Class Action Lawsuit Claiming FCRA Violations Dismissed for Failure to Allege Concrete Injury


Class Action Lawsuit Claiming FCRA Violations Dismissed for Failure to Allege Concrete Injury

On October 25, 2022, a Court of Appeal in California dismissed a proposed class action lawsuit that claimed an employer violated the federal Fair Credit Reporting Act (FCRA) by failing to provide a prospective employee with proper disclosures to receive authorization to obtain a background check on him because the plaintiff failed to allege any “concrete injury.”

The plaintiff – a former employee of the employer – claimed the defendant violated the FCRA by including extraneous information on its background check disclosure form. Under the FCRA, an employer may not obtain a background check unless “a clear and conspicuous disclosure has been made in writing… in a document that consists solely of the disclosure.”

The defendant – an American chain of convenience stores – countered the plaintiff’s argument that the disclosure violated the “standalone” requirement of the FCRA by claiming that any alleged “confusion” suffered by the plaintiff was insufficient to establish an injury because there were no “downstream consequences” that impacted his employment.

The Court of Appeal of the State of California Fifth Appellate District agreed with the defendant. In affirming a previous judgment of dismissal and granting the defendant’s motion to dismiss, the court explained that the plaintiff “has not alleged a concrete or particularized injury to his privacy interest sufficient to afford him an interest in pursuing his claims vigorously.”

The court also found that the plaintiff’s “alleged informational injury is insufficient under California law to confer upon him standing to pursue his claim in state court. We conclude, under California law, that an informational injury that causes no adverse effect is insufficient to confer standing upon a private litigant to sue under the FCRA.”

On June 25, 2021, the Supreme Court of the United States ruled in TransUnion LLC v. Ramirez that a plaintiff must suffer a “concrete harm” resulting from a defendant’s statutory violation of federal statute such as the FCRA to have sufficient standing to sue under Article III of the United States Constitution. “No concrete harm, no standing,” read the majority opinion 

On May 16, 2016, in a similar case to TransUnion, the Supreme Court ruled in Spokeo v. Robins and established that standing consisted of three elements. “The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision,” read the opinion.

Enacted by Congress in 1970, the FCRA protects information collected by consumer reporting agencies. Information in a consumer report cannot be provided to anyone who does not have a purpose specified in the FCRA. In addition, users of the information must notify the consumer when an adverse action is taken on the basis of such reports.

ClearStar is a leading Human Resources technology company that specializes in background checks, drug testing, and occupational health screening. ClearStar offers background check solutions that empower employers to make informed hiring decisions and comply with the FCRA and various state and local laws. To learn more, contact ClearStar today.

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    Thomas Ahearn - Digital Content Editor

    Thomas Ahearn is a Digital Content Editor at ClearStar, a leading Human Resources (HR) technology company specializing in background checks, drug testing, and occupational health screening. He writes about a variety of topics in the background screening industry including "Ban the Box," class action lawsuits, credit reports, criminal records, drug testing, the Equal Employment Opportunity Commission (EEOC), the Fair Credit Reporting Act (FCRA), HR technology, identity theft, privacy, social media screening, and workplace violence.

    At ClearStar, we are committed to your success. An important part of your employment screening program involves compliance with various laws and regulations, which is why we are providing information regarding screening requirements in certain countries, region, etc. While we are happy to provide you with this information, it is your responsibility to comply with applicable laws and to understand how such information pertains to your employment screening program. The foregoing information is not offered as legal advice but is instead offered for informational purposes. ClearStar is not a law firm and does not offer legal advice and this communication does not form an attorney client relationship. The foregoing information is therefore not intended as a substitute for the legal advice of a lawyer knowledgeable of the user’s individual circumstances or to provide legal advice. ClearStar makes no assurances regarding the accuracy, completeness, or utility of the information contained in this publication. Legislative, regulatory and case law developments regularly impact on general research and this area is evolving rapidly. ClearStar expressly disclaim any warranties or responsibility or damages associated with or arising out of the information provided herein.


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