Kang v. Credit Bureau Connection, Inc.

1

2

3 UNITED STATES DISTRICT COURT

4 EASTERN DISTRICT OF CALIFORNIA

5

6 SUNG GON KANG, CASE NO. 1:18-cv-01359-AWI-SKO

7 Plaintiff,

ORDER ON PLAINTIFF’S MOTION

8 v. FOR CLASS CERTIFICATION

9 CREDIT BUREAU CONNECTION, INC.,

(Doc. No. 111)

10 Defendant.

11

12

13 Plaintiff Sung Gon Kang alleges that Defendant Credit Bureau Connection, Inc. (“Credit

14 Bureau”) caused him injury in its violation of several state and federal consumer credit reporting

15 statutes. Kang now moves for class certification under Federal Rule of Civil Procedure 23(b)(3).

16 Having reviewed and considered all the briefing and evidence submitted by the parties, the Court

17 will GRANT in part Kang’s motion.

18 BACKGROUND

19 Credit Bureau sells credit reports that help automobile dealers manage the regulatory

20 compliance obligations that accompany every consumer car purchase. One of the obligations

21 derives from a Treasury Department Office of Foreign Assets Control (“OFAC”) regulation that

22 prohibits dealers from doing business with anyone designated as a “Specially Designated

23 National” or “SDN” on OFAC’s SDN list. Individuals on the SDN list consist of persons and

24 companies owned or controlled by, or acting for or on behalf of, targeted countries, as well as

25 persons and entities that are not country-specific, such as terrorists and drug traffickers. SDNs are

26 prohibited from transacting business in the United States for national security reasons.

27 Credit Bureau’s credit reports indicate whether a consumer is an “OFAC Hit,” that is,

28 someone with whom the automobile dealer might not want to do business with because of that

1 person’s match to the SDN list. To determine whether a consumer is an OFAC Hit, Credit Bureau

2 uses a “similar name” algorithm script that runs the consumer’s name against a copy of the SDN

3 list downloaded on Credit Bureau’s servers. Despite the availability of additional pieces of

4 information identifying the consumer, such as date of birth and address, Credit Bureau runs only

5 first and last names when checking whether a consumer matches with anyone on the SDN list.

6 In 488 credit reports containing an OFAC Hit that Credit Bureau sold to a third party

7 between October 2016 and September 2019, 8 reports had an exact match between the name of the

8 consumer applying for credit and the SDN considered a matching “Hit.” None of the reports had a

9 match for name, date of birth, and address. Credit Bureau is unaware of a single case in which its

10 “similar name” algorithm script generated an OFAC Hit that correctly matched a consumer with

11 an SDN.

12 Kang was a consumer whose name inaccurately came up as an OFAC Hit on a credit report

13 sold by Credit Bureau to Norm Reeves Honda. The OFAC check matched Kang with a North

14 Korean SDN named Song Nam Kang. After Norm Reeves Honda denied Kang credit in front of

15 his father and sister, Kang felt embarrassed, ashamed, and angry. He later requested and received a

16 copy of the credit report, at which time he learned that Credit Bureau’s OFAC check incorrectly

17 matched him with an SDN.

18 Kang filed this lawsuit on behalf of himself and a class of similarly situated consumers,

19 pleading causes of action under the federal Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681

20 et seq., and California’s Consumer Credit Reporting Agencies Act (“CCRAA”), Cal. Civil Code

21 § 1785.1 et seq. Doc. No. 1. Specifically, on behalf of a putative class, Kang alleged that Credit

22 Bureau failed to follow reasonable procedures to assure the maximum possible accuracy of the

23 consumer information included in its OFAC Check documents, in violation of 15 U.S.C.

24 § 1681e(b) and Cal. Civil Code § 1785.14(b); and failed to disclose upon request all information

25 in consumer files, in violation of 15 U.S.C. § 1681g(a) and Cal. Civil Code §§ 1785.10 and

26 1785.15. On behalf of only himself, Kang alleged that Credit Bureau failed to reinvestigate the

27 disputed OFAC-related information that it had prepared and sold to the dealership, in violation of

28 15 U.S.C. § 1681i.

1 Pursuant to Federal Rule of Civil Procedure 12(b)(6), Credit Bureau moved to dismiss all

2 five claims on the ground that it was not subject to these provisions of the FCRA and CCRAA

3 because it was not acting as a credit reporting agency under the factual allegations of the

4 complaint. Doc. No. 10. The Court denied this motion. Doc. No. 20. Credit Bureau then moved

5 for summary judgment, arguing that under the applicable statutes it was not acting as a consumer

6 reporting agency and the OFAC check documents were not consumer reports. Doc. No. 81.

7 Before that motion was taken under submission by the Court, Kang filed a motion for class

8 certification. Doc. No. 84. The Court denied the latter motion, noting it could be re-noticed, if

9 necessary, following the Court’s resolution of Credit Bureau’s summary judgment motion. Doc.

10 No. 95. The Court later denied the summary judgment motion. Doc. No. 96. Thereafter, Kang

11 has now re-noticed his class certification motion. Doc. No. 111.

12 LEGAL STANDARD

13 A class action is a procedural mechanism that allows for representative litigation. Amchem

14 Prods. v. Windsor, 521 U.S. 591, 613-19 (1997). This means that one or more class members may

15 “litigate on behalf of many absent class members, and those class members are bound by the

16 outcome of the representative’s litigation.” 1 William Rubenstein, Newberg on Class Actions

17 § 1:1 (5th ed. 2012) (citing Supreme Tribe of Ben Hur v. Cauble, 255 U.S. 356, 363 (1921)).

18 “The class action is ‘an exception to the usual rule that litigation is conducted by and on behalf of

19 the individual named parties only.’” Comcast Corp. v. Behrend, 569 U.S. 27, 33 (2013) (quoting

20 Califano v. Yamasaki, 442 U.S. 682, 700–01 (1979)).

21 Class actions are governed by Rule 23 of the Federal Rules of Civil Procedure, which

22 imposes a two-step test for deciding whether a class may be certified. Under the first step, the

23 court determines whether the moving party has established four perquisites:

24 (1) the class is so numerous that joinder of all members is impracticable; (2) there

are questions of law or fact common to the class; (3) the claims or defenses of the

25

representative parties are typical of the claims or defenses of the class; and (4) the

26 representative parties will fairly and adequately protect the interests of the class.

27 Fed. R. Civ. P. 23(a)(1)–(4). If the prerequisites of Rule 23(a) are met, the court considers

28 whether the proposed class action meets at least one of the three provisions of Rule 23(b). Fed. R.

1 Civ. P. 23(b). Relevant here, Rule 23(b) states that a class action may be maintained if “the court

2 finds that the questions of law or fact common to class members predominate over any questions

3 affecting only individual members, and that a class action is superior to other available methods

4 for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3).

5 A party moving to certify a class action bears the burden of affirmatively demonstrating

6 compliance with Rule 23. Comcast, 569 U.S. at 33. “The Rule ‘does not set forth a mere pleading

7 standard,’” but instead demands the moving party establish through evidentiary proof that the

8 proposed class action satisfies the prerequisites of Rule 23(a) and one of the provisions of Rule

9 23(b). Id. (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011)). Courts generally

10 require the moving party to demonstrate by a preponderance of the evidence that class certification

11 is appropriate. 3 Newberg on Class Actions § 7:21 (citing cases, including Martin v. Sysco Corp.,

12 325 F.R.D. 343, 354 (E.D. Cal. 2018) (“While Rule 23 does not specifically address the burden of

13 proof to be applied, courts routinely employ the preponderance of the evidence standard.”)).

14 To ensure the moving party has “satisfied” its burden, the district court must conduct a

15 “rigorous analysis.” Comcast, 569 U.S. at 33. Because the “class determination generally

16 involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff’s

17 cause of action,” this rigorous analysis may include “prob[ing] behind the pleadings” and “overlap

18 with the merits of the plaintiff’s underlying claim.” Id. at 33–34. Yet, “‘[n]either the possibility

19 that a plaintiff will be unable to prove his allegations, nor the possibility that the later course of the

20 suit might unforeseeably prove the original decision to certify the class wrong, is a basis for

21 declining to certify a class which apparently satisfies’ Rule 23.” Sali v. Corona Reg’l Med. Ctr.,

22 909 F.3d 996, 1004−05 (9th Cir. 2018) (quoting Blackie v. Barrack, 524 F.2d 891, 901 (9th Cir.

23 1975)). Ultimately, the decision to grant or deny a motion for class certification under Rule 23 is

24 committed to the broad discretion of the trial court. Bateman v. Am. Multi–Cinema, Inc., 623

25 F.3d 708, 712 (9th Cir. 2010).

26

27

28

1 DISCUSSION

2 A. Class Definition

3 Before turning to the requirements of Rule 23(a) and (b)(3), an issue regarding the

4 proposed class definitions must be resolved. Fed. R. Civ. P. 23(c)(1)(B) (“An order that certifies a

5 class action must define the class . . . .”). District courts have discretion to modify class

6 definitions where necessary. Nevarez v. Forty Niners Football Co., 326 F.R.D. 562, 575 (N.D.

7 Cal. 2018); Campbell v. PricewaterhouseCoopers, LLP, 253 F.R.D. 586, 594 (E.D. Cal. 2008).

8 Kang seeks certification of the following classes:

9 All individuals about whom Defendant prepared a report that (1) included an

OFAC “Hit;” (2) was published to a third party from October 2, 2013 to the date of

10 judgment; and (3) included a U.S. address (including U.S. Territories) for that

individual.

11

All individuals about whom Defendant prepared a report that (1) included an

12 OFAC “Hit;” (2) was published to a third party from October 2, 2011 to the date of

judgment; and (3) included a U.S. address (including U.S. Territories) for that

13 individual.

14 With one exception, these definitions describe classes that are ascertainable based on

15 objective criteria. See Briseno v. ConAgra Foods, Inc., 844 F.3d 1121, 1124 n.3−4 (9th Cir. 2017)

16 (describing ways in which courts have considered the implicit prerequisite of “ascertainability”

17 within certification decisions under Rule 23). The lone problem rests with the class period’s

18 unspecified end date—“to the date of judgment”—which both “creates a moving target and

19 presents potential case management problems.” Taylor v. AutoZone, Inc., 2011 U.S. Dist. LEXIS

20 62712, *4 (D. Ariz. June 13, 2011); Hart v. Rick's N.Y. Cabaret Int'l, Inc., 967 F. Supp. 2d 901,

21 949 (S.D.N.Y. 2013) (explaining why an “open-ended end-date is untenable”). A specified end

22 date, in contrast, promotes the “interests of clarity and finality” and “helps ensure that plaintiff-

23 specific discovery will be completed in a timely manner.” Taylor, 2011 U.S. Dist. LEXIS 62712,

24 at *4-5. The Court will exercise its discretion to set a new class period end date as the date of this

25 certification order. See id. (redefining unascertainable class period end date as date of conditional

26 class certification order); Cruz v. Dollar Tree Stores, Inc., No. 07-cv-2050, 2009 U.S. Dist. LEXIS

27 62817, 2009 WL 1974404, at *2 (N.D. Cal. July 2, 2009) (redefining unascertainable class period

28 end date as the date of certification order).

1

2 B. Numerosity

3 Pursuant to Rule 23(a)(1), a class action is maintainable only if “the class is so numerous

4 that joinder of all members is impracticable.” Fed. R. Civ. P. 23(a)(1). Credit Bureau does not

5 contest that the proposed class satisfies this requirement. Kang presents evidence suggesting that

6 at least 400 putative class members exist. Doc. No. 111-2 (“Sartell Decl.”), ¶¶ 2–3; Doc. No. 111-

7 22 (“Levin Decl.”), ¶¶ 25–28. This satisfies the numerosity requirement of Rule 23(a)(1). See

8 Californians for Disability Rights, Inc. v. Cal. Dep’t of Transp., 249 F.R.D. 334, 347 (N.D. Cal.

9 2008) (stating that “precedent suggests that 20−40 class members is the ‘grey area’ for

10 numerosity”); see also Gomez v. J. Jacobo Farm Labor Contractor, Inc., 334 F.R.D. 234, 251

11 (E.D. Cal. 2019) (explaining that an exact number of class members is not required for

12 certification if it is reasonable to believe that joinder would be impracticable).

13

14 C. Commonality

15 Pursuant to Rule 23(a)(2), a class action is maintainable only if “there are questions of law

16 or fact common to the class.” Fed. R. Civ. P. 23(a)(2). To meet the commonality requirement,

17 class claims must be based on a “common contention . . . capable of classwide resolution.” Wal-

18 Mart Stores, 564 U.S. at 350. This means that determination of the “truth or falsity” of that

19 contention “will resolve an issue that is central to the validity of each one of the claims in one

20 stroke.” Id. Certification does not turn on “the raising of common ‘questions’—even in droves—

21 but, rather the capacity of a classwide proceeding to generate common answers apt to drive the

22 resolution of the litigation.” Id. (quoted source omitted). In other words, not “every question of

23 law or fact must be common to the class; all that Rule 23(a)(2) requires is ‘a single significant

24 question of law or fact.’” Abdullah v. U.S. Sec. Assocs., Inc., 731 F.3d 952, 957 (9th Cir.2013)

25 (emphasis omitted) (quoting Mazza v. Am. Honda Motor Co., 666 F.3d 581, 589 (9th Cir. 2012)).

26 Here, the commonality requirement is satisfied. Kang identifies the common issues as (1)

27 whether Credit Bureau disclosed consumer information included in its OFAC Check documents to

28 third parties; (2) whether those disclosures contained inaccurate OFAC “Hits”; and (3) whether

1 Credit Bureau willfully failed to use reasonable procedures to assure the maximum possible

2 accuracy of the OFAC information through its “similar name” matching script system. Credit

3 Bureau does not address the commonality issue in opposition. Additionally, several courts in this

4 Circuit have regarded the question of whether the defendant used reasonable procedures to assure

5 maximum possible accuracy as satisfying the commonality prerequisite. See Patel v. Trans Union,

6 LLC, 308 F.R.D. 292, 304 (N.D. Cal. 2015); Ramirez v. Trans Union, LLC, 301 F.R.D. 408, 418

7 (N.D. Cal. 2014);1 Acosta v. Trans Union, LLC, 243 F.R.D. 377, 384 (C.D. Cal. 2007).

8 Accordingly, the commonality requirement is met here.

9

10 D. Typicality

11 Pursuant to Rule 23(a)(3), a class action may be maintained only if the “claims or defenses

12 of the representative parties are typical of the claims or defenses of the class.” Fed. R. Civ. P.

13 23(a)(3). “[T]ypicality determines whether a sufficient relationship exists between the injury to

14 the named plaintiff and the conduct affecting the class so that the court may properly attribute a

15 collective nature to the challenged conduct.” 1 Newberg on Class Actions § 3:29. The test for

16 typicality is (1) “whether other members have the same or similar injury,” (2) “whether the action

17 is based on conduct which is not unique to the named plaintiffs,” and (3) “whether other class

18 members have been injured by the same conduct.” Wolin v. Jaguar Land Rover N. Am., LLC,

19 617 F.3d 1168, 1175 (9th Cir. 2010) (citations omitted).

20 Here, Kang’s claims are typical of those of the class. Following the Supreme Court’s

21 holding in TransUnion LLC v. Ramirez, Kang and the putative class members incurred the “same

22 or similar injury” in that they suffered “concrete reputational harm” from the “same conduct” of

23 Credit Bureau. See TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2200 (2021) (finding that 1,853

24

25 1 The Court recognizes that Ramirez v. Trans Union, LLC, 301 F.R.D. 408 (N.D. Cal. 2014) was reviewed on appeal

by the Ninth Circuit in Ramirez v. TransUnion LLC, 951 F.3d 1008 (9th Cir. 2020), and then again by the Supreme

26 Court in TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021). The Supreme Court reversed as to standing only and

for a portion of the class who had no proof that the defendant published their credit information inaccurately to a third

27 party. The Supreme Court affirmed the holdings of the lower courts that the portion of the class whose credit

information was inaccurately published to a third party had standing because they suffered a common concrete injury.

28 Accordingly, when citing the “Ramirez Cases” from the lower court levels, the Court only cites those portions of the

1 class members demonstrated “concrete reputational harm” where the defendant failed to use

2 reasonable procedures to ensure the accuracy of the class members’ OFAC information).

3 Specifically, like the TransUnion defendant, Credit Bureau prepared a report about Kang and each

4 class member that included an inaccurate OFAC “Hit” generated by its “similar name” matching

5 script and published that OFAC information to its customers.

6 Credit Bureau contends that Kang’s claims are not typical because Kang’s experience with

7 Credit Bureau’s OFAC Check is “entirely different than the class he seeks to represent” and the

8 injuries of Kang and the class are “worlds apart.” Doc. No. 116 at 11-12. While Kang may have

9 had a somewhat unique experience with Credit Bureau when the disclosure of his OFAC check

10 results in front of his father and sister during his purchase caused him to feel “angry” and

11 “embarrassed,” that experience is not the basis for Kang’s claim; rather, the basis comes from the

12 willfulness of Credit Bureau’s conduct. Ramirez, 301 F.R.D. at 420. Even if Kang’s injuries were

13 slightly more severe than some class members’ injuries, Kang’s injuries still arose “from the same

14 event or practice or course of conduct that [gave] rise to the claims of other class members and

15 [his claims were] based on the same legal theory.” Ramirez v. TransUnion LLC, 951 F.3d 1008,

16 1033 (9th Cir. 2020) (citing Lacy v. Cook Cty., Ill., 897 F.3d 847, 866 (7th Cir. 2018)); see also

17 Parsons v. Ryan, 754 F.3d 657, 685 (9th Cir. 2014) (“We do not insist that the named plaintiffs'

18 injuries be identical with those of the other class members, only that the unnamed class members

19 have injuries similar to those of the named plaintiffs and that the injuries result from the same,

20 injurious course of conduct.”). Thus, Kang’s injuries were not so unique, unusual, or severe to

21 make him an inapt representative of the classes. Ramirez, 951 F.3d at 1033.

22

23 E. Adequacy of Representation

24 Pursuant to Rule 23(a)(4), a class action is maintainable only if the “the representative

25 parties will fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). The

26 term “parties” refers to both the class representative and class counsel. In re Conseco Life Ins. Co.

27 LifeTrend Ins. Sales & Mktg. Litig., 270 F.R.D. 521, 531 (N.D. Cal. 2010). The Ninth Circuit

28 tests the adequacy as follows: “(1) do the named plaintiffs and their counsel have any conflicts of

1 interest with other class members and (2) will the named plaintiffs and their counsel prosecute the

2 action vigorously on behalf of the class?” Ellis v. Costco Wholesale Corp., 657 F.3d 970, 985

3 (9th Cir. 2011) (quoted source omitted). “Adequate representation depends on, among other

4 factors, an absence of antagonism between representatives and absentees, and a sharing of interest

5 between representatives and absentees.” Id.

6 The Court finds that Kang is an adequate class representative, a matter that Credit Bureau

7 does not contest. First, Kang is not conflicted, as he and the rest of the putative class have a

8 mutual interest in recovering from Credit Bureau (and not any supervisors or other employees)

9 uniform statutory damages under the FCRA and CCRAA. Second, Kang has shown himself to be

10 qualified to serve as class representative by retaining counsel, conferring with his attorneys

11 regarding the matter, and participating in discovery. Doc. No. 111-18.

12 Credit Bureau also does not challenge the adequacy of proposed class counsel, Caddell &

13 Chapman, and Francis Mailman Soumilas, P.C. Michael Caddell, of the former firm, declares that

14 he and his law firm have significant experience litigating complex claims and numerous class

15 action lawsuits. Doc. No. 111-21. Kang has also presented a firm biography of Francis Mailman

16 Soumilas, P.C. that reflects similar credentials. Doc. No. 111-20. Having considered the factors

17 under Rule 23(g), the Court finds that proposed class counsel is adequate because counsel: (1)

18 have sufficiently identified and investigated potential claims in this lawsuit; (2) have sufficient

19 experience litigating FCRA and other class actions; (3) appear to have sufficient knowledge of the

20 applicable FCRA and CCRAA laws; and (4) appear to be willing and able to commit sufficient

21 resources to representing the proposed class. Fed. R. Civ. P. 23(g)(1)(A).

22

23 F. Predominance

24 Rule 23(b)(3) requires a showing that “questions of law or fact common to class members

25 predominate over any questions affecting only individual members.” Fed. R. Civ. P. 23(b)(3).

26 This requirement “tests whether proposed classes are sufficiently cohesive to warrant adjudication

27 by representation.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623 (1997). The

28 predominance inquiry logically involves two steps: “a court must first characterize the issues in

1 the case as common or individual and then weigh which predominate.” 2 Newberg on Class

2 Actions § 4:50. An individual issue is one where the “members of a proposed class will need to

3 present evidence that varies from member to member.” Tyson Foods, Inc. v. Bouaphakeo, 136 S.

4 Ct. 1036, 1045 (2016) (citing 2 Newberg on Class Actions § 4:50). Whereas a common issue is

5 one where “the same evidence will suffice for each member to make a prima facie showing [or]

6 the issue is susceptible to generalized, class-wide proof.” Id.

7 In general, common issues will not predominate if “‘a great deal of individualized proof’

8 would need to be introduced or ‘a number of individualized legal points’ would need to be

9 established after common questions were resolved,” nor would they predominate if the resolution

10 of an “‘overarching common issue breaks down into an unmanageable variety of individual legal

11 and factual issues.’” 2 Newberg on Class Actions § 4:50 (quoting Klay v. Humana, Inc., 382 F.3d

12 1241, 1255 (11th Cir. 2004), and Cooper v. S. Co., 390 F.3d 695, 722 (11th Cir. 2004)). On the

13 other hand, common questions likely will predominate if “individual factual determinations can be

14 accomplished using computer records, clerical assistance, and objective criteria—thus rendering

15 unnecessary an evidentiary hearing on each claim,” or if “adding more plaintiffs to the class would

16 minimally or not at all affect the amount of evidence to be introduced.” Id. (quoting Smilow v.

17 Sw. Bell Mobile Sys., Inc., 323 F.3d 32, 40 (1st Cir. 2003), and Klay, 382 F.3d at 1255).

18 Here, the Court finds that common questions predominate on Kang’s FRCA claims, but

19 not on a subgroup of Kang’s CCRAA claims. The primary common question is whether Credit

20 Bureau’s “similar name’ matching script system was a reasonable procedure to assure maximum

21 possible accuracy of the OFAC information it prepared for its customers. See Patel, 308 F.R.D. at

22 308 (finding that a predominant common issue was whether there were “reasonable procedures in

23 place (here, the name-only logic) to ensure the maximum possible accuracy of the information”);

24 Ramirez, 301 F.R.D. at 422 (The overriding common question on this claim is whether

25 [Defendant’s] name-only matching logic is a reasonable procedure to assure maximum possible

26 accuracy).

27 Credit Bureau contends that predominance is not met on two grounds: First, Credit Bureau

28 asserts that individualized inquiries into the extent of each class member’s “actual damages”

1 predominate over common questions. Second, Credit Bureau contends that the “timeliness” of

2 each class member’s claims presents predominant individualized inquiries. The next two

3 subsections address both subjects in turn.

4

5 1. Damages

6 A defendant who willfully violates the FCRA owes the consumer actual damages sustained

7 by the consumer or statutory damages of not less than $100 and not more than $1,000. 15 U.S.C. §

8 1681n(a)(1). Kang claims that “[n]o individualized damages issues exist because Plaintiff is

9 seeking statutory damages for each member of the class, not actual damages[.]” Doc. No. 111-1 at

10 15. Credit Bureau contends that, despite Kang’s demand for statutory damages, the Court must

11 nevertheless consider the members’ individualized actual damages when assessing statutory

12 damages because “the FCRA does not specify the factors a jury should consider in awarding

13 statutory damages” and “[u]sing actual damage to determine statutory damages grounds the award

14 in objective, concrete evidence and limits the risk that the award will be found unreasonable or

15 excessive.” Doc. No. 116 at 15–16. The Court declines to accept Credit Bureau’s interpretation of

16 15 U.S.C. § 1681n(a)(1).

17 The plain language of § 1681n(a)(1)(A) provides that a qualifying consumer is entitled to

18 actual damages “or” statutory damages, and the Ninth Circuit has interpreted this disjunction to

19 mean that the consumer may recover statutory damages without demonstrating actual harm.

20 Bateman v. Am. Multi-Cinema, Inc., 623 F.3d 708, 718-19 (9th Cir. 2010) (citing Murray v.

21 GMAC Mortg. Corp., 434 F.3d 948, 953 (7th Cir. 2006) (under the FCRA “individual losses, if

22 any, are likely to be small—a modest concern about privacy, a slight chance that information

23 would leak out and lead to identity theft. That actual loss is small and hard to quantify is why

24 statutes such as the Fair Credit Reporting Act provide for modest damages without proof of

25 injury”)). Because the actual harm that a willful FCRA violation will inflict on a consumer is often

26 small or difficult to prove, Congress set a range of statutory damages that “is proportionate and

27 appropriately compensates the consumer” irrespective of actual harm. Bateman, 623 F.3d at 719

28 (emphasis in original). Although there is no principled basis for determining when an award closer

1 to the $100 mark or $1,000 mark is more proportionate, id., the Ninth Circuit noted that an award

2 “near the high end of the range” is clearly justified when the defendant willfully violates the

3 FCRA, like Credit Bureau is alleged to have done here, by recklessly labeling hundreds of

4 consumers as sanctioned individuals without taking basic steps to verify the accuracy of these

5 labels. Ramirez, 951 F.3d at 1035.

6 Moreover, within the Ninth Circuit, the issue of determining the award amount within the

7 statutory range generally has not been predominant enough to negate certification of FRCA

8 section 1681e(b) class actions. See Patel, 308 F.R.D. at 307-10 (certifying class action that sought

9 statutory damages for defendant’s willful violation of section 1681e(b)); Ramirez, 301 F.R.D. at

10 423 (the question of what statutory damage (between $100 and $1000) to award each class

11 member did not require an individualized inquiry that predominated); Acosta v. Trans Union,

12 LLC, 240 F.R.D. 564, 571 (C.D. Cal. 2007) (noting that any legally relevant distinction among the

13 class members’ claims regarding the damages each suffered “is immaterial here where the FCRA

14 awards statutory damages”). Credit Bureau cites one exception from the District of Arizona, which

15 denied class certification in part because there could be wide variation in award amount within the

16 statutory regime based on each class member’s actual harm.2 Mix v. Asurion Ins. Servs., 2016

17 U.S. Dist. LEXIS 172874, *42 (D. Ariz. Dec. 14, 2016). However, the Mix court did not address

18 or distinguish the Ninth Circuit’s apparently contrary holding in Bateman that the statutory

19 damages range “is proportionate and appropriately compensates the consumer” irrespective of

20 actual harm. Bateman, 623 F.3d at 719. Additionally, the Mix court primarily relied on Six (6)

21 Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301 (9th Cir. 1990) as authority to reach its

22 conclusion. However, the Ninth Circuit later distinguished Six (6) Mexican Workers on the

23 grounds that it involved Act-specific analysis under the Farm Labor Contractor Registration Act.

24

25 2 Credit Bureau also cites Campbell v. Facebook Inc., 315 F.R.D. 250, 267-69 (N.D. Cal. 2016) for the proposition

that the Northern District of California denied certification of a FCRA class under Rule 23(b)(3) on “similar grounds.”

26 However, Campbell is distinguishable because it concerned inquiries into statutory damage awards under the

Electronic Communications Privacy Act (“ECPA”) in which courts consider a set of factors, such as (1) the severity of

27 the violation, (2) whether or not there was actual damage to the plaintiff, (3) the extent of any intrusion into the

plaintiff's privacy, (4) the relative financial burdens of the parties, (5) whether there was a reasonable purpose for the

28 violation, and (6) whether there is any useful purpose to be served by imposing the statutory damages amount.

1 Ramirez, 951 F.3d at 1034-35. Accordingly, the Court concludes that this case does not present

2 individualized damages issues that are so severe that they destroy class certification with respect to

3 Kang’s FCRA claims.3

4 Nevertheless, with respect to Kang’s CCRAA claims, the predominance analysis is

5 different. The CCRAA, unlike the FCRA, requires a showing of actual harm where, as here, the

6 plaintiff is seeking statutory punitive damages under section 1785.31(a)(2)(B). See Trujillo v. First

7 American Registry, Inc., 157 Cal. App. 4th 628, 637-38 (2008). Thus, to the extent Kang is

8 seeking class certification of his state law claims for statutory punitive damages, individual issues

9 will predominate. Ramirez, 301 F.R.D. at 425.

10 Kang, however, also seeks certification of his CCRAA reasonable procedures claim for

11 injunctive relief pursuant to Rule 23(b)(2). Certification under that provision is appropriate if Rule

12 23(a) is satisfied (as it is here) and “the party opposing the class has acted or refused to act on

13 grounds that apply generally to the class, so that final injunctive relief or corresponding

14 declaratory relief is appropriate respecting the class as a whole.” Fed. R. Civ. P. 23(b)(2). There is

15 no requirement that common questions predominate as with Rule 23(b)(3). Further, that the state

16 monetary claims will not be certified pursuant to Rule 23(b)(3) does not mean that the claim for

17 injunctive relief cannot be certified under Rule 23(b)(2). See Ramirez, 301 F.R.D. at 425; Ries v.

18 Arizona Beverages USA LLC, 287 F.R.D. 523, 542 (N.D. Cal. 2012) (denying certification of

19 monetary claims under Rule 23(b)(3) and granting certification of declaratory and injunctive relief

20 claims under Rule 23(b)(2)).

21 2. Timeliness

22 The FCRA requires a consumer to file suit “no later than the earlier of (1) two years after

23 the date of discovery by the consumer of the violation, or (2) five years after the date on which the

24 violation occurs. 15 U.S.C. § 1681p. The CCRAA requires a consumer to file suit within two

25 years of the date the consumer knew, or should have known, of the violation, or seven years from

26 the earliest date on which liability could have arisen. Cal. Civ. Code § 1785.33.

27

3 Even if this case presents some individualized damages issues within the statutory range, the need for individual

28 damages calculations alone will not defeat class certification. Ramirez, 951 F.3d at 1033 n.14 (citing Vaquero v. Ashley

1 Kang seeks to certify a class under the FCRA dating back five years from the time he filed

2 his Complaint and a class under the CCRAA dating back seven years from the time he filed his

3 Complaint. Credit Bureau contends that class certification should be denied because the issue of

4 whether a class member’s claims fall within the longer of the two statute of limitations periods

5 presents individual questions that predominate over common questions. Doc. No. 116 at 20. In

6 response, Kang argues that the existence of a statute of limitations issue does not compel a finding

7 that individual issues predominate over common ones. Doc. No. 117 at 16.

8 “The Ninth Circuit has repeatedly held that ‘[t]he existence of a statute of limitations issue

9 does not compel a finding that individual issues predominate over common ones.’” Nitsch v.

10 Dreamworks Animation SKG Inc., 315 F.R.D. 270, 308 (N.D. Cal. 2016) (citing Williams v.

11 Sinclair, 529 F.2d 1383, 1388 (9th Cir. 1975) and Cameron v. E.M. Adams & Co., 547 F.2d 473,

12 478 (9th Cir. 1976)). “[B]ut individual questions of compliance with the relevant statute of

13 limitations nonetheless weigh against certification in terms of predominance.” Wilson v. Metals

14 USA, Inc., 2016 U.S. Dist. LEXIS 86861, *37 (E.D. Cal. July 1, 2016). When weighing

15 predominance, the Court undertakes a pragmatic inquiry into the types of proof the parties will use

16 to prove or disprove the elements of their claims. Nitsch, 315 F.R.D. at 310; Romero v. Producers

17 Dairy Foods, Inc., 235 F.R.D. 474, 489 (E.D. Cal. 2006). “Merits questions may be considered to

18 the extent—but only to the extent—that they are relevant to determining whether the Rule 23

19 prerequisites for class certification are satisfied.” Stromberg v. Qualcomm Inc., 14 F.4th 1059,

20 1075 (9th Cir. 2021).

21 Here, a pragmatic assessment demonstrates that the statute of limitations issue will not

22 present individual questions that predominate over common questions. “Credit reports are

23 generally prepared and published to third parties without a consumer being made aware of them,

24 signifying that the vast majority of violations would fall subject to the longer of [the two statute of

25 limitations periods].” Acosta, 243 F.R.D. at 387. Credit Bureau has not presented evidence

26 indicating otherwise.

27 Credit Burea relies heavily on Holman v. Experian Info. Sols., Inc., 2012 U.S. Dist. LEXIS

28 59401 (N.D. Cal. Apr. 27, 2012). In Holman, the court found that individual issues predominated

1 because in order for the defendant to assess its liability to the putative class members whose credit

2 reports were disclosed more than two years before the class action’s trigger date, the defendant

3 would have to determine whether each class member had accessed their credit report or otherwise

4 learned of the defendant’s disclosure. Holman, 2012 U.S. Dist. LEXIS 59401, at *42-43.

5 However, Holman is distinguishable because, unlike Credit Bureau, the Holman defendant

6 submitted evidence that “a substantial proportion of the class members may have been put on

7 notice by [the defendant’s customer] of the [the defendant’s] violation.” Id. at 42. Here, aside from

8 the experience Norm Reeves Honda had with Kang, Credit Bureau presented no evidence that its

9 other customers notified, or may have notified, putative class members of their OFAC check

10 results. Neither did Credit Bureau submit evidence suggesting that the class members were

11 notified, or may have been notified, through other means.

12 Furthermore, to the extent Holman suggests that a tolling analysis always defeats class

13 certification, it conflicts with the Ninth Circuit’s holdings in Williams and Cameron, which

14 permitted class action claims to proceed despite the existence of such individualized inquiries. See

15 Williams, 529 F.2d at 1388 (holding that the statute of limitations issue of whether each class

16 member discovered, or in the exercise of reasonable diligence should have discovered, the

17 violation was not a predominant individual issue); Cameron, 547 F.2d at 478 (same); see also

18 Siqueiros v. GM LLC, 2021 U.S. Dist. LEXIS 98944, *68 (N.D. Cal. May 25, 2021) (applying

19 holdings of Williams and Cameron that the existence of a statute of limitations issue does not

20 compel a finding that individual issues predominate over common ones); Nitsch v. Dreamworks

21 Animation SKG Inc., 315 F.R.D. 270, 308-09 (N.D. Cal. 2016) (same); Daniel v. Ford Motor Co.,

22 2016 U.S. Dist. LEXIS 130745, *12-14 (E.D. Cal. Sep. 23, 2016) (same). Holman does not

23 address or distinguish Williams or Cameron in its analysis.

24 In sum, although Kang’s proposed classes do raise some individualized statute of

25 limitations questions, they are not predominant over the primary common question of whether

26 Credit Bureau’s “similar name” matching script system was a reasonable procedure to assure

27 maximum possible accuracy of the OFAC information it prepared for its customers.

28

1 3. Conclusion on Predominance

2 The Court finds that individualized damages issues do not predominate over Kang’s FCRA

3 claim for statutory damages or CCRAA claim for injunctive relief, but they do predominate over

4 Kang’s CCRAA claim for statutory punitive damages. Additionally, the Court finds insufficient

5 evidence in the record to conclude that individualized statute of limitations questions predominate

6 over common questions regarding the reasonableness of Credit Bureau’s procedures.

7

8 G. Superiority

9 Certification under Rule 23(b)(3) also requires a finding that “a class action is superior to

10 other available methods for the fair and efficient adjudication of the controversy.” Fed. R. Civ. P.

11 23(b)(3). To evaluate superiority, the court shall consider four “pertinent” factors: (1) the class

12 members’ interests in individually controlling the prosecution or defense of separate actions; (2)

13 the extent and nature of any litigation concerning the controversy already begun by or against

14 class members; (3) the desirability or undesirability of concentrating the litigation of the claims in

15 the particular forum; and (4) the likely difficulties in managing a class action. Fed. R. Civ. P.

16 23(b)(3)(A)−(D). “A consideration of these factors requires the court to focus on the efficiency

17 and economy elements of the class action so that cases allowed under subdivision (b)(3) are those

18 that can be adjudicated most profitably on a representative basis.” Zinser v. Accufix Research

19 Inst., Inc., 253 F.3d 1180, 1190 (9th Cir. 2001) (quoting 7A Charles Alan Wright, Arthur R. Miller

20 & Mary Kay Kane, Federal Practice and Procedure § 1780, at 562 (2d ed. 1986)). “A class action

21 is the superior method for managing litigation if no realistic alternative exists.” Valentino v.

22 Carter–Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996). In contrast, “[i]f each class member has

23 to litigate numerous and substantial separate issues to establish his or her right to recover

24 individually a class action is not superior.” Zinser, 253 F.3d at 1192.

25 Kang argues that class treatment is clearly superior, and Credit Bureau does not directly

26 address the issue in opposition.4 The Court finds the Rule 23(b)(3) factors weigh in favor of

27

28 4 The Court notes that Credit Bureau’s arguments against Kang’s satisfaction of typicality, commonality, and

1 certification. There is no indication that putative class members have any interest in individually

2 controlling the prosecution of separate actions. Nor is there indication of other actions raising the

3 same issues based on the same facts or indication that there is another forum where an action of

4 this kind could be raised. While managing a class is by nature more difficult than managing the

5 claims of a single plaintiff, there is no suggestion here that the proposed class would be

6 unmanageable. To the contrary, these claims seem particularly apt for class adjudication through

7 use of records and data in Credit Bureau’s possession. Patel, 308 F.R.D. at 310; Ramirez, 301

8 F.R.D. at 423-24.

9 H. Conclusion

10 In light of the above, the Court is satisfied that Kang has demonstrated that class

11 certification is appropriate. As discussed above, however, the classes to be certified will be

12 modified to reflect that the class period ends as of the date of this order and that statutory punitive

13 damages under the CCRA will not be permitted through the class process.

14

15 ORDER

16 Accordingly, IT IS HEREBY ORDERED that:

17 1. Kang’s motion for class certification (Doc. No. 111) is GRANTED in part as

18 follows:

19 a. For Kang’s FCRA claims for statutory damages, the Court certifies a class

20 defined as “All individuals about whom Defendant prepared a report that (1)

21 included an OFAC “Hit;” (2) was published to a third party from October 2,

22 2013 to March 4, 2022 and (3) included a U.S. address (including U.S.

23 Territories) for that individual.”

24 b. For Kang’s CCRAA claims for injunctive relief, the Court certifies a class

25 defined as “All individuals about whom Defendant prepared a report that (1)

26 included an OFAC “Hit;” (2) was published to a third party from October 2,

27 2011 to March 4, 2022; and (3) included a U.S. address (including U.S.

28 Territories) for that individual.”; and

1 2. The Court appoints Plaintiff Sung Gon Kang as class representative, and appoints

2 Plaintiff's counsel, Caddell & Chapman, and Francis Mailman Soumilas, P.C., to

3 serve as co-class counsel.

4

5 IT IS SO ORDERED.

|Dated: _March 4, 2022 7 □□ 7 Cb Lec

_-SENIOR DISTRICT JUDGE

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