Goto v. Whelan Security of California, Inc.

Background

Michael Anthony Goto filed a proposed class action in San Francisco County Superior Court against Whelan Security of California, Inc. and Doe defendants. He later filed a first amended complaint. The complaint alleged that Goto worked for Whelan Security in California from approximately April 2012 through October 2019, including as a non-exempt supervisor from about 2015 through October 2019.

Goto sought to represent current and former supervisory and office employees who worked in California, as well as people subjected to background checks by Whelan Security. The complaint asserted 20 causes of action under the Fair Credit Reporting Act (FCRA) and California law, including wage, vacation-pay, rest-period, wage-statement, waiting-time, expense-reimbursement, background-check, California Investigative Consumer Reporting Agencies Act, and Private Attorneys General Act claims.

Whelan Security removed the case to federal court, asserting federal-question jurisdiction based on the FCRA claim and the federal-enclave doctrine. Whelan Security also asserted supplemental jurisdiction over the state-law claims.

Federal-question jurisdiction and the FCRA claim

Goto argued that he lacked Article III standing because his FCRA allegations described only technical or procedural violations and did not identify a concrete injury. Article III standing requires an injury in fact that is concrete and particularized, fairly traceable to the defendant, and likely to be remedied by a favorable decision.

The court agreed. Goto alleged that Whelan Security failed to provide a required summary of rights and failed to provide a clear and conspicuous standalone disclosure before obtaining consumer reports. But, according to the court, Goto did not allege that he was confused, misled, or otherwise harmed by those violations. The court also found that he did not allege facts showing that the extra information in the disclosure caused confusion, including facts about his state of mind or when he discovered the alleged violation.

The court concluded that Goto had pleaded no more than bare procedural violations of the FCRA. Because he did not have Article III standing, the federal court lacked jurisdiction over the FCRA claim.

Federal-enclave jurisdiction

Whelan Security also relied on the federal-enclave doctrine, which can provide federal jurisdiction for claims arising from events occurring on land under the exclusive jurisdiction of the United States. The court took judicial notice that the Presidio is a federal enclave.

Whelan Security asserted that most of the events underlying the claims occurred at the Presidio and stated in its removal papers that Goto spent about 97 percent of his work time there. Goto argued that the first amended complaint did not mention the Presidio, that some claims involved travel outside it, and that he was willing to stipulate that his state-law claims arose only from events outside the Presidio or another federal enclave.

The court found that Goto did not assert that the work or injuries underlying the putative class’s claims occurred on the Presidio. The complaint identified various client locations and based many labor claims on unpaid time spent driving between client locations or to client locations. The court also found no evidence showing whether putative class members worked inside or outside the Presidio. It therefore concluded that the state-law claims did not come within federal-enclave jurisdiction based on the materials before it.

Supplemental jurisdiction

Supplemental jurisdiction allows a federal court with original jurisdiction over at least one claim to hear related state-law claims forming part of the same constitutional case or controversy. Because the court found no original jurisdiction under either basis identified by Whelan Security, it also found no supplemental jurisdiction over the state-law claims.

Disposition

The court granted Goto’s motion to remand. It remanded the case to San Francisco County Superior Court and directed the clerk to close the federal case. The opinion did not decide the merits of Goto’s FCRA or California-law claims.