FCRA Cases and the Justice Antonin Scalia Void

Employers and their background screening partners were optimistic a Supreme Court ruling in Spokeo v. Robins would establish an actual injury requirement for FCRA-based class action cases to advance through the courts. The Spokeo ruling was expected to settle the controversy created by divided lower court decisions on whether “no-injury” cases have legal standing based upon statutory violation alone or if specific injury must occur.

The sudden passing of Justice Antonin Scalia on February 13, 2016 deprives the Court of a highly respected Justice and a prominent, frequently decisive vote.  It changes what has been generally viewed as a pro-business Court, albeit it narrowly so with frequent 5-4 decisions, to a potentially split Court with 4-4 “non-decisions.” Given the uncertainty as to whether a new justice will join the Court during the Obama administration, legal experts offer at least three possible scenarios regarding the pending Spokeo decision:

• The current eight Justices could render a decisive decision. Although considered unlikely given the general 50/50 liberal and conservative divide of the Court, Justices have been known to change sides on specific questions.
• A 4-4 split decision by the Justices would provide no value relative to precedent, maintaining status quo with lower court rulings and making it likely another Spokeo-type case would appear on the docket in 2017 or 2018.
• The Justices could forgo issuing a decision and list the case for reargument in the next term when a full slate of justices is back on the Court.

While we await Supreme Court action on Spokeo, FCRA litigation marches on. Among recent happenings:

• FCRA litigation being brought in state courts, rather than federal, as in the case of Rodriguez v. Sprint in Cook County Illinois Circuit Court and Casteel v. Saline Retail 26, LLC Cole County Missouri Circuit Court.
• New cases and new rulings in federal courts based on historically common claims, such as Alvarez v. Dave & Buster’s Inc. where failure to meet adverse action requirements is alleged and Lagos v. The Leland Stanford Junior University where failure to provide clear and conspicuous disclosure is alleged and defendant’s motion to dismiss was denied.
• Multi-million dollar settlements in cases such as Fernandez v. Home Depot USA Inc. at $3 million and Manuel v. Wells Fargo Bank at $12 million.
• WebRecon reported FCRA cases increased from 2,445 in 2014 to 3,751 in 2015 with 601 of the 2015 cases being filed as punitive class actions.

What’s an employer to do? The best course of action is to remain vigilant in complying with FCRA federal and state requirements, especially in the frequently litigated areas of disclosure, authorization, and adverse action. EBI offers a variety of resources to help employers stay informed and compliant. Download our newest whitepaper on adverse action below - “When the Background Check Is Not Good:  An Employer’s Guide to Adverse Action.”