1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 SAN JOSE DIVISION 7

LAKEYSHA KAUFMAN,

8 Case No. 5:20-cv-01213-EJD Plaintiff, 9 ORDER GRANTING MOTION TO v. REMAND; DENYING MOTION FOR 10 JUDGMENT ON THE PLEADINGS

MARSH AND MCLENNAN

11 COMPANIES, INC., et al., Re: Dkt. Nos. 20, 26 12 Defendants.

13 Plaintiff Lakeysha Kaufman (“Plaintiff”) filed the present motion for an order remanding 14 this case to the Superior Court for the State of California, County of Santa Clara, arguing that 15 there is no subject matter jurisdiction because Plaintiff alleges no actual injury and, therefore, 16 lacks Article III standing. Plaintiff’s Motion to Remand, Dkt. No. 20 (“Plaintiff’s Mot.”). 17 Defendants Marsh & McLennan Companies, Inc. and Marsh USA Inc. (collectively, 18 “Defendants”) then filed a motion for judgment on the pleadings, concurring that Plaintiff lacks 19 Article III standing but arguing that dismissal, rather than remand, is the proper remedy. 20 Defendants’ Motion for Judgment on the Pleadings, Dkt. No. 26 (“Defendants’ Mot.”). The Court 21 took the matter under submission for decision without oral argument pursuant to Civil Local Rule 22 7-1(b). For the reasons below, the Court GRANTS Plaintiff’s Motion to Remand and DENIES 23 Defendants’ Motion for Judgment on the Pleadings. 24 I. Background 25 Plaintiff filed a putative class action complaint against Defendants in the Superior Court 26 for the State of California, County of Santa Clara on January 17, 2020. Ex. A., Dkt. No. 1-3 27 Case No.: 5:20-cv-01213-EJD 1 (“Compl.”). The complaint alleges a violation of the Fair Credit Reporting Act, 15 U.S.C. § 2 1681b(b)(2)(A), (“FCRA”). Id. at 6. On January 22, 2020, Defendants were properly served. Ex. 3 C, Dkt. No. 1-5. On February 18, 2020, Defendants removed the action to federal court pursuant 4 to 28 U.S.C. § 1331. See Defendants’ Notice of Removal, Dkt. No. 1. The Court granted the 5 Parties’ joint stipulation to stay proceedings in this action pending their attempt to resolve the case 6 through private mediation. See Order Granting Stipulation to Stay Proceedings Pending Private 7 Mediation, Dkt. No. 17. The Parties ultimately elected not to mediate, and the stay was lifted. 8 Plaintiff brings the present motion to remand the case to state court on the grounds that she 9 does not allege any concrete injury, economic or otherwise, as required for Article III standing in 10 the federal courts. Plaintiff’s Mot. at 5. In combination with their opposition, Defendants filed a 11 motion for judgment on the pleadings, arguing that Plaintiff’s failure to allege injury is fatal to her 12 case in state court as well, rendering remand futile. See Defendants’ Motion for Judgement on the 13 Pleadings, Dkt. No. 26-1, 3 (“Defendants’ Mot.”). Defendants argue that because remand would 14 be futile, this Court should instead dismiss the case entirely. Id. 15 II. Legal Standard 16 Article III of the United States Constitution limits federal courts’ subject-matter 17 jurisdiction to actual “cases” and “controversies.” U.S. Const. art. III, § 2. To satisfy the case-or- 18 controversy requirement, a plaintiff must have standing to bring a claim. See, e.g., Lexmark Int’l, 19 Inc. v. Static Control Components, Inc., 572 U.S. 118, 125, 134 S. Ct. 1377, 188 L. Ed. 2d 392 20 (2014); Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547, 194 L. Ed. 2d 635 (2016), as revised (May 21 24, 2016). Article III standing requires that a plaintiff “have (1) suffered an injury in fact, (2) that 22 is fairly traceable to the challenged conduct of the defendant, and (3) is likely to be redressed by a 23 favorable judicial decision.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61, 112 S. Ct. 2130, 24 119 L. Ed. 2d 351 (1992). 25 Removal of a civil action from state to federal court is appropriate only if the federal court 26 has subject-matter jurisdiction over the matter. 28 U.S.C. § 1444(a). If a case is improperly 27 Case No.: 5:20-cv-01213-EJD 1 removed, “the federal court must remand the action because it has no subject-matter jurisdiction to 2 decide the case.” ARCO Envtl. Remediation, L.L.C. v. Dep’t of Health & Envtl. Quality of 3 Montana, 213 F.3d 1108, 1113 (9th Cir. 2000); see also 28 U.S.C. § 1447(c) (“If at any time 4 before final judgment it appears that the district court lacks subject matter jurisdiction, the case 5 shall be remanded.”). The burden to establish that jurisdiction rests upon the party asserting 6 jurisdiction. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009). The “strong 7 presumption” against removal jurisdiction means that the court “resolves all ambiguity in favor of 8 remand to state court.” Id. (quoting Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992)). 9 III. Discussion 10 Plaintiff concedes that she lacks concrete injury and has no Article III standing. See 11 Plaintiff’s Mot. at 5. Plaintiff argues that, absent Article III standing, this Court lacks subject 12 matter jurisdiction and the case must be remanded to state court. Id. at 4-5; see 28 U.S.C. § 13 1447(c). Defendants agree that Plaintiff lacks Article III standing but contend that Plaintiff’s 14 claim should be dismissed with prejudice because remand would be futile. Defendants’ Mot. at 3. 15 According to Defendants, the Court may dismiss Plaintiff’s claim if it is “certain that a remand to 16 state court would be futile.” Bell v. City of Kellogg, 922 F.2d 1418, 1425 (9th Cir. 1991). 17 In cases where the plaintiff lacks Article III standing, the default is to remand rather than 18 dismiss. See, e.g., Polo v. Innoventions Int’l, LLC, 833 F.3d 1193, 1198 (9th Cir. 2016) (“only 19 when the eventual outcome of a case after remand is so clear as to be foreordained have we held 20 that a district court may dismiss it.”). In Bell, the Ninth Circuit recognized an exception to this 21 rule in the futility doctrine. In that case, the plaintiff-appellants challenged the results of a local 22 tax levy election in Idaho. The Ninth Circuit found that the plaintiff-appellants lacked Article III 23 standing to challenge the election results, and also found that they had not met a state law 24 requirement that they post a bond in order to challenge an election. The Bell court explained: 25 “[t]he state election statute provided the only state cause of action for the plaintiffs. The state 26 court would have simply dismissed the action on remand due to the fatal failure to comply with 27 Case No.: 5:20-cv-01213-EJD 1 the bond posting requirement. Because we are certain that a remand to state court would be futile, 2 no comity concerns are involved.” Id. at 1425. 3 It is unclear whether the Bell standard is good law. See, e.g., Polo, 833 F.3d at 1197 4 (holding that district court should have remanded rather than dismissed case after finding that the 5 plaintiff lacked standing, noting “the Bell rule has been questioned, and may no longer be good 6 law.”). “[M]any district courts within this circuit have joined the trend of abandoning 7 the futility doctrine.” Morgan v. Bank of Am., N.A., No. 2:20-CV-00157-SAB, 2020 WL 8 3979660, at *2–3 (E.D. Wash. July 14, 2020), reconsideration denied, No. 2:20-CV-00157-SAB, 9 2020 WL 5026857 (E.D. Wash. Aug. 25, 2020) (explaining that “the only reason the Ninth Circuit 10 did not overrule Bell in Polo was because the plaintiff in that case failed to raise that argument, 11 and the Circuit was unwilling to explicitly overrule its precedent sua sponte) (citing Polo, 833 12 F.3d at 1198). In similar cases, courts have held that without subject matter jurisdiction they must 13 remand to state court and may actually lack discretion to determine whether doing so is 14 appropriate. See, e.g., Garcia v. Kahala Brands, LTD., No. CV 19-10062-GW-JEMX, 2020 WL 15 256518, at *3 (C.D. Cal. Jan. 16, 2020) (“Given that Plaintiff lacks Article III standing, this case 16 must be remanded to state court.”) (citing Polo, 833 F.3d at 1196); Mendoza v. Pac. Theatres 17 Entm’t Corp., No. CV1909175CJCJCX, 2019 WL 6726088, at *3 (C.D. Cal. Dec. 10, 2019) 18 (same); Mendoza v. Aldi Inc., No. 219CV06870ODWJEMX, 2019 WL 7284940, at *2 (C.D. Cal. 19 Dec. 27, 2019) (“the literal words of [28 U.S.C.] § 1447(c) . . . on their face, give no discretion to 20 dismiss rather than remand an action.”); Miranda v. Magic Mountain LLC, No. CV 17-07483 SJO 21 (SS), 2018 WL 571914, at *3 (C.D. Cal. Jan. 25, 2018) (“Accordingly, the Court is without 22 discretion in determining whether remand is appropriate and must remand the action.”). 23 Even if Bell is still good law, this Court is far from certain that Plaintiff’s claim is in fact 24 futile. Cf. Rodriguez v. U.S. Healthworks, Inc., 813 F. App’x 315, 316 (9th Cir. 2020) (“The 25 [futility] doctrine applies . . . ‘only when the eventual outcome . . . is so clear as to be foreordained 26 have we held that a district court may dismiss it.’”) (quoting Polo, 833 F.3d at 1198). Defendants 27 Case No.: 5:20-cv-01213-EJD 1 make several arguments about why Plaintiff’s admitted lack of injury is fatal to her claim in state 2 court as well as federal court. See Defendants’ Mot. at 3-4; Defendants’ Opp. at 6-17. These 3 arguments are all premised on the fact that states have different standing requirements; some states 4 incorporate Article III principles while others do not. Because some states require a plaintiff to 5 show injury while other states do not, FCRA claims like Plaintiff’s will succeed in certain states 6 and fail in others. Defendants contend that Congress could not have intended for plaintiffs with no 7 injury to have a valid FCRA claim in certain states but not others. Thus, Defendants argue that the 8 FCRA should be interpreted to preclude no-injury claims like Plaintiff’s. 9 The Court disagrees. The United States Supreme Court long ago approved of state courts 10 adjudicating federal questions even where Article III standing is lacking: 11 “The state judiciary here chose a different path, as was their right, and took no account of federal standing rules in letting the case go to final judgment 12 in the Arizona courts. That result properly follows from the allocation of 13 authority in the federal system. We have recognized often that the constraints of Article III do not apply to state courts, and accordingly the 14 state courts are not bound by the limitations of a case or controversy or other federal rules of justiciability even when they address issues of federal law, 15 as when they are called upon to interpret that Constitution, or in this case, a federal statute.” 16 17 ASARCO Inc. v. Kadish, 490 U.S. 605, 617, 109 S. Ct. 2037, 2045, 104 L. Ed. 2d 696 (1989). 18 Inherent in this recognition that state courts are not bound by Article III is the understanding that 19 justiciability principles may be dispositive of a claim, and that the outcomes of certain claims may 20 vary from federal court to state court and also between state courts. In Alvarez v. TransitAmerica 21 Servs., Inc., No. 5:18-CV-03106-EJD, 2019 WL 4644909, at *3 (N.D. Cal. Sept. 24, 2019), this 22 Court remanded an FCRA standalone disclosure case to state court. In that case, this Court 23 expressly stated that “[n]othing in this order . . . should be construed as precluding a Plaintiff from 24 pursuing its claim in state court” and cited Moore for the proposition that “the lack of standing 25 does not preclude a plaintiff from vindicating a federal right in state court.” Id. (citing Moore v. 26 United Parcel Serv., Inc., No. 18-CV-07600-VC, 2019 WL 2172706, at *2 (N.D. Cal. May 13, 27 Case No.: 5:20-cv-01213-EJD 1 2019)). Thus, the fact that Plaintiff’s lack of injury bars her FCRA claim in federal court and in 2 some state courts is not in itself enough to show that Congress intended a no-injury FCRA claim 3 to be barred in all courts. 4 Defendants point to the “reverse-Erie” doctrine, which generally dictates that federal law 5 applies to federal claims in state court. Defendants argue that under this doctrine, “[a] law that 6 predictably alters the outcome of [federal] claims depending solely on whether they are brought in 7 state or federal court within the same State is obviously inconsistent with th[e] federal interest in 8 intrastate uniformity.” Defendants’ Mot. at 12 (citing Felder v. Casey, 487 U.S. 131, 153, 108 S. 9 Ct. 2302, 101 L. Ed. 2d 123 (1988)). But this is not a scenario in which different court systems 10 are interpreting the same statute differently; rather, Defendants take issue with the outcome 11 determinative effects of legitimate state standing laws. “[S]tanding is viewed as an indicator of a 12 court’s subject matter jurisdiction, and not the viability of the claims themselves.” Miranda, 2018 13 WL 571914, at *3. Thus, the reverse-Erie doctrine does not require a state court to apply federal 14 standing law to every federal claim. Indeed, such a rule would contradict the Supreme Court’s 15 express holding that “state courts are not bound by the limitations of a case or controversy or other 16 federal rules of justiciability even when they address issues of federal law.” ASARCO, 490 U.S. at 17 617. 18 Defendants next argue that allowing a no-injury plaintiff to bring an FCRA claim in state 19 but not federal court circumvents the doctrine of federal question jurisdiction. Given that 20 Congress granted federal courts original jurisdiction over all civil actions arising under federal 21 laws, Defendants argue that Congress cannot have intended to authorize “federal claims that 22 federal courts are constitutionally precluded from adjudicating.” Defendants’ Mot. at 14 (quoting 23 Michael T. Morley, Spokeo: The Quasi-Hohfeldian Plaintiff and the Nonfederal Federal 24 Question, 25 Geo. Mason L. Rev. 583, 599 (2018)). “While it may strike some as nonsensical that 25 a state court has jurisdiction to adjudicate a federal claim when a federal court does not, this is in 26 fact a notable quirk of the United States federalist system.” Miranda, 2018 WL 571914, at *3. So 27 Case No.: 5:20-cv-01213-EJD 1 long as there is no disabling incompatibility or express intent by Congress to the contrary, “a state 2 court may adjudicate a claim that could not have been brought in federal court due to lack 3 of standing.” Id. (citing Polo, 833 F.3d at 1196). In cases involving similar FCRA claims, “there 4 is no such contrary provision or incompatibility afoot; indeed, Congress authorized individuals to 5 sue under the FCRA in both state and federal court.” Pitre v. Wal-Mart Stores, Inc., No. 6 SACV1701281DOCDFMX, 2019 WL 5294397, at *10 (C.D. Cal. Oct. 18, 2019) (citing 15 7 U.S.C. § 1681p (2019) (“An action to enforce any liability created under this title may be brought 8 in any appropriate United States district court . . . or in any other court of competent 9 jurisdiction”)); see Moore, 2019 WL 2172706, at *2 (“Congress authorized citizens to vindicate 10 their rights under the FCRA in either federal or state court.”). 11 Defendants’ remaining arguments fail for similar reasons. Defendants argue that allowing 12 state courts to adjudicate FCRA claims that federal courts cannot hear undermines the Supreme 13 Court’s supremacy because it is possible that certain FCRA cases will be unreviewable by the 14 Supreme Court. Defendants further argue that, at a minimum, allowing state courts to adjudicate 15 such cases presents Constitutional questions under the Equal Protection and Due Process clauses. 16 The possibility that allowing state courts to do so could lead to unreviewable decisions on federal 17 questions or could lead to Constitutional violations is no more present in this case than it was in 18 ASARCO. Nevertheless, the Supreme Court squarely held that state courts can decide federal 19 questions whether there is Article III standing or not. ASARCO, 490 U.S. at 617. Thus, this Court 20 does not find that the Supremacy clause or the Constitutional avoidance principle lend persuasive 21 support to Defendants’ theory that Plaintiff should not be permitted to bring her FCRA claim in 22 state court. 23 While it is clear that Plaintiff lacks federal standing under Article III, the Court, cannot say 24 with certainty that her lack of injury would be fatal to her FCRA claim in state court. Thus, it is 25 not clearly futile to remand Plaintiff’s FCRA claim. 26 // 27 Case No.: 5:20-cv-01213-EJD 1 IV. Conclusion 2 For the foregoing reasons, the Court GRANTS Plaintiff’s Motion to Remand and 3 DENIES Defendants’ Motion for Judgment on the Pleadings. 4 IT IS SO ORDERED. 5 Dated: December 7, 2020 6

EDWARD J. DAVILA

7 United States District Judge 8 9 10 11 12

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THE PLEADINGS