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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

CASE NO. 3:17-CV-00152-VC

38538544v.7

SEYFARTH SHAW LLP

Eric Michael Lloyd (SBN 254390)

elloyd@seyfarth.com

560 Mission Street, Suite 3100

San Francisco, California 94105

Telephone: (415) 397-2823

Facsimile: (415) 397-8549

SEYFARTH SHAW LLP

Frederick T. Smith (admitted pro hac vice)

fsmith@seyfarth.com

Esther Slater McDonald (admitted pro hac vice)

emcdonald@seyfarth.com

1075 Peachtree Street, N.E., Suite 2500

Atlanta, Georgia 30309-3958

Telephone: (404) 885-1500

Facsimile: (404) 892-7056

Attorneys for Defendant

FIRST ADVANTAGE BACKGROUND SERVICES CORP.

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

MARCUS CHISM, on behalf of himself, all others

similarly situated,

Plaintiff,

v.

PEPSICO, INC., a North Carolina Corporation;

FRITO-LAY, INC., a Delaware Corporation;

FIRST ADVANTAGE BACKGROUND

SERVICES CORP., a Florida Corporation; and

DOES 1 through 100, Inclusive,

Defendants.

Case No. 3:17-cv-00152-VC

DEFENDANT FIRST ADVANTAGE

BACKGROUND SERVICES CORP.’s

NOTICE OF MOTION, MOTION TO

DISMISS PLAINTIFF’S CLASS ACTION

COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6),

AND MEMORANDUM OF POINTS AND

AUTHORITIES IN SUPPORT THEREOF

Date: May 25, 2017

Time: 10:00 a.m.

Courtroom: 4

Complaint Filed: January 12, 2017

Complaint Served: January 23, 2017

Case 3:17-cv-00152-VC Document 29 Filed 04/17/17 Page 1 of 20
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TABLE OF CONTENTS

NOTICE OF MOTION AND MOTION .................................................................................................... 1

RELIEF SOUGHT...................................................................................................................................... 1

MEMORANDUM OF POINTS AND AUTHORITIES ............................................................................ 2

STATEMENT OF ISSUES TO BE DECIDED ......................................................................................... 2

INTRODUCTION ...................................................................................................................................... 2

BACKGROUND ........................................................................................................................................ 3

LEGAL STANDARD................................................................................................................................. 4

ARGUMENT.............................................................................................................................................. 5

I. PLAINTIFF FAILS TO PROVIDE FAIR NOTICE OF HIS CLAIMS BECAUSE HE

DOES NOT DISTINGUISH AMONG DEFENDANTS. .............................................................. 5

II. PLAINTIFF FAILS TO STATE A CLAIM BECAUSE THE STATUTORY

PROVISIONS AT ISSUE DO NOT APPLY TO FIRST ADVANTAGE..................................... 8

A. Section 1681b(b)(2) of the FCRA Applies Only to Users of Consumer Reports............... 8

B. Section 1681d(a)(1) of the FCRA Applies Only to Users of Consumer Reports............. 12

C. ICRAA Section 1786.16 and CCRAA Section 1785.20(a) Apply Only to Users of

Consumer Reports............................................................................................................. 14

CONCLUSION......................................................................................................................................... 15

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RULE OF CIVIL PROCEDURE 12(B)(6)

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TABLE OF AUTHORITIES

Page(s)

Federal Cases

Atuahene v. City of Hartford,

10 F. App’x 33 (2d Cir. 2001) ...............................................................................................................5

Barreras v. Travelers Home & Mar. Ins. Co.,

No. 12-cv-0354 ..................................................................................................................................6, 7

Bell Atl. Corp. v. Twombly,

550 U.S. 544 (2007)...........................................................................................................................5, 7

Ben-Hur v. Equifax Info. Servs., Inc.,

976 F. Supp. 795 (E.D. Wis. 1997)......................................................................................................13

Cholla Ready Mix, Inc. v. Civish,

382 F.3d 969 (9th Cir. 2004) .................................................................................................................4

Coleman v. Kohl’s Dep’t Stores, Inc.,

No. 15-cv-02588-JCS, 2015 WL 5782352 (N.D. Cal. Oct. 5, 2015) ..................................................13

Corazon v. Aurora Loan Servs., LLC,

No. 11-00542 SC, 2011 WL 1740099 (N.D. Cal. May 5, 2011)...................................................5, 6, 7

Davis v. Mich. Dep’t of Treasury,

489 U.S. 803 (1989)...............................................................................................................................8

Dunson v. Cordis Corp.,

No. 16-CV-03076-SI, 2016 WL 3913666 (N.D. Cal. July 20, 2016)....................................................6

E.D.C. Techs., Inc. v. Seidel,

No. 16-CV-03316-SI, 2016 WL 4549132 (N.D. Cal. Sept. 1, 2016) ....................................................6

Feisal v. Resol. Trust Corp.,

815 F. Supp. 344 (E.D. Cal. 1993).........................................................................................................8

Gauvin v. Trombatore,

682 F. Supp. 1067 (N.D. Cal. 1988) ......................................................................................................6

Henry v. Forbes,

433 F. Supp. 5 (D. Minn. 1976)...........................................................................................................13

Jajco, Inc. v. Leader Drug Stores, Inc.,

No. C 12-05703 PJH, 2013 WL 875957 (N.D. Cal. Mar. 7, 2013) .......................................................7

Kelchner v. Sycamore Manor Health Ctr.,

135 F. App’x 499 (3d Cir. 2005) ...........................................................................................................9

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RULE OF CIVIL PROCEDURE 12(B)(6)

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Lagrassa v. Jack Gaughen,

LLC, No. 09-cv-770, 2011 WL 1257371 (M.D. Pa. Mar. 30, 2011)...................................................11

Lyshorn v. J.P.Morgan Chase Bank,

No. C 12-05490 JSW, 2013 WL 792632 (N.D. Cal. Mar. 4, 2013) ......................................................6

Mathison v. Bumbo,

No. SA CV08-0369 DOC ANX, 2008 WL 8797937 (C.D. Cal. Aug. 18, 2008)..................................8

Mattiaccio v. DHA Group, Inc.,

21 F. Supp. 3d 15 (D.D.C. 2014).........................................................................................................11

Middlebrooks v. Retail Credit Co.,

416 F. Supp. 1013 (N.D. Ga. 1976).....................................................................................................13

In re MyFord Touch Consumer Litig.,

46 F. Supp. 3d 936 (N.D. Cal. 2014) .....................................................................................................7

Phillips v. County of Allegheny,

515 F.3d 224 (3d Cir. 2008)...................................................................................................................5

Powell v. Residential Mortg. Capital,

No. C 09-04928 JF (PVT), 2010 WL 2133011 (N.D. Cal. May 24, 2010) ...........................................5

Republic of Ecuador v. Mackay,

742 F.3d 860 (9th Cir. 2014) .................................................................................................................8

Robbins v. Oklahoma,

519 F.3d 1242 (10th Cir. 2008) .....................................................................................................5, 6, 7

Robinson v. Shell Oil Co.,

519 U.S. 337 (1997)...............................................................................................................................8

Rosciano v. Experian,

No. CV-14-02102-PHX-NVW, 2015 WL 163383 (D. Ariz. Jan. 13, 2015).........................................7

Sanders v. Brown,

504 F.3d 903 (9th Cir. 2007) .................................................................................................................5

Sollberger v. Wachovia Sec., LLC,

No. SACV 09-0766AGANX, 2010 WL 2674456 (C.D. Cal. June 30, 2010).......................................5

Wallis v. Centennial Ins. Co.,

927 F. Supp. 2d 909 (E.D. Cal. 2013)....................................................................................................7

Federal Statutes

15 U.S.C. § 1681a(f), (u) .............................................................................................................................9

15 U.S.C. § 1681b(b)(1) ......................................................................................................................10, 11

Case 3:17-cv-00152-VC Document 29 Filed 04/17/17 Page 4 of 20
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RULE OF CIVIL PROCEDURE 12(B)(6)

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15 U.S.C. § 1681b(b)(2) .................................................................................................................... passim

15 U.S.C. § 1681b(b)(2)(A)...............................................................................................................2, 9, 12

15 U.S.C. § 1681b(b)(3) ..................................................................................................................9, 10, 11

15 U.S.C. § 1681b(b)(3)(A).........................................................................................................................9

15 U.S.C. § 1681d(a) .....................................................................................................................12, 13, 14

15 U.S.C. § 1681d(a)(1).............................................................................................................2, 12, 13, 14

15 U.S.C. § 1681g(c)(1)(A) .......................................................................................................................14

State Statutes

Cal. Civ. Code § 1785.20(a) ................................................................................................................14, 15

Cal. Civ. Code § 1786.16...........................................................................................................................14

Cal. Civ. Code § 1786.16(a) ......................................................................................................................14

Cal. Civ. Code § 1786.16(d) ......................................................................................................................14

Cal. Civ. Code § 1786.22.............................................................................................................................3

Cal. Lab. Code § 1024.5(a)........................................................................................................................15

Rules

Federal Rule of Civil Procedure 8 .......................................................................................................5, 6, 8

Federal Rule of Civil Procedure 8(a)(2) ..............................................................................................1, 2, 4

Federal Rule of Civil Procedure 12(b)(6) ................................................................................................1, 5

Other Authorities

F.T.C. Report, “40 Years of Experience with the Fair Credit Reporting Act” (2011) ........................11, 14

F.T.C. Opinion Letter, “Advisory Opinion to Rosen” (June 9, 1998).......................................................12

F.T.C. Opinion Letter, “Advisory Opinion to Beaudette” (June 9, 1998).................................................12

H.R. Rep. No. 103-486, 103d Cong., 2d Sess. 30-31 (1994) ....................................................................10

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

CASE NO. 3:17-CV-00152-VC

38538544v.7

NOTICE OF MOTION AND MOTION

TO ALL PARTIES AND THEIR COUNSEL OF RECORD:

PLEASE TAKE NOTICE that on May 25, 2017, at 10:00 a.m. in Courtroom 4 of this Court,

located at 450 Golden Gate Avenue, San Francisco, California 94102, Defendant FIRST ADVANTAGE

BACKGROUND SERVICES CORP. will and hereby does move this Court for an Order under Federal

Rule of Civil Procedure 12(b)(6) dismissing Plaintiff’s first through fourth causes of action against First

Advantage, without leave to amend. This Motion is based on this Notice of Motion and Motion, the

below Memorandum of Points and Authorities, the concurrently filed Request for Judicial Notice, oral

argument of counsel, and any other documents, files, pleadings or matters of which the Court may take

judicial notice.

RELIEF SOUGHT

First Advantage seeks an Order pursuant to Federal Rule of Civil Procedure 12(b)(6) dismissing

Plaintiff’s first through fourth causes of action against First Advantage with prejudice. Plaintiff’s

Complaint fails to comply with Federal Rule of Civil Procedure 8(a)(2) insofar as it contains conclusory

allegations which do not distinguish among the Defendants. Further, leave to amend would be futile

because Plaintiff’s claims against First Advantage fail as a matter of law—none of the statutory

provisions that Plaintiff asserts were violated in this action apply to consumer reporting agencies such as

First Advantage. The Court should thus dismiss Plaintiff’s first through fourth causes of action against

First Advantage with prejudice.

Case 3:17-cv-00152-VC Document 29 Filed 04/17/17 Page 6 of 20
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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

CASE NO. 3:17-CV-00152-VC

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MEMORANDUM OF POINTS AND AUTHORITIES

STATEMENT OF ISSUES TO BE DECIDED

1. Whether Plaintiff’s Complaint contains “a short and plain statement of the claim[s]

showing that [Plaintiff] is entitled to relief” against First Advantage in compliance with Fed. R. Civ. P.

8(a)(2).

2. Whether Plaintiff’s first through fourth causes of action against First Advantage should

be dismissed with prejudice because the statutory provisions at issue do not apply to consumer reporting

agencies such as First Advantage.

INTRODUCTION

Plaintiff Marcus Chism applied for employment with PepsiCo, Inc. and/or Frito-Lay, Inc.

(collectively, “Co-Defendants”). In connection with his employment application, PepsiCo or Frito-Lay

ordered Plaintiff’s background report from First Advantage Background Services Corp., a consumer

reporting agency (“CRA”). In his Class Action Complaint, Plaintiff asserts four putative class claims

for alleged violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (“FCRA”), the

California Investigative Consumer Reporting Agencies Act, Cal. Code Civ. § 1786 et seq. (“ICRAA”),

and the California Consumer Credit Reporting Agencies Act, Cal. Code Civ. 1785 et seq. (“CCRAA”).

Count I alleges that Defendants violated Section 1681b(b)(2)(A) of the FCRA by failing to

disclose that they were going to procure Plaintiff’s background report for employment purposes from a

CRA and by failing to obtain his written authorization to do so. Count II alleges that Defendants

violated Section 1681d(a)(1) of the FCRA by failing to disclose that they were going to procure

Plaintiff’s investigative background report from a CRA and that he could request a copy of the model

summary of rights. Count III alleges that Defendants violated the ICRAA by failing to disclose that they

were going to procure Plaintiff’s background report for employment purposes from a CRA and by

failing to obtain his written authorization to do so. Count IV alleges that Defendants violated the

CCRAA by procuring Plaintiff’s background report for employment purposes without first providing

him written notice identifying the legal basis for using the report and identifying the CRA that would

prepare the report.

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

CASE NO. 3:17-CV-00152-VC

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Plaintiff fails to state a claim because his allegations are conclusory and lack particularity.

Plaintiff asserts all counts against all Defendants without distinguishing among Defendants except to

identify their states of incorporation. Other allegations are stated generically against “Defendant” or

“Defendants.” Plaintiff does not allege any specific conduct by First Advantage. Even if Plaintiff had

pled his claims with some specificity, Plaintiff’s claims would fail as a matter of law because the

statutory provisions at issue do not apply to CRAs like First Advantage. The provisions apply to

employers who procure and use background reports rather than to CRAs that prepare and furnish the

reports. For these reasons and because amendment is futile, Plaintiff’s claims against First Advantage

should be dismissed in their entirety with prejudice.

BACKGROUND1

Plaintiff was employed by “Defendant,” namely Frito-Lay, “from approximately October 2015

to September 2016. (Compl. ¶ 6; Co-Defendants’ Answer ¶ 6 (admitting that Frito-Lay employed

Plaintiff).) When Plaintiff applied for employment, “Defendants procured or caused to be prepared ... a

consumer report and/or investigative consumer report, as defined by [the FCRA],” on him. (Compl.

¶ 27.) “Defendants” used Plaintiff’s report “in evaluating him and other class members for employment.”

(Compl. ¶ 27.) “Defendants did not provide Plaintiff with required Disclosures and Authorizations”

before procuring his report for employment purposes. (Compl. ¶ 28.) “Defendants only provided a

Notice” under California law2, stating:

(Compl. ¶ 29.) Plaintiff did not sign any authorization to procure his report for employment purposes.

1

First Advantage accepts the truth of the facts as pled in Plaintiff’s Class Action Complaint solely for

purposes of this motion.

2

This notice appears to be the notice included in Plaintiff’s report pursuant to California law. See Cal.

Civ. Code § 1786.22.

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

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(Compl. ¶ 31.) “Defendants” also “procured investigative consumer reports or caused investigative

consumer reports to be procured for Plaintiff and class members ... without informing class members of

their rights to request a written summary of their rights under the FCRA.” (Compl. ¶ 35.) “Defendants”

acted negligently and willfully in violating the law. (Compl. ¶¶ 34, 39, 67.) Defendants’ willfulness “is

reflected by ... the following facts”:

• “Defendants are a large corporation [sic] with access to legal advice”

(Compl. ¶¶ 34, 64, 79.);

• “Defendants” have a “policy and practice of procuring investigative

consumer reports or causing investigative consumer reports to be

procured for applicants and employees without informing such

applicants of their right to request a summary of their rights under the

FCRA at the same time as the disclosure explaining that an

investigative consumer report may be made” (Compl. ¶ 35.);

• “Defendants” have a “policy and practice of failing to provide

adequate written disclosures to applicants and employees” before

procuring background checks or credit reports or causing background

checks or credit reports to be procured (Compl. ¶¶ 63, 78); and

• The “plain language” of the CCRAA “unambiguously” requires a

disclosure that “must identify the specific basis ... for use of the credit

report and must identify the source of any credit report.” (Compl. ¶

79.)3

Plaintiff seeks to recover actual, statutory, and punitive damages; civil and statutory penalties; injunctive

relief; attorneys’ fees and costs; interest; and such other relief as the Court deems just and proper.

(Compl. ¶¶ 38-39, 66-67, 81-82, Prayer for Relief.)

LEGAL STANDARD

To survive a motion to dismiss, a complaint must contain “a short and plain statement of the

claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The district court must

accept “all facts alleged in the complaint as true and construing them in the light most favorable to the

plaintiff.” Cholla Ready Mix, Inc. v. Civish, 382 F.3d 969, 973 (9th Cir. 2004). “Conclusory allegations

3 Although Plaintiff alleges additional facts in support of willfulness, it appears that Plaintiff cut and

pasted text from another complaint raising different claims because the additional facts are inconsistent

with Plaintiff’s contention that he was not provided any disclosure and authorization form. Compare

Compl. ¶¶ 32, 61 (alleging that “Defendants failed to provide Plaintiff with any Disclosures or

Authorizations”) with Compl. ¶¶ 34, 64 (alleging that the “disclosure form” contained “a liability release

and other extraneous information”); id. ¶¶ 34, 79 (alleging that the “authorization” was “defective”).

Because of this inconsistency, the additional allegations are irrelevant.

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

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and unreasonable inferences, however, are insufficient to defeat a motion to dismiss.” Sanders v. Brown,

504 F.3d 903, 910 (9th Cir. 2007). Rather, a complaint must contain sufficient factual content to give

the defendant “fair notice of what the ... claim is and the grounds upon which it rests.” Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 555 (2007) (quotation marks omitted).

Moreover, fair notice “depends on the type of case.” Phillips v. County of Allegheny, 515 F.3d

224, 232 (3d Cir. 2008). “Context matters in notice pleading,” and the degree of specificity required to

provide fair notice increases with the complexity of a case. Id. Cases involving “complex claims

against multiple defendants” often present “a greater likelihood of failures in notice and plausibility.”

Robbins v. Oklahoma, 519 F.3d 1242, 1249 (10th Cir. 2008). Thus, Twombly’s fair-notice standard

“may have greater bite in such contexts.” Id. A complaint that does not provide fair notice is subject to

dismissal for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6).

ARGUMENT

I. PLAINTIFF FAILS TO PROVIDE FAIR NOTICE OF HIS CLAIMS BECAUSE HE

DOES NOT DISTINGUISH AMONG DEFENDANTS.

A complaint against multiple defendants that “uses the omnibus term ‘Defendants’ throughout”

without identifying which defendant committed what wrongful acts is an impermissible pleading.

Sollberger v. Wachovia Sec., LLC, No. SACV 09-0766AGANX, 2010 WL 2674456, at *4 (C.D. Cal.

June 30, 2010) (“This shotgun pleading style deprives Defendants of knowing exactly what they are

accused of doing wrong.”). “Failure to indicate which defendant was allegedly responsible for which

wrongful act and to provide well-pleaded factual allegations in support of each cause of action renders

the complaint deficient under Rule 8.” Corazon v. Aurora Loan Servs., LLC, No. 11-00542 SC, 2011

WL 1740099, at *5 (N.D. Cal. May 5, 2011). “Treating disparate parties identically without

explanation ... deprives each individual defendant a fair and meaningful opportunity to defend itself.”

Powell v. Residential Mortg. Capital, No. C 09-04928 JF (PVT), 2010 WL 2133011, at *3 (N.D. Cal.

May 24, 2010). Thus, “[u]ndifferentiated pleading against multiple defendants is improper.” Corazon,

2011 WL 1740099 at *4 (quotation marks omitted); see also Atuahene v. City of Hartford, 10 F. App’x

33, 34 (2d Cir. 2001) (dismissing complaint that “failed to differentiate among the defendants, alleging

instead violations by ‘the defendants’” and “providing no factual basis to distinguish their conduct”).

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

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For example, in Robbins, the court held that undifferentiated pleading did not provide fair notice

in a complex civil rights action involving multiple defendants. 519 F.3d at 1250. The court reasoned

that, while a simple negligence action for a car accident would not require much specificity, an action

alleging a conspiracy of multiple defendants to violate civil rights laws would require more detail. Id. at

1248-49. The court reasoned that context matters for fair notice and held that, a complaint against

multiple defendants must “make clear exactly who is alleged to have done what to whom.” Id. at 1250.

Otherwise, it is “impossible” for a defendant to ascertain what wrongful acts it has committed. Id. This

same principle applies to class actions asserting claims against multiple defendants. See Barreras v.

Travelers Home & Mar. Ins. Co., No. 12-cv-0354 RB/RHS, 2012 WL 12870348, at *6 (D.N.M. Oct. 17,

2012) (requiring a higher “degree of specificity” for a “class action lawsuit” brought against multiple

defendants and dismissing complaint for “fail[ing] to differentiate among the four identified

Defendants”).

Likewise, for nearly thirty years, this Court has held that a plaintiff “must allege the basis of his

claim against each defendant” to satisfy Rule 8 and has consistently dismissed pleadings that fail to

differentiate among defendants. Gauvin v. Trombatore, 682 F. Supp. 1067, 1071 (N.D. Cal. 1988)

(dismissing claims where plaintiff did not allege facts as to each defendant “with any specificity” but

instead “all defendants are lumped together”); see also E.D.C. Techs., Inc. v. Seidel, No. 16-CV-03316-

SI, 2016 WL 4549132, at *9 (N.D. Cal. Sept. 1, 2016) (dismissing claims based on “undifferentiated

pleading against multiple defendants”); Dunson v. Cordis Corp., No. 16-CV-03076-SI, 2016 WL

3913666, at *3 (N.D. Cal. July 20, 2016) (same); Lyshorn v. J.P.Morgan Chase Bank, No. C 12-05490

JSW, 2013 WL 792632, at *2 (N.D. Cal. Mar. 4, 2013) (same).

For example, in In re Sagent Tech, Inc., the Court held that a complaint “fail[ed] to state a claim

because plaintiffs do not indicate which individual defendant or defendants were responsible for which

alleged wrongful act.” 278 F. Supp. 2d 1079, 1094 (N.D. Cal. 2003). Similarly, in Corazon, the Court

dismissed a complaint in which the plaintiff “simply refers to ‘Defendants’ in nearly all of her

allegations,” and, “[i]n the few allegations where she alleges misconduct by a singular defendant, she

fails to specify which one.” 2011 WL 1740099 at *4. The Court held that a defendant “should not be

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RULE OF CIVIL PROCEDURE 12(B)(6)

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required to guess which allegations pertain to it.” Id. The Court rejected the plaintiff’s claim that her

complaint was sufficient because it alleged, without factual support, that the actions of each defendant

were “imputed” to the others. See id.

As in Robbins and Barreras, this action involves complex claims against multiple defendants,

and, thus, Plaintiff must identify who has done what and when to provide Defendants fair notice, but

Plaintiff does not do this. Rather, like the Corazon plaintiff, Plaintiff generally refers to “Defendant” or

“Defendants” throughout his Class Action Complaint without specifying which Defendant or

Defendants engaged in the conduct alleged. (See generally Compl.) In fact, the only particularized

allegations in the complaint are those alleging Defendants’ residencies. (See Compl. ¶¶ 7-9.) Plaintiff’s

failure to differentiate between First Advantage and Co-Defendants is “particularly troubling” because

her allegations pertain to an employer’s procurement of a consumer report rather than to a CRA’s

furnishing of a report. Corazon, 2011 WL 1740089 at *4. Plaintiff does not plead any facts showing

how First Advantage, the CRA that furnished his report, was involved with procuring his report.

Instead, Plaintiff alleges without factual support that “each and every one of the acts and

omissions alleged herein were performed by, and/or attributable to, all Defendants, each acting as agents

and/or employees, and/or under the direction and control of each of the other defendants.” (Compl. ¶

12.) In Corazon, the Court rejected such pleading as “naked assertions,” and the Court should do so

here as well. 2011 WL 1740089 at *5; see also In re MyFord Touch Consumer Litig., 46 F. Supp. 3d

936, 955–56 (N.D. Cal. 2014) (“[C]onclusory allegation of an agency relationship is not enough” to

satisfy Iqbal and Twombly.); Jajco, Inc. v. Leader Drug Stores, Inc., No. C 12-05703 PJH, 2013 WL

875957, at *2 (N.D. Cal. Mar. 7, 2013) (dismissing claim as insufficiently pled where plaintiff alleged

that “defendants, and each of them, were an owner, co-owner, agent, representative, partner, and/or alter

ego of its co-defendants, or otherwise acting on behalf of each and every remaining defendant”); Wallis

v. Centennial Ins. Co., 927 F. Supp. 2d 909, 916–17 (E.D. Cal. 2013) (same).4

4 Moreover, the FCRA does not provide for vicarious liability. See Rosciano v. Experian, No. CV-14-

02102-PHX-NVW, 2015 WL 163383, at *3 (D. Ariz. Jan. 13, 2015) (“[T]he Court has found-no case

law suggesting that FCRA liability may be premised on “principles of agency.”).

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

CASE NO. 3:17-CV-00152-VC

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As the Central District of California explained in dismissing a class action complaint containing

“a large and varied mass of accusations ... failing to identify any particular party,” such pleading “fails

to provide adequate notice of the nature of Plaintiff’s claims against each Defendant, and denies

Defendants the opportunity to respond effectively.” Mathison v. Bumbo, No. SA CV08-0369 DOC

ANX, 2008 WL 8797937, at *3 (C.D. Cal. Aug. 18, 2008). The allegations levied against “Defendants”

here are no different and should lead to the same result: dismissal. Because Plaintiff fails to plead his

claims with particularity, he has not satisfied Rule 8, and his Class Action Complaint must be dismissed.

II. PLAINTIFF FAILS TO STATE A CLAIM BECAUSE THE STATUTORY PROVISIONS

AT ISSUE DO NOT APPLY TO FIRST ADVANTAGE.

Moreover, Plaintiff’s claims against First Advantage must be dismissed with prejudice because

the statutory provisions at issue do not apply to First Advantage. Thus, Plaintiff could not plead any

particularized facts that would give rise to a claim against First Advantage under those provisions.

When construing a statute, the starting point is “the language of the statute itself.” Feisal v.

Resol. Trust Corp., 815 F. Supp. 344, 346 (E.D. Cal. 1993). To determine the plain meaning, a court

begins with “the language itself, the specific context in which that language is used, and the broader

context of the statute as a whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997). Word and

phrases cannot be read in isolation. Republic of Ecuador v. Mackay, 742 F.3d 860, 864-65 (9th Cir.

2014). They must be read “in their context and with a view to their place in the overall statutory

scheme.” Davis v. Mich. Dep’t of Treasury, 489 U.S. 803, 809 (1989). An interpretation should give

effect to every provision; no provision should be rendered redundant. Mackay, 742 F.3d at 864-65.

A. Section 1681b(b)(2) of the FCRA Applies Only to Users of Consumer Reports.

Section 1681b(b) contains three subsections that set out separate and independent duties imposed

on CRAs, and separate and independent duties imposed on employers. By its terms, Section (b)(1) is the

only one of these three subsections that directly applies to CRAs. Sections (b)(2) and (b)(3), on the

other hand, impose disclosure and notice requirements upon users of information in a consumer report,

i.e., employers and prospective employers.

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

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Section 1681b(b)(2)(A) provides, in relevant part, that:

Except as provided in subparagraph (B), 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—

(i) 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 report may be obtained for employment purposes;

and

(ii) the consumer has authorized in writing (which authorization

may be made on the document referred to in clause (i)) the

procurement of the report by that person.

15 U.S.C. § 1681b(b)(2)(A) (emphasis added). Similarly, Section 1681b(b)(3) provides “[c]onditions on

use for adverse actions”:

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)(A) (emphasis added). The express and unambiguous statutory text of Sections

1681b(b)(2) and (b)(3) makes clear that these sections do not apply to CRAs like First Advantage.

By its very text, Section 1681b(b)(2)’s requirement is imposed on persons who procure

consumer reports for employment purposes. The only entities that procure consumer reports for

employment purposes are the user of those reports, employers. In contrast, a CRA like First Advantage

does not procure or obtain other consumer reports for employment purposes. Rather, a CRA obtains

those reports to fulfill its function as a CRA—to “assemble[] ... information on consumers” or “merge[]

information contained in the database of another consumer reporting agency ... concerning any

consumer” and to furnish a consumer report to a third party. 15 U.S.C. § 1681a(f), (u). Section

1681b(b)(2) therefore imposes its obligations on the user of a consumer report—not the CRA that

furnishes the consumer report to the user. See Kelchner v. Sycamore Manor Health Ctr., 135 F. App’x

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

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499, 502 (3d Cir. 2005) (finding that statutory “requirement [under Section 1681b(b)(2)] that an

employer obtain authorization ‘at any time before the report is procured’ is unambiguous”).

Similarly, by its clear terms, Section 1681b(b)(3) imposes notice requirements upon users of

information in a consumer report. In the employment context, users can only be employers and

prospective employers; those are the only entities that can actually take, and therefore intend to take,

employment-related adverse action. 15 U.S.C. § 1681b(b)(3); see also H.R. Rep. No. 103-486, 103d

Cong., 2d Sess. 30-31 (1994) (“The bill also triggers special provisions when an employer contemplates

taking adverse action based in whole or in part on a consumer report. Specifically, before taking adverse

action regarding the consumer’s current or prospective employment, an employer must provide to the

consumer a copy of the report and a written description of the consumer’s rights under the FCRA.”).

First Advantage is not, and cannot be, a “user” of its own consumer reports because it does not make

employment decisions with respect to the applicants on whom it prepares consumer reports. Those

decisions are made by the applicants’ prospective employers.

The structure of Section 1681b(b) confirms this interplay between an employer’s obligations and

those of a CRA. In stark contrast to Sections (b)(2) and b(b)(3), Section (b)(1) expressly refers to a

“consumer reporting agency,” allowing it to furnish a consumer report for employment purposes only

for a permissible purpose and only after certification from the employer that the employer will comply

with its duties under Sections (b)(2) and (b)(3). 15 U.S.C. § 1681b(b)(1). If a CRA could be a “user”

for purposes of Sections (b)(2) and (b)(3), there would be no need for the CRA to obtain a statement

from itself certifying compliance with those subsections.

Courts addressing claims like Plaintiff’s have agreed that Section 1681b(b)(2) applies to users,

not CRAs. For example, in Muir v. Early Warning Servs., LLC, the district court held that “sections

(b)(2) and (b)(3) do not apply to CRAs because the FCRA places distinct obligations on credit reporting

agencies and users: section (b)(1) covers CRAs; sections (b)(2) and (b)(3) delineate the obligations of

users.” No. CV 16-521 (SRC), 2016 WL 4967792, at *3 (D.N.J. Sept. 16, 2016). The court reasoned

that Section 1681b(b)(1) “explicitly addresses consumer reporting agencies,” which are “provider[s] of

information for the use of others.” Id. The court stated that, because section (b)(1) “requires the report

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

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user to certify compliance with sections (b)(2) and (b)(3) to the credit-reporting agency, the onus of in

fact complying with these provisions must logically fall on the user.” Id.

Similarly, in Obabueki v. International Business Machines Corp., the district court discussed the

interplay between Section 1681b(b)’s subsections and held that “contrary to plaintiff’s suggestion, each

of the subsections need not, and does not, prescribe obligations for both [consumer reporting] agencies

and users [such as employers]. The second and third subsections both affect users. . . . On the other

hand, the first subsection . . . sets forth obligations that an agency must satisfy before furnishing a

consumer report.” 145 F. Supp. 2d 371, 393 (S.D.N.Y. 2001); see also Mattiaccio v. DHA Group, Inc.,

21 F. Supp. 3d 15, 22 n.5 (D.D.C. 2014) (holding that a CRA “cannot be liable under § 1681b(b)(2),

which applies only to ‘users’ of consumer reports”); Lagrassa v. Jack Gaughen, LLC, No. 09-cv-770,

2011 WL 1257371, at *2 (M.D. Pa. Mar. 30, 2011) (“Plaintiff cannot argue a violation of § 1681b(b)(2)

because that provision applies only to users of a report, rather than agencies that furnish the report.”)

(emphasis in original).

Further, the FTC has issued guidance confirming that Section 1681b(b)(2) was never intended to

apply to CRAs. In a July 2011 report, the FTC concluded that “Section [1681b(b)(2)(A)] imposes an

obligation on employers. It requires that, before obtaining consumer reports for employment purposes,

employers must disclose this fact.” (Request for Judicial Notice, dated Apr. 17, 2017 (“RJN”), Ex. A,

40 Years of Experience with the Fair Credit Reporting Act, at 50-51 (emphasis added).) The report

specifically identifies “employers” (i.e., users of credit reports) when discussing Section 1681b(b)(2),

and not CRAs.

Multiple FTC opinion letters have reached the same conclusion that Section 1681b(b)(2) governs

the conduct of employers or other users, and not CRAs. For instance, a 1998 FTC opinion letter states:

An employer or any other user of consumer report information obtained

from a CRA may have the CRA fulfill the user’s ministerial obligations

under the FCRA. For example, an employer may arrange for the CRA to

provide any pre-adverse action disclosures required by [Section

1681b(b)(3)]. However, the employer or other user remains responsible

for any duty imposed by FCRA and may be subject to liability if the duties

are not performed by the CRA.

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

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(RJN Ex. B, “Advisory Opinion to Rosen,” William Haynes, FTC, Staff Op. Ltr. (June 9, 1998)

(emphasis added).) Another staff opinion letter advised a CRA representative that:

[Y]our employer clients may arrange for you [the CRA] to make the

[Section 1681b(b)(2) and (3)] disclosures, obtain written permission, and

provide the notices required by these provisions. If you assume these

responsibilities, you should ensure that your procedures comply with the

FCRA. Your employer clients, however, remain liable for any violations

of the law that result from your actions.

(RJN Ex. C, “Advisory Opinion to Beaudette,” William Haynes, FTC, Staff Op. Ltr. (June 9, 1998)

(emphasis added).) The opinion letters make clear that the FTC does not contemplate that CRAs can be

liable under Section 1681b(b)(2), which is, by its nature, a provision directed at users.

The only conceivable basis for First Advantage’s liability under Section 1681b(b)(2)(A) rests on

First Advantage’s provision of Plaintiff’s background check to Co-Defendants. Because Section

1681b(b)(2) does not impose any obligation upon First Advantage, Plaintiff’s claim fails as a matter of

law, and, therefore, Count I should be dismissed in full and with prejudice as to First Advantage.

B. Section 1681d(a)(1) of the FCRA Applies Only to Users of Consumer Reports.

Similarly, Section 1681d(a) applies only to users “procuring” investigative consumer reports, a

specialized type of consumer report. That section provides that “[a] person may not procure or cause

to be prepared an investigative consumer report on any consumer unless—“

(1) it is clearly and accurately disclosed to the consumer that an

investigative consumer report ... may be made, and such disclosure (A) is

made in a writing mailed, or otherwise delivered, to the consumer, not

later than three days after the date on which the report was first requested,

and (B) includes a statement informing the consumer of his right to

request the additional disclosures provided for under subsection (b) of this

section and the written summary of the rights of the consumer prepared

pursuant to section 1681g(c) of this title; and

(2) the person certifies or has certified to the consumer reporting agency

that—

(A) the person has made the disclosures to the consumer required

by paragraph (1); and

(B) the person will comply with subsection (b).

15 U.S.C. § 1681d(a) (emphasis added).

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

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Like Section 1681b(b), Section 1681d(a) distinguishes between a CRA, which prepares a report,

and a user, who receives a report. Section 1681d(a)(1) requires the user to disclose that it is procuring a

report and to inform the consumer of his or her right to request additional disclosures and a summary of

rights. A CRA assembles and furnishes reports; it does not procure reports. See Part II.A, supra, at 9.

In contrast to Section (a)(1), Section (a)(2) expressly refers to a “consumer reporting agency” and

requires the user to certify its compliance with Section (a)(1) before procuring the report. As with

Section 1681b(b), if a CRA could be a “user” for purposes of Section 1681d(a)(1), there would be no

need for the CRA to certify compliance to itself.

Courts have long held that Section 1681d(a) applies to employers (or others requesting reports),

not CRAs. For example, in an action brought by Plaintiff’s counsel, this Court held that Section

1681d(a) requires “that whenever an employer requests a consumer report, it must notify the consumer

in writing within three days of the request.” Coleman v. Kohl’s Dep’t Stores, Inc., No. 15-cv-02588-JCS,

2015 WL 5782352, at *6 (N.D. Cal. Oct. 5, 2015). In Short v. Allstate Credit Bureau, the district court

dismissed a Section 1681d(a) claim against a CRA because “the plain language of the provision speaks

for itself and [a CRA] is not subject to liability thereunder.” 370 F. Supp. 2d 1173, 1181 (M.D. Ala.

2005). The court held that Section 1681d “applies only to the party which requests preparation of the

report, not the entity which prepared it.” Id.; see also Ben-Hur v. Equifax Info. Servs., Inc., 976 F. Supp.

795, 805 (E.D. Wis. 1997) (same).

Similarly, in Ippolito v. WNS, Inc., the district court dismissed a Section 1681d claim against a

CRA because the section “applies only to a party requesting an investigative consumer report, and not a

consumer reporting agency preparing a report.” 636 F. Supp. 471, 473-74 (N.D. Ill. 1986); see also

Henry v. Forbes, 433 F. Supp. 5, 10 (D. Minn. 1976) (concluding that Section 1681d does not apply to

CRAs because “a duty prescribed simply for ‘a person’ who procures or causes the report to be

prepared ... must indicate the responsibility of the requesting party only”); Middlebrooks v. Retail

Credit Co., 416 F. Supp. 1013, 1017 (N.D. Ga. 1976) (granting CRA summary judgment on Section

1681d(a) claim because the section applies to those procuring reports, not the CRAs preparing the

reports).

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

CASE NO. 3:17-CV-00152-VC

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The fact that First Advantage provided Plaintiff’s background report to Co-Defendants is not a

proper basis for Section 1681d(a)(1) liability. Thus, because Section 1681d(a) does not apply to First

Advantage, Count II fails to state a claim and should be dismissed with prejudice as to First Advantage.5

C. ICRAA Section 1786.16 and CCRAA Section 1785.20(a) Apply Only to Users of

Consumer Reports.

Like the FCRA, the ICRAA and the CCRAA distinguish between users and CRAs. Section

1786.16(a) provides that a person “described in subdivision (d) of Section 1786.12” shall not procure or

cause to be prepared an investigative consumer report unless the person provides a clear and

conspicuous disclosure in writing to the consumer. Cal. Civ. Code § 1786.16(a). Similarly, Section

1786.16(d) provides that persons “described in subdivision (d) of Section 1786.12” constitute “the sole

and exclusive class of persons may cause an investigative consumer report to be prepared.” Cal. Civ.

Code § 1786.16(d).

Section 1786.12(d) lists the persons to whom CRAs may furnish consumer reports. That section

states that a “consumer reporting agency shall only furnish an investigative consumer report ... [t]o a

person that [the CRA] has reason to believe” will “use” the information for one of five permissible

purposes. Id. The plain language distinguishes between the CRA, which furnishes the consumer report,

and the person that uses the report. The CRA is not the user: the CRA furnishes the report to the user.

Because a CRA is not a person “described in subdivision (d) of Section 1786.12,” Section 1786.16 does

not apply to CRAs.

In addition, Section 1785.20(a) provides that, “[p]rior to requesting a consumer credit report for

employment purposes, the user of the report shall provide written notice to the person involved.” Cal.

Civ. Code § 1785.20(a) (emphasis added). The notice must “inform the person that a report will be used”

and “identify the specific basis under subdivision (a) of Section 1024.5 of the Labor Code for use of the

report.” Id. That subdivision expressly applies to employers: “An employer or prospective employer

5

To the extent that Plaintiff asserts a claim under Section 1681g(c)(1) (see Compl. ¶¶ 43-49), that

provision merely directs the government to prepare the summary of rights referenced in Section

1681d(a)(1). See 15 U.S.C. § 1681g(c)(1)(A) (“The Commission shall prepare a model summary of the

rights of consumers under this subchapter.”). Accordingly, Plaintiff cannot state a claim against First

Advantage under Section 1681g(c)(1).

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DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S CLASS ACTION COMPLAINT PURSUANT TO FEDERAL

RULE OF CIVIL PROCEDURE 12(B)(6)

CASE NO. 3:17-CV-00152-VC

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shall not use a consumer credit report for employment purposes unless the position of the person for

whom the report is sought is any of the following [positions].” Cal. Lab. Code § 1024.5(a). Section

1785.20(a) further states that, if the consumer requests a copy of his report “the user shall request that a

copy be provided to the person when the user requests its copy from the credit reporting agency.” Cal.

Civ. Code § 1785.20(a) (emphasis added).

Here, First Advantage is the CRA. First Advantage furnished Plaintiff’s background report; First

Advantage did not “request” or “use” the report, and First Advantage was not Plaintiff’s prospective or

actual employer. Accordingly, Section 1785.20 does not apply to First Advantage. For these reasons,

Counts III and IV fail to state claims against First Advantage and should be dismissed with prejudice as

to First Advantage.

CONCLUSION

Plaintiff’s Class Action Complaint is devoid of particularized allegations, and the claims Plaintiff

asserts cannot be stated against a CRA such as First Advantage. Accordingly, and for the reasons stated,

the Court should dismiss all claims against First Advantage in full and with prejudice and should grant

any other relief the Court deems necessary and just.

DATED: April 17, 2017 Respectfully submitted,

SEYFARTH SHAW LLP

By: /s/ Eric M. Lloyd

Frederick T. Smith*

Esther Slater McDonald*

Eric M. Lloyd

Attorneys for Defendant

FIRST ADVANTAGE BACKGROUND

SERVICES CORP.

* admitted pro hac vice

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