On December 21, 2017, the U.S. District Court for the Eastern District of Pennsylvania in Moore v. Rite Aid Headquarters Corp., 2:13-cv-01515, dismissed a 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”). Moore is significant in the body of criminal background check precedent because it is a post-Spokeo ruling dismissing a pre-adverse action notice claim (as opposed to a 1681b(b)(2) Disclosure claim) on standing grounds after the parties participated in discovery and developed a factual record.
In the opinion, Judge Jan DuBois found plaintiff Moore could not show that she suffered a concrete injury after Rite Aid allegedly did not properly provide her with an FCRA mandated notice before declining her employment due to criminal background check results.
Moore applied for a position at Rite Aid and was offered the position conditioned upon a successful background report. Rite Aid procured a background report through its designated consumer reporting agency which found Moore to be “Non-Competitive,” or ineligible for hire, based on the criminal background results. Rite Aid sent an FCRA mandated pre-adverse action letter to Moore informing her that she would not be offered employment if she did not contest the results within five business days.
Moore contacted Rite Aid to discuss the results of her background check after receiving the pre-adverse action letter. Nevertheless, notwithstanding her inquiry, she was mailed a final adverse action letter exactly five business days after the date of the pre-adverse action letter.
Moore’s theory of the case was that Rite Aid had never hired an applicant who received a “Non-Competitive” grade, making this assignment the de facto final employment decision and the actual adverse action. Hence, according to Moore, the pre-adverse action notice was final and did not give applicants the ability to meaningfully dispute any “Non-Competitive” grade. Moore also alleged that Rite Aid did not give her the full five business days to contest the results of the background report.
The parties participated in significant discovery after which Rite Aid moved to dismiss the claim for lack of subject-matter jurisdiction under Rule 12(b)(1) or, alternatively, for summary judgment. Moore also moved for class certification around the same time. Rite Aid argued that Moore had no standing (and therefore no subject-matter jurisdiction) because she could not show a concrete injury under Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (establishing the principle that persons have standing to sue for damages due to an alleged statutory violation only if they suffered a “concrete, de facto” injury, i.e., one that “actually exists” because it has already occurred or presents a “material risk” that it may occur). More specifically, Rite Aid argued that Moore could not show that she suffered any harm because she availed herself of the pre-adverse notice protections before the adverse action notice was sent. In other words, Moore had an opportunity to dispute and actually disputed the allegedly inaccurate information before she was not hired.
The Court concluded Moore had “not suffered a concrete harm to her procedural rights under the FCRA” and dismissed her claim for lack of standing, finding that a defendant should not be held liable in federal court for the technical violation of the FCRA where that plaintiff experienced no actual injury as a result. Moreover, because courts view standing as a threshold matter, the Court did not substantively address the merits of Moore’s motion for class certification.
Since the number of FCRA class actions alleging violations of the pre-adverse action notice requirements has exploded over the last several years, Moore provides a possible roadmap, where the facts allow, for an effective defense to an FCRA class action with a post-discovery Spokeo challenge. Indeed, with the aid of discovery, standing can be attacked in pre-adverse action claims under section 1681b(b)(3) of the FCRA.