SAN JOSE –  A U.S. district court in California recently granted a motion to dismiss a Fair Credit Reporting Act class action against Hertz, with the case moving back to San Francisco.

Concerning the case of Lee v. Hertz Corp., the order from the U.S. District Court for the Northern District of California, San Jose Division, stated that the plaintiffs — Peter Lee and Latonya Campbell — lacked Article III standing. The presiding judge remanded the case to San Francisco Superior Court.

“This is something that we have seen in numerous similar decisions in the past few months,” Ross Andre of Troutman Sanders LLP told the Northern California Record.

Increasingly this year, FCRA cases are being filed in the first instance in state court, while a defendant has the right to remove the case to federal court. If the court lacks jurisdiction, the case automatically goes back to state court, rather than being tossed out.

“There are a number of variations that can mandate a different result, but as a general matter it is not too surprising that in this case, the court chose to remand the action,” Andre said.

This case is the latest in a string of decisions in the wake of the Supreme Court’s 2016 decision in Spokeo, Inc. v. Robin.

“In [Spokeo, Inc. v. Robin], the plaintiff is suing a company that he alleges is a consumer reporting agency—i.e., a company that provides consumer reports to third-parties. [Lee v. Hertz Corp.], on the other hand is a case against an employer — i.e., the user of a consumer report,” Andre said. “While both have obligations under the Fair Credit Reporting Act, the particular requirements for each vary substantially, as do the claims.”

In Lee v. Hertz Corp., Lee and Campbell are suing for alleged violations of the FCRA. The plaintiffs applied to work at a rental-car location in California owned by Hertz. As part of the hiring process, Hertz ran a background check on the applicants after providing a disclosure of its intent and permission to move forward.

The plaintiffs allege the disclosure that Hertz gave them was not “clear and conspicuous” as the statute requires. They also claim Hertz denied their applications without first providing notice of its intent to do so.

 After the Supreme Court decided Spokeo earlier this year, Hertz moved to dismiss the case. The company argued that neither Lee nor Campbell had alleged Article III standing.

“Article III standing is the constitutional minimum required to bring a case in federal court,” Andre said.

According to Andre, the Supreme Court had defined and redefined the elements of constitutional standing over the years, but it generally requires that the person bringing the lawsuit has suffered an injury that was caused by the conduct complained about and will likely be redressed by a favorable judicial decision.

   

“Article III standing is what prevents parties with no stake in a controversy from bringing a lawsuit related to that controversy,” Andre said.

   

The court noted that both Lee and Campbell had been able to converse with Hertz about their background reports, and concluded that the sum of the claim was a belief that Hertz shouldn’t have considered the information.

The plaintiffs opposed the motion, arguing that if the court found that jurisdiction was lacking, it should be remanded to San Francisco, not dismissed. The court agreed.

 

“The case will continue immediately,” Andre said. “The parties will pick up where they left off, and it will be up to the state court to set a schedule and determine the next steps.”

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