Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_15-cv-04524/USCOURTS-cand-4_15-cv-04524-0/pdf.json

Parties Involved:
Thomas Lagos
Plaintiff
The Leland Stanford Junior University
Defendant

Document Text:

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Case No. 5:15-cv-04524-PSG

ORDER DENYING MOTION TO DISMISS

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

THOMAS LAGOS,

Plaintiff,

v.

THE LELAND STANFORD JUNIOR 

UNIVERSITY,

Defendant.

Case No. 5:15-cv-04524-PSG

ORDER DENYING MOTION TO 

DISMISS

(Re: Docket No. 7)

Earlier this year, Plaintiff Thomas Lagos applied for a job with Defendant Leland Stanford 

Junior University. As part of his application, he viewed and signed a disclosure form authorizing 

Stanford to run a background check on him. On behalf of himself and others similarly situated, 

Lagos has sued Stanford under the Fair Credit Reporting Act, alleging that Stanford’s disclosure 

form contained extraneous information prohibited by law. Because Lagos has alleged facts 

sufficient to state a facially plausible claim for relief, Stanford’s motion to dismiss is DENIED.

I.

Under the FCRA, before an employer is allowed to obtain a consumer report on a 

prospective employee, the employer must make “a clear and conspicuous disclosure” to the 

prospective candidate “that a consumer report may be obtained for employment purposes.”

1

 The 

disclosure must be “in writing” and “in a document that consists solely of the disclosure.”

2

 The

 

1

15 U.S.C. § 1681b(b)(2)(i).

2

Id.

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Case No. 5:15-cv-04524-PSG

ORDER DENYING MOTION TO DISMISS

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disclosure form also may include the candidate’s authorization for the consumer report.3

This court has twice considered just how strictly the FCRA’s requirement that the 

disclosure form consist “solely” of the disclosure (and the consumer’s authorization) ought to be 

interpreted. Peikhoff v. Paramount Pictures Corp. held that including a one-sentence certification 

of truth in the disclosure form did not violate the “solely” requirement, because the certification 

was “closely related” to the “statutorily permitted authorization” and “similarly serve[d] to ‘focus 

the consumer’s attention on the disclosure.’”

4

 Harris v. Home Depot U.S.A., Inc. later 

distinguished Peikhoff’s one-sentence certification of truth from including a liability waiver in the 

FCRA disclosure form.

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 While a certification of truth might be “so closely related [to the FCRA 

disclosure] that it was inherently implausible anyone would include it in a willful attempt to 

violate the statute,” a liability waiver “is distinguishable because it is ‘independent from the 

disclosure and authorization.’”

6

 Harris then denied Home Depot’s motion to dismiss, finding that 

Harris had pled facts sufficient to state a claim that Home Depot had willfully violated the FCRA

by including a liability waiver in its FCRA disclosure.

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II.

This court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331. The parties further 

consented to the jurisdiction of the undersigned magistrate judge under 28 U.S.C. § 636(c) and 

Fed. R. Civ. P. 72(a).8

 

3

See 15 U.S.C. § 1681b(b)(2)(A)(ii).

4 Case No. 15-cv-00068-VC, 2015 U.S. Dist. LEXIS 63642, at *3-4 (N.D. Cal. March 26, 2015)

(quoting Letter from William Haynes, Attorney, Div. of Credit Practices, Fed. Trade Comm’n, to 

Harold Hawkey, Emp’rs Assoc. of N.J. (Dec. 18, 1997), 1997 WL 33791224, at *3).

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See Case No. 15-cv-01058-VC, 2015 U.S. Dist. LEXIS 93576, at *4 (N.D. Cal. June 30, 2015)

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Id. (quoting Peikhoff, 2015 U.S. Dist. LEXIS 63642, at *3).

7 Harris, 2015 U.S. Dist. LEXIS 93576, at *5.

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See Docket Nos. 9, 10.

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Case No. 5:15-cv-04524-PSG

ORDER DENYING MOTION TO DISMISS

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A complaint must contain “a short and plain statement of the claim showing that the 

pleader is entitled to relief.”9 When a plaintiff fails to proffer “enough facts to state a claim to 

relief that is plausible on its face,” the complaint may be dismissed for failure to state a claim upon 

which relief may be granted.10 A claim is facially plausible “when the pleaded factual content 

allows the court to draw the reasonable inference that the defendant is liable for the misconduct 

alleged.”11 Under Fed. R. Civ. P. 12(b)(6), “dismissal can be based on the lack of a cognizable 

legal theory or the absence of sufficient facts alleged under a cognizable legal theory.”12 

Dismissal with prejudice and without leave to amend is appropriate if it is clear that the complaint 

could not be saved by amendment.13

At this stage of the case, the court must accept all material allegations in the complaint as 

true and construe them in the light most favorable to the non-moving party.14 The court’s review 

is limited to the face of the complaint, materials incorporated into the complaint by reference and 

matters of which the court may take judicial notice.15 However, the court need not accept as true 

allegations that are conclusory, unwarranted deductions of fact or unreasonable inferences.16

III.

Applying the standards as set forth above, Stanford’s motion fails.

 

9

Fed. R. Civ. P. 8(a)(2).

10 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007).

11 Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). 

12 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).

13 See Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

14 See Metzler Inv. GMBH v. Corinthian Colls., Inc., 540 F.3d 1049, 1061 (9th Cir. 2008).

15 See id.

16 See Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); see also Twombly, 

550 U.S. at 561 (“a wholly conclusory statement of [a] claim” will not survive a motion to 

dismiss).

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Case No. 5:15-cv-04524-PSG

ORDER DENYING MOTION TO DISMISS

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First, Stanford’s FCRA disclosure form included seven state law notices informing 

consumers of their additional rights under state law.17 The authorization form also included the 

following sentence: “I also understand that nothing herein shall be construed as an offer of 

employment or contract for services.”

18 Both the state law notices and the sentence of 

understanding plausibly violate Section 1681b(b)(2)(i)’s requirement that the FCRA disclosure be 

in a document consisting “solely of the disclosure” (and the authorization form). Unlike 

Peikhoff’s certification of truth, the state law notices and sentence of understanding are not 

“closely related” to the FCRA disclosure. Stanford argues that the state law notices give job 

applicants “important relevant information that contributes to . . . the required disclosure,”

19 but 

the state law notices provide information about applicants’ rights under the laws of seven states, 

not under the FCRA. It therefore is unclear how the state law notices contribute to the disclosure

required by the FCRA. 

As for the sentence of understanding, Stanford candidly admitted at oral argument that its 

inclusion in the authorization form undermined Stanford’s disclosure as a standalone form as 

required by the FCRA.20 The sentence does not serve to focus an applicant’s attention on the

FCRA disclosure, as it is unrelated to the FCRA’s directive to state “that a consumer report may 

be obtained for employment purposes.”

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Second, Lagos has alleged sufficient facts to state a facially plausible claim that Stanford’s 

violation of the FCRA was willful. Harris held that additional language unlikely to focus the 

applicant’s attention on the FCRA disclosure was sufficient to support a willful violation claim at 

 

17 See Docket No. 7-1 at 2-3.

18 Id. at 4.

19 Docket No. 7 at 7.

20 See Docket No. 23.

21 15 U.S.C. § 1681b(b)(2)(i).

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Case No. 5:15-cv-04524-PSG

ORDER DENYING MOTION TO DISMISS

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the pleading stage. The sentence of understanding in Stanford’s form is closer to the liability 

waiver in Harris than the certification of truth in Peikhoff, because like the liability waiver, it has 

nothing to do with the FCRA. It serves only to clarify that authorizing Stanford to obtain a 

background investigation does not mean the job applicant is receiving a job offer. It is unlikely to 

focus the applicant’s attention on the FCRA disclosure, and it therefore is plausible that Stanford 

“inserted this language into the disclosure form despite knowing that to do so would violate the 

FCRA, or at least with reckless disregard for the FCRA’s requirements.”

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SO ORDERED.

Dated: December 4, 2015

_________________________________

PAUL S. GREWAL

United States Magistrate Judge

 

22 Harris, 2015 U.S. Dist. LEXIS 93576, at *5.

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