Lengel v. Homeadvisor, Inc.

• Citation: 102 F.Supp.3d 1202
• Decision Date: 05 May 2015
• Docket Number: Case No. 15–2198–RDR.
• Parties: Emerald LENGEL, individually and on behalf of all others similarly situated., Plaintiff, v. HOMEADVISOR, INC., Defendant.
• Court: U.S. District Court — District of Kansas

102 F.Supp.3d 1202

Emerald LENGEL, individually and on behalf of all others similarly situated., Plaintiff,

v.HOMEADVISOR, INC., Defendant.

Case No. 15–2198–RDR.

United States District Court, D. Kansas.

Signed May 5, 2015.

Filed May 6, 2015.

Daniel Bryden, Kai H. Richter, Nichols Kaster, PLLP, Minneapolis, MN, Mark A. Kistler, Michael F. Brady, Brady & Associates Law Office, Overland Park, KS, for Plaintiff.

Alexander C. Clayden, Stephen J. Horace, Lathrop & Gage, LLP, Denver, CO, Mark A. Samsel, Lathrop & Gage, LLP, Overland Park, KS, for Defendant.

MEMORANDUM AND ORDER

RICHARD D. ROGERS, District Judge.

Plaintiff made application for employment with defendant. During this process, plaintiff signed a form which permitted defendant to procure a consumer report as a kind of background check. Plaintiff now brings this action alleging that defendant violated a provision of the Fair Credit Reporting Act (FCRA) which governs disclosures that are required prior to procuring such a consumer report. The FCRA provision at issue states in part that it is illegal to “procure, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless ... 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.” 15 U.S.C. § 1681b(b)(2)(A)(i)(emphasis added). Plaintiff alleges that the disclosure defendant made to her was not in a document consisting solely of the disclosure, contrary to FCRA requirements. This case is now before the court upon defendant's motion to dismiss for failure to state a claim pursuant to FED.R.CIV.P. 12(b)(6).

Plaintiff does not allege actual damages. Defendant's motion to dismiss argues, and it is undisputed by plaintiff, that in order to obtain statutory damages for a violation of the FCRA, plaintiff must allege a knowing or reckless violation of the statute. The statute requires proof of willful noncompliance to obtain statutory damages. § 1681n(a). A willful violation requires proof of knowing or reckless conduct. Safeco Ins. Co. of America v. Burr,551 U.S. 47, 57, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007). Defendant asserts that plaintiff has failed to plausibly allege a willful violation of the FCRA. The court disagrees. For the reasons which follow, the court finds that plaintiff has alleged a plausible claim that defendant recklessly violated the provisions of § 1681b(b)(2)(A)(i).

I. MOTION TO DISMISS STANDARDS

In Khalik v. United Air Lines,671 F.3d 1188, 1190–92 (10th Cir.2012), the Tenth Circuit reviewed the standards for determining whether a complaint fails to state a claim:

Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Recently the Supreme Court clarified this pleading standard in Bell Atlantic Corp. v. Twombly,550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal,556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009): to withstand a Rule 12(b)(6)motion to dismiss, a complaint must contain enough allegations of fact, taken as true, “to state a claim to relief that is plausible on its face.” Twombly,550 U.S. at 570, 127 S.Ct. 1955. A plaintiff must “nudge [his] claims across the line from conceivable to plausible” in order to survive a motion to dismiss. Id.

The Court explained two principles underlying the new standard: (1) when legal conclusions are involved in the complaint “the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to [those] conclusions,” Iqbal,129 S.Ct. at 1949, and (2) “only a complaint that states a plausible claim for relief survives a motion to dismiss,” id.at 1950. Thus, mere “labels and conclusions” and “a formulaic recitation of the elements of a cause of action” will not suffice. Twombly,550 U.S. at 555, 127 S.Ct. 1955. Accordingly, in examining a complaint under Rule 12(b)(6), we will disregard conclusory statements and look only to whether the remaining, factual allegations plausibly suggest the defendant is liable.

II. THE COMPLAINT'S FACTUAL ALLEGATIONS

Plaintiff alleges that she submitted an employment application to defendant on November 25, 2013; that she was hired the same day contingent upon a satisfactory background check; and that she began working for defendant on December 2, 2013.

Plaintiff's employment application with defendant is an exhibit to the complaint (Doc. No. 1–2) and, therefore, may be considered as an allegation in the complaint. FED.R.CIV.P. 10(c); Gorsuch, Ltd., B.C. v. Wells Fargo Nat. Bank Ass'n,771 F.3d 1230, 1238 n. 9 (10th Cir.2014). The exhibit has five pages and contains two disclosures which plaintiff alleges violate the FCRA. One of the alleged disclosures is in a section labeled “Acknowledgment and Signature” and the other alleged disclosure is on a page labeled “Background Check Authorization: Applicant Information Release Form.” The complaint alleges that the employment application included the background check and release form. Doc. No. 1–2 at ¶ 18.

The first three pages of the exhibit ask for “basic information” such as name, address, position applied for, education, prior work history, references and prior convictions (if any). The fourth page contains the “Acknowledgment and Signature” provision. On this page, plaintiff represented with her signature that she had no agreement with a prior employer which would restrict or impair her employment with defendant; that she understood that her employment relationship with defendant would be as an at-will employee; that she understood that policy statements or handbooks or other materials did not constitute a guarantee of employment; that defendant had the right to modify, amend or terminate its policies, practices, programs and benefit plans; and that she understood that defendant would rely upon the accuracy and completeness of her statements. Finally, the acknowledgement section reads:

I authorize investigation of all statements contained in this application and permit HomeAdvisor to obtain any transcripts, records or documents pertaining to my background and business experience. I also agree to release HomeAdvisor from any liability arising there from and understand that any misstatements, omissions or false statements made by me may be cause for dismissal.

Plaintiff signed and dated this page.

The first four pages of the exhibit have a bold line border. The fifth page does not, suggesting that it is a different document than the first four pages. But, it is not clear to the court whether the fifth page was presented to plaintiff as part of the other pages of the exhibit or whether it was presented separately.

The fifth and last page of the exhibit is the “Background Check Authorization: Applicant Information Release Form.” This page states as follows:

I hereby authorize HomeAdvisor and/or their authorized agents to gather information regarding the following: All records including criminal, credit, driving, drug, and/or education; written or verbal from previous employers; and any other pertinent information relating to the function of my job.

I understand that all inquiries on this form are used for identification purposes only in order to conduct a background check, and are asked for legitimate nondiscriminatory reasons. Responses to sex, age and race inquir[i]es are voluntary, and choosing not to respond will not preclude hire. I hereby release HomeAdvisor and any of its authorized agents from liability, and understand there is no invasion of privacy.

I understand that submission of false information on this or any employment forms m[a]y result in nonselection or termination if hired. The following is my complete legal name, and all information is true and correct to the best of my knowledge. This information is used for verification purposes ONLY:

Below these paragraphs are blank fields where plaintiff filled in her name, the position she applied for, her race, her sex, and the cities where she currently and previously lived. This information duplicated to some extent the information on the first three pages of the exhibit. Again, this indicates that the fifth page was a separate document from the first four pages. There was also a blank field for plaintiff's signature on the fifth page, which she completed.

III. PLAINTIFF'S LEGAL CLAIMS

Plaintiff contends that defendant violated the FCRA's requirement that the disclosure of defendant's request to procure a consumer report be made “in a document that consists solely of the disclosure.” In making this claim, plaintiff refers to both the “Acknowledgment & Signature” page (“Acknowledgment page”) and the “Background Check Authorization: Applicant Information Release Form” (“Release form”).

Defendant's arguments focus upon the Release form.

IV. DEFENDANT'S ARGUMENTS

Defendant contends that plaintiff has not plausibly alleged a willfulviolation of § 1681b(b)(2)(A) of the FCRA as required if plaintiff is to be entitled to statutory damages or punitive damages. Defendant argues that its analysis comports with the Supreme Court's decision in Safeco.In Safeco,the Court examined whether a violation of the FCRA constituted a willful violation. The Court determined that “willful” violations include both knowing violations and “reckless” violations of the law. The court held that “reckless” violations are those acts which rely upon an objectively unreasonable reading of the FCRA and which lead to a substantially higher risk of violating the law than the risk associated with a merely careless reading of the statute. 551 U.S. at 69, 127 S.Ct. 2201. In Safeco,the Court examined the statutory text, considered the district court's ruling, took into account the presence or absence of guidance from the courts of appeals, and also reviewed whether...