The Northern District of California recently dismissed a putative class action, filed under the Fair Credit Reporting Act, challenging an employer’s inclusion of state-specific information in its FCRA consent and disclosure form. The Court held that the plaintiff had no standing to assert her FCRA claim because she failed to plead a concrete injury-in-fact.
In Soman v. Alameda Health Sys., No. 17-cv-06076-JD, 2018 U.S. Dist. LEXIS 204450 (N.D. Cal. Dec. 3, 2018), consumer Jas Soman argued that the disclosure form used by Alameda Health Systems (“AHS”) violated the FCRA by including language advising Soman that she was entitled to a copy of the consumer report obtained by AHS under state laws of California, New York, Minnesota, and Oklahoma.
The FCRA requires an employer to make certain disclosures prior to obtaining a consumer report for employment purposes. Specifically, the FCRA requires “a clear and conspicuous disclosure” in writing that consists “solely” of the disclosure. AHS moved to dismiss Soman’s second amended complaint, arguing that the text boxes advising residents of certain states of their rights under state law could not “possibly make the FCRA disclosure non-compliant for saying more than what was ‘solely’ required.” AHS argued that under Article III, even if the text boxes were superfluous, they amounted to a “bare procedural violation” divorced from any concrete harm.
The District Court agreed, finding it “hard to see how Soman’s complaint is actionable” under either Rule 12(b)(1) or 12(b)(6) of the Federal Rules of Civil Procedure. The Court noted that the boxes containing the state-law provisions were “not of a sort that would make the notice in the FCRA disclosure less than clear and conspicuous in any meaningful way, or violate the intent of being ‘solely’ disclosures.” The Court reasoned that the boxes were “wholly consistent with Congress’s intent to protect applicants’ rights by advising them in plain words of state-law rights that enhance the FCRA’s disclosure requirements.”
The Court’s opinion distinguished AHS’s disclosures from the form at issue in Syed v. M-I, LLC, 853 F.3d 492, 496 (9th Cir. 2017). The form in Syed included a liability waiver in the disclosure. Comparing the issues in Syed to AHS’s disclosure, the Court noted that there was no liability waiver in AHS’s disclosure, and the inclusion of the state-specific language did not limit Soman’s rights but provided her with additional information under state laws that are “in full harmony with the FCRA.”
At the same time that Soman argued the FCRA disclosure contained superfluous information, she also alleged the FCRA disclosure contained too little information, specifically pointing to a missing digit in the ZIP code for the vendor who conducted the background check. The Court also held this allegation was insufficient to establish an injury-in-fact, reasoning that this “minor typo is the quintessence of a procedural misstep that could not cause an injury[.]”
Finding that Soman’s complaint failed to allege an injury-in-fact, the Court dismissed the case without prejudice. This case is yet another example of ways in which consent and disclosure forms continue to be challenged. Troutman Sanders routinely reviews these types of forms and recommends that all employers utilizing background checks review their disclosure forms to ensure FCRA and state law compliance.