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, __ ~m ~--= JON ~ ~ ~~~ ~Y( ~(8~~ti,_I;t * \'. FAIR COLLECTIONS & OUTSOURCING, INC. Case No.: G,JII-I-t-3191 * * * Defendant. * * * * * * * * * * * * * 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 * * ;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 requires the potential employcc il1\'estigath'e See ECF No. 1-3. The disclosure to acknowledge and uses the screening to 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 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. 'i 2 , J 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)). "/\ 5 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 4 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. 5 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 the exclusion of all else:' See ECF NO.1 at 6 n.l: .Iee also hllp://lnnr.merriam-\1"}'/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' 10 Hau.nrell. June 12. 1998. amilahie i(J'/a(h'i.HII'.I'.opinions/mh''.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 6 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' '\ ,' 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 7 alier finding inclusion disclosure of waiver was not permitted and authorization were nonetheless that did not create so great a distraction * 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- 9 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 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

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