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Henderson v. Corelogic National Background Data, LLC

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

September 2, 2016



          Robert E. Payne Senior United States District Judge

         This matter is before the Court on PLAINTIFFS' RENEWED MOTION FOR CLASS CERTIFICATION (ECF No. 281) . For the reasons set forth herein, the motion will be denied.


         On July 16, 2015, Plaintiffs Tyrone Henderson ("Henderson") and James Hines ("Hines") (collectively, "Plaintiffs") filed a Second Amended Class Action Complaint on behalf of themselves and all others similarly situated, alleging that Defendant National Background Data, LLC ("NBD") had violated the Fair Credit Reporting Act ("FCRA"). (Second Amended Complaint ("SAC"), ECF No. 191). The SAC alleges two Counts under the FCRA. Count One alleges, on behalf of a putative nationwide class, that NBD violated the FCRA by failing to "maintain strict procedures" to ensure that the public records it provided to its customers were "complete and up to date" and by failing to notify consumers when such records were provided about them, in violation of 15 U.S.C § 1681k(a). Count Two, an individual claim on behalf of Henderson and Hines, alleges that NBD failed to use reasonable procedures to assure maximum accuracy of its reports, in violation of U.S.C. § 1681e(b).

         Plaintiffs now seek to certify the following class:

All natural persons residing in the United States (a) who were the subject of a report sold by NBD to Verifications, ADP or HR Plus, (b) where NBD's Results Returned database indicates that it was furnished for an employment purpose (Code 6), (c) where NBD's Results Returned database showed that the report contained at least one adverse criminal record "Hit, " (d) within five years next preceding the filing of this action and during its pendency...[excluding] any employees, officers, directors of Defendant, any attorney appearing in this case, and any judge assigned to hear this action.

(ECF No. 282).

         Plaintiffs also contend that, should the Court find that the foregoing class does not meet the requirements of Fed.R.Civ.P. 23, the Court should certify one or more of Plaintiffs' three proposed subclasses, defined as follows:

SUBCLASS 1: (i) NBD's Results Returned database shows a criminal record hit from a Virginia General District Court; (ii) NBD did not return a SSN to its customers; and (iii) the computer database of the Executive Secretary of the Supreme Court of Virginia contains a SSN or Drivers License number associated with that criminal record.
SUBCLASS 2: (i) NBD's Results Returned database shows a criminal record hit from a [Pennsylvania] General District Court; (ii) NBD did not return a SSN to its customers; and (iii) the computer database of the Pennsylvania Administrative Office of Pennsylvania Courts (AOPC) contains a SSN associated with that criminal record.
SUBCLASS 3: (i) NBD's Results Returned database show [sic] a criminal record hit from a state Sex Offender Registry; (ii) where the age and/or date of birth provided for that consumer by Verifications, ADP or HR Plus did not match the age and/or date of birth contained in that State's publically accessible Sex Offender Registry.


         Because Plaintiffs failed to provide NBD with notice of some important evidence underlying the subclasses, NBD was denied the opportunity to conduct discovery necessary to fully brief that issue. Therefore, Plaintiffs' motion will be denied without prejudice as to the three subclasses, and the parties will be given an opportunity to conduct expedited discovery as to the viability of the subclasses. However, for the reasons set forth below, Plaintiffs' motion will be denied with prejudice as to the putative nationwide class.


         NBD is a company that provides its customers access to a database ("The Multistate Database" 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 (ECF No. 195), Statement of Undisputed Facts ("SOF") ¶ 18). NBD's customers, which in this instance are consumer 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 are responsive to 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 often contain only limited identifying information. For example, public records purchased in bulk rarely, if ever, contain Social Security Numbers ("SSNs") . Id. ¶¶ 16-17. Based on the reports generated by NBD in response to queries regarding Plaintiffs, it is clear that the records sometimes also lack other identifying data such as middle names or addresses. (ECF No. 196 Exs. 13, 14). Therefore, the portions of the public records that are in the Multistate Database often are not sufficient to link the data supplied with the particular consumer to whom the records pertain. ECF No. 195, SOF ¶¶ 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 independently to verify the records returned in response to their search queries before providing consumer reports to their clients. Id. ¶¶ 8-15.

         Henderson and 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. (SAC ¶ 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. ¶ 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. (ECF No. 195, SOF ¶ 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 M 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. ¶ 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. (ECF No. 195, 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 that it provided to CareSouth. As a result of the incorrect information, Hines was not hired for the position at that time. Id. ¶ 5.


         To obtain class certification, a plaintiff must satisfy the four requirements of Fed.R.Civ.P. 23(a). Additionally, the proposed class must be consistent with at least one of the types of class actions delineated in Fed.R.Civ.P. 23(b), and must meet the corresponding prerequisites for certification. However, before the Court undertakes the Rule 23 analysis, there are three threshold disputes to be resolved.

         A. Standing

         To begin, NBD contends that "Plaintiffs cannot establish Article III standing for the absent class members." (Defendant's Memorandum in Opposition to Plaintiffs' Renewed Motion for Class Certification ("Def. Mem. in Opp., " ECF No. 296) at 19) . More specifically, says NBD, every class member must "establish that any return of incomplete records by NBD caused him or her 'concrete' and 'particularized' harm sufficient to establish Article III standing." Id. (citing Spokeo v. Robins, 136 S.Ct. 1540 (2016)). Before proceeding to the merits of the motion, the Court must first resolve any issues relating to standing because that issue affects the Court's subject matter jurisdiction.

         The Court need not delve into the issue of absent class members' standing here, however, because NBD's argument simply misapprehends the role of constitutional standing in the class action context. There is no dispute that the named plaintiffs- that is, Henderson and Hines-have standing; therefore, there is a justiciable case and controversy between the parties before the Court. That is all that Article III requires. See, e.g., ProEnglish v. Bush, 70 F.App'x 84, 87 (4th Cir. 2003) (quoting Harris v. Evans, 20 F.3d 1118, 1121 (11th Cir. 1994)) (observing that the "'central purpose of the standing requirement [is] to ensure that the parties before the court have a concrete interest in the outcome of the proceedings such that they can be expected to frame the issues properly.'") (emphasis added).

         Thus, given that Henderson and Hines indisputably have standing, NBD's argument concerning whether, and to what extent, the absent class members have suffered harm is more aptly characterized as identifying perceived differences between the named plaintiffs' claims and the claims of the absent class members: in other words, NBD's standing argument really presents issues that are pertinent to the questions of predominance, typicality, and adequacy of representation, which must be analyzed under Fed.R.Civ.P. 23.

         The leading class action treatise has succinctly explained this distinction, noting that, although the constitutional requirement of standing and the statutory prerequisites of Rule 23(a) "appear related as they both aim to measure whether the property party is before the court to tender the issues for litigation, " "whether or not the named plaintiff who meets individual standing requirements may assert the rights of absent class members is neither a standing issue nor an Article III case or controversy but depends on meeting the prerequisites of Rule 23 governing class actions." Alba Conte & Herbert Newberg, Newberg on Class Actions § 2:6 (5th ed. 2013) (hereafter "Newberg § ___") . Therefore, Rule 23, rather than Article III, is the appropriate rubric for evaluating these differences because, "while standing doctrine is primarily concerned with ensuring that a real case or controversy exists, Rule 23(a)'s requirements are designed precisely to address concerns about the relationship between the class representative[s] and the class." Id. Accordingly, to the extent that injury (or lack thereof) to absent class members is relevant to the Rule 23 analysis, it is addressed in more detail below.

         B. Incompleteness is a Required Element of ...

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