Theriot v. The Mundy Companies, Inc.
MEMORANDUM OPINION AND ORDER granting 9 Mundy's MOTION for Summary Judgment.(Signed by Judge Kenneth M Hoyt) Parties notified.(chorace)
United States District Court
Southern District of Texas
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
TREMANIE THERIOT, individually,
and on the behalf of all others similarly
MUNDY COMPANIES, INC.,
January 20, 2017
David J. Bradley, Clerk
CIVIL ACTION NO. 4:15-CV-2481
MEMORANDUM OPINION AND ORDER
Pending before the Court is the defendant’s, Mundy Companies Inc. 1 (“Mundy”), motion
for summary judgment. (Dkt. No. 9). The plaintiff, Tremanie Theriot (“Theriot”), has filed a
response in opposition to the motion (Dkt. No. 11); and Mundy has filed a reply (Dkt. No. 12).
After having carefully evaluated the motions, the record, the undisputed facts and the applicable
law, the Court hereby GRANTS Mundy’s motion for summary judgment.
Theriot brings this putative class action lawsuit against Mundy, under the Fair Credit
Reporting Act (“FCRA” or the “Act”), 15 U.S.C. § 1681 et seq. The complaint alleges that
Mundy, an industrial contractor, violated the Act by obtaining consumer reports on job
applicants and employees of the company without first complying with the Act’s notice
Mundy moves for summary judgment on all counts, raising the following
questions: (1) whether including a release of liability in an FCRA-regulated disclosure document
violates clause (i) of § 1681b(b)(2)(A)(i)-(ii), and if so, (2) whether such a violation is willful.
While Theriot’s complaint incorrectly named Mundy as “Mundy Companies Inc.,” the Court notes the defendant’s
corrected name as provided in its motion, Mundy Maintenance Services and Operations, LLC.
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Mundy is a staffing company that provides contract workers and flexible work forces to
large and small companies across the United States. Some of Mundy’s customers require
criminal background checks to be performed on prospective employees. Mundy often times rely
on the results of these background checks when dealing with future and existing employees.
Mundy hired third party consumer reporting agencies to assist with background checks. These
third parties provided Mundy with FCRA forms, compliance updates, and reports on the
candidates. These reports constitute “consumer reports” for purposes of the FCRA.
Theriot has been employed by Mundy on numerous occasions.
The last of these
occasions was on April 23, 2014. In conjunction with her last employment assignment, Mundy
required Theriot to execute two documents: (1) the Notice to Applicants Regarding Consumer
Report (“Applicant Notice”) (Dkt. No. 9, Ex. A) and; (2) the Candidate Notification (“CN”) (Dkt.
No. 9, Ex. B). There is no dispute that Theriot signed both documents. Once these documents
were executed Mundy conducted a criminal background check on Theriot as part of its
employment screening process.
Before conducting a background check, Mundy was required to make a disclosure that
complied with § 1681b(b)(2)(A). Both the CN and the Applicant Notice state that, as a condition
of employment, Mundy will perform a background check on the applicant. These notices also
state that these background checks will be secured via a consumer report and require all
applicants to consent to a criminal background check.
The CN specifically includes the
following language: “I voluntarily waive all recourse and release the requested parties from
liability for complying with the request/release.” (Dkt. No. 1, Ex. B).
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On August 27, 2015, Theriot filed a two-count class action complaint against Mundy on
behalf of job applicants and employees who were the subject of a consumer report procured by
Mundy. This putative class action lawsuit was filed under the FCRA. Count one alleges that
Mundy failed to comply with § 1681b(b)(2)(A)(i)’s formatting requirements for disclosing that a
consumer report might be obtained; and, count two asserts that Mundy procured the reports
without proper authorization under § 1681b(b)(2)(A)(ii).
Theriot further alleges that these
violations were willful, triggering an award of statutory and punitive damages, attorney’s fees
and costs under § 1681n(a)(3).
Having answered the complaint, Mundy now moves for
summary judgment on all counts.
CONTENTIONS OF THE PARTIES
A. The Defendant’s Contentions
Mundy contends that Theriot based its complaint upon the wrong document. Mundy
argues that it used the Applicant Notice to secure Theriot’s consumer report information and not
the CN, as alleged by Theriot. Mundy contends that the Applicant Notice complies with the
FCRA’s basic requirements under § 1681b(b)(2)(A)(i)-(ii) because it: is a single, one-page
document that; contains a clear and conspicuous disclosure that a background check will be
performed; and, obtains the necessary authorization to conduct the check. Mundy further argues
that the Applicant Notice does not contain any release language and in no way is voided nor
nullified by the CN. Alternatively, Mundy argues that even if the Court finds that it violated the
FCRA, Theriot cannot establish that the violation was willful, a requirement for recovering
statutory and punitive damages. Mundy maintains that Theriot cannot demonstrate that the
decision to include the liability release was objectively unreasonable given the competing
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interpretations of § 1681b(b)(2)(A) at the time its disclosure form was in use. Mundy moves for
summary judgement on all of Theriot’s claims.
B. The Plaintiff’s Contentions
Theriot alleges that Mundy violated 15 U.S.C. § 1681b(b)(2)(A)(i) by procuring
consumer reports on Theriot and other putative class members for employment purposes, without
first making proper disclosures in the format required by the statute. Theriot alleges that the
inclusion of a liability release in the CN failed to adhere to the FCRA’s stand-alone disclosure
and authorization requirements. Theriot further claims that the violation of the stand-alone
disclosure essentially voided the CN making any authorization she provided void as well. On the
question of willfulness, Theriot argues that Mundy had sufficient knowledge of its FCRA duties
and responsibilities, which serves to establish that it willfully violated those duties. On behalf of
herself and the class, Theriot seeks statutory damages and attorneys’ fees, urging the Court to
deny the defendant’s motion for summary judgment.
LEGAL STANDARD AND APPLICABLE LAW
A. Standard for Summary Judgment
Rule 56 of the Federal Rules of Civil Procedure authorizes summary judgment against a
party who fails to make a sufficient showing of the existence of an element essential to the
party’s case and on which that party bears the burden at trial. See Celotex Corp. v. Catrett, 477
U.S. 317, 322 (1986); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc).
The movant bears the initial burden of “informing the Court of the basis of its motion” and
identifying those portions of the record “which it believes demonstrate the absence of a genuine
issue of material fact.” Celotex, 477 U.S. at 323; see also Martinez v. Schlumber, Ltd., 338 F.3d
407, 411 (5th Cir. 2003). Summary judgment is appropriate where “the pleadings, the discovery
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and disclosure materials on file, and any affidavits show that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
If the movant meets its burden, the burden then shifts to the nonmovant to “go beyond the
pleadings and designate specific facts showing that there is a genuine issue for trial.” Stults v.
Conoco, Inc., 76 F.3d 651, 656 (5th Cir. 1996) (citing Tubacex, Inc. v. M/V Risan, 45 F.3d 951,
954 (5th Cir. 1995); Little, 37 F.3d at 1075). “To meet this burden, the nonmovant must
‘identify specific evidence in the record and articulate the ‘precise manner’ in which that
evidence support[s] [its] claim[s].’” Stults, 76 F.3d at 656 (citing Forsyth v. Barr, 19 F.3d 1527,
1537 (5th Cir.), cert. denied, 513 U.S. 871, 115 S. Ct. 195, 130 L. Ed.2d 127 (1994)). It may not
satisfy its burden “with some metaphysical doubt as to the material facts, by conclusory
allegations, by unsubstantiated assertions, or by only a scintilla of evidence.” Little, 37 F.3d at
1075 (internal quotation marks and citations omitted). Instead, it “must set forth specific facts
showing the existence of a ‘genuine’ issue concerning every essential component of its case.”
American Eagle Airlines, Inc. v. Air Line Pilots Ass'n, Intern., 343 F.3d 401, 405 (5th Cir. 2003)
(citing Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998)).
“A fact is material only if its resolution would affect the outcome of the action, . . . and
an issue is genuine only ‘if the evidence is sufficient for a reasonable jury to return a verdict for
the [nonmovant].’” Wiley v. State Farm Fire and Cas. Co., 585 F.3d 206, 210 (5th Cir. 2009)
(internal citations omitted). When determining whether a genuine issue of material fact has been
established, a reviewing court is required to construe “all facts and inferences . . . in the light
most favorable to the [nonmovant].” Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536,
540 (5th Cir. 2005) (citing Armstrong v. Am. Home Shield Corp., 333 F.3d 566, 568 (5th Cir.
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2003)). Likewise, all “factual controversies [are to be resolved] in favor of the [nonmovant], but
only where there is an actual controversy, that is, when both parties have submitted evidence of
contradictory facts.” Boudreaux, 402 F.3d at 540 (citing Little, 37 F.3d at 1075 (emphasis
omitted)). Nonetheless, a reviewing court is not permitted to “weigh the evidence or evaluate the
credibility of witnesses.” Boudreaux, 402 F.3d at 540 (quoting Morris, 144 F.3d at 380). Thus,
“[t]he appropriate inquiry [on summary judgment] is ‘whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one party must
prevail as a matter of law.’” Septimus v. Univ. of Hous., 399 F.3d 601, 609 (5th Cir. 2005)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251 – 52, (1986)).
ANALYSIS AND DISCUSSION
It is undisputed that on April 23, 2014, as a condition of her employment with Mundy,
Theriot received and signed both a CN and an Applicant Notice. After the forms were executed,
Mundy procured a criminal background check on her. Theriot alleges that Mundy violated the
Act by including a liability release in the CN. Mundy argues that these claims are unfounded
because they also provided and relied on an Applicant Notice. Whether or not Mundy relied on
the CN or the Applicant Notice to procure a background check on Theriot is of no consequence.
The fact remains that Mundy provided the CN and Theriot executed it. In light of the undisputed
facts, the Court now turns to the remaining legal questions raised by the pending motion: (1)
whether the inclusion of a liability release on the CN violates the stand-alone disclosure
requirement of § 1681b(b)(2)(A)(i)-(ii) and if so, (2) whether that violation was willful as a
matter of law.
A. Fair Credit Reporting Act
The FCRA, enacted in 1970 and codified at 15 U.S.C. § 1681 et seq., has the stated
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purpose of safeguarding consumers in connection with the utilization of credit. See Safeco Ins.
Co. of Am. v. Burr, 551 U.S. 47, 127 S. Ct. 2201, 167 L.Ed.2d 1045 (2007). Congress affected
this goal by limiting the release of consumer reports for certain enumerated purposes. See 15
U.S.C. § 1681b(a). Section 1681b(b) sets forth the conditions for furnishing and using consumer
reports for employment purposes. According to one of those conditions:
[A] person may not procure a consumer report, or cause a consumer report to be procured, for
employment purposes with respect to any consumer unless—
(i) a clear and conspicuous disclosure has been made in writing
to the consumer at any time before the report is procured or
caused to be procured, in a document that consists solely of the
disclosure, that a consumer report may be obtained for
employment purposes (emphasis added); and
(ii) the consumer has authorized in writing (which
authorization may be made on the document referred to in
clause (i)) the procurement of the report by that person.
15 U.S.C. § 1681b(b)(2)(A). Anyone who “willfully fails” to
comply with FCRA requirements is civilly liable to the
(1)(A) any actual damages sustained by the consumer as a
result of the failure or damages of not less than $100 and not
more than $1,000; or
(B) in the case of liability of a natural person for obtaining a
consumer report under false pretenses or knowingly without a
permissible purpose, actual damages sustained by the consumer
as a result of the failure or $1,000, whichever is greater;
(2) such amount of punitive damages as the court may allow;
(3) in the case of any successful action to enforce any liability
under this section, the costs of the action together with
reasonable attorney’s fees as determined by the court.
15 U.S.C. § 1681n(a).
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B. Mundy Violated § 1681b(b)(2)(A)(i)-(ii)
It is clear to the Court that Mundy violated the Act when it included the liability release in
the CN. As previously stated by this Court, inclusion of a liability release as part of a §
1681b(b)(2)(A)-governed disclosure violates the FCRA.
See Landrum v. Harris Cty.
Emergency Corps, 122 F. Supp. 3d 617 (S.D. Tex. 2015). “[A] disclosure meets the FCRA’s
stand-alone requirement when it consists of the words creating the disclosure itself, to the
exclusion of all other information.” Id. at 624. The sufficiency of Mundy’s disclosure turns on
the meaning of the word “solely” in clause (i) and whether including a liability release as part of
that disclosure is consistent with that definition. This Court previously defined the word
“solely” to mean “without another” and “to the exclusion of all else.” Id.
Principles of statutory construction lead this Court to conclude that the inclusion of a
liability release as part of a § 1681b(b)(2)(A)-regulated disclosure violates the FCRA. “The
preeminent canon of statutory interpretation requires [the Court] to ‘presume that [the]
legislature says in a statute what it means and means in a statute what it says there.’” BedRoc
Ltd. v. United States, 541 U.S. 176, 183, 124 S. Ct. 1587, 158 L. Ed. 2d 338 (2004) (citation
omitted). Accordingly, “[w]hen faced with questions of statutory construction, ‘[the Court]
must first determine whether the statutory text is plain and unambiguous’ and, ‘[i]f it is, [the
Court] must apply the statute according to its terms.’” Asadi v. G.E. Energy (USA), L.L.C., 720
F.3d 620, 622 (5th Cir. 2013) (citing Supreme Court cases). “The plainness or ambiguity of
statutory language is determined by reference to the language itself, the specific context in
which that language is used, and the broader context of the statute as a whole. If the statutory
text is unambiguous, [the Court’s] inquiry begins and ends with the text.” Id. (internal citations
and quotation marks omitted). “In construing a statute, a court should give effect, if possible, to
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every word and every provision Congress used.”
Yet, “[l]ike other canons, the
antisuperfluousness canon is merely an interpretive aid, not an absolute rule.” Id. (quoting
Corley v. United States, 556 U.S. 303, 325, 129 S. Ct. 1558, 173 L. Ed. 2d 443 (2009) (Alito, J.,
The Court assumes that the legislative purpose of the FCRA is “expressed by the ordinary
meaning of the words used.” Burlington N. & Santa Fe Ry. Co. v. Poole Chem. Co., 419 F.3d
355, 362 (5th Cir. 2005) (internal quotation marks omitted) (citing Am. Tobacco Co. v.
Patterson, 456 U.S. 63, 68, 102 S. Ct. 1534, 71 L. Ed. 2d 748 (1982)). Deference to the
common definition of “solely”, and by it the first canon of statutory construction, compels the
conclusion that a disclosure meets the FCRA’s stand-alone requirement when it consists of the
words creating the disclosure itself, to the exclusion of all other information. Mundy’s CN fails
Count two of Theriot’s complaint alleges that Mundy failed to comply with the FCRA
requirement that an employer obtain an authorization in writing from the individual prior to
procuring a consumer report. Mundy maintains that the inclusion of authorization language in
the disclosure statement confirms the validity of the authorization. This argument falls flat.
The mere presence of authorization language in and of itself is not enough to clear the hurdle of
obtaining proper authorization. Clauses (i) and (ii) of 15 U.S.C. § 1681b(b)(2)(A) must be read
in conjunction with one another. Moreover, a violation of one clause would lead to the violation
of both clauses. Although it may seem that Theriot attempted to authorize the procuring of her
consumer report, Mundy’s violation of the stand-alone requirement in clause (i) made it
impossible for Theriot to provide the proper authorization. Thus, the Court holds Mundy failed
to obtain the required authorization before procuring the consumer report.
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C. Mundy’s Violation Was Not Willful
As previously stated, Mundy’s CN violates the stand-alone requirement of the FCRA, but
that is just one prong of the test. To recover statutory and punitive damages, as Theriot seeks in
this case, a plaintiff must also show that a defendant has “willfully” violated the FCRA. 15
U.S.C. § 1681n(a). The Supreme Court has held that willful violations of the Act include both
intentional and reckless violations of the law. See Safeco, 551 U.S. at 52, 57-60, 127 S. Ct.
2201. “[A] company subject to [the] FCRA does not act in reckless disregard of it unless the
action . . . shows that the company ran a risk of violating the law substantially greater than the
risk associated with a reading that was merely careless.” Id. at 69, 127 S. Ct. 2201. In short, to
constitute a willful violation, Mundy’s interpretation of the FCRA must have been “objectively
unreasonable.” Id. at 68–70, 127 S. Ct. 2201.
In Safeco, the Supreme Court measured objectivity by assessing whether the defendant
corporation’s interpretation of the FCRA “ha[d] a foundation in the statutory text” and whether it
had “the benefit of guidance from the courts of appeals or the . . . FTC that might have warned it
away from the view it took.” Id. at 69–70, 127 S. Ct. 2201. At the time the defendant took
action against the consumer in that case, no court of appeals had addressed the statutory
interpretation issue then before the Court; nor had the FTC offered “authoritative guidance” on
the issue.2 Even though the defendant took a textual position that the Court did not find
convincing, the Court concluded that “[g]iven the dearth of guidance and less-than-pellucid
statutory text, [the defendant’s] reading was not objectively unreasonable, and so falls well short
The FTC “has only enforcement responsibility, not substantive rulemaking authority, for the provisions in
question.” Safeco, 551 U.S. at 70, 127 S. Ct. 2201.
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of raising the ‘unjustifiably high risk’ of violating the statute necessary for reckless liability.” Id.
at 70, 127 S. Ct. 2201.
Applying the analysis previously used by this Court in Landrum, the Court finds that
Mundy’s reading of § 1681b(b)(2)(A) was objectively reasonable and its use of the CN was not a
willful violation of the FCRA. When Mundy presented Theriot with the CN and asked her to
sign it, only two other district courts had addressed the propriety of including a liability release
provision as part of an FCRA-regulated disclosure. Each court reached a different conclusion.
In Smith, the court found that the inclusion of a one-sentence liability waiver in a 2007 disclosure
was “statutorily impermissible” and not supported by the two FTC staff opinion letters submitted
to buttress the plaintiff’s position. Smith v. Waverly Partners, LLC, No. 3:10–cv–00028, 2012
WL 36345324 (W.D.N.C. Aug. 23, 2012). The court then severed the waiver, which in its view
did not distract the consumer from the overall purpose of the disclosure document, and upheld
the disclosure. Id.
By contrast, in Reardon, the Court determined that the inclusion of a liability waiver in a
2006 disclosure was “facially contrary” to the FCRA and the “administrative guidance” of three
informal Federal Trade Commission (“FTC”) Staff opinion letters drafted from 1997 and 1998
addressing the sufficiency of a disclosure-waiver combination. Reardon v. ClosetMaid Corp.,
No. 2:08–cv–01730, 2013 WL 6231606, at *10 (W.D.Pa. Dec. 2, 2013). Much like the plaintiff
in Landrum, Theriot relies on the FTC opinion letters as evidence that Mundy had sufficient
notice that the inclusion of a liability release was violative. This argument has no merit as these
letters are “advisory” and not controlling law.3 As noted by Mundy, in Landrum this Court
recognized a leading employment treatise that included liability release provisions in its model
Each advisory letter includes a disclaimer that the views expressed in the letter are “those of the staff” and “not the
views of the Commission itself.” Hauxwell FTC Letter, 1998 WL 34323756, at *3; accord Steer FTC Letter, 1997
WL 33791227, at *2.
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FCRA disclosure forms. 24A Daniel Oberdorfer & Mark A. Rothstein, West’s Legal Forms,
Employment §§ 1.47 (“Consumer Report Disclosure and Consent Form”) & 1.48 (“Disclosure of
Intent to Obtain Consumer Report”) (3d ed. 2003 & Supp.2013–2014).
In light of the difference of interpretation at the district court level, the lack of an
appellate court decision, the noted advisory opinions and the model forms, it cannot be said that
it was objectively unreasonable for Mundy to presume the lawfulness of including a liability
release as part of a background check disclosure document. As Theriot has not provided any
compelling evidence to the contrary, the Court finds that Mundy did not willfully violate the
FCRA. Thus, as a matter of law, Mundy is neither statutorily nor punitively liable to Theriot.
Indeed, “it would defy history and current thinking to treat a defendant who merely adopts one
[reasonable] interpretation [of the Act] as a knowing or reckless violator.” Safeco, 551 U.S. at
70 n. 20, 127 S. Ct. 2201.
Based on the foregoing analysis and discussion, the Court finds that the Mundy's motion
for summary judgment should be GRANTED.
It is so ORDERED.
SIGNED on this 20th day of January, 2017.
Kenneth M. Hoyt
United States District Judge
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