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Employer Caution: Use of Consumer Reports when Considering Candidates

By Garrett C. Parks

On August 15, 2017, the Ninth Circuit Court of Appeals, in Robins v. Spokeo, Inc., Case No. 11-56843, reversed the district court dismissal of an action, holding that the plaintiff had sufficiently alleged a “concrete injury” to maintain a Fair Credit Reporting Act (FCRA) claim against a consumer reporting agency that had published false information about, among other things, his employment history.

The Facts

Spokeo, Inc. (“Spokeo”) operates a website that collects consumer data and builds individual consumer profiles. It markets its services to businesses to learn information about prospective business associates and employees. The plaintiff became aware that Spokeo published an inaccurate report about him, which included false information about his age, marital status, wealth, education level, profession and employment status, and listed a photo of a different person. The plaintiff alleged that this false report harmed his employment prospects when he was actually unemployed and caused him emotional distress.

The Decision

This case went to the United States Supreme Court, which remanded it back to the Ninth Circuit to determine whether the plaintiff suffered a concrete harm, not a mere statutory violation. The Ninth Circuit held that the plaintiff had established “concrete interests in truthful credit reporting” and the errors to his report were significant enough to meet the Supreme Court’s standard. The Ninth Circuit noted that harm to the plaintiff’s ability to search for a job was more than a mere “technical violation” of the FCRA.

Caution for Employers

This decision impacts employers in at least two ways. First, many employers rely on third-party reporting services for information about prospective employees. With federal and state laws increasingly narrowing the circumstances under which employers may consider credit reports in employment decisions, employers should weigh the benefits of using such reports against the risk of being swept into litigation for relying on a reporting company’s report.

Second, this case was filed as a class action. The Ninth Circuit’s analysis of the plaintiff’s “concrete injury” focused on the facts particular to him, e.g., the errors relating to his age, marital status, wealth, education level, profession and employment status, and the use of the wrong photo. Companies that become embroiled in similar litigation should argue that the analysis will require an individualized inquiry not subject to class action adjudication.