Photo of H. Scott Kelly

Scott specializes in complex litigation and business disputes.

On February 7, the Washington State House of Representatives approved a bill that would “ban the box” and prohibit requests about past criminal history in initial employment applications. According to The Spokesman-Review, the bill, dubbed the “Fair Chance Act,” passed on a mostly partisan vote after supporters said it was important to give people a second chance and opponents said was unfair to businesses.

“You have to get through that door.  The only way to do it is not to mark that box,” Rep. Sherry Appleton, D-Poulsbo, said.  “This is a bill of justice.”

Before voting on the Fair Chance Act, the House narrowly rejected an amendment that would have kept cities like Spokane from having stricter requirements than the state. The Spokane City Council adopted its own “ban the box” ordinance in November 2017.

The state bill allows a warning from the state attorney general for the first offense and a fine on the second offense.

The bill now moves to the Senate for a vote, then to Governor Jay Inslee for signature if approved by the Senate.


On February 1, the city council of Kansas City, Missouri passed a “ban the box” ordinance which prohibits nearly all Kansas City employers from inquiring into an applicant’s criminal history until after the applicant has been interviewed.  The ordinance – titled “Criminal Records in Employment” and effective June 9, 2018 – applies to those with six or more employees in the city, but excludes employers that are prohibited by a local, state, or federal law or regulation from considering applicants with a criminal record.

Kansas City government adopted the policy for most city employees in 2013, while the state of Missouri approved it for state hiring in 2016.

Following an applicant’s interview, but before an offer is extended, employers are permitted to ask about the applicant’s criminal history.  Yet, the ordinance prohibits an employer from basing a hiring decision on this factor alone.  Penalties for violating the ordinance include a loss of business licensure for up to 30 days on the first offense and permanently if more than three violations occur within five years, fines of up to $500, and/or imprisonment for up to 180 days.

Kansas City is now one of more than 150 cities and counties in the United States to enact a “ban the box” ordinance.

Troutman Sanders will continue to monitor related legislative developments concerning employment background screening and employee hiring.

Today, the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) issued its en banc decision in the closely-watched PHH Corp. v. Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) matter. In short, the D.C. Circuit upheld the constitutionality of the structure of the CFPB, reversing its 2016 panel decision.


As we previously reported, on October 11, 2016, a panel of the D.C. Circuit held that the Director of the CFPB had too much unilateral, unchecked power. The portion of the Dodd-Frank Act providing that the Director can only be removed by the President “for cause” was deemed unconstitutional. The 2016 panel found that “the CFPB, lacks that critical check and structural constitutional protection, yet wields vast power over the U.S. economy.”

The panel limited the remedy to the problem, however, by striking the “for cause” portion of the law and held that the President supervises the Director, and the President may remove the Director without cause. The Court also declined to shut down the entire CFPB even after finding the Bureau constitutionally flawed.

The case originally began as a bid by mortgage servicer PHH to overturn a $109 million CFPB penalty for violations of the Real Estate Settlement Procedures Act (“RESPA”). But as a result of the 2016 panel decision, the case changed focus to the broader constitutional question.


The D.C. Circuit “granted en banc review to consider whether the federal statute [the Dodd-Frank Act] providing the Director of the [CFPB] with a five-year term in office, subject to removal by the President only for ‘inefficiency, neglect of duty, or malfeasance in office,’ . . . is consistent with Article II of the Constitution.”

On January 31, 2018, the full D.C. Circuit issued its 7-3 opinion reversing the 2016 panel decision. The Court held that the Dodd-Frank Act provision “shielding the Director of the CFPB from removal without cause is consistent with Article II.” In the 68-page opinion, the Court ruled that the original panel’s decision was incorrect in finding that the CFPB’s structure was unconstitutional: “Applying binding Supreme Court precedent, we see no constitutional defect in the statute preventing the President from firing the CFPB Director without cause.”

The Court then held: “Congress’s decision to provide the CFPB Director a degree of insulation reflects its permissible judgment that civil regulation of consumer financial protection should be kept one step removed from political winds and presidential will. . . . Congress made constitutionally permissible institutional design choices for the CFPB with which courts should hesitate to interfere.”


The case is not over. There is a chance that PHH appeals the en banc decision to the U.S. Supreme Court, where the case would take on heightened scrutiny and political ramifications. However, the practical effects of the ruling could be favorable to PHH.

Regardless of whether the case is appealed to the Supreme Court, the October 2016 RESPA rulings of the three-judge panel were reinstated by the en banc Court. As a reminder, the panel was unanimous in holding that Section 8 of RESPA permits captive reinsurance arrangements so long as mortgage insurers pay no more than reasonable market value for reinsurance. And, even if Director Cordray’s contrary interpretation (that RESPA flatly prohibits tying arrangements) were permissible, the panel held, it was an unlawful, retroactive reversal of the federal government’s prior position. Finally, according to the panel, a three-year statute of limitations applies to both administrative proceedings and civil actions enforcing RESPA. According to today’s en banc decision, all of those RESPA rulings have been reinstated. This mean that the CFPB’s prior interpretation was based on an incorrect legal theory and, therefore, the CFPB must revisit the entire case in light of the panel’s rulings.

Critically, in accordance with the prior panel ruling, the CFPB’s prior $109 million fine against CFPB has been effectively vacated and remanded to the CFPB for further proceedings. Given the new administration’s position on the CFPB and the appointment of a new director (Mick Mulvaney), the CFPB’s new ruling may prove different under the correct legal standard and/or the fine may be reduced or eliminated altogether.

Troutman Sanders will continue to monitor this case – and all CFPB-related decisions – for future developments.

The case is PHH Corp. v. Consumer Financial Protection Bureau, 15-1177 (D.C. Cir. October 11, 2016), and the D.C. Circuit’s recent decision can be found here.


On January 22, 2018, the United States Supreme Court denied the second petition for a writ of certiorari filed by Spokeo, Inc. in its landmark, Article III standing case against Plaintiff Thomas Robins. Previously, on August 15, 2017, the Ninth Circuit issued its decision on remand in the same case, reversing and remanding the case to the California district court after finding that Robins had standing to pursue his claims. Spokeo appealed that ruling to the U.S. Supreme Court, arguing that the Court’s prior opinion created massive uncertainty among lower courts as to the contours of Article III standing – particularly in cases alleging statutory claims based on purely technical or procedural violations.

The denial of cert means that such confusion and disagreement may continue to fester. It also signals the Court’s unwillingness to dive back into its 2016 Spokeo ruling so soon after publication –paving the way for continued litigation and legal development in the lower courts.

Troutman Sanders will continue to monitor decisions grappling with these standing issues and report on any future developments.

On January 19, 2018, the Virginia Senate voted 23 to 16 to “ban the box” on state employment applications.  The bill, sponsored by Democrats Rosalyn Dance (Petersburg), Adam Ebbin (Alexandria) and Jennifer McClellan (Richmond), would bar state agencies and localities from including on an employment application a question about whether the prospective employee has ever been arrested, charged with, or convicted of a crime – with certain exceptions. A prospective employee could not be asked if he or she has been convicted of a crime unless he has received a conditional offer of employment. The offer could be withdrawn if the worker has a conviction that directly relates to the position’s duties.

“This is about second chances,” said Sen. Rosalyn Dance.  “Those who have paid their debts to society should be given the opportunity to be a productive member of society.”

Local governments would also be permitted to implement their own “ban the box” laws for local government positions. The bill now goes to the Virginia House of Delegates.

Troutman Sanders will continue to monitor related legislative developments concerning employment background screening and employee hiring.

On January 5, Troutman Sanders filed an amicus brief on behalf of the National Association of Professional Background Screeners (“NAPBS”) in support of Spokeo, Inc.’s second petition for certiorari to the United States Supreme Court in Spokeo, Inc. v. Robins (U.S. No. 17-806).  The new petition requests that the Court revisit its prior ruling and add clarity to the divergence in lower court rulings over the past two years.

The NAPBS’s amicus brief contends that the Ninth Circuit’s Spokeo decision on remand misapplied the Court’s instruction to limit federal court jurisdiction to actual cases and controversies under Article III by allowing plaintiffs to file technical, no-injury claims or claims based on bare procedural violations.  In the class action context, such technical claims led to in terrorem settlements under the FCRA’s statutory damages scheme which does not cap the damages multiplier in a class case.  The NAPBS and its members “face a practical reality in which ruinous potential liability and litigation expense grossly outweigh any harm actually caused to consumers – which oftentimes is no injury whatsoever.”  In turn, the divergence in interpretations of Spokeo I coupled with the ability to command in terrorem settlements has resulted in forum shopping by plaintiffs in favorable jurisdictions like the Ninth Circuit.  “Clarity is warranted,” according to the NAPBS.

The NAPBS is a trade association representing over 900 small and large background screening firms whose mission is to advance excellence in the screening profession and provide a unified voice in the development of national, state, and local regulation of professional screening services.

A copy of the amicus brief can be found here.

On December 20, New Jersey Governor Chris Christie signed a new bill amending the New Jersey Opportunity to Compete Act (“OTCA”) that went into effect in March 2015.  The amendment seeks to strengthen the “ban the box” legislation by adding express prohibitions as to expunged criminal records and providing clarity to the types of job applications at issue in the OTCA. It becomes effective immediately.

Under the amendment – Senate Bill 3306 – covered employers are barred from seeking information about the current and expunged criminal records of applicants during the early stages of the employment application process.  In addition to barring employers from making oral or written inquiries, the amendment also bars employers from doing online searches for an applicant’s criminal record or expunged criminal record.

The OTCA applies to employers with fifteen or more employees over twenty calendar weeks who do business, employ persons, or take applications for employment within New Jersey.  Those employers may ask about criminal records and any expungements after the initial employment application process, such as after the interview.  While New Jersey law does not prohibit employers from refusing to hire an individual because of his or her criminal history, under Senate Bill 3306, employers may not refuse to hire an applicant because of a criminal record that has been expunged or erased through executive pardon, unless the refusal is consistent with other applicable laws, rules and regulations.

Troutman Sanders will continue to monitor related legislative developments concerning employment background screening and employee hiring.

On November 27, the City Council for Spokane, Washington made that city the newest locality to approve a “ban the box” ordinance, which would prohibit employers from requesting criminal or arrest records to make decisions on employment until after an in-person interview.  The vote passed 5-2.  The mayor of Spokane has until December 14, 2017 to veto or sign the ordinance.

The ordinance only applies to those applying for positions within the Spokane city limits.  It is broad enough to cover all types of work, including “temporary or seasonal work, contracted work, contingent work and work through the services of a temporary or other employment agency; or any form of vocational or educational training, whether offered with or without pay.”  Notably, the ordinance has a carve-out exception aimed at local school employees that allows businesses hiring employees who will work with unsupervised children to continue to ask about criminal histories. There is also a Washington state law that requires school employees to complete a background check.

If passed, Spokane employers will have until July 2018 to comply with the new ordinance, although the city will not enforce it until 2019.  A violation of the ordinance is a class 1 civil infraction, with a fine of $261. The City may double the infraction penalty for any subsequent violations.

Troutman Sanders will continue to monitor related legislative developments concerning employment background screening and employee hiring.

On December 5, a Court of Appeals for the state of Ohio affirmed dismissal of a putative FCRA class claim against Ohio State University on the basis that the plaintiffs lacked standing to assert their no-injury, statutory claim in Ohio state court.  The state appellate court declined to adopt a “statutory standing” doctrine in Ohio that would allow standing for a federal statutory claim without the existence of an alleged injury-in-fact.


In 2012 and 2014, OSU hired the plaintiffs as a facility manager and a housekeeper. In October 2015, the plaintiffs, individually and on behalf of a class of others similarly situated, filed suit against OSU under the FCRA. They alleged that as part of their application and hiring process, OSU provided a background check disclosure and authorization to each of them that improperly included extraneous information and a liability release in violation of 15 U.S.C. § 1681b(b)(2)(A)(ii).

The following month, OSU removed the action to the United States District Court for the Southern District of Ohio, Eastern Division, based on federal question jurisdiction. In June 2016, the federal court found that appellants failed to allege that they sustained any injury-in-fact due to OSU’s alleged violations of the FCRA, and that they therefore lacked standing under Article III of the United States Constitution. Consequently, the federal court remanded the matter to the Ohio trial court pursuant to 28 U.S.C. 1447(c).

In July 2016, OSU moved to dismiss the action in the Ohio trial court based on its contention that the appellants lacked standing to bring their claims in Ohio state court because they alleged no injury-in-fact resulting from violations of the FCRA. In response, the appellants argued that Ohio law recognizes standing even in the absence of an injury-in-fact, when that standing is conferred by statute. In February 2017, the Ohio trial court dismissed the appellants’ claims against OSU based on its conclusion that they failed to plead any particularized injury-in-fact and lacked statutory standing to pursue their claims in the absence of a cognizable injury. The plaintiffs appealed.

Appellate Ruling

Noting the instructive ruling by the United States Supreme Court in Spokeo, the Court of Appeals of Ohio stated that the plaintiffs were relying on a concept of “statutory standing” that, according to the plaintiffs, provided standing to sue for a statutory violation “even in the absence of an alleged injury-in-fact.” The appellate court nevertheless disagreed with that argument, adding:

Ohio and federal law have diverged on the issue of whether a party may have standing to sue in the absence of an injury-in-fact. However, even though Ohio courts have, in some circumstances, found standing despite no allegation of concrete injury, appellants fail to cite, and our independent research does not reveal, any case in which an Ohio court has analyzed and found standing to exist on the basis of a federal statute despite the absence of an alleged injury-in-fact.

Ultimately, “[t]o the extent the ‘statutory standing’ doctrine constitutes an exception to the traditional principles of standing in Ohio,” the Ohio appellate court declined “to extend that exception to this circumstance involving the application of a federal statute.”

To find statutory standing here, the court said that it “would need to find that Congress intended to abrogate the Ohio common-law requirements to establish standing.” Yet, “there [was] no indication that Congress intended the pertinent FCRA statute to supplant the traditional requirements of standing in Ohio state court. Further, such a finding would be improper as it would permit Congress to affect the parameters of standing in Ohio courts, even though it is well-settled that Ohio law determines standing in Ohio courts.”

Troutman Sanders will continue to monitor these developments, especially as they relate to Spokeo and its progeny, and provide any further updates as they are available.

On November 17, car rental company Avis filed its memorandum in support of final approval of a $2.7 million class action settlement to resolve Fair Credit Reporting Act claims related to its background screening practices. The case is Angela Fuller v. Avis Budget Car Rental LLC, et al., No. 2:15-cv-03856, pending in the U.S. District Court for the District of New Jersey.  A copy of the final approval papers can be found here.

Plaintiff Angela Fuller filed her suit in June 2015, claiming that she lost a job with Avis because of improper background check practices – including the failure to provide an adverse action notice and stand-alone disclosure, as well as improper reliance on a 1985 citation for alcohol possession that should have been removed from her background report under the statute.

The settlement class consists of approximately 45,000 individuals, each of whom will receive cash payments or other compensation based on membership in one of four subgroups dictated by the timing of his or her background check with Avis.  Cash payments to settlement class members will range from $20 to $695.

Plaintiffs’ counsel are seeking about $891,000 to cover fees and expenses. Fuller is seeking $15,000 as an award for her services as class representative.  A final approval hearing is scheduled for November 28.

Troutman Sanders will continue to monitor this case and will report on any developments.