Why it matters

Granting LinkedIn’s motion to dismiss, a federal court judge in California held that LinkedIn users could not sue the site for violations of the Fair Credit Reporting Act (FCRA). A group of users claimed that they were not hired for jobs after potential employers utilized the site’s Reference Searches function, which provides a list of other LinkedIn users that may have worked with the applicant. The social networking site moved to dismiss, arguing that the report generated by the function was not a “consumer report” as defined by the statute and that LinkedIn was not a “consumer reporting agency” under the FCRA. The court agreed. All of the information in the reports generated by LinkedIn was derived solely from the plaintiffs’ experiences and transactions with the site, the judge noted, and the plaintiffs provided the site with information about their employment history for the purpose of being published online.

Detailed discussion

Seeking to work in the hospitality industry, Tracee Sweet submitted her resume to a potential employer via LinkedIn. Sweet was invited to interview for the position and was told she would be hired for the job. But the company then called her back to say it had changed its mind after checking some references and declined to give her the job.

Sweet later learned that the references may have been the result of LinkedIn’s “Reference Searches” function, where employers can find people with whom an applicant may have worked previously.

For users that pay a subscription fee, the Reference Search results provide two categories of information: the name of the subject of the search and names of his or her current and former employers and a list of LinkedIn members who are in the same network as the search initiator and who may have worked at the same company as the applicant during the same time period.

Sweet—joined by other individuals—filed suit in California federal court alleging the Reference Search results violated the Fair Credit Reporting Act (FCRA). LinkedIn markets the searches as a way for potential employers to find “trusted references for job candidates” and to “[g]et the real story on any candidate,” Sweet argued, encouraging the search initiator to contact the listed references.

LinkedIn moved to dismiss and U.S. District Court Judge Paul S. Grewal granted the motion, ruling that the searches did not fall within the statute’s definition of a consumer report.

“LinkedIn’s publications of employment histories of the consumers who are the subjects of the Reference searches are not consumer reports because the information contained in these histories came solely from LinkedIn’s transactions or experiences with these same consumers,” the court said. “The FCRA excludes from the definition of consumer report ‘any report containing information solely as to transactions or experiences between the consumer and the person making the report.’ ”

The plaintiffs’ own allegations demonstrated that consumers provide LinkedIn with information about their employment histories so that the site can publish it online, Judge Grewal noted. “[S]haring information is precisely why the subject here or anyone else on LinkedIn provides their employment histories to LinkedIn,” he said.

The inclusion of information about the listed references did not take the search results outside of the exception, the court added. Even though it was secondhand information, it was information about the listed references—not the subjects of the searches, and therefore did not include information pertaining to the plaintiffs.

Further, even if the court had found that the Reference Searches fell within the scope of the FCRA, LinkedIn did not act as a consumer reporting agency when it published the results, Judge Grewal said, as “ ‘[a]n entity does not become a [consumer reporting agency] solely because it conveys, without the consumer’s consent, information about the consumer to a third party in order to provide a specific product or service that the consumer has requested.’ ”

The plaintiffs specifically alleged that the subjects of Reference Searches voluntarily provided their names and employment histories to LinkedIn for the purpose of publication, the court wrote. “As LinkedIn notes, the facts alleged in Plaintiffs’ complaint therefore support the inference that LinkedIn gathers the information about the employment histories of the subjects of the Reference Searches not to make consumer reports but to ‘carry out consumers’ information-sharing objectives,’ ” the judge said.

A claim that the list of possible references was itself a “consumer report” failed because the information provided in the search results did not bear on the plaintiffs’ “character, general reputation, mode of living” or other relevant characteristics, the court said. The people listed are allegedly in the searcher’s network, not the subject’s network, and the search results therefore simply communicate whether the searcher is well connected in a certain industry—not the subject.

Considering the purpose of the Reference Searches, the court said the plaintiffs failed to state a claim that they are used or intended to be used as a factor in determining whether the subjects of the searches are eligible for employment.

“LinkedIn markets the Reference Search results—and therefore expects them to be used—as a way for potential employers to locate people who can provide reliable feedback about job candidates and does not market the results themselves as a source of reliable feedback about job candidates,” the court wrote. “[T]he fact that a potential employer could use a telephone directory for a job candidate’s current employer to contact people who know the candidate does not make that directory a consumer report.”

Judge Grewal granted the motion to dismiss with leave to amend.

To read the order in Sweet v. LinkedIn Corp., click here.