On April 23, 2018, the U.S. District Court for the Northern District of Illinois in Ratliff v. Celadon Trucking Servs., 1:17-cv-07163, dismissed a putative class action lawsuit alleging a violation of the pre-adverse action notice requirements in section 1681b(b)(3) of the Fair Credit Reporting Act (“FCRA”). Ratliff is significant in the body of background check precedent because it is a part of an emerging trend of § 1681b(b)(3) claims (as opposed to the more commonly challenged § 1681b(b)(2)Disclosure claims) challenged and dismissed for lack of Article III standing.

In the opinion, Judge Manish S. Shah found plaintiff Ratliff could not show that he suffered an injury-in-fact after defendant Celadon allegedly did not properly provide him with an FCRA mandated notice before declining his employment due to the results of his criminal background check.

Ratliff applied for a truck driver position with Celadon by submitting an application and electronically signing disclosure and release consent forms. Then, a recruiter at Celadon processed Ratliff’s application and initiated a request to obtain his background report from a credit reporting agency. Based on information obtained in the background report, Celadon decided not to hire Ratliff. But, Celadon allegedly did not follow the pre-adverse action notice requirements mandated by the statute.

Ratliff asserted that Celadon willfully violated section b(b)(3) of the FCRA by failing to give him an opportunity to contest the results of his background check, which caused him an informational injury. Celadon moved to dismiss for lack of standing, arguing that the complaint did not allege that the report Celadon used contained harmful inaccuracies that he was unable to correct.

The Court concluded Ratliff did not have Article III standing because his alleged injury “does not satisfy Article III’s injury-in-fact requirement.”

In more detail, the Court explained:

Congress designed the procedures in § 1681b(b)(3)(B) and other sections of the FCRA to prevent the dissemination of false consumer information. See Spokeo, 136 S.Ct. at 1550. Had Ratliff, for example, alleged that defendants’ violation of the FCRA prevented him from correcting misinformation in the report regarding his driving record, which affected defendants’ decision not to hire him, then this case would be analogous to Akins and Public Citizen because it would describe a concrete harm that the statute sought to prevent. Absent those or related allegations, Akins and Public Citizen do not support Ratliff’s assertion of an injury in fact.

But for the procedural violation, Ratliff would not have a claim against defendants. Indeed, it is possible that the information in Ratliff’s report that motivated defendants’ hiring decision was accurate and that even if defendants had timely notified Ratliff of the report, defendants still would not have hired Ratliff. In that scenario, there would be no injury—abstract or concrete. “Congress’ judgment that there should be a legal remedy for the violation of a statute does not mean each statutory violation creates an Article III injury.” Meyers v. Nicolet Rest. of De Pere, LLC, 843 F.3d 724, 727 (7th Cir. 2016) (citing Diedrich v. Ocwen Loan Serv., LLC, 839 F.3d 583, 590–91 (7th Cir. 2016)). Defendants’ violation here is divorced from any concrete harm that the FCRA intended to prevent. Ratliff’s informational injury allegations do not satisfy Article III’s injury-in-fact requirement.

Because the number of FCRA class actions alleging violations of the pre-adverse action notice requirements have steadily increased over the last several years, Ratliff is a valuable reminder that a defendant can have success in attacking pre-adverse action claims on standing grounds.