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Posts Tagged ‘FCRA’

California Judge Approves $3M Settlement with FedEx Workers

Posted on: April 29th, 2019

By: Marshall Coyle

A California federal judge gave the green light to a $3.15 million deal ending a pair of putative class actions accusing FedEx unit Genco I Inc. of not giving breaks to workers and of violating the Fair Credit Reporting Act by conducting secret background checks.

U.S. District Judge Yvonne Gonzalez Rogers initially approved the agreement in August following a revision of a “confusing” settlement first proposed in June.

Under the terms of the agreement, half the settlement will be allotted to the nearly 900 members of a California wage and hour class, and the other half will go to over 20,000 members of a national Fair Credit Reporting Act (FCRA) class.

In a brief order, Judge Gonzalez Rogers certified the classes for settlement purposes and granted an award of $787,500 in attorney fees, or 25% of the total fund, along with $16,809.70 for litigation expenses. The lead plaintiff for both suits, Adan Ortiz, will receive $5,000 for his time and effort.

“The Court further finds and determines that the terms of the Settlement are fair, reasonable, and adequate to the Classes and to each Class Member,” the judge said. “The Court finds and determines that the Classes, as conditionally certified by the Preliminary Approval Order meet all of the legal requirements for class certification for settlement purposes only.”

The settlement resolves two lawsuits that Ortiz filed against Genco, which has since been renamed FedEx Supply Chain Inc. Ortiz was a nonexempt worker for Genco, which operated a Kraft Heinz Food Co. facility, from March to October 2015. He filed the wage and hour suit against Genco and Kraft Heinz in June 2016, followed by a separate suit alleging FCRA violations in May 2017.

The first suit alleged Genco and Kraft Heinz failed to give workers meal and rest breaks and improperly rounded employee time records. Ortiz voluntarily dropped allegations against Kraft Heinz in December 2016. The other action accused the company of violating the FCRA by failing to disclose it was conducting preemployment background checks.

The cases are Ortiz v. Genco I Inc. and Ortiz v. Genco I Inc. et al., case numbers 4:16-cv-04601 and 4:17-cv-03692, in the U.S. District Court for the Northern District of California.

If you have any questions or would like more information, please contact Marshall Coyle at [email protected].

Ninth Circuit Tightens FCRA Disclosure Requirements

Posted on: February 12th, 2019

By: Matthew Foree

Ninth Circuit Holds Combining State and Federal Disclosures Violates FCRA’s Standalone and Clarity Requirements

The Court of Appeals for the Ninth Circuit recently issued a decision regarding the disclosure requirements under the Fair Credit Reporting Act (“FCRA”).  The FCRA includes certain requirements for employers prior to obtaining a consumer report on a job applicant. For example, employers must provide the applicant a “clear and conspicuous disclosure” that they may obtain such a report “in a document that consists solely of the disclosure.”

The Ninth Circuit took the FCRA’s language literally, prohibiting the employer from including any superfluous information in the disclosure document.  The case at issue, Gilberg v. California Check Cashing Stores, LLC, involved a class action filed by Desiree Gilberg, a former employee of CheckSmart Financial, LLC (“CheckSmart”). Before she began working with CheckSmart, Gilbert signed a disclosure regarding background information, which provided that CheckSmart could obtain her background report and that she had the right to request a copy of the report. The form also included information regarding her right to obtain a copy of the report under various state laws. Gilberg alleged that the disclosure violated the FCRA and California’s state law disclosure statute. The Ninth Circuit agreed and reversed the District Court’s grant of summary judgment to CheckSmart.

The Ninth Circuit interpreted the statute literally by holding that providing other state disclosure information in the disclosure form violated the FCRA’s stand-alone document requirement. The Court held that such “extraneous information is as likely to confuse as it is to inform” and, therefore, does not further the FCRA’s purpose.

The court also held that the disclosure, although conspicuous, was not clear. The court focused on the following language of the disclosure at issue:

The scope of this notice and authorization is all-encompassing; however, allowing CheckSmart financial, LLC to obtain from any outside organization all manner of consumer reports and investigative consumer reports now and, if you are hired, throughout the course of your employment to the extent permitted by law.

Among other things, the court recognized the lack of clarity in the first part of the sentence and the typographical error in the second part of the sentence, which lacked a subject and was incomplete. Therefore, it determined that this provision contained “language that a reasonable person would not understand.” The court also held that the disclosure would confuse a reasonable reader because it combined federal and state disclosures.

According to the Gilberg decision, employers in the Ninth Circuit cannot include disclosures required by other state laws in the same document that contains the FCRA disclosure. The obvious result of the decision will be the increase in documentation driven by separate disclosure statements. Although it is unclear whether other courts will adopt the Ninth Circuit’s holdings, employers would do well to revisit their forms to ensure compliance. Given the court’s position that language that would confuse a “reasonable person” would violate the clear and conspicuous requirement, employers should also ensure that their disclosures are clear.

If you have any questions or would like more information, please contact Matthew Foree at (770) 818-4245 or [email protected].

District Court in California Certifies a Class of Five Million Against Walmart

Posted on: February 8th, 2019

By: Koty Newman

On January 17, 2019, a Federal District Court in California certified a class of five million Walmart applicants. The Class Representatives allege that Walmart failed to comply with the Fair Credit Reporting Act’s (“FCRA”) disclosure requirements by including extraneous information in its disclosure forms, thus violating disclosure and authorization requirements. The Class Representatives also allege that Walmart obtained investigative reports without informing the applicants of their right to request a written summary of their rights under the FCRA.

For a court to certify a class, the court must find that the proposed class satisfies the four requirements of Federal Rule of Civil Procedure 23(a): numerosity, typicality, commonality, and adequacy of representation. The facts of this case were tailor-made to meet these requirements. The Court noted that with the proposed class of five million applicants and employees, the class would be so numerous that joining all the members would be impracticable. The Court also found that the Class Representatives would adequately represent the class and vigorously prosecute the action on behalf of the class.

The requirements of typicality and commonality overlap to some degree, and the Court found that both were satisfied in this case. The Class Representatives, as applicants to Walmart, were found to be typical of the class because their interests align with those of the class. Finally, the case satisfied the commonality requirement given that every person in the class allegedly encountered similar confusing extraneous material in violation of the Fair Credit Reporting Act during their application process to Walmart. Each class member also allegedly was not informed of his or her right to request a written summary of his or her rights. The Court found these common issues would predominate the adjudication of the case, even though there may be small factual differences among individuals in the class. Thus, the Court held that it made practical sense to certify the class and resolve all of these individual’s problems in one case, rather than five million cases.

The Court also noted that this case presents more than a mere technical violation of the FCRA. The Class Representatives have, in essence, alleged that Walmart accessed their personal information in violation of their protected rights, a concrete harm.

This ongoing case serves as a warning to employers across the United States who conduct background investigations; comply with the FCRA, or you may face the prospect of having all those applicants come back to haunt you in a class action. If you have any questions or need help with an FCRA case, please contact one of our attorneys for guidance.

If you have any questions or would like more information, please contact Koty Newman at [email protected].