Circuit 8 dismisses FCRA ‘s class action on the ground of lack of status Burr & Forman

After the decision of the Supreme Court, incl Spokeo, Inc. in. Robins, 578 U.S. 330 (2016), federal courts continued to investigate what is actually harm under the Fair Reporting Act (“FCRA”). On April 4, 2022, the Eighth Circuit issued instructions to detain the FCRA class action for lack of standing. Schumacher v. SC Data Ctr., Inc., – F.4th —-, 2022 WL 997742 (8th Cir. April 4, 2022). Ria Schumacher applied for a position at SC Data and during the application process she answered “no” to the question of whether she was convicted of a crime. In connection with the job offer to Schumacher, SC Data requested that she fill in a “Release Information”, which revealed that SC Data intended to use the seller to conduct a criminal investigation. A background search returned Schumacher’s previous criminal convictions, and SC Data withdrew its job offer. Before SC Data withdrew the offer, it was not given the opportunity to explain the results of the background survey.

Schumacher filed a class action lawsuit and filed three claims under the FCRA. She claimed that SC Data had violated Section 1681 (b) of the FCRA by (1) taking adverse employment action on the basis of a report from the consumer without first providing the report (“entitlement to adverse action”); (2) obtaining a consumer report without providing disclosure in accordance with the FCRA (“right to misrepresentation”); and (3) obtaining more information than was disclosed on request in the authorization and release form (“disapproval of the claim”). On appeal, the Eighth District ruled that Schumacher did not have locus standi to assert any of the claims.

As regards the first claim, the Eighth Circuit ruled[n]neither the text of the FCRA nor the legislative history provide support for Schumacher’s assertion that, according to the FCRA, it has the right not only to receive a copy of its consumer report but also to discuss accurate but negative information directly with the employer before the employer takes adverse action. ” Although the court acknowledged that Schumacher had not received a copy of the report prior to the cancellation of the job offer by SC Data, it noted that it had not claimed that the report was inaccurate and that SC Data had written a reason for the cancellation. – Previous conviction of the applicant. The Eighth Circuit explained that one of the FCRA’s objectives was to protect against the dissemination of inaccurate information and refused to read the FCRA’s right to explain negative but accurate information to a potential employer before the employer’s adverse employment conduct.

As regards the claim for incorrect disclosure, Schumacher claimed several shortcomings in SC Data’s disclosure that it would procure consumer administration for employment purposes. These shortcomings included, inter alia, the small font size, the inclusion of non-disclosure information and the absence of the explicit term “consumer message”. The court rejected this claim for lack of locus standi and explained that, while Schumacher claimed that there were a “number” of deficiencies in disclosing SC Data, it did not claim any damages and thus failed to prove the specific injury caused by the alleged incorrect disclosure.

Finally, as regards the dismissal of the claim, the court rejected Schumacher’s argument that it had not authorized SC Data to obtain a consumer report. Specifically, the court found “it [was] it is undeniable that Schumacher authorized SC Data to obtain a type of consumer report documenting its criminal history ‘and the report containing information on its criminal history was a consumer report as defined in § 1681a (d) (1), although it was not specifically named as such. The court ruled that Schumacher had agreed to a criminal investigation and “did not claim any material damage to her privacy that would be sufficient to confer the status of Article III. The Eighth District returned the case to the District Court with an instruction to dismiss for lack of jurisdiction.

The courts will continue to develop the contours of Article III under the FCRA. While many plaintiffs may in fact claim harm, defendants should be cautious at the outset of the FCRA case in assessing whether the plaintiff alleged that the injury was in fact linked to an alleged breach of the FCRA law which is sufficient to confer standing.

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