United States: Background Check Company's Investigative Efforts On Potential Job Candidate Do Not Violate The FCRA

Shawn Smith v. Waverly Partners, LLC et al., 2011 U.S. Dist. LEXIS 90135(W.D.N.C. Aug. 12, 2011)

Facts: Plaintiff was contacted by Harrison Turnbull ("Turnbull"), a principal of Defendant Waverly Partners, LLC ("Waverly") to discuss her interest in a general counsel position with a company outside of North Carolina. Over the next two weeks, Plaintiff faxed her resume and a list of references to Waverly, had several in-depth telephone conversations about the position, and had an in-person interview with Turnbull. Soon thereafter, Turnbull sent various forms to Plaintiff, including a Fair Credit Reporting Act ("FCRA") consent form. Plaintiff signed and returned the form, which permitted verification of Plaintiff's former employment. Significantly, the consent form did not permit Waverly to contact Plaintiff's current employer, Cato. Turnbull told Plaintiff that no references would be contacted unless she was the final candidate for the job and then only the specific individuals listed as personal references would be contacted. Waverly hired Defendant AlliedBarton Security Services, LLC ("AlliedBarton") to conduct a background check on Plaintiff. AlliedBarton faxed a copy of the consent form to Cato, which resulted in her firing days later. Subsequently, Waverly informed Plaintiff that she was not considered for the general counsel position. AlliedBarton moved to dismiss Plaintiff's claim for invasion of privacy, claim for a violation of the FCRA, and a claim for unfair and deceptive trade practices. The Court granted the motion to dismiss. Plaintiff subsequently filed his Motion to Reconsider as to Plaintiff's § 1681d(d) and § 1681b claims. The Court denied Plaintiff's Motion.

• Investigative Consumer Reports. Under § 1681a(e), an "investigative consumer report" is a consumer report in which information about a consumer is "obtained through personal interviews with neighbors, friends, or associates of the consumer reported on or with others with whom he is acquainted or who may have knowledge concerning any such items of information. In support of its ruling denying Plaintiff's Motion to Reconsider, the Court found that AlliedBarton did not prepare an investigative consumer report on Plaintiff because it did not conduct any personal interviews of Plaintiff's neighbors, friends, or associates. AlliedBarton merely attempted to confirm Plaintiff's employment status with Cato which did not include conducting any personal interviews. Note: the Court also held that AlliedBarton did not violate Section 1681d(d) because Waverly obtained the requisite consent to inform Plaintiff and then provided the same to AlliedBarton. The consent form that Plaintiff signed and which Waverly provided to AlliedBarton specifically states "[s]everal consumer reports may be obtained on you . . . The reports may be investigative consumer reports . . . ."
• Permissible Purpose. Plaintiff argued that AlliedBarton did not have a permissible purpose under §§ 1681b(a), 1681b(b)(1), and 1681b(b)(2) when it faxed Plaintiff's consent form to Cato. None of these provisions, however, prohibit a consumer reporting agency ("CRA") from communicating with a consumer's employer, which was the basis of Plaintiff's contention under this claim.
• Consumer Report. A consumer report is defined in § 1681a(d) as a 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 for establishing the consumer's eligibility for--(A) credit or insurance to be used for personal, family or household purposes; (B) employment purposes; or (C) any other purpose authorized under § 1681b. Note: The Court found that AlliedBarton merely provided Plaintiff's name, Social Security Number, prior addresses, date of birth, and driver's license information to Cato. Such minimal information does not bear on any of the seven enumerated factors in § 1681a(d), and is thus not a consumer report.

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