2022FCRA

Written By Digital Content Editor Thomas Ahearn

In October 2022, the Court of Appeal of the State of California Fifth Appellate District affirmed a judgment of dismissal and granted the defendant’s motion to dismiss a proposed class action lawsuit that claimed violations of the federal Fair Credit Reporting Act (FCRA) because the plaintiff “failed to allege any concrete injury.”

The plaintiff claimed the defendant violated the FCRA by including extraneous information on its background check disclosure form. Under the FCRA, an employer may not obtain a background check unless “a clear and conspicuous disclosure has been made in writing… in a document that consists solely of the disclosure.”

The defendant countered the plaintiff’s argument that the disclosure did not comply with the FCRA because it violated the “standalone” requirement by saying any alleged “confusion” suffered by the plaintiff was insufficient to establish an injury because there were no “downstream consequences” that impacted his employment.

The court agreed with the defendant that the plaintiff was unable to show he was injured and had no claim. In dismissing the lawsuit, the court explained that the plaintiff “has not alleged a concrete or particularized injury to his privacy interest sufficient to afford him an interest in pursuing his claims vigorously.”

The court found the plaintiff’s “alleged informational injury is insufficient under California law to confer upon him standing to pursue his claim in state court. We conclude, under California law, that an informational injury that causes no adverse effect is insufficient to confer standing upon a private litigant to sue under the FCRA.”

In June 2021, the Supreme Court of the United States ruled in TransUnion LLC v. Ramirez that a plaintiff must suffer a “concrete harm” resulting from a defendant’s statutory violation of federal statute such as the FCRA to have sufficient standing to sue under Article III of the United States Constitution.

“To have Article III standing to sue in federal court, plaintiffs must demonstrate, among other things, that they suffered a concrete harm. No concrete harm, no standing,” Justice Brett M. Kavanaugh wrote in the majority opinion that reversed and remanded the case in a narrow five to four vote.

In May 2016, the Supreme Court ruled in Spokeo v. Robins that consumers must prove “an injury in fact” in class action lawsuits for alleged “bare” violations of a federal statute such as the FCRA. The case involved a man who filed a lawsuit against an online “people search engine” for alleged FCRA violations.

The opinion established that the “irreducible constitutional minimum” of standing consists of three elements: “The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.”

The FCRA 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) is a service offering of ClearStar, a leading Human Resources technology company that specializes in background checks, drug testing, and occupational health screening. ClearStar offers background checks that comply with the FCRA and state laws. To learn more, contact ClearStar.

NOTE: Employment Screening Resources (ESR) – a service offering of ClearStar – 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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