On January 26, a federal judge granted plaintiff Maria Garcia’s (Garcia) motion to remand on the basis that the amount in controversy was below the required threshold. The order was based on the court’s interpretation of the California Investigative Consumer Reporting Act’s (ICRAA) statutory damages scheme and its finding that the statute allows for one statutory penalty per background report, not per violation. The case is styled as Garcia v. Quest Group Consulting.
In this case, Garcia alleged violations of the ICRAA against Quest Group Consulting LLC, Quest Group Search, LLC, Douglas Shaener, and Jason Hanges (defendants). Garcia also asserted claims under the California Private Attorney General Act (PAGA) for alleged violations of the California Labor Code. Garcia alleged that she was hired by the defendants as a youth care worker to supervise unaccompanied migrant children who were temporarily housed in California. Garcia alleged that during her employment, the defendants violated various sections of the California Labor Code and procured an investigative consumer report after requiring her to sign a deficient disclosure form.
The defendants had originally removed the case to federal court based on diversity jurisdiction, which requires an amount in controversy of $75,000. The parties agreed that Garcia’s PAGA claims only totaled $2,125. However, the parties disagreed on the potential monetary liability for the ICRAA claim, which formed the basis of the motion to remand.
The damages provision of ICRAA provides that a user who fails to comply with ICRAA is liable for any damages sustained by the consumer as a result of the failure, or, except in the case of class actions, $10,000, whichever sum is greater. Cal. Civ. Code § 1786.50(a).
The defendants argued that the amount in controversy was $120,000 because Garcia alleged multiple separate statutory violations of the ICRAA against two of the defendants. On the other hand, Garcia argued the amount in controversy for the ICRAA claim was only $20,000 (or $10,000 per defendant) because, although she alleged multiple technical violations of the ICRAA, there was only one potential statutory penalty per background report. The court agreed with the plaintiff’s interpretation, focusing on the plain language of Section 1786.50(a), which provides that a defendant that fails to comply with “any requirement … with respect to an investigative consumer report” is liable to the consumer for actual damages, or $10,000, whichever sum is greater. Therefore, the court held that, at most, the plaintiff would be entitled to one $10,000 ICRAA penalty per background report.
While the case was remanded, the decision can be used as a helpful tool for the defendants to argue that statutory damages should be limited in ICRAA cases. This is especially true given the lack of case law discussing how ICRAA’s statutory damages scheme should be interpreted, and given that in practice, the plaintiff’s bar often takes the position that the statutory damages should be recoverable for each distinct technical violation of the ICRAA. Troutman Pepper will continue to monitor similar cases that interpret the liability and damages available under the ICRAA.