JPMorgan Chase Granted Summary Judgment in FCRA Class Action Lawsuit over Background Checks

Written By ESR News Blog Editor Thomas Ahearn

The U.S. District Court for the District of Arizona has granted JPMorgan Chase a summary judgment motion in a class action lawsuit that claimed the banking and financial services company violated the Fair Credit Reporting Act (FCRA) when obtaining Federal Bureau of Investigation (FBI) background checks, according to an article on the website of international law firm Troutman Sanders LLP.

The article posted in October 2016 and written by Troutman Sanders lawyers Alan Wingfield, John Lynch, and Meagan Mihalko – all of whom represented Chase in the class action lawsuit – states that the case of Amanda Mix v. JPMorgan Chase (No. 2:15-cv-01102-JJT) has “important positive implications for banks conducting federally-required background checks on job applicants and employees.”

The authors explain how Chase uses an “authorized FBI-channeler” to obtain FBI background checks “to comply with its own federal obligations governing employee qualifications” and that “the background checks were not governed by the FCRA” because both the FBI and FBI-channeler did not meet the definition of a “consumer reporting agency” that would indeed be regulated by the FCRA.

Chase argued that the background checks “are not consumer reports because the channeler does not assemble or evaluate the information, but instead passes the unadulterated information from the FBI to Chase as a conduit.” The Court rejected arguments by the Plaintiff on why the background checks and channeler should be governed by the FCRA and adopted Chase’s position “that the FCRA did not apply.”

The article explains that the Court found Chase demonstrated the “absence of a genuine dispute” as to whether their FBI-approved channeler is a CRA: Specifically, the Court reasoned that Chase’s approved channeler was “akin to an agent acting at the behest of its principals—[Chase] and the FBI; therefore, as an agent without control over its principals’ employment decisions [the channeler] is not a CRA.”

The authors concluded: Banks operate under a number of federal requirements to conduct background checks on employees. This opinion confirms that FBI background checks, relied on by many financial institutions in accordance the federal requirements, may not be subject to the FCRA disclosure requirements, especially where they are conducted through the use of an authorized-FBI channeler.

The opinion contains favorable law for consumer reporting agencies as well. The opinion lends support that the definitional inquiry into whether an entity acts as a consumer reporting agency should be determined on a transaction-based analysis, and therefore the fact that the entity has an affiliate, or itself, has FCRA-lines of business does not mean that every part of the business is subject to the FCRA.

The article “District of Arizona Grants Summary Judgment to JPMorgan Chase on FCRA Background Screening Class” is available at www.troutmansanders.com/district-of-arizona-grants-summary-judgment-to-jpmorgan-chase-on-fcra-background-screening-class-action-10-13-2016/. For more information about Troutman Sanders LLP, visit www.troutmansanders.com.

The Order Granting Summary Judgment in the case of Mix v. JPMorgan Chase Bank, NA, No. CV-15-01102-PHX-JJT, United States District Court, District of Arizona, dated October 6, 2016, is available online at  www.leagle.com/decision/In%20FDCO%2020161007761/MIX%20v.%20JPMORGAN%20CHASE%20BANK,%20NA.

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