On April 19, 2022, a California Appeals Court reversed and remanded a trial court’s grant of summary judgment in an employer’s favor, concluding there was a triable issue of material fact regarding whether a defendant had “willfully” violated the Fair Credit Reporting Act’s (“FCRA”) “standalone disclosure” requirement.  The case is Hebert v. Barnes & Noble, Inc., No. D079038.

Background

The FCRA permits background checks for purposes of employment so long as employers obtain authorization from the person subject to the background check and furnish an appropriate disclosure and comply with certification and notice requirements. FCRA standalone disclosure cases have proliferated in recent years.  Of course, an important issue in these cases is whether the employer’s violation is “willful.”  The U.S. Supreme Court held in Safeco Ins. Co. of America v. Burr that willfulness under the FCRA requires a plaintiff to show that the defendant’s conduct was “intentional” or “reckless.”  Willful violations can lead to recovery of statutory damages ranging from $100 to $1,000 per violation.

California Appeals Court Decision

A recent decision out of the California Appeals Court addressed the willfulness standard under the FCRA.  The plaintiff filed suit in the Superior Court of San Diego County alleging the defendant willfully violated the FCRA by providing job applicants with a disclosure form that included extraneous language unrelated to the topic of consumer reports (i.e., background checks).  Defendant moved for summary judgment, arguing that no reasonable jury could find its alleged FCRA violation was willful because the extraneous information in its disclosure was due to an inadvertent drafting error.  The trial court agreed, and granted the motion for summary judgment, and plaintiff appealed.

The California Court of Appeals reversed, concluding that plaintiff had proffered sufficient evidence from which a reasonable jury could find a willful violation under the FCRA.  The Court focused on the fact that: (i) one of defendant’s employees was aware the extraneous language would be included in the disclosure and he reviewed the disclosure before it was issued; and (ii) defendant used the disclosure for nearly two years.

Defendant argued that the employee who reviewed the disclosure form was a “non-lawyer” who was not well-versed in FCRA requirements and received only “general” training on the FCRA. Unpersuaded, however, the court noted that a jury could find that defendant acted recklessly by “delegating all of its FCRA compliance responsibilities to a human resources employee who, by his own admission, knew very little about the FCRA.”  The court also rejected defendant’s argument that it had no reason to know its disclosure form violated the FCRA because it received no complaints from job applicants. The court noted that the defendant’s prolonged use of the disclosure form could suggest recklessness because the defendant lacked a proactive and routine monitoring system to guarantee FCRA compliance.

Implications

This decision identifies the types of conduct on which a court might rely in potentially concluding that a violation of the FCRA was willful.  Moreover, it could serve to persuade plaintiffs to pursue class-wide FCRA stand-alone disclosure claims.

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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular…

Steven J. Pearlman is a partner in the Labor & Employment Law Department and Co-Head of the Whistleblowing & Retaliation Group and the Restrictive Covenants, Trade Secrets & Unfair Competition Group.

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Steven was recognized as Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers.  Chambers describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a “Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly quoted in leading publications such as The Wall Street Journal.

The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.

Photo of Edward Young Edward Young

Edward “Eddie” C. Young is a senior counsel in the Labor & Employment Law Department and a member of the following Firm practice groups: Restrictive Covenants & Trade Secrets; Discrimination, Harassment & Title VII; and Whistleblowing & Retaliation.

Eddie represents employers in all…

Edward “Eddie” C. Young is a senior counsel in the Labor & Employment Law Department and a member of the following Firm practice groups: Restrictive Covenants & Trade Secrets; Discrimination, Harassment & Title VII; and Whistleblowing & Retaliation.

Eddie represents employers in all aspects of employment law, with a concentration on litigating complex employment disputes of all types before federal and state courts throughout the country, the U.S. Equal Employment Opportunity Commission, state and local human rights commissions and arbitral tribunals (e.g., FINRA and AAA).  In particular, Eddie has successfully litigated employment-related disputes alleging breach of non-compete agreements, theft of trade secrets, discrimination, sexual harassment, whistleblower retaliation, wage and hour violations, including employee misclassification claims, breach of contract, defamation, fraud and other business-related torts.  Eddie has obtained a world-wide injunction to enforce a client’s non-competition restriction on a former executive, successfully defended a client through summary judgment and appeal against retaliation claims brought by a former General Counsel, represented Fortune 500 companies in defense of high-profile harassment claims associated with the #metoo movement, and provided representation to several professional sports leagues.  He also has significant appellate experience, including successfully representing clients before the U.S. Circuit Court of Appeals for the First, Second and Seventh Circuits, as well as before the United States Supreme Court.  Eddie often draws on his litigation experience to help clients avoid the courtroom by effectuating positive change in the workplace through impactful training, counseling and developing robust employment policies.

Working in a wide range of industries, Eddie represented clients in food services, financial services, medical devices, telecommunications, higher education, sports, retail, real estate and others.

Eddie has been recognized as “One to Watch” by Best Lawyers in America since 2021 and as a “Rising Star” by Super Lawyers since 2017. He also regularly advises clients, writes and speaks on cutting-edge legal issues, including the use of Artificial Intelligence in the workplace, and legal issues arising from the collection and use of employee biometric information.

Eddie maintains an active pro bono practice, including on-going representation of a certified class of approximately 65,000 visually disabled Chicagoans in litigation challenging the City’s lack of accessible pedestrian crosswalks.  Eddie is also a member of the Firm’s Pro-Bono Committee and is a three-time recipient of the Firm’s “Golden Gavel” award for his significant pro bono contributions.

Prior to joining Proskauer, Eddie was a cum laude graduate from Loyola University Chicago School of Law. He also obtained a Master’s Degree in Human Resources and Industrial Relations from Loyola University Chicago Graduate School of Business. He began his practice at a national management-side employment law firm, and has also worked in the corporate human resources department of a national tax consulting firm and as a Fellow with the Illinois Human Rights Commission.