Lee, et al v. The Hertz Corporation, et al

Filing 35

ORDER GRANTING 13 DEFENDANTS' MOTION TO STAY. Signed by Judge Beth Labson Freeman.(blflc2S, COURT STAFF) (Filed on 2/26/2016)

1
2
3

UNITED STATES DISTRICT COURT

4

NORTHERN DISTRICT OF CALIFORNIA

5

SAN JOSE DIVISION

6
7

PETER LEE, et al.,

Case No. 15-cv-04562-BLF

Plaintiffs,
8
v.

ORDER GRANTING DEFENDANTS’
MOTION TO STAY

9
10

United States District Court
Northern District of California

11
12

DOLLAR THRIFTY AUTOMOTIVE
GROUP, INC., et al.,

[Re: ECF No. 13]

Defendants.
Defendants Hertz Corporation and its subsidiary, Dollar Thrifty Automotive Group, move

13

to stay this matter pending the Supreme Court’s decision in Spokeo, Inc. v. Robins, 135 S. Ct.

14

1892 (2015). For the following reasons, the motion is GRANTED.

15

Plaintiffs Peter Lee and Latonya Campbell filed a putative class action complaint in

16

California Superior Court, County of San Francisco, on behalf of themselves and similarly situated

17

persons against Defendants, alleging violations of the Fair Credit Reporting Act (“FCRA”), 15

18

U.S.C. § 1681, et seq. See generally Complaint (“Compl.,” ECF No. 1, Exh. 1). Lee and

19

Campbell each allege that, in the course of the hiring process, Defendants failed to give them a

20

consumer credit disclosure statement “in a document that consists solely of the disclosure,” as

21

required under 15 U.S.C. § 1681b(b)(2)(A)(i). Id. ¶¶ 107–10. They also allege that Defendants

22

rescinded their conditional offers of employment following the results of a criminal background

23

check, without giving Plaintiffs notice prior to taking “adverse action,” as required under 15

24

U.S.C. §§ 1681b(b)(3)(A)(i) and (ii). Id. ¶¶ 100–06. In their Complaint, Plaintiffs seek only

25

statutory and punitive damages under 15 U.S.C. § 1681n(a) for willful violations of the FCRA. Id.

26

Prayer for Relief. Defendants removed the case to the Northern District of California on the basis

27

of federal question jurisdiction, and now request to stay the matter pending the Supreme Court’s

28

decision in Spokeo. Notice of Removal (ECF No. 1); Motion to Stay Action Pending Resolution

1
2

of Spokeo by U.S. Supreme Court (ECF No. 13).
In Robins v. Spokeo, Inc., 742 F.3d 409 (9th Cir. 2014), the Ninth Circuit held that the

3

plaintiff there had sufficiently alleged Article III standing by merit of his claims for willful

4

violations of the FCRA, regardless of whether he had sufficiently alleged actual harm. Id. at 414.

5

The Supreme Court granted a petition for writ of certiorari to review the following question:

6

“Whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm,

7

and who therefore could not otherwise invoke the jurisdiction of a federal court, by authorizing a

8

private right of action based on a bare violation of a federal statute.” Spokeo, Inc. v. Robins, 13-

9

1339, “Question Presented,” available at http://www.supremecourt.gov/qp/13-01339qp.pdf.
Defendants request that the Court stay the matter because the Supreme Court’s decision in Spokeo

11
United States District Court
Northern District of California

10

could deprive Plaintiffs of standing and could therefore deprive this Court of subject matter

12

jurisdiction. The Court agrees that staying the matter would be appropriate in this circumstance.

13

“[T]he power to stay proceedings is incidental to the power inherent in every court to

14

control the disposition of the causes on its docket with economy of time and effort for itself, for

15

counsel, and for litigants.” Landis v. North American Co., 299 U.S. 248, 254 (1936). A district

16

court’s decision to grant or deny a Landis stay is a matter of discretion. Lockyer v. Mirant Corp.,

17

398 F.3d 1098, 1109 (9th Cir. 2005) (citing Landis, 299 U.S. at 254). The moving party has the

18

burden of proving such a stay is justified. Clinton v. Jones, 520 U.S. 681, 708 (1997).

19

Determining whether to grant a motion to stay requires the district court to weigh the

20

competing interests affected by either granting or denying the motion. CMAX, Inc. v. Hall, 300

21

F.2d 265, 268 (9th Cir. 1962) (citing Landis, 299 U.S. at 254–55). The court may “find it is

22

efficient for its own docket and the fairest course for the parties to enter a stay of an action before

23

it, pending resolution of independent proceedings which bear upon the case.” Dependable

24

Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007) (quoting Levya v.

25

Certified Grocers of California, Ltd., 593 F.2d 863–64 (9th Cir. 1979)). “Among these competing

26

interests are (1) the possible damage which may result from the granting of a stay, (2) the hardship

27

or inequity which a party may suffer in being required to go forward, and (3) the orderly course of

28

justice measured in terms of the simplifying or complicating of issues, proof, and questions of law
2

1

which could be expected to result from a stay.” CMAX, 300 F.2d at 268.
Based on the submissions of the parties, the Court finds that the Landis factors weigh in

2
3

favor of staying this action pending the Supreme Court’s decision in Spokeo. Contrary to

4

Plaintiffs’ assertions, the outcome of Spokeo may have a determinative effect on this Court’s

5

jurisdiction over the case. Spokeo will address whether, as a matter of law, Plaintiffs have

6

standing to bring this claim, and therefore, whether this Court may continue to hear the matter.

7

Should the Supreme Court reverse the Ninth Circuit’s decision in Spokeo, such a decision may

8

have serious implications not only for Plaintiffs’ own individual standing, but also for the

9

predominance and superiority requirements necessary for Rule 23(b)(3) class certification. See
Larson v. Trans Union, LLC, No. 12-CV-05726-WHO, 2015 WL 3945052, at *8 (N.D. Cal. June

11
United States District Court
Northern District of California

10

26, 2015).

12

Plaintiffs argue that Spokeo bears little on this case because Defendants rescinded their

13

conditional offers of employment following the outcome of their criminal background checks.

14

Opposition (“Opp.,” ECF No. 15) at 5–7. However, the Court notes that Plaintiffs do not allege

15

that the decision to rescind those conditional offers would have been different but for Defendants’

16

non-compliance with the FCRA. For instance, they do not allege that their respective criminal

17

background reports contained inaccurate information, nor do they allege that Defendants’ proper

18

disclosure and notice would have preserved their conditional offers. Rather, Plaintiffs’ claims

19

hinge on the statutory violation of notice and disclosure procedures set forth in the FCRA, Compl.

20

¶¶ 100–10, and seek statutory and punitive damages available only under the FCRA, id. Prayer for

21

Relief.1

22

Furthermore, the Court finds that the possible damage which may result from granting the

23

stay is minimal. Plaintiffs argue that in the period of months between now and when the Supreme

24
1

25
26
27
28

Plaintiffs also argue that granting a stay amounts to rewarding Defendants’ efforts at
“jurisdictional gamesmanship,” since Defendants had removed this case from California Superior
Court to this Court. This argument is unpersuasive. Plaintiffs, as “the master of the complaint,”
Holmes Group, Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 831 (2002), could have
avoided federal jurisdiction by exclusive reliance on state law, but chose not to do so. See
Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Instead, they initiated a cause of action in
state court based on federal law. See generally Compl. Defendants had simply exercised their
right to defend Plaintiffs’ federal claim in a federal forum. 28 U.S.C. §§ 1331 and 1441(a).
3

1

Court decides Spokeo, “such a long period of time” may degrade evidence, as “memories fade, and

2

defense witnesses . . . may leave Hertz’s employ or become otherwise unfindable.” Opp. at 10.

3

The Court finds this argument unconvincing. The allegations in this litigation primarily concern

4

documents regarding Defendants’ compliance or non-compliance with the FCRA. Such

5

documentary evidence can be preserved and may be discovered in the due course of litigation.

6

Moreover, to the extent Plaintiffs expect to rely on witnesses, the Court finds that the period of

7

several months from now until Spokeo is decided is not substantial, and is unlikely to cause

8

material harm. See, e.g., Larson, 2015 WL 3945052, at *8 (staying FCRA litigation pending

9

Spokeo, and explaining that “it is implausible that a one-year delay will cause” “witnesses [to]

10

become difficult to locate, or [that they] will forget their testimony as their ‘memories fade’”).

United States District Court
Northern District of California

11

The potential prejudice to Plaintiffs and the putative class is minimal. Plaintiffs seek only

12

statutory and punitive damages stemming from Defendants’ conduct. Because this case is in its

13

early stages, the deadlines affected by any such stay are few. And, because the Supreme Court

14

will likely issue Spokeo within the next several months, the stay would be of a definite and limited

15

duration. On the other hand, the potential prejudice to Defendants is significant. If this case were

16

to continue, Defendants would be made to defend a nationwide putative class action that could be

17

rendered moot. Doing so would require Defendants to undertake significant time, effort, and

18

expenses to engage in discovery and potential class certification briefing. Moreover, continuing

19

the matter in spite of Spokeo would be an inefficient use of limited judicial resources, as the Court

20

would have to review the adequacy of pleadings, resolve discovery disputes, and consider class

21

certification in a case that it may not have subject matter jurisdiction to entertain.

22

For these reasons, the Court agrees with the decisions from courts in this and other districts

23

finding that a stay was appropriate pending the Supreme Court’s decision in Spokeo. See, e.g.,

24

Larroque v. First Advantage Lns Screening Sols., Inc., No. 15-CV-04684-JSC, 2016 WL 39787, at

25

*1 (N.D. Cal. Jan. 4, 2016) (staying FCRA matter pending Spokeo); Larson, 2015 WL 3945052, at

26

*1 (N.D. Cal. June 26, 2015) (same); Eric B. Fromer Chiropractic, Inc. v. New York Life Ins. &

27

Annuity Corp., No. CV 15-04767-AB (JCX), 2015 WL 6579779, at *2 (C.D. Cal. Oct. 19, 2015)

28

(same); Stone v. Sterling InfoSystems, Inc., No. 2:15–cv–00711–MCE–DAD, 2015 WL 4602968,
4

1
2

at *3 (E.D. Cal. July 29, 2015) (same).
For the foregoing reasons, further proceedings in this Court are hereby STAYED pending

3

the Supreme Court’s ruling in Spokeo, Inc. v. Robins, 135 S. Ct. 1892 (2015). Defendants are

4

ORDERED to inform this Court of the status of this case no later than ten (10) days after a

5

decision is reached in Spokeo.

6

IT IS SO ORDERED.

7
8
9
10

Dated: February 26, 2016
______________________________________
BETH LABSON FREEMAN
United States District Judge

United States District Court
Northern District of California

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
5