Martin v. Fair Collections and Outsourcing, Inc.

Filing 29

MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 6/29/2015. (aos, Deputy Clerk)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

KEVIN D. MARTIN
Plaintiff,

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~m
~--=
JON ~ ~ ~~~

~Y(

~(8~~ti,_I;t

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FAIR COLLECTIONS &
OUTSOURCING, INC.

Case No.: G,JII-I-t-3191

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Defendant.

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MEMORANDUl\1 OPINION
Plaintiff Kevin Martin brings this two-count
& Outsourcing

Collections
U.S.c.

that FCO willfully or negligently
a consumer

conspicuous

explained

I.

Fair

See ECF NO.1 at

i 1. FCO

Act. 15

has moved to dismiss count one.

that Martin has failcd to state a claim. See ECF No. 11. In count one. Martin allegcs

contending

disclosurc.

against Dcfendant

(""FCO") as a class action under thc Fair Credit Reporting

~ 1681 el seq. (the "FCRA").

procured

complaint

disclosure

violated

report lor cmploymcnt

15 U.S.C. ~ 1681 b(b)(2) by procuring
purposcs

in writing to the consumer

without first providing

in a document

See id at ~ 53. A hearing is unnecessary.

or causing to be

a clcar and

that consisted

solely of thc

See Loc. R. 105.6 (Md.). For the rcasons

below. FCO's motion to dismiss is DENIED.

BACKGROUND
In August 2014. Plaintiff Kevin D. Martin intcrviewed

rco. See

Eel'

No. I at'i

fiJr a position with Defendant

18. FCO offercd Martin the position. See hI. As part ofthc

process. Martin signed a form entitled "Consent

to Request Consumcr

~

-...~t.:OOm:b

SOllthem D;l';s;oll

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*

;Pfl~O

hiring

Rcport and Investigativc

Consumer

Report Information"

perform background
Sterling

chccks on applicants

Infosystcms.
The disclosure

obtain a consumer
employment
employee

(the "disclosure

Inc. ("Sterling")

for employmcnt

fi.mn requires the potential

employcc

il1\'estigath'e

See ECF No. 1-3. The disclosure

to acknowledge

and uses the screening

to perfi.mn the background

report and/or consumer

purposes.

form"). See id at ~ 19. FCO uses this form to

check. See id at

to acknowledge

various other methods
are marked on Martin's

li.lr gathering
form.

1

'i 12.

that Sterling will

lorm also rcquircs the potential

that Sterling may obtain additional

background

infi.mnation

about the applicant

tools that could be uscd.

check. a searcb of a number of othcr databases.
information.

of

report and scnd it to FCO fi.,r

from a number of sources. See id The 10rIn goes on to list investigative
which includes a criminal

scn'ices

and

See id A total of eight of the investigativc

tools

See id The form then provides the following:

I acknowledge receipt of the attached summary of my rights undcr
the Fair Credit Reporting Act and. as rcquircd by law. any related
state summary 0 frights (collecti vel y "S ummarics 0 I' Rights").
This consent will not affect my ability to qucstion or disputc
thc accuracy
of any infi.mnation
containcd
in a Report. I
understand
if COMPANY
makcs a conditional
decision
to
disqualify mc based all or in part on my Rcport. I will bc provided
with a copy of the Report and anothcr copy of the Summarics of
Rights. and if I disagrce with the accuracy
of thc purported
disqualifying
information
in the
Report.
I must
notily
COMPANY within
five business
days of my receipt of the
Report that I am challenging the accuracy of such infi.mnation
with STERLING.
I hereby conscnt to this investigation
procure a Report on my background.

and authorize

COMPANY

to

In order to verify my identity for the purposes
of Report
preparation,
I am voluntarily releasing my date of birth. social

1 The selected investigative
tools are: criminal background check. SSN trace/address locator.
employment credit report. education veri fication. employment veri flcation. personal relerenee
veritlcation. professional license/certification.
and sex offender search.

2

security number and the other
that all employment
decisions
discriminatory
reasons.

information
arc based

and fully understand
on
legitimate
non-

The name. address and telephone number of the nearest unit of the
consumer
reporting
agency
designated
to handle
inquiries
regarding
the
investigative
consumer
report
is: Stcrling
Infosystems. Inc. I State Street. 24th Floor. J ew York. NY 10004
877-424-2457 or 5750 West Oaks Boulevard. Ste. 100
Rocklin. CA 95765 800-943-2589
or 6111 Oak Tree Boulc\'ard.
Independence. Oil 44131 1800-853-3228

See id The remainder of the form contains additional

information

See id It also requires the applicant to provide certain identifying
date the form. See id Finally. a summary

for residents of certain states.
ini(mnation

and to sign and

of rights is [(lUnd on the last two pages. See id The

form is a total of five pages.
Afier Martin signed the disclosure

I(mn. Sterling completed

See id at ~ 32. The resulting report inaccurately

August

14.2014.

arrested

I()r a felony offense on August 18.2007

On August

15.2014.

in Charleston.

the background

check on

stated that Martin had been
South Carolina. See id at

Martin received a letter from FCO rescinding

'i 33.

the offer of employment

,
along with a copy of the background
to dispute the background
his dispute.

II.

report. See id at'i 36.- Martin called both FCO and Sterling

report tindings.

Sterling stated that they ,,"ould respond to

Martin did not reeeive a reply and lost the job opportunity

at FCO. See id at 40-43.

STANDARD OF REVIEW
Federal Rule of Civil Procedure

dismiss

Although

12(b)(6) permits a defendant

for failure to state a claim upon whieh relief can be granted.

survive a motion to dismiss invoking

12(b)(6). "a complaint

to present a motion to
Fed. R. Civ. 1'. 12(b)(6). To

must contain sufficient

I~lctual

Coincidentally.
the Vice-President
I()r Colleetions at FCO. and signatory on the letter. is also
named Kevin Martin but is not related to the I'laintifI see ECF No. I at 36. or. the Court
assumes. to the Kevin Martin who was actually arrested on August 18. 2007.

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,
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matter. accepted as true .. to state a claim to relief that is plausible on its face .... Asherl!!; \'. l!fhal.
556 U.S, 662. 678 (2009) (ciling Bell Allalllic COlli. ". 1'll'OlIIhI)'. 50 U.S. 544. 570 (2007)). "/\
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claim has facial plausibility when the plaintiff pleads filctual content that allows the court to
draw the reasonable infcrcnce that the defendant is liable for thc misconduct allcgcd:' Id at 663.
"Thrcadbarc rccitals of thc clcmcnts of a causc of action. supportcd by mcrc conclusory
statcmcnts. do not sufficc:' /d. at 678-79; 7"l'omh~\'.550 U.S. at 545 ("a plaintitrs obligation to
provide thc 'grounds' of his 'cntitlelmcntj

to relicI' rcquircs morc than labels and conclusions.

and a formulaic rccitation ofa causc ofaction's

c1cmcnts will not do.").

Fed. R. Civ. P, 12(b)(6)'s purposc "is to test thc sufticicncy ofa complaint and not to
rcsolvc contcsts surrounding thc facts. thc mcrits of a claim. or thc applicability of dcf'cnscs:'
Presley \'. Cilyo(Charlolle.\Tille.

464 F.3d 480. 483 (4th Cir. 20(6) (citation and intcrnal

quotation marks omittcd). Whcn deciding a motion to dismiss undcr Rule 12(b)(6). a court "must
acccpt as truc all of the factual allegations eontaincd inthc complaint:' anclmust "draw all
rcasonablc inferences Ifrolll those facts I in favor of the plaintifr." 1:".1. d//

1'0111

de Nemo//rs & Co

\'. Kolonlndlls .. Inc.. 637 F.3c1435. 440 (4th Cir. 201 J) (citations and internal quotation marks
omitted), The Court nccclnot. howcvcr. acccpt unsupported legal allegations. see Re\'elle \'.
Charles CO//III)'COIl//n'1'.1'.882 F.2d 870. 873 (4th Cir. J 989). legal conclusions couchcd as
factual allcgations. "apasall \'. Allaill. 478 U.S. 265.286 (1986). or conclusory filctuai
allcgations dcvoid of any rcfercnce to actual cvcnts. Uniled mack Fire!ighlers 4Nor!iJlk \'.
/Iirsl, 604 F.2d 844. 847 (4th Cir. 1979).
III.

DISCUSSION

FCO movcs to dismiss count onc of Martin's Complain!. See ECF No. II. Count onc
allcgcs that FCO violated J 5 U.S,c. ~ J 681 b(b)(2) by "procuring or causing to bc procured a

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consumer report for employmcnt purposes without tirst providing a c1car and conspicuous
disclosurc in writing to the consumer in a document that consists solcly of the disclosure that thc
consumer report may be obtaincd for employment purposcs:' ECF No. I at

'1 53. FCO argues

that this count should be dismisscd for two main reasons. First. FCO contcnds. Martin cannot
allege a violation of the FCRA because the disclosure form provided to Martin clearly mects thc
requiremcnts of the FCRA as a matter of law . .'1"" ECF No. 11-1 at I. Sccond. evcn if the
disclosure fonll docs violate the FCRA, FCO argucs that Martin cannot recover bccause he has
neither alleged that FCO's negligencc in violating the statute caused him actual damagcs nor that
FCO acted willfully in violating thc statute . .'1"" itl. at 2.
A. The Disclosure Form
The Court will lirst address whcther Martin's Complaint statcs a claim that thc I'CO form
violates 15 U.S.c. ~ 168 Ib(b )(2). The FCRA was cnacted ..[t 10 saleguard the consumcr in
connection with the utilization of credit:' Pub. L. No. 90-321. 82 Stat. 146 (2003). Scction
1681b(b)(2)(A) providcs:
. . . a pcrson may not procurc a consumcr rcport. or causc a
consumcr report to be procured. ric)remployment purposes with
rcspect to any consumer. unless-(i) a clear and conspicuous disclosure has bcen madc in writing to
thc consumcr at any timc before the report is procured or caused to
be procured, in a document that consists so!,,!y of thc disclosure.
that a consumcr report may be obtaincd Ii))" employment purposes:
and
(ii) the consumer has authorized in writing (which authorization
may be made on the document relerred to in clause (i)) the
procurement of the report by that person.
15 U.S.c. ~ 1681b(b )(2)(A) (emphasis added)
FCO contends its disclosurc form complies with this statute . .'1"" ECF No. I I-I at 5-7.
Martin alleges that the form does not "solely" contain thc disclosure as required by law.

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S"" ECF

No. I at

'i~
20-30.

To resolve this dispute. the Court must consider what is meant by the word

"solely"' in the statute.
In interpreting a statute. the court tirst looks at whethcr the language has a plain and
unambiguous meaning. Robinson\". Shell Oil Co.. 519 U.S. 337. 340 (1997). "The plainness or
ambiguity of statutory languagc is determined by referencc to the language itsell: the spcci lic
contcxt in which that language is used. and the broader context of the statute as a whole:' Id at
341. "Solely" is defined by Merriam- Webster' s online dictionary as "without anything or anyone
else involved" and as ..to the exclusion of all else:' See ECF NO.1 at 6 n.l: .Iee also
hllp://lnnr.merriam-\1"ehsler.com/i/iclionw}'/solely.

Further. this speciJic statute has been

repeatedly addressed and interpreted by the Federal Trade Commission ("'FTC'). In one advisory
opinion. the FTC explained that "[ilt is our view that Congress intended that the disclosure not
be encumbered with extraneous information. However. some additional information. such as a
brief description of the nature of the consumer reports covered by the disclosure. may be
included if the information does not confuse the consumer or detract from the mandated
disclosure:' Advisory Opinion to Coffey. Feb. 11. 1998. amilahie al
hIIPS://IIWlljic.gol'lp()1

icy/a(h'i.ID1)'.opillions/a(h'is(II'.1'-()pi nion-cojf'e.I'-02 -11- 98. In anothcr

advisory opinion on the issue. the FTC stated that the disclosure notice and authorization may be
combined into one document. See Ai/I'i.WJI)' Opinion
hIIPS://I\'ll'lljic.gov/pol

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Hau.nrell. June 12. 1998. amilahie

i(J'/a(h'i.HII'.I'.opinions/mh'i.ml'.l'.opi

niOll.lwl(Xll'ell.06.12.98.

al

In that same

opinion the FTC cautioned that " ... the form should not contain any extraneous information:'
See id. In fact. the FTC explained that the inclusion ofa waiver by the consumer of his or her
rights under the FCRA in a disclosure form "will violate Section 604(b)(2)(A) of the FCRA"
becausc it is extraneous information. See ill. With the inclusion of the waiver. the form no longer

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consists '''solely' of the disclosure that a consumer report may be obtained for employment
purposes:' See hi. [n a third opinion on this topic. the FTC further advised that "Itlhe disclosure
may not be part of an employment application" because it would not be "in a document that
consists solely of the disclosure:' See Advisory Opinion to Leathers. Sept. 9. 1998. an/ilahle

al

h'Ips: /11, '1' '\ ,'..fi c.go, 'ipol i (~I'/(/l'"i,I'IJ1) '-opi n ions/a!'" i,I'IJ1)'-opin i oil-lea' he 1'.1'- 1)-()1)-1)8.
()

Here. in addition to the disclosure that the consumer report would be obtained for
employment purposes. FCO's form contains an authorizatioll to obtain the report. inf(lI'Ination on
when the applicant must challenge the aceuracy of any report. an acknowledgement that the
employee understands that 'all employment decisions are based on legitimate non-discriminatory
reasons: the name. address and telephone number of the nearest unit of the consumer reporting
agency designated to handle inquiries regarding the investigative consumer report. and several
pieces of state-specific information. See ECF No. 1-3. The form is a total of five pages. See iii.
With all of this information. there is no question that FCO's disclosure j()[In contains more than
a disclosure that the background check would be obtained and an authorization to obtain the
infomlation. Thus. under the plain language of the statute. FCO's disclosure form does not
contain "solely the disclosure:' and the Court cannot say. as a matter of law. that it is acceptable
under the FCRA. Plaintiff: therefore. states a claim that the disclosure f()[In violates the FCRA.
See Single/on\'.

Domino's

Pizza. LLC. DKC-II-1823.

2012 WL 245965 at *7-8 (D. r-vld.Jan.

25. 2012) (denying motion to dismiss claim that defendant violated FCRA' s disclosure
requirements where defendant's form contained more than the disclosure and authorizationnamely. a liability release-so

the defendant could not show. as a matter of law. that its form

complied with the FCRA): h1l/ <f SmUh \'. Wa\'erly Parlners. He. 3: IO-CY-00028-RLY -DSC.
2012 WL 3645324 at

*

6 (W.D.N.C. Aug. 23. 2012) (granting defendant summary judgmcnt

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alier finding inclusion
disclosure

of waiver was not permitted

and authorization

were nonetheless

that did not create so great a distraction

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under 15 U .S.c.

adequate

as to discount

16XI b(b)(2) but that the

because the waiver was a single sentence
the elTeetiveness

of the disclosure).

B, Willful Violation
rco

asserts that Martin's

claim should be dismissed

the FCRA because he has not sufticiently

requirements.

SI!I!

acted either negligently

*

15 U.S.c.

1681 o(a)(I)

damages

in cases of negligent

damages

in cases of willful noncompliance).

reasons explained
willful violation

*

of 15 U.S.c.

acts willfully

its statutory

unreasonable"

duty.

that a delCndant

requirements.

arc sut1icient

objectively

of the statute

may recover actual

1681 n (a)( I )(A) (providing

for statutory

Without negligent or w'illfulmiseonduct.

Satem

filS,

CO. I'.

!JurI'. 551 U.S. 47. 53 (2007).

the FCRA
For the

states a claim ttlI'. at least.

1681 b(b)(2)J
under the FCRA by either knowingly

Satem

filS.

or recklessly

Co.. 551 U.S. at 57-60. An "objeetively
!d. at 69-70.

was aware of the FCRA. but failed to comply with its

to support an allegation

of willfulness

and to avoid dismissal:'

2012 WI. 245965 at *4. Some courts have ItHlIld that a plaintiffsuflieicntly
unreasonable

SI!I!

the statute's

reading of the statute can lead to a linding ofrecklcssness.

"[A]ssertions

Sillgle/oll.

*

that a plaintilf

below. the Court finds that Plaintiffsuflieiently

A defendant
disregarding

Sl!1!

recover Itlr a violation

or willfully in violating

(providing

noncompliance):

does not provide lor any recovery.

form violates

alleged that FCO acted willfully or negligently.

ECl' No. II-I at 13-14. The FCRA permits a plaintilTto
only when a delendant

even if the disclosure

reading of 15 U.S.c.

*

16X I b(b)(2) when a delendant's

*

alleges an

disclosure

Itll'lll

3 Because Martin's claim sut1iciently alleges willful violation of 15 U,S.c.
16XI b(b)(2). the
claim survives rco's
motion to dismiss. and the Court will not address whether Martin's claim
sufliciently alleges a negligence violation,

contains anything

more than the disclosure

agcncy guidance"

demonstrate

1681 b(b )(2). Aloore

I'.

and authorization

because the "statute and available

that the inclusion of additional

information

violates

15 U .S.c. ~

Rite Aid lIeadquarters Corp .. 13-1515. 2015 WL 3444227 at

* 12 (E.n.

Pa. May 29. 2015).
Courts rcviewing

disclosure

fomls quite similar to the one in this case have denied

motions to dismiss for failure to state a claim for willful violation.

Diagnostics. -- r.supp.

2d --. 2:14-ev-04278-SRB.

See Miller

2015 WL 545506 at

I'.

f)uesl

* 3 (w.n.

i\lo. Jan. 28.

2015): ./ones \'. Halstead Mglllt. Co.. LLe. -- F.Supp. 3d --. No. 14-CV -3125 VEe. 2015 WL

*

366244 at
sufliciently

5-6 (Jan. 27. 2015). Speeilieally.
alleged a willful violation

state-mandated

consumer

though the defendant
rCRA disclosure

and authorization.

must challenge

employment

decisions

disclosures
straining

...

the accuracy

stretched

regarding

writing."

consumer

non-discriminatory
reporting

report' ...

agreeing

as to be "objectively

only of the

3. Similarly.

in ./one.\. the

time frames \\"ithin \\hich

rcasons';

that 'all
thc name. address

agency designated

to handle

; and all sorts of state-specific
form to two full pages of eye-

See ./ones. 2015 WL 366244 at

a claim for willful violation.

marks omitted);

*

of any report; an acknowledgement

what should be a simple disclosure

so far from the FCRA requirement
quotation

of"in!llrlnation

are based on legitimate

included

sections. and release language even

See .\liller. 2015 WL. 545506 at

inclusion

the investigative

tiny typeface

the plaintiffstated

alleged that the defendant

administrative

of .the nearest unit of the consumer

regarding

that the plaintiff had

knew that they were required to use a fill'ln that consisted

the applicant

inquiries

where the complaint

report information.

court stated that the disclosure's

and telephone

the court in ,I/iller determined

*

6. Thus. the court fl)lllld that

with the plaintifTthat
unreasonable,"

the tlll'ln deviated

See id (internal

See also Speer \', Whole Food Market Group. Inc.. 8: 14-cv-3035-T-

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26TI3M. 2015 WL 145698 I at

* 4 (M.D.

had access to legal advice and guidance
conduct was inconsistent
withstand

from the Federal Trade Commission

with that guidance

more information

than would seem to be acceptable

under 15

~~ 25- 18. The Court agrees. Martin's

form violated the FCRA because of the statutory

complaint

violation
reasonable

dismissal
of 15

at

* 12 (.....

conduct was objectivcly

state of the law and thus plaintilThas

advisory

plaintiffs

unreasonable

language

See it!. at

opinions.

states a claim for willful violation

~ 1681 b(b)(2). Compare Moore. 2015 WL 3444227
to show that defendant"s

U.s.c. ~ 1681 b(b)(2).

Martin alleges that FCO knew or

of 15 U.S.c. ~ 168\ b(b)(2). see ECF No. \ at ~ 24. and the FTes

(aflirming

to

form. being almost identical to those in ,lliffer and .folies.

should have known that the disclosure

168 I b(b)(2)(A):'):

yet it knew that its

on a motion to dismiss:').4

which requires the form to consist "solely of the disclosure:'

surticient

that Detendant

and the plain terms of the statute. arc surticient

attack at this stage of the proceedings

Here. FCO's disclosure
contained

Fla. Mar. 30. 2015) ("'The allegations

of 15 U .S.c.

allegations

arc

in light of the clear

stated a plausible claim for a willful violation

of ~

\l"ill1 Shlal1licl1mall ,.. I-SOO Comacls. IlIc .. 6 15 F.3d 794. 803 (7th Cir. 20 I0)
where allegations

u.s.c. ~ 168Ic(g)

of willfulness

because defendant"s

and there had been no contrary opinion

defendant" s interpretation

were insurticient

to state a claim Il)r

reading of the statute was objccti,.e1y

Ii.om a court or federal agency suggesting

the

was wrong): cl Reardoll \.. Cfosel Maid CorfJ.. 2:08-c,.-0 1730. 2013

4 In support of dismissal. FCO provided the Court with an order issued in I'eikofr, .. l'ar{l/IlOlI/1/
I'iclllres COIl'.' 15-cv-68. (N.D. Cal. Mar. 25. 2015). where the court flnmd that the plaintiff
failed to state a claim that the defendant had acted in willful violation of 15 U.S.c. ~
168 I b(b )(2). There. the employment disclosure included a certilication that the information was
true and correct. The court determined that the one-sentence cel1ilication was in the same
paragraph as the disclosure and was related to the disclosure and the claim I~liled to plausibly
allege a reckless violation. Given the lack of similarity to this case. and thc brevity of the order.
the Court does not lind this order persuasive.

10

WL 6231606 at

*

9 (W.D. Pa. Dec. 2, 2013) (granting summary judgment in plaintilTs favor on

the issue of willful violation where disclosure form contained waiver of rights because statute
and agency guidance was clear that disclosure form could only contain disclosure and
authorization, making defendants interpretation objectively unreasonable).
IV,

CONCLUSION
For the reasons discussed above, Defendant FCO's Motion to Dismiss count one of

Plaintiffs Complaint. ECF No. II, is DENIED.
A separate order shall lollow.

Dated: June

ft. 2015

George J. Hazel
United States District Judge

II