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Employee can bring FCRA claim over background check

A state appeals court has decided that a plaintiff can sue her former employer in state court under the federal Fair Credit Reporting Act (FCRA) for conducting a pre-hire background check that did not technically comply with the FCRA’s disclosure requirements.

When plaintiff Nicole Kenn applied for a position with defendant Eascare LLC, she signed a disclosure form and authorization allowing Eascare to perform a background check that could include a look into her credit history. The disclosure form also included a waiver releasing the defendant from any liability resulting from the background check, as well as other allegedly extraneous language.

Kenn left the company a year later, alleging that Eascare retaliated against her when she complained of sexual harassment.

In addition to discrimination and retaliation claims, Kenn brought a putative class action under the FCRA. Specifically, she argued that by including the liability waiver and other additional language on its disclosure form and accordingly running the check without proper authorization, the employer violated the FCRA’s “standalone” disclosure and authorization requirements, creating a cause of action under the statute.

Kenn initially brought her claims in Massachusetts Superior Court, but Eascare removed them to U.S. District Court, which dismissed the claims for failure to demonstrate a concrete “injury-in-fact” that would allow standing to sue under Article III. That provision requires the plaintiff to prove that she suffered an actual injury or threatened injury due to the employer’s conduct.

When Kenn re-filed her action in state court, a Superior Court judge, applying the same reasoning as the federal District Court, dismissed her claims as well.

But the Massachusetts Appeals Court reversed, emphasizing that the FCRA, 15 U.S.C. §1681, explicitly provides a cause of action to sue in state or federal court for any “liability” created by its provisions.

“Eascare’s willful failure to provide the plaintiff with the disclosure required by … §1681a [of the FCRA], thereby obtaining her authorization to conduct the consumer report, if proven, would establish ‘liability,’” Judge Gregory I. Massing wrote for the panel. “Under the plain language of FCRA, the plaintiff alleged a legal injury for which Eascare is liable. … Although her injury may not be ‘concrete’ as that term is understood in art. III jurisprudence, it is not ‘speculative, remote, and indirect’ as a matter of State law.”