United States District Court, E.D. Virginia, Richmond Division
TYRONE HENDERSON, et al., On behalf of themselves and others similarly situated Plaintiffs,
CORELOGIC NATIONAL BACKGROUND DATA, LLC f/k/a NATIONAL BACKGROUND DATA, LLC, Defendant.
Robert E. Payne Senior United States District Judge
This matter is before the Court on DEFENDANT'S RENEWED MOTION FOR PARTIAL SUMMARY JUDGMENT ON COUNT I OF THE SECOND AMENDED COMPLAINT (Docket No. 201). For the reasons set forth herein, the motion will be denied.
CoreLogic National Background Data, LLC ("NBD") is a company that provides its customers access to a database ("The Multistate Database7' or "the Database") of criminal record information. (Defendant's Memorandum in Support of its Renewed Motion for Partial Summary Judgment on Count I of the Second Amended Complaint ("Def. Mem., " ECF No. 195), Statement of Undisputed Facts ("SOF") SI 18). NBD's customers, which in this instance are credit reporting agencies ("CRAs"), pay to search the Multistate Database by way of the Internet. The Multistate Database then returns results (such as arrest records) that match the search criteria entered by NBD's customer. Id.
The Multistate Database is owned and managed by CoreLogic SafeRent, LLC ("SafeRent"), a sister company to NBD. Id. SafeRent obtains most of the criminal record data in the Database electronically from governmental sources, although approximately ten percent of the data is purchased from a third party vendor. Id. ¶19. SafeRent buys criminal records in bulk, formats the records it purchases so that they can be properly incorporated into the Multistate Database, and updates the records at varying intervals. Id. ¶¶ 20-24. Because SafeRent purchases criminal record data in bulk, the public records in the Multistate Database typically contain only limited identifying information. For example, public records purchased in bulk rarely, if ever, contain Social Security Numbers ("SSNs"), and typically do not contain other identifying data such as middle names or addresses. Therefore, the portions of the public records that are in the Multistate Database are typically insufficient to identify the particular consumer to whom the records pertain. Id. ¶¶ 5-6.
SafeRent oversees all formatting, updating, and maintenance of the Multistate Database; NBD merely acts as an intermediary between SafeRent and the customer CRAs, and transmits this data to its customers without change. The contracts between NBD and its customers obligate the customers to independently verify the records returned in response to their search queries before providing consumer reports to their clients. Id. ¶¶ 8-15.
The Named Class Plaintiffs Tyrone Henderson ("Henderson") and James 0. Hines, Jr. ("Hines") present factually similar cases. Specifically, Henderson and Hines were denied employment based on allegedly inaccurate and incomplete criminal history information supplied by NBD. Henderson applied for a job at Interstate Brands Corporation ("Interstate") in August or September of 2009. (Second Amended Complaint ("SAC") (ECF No. 191) ¶ 19) . Interstate made Henderson a conditional offer of employment, and subsequently requested a background check on Henderson from Verifications, Inc. ("Verifications), a third party CRA. Id. 31 21. As part of the background check process, Verifications conducted a search of the Multistate Database by inputting Henderson's last name, the first three letters of his first name, and his date of birth. Def. Mem. SOF St 29. The results of this search correctly included Henderson's criminal history, but the search results also contained several records, including felony convictions, belonging to at least one other individual who had the same first and last name and date of birth as Henderson. SAC SISI 24-26. In the background check that it provided to Interstate, Verifications included multiple criminal records that were incorrectly attributed to Henderson by NBD. Id. ¶ 27. As a result of the incorrect information, Interstate withdrew its conditional offer of employment. Id.
Hines applied for a position as a physical therapist with CareSouth Homecare Professionals ("CareSouth") in May 2011. Id. SI 39. As part of its consideration of Hines for that position, CareSouth purchased a consumer report from ADP Screening and Selection Services ("ADP"), a CRA similar to Verifications. Id. ¶¶ 41-42. As part of the compilation of this report, ADP conducted a search of the Multistate Database by inputting Hines' first and last names and his date of birth. Def. Mem. SOF ¶41. These search results contained criminal records correctly attributed to Hines, but also contained records belonging to at least one other individual with the same first name, last name, and date of birth, including an Indiana record indicating that Hines was a registered sex offender. SAC ¶¶ 42-45. ADP included this incorrect information in the consumer report it provided to CareSouth. As a result of the incorrect information, Hines was not hired for the position at that time. Id. ¶ 5.
SUMMARY JUDGMENT STANDARD
Summary judgment is proper when there is no genuine issue as to any material fact in the case such that the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). Once the moving party properly files and supports its motion for summary judgment, the opposing party must show that a genuine issue of fact exists. See Matsushita Elec. Indus. Co v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986).
A fact is material if the existence or non-existence thereof could lead a jury to different resolutions of the case. See Anderson v. Liberty Lobby, Inc. 477 U.S. 242, 248 (1986). A genuine issue of material fact only exists when the opposing party has presented sufficient evidence upon which a reasonable jury could return a verdict in its favor. Id. This means that "summary judgment is only appropriate when, after discovery, the non-moving party has failed to make a 'showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.'" BM v. Chesterfield County School Dist., 2010 WL 145661, at *1 (E.D. Va. 2010) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)). In considering motions for summary judgment, the court must consider the evidence in the light most favorable to the non-moving party. Smith v. Virginia Commonwealth Univ., 84 F.3d 672, 675 (4th Cir. 1985).
As relevant to this motion, Plaintiffs claim in Count I of the SAC that NBD, a qualifying consumer reporting agency as defined in the preamble to 15 U.S.C. § 1681k, failed to satisfy the requirements thereof because: (1) NBD never sent notices to consumers when it provided criminal background information to its customers; and (2) NBD failed to satisfy the alternative provision of § 1681k (a) (2) due to "the manner in which it obtains and furnishes'' criminal records. SAC ¶ 66.
NBD seeks summary judgment on Count I, brought under 15 U.S.C. § 1681k(a). That section provides:
A consumer reporting agency which furnishes a consumer report for employment purposes and which for that purpose compiles and reports items of information on consumers which are matters of public record and are likely to have an adverse effect upon a consumer's ability to obtain employment shall-
(1) at the time such public record information is reported to the user of such consumer report, notify the consumer of the fact that public record information is being reported by the consumer reporting agency, together with the name and address of the person to whom such information is being reported; or
(2) maintain strict procedures designed to insure that whenever public record information which is likely to have an adverse effect on a consumer's ability to obtain employment is reported it is complete and up to date. For purposes of this paragraph, items of public record relating to arrests, indictments, convictions, suits, tax liens, and outstanding judgments shall be considered up to date if the current public record status of the item at the time of the report is reported.
15 U.S.C. § 1681k(a).
NBD's arguments in support of summary judgment fall into two categories. First, NBD argues that § 1681k does not apply to its business model at all, because it offers only "wholesale data'' and does not provide "consumer reports" for "employment purposes" that are "likely adverse" to "a" consumer's "ability to obtain employment." (Def. Mem. at 11-18). Second, NBD contends that, even if § 1681k does apply, § 1681k (a) (2) is satisfied because there is no dispute of material fact that NBD maintained "strict procedures" to insure that its reports were "complete and up to date, " and those reports were, in fact, complete and up to date. Id. at 20-26. Each of these arguments will be addressed in turn.
A. Does Section 1681k(a) Apply to NBD?
NBD's first ground for summary judgment is that § 1681k(a) does not apply to it because its "wholesale results are not 'consumer reports'" furnished for "employment purposes" that are "'likely' to have an adverse effect on a consumer's ability to obtain employment." (Def. Mem. at 11-18). This argument may be separated into several components. First, NBD contends that the criminal history records it provides are not "consumer reports" within the scope of the FCRA because the data "do[es] not relate to 'a' specific consumer." Id. at 11. Second, NBD asserts that § 1681k(a) is inapplicable because "NBD did not deliver data for 'employment purposes.'" Id. at 17-20. Finally, NBD argues that the "data returned by NBD's system was not 'likely' adverse to Plaintiffs." Id. at 14-17.
Each facet of NBD's argument lacks merit. Each is addressed in turn.
1. The Search Results that NBD Provides To Its Customers Constitute "Consumer Reports."
NBD first asserts that the reports that it sells to its customers are not "consumer reports" within the meaning of the FCRA because NBD "provides data in its 'raw' form, " which is "not descriptive about any one person, " but rather is simply a "movement of data" in response to the search queries provided by its customers. (Def. Mem. at 11-12) (emphasis added). NBD adds that it is the "contractual and legal requirement" of the CRAs to whom NBD sells information to match the "raw data" that NBD provides to a specific individual. Id. at 13. The linchpin of NBD's argument is that "criminal record data cannot bear on
'a consumer' unless and until it is later linked to a specific individual by the recipient CRA." Id. at 14. Therefore, NBD concludes, the search results that it provides are not "consumer reports."
The FCRA defines a "consumer report" as "any written, oral, or other 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 in whole or in part for the purposes of serving as a factor in establishing the consumer's eligibility for:...employment purposes [.]" 15 U.S.C. § 1681a(d). This statutory definition is considered to have "three fundamental elements." Yang v. Govt. Emp. Ins. Co., 146 F.3d 1320, 1323 (11th Cir. 1998). The first element is the "communication" element, which requires that a consumer reporting agencycommunicate information. Id. The second element is the "information" element, which requires that the information communicated bear on "a consumer's credit worthiness, character, general reputation, personal characteristics, or mode of living." Id. The third element is the "purpose clause." Id. The "purpose clause" requires that the information communicated must be "used or ...