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Court Allows FCRA Authorization & Adverse Action Claims to Proceed

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In a seemingly never-ending litigation matter, the U.S. District Court for the District of Columbia recently allowed a plaintiff’s Fair Credit Reporting Act (FCRA) claim to move forward against his former employer.
 
Originally filed in July 2012, the plaintiff alleged his former employer violated the FCRA by improperly obtaining a background report without proper authorization and by failing to follow the adverse action process. Interestingly, the report at issue was allegedly conducted after the employer learned of a prior perjury conviction. Thus, the employer claimed that the report was conducted in connection with an investigation of suspected misconduct.
 
In the recent opinion, the court analyzed whether the plaintiff had standing to bring the FCRA claims. Essentially the court looked at whether the plaintiff suffered an “injury in fact” versus “bare procedural violations”.

Claim 1: Failure to Obtain Proper Authorization Pre-Hire & Provide Summary of Rights Document

The court analyzed the plaintiff’s argument that the employer failed to provide a proper authorization. First, the court determined the plaintiff cannot claim he did not authorize the initial pre-employment background check. Next, the court reviewed the plaintiff’s argument that he was unaware he was authorizing a background check due to the formatting of the authorization. The court found the plaintiff simply alleged a bare procedural violation as no evidence was presented that demonstrated the formatting caused any sort of injury.
 
Next, the court turned to the plaintiff’s argument that the employer violated the FCRA by failing to provide the “A Summary of Your Rights Under the Fair Credit Reporting Act” document either at time of hire or before any alleged adverse action was taken. The court focused on providing this document during the adverse action process (see following analysis).

Claim 2: Failure to Obtain Proper Authorization Post-Hire & Follow Adverse Action Process

The court then turned to the plaintiff’s next two arguments starting with the allegation that he did not authorize any background checks post-hire. Specifically, the plaintiff claimed any authorization he signed pre-hire did not contain an evergreen clause allowing the employer to conduct further background checks during the lifetime of employment. The plaintiff also alleged the employer submitted a falsified employment application to the court (complete with a “forged signature”). Given the unsettled facts, the court agreed the plaintiff had standing to allow this claim to move forward. In so finding, the court stated that “the right to be informed of to and to authorize a background check…is more than procedural.”
 
With respect to adverse action, the court disagreed with the employer’s claim that it is a bare procedural violation as the plaintiff could not contest the accuracy of the report. In particular, the court found the FCRA’s adverse action requirements extend beyond simply allowing an individual to dispute consumer report information. Rather, the point of the process is to provide the consumer a right to receive the report, and review and discuss prior to a final adverse decision. Further, the purpose of the Summary of Rights document is to inform consumers of what they can do with consumer report results.
 
Based on the intent of the adverse action language and persuasive case law, the court held the plaintiff has standing to bring these claims against the employer. The 8+ year litigation saga continues.

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