Olea v. Teichert Pipelines, Inc.

Background

Teichert interviewed Olea for a laborer position, offered him the job, and provided employment forms that included a consumer-report disclosure and authorization. Olea signed the release authorizing Teichert to obtain background reports and indicated that he wanted a copy of any report ordered about him. He began working for Teichert on April 2, 2018.

Olea later filed a state-court complaint individually and for a proposed class. He alleged that Teichert’s disclosure forms violated the federal Fair Credit Reporting Act, the California Investigative Consumer Reporting Agencies Act, the California Consumer Credit Reporting Agencies Act, and California’s Unfair Competition Law. Teichert removed the case to federal court. The parties filed motions for summary judgment, and the court later ordered Teichert to explain why the case should not be sent back to state court because of a possible lack of constitutional standing.

Standing

The court held that Olea lacked Article III standing to pursue his Fair Credit Reporting Act claim. Standing requires a plaintiff to show a concrete injury caused by the alleged violation. The relevant federal law requires an employer to give a standalone disclosure and obtain written authorization before obtaining a consumer report.

The court explained that this law can protect an applicant’s rights to information and privacy, including the ability to meaningfully authorize a background check. But the court found no evidence that Olea suffered that type of injury. Unlike a plaintiff who was confused by extra language in a disclosure, Olea did not claim that he was confused or unaware that he was authorizing a background check. His testimony showed that he understood Teichert needed a background check and would obtain a report to evaluate his employment eligibility. He also testified that the report did not prevent him from obtaining work and that he could not identify another way it harmed him.

The court therefore found that Olea had not shown a concrete injury-in-fact sufficient to establish standing at the summary-judgment stage. Because the federal court lacked subject-matter jurisdiction over the federal claim, it could not exercise supplemental jurisdiction over the related California claims.

Disposition

The court remanded the action to the Superior Court of Alameda County under the rule requiring remand when a federal court lacks subject-matter jurisdiction before final judgment. The court stated that state courts are not subject to Article III’s standing restrictions and that Olea may be able to pursue his claims there.

The court denied the pending motions for summary judgment as moot and directed the clerk to close the federal file. The opinion did not decide the merits of whether Teichert violated the federal or California laws.