9th Circuit Holds FCRA’s Standalone Disclosure Requirement Violated by Inclusion of Extraneous Information
The Ninth Circuit Court of Appeals recently held that an employer violated FCRA’s standalone document requirement by providing a job applicant with a disclosure that contained extraneous information in the form of various state disclosure requirements. The court also held that the defendant’s disclosure form violated FCRA’s “clear and conspicuous” requirement.
As background, before the plaintiff voluntarily terminated her employment several months into her position, she signed a “Disclosure Regarding Background Investigation.” The plaintiff subsequently filed a putative class action against the company asserting violations of FCRA’s standalone disclosure requirement as well as its clear and conspicuous requirement. The plaintiff alleged that the disclosure form included not only an unclear disclosure stating that the defendant could obtain a consumer report on her but also additional disclosures required by several other states. The plaintiff also alleged parallel claims under the California Investigative Consumer Reporting Agency Act (ICRAA), which contains similar requirements. The district court disagreed with the plaintiff’s assertions and granted the defendant’s motion for summary judgment, holding that the disclosure form complied with both FCRA and ICRAA.
On appeal, the 9th Circuit agreed with the plaintiff’s argument that the disclosure form violated the FCRA and ICRAA standalone document requirements. The standalone document requirement obligates employers who obtain a consumer report on job applicants to disclose that process in a document that only contains the disclosure and nothing else. The court relied on its prior ruling in Syed v. M-I, LLC, which held that “’a prospective employer violates [FCRA] when it procures a job applicant’s consumer report after including a liability waiver in the same document as the statutorily mandated disclosure.’” While quoting Syed, the panel noted FCRA’s plain language: “’the required disclosure must be in a document that ‘consist[s] ‘solely’ of the disclosure.’”
The Ninth Circuit also concluded that the defendant’s disclosure was not clear because it included language that a reasonable person would not understand. Additionally, the combination of federal and state disclosures in the document would confuse a reasonable reader because the state disclosures implied that only applicants in certain states were entitled to receive a copy of their report. Nevertheless, the court held that the disclosure was conspicuous because it capitalized, bolded, and underlined the headings of each section, labeled the form accurately, and contained legible font.
Accordingly, the 9th Circuit affirmed the district court’s judgment that the defendant’s disclosure form was conspicuous, but vacated the district court’s decision that the disclosure form satisfied the standalone document requirement and was clear under FCRA and ICRAA. The panel remanded the case for further proceedings consistent with its holdings.
