Petco’s motion to dismiss a background screening class action alleging violation of the Fair Credit Reporting Act was recently denied by a district court in the Southern District of California. In the putative class action, the plaintiffs alleged that Petco’s background check disclosure form violated the FCRA because it was not provided in a stand-alone document as required by the statute.
Petco moved to dismiss the complaint, arguing that the plaintiffs failed to establish that the disclosure contravenes the FCRA and that they had failed to adequately allege a willful violation. Petco further argued that the plaintiffs lacked Article III standing because they had not suffered a concrete injury.
Denying the motion to dismiss, the Court held that the plaintiffs plausibly alleged that they may have been confused or distracted by the length of the consent form, which “contained 35 paragraphs providing the disclosure and related information, such as: an authorization allowing other entities to disclose information about the applicant, a summary of consumer rights in seven different states, a summary of consumer rights under the FCRA, and a list of entities that enforce the FCRA.”
The Court noted that “[w]hether Plaintiffs were actually confused or distracted is better left to a motion for summary judgment.” In denying Petco’s motion to dismiss on the plaintiffs’ willfulness claim, the Court held that willfulness does not need to be alleged with particularity and that the plaintiffs had sufficiently alleged that Petco “knew or had reason to know that its conduct violated the FCRA due to its communications with its consumer report vendors.”
Finally, the Court rejected Petco’s challenge to the plaintiffs’ Article III standing under Spokeo. While Petco argued that providing extraneous information in the consent form did not cause any harm, the Court held that the determination of whether the plaintiffs suffered a concrete injury would be better addressed in a motion for summary judgment. A copy of the opinion can be found here.
This case serves as another reminder about the importance of using FCRA-compliant forms in the background check process. Troutman Sanders regularly advises clients on FCRA requirements, including those governing the background screening processes.