Judge Keri G. Katz, Case Number: 37-2022-00041830-CU-NP-CTL, Date: 2024-01-26 Tentative Ruling

Judge: Keri G. Katz, Case: 37-2022-00041830-CU-NP-CTL, Date: 2024-01-26 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - January 25, 2024

01/26/2024 08:30:00 AM C-74 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Keri Katz

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Civil - Unlimited Non-PI/PD/WD tort - Other Demurrer / Motion to Strike 37-2022-00041830-CU-NP-CTL FLORES VS ACCURATE BACKGROUND LLC [IMAGED] CAUSAL DOCUMENT/DATE FILED:

The court addresses the evidentiary issues. Defendant Accurate Background, LLC's request for judicial notice is DENIED. Plaintiff's request for judicial notice is DENIED.

The court then rules as follows. Defendant Accurate Background, LLC's demurrer to Plaintiff's First Amended Complaint is SUSTAINED WITHOUT LEAVE TO AMEND as to the Violations of Civ. Code §§ 1786.10, 1786.11, 1786.16 and 1786.22 for Failure to Provide Investigative Consumer Report in a Timely Manner, Violation of Civ. Code § 1786.12(e) For Failure to Obtain a Certification Pursuant To § 1786.16(a)(4) and Violation of Civ. Code § 1786.12(d) For Failure to Protect a Consumer's Privacy causes of action and OVERRULED as to the Violations of Civ. Code §1786.29(b) For Failure to Provide Statutorily Required Notice and Violation of Civ. Code § 1786.10(c) for Failure to Identify All Recipients of Plaintiff's Investigative Consumer Report causes of action.

Preliminarily, the court is not persuaded by Plaintiff's 'backdoor serial Demurrer' argument. On Accurate's motion for judgment on the pleadings the court ruled exclusively on the standing issue and did not reach the individual cause of action arguments. The court addresses those arguments on this demurrer.

(1) Violations of Civ. Code §§ 1786.10, 1786.11, 1786.16 and 1786.22 for Failure to Provide Investigative Consumer Report in a Timely Manner Accurate's demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.

Plaintiff concedes in opposition that none of statutes cited in the FAC as to this cause of action set forth a specific timeframe for an investigative consumer reporting agency to provide an investigative consumer report in response to a request from a consumer. Absent a specific timeframe, the court finds the FAC fails to allege facts sufficient to support a cause of action for failure to provide investigative consumer report in a timely manner.

The court is not persuaded by any of the arguments Plaintiff raises in opposition. Plaintiff fails to cite to any case authority to support Plaintiff's 'expeditious manner' argument. Plaintiff also relies on 'Civil Code § 1786.16 subdivision (a)(5)(1)' a subsection which does not exist. It appears Plaintiff may instead be relying on CC § 1786.16(a)(5) and subdivision (b)(1) which provide: (a) Any person described in subdivision (d) of Section 1786.12 shall not procure or cause to be prepared Calendar No.: Event ID: TENTATIVE RULINGS

3024305 CASE NUMBER: CASE TITLE: FLORES VS ACCURATE BACKGROUND LLC [IMAGED] 37-2022-00041830-CU-NP-CTL an investigative consumer report unless the following applicable conditions are met: . . . .

5) The person procuring the report or causing it to be prepared agrees to provide a copy of the report to the subject of the investigation, as provided in subdivision (b).

b) Any person described in subdivision (d) of Section 1786.12 who requests an investigative consumer report, in accordance with subdivision (a) regarding that consumer, shall do the following: - Provide the consumer a means by which the consumer may indicate on a written form, by means of a box to check, that the consumer wishes to receive a copy of any report that is prepared. If the consumer wishes to receive a copy of the report, the recipient of the report shall send a copy of the report to the consumer within three business days of the date that the report is provided to the recipient, who may contract with any other entity to send a copy to the consumer. The notice to request the report may be contained on either the disclosure form, as required by subdivision (a), or a separate consent form. The copy of the report shall contain the name, address, and telephone number of the person who issued the report and how to contact them.

. . . .

Plaintiff's reading of these subdivisions as requiring an investigative reporting agency, such as Accurate in this case, to comply with the three business day requirement of CC § 1786.16(b)(1) is directly at odds with the plain meaning of the statute. When reading subdivision (a)(5) together with subdivision (b)(1), and CC § 1786.12(d) referenced therein, it is clear that the three business day requirement applies, not to the investigative reporting agency, but to the person who procured the report and received the report – in this case Plaintiff's prospective employer. Plaintiff's 'recipient' analysis is similarly at odds with the plain meaning of CC § 1786.16. Plaintiff's citation to Marbury v. Madison (1803) 5 U.S. 137 provides no support for Plaintiff's arguments.

Although Plaintiff requests leave to amend Plaintiff fails to proffer any facts to cure this pleading deficiency. Therefore, the court finds Plaintiff fails to demonstrate a reasonable probability the complaint can be amended to plead a basis for liability against Accurate under this cause of action. Accordingly, Accurate's demurrer is SUSTAINED WITHOUT LEAVE TO AMEND. Doe v. United States Youth Soccer Assn., Inc. (2017) 8 Cal.App.5th 1118, 1143 citing Titus v. Canyon Lake Property Owners Assn. (2004) 118 Cal.App.4th 906, 917. See also, Goodman v. Kennedy (1976) 18 Cal.3d 335, 349; Ruinello v. Murray (1951) 36 Cal.2d 687, 690.

(2) Violations of Civ. Code §1786.29(b) For Failure to Provide Statutorily Required Notice Accurate's demurrer is OVERRULED.

Accurate's demurrer to this cause of action is premised on the court taking judicial notice of Exhibit A described in Accurate's request for judicial notice as a copy of 'the correspondence Accurate provided to Plaintiff on September 26, 2022, which contains Plaintiff's consumer report copy . . . .' As set forth above, Accurate's request for judicial notice is DENIED. Although it appears Plaintiff does not dispute portions of Accurate's Exhibit A, without an unqualified affirmative representation from Plaintiff that Plaintiff does not dispute the contents of any portion of Exhibit A, the court finds Accurate fails to establish grounds for the judicial notice it seeks.

(3) Violation of Civ. Code § 1786.10(c) for Failure to Identify All Recipients of Plaintiff's Investigative Consumer Report Calendar No.: Event ID: TENTATIVE RULINGS

3024305 CASE NUMBER: CASE TITLE: FLORES VS ACCURATE BACKGROUND LLC [IMAGED] 37-2022-00041830-CU-NP-CTL Accurate's demurrer is OVERRULED.

To support this cause of action the FAC alleges that Accurate 'misidentified the recipients of Plaintiff's investigative consumer report in violation of subdivisions (c) and (d) of Civ. Code § 1786.10' [FAC ¶ 67].

Pursuant to CC § 1786.10 . . . .

(c) The investigative consumer reporting agency shall also identify the recipients of any investigative consumer report on the consumer that the investigative consumer reporting agency has furnished . . . .

(d) The identification of a recipient under subdivision (c) shall include the name of the recipient or, if applicable, the trade name (written in full) under which the recipient conducts business and, upon request of the consumer, the address and telephone number of the recipient.

. . . .

As pled, the three entities allegedly identified by Accurate are 'AIMBRIDGE PARENT, INC.' 'Evolution' and 'Hard Rock Hotel San Diego' [FAC ¶ 62]. The FAC goes on to allege: Plaintiff is informed and believes and therefore aver[s] there is no such entity known just as 'Evolution' or 'Hard [Rock] Hotel San Diego' ' [FAC ¶ 64]. In its moving papers Accurate provides a description of the role of 'Ambridge Parent, Inc.' 'Evolution' and 'Hard Rock Hotel San Diego' in this matter. However such information is beyond the scope of the pleadings and, as such, not properly considered on demurrer. Similarly, the issue of whether the entities identified by Accurate were identified by Accurate by each entity's name or trade name as required under subdivision (d) is a factual issue not properly resolved on demurrer.

(4) Violation of Civ. Code § 1786.12(e) For Failure to Obtain a Certification Pursuant To § 1786.16(a)(4) Accurate's demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.

Pursuant to CC § 1786.12(e) (e) An investigative consumer reporting agency shall not prepare or furnish an investigative consumer report to a person described in subdivision (d) unless the agency has received the certification under paragraph (4) of subdivision (a) of Section 1786.16 from the person requesting the report.

CC § 1786.16(a)(4) provides: (4) The person procuring or causing the request to be made shall certify to the investigative consumer reporting agency that the person has made the applicable disclosures to the consumer required by this subdivision and that the person will comply with subdivision (b).

The FAC alleges: 86. Notwithstanding the foregoing and via the discovery process, Plaintiff via counsel obtained evidence that Plaintiff's previous employer did not provide the required certification to the Defendant before Defendant procured Plaintiff's report and provided the report to Plaintiff's prospective employer in compliance with Civ. Code § 1786.12(e).

87. Based thereon, Plaintiff alleges that Defendant violated subdivision (e) of Civ. Code § 1786.12.

The court is persuaded by federal authorities interpreting the analogous Fair Credit Reporting Act Calendar No.: Event ID: TENTATIVE RULINGS

3024305 CASE NUMBER: CASE TITLE: FLORES VS ACCURATE BACKGROUND LLC [IMAGED] 37-2022-00041830-CU-NP-CTL (FCRA) which similarly 'governs 'consumer reporting agencies' . . . which maintain credit information on consumers and provide it to third parties. See 15 U.S.C. § 1681.' Washington v. CSC Credit Services Inc. (5th Cir. 2000) 199 F.3d 263, 265. Washington explains, [t]he crucial issue in this case is whether a plaintiff can bring an action for failure to 'maintain [the] reasonable procedures' required by § 1681e(a) without first showing that a report was disclosed in violation of § 1681b. The district court found that a plaintiff claiming a violation of § 1861e does not need to show improper disclosure in violation of § 1681b, but instead only needs to show that the reporting agency did not maintain the required reasonable procedures and that it released a report to an insurance company. See Washington, 178 F.R.D. at 99–100.

The only other two courts which have considered this issue disagree with the district court's interpretation of § 1861e. In Andrews v. Trans Union Corp., 7 F.Supp.2d 1056 (C.D.Cal.1998), the court found that where a 'disclosure was made for a permissible purpose [under § 1681b], then the inquiry ends, and no investigation of the reasonableness of the consumer reporting agency's procedures are necessary.' Id. at 1067. The court reasoned that '[i]t makes no sense for a consumer whose file was disclosed only for permissible purposes to nevertheless be able to challenge the reasonableness of the consumer reporting agency's procedures.' Id. Similarly, in Middlebrooks v. Retail Credit Co., 416 F.Supp. 1013 (N.D.Ga.1976), the court endorsed the proposition that, 'once it is shown that the information was relevant and for a permissible purpose, this court need not inquire into the reasonableness of the underlying procedures adopted by the agency to assure that the information will be furnished for purposes defined as permissible under the Act.' Id. at 1016.

We find these cases persuasive. Section 1681e(a) requires reporting agencies to 'maintain reasonable procedures designed ... to limit the furnishing of consumer reports to the purposes listed under section 1681b.' 15 U.S.C. § 1681e(a). As the above-cited courts reason, this purpose is not furthered unless a plaintiff suffers the harm the procedures are meant to prevent.

Similarly, Congress has stated that it adopted the 'reasonable procedures' requirement to 'meet[ ] the needs of commerce for consumer credit ... in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information.' 15 U.S.C. § 1681(b) (emphasis added). Congress identified actual injuries-including breaches of 'confidentiality' and '[im]proper utilization'-which only occur if there is an improper disclosure, suggesting that a general claim of improper procedures is by itself inadequate. Id. In light of the purposes of the FCRA, we find that the actionable harm the FCRA envisions is improper disclosure, not the mere risk of improper disclosure that arises when 'reasonable procedures' are not followed and disclosures are made. Accordingly, a plaintiff bringing a claim that a reporting agency violated the 'reasonable procedures' requirement of § 1681e must first show that the reporting agency released the report in violation of § 1681b.

Washington, 199 F.3d 266-267.

As in Washington there are no allegations in the FAC of an improper disclosure or that the information contained within the report was inaccurate. Absent such allegations, this cause of action fails.

The court is not persuaded by Plaintiff's attempts to distinguish the FCRA from the Investigative Consumer Reporting Agencies Act (ICRAA). Similar to the FCRA, the purpose of the ICRAA is to 'require that investigative consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for employment . . . information . . . in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of the information in accordance with the requirements of this title.' As in Washington, in light of the purpose of the ICRAA, the actionable harm the ICRAA envisions is actual improper disclosure, not the risk of improper disclosure that arises when 'reasonable procedures', such as the certification requirement, are not followed. Under the analysis in Washington, absent allegations that Accurate made an improper Calendar No.: Event ID: TENTATIVE RULINGS

3024305 CASE NUMBER: CASE TITLE: FLORES VS ACCURATE BACKGROUND LLC [IMAGED] 37-2022-00041830-CU-NP-CTL disclosure, this cause of action is not viable.

(5) Violation of Civ. Code §1786.12(d) For Failure to Protect a Consumer's Privacy Accurate's demurrer is SUSTAINED WITHOUT LEAVE TO AMEND.

Pursuant to CC § 1786.12: An investigative consumer reporting agency shall only furnish an investigative consumer report under the following circumstances: . . . .

(d) To a person that it has reason to believe: (1) Intends to use the information for employment purposes; or (2) Intends to use the information serving as a factor in determining a consumer's eligibility for insurance or the rate for any insurance; or (3) Intends to use the information in connection with a determination of the consumer's eligibility for a license or other benefit granted by a governmental instrumentality required by law to consider the applicant's financial responsibility or status; or (4) Intends to use the information in connection with an order of a court of competent jurisdiction to provide support where the imposition or enforcement of the order involves the consumer; or (5) Intends to use the information in connection with the hiring of a dwelling unit, as defined in subdivision (c) of Section 1940.

. . . .

The FAC alleges: . . . .

98. Exhibit 2 expressly provides that AIMBRIDGE PARENT, INC. was going to procure his investigative consumer report pursuant to the ICRAA.

99. Notwithstanding the clear instructions of Exhibit 2, Defendant shared Plaintiff's statutorily protected private information with at least two other recipients whose names are not identified in Exhibit 2 in violation of Civ. Code § 1786.12.

100. Plaintiff maintains Defendant's failure to comply with the ICRAA above constitutes a violation of his right to privacy because Plaintiff has the right to know the names of everyone who intended to possess his investigative consumer report.

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3024305 CASE NUMBER: CASE TITLE: FLORES VS ACCURATE BACKGROUND LLC [IMAGED] 37-2022-00041830-CU-NP-CTL 101. Plaintiff alleges that Defendant violated Plaintiff's right to privacy because he had only given AIMBRIDGE PARENT, INC. permission to procure his report and believed that Defendant would not share his report with any third party. See Exhibit 2.

. . . .

However, the FAC fails to allege that Accurate furnished an investigative consumer report to the 'two other recipients.' Nor does the FAC allege that the 'two other recipients' were not persons to whom an investigative consumer report is properly furnished by an investigative consumer reporting agency under CC § 1786.12(d). Absent such allegations, this cause of action fails.

Accurate shall answer within 10 days of this ruling.

If this tentative ruling is confirmed the Minute Order will be the final order of the court and the parties shall not submit any further order on this motion.

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