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No standing where improper FCRA disclosure didn’t cause employee ‘real harm’

By Lorene D. Park, J.D.

An applicant for employment may not have received the statutorily required disclosures in a separate document when his employer had a background check run, but he got the job and failed to allege that he suffered any real harm, or even a risk of real harm, resulting from the technical violation of the Fair Credit Reporting Act (FCRA). As such, a federal district court in California concluded that he did not allege an injury in fact and lacked Article III standing to assert his FCRA claims, which were dismissed (Nokchan v. Lyft, Inc., October 5, 2016, Spero, J.).

Improper FCRA disclosures. The employee was hired by Lyft after he successfully completed its background investigation and he continues to work there. Nonetheless, he filed suit claiming the employer violated the FCRA because he did not receive, in a separate document, the required FCRA disclosures notifying him that a background check might be used for employment purposes. To the contrary, the employer’s FCRA disclosures were embedded in a document containing “extraneous information.” Moreover, the employer did not inform him that he had a right to request a summary of his FCRA rights. He claimed that due to these inadequate disclosures, he and a class of similarly situated individuals had their privacy and statutory rights violated.

Failed to allege concrete injury. Granting the employer’s motion to dismiss, the court explained that under the Supreme Court’s decision in Spokeo, Inc. v. Robins, an FCRA plaintiff must do more than merely allege a statutory violation. A plaintiff must allege facts showing an injury in fact that was not only particularized but also “concrete and real, and not abstract.”

While procedural violations that result in real harm or a risk of real harm may meet this standard, the employee here alleged no such harm. He did not claim that he suffered harm from not receiving the FCRA disclosures in a separate document and not receiving the summary of rights. Nor did he claim that he was confused about his rights and would not have consented to the background check if he had understood them. Furthermore, he got the job. Absent real harm or threat of such harm, the employee lacked Article III standing to pursue his FCRA claims.

No invasion of privacy. At oral argument, the employee argued that invasion of privacy is an injury that traditionally has been recognized and that he established such an injury for purposes of standing because the authorization he gave the employer to obtain his personal information was not proper. The employee, however, cited no authority for his proposition and the court found none. Moreover, while a consent to disclosure obtained by fraud may result in an invasion of privacy under common law, no such conduct was alleged here.

Informational injury not enough post-Spokeo. Also rejected was the employee’s claim that he had Article III standing because he suffered an informational injury. While there was case law in which courts have held that a failure to provide all required disclosures amounted to an informational injury, those decisions were all decided before Spokeo. In the wake of Spokeo, concluded the court here, such case law could not support the broad proposition that violation of an FCRA disclosure requirement, by itself, confers Article III standing on a plaintiff. Based on the foregoing, the case was dismissed, albeit without prejudice to refiling in state court.