On March 2, the plaintiff’s counsel in Brown v. Delhaize America, LLC submitted an unopposed motion for preliminary approval, seeking Court approval of another Fair Credit Reporting Act class action settlement.  Employers should treat this settlement as another reminder to verify their compliance with the FCRA.

According to the parties’ settlement paperwork, the Brown case involved two claims that appear frequently in FCRA-based background check litigation.  In Brown, the plaintiff claimed that the defendants failed to provide class members with a clear and conspicuous disclosure, consisting solely of the disclosure that a consumer report would be obtained for employment purposes, prior to obtaining the consumer report.  Additionally, the plaintiff claimed that the defendants frequently took adverse employment action against their employees based on their background checks without providing those employees with a pre-adverse action notice required by the FCRA.

After the defendants filed a motion to dismiss and the parties engaged in a two-day mediation, the parties reached a $3 million settlement.  This settlement covers approximately 57,000 class members in the improper disclosure class and 2,500 class members in the adverse action class.  Under this settlement, the improper disclosure class members will receive a gross payment of $48, and the adverse action class will receive a gross amount of $96.  After deducting attorneys’ fees of up to one-third of the settlement fund, in addition to other expenses, these amounts drop to $31 and $61, respectively.

Because of the risk of statutory damages and attorneys’ fees, and the potential for very large class sizes, employers in FCRA class actions often find themselves exposed to significant liability.  This exposure can be unpalatable for legal departments and business leaders, despite the fact that employers frequently have significant arguments against liability.  Because of this exposure, the Food Lion settlement is just one of many significant FCRA class settlements we have seen in recent years.