Fair Credit Reporting Act Section 1681b(b)(3) confers on an individual a right to receive, before adverse action is taken, a copy of his consumer report (regardless of its accuracy) and a notice of his rights, said the Third Circuit, reversing the dismissal of a claim by three individuals—the named plaintiffs in this putative class action who had been denied jobs by SEPTA after it discovered their prior drug-related convictions—based on its failure to provide them with copies of their consumer reports, The court, however, affirmed the dismissal of their claim based on SEPTA’s failure to provide them with notice of their FCRA rights (Long v. Southeastern Pennsylvania Transportation Authority, September 10, 2018, Fisher, D.).
Denied jobs. The applicants, all convicted of drug offenses in the past, applied to SEPTA for jobs that involved operating vehicles. Each filled out a form disclosing his criminal history and authorizing SEPTA to obtain a background check, and each allegedly received an offer or was given information about when to start training. All three were ultimately denied jobs, they alleged, claiming SEPTA told one he was not hired because of the information it had received from his background check and the other two that they were not hired because of their “criminal history.” When one asked for more information, SEPTA responded that for positions that “require the operation of . . . vehicles,” it has a “categorical lifetime ban” on hiring anyone convicted of a crime “involving the possession, sale, distribution, manufacture and use of controlled substances.”
FCRA violations. Claiming that SEPTA did not send them copies of their background checks before it decided not to hire them, or notices of their rights under the FCRA, the applicants filed a putative class action complaint based on these two violations. Granting SEPTA’s motion to dismiss for lack of standing, the district court found there was only a “bare procedural violation,” not a concrete injury in fact.
Broader right. The applicants argued that the FCRA prohibits adverse employment actions based on consumer reports that an individual has not had the opportunity to review or discuss with the potential employer, while SEPTA countered that the statute protects only against adverse employment action that is based on inaccurate or misleading information. It contended that because the applicants’ consumer reports were accurate, they suffered no injury in fact. Disagreeing, the appeals court explained that “the statute confers a broader right than simply to be free from adverse action based on inaccurate information.”
Before taking any adverse action. Section 1681b(b)(3) requires not just that the employer “shall provide” the consumer report and FCRA rights disclosure, but that it must do so “before taking any adverse action,” observed the court, noting that the required pre-adverse-action copy of an individual’s consumer report allows him to ensure that the report is true, and may also enable him to advocate for it to be used fairly—such as by explaining why true but negative information is irrelevant to his fitness for the job. Further, the required pre-adverse-action notice of FCRA rights provides the individual with information about what the law requires with regard to consumer reports. The right to pre-adverse-action disclosures, the court stressed, serves the purposes of accuracy, relevancy, proper utilization, and fairness. If Congress meant to provide protections only against the use of inaccurate consumer reports, it could have written the statute to say so, reasoned the court, explaining that the meaning of Section 1681b(b)(3) is plain: Before an employer takes adverse action based in any part on a consumer report, the consumer has a right to receive a description of his rights under the FCRA, as well as a copy of his report, regardless of its accuracy.
Standing. In determining whether the applicants had Article III standing, the court surveyed Supreme Court and Third Circuit precedent, noting that in Spokeo, the Court explained that “In determining whether an intangible harm constitutes injury in fact, both history and the judgment of Congress play important roles.” The Spokeo Court further held that a “bare procedural violation, divorced from any concrete harm,” cannot “satisfy the injury-in-fact requirement of Article III.”
Spokeo tests. Applying the law to the facts here, the court found the applicants had standing to assert that SEPTA violated the FCRA by taking adverse action without first providing copies of their consumer reports. Under Spokeo’s congressional test, the FCRA clearly expresses Congress’s “intent to make [the] injury redressable.” Congress granted the consumer a right to receive a copy of his report before adverse action is taken and provided for statutory damages plus attorneys’ fees for willful noncompliance, which the applicants’ alleged here. This harm, said the court, was within Congress’s power to elevate to an injury in fact. Moreover, the court observed, taking an adverse employment action without providing the required consumer report is “the very harm that Congress sought to prevent, arising from prototypical conduct proscribed” by the FCRA.
As to Spokeo’s historical test, which assesses whether the injury in question has a close relationship to a harm traditionally recognized under common law, the court looked to common law privacy rights and noted several types of privacy torts represent interference with an individual’s ability to control his personal information, which was analogous to the injury here: the use of the applicants’ personal information—their consumer reports—without their being able to see or respond to it. Thus, said the court, because the FCRA meets both tests, and because the applicants alleged sufficient concrete harm, they had standing to bring their claim that SEPTA did not provide them with the required copies of their consumer reports.
Bare procedural violation. As to SEPTA’s alleged failure to notify the applicants of their FCRA rights, the court found this was a bare procedural violation, divorced from any concrete harm, and could not “satisfy the injury-in-fact requirement of Article III.” The applicants, the court explained, became aware of their FCRA rights and were able to file this lawsuit within the prescribed limitations period, so they were not injured. And while they implied that unnamed class members remained unaware of their FCRA rights, “[n]amed plaintiffs who represent a class must allege . . . that they personally have been injured, not that injury has been suffered by other, unidentified members of the class . . .” said the court, finding that any harm to unnamed class members could not constitute injury in fact.
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