Federal Judge Addresses Injury-in-Fact in New Jersey Employment Class Action

computerA plaintiff in a civil lawsuit must establish that they have standing, meaning that they are legally eligible to bring this particular claim against this particular defendant. The method of establishing standing varies considerably among different types of claims. In many cases, a plaintiff must demonstrate that they have suffered actual harm, known as an “injury-in-fact.” The U.S. Supreme Court recently established an injury-in-fact requirement for claims under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., which can include employment-related claims. In a putative class action brought by a group of employees under the FCRA, a New Jersey judge denied class certification on the ground that the plaintiffs had not alleged an injury-in-fact but gave the plaintiffs the opportunity to amend their complaint. In re Michael’s Stores, Inc. Fair Credit Reporting Act (FCRA) Litigation, Nos. 14-7563, 15-2547, 15-5504, opinion (D.N.J., Jan. 24, 2017).

The FCRA regulates the collection, distribution, and use of consumer credit information by credit reporting agencies, employers, and others. Since many employers want to review credit history and related information when making employment decisions, the FCRA regulates how employers may obtain that information. In addition to getting consent from each employee or job applicant, employers make specific disclosures to those individuals about how they intend to use the information. The disclosure must be “clear and conspicuous” and “in writing,” and it must be presented to the individual “in a document that consists solely of the disclosure.” 15 U.S.C. § 1681b(b)(2)(A).

The Supreme Court ruled on the FCRA’s injury-in-fact requirement in Spokeo, Inc. v. Robins, 578 U.S. ___ (2016). The defendant in that case operates a search engine that aggregates personal information from a variety of sources, allowing users to gather information about specific individuals. The plaintiff filed suit under the FCRA after finding that the site created a profile page for him that contained inaccurate information. He alleged that the defendant violated his rights under the FCRA by mishandling his personal credit information. The Supreme Court ruled that the plaintiff had not demonstrated an injury-in-fact, noting three required elements:  (1) “an invasion of a legally protected interest” that is both (2) “concrete and particularized” and (3) “actual or imminent, not conjectural or hypothetical.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).

The plaintiffs in the Michael’s case applied for jobs with the defendant through its website. The online application included a request for consent to obtain credit information, but the plaintiffs allege that the disclosure provided by the defendant was deficient. Specifically, they state that “[t]he disclosure allegedly appears in the middle of the application, not in a stand-alone document” as required by the FCRA. Michael’s, opinion at 7.

The Judicial Panel on Multidistrict Litigation consolidated multiple similar cases prior to the Supreme Court’s decision in Spokeo. After that decision was released, the defendant challenged the plaintiffs’ standing. The court agreed, holding that the plaintiffs had only asserted “a bare procedural violation of the FCRA.” Id. at 6. It dismissed the case without prejudice, meaning that the plaintiffs have the opportunity to amend their complaint to meet the pleading requirements for an injury-in-fact.

The employment attorneys at the Resnick Law Group can help you with your employment matter in New Jersey or New York. Contact us today online, at 973-781-1204, or at 646-867-7997 to schedule a confidential consultation.

More Blog Posts:

EEOC Settles Genetic Discrimination Lawsuit for $125,000, The New Jersey Employment Law Firm Blog, January 6, 2017

New EEOC Rules on Employer Wellness Programs Lead to Lawsuit, The New Jersey Employment Law Firm Blog, November 18, 2016

New Jersey Lawsuit Accuses Employer of Failing to Make Disclosures Related to Credit Checks, as Required by Federal Law, The New Jersey Employment Law Firm Blog, August 18, 2016

Photo credit: Lance Cpl. Brandon R. Holgersen [Public domain], via Wikimedia Commons.

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