A California state appellate court recently issued an opinion reviving a class-action lawsuit concerning alleged violations of requirements employers must follow when performing employment-related background checks. In its opinion, the Court reversed summary judgment entered in favor of book retailer Barnes & Noble in a class-action lawsuit accusing the retailer of failing to strictly comply with the requirements for obtaining authorization for background checks found in the Fair Credit Reporting Act (FCRA). The Court’s decision breathes new life into the putative class action which was remanded to the trial court for further proceedings.
The FCRA is a federal statute that is meant to protect consumer privacy and promote fair and accurate credit reporting. Part of the law contains a number of requirements that employers must follow when performing employment-related background checks. Two of these requirements are found in 15 U.S.C. 1681b and require an “employer who obtains a consumer report about a job applicant first to provide the applicant with a standalone, clear and conspicuous disclosure of its intention to do so, and to obtain the applicant’s consent.” The FCRA further requires that the disclosure be contained in a document that consists solely of the disclosure.
In 2018, the plaintiff applied to work for Barnes & Noble. During the application process, Barnes & Noble’s consumer reporting agency, First Advantage, emailed the plaintiff a link to a website containing the retailer’s consumer report disclosure and asked her to authorize Barnes & Noble to perform a background check. The plaintiff alleges that she clicked the link, viewed the disclosure, and authorized Barnes & Noble to perform the background check.
First Advantage had prepared the consumer report disclosure statement that appeared on Barnes & Noble’s website. Included with the statement was a footnote that stated:
Nothing contained herein should be construed as legal advice or guidance. Employers should consult their own counsel about their compliance responsibilities under the FCRA and applicable state law. First Advantage expressly disclaims any warranties or responsibility or damages associated with or arising out of information provided herein.
Due to an oversight, Barnes & Noble put the entire disclosure statement, including the footnote on its website.
In 2019, the plaintiff filed suit against Barnes & Noble on behalf of a putative class of individuals to whom the company had procured or caused to procure a consumer report in the preceding five years. The complaint alleged a single cause of action for willful violation of the FCRA. The plaintiff alleged that the book retailer willfully violated the FCRA’s requirement that the disclosure statement be free of extraneous information unrelated to the procurement of a consumer report.
Barnes & Noble filed a motion for summary judgment arguing that no reasonable jury could find its alleged FCRA violation was willful. It asserted it included the extraneous information in its disclosure due to an inadvertent drafting error. The trial court agreed with the book retailer and entered judgment in the company’s favor. The plaintiff appealed.
The appellate court disagreed with the trial court’s conclusion that no reasonable jury could conclude that Barnes & Noble acted willfully. Based on the evidence presented to the trial court, the Court reasoned that a reasonable jury could find that Barnes & Noble acted willfully. The Court noted that the retailer violated an unambiguous provision of the FCRA and that at least one of its employees was aware of that the disclosure statement contained the extraneous information before the statement was made available to job applicants. The fact that at least one employee had seen the extraneous information in the statement but did not remove it could be evidence that the retailer had not adequately trained its employees on FCRA compliance or may not have had a monitoring system in place to ensure its disclosure statement complied with the FCRA. Based on these findings, the Court concluded that entry of summary judgment was in error and remanded the class-action suit with instructions that the trial court vacate its order granting the motion for summary judgment and enter a new order denying the motion for summary judgment.
The Court’s full opinion is available here.
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