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Brooks v. Hualalai Investors, LLC

United States District Court, D. Hawaii

October 30, 2017

STEVEN BROOKS, individually and on behalf of all similarly situated individuals, Plaintiff,
v.
HUALALAI INVESTORS, LLC, a Delaware limited liability company, et al., Defendants.

          FINDINGS AND RECOMMENDATION TO GRANT PLAINTIFF'S NOTICE OF MOTION AND MOTION TO REMAND ACTION TO STATE COURT.

          Kenneth J. Mansfield United States Magistrate Judge.

         Plaintiff Steven Brooks (“Plaintiff”) filed his Notice of Motion and Motion to Remand Action to State Court on August 11, 2017 (“Motion to Remand”). See ECF No. 9. Defendants Hualalai Investors, LLC and Four Seasons Hotels Limited (collectively, “Defendants”) filed their Opposition on September 1, 2017. See ECF No. 22. Plaintiff filed his Reply on September 8, 2016. See ECF No. 23.

         The Court held a hearing on the Motion to Remand on September 25, 2017. See ECF Nos. 19, 24. Kenneth S. Robbins, Esq., and Melinda M. Weaver, Esq., appeared on behalf of Plaintiff. Daniel F. Gaines, Esq., also appeared on behalf of Plaintiff by telephone. Patrick K. Shea, Esq., and Steven A. Ellis, Esq., appeared on behalf of Defendants. After careful consideration of the Motion to Remand and the supporting and opposing briefs, the arguments of counsel, and the relevant case law, the Court FINDS AND RECOMMENDS that the district court GRANT Plaintiff's Motion to Remand.

         BACKGROUND

         Plaintiff filed his Complaint against Defendants in the Circuit Court of the Third Circuit for the State of Hawai‘i (“State Court”) on June 26, 2017, alleging one cause of action under the Fair Credit Reporting Act of 1970 (“FCRA”), 15 U.S.C. § 1681 et seq. See ECF No. 1-2 at 12. Plaintiff's Complaint alleges that he used his Visa credit card to pay for his hotel stay at the Four Seasons Resort Hualalai in 2017 (“Four Seasons”). Id. at 4, ¶ 9. Plaintiff asserts that Four Seasons generated and provided him a receipt that contained more than the last five digits of his credit card account number and the expiration date of his credit card, in violation of 15 U.S.C. § 1681c(g). Id. Plaintiff contends that Defendants' alleged violation has harmed him and other consumers by: “failing to provide them with a receipt that does not contain their credit/debit card expiration date”; “by exposing them to a serious risk of identity theft and fraud that could have been avoided if Defendants had complied with their statutory obligations”; and “by requiring them to either secure their receipts in a safe place or destroy them to avoid the risk of identity.” Id. at 6-7.

         Defendants removed this action on July 26, 2017. Plaintiff subsequently filed the Motion to Remand. On August 25, 2017, Defendants filed a Motion to Dismiss Complaint, Filed June 26, 2017 [ECF No. 1-2] (“Motion to Dismiss”), which is currently pending before the district court. See ECF No. 21. The district court has informed the parties that it will not take any action on the Motion to Dismiss until the Motion to Remand is resolved.

         DISCUSSION

         A. Standing

         The instant Motion to Remand requires this Court to determine whether Plaintiff has standing to maintain a federal action under the FCRA for an alleged violation of 15 U.S.C. § 1681(c)(g). The FCRA's purpose is to “require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information 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). Pursuant to 15 U.S.C. § 1681n, any person who willfully fails to comply with any of the requirements imposed in the FCRA with respect to any consumer, is liable to that consumer in an amount equal to: “(1A) 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; or . . . (2) such amount of punitive damages as the court may allow;” and (3) reasonable attorneys' fees “in the case of any successful action to enforce any liability” under § 1681n.

         In 2003, Congress amended the FCRA and enacted the Fair and Accurate Transactions Act of 2003 (“FACTA”). As part of the amendments, Congress added § 1681c(g) to the FCRA, which prohibits any “person” that accepts credit cards or debit cards for the transaction of business from printing “more than the last 5 digits of the card number or the expiration date” on any receipt “provided to the cardholder at the point of the sale or transaction.” 15 U.S.C. § 1681c(g)(1); see also id. at § 1681a (providing that the definition of “person” includes any “individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity”). Section 1681n thus confers to consumers a right to sue any person that fails to comply with any provision of the FCRA, including § 1681c(g).

         Notwithstanding Congress' grant of a statutory cause of action for violations of FACTA, the United States Supreme Court has maintained that Congress cannot confer any more power beyond those contained in Article III of the Constitution. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (“Spokeo”) (“Congress' role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.”). Accordingly, although § 1681n provides a means to impose civil liability for noncompliance with any provision in FCRA, a plaintiff invoking federal jurisdiction pursuant to § 1681n nonetheless bears the burden of establishing the “irreducible constitutional minimum” of standing to sue. Spokeo, 136 S.Ct. at 1547 (citing Lujan v. Defenders of Wildlife, 504 U.S. 560 (1992)). To establish federal standing, “[t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Id. (citing Lujan, 504 U.S. at 560-61).

         Here, the parties dispute only the “injury in fact” element of federal standing. See ECF No. 9-1 at 2 (“For purposes of this motion, Plaintiff concedes that he lacks the requisite Article III standing to proceed in federal court because he has sustained no injury in fact within the meaning of federal standing law . . . .”); ECF No. 22 at 13 (“[T]his Court should conclude that Plaintiff has alleged an injury in fact sufficient to satisfy the requirements of Article III.”). Plaintiff contends that he lacks standing to sue under Article III of the United States Constitution because he is unable to establish a sufficient injury in fact for the purposes of the Motion to Remand. See ECF No. 9-1 at 2. Plaintiff argues that an alleged violation of § 1681c(g) without allegations of “actual incidents of identity theft” is insufficient to confer federal court jurisdiction. Id. at 7. Plaintiff thus asserts that this Court lacks jurisdiction over this action, and therefore, this action must be remanded to State Court. Id. at 10.

         B. Establishing an Injury In Fact

         “To protect the jurisdiction of state courts, removal jurisdiction is strictly construed in favor of remand.” Nasrawi v. Buck Consultants, LLC, 776 F.Supp.2d 1166, 1169 (E.D. Cal. 2011) (citing Harris v. Bankers Life and Cas. Co., 425 F.3d 689, 698 (9th Cir. 2005)). “Any doubt as to the right of removal must be resolved in favor of remand.” Id. (citing Gaus v. Miles, 980 F.2d 564, 566 (9th Cir.1992)). “Th[is] ‘strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper.” Id. (brackets in original) (citing Gaus, 980 F.2d at 566 (internal citations omitted)). Accordingly, Defendants bear the burden of establishing that removal is proper in this action, i.e. that Plaintiff has alleged a sufficient injury in fact in his Complaint to maintain standing in this Court. See Spokeo, 136 ...


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