Why it matters: Reiterating the need for employers to ensure compliance with every word of the Fair Credit Reporting Act (FCRA), an Illinois judge let a suit proceed against Sprint over background checks, holding that the alleged technical violation of the statute can move forward despite the fact that the plaintiff suffered no actual harm. An applicant for a position at a Sprint store in Chicago signed a form titled, "Authorization for Background Investigation." He then sued the company asserting a violation of Section 1681 of the FCRA, arguing that Sprint willfully ran afoul of the statute because the authorization form did not consist solely of the required disclosure. The employer responded with a motion to dismiss because the applicant suffered no actual harm.

Whether or not the applicant suffered any harm was irrelevant, the court said, as the "FCRA exists to protect the privacy and economic interests of consumers." Congress established enforceable statutory rights in the FCRA, the judge wrote, and created a remedy within the Act that was not dependent upon evidence of harm.

Detailed discussion: In June 2015, Roberto Rodriguez applied for a job at a Sprint retail store in Chicago. As part of the application process, Sprint provided Rodriguez with a form seeking his authorization to perform a background check.

Titled "Authorization for Background Investigation," the form contained "third party authorizations, a blanket release of multiple types of information from multiple types of entities, state specific information, and various statements above and beyond a disclosure that a consumer report would be procured." Rodriguez signed the form and Sprint obtained a consumer report on him from a consumer reporting agency.

Rodriguez then filed suit against Sprint in November 2015, alleging a violation of Section 1681b(b)(2)(A) of the Fair Credit Reporting Act (FCRA). That provision provides that a "person may not procure a consumer report" unless: "(i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of that disclosure, that a consumer report may be obtained for employment purposes; and (ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person."

Because Sprint's authorization form did not "consist[] solely of the disclosure," Rodriguez claimed the company committed a willful violation of the statute. The complaint requested statutory damages and punitive damages as well as costs and attorneys' fees.

Sprint offered the plaintiff $1,000 to settle his claim. When Rodriguez let the offer lapse, the defendant moved to dismiss the suit for lack of subject matter jurisdiction based on the purported absence of a case or controversy.

Relying in part upon the U.S. Supreme Court's recent decision in Campbell-Ewald Co. v. Gomez, an Illinois federal court judge denied the motion. In that case, the Justices determined that a lapsed offer of judgment has no effect on the justiciability of a case and does not nullify a live controversy between the litigating parties.

As an alternative, Sprint contended that Rodriguez lacked standing because he failed to allege any actual harm and did not seek any actual damages, leaving him without a concrete injury capable of judicial redress. While that argument would generally prevail, Congress has the power to confer standing with the creation of statutory rights, U.S. District Court Judge Matthew F. Kennelly wrote, as the Legislature did with the FCRA.

"[I]t is readily apparent that Rodriguez has alleged an injury in fact sufficient to confer standing to sue under Article III," the court said. "The FCRA exists to protect the privacy and economic interests of consumers. The purpose of the law is to protect consumers by requiring consumer reporting agencies to meet the needs of commerce 'in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information.' "

One way that Congress attempted to achieve this purpose was through Section 1681b(b)(2)(A)'s disclosure provision, providing that a consumer's private information may be disclosed only after he or she has signed a clear and decipherable authorization, the court explained. A separate provision, Section 1681n(a), established an enforcement mechanism where "[a]ny person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to … damages of not less than $100 and not more than $1,000."

"Section 1681b(b)(2)(A) exists to ensure that consumers who authorize disclosure do so freely and knowingly, and together with the private enforcement provision in Section 1681n(a), it imposes a binding, mandatory obligation on a party in Sprint's position," Judge Kennelly wrote, with harm not a necessary component of the equation. "Congress enacted the FCRA to protect consumer control over personal information the exposure of which, though often necessary in the modern economy, can result in a significant invasion of privacy and can jeopardize a consumer's personal, reputational, and financial well-being. The statute provides that when a person or entity willfully violates a mandate of the FCRA that is designed to protect these interests, the aggrieved consumer may recover statutory damages."

The court cited similar conclusions from the Sixth, Eighth, and Ninth Circuit Courts of Appeals. Sprint's argument that those decisions were balanced by opposite authority from the Second, Third, and Fourth Circuits—as well as the fact that the Ninth Circuit case, Robins v. Spokeo, is currently pending before the U.S. Supreme Court—did nothing to change the court's mind.

"[T]he fact that at least four Justices of the Supreme Court voted to grant certiorari in Robins says nothing about whether at least five Justices will be convinced to reverse the court below," the court wrote. He also distinguished the contrary authority based on the underlying statutes in those cases, the Employee Retirement Income Security Act and the Americans with Disabilities Act.

To read the opinion in Rodriguez v. Sprint, click here.