Alvarez v. TransitAmerica Services, Inc.

Background

Albert C. Alvarez filed a proposed class action in Santa Clara County Superior Court against TransitAmerica Services, Herzog Transit Services, and others. His complaint alleged two claims under the Fair Credit Reporting Act (FCRA), concerning the defendants’ alleged failure to provide legally required disclosures and summaries of rights before or in connection with employment background checks. He also asserted California claims under the Investigative Consumer Reporting Agencies Act, the Consumer Credit Reporting Agencies Act, California’s unfair-competition law, and wage-and-hour laws.

The defendants removed the action to federal court, relying on federal-question jurisdiction for the FCRA claims and supplemental jurisdiction for the state-law claims. Alvarez moved to remand, arguing that the federal court lacked subject-matter jurisdiction because his complaint did not establish Article III standing.

Standing and Federal Jurisdiction

Article III standing requires a plaintiff to show an injury in fact that is concrete and particularized, traceable to the defendant’s conduct, and likely to be remedied by a favorable decision. The court explained that alleging a statutory violation alone does not necessarily establish an injury in fact. The complaint alleged that the defendants violated the FCRA’s stand-alone disclosure and summary-of-rights requirements and that Alvarez’s privacy and statutory rights were invaded, but it did not explain how those alleged violations personally and concretely harmed him.

The defendants argued that Alvarez had consented to federal jurisdiction and that the summary-of-rights claim supported an injury in fact. The court rejected both arguments. Subject-matter jurisdiction cannot be waived, and the defendants did not identify a concrete, particular injury arising from either FCRA claim. The court considered both claims, including the stand-alone disclosure claim even though the defendants had not addressed it in their opposition.

Because the complaint alleged only bare procedural violations and did not show a concrete injury, the court held that Alvarez lacked Article III standing and that federal-question jurisdiction did not exist. The court also noted that the defendants did not argue that the state-law claims independently supported jurisdiction. Because federal-question jurisdiction was absent, and the opinion said it was unclear whether diversity or another statutory basis applied, the court held that it could not exercise supplemental jurisdiction over the state-law claims.

Disposition

The court granted Alvarez’s motion to remand and directed the clerk to remand the action to Santa Clara County Superior Court. The court did not decide whether the defendants actually violated the FCRA or the state laws. It stated that the order did not preclude Alvarez from pursuing his claim in state court.