Ramirez v. Trans Union, LLC

Filing 76

ORDER by Magistrate Judge Jacqueline Scott Corley denying 52 Motion to Dismiss for Lack of Jurisdiction (ahm, COURT STAFF) (Filed on 3/15/2013)

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1 2 3 4 5 6 7 8 IN THE UNITED STATES DISTRICT COURT 9 FOR THE NORTHERN DISTRICT OF CALIFORNIA 10 Northern District of California United States District Court 11 12 13 14 SERGIO L. RAMIREZ, on behalf of himself and all others similar situated, Plaintiff, 15 16 v. Case No.: 3:12-cv-00632 JSC ORDER DENYING DEFENDANT’S MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION (Dkt. No. 52) 17 18 19 TRANS UNION, LLC, Defendant. 20 21 In this putative class action, Plaintiff Sergio Ramirez alleges that he was denied an 22 auto loan after Defendant Trans Union, LLC mistakenly informed a car dealership that 23 Plaintiff was on the federal government’s Office of Foreign Assets Control (“OFAC”) list. 24 Plaintiff contends that Defendant violated the Federal Credit Reporting Act (“FCRA”) and 25 the California Consumer Credit Reporting Agencies Act (“CCRAA”) by failing to ensure 26 “maximum possible accuracy” of its credit reports, and failing to provide consumers with 27 proper disclosures. (Dkt. No. 1 ¶ 1.) Now pending before the Court is Defendant’s motion 28 to dismiss for lack of subject matter jurisdiction (“Motion”). (Dkt. No. 52.) Defendant 1 insists that this Court does not have subject matter jurisdiction because it has offered to pay 2 Plaintiff all of his alleged monetary damages, an offer Plaintiff did not accept. After 3 carefully considering the pleadings and evidence submitted by the parties, and having had 4 the benefit of oral argument on March 13, 2013, the Court concludes that Defendant’s 5 argument is foreclosed by binding Ninth Circuit precedent and therefore DENIES the motion 6 to dismiss. 7 8 9 10 Northern District of California United States District Court 11 12 13 14 15 16 FACTUAL & PROCEDURAL BACKGROUND Defendant Trans Union is a credit reporting agency that sells consumer reports about millions of consumers annually. (Dkt. No. 1 ¶¶ 6-7.) These reports occasionally include what is known as an “OFAC alert.” An OFAC alert is a specific type of data provided by consumer reporting agencies on credit reports signifying that the subject of the report is purportedly included in the list of the Office of Foreign Assets Control, Specifically Designated National and Blocked Persons, which includes terrorists, money launderers and narcotic traffickers. (Id. at ¶ 16.) On February 27, 2011, Plaintiff submitted a credit application with his wife to secure 17 financing to purchase a car at Dublin Nissan (“Nissan”). (Id. at ¶ 48.) Nissan transmitted 18 Plaintiff’s name, address, social security number, and date of birth to Defendant in order to 19 obtain a credit report from Defendant. (Id. at ¶¶ 49, 51.) Defendant then provided Nissan 20 with Plaintiff’s credit report. (Id. at ¶¶ 49.) Thereafter, Nissan refused to provide Plaintiff 21 with an auto loan because there was an “OFAC alert” on his credit report. (Id. at ¶ 55.) 22 Plaintiff is not, in fact, an individual included on the OFAC list. (Id. at ¶ 54.) 23 Plaintiff promptly contacted Defendant to inquire as to the OFAC alert and was told 24 that he did not appear on the OFAC list. (Id. at ¶¶ 56-58.) Upon Plaintiff’s request, 25 Defendant sent him a copy of his credit report which did not include an OFAC alert. (Id. ¶¶ 26 58-62.) Plaintiff also separately received a letter from Defendant indicating that he 27 “potentially matched to the OFAC list.” (Id. ¶¶ 65-67.) Upon receipt of the letter, Plaintiff 28 contacted legal counsel, spoke with Defendant “a lot of times,” and sent Defendant a letter 2 1 asking that it take him “off the OFAC list.” (Dkt. Nos. 51-2 at 54:6-11, 60-2 at 43:11-25.) 2 Plaintiff then received a letter from Defendant stating that “we have removed your name 3 from the OFAC name screen alert list.” (Dkt. No. 60-2 at 46:15-47:4.) Plaintiff 4 subsequently filed this putative class action. Seeking to represent six distinct classes 5 Plaintiff brings six causes of action, three each under the FCRA and the CCRAA. 6 On December 21, 2012, Defendant sent Plaintiff an offer of judgment in the amount Procedure 68 (“Offer”). (Dkt. Nos. 52-1 at ¶ 4; 52-4.) Plaintiff did not accept the Offer and 9 so, by its own terms and the provisions of Rule 68, the Offer lapsed after 14 days. (Id.) 10 Defendant argues that the amount of the offer of judgment is more than Plaintiff seeks to 11 Northern District of California of $5,001.00, plus court costs and reasonable attorney fees pursuant to Federal Rule of Civil 8 United States District Court 7 recover in this lawsuit and therefore the Court lacks subject matter jurisdiction. LEGAL STANDARD 12 “Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Ins. Co. of 13 14 America, 511 U.S. 375, 377 (1994). It is therefore presumed that a claim is not within the 15 jurisdiction of the federal court “and the burden of establishing the contrary rests upon the 16 party asserting jurisdiction.” Kokkonen, 511 U.S. at 377; see also St. Clair v. City of Chico, 17 880 F.2d 199, 201 (9th Cir. 1989) (finding that it is “necessary for the party opposing the 18 motion to present affidavits or any other evidence necessary to satisfy its burden of 19 establishing that the court, in fact, possesses subject matter jurisdiction”). Article III requires that the party purporting to represent a class must be able to prove 20 21 actual injury to himself. O’shea v. Littleton, 414 US 488, 494 (1974). At least one named 22 plaintiff must satisfy the actual injury component of standing in order to seek relief on behalf 23 of himself or a class. Casey v. Lewis, 4 F.3d 1516, 1519 (9th Cir. 1993) (internal citation 24 omitted). “The inquiry is whether any named plaintiff has demonstrated that he has 25 sustained . . . a direct injury as the result of challenged conduct.” 26 27 DISCUSSION I. Defendant’s Rule 68 Offer is Properly Before the Court 28 3 1 At the outset, the Court must determine whether consideration of Defendant’s Rule 68 is not admissible except in a proceeding to determine costs.” Fed. R. Civ. P. 68(b). Plaintiff 4 argues that Defendant’s submission of the Offer in support of its motion to dismiss therefore 5 violates Rule 68 and requires that Defendant’s Motion to be stricken from the record. The 6 Court disagrees. “[F]ederal courts may adjudicate only actual, ongoing cases or 7 controversies,” Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990), and Federal Rule of 8 Civil Procedure 82 dictates that the other Federal Rules of Civil Procedure cannot “extend or 9 limit the jurisdiction of the district courts.” Therefore, Rule 68(b) cannot prevent this Court 10 from considering Defendant’s offer of judgment to determine whether there is subject matter 11 Northern District of California Offer of Judgment is appropriate. Rule 68 specifies that “[e]vidence of an unaccepted offer 3 United States District Court 2 jurisdiction; to hold otherwise would potentially allow the Federal Rules to expand the 12 federal court’s jurisdiction beyond what is allowed by the Constitution. It is thus 13 unsurprising that the federal appellate courts have considered Rule 68 offers in deciding 14 subject matter jurisdiction motions. See Pitts v. Terrible Herbst, Inc., 653 F. 3d 1081, 1086 15 (9th Cir. 2011) (considering the effect of a pre-certification Rule 68 offer on a named 16 plaintiff’s standing to pursue his claims); O’Brien v. Ed Donnelly Enterprises, Inc., 575 F. 3d 17 567, 574 (6th Cir. 2009) (“a Rule 68 offer can be used to show that the court lacks subject- 18 matter jurisdiction”). 19 20 II. Pitts Disposes of Defendant’s Motion The Ninth Circuit has squarely addressed “whether a rejected offer of judgment for 21 the full amount of a putative class representative’s individual claim moots a class action 22 complaint where the offer precedes the filing of a motion for class certification.” Pitts, 653 23 F. 3d at 1084. It does not. Id. In Pitts, the defendant made a Rule 68 offer to the named 24 plaintiff for more than ten times the amount claimed as individual damages, “plus costs and a 25 reasonable attorney’s fee.” Id. at 1085. The defendant argued that this unaccepted offer 26 mooted the named plaintiff’s claim and thus deprived the court of subject matter jurisdiction. 27 28 The Pitts court first undertook a thorough survey of the Supreme Court’s rulings on the issue of mootness and determined that “though Sosna [v. Iowa, 419 U.S. 393 (1975)], 4 1 Gerstein [v. Pugh, 420 U.S. 103 (1975)], [Deposit Guaranty Nat’l Bank v.] Roper [445 U.S. 2 326 (1980)], [U.S. Parole Comm’n v.] Geraghty [445 U.S. 388 (1980)], and [County of 3 Riverside v.] McLaughlin [500 U.S. 44 (1991)] do not address the precise issue before 4 us…they provide several principles that guide our decision.” The court then identified three 5 such principles: (1) upon certification of a class, mooting a class representative’s individual 6 claims will not moot the class action because the class has “acquire[d] a legal status separate 7 from the [individual] interest” of the class representative (quoting Sosna, 419 U.S. at 399); 8 (2) even “if the district court has denied class certification, mooting the putative class 9 representative’s claim will not necessarily moot the class action” because the class Northern District of California representative retains an interest in certifying the class on appeal (citing Roper, 445 U.S. at 11 United States District Court 10 336-37 and Geraghty, 445 U.S. at 403-04); and (3) “even if the district court has not yet 12 addressed the class certification issue, mooting the putative class representative’s claims will 13 not necessarily moot the class action” because subsequent certification of the class will relate 14 back to the filing of the complaint (citing McLaughlin, 500 U.S. at 52 and Gerstein, 420 U.S. 15 at 110 n.11). 656 F. 3d at 1090. 16 The Pitts court applied these principles to the facts before it and concluded that 17 allowing a Rule 68 offer to moot a class action by satisfying the class representative’s 18 individual claims would allow a defendant to “pick off” lead plaintiffs and “effectively 19 ensure that claims that are too economically insignificant to be brought on their own would 20 never have their day in court.” Id. at 1091. The court therefore held that “an unaccepted 21 Rule 68 offer of judgment—for the full amount of the named plaintiff’s individual claim and 22 made before the named plaintiff files a motion for class certification—does not moot a class 23 action.” Id. at 1091-1092. Thus, under binding Ninth Circuit precedent, Defendant’s Rule 24 68 Offer does not defeat Plaintiff’s claims. 25 Defendant nonetheless asks that this Court stay disposition of the present motion 26 pending the United States Supreme Court’s ruling in Genesis HealthCare Corp. v. Symczyk, 27 No. 11-1059 (arg’d Dec. 3, 2012). The Court declines Defendant’s invitation. Even if the 28 Supreme Court were to reverse the Third Circuit’s ruling in Symczyk v. Genesis HealthCare 5 1 Corp., 656 F. 3d 189, 190 (3d Cir. 2011), it is far from clear that such ruling would overrule 2 Pitts. 3 4 5 CONCLUSION In light of Pitts v. Terrible Herbst, Inc., 653 F. 3d 1081 (9th Cir. 2011), the Court DENIES Defendant’s Motion to dismiss for lack of subject matter jurisdiction. 6 This Order disposes of Docket No. 52. 7 IT IS SO ORDERED. 8 9 Dated: March 15, 2013 _________________________________ JACQUELINE SCOTT CORLEY UNITED STATES MAGISTRATE JUDGE 10 Northern District of California United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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