California Federal Court Strikes Down FCRA Claim

Author:Ms Erin Horton
Profession:Foley & Lardner

Earlier this month, in a case pending in the U.S. District Court for the Central District of California, Home Depot avoided a class action suit under the Fair Credit Reporting Act (FCRA). The lawsuit accused the company of improperly obtaining personal information about job applicants by relying on background check authorization forms that did not meet the FCRA's specific procedural requirements. The company prevailed in having the case dismissed by successfully arguing that the named plaintiff, Katherine Saltzberg, did not allege a "concrete injury" and as a result, lacked legal standing to sue her employer.

The court's decision should be carefully reviewed, because it puts a fine point on the importance of pleading concrete harm in procedural FCRA claims, following the U.S. Supreme Court's decision in Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016).

Congress passed the FCRA in 1970 in order to protect consumer rights to privacy and to ensure fair and accurate credit reporting. The statute includes several stringent procedural requirements, which most employers are aware (and weary) of. Namely, employers must disclose to applicants in writing that they may obtain the applicant's consumer credit report, and they must get each applicant's written authorization before doing so. The disclosure and authorization must be contained in a "stand-alone" document, free of any extra language that might confuse or distract the applicant from reading and understanding the disclosure. In her complaint against Home Depot, Saltzberg alleged that the company failed to present its disclosure and authorization form to her as a stand-alone document, and, therefore, improperly obtained her personal information (despite the fact that she signed the authorization).

These detailed procedural requirements, including the one at issue in Saltzberg's suit, have long been a minefield for employers, because even minor missteps could place the employer on the hook for $1,000 in damages for each violation. For years, class counsel enjoyed a lucrative business arising from employers' procedural mistakes, whether or not they resulted in any concrete harm to the class members. Saltzberg's bare procedural complaint may have passed muster back then. But that was then, and this is now.

In its 2016 Spokeo opinion, the Supreme Court emphasized that a plaintiff cannot withstand a motion to dismiss by simply alleging a procedural FCRA violation—there must be some tangible or intangible "concrete...

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