Judge Dismisses FCRA Lawsuit Over Background Check Disclosure for Lack of Standing Under Article III

Written By ESR News Blog Editor Thomas Ahearn

On June 15, 2017, a Judge in the Northern District of Texas issued a Memorandum Opinion and Order granting a dismissal for the defendants in a class action lawsuit, Dyson v. Sky Chefs, Inc., holding that the plaintiff who alleged the improper inclusion of “extraneous” information in a Fair Credit Reporting Act (FCRA) disclosure for a background check lacked standing under Article III of the U.S. Constitution.

United States District Judge Jane J. Boyle cited the Supreme Court of the United States decision on May 16, 2016, in the case of Spokeo Inc. v. Robins: “A ‘concrete’ injury must be ‘de facto’; that is, it must actually exist.” Judge Boyle concluded that the Plaintiff suffered no concrete injury and therefore lacked standing under Article III. As a result, the Court lacked subject matter jurisdiction over this case.

In December 2015, the plaintiff applied to work for the defendants as a cook. As part of the application process, the defendants provided applicants with a ‘Disclosure and Authorization Form.’ The plaintiff claimed that due to the form’s non-compliance with the FCRA, the defendants obtained information about him – and thousands of their other employees – that they had no legal right to obtain.

The FCRA is federal government legislation that was enacted in 1970 to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies (CRAs). Under section § 604 of the FCRA, a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless:

• (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.

The plaintiff claimed the defendant violated the FCRA requirement that employers provide their disclosures “in a document that consists solely of the disclosure” because their disclosure combined the required disclosure and authorization with “extraneous information” such as an ongoing authorization clause, notices pertaining to state and municipal law, a summary of rights, and a legal disclaimer.

The defendant argued the Plaintiff’s claim should be dismissed for lack of Article III standing because the acts the Plaintiff complained of did not amount to a “concrete injury.” Article III of the Constitution limits federal-court jurisdiction to actual “Cases” and “Controversies.” Where a court lacks the constitutional power to adjudicate a case, it must dismiss the case for lack of subject matter jurisdiction.

For standing, a plaintiff must demonstrate a “personal stake” in the lawsuit by showing: (1) an injury in fact; (2) a causal connection between the injury and the conduct complained of; and (3) a likelihood that a favorable decision would redress the injury. The injury, however, must be “concrete, particularized, and actual or imminent; fairly traceable to the challenged action; and redressable by a favorable ruling.”

The Memorandum Opinion and Order for the dismissal of Dyson v. Sky Chefs, Inc., (Civil Action No. 3:16-CV-3155-B), issued by United States District Judge Jane J. Boyle in the United States District Court Northern District of Texas Dallas Division on June 15, 2017, is available online at www.esrcheck.com/file/Dyson-v-Sky-Chefs_Memorandum-Opinion-and-Order_6-15-2017.pdf.

ESR Whitepaper on FCRA Lawsuits

Employment Screening Resources® (ESR) founder and CEO Attorney Lester Rosen has written a whitepaper entitled “Common Ways Prospective or Current Employees Sue Employers Under the FCRA” in response to the rising trend of FCRA class action lawsuits. The complimentary whitepaper is available for download at www.esrcheck.com/Whitepapers/Ways-Employees-Sue-Employers-Under-FCRA/.

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