Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_14-cv-01437/USCOURTS-caed-2_14-cv-01437-6/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 15:1681 Fair Credit Reporting Act

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

MICHAEL KIRCHNER, an individual, 

on behalf of himself and all 

others similarly situated,

Plaintiff,

v.

SHRED-IT USA INC., a Delaware 

Corporation; FIRST ADVANTAGE LNS 

SCREENING SOLUTIONS, INC., and 

Does 1 through 10,

Defendants.

CIV. No. 2:14-1437 WBS EFB

MEMORANDUM AND ORDER RE: 

MOTION TO DISMISS

----oo0oo----

Plaintiff Michael Kirchner brought this putative classaction lawsuit against defendants Shred-it USA (“Shred-it”) and 

First Advantage LNS Screening Solutions, Inc. (“First 

Advantage”), in which he alleges that defendants failed to comply 

with federal credit reporting laws while conducting preemployment background checks. Plaintiff has reached a settlement 

with Shred-it. Before the court is First Advantage’s motion to 

dismiss plaintiff’s First Amendment Complaint (“FAC”).

Case 2:14-cv-01437-WBS-EFB Document 44 Filed 11/25/14 Page 1 of 7
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I. Alleged Facts

Plaintiff applied for a job with Shred-it on April 13, 

2011. (FAC ¶ 14 (Docket No. 17).) As part of the application 

process, plaintiff received and signed a one-page form entitled 

“USA – Notice, Authorization and Release for a Consumer Report.” 

(Id. ¶ 14, Ex. A.) 

At some point “within the last two years,” plaintiff 

allegedly obtained and reviewed his personnel file with Shred-it. 

(FAC ¶¶ 31, 47.) Upon doing so, he allegedly discovered that 

First Advantage had provided Shred-it with a consumer report on 

him. (Id. ¶ 16.) Plaintiff alleges that First Advantage 

violated the FCRA by furnishing Shred-it with a consumer report 

on plaintiff without first obtaining a certification from Shredit stating that Shred-it “has complied” with its statutory 

obligations “with respect to the consumer report.” (Id. ¶ 39.) 

II. Legal Standard

On a motion to dismiss under Federal Rule of Civil 

Procedure 12(b)(6), the court must accept the allegations in the 

complaint as true and draw all reasonable inferences in favor of 

the plaintiff. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974), 

overruled on other grounds by Davis v. Scherer, 468 U.S. 183 

(1984); Cruz v. Beto, 405 U.S. 319, 322 (1972). To survive a 

motion to dismiss, a plaintiff must plead “only enough facts to 

state a claim to relief that is plausible on its face.” Bell 

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). This 

“plausibility standard,” however, “asks for more than a sheer 

possibility that a defendant has acted unlawfully,” and where a 

plaintiff pleads facts that are “merely consistent with a 

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defendant’s liability,” it “stops short of the line between 

possibility and plausibility.” Ashcroft v. Iqbal, 556 U.S. 662, 

678 (2009) (quoting Twombly, 550 U.S. at 557).

Plaintiff seeks statutory and punitive damages for

violations of the FCRA, (FAC ¶¶ 31, 47), which requires him to 

allege that defendant “willfully fail[ed] to comply with the 

requirements of [the FCRA].” 15 U.S.C. § 1681n(a) (emphasis 

added). In Safeco Insurance Company of America v. Burr, the 

Supreme Court held that the FCRA’s use of the term “willfully” 

requires a plaintiff to show that the defendant’s conduct was 

intentional or reckless. 551 U.S. 47, 57 (2007). 

Recklessness consists of “action entailing an 

unjustifiably high risk of harm that is either known or so 

obvious that it should be known.” Id. at 68 (citation and 

internal quotation marks omitted). In other words, “a company 

subject to FCRA does not act in reckless disregard of it unless 

the action is not only a violation under a reasonable reading of 

the statute’s terms, but shows that the company ran a risk of 

violating the law substantially greater than the risk associated 

with a reading that was merely careless.” Id. at 69. A

defendant’s violation of the FCRA is not reckless simply because 

its understanding of a statutory obligation is “erroneous”; 

instead, a plaintiff must allege, at a minimum, that the 

defendant’s reading of the FCRA is “objectively unreasonable.”

Id. 

In applying this standard, the Supreme Court considered 

whether the defendant’s interpretation “has a foundation in the 

statutory text” and whether the defendant had “guidance from the 

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courts of appeals or the Federal Trade Commission (FTC) that 

might have warned it away from the view it took.” Id. at 69-70. 

Noting “a dearth of guidance and . . . less-than-pellucid 

statutory text,” the Court declined to find the defendant’s 

interpretation objectively unreasonable. Id. at 70. Finally, 

the Court observed that the presence or absence of subjective bad 

faith made no difference “where, as here, the statutory text and 

relevant court and agency guidance allow for more than one 

reasonable interpretation.” Id. at 70 n.20. 

Safeco’s analysis strongly suggests that the issue of 

whether a defendant’s reading of the FCRA was “objectively 

unreasonable” is a question of law.1 See Van Straaten v. Shell 

Oil Prods. Co., 678 F.3d 486, 490-01 (7th Cir. 2012) (stating 

that the Safeco Court “treated willfulness as a question of 

law”). The Court in Safeco held that there was no need to remand 

the case for further factual development because, as a matter of 

law, “Safeco’s misreading of the statute was not reckless.” 

Safeco, 551 U.S. at 71. Perhaps most tellingly, the Court

analogized this inquiry to the “clearly established” inquiry 

required under its qualified immunity precedents--an inquiry that 

is legal in nature. See id. at 70 (citing Saucier v. Katz, 533 

U.S. 194, 202 (2001)). 

 

1 Some courts have treated the question of whether a 

defendant’s conduct was “willful” as a factual inquiry, see, 

e.g., Edwards v. Toys “R” Us, 527 F. Supp. 2d 1197, 1210 (C.D. 

Cal. 2007) (citing cases treating willfulness as a question of 

fact), but these cases either predate Safeco or are 

distinguishable from the situation in Safeco and the one here 

because the relevant statute they addressed was “not ambiguous or 

susceptible to conflicting interpretations,” see id. at 1209. 

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Accordingly, courts may consider whether a particular 

interpretation was “objectively unreasonable” upon a motion to 

dismiss. See, e.g., Goode v. LexisNexis Risk & Info. Analytics 

Grp., Inc., 848 F. Supp. 2d 532, 543-46 (E.D. Pa. 2012) 

(considering court cases and FTC guidance on the question of 

willfulness for purposes of a motion to dismiss); see also Long 

v. Tommy Hilfiger U.S.A., Inc., 671 F.3d 371, 378 (3d Cir. 2012) 

(affirming dismissal upon a motion to dismiss because a 

defendant’s interpretation “although erroneous, was at least 

objectively reasonable”); Shlahtichman v. 1-800 Contacts, Inc., 

615 F.3d 794, 803 (7th Cir. 2010) (same).

III. First Advantage’s Motion to Dismiss Plaintiff’s 

Certification Claim

15 U.S.C. § 1681b(b)(1) requires that a consumer 

reporting agency obtain certification from a person that the 

person “has complied with paragraph (2) with respect to the 

consumer report” before it may “furnish a consumer report for 

employment purposes.”2 There is no ambiguity in § 1681b(b)(1)’s 

language regarding the need to obtain certification. It would 

therefore be “objectively unreasonable” under the Safeco standard

 

2 Section 1681b(b)(1) provides in relevant part:

A consumer reporting agency may furnish a consumer report 

for employment purposes only if--

(A) the person who obtains such report from the agency 

certifies to the agency that--

(i) the person has complied with paragraph (2) with 

respect to the consumer report, and the person will 

comply with paragraph (3) with respect to the consumer 

report if paragraph (3) becomes applicable . . .” 

15 U.S.C. § 1681b(b)(1) (emphasis added).

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for a consumer reporting agency to fail to obtain a certification 

from an employer before furnishing to that employer a consumer 

report on an individual. See Safeco, 551 U.S. at 69. 

Plaintiff alleges that First Advantage “intentionally 

or recklessly” violated 15 U.S.C. § 1681b(b)(1) by “furnishing 

consumer reports regarding Plaintiff and other class members for 

employment purposes to Shred-it . . . without first obtaining 

from Shred-it . . . a certification . . . as to each consumer 

report it furnished.” (FAC ¶¶ 39, 43.) Because the court must 

accept this allegation as true for purposes of this motion, 

Scheuer, 416 U.S. at 236, plaintiff has plausibly alleged that 

First Advantage’s actions were objectively unreasonable. 

First Advantage asks the court to consider several 

documents in an effort to show that First Advantage never 

furnished a report on plaintiff and that First Advantage obtained 

a certification from Shred-it. (See First Advantage’s Mem. at 5-

13; O’Connor Decl. Ex. A (Docket No. 29-4) (the “Kirchmen 

Report”); Marsh Decl. Ex. A (Docket No. 29-3) (the “First 

Advantage Enterprise Screening Corporation Master Agreement”).) 

However, a district court ruling on a motion to dismiss may only 

consider “a document the authenticity of which is not contested, 

and upon which the plaintiff’s complaint necessarily relies.” 

Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998), 

superseded by statute on other grounds as stated in Abrego Abrego 

v. The Dow Chem. Co., 443 F.3d 676, 681-82 (9th Cir. 2006). 

Plaintiff disputes the authenticity of the “First 

Advantage Enterprise Screening Corporation Master Agreement,”

(see Pl.’s Objections (Docket No. 36)), and neither the “Kirchmen 

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Report” nor the declaration that purports to authenticate it

clarify whether that document simply misstates plaintiff’s name 

or was intended as a report on an entirely different person. 

(See O’Connor Decl. at 1, Ex. A.) Accordingly, because disputes

exist as to the authenticity of both documents, the court cannot

consider either of them for purposes of this motion. 

Because all of First Advantage’s arguments for 

dismissal rely on these documents (see First Advantage’s Mem. at 

5-13), and the court must otherwise accept the truth of 

plaintiff’s allegations, the court must deny First Advantage’s 

motion to dismiss plaintiff’s claim of a § 1681b(b)(1)

violation.

3 

IT IS THEREFORE ORDERED that the motion of defendant 

First Advantage LNS Screening Solutions, Inc. to dismiss this 

action as against it be, and the same hereby is, DENIED.

Dated: November 25, 2014

 

3 First Advantage also moves to dismiss plaintiff’s class 

allegations on the basis that they define an impermissible “failsafe” class. (First Advantage’s Mem. at 13-19); see Young v. 

Nationwide Mut. Ins. Co., 693 F.3d 532, 538 (6th Cir. 2012) (“[A] 

‘fail-safe’ class is one that includes only those who are 

entitled to relief . . . [and] allow[s] putative class members to 

seek a remedy but not be bound by an adverse judgment--either 

those class members win or, by virtue of losing, they are not in 

the class and are not bound.” (internal quotation marks and 

citations omitted)). Because the issue of class certification is 

not presently before it, the court will deny First Advantage’s 

motion with respect to this issue without prejudice. First 

Advantage may assert its fail-safe arguments in opposition to a 

motion for class certification or, if plaintiff fails to move for 

certification, move to strike the class allegation pursuant to 

Federal Rule of Civil Procedure 12(f) prior to trial. 

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