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California Court Dismisses Fair Credit Reporting Act (FCRA) Class Action Against LinkedIn

In recent years, the Fair Credit Reporting Act (FCRA) has become the focus of increasing litigation.  By way of background, FCRA regulates consumer reporting agencies (CRAs) that assemble or evaluate “consumer reports” for employers on the “character, general reputation, personal characteristics, or mode of living” of prospective and current employees.  In the course of furnishing consumer reports to employers, CRAs must comply with specific disclosure, certification, and notice requirements.

A few months ago, we blogged about Sweet v. LinkedIn Corporation, a FCRA class action filed in the Northern District of California. The Plaintiffs in that case alleged that LinkedIn, of all companies, is a CRA that violated certain disclosure, certification, and notice requirements under FCRA in the course of running Reference Searches for prospective employers. The plaintiffs also claimed that they lost employment opportunities as a result of LinkedIn providing the results of the Reference Searches to their prospective employers.

LinkedIn’s Reference Search is a fee-based service that provides the search initiator with a list of former employers for a given LinkedIn member/potential employee.  The service also provides a list of LinkedIn members within the search initiator’s network who worked at the same companies during the same time periods as the job seeker, from whom the search initiator can solicit “honest” references without the potential employee’s knowledge.

The district court dismissed the Plaintiffs’ complaint on several grounds, holding that:

  • Reference Searches are not consumer reports because they are generated from information provided by the Plaintiffs themselves and given to LinkedIn for the express purpose of sharing and publishing the information.  As such, the Reference Searches flow solely from LinkedIn’s “transactions or experiences” with the Plaintiffs—a category of information expressly excluded from the meaning of a consumer report;

  • Reference Searches also are not consumer reports because the information generated from such searches do not bear on the “character, general reputation, mode of living and other relevant characteristics” of the Plaintiffs.  Rather, the Reference Search merely lists individuals who once shared a common employer and are within the network of the search initiator;

  • The allegations against LinkedIn also do not establish that the company is a CRA. LinkedIn obtained the names and employment histories used to generate the Reference Searches through the voluntary participation of its members for the purpose of fulfilling their information sharing goals, not for the purpose of preparing a consumer report; and, finally,

  • The Plaintiffs failed to demonstrate that the Reference Searches were used or intended as a factor in determining their eligibility for employment, as the results themselves do not provide any feedback about a job candidate’s eligibility for employment.  By way of analogy, the Court noted “the fact that a potential employer could use a telephone directory for a job candidate’s current employer to contact people who know the candidate does not make that directory a consumer report.”

This decision is a positive development not only for LinkedIn, but for employers who utilize LinkedIn in the course of vetting prospective and current employees.

The court has allowed the Plaintiffs until May 19, 2015 to file an amended pleading to cure the defects in their complaint.  Stay tuned to see what happens …

© 2019 Proskauer Rose LLP.

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About this Author

Katharine H Parker, Labor Employment Attorney, Proskauer Rose Law Firm
Partner

Katharine Parker is a Partner in the Labor & Employment Law Department and co-head of the Employment Law Counseling & Training and Government Regulatory Compliance and Relations Groups.

212-969-3009
Daniel L Saperstein, Proskauer Law Firm, Labor Employment Attorney
Associate

Daniel L. Saperstein is an Associate in the Labor & Employment Law Department, resident in the Newark office. He is a member of the Employment Litigation & Arbitration, Labor-Management Relations, Employment Law Counseling & Training, International Labor & Employment, and Whistleblower & Retaliation Groups, as well as the Dodd-Frank Task Force.

973-274-3272
Kelly Anne Targett, Proskauer Rose Law Firm, Labor Employment Attorney
Associate

Kelly Targett is an Associate in the Labor & Employment Law Department, and a member of the Employment Law Counseling & Training, Whistleblower & Retaliation, and Appellate Practice Groups.

973-274-6074