A recent decision in the Eastern District of Pennsylvania confirms Third Circuit precedent that an employer’s failure to provide a consumer with notice of their rights under the Fair Credit Reporting Act (“FCRA”), as required by the FCRA, does not cause an injury-in-fact where the plaintiffs ultimately became aware of their rights and timely brought suit against said employer.  Where there is no injury-in-fact, there is no standing in Federal court under Article III of the Constitution and the claim must be dismissed.

The FCRA provides that before a potential employer takes “any adverse action based in whole or in part” on a consumer report, it must provide the person who is the subject of that report with a notice that includes a copy of the report and a summary of the consumer’s rights under the FCRA.  A denial of employment is an “adverse action” for FCRA purposes.

In Davis v. C&D Sec. Mgmt., No. No. 2:20-cv-01758-MMB, 2020 U.S. Dist. LEXIS 132291 (E.D. Pa. July 27, 2020), the lead plaintiff twice applied for employment as a security guard with defendant. The defendant denied plaintiff’s application for employment, allegedly without providing her with notice, a copy of her report and a summary of her rights under the FCRA.  The plaintiff then filed this action on behalf of herself and all other similarly situated applicants.

In answering, defendant contended that the plaintiff lacked Article III standing to bring her claims, asserting that plaintiff suffered no injury-in-fact from the alleged FCRA violation because plaintiff ultimately became informed of her rights and timely filed suit.  Plaintiff countered that it was premature to strike the class allegations.

Under Article III of the United States Constitution, the power of the judiciary extends only to “cases” and “controversies.”  The standing doctrine identifies what constitutes a “case” or controversy.” Courts have found that “in order to have standing, all claims must demonstrate an injury-in-fact, which the Third Circuit has defined as the ‘invasion of a concrete and particularized legally protected interest’ resulting in harm ‘that is actual or imminent, not conjectural or hypothetical.'”[1]  The Third Circuit has held that a bare procedural violation, divorced from any concrete harm, cannot satisfy the injury-in-fact requirement of Article III.  In this case, the defendant argued that because the plaintiff became aware of her rights and brought a timely lawsuit, any harm suffered for the alleged FCRA was a “bare procedural violation.” The court in Davis agreed.

The court found that even assuming that defendant failed to provide plaintiff with a summary of her FCRA rights, plaintiff ultimately became informed in time to file suit. Thus, plaintiff suffered no injury-in-fact and the court must dismiss the claim for lack of subject matter jurisdiction.  The court found that because plaintiff failed to establish her own standing, she may not seek relief on behalf of the putative class.   The court saw delaying the issue until class certification would be futile given that no additional showing of facts or discovery could cure the deficiencies relating to a lack of standing.

[1] Finkelman v. Nat’l Football League, 810 F.3d 187, 193 (3d Cir. 2016) (quoting Blunt v. Lower Merion Sch. Dist., 767 F.3d 247, 278 (3d Cir. 2014)).