Walker v. Fred Meyer Inc

Filing 47

ORDER - Judge You's F&R is adopted in part, as supplemented herein. With respect to the issue of Plaintiff's Article III standing to bring his § 1861b(b)(3) claim, the court declines to adopt that portion of the F&R. Defendant's motion to dismiss (ECF 24 ) is GRANTED, and Plaintiff's Complaint is dismissed with prejudice. Signed on 6/21/2018 by Judge Michael H. Simon. (mja)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

DANIEL WALKER, individually and on
behalf of all others similarly situated,

Case No. 3:17-cv-1791-YY
ORDER

Plaintiff,
v.
FRED MEYER, INC.,
Defendant.
Michael H. Simon, District Judge.
United States Magistrate Judge Youlee Yim You issued Findings and Recommendation
(“F&R”) in this case on May 7, 2018. ECF 38. Judge You recommended that the Court grant
Defendant’s motion to dismiss.
Under the Federal Magistrates Act (“Act”), the Court may “accept, reject, or modify, in
whole or in part, the findings or recommendations made by the magistrate.” 28 U.S.C.
§ 636(b)(1). If a party files objections to a magistrate’s findings and recommendations, “the court
shall make a de novo determination of those portions of the report or specified proposed findings
or recommendations to which objection is made.” Id.; Fed. R. Civ. P. 72(b)(3).

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For those portions of a magistrate judge’s findings and recommendations to which neither
party has objected, the Act does not prescribe any standard of review. See Thomas v. Arn, 474
U.S. 140, 152 (1985) (“There is no indication that Congress, in enacting [the Act], intended to
require a district judge to review a magistrate’s report to which no objections are filed.”); United
States. v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) (holding that the court
must review de novo magistrate’s findings and recommendations if objection is made, “but not
otherwise”). Although in the absence of objections no review is required, the Act “does not
preclude further review by the district judge[] sua sponte . . . under a de novo or any other
standard.” Thomas, 474 U.S. at 154. Indeed, the Advisory Committee Notes to Fed. R. Civ.
P. 72(b) recommend that “[w]hen no timely objection is filed,” the Court review the magistrate
judge’s recommendations for “clear error on the face of the record.”
BACKGROUND
Plaintiff Daniel Walker brings a purported class action claim against Fred Meyer, Inc.,
alleging violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (“FCRA”).
Plaintiff alleges that Defendant’s consumer report disclosure and pre-adverse action notice
violate FCRA Sections 1681b(b)(2)(A)(i) and 1681b(b)(3), respectively. Section
1681b(b)(2)(A)(i) requires an employer who procures a consumer report on an individual for
employment purposes provide “a clear and conspicuous disclosure . . . in writing . . . in a
document that consists solely of the disclosure, that a consumer report may be obtained for
employment purposes.” Plaintiff argues that Defendant’s disclosure is not “clear and
conspicuous” and fails to “consist solely of” that disclosure because it contains other extraneous
information. Section 1681b(b)(3) provides that, before using a consumer report to take adverse
employment action, “the person intending to take such adverse action shall provide to the
consumer to whom the report relates” both a copy of the report and “a description in writing of
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the rights of the consumer under this subchapter . . .” Plaintiff argues that Defendant’s preadverse action notice failed to comply with this provision because it only directed him to contact
General Information Services, Inc. (“GIS”), an agent of Fred Meyer that procured the consumer
report in Plaintiff’s case. Plaintiff argues that this notice should have informed Plaintiff that he
could discuss any issues directly with Defendant.
Defendant moves to dismiss Plaintiff’s claims. Defendant argues that Plaintiff fails to
state a claim because the conduct described in Plaintiff’s Complaint does not violate the FCRA.
Defendant further argues that Plaintiff lacks standing to assert his Section 1681b(b)(3) claim.1
Judge You recommended that Defendant’s motion to dismiss be granted. Plaintiff timely filed an
objection (ECF 40), to which Defendant responded. ECF 43. Plaintiff objects to the entirety of
the F&R.
DISCUSSION
A. Count I: Disclosure Requirement
Plaintiff objects to the F&R’s findings with respect to the disclosure requirement for
several reasons. First, Plaintiff argues that Judge You mischaracterized the applicable legal
standards and ignored extraneous information in Defendant’s disclosure. Second, Plaintiff argues
that Judge You overlooked the inclusion of information about investigative consumer reports.
Third, Plaintiff argues that the F&R did not address the “interplay” of Defendant’s authorization

1

In objecting to the F&R’s conclusion with respect to Article III standing, Plaintiff seems
to assert that he has standing to bring both of the claims alleged in his Complaint. Defendant
states, in response, that Defendant did not argue, and Judge You did not render any findings with
respect to the argument that, Plaintiff lacks standing to bring his § 1681b(b)(2)(A)(i). Defendant
asserts that it only argued Plaintiff lacked Article III standing to bring his § 1681b(b)(3) claim.
The Court notes that a portion of Defendant’s brief before Judge You may have been construed
as a challenge to Plaintiff’s standing, generally. See ECF 24 at 19-20. Nonetheless, Judge You
did not discuss any such argument, and the Court interprets Defendant’s statement in its response
to Plaintiff’s Objections to mean that Defendant does not move to dismiss on this ground.
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form with its disclosure form. Finally, Plaintiff argues that Judge You should have found that the
disclosure and authorization forms presented to Plaintiff were improperly presented together and
as part of a job application or employee manual.
1. Characterizing Law
Plaintiff argues first that Judge You mischaracterized the applicable law on the FCRA’s
disclosure requirement. The Court disagrees. Judge You properly characterized the requirements
of the FCRA, including by case law for examples of FCRA’s application. Plaintiff also argues
that Defendant’s disclosure is “replete” with extraneous statements, which Judge You simply
ignored. Again, the Court disagrees. Judge You reproduced the text of Defendant’s disclosure,
discussed case law analyzing what information may be appropriately included in such
disclosures, and then concluded that Defendant’s disclosure did not contain improper or
extraneous information.
2. Including Investigative Report Information
Plaintiff also objects to the F&R’s conclusion that information in Defendant’s disclosure
about investigative consumer reports, which are different from general consumer reports, did not
“overshadow” the consumer report disclosure. Specifically, Plaintiff argues that Judge You
ignores an FTC advisory opinion, Willner. Advisory Opinion to Willner, Federal Trade
Commission (March 25, 1999), available at https://www.ftc.gov/policy/advisoryopinions/advisory-opinion-willner-03-25-99. Defendant’s disclosure does differ from that
recommended by the FTC in Willner, in that it mentions both reports in the same, initial,
disclosure, and then does not distinguish between regular and investigative consumer reports or
state whether the information subsequently provided applies to only one or the other.
Nonetheless, as Judge You concluded, Defendant’s disclosure in this case is consistent with the
Willner opinion’s guidance. The first sentence sets out a consumer report disclosure, and there is
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no further mention of the nature or scope of a potential investigative report. Rather, the next
mention of an investigative report comes in the final paragraph, which states: “If GIS obtains any
information by interview, you have the right to obtain a complete and accurate disclosure of the
scope and nature of the investigation performed.” This sentence in fact emphasizes to the reader
that this disclosure is not in itself an investigative report disclosure. Thus, the Section 1681b
disclosure is not overshadowed by the limited Section 1681d disclosure.
3. Authorization Form
Plaintiff also argues that the F&R fails to address Plaintiff’s argument about the alleged
impropriety of Defendant’s authorization form. Although Plaintiff does allege that, as a result of
the violation of the FCRA’s disclosure requirements, “Plaintiff was unable to meaningfully
evaluate and understand the nature of the report [Defendant] intended to obtain,” Plaintiff’s
Complaint does not assert a violation of Section 1861b(b)(2)(A)(ii), which requires
authorization.
Furthermore, Plaintiff argues that the authorization form was unlawful because it was
“riddled with extraneous information.” But Section 1681b(b)(2)(A) does not require that an
authorization consist solely of the authorization, as it does for the disclosure. Compare 15 U.S.C.
§ 1681b(b)(2)(A)(i) with (b)(2)(A)(ii). Plaintiff cites on Syed v. M-I, LLC, 853 F.3d 492, 502 (9th
Cir. 2017), in which the Ninth Circuit stated:
M-I also argues that the statute contains an explicit exception
allowing for the inclusion of a liability waiver, positing that a
liability waiver is one type of authorization. But we need not
speculate about how broadly Congress intended us to read the term
“authorization,” because Congress told us exactly what it meant
when it described the authorization as encompassing only “the
procurement of [a consumer] report.” 15 U.S.C.
§ 1681b(b)(2)(A)(ii). . . . We thus reject M-I’s argument that the
statute somehow explicitly permits the inclusion of a liability
waiver on the disclosure document.
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Syed, 853 F.3d at 502.
Taking the first sentence out of its context, Plaintiff relies on the court’s reference to an
authorization “encompassing only the procurement of a consumer report.” Id. (alteration and
quotation marks omitted). This, however, was written in the context of discussing what
information, aside from a disclosure itself, would be permissible on a Section 1681b(b)(2)(A)(i)
disclosure. The Ninth Circuit found that subsection (ii) made an exception to the requirement in
subsection (i) for an authorization to procure a consumer report. The parties in Syed disputed the
breadth of the term “authorization” for these purposes, because the defendant had included a
liability waiver in the subsection (ii) disclosure. The court found that this waiver was not an
“authorization” within the meaning of subsection (ii), and thus its inclusion in the subsection (i)
disclosure rendered the disclosure improper. The Ninth Circuit did not, as Plaintiff suggests, hold
that an authorization may contain only an authorization for the procurement of a credit report.
Thus, Plaintiff’s assertion, not contained in his Complaint, that the authorization contained
extraneous information, nonetheless fails to state a claim for a violation of section (b)(2)(A)(ii).
4. Presenting Documents Together
Plaintiff also argues that the disclosure and authorization form violate the FCRA because
they “should be read jointly as having been improperly included together in [Defendant’s] job
application.” Plaintiff cites Thomas v. FTS USA, LLC, 193 F. Supp. 3d 623, 633 (E.D. Va. 2016),
which quoted a legislative report stating that “an employer could not make the disclosure in
either a job application or an employee manual.” The disclosure in this case, however, was in a
document separate from a job application or employee manual. Plaintiff does not dispute this
fact. Rather, Plaintiff argues that the disclosure and authorization should be read jointly as
having been improperly included together in Defendant’s job application.

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Plaintiff relies on Speer v. Whole Food Mkt. Grp., Inc., 2015 WL 1456981, at *3 (M.D.
Fla. Mar. 30, 2015), for holding that “if both the disclosure and the consent forms combined and
read as one document with the waiver and release included simultaneously with the disclosure,
the complaint states a claim for relief.” Id. (emphasis added). Plaintiff fails to note, however,
relevant surrounding facts in Speer: in that case, the plaintiff had specifically alleged that the
disclosure and consent (waiver) form “were in fact one document or application that was read
and signed by the applicant at the same time.” Id. Noting case law holding that a disclosure
document that includes, in the same document, a waiver or release of rights violates the FCRA,
the court concluded that Plaintiff alleged sufficient facts to survive a motion to dismiss. The
defendant asked the court to consider that the documents were actually free-standing, but the
court decided that it could not consider facts outside the complaint or its attachments, and based
its decision on the plaintiff’s allegation, and reasonable inferences from it, suggesting that the
disclosure and waiver were in fact the same document.
In this case, Plaintiff’s Complaint references the relevant documents, and Defendant
introduced them into the record. Judge You took judicial notice of those documents, see ECF 38
at 2, note 1, and Plaintiff does not object to the Court taking judicial notice. Thus, apparently
unlike the court in Speer, the Court has before it the disclosure and the authorization, which
appear as two separate documents, and not as part of Defendant’s job application. Speer,
properly understood, does not support Plaintiff’s argument that the court should nonetheless
“read them” as being joined and included in Defendant’s job application. The Court therefore
agrees with Judge You’s finding that presenting the disclosure with other employment
documents did not destroy the stand-alone character of the disclosure.

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B. Count II: Pre-Adverse Action Notice
Plaintiff also objects to the F&R’s findings with respect to Plaintiff’s second claim,
relating to pre-adverse action notice.
1. Article III Standing
Plaintiff objects to the F&R’s conclusion that Plaintiff lacks standing to bring Count Two
under Article III of the U.S. Constitution. “To satisfy Article III standing, 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.” Van Patten v.
Vertical Fitness Grp., LLC, 847 F.3d 1037, 1042 (9th Cir. 2017) (alteration and quotation marks
omitted). Injury in fact, in turn, is established where a Plaintiff “suffer[s] an invasion of a legally
protected interest that is concrete and particularized and actual or imminent, not conjectural or
hypothetical.” Id. (quotation marks omitted).
In the context of an alleged statutory violation, “[a] plaintiff who alleges a ‘bare
procedural violation’ . . . fails to satisfy Article III’s injury-in-fact requirement.” Syed v. M-I,
LLC, 853 F.3d 492, 499 (9th Cir. 2017) (quoting Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549
(2016). In evaluating a claim under the FCRA, the Court must ask: “(1) whether the statutory
provisions at issue were established to protect [Plaintiff’s] concrete interests (as opposed to
purely procedural rights), and if so, (2) whether the specific procedural violations alleged in this
case actually harm, or present a material risk of harm to, such interests.” Robins v. Spokeo,
Inc., 867 F.3d 1108, 1113 (9th Cir. 2017).
With respect to disclosure claims, Section 1681b(b)(2)(A) “creates a right to information”
and a “right to privacy.” Syed v. M-I, LLC, 853 F.3d 492, 499 (9th Cir. 2017). “By providing a
private cause of action for violations of Section 1681b(b)(2)(A), Congress has recognized the
harm such violations cause, thereby articulating a chain of causation that will give rise to a case
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or controversy.” Id. (quotation marks omitted). This Court has previously held that by alleging
informational injury due to a failure to provide required disclosures under FCRA, a plaintiff
adequately alleges concrete harm. See Demmings v. KKW Trucking, Inc., 2017 WL 1170856,
at *10 (D. Or. Mar. 29, 2017). By similar reasoning, the Court concludes that Plaintiff has
Article III standing to bring his pre-adverse action notice claim.
Section 1681b(b)(3) provides:
Except as provided in subparagraph (B), in using a consumer
report for employment purposes, before taking any adverse action
based in whole or in part on the report, the person intending to take
such adverse action shall provide to the consumer to whom the
report relates-(i) a copy of the report; and
(ii) a description in writing of the rights of the consumer under this
subchapter, as prescribed by the Bureau under section 1681g(c)(3)
of this title.
15 U.S.C. § 1681b(b)(3). Plaintiff alleges that he was not provided with an accurate description
of his rights under FCRA, and that as a result he was harmed because he was not given the
chance to discuss the contents of the report with Defendant. Plaintiff explains in briefing, and the
Court concludes that it is reasonable under Syed to infer, that had Plaintiff been properly notified,
he would have explained to Defendant that he had paid his debt to society.
The Court rejects Defendant’s argument that Plaintiff lacks standing because he frames
the issue as having no opportunity to discuss the report, “including any accurate negative items,”
with Defendant. As an initial matter, Plaintiff has alleged that his report contained “inaccurate
and erroneous information.” ECF 1 at ¶22. Furthermore, Congress did not condition the
protections in the FCRA on the accuracy or inaccuracy of the information contained in the
consumer report. See 15 U.S.C. §§ 1681b(b)(2)(B), (b)(3)(B); see also Thomas v. FTS USA,
LLC, 193 F. Supp. 3d 623, 638 (E.D. Va. 2016) (“Even if all of the subclass members’ consumer
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reports were entirely correct . . . the sub-class members were deprived of the opportunity to
explain any negative records in their consumer reports and discuss the issues raised in their
reports with Defendants before suffering adverse employment action.”). The right at issue is
simply a right to pre-adverse action notice—an informational right—it does not depend on
whether that adverse action is based on accurate or false information.
The Court is also unpersuaded by Defendant’s argument that because Plaintiff declined to
participate in the process to which he was directed, Plaintiff cannot establish Article III standing.
Plaintiff alleges that Defendant’s pre-adverse action notice was defective under the FCRA and
that, as a result, Plaintiff was not able meaningfully to respond to the report and its contents as he
was entitled to under the FCRA. Although Plaintiff does not, as he does in Count One,
specifically allege that he was confused about what to do, it is reasonable to infer from Plaintiff’s
Complaint that, to the extent Defendant violated § 1861b(b)(3)(A), Defendant was harmed
because he did not receive required information about, and was prevented from taking part in,
the proper route for addressing issues in a pre-employment consumer report. Without, at this
stage, reaching the merits of Plaintiff’s allegations, the Court concludes that Plaintiff has
Article III standing because, to the extent his allegations actually state a claim for violation of
FCRA, Plaintiff has also alleged particularized and concrete injury stemming from those
violations. See Robins v. Spokeo, Inc., 742 F.3d 409, 414 (9th Cir. 2014), vacated and remanded
on other grounds, 136 S. Ct. 1540 (2016), as revised (May 24, 2016) (“Because standing is the
only question before us . . . [w]e do not decide . . . whether Spokeo qualifies as a consumer
reporting agency or whether Spokeo actually violated the FCRA.”).
2. Merits
Plaintiff also objects to the F&R’s findings with respect to the merits of Plaintiff’s preadverse action notice claim. Plaintiff argues that Defendant violates the FCRA by relying on a
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third party to handle adverse action discussions. As Judge You found, however, Defendant
simply has not cited any FCRA provision (and the Court is aware of none) supporting Plaintiff’s
argument that his pre-adverse action notice was required to include information about contacting
his current or future employer.
Furthermore, even assuming that the purpose of the provision requiring pre-adverse
action notice is, as Plaintiff argues, to allow consumers to discuss the report with employers only,
and not with designated agents, this does not support Plaintiff’s argument that the notice itself
must instruct a consumer on how, precisely, to contact that employer. As Judge You noted, the
FTC advisory opinion that Plaintiff relies on, Coffey, discusses the timeline between when a preadverse action notice is sent and when the adverse action may be taken, suggesting that the
purpose of the provision requiring notice is to allow time for a consumer to contact the employer
before the adverse action is taken. Plaintiff cites to no provision of the FCRA or persuasive case
law suggesting that Defendant’s notice was deficient by not informing Plaintiff that he could
contact Defendant directly, or the date by which he must do so.
CONCLUSION
Judge You’s F&R is adopted in part, as supplemented herein. With respect to the issue of
Plaintiff’s Article III standing to bring his § 1861b(b)(3) claim, the court declines to adopt that
portion of the F&R. Defendant’s motion to dismiss (ECF 24) is GRANTED, and Plaintiff’s
Complaint is dismissed with prejudice.
IT IS SO ORDERED.
DATED this 21st day of June, 2018.

/s/ Michael H. Simon
Michael H. Simon
United States District Judge
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