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Limson v. Bridge Property Management Co.

United States District Court, N.D. California

September 24, 2019

MARYROSE LIMSON, et al., Plaintiffs,
v.
BRIDGE PROPERTY MANAGEMENT COMPANY, Defendant.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS AND DENYING DEFENDANT’S MOTION TO STRIKE RE: DKT. NOS. 10, 11

          JOSEPH C. SPERO, CHIEF MAGISTRATE JUDGE.

         I. INTRODUCTION

         Plaintiffs bring a putative class action against Defendant Bridge Property Management Company (“BPMC”), asserting claims under the federal Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq., the California Investigative Consumer Reporting Agencies Act (“ICRAA”), Cal. Civ. Code § 1786, and California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq. Plaintiffs’ claims are based on BPMC’s alleged failure to follow certain disclosure requirements with respect obtaining consumer background reports about Plaintiffs, who applied to be tenants and residents of a low-income apartment complex managed by BPMC. BPMC brings a Motion to Dismiss for Failure to State a Claim and Lack of Jurisdiction (“Motion to Dismiss”) and a Motion to Strike Complaint (“Motion to Strike”), which came on for hearing on September 6, 2019. For the reasons stated below, the Motion to Dismiss is GRANTED in part and DENIED in part. The Motion to Strike is DENIED.[1]

         II. BACKGROUND

         A. The Complaint

         The named plaintiffs are four adults who applied to be tenants or are residents at the Ivy II at College Park (“the Ivy II”), a low-income apartment complex in Chino, California, and their minor children. Complaint ¶¶ 2, 7. The Ivy II is “own[ed] and manage[d]” by BPMC, which is a corporation formed under the laws of the State of California that has its principal place of business in San Francisco, California. Id. ¶¶ 8, 15. Plaintiffs allege that “Defendants requested, procured, processed, used and/or assisted in acquiring investigative consumer reports on the Plaintiffs as part of their applications for residency at the Ivy II and as part of the annual re-certification of the Plaintiffs to be residents at the Ivy II, without providing proper disclosures in compliance with the FCRA and ICRAA, and without obtaining proper authorization in compliance with the ICRAA.” Id. ¶ 4; see also Id . ¶ 16 (alleging that “Plaintiffs are informed and believe and thereon allege that, throughout the time period at issue, Defendants used investigative consumer reports as part of their applications for rentals and for continuing the residency of tenants”).

         Specifically, Plaintiffs allege that they applied for housing at the Ivy II in June 2017 and paid a $25 application fee. Id. ¶ 17. They allege that as part of that process, they “completed a mandatory multi-page application form” that “included a release and purported authorization permitting the Defendants, at their request, to perform credit and background [checks] to obtain . . . certain private[ ] and personal information from third parties about Plaintiffs.” Id. ¶18. Plaintiffs allege the release and authorization did not comply with the requirements of the FCRA because it “failed to provide applicants . . . with written notice of their rights to request additional disclosures and the written summary of their rights under the FCRA.” Id. ¶ 19. Plaintiffs further allege that BPMC violated the ICRAA as follows:

In violation of the ICRAA, the release/application did not provide a means for Plaintiffs to indicate (i.e., by means of a box to check), allowing them to obtain any report prepared in relation to applications. Defendants obtained investigative consumer reports on Plaintiffs for the applications at the rental property, and never told Plaintiffs that investigative consumer reports would be prepared regarding their character, general reputation, personal characteristics, and mode of living. In addition, Defendants never told Plaintiffs the name or address of the investigative reporting agency that prepared the reports, and neither did Defendants give or allow Plaintiffs to have a summary of the provisions of Civil Code § 1786.22 as required under the ICRAA, which defeated the purpose of the statute and discouraged and/or effectively eliminated the ability of tenants to know and thus obtain access to and copies of the investigative reports on them and their family members.

Id. ¶ 20.

         In their Class Allegations, Plaintiffs seek to assert class claims on behalf of the following class:

All persons in the United States who applied to become tenants and/or completed tenant recertifications, and/or were minors with permission to reside at any of Defendants’ properties within the applicable Class Period.

Id. ¶ 21. They allege the class meets the requirements of Rule 23 of the Federal Rules of Civil Procedure. Id. ¶ 23. Though they are uncertain about the exact number of Class Members, id. ¶ 24, they allege that “[t]here are more than 1000 (one thousand) putative Class Members in many different apartment home complexes owned and/or managed by Defendants throughout the State of California.” Id ¶ 11.

         Plaintiffs assert claims under the ICRAA, the FCRA and the UCL. In their ICRAA claim, Plaintiffs allege that BPMC “willfully violated California Civil Code § 1786.16(b)(1) because [it] failed to provide, by means of a box to check on a written form, the opportunity to request and receive a copy of the consumer background report obtained for Plaintiff[s].” Id. ¶ 36. Plaintiffs further allege that BPMC violated the ICRAA, Cal. Civil Code § 1786.16(a)(3), “by not informing Plaintiffs that investigative consumer reports would be prepared regarding their character, general reputation, personal characteristics, and mode of living” and failing to provide Plaintiffs “with the names and addresses of the investigative consumer reporting agency or agencies that made the reports, ” or “a summary of the provisions of Civil Code § 1786.22.” Id. ¶ 38. Plaintiffs allege that “[a]s a direct and proximate result of the acts and omissions of Defendants as alleged [herein] Plaintiffs have suffered and incurred, and continues to suffer and incur, damages, including but not limited to attorneys’ fees and costs.” Id. ¶ 40. Plaintiffs further allege that “[a]s a direct and proximate result of Defendants’ illegal procurement of background reports through their inadequate disclosures, as alleged herein, Plaintiffs have been injured including, but not limited to, having their privacy and statutory rights invaded in violation of the ICRAA.” Id. ¶ 44. Plaintiffs seek “damages in an amount according to proof at trial” or “statutory damages of $10, 000 per person for each violation” as well as an injunction enjoining BPMC from violating the ICRAA. Id. ¶ 39.

         In their FCRA claim, Plaintiffs allege that BPMC willfully violated 15 U.S.C. § 1681d(a)(1) by failing “to inform Plaintiffs and the putative class of their rights to request additional disclosures, and fail[ing] to provide them the written summary of their rights under the FCRA.” Id. ¶ 47. Plaintiffs allege that BPMC’s “failure to inform Plaintiffs and the putative Class of their rights under 15 U.S.C. § 1682d(b) deprived Plaintiffs and the putative Class of the benefit of information that they had been entitled by law to receive, and runs afoul of the FCRA’s rationale.” Id. ¶ 50. They further allege that BPMC “required Plaintiffs to execute illegal contracts.” Id. ¶ 52. For these violations, the Complaint asserts that Plaintiffs are entitled to statutory damages of $100.00 to $1, 000.00 pursuant to 15 U.S.C. § 1681n(a)(1)(A), punitive damages under 15 U.S.C. § 1681n(a)(2), and reasonable attorneys’ fees and costs pursuant to 15 U.S.C. § 1681n(a)(3). Id. ¶ 53. In addition, Plaintiffs seek a declaration from the Court that BPMC’s “residential contracts and applications are illegal contracts and are in violation of the FCRA. Id. ¶ 55.

         Finally, Plaintiffs assert a claim under the UCL, which prohibits “any unlawful, unfair or fraudulent business act or practice.” Id. ¶ 57. Plaintiffs allege that BPMC engaged in “unlawful conduct” by violating the FCRA and the ICRAA. Id. ¶ 58. They further allege that BPMC engaged in “fraudulent conduct” by “willfully concealing investigative consumer reports from the tenants it was investigating in violation of the FCRA and the ICRAA.” Id. ¶ 60. Plaintiffs allege that “[a]s a direct result of Defendants’ unlawful, unfair, and fraudulent business acts and/or practices, Plaintiffs and Class members suffered injury in fact and lost money or property. Among other things, Plaintiffs were deprived of the benefit of information that they had been entitled by law to receive.” Id. ¶ 64. On their UCL claim, Plaintiffs seek “restitution and injunctive relief against Defendants in the form of an order prohibiting Defendants from engaging in the alleged misconduct described herein [and] monetary damages for what Plaintiffs and Class members paid to apply for tenancy and/or residency at Defendants’ properties.” Id. ¶ 65.

         In addition to the remedies described above, Plaintiffs “request declaratory relief to quiet title to Plaintiffs’ leasehold interests in Defendants’ properties so that Plaintiffs may hold and continue to occupy their residential apartment homes without fear of unlawful eviction.” Id. ¶ 1.

         Plaintiffs assert that the Court has jurisdiction over the FCRA claim under 28 U.S.C. § 1331 (federal question). Id. ¶ 10. They assert that the Court has jurisdiction over the California State law claims under the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(2), and on the basis of supplemental jurisdiction under 28 U.S.C. § 1367. Id. ¶¶ 11-12.

         B. The Motions

         1. The Motion to Dismiss

          In the Motion to Dismiss, BPMC argues that Plaintiffs’ FCRA and ICRAA claims fail for lack of standing under Article III of the U.S. Constitution, citing the Supreme Court’s decision in Spokeo v. Robins, 136 S.Ct. 1540 (2016). Motion to Dismiss at 15-18. According to BPMC, Plaintiffs allege only two forms of harm: invasion of privacy and informational. Id. at 17. As to the former, BPMC argues that because Plaintiffs authorized it to access their information they have no claim for invasion of privacy. Id. (citing Larroque v. First Advantage LNS Screening Solutions, Inc., No. 15-4684 JSC, 2016 WL 4577257, at *4 (N.D. Cal. Sept. 2, 2016)). Likewise, BPMC asserts, to state a claim based on informational injury Plaintiffs must allege that they were not aware that they were authorizing BPMC to access their information, which they do not allege. Id. (citing Marc Marchioli v. Pre-employ.com, Inc., Eisenhower Med. Ctr., et al., No. EDCV 16-cv-2305 JGB (DTBx), 2017 WL 7049527 (C.D. Cal. June 30, 2017)). Because Plaintiffs allege only a “bare procedural violation, ” BPMC argues, they do not have standing to assert their claims under the FCRA and ICRAA. Id. at 18.

         BPMC also argues that Plaintiffs fail to state a claim under Rule 12(b)(6) as to their FCRA claim because they have alleged no facts showing that the consumer reports obtained by BPMC fall under the FCRA’s definition of an “investigative consumer report.” Id. at 18-21. In contrast to the definition of the same term under the ICRAA, an “investigative consumer report” under federal law must be “obtained through personal interviews.” Id. (quoting 15 U.S.C. § 1681a(e)). According to BPMC, Plaintiffs have not alleged any facts showing that this requirement is satisfied. Id. Rather, BPMC contends, Plaintiffs have glossed over this difference, suggesting that under both state and federal law, a report constitutes an “investigative consumer report” so long as it meets the requirement (applicable under both the FCRA and the ICRAA) that it contain “information on a consumer’s character, general reputation, personal characteristics, or mode of living.” Id. (citing Complaint ¶ 5). Because Plaintiffs have included only conclusory allegations that BPMC obtained “investigative consumer reports” about them, their FCRA should be dismissed under Rule 12(b)(6), BPMC argues. Id. at 21.

         Next, BPMC argues that in the absence of a viable federal claim the remaining state law claims should be dismissed for lack of federal jurisdiction. Id. at 21-23. First, to the extent that Plaintiffs rely on jurisdiction under CAFA, they have not demonstrated that CAFA’s $5 million amount-in-controversy requirement has been met. Id. at 22. BPMC notes that to the extent that Plaintiffs rely on the statutory damages that they seek under the ICRAA to establish that the amount-in-controversy requirement is met, Plaintiffs fail to meet their burden because the statute does not provide for statutory damages in the case of class actions and Plaintiffs have not alleged any actual damages resulted from BPMC’s alleged violations. Id. (citing Cal. Civ. Code § 1786.50(a)). BPMC further asserts that the Court should not exercise supplemental jurisdiction under 28 U.S.C. § 1367(c)(3) over Plaintiffs’ state law claims if it dismisses Plaintiffs’ federal claim. Id. at 23.

         Finally, BPMC challenges Plaintiffs’ UCL claim on the grounds that: 1) Plaintiffs have not alleged economic injury, which is required to establish standing under the UCL; and 2) the claim fails because it is “tethered” to the FCRA and ICRAA claims and therefore fails for the same reasons those claims fail.

         BPMC asks the Court to award attorneys’ fees in connection with the instant motion under the FCRA, arguing that the law is clear that Plaintiffs must allege a concrete injury and Plaintiffs’ filing of the Complaint therefore was in bad faith or for the purposes of harassment. Id. at 24.

         2. The Motion to Strike

          In the Motion to Strike, BPMC argues that Plaintiffs’ allegations in Paragraph 1 of the Complaint, seeking “declaratory relief to quiet title in Plaintiffs’ leasehold interest” should be stricken because no quiet title claim has been asserted and there are no allegations suggesting such relief is appropriate. Motion to Strike at 3-4. Consequently, BPMC contends, these allegations are immaterial and redundant. Id. BPMC also asks the Court to strike allegation in the Complaint referring to an “illegal contract” and asking the Court for a “declaration . . . that Defendants’ residential contracts and applications are illegal contracts.” Id. at 4-5. According to BPMC, these allegations should be stricken because violation of the FCRA and/or the ICRAA does not invalidate lease agreements or other contracts. Id.

         III.ANALYSIS

         A. Legal Standards

         1. Rule 12(b)(1)

         Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Accordingly, “federal courts have a continuing independent obligation to determine whether subject-matter jurisdiction exists” over a given claim. Leeson v. Transamerica Disability Income Plan, 671 F.3d 969, 975 (9th Cir. 2012) (internal quotation marks and citations omitted). Rule 12(b)(1) allows defendants to move to dismiss a claim for lack of subject-matter jurisdiction. Fed.R.Civ.P. 12(b)(1). On a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1), it is the ...


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