Written By ESR News Blog Editor Thomas Ahearn
On March 25, 2021, a District Judge in a Missouri federal court denied a motion to dismiss the class action lawsuit HOOD v. ACTION LOGISTIX, LLC that alleged violations of the federal Fair Credit Reporting Act (FCRA) during a background check by finding that a “technical” procedural violation of the FCRA could cause a “concrete” injury.
Plaintiff Darion Hood applied for a job at Defendant Action Logistix in 2019 and received an offer of employment based on the successful completion of a background check. Hood called Action Logistix to check on the status of his background check and was informed he was no longer eligible for a job due to information in the report.
Hood filed a class action lawsuit that claimed his rights were violated under FCRA § 1681b(b)(3)(A) because he was not provided with the document “A Summary of Your Rights Under the Fair Credit Reporting Act” or given a chance to review the background check report and address its information before the job offer was withdrawn.
Under § 1681b(b)(3)(A) of the FCRA, “the person intending to take such adverse action shall provide to the consumer to whom the report relates – (i) a copy of the report; and (ii) a description in writing of the rights of the consumer under this title, as prescribed by the Bureau (Consumer Financial Protection Bureau or CFPB).”
District Judge Rodney W. Sippel wrote in the Memorandum and Order: “Section 1681b(b)(3)(A) clearly states that anyone who obtains a consumer report ‘for employment purposes’ must furnish a copy of the report and a summary of rights to the individual that the report concerns before any adverse action is taken.”
District Judge Sippel continued in his analysis: “Hood alleged that he was specifically deprived of the opportunity to explain the information in his consumer report before his job offer was withdrawn… The informational injury that Hood has alleged is supported by precedent and is a traditional basis for lawsuits in this country.”
He found the case had merit: “As discussed previously, the language of § 1681b(b)(3)(A), as well as the legislative history of the FCRA, reflects clear congressional intent to make an individual’s inability to review and respond to the contents of his consumer report before suffering an adverse employment action a redressable harm.”
District Judge Sippel explained his denial of the Motion to Dismiss the class action lawsuit HOOD v. ACTION LOGISTIX, LLC: “As a result, I find that Hood has alleged a concrete injury and because he has satisfied the other elements of constitutional standing, I will deny Action Logistix’s motion to dismiss this case.”
In May 2016, the Supreme Court of the United States (SCOTUS) ruled in Spokeo, Inc. v. Robins that consumers must prove “an injury in fact” in class action lawsuits for alleged procedural violations of a federal statute such as the FCRA. Some lower courts have found certain procedural violations of the FCRA can cause a concrete injury.
In March 2021, SCOTUS heard arguments regarding standing in the class action lawsuit TransUnion LLC v. Ramirez that involved alleged violations of the FCRA to consider whether to permit damages when most of the 8,000 class members suffered no actual injury and were reported in an Argument Analysis on SCOTUSblog.com.
“The Supreme Court… seemed to favor a middle-ground approach in a dispute over the rules that limit when consumers can bring class-action lawsuits against corporations. Some justices suggested that an 8,000-member class action against TransUnion… should be significantly narrowed — but not tossed out entirely.”
The FCRA 15 U.S.C § 1681 was enacted by Congress in 1970 to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies (CRAs), and to protect consumers from the willful and/or negligent inclusion of inaccurate information in their consumer reports.
Employment Screening Resources® (ESR) – which was ranked the #1 screening provider by HRO Today in 2020 – offers white papers on “Common Ways Prospective or Current Employees Sue Employers Under the FCRA” and “Common Ways CRAs are Sued Under the FCRA.” To learn more about ESR, visit www.esrcheck.com.
NOTE: Employment Screening Resources® (ESR) reminds readers that allegations made in class action lawsuits are not proof a business or individual violated any law, rule, or regulation since they are in the pleading stage with no factual adjudications yet.
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