Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_14-cv-01174/USCOURTS-casd-3_14-cv-01174-0/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1332 Diversity-Personal Injury

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

CHRISTOPHER GRECO,

Plaintiff,

CASE NO. 14cv1174 JM(NLS)

ORDER REMANDING ACTION TO

STATE COURT FOR LACK OF

SUBJECT MATTER JURISDICTION 

vs.

SELECTION MANAGEMENT

SYSTEMS, INC. dba

SELECTION.COM,

Defendant.

Defendant Selection Management Systems (“SMS”), dba Selection.com, moves

to transfer this action to the Southern District of Ohio or to dismiss the claims pursuant

to Fed.R.Civ.P. 12(b)(6). Plaintiff Christopher Greco opposes both motions. Pursuant

to L.R. 7.1(d)(1), the court finds the matters presented appropriate for resolution

without oral argument. For the reasons set forth below, the court remands the action

for lack of subject matter jurisdiction and instructs the Clerk of Court to close the file.

BACKGROUND

The Complaint

On January 27, 2014, Plaintiff, a citizen of the state of California, commenced

this action against SMS in the Superior Court for the County of San Diego by alleging

three claims for violation of (1) Cal. Civil Code §1786.29(a), (2) Cal. Civil Code

§§1786.11 and 1786.20, and (3) 15 U.S.C. §1681c. Plaintiff’s claims arise from a preemployment background check requested by Axcess Financial, an Ohio corporation

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with its principal place of business in that state. (Bailey Decl. ¶7). Axcess Financial

requested a pre-employment background check from SMS, also an Ohio corporation

with its principal place of business in that state. (Compl. ¶9, Bailey Decl.6). 

Plaintiff brings this action on behalf of a nationwide class and a subclass of

California residents who, within two years of filing the complaint, were subject to a

consumer report sold by SMS “that contained adverse information other than records

of convictions of crimes and which information antedated the report by more than

seven years.” (Compl. ¶¶2, 3). With respect to count one, among other things, Plaintiff

alleges that the background report violated Civil Code §1786.29(a) because it did not

contain 12-point boldface type stating that “the report does not guarantee the accuracy

or truthfulness of the information as to the subject of the investigation, but only that it

is accurately copied from public records, and information generated as a result of

identity theft, including evidence of criminal activity, may be inaccurately associated

with the consumer who is the subject of the report.” (Compl. ¶22). With respect to

count two, Plaintiff alleges that the background report violated Civil Code §1786.18

because the report contained “records of arrest, indictment, information, misdemeanor

complaint, or conviction of crimes that, from the date of disposition, release, or parole,

antedated the report by more than seven years.” (Compl. ¶28). With respect to count

three, Plaintiff alleges that the background report violated 15 U.S.C. §1681c by

containing information about records of arrest and other adverse information that

antedated the report by more than seven years. (Compl. ¶37). 

With respect to Plaintiff’s background report, he alleges that it improperly

included information about certain criminal proceedings occurring in 1991 and 1992. 

(Compl. ¶38). The reporting of these criminal proceedings, not resulting in a

conviction, predated the report by more than seven years, thus allegedly subjecting

SMS to statutory penalties of not less than $100 and not more than $1,000. (Compl.

¶39).

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The Notice of Removal

On May 9, 2014, SMS removed the action to this court alleging jurisdiction

under the Class Action Fairness Act of 2005 (“CAFA”), 28 U.S.C. §1332(d)(2). 

Plaintiff alleges that the class consists of more than 100 members with more than

$5,000,000 in dispute. (Ct. Dkt. 1). In support of removal, Charles D. Bailey, a Senior

Vice President of SMS declares that it completes approximately 25,000 nationwide

background checks per year and that the class, therefore, consists of about 50,000

members. (Bailey Decl. ¶5). Mr. Bailey does not identify what portion of those

background checks contain adverse information that antedates the reports by more than

seven years.

Mr. Bailey also declares that SMS completed the background check of Plaintiff

in Ohio and provided the report to Axcess Financial in Ohio. Mr. Bailey also declares

that SMS has no office or employees in California. When Plaintiff requested a copy

of the background report, a copy was provided to Plaintiff in California.

DISCUSSION

Federal courts are courts of limited jurisdiction. “Without jurisdiction the court

cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when

it ceasesto exist, the only function remaining to the court isthat of announcing the fact

and dismissing the cause.” Steel Co. v. Citizens for a Better Environment, 523 U.S. 83,

94 (1998) (quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514, 19 L.Ed. 264

(1868)). Accordingly, federal courts are under a continuing duty to confirm their

jurisdictional power and are “obliged to inquire sua sponte whenever a doubt arises as

to [its] existence. . . .” Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S.

274, 278 (1977) (citations omitted). 

A state court civil action may be removed to federal court if the district court had

“original jurisdiction” over the matter. 28 U.S.C. §1441(a). Defendant, as the party

who invokes federal removal jurisdiction, has the burden of demonstrating the

existence of federal jurisdiction. See Gaus v. Miles, Inc. 980 F.2d 564, 566 (9th Cir.

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1992); B., Inc. v. Miller Brewing Co., 663 F.2d 545 (5th Cir. 1981). Any doubts

regarding removal jurisdiction are construed against Defendant and in favor of

remanding the case to state court. See Gaus, 980 F.2d at 566. Even after enactment

ofCAFA, the burden of demonstrating subject matter jurisdiction at the time the Notice

of Removal is filed remains with Defendant. See Abrego Abrego v. The Dow

Chemical Co., 443 F.3d 676, 682-83 (9 Cir. 2006) (under CAFA, defendant retains th

the burden of establishing federal jurisdiction, including the amount in controversy).

As amended by CAFA, 28 U.S.C. § 1332(d) vests district courts with “original

jurisdiction of any civil action in which, inter alia, the amount in controversy exceeds

the sum or value of $5,000,000, exclusive of interest and costs,” and in which the

aggregate number of proposed plaintiffs is 100 or greater, and any member of the

plaintiff class is a citizen of a state different from any defendant. 28 U.S.C. § 1332(d). 

As discussed in Abrego, where the plaintifffailsto plead a specific amount of damages,

the defendant seeking removal “must prove by a preponderance of the evidence that

the amount in controversy requirement has been met.” 443 F.3d at 683 (citing Gaus,

980 F.2d at566). In Abrego, the complaint sought only “pre-and post-judgment

interest, attorney's fees and costs, and relief in the form of special, general, punitive,

and exemplary damages due and awardable pursuant to the actions of Defendants.” 

443 F.3d at 688. As damages were not quantified, the court looks beyond the

complaint to “consider facts in the removal petition.” Id. at 690. 

Here, looking to the Complaint and the Notice of Removal and supporting

documentation, SMS fails to make a sufficient jurisdictional showing. While Mr.

Bailey declaresthat SMS performed about 50,000 background checks during the class

period, there is simply no indication how many of those involved the reporting of

criminal proceedings (except convictions) antedating the background report by more

than seven years. Undoubtedly, the number of class members is a small fraction of the

total number of background reports. Withoutsome indication asto the number of class

members- and by corollary, the amount in controversy - the court has substantial doubt

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regarding the existence of subject matter jurisdiction. As jurisdictional doubts are

construed against SMS and in favor of remanding the case to state court, see Gaus, 980

F.2d at 566, the court remands the action to state court.1

Finally, as noted in Harris v. Bankers Life & Casualty Co., 425 F.3d 689, 698

(9th Cir. 2005), “[b]y assuring that removal occurs once the jurisdictional facts

supporting removal are evident, we also ensure respect for the jurisdiction of state

courts.” Where a defendant, like here, fails to establish that it is more likely than not

that subject matter jurisdiction lies in federal court, remand is appropriate.

2

In sum, the court remands this action to state court and instructs the Clerk of

Court to close the file.

IT IS SO ORDERED.

DATED: June 26, 2014

 Hon. Jeffrey T. Miller

 United States District Judge

cc: All parties

The court notes that the parties will not be prejudiced by remand to state court

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where jurisdictional discovery may indeed establish CAFA jurisdiction. CAFA

providesthat class actions may be removed at any time once defendant is put on notice

that the case is removable. See 28 U.S.C. §1453(b). The court is also concerned that

SMS has not been forthcoming in identifying the number of class members. SMS is

in the best position to determine the number of potential class members from its own

business records. SMS, however, has not disclosed that information. 

The court notes that SMS could have potentially sought removal based upon 2

28 U.S.C. §1331 because the third cause of action asserts a federal claim. However,

as is its prerogative, SMS opted not to remove the action based upon federal question

jurisdiction and would presumably be barred from removing solely on this ground in

the future.

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