November 19, 2018

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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 Complaint

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.

Ruling

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.

Implications

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.

© 2018 Proskauer Rose LLP.

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About this Author

Steven J Pearlman, Labor Employment Law Firm, Proskauer Law firm
Partner

Steven Pearlman is a partner in the Labor & Employment Law Department and co-head of the firm's Whistleblowing & Retaliation Group, resident in the Chicago office. Steven’s practice focuses on defending complex employment litigation involving claims of discrimination and harassment, wage-and-hour laws and breaches of restrictive covenants (e.g., non-competition agreements). He has successfully tried cases to verdict before judges and juries in Illinois, Florida and California, and defended what is reported to be the largest Illinois-only class action in the history of the U.S....

312-962-3545
Edward C. Young, Proskauer Rose, Harassment Lawyer, Labor Rights Attorney
Associate

Edward C. Young is an associate in the Labor & Employment Law Department. He represents companies nationwide in a broad range of employment issues, including discrimination, retaliation and harassment claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act and the Family Medical Leave Act, as well as other federal and state employment statutes and various common law torts. In addition, Eddie represents employers in trade secret matters and challenges to the independent contractor status of workers.

Prior to attending law school, Eddie earned his master’s degree in Human Resources and Industrial Relations from Loyola University while working for more than three years in the corporate human resources department of a national professional services firm. Eddie also served as a Coles Fellow with the Illinois Human Rights Commission.

Eddie is a co-author of “Discrimination Law Basics,” which was presented at the Practicing Law Institute’s Understanding Employment Law Conference in 2014. 

312-962-3595
Associate

Michelle Gyves is an associate in the Labor & Employment Law Department. Her practice focuses on providing strategic advice and counseling to domestic and multinational employers on a wide range of employment law matters. These matters include hiring and termination, compensation and benefits, restrictive covenants, diversity and inclusion, and global mobility.

Michelle has conducted numerous multi-country audits of employment laws and practices, ensuring clients’ compliance in a wide range of areas. Her experience covers data privacy,...

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