Milbounre v. JRK Residential America, LLC

Filing 288

MEMORANDUM OPINION. Signed by District Judge Robert E. Payne on 8/11/2016. (jsmi, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division

DERRICK A. MILBOURNE,
On his own behalf and on
Behalf of those similarly
Situated,
Plaintiff,

v.

Civil Action No. 3:12cv861

JRK RESIDENTIAL AMERICA, LLC,
Defendant.

MEMORANDUM OPINION

This matter is before the Court on the parties'

joint oral

motion, made at the Final Pretrial Conference, to have the Court
decide,

as

America,
the

Fair

a matter of law,

LLC' s

("JRK")

Credit

whether defendant

violation of 15 U.S.C.

Reporting

Act

( "FCRA")

JRK Residential
168lb(b) (2)

§

was

of

"objectively

reasonable," as that concept was defined by the Supreme Court of
the United States in Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47
(2007).

(1)
does

For the reasons set forth below, the Court finds that:

the "objective reasonableness" analysis set forth in Safeco
not

apply

interpretation
occurred;

and

because

of
(2)

the

JRK

statute

assuming

did
at
that

not
the

adopt

time

JRK's

or

that

conduct

act

the

on

an

violation

sufficiently

evinces an "interpretation" of the statute

(as JRK contends to

be the case), that interpretation is not objectively reasonable.
BACKGROUND

A.

Class Claims

On

October

26,

2015,

Plaintiffs

("Milbourne")

and Samantha Churcher

"Plaintiffs")

filed a

147)

Derrick

( "Churcher")

First Amended Complaint

A.

Milbourne

(collectively,
("FAC",

on behalf of themselves and all others similarly situated,

alleging that JRK violated two sections of the FCRA.
One,

ECF No.

Plaintiffs

potential

alleged

employees

that

JRK

without

took

adverse

complying

with

In Count

action
15

against

u.s.c.

§

1681b(b) (3) (A), which requires that:
In using a consumer report 1 for employment
purposes, before taking any adverse action
based in whole or in part on the report, the
person intending to take such adverse action
shall provide to the consumer to whom the
report relates: ( i) a copy of the report;
and (ii) a description in writing of the
rights
of
the
consumer
under
this
subchapter, as presented by the Bureau under
Section 1681g(c) (3) of this title.
Count One is sometimes referred to as "the

1

§

1681b(b) (3) claim."

The FCRA defines a "consumer report" as "any written, oral, or
other communication of any information by a consumer reporting
agency bearing on a
consumer's credit worthiness,
credit
standing,
credit
capacity,
character,
general
reputation,
personal characteristics, or mode of living which is used or
expected to be used in whole or in part for the purposes of
serving as a factor in establishing the consumer's eligibility
for: ... employment purposes[.]" 15 U.S.C. § 1681a(d).
2

In Count Two,
that

JRK

Plaintiffs alleged that the disclosure form

provided

Disclosure

Form"}

to

all

potential

violated

15

employees

U.S.C.

("the

Standard

1681b(b) (2) (A),

§

which

provides that:
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; 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.
Count Two is sometimes referred to as "the

§

168lb(b) (2) claim."

Plaintiffs alleged that the violations alleged in Counts One and
Two

were

committed

"willfully,"

and

sought

statutory

and

punitive damages.
Count Three,

filed on behalf of a putative subclass of the

class represented in Count Two, alleged that a second disclosure
form

that

Standalone
violated

§

JRK

provided

Disclosure

to

Form"

some
or

1681b (b) (2) (A).

3

potential

"the

employees

contingency

form")

("the
also

FACTUAL BACKGROUND

In November 2010, Milbourne applied for,
received,

a

and conditionally

job with JRK pending satisfactory completion of a

background check.

Before JRK obtained a consumer

(FAC <JI<Jl 7-9).

report on Milbourne, he signed two disclosure forms.
15-18.

Id. at

<Jl<JI

The first form, the "Standard Disclosure Form," provides

in pertinent part:
I certify that the information contained
herein is true and understand that any
falsification will result in the rejection
of my application or termination of my
employment.
I also understand that the
requested
information
is
for
the
sole
purpose
of
conducting
a
background
investigation which may include a check of
my
identity,
work
and
credit
history,
driving records, and any criminal history
which may be in the files of any state or
local criminal agency ...
I
hereby
authorize
this
company,
its
corporate affiliates,
its employees,
its
authorized agents, and representatives ... to
verify all information contained in this
form or in my application and to inquire
into
any
character,
general
reputation,
personal
characteristics,
and
mode
of
living ... I hereby release this company, its
corporate affiliates,
its employees,
its
authorized agents and representatives and
all
others
involved in this background
investigation
from
any
liability
in
connection with any information they give or
gather and any decisions made concerning my
employment based on such information.
I
understand that any offer of employment I
may
receive
is
contingent
upon
the
successful
completion
of
the
background
investigation.
I further understand that I
have a right, under Section 606 (B} of the
4

Fair Credit Reporting Act, to make a written
request to this company within a reasonable
period of time for a complete and accurate
disclosure of the nature and scope of the
investigation requested.
(ECF No.

49-2 at 2)

Standard Disclosure

Form when she applied for

JRK in September 2013.
After

Churcher also signed the

(emphasis added).

extensive

<JI<JI

2 7 -31) .

discovery,

became

(not

Churcher),

had also signed a second disclosure form before JRK

form").

their

background

class

that

along

558

other

apparent

members

it

Milbourne,

obtained

with

( FAC

employment with

checks

{"the

Standalone

including

Disclosure

That form provides:
understand that my employment with JRK is
subject to the successful clearance of my
background
report
to
acceptable
company
standards.
The results of my background
report will be reviewed and evaluated by JRK
and JRK,
in its
sole discretion,
will
determine whether it is approved.
I

(ECF No. 150, Exs. 1-650).
Milbourne was conditionally hired by JRK,
the

contingent upon

successful

check.

receiving
felony

clearance

Milbourne's

arrest

(ECF No. 76-8

records,
<JI<JI

2-3).

of

his

consumer
JRK

background

report,

terminated

which

contained

Milbourne' s

After
two

employment.

Milbourne did not receive a copy of his

consumer report or a summary of rights under the FCRA before JRK
informed
However,

him

of

its

decision

to

terminate

his

employment.

Milbourne later received a "Notice of Adverse Action"
5

accompanied

by

those

materials

from

United

States

Background

Screening ("USBS"), the consumer reporting agency from which JRK
purchased employment-purposed background checks.

(ECF No.

76-

5) •

PROCEDURAL HISTORY

On October 31, 2014, the Court certified two classes based
on

the

alleged

deficiencies

of

the

Standard

Disclosure

form.

First, the Court certified an "Impermissible Use Class," defined
as follows:
All natural persons residing in the United
States (including all territories and other
political
subdivisions
of
the
United
States), (a) who applied for an employment
position with Defendant or any of its
subsidiaries,
(b)
as
part
of
this
application process were the subject of a
consumer report obtained by Defendant during
the two years proceeding [sic] the filing of
the Complaint, (c} where Defendant used a
form to make its disclosures pursuant to 15
U.S.C.
§
1681b(b) (2)
that
contained
a
release
and/or
waiver
of
the
signing
consumer's claims and/or rights.
(ECF No.

56).

The

Court

also

certified an

"Adverse Action"

subclass, defined as follows:
All natural persons residing in the United
States (including all territories and other
political
subdivisions
of
the
United
States), (a} who applied for an employment
position with Defendant or any of its
subsidiaries,
(b)
as
part
of
this
application process were the subject of a
consumer report background check obtained by
Defendant on or after the date two years
proceeding
[sic]
the
filing
of
the
6

Complaint,
(c)
where
Defendant's records
show
that
the
applicant
was
denied
employment because of the background check,
(d) and to whom Defendant did not provide a
copy of the
consumer report
and other
disclosures
stated
at
15
U.S. C.
§
168lb(b) (3) (A) (ii)
at least five business
days before the date the employment decision
is first noted in Defendant's records.
Id.
On March 15, 2016, the Court granted Plaintiffs' motion for
summary judgment on the issue of whether JRK violated the FCRA
as to Count One

(the § 1681b(b) (3) claim).

(ECF No. 199).

The

Court also granted summary judgment for Plaintiffs on Count Two,
finding that JRK had violated the FCRA as to those class members
who

signed the

Standalone

Disclosure

Disclosure
report.

Standard Disclosure

Form only

Id.

Form
after

or
JRK

Form and did not

who
had

signed
procured

sign the

the

Standalone

their

background

The Court granted summary judgment in JRK's favor

on Count Three except as to 91 class members whose background
reports

JRK

had

already

procured

Standalone Disclosure Form form.

before

they

signed

the

JRK conceded that it was not

entitled to summary judgment as to those 91 class members,
remain part
reserved

for

of

the
trial

Impermissible
the

issue

Use
of

Class.
whether

violations in Counts One and Two was "willful."

7

who

Id.

The

Court

either

of

JRK's

In accordance with those decisions,
definition of the

the Court amended the

Impermissible Use Class,

which now

includes

the following consumers:
All natural persons residing in the United
States (including all territories and other
political
subdivisions
of
the
United
States) , (a) who applied for an employment
position with Defendant or any of its
subsidiaries,
(b)
as
part
of
this
application process were the subject of a
consumer report obtained by Defendant (c) on
or after November 30,
2010
(two years
preceding the filing of the Complaint) and
before March 15, 2016 (the date of the
Court's Order amending this definition) (d)
where Defendant used a form to make its
disclosures
pursuant
to
15
U.S.C.
§
1681b (b) (2) that contained a release and/or
waiver of the signing consumer's claims
and/or rights, and (e) Defendant did not
provide
the
applicant
with
any
other
disclosure
form prior to
obtaining the
applicant's consumer report.
(ECF

No.

203).

Because

Milbourne

had

signed

the

Standalone

Disclosure Form, he could no longer prosecute a claim on behalf
of

the

Impermissible

appointed

to

Use

serve

representative.

Id.

Class;
the

as

substance

addressing
of

argued that,

the

Impermissible

Churcher
Use

was

Class

Id.

admissibility

instructions
under

therefore,

Milbourne remains the class representative

of the Adverse Action Sub-Class.
In

and,

Safeco,

matter of law on Count Two,

on

of

exhibits

the

topic

was

entitled

§

1681b(b) (2)

it
the

8

of

and

the

willfulness,

JRK

to

judgment

claim.

as

a

That was

so,

said JRK,

was

objectively

could

not

be

Count

Two. 2

because its use of the Standard Disclosure Form
Therefore,

reasonable.

held

accountable

Plaintiffs

for

argued

a

according

willful

that

Safeco

to

JRK,

violation
was

it

under

inapplicable

because JRK had never adopted or acted on an interpretation of
§

1681b(b) (2); and that, as a matter of law, JRK was objectively

unreasonable in acting as it did even if JRK could be considered
to have acted pursuant to some interpretation of § 1681b(b) (2).
The factual record respecting this issue is fairly sparse.
The entirety of JRK's evidence on this point amounts to one email

from

Melody

{"Salazar") ,

Salazar

administrative

an

assistant at JRK, to Andrew Klein ("Klein"), head of USBS.
No.

49-1).

In

"compliance/legal"

that

e-mail,

Salazar

team

examine

the

before JRK begins using it.
evidence

that

comprised
careers

to

of

it

engaged

Id.
USBS,

"professionals

Pre-Employment

who

requests

Standard

that

Form

JRK points to that e-mail as
which
have

holds
devoted

Screening ... and

(ECF No. 49

USBS'

Disclosure

itself
their

Employment

interpret the FCRA on JRK' s behalf and ensure JRK' s
with the statute.

{ECF

out

as

entire
Law"

to

compliance

3).

~

2

JRK does not contend that it adopted an objectively reasonable
interpretation of 15 U.S.C. § 1681b(b) (3).
The only remaining
question to be decided as to Count One, therefore, is whether
JRK's violation was knowing or reckless or whether it was merely
negligent.
The parties agree that that issue should be decided
by the jury.
Accordingly, only the reasonableness of JRK' s
interpretation of § 1681b(b) (2) is addressed herein.
9

However,
of

that

when deposed,

e-mail

was

Salazar testified that the purpose

merely

to

confirm

the

compliance

of

a

particular box that she had added to the form "for accounting
purposes only."
at 63: 15-24) .

(ECF No.
Moreover,

262-4,

Deposition of Melody Salazar,

the record

~!early

shows that JRK did
Instead, the

not retain USBS for legal or compliance purposes.
record proves that

JRK merely paid USBS to provide background

reports, a service for which USBS was paid on a report-by-report
basis.

(ECF No.

35:1-17).

270-1,

JRK's

Deposition of Michael Moerschbacher,

contract

compliance services.

with

USBS

contains

Id. at 35:12-36:8.

no

mention

at
of

Furthermore, according

to JRK's head of Human Resources and corporate designee pursuant
to Fed. R.

Civ.

communicated

P.

with

30(b) (6),
USBS

neither he nor anyone else at JRK

concerning

1681b(b) (2) during the class period.

JRK's

compliance

Id. at 36:14-23.

with

§

There is

no evidence about when or why the release language was included
in the Standard Disclosure Form or whether anyone at JRK made
any decision respecting the language contained in the form.
DISCUSSION
A.

Legal Framework

In

Safeco

Ins.

Co.

of

Am.

considered two consolidated cases

v.

Burr,

the

Supreme

in which consumers

insurers for violations of 15 U.S.C.

§

Court

had sued

1681m(a), which requires

that notice be provided to any consumer subjected to "adverse
10

action ... based in whole or in part on any information contained
in

a

consumer

report."

551

U.S.

47,

52

One

(2007).

who

"willfully fails" to provide such notice is civilly liable under
15 U.S.C.

§

168ln.

The Supreme Court began by clarifying that "willfulness" in
the context of the FCRA "cover [s]
but reckless ones as well[.]"
citations

The

omitted) .

not only knowing violations,

Safeco,

Court

551 U.S. at 57

reasoned that

a

(internal

definition of

willfulness encompassing "reckless disregard" was consonant with
both

the

common

law

and

the

Court's

comparable language in -other statutes.
The

Supreme

Court

interpretations

of

Id.

then elaborated that

"recklessness"

is

defined "in the sphere of civil liability as conduct violating
an objective standard:

action entailing

'an unjustifiably high

risk of harm that is either known or so obvious that it should
be known.'"
825,

836

551 U.S. at 68

(1994)).

(citing Farmer v. Brennan, 511 U.S.

Therefore,

the

Court

held

that

a

company

subject to the FCRA "does not act in reckless disregard of it
unless

the action is not

only a

violation under a

reasonable

reading of the statute's terms, but shows that the company ran a
risk of violating the law substantially greater than the risk
associated with a reading that was merely careless."
Importantly,

however,

the

Supreme

Court

Id. at 69.

qualified

that

definition by stating that a defendant does not act willfully if
11

its "reading" of the statute, even if erroneous, was objectively
reasonable.
the

In determining that Safeco's interpretation of

Id.

definition

of

unreasonable,"

the

"adverse

action"

Supreme

Court

"not

was

was

objectively

influenced

by

three

factors.

First,

the statute did not define the term at issue;

in

words,

the

other

Id.

at 69-70.

of

the

FCRA

provided

a

statutory

text

was

"less-than-pellucid."

Second, the Court observed that Safeco's reading
had

a

"foundation

sufficiently

in

the

convincing

statutory

text"

justification

that

to

"have

persuaded the District Court to adopt it and rule in Safeco' s
favor."
which

Id.
had

a

at 70.
basis

In other words,
in

the

Safeco' s

statutory

text,

interpretation,

was

sufficiently

reasonable as to warrant adoption by an independent third party.
Third,
"the

the Court found it significant that Safeco did not have
benefit

of

guidance

Federal Trade Commission
from the view it took."

from
(FTC}

Id.

the

courts

of

appeals

or

the

that might have warned it away

Therefore, "[g]iven this dearth of

guidance and the less-than-pellucid statutory text," the Court
found that Safeco's reading was "not objectively unreasonable,"
and
risk'

so

"f [ell]
of

violating

liability."
Safeco
involves

well

a

short
the

of

raising

statute

the

'unjustifiably high

necessary

for

reckless

Id.
teaches
two-step

that

assessment

12

the

First,

inquiry.

of

it

willfulness
is

issue

necessary

to

determine

whether

the

violative conduct on,

defendant

"adopt[ed],"

and

based

its

an "interpretation" that was "objectively

reasonable," as that concept was defined in Safeco,

a question

of law that both parties agree is to be decided by the Court.
If

the

Court

finds

that

the

defendant's

interpretation

was

objectively reasonable, its conduct falls within the safe harbor
created by Safeco and the defendant is entitled to judgment as a
matter of law on the issue of willfulness.

And,

that is what

JRK now seeks.
If,
was

however,

not

the

objectively

Court

concludes

that

it

reasonable,

the

becomes

interpretation
necessary

to

determine whether the defendant's violation rose to the level of
a

knowing or reckless

violation,

as

defined by Safeco.

That

determination, the parties agree, must be made by the jury.
B.

Analysis

With

these

instruction

principles

provided

by

in

Safeco,

mind,
the

and

guided

objective

by

reasonableness

issue will be assessed as it is presented on this record.
the

reasons

that

follow,

JRK' s

position does

the

For

not

pass muster

"objectively

reasonable

under Safeco.
1.

JRK Did Not "Interpret" The Statute.

To

take

advantage

interpretation" safe harbor,

the

of

Safeco requires that the defendant

have "adopt[ed]" and acted on an interpretation of the statute.
13

Safeco,

551 U.S.

language
Court

used

at 70 n.20.

in

the

repeatedly

That premise is clear from the

holding

referred

in

to

First,

Safeco.

the

defendant's

the

Supreme

"reading,"

"adopt[ion]" of an "interpretation" of the statute.

or

Second, the

Court exonerated Safeco because it had acted in accordance with
that reading when it violated the statute.

As the Court put it,

"Safeco took the definition as excluding initial rate offers for
new insurance,
plaintiffs.

and so

sent no adverse

Safeco, 551 U.S. at 69.

its obligations to abide by the
determine

what

the

statute

action notices"

to

the

That is, Safeco recognized

FCRA,

examined the statute to

required,

and

relied

on

that

interpretation when it took the actions that violated the FCRA.
Thus, the initial question is whether the record shows that
JRK actually interpreted

168lb (b) (2)

§

when it implemented the

Standard Disclosure Form in 2008 and provided that form to the
class members throughout the class period.
evidence

that

168lb(b) (2)
violated

JRK

actually

adopted

the

Here,

there is no

interpretation

the

statute.

Instead,

the

record

simply used a

shows

that

form that

evidence

that

the

with any interpretation of
the

vendor

made

any

background check vendor
§

comment

1681b(b) (2)
on
14

the

JRK,

had been

provided to it by a third-party background check vendor.
no

§

that it has urged throughout this litigation when it

uninformed by any analysis,

is

of

There

provided

JRK

at all, much less that

propriety

of

the

release

language.

In sum, there is nothing in the record from which the

Court could inf er that anyone at JRK made a decision as to what
the word "sole 1 y" in

16 8 lb (b) ( 2)

§

requires or that anyone at

JRK ever sought advice on whether inclusion of the release in
the form was permissible,

either at the time that JRK adopted

the

Form

Standard

Disclosure

or

at

any

point

thereafter.

Therefore, the "objective reasonableness" analysis called for by
Safeco does not apply in this case.
Relying
Appeals

for

show that
take

on

decisions

from

the Third Circuit,

it

"adopt [ed]

advantage

of

the

an

the

United

States

JRK contends that

interpretation"

"objectively

Court

it need not

of the

reasonable

of

statute

to

interpretation"

safe harbor formulated by the Supreme Court in Safeco.

See Long

v.

Fuges v.

Sw.

Tommy Hilfiger U.S.A.,
Fin.

decisions

Servs.,
do

707

Inc.,

F.3d

hold that

671 F.3d 371

241

requiring

{3d

Cir.

(2012};

2012).

evidence of

And,

an

those

express

pre-

litigation "interpretation" is "expressly foreclosed by Safeco,
which held that evidence of subjective bad faith or intent of
the

defendant

reasonable

is

irrelevant

when

interpretation of the

conduct in question."

there

is

an

objectively

statute that would allow the

Long, 671 F.3d at 377 (citing Safeco, 551

U.S. at 70 n.20).
The principle announced in Long and Fuges
persuasive

because

both

decisions
15

rest

on

the

is

not at

faulty

all

premise

that determining whether a

defendant adopted,

and acted on,

a

"reading" or "interpretation" of the statute requires an inquiry
into "subjective bad faith" or "subjective intent."
that

view,

Long

and

footnote in Safeco.
251-52.

Fuges

rely on

an

erroneous

Long,

671 F.3d at 377;

To support

reading

Fuges,

of

a

707 F.3d at

That footnote actually reads as follows:
Respondent-plaintiffs argue that evidence of
subjective bad faith must be taken into
account in determining whether a company
acted knowingly or recklessly for purposes
of § 1681n (a) .
To the extent that they
argue that evidence of subjective bad faith
can support a willfulness finding even when
the company's reading of the statute is
objectively reasonable, their argument is
unsound.
Where, as here, the statutory text
and relevant court and agency guidance allow
for more than one interpretation, it would
defy history and current thinking to treat a
defendant
who
merely
adopts
one
such
interpretation as a knowing or reckless
violator.

Safeco, 127 S. Ct. at 70 n.20

(emphasis added).

Of course, the

footnote does deal with the topic of subjective bad faith and
how that relates to whether a

company's

statute was objectively reasonable.
not

eliminate

the

rest

of

the

interpretation of the

However, that footnote does

Safeco

opinion,

in

which

the

Supreme Court quite clearly found that Safeco had, and had acted
on,

an

interpretation

violated the FCRA.

of

Indeed,

the

statute

at

the

time

that

the footnote on which Long,

and JRK rely clearly contemplates that a court can,
16

it

Fuges,

and should,

determine a company's "reading" of the statute and consider the
reasonableness

of

that

subjective bad faith.

reading
And,

without

any

inquiry

into

that is perfectly logical because

having an interpretation and relying on it at the time of the
allegedly offending conduct is not a matter of subjective bad
Rather,

faith at all.

whether a company had,

and relied upon,

an interpretation at the time it allegedly violated the act is
an objectively demonstrable inquiry that simply determines what
the company

knew about

the

law at the time that

it took the

actions that are alleged to have violated the law,

and whether

Accordingly, the

it acted in reliance on that view of the law.

Court declines JRK's invitation to adopt the views expressed in
Long and Fuges.
JRK

also

points

immunity jurisprudence,

to

the

to

demonstrate

jurisprudence.
analogy

to

Supreme

Court

proposition
defendant's

Safeco

to

qualified

that an actor's conduct

and does not require the actor in
familiarity

with

relevant

the

However, JRK overstates Safeco's reliance on the

the

qualified
in

that

immunity

Safeco
the

violation

reasonableness inquiry,
3

in

which requires

was objectively reasonable,
question

analogy

cited

state
is

of

analysis.

Saucier
the

law

relevant

v.
at
to

Although
Katz 3

the
the

for

time

of

17

the
the

objective

nowhere did the Supreme Court hold,

533 U.S. 194 (2001).

the

or

even

suggest,

that

it

intended

to

substitute

the

qualified

immunity analysis for the determination of willfulness under the
FCRA that the Court so thoroughly laid out in the rest of its
opinion.

To

the

contrary,

in

qualified immunity only once,
introduced by "Cf."

Safeco,

the

Court

mentioned

in a parenthetical to a citation
"Cf." is used

See Safeco, 551 U.S. at 70.

to introduce a citation when the "[c] ited authority supports a
proposition different from the main proposition but sufficiently
analogous to lend support.
The Bluebook:

'cf. '

means

'compare. ' "

A Uniform System of Citation {Columbia Law Review

Ass'n et al.

eds.,

HomeAdvisor,

Literal 1 y,

Inc.,

20th ed.
102

F.

2015)

Supp.

at 59.

See also Lengel v.

3d 1202,

1211

{D.

Kan.

2015)

{noting the limits of the analogy between qualified immunity and
willfulness

in

Additionally,
of

the

context

of

statutory

interpretation) .

the Safeco Court considered not only the "dearth

guidance"

in

deciding

that

Safeco's

interpretation

objectively reasonable,

but also considered other factors,

as

whether the defendant's

the statutory text,

foundation
offered

a

in

statutory

"sufficiently

interpretation.
comparison

the

to

Safeco,
qualified

text,"

and whether

convincing
559

U.S.

immunity

whether JRK must have had,

69-70.

does

and acted on,

the statute when it violated the FCRA.
18

little

such

reading had "a
the

justification"

at

was

defendant
for

its

Therefore,

the

to

illuminate

an interpretation of

Given that the record shows that JRK never subscribed to a
JRK,

of

"reading"

or

necessity,

asserts that the Court may infer its interpretation

"interpretation"

of

1681b(b(2)'

§

of the law at the time that it violated the statute through its
conduct:

namely, the adoption and use of the form in question.

However,

the

fact

that

JRK was

sufficiently cognizant of

the

FCRA to know that it needed to provide applicants for employment
with

some

sort

of

disclosure

form

does

plausible inference that any employee,
( 1)

had or

1681b(b) (2)
whether

subscribed to
at

inclusion

permitted by
legal

all;

or

(2)

of

the

the

with

give

officer,

any

language

or

sought

(3)

respect

or

decision

release

to

that

to

reading

with
in

or

rise

a

or agent of JRK

interpretation

made

statute;

otherwise,

any

not

respect

that

acted

of

form
on

§

to
was

advice,

language.

To

the

contrary, JRK takes the position that it simply used a form that
it

had

received

from

a

background check vendor,

and

that

it

relied on that vendor to interpret the law on JRK's behalf, even
though there is no evidence that the vendor was ever retained
for legal or compliance services.
2.

JRK's Interpretation Is Objectively Unreasonable

Even assuming,
acted on
not)
urged

an

arguendo,

"interpretation"

that

the

of

1681b(b) (2)

§

record showed that

in using the Standard Disclosure Form,
by

JRK

was

not

objectively
19

(which

JRK

it does

the interpretation

reasonable

because

it

is

contrary

to

requires

a

disclosure.

the

unambiguous

disclosure
As

the

language

document
Court

that

has

of

168 lb (b) {2) ,

§

consists

which

"solely"

previously

noted,

of

the

the
word

"solely" generally means "'to the exclusion of all else,'" and
the language of the statute "does not qualify the word 'solely'
or otherwise limit its meaning."
Am.,

92 F. Supp.

omitted).

3d 425,

432

Milbourne v.

(E.D. Va.

2015)

JRK Residential

(internal citation

Therefore, JRK's interpretation is "foreclosed by the

straightforward statutory text."
F. 3d 853,

Seamans v.

Temple Univ. ,

7 44

868 (3d Cir. 2014).

JRK contends that the plain meaning of the word "solely" is
put

into

question

by

the

statutory

provision

permitting

authorization to appear in the Standard Disclosure Form.
argument is unavailing.

To begin,

the allowance of a

an

That
limited

exception allowing the inclusion of an authorization cannot be
the

basis

for

inclusion

of

obviously

entitled

to

statutory

rule.

Moreover,

Congress's

failure

to

make

anything
an

make

the
other

else.

express
court

"Congress

exception
may

exceptions

is

within

construe

a

from

that

such

other

Supp.

3d at 1211

exceptions were not intended."

Lengel,

102 F.

(internal citations omitted).

Indeed,

if Congress had desired

to make

surely

another

exception,

it

could have

so

provided.

That Congress did not do so does not cast any doubt on the plain
meaning of the word "solely."
20

Thus,

"[t]he

key

factor

distinguishing

this

case

from

Safeco ... is that the statutory provision at issue here cannot be
called

'less-than-pellucid,'

anything close to it."
2008

WL

4316950,

at

Safeco,

[551

U.S.

at

70],

or

Gillespie v. Equifax Info. Servs., LLC,

*6

(N.D.

Ill.

Sept.

15,

To

2008).

the

contrary, the statutory text is clear now and was clear when JRK
started using the

Standard Disclosure

Form and throughout

the

class period.
It

is

decisions

as

construing

implemented
period.

true,

the

JRK notes,
§

Standard

that

1681b (b) (2)
Disclosure

there
at

were

the

Form or

no

time
during

appellate
that
the

it

class

For that matter, there is no appellate authority on the

issue even today.

In addition, by the end of the class period,

district courts had reached differing conclusions on the issue. 4
Contrast Singleton v. Domino's Pizza, LLC, 2012 WL 245965, at *8
(D. Md. Jan. 25, 2012) with Smith v. Waverly Partners, LLC, 2012

4

JRK contends that the Court should consider the presence or
absence of judicial and administrative authority as of late
2013,
when
Churcher,
the
class
representative
for
the
Impermissible Use Class,
received and signed the Standard
Disclosure Form.
Cf. Saucier, 533 U.S. at 202 (for purposes of
qualified immunity analysis, courts look to whether the law was
clearly established at the time of the alleged constitutional
violation) .
However, other class members received the form as
early as 2010.
Thus, no single date within the class period
stands out as the ideal elevation from which to survey the legal
landscape.
However, because JRK continued to use the same form
throughout the class period, the Court finds it appropriate to
examine the judicial guidance that existed in 2013.
21

WL 3645324 (W.D.N.C. Aug. 23, 2012).

And, as JRK points out, it

lacked the benefit of any binding authority from the FTC.
However,

a

lack

of

judicial

or

administrative

guidance

cannot salvage an objectively unreasonable interpretation where
the

statutory

text

is

Information Solutions,
2014) ;
Supp.

Follman v.
2d

960,

text of [the]

Partners,

Inc.,

71

F.

e.g.,

Dreher

Supp.3d 572,

Hosp.

Ill.

2007)

v.

Experian

580

Plus of Carpentersville,

{N.D.

964

{E.D.

Inc.,

(holding that,

Va.

532 F.

where

"the

statute is clear and open to only one reasonable

interpretation ... a
defendant's

See,

clear.

dearth

readings

the

only

of

guidance

plausible.") .
case

decided

does

not

render
in

Moreover,

before

or

during

[a]

Waverly

the

class

period that expressly permitted the use of release language, the
court

recognized that the

violated the

text of §

the

was

release

unclear,

but

inclusion of such

1681b {b) (2),

permissible,

because

but ultimately found that

not

inclusion

language actually

because

of

the

the

release

statute
was

not

distracting as to undermine the purpose of the disclosure.
WL 3645324, at *5-*6.

was
so
2012

In other words, as of 2013, no court had

held that inclusion of release language complied with the text
of the statute and at least one court had found to the contrary.
See Singleton, 2012 WL 245965, at *8.
In

addition

Burghy v.

to

Waverly,

Dayton Racquet Club,

JRK

points

Inc.,
22

695 F.

to

the

Supp.

decision
2d 689

in

{S.D.

Ohio

to

2010)

However,

support

Burghy

1681b(b) (2)

dealt
as

only

"conspicuousness"
in that case.
alongside

"interpret~tion"

its

the

part

requirement,

its

statute.

the

language

"solely"

of

with

of

in
of

discussion

the
issue

the dispositive

which was

§

Id. at 699 ("[i]ncluding the explanatory language

the

disclosure

language

is

logical,

given

their

relationship, and the Court cannot conclude that the presence of
the

former

renders

the

latter inconspicuous.") .

Thus,

Burghy

does not aid JRK's argument.
JRK

also

cites

2015 WL 3407899
2014

WL

5426862

Schoebel

(M.D.
(E.D.

Fla.
Cal.

v.

American

May 27,
Oct.

2015)

23,

text

although inclusion of a
of

the

statute,

the

Ins.

and Syed v.

2014)

Co. ,

M-I LLC,

in support of

its

Schoebel and Syed found

argument on objective reasonableness.
that,

Integrity

release may not comply with the

meaning

of

the

word

"solely"

in

§

1681b(b) (2) is sufficiently flexible that inclusion of a release
is not "objectively unreasonable."
forth above,
more

Supp.

the Court finds the decisions to the contrary much

persuasive,

articulated
3d

6231606,

and

therefore

declines

in Syed and Schoebel.

at
at

However, for the reasons set

1211-12;
*9

(W.D.

Reardon
Pa.

v.

Dec.

245965, at *9.

23

2,

See,

to
e.g.,

the

Lengel,

view

102

F.

Corp.,

2013

WL

Singleton,

2012

WL

Closetmaid
2013);

adopt

Furthermore,
issue,
waiver

the FTC expressly advised that inclusion of a liability
would

disclosure

violate

be

disclosure.
see

shortly after the enactment of the section at

§

168lb(b) (2)'s

made

a

document

in

Hauxwell Letter,

also Milbourne,

92

F.

requirement

consisting

3d

at

431

opinion letters are persuasive authority,
not

binding} .

And,

as

"solely"

1998 WL 34323756

Supp.

noted

above,

that
of

the
the

(June 12, 1998);
(noting

that

FTC

even though they are

the

dearth

of

binding

authority cannot rescue JRK's interpretation where, as here, the
Dreher v.

statutory text is unambiguous.
Solutions,

Inc.,

71 F.

Supp.3d 572,

580

Experian Information
(E.D.

Va.

2014).

Nor

does the dearth of appellate authority interject ambiguity into
Therefore,

otherwise clear statutory text.

even assuming that

JRK has sufficiently demonstrated that it had ever "interpreted"
§

1681b(b} (2)

(which it has not},

that

interpretation was not

objectively reasonable.
CONCLUSION

For the foregoing reasons,

the record here does not permit

a finding that JRK held, and acted on, an objectively reasonable
"int e rp re tat ion"

of

15

U. S . c .

§

16 8 lb (b} ( 2 )

in vi o 1 at ing that

statute by using the Standard Disclosure Form.
is

not

entitled

Accordingly,

to

the

safe

harbor

Therefore,

provided

by

JRK,

Safeco.

JRK's oral motion for judgment as a matter of law

on the issue of objective reasonableness will be denied, and the
24

question of whether JRK's violation of

§

168lb{b} {2} was knowing

or reckless will be decided by the jury. 5
It is so ORDERED.

Isl

~t:('

Robert E. Payne
Senior United States District Judge

Richmond, Virginia
Date: August _Jj__, 2016

5

Because JRK seeks the Safeco safe harbor, it is logical that
the burden of proving entitlement thereto should fall on JRK.
However, in some of its briefs, JRK suggests that it is up to
the Plaintiffs to prove that JRK's conduct was objectively
unreasonable.
Where that burden falls was somewhat confused by
the Supreme Court's comment in Safeco that Safeco's reading was
"not objectively unreasonable."
Id.
The parties have not
squarely addressed the burden issue, but it is not necessary to
resolve it here because no matter who has the burden, the record
shows that JRK is not entitled to the Safeco safe harbor both
because it neither adopted, nor acted on, any interpretation of
§ 168lb{b} {2};
and because, even if JRK's conduct could be
regarded as an interpretation on which it acted when it violated
§ 168lb{b} (2),
the
interpretation
was
not
objectively
reasonable.
25