Muha v. Experian Information Solutions ( 2024 )

Filed 10/1/24; certified for publication 10/29/24 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
CHARLOTTE MUHA et al.,
Plaintiffs and Appellants, G062621
v. (Super. Ct. Nos. 30-2021-
01233648; 30-2021-01233482)
EXPERIAN INFORMATION
SOLUTIONS, INC., OPINION
Defendant and Respondent.
Appeal from a judgment of the Superior Court of Orange County,
William D. Claster, Judge. Affirmed.
Ademi, John D. Blythin, and Monteverde & Associates, and
David E. Bower, for Plaintiffs and Appellants.
Jones Day, John A. Vogt, Ryan D. Ball, David A. Phillips,
Nathaniel P. Garrett, for Defendant and Respondent.
Charlotte Muha, Chaning, Graber, and Debra Graber
(collectively “Plaintiffs”) appeal from a judgment of dismissal entered after
the superior court granted a motion for judgment on the pleadings brought by
Experian Information Solutions, Inc. (“Experian”). The superior court granted
Experian’s motion based on Limon v. Circle K Stores Inc. (2022) 84
Cal.App.5th 671 (Limon), which generally held that a plaintiff must allege a
concrete injury to sue in state court. Plaintiffs contend Limon was wrongly
decided. As discussed below, we find Limon persuasive, and conclude that
Plaintiffs lacked standing to sue. Accordingly, we affirm.
PROCEDURAL HISTORY
I.
COMPLAINTS
On November 24, 2021, Plaintiffs’ counsel filed two class action
complaints against Experian in Orange County Superior Court under the
Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq. Charlotte Muha
was the sole named plaintiff in one complaint, while Chaning Graber and
Debra Grabner were the named plaintiffs in the other. As the superior court
noted, aside from the different named plaintiffs, the allegations in both cases
are identical. Subsequently, both cases were consolidated, with the Muha
action deemed the lead case.
The complaints alleged that Plaintiffs are residents of the State
of Wisconsin. In 2020, they requested copies of their consumer report from
Experian, which is a consumer reporting agency (“CRA”) as defined by the
FCRA (15 U.S.C. § 1681(a)). In response, Experian mailed a copy of their
consumer report to each respective Plaintiff. The complaints alleged the
“Summary of Rights” portion of the consumer reports was “inconsistent with
15 U.S.C. § 1681g(c) and Appendix K of Regulation V because it [did] not
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include ‘a statement that the consumer may have additional rights under
State law, and that the consumer may wish to contact a State or local
consumer protection agency or a State attorney general (or the equivalent
thereof) to learn of those rights,’” in violation of 15 U.S.C. § 1681g(c)(2)(D).
Plaintiffs asserted, on information and belief, that “Experian knowingly and
willfully made the decision to remove th[at] portion of the Summary of
Rights.” They prayed for actual damages, statutory damages, and punitive
damages on behalf of themselves and the purported class.
II.
REMOVAL
Experian removed the actions to federal district court. In federal
court, Plaintiffs moved to remand the actions back to state court on the basis
that they lacked standing to sue in federal courts. They note that in the
context of claims almost identical to their FCRA claims, the United States
Supreme Court has held that “[t]o have Article III standing to sue in federal
court, plaintiffs must demonstrate, among other things, that they suffer a
concrete harm.” (TransUnion LLC v. Ramirez (2021) 594 U.S. 413(TransUnion).) Plaintiffs argued, that “[e]ven when a plaintiff alleges a
defendant’s failure to disclose information required by statute caused them
an ‘informational injury,’ that statutory violation does not provide standing
unless the plaintiff identifies ‘downstream consequences” because “[a]n
asserted informational injury that causes no adverse effects cannot satisfy
Article III.” (Id. at p. 442.) Plaintiffs argued they lacked standing under
section 2 of Article III of the United States Constitution (Article III standing)
because they “clearly do[] not allege” that they “suffered any ‘downstream
consequences’” as a result of Experian’s alleged misconduct. Thus, they
claimed, their actions merely seek to “‘vindicate procedural violations of
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applicable credit reporting laws’, and therefore the alleged harm does not
establish Article III standing.” (Winters v. Douglas Emmett, Inc. (C.D. Cal.
2021) 547 F.Supp.3d 901, 908.) Plaintiffs argued remand rather than
dismissal was proper because “‘a lack of Article III standing does not
necessarily preclude a plaintiff from vindicating a federal right in state court.’
[Citations.]”
The federal district court granted Plaintiffs’ remand motion on
the basis that Plaintiffs’ allegations did not establish Article III standing.
The court explained that “Plaintiffs’ FCRA claim is straightforward: they
submitted requests to [Experian] for a copy of their consumer reports and
[Experian] produced reports that were missing information required by law.”
However, “Plaintiffs do not allege that such non-disclosure resulted in any
particular harm to them.” “Plaintiffs have not alleged that they had some
reason to contact state authorities, would have done so if the requisite
information was provided, and incurred some harm or face the substantial
risk of some harm arising from the missed opportunity to contact state
authorities.”
III.
JUDGMENT ON THE PLEADINGS
Following remand, on October 5, 2022, Experian moved for
judgment on the pleadings, arguing Plaintiffs’ FCRA allegations did not state
a cause of action because: (1) Plaintiffs lacked standing under Wisconsin law
since they did not suffer a concrete injury; and (2) their FCRA claim does not
fall within the “zone of interests” that FCRA is designed to protect. In
response, Plaintiffs argued, among other grounds, that California law should
apply and they have standing to sue under California law.
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Before the trial court decided Experian’s motion for judgment on
the pleadings, the Court of Appeal for the Fifth District issued its opinion in
Limon, supra, 84 Cal.App.5th 671. Limon generally held that a plaintiff must
allege or suffer a concrete or particularized injury to bring a claim under the
FRCA in California state courts. (Id. at p. 706.) Thereafter, on November 10,
2022, Experian filed a notice of supplemental authority, in which it asserted
that Limon demonstrates Plaintiffs lack standing under California law.
On November 21, 2022, the superior court continued the hearing
on Experian’s motion for judgment on the pleadings until January 13, 2023.
On January 6, 2023, in a Joint Status Conference Statement Plaintiffs stated
their belief that the superior court should stay Experian’s motion in light of a
petition for review filed in Limon with the California Supreme Court, as well
as Plaintiffs’ own request to depublish the Limon opinion. Plaintiffs argued
that a stay was warranted because “the issue in Limon is similar to the issue
raised in this consolidated action – whether a consumer has standing under
California law to sue when the defendant is alleged to have willfully violated
the plaintiff’s statutory rights, where the plaintiff has not alleged injury
beyond injury to her statutory rights.”
On January 13, 2023, the superior court heard oral argument and
issued a tentative ruling granting Experian’s motion for judgment on the
pleadings. In its tentative ruling, the court explained that, “[l]ike the
employee in Limon, Plaintiffs admitted in federal court that they suffered no
concrete injury as a result of the alleged FCRA violations. They argued they
suffered no ‘downstream consequences’ of the alleged FCRA violations.”
Thus, under California law as set forth in Limon, they lack standing to sue.
Because Limon was still under review at the Supreme Court, however, the
superior court deferred making its tentative ruling its final ruling.
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After the California Supreme Court denied the petition for review
and request for depublication of Limon, on January 31, 2023, Plaintiffs filed a
response to Experian’s notice of supplemental authority. Plaintiffs argued
that Limon does not compel dismissal because Limon erred when it held that
consumers who seek purely statutory damages must prove actual injury.
They contend that because they are entitled to recover statutory damages,
“[t]his is all the ‘beneficial interest’ necessary for standing in California,
notwithstanding Limon.”
The superior court held a second hearing on Experian’s motion
for judgment on the pleadings on March 1, 2023. After the hearing, the court
confirmed its tentative ruling and granted Experian’s motion for judgment on
the pleadings. Judgment in favor of Experian was entered on March 14,
2023. Plaintiffs timely appealed.
DISCUSSION
I.
DUE PROCESS
As an initial matter, we address Plaintiffs’ request that this court
should, “[a]t a bare minimum,” vacate the judgment and remand the matter
because the superior court did not allow the parties to brief Limon. Although
the parties completed their briefing on Experian’s motion before Limon was
issued, the record shows the parties submitted written argument on Limon
before the superior court issued its final ruling. Accordingly, the parties were
afforded due process and remand is not warranted.
II.
STANDING TO SUE
Turning to the sole substantive issue in this matter, Plaintiffs
argue the superior court erred in granting Experian’s motion for judgment on
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the pleadings based on lack of standing because Limon was wrongly decided.
We review the grant of judgment on the pleadings de novo. (Greif v. Sanin
(2022) 74 Cal.App.5th 412, 426; see People for Ethical Operation of
Prosecutors and Law Enforcement v. Spitzer (2020) 53 Cal.App.5th 391, 408
[“standing is typically a question reviewed de novo”].)
A. The FCRA
“Congress enacted [the] FCRA in 1970 to ensure fair and
accurate credit reporting, promote efficiency in the banking system, and
protect consumer privacy.” (Safeco Ins. Co. of America v. Burr (2007) 551 U.S.
47, 52.) The FCRA requires CRAs to disclose certain information to the
consumer upon request. (15 U.S.C. § 1681g.) As relevant in this case, a
disclosure to the consumer must include, inter alia, a generic “statement that
the consumer may have additional rights under State law, and that the
consumer may wish to contact a State or local consumer protection agency or
a State attorney general (or the equivalent thereof) to learn of those rights.”
(15 U.S.C. § 1681g(c)(2)(D).) The FCRA also provides certain enforcement
mechanisms. If a CRA willfully fails to comply with its obligations, including
its disclosure obligations, the FCRA grants a cause of action for actual or
statutory damages. (See 15 U.S.C. § 1681n(a).) Specifically, section
1681n(a)(1)(A) provides that any person who willfully fails to comply with
any requirement imposed by the FCRA is liable to a consumer in an amount
equal to “any actual damages sustained by the consumer as a result of the
failure or damages of not less than $100 and not more than $1,000.” (Ibid.)
In Limon, supra, 84 Cal.App.5th 671, the plaintiff (Ernesto
Limon) alleged his employer violated the FCRA “by failing to provide him
with proper FCRA disclosures when it sought and received his authorization
to obtain a consumer report about him in connection with his application for
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employment, and by actually obtaining the consumer report in reliance on
that authorization.” (Limon, 84 Cal.App.5th at p. 680, fn. omitted.) Limon
initially filed a complaint in federal district court, but after the district court
dismissed the complaint for lack of Article III standing, Limon filed the
complaint in state court. The employer demurred to the complaint on the
ground, among others, that Limon lacked standing to sue because he “did not
allege or suffer any resulting, cognizable harm or injury.” (Ibid.) The trial
court sustained the demurrer, and the appellate court affirmed.
The Limon court held that, “as a general matter, to have
standing to pursue a claim for damages in the courts of California, a plaintiff
must be beneficially interested in the claims he is pursuing.” (Limon, Supra,
84 Cal.App.4th at p. 700.) Although California courts are not constrained by
the case or controversy provisions of Article III of the U.S. Constitution, “they
have also equated the ‘beneficially interested’ test for standing in California
to the injury-in-fact prong of the Article III test for standing in the federal
courts.” (Id. at pp. 697-698 [collecting cases].) The Limon court concluded
Limon “has not alleged a concrete or particularized injury to his privacy
interests sufficient to afford him an interest in pursuing his claims
vigorously.” (Id. at p. 706.) Although Limon alleged an informational injury,
he “failed to allege any concrete injury in connection with his claim of
informational injury.” (Id. at p. 707.) “[U]nder California law, . . . an
informational injury that causes no adverse effect is insufficient to confer
standing upon a private litigant to sue under the FCRA.” (Ibid.) “Thus, his
alleged informational injury is insufficient under California law to confer
upon him standing to pursue his claim in state court.” (Ibid.)
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B. Beneficial Interest
Plaintiffs do not challenge “the general principle that a plaintiff
must have a beneficial interest in the outcome of litigation,” but they argue
the “statutory damages under 15 U.S.C. § 1681n for willful conduct directed
at the consumer are both an interest and a remedy due to the consumer.”
Plaintiffs contend they need not allege actual injury to recover statutory
damages under 15 U.S.C. § 1681n, and argue the Limon court erred in so
concluding. We are not persuaded that Limon was incorrectly decided. (See
The MEGA Life & Health Ins. Co. v. Superior Court (2009) 172 Cal.App.4th
1522, 1529 [although we “are not bound by the decision of a sister Court of
Appeal,” “‘we ordinarily follow the decisions of other districts without good
reason to disagree’”].)
A beneficial interest means the party has a special interest over
and above the interest of the public at large. (State Water Resources Control
Bd. Cases (2006) 136 Cal.App.4th 674, 829.) This standard “is equivalent to
the federal ‘injury in fact’ test, which requires a party to prove by a
preponderance of the evidence that it has suffered ‘an invasion of a legally
protected interest that is “(a) concrete and particularized, and (b) actual or
imminent, not conjectural or hypothetical.”’ [Citation.]” (Associated Builders
& Contractors, Inc. v. San Francisco Airports Com. (1999) 21 Cal.4th 352,
362.) Although the California Supreme Court used the term “concrete
interests” rather than “concrete injury” in Teal v. Superior Court (2014) 60
Cal.4th 595, the high court there reaffirmed that standing to sue requires a
beneficial interest. (See id. at p. 599 [To have standing, “‘[t]he party must be
able to demonstrate that he or she has some such beneficial interest that is
concrete and actual, and not conjectural or hypothetical’”].) Thus, as a
general rule, a plaintiff must allege he or she suffered a concrete “injury,” as
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that term is used in Article III standing jurisprudence, to sue in California
state court.
The general rule that a concrete injury is required before a
plaintiff can bring a claim in state court may be modified by the Legislature.
Under California law, “[t]he prerequisites for standing to assert statutorily
based causes of action are determined from the statutory language, as well as
the underlying legislative intent and the purpose of the statute.” (Boorstein v.
CBS Interactive, Inc. (2013) 222 Cal.App.4th 456, 466 (Boorstein); see White
v. Square, Inc. (2019) 7 Cal.5th 1019, 1024 [“Standing rules for statutes must
be viewed in light of the intent of the Legislature and the purpose of the
enactment”].) Thus, as the Limon court noted, “the Legislature may authorize
public interest lawsuits by a plaintiff even if that plaintiff has not been
injured by the claimed violation.” (Limon, supra, 84 Cal.App.5th at pp. 693-
694.) Plaintiffs do not claim the California Legislature expressly authorized
FCRA claims by plaintiffs who have not been injured by the FCRA violations.
Nor do they claim that the FCRA conferred public interest standing on them.
(See Limon, p. 703 [“We discern no basis upon which to conclude the FCRA
was intended to confer public interest standing upon a private litigant”].)
Rather, Plaintiffs allege they have a beneficial interest because
they suffered an informational injury—the failure to include one required
disclosure—that entitles them to statutory damages. However, as the Limon
court noted, “under California law, . . . an informational injury that causes no
adverse effect is insufficient to confer standing upon a private litigant to sue
under the FCRA.” (Limon, supra, 84 Cal.App.5th at p. 707.) Boorstein, supra,222 Cal.App.4th 456, is illustrative. There, the plaintiff sued a business for
failing to include certain disclosures on its website as required by the Shine
the Light law (the STL law), Civil Code section 1798.83 et seq. (Boorstein, 222
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Cal.App.4th at pp. 460-461.) With respect to his standing to sue under the
STL law, “Plaintiff contend[ed] that he suffered a cognizable injury—an
‘informational injury’—because he did not receive information to which he
was statutorily entitled.” (Id. at p. 472.) The appellate court noted that
“Plaintiff has not cited any California cases recognizing ‘informational
injury,’ and we are not aware of any such cases.” (Ibid.) However, to the
extent “informational injuries may be cognizable in some cases, under the
STL law, a defendant’s failure to post information on its Web site in the
manner the statute requires, without more, does not give rise to a cause of
action.” (Ibid.)
Federal law is in accord. In TransUnion, supra, 594 U.S. 413, the
U.S. Supreme Court analyzed a claim brought under the FCRA for failure to
include required information in a single mailing of the plaintiffs’ credit files.
The high court noted the plaintiffs identified no “downstream consequences”
from failing to receive the required information, and it concluded that an
“‘asserted informational injury that causes no adverse effects cannot satisfy
Article III.’ [Citation.]” (Id. at p. 442.)
The fact that a plaintiff may recover statutory damages without
alleging or proving “actual harm” under the FCRA is irrelevant. As noted, the
FCRA provides that under certain circumstances a plaintiff may recover
actual damages or statutory damages or both. Actual damages require “proof
of actual harm.” (Syed v. M-I, LLC (9th Cir. 2017) 853 F.3d 492, 498, citing
Crabill v. Trans Union, L.L.C. (7th Cir. 2001) 259 F.3d 662, 664 (Crabill).)
Although proof of actual harm is not required to recover statutory damages,
this does not obviate the need for an “injury in fact” when bringing an FCRA
claim purely for statutory damages. As the Crabill court stated: “Many
statutes, notably consumer-protection statutes, authorize the award of
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damages (called ‘statutory damages’) for violations that cause so little
measurable injury that the cost of proving up damages would exceed the
damages themselves, making the right to sue nugatory.” (Crabill, supra, 259
F.3d at p. 665, italics added.) “Injury in fact” is required because “if no injury
is alleged (or, if the allegation is contested, proved, [citation]), . . . there is no
case or controversy between the parties within the meaning of Article III of
the Constitution.” (Ibid.)
Like the plaintiff in TransUnion, supra, 594 U.S. 413, Plaintiffs
in this case represented in federal district court they had not “suffered any
‘downstream consequences’” as a result of Experian’s alleged misconduct.
Accordingly, they did not suffer an “injury in fact” under Article III, and
therefore, they do not have a beneficial interest under California standing
law. Without a beneficial interest, Plaintiffs lack standing to sue in state
court. The superior court properly granted Experian’s motion for judgment on
the pleadings.
DISPOSITION
The judgment is affirmed. Respondent is entitled to costs on
appeal.
DELANEY, J.
WE CONCUR:
SANCHEZ, ACTING P.J.
MOTOIKE, J.
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Filed 10/29/24
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
CHARLOTTE MUHA et al.,
Plaintiffs and Appellants, G062621
v. (Super. Ct. Nos. 30-2021-
01233648; 30-2021-01233482)
EXPERIAN INFORMATION
SOLUTIONS, INC., ORDER
Defendant and Respondent.
Trader Joe’s Company has requested that our opinion, filed on
October 1, 2024, be certified for publication. It appears that our opinion
meets the standards set forth in California Rules of Court, rule 8.1105(c).
The request is GRANTED.
The opinion is ordered published in the Official Reports.
DELANEY, J.
WE CONCUR:
SANCHEZ, ACTING P. J.
MOTOIKE, J.