In a 2-1 decision, the United States Court of Appeals for the Ninth Circuit held the seven-year period for reporting adverse items under § 1681c(a)(5) of the Fair Credit Reporting Act (FCRA) runs from the “date of entry” of an item and not the “date of disposition.” This case offers a detailed analysis of how to report non-conviction criminal charges, specifically when the seven-year reporting window begins to run and whether a dismissal of an earlier charge constitutes an independent, reportable adverse item. The Ninth Circuit also reversed the dismissal of analogous claims under the California Investigative Consumer Reporting Agencies Act (“ICRAA”) and California’s Unfair Competition Law claims based on the intervening decision of the Supreme Court of California holding that the ICRAA was not unconstitutionally vague.
In Moran v. Screening Pros, the issue was whether the seven-year period ran from the date of a criminal misdemeanor charge, or from the date of the dismissal of that charge nearly four years later.
The Ninth Circuit reversed the district court’s holding that the dismissal of the charge triggered the seven-year reporting period under the FCRA. In doing so, the Ninth Circuit found a tenant screening report that referenced a ten-year old charge (and the dismissal of that charge six years prior) created a claim under FCRA. The court provided a lengthy analysis of § 1681c(a)(5), finding a “charge is an adverse event upon entry, so it follows that the date of entry begins the reporting window.” That interpretation mirrors the opinions put forward by the FTC and the CFPB in their amicus brief to the case.
Of further significance, the Ninth Circuit decision also stated a dismissal of a charge would not be independently reportable under the seven-year period as a separate adverse item. The court explained a dismissal is not an independent adverse item that needs to be reported, but rather the dismissal is a reference to the adverse item, the original charge. The court held:
Both events must be considered as part of the same criminal record and neither may be reported after seven years from the “adverse item,” the charge. Reporting the dismissal alone would reveal the existence of the charge, which after seven years, constitutes outdated criminal history information. A related later event should not trigger or reopen the window, as the adverse event already occurred. To hold otherwise, thereby allowing this information to be reported through disclosure of a dismissal, would circumvent Congress’s intent to confine adverse criminal information to a seven-year window.
Thus, in determining what to include in screening reports, under the Ninth Circuit’s interpretation, companies must ensure that not only are any criminal charges that exceed the seven-year limit excluded, but also any later events (which may be within the seven-year window) that are related to or dependent on that first, triggering event.
In a lengthy dissent, Senior Circuit Judge Kleinfeld disagreed with the majority’s interpretation of how to report the dismissal, stating that a dismissal is an adverse item in itself because “it reveals prior contact with the criminal justice system” and notes in many instances a dismissal is not the equivalent of a finding of innocence, but rather may be that an individual successfully completed the terms of probation and/or is the result of a plea deal. He writes:
Today’s majority, though, takes a path without support in the text of the statute, and without support from any of our sister circuits, mistakenly holding that even if a dismissal is an adverse item of information within seven years, it may not be reported if it arises from a charge more than seven years old. The closest statutory categories are records of arrest, that cannot be reported more than seven years later, and records of convictions, that can be reported forever. A dismissal is neither one.
This case has now been remanded back to the district court for further proceedings.
This decision is significant for the background screening industry, which must navigate how to comply with the FCRA’s strict reporting window. This interpretation of the reporting rules is consumer-friendly in that it narrows the reporting window and gives specific guidelines of how to treat a non-conviction criminal charge that was ultimately dismissed. Background screening companies should review their compliance with the FCRA’s obsolescence restrictions – as well as state law counterparts – in light of this new authority. Further, while the opinion does not address the situation of probation violations from the underlying charge and how such violations would be addressed if dismissed, but a compliance review of that issue may also be appropriate. Finally, to the extent scoring models/products are in use and incorporate non-conviction offenses, those models and products should also be the subject of a compliance review.