District Court Rejects Notion That An Improper Background Check Disclosure Automatically Renders A Subsequent Background Authorization Improper

In the world of background check litigation under the Fair Credit Reporting Act (“FCRA”), one theory that plaintiffs frequently assert is that if the background check disclosure provided by the employer violates the FCRA, then the authorization based on that disclosure is also necessarily inadequate. Under the FCRA, an employer desiring to obtain a criminal background check is required to provide a stand-alone disclosure, without extraneous material, of the fact that a background check is being procured. In addition, the employer is required to obtain the consumer’s written authorization for the background check. The disclosure and authorization can, but are not required to be, included in a single form. A recent decision out of the Northern District of California implicitly rejects the proposition that an inadequate disclosure in a form automatically invalidates the authorization obtained on the same form.

In Cunha v. Intellicheck, LLC, the plaintiff alleged multiple FCRA violations against the defendant. Two of these alleged violations involved claims related to the disclosure and authorization form provided to the plaintiff in connection with an employment background check. Specifically, the plaintiff claimed that the background check disclosure that he received violated the FCRA’s requirement that it be a clear and conspicuous disclosure that consisted solely of the disclosure that his potential employer would obtain a background check. The plaintiff also alleged that he did not provide a valid authorization permitting his employer to obtain a background check.

The District Court found that the plaintiff had adequately stated a claim for a willful violation of the FCRA based on the background check disclosure. According to the Court, because the disclosure form included a “liability waiver,” this was sufficient to state a claim for willfulness under Ninth Circuit standards. With respect to the authorization, however, the Court found that the plaintiff had failed to state a claim. According to the Court, the plaintiff’s own allegations indicate that he gave written authorization to procure a consumer report.

While this holding may seem unremarkable as it tracks the structure of the FCRA’s separate disclosure and authorization requirements, Plaintiffs’ counsel frequently argue that if the disclosure form that explains to the applicant that a background check will be procured is invalid, then the authorization itself must also be invalid because it is based on an improper disclosure of rights. The Cunha decision appears to reject that proposition, at least implicitly.

Cunha v. Intellicheck, LCC comes on the heels of the Ninth Circuit’s decision in Syed, where the plaintiff, according to the Ninth Circuit, had alleged that he would not have provided the authorization if the defendant had provided an adequate disclosure. On that basis, the Ninth Circuit held that the Plaintiff had standing to pursue an FCRA lawsuit based on the theories that the plaintiff’s privacy had been violated because the plaintiff’s authorization was not adequately informed. In sum, it appears that in the Ninth Circuit, plaintiffs seeking to challenge authorization need to do more than rely on an “automatic” violation theory premised on an inadequate disclosure. They need to plausibly plead and prove, at a minimum, that the authorization would not have been given absent the inadequate disclosure.