Long v. Se. Pa. Transp. Auth.

• Decision Date: 10 September 2018
• Docket Number: No. 17-1889,17-1889
• Parties: Frank LONG; Joseph Shipley; Michael White, Individually and on Behalf of All Others Similarly Situated, Appellants v. SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY
• Court: U.S. Court of Appeals — Third Circuit

903 F.3d 312

Frank LONG; Joseph Shipley; Michael White, Individually and on Behalf of All Others Similarly Situated, Appellants

v.SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY

No. 17-1889

United States Court of Appeals, Third Circuit.

Argued December 12, 2017

Filed: September 10, 2018

Cheryl-Lyn D. Bentley, Adam T. Klein, Christopher M. McNerney, Ossai Miazad, Lewis M. Steel, Outten & Golden, 685 Third Avenue, 25th Floor New York, NY 10017, Benjamin D. Geffen, Public Interest Law Center of Philadelphia, 1709 Benjamin Franklin Parkway, United Way Building, 2nd Floor, Philadelphia, PA 19103, Jon M. Greenbaum, Dariely Rodriguez, Lawyers' Committee for Civil Rights Under Law, 1500 K Street, Suite 900, Washington, DC 20005, Deepak Gupta [ARGUED], Gupta Wessler, 1900 L Street, N.W., Suite 312, Washington, DC 20036, Ryan A. Hancock, Willig Williams & Davidson, 1845 Walnut Street, 24th Floor, Philadelphia, PA 19103, Counsel for Appellants

Jamie M. Gullen, Community Legal Services, 1424 Chestnut Street, Philadelphia, PA 19102, Counsel for Amicus Appellants Community Legal Services, National Employments Law Project and Service Employees International Union Local 668

James A. Francis, Francis & Mailman, 100 South Broad Street, Land Title Building, 19th Floor, Philadelphia, PA 19110, Counsel for Amicus Appellant National Consumer Law Center

Michael A. Cognetti, Candidus K. Dougherty, Jeffrey B. McCarron, Swartz Campbell, 50 South 16th Street, Two Liberty Place, 28th Floor, Philadelphia, PA 19102, Elizabeth A. Malloy [ARGUED], Cozen O’Connor, 1650 Market Street, One Liberty Place, Suite 2800, Philadelphia, PA 19103, Counsel for Appellee

Before: CHAGARES, RESTREPO and FISHER, Circuit Judges.

OPINION OF THE COURT

FISHER, Circuit Judge.

This case raises again the frequently-litigated question of whether violation of a statute—here, the Fair Credit Reporting Act—is an injury in fact that satisfies the Constitution’s "case or controversy" requirement. The District Court concluded that the plaintiffs did not allege a concrete injury in fact and therefore dismissed their complaint for lack of jurisdiction. We affirm in part and reverse in part.

I. Background

The complaint alleges the following facts. The three named plaintiffs were convicted of drug offenses in the relatively distant past: Michael White in 2006 and 2007, Joseph Shipley in 2001, and Frank Long in 1997. More recently, Plaintiffs applied to Southeastern Pennsylvania Transportation Authority (SEPTA) for jobs that involved operating vehicles. Each Plaintiff filled out a form disclosing his criminal history and authorizing SEPTA to obtain a background check. Initially, Plaintiffs’ job applications seemed to meet with success: each received an offer or was given information about when to start training.

Ultimately, though, SEPTA denied employment to Plaintiffs. SEPTA told Long he was not hired because of "the information SEPTA had received from [the] background check." App. 28 (Complaint ¶ 47). SEPTA told White and Shipley they were not hired because of their "criminal history." App. 29, 31 (Complaint ¶¶ 57, 69). When Shipley requested more information, SEPTA sent a letter saying that for positions that "require the operation of ... vehicles," SEPTA has a "categorical lifetime ban" on hiring anyone convicted of a crime "involving the possession, sale, distribution, manufacture and use of controlled substances." App. 29-30 (Complaint ¶ 58).

SEPTA did not send Plaintiffs copies of their background checks before it decided not to hire them. Nor did it send them notices of their rights under the Fair Credit Reporting Act (FCRA). The FCRA, however, required SEPTA to send both before it denied them employment. 15 U.S.C. § 1681b(b)(3). Plaintiffs filed a putative class action complaint based on these two FCRA violations, as well as other claims not at issue here.

SEPTA moved to dismiss the complaint. The District Court granted the motion and dismissed for lack of standing. It concluded there was only a "bare procedural violation," not a concrete injury in fact, because Plaintiffs alleged that SEPTA denied them jobs "based on their criminal history, which Plaintiffs disclosed prior to SEPTA procuring their background checks." Long v. Se. Pa. Transp. Auth. , No. CV 16-1991, 2017 WL 1332716, at *4 (E.D. Pa. Apr. 5, 2017). "Additionally," the court noted, "Plaintiffs do not allege that their reports were inaccurate in any way." Id. The court concluded that "SEPTA’s purported FCRA violations did not cause the type of harm to Plaintiffs, or present any material risk of harm, that would give rise to a de facto injury." Id. The court did not reach SEPTA’s argument that Plaintiffs failed to state a claim under Rule 12(b)(6).

II. Jurisdiction and Standard of Review

The District Court had jurisdiction under 28 U.S.C. § 1331 and 15 U.S.C. § 1681p. This Court has jurisdiction to review the District Court’s final order under 28 U.S.C. § 1291. We exercise plenary review over a district court’s dismissal of a complaint under Rule 12(b)(1) for lack of standing. In re Schering Plough Corp. Intron/Temodar Consumer Class Action , 678 F.3d 235, 243 (3d Cir. 2012).

III. Analysis

Plaintiffs allege that SEPTA violated the FCRA by taking adverse employment action without providing copies of their background checks or notices of their rights under the FCRA. SEPTA argues that Plaintiffs lack standing because they were not harmed by what the District Court ruled were "bare procedural violations" of the statute. To determine whether the violations were "bare" and "procedural," or whether they were concrete injuries in fact, we will first examine the statute to ascertain what rights it confers. Next, we will examine the factual allegations in the complaint. Finally, with the FCRA and the facts in hand, we will analyze whether Plaintiffs have standing.

A. The Statute

The FCRA provides that "before" a potential employer, like SEPTA, takes "any adverse action based in whole or in part" on a consumer report, it "shall provide" the person who is the subject of the report with "(i) a copy of the report; and (ii) a description in writing of the rights of the consumer under [the FCRA]." 15 U.S.C. § 1681b(b)(3)(A). An adverse action includes "a denial of employment." Id. § 1681a(k)(1)(B). Criminal background checks are "consumer reports," i.e., "written ... communication" that bears on "a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living" and "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 ... employment purposes ...." Id. § 1681a(d)(1).¹

Plaintiffs argue that the statute prohibits adverse employment actions based on consumer reports that an individual has not had the opportunity to review or discuss with the potential employer. SEPTA, on the other hand, argues that the statute protects only against adverse employment action that is based on inaccurate or misleading information. SEPTA’s position is that Plaintiffs’ consumer reports were accurate and therefore they suffered no injury in fact. SEPTA is incorrect, however. As we now explain, the statute confers a broader right than simply to be free from adverse action based on inaccurate information.

Following the Supreme Court’s directives, we "look to the text of the statute, rather than the legislative history, to interpret a statute or determine legislative intent as an aid to interpretation." Thorpe v. Borough of Thorpe , 770 F.3d 255, 263 (3d Cir. 2014).² The text of § 1681b(b)(3) requires not just that the employer "shall provide" the consumer report and FCRA rights disclosure, but that it must do so "before taking any adverse action." 15 U.S.C. § 1681b(b)(3)(A). The statute should be construed so that words and phrases are not "superfluous, void, or insignificant." TRW Inc. v. Andrews , 534 U.S. 19, 31, 122 S.Ct. 441, 151 L.Ed.2d 339 (2001) (quoting Duncan v. Walker , 533 U.S. 167, 174, 121 S.Ct. 2120, 150 L.Ed.2d 251 (2001) ). The phrase "before taking any adverse action" should, therefore, have some purpose, and this purpose is illuminated by the congressional findings incorporated into the statute’s text. 15 U.S.C. § 1681.

Congress found that "[c]onsumer reporting agencies have assumed a vital role in assembling and evaluating ... information on consumers."Id. § 1681(a)(3). Therefore, "[t]here is a need to ensure that [they] exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy." Id. § 1681(a)(4); see also Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 1545, 194 L.Ed.2d 635 (2016), as revised (May 24, 2016) ("The FCRA seeks to ensure ‘fair and accurate credit reporting.’ " (quoting 15 U.S.C. § 1681(a)(1) ) ). "To achieve this end, the Act regulates the creation and the use of consumer reports ... for certain specified purposes, including ... employment." Spokeo , 136 S.Ct. at 1545 (internal quotation marks and footnote omitted). " ‘These consumer oriented objectives support a liberal construction of the FCRA,’ and any interpretation of this remedial statute must reflect those objectives." Cortez v. Trans Union, LLC , 617 F.3d 688, 706 (3d Cir. 2010) (quoting Guimond v. Trans Union Credit Info. Co. , 45 F.3d 1329, 1333 (9th Cir. 1995) ).

The required pre-adverse-action copy of an individual’s consumer report allows him to ensure that the report is true, and may also enable him to advocate for it to be used fairly—such as by explaining why true but negative information is irrelevant to his fitness for the job. The required pre-adverse-action notice of FCRA rights provides the individual with information about what the law requires with regard to consumer reports. The advance notice requirement, then, supports both accuracy and fairness. It helps ensure that reports are properly used and relevant for the...