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Garza v. Confi-Chek, Inc.

United States District Court, E.D. California

January 16, 2020

DAVID GARZA, et al., Plaintiffs,
v.
CONFI-CHEK, INC., et al., Defendants.

          ORDER

         Plaintiffs David Garza, Naser Alzer, Kimberly Kennedy, Amandeep Singh and Samah Haider (collectively “plaintiffs”), on behalf of themselves and others similarly situated, bring this class action suit against defendants Confi-Chek, Inc., Peoplefinders.com, Enformion, Inc. and Advanced Background Checks (collectively “defendants”) for violations of § 1681(e)(b) of the federal Fair Credit Reporting Act (“FCRA”) and chapter 109 of the Texas Business and Commerce Code. First Am. Compl. (“FAC”), ECF No. 26, ¶¶ 1, 59. Confi-Chek, Inc. is the parent or holding company to subsidiary defendants Peoplefinders.com, Enformion, Inc. and Advanced Background Checks. Id. ¶ 17. On February 25, 2019, defendants moved to transfer this action to the Southern District of Texas. Mot., ECF No. 49. Plaintiffs oppose the motion, Opp'n, ECF No. 52, and defendants replied, Reply, ECF No. 54. On May 31, 2019, the court heard oral argument on the motion. After consideration, as explained below, the court GRANTS the motion and orders this matter transferred to the Southern District of Texas for further proceedings.

         I. FACTUAL AND PROCEDURAL BACKGROUND

         A. Factual Background

         Defendants are consumer reporting agencies engaged in the business of “dispersing information concerning consumers for the purpose of furnishing ‘consumer reports' . . . to third parties.” FAC ¶¶ 17-19. Defendants' principal place of business is in Sacramento, California. Id. Defendants operate several background investigation websites that provide personal, and often highly sensitive, information about consumers within their database, including arrest and conviction records, if any. Id. ¶ 24. For a fee, users can obtain a background report on “virtually any person in the United States.” Id. ¶ 25.

         Named plaintiffs, who are citizens of Texas, allege defendants “maintain inadequate polic[ies] or procedures to insure they accurately assemble and provide consumer reports in compliance with the FCRA, especially in the matter of eliminating expunged, expuncted, or sealed criminal records from their websites and reports.” Id. ¶¶ 12-16, 26. Plaintiffs contend defendants are attempting to avoid liability for erroneous or inaccurate information contained in these reports by claiming they are not actually consumer reporting agencies, do not sell consumer reports and are not subject to FCRA regulations. Id. ¶ 28. Regardless of the proper label applied to defendants, plaintiffs contend defendants are providing the same sensitive personal, legal and financial information, compiled using the same data sources, as the major consumer reporting agencies; this information is inevitably used for the same purpose as most users of major reporting agencies, namely consideration of employment, housing, credit worthiness, etc. Id. ¶¶ 29-30. As such, plaintiffs allege defendants are, in all respects, consumer reporting agencies as defined by § 1681a(f) of the FCRA.[1] Id. ¶ 32.

         If defendants are subject to FCRA regulations, as plaintiffs claim, defendants must “follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates, per 15 U.S.C. § 1681e(b).” Id. ¶ 33. Plaintiffs argue that defendants “regularly and illegally publish and report criminal records that have been expunged, expuncted or sealed by court order, ” thus violating FCRA standards. Id. ¶ 34. For example, the claims of three of the named class representatives stem from a Texas-based expungement service that discovered the class members' expunged or expuncted criminal records improperly published on defendants' database. Id. ¶ 35. Among the many harmful effects of defendants' unlawful practices, the most prominent is the consumer's inability to secure employment because of the erroneous criminal records in their reports. Id. ¶ 36.

         Plaintiffs also allege these same practices violate chapter 109 of the Texas Business and Commerce Code, which governs business entities engaged in the publication of criminal record information. Id. ¶¶ 40-42. Because defendants allegedly received notice that certain criminal records have been expunged, yet failed to update the expunction in their own databases, plaintiffs claim defendants contravene Texas law. Id. 42-46.

         B. Procedural History

         Plaintiffs initiated this action on July 16, 2018. ECF No. 1. On November 5, 2018, plaintiffs amended their complaint and now bring three causes of action on behalf of the putative class: (1) violation of FCRA § 1681e(b), (2) violation of Texas Business and Commerce Code sections 109.001-.007, and (3) injunctive relief under Texas law. FAC ¶¶ 66-76. Defendants have moved to transfer this action to the Southern District of Texas because, among other things, the named plaintiffs are Texas citizens and interpretation of Texas law is central to the resolution of this matter. Mot. at 1. Plaintiffs oppose transfer, Opp'n, and defendants have replied, Reply. The court resolves the motion below.

         II. LEGAL STANDARD

         “For the convenience of parties and witnesses, . . . a district court may transfer any civil action to any other district or division where it might have been brought . . . .” 28 U.S.C. § 1404(a). “Section 1404(a) is intended to place discretion in the district court to adjudicate motions for transfer according to an ‘individualized, case-by-case consideration of convenience and fairness.'” Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988) (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)). “In ruling on a motion to transfer pursuant to § 1404(a), the Court must evaluate three elements: (1) convenience of the parties; (2) convenience of the witnesses; and (3) interests of justice.” Safarian v. Maserati North America, Inc., 559 F.Supp.2d 1068, 1071 (C.D. Cal. 2008) (citation omitted). “Once the court determines that venue is proper, the movant must present strong grounds for transferring the action . . . .” Id. (citing Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986)). A motion to transfer venue under section 1404(a) “does not concern the issue ‘whether and where' an action may be properly litigated. It relates solely to the question where, among two or more proper forums, the matter should be litigated to best serve the interests of judicial economy and convenience to the parties.” Injen Tech. Co. v. Advanced Engine Mgmt., 270 F.Supp.2d 1189, 1193 (S.D. Cal. 2003) (citation and emphasis omitted).

         In determining whether transfer is proper, the court must “balance the preference accorded plaintiff's choice of forum with the burden of litigating in an inconvenient forum.” Decker Coal, 805 F.2d at 843 (citations omitted). According to the Ninth Circuit, relevant factors determining whether transfer is appropriate include:

(1) the location where relevant agreements were negotiated and executed, (2) the state that is most familiar with the governing law, (3) the plaintiff's choice of forum, (4) the respective parties' contacts with the forum, (5) the contacts relating to the plaintiff's cause of action in the chosen forum, (6) the differences in the costs of litigation in the two forums, (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses, and (8) the ease of access to sources of proof.

Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000) (citing Stewart Org., 487 U.S. at 29).

         In addition to the above considerations, if venue is to be transferred, “the transferee court must have subject matter jurisdiction and . . . defendants must be subject to personal jurisdiction in the district, and be amenable to service of process there.” Rubio v. Monsanto Co., 181 F.Supp.3d 746, 760 (C.D. Cal. 2016) (citing A.J. Industries, Inc. v. U.S. District Court for Central Dist. of Cal., 503 F.2d 384, 386-88 (9th Cir. 1974)). These requirements are not subject to waiver by the parties; the court must perform an independent examination to determine if transfer is appropriate under section 1404(a). See Id. (“[N]one of the requirements for transfer can be waived by the parties, and the Court cannot transfer the case if § 1404(a) is not satisfied.” (citing Hoffman v. Blaski, 363 U.S. 335, 342-44 (1960)); see also 15 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 3845 (4th ed. 2019) (“Transfer under Section 1404(a) is proper only to a judicial district or division where the plaintiff had a right-independent of the consent or wishes of the defendant-to bring the action.”).

         III. DISCUSSION

         A. Subject Matter Jurisdiction

         The parties do not address subject matter jurisdiction in their briefing; nonetheless, the court must ensure the Southern District of Texas would have subject matter jurisdiction over this litigation if transferred. Rubio, 181 F.Supp.3d at 760. For the same reasons subject matter jurisdiction adheres in this court, namely that plaintiffs' claims invoke 15 U.S.C. § 1681p (FCRA jurisdiction) as well as 28 U.S.C. §§ 1331 (federal question jurisdiction), 1332(a) (diversity jurisdiction), 1332(d)(2) (class action diversity jurisdiction) and 1367 (supplemental jurisdiction), the Southern District of Texas would have jurisdiction over this matter. See FAC ¶¶ 5-9.

         B. Persona ...


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