Banking and Finance Law Daily Providing disclosure with other application materials did not violate FCRA
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Monday, April 27, 2020

Providing disclosure with other application materials did not violate FCRA

By Brandi O. Brown, J.D.

An employee’s novel argument that an employer violated the FCRA by providing the disclosure document simultaneously with other documents and by failing to place the authorization on a standalone document was "thwarted by the statute itself."

Joining a "long line of litigants" who challenged the Fair Credit Reporting Act "regime," a putative class representative who applied and was hired to work for a trucking company reached the end of the road in his appeal of a summary adjudication in favor of the employer. Although he contended that the employer violated the FCRA in at least two ways during the hiring process, the Ninth Circuit affirmed the lower court’s decision rejecting the applicant’s text-based arguments (Luna v. Hansen and Adkins Auto Transport, Inc., April 24, 2020, McKeown, M.).

Putative class claims. According to the employee, Hansen and Adkins Auto Transport, Inc., his former employer, violated the FCRA in multiple ways. The employer’s "Commercial Driver Employment Application" was a multi-page application that included multiple forms, notices, and authorizations. Applicants signed two documents that related to consumer reports—one was "the disclosure" and one was "the authorization."

The disclosure appeared on a separate piece of paper and told job applicants "that reports verifying your previous employment, previous drug and alcohol test results, and your driving record may be obtained on you for employment purposes." The authorization told the applicant that his or her signature authorized the employer or its agent or subsidiary to investigate the applicant’s previous employment record. The latter appeared at the end of the application and included other matters not related to acquiring the consumer report.

The employee filed a putative class action contending that the employer violated the FCRA by providing the disclosure contemporaneously with the other application materials and by failing to place the authorization on a standalone document. The district court granted the employer’s motion for summary judgment.

The disclosure. According to the FCRA, specifically 15 U.S.C. sec. 1681b(b)(2)(A)(i), a consumer report cannot be procured for employment purposes unless "a clear and conspicuous disclosure has been made in writing to the consumer in a document that consists solely of the disclosure." According to the employee’s argument, which the appeals court considered de novo, the employer violated this provision because it presented the disclosure alongside other application materials. The employee’s argument, the appeals court explained, expanded the statute’s requirements "beyond the limits of law and common sense." No authority, the court opined, suggested that the disclosure had to be "distinct in time, as well."

Contemporaneous presentation okay. By making the argument he did, the employee was attempting to "bootstrap" the "physical requirement into a temporal one," relying on the court’s previous decision in Syed v. M-I, LLC. In that case, the Ninth Circuit held that inclusion of a liability waiver in the disclosure document violated the Act because it required that the document "consist solely of the disclosure." Nothing in that decision, however, could be understood to prevent an employer from "providing a standalone FCRA disclosure contemporaneously with other employment documents." In fact, the court added, it had "decisively rejected" a similar argument in Gilberg v. Cal. Check Cashing Stores, LLC, in 2019. In Gilberg, the court explained, it rejected the notion that the term "document," as used in the Act, was intended to cover the "universe of employment application materials" an employer would furnish to a prospective employee. All that is, and what the employer in this case did, is that the disclosure appear in a standalone document.

Co-presentation of the disclosure and authorization, moreover, was neither unclear nor inconspicuous, contrary to the employee’s argument, and job applicants could be expected to notice a standalone document that featured a bold, underlined, and all-caps heading such as the one used by the employer.

The authorization. As to the authorization the employer provided, the court rejected the argument that it violated the FCRA because it was not in a standalone document. "Crucially," said the court, "the authorization subsection of FCRA lacks the disclosure subsection’s standalone document requirement." All that the Act requires is that the authorization be "in writing." Accordingly, the lower court’s decision was affirmed.

The case is No. 18-55804.

Attorneys: Aashish Y. Desai (Desai Law Firm) for Leonard Luna and Ian Hall. Victor J. Consentino (Larson & Gaston) for Hansen and Adkins Auto Transport, Inc.

Companies: Hansen and Adkins Auto Transport, Inc.

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