District Court Dismisses Putative FCRA Class Action For Lack Of Standing
The U.S. District Court for the Central District of California recently dismissed a putative class action alleging violations of the Fair Credit Reporting Act (“FCRA”), finding that the named plaintiff lacked standing to pursue her claims. Saltzbreg v. Home Depot, U.S.A., Inc., No. 17-cv-05798 (C.D. Cal. Oct. 18, 2017).
The plaintiff filed a class action complaint against Home Depot U.S.A. (“Home Depot”) alleging that it violated the FCRA by: (i) failing to provide a compliant disclosure notifying her that a background check would be conducted; and (ii) failing to obtain proper authorization before conducting the background check.
The plaintiff sought to represent a nationwide class of all persons who received Home Depot’s FCRA background check disclosure form during the five years preceding the filing of the complaint. Plaintiff claimed that, because this form included a liability waiver, it was not a standalone disclosure as required by FCRA. Because the disclosure form was defective, plaintiff alleged, her authorization for the background check was invalid. However, plaintiff did not allege that she was harmed as a result of her receipt of the allegedly non-compliant disclosure form.
The court dismissed the complaint for lack of subject matter jurisdiction, finding that the plaintiff did not allege that she suffered an injury-in-fact to confer Article III standing. Citing the U.S. Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016), the district court noted that the injury-in-fact requirement is not “automatically satisfie[d] … whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Rather, Article III standing requires a concrete injury even in the context of a statutory violation. The court concluded that merely asserting a violation of FCRA’s standalone disclosure requirement is insufficient without connecting it to a concrete injury.
This is another welcomed decision in the wake of Spokeo for employers defending FCRA class actions. However, given the stiff penalties employers face under this statute, it still is prudent for employers to revisit their background check policies and documentation to ensure compliance with the FCRA and related state and local laws.