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Costa v. Family Dollar Stores of Virginia, Inc.

United States District Court, E.D. Virginia, Richmond Division

July 19, 2016

RAMON J. COSTA et al., for themselves and on behalf of all similarly situated individuals, Plaintiffs,
v.
FAMILY DOLLAR STORES OF VIRGINIA, INC., FAMILY DOLLAR STORES, INC., and FAMILY DOLLAR, INC., Defendants.

          OPINION

          JOHN A. GIBNEY UNITED STATES DISTRICT JUDGE

         Family Dollar[1] either terminated or did not hire each of the three named plaintiffs based on the results of a background check. The plaintiffs contend that Family Dollar has violated the Fair Credit Reporting Act ("FCRA") by taking adverse action against job applicants before providing FCRA-required notice. The plaintiffs stake their claim on the assertion that the act of assigning an internal code to an applicant qualifies as an adverse action under the FCRA. The internal coding, however, does not amount to an adverse action against an applicant. Rather, it is simply one step in a process, and it may, in certain circumstances, trigger an FCRA notice. Even if the coding did amount to an FCRA violation, however, Family Dollar did not act willfully, precluding any relief in this case. Thus, the Court grants Family Dollar's motion for summary judgment.

         I. BACKGROUND[2]

         A. Family Dollar's Background Check Process

         As part of its hiring process, Family Dollar depends on job applicants' background checks. Throughout the background check process, Family Dollar uses the services of First Advantage Background Services, Corp. ("First Advantage"). Once a job applicant agrees to a background check, First Advantage, on behalf of Family Dollar, performs an investigation, compares the results with Family Dollar's stated hiring criteria, [3] and assigns a code to the applicant. The possible codes are (1) recommended, (2) decisional, or (3) not recommended. The applicants coded as recommended continue in the hiring process. The applicants coded as decisional go to Family Dollar's Background Check Committee (the "Committee") for review.

         To those applicants coded as not recommended, First Advantage sends a packet of information (the "First Letter Packet"). The First Letter Packet consists of three things: 1) a letter informing the applicant that the background check "may adversely affect your employment status, " 2) a copy of the applicant's background check, and 3) a description of the applicant's rights under the FCRA. (Halstead Am. Decl. Ex. A.) If the applicant does not lodge a dispute in response to the First Letter Packet, First Advantage-after at least five business days have passed since it sent the First Letter Packet-sends a second letter informing the applicant that "[Family Dollar] will not be able to offer or continue [the applicant's] employment at this time" (the "Second Letter"). (Halstead Am. Decl. Ex. B.) If, however, the applicant lodges a dispute with Family Dollar, the Committee conducts a review of the job application and the disputed background check. In 35% of dispute cases sampled, after review, the Committee changed the applicants' codes from not recommended to recommended[4]

         B. The Individual Defendants

         Three plaintiffs-Ramon J. Costa, Teresa Sanders, and Eric J. Duncan-have sued Family Dollar on behalf of themselves and all other similarly situated individuals.[5] Costa applied for a job with Family Dollar on March 20, 2013. On March 22, 2013, Family Dollar offered him a job contingent on successfully completing a background check, and Costa started that day. After reviewing Costa's background check, on April 1, 2013, First Advantage coded Costa as not recommended and sent the First Letter Packet. Costa did not file a dispute with either Family Dollar or First Advantage, so First Advantage sent the Second Letter on April 8, 2013. Costa denied receiving the Second Letter. Costa continued to work at Family Dollar until August 7, 2013, when Family Dollar fired him.

         Duncan applied for and received a job offer with Family Dollar on August 3, 2012, and he began work on August 5, 2012. After reviewing Duncan's background check, on August 4, 2012, First Advantage coded Duncan as not recommended and sent the First Letter Packet. Duncan did not file a dispute with either Family Dollar or First Advantage in response to the First Letter, so First Advantage sent the Second Letter on August 13, 2012. Duncan continued working for Family Dollar until Family Dollar fired him on August 17, 2012. Duncan says he received the Second Letter a couple of days after his termination.

         Finally, Sanders applied for a job with Family Dollar on January 10, 2013. After reviewing Sanders's background check, on January 11, 2013, First Advantage coded Sanders as not recommended and sent the First Letter Packet. Sanders did not file a dispute with either Family Dollar or First Advantage in response to the First Letter, so First Advantage sent the Second Letter on January 18, 2013. Sanders says she did not receive the Second Letter until discovery in this case.

         II. DISCUSSION[6]

         The FCRA establishes civil liability for actual and statutory damages for noncompliance with the notice requirement at issue here. When a consumer does not sustain any actual damages, he can still recover statutory damages, but only for a willful violation. Here, the plaintiffs do not seek actual damages. In order to prevail, therefore, they must prove a willful violation of the statute.

         A. Section 1681b(b)(3)(A)

         The plaintiffs in this case bring their claim under § 1681b(b)(3)(A) of the FCRA. Section 1681 b(b) sets conditions for furnishing and ...


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