On August 29, 2018, the U.S. Court of Appeals for the Seventh Circuit issued its opinion in Robertson v. Allied Solutions, LLC, holding the plaintiff had standing to sue in federal court under the Fair Credit Reporting Act (FCRA). Standing is a constitutional requirement to bring a lawsuit in federal court. Standing requires, among other things, that the defendant's alleged wrongdoing caused the plaintiff to suffer a concrete “injury-in-fact.” In Robertson, the court held that the plaintiff established standing for her class action claims based on the defendant’s alleged violation of the FCRA’s “pre-adverse action” notice requirement.1 Earlier this year, the Ninth Circuit reached just the opposite conclusion in a similar class action.2 Together, the two opinions underscore the grave uncertainty in this evolving area of class action litigation, one that employers should continue to be mindful of and closely monitor.3

Supreme Court’s Standing Opinion in Spokeo Summarized

The United States Supreme Court has addressed standing in several recent opinions, including under the FCRA. The plaintiff in ongoing FCRA litigation against Spokeo alleged that the company violated the FCRA by reporting inaccurate information about him as a “consumer reporting agency,” not as an employer. While the district court dismissed the case for lack of standing under Article III of the United States Constitution, the Ninth Circuit reversed and found that the plaintiff established an adverse consequence—or an “injury-in-fact”—from the defendant’s actions under the FCRA.

In May 2016, the U.S. Supreme Court vacated the Ninth Circuit’s opinion and declared that a plaintiff does not “automatically” have the requisite injury-in-fact “whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” The Supreme Court held that the Ninth Circuit’s standing analysis was incomplete because it did not address the “concreteness” element of standing—i.e., whether the statutory violation cause some “real” harm that “actually exists in the world.”4 On remand from the Supreme Court, the Ninth Circuit recently determined that the plaintiff’s allegations of inaccurate reporting of information about his marital status, age, education, and employment history constitute harm sufficiently concrete to satisfy the injury-in-fact requirement for standing.5

Robertson

The plaintiff in Robertson alleged that Allied Solutions, LLC rejected her for employment based on information in her background report, without first providing her with a pre-adverse action notice and an opportunity to contest the criminal records in the report. The plaintiff claimed that a recruiter merely informed her that the company was rescinding the job offer based on her background check. She filed a putative nationwide FCRA class action. The parties actually reached a class action settlement, but the district court raised the question of standing itself, and ultimately dismissed the lawsuit based on the plaintiff’s lack of standing. The district court relied on the Seventh Circuit’s opinion in another FCRA case,6 one involving the FCRA’s directive for employers to get authorization from job applicants and employees for background checks.

In Robertson, the Seventh Circuit reversed the district court’s order dismissing the plaintiff’s case, holding that the plaintiff established her standing by asserting Allied Solutions, LLC failed to provide her with information she was entitled to by law, i.e., a copy of the background report and a summary of her legal rights under the FCRA. The court emphasized how the plaintiff was entitled under the FCRA to an opportunity to try to convince Allied Solutions, LLC not to rescind the offer, and that she was entitled to see a copy of her background check in order to do so. (The court did not go so far as to say that Allied Solutions, LLC should have hired her. Nothing in the FCRA dictates the outcome of hiring or other personnel decisions.)

Takeaways

The FCRA remains a very fertile source of nationwide class action litigation against employers. Standing to proceed with FCRA claims in federal court is an evolving area of the law, one where consensus continues to be lacking. They key for employers to minimizing legal risk is thus to be hyper-vigilant about compliance with the requirements of the FCRA, as well as the many other local “ban the box laws” in California7 and other jurisdictions.8