including the risk of identity theft,” and has previously
been the victim of identity theft. Id. at ¶¶ 24, 25. Thus, when
Plaintiff was given a non-compliant receipt, [defendant] allegedly
burdened him “with the unnecessary fear and risk of identity theft,
and the duty to consistently check his credit card statements, so as
to make certain that identity thieves did not take advantage” of the
FACTA violation, “thereby wasting Plaintiff’s time.” Id. at ¶ 92.
Plaintiff also alleges [defendant] burdened him with the obligation
to check other receipts printed on [defendant’s] devices to
determine their FACTA compliance, and “make known to its staff
and possibly others Plaintiff’s private credit card information.” Id.
at ¶¶ 90, 91.
The [amended complaint]’s allegations fare no better than
its predecessor under Spokeo . . . because Plaintiff still has not
plausibly identified a concrete, certainly impending injury resulting
from the non-compliant receipt. Identity theft does not become
certainly impending through a procedural violation of FACTA;
additional facts must be alleged. The newly-described “burden of
vigilance” fails in that regard because the actual harm Plaintiff
seeks to avoid by checking credit card statements and receipts −
identity theft − is merely a possible, and seemingly unlikely, future
injury based on the allegations . . . . Since Plaintiff, being keenly
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aware of FACTA’s truncation requirement, “discovered the
violation immediately and nobody ever saw the non-compliant
receipt,” and indeed is still in possession of the receipt, the “low
tech” theft described in the SAC could occur only if one of a litany
of speculative events comes about, all of which require someone or
something obtaining information from a receipt over which
Plaintiff has absolute control . . . . Stated another way, the SAC
does not adequately explain how [defendant’s] alleged procedural
violation of FACTA “presents a material risk of harm to the
underlying concrete interest Congress sought to protect” by
elevating the likelihood of identity theft from just possible to
certainly impending status . . . . And to be sure, Plaintiff cannot
“manufacture” standing by inflicting a burden on himself out of a
fear of future identity theft that is nothing more than a remote
prospect. See Clapper, 568 U.S. at 416.
Nor does the suggestion that [defendant] may have exposed
Plaintiff’s credit card number to “its staff and possibly others” alter
the analysis. FACTA was not enacted to protect consumer’s
private information from credit card processors, but was “intended
to ‘reduce the amount of potentially misappropriateable
information produced in credit and debit card receipts.’ ” Meyers,
843 F.3d at 725 (quoting Meyers v. Oneida Tribe of Indians of
Wis., 836 F.3d 818, 820 (7th Cir. 2016)). This allegation, like
those already discussed, does not demonstrate a material risk to the
concrete interest that Congress sought to protect through FACTA.
For the reasons stated above, this Court rejects Defendant’s argument made at the hearing
today that the Ninth Circuit’s decision in Spokeo I establishes or otherwise requires a finding that
Plaintiffs have Article III standing in this case. The Court concludes that Plaintiffs do not have
Article III standing here and, hence, this Court lacks subject matter jurisdiction over the action.
Pursuant to 28 U.S.C. § 1447(c), the case is hereby ordered remanded back to state court
forthwith.

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