In Derrick v. Full House Mktg., the plaintiff applied for employment in March of 2019 with defendant Full House Marketing, an employment agency. Plaintiff was classified as ineligible for employment based on the contents of a consumer report generated by Resolve Partners, LLC ("Resolve"), a consumer reporting agency. Shortly thereafter, Resolve sent Plaintiff a pre-adverse action letter as required by the Fair Credit Reporting Act (FCRA); however, the letter was not accompanied by a copy of the consumer report. Since Plaintiff never received a copy, he was unaware that it contained inaccurately reported information involving certain felonies and misdemeanors. He only learned of the contents of the report five weeks later after the position had been filled.

Plaintiff alleged in his complaint that Defendant violated the FCRA by failing to provide him a copy of the consumer report prior to taking adverse action. As part of his claim, Plaintiff also alleged that he suffered actual harm as a result of the violation in the form of a lost employment opportunity, wage loss and emotional distress. Defendant argued that Plaintiff "failed to articulate any injury" because an informational injury does not suffice for Article III standing. Parties seeking to sue in federal court are required to establish Article III standing, which requires that the plaintiff demonstrate: (1) an injury in fact; (2) that the injury was caused by defendant's conduct; and (3) that the injury can likely be redressed by a favorable judicial decision.

The Supreme Court has held that "[o]nly plaintiffs concretely harmed by a defendant's statutory violation have Article III standing to seek damages against that private defendant in federal court." (See Spokeo, Inv. V. Robins, 156 S. Ct. 1540 (2016)). The Court further held that "Article III standing requires a concrete injury even in the context of a statutory violation" and it was not the case that "a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right."

Here, the court found that Defendant's failure to supply Plaintiff with a copy of his report was material, as it ultimately prevented him from being hired. As such, the court denied Defendant's motion and held that Plaintiff had sufficiently alleged that a concrete and particularized injury in fact was suffered, meeting the requirements for Article III standing.

Employers are encouraged to review internal workflows for issuing pre-adverse and adverse action letters as well as copies of consumers' reports to ensure compliance with FCRA.

Posted: March 22, 2022