United States District Court, N.D. California
ORDER GRANTING MOTION TO REMAND; DENYING MOTION TO
STAY AS MOOT Re: Dkt. Nos. 13, 32, 38, 41
PHYLLIS J. HAMILTON United States District Judge
motion to remand and defendant's motion to stay came on
for hearing before this court on June 28, 2017. Plaintiff
appeared through her counsel, Mark Greenstone. Defendant
appeared through its counsel, Michael Burns and Robert Szyba.
Having read the papers filed by the parties and carefully
considered their arguments and the relevant legal authority,
and good cause appearing, the court hereby GRANTS the motion
to remand for the reasons that follow. Given this
disposition, the motion to stay the case is DENIED AS MOOT.
a putative class action under the Fair Credit Reporting Act
(“FCRA”), which was removed, for the second time,
from Sonoma County Superior Court on March 31, 2017. Dkt. 1.
Plaintiff Michelle Bercut alleges that defendant Michaels
Stores, Inc. (“Michaels”) procured consumer
reports in conjunction with its employment applications, yet
failed to comply with FCRA's disclosure requirements for
obtaining such reports. Compl. ¶¶ 2, 62, 71. The
basis for removal is both federal question and CAFA
jurisdiction. Notice of Removal ¶ 12.
Bercut alleges that in the fall of 2014 she applied to work
for Michaels by completing an online application. Compl.
¶ 32. In conjunction with that application, Michaels
used a third party to procure consumer and/or investigative
reports within the meaning of FCRA, as part of its background
check for potential employees. Compl. ¶¶ 2-3,
such reports is not unlawful, but is subject to particular
disclosure requirements under FCRA. Compl. ¶¶ 3,
22-30. One of the concerns that motivated FCRA was that
“prospective employers were obtaining and using
consumer reports in a manner that violated job
applicants' privacy rights.” See Syed v. M-I,
LLC, 853 F.3d 492, 496-97 (9th Cir. 2017) (citing S.
Rep. No. 104-185 at 35 (1995)). In response, Congress enacted
the provision now codified at 15 U.S.C. §
1681b(b)(2)(A), which prohibits the procurement of consumer
reports “for employment purposes” unless certain
specified procedures are followed. Id.
1681b(b)(2)(A) requires a “clear and conspicuous”
written disclosure before a consumer report is procured for
employment purposes, which must be contained “in a
document that consists solely of the disclosure.” 15
U.S.C. § 1681b(b)(2)(A)(i). The complaint refers to this
provision as FCRA's “stand-alone disclosure”
requirement. See Compl. ¶ 24. Plaintiff alleges
that under judicial and FTC guidance, the stand-alone
disclosure may not be part of the employment application
document, and may not include a liability release. Compl.
¶¶ 26-27. FCRA further requires that the consumer
authorize the procurement of the consumer report “in
writing.” 15 U.S.C. § 1681b(b)(2)(A)(ii).
alleges that Michaels' online application consisted of a
single form, violating FCRA's stand-alone disclosure
requirement. Compl. ¶¶ 37-38. The application does
include a hyperlink to a purported “disclosure form,
” but plaintiff alleges that this is insufficient
because the disclosure was not “clear and
conspicuous” and included “extraneous
information.” Compl. ¶¶ 38-39. Plaintiff also
alleges that the application's electronic signature
procedure was not an effective “authorization”
under FCRA for the procurement of a consumer report. Compl.
seeks to represent a nationwide class of “all employees
or prospective employees of [Michaels] who applied for a job
by filling out Defendant's online Employment Application,
with respect to whom Defendants procured or caused a consumer
report to be procured, during the two years prior to the
filing of the Complaint in this action through the date of
certification.” Compl. ¶ 55.
asserts two causes of action under FCRA, one based on
defendant's alleged failure to make the required
disclosures, and one based on defendant's alleged failure
to obtain the required authorization. Plaintiff seeks
statutory and punitive damages, as well as attorneys'
fees and costs. Compl. ¶¶ 67-69, 73-75.
case has an unusual procedural history. The complaint was
originally filed on June 8, 2015 in California Superior Court
for Sonoma County. Notice of Removal ¶ 1. Michaels first
removed the matter to the Northern District of California on
June 23, 2015. Id. ¶ 3. Less than three weeks
later, the Judicial Panel for Multidistrict Litigation
identified the case as a tag-along action. See Bercut v.
Michaels Stores, Inc., No. 4:15-cv-02913-HSG, Dkt. 14.
On July 14, 2015, the case was transferred to MDL No. 2615,
In re Michaels Stores, Inc., FCRA Litigation (the
“In re Michaels MDL” or “the
MDL”) before the Hon. Kevin McNulty in the District of
New Jersey. Notice of Removal ¶ 4.
In re Michaels MDL was subsequently stayed pending
the Supreme Court's decision in Spokeo v.
Robins, 136 S.Ct. 1540 (2016). Notice of Removal ¶
6. Following the Supreme Court's May 16, 2016 decision in
Spokeo, Michaels successfully moved to dismiss
plaintiffs' claims based on a lack of Article III