On June 16, 2017, the U.S. District Court for the District of New Jersey—in Muir v. Early Warning, 2:16-cv-00521(SRC)(CLW), 2017 WL 2616890, at *1 (D.N.J. June 16, 2017)—denied a motion to dismiss that argued that a plaintiff’s “informational injury” alleged under the Fair Credit Reporting Act (“FRCA”) did not constitute a concrete and particularized harm for the purposes of Article III’s injury-in-fact standing requirement.

In August 2014, the plaintiff’s prospective employer offered the plaintiff a job, subject to a background check. The prospective employer hired First Advantage Background Services Corp. (“First Advantage”) to perform the background check. First Advantage, in turn, hired Early Warning Services, LLC (“Early Warning”)—a defendant in the case—to perform a particular part of the background check. Specifically, First Advantage hired Early Warning to investigate whether the plaintiff “had ever been terminated . . . for internal fraud, i.e. fraud perpetrated by an employee against... her own employer.” Early Warning’s report to First Advantage indicated that the plaintiff’s prior employer had fired the plaintiff because she had committed internal fraud. First Advantage included Early Warning’s findings in the report that it sent to the plaintiff’s prospective employer.

In November 2014, the plaintiff asked Early Warning to send her the contents of the file it kept on her. Early Warning sent the plaintiff a file disclosure report, which stated that her prior employer had contributed an “unfavorable employment record” to the plaintiff’s file. The file disclosure report, however, did not state that the prior employer had fired the plaintiff because of internal fraud. In May 2015, the plaintiff sent to First Advantage and Early Warning letters in which the plaintiff disputed (1) the contention that she had ever committed internal fraud while she was at her prior employer, and (2) the claim that her prior employer had fired her for committing internal fraud. In response, Early Warning sent the plaintiff a letter stating that it had reinvestigated the disputed information and that the reinvestigation confirmed that the plaintiff’s file contained information that was incomplete or inaccurate, or the  accuracy of which could not be verified.

In January 2016, the plaintiff commenced a lawsuit against Early Warning, First Advantage and unknown affiliates of the named defendants. She alleged that the defendants negligently or willfully failed to provide all of the information in her consumer file, which the plaintiff alleged was a violation of 15 U.S.C. § 1681g(a)(1). Early Warning moved to dismiss, arguing, among other things, that the plaintiff lacked standing because her allegations failed to establish that she had suffered an injury-in-fact. Specifically, Early Warning contended that the plaintiff had failed to meet the concrete and particularized harm component of the injury-in-fact standing requirement.

The relevant statute—15 U.S.C. § 1681(a)(1)—requires a consumer reporting agency to, “upon request,... clearly and accurately disclos[e] to [any] consumer:.. . [a]ll information in the consumer’s file.” The plaintiff alleged that Early Warning failed to disclose all of the information in her file. The question that the court had to answer was whether the failure, if proved, constituted a concrete and particularized injury. To answer that question, the court considered the U.S. Supreme Court’s guidance in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). In particular, the court focused on the legislative history of the FCRA and the problem Congress had attempted to solve by enacting it.  According to the court, Congress’ goal, among other things, was to decrease the instances of people “fail[ing] to obtain information that would help them to correct inaccurate information in their [credit report] files.” To achieve that goal, Congress gave “consumers a statutory right to [obtain the ... information [in their credit reports] and... creat[ed] a private cause of action to vindicate that right.” Based on that understanding of the statute, the court concluded that Early Warning’s failure to disclose statutorily covered information was “precisely the sort of ‘informational injury’ that the Supreme Court has recognized as concrete, and in the present case it is certainly particularized, as the allegedly undisclosed, inaccurate information concerned [the] [p]laintiff herself.” Because the court concluded that the plaintiff’s alleged injury counted as concrete and particularized, the court  declined to dismiss the case for lack of standing.

In another background check case that concerned standing—LaFollette v. RoBal, Inc., No. 1:16-CV-2592-WSD, 2017 WL 1174020, at *1 (N.D. Ga. Mar. 30, 2017)—the U.S. District Court for the Northern District of Georgia reached a different conclusion.  In that case, the plaintiff applied to work for the defendant. As part of the application process, the plaintiff signed a form that included the following language: “[T]he undersigned ... confirms that it ... has authorized the above named... [prospective employer] to obtain a background check for employment purposes including... a consumer report and criminal background check on the undersigned.” The defendant obtained a background check, but the plaintiff alleged that the defendant did so in a way that violated a part of the FCRA. Specifically, the plaintiff alleged that the defendant violated 15 U.S.C. § 1681b(b)(2)(A) because it failed to give her a standalone document that consisted solely of a disclosure indicating that the defendant might obtain a consumer report for employment purposes. According to the plaintiff, failing to receive the standalone disclosure document satisfied the concrete and particular harm component of the injury-in-fact requirement.

A key difference between this case and Muir v. Early Warning is what the plaintiffs alleged they failed to receive. In Muir, the plaintiff alleged that she failed to receive statutorily required information. In LaFollette, however, the plaintiff did not dispute whether she received the statutorily required information. She did not even allege that she was confused or did not understand that she was authorizing the prospective employer to do a background check. Instead, she contended that she merely did not receive the information in the correct form. According to the court, the statute’s goal was to make sure job applicants receive certain information. Because the plaintiff received that information—albeit in a form she did not like—the alleged harm did not constitute a concrete and particularized harm. Accordingly, the court granted the defendant’s motion to dismiss.

A copy of the Muir v. Early Warning decision is available here. A copy of the LaFollette v. Robal decision is available here.