The Form Must Stand Alone: Ninth Circuit Rules that Disclosure Form Referencing State Laws Violates FCRA
On January 29, 2019, a unanimous three-judge panel of the Ninth Circuit ruled that an employer violated FCRA by providing a background check disclosure form that included information regarding state laws closely related to FCRA. Gilberg v. California Check Cashing Stores, LLC, No. 17-16263, 2019 WL 347027 (9th Cir. Jan. 29, 2019). In Gilberg, the plaintiff brought a putative FCRA class action against her former employer, CheckSmart Financial, LLC (“CheckSmart”). When the plaintiff applied for a job with CheckSmart, she signed a disclosure form providing that the company could obtain a consumer report regarding her credit and criminal history. The disclosure form also included several sections referencing background-check disclosures under the laws of various state.
The plaintiff sued CheckSmart, claiming that the disclosure form violated FCRA because the form did not standalone and was not clear and conspicuous. Specifically, before a consumer report can be procured, FCRA requires “a clear and conspicuous disclosure” in writing “in a document that consists solely of the disclosure[.]” 15 U.S.C. § 1681b(b)(2)(A).
Initially, at the trial court level, the district court granted CheckSmart’s motion to dismiss, finding there was no FCRA violation because the form consisted solely of disclosures about background checks under related federal and state laws.
The plaintiff thereafter appealed her case to the Ninth Circuit, arguing that the additional state information in the disclosure violated FCRA’s standalone requirement and made the form unclear. The Ninth Circuit agreed, finding that “the presence of this extraneous information is as likely to confuse as it is to inform[.]” Gilberg, 2019 WL 347027, at *5. For example, the Court noted that the language in the disclosure providing that New York and Maine applicants had the right to receive copies of their consumer reports, could cause a “reasonable reader” to wrongly believe that applicants in other states could not obtain such copies. Id. at *6. The Ninth Circuit vacated and remanded the case back to the district court for further proceedings.
Gilberg provides another cautionary tale of the potential FCRA traps that exist for the unwary.