CA Appellate Court Addresses “Willfulness” Standard Under FCRA
On April 19, 2022, a California Appeals Court reversed and remanded a trial court’s grant of summary judgment in an employer’s favor, concluding there was a triable issue of material fact regarding whether a defendant had “willfully” violated the Fair Credit Reporting Act’s (“FCRA”) “standalone disclosure” requirement. The case is Hebert v. Barnes & Noble, Inc., No. D079038.
The FCRA permits background checks for purposes of employment so long as employers obtain authorization from the person subject to the background check and furnish an appropriate disclosure and comply with certification and notice requirements. FCRA standalone disclosure cases have proliferated in recent years. Of course, an important issue in these cases is whether the employer’s violation is “willful.” The U.S. Supreme Court held in Safeco Ins. Co. of America v. Burr that willfulness under the FCRA requires a plaintiff to show that the defendant’s conduct was “intentional” or “reckless.” Willful violations can lead to recovery of statutory damages ranging from $100 to $1,000 per violation.
California Appeals Court Decision
A recent decision out of the California Appeals Court addressed the willfulness standard under the FCRA. The plaintiff filed suit in the Superior Court of San Diego County alleging the defendant willfully violated the FCRA by providing job applicants with a disclosure form that included extraneous language unrelated to the topic of consumer reports (i.e., background checks). Defendant moved for summary judgment, arguing that no reasonable jury could find its alleged FCRA violation was willful because the extraneous information in its disclosure was due to an inadvertent drafting error. The trial court agreed, and granted the motion for summary judgment, and plaintiff appealed.
The California Court of Appeals reversed, concluding that plaintiff had proffered sufficient evidence from which a reasonable jury could find a willful violation under the FCRA. The Court focused on the fact that: (i) one of defendant’s employees was aware the extraneous language would be included in the disclosure and he reviewed the disclosure before it was issued; and (ii) defendant used the disclosure for nearly two years.
Defendant argued that the employee who reviewed the disclosure form was a “non-lawyer” who was not well-versed in FCRA requirements and received only “general” training on the FCRA. Unpersuaded, however, the court noted that a jury could find that defendant acted recklessly by “delegating all of its FCRA compliance responsibilities to a human resources employee who, by his own admission, knew very little about the FCRA.” The court also rejected defendant’s argument that it had no reason to know its disclosure form violated the FCRA because it received no complaints from job applicants. The court noted that the defendant’s prolonged use of the disclosure form could suggest recklessness because the defendant lacked a proactive and routine monitoring system to guarantee FCRA compliance.
This decision identifies the types of conduct on which a court might rely in potentially concluding that a violation of the FCRA was willful. Moreover, it could serve to persuade plaintiffs to pursue class-wide FCRA stand-alone disclosure claims.