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Lagos v. Leland Stanford Junior University

United States District Court, N.D. California

June 7, 2017

THOMAS LAGOS, Plaintiff,
v.
THE LELAND STANFORD JUNIOR UNIVERSITY, Defendant.

          ORDER DENYING MOTION FOR LEAVE TO FILE MOTION FOR RECONSIDERATION Re: Dkt., 79

          KANDIS A. WESTMORE United States Magistrate Judge

         Plaintiff Thomas Lagos filed the instant putative class action against Defendant The Leland Stanford Junior University, alleging that Defendant violated the Fair Credit Reporting Act ("FCRA"). (First Amended Compl., FAC, Dkt. No. 30.) The parties entered into a settlement, and on January 12, 2017, Plaintiff filed a motion for preliminary approval of the class action settlement. (Dkt. No. 63.) On March 24, 2017, the Court denied the motion for preliminary approval. (Ord., Dkt. No. 73.) Defendant now moves for leave to file a motion for reconsideration of that order. (Def.'s Mot., Dkt. No. 79.) Having considered the papers filed by the parties and the relevant legal authority, the Court DENIES the motion for leave to file a motion for reconsideration.

         I. BACKGROUND

         The FCRA generally prohibits an employer from procuring or causing to be procured a consumer report for employment purposes, 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). When a violation is "willful, " the FCRA provides for statutory damages "of not less than $100 and not more than $1, 000." 15 U.S.C. § 1681n(1)(A).

         In January 2015, Plaintiff applied for a job with Defendant. (FAC ¶ 14.) "As part of the application process, [Defendant] procured or caused to be procured a consumer report regarding Plaintiff from HireRight." (Id.) Plaintiff alleges that Defendant "willfully" violated the FCRA when it procured or caused to be procured a consumer report without making the required disclosure "'in a document that consists solely of the disclosure.'" (FAC ¶¶ 15-16 (quoting 15 U.S.C. § 1681b(b)(2)(i)).) Specifically, Plaintiff signed a four-page disclosure and authorization form; the form's first page states that Defendant may request a consumer report assembled by HireRight or another consumer reporting agency, and explains the type of information that may be contained in the background report. (See Dkt. No. 7-1, Exh. A at 1.) The form's second and third pages are entitled "Additional State Law Notices, " and contain notices relating to consumer reports for applicants, employees, or contractors in California, Maine, Massachusetts, Minnesota, New Jersey, New York and Washington state. (Id. at 2-3.) The last page is entitled "Authorization of Background Investigation, " which includes a consent to the preparation of a background check. (Id. at 4.) The second paragraph contains the disclaimer: "I also understand that nothing herein shall be construed as an offer of employment or contract for services." (Id.)

         On October 6, 2015, Defendant moved to dismiss Plaintiff's claim, on the grounds that: (1) Defendant's disclosure complied with FCRA requirements, and (2) challenging Plaintiff's ability to show that Defendant "willfully" violated the FCRA. (Dkt. No. 7 at 2.) On December 4, 2015, Judge Grewal denied Defendant's motion to dismiss, finding that Plaintiff had adequately alleged a willful violation. (Dkt. No. 24 at 1, 4-5.)

         On December 28, 2015, Defendant moved to stay the case pending the Supreme Court's decision in Spokeo, Inc. v. Robins. (Dkt. No. 27.) The parties then stipulated to stay the case. (Dkt. No. 28.) After the Supreme Court issued its decision in Spokeo, Judge Grewal lifted the stay on May 20, 2016. (Dkt. No. 34.) The case was then reassigned to the undersigned. (Dkt. No. 36.)

         On November 22, 2016, the parties informed the Court that the case had settled. (Dkt. No.53 at 1.) Plaintiff then filed a motion for preliminary approval of the class action settlement. The settlement was for $400, 000; once the attorney's fees, costs, incentive award, and class administration costs were excluded, the net settlement fund was estimated to be $212, 167, resulting in a $13.82 recovery per class member. (Dkt. No. 63 at 5.) This amount represented an 86% discount from the minimum statutory penalty.

         On February 17, 2017, the Court requested supplemental briefing from the parties, including on "why a discount of over 70% is warranted in this case, i.e., the specific risks faced by Plaintiff in moving forward with this case, the complexity and likely duration of further litigation, and the risk of maintaining class action status." (Dkt. No. 66 at 2.) On March 2, 2017, the parties filed a joint supplemental brief. In discussing the proposed discount, the parties identified the Ninth Circuit decision, Syed v. M-I, LLC, 853 F.3d 492 (9th Cir. 2017), which had been decided on January 20, 2017, after the parties entered into the settlement agreement and filed the motion for preliminary approval. (Dkt. No. 68 at 10-11.) Defendant argued, however, that the Court should not consider Syed because it was a "'post-settlement change in the law, '" which would "'not alter the binding nature of the parties' settlement agreement.'" (Id. at 11 (quoting Whitlock v. FSL Mgmt., LLC, 843 F.3d 1084, 1089 (6th Cir. 2016).) Further, the parties disputed whether Syed affected whether the settlement was within the range of reasonableness. (Id. at 12-13.)

         On March 24, 2017, the Court denied the motion for preliminary approval. First, the Court considered whether the proposed settlement fell within the range of reasonableness based on pre-Syed law, stating that based on Judge Grewal's prior ruling, "it is not clear to the Court that an 86% discount was justified by the risks in this case." (Ord. at 6-9.) Second, the Court considered whether the proposed settlement fell within the range of reasonableness based on Syed. (Ord. at 9-12.) The Court addressed Defendant's contention that the Court should not consider Syed, explaining that its consideration of Syed did not go to "whether the settlement agreement is binding or in violation of Rule 23, " but "the strengths and weaknesses of Plaintiff's case, which in turn directly informs whether the settlement -- which includes an 86% discount on the value of the class's claims -- fall within the range of reasonableness." (Id. at 10.) The Court found it was appropriate to consider Syed, and concluded that in light of this binding authority, Plaintiff's case "[wa]s not so weak so as to justify an 86% discount." (Id. at 12.)

         On May 1, 2017, Defendant filed the instant motion for leave to file a motion for reconsideration of the Court's order denying preliminary approval. On May 3, 2017, Plaintiff filed an opposition. (Plf.'s Opp'n, Dkt. No. 80.) On May 8, 2017, Defendant filed a reply. (Def.'s Reply, Dkt. No. 81.)

         II. ...


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