The Eighth Circuit reiterated in a decision last month that trial courts must distinguish between FCRA plaintiffs who have suffered concrete harm and plaintiffs who merely seek to collect statutorily allowed damages as a way to ensure compliance with the law. Under the Supreme Court’s decision in Spokeo, the former have Article III standing to assert FCRA claims but the latter do not.
In Schumacher v. SC Data Center, Inc., plaintiff Ria Schumacher sought a job with defendant SC Data. During the application process, Schumacher responded “no” to a question asking whether she had ever been convicted of a felony. SC Data offered a position to Schumacher and then obtained her authorization to allow a third party to independently investigate her criminal records. SC Data later rescinded its offer to Schumacher when the report that it obtained revealed Schumacher’s 1996 felony conviction.
Schumacher alleged three FCRA violations on behalf of herself and a class: (1) taking an adverse employment action based on a consumer report without first providing the report to the applicant; (2) obtaining a consumer report without providing an FCRA-compliant disclosure form; and (3) obtaining more information about an applicant than allowed by the authorization. Four days after the Supreme Court’s decision in Spokeo, SC Data moved to dismiss Schumacher’s claims for lack of standing. The trial court found that Schumacher had standing to pursue all three claims, but the Eighth Circuit reversed.
The Eighth Circuit began with Schumacher’s adverse action claim. The FCRA provides that before an employer takes an adverse action against a consumer based on a consumer report, the employer must provide a copy of the report to the consumer. 15 U.S.C. § 1681b(b)(3)(A). The Court concluded that SC Data violated the FCRA when it did not provide a copy of the report to Schumacher before rescinding her job offer. Still, the Court noted the split in authority regarding whether an employer’s failure to provide a pre-action report is a bare procedural violation or conduct that causes an intangible harm sufficient to confer standing.
Those courts that have found standing, the Court explained, did so on the premise that an employee has a right to discuss with an employer the information in a report prior to any adverse action. However, the Eighth Circuit agreed with the Ninth Circuit that no such right is found in the FCRA’s text or supported by its legislative history. Instead, the FCRA was intended to protect against the dissemination of inaccurate information. Schumacher did not claim that the information contained in the report was inaccurate, so her adverse action claim was not redressable under the FCRA.
The Court turned next to Schumacher’s improper disclosure claim. When an employer obtains a consumer report for employment purposes, the FCRA requires the employer to provide the applicant with a “clear and conspicuous” written disclosure “in a document that consists solely of the disclosure.” 15 U.S.C. § 1681b(b)(2)(A)(i). Schumacher pointed to several purported statutory defects in SC Data’s disclosure form, including the size of the disclosure’s font. However, the Court held that a technical violation of the disclosure provision, without “something more,” is insufficient to confer standing. Schumacher did not point to any tangible or intangible harm that flowed from the purported technical violations, such as confusion about the consent being given. Thus, she lacked standing to pursue this claim, too.
Finally, the Court turned to Schumacher’s failure-to-authorize claim. The FCRA forbids an employer from obtaining a consumer report without the employee’s written authorization. 15 U.S.C. § 1681b(b)(2)(A)(ii). However, Schumacher indisputably authorized SC Data to obtain a type of consumer report documenting her criminal history. The Court found that the report at issue fit within these parameters. To the extent the report exceeded Schumacher’s authorization, Schumacher failed to plead any facts demonstrating a concrete harm. Thus, regardless of whether the report contained noncriminal information, Schumacher lacked Article III standing.
Because Schumacher lacked standing to assert any of her claims, the Court vacated the trial court’s orders and remanded the case with instructions to return the case to the state court.
The post-Spokeo landscape is still very much in development. Schumacher provides a reminder that employers who find themselves defending against FCRA claims should closely scrutinize whether plaintiffs have alleged mere procedural violations or the kind of concrete harm sufficient to open the doors to the federal courthouse.