Thomas v. FTS USA, LLC et al, No. 3:2013cv00825 - Document 228 (E.D. Va. 2016)
Court Description: MEMORANDUM OPINION. Read Opinion for complete details. Signed by District Judge Robert E. Payne on 06/30/2016. (ccol, )
Download PDF
<![CDATA[
Thomas v. FTS USA, LLC et al Doc. 228 \p IN THE tJNITED STATES DISTRICT COXJRT FOR THE EASTERN DISTRICT OF VIRGINIA 11 L Richmond Division KELVIN M. THOMAS, L JH 30 2016 r\\ / , > OJHmC U.S. et al., Plaintiffs, Civil Case No. V. FTS USA, LLC, 3:13-cv-825 et al.. Defendants. MEMORANDUM OPINION This matter is before the MOTION FOR SUMMARY JUDGMENT Court (ECF No. on 156). DEFENDANTS' SECOND For the reasons set forth herein, the motion will be denied. BACKGROUND On filed a December class 11, 2013, action complaint others similarly situated, ("FTS"), a subsidiary (("UniTek"); Credit (Complaint Act, ("Compl.") 15 on Kelvin behalf Thomas of ("Thomas") himself and all alleging that defendant FTS USA, LLC of collectively, Reporting Plaintiff UniTek Global "Defendants") U.S.C. (ECF No. § 1)). Services, had violated the 1681 et seq. Inc. Fair ("FCRA"). Counts One and Two of the Complaint allege violations of 15 U.S.C. § 1681b{b)(2)(A)(i) and (ii), which require a disclosure and written consent from the Dockets.Justia.com consumer before a person may obtain a consumer employment purposes. 15 U.S.C. that for Counts Three and Four allege violations of §§ 1681b(b)(3)(A)(i) subsection report^ states that and an (ii), respectively. employer may not In sum, take adverse employment action based on a consumer report before the affected person receives a copy of the consumer report and a summary of rights under the FCRA. Both subsections will be discussed in more detail below. On January 7, 2016, the Court granted Thomas' motion to certify two classes based on the allegations in the Complaint. (ECF No. 105), The Court first certified a "Impermissible Use Class," defined as follows: All natural persons residing in the United States (including all territories and other political subdivisions of the United States), who applied for an employment position with Defendants or any of their subsidiaries immediately within preceding the the two filing years of the ^ The FCRA defines a "consumer report" as: any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used in whole or in part for the purposes of serving as a factor in establishing the consumer's eligibility for:...employment purposes[.] 15 U.S.C. § 1681a{d). so-called Complaint in this matter on December 11, 2013, and as part of this application process were the subject of a consumer report obtained by Defendants, (a) where the defendants failed disclosure as to provide stated at a 15 written U.S.C. § 1681b(b)(2)(A)(i) to the applicant that they intended to obtain a consumer report for employment purposes, (b) and where as a result the Defendants failed to obtain a proper written authorization as stated at 15 U.S.C. § applicant 1681b(b)(2)(A)(ii) signed by the prior to obtaining the consumer report. (ECF No. The 105). Court defined as also certified an "Adverse Action Sub-Class, follows: All natural persons residing in the United States (including all territories and other political subdivisions of the United States), who applied for an employment position with Defendants or any of their subsidiaries within the two years immediately preceding the filing of the Complaint in this matter on December 11, 2013, and as part of this application process were the subject of a consumer report obtained by Defendants, (a) where the defendants failed to provide a written disclosure as stated at 15 U.S.C. § 1681b(b)(2)(A)(i) to the applicant that they intended to obtain a consumer report for employment purposes, (b) and where as a result the Defendants failed to obtain a proper written authorization as stated at 15 U.S.C. § 1681b(b) (2) (A) (ii) signed by the applicant prior to obtaining the consumer report, and (c) whom Defendants found ineligible for the position for which the applicant had applied based on the applicant's consumer report; (d) to whom Defendants did not provide a copy of the consumer report as stated at 15 U.S.C. § 1681b(b) (3) (A) (i) at least five business days before the date the adverse employment decision is records, first (d) provide a noted in Defendants' and to whom Defendants did not written summary of Fair Credit Reporting Act rights as stated at 15 U.S.C. § 1681b(b) (3) (A) (ii) at least five business days before the date the adverse employment decision is first noted in Defendant's records. Id. After the conducted Court limited certified the classes, post-certification the discovery. parties The Court granted leave for Defendants to file a second motion for summary judgment "limited to Representative Kelvin Release that the Form following Thomas' he issues: understanding signed at the employment with FTS USA, LLC; and b. No. two of time the he Plaintiffs' a. Class Employment applied damages." for (ECF 124). After motion the for contend close of discovery, summary that judgment. summary disclosure 1681b(b)(2); (2) Court's decision (2016); (3) is forms Plaintiffs in (ECF judgment Defendants' Defendants Spokeo, lack Inc. No. 156). comply v. Robins, § now because; with standing their second Defendants appropriate (1) 15 under 136 U.S.C. the S. § Supreme Ct. 1540 summary judgment is proper as to some members of the Adverse Action Sub-Class who received notice U.S.C. filed 1681b(b)(3); (4) as required by 15 summary judgment is proper as to some members of the class who executed general releases or signed settlement agreements such that their claims are barred by the doctrine from of accord pursuing and the satisfaction; instant and claims (5) by Thomas is judicial barred estoppel. (Memorandum of Law in Support of Defendants' Motion for Summary Judgment ("Def. Mem.," ECF No. 157)}. Defendants' motion allowed by the judgment. (ECF No. because jurisdiction. is order authorizing 124). Defendants to raise, issue, obviously not a confined second motion Nonetheless, is a the for scope summary it is appropriate for and for the Court to address, that to . question of the standing subject matter Defendants have abandoned the defenses of release and accord and satisfaction; therefore, that part of the summary judgment motion will not be further addressed. See ECF No. 217. For reasons set forth in the Memorandum Opinion (ECF No. addressing PLAINTIFF'S OBJECTION AND MOTION TO STRIKE 173), the Court has stricken newly minted argument that Sub-Class received Defendants' proper motion for adequacy of the evidentiary (ECF No. support for the some members of the Adverse Action pre-adverse action summary members will be denied. the the 217) judgment As to Defendants' Employment Release notices. against those argument Statement Hence, class respecting (which is beyond the scope allowed by the Court's order, ECF No. 124), the motion will be denied because Plaintiffs are entitled to summary judgment on that issue, Opinion and order. as set Finally, forth in a separate Memorandum the motion for summary judgment on the ground of judicial estoppel will be denied. A. Factual Background In September Communications 165-2) FTS. employment 12). No. with "Employment obtained a Defendant UniTek is at 38 2) . FTS, Release 6, on job with Cableview which was purchased by FTS in the (Deposition of Kelvin Thomas at (ECF Thomas ("Cableview"), fall of 2011. No. 2009, SI In January Statement," 17, which ("Thomas Dep.," ECF the parent order 2012, to company of continue Thomas provides, in part: Prior to and for the duration of my employment with FTS USA, LLC (the "Company"), I understand that investigative background inquiries are going to be made on myself [sic]. I understand that the Company will be requesting information from various Federal, State, Local and other agencies which maintain activities credit, records relating criminal, to concerning my my driving civil, past history, and other experiences. These reports may also include inquiries regarding my educational history and past work experience and performance including reasons for termination of employment. I authorize, without reservation, any party or agency contacted by the Company or its agents to furnish any of the above mentioned information or any other information requested. signed his an pertinent (ECF No. 92 corporate Ex. 1). designee According under to Fed. Steven R. Conlin, Civ. P. Defendants' 30(b) (6), the Employment Release Statement that Thomas received was UniTek's standard disclosure form, employees during the which was provided to all prospective relevant class period. (Deposition of Steven Conlin ("Conlin Dep.," ECF No, 165-1) at 58). After its acquisition of Cableview, FTS required every Cableview employee who wished to continue employment with FTS to undergo a UniTek's background internal check. hiring (ECF No. policies 38 provided at 3, that If "[a] 7-10) . pending employee may not be eligible for hire" if the employee has been charged with or convicted of certain felonies, driving offenses, or other "unacceptable" crimes. misdemeanors, Id. at 55 11- 12. On or about January 20, 2012, consumer report-related and...FTS," behalf BGC performed all on itself (ECF D). check of Backgroundchecks.com ("BGC"), a consumer reporting agency. Ex. background on from 99, a functions Thomas No. ordered UniTek, which performed "all background consumers who applied for employment with FTS, engaged various background employees. other checks on consumer its (Conlin Dep. at 73). reporting other checks for but UniTek also agencies subsidiaries' to perform potential BGC s initial convictions, marijuana, report including money knowledge of a revealed that Thomas as was well all driving a of Ex. record Id. rape, a C) . 2011 Thomas and were carnal report also several moving accident was of incorrectly The contained of felony distribution which 38, report fault. for statutory (ECF No. as contained numerous convictions juvenile, Thomas' at Thomas laundering, attributed to Thomas. violations, on not in which afforded an opportunity to review or address the contents of that report. On March 12, 2012, Thomas' supervisor informed Thomas that, as a result of his driving record, he was position for which he had applied. Conlin Dep. at 136). ineligible (ECF No. 38, for Exs. E, the F; On that same date, an FTS representative provided Thomas with an edited copy of the BGC background check, which included some of the at informed 21). Thomas then check was inaccurate. background confirmed 38, Ex. check that that Thomas' Id. erroneous convictions. Defendants Thereafter, reflected driving his Dep. background BGC provided an updated no record that (Thomas criminal was charges, accurate. but (ECF No, D). It is undisputed that Thomas was never given a copy of the background check before March 12, 2012, and Defendants did not ever provide Thomas with a summary of his rights under the FCRA. In fact, Defendants never provided either of these documents to 8 any current Defendants, or they potential were employees under the because, impression according that their to third- party vendors would provide the required notices. (Conlin Dep. at that 121-122). Defendants claim to have held belief notwithstanding the absence of any provisions to that effect in the contracts vendors. between (ECF Nos. Defendants and their background check 165-9, 165-11). DISCUSSION A. Legal Standard Summary judgment is proper when there is no genuine issue as to any material fact in the case such that the moving party is entitled to judgment as a matter of law. 56(c). See Fed. R. Civ. P. Once the moving party properly files and supports its motion for summary judgment, the opposing party must show that a genuine issue of fact exists. See Matsushita Elec. Indus. Co v. Zenith Radio Corp., 475 U.S. 574, 586-87 A fact is material thereof could lead a See Anderson v. genuine issue if the (1986). existence or non-existence jury to different resolutions of the case. Liberty Lobby, of material Inc. fact 477 U.S. 242, 248 only exists when the party has presented sufficient evidence upon which a jury could return a verdict in its favor. Id. (1986). opposing reasonable This means that "summary judgment is only appropriate when, after discovery, non-moving party has failed to make 9 a A *showing sufficient the to establish the existence of an element essential case, and on which that party will bear the burden of proof at trial.'" BM v. at to that party's *1 (E.D. U.S. 317, Chesterfield County School Dist., Va. 322 2010) (quoting Celotex Corp. (1986)), In considering 2010 WL 145661, v. Catrett, motions for 477 summary judgment, the court must consider the evidence in the light most favorable to the non-moving Commonwealth Univ., party. 84 F.3d 672, Smith v. Virginia 675 {4th Cir. 1985). B. The Standing Issue As the a other threshold matter, class members Defendants lack standing contend that to pursue Thomas their and claims because they have failed to allege a cognizable injury-in-fact, as defined Inc. v. the Robins, Defendants the in Plaintiffs' 136 S. take threshold Supreme Court's Ct. 1540 that recent (2016). the view Spokeo of constitutional decision (Def. in Mem. at 21-24) significantly standing and Spokeo, heightened that "the alleged injuries are exactly what the Supreme Court stated would not constitute a concrete injury [in Spokeo], i.e., a technical procedural violation that causes no concrete harm." Id. at 23-24 argument. (emphasis Defendants ^ Defendants' in point original). to Thomas' In support testimony of that that he is standing argument appears near the end of their summary judgment brief; however, because standing is a jurisdictional question and jurisdiction must be established before the merits of a case may be addresses the issue of standing first. 10 considered, the Court seeking only statutory damages and that he has declined to seek any actual damages. Thomas Id. at 24. responds constitutional that requirements Opposition to ("PI. in 0pp.," Mem. Spokeo Defendants' for not alter standing. Second EOF No. did Motion 176) at the (Plaintiff's for Summary 12-13). In Judgment any event, Thomas argues that every class member has suffered two concrete injuries. procured proper First, class Thomas members' authorization as contends that, consumer required reports by unlawfully invaded the class members' by the FCRA. Id. at 15. class suffered have Defendants "denied Mr. because Defendants without statute. obtaining Defendants have rights of privacy created Second, Thomas asserts that he and the an "informational injury," Thomas information to which she specifically entitled under the FCRA." because [sic] was Id. at 17. a. Legal Framework Contrary to Defendants' position, Spokeo did not change the basic requirements of standing. Indeed, the Supreme Court reaffirmed that a plaintiff must have "(1) suffered an injury in fact, the (2) that is fairly traceable to the challenged conduct of defendant; favorable (citing (1992)). and judicial Lujan v. As the (3) that is decision." Defenders party of likely to be Spokeo, 136 Wildlife, 504 invoking 11 federal redressed S. U.S. Ct. at by a 1547 555, 560-61 jurisdiction, Thomas bears U.S. the at burden of establishing those elements. Lujan, 504 560. It is undisputed that the alleged statutory violations are traceable to violations are redressable by statutory damages. the Defendants' remainder of the conduct, discussion and on that the the alleged Accordingly, standing issue is addressed solely to the requirement of injury-in-fact. In Spokeo, the Court reiterated that to satisfy the first element of the Lujan test, a plaintiff must establish that he or she suffered "*an invasion of a legally protected interest' that is ^concrete and particularized' conjectural U.S. 504 at 560). To ^actual or imminent, 136 or hypothetical.'" Lujan, and S. Ct. at 1548 be "particularized," not (quoting an injury "^must affect the plaintiff in a personal and individual way,'" Spokeo, 136 S. Ct. at 1548 (citing Lujan, 504 U.S. at 560 n.l), as opposed to an "undifferentiated, generalized grievance" that all citizens share. However, number "the fact of people nonjusticiable Lance v. that does Coffman, 549 U.S. 1548 not generalized (2007). of itself make grievance," as that injury long Spokeo, large as a "each 136 S. Ct. n.7. A "concrete" "^real,' 442 an injury may be suffered by a individual suffers a particularized harm." at 437, and not injury, on the 12 hand, Spokeo, ^abstract.'" other 136 is S. one that Ct. at is 1548 (citing Webster's Third New International Dictionary 472 (1971); Random House Tangible Dictionary injuries of the plainly English satisfy Language this 305 (1967)). requirement, intangible injuries may also "nevertheless be concrete." 1549. but Id. at In evaluating whether an intangible injury satisfies the "concreteness" important requirement, considerations: the (1) Spokeo Court offered two "whether an alleged intangible harm has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American " ^has courts[;]" the power to causation that will and (2) define give the judgment injuries rise to a none existed before.'" I^ of Congress, and articulate which chains of case or controversy where (quoting Lujan, 504 U.S. at 580 (Kennedy, J., concurring in part and concurring in judgment)). The Supreme Court then elaborated on the connection between statutory standing created by Congress and concrete injury. To begin, the Court explained that, "Article III standing requires a concrete injury even in the context of a statutory violation," and therefore "[the plaintiff] bare procedural violation, satisfy the (citing Summers (2009) ("[D]eprivation concrete interest Earth that for example, allege a divorced from any concrete harm, injury-in-fact v. could not, requirement Island of is a of Institute, procedural affected 13 Article by 555 right the III." U.S. 488, without and Id. 496 some deprivation, .. is insufficient to create Article clarify that distinction, one of the FCRA's credit reporting, how the standing")). Attempting to the Court then noted that, purposes "not all any risk of harm": III is to protect inaccuracies against although inaccurate cause harm or present for example, "[i]t is difficult to imagine dissemination of an incorrect could work any concrete harm." At the same time, zip code, without more, Id. at 1550. the Court observed that, in cases where "harms may be difficult to prove or measure[,]" "the violation of a procedural sufficient. .. [and] any additional Id. at 1549 11, 20-25 U.S. granted by a plaintiff in such a harm beyond the statute one Congress 449 Public Citizen v. (1989)) has these social has situations, judgments not occurred. in legal about original). rights where Often, As harm these reflect has and kinds of injuries exist where we think the harm is in the act itself. The public disclosure of private information or defamatory falsehoods does not need downstream consequences to be hurtful; neither does differential treatment on the basis of race. Procedural wrongs are an oft-seen category where the distinction between the legal violation and the injury may be so thin as to be essentially nonexistent. Proving the injury in many of these cases just entails proving the violation itself—that 14 524 U.S. Department of Justice, (emphasis certain be identified." commentator has put it: In can case need not allege (citing Federal Election Common v. Akins, (1998); 440, right words were 491 one spoken, certain information disclosed, or certain procedures flouted. As a result, requiring some sort of additional indicia of harm beyond the violation itself ignores the nature of the injury and the reason for the remedy. Daniel Townsend, Standing?, Who Should Define 68 Stan L. Rev. Online 76, Injuries For Article III 80-81 (2015) . In sum, then, the proposition that "[t]he... injury required by Article III may exist solely by virtue of 'statutes creating legal rights, the invasion of which creates standing'" survives Spokeo subject to qualification, depending on the facts of each case and the considerations articulated above, intact. Warth Linda R.S. v. fundamental v. Seldin, Richard D., principles 422 U.S. 410 U.S. guide the 490, 614, in mind, it is necessary, 500 (1975) 617 n.3 analysis questions raised in Defendants' motion. but nevertheless of {quoting (1973)). the These standing With those principles as Spokeo instructs, to look to the common law and to the judgment of Congress, as reflected in the FCRA, to determine whether the violations of that statute alleged by Thomas constitute concrete injuries that satisfy the case or controversy requirement. b. Statutory Text A fundamental premise of Defendants' motion is that, in all four counts of the Complaint, Thomas is asserting technical or procedural FCRA. violations of the 15 The assumed predicate of that argument is that sections §§ 1681b(b) (2) and 1681b(b) (3) do not create substantive rights, the violation of which can cause a concrete injury as defined in Spokeo. The text first the task, nature of then, the is to determine substantive from the protections that statutory Congress intended to create in enacting those sections of the FCRA. The text at issue is found in two separate but related subsections of the FCRA that were added to the statute in 1994: §§ 1681b(b){2) and 1681b(b)(3). Cong., 2d Sess. (1994). H.R. Rep. No. 15 U.S.C. 103-486, 103d The words of the statute are accorded their ordinary meaning in the absence of a statutory definition. Mohamad v. Palestinian Auth., 132 S. Ct. 1702, 1706-07 (2012) (citing FCC v. AT&T Inc., 131 S. Ct. 1177, 1182 (2011)). Section 1681b(b)(2)(A) provides that: a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless: (i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and (ii) the consumer has authorized in writing (which document authorization referred may to in be made clause on the (i)) the procurement of the report by that person. That subsection protects against securing a consumer's private information that by way of a consumer report except on certain 16 conditions. obtain a doing so, The first condition consumer report provide the for is that a person seeking employment purposes must, consumer with a clear disclosure that the report will be obtained. to before and conspicuous The second is that the person seeking to obtain the report must first obtain the consumer's written consent. Thus, § establishes a clear and 1681b(b)(2) establishes two rights. First, it right to specific information in the form of a conspicuous disclosure. The statutory requirement that the disclosure be made in "a document that consists solely of the disclosure" helps to implement the textual command that the disclosure be clear and conspicuous. Second, § 1681b(b)(2) establishes a right to privacy in one's consumer report that employers may circumstances. invade only under stringently defined Those protections are clearly substantive, neither technical nor procedural. Section 1681b(b)(3) provides that: In using purposes, a consumer report before taking any for employment adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates: (i) a copy of the report; and (ii) a description in writing of the rights of the consumer under this subchapter, as presented by the Bureau under Section 1681g{c){3) of this title. 17 and That subsection protects the consumer against adverse employment actions based on a consumer report that the consumer has had no opportunity to review prospective employer. or discuss Thus, provides a consumer with a consumer report FCRA) before report. and a an with text the his of her current takes rights adverse or section 1681b(b)(3) right to certain information description of employer or (the conferred by the action based on that By requiring that the consumer receive the foregoing information before adverse action is taken, the statute provides the consumer with a right to review the report and discuss it with his putative or current employer before adverse action is taken against him. 30-31 (1994). H.R. Rep. No. 103-486, 103d Cong,, 2d Sess. In sum, § 1681b(b){3) also delineates substantive rights. Moreover, Congress permitted consumers to sue to redress a breach of the subsections and, substantive if successful, and punitive damages, doing, rights set forth in the to be awarded actual, as applicable. foregoing statutory, 15 U.S.C. § 168In. as set forth in further detail below. In so Congress defined injuries and articulated chains of causation that give rise to a case or controversy. c. Historical Framework: The FCRA The legislative history of the FCRA underscores the nature and importance of the rights created by the statutory text. 18 To begin, as our Court of Appeals has held, "Congress enacted FCRA in 1970 out of concerns about abuses in the consumer reporting industry." 409, 414 Dalton v. Capital Associated Indus., Inc., 257 F.3d (4th Cir. 2001). Specifically, Congress intended to address developments in "computer technology [that] facilitated the storage and interchange of information" and "open[ed] the possibility of a nationwide data bank covering every citizen." S. Rep. No. 517, 91st Cong., 1st Sess. 2 {"Senate Report"). Representative Sullivan remarked, establishment of all sorts As "with the trend toward...the of computerized data banks, the individual is in great danger of having his life and character reduced to impersonal ^blips' and key-punch holes in a stolid and unthinking machine which can literally ruin his reputation without cause, and make him unemployable." 116 Cong. Rec. 36570 (1970) . With Congress the advent "found of that in these too "computerized many instances data banks," agencies were reporting inaccurate information that was adversely affecting the ability of individuals to obtain employment." F,3d at 414. Therefore, Dalton, 257 Congress sought "to prevent consumers from being unjustly damaged because of inaccurate or arbitrary information," and individual's right "to of prevent privacy 19 an undue in the invasion of collection the and dissemination of credit information." Senate Report at 1 (emphasis added). Congress also specifically recognized that "[o]ne problem which the hearings [concerning the bill that later became the FCRA]...identified is the inability at times of the consumer to know he is being damaged by an adverse credit report." Report at 3. Senate "Unless a person knows he is being rejected for credit or insurance or employment because of a credit report, he has no opportunity to be confronted with the charges against him and tell his side of the story." Congress emphasized that "the consumer has a right to know when he is being turned down for credit, insurance, information in a information in his Therefore, consumer credit Congress to be or report credit and file." wished informed employment of to to Id. because correct at 2 "establish[] investigations of any adverse erroneous (emphasis the into added). right his of a personal life" and to "be told the name of the agency making the report" whenever the individual "is rejected for credit, insurance employment because of an adverse credit report[.]" Id. or at 1 (emphasis added). Congress added §§ advance those objectives. 1681b(b)(2) and (b)(b)(3) in 1994 to The House Committee stated that those provisions: 20 prohibit a person from procuring a consumer report on a consumer for employment purposes unless it has been clearly and conspicuously disclosed to the consumer that the report may be obtained for such purposes and the consumer affirmatively consents, in writing, to the procurement of the consumer report. The disclosure must be made in writing in a document that consists solely of the disclosure. Consequently, an employer could not make the disclosure in either a job application or an employee manual... The bill also triggers special provisions when an employer contemplates taking adverse action based in consumer report. taking adverse consumer's whole or in part on a Specifically, before action regarding the current or prospective employment, an employer must provide to the consumer a copy of the report and a written description of the consumer's rights under the FCRA. The employer must also provide the consumer with a reasonable period to respond to any information in the report that the consumer disputes and with written notice of the opportunity and time period to respond. A reasonable period for the employee to respond to disputed information is not required to exceed 5 business days following the consumer's receipt of the consumer report from the employer. H.R. Rep. No. 103-486, 103d Cong,, 2d Sess. 30 (1994). In sum, the FCRA reflects Congress' concern with the "need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, the consumer's right to privacy." is clear intended from the that the statute's FCRA be 15 U.S.C. legislative construed 21 and a respect for § 1681(a)(4). history to that promote the It Congress credit industry's responsible information reports. and to dissemination maintain To that end, the it was of accurate and relevant of consumer confidentiality Congress' judgment, as clearly expressed in §§ 1681b{b)(2) and (3), to afford consumers rights to information and privacy. d. The Impermissible Use Class With the statutory text and legislative history in mind, it is necessary to Impermissible determine Use whether Class, has Thomas, alleged on a behalf of concrete and particularized injury pursuant to 15 U.S.C. § 1681b(b)(2). an initial matter, the As Defendants do not dispute that the injuries alleged by the Impermissible Use Class are "particularized," in the sense that each Impermissible Use Class member actually received a copy of the Employment Release Form from Defendants, and each has rights. alleged a Therefore, violation of his the remainder of or her own statutory the discussion herein addresses whether the injuries alleged by the Impermissible Use Class are "concrete," in accordance with Spokeo's directives. In the Complaint, Thomas alleged that "Defendants did not provide Plaintiff with a written disclosure that they intended to obtain a copy of his consumer report for employment purposes," and that "Plaintiff did not provide Defendants with 22 his written authorization for them to obtain his consumer report for employment purposes." (ECF No. 1 at 5, ff 37-38).^ In determining whether a statutory violation has caused a "concrete" injury (as opposed to a "bare procedural violation"), it is helpful to first examine the nature of the interests that the statute creates. Miller, Federal See 13A Charles Alan Wright Practice & Procedure § 3531.4 & Arthur {3d ed. R. 2008) {noting that "the question whether there is an injury quickly becomes blended with the question whether to recognize the asserted interest that has in fact been impaired."). Here, is distinct clear that § 1681b(b)(2) statutory rights: first, a is disclosure extraneous that information; creates two related but it a legally cognizable right to receive clear, conspicuous, and second, one's personal information, a which an and right to unencumbered by the privacy of employer may not invade without first providing the above information and obtaining the consumer's express written consent. Having identified the interests that § 1681b(b)(2) seeks to protect, it becomes clear that Thomas, on behalf of the ^ During discovery. Defendants adduced evidence that Thomas received and signed the Employment Release Statement. For his part, Thomas testified that the document was placed in front of him and he was told to sign it (which he did) . However, that factual issue is not significant to the standing claim, because the claim is that the Employment Release Statement was not a "clear and conspicuous" disclosure and that it does not contain a proper authorization. 23 Impermissible Use Class, has alleged two concrete injuries. First, Thomas has alleged a concrete informational injury: is, Thomas has alleged that he was deprived of that a clear disclosure stating that Defendants sought to procure a consumer report before the report was obtained. Court in Spokeo confirmed Election Common v. Akins^ its and Importantly, the Supreme previous holdings Public Citizen v. in Federal Department of Justice,^ both of which teach that Congress may create a legally cognizable right to specific information, which constitutes Article III. a 136 Supreme Court concrete S. found Ct. injury at sufficient 1549-50. standing where the deprivation of In to those satisfy cases, the plaintiffs sought the to obtain, and were denied, information that was subject to public disclosure under the Federal Election Campaign Act and the Federal Advisory Committee Act, respectively. Similarly, in Havens Realty Corp. v. Coleman, Court held that the plaintiffs (individuals the Supreme "who, without an intent to rent or purchase a home or apartment, pose as renters or purchasers for the purpose of collecting evidence of unlawful steering practices,") had suffered a concrete injury under the Fair Housing information, Act even when though they they ^ 524 U.S. 11, 20-25 (1998). ^ 491 U.S. 440, 449 (1989). 24 received did not untruthful seek to housing use the information for any 363, 373 (1982). purpose other than litigation. 455 U.S. The Supreme Court held that, regardless of the plaintiffs' motives. Congress had created "an enforceable right to truthful information concerning the availability of housing," and that a "tester who has been the object of a misrepresentation made unlawful under [the Fair Housing Act] has suffered injury in precisely the form the statute was intended to guard against, and therefore has standing to maintain a claim for damages under the Act's provisions." In the wake of Havens, Akins, and Id. Public Citizen, it is well-settled that Congress may create a legally cognizable right to information, concrete the of which By extension, injury. deprivation it is will well constitute a within Congress' power to specify the form in which that information must be presented. Many courts, including this one, have explicitly or implicitly recognized this point. First Fed. Credit cert, denied, Union, 134 S. Ct. 725 1515 See, e.g., Charvat v. Mutual F.3d 819, (2014) 824 (8th Cir. 2013), (finding that deprivation of the proper form of information required by the Electronic Fund Transfer Act Farqo Bank, 2015) Nat. (same, WL 987935, ("EFTA") Ass'n, 123 confers F. under the FCRA); at *3-*4 (N.D. Ala. standing); Supp. 3d 810, Amason v. Mar. 11, Fair and Accurate Credit Transactions Act 25 Manuel 817-18 v. (E.D. Kanqaroo Express, 2013) (same, ("FACTA")). Wells Va. 2013 under the In the FCEIA, Congress has provided that an applicant for employment must receive notice that an employer seeks to procure the applicant's notice must consisting consumer be report, "clear," solely of 1681b(b)(2)(A)(i). and has "conspicuous," the specified and "in disclosure." In Congress' that a 15 that document U.S.C. § legislative judgment, where the disclosure does not satisfy these requirements, the consumer has been deprived of a fully appreciable disclosure to which he or she is entitled under the FCRA.® See Spokeo, 136 S. Ct. at 1549 (noting the importance of legislative judgment to the standing analysis); Havens, 455 U.S. consumer as alleges, at 373 Thomas has (same). here, Therefore, that he or where a she has ® Although the Court need not second-guess Congress on this point, the requirements of § 1681b(b)(2)(a) are well-grounded in professional literature: If information is not provided in a clear and usable form, it may actually make people less knowledgeable than they were before, producing overreactions, or underreactions, based on an ability to understand what the information actually means. People also face a pervasive risk of 'information overload,' causing consumers to treat a large amount of information as equivalent to no information at all. Certainly this is true when disclosure campaigns are filled with details that cannot be processed easily. Cass R. Standing: Sunstein, Informational Regulation Akins and Beyond, 147 U, Pa. L. Rev. (footnotes omitted). 26 and Informational 613, 627-28 (1999) received a disclosure that does not satisfy those requirements, the consumer has alleged a concrete informational injury. Second, violation the Impermissible Use Class members have alleged a of their confidentiality statutorily of their created personal right to privacy and The FCRA information. provides that an employer may not obtain an applicant's consumer report, thereby invading his or her statutory right of privacy, unless the employer voluntary required first written by § consent obtains to the secure 1681b(b) (2) (A) . The consumer's that knowing and information, as common law has long recognized a right to personal privacy, and "both the common law and the literal individual's person." understandings control of of information privacy encompass concerning his or the her United States Dept. of Justice v. Reporters Comm. for Freedom of Press, 489 U.S. 749, 763 (1989) (defining "private" as "intended for or restricted to the use of a particular person or group or class of persons: public"). Moreover, not freely available to the as the Supreme Court has observed, right to privacy in compilations of personal particularly powerful because the "power of the information is compilations to affect personal privacy that outstrips the combined power of the bits of information Accordingly, dissemination it has of contained within." Id. at 765. long been the case that an unauthorized one's personal 27 information, even without a showing of actual damages, is an invasion of one's privacy that constitutes a concrete injury sufficient to confer standing to sue. See generally Samuel D. Warren & Louis D. Brandeis, The Right to Privacy, 4 Harv. L. Rev. 193 (1890) . Similarly, statutory it right is to well-settled that privacy strengthens or replaces the in Congress may create a certain information that common law,^ and citizens whose statutory right to informational privacy has been invaded may bring suit e.g., 18 under the statute to vindicate U.S.C. § 2707(c) (authorizing that right. See, statutory damages for violations of the Electronic Communications Privacy Act of 1986 ("ECPA")); 12 U.S.C. § 3417 the Right 2710(c)(1) to Financial (statutory damages available under Privacy Act 18 U.S.C. § (establishing a private right of action under the Video Privacy Protection Act defendant ("RFPA")); fails to comply (''VPPA") ) . with Furthermore, statutory where a prerequisites protecting the plaintiff's privacy, the plaintiff's privacy has '' Indeed, in the case of the FCRA, Congress explicitly preempted suits for invasion of privacy, "except as to false information furnished with malice or willful intent to injure [the] consumer." 15 U.S.C. § 1681h(e); see also Myers v. Bennett Law Offices, 238 F.3d 1068, 1074 {9th Cir. 2001) ("When a consumer brings an action for violation of the disclosure provisions of the FCRA, the Act's purpose of protecting consumer confidentiality is implicated. In that respect, such cases are akin to invasion of privacy cases under state law—cases where the plaintiff alleges that the defendant unlawfully invaded the plaintiff s privacy by obtaining information deemed confidential.") (collecting cases). 28 been unlawfully regardless invaded and he has of actual damages. suffered concrete See, e.g., In re injury, Nickelodeon Consumer Privaacy Litiq., — F.3d —, 2016 WL 3513782, at *7 {3d Cir. June 27, plaintiffs 2016) with (noting that "Congress has long provided the disclosures of to right private") remain Automated to seek information that, Retail, 770 for in Congress's (footnote LLC, redress F.3d omitted); 618, unauthorized judgment, Sterk 623 ought v. Cir. (7th Redbox 2014) (holding that the plaintiffs suffered a concrete injury-in-fact when defendant sold plaintiffs' information to third parties in violation of the VPPA); Supp. 3d ~, Coelter v. Hearst Commc'ns, 2016 WL 3369541, at *3 (S.D.N.Y. Inc., — F, June 17, 2016) (same); Johnson v. Navient Sols., Inc., — F. Supp. 3d —, 2015 WL 8784150, based on a privacy United Okla. failure right July to follow customer's to Cousineau (S.D. violation created ("TCPA")); (W.D, at *2 v. (W.D. Wash. of by the States 16, Microsoft 2012) 15, v. 2015) the Corp., 2015) plaintiff's Telephone records under Dec. the necessary financial privacy Ind. 2015 (finding invaded which F. 4394947, the before the right Protection WL that procedures 992 statutory Consumer Koranki, RFPA, (finding standing at procuring conferred 2d Act *1 government's customer's Supp. to bank statutory standing); 1116, 1122-23 (finding an invasion of privacy sufficient to 29 constitute injury-in-fact where defendant collected smartphone user's location data without her consent). Here, alleged Thomas, that on behalf Defendants confidentiality of his of himself invaded personal and the the class, has right to statutory information by obtaining his consumer report without first providing the required disclosure or obtaining his 1681b(b) (2) (A) . written This consent, allegedly as required § disclosure unauthorized by of personal information constitutes an invasion of the statutory right to privacy and a concrete injury sufficient to confer Article III standing. Defendants have repeatedly argued, both in their briefs and at oral argument, that the Complaint alleges only a "bare procedural violation" insufficient to confer standing because Plaintiffs are not seeking actual damages, and because the class members who have been deposed uniformly acknowledged as much at their depositions. (Def. Mem. at 24; ECF No. 155 at 15) . That argument is unavailing, for four reasons. First, the rights created by § 1681b(b)(2) are substantive rights, and the breach of the statute is not a "bare procedural violation" of a technical requirement. Second, the argument misunderstands the holding in Spokeo, wherein the Supreme Court explicitly noted, violation of a citing Akins procedural and right 30 Public Citizen, granted by that statute can "the be sufficient in some circumstances to constitute injury in fact. In other words, a plaintiff in such a case need not allege any additional harm [e.g., has identified." actual damages] Spokeo, 136 S. beyond the one Congress Ct. at 1549 (emphasis in original). The Supreme Court also reiterated in Spokeo that "the of risk requirement. real Id. harm" Neither may of satisfy those the concreteness categories of concrete injuries necessarily entails proof of actual damages. Third, Defendants' argument runs contrary to firmly-rooted principles of Anglo-American law, which has long allowed nominal damages quantify. where actual damages are too small or difficult to For example, it is black letter law that a property owner may sustain a cause of action for trespass regardless of whether the question. (1977). trespasser See, e.g.. actually damaged Restatement the (Second) property of Torts § in 163 Similarly, a contracting party may sue for breach of contract, even if the contracting party was not harmed by the breach. See, e.g.. Restatement (Second) of Contracts § 328 (1932). Finally, Defendants' argument would require the Court to override clear Congressional intent. The FCRA provides that: Any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to the to that consumer sum of- 31 in an amount equal (1) (A) any actual damages consumer as a result damages of not sustained by the of the failure or less than $100 and not more than $1,000... 15 U.S.C. § 1681n(a) (emphasis added). Thus, Congress explicitly provided for actual damages as an alternative to, not a prerequisite for, the recovery of statutory damages. Clearly, Congress understood that actual damages in the case of an FCRA violation may be difficult to quantify or prove. statutory damages are available to Accordingly, plaintiffs, like the Impermissible Use Class members here, who have suffered concrete harm, but may find it difficult to prove actual damages. For claims the of foregoing the reasons, Impermissible Use the motion Class to members dismiss for lack the of standing will be denied. e. The Adverse Action Sub-Class Thomas has also alleged concrete injuries on behalf of the Adverse Action Sub-Class.® Section 1681b(b)(3), like § 1681b(b) (2) (A) , provides the consumer with a legally cognizable right to specific information. consumers against contemplating receive a Specifically, Congress provided whom current adverse copy of the employment or prospective action with report on which the employers the adverse right are to action is ® As is true for the Impermissible Use Class, the parties agree that the alleged injury is particularized. 32 based and a summary of their rights under the FCRR before the contemplated adverse this subsection employment provides action consumers is taken. against Relatedly, whom adverse employment action is contemplated with a right to have time to discuss the reports with their current or prospective employers and to correct the reports if necessary before the contemplated adverse action is taken. Thus, Thomas, for himself and the Adverse Action Sub-Class, has alleged two concrete injuries. First, by alleging that Defendants took adverse employment action without providing the information guaranteed by the statute, Thomas, on behalf of the Adverse Action Sub-Class, has alleged an informational injury. Every sub-class member had a statutory right to receive a copy of his or her consumer report and an FCEIA summary of rights prior to received Defendants' the required adverse action. information. No sub-class member Therefore, Thomas, like every sub-class member, was deprived of information required by law to be disclosed, which constitutes a concrete injury sufficient to confer standing. Moreover, Thomas and other sub-class suffered a second concrete injury: members have they were deprived of the opportunity to "be confronted with the charges against and tell [their] side of the story." if all of the subclass members' 33 also Senate Report at 3. [them] Even consumer reports were entirely correct pepper (an unlikely scenario, consumer reports given the errors that commonly despite the FCRA's protections), the sub-class members were deprived of the opportunity to explain any negative records in their consumer reports and discuss the issues raised in their reports with Defendants before suffering adverse employment action.® For the foregoing reasons, the motion to dismiss the claims of the Adverse Action Sub-Class members for lack of standing will be denied. C. Defendants' Employment Release Statement Does Not Satisfy 15 U.S.C. § 1681b(b)(2). The Court need not consider Defendants' argument concerning the Employment Release Form's compliance with § 1681b(b)(2)(A), because that argument exceeds the scope of the Order specifying the issues on which Defendants would be permitted to move summary judgment a second time. however, for Opinion, the the reasons Employment set for (ECF No. 124). In any event, forth Release in a separate Memorandum Statement provided to the Impermissible Use Class does not, as a matter of law, satisfy § 1681b (b) (2) (A) . ® For some Accordingly, sub-class Defendants' members, this motion for deprivation summary may have ultimately cost them employment opportunities with Defendants. However, for purposes of this discussion. Plaintiffs need not show that traceable their to failure Defendants' to obtain failure employment to comply was with directly the FCRA, because the other concrete and particularized injuries discussed herein are sufficient to confer standing. 34 judgment as to the issue of liability under § 1681b (b) (2) (A) will be denied. D. Defendants are not Entitled to Defense of Judicial Estoppel. Finally, Defendants contend summary judgment against Summary Judgment on that they are Thomas because Thomas entitled is to barred by judicial estoppel from pursuing the claims made herein. Mem. at 27-30). the (Def. Specifically, Defendants assert that judicial estoppel applies because Thomas was required to disclose his interest in this litigation during proceedings and he failed to do so. The Fourth Circuit judicial estoppel as has "an his previous bankruptcy Id. characterized equitable doctrine the doctrine that exists of to prevent litigants from playing *fast and loose' with the courts— to deter improper manipulation of the judiciary." of Clarksburg, W. Va., 134 F.3d 1211, 1217 Folio v. City (4th Cir. 1998) (quoting John S. Clark Co. v. Faqqert & Frieden, P.C., 65 F.3d 26, 28-29 (4th Cir. 1995)). In order for the doctrine to apply, (1) the party to be estopped must be advancing an assertion that is inconsistent with a position taken during previous litigation; (2) the position must be one of fact, rather than law or legal theory; (3) the prior position must have been accepted by the court in the first proceeding; and (4) the party to be estopped must have acted intentionally, not inadvertently. 35 Havird Oil Co., 292 Inc. {4th Cir. 1998) v. Marathon Oil Co., Inc., (citing Lowery v. Stovall, 149 F.3d 283, 92 F.3d 219, 224 (4th Cir. 1996), cert, denied, 519 U.S. 1113 (1997)). "Judicial estoppel has often been applied to bar a civil law suit brought by a plaintiff who concealed the existence of the legal claim from creditors petition." 2010) by omitting the from his bankruptcy Whitten v. Fredas, Inc., 601 F.3d 231, 241 (4th Cir. (citing Cannon-Stokes v. Cir. 2006) lawsuit Potter, 453 F.3d 446, 448 (7th ("All six appellate courts that have considered this question hold that a debtor in bankruptcy who denies owning an asset, including a chose in action or other legal claim, cannot realize on that concealed asset after the bankruptcy ends.")), abrogated on other grounds by Vance v. Ball State Univ., 133 S. Ct. 2434 (2013). Importantly, however: Judicial remed[y] estoppel is an "extraordinary to be invoked when a party's inconsistent in a miscarriage meant to be litigants alleged and will of a justiceIt to claims, derail is no is result is defense when insignificant evidence not for potentially especially inconsistency there otherwise technical seeking meritorious best behavior of intent the at to manipulate or mislead the courts. Judicial estoppel is not a sword to be wielded by adversaries unless such tactics are necessary to "secure substantial equity." Ryan Operations G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 365 (3d Cir. 1996) (internal citation omitted). 36 Federal bankruptcy law requires a debtor to list in the initial petition, inter alia, a "schedule of assets." § 521(1). The Bankruptcy Rules require the prepared as prescribed by the Official Forms. 1007(b)(1). Official Form 6 requires a 11 U.S.C. schedules to be Fed. R. Bankr. P. debtor to list "all personal property of the debtor of whatever kind," and property of a bankruptcy estate is defined broadly to include "all legal or equitable interests of commencement of the "'the of disclosure duty continuing one, case." and a the 11 U.S.C. in a debtor 282 § in property 541(a) (1). bankruptcy is potential causes of action.'" 310 B.R. 274, debtor as Moreover, proceeding required to is disclose In re USinternetworking, (Bankr. D. Md. 2004) of a all Inc., (quoting In re Coastal Plains, Inc., 179 F.3d 197, 207-08 (5th Cir. 1999)). A debtor also has the opportunity to voluntarily convert a case brought under Chapter 13 to a proceeding under Chapter 7 of the bankruptcy code at any time. 11 U.S.C. § 1307(a). Converting a case from Chapter 13 to Chapter 7 "does not effect a change in the date of the filing of the petition, commencement of the case, or the order for relief." 348(a). After converted case the date of conversion, "property of the 11 U.S.C. § estate shall consist of property of the estate, filing of the petition, that the remains in the as of in the possession of or is under the control of the debtor as of the 37 date of the conversion." 11 "if the debtor converts a 13...in bad faith, U.S.C. case § 348(f)(1)(A). [initially filed] However, under Chapter the property of the estate in the converted case shall consist of the property of the estate as of the date of the conversion." 11 U.S.C. § 348(f)(2). Therefore, "in a case converted from Chapter 13, a debtor's postpetition earnings and acquisitions estate." do not become part of the new Chapter Harris v. Vieqelahn, 135 S. Ct. 1829, 1837 (2015). other words, "absent a bad-faith conversion, § 348(f) 7 In limits a converted Chapter 7 estate to property belonging to the debtor ^as of the date' the original Chapter 13 petition was filed." Id. Accordingly, some courts have declined to apply judicial estoppel to plaintiffs whose claims accrued after the filing of their Chapter 13 petition, converted to Chapter 7, but before the WL at *3 (N.D. also Garcimonde-Fisher v. 3d 825, 835 (E.D. 2006 WL 2190575 that the [the] Chapter 7 Sherman v. Wal-Mart Assoc., Inc., — B.R. 1669019, debtor Tenn. Tex. Area203 not Apr. Marketing, 2015); Smith v. (S.D. Ala. Aug. did was because the "post-petition claim...was not property of the estate for purposes of bankruptcy." bankruptcy have 2, a 105 s^ Supp. Scales Express, Inc., to LLC, 2016); F. 2006). duty 25, , 2016 Those courts found disclose the newly pending claims in the conversion to Chapter 7 bankruptcy, 38 and therefore had not taken inconsistent positions warrant the application of judicial estoppel. that would Having held that the plaintiff had no duty to disclose the pending claims to the bankruptcy court, it necessarily follows that the plaintiff has not acted in bad faith. The same is Smith, 2006 WL 2190575, at *3. true here. Thomas originally filed for bankruptcy under Chapter 13 of the Bankruptcy Code on October 16, 2009. (ECF No. 158-10, Docket of Bankruptcy Petition No. 09-36747-KLP). November 2, Thomas 2009, and December 22, 2009. submitted his Id. his Chapter original plan 13 schedules confirmed on was on Thomas subsequently twice amended his Chapter 13 plans; the amended plans were confirmed on August 12, 2010 and April 21, 2011. on March 12, 2012, The claims in this case accrued when Thomas was denied employment without having received the pre-adverse action documents required by the FCE^. On October dismiss Thomas' payments as 1, 2013, the bankruptcy bankruptcy petition required under his for trustee failure Chapter moved to his plan. 13 to make Id. Accordingly, at a hearing held December 11, 2013, the bankruptcy court allowed Thomas 30 days to convert the bankruptcy proceeding to one under Chapter 7 to avoid dismissal. Id. accordance with filed notice voluntary of Defendants have the bankruptcy conversion offered no court's on January evidence 39 order, to Thomas 10, show 2014. that In a Id. Thomas' conversion was in bad faith. On this record, to issue find that the claims Chapter 7 estate.^° at here were it is not possible ever part of the Therefore, Defendants have not shown that Thomas asserted a contrary position in the bankruptcy court, and they are not entitled to summary judgment on the issue of judicial estoppel. CONCLUSION For the foregoing reasons, DEFENDANTS' SECOND MOTION FOR SUMMARY JUDGMENT (ECF No. 156) will be denied. It is so ORDERED. /S/ Robert E. Payne Senior United States District Judge Richmond, Virginia Date: June lo , 2016 In accordance with the bankruptcy court's order, Thomas' attorney submitted amended schedules on March 6, 2014, after the proceeding had been converted to Chapter 7. However, it appears that Schedule B, on which the debtor's personal property is listed, was inadvertently omitted from the filing. (Case No. 3:09-BK-36747-KLP, ECF No. 107). Defendants have made no showing from which the Court could infer that this apparent oversight was a result of bad faith on Thomas' part. Therefore, the bankruptcy omission of Schedule B from Thomas' amended filings does not affect the result herein. The parties agree that judicial estoppel, an equitable defense, is to be decided by the Court, sitting without a jury. 40
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
