You’ve seen the headlines about the many FCRA-related class action lawsuits brought against a number of large, well-known employers. In today’s blog, Corporate Screening provides some updates on FCRA class action lawsuits brought against Paramount Pictures and Whole Foods.  While each case is unique, the contradictory court decisions highlight the controversy regarding technical violations of the FCRA.  A controversy you don’t want to be stuck in the middle of.

Paramount Pictures

In January, we reported on a lawsuit that alleged Paramount Pictures violated the Fair Credit Reporting Act because the company’s disclosure document was not a stand-alone document. A recent article from the law firm Troutman Sanders reports that the lawsuit was dismissed. The plaintiff claimed that the disclosure form violated the FCRA because it also included the following sentence: “"I certify that the information contained on this Authorization form is true and correct and that my application may be terminated based on any false, omitted, or fraudulent information."

The judge in this case dismissed the suit on the following rationale; ”the one-sentence certification Paramount included in its disclosure form if not a part of the statutorily permitted authorization, was closely related to it, and would similarly serve to focus the consumer's attention on the disclosure."   The spirit of the standalone disclosure requirement in the FCRA is so that consumers are clearly made aware that they may be the subject of a consumer report and their rights and that this notification is not buried amongst other notifications they may be required to review and/or sign. The judge in this case felt the additional information on Paramount’s disclosure may not have technically met the statutory requirement; however, the additional information did not violate the spirit of the rule as it would not distract the consumer from the disclosure.

This is good news for employers, in that, in this instance a technical violation of the FCRA was not enough for a plaintiff to win judgment.

On the other hand…

Whole Foods

Whole Foods' motion to dismiss the class action lawsuit against them for violating the FCRA was denied. The plaintiff alleged Whole Foods disclosure form contains a waiver and release of liability, and therefore violates the FCRA. Whole Foods argued that the evidence introduced by the plaintiff indicates that there are two forms – a disclosure and another liability release. The plaintiff claimed the forms should be considered one document because they were read and signed at the same time. In the end, the judge in the case declined to dismiss the lawsuit based on this, and the lawsuit is moving forward

Take Aways - What Can You Do to Protect Yourself?

While the Paramount dismissal is encouraging that perhaps technical violations of the FCRA may not be enough for a lawsuit to prevail, as an employer, you likely do not want to leave that up to a judge to decide. You should review your disclosure and authorization forms to ensure they comply with the FCRA. Corporate Screening has made sample forms available to you in the “Hints & Resources” section in EASE.