Appeals Court Finds FCRA Lawsuit Over Background Check Disclosures Lacks Article III Standing

FCRA-graphic

Written By ESR News Blog Editor Thomas Ahearn

On August 1, 2017, the United States Court of Appeals for the Seventh Circuit held that a plaintiff who filed class action lawsuits claiming extraneous information in a background check disclosure form violated the federal Fair Credit Reporting Act (FCRA) lacked the necessary Article III standing under the U.S. Constitution for a lawsuit.

Circuit Judge William J. Bauer wrote the ruling for the appeal of FCRA cases with the same plaintiff: Over the course of a year and a half, plaintiff Cory Groshek submitted 562 employment applications to various employers, including Time Warner Cable, Inc. and Great Lakes Higher Education Corporation (collectively, “Appellees”).

Judge Bauer wrote that employers provided Groshek with a job application that “included a disclosure and authorization form” telling him a background check report may be procured and used for making an employment decision. The form also contained other information that included a liability release.

Groshek filed a class action lawsuit against the Appellees seeking statutory and punitive damages for alleged violations of FCRA section 1681b(b)(2)(A). This section prohibits employers from procuring a background check report for employment purposes unless certain procedures are followed including:

  • (i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and
  • (ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.

Groshek claimed the Appellees willfully violated what is commonly known as the “stand-alone disclosure requirement” of FCRA 1681b(b)(2)(A)(i). As a result, he claimed Appellees also violated 1681b(b)(2)(A)(ii) by failing to obtain a valid authorization from him before procuring a background check report.

Judge Bauer wrote: Appellees moved to dismiss for lack of subject matter jurisdiction, arguing that Groshek lacked Article III standing because he did not suffer a concrete injury; Groshek responded that he suffered concrete informational and privacy injuries. The district court granted Appellees’ motion.

Groshek appealed to the Seventh Circuit, which consolidated the separate cases. However, Judge Bauer concluded “that Groshek has not alleged facts demonstrating a real, concrete appreciable risk of harm. Because he has failed to demonstrate that he suffered a concrete injury, he lacks Article III standing.”

Not all background check cases involving the FCRA end in favor of employers. ESR News reported that on August 15, 2017, the Ninth U.S. Circuit Appeals Court ruled in the case of Robins v. Spokeo Inc. on remand from the Supreme Court of the United States that involved alleged violations of the FCRA.

The Ninth U.S. Circuit Appeals Court ruled 3-0 in favor of Robins – a man who claimed online “people search engine” Spokeo violated the FCRA by providing inaccurate information about him – had sufficient “concrete injury” to meet the Article III standing established by a Supreme Court ruling in May 2016.

ESR WHITEPAPER EXAMINES FCRA LAWSUITS

Employment Screening Resources® (ESR) founder and CEO Attorney Lester Rosen wrote a whitepaper entitled “Common Ways Prospective or Current Employees Sue Employers Under the FCRA” that is available at www.esrcheck.com/Whitepapers/Ways-Employees-Sue-Employers-Under-FCRA/.

NOTE: Employment Screening Resources® (ESR) does not provide or offer legal services or legal advice of any kind or nature. Any information on this website is for educational purposes only.

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