Court: District Court, D. Minnesota; May 12, 2016; Federal District Court
Plaintiff Thomas J. Just has initiated a putative class action against Defendant Target Corporation regarding alleged violations of the Fair Credit Reporting Act (FCRA). Just claims that after applying for a job, he received a 'Consent, Disclosure' document, which improperly included extraneous information while notifying him of an impending background check. Under the FCRA, employers must provide such notifications in a separate document without additional content. Just asserts that these unlawful inclusions constitute a willful violation of the FCRA by Target.
The court, presided over by Judge Donovan W. Frank, is considering Target’s motion to dismiss the case under Rule 12(b)(6). Even if Target had violated the FCRA, the court finds that Just has not plausibly alleged that Target's actions were willful. The court notes the absence of clear guidance from appellate courts and the FTC, as well as differing interpretations among district courts regarding the statute's requirements, leading to the conclusion that Target's interpretation of the FCRA was not objectively unreasonable.
Just applied for jobs at Target in 2014 and 2015 and signed the Consent, Disclosure that detailed Target's intent to conduct a background check, which revealed criminal convictions, leading to the withdrawal of a job offer. Notably, Just does not contest the job offer withdrawal itself but focuses on three specific provisions in the Consent, Disclosure he claims are misleading. These provisions suggest the necessity of dedication and honesty, impose an obligation to contest inaccuracies within five days, and clarify that signing the document does not create an employment contract. Just argues the latter could imply discriminatory termination rights. The court ultimately grants Target’s motion to dismiss.
Just asserts that Target's Consent, Disclosure contains specific state information relevant to Minnesota (MN) and Oklahoma (OK) while lacking a release clause that would exempt Target or First Advantage from liability related to background checks. Just's Complaint alleges a statutory claim for damages due to Target's purported willful breach of the Fair Credit Reporting Act (FCRA), specifically the stand-alone disclosure requirement under 15 U.S.C. § 1681b(b)(2)(A)(i). Just supports his claim by arguing that Target's actions contradict regulatory guidance and legal interpretation, that Target routinely includes extraneous information in its disclosures, and that Target has knowingly imposed unfavorable conditions on job applicants.
The legal standard for addressing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) requires courts to accept the complaint's factual allegations as true, while not accepting conclusory statements or legal conclusions. A complaint must provide sufficient factual detail to present a plausible claim for relief, avoiding mere speculative assertions. The FCRA mandates that before obtaining a consumer report for employment purposes, a clear and conspicuous disclosure must be made in a standalone document, along with written authorization from the consumer. Just contends that Target's Consent, Disclosure fails to meet this stand-alone requirement as outlined in 15 U.S.C. § 1681b(b)(2)(A)(i).
A judge clarified that the term 'solely' requires employers to provide a notice that consists exclusively of the disclosure, without additional information. This principle is echoed by various court rulings that assert the stand-alone disclosure must not include extraneous details. Courts have consistently held that including a liability waiver in disclosure forms violates this requirement. The Federal Trade Commission (FTC) has also indicated that liability waivers should not be part of these documents. However, there is a split in authority on this matter, with some courts finding that while liability waivers may be impermissible, the disclosure can still be considered adequate. Exceptions to the strict disclosure rule exist, allowing for the inclusion of an authorization in the same document and permitting minimal additional information, such as a brief description of the reports and the applicant's rights regarding the reports. In the case at hand, Target’s Consent and Disclosure included more than just the necessary statements and authorization but did not contain a liability waiver. Target argued that the additional information was essential for meaningful disclosure and authorization. The Court did not need to determine whether Target violated the stand-alone disclosure requirement, as Just must also demonstrate that any such violation was willful.
Just asserts that Target's violation of the FCRA's stand-alone disclosure requirement was willful rather than negligent, as statutory damages under the FCRA are only available for willful noncompliance. Willful violations entail liability for statutory damages ranging from $100 to $1,000. To sustain his lawsuit without claiming actual damages, Just must demonstrate that Target acted willfully, as defined by the Supreme Court in Safeco Ins. Co. of Am. v. Burr, which interprets "willfully" to include both knowing and reckless violations of the FCRA. The Court clarified that for conduct to be considered reckless, it must not only violate a reasonable interpretation of the statute but also pose a significantly greater risk of violation than mere carelessness.
Just must plausibly argue that Target’s reading of the FCRA’s disclosure requirement was objectively unreasonable, drawing from three potential sources for guidance: federal appellate courts, the FTC, and the statutory text. In Safeco, the Court found that because there was no clear guidance from the courts, the FTC had only provided informal opinions, and the statute was ambiguous, the defendant’s interpretation did not present an unjustifiably high risk of violation.
Furthermore, the Safeco ruling established that evidence of subjective bad faith does not support a finding of willfulness if the defendant's interpretation is objectively reasonable. Consequently, Just cannot establish willfulness merely by claiming that Target knew its actions violated the statute unless he can also prove that Target’s interpretation was objectively unreasonable. Various cases have affirmed this standard while highlighting different outcomes in willfulness allegations.
Target's interpretation of the Fair Credit Reporting Act (FCRA) stand-alone disclosure requirement is deemed not objectively unreasonable due to insufficient guidance from federal appellate courts and the Federal Trade Commission (FTC). While the statute's wording appears clear, ambiguity exists regarding the term 'solely' and what constitutes 'disclosure.' The FTC has only provided informal advisory opinions, prohibiting liability waivers but allowing additional context about background checks. Multiple district courts have identified the statutory language as ambiguous. Consequently, if Target did violate the FCRA, such a violation was not willful, as established by case law. The court determines that any proposed amendments to the Complaint would be futile, leading to the dismissal of the lawsuit with prejudice. The court grants Target's motion to dismiss the Complaint and orders that it be dismissed with prejudice.
