On January 20, 2017, the Ninth Circuit Court of Appeals issued a decision of first impression in Syed v. M-I, LLC, a putative class action, when it held that a prospective employer willfully violated the Fair Credit Reporting Act by including a liability waiver in its FCRA background check disclosure form.
In the underlying case, Syed applied for a job with M-I. During the application process, M-I provided a form labeled “Pre-employment Disclosure Release.” The form provided that the employer would obtain Syed’s credit history and that other information could be collected and used to make a decision on his employment application. The form also included a waiver that discharged, released, and indemnified the “prospective employer … , their agents, servants, employees, and all parties that rely on this release and/or the information obtained with this release from any and all liability and claims arising by reason of the use of this release and dissemination of information that is false and untrue if obtained by a third party without verification.”
Under the FCRA, before obtaining a background check on a prospective or current employee for employment purposes, an employer is required to make disclosure of the prospective background check in a writing consisting “solely” of the disclosure. Additionally, the viability of an employee’s class action often depends on the plaintiff’s ability to establish not only a violation of the FCRA but also that such violation was “willful.”
The district court granted M-I’s motion to dismiss, finding that Syed’s willfulness allegations were insufficient. The Ninth Circuit disagreed. Not only did the court reverse the district court and find that Syed’s complaint sufficiently stated a claim, it also found that M-I’s use of the disclosure form was a willful violation of the FCRA. In reversing the district court, the Ninth Circuit held that the language in Section 1681b(b)(2)(A) was unambiguous in its requirement that the disclosure and authorization be presented in a form that “consists solely of the disclosure.” In its opinion, the Ninth Circuit explicitly rejected M-I’s argument that the statutory text was “less than pellucid” and noted that a “lack of guidance” does not render an interpretation reasonable. The Court also noted that M-I’s inclusion of the liability waiver in its disclosure form “comports with no reasonable interpretation of 15 U.S.C. § 1681b(b)(2)(A).”
The Ninth Circuit denied a request for rehearing in March. The defendant has now petitioned the Supreme Court for review, arguing that the plaintiff lacks standing under the Supreme Court’s 2016 decision in Spokeo, Inc. v. Robins due to a lack of “concrete” harm from the alleged violation, and that the finding of willfulness was incorrect given the text of the statute. The petition also emphasizes the important nature of the question for the industry.
We will continue to monitor further developments in this case, as well as other decisions addressing issues of “willfulness” and “standing” under the FCRA.