On January 25, the United States District Court for the District of Kansas granted partial preliminary approval to the class settlement in Lengel v. HomeAdvisor, Inc., No. 15-2198-KHV. The plaintiff, Emerald Lengel, brought a class action lawsuit in January 2015, alleging that HomeAdvisor, her then-potential employer, violated the Fair Credit Reporting Act. Lengel alleged HomeAdvisor provided her a background check disclosure and authorization form that did not consist “solely” of the disclosure, alleging the form contained numerous extraneous pieces of information, including a release of liability.
Based on the purportedly improper disclosure, Lengel brought a claim under section 1681b of the FCRA, on behalf of herself and a nationwide class. She sought only statutory and punitive damages (under a theory that HomeAdvisor willfully violated the FCRA), foregoing any claim for actual damages. Following motions practice and discovery, the parties reached an agreement to settle the case on a class-wise basis. They filed an unopposed motion for preliminary approval of the class settlement in November 2015, and the motion remained pending until January 2017 – somewhat unusual for class action settlement motions.
In its January 25, 2017 order, the court found that most of the requirements for approving a class action settlement were met and agreed it would preliminarily certify a settlement class and appoint class counsel, but otherwise not approve the settlement as initially submitted. The court identified three overarching problems that precluded preliminary approval in full. The first was the court’s concern about lingering questions of law and fact—namely, whether HomeAdvisor might be able to prove it had not willfully violated the FCRA, thereby cutting off liability. Noting it had denied HomeAdvisor’s motion to dismiss the willfulness claim, the court nonetheless remarked that HomeAdvisor may be able to establish, with the benefit of a developed record, that its conduct—even if in violation of the statute—was mere negligence, which would cut off any potential recovery given the posture of the case.
The second concern that prevented the court from unconditionally granting preliminary approval was its concern over the scope of the release in the settlement, which included any claim related to the underlying facts, not just potential FCRA claims. The court expressed concern that this release would touch on, among other things, any claim related to a class member’s employment, or other claims wholly unrelated to the FCRA, which was inappropriate on the facts before the court.
The court’s third and final concern was related to the provision of payments. The settlement called for payments mailed to each class member, but the court was left unsure how the parties would deal with class members for whom HomeAdvisor had no address. Likewise, the settlement made no provision for re-distribution of checks not initially cashed. The court noted it needed some guidance from the parties on how both issues would be handled.
From those concerns, the court granted only partial approval, certifying the class but directing the parties to revisit the items identified in the Court’s order. On February 6, the parties filed an amended motion for preliminary approval (together with and an amended settlement agreement), which is currently pending before the court.