Manuel v. Wells Fargo Bank, Nat'l Ass'n

• Decision Date: 19 August 2015
• Docket Number: Civil Action No. 3:14cv238.
• Citation: 123 F.Supp.3d 810
• Court: U.S. District Court — Eastern District of Virginia
• Parties: Terrell MANUEL, et al., Plaintiff, v. WELLS FARGO BANK, NATIONAL ASSOCIATION, Defendant.

123 F.Supp.3d 810

Terrell MANUEL, et al., Plaintiff,

v.WELLS FARGO BANK, NATIONAL ASSOCIATION, Defendant.

Civil Action No. 3:14cv238.

United States District Court, E.D. Virginia, Richmond Division.

Signed Aug. 19, 2015.

Leonard Anthony Bennett, Susan Mary Rotkis, Consumer Litigation Associates, William Leonard Downing, The Consumer and Employee Rights Law Firm PC, Christopher Colt North, Newport News, VA, for Plaintiff.

Jimmy Frank Robinson, Jr., James Clay Rollins, Ogletree Deakins Nash Smoak & Stewart PC, Richmond, VA, for Defendant.

MEMORANDUM OPINION

ROBERT E. PAYNE, Senior District Judge.

This case is before the Court on the Defendant's MOTION FOR SUMMARY JUDGMENT (Docket No. 57). For the reasons set forth below, this motion will be denied.

BACKGROUND

A. PLAINTIFF'S CLAIMS

On April 1, 2014 plaintiffs Terrell Manuel ("Manuel") and Charles White ("White") filed a class action complaint on behalf of themselves and all others similarly situated alleging that defendant Wells Fargo Bank, N.A. ("Wells Fargo") had violated the Fair Credit Reporting Act ("FCRA"). Docket No. 1. That complaint was amended three times, and the operative complaint at this time is the Third Amended Class Complaint ("TAC"). Docket No. 41.

The TAC alleges two counts claiming that the Defendants violated the Fair Credit Reporting Act ("FCRA"). Count One alleges a violation of § 1681b(b)(2)(A), which requires that "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."

Count Two alleges that Wells Fargo violated § 1682b(b)(3)(A)(i) of the FCRA. § 1681b(b)(3)(A)(i) requires that "in using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates: (i) a copy of the report; and (ii) a description in writing of the rights of the consumer under this subchapter, as presented by the Bureau under section 1681g(c)(3) of this title."

Plaintiffs filed the instant Motion for Summary Judgment on April 30, 2015. Docket No. 57. Defendants have opposed the motion. Docket No. 70. Plaintiffs have replied in support. Docket No. 73.

B. Factual Background

a. Facts Regarding Plaintiff Manuel¹

During February of 2012, Manuel completed an online application for an open loan document specialist position at Wells Fargo. On or about February 24, 2012, Manuel completed an interview with Wells Fargo personnel and was offered the position conditioned upon the successful completion of a background check. He was given an offer letter and signed and returned said offer letter. On February 25, 2012, pursuant to Wells Fargo's instructions, Manuel accessed the First Advantage² website and completed two documents: the "Wells Fargo Standard Application" and the "Wells Fargo Standard Consent". This initiated a criminal background screening process which was completed on April 3, 2012. Manuel's background screening reported two convictions for petit larceny as well as a conviction for aggravated assault with serious bodily injury in the second degree.

Upon receiving the above information, Wells Fargo coded Manuel as "ineligible" within the First Advantage system. This prompted First Advantage to begin the "adverse action" protocol described below. On April 11 or 12, 2012, Manuel received a letter that referred to itself as a "Pre–Adverse Action Notice" and was dated April 3, 2012. That letter included a copy of Manuel's background report and an FCRA Summary of Rights. After Manuel received the Pre–Adverse Action Notice, he began the appeal/dispute process described in the letter and filed a written dispute of the contents of his Pre–Employment/Security Screening. First Advantage then generated a revised report that still contained the convictions at issue. Wells Fargo contends that only then did it determine "on June 28, 2012 that Manuel was ineligible for employment with Wells Fargo."

b. Wells Fargo's Procurement: and Use of Consumer Reports

The parties have stipulated to the following facts (see Docket No. 43):

1. Stipulation One: After March 1, 2010, Wells Fargo's standard policy and procedure for using criminal background screenings in regards to current and prospective employees in its Home Mortgage Business Line was as follows:

a. Wells Fargo refers individuals subject to criminal background screenings to a website operated by First Advantage Background Services Corporation. Such individuals use this website to complete a number of application forms, including disclosure and authorization forms related to the criminal background screening. After all application forms are completed First Advantage Background Services Corporation generates the criminal background screening report and provides its findings to Wells Fargo. Specifically, First Advantage enters the criminal background screening report into a database to which both First Advantage and Wells Fargo have access.

b. Members of Wells Fargo's Background Screening Compliance Team then review the results to make a determination as to whether the current or prospective employee was ineligible for the relevant employment position in whole or in part because of the content of the criminal background check. If the reviewing members of the Background Screening Compliance Team believe that the individual in question would not meet employment eligibility requirements for the position to which he or she applied based in whole or in part on the contents of his or her criminal background screening report, the reviewing members would then access the database to which both First Advantage and Wells Fargo have access and enter a code or other notation that the applicant would not be eligible for the employment position based in whole or in part on the contents of his or her criminal background screening report. Upon the entry of this coding, First Advantage generates and sends a notice, with the title "Pre–Adverse Action Notice", which was substantially similar at all relevant times to the ones sent to Plaintiffs Manuel and White, and mails it, along with an FCRA Summary of Rights Notice and a copy of the current or prospective employee's criminal background screening results, to the current or prospective employee. If the current or prospective employee does not appeal or dispute the results of his or her criminal background screening during the next five business days after the first notice is mailed, First Advantage generates and sends the applicant or employee an Adverse Action Notice, which was substantially similar at all relevant times to the ones sent to Plaintiffs Manuel and White.

2. Stipulation Two: During the putative class period, at least 1000 current or prospective employees associated with Wells Fargo's Home Mortgage Business Line were subjected to the process described in Stipulation One.

3. Stipulation Three: During the putative class period, at least 1000 current or prospective employees associated with Wells Fargo's Home Mortgage Business Line were notified by Wells Fargo, either in person or via telephone, communicating that the current or prospective applicant's criminal background screening report contains records that may preclude employment with Wells Fargo before Wells Fargo or First Advantage generated and mailed a Pre–Adverse Action Notice along with an FCRA Summary of Rights Notice and a copy of the applicant's criminal background screening results.

4. Stipulation Four: Wells Fargo retains detailed employment and application records related to all individuals who were rejected for employment based in whole or in part on the contents of a criminal background screening obtained from First Advantage Background Services Corporation. In the event that any class is certified in this case, Wells Fargo can identify these current or prospective employees described in Stipulations One, Two, and Three for the relevant time period.

The background check process was conducted as follows: all current and prospective employees subject to a background check were asked to visit First Advantage's website. Once on the website, the individuals filled out several forms. One of these forms was a disclosure and authorization form that contained the following release language: "You hereby release the Company, First Advantage and all Third Parties to the full extent permitted by law, from any liability or claims arising from retrieving and/or reporting information concerning you and/or from using the Report for employment purposes."

Once the applicant completed the forms, First Advantage generated a background check on the individual and forwarded the results to Wells Fargo by uploading the results into a database that Wells Fargo and First Advantage could both access. Members of Wells Fargo's Background Screening Compliance Team then reviewed these results and determined whether the applicant appeared to be ineligible for employment based on the contents of the background check. That determination was entered into the shared database in the form of a code. Although Wells Fargo refers to this as a "preliminary" determination, Manuel correctly points out that it was the only affirmative step taken by Wells Fargo in the process. According to Manuel, this was a final hiring decision.

Once the code was entered into the database, First Advantage would generate and send a notice titled "Pre–Adverse Action Notice", a summary of the consumer's FCRA rights, and the applicant's...