Last week, a district court in New Jersey dismissed a consolidated action against Michaels Stores, Inc., finding that the plaintiffs lacked Article III standing to bring their FCRA claims.
In the consolidated action, plaintiffs Christina Graham, Gary Anderson, Michele Castro, Janice Bercut, and Michelle Bercut applied for and were hired by Michaels. Despite obtaining employment, the plaintiffs brought suit under the FCRA alleging that Michaels violated the FCRA’s consent and disclosure requirement when Michaels’ “only disclosure of its intent to obtain consumer reports for employment purposes” appeared in the middle of the online application and not in a stand-alone document. The plaintiffs further alleged that the form contained extraneous information.
Although the plaintiffs conceded that they received a disclosure containing the required information, they argued that they suffered an informational injury because they were deprived of the disclosure in the manner prescribed by law. The district court rejected the plaintiffs’ argument and expressed its disagreement with the Eastern District of Virginia’s decision in Thomas v. FTS USA, LLC. In contrast to the Thomas decision, District Judge Kevin McNulty held that “Michaels’ nonconformance to disclosure formatting specifications” was not sufficient to confer Article III standing.
While the Court acknowledged that a deviation of the technical or procedural requirements of the FCRA may cause concrete harm, the Court cautioned that whether any such violation actually does cause concrete harm is “situation-dependent.”
The Court also noted that the plaintiffs failed to allege they suffered the harm addressed by Congress’ promulgation of the stand-alone disclosure rule. According to the Court’s opinion, the harm addressed by the stand-alone disclosure requirement is an “applicant’s failure to understand that he or she was authorizing an employer background check.” Here, there were no allegations that the plaintiffs did not see the disclosure or were distracted from it.
Finally, the Court rejected the plaintiffs’ invasion of privacy arguments on the basis that Michaels obtained the applicants’ consent to obtain a background report after informing them that Michaels would obtain such a report. According to the Court, as long as the disclosure was provided prior to the background report being obtained, there can be no invasion of privacy.
Because the Court dismissed the case based on its lack of subject matter jurisdiction, it remanded plaintiff Michelle Bercut’s case to California state court, where it was originally filed, and granted the remaining plaintiffs leave to amend. A copy of the opinion is available here.
Troutman Sanders LLP has been tracking recent developments related to the Supreme Court’s ruling in Spokeo, Inc. v. Robins. Check back regularly for up-to-date analysis on recent decisions.