What’s Happening in FCRA Class Actions

Types : Bylined Articles

Originally prepared for and published by PBSA in the May-June 2020 edition of the Journal. Read the full issue here:  https://thepbsa.org/resources/publications/ 

It is no surprise that class actions continue to plague consumer reporting agencies and employer end-users.  There were 4,937 Fair Credit Reporting Act (“FCRA”) cases filed in 2019.[1]  And since the FCRA allows for the award of both statutory damages and attorney’s fees and costs, it is unlikely that we will see a slowdown anytime soon.  One of the few upsides to the sheer volume of FCRA class action litigation is that there is a growing body of case law that offers significant guidance for best practices.  A review of the most recent case law shows several trends worth noting.

Employers Continue to be Targeted

Despite the (reasonably) clear edicts of 15 U.S.C. §§ 1681b(b)(2) and 1681b(b)(3), litigation under these two sections of the FCRA continues unabated.  Here are some best practices gleaned from recent case law that both consumer reporting agencies and employers can consider adopting:

• Rethink including state law disclosures embedded within the FCRA disclosure document. This issue was recently certified for class action status in the Northern District of California.[2]
• Additional documents may be okay. According to the Ninth Circuit, the “standalone” requirement of FCRA section 1681b(b)(2) only applies to information within the disclosure itself and does not apply to additional documentation that may be provided to an employee or applicant at the same time as the FCRA disclosure.[3]
• Your authorization form does not need to be stand alone. This is a requirement only for the disclosure.[4]
• It is time to delete the liability waivers from your disclosures and authorizations![5]
• Don’t forget to send a copy of the consumer report and a notice of rights to applicants/employees with pre-adverse action correspondence.[6]
• Consumers have no right to discuss their consumer report with their employer/potential employer.[7]
• If you are sued for a disclosure claim, Spokeo is providing a complete defense in some circumstances.[8]

Plaintiffs Continue to Look for an Impermissible Purpose Class

There are also no shortage of cases involving consumers for whom an end user reviewed their consumer report without proper permission.  Several of these mattes have been filed in the past few years, but it is unclear if plaintiffs will be able to prosecute these matters through trial.  At least one recent impermissible purposes case was dismissed after the close of discovery, when plaintiffs were unable to provide evidence that supported their claims.[9]  So even when impermissible purpose claims continue after the pleadings phase into discovery, there is hope that the case may still be dismissed for lack of evidence.

Interestingly, these cases straddle privacy laws and test the boundaries of the FCRA and its coverage of consumer information used for business, employment, insurance, or credit purposes.[10]  The safest bet is to always obtain written permission to obtain a consumer report prior to obtaining each report.

Plaintiffs Also Make More Inroads on Litigating FCRA Section 1681e(b) Claims on a Class Basis

In the past five years plaintiff’s attorneys have managed to certify – and settle – FCRA section 1681e(b) claims.  Although there was a long history of courts refusing to certify 1681e(b) classes because individual issues predominated, that isn’t the rule anymore.  For example, six FCRA section 1681e(b) claims against a tenant screening agency were centralized in a Multidistrict Litigation in March 2020.[11]

These cases are the most recent iteration of FCRA section 1681e(b) claims that attempt to overcome the particularized inquiry presumption by focusing the class on one courthouse that has a single exploitable procedure.[12]  These types of cases started with traditional credit reporting agencies but have now become common place against tenant screening companies as well.[13]

There is no silver bullet to avoid or defend against these cases.  However, the persistence of these cases suggests root cause analysis for clustered disputes in a single jurisdiction, salting of vendors in each jurisdiction, and monitoring similar pending class actions could all be considered as best practices.

As the above recent cases shows, FCRA class action litigation is here to stay and the current focus is on permissible purpose and accuracy claims.  Right now, there is no perfect system of compliance to guard against class action litigation but incorporating best practices from recent case law will help us better serve our clients and consumers.

[1] https://webrecon.com/webrecon-stats-for-dec-2019-and-year-in-review-how-did-your-favorite-statutes-fare/

[2] Bebault v. DMG Mori USA, Inc., No. 18-CV-02373-JD, 2020 WL 2065646 (N.D. Cal. Apr. 29, 2020).

[3] Luna v. Hansen & Adkins Auto Transp., Inc., No. 18-55804, 2020 WL 1969409 (9th Cir. Apr. 24, 2020).

[4] Luna, No. 18-55804, 2020 WL 1969409.

[5] Der-Hacopian v. Darktrace, Inc., No. 18-CV-06726-HSG, 2020 WL 1904471 (N.D. Cal. Apr. 17, 2020), and Taafua v. Quantum Glob. Techs., LLC, No. 18-CV-06602-VKD, 2020 WL 95639 (N.D. Cal. Jan. 8, 2020).

[6] Der-Hacopian, No. 18-CV-06726-HSG, 2020 WL 1904471.

[7] Walker v. Fred Meyer, Inc., 953 F.3d 1082 (9th Cir. 2020).

[8] Toro v. Centene Corp., No. 19-CV-05163-LHK, 2020 WL 1643861 (N.D. Cal. Apr. 2, 2020) (trial court dismissed a 1681b(b)(2), where plaintiff’s allegations that the disclosure contained extraneous, but failed to allege concrete harm as a result of the extra information); and Ruiz v. Shamrock Foods Co., No. 18-56209, 2020 WL 1320953 (9th Cir. Mar. 20, 2020) (grant of summary judgment affirmed where plaintiff had no evidence of a concrete harm).

[9] Rogers v. Smith Volkswagen, LTD, No. CV 19-2567, 2020 WL 1676400 (E.D. Pa. Apr. 6, 2020) (impermissible pull class permitted to proceed through discovery); Brogan v. Fred Beans Motors of Doylestown, Inc., No. CV 17-5628, 2020 WL 1666464 (E.D. Pa. Apr. 3, 2020) (impermissible pull class dismissed after discovery was completed).

[10] Skiles v. Tesla, Inc., No. 17-CV-05434-WHO, 2020 WL 1181264 (N.D. Cal. Feb. 19, 2020) (dismissing an FCRA class action because the information gathered about customers was for marketing – not credit – purposes).

[11] In re TransUnion Rental Screening Sols., Inc., Fair Credit Reporting Act Litig., No. MDL 2933, 2020 WL 1503251 (U.S. Jud. Pan. Mult. Lit. Mar. 30, 2020).

[12]  See e.g. Soutter v. Equifax Info. Servs., LLC, 10-CV-107 , 307 F.R.D. 183, 192 (E.D. Va. 2015).  Naher v. Experian Information Solutions, Inc., No. 1:17-cv-04812 (N.D. Il.); Peters v. Trans Union, LLC, No. 2:17-cv-01273-MHH (N.D. Ala.); Jones v. Equifax Information Services LLC, No. 1:17-cv-01166 (W.D. Tenn.); Jakob v. Trans Union, LLC, No. 2:17-cv-01247 (E.D. Wis.); De La Rosa v. Experian Information Solutions, Inc., No. 1:18-cv-00019 (S.D. NY); and Fryette v. Equifax Information Services, LLC, No. 5:18-cv-00109-BO (E.D. of NC).

[13]  In re TransUnion Rental Screening Sols., Inc., Fair Credit Reporting Act Litig., No. MDL 2933, 2020 WL 1503251 (U.S. Jud. Pan. Mult. Lit. Mar. 30, 2020); Gonzalez-Torres v. Zumper, Inc., No. 19-CV-02183-PJH, 2019 WL 6465283 (N.D. Cal. Dec. 2, 2019); McIntyre v. RentGrow, Inc., No. 18-CV-12141-ADB, 2019 WL 3494343 (D. Mass. Aug. 1, 2019); and Feliciano v. CoreLogic Rental Prop. Sols., LLC, 332 F.R.D. 98 (S.D.N.Y. 2019).