Larson v. Trans Union, LLC

BRIAN DOUGLAS LARSON, Plaintiff, v. TRANS UNION, LLC, Defendant.

Case No. 12-cv-05726-WHO

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

June 26, 2015

ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT; STAYING CASE; AND TENTATIVELY GRANTING PLAINTIFF'S MOTION FOR CLASS CERTIFICATION

Re: Dkt. Nos. 62, 63, 64, 66, 70, 72, 79

INTRODUCTION

Plaintiff Brian Larson brings this putative class action against defendant Trans Union, LLC ("Trans Union"), alleging that Trans Union violated the Fair Credit Reporting Act ("FCRA") by providing him and approximately 18,000 putative class members with file disclosures that were not "clear and accurate" within the meaning of 15 U.S.C. § 1681g. He now moves for class certification. Trans Union opposes and moves for summary judgment on the ground that Larson was not entitled to the free file disclosure on which his claims are based.

Trans Union's motion is based on a misreading of the interaction between section 1681g and another FCRA provision, 15 U.S.C. § 1681j. Its motion is DENIED. I am tentatively inclined, based on current law, to grant Larson's motion for class certification. However, in light of the Supreme Court's recent grant of the petition for writ of certiorari in Robins v. Spokeo, Inc., 742 F.3d 409 (9th Cir. 2014), I will STAY proceedings in this case pending resolution of that appeal. I provide my tentative ruling on class certification under the law as it exists today in section III-B of this Order.

BACKGROUND

I. FACTUAL BACKGROUND

Trans Union is one of the "big three" consumer credit reporting agencies in the UnitedStates. First Amended Complaint ¶ 6 (Dkt. No. 39) ("FAC"). Larson alleges that he obtained a copy of his "personal credit report" from Trans Union on October 26, 2011. FAC ¶ 22. After disclosing information under the headings, "Personal Information," "Adverse Accounts," "Satisfactory Accounts," "Regular Inquiries," and "Account Review Inquiries," the report stated, "End of Credit Report." FAC ¶ 24. Beneath the heading, "End of Credit Report," the report stated the following:

Begin Additional Information

Additional Information

The following disclosure of information is provided as a courtesy to you. This information is not part of your TransUnion [sic] credit report, but may be provided when TransUnion receives an inquiry about you from an authorized party. This additional information can include Special Messages, Possible OFAC¹ Name Matches, Income Verification and Inquiry Analysis Information. Any of the previously listed information that pertains to you will be listed below.

[ . . . ]

Possible OFAC Match

As a courtesy to you, we also want to make sure you are aware that the name that appears on your TransUnion credit file is considered a potential match to information listed on the United States Department of Treasury's Office of Foreign Asset Control ("OFAC") database.

The OFAC record that is considered a potential match to the name on your credit file is:

For more details regarding the OFAC Database, please visit:

http://www.ustreas.gov/offices/enforcement/ofac/faq/index.shtml

FAC ¶¶ 25-28.

Following the words, "the name on your credit file is," the disclosure contained "no data at all, intentionally leaving the space blank, and leaving consumers such as [Larson] to wonder what information from the OFAC list [Trans Union] thinks is attributable to them." FAC ¶ 29. The parties do not dispute that Larson is not on the OFAC list, and that his name is not a "potential match" to any OFAC record. See, e.g., FAC ¶ 34; Answer ¶ 34 (Dkt. No. 53).

According to materials submitted by the parties in conjunction with these motions, Trans Union first enabled consumers with potentially matching OFAC data to obtain that information online on September 22, 2011. See, e.g., Trans Union's Rog. Resp. Set 1 at 8-9 (Soumilas Decl. Ex. 2, Dkt. No. 62-9); Garst Depo. at 51 (Soumilas Decl. Ex. 3, Dkt. No. 62-11). Before implementing the OFAC disclosure functionality, Trans Union provided sample files to its software vendor, Saksoft, for coding and testing. Class Cert. Opp. at 5; Garst Depo. at 58-60 (Newman Decl. Ex. B, Dkt. No. 72-8); Thackrey Depo. at 63-64 (Newman Decl. Ex. C, Dkt. No. 72-10). The OFAC software performed as intended during the testing process: sample files containing potentially matching OFAC data displayed the desired OFAC header and information, while sample files without potentially matching OFAC data displayed nothing at all regarding OFAC. Thackrey Depo. 64-65 (Newman Decl. Ex. C, Dkt. No. 72-10).

Trans Union first learned about a potential problem with its OFAC software on October 19, 2011, when its consumer relations operators reported "that they were getting phone calls from consumers about seeing the 'Possible OFAC Match' section on their online [file disclosures] and wanting to dispute it." Garst Depo. at 62 (Newman Decl. Ex. B, Dkt. No. 72-8). On or around October 20, 2011, Trans Union realized that the OFAC header that consumers were concerned about was not visible on its own consumer relations database. Id. at 63-64 ("Q: So the operators who would be handling the consumer calls couldn't even really see what the consumers were talking about? A: That's correct."). On Friday, October 21, 2011, Trans Union determined that the OFAC header was being misdisplayed as a result of a coding error in its software. Thackrey Depo. at 49 (Newman Decl. Ex. C, Dkt. No. 72-10). Trans Union immediately instructed Saksoftto develop a fix. Garst Depo. at 77 (Newman Decl. Ex. B, Dkt. No. 72-8). Trans Union and Saksoft attempted to implement the fix on Tuesday, October 25, 2011, but the attempt failed. Id. at 77-78. Finally, by Friday, October 28, 2011, Trans Union was able to confirm that the defect had been corrected. Id.

II. PROCEDURAL BACKGROUND

Larson filed this action on September 12, 2012 in the Superior Court of California for the County of San Francisco, alleging claims against Trans Union under the California Consumer Credit Reporting Agencies Act ("CCRAA"). Dkt. No. 1 at 11. Trans Union removed the case to federal court on November 7, 2012. Id. at 1. On October 15, 2013, I granted Trans Union's motion to dismiss Larson's original complaint. Dkt. No. 33. Larson's first amended complaint alleges claims under the CCRAA and the FCRA. FAC ¶¶ 1, 49-59. On April 14, 2014, I issued an order dismissing the CCRAA claims but allowing the FCRA claims to proceed. Dkt. No. 52.

Larson's FCRA claims are based on alleged violations of the Act's requirement that a credit reporting agency "clearly and accurately" disclose to a consumer "[a]ll information in the consumer's file" upon request. 15 U.S.C. § 1681g(a). Larson asserts that Trans Union violated this requirement in two ways. His first claim "arises out of the juxtaposition of the statement, ' The OFAC record that is considered a potential match to the name on your credit file is,' and the blank space that follows." Class Cert. Mot. at 5; see also FAC ¶ 57. Larson contends that a person faced with this information cannot determine whether (a) he potentially matches a name on the OFAC list but Trans Union is not disclosing the identity of the potential OFAC match; or (b) he does not potentially match any name on the OFAC list. Class Cert. Mot. at 5.

Larson also asserts that by describing the OFAC information as "additional information" that is "provided as a courtesy" and that is not part of the file disclosure, Trans Union "le[ft] [Larson] and the class confused as to whether they had the right to dispute such information." FAC ¶ 50; see also Class Cert. Mot. at 6 ("Trans Union represented to consumers that the OFAC information is not part of their credit report and that Trans Union was providing it as a 'courtesy' and not as required by law. Both statements are false.").

Larson claims that both violations were willful and seeks statutory damages under 15 U.S.C. § 1681n(a). FAC ¶¶ 50, 57.

Trans Union filed its motion for summary judgment on March 13, 2015. Dkt. No. 66. Larson moved for class certification the same day. Dkt. Nos. 63, 64. Larson seeks to certify a Rule 23(b)(3) class defined as

[a]ll persons residing at an address within the State of California to whom Trans Union LLC provided a Personal Credit Report, from September 22, 2011 until October 27, 2011, substantially similar in form to the one Trans Union provided to [Larson] dated October 26, 2011.

Class Cert. Mot. 7, 15. I heard argument from the parties on May 6, 2015. Dkt. No. 77.

LEGAL STANDARD

I. FEDERAL RULE OF CIVIL PROCEDURE RULE 23

Federal Rule of Civil Procedure 23 governs class actions. "Before certifying a class, the trial court must conduct a rigorous analysis to determine whether the party seeking certification has met the prerequisites of Rule 23." Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012) (internal quotation marks omitted). The burden is on the party seeking certification to show, by a preponderance of the evidence, that the prerequisites have been met. See Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011).

Certification under Rule 23 is a two-step process. The party seeking certification must first satisfy the four threshold requirements of Rule 23(a) - numerosity, commonality, typicality, and adequacy. Specifically, Rule 23(a) requires a showing that

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a).

The party seeking certification must then establish that one of the three grounds for certification applies. See Fed. R. Civ. P. 23(b). Larson invokes Rule 23(b)(3), which provides that a class action may be maintained where

the court finds that the questions of law or fact common to class

...