Syed v. M-I, LLC, 032017 FED9, 14-17186

Docket Nº:14-17186
Opinion Judge:WARDLAW, Circuit Judge.
Party Name:Sarmad Syed, an individual, on behalf of himself and all others similarly situated, Plaintiff-Appellant, v. M-I, LLC, a Delaware Limited Liability Company; PreCheck, Inc., a Texas Corporation, Defendants-Appellees.
Attorney:Peter R. Dion-Kindem (argued), Peter R. Dion-Kindem P.C., Woodland Hills, California; Lonnie C. Blanchard, III, The Blanchard Law Group, Los Angeles, California; for Plaintiff-Appellant. Jason S. Mills (argued) and Alexis M. Gabrielson, Morgan Lewis & Bockius LLP, Los Angeles, California; Allyson...
Judge Panel:Before: Mary M. Schroeder, Kim McLane Wardlaw, and John B. Owens, Circuit Judges.
Case Date:March 20, 2017
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Sarmad Syed, an individual, on behalf of himself and all others similarly situated, Plaintiff-Appellant,

v.

M-I, LLC, a Delaware Limited Liability Company; PreCheck, Inc., a Texas Corporation, Defendants-Appellees.

No. 14-17186

United States Court of Appeals, Ninth Circuit

March 20, 2017

Argued and Submitted November 17, 2016 San Francisco, California

Amended March 20, 2017

Appeal from the United States District Court No. 1:14-cv-00742-WBS-BAM for the Eastern District of California William B. Shubb, District Judge, Presiding

Peter R. Dion-Kindem (argued), Peter R. Dion-Kindem P.C., Woodland Hills, California; Lonnie C. Blanchard, III, The Blanchard Law Group, Los Angeles, California; for Plaintiff-Appellant.

Jason S. Mills (argued) and Alexis M. Gabrielson, Morgan Lewis & Bockius LLP, Los Angeles, California; Allyson N. Ho, Morgan Lewis & Bockius LLP, Dallas, Texas; Thomas M. Peterson, Morgan Lewis & Bockius LLP, San Francisco, California; Judd E. Stone, Morgan Lewis & Bockius LLP, Washington, D.C.; for Defendant-Appellee M-I, LLC.

E. Michelle Drake and John Albanese, Nichols Kaster PLLP, Minneapolis, Minnesota, for Amici Curiae National Association of Consumer Advocates and National Consumer Law Center.

Daniel E. Jones, Archis A. Parasharami, and Andrew J. Pincus, Mayer Brown LLP, Washington, D.C.; Warren Postman and Kate Comerford Todd, U.S. Chamber Litigation Center, Inc., Washington, D.C.; for Amicus Curiae Chamber of Commerce of the United States.

Before: Mary M. Schroeder, Kim McLane Wardlaw, and John B. Owens, Circuit Judges.

ORDER AND AMENDED OPINION

SUMMARY[*]

Fair Credit Reporting Act

The panel filed: (1) an order amending its opinion and denying petitions for panel rehearing and rehearing en banc; and (2) an amended opinion reversing the district court's dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) of an action under the Fair Credit Reporting Act.

In its amended opinion, the panel held that a prospective employer violates 15 U.S.C. § 1681b(b)(2)(A) when it procures a job applicant's consumer report after including a liability waiver in the same document as a statutorily mandated disclosure. The panel also held that, in light of the clear statutory language that the disclosure document consist "solely" of the disclosure, a prospective employer's violation of § 1681b(b)(2)(A) is "willful" when the employer includes terms in addition to the disclosure, such as the liability waiver here, before procuring a consumer report or causing one to be procured.

ORDER

The opinion filed on January 20, 2017 is hereby amended, and an amended opinion is filed concurrently with this order.

With that amendment, the panel has unanimously voted to deny the petition for panel rehearing. Judges Wardlaw and Owens have voted to deny the petition for rehearing en banc, and Judge Schroeder has so recommended.

The full court has been advised of the suggestion for rehearing en banc and no active judge has requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35.

Accordingly, the petition for panel rehearing and the petition for rehearing en banc are DENIED. No further petitions for rehearing or for rehearing en banc will be entertained. The mandate shall issue forthwith.

IT IS SO ORDERED.

OPINION

WARDLAW, Circuit Judge.

The modern information age has shined a spotlight on information privacy, and on the widespread use of consumer credit reports to collect information in violation of consumers' privacy rights. This case presents a question of first impression in the federal courts of appeals: whether a prospective employer may satisfy the Fair Credit Reporting Act's ("FCRA") disclosure requirements by providing a job applicant with a disclosure that "a consumer report may be obtained for employment purposes" which simultaneously serves as a liability waiver for the prospective employer and others.1 See 15 U.S.C. § 1681b(b)(2)(A). We hold that a prospective employer violates Section 1681b(b)(2)(A) when it procures a job applicant's consumer report after including a liability waiver in the same document as the statutorily mandated disclosure. We also hold that, in light of the clear statutory language that the disclosure document must consist "solely" of the disclosure, a prospective employer's violation of the FCRA is "willful" when the employer includes terms in addition to the disclosure, such as the liability waiver here, before procuring a consumer report or causing one to be procured.

I. A. Fair Credit Reporting Act.

Congress enacted the FCRA in 1970 in response to concerns about corporations' increasingly sophisticated use of consumers' personal information in making credit and other decisions. Fair Credit Reporting Act of 1970, Pub. L. 91-508, § 602, 84 Stat. 1114, 1128. Specifically, Congress recognized the need to "ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy." Safeco Ins. Co. v. Burr, 551 U.S. 47, 52 (2007). Congress thus required the use of reasonable procedures in procuring and using a "consumer report, " defined as any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for (A) credit or insurance to be used primarily for personal, family, or household purposes; (B) employment purposes; or (C) any other purpose authorized under [the statute].

15 U.S.C. § 1681a(d).

Congress amended the FCRA in 1996. Consumer Credit Reporting Reform Act of 1996, Pub. L. 104-208, § 2403, 110 Stat. 3009-426, 3009-431. It recognized "the significant amount of inaccurate information that was being reported by consumer reporting agencies and the difficulties that consumers faced getting such errors corrected." S. Rep. No. 108-166 at 5-6 (2003) (describing 1996 amendments). Congress was specifically concerned that prospective employers were obtaining and using consumer reports in a manner that violated job applicants' privacy rights. S. Rep. No. 104-185 at 35 (1995). The disclosure and authorization provision codified at 15 U.S.C. § 1681b(b)(2)(A) was intended to address this concern by requiring the prospective employer to disclose that it may obtain the applicant's consumer report for employment purposes and providing the means by which the prospective employee might prevent the prospective employer from doing so-withholding of authorization. S. Rep. No. 104-185 at 35. This provision furthers Congress's overarching purposes of ensuring accurate credit reporting, promoting efficient error correction, and protecting privacy. See Safeco, 551 U.S. at 52. Indeed, in addition to securing job applicants' privacy rights by enabling them to withhold authorization to obtain their consumer reports, the provision promotes error correction by providing applicants with an opportunity to warn a prospective employer of errors in the report before the employer decides against hiring the applicant on the basis of information contained in the report.2

Congress prohibited procurement of consumer reports unless certain specified procedures were followed: (2) Disclosure to consumer

(A) In general

Except as provided in subparagraph (B), a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless-

(i) a clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured or caused to be procured, in a document that consists solely of the disclosure, that a consumer report may be obtained for employment purposes; and

(ii) the consumer has authorized in writing (which authorization may be made on the document referred to in clause (i)) the procurement of the report by that person.

15 U.S.C. § 1681b(b)(2)(A). Congress amended the statute in 1998 to add language providing that the authorization may be made on the same document as the disclosure. Consumer Reporting Employment Clarification Act of 1998, Pub. L. 105-347, § 2, 112 Stat. 3208, 3208.

The FCRA provides a private right of action against those who violate its statutory requirements in procuring and using consumer reports. The affected consumer is entitled to actual damages for a negligent violation. 15 U.S.C. § 1681o. For a willful violation, however, a consumer may recover statutory damages ranging from $100 to $1, 000, punitive damages, and attorney's fees and costs. 15...

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