Vera v. Mondelez Global LLC
Filing
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MEMORANDUM Opinion and Order: For the foregoing reasons, Mondelez's motion to dismiss for lack of subject matter jurisdiction, 8 , is granted, and the case is dismissed without prejudice. Should Vera believe he can, consistent with Federal R ule of Civil Procedure 11, cure the deficiencies identified in this opinion, he may file a motion for leave to amend by April 21, 2017. The motion must attach a proposed amended complaint, and be supported by a brief of no more than five pages explai ning how the proposed amendments address the Court's analysis in this opinion. Vera must contact the Court by April 7, 2017, to report whether he intends to seek to amend his complaint. If not, the Court will remand the case to state court. Civil case terminated. Signed by the Honorable Thomas M. Durkin on 3/17/2017:Mailed notice(srn, )
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JOHNNY VERA, individually and as a
representative of the class,
No. 16 C 8192
Plaintiff,
Judge Thomas M. Durkin
v.
MONDELEZ GLOBAL LLC,
Defendant.
MEMORANDUM OPINION AND ORDER
Johnny Vera alleges that his former employer, Mondelez Global LLC, used an
improper disclosure format to inform him that they planned to run a background
check on his personal history before hiring him, in violation of the Fair Credit
Reporting Act (“FCRA”), 15 U.S.C. § 1681b(b)(2)(A)(i). See R. 1-1. Mondelez has
moved to dismiss for lack of subject-matter jurisdiction pursuant to Federal Rule of
Civil Procedure 12(b)(1). R. 8. For the following reasons, that motion is granted.
Legal Standard
For purposes of a motion to dismiss under Rule 12(b)(1) the court accepts all
well-pleaded factual allegations as true and construes all reasonable inferences in
the plaintiffs favor. See Scanlan v. Eisenberg, 669 F.3d 838, 841 (7th Cir. 2012).
“Where jurisdiction is in question, the party asserting a right to a federal forum has
the burden of proof, regardless of who raise[d] the jurisdictional challenge . . . .”
Craig v. Ontario Corp., 543 F.3d 872, 876 (7th Cir. 2008).
Background
Vera applied online for a job with Mondelez. R. 1-1 ¶ 20. As part of the
application process, the website displayed “a statement related to the general topic
of background checks” (the “Statement”). Id. ¶ 21. Vera was required to scroll down
the webpage in order to read the Statement in its entirety. Id. The Statement
provided that Vera gave Mondelez “the right to request . . . any and all information
about [Vera’s] background.” Id. ¶ 32. In addition to information about requesting a
background check, the Statement included “privacy and liability waivers,” such as
an authorization for “all companies, credit agencies, educational institutions,
persons, government agencies, criminal and civil courts, and former employers to
release information they have about me and release them for any liability for doing
so.” Id. ¶ 33. Vera also alleges that the Statement misstated his rights under the
FCRA, id. ¶¶ 42-44, and included various other information about his and
Mondelez’s obligations should he be hired. Id. ¶¶ 47-50. Mondelez then proceded to
obtain a background check of Vera. Id. ¶ 28.
Vera alleges that Mondelez’s Statement violated FCRA’s “stand-alone
disclosure requirement.” The statute provides the following in relevant part:
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 . . . 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 may be obtained for
employment purposes . . . .
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15 U.S.C. § 1681b(b)(2)(A)(i) (emphasis added). Vera alleges that the Statement
Mondelez gave him as part of his employment application violates this provision of
the FCRA because it contained more information than just the disclosure that
Mondelez intended to “procure a consumer report” about him. R. 1-1 ¶¶ 31, 60, 68.
Analysis
Mondelez argues that the Court does not have subject matter jurisdiction
over Vera’s claim because Vera has failed to allege an injury-in-fact. Mondelez
argues that even if Vera has alleged that Mondelez failed to comply with the “standalone disclosure requirement” in § 1681b, Vera has failed to allege that he was
harmed by that failure.
In Spokeo, Inc. v. Robins the Supreme Court addressed the circumstances
under which violation of statutory rights—like the “stand-alone disclosure
requirement” of § 1681b—are sufficient to establish harm that forms that basis of a
“case or controversy” under Article III of the Constitution. 136 S. Ct. 1540 (2016).
The Supreme Court acknowledged that “Congress has the power to define injuries
and articulate chains of causation that will give rise to a case or controversy where
none existed before.” Id. at 1549. Nevertheless, “Congress’[s] 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 right.” Id. For instance, “a
bare procedural violation, divorced from any concrete harm, [cannot] satisfy the
injury-in-fact requirement.” Id.
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Like Vera’s claim, Spokeo concerned a provision of the FCRA. The FCRA
provision at issue in Spokeo imposed obligations on reporting agencies to follow
certain procedures when collecting and reporting background and credit
information about individuals. The Supreme Court acknowledged that by imposing
these requirements on reporting agencies, “Congress plainly sought to curb the
dissemination of false information by adopting procedures designed to decrease that
risk.” Id. at 1550. Despite that intent, however, “[a] violation of the FCRA’s
procedural requirements may result in no harm. For example, even if a consumer
reporting agency fails to provide the required notice to a user of the agency’s
consumer information [in violation of § 1681e(d)], that information regardless may
be entirely accurate.” Id.
By contrast, “the violation of a procedural right granted by statute can be
sufficient in some circumstances to constitute injury in fact,” such that a plaintiff
“need not allege any additional harm beyond the one Congress has identified.” Id. at
1549 (emphasis added). As an example of such an actionable procedural right, the
Court cited the deprivations of information allegedly in violation of rights granted
by federal statutes at issue in Federal Election Comm’n v. Akins, 524 U.S. 11 (1998),
and Public Citizen v. Department of Justice, 491 U.S. 440 (1989). Id. at 1549-50; see
also id. at 1553 (Thomas, J. concurring ) (citing Havens Realty Corp. v. Coleman,
455 U.S. 363 (1982) (concerning the right to disclosures under the Fair Housing
Act)).
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Vera does not allege that Mondelez’s Statement failed to disclose the fact that
Mondelez sought to procure a background check report about him as part of his
employment application. Nor does Vera allege that he denied Mondelez permission
to conduct such an investigation. The question here, then, is whether a violation of
the “stand-alone” aspect of the disclosure requirement is sufficient on its own to
establish constitutional harm. In other words, the question is whether the failure to
use the statutory form of disclosure constitutes a constitutional harm, when the
disclosure was made in substance. Vera, of course, analogizes his right to receive a
disclosure in a “stand-alone” form to the right to receive certain information cited by
the Supreme Court with reference to the Akins and Public Citizen cases. For its
part, Mondelez argues that the “stand-alone” requirement is a “bare” procedural
requirement akin to the FCRA procedural violation at issue in Spokeo, which the
Supreme Court held did not establish constitutional harm in and of itself.
District courts have come out on both sides of this very issue. Compare
Thomas v. FTS USA, LLC, 193 F. Supp. 3d 623, 632 (E.D. Va. 2016) (The ‘standalone disclosure requirement’ is “clearly substantive, and neither technical nor
procedural.”), with, Hopkins v. Staffing Network Holdings, LLC, 2016 WL 6462095,
at *3 (N.D. Ill. Oct. 18, 2016) (“In the instant case, § 1681b(b)(2)(A) is an adoption of
a procedure designed to decrease a congressionally identified risk of harm . . . .
[and] a bare allegation of a violation of this section, without more, does not allege a
concrete injury.”). This is unsurprising since there is merit to both perspectives. On
the one hand, Congress expressly granted consumers the right to receive the
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disclosure in a certain form, indicating that the right is something greater than the
“bare” procedural requirement that was at issue in Spokeo. On the other hand,
when the disclosure is made in the incorrect form, yet no pecuniary, bodily,
reputational, or other harm results, it is hard to see why such a circumstance
should be legally actionable. Despite district courts’ pronouncements that §
1681b(b)(2)(A) is “clearly” either substantive or procedural, nothing could be further
from the case.
In any event, the most significant clue the Supreme Court gave to addressing
the question at issue here is that the deprivation of information at issue in Akins
and Public Citizen is the kind of procedural right violation which constitutes
constitutional harm in and of itself. In those cases, certain statutes required the
release of, respectively, information pertaining to campaign contributions and
evaluation of federal judicial nominees. The plaintiffs in those cases sued for release
of information they alleged the public had a right to obtain pursuant to the relevant
statutes. Similarly in Havens (the case Justice Thomas cited in his concurrence), an
African-American plaintiff sued a landlord who failed to provide her with certain
disclosures as required by the Fair Housing Act, whereas the landlord provided the
disclosures to white prospective tenants. In all three cases, the plaintiffs sued
because they did not receive information or disclosures to which they allegedly had
a statutory right. Additionally, all three cases implicated or touched upon
fundamental rights, i.e., the First Amendment rights to freedom of association and
expression, and the Fourteenth Amendment right to equal protection.
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By contrast, Vera does not allege that he was actually deprived of the
information with which the FCRA required Mondelez to provide him, and receipt of
that information does not implicate a fundamental right. To the extent the FCRA
establishes privacy right protections that implicate a fundamental right (and it is
not at all clear that a statutory right to protection of one’s private information from
other private entities is related to the Fourteenth Amendment’s Due Process Clause
protections against government intrusion into private actions (such as the use of
birth control, abortions, or marriage)), Vera does not allege that he denied Mondelez
permission to investigate his private information.
Furthermore, the “stand-alone” requirement at issue here is analogous to the
FCRA procedural requirements at issue in Spokeo, which the Supreme Court held
fail to establish an injury-in-fact. In Spokeo, the Supreme Court addressed FCRA §
1681e, which requires “[e]very consumer reporting agency [to] maintain reasonable
procedures designed to avoid [improper or incorrect disclosure of personal
information] and to limit the furnishing of consumer reports to [certain permitted
circumstances].” 15 U.S.C. § 1681e(a). Notably, the procedural requirements of §
1681e place obligations on reporting agencies, rather than directly establishing
rights for the individuals about whom the agencies are reporting. Congress imposed
these obligations on the reporting agencies intending to decrease the risk that the
agencies would report inaccurate information. Similarly, the “stand-alone”
requirement is an obligation placed on prospective employers who wish to procure
background reports, which is only indirectly related to prospective employees’ right
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to receive the disclosure itself. Congress imposed this obligation on employers to
decrease the risk that prospective employees would be unaware that they were
granting prospective employers access to their private information, and to increase
their opportunity to challenge any errors in the report. In both instances—§ 1681e
at issue in Spokeo, and the “stand-alone” requirement at issue here—(viewed
through the lens created by Spokeo) the obligations placed on reporting agencies
and employers are procedures (or a means) intended to decrease the risk of harms
Congress seeks to eliminate. A failure to comply with the procedures might cause
the statutorily identified harm, i.e., inaccurate and unauthorized reporting. But a
procedural violation will not necessarily cause that harm, so the procedural
violation by itself is not an injury-in-fact.
Moreover, Vera has not alleged that he suffered the harm Congress intended
the FCRA to prevent. He has not alleged that Mondelez failed to disclose that it
intended to investigate his private information. In fact, he alleges that the
statement Mondelez had him review did, in fact, inform him that Mondelez
intended to perform a background check. Vera also has not alleged that he denied
Mondelez permission to conduct such an investigation. Indeed, Vera’s allegations
demonstrate that the Statement Mondelez required him to review provided the
information he argues Mondelez withheld, and that he consented to Mondelez’s
investigation of his private information. If Vera had alleged otherwise, this would
be a different case entirely. As the allegations stand, however, Vera has not alleged
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that he suffered an injury-in fact, and the Court does not have subject-matter
jurisdiction over this case.1
Conclusion
For the foregoing reasons, Mondelez’s motion to dismiss for lack of subject
matter jurisdiction, R. 8, is granted, and the case is dismissed without prejudice.
Should Vera believe he can, consistent with Federal Rule of Civil Procedure 11, cure
the deficiencies identified in this opinion, he may file a motion for leave to amend by
April 21, 2017. The motion must attach a proposed amended complaint, and be
supported by a brief of no more than five pages explaining how the proposed
amendments address the Court’s analysis in this opinion.
If Vera chooses not to seek leave to amend his complaint, the case will be
remanded to the state court pursuant to 28 U.S.C. § 1447(c) (“If at any time before
Other district courts in the Seventh Circuit have found a lack of subject-matter
jurisdiction over claims based on violation of the “stand-alone” disclosure
requirement after applying Spokeo’s reasoning. See Hopkins, 2016 WL 6462095, at
*3; Groshek v. Great Lakes Higher Educ. Corp., 2016 WL 6819697, at *2 (W.D. Wis.
Oct. 4, 2016) (“The court concludes that receiving a statutorily defective notice is
not, in itself, a concrete injury.”); Tyus v. United States Postal Serv., 2016 WL
6108942, at *2 (E.D. Wis. Oct. 19, 2016), affirmed in relevant part on
reconsideration, 2017 WL 52609 (E.D. Wis. Jan. 4, 2017). District courts in other
circuits have done so as well. See Nokchan v. Lyft, Inc., 2016 WL 5815287, at *9
(N.D. Cal. Oct. 5, 2016) (“[The plaintiff] does not allege[] that as a result of Lyft’s
failure to provide the disclosures in a separate document or to notify him of his right
to receive a summary of his legal rights he was confused about his rights or that he
would not have consented to the background checks had he understood his rights.
Nor does he allege that he was harmed by the background check in any way.”);
Shoots v. iQor Holdings US Inc., 2016 WL 6090723, at *5 (D. Minn. Oct. 18, 2016)
(“Shoots cannot avoid the key fact that he knew iQor intended to perform a
background check, and that he consented to its doing so.”); Smith v. Ohio State
Univ., 191 F. Supp. 3d 750, 757 (S.D. Ohio 2016) (“Plaintiffs admitted that they did
not suffer a concrete consequential damage as a result of OSU’s alleged breach of
the FCRA.”).
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final judgment it appears that the district court lacks subject matter jurisdiction,
the case shall be remanded.”). As the Seventh Circuit explained:
While some consider it odd that a state court might have
the authority to hear a federal constitutional claim in a
setting where a federal court would not, it is clear that
Article III’s ‘case or controversy’ limitations apply only to
the federal courts. Perhaps, were the claim remanded to
Wisconsin state court, it would there be dismissed on
state ripeness or standing grounds. But again, § 1447(c)
says that a case removed to federal court ‘shall be
remanded’ to the state court if it is discovered that the
federal court lacks subject matter jurisdiction. Wisconsin’s
doctrines of standing and ripeness are the business of the
Wisconsin courts, and it is not for us to venture how the
case would there be resolved.
Smith v. Wisconsin Dep’t of Agric., Trade & Consumer Prot., 23 F.3d 1134, 1142 (7th
Cir. 1994) (internal citations omitted); see also Mocek v. Allsaints USA Ltd., 2016
WL 7116590, at *2-3 (N.D. Ill. Dec. 7, 2016) (remanding case to state court upon
finding of a lack of subject-matter jurisdiction pursuant to Spokeo); Hopkins, 2016
WL 6462095, at *4 (same).
Vera must contact the Court by April 7, 2017, to report whether he intends to
seek to amend his complaint. If not, the Court will remand the case to state court.
ENTERED:
______________________________
Honorable Thomas M. Durkin
United States District Judge
Dated: March 17, 2017
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