On January 13, 2014, the Southern District of California granted the United States’ motion to intervene in Dowell v. General Information Services, Inc. (“GIS”), No. 13-2581, to defend the constitutionality of 15 U.S.C. § 1681c, a provision of the Fair Credit Reporting Act. GIS contends that subsections (a)(2) and (a)(5) of the provision, which generally prohibit consumer reporting agencies (“CRAs”) from disclosing public information regarding an individual’s non-conviction criminal history more than seven years old, is unconstitutional under Sorrell v. IMS Health Inc., 131 S. Ct. 2653 (2011).

The case stems from a purported class action complaint filed by three plaintiffs, alleging that GIS provided non-conviction data over seven years old in a report to a private company that regulates access and provides employee registration for military base personnel. For one plaintiff, who applied at a California military base in 2012, the report disclosed three drug counts pre-2003, including information that two had been dismissed. For a second plaintiff who applied for a position at a San Diego naval base, the report identified charges in three separate criminal cases, including felonies, along with dismissal information. Finally, the third plaintiff’s report revealed multiple charges for felonies and accurately disclosed that all had been dismissed. 

In Sorrell, the Court struck down a Vermont statute that prohibited pharmacies and data brokers from selling prescriber data if the data would be used for marketing purposes. The Court determined that because the statute permitted pharmacies and data brokers to sell the information to insurance companies, university researchers, journalists and others, that the statute imposed speaker- and content-based restrictions subject to heightened scrutiny, as is required under the Constitution. The state, therefore, failed to establish that the statute directly advanced a substantial government interest and that the measure was drawn to achieve that interest, and that statute was struck down as unconstitutional. 

In Dowell, GIS maintains that if the government could achieve its interests without restricting speech or restricting less speech, it must do so under Thompson v. Western Sates Med. Ctr., 535 U.S. 357, 371 (2002) (holding that if the Government can achieve its interests in a manner that does not restrict commercial speech, or that restricts less speech, the Government must do so). GIS argues in its motion to dismiss that the government’s purported interests — relevancy, privacy and accuracy –  do not support FCRA’s blanket prohibition on disclosure. According to GIS, less restrictive alternatives, including a restriction on employer use of the older, non-conviction data, would equally advance the government’s interest.   

GIS also contends that the government’s focus on privacy interests is overstated, as it is the government who makes the information public, allows disclosure for seven years of non-conviction information and, in some states, offers online, searchable databases for anyone to use. It would stand to reason, then, that any privacy interest, if legitimate, related to the disclosure of “adverse information” that did not result in a conviction would apply equally or even more in the first seven years after the initial event. 

Similarly, First Amendment challenges to the validity of the FCRA were unsuccessful in King v. General Information Systems, Inc., 903 F. Supp. 2d 303 (E.D. Pa. 2012).  That court upheld the constitutionality of the same FCRA provision, finding that individuals have a privacy interest “in maintaining the ‘practical obscurity’ of cumulative, indexed, computerized data” citing U.S. Dept. of Justice v. Reporters Committee for Freedom of Press, 489 U.S. 749, 763 (1989).   

The Attorney General’s decision to intervene in Dowell is the second time in recent months that the Government has decided to weigh in on FCRA litigation. On October 4, 2013, before  the Ninth Circuit Court of Appeals, the Federal Trade Commission (“FTC”) and Consumer Financial Protection Bureau (“CFPB”) filed a joint amicus brief in Moran v. The Screening Pros, LLC, No. 12-57246, arguing that the seven-year period for reporting an “adverse item of information” begins at the time of the charge rather than at the dismissal of a charge. The FTC, however, published guidance materials in 2011 that adopted certain comments from a 1990 guidance document, which stated that the seven-year period could run from the time of dismissal. Now, both the FTC and CFPB are backtracking from the FTC’s own long-standing guidance documents in an amicus brief. Courts have generally rejected this approach, however. Price v. Stevedoring Servs. of Am., Inc., 697 F.3d 820, 832 (9th Cir. 2012) (en banc) (Director of the Office of Worker’s Compensation Programs and Benefits Review Board’s interpretation of statute entitled to no deference where it was a position taken in litigation and unpersuasive). 

What impact do these cases have for employers and background screening providers? 

For background screening providers, if GIS is successful in its argument, the restriction on reporting older, non-conviction criminal history would cease to exist under federal law. For employers, such a future would be uncertain. Would the government then attempt to restrict employers from considering the older, non-conviction data? Is past behavior that resulted in charges relevant to certain positions, such as child sex offenses later dismissed as part of a plea deal for teachers or day care workers? What about felony theft-related charges for individuals who wish to work on military bases, as is the case in Dowell? Where the EEOC has issued guidance stating that an arrest alone is not grounds for denying an employment opportunity, even the EEOC recognizes that an employer may make a decision based on the underlying conduct if the conduct makes the individual unfit for position in question. It remains to be seen how the Court will decide this issue, but both employers and background screening providers should be watching.