Gavel on desk

Written By ESR News Blog Editor Thomas Ahearn

A subsidiary of food and beverage giant PepsiCo has agreed to pay $1.2 million to settle a class action lawsuit that claimed the company violated the Fair Credit Reporting Act (FCRA) “by procuring background reports for employment purposes without making certain required disclosures,” Top Class Actions reports.

A former employee claimed PepsiCo subsidiary Bottling Group LLC violated the FCRA – a federal law that regulates background checks in the U.S. – by failing “to disclose that it would obtain a consumer report for employment purposes in a document consisting solely of the disclosure,” Top Class Actions reports.

Plaintiff Altareek Grice claimed that when he applied for a job at Bottling Group LLC in August of 2016 that the company allegedly violated 15 U.S.C. Section 1681b(b)(2) of the FCRA by failing to make necessary disclosures prior to obtaining background checks for employment purposes. Specifically:

  • 604. Permissible purposes of consumer reports [15 U.S.C. § 1681b] (b) Conditions for Furnishing and Using Consumer Reports for Employment Purposes. (2) Disclosure to Consumer. (A) In general. Except as provided in subparagraph (B), 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.

Top Class Actions reports that the defendants denied any wrongdoing but agreed to the settlement – which was preliminarily approved on May 23, 2018 – to avoid the burden and expense of litigation. Approximately 23,133 Class Members who may be entitled to a payment from the settlement include:

  • Job applicants for whom Bottling Group LLC, Grayhawk Leasing LLC or New Bern Transport Co. (collectively referred to as “Pepsi Beverages Company”) procured a background report for employment purposes from June 19, 2015, through December 1, 2016.
  • Employees subject to Department of Transportation DOT background checks and for whom Pepsi Beverages Company procured a background report for employment purposes from June 19, 2015, through September 4, 2017.
  • All other employees for whom Pepsi Beverages Company procured a background report for employment purposes from June 19, 2015, through October 2, 2017.

FCRA violations may result in fines of up to $100 to $1,000 per violation. The final approval hearing will be held on November 15, 2018. The class action lawsuit is Altareek Grice v. Pepsi Beverages Co., et al., Case No. 1:17-cv-08853, in the U.S. District Court for the Southern District of New York.

Passed by Congress in 1970, the FCRA promotes the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies (CRAs) and is intended to protect consumers from the willful and/or negligent inclusion of inaccurate information in their credit reports.

In May 2016, the U.S. Supreme Court ruled consumers must prove “concrete injury” in lawsuits for alleged “bare” violations of federal statutes like the FCRA in the case Spokeo v. Robins that involved a man who claimed he suffered an injury when Spokeo published incorrect information about him on its website.

The U.S. Supreme Court stated in its opinion: Article III standing requires a concrete injury even in the context of a statutory violation. For that reason, Robins could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.

In January 2018, the Supreme Court denied a petition for a writ of certiorari that sought a review of its opinion following a ruling in August 2017 by the Ninth U.S. Circuit Appeals Court on remand from the Supreme Court that found Robins had sufficient concrete injury under Article III of the U.S. Constitution.

The fact that employers are still targeted in FCRA class action lawsuits for technical violations of the statute even after the Supreme Court ruling in Spokeo is one of the “ESR Top Ten Background Check Trends” for 2018 selected by leading global background check firm Employment Screening Resources® (ESR).

“In no way did the Supreme Court decision in Spokeo mean employers could relax obligations for FCRA compliance,” said ESR founder and CEO Attorney Lester Rosen. “Employers must ensure they comply with the FCRA and work with a background screening firm that understands the FCRA inside and out.”

ESR Whitepapers about FCRA Lawsuits

Employment Screening Resources® (ESR) offers two whitepapers by ESR CEO Attorney Lester Rosen about the causes of FCRA lawsuits: “Common Ways Prospective or Current Employees Sue Employers Under the FCRA” and “Common Ways Consumer Reporting Agencies are Sued Under the 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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