The Eighth Circuit’s recent decision in Schumacher v. SC Data Center, Inc. provides guidance on when alleged violations of the Fair Credit Reporting Act do not constitute a concrete injury sufficient to confer standing under the Supreme Court’s TransUnion LLC v. Ramirez decision. Given class-action plaintiffs’ fondness for claims seeking statutory damages, the potential ramifications of TransUnion — which was issued last summer and cast further doubt on whether plaintiffs have standing to recover statutory damages for technical violations of the FCRA and other statutes — have been a hot topic among the class-action bar.  In fact, an entire panel discussion at this year’s ABA National Institute on Class Actions was devoted to TransUnion.

TAKEAWAY: While the full impact of TransUnion remains to be seen, Schumacher shows that plaintiffs may not have standing to pursue violations of the FCRA’s requirements that employers provide information to prospective employees.

In the Eighth Circuit case, Ria Schumacher sued after her offer of employment with SC Data Center was rescinded because her criminal-background check revealed felony convictions from 1996. The Eighth Circuit, however, held that Schumacher did not have standing to pursue the following three FCRA claims:

  • Adverse Action Claim: that SC Data took an adverse employment action without first giving Schumacher a chance to respond to the consumer report, in this case a criminal-background search.
  • Improper Disclosure Claim: that SC Data did not provide a clear and conspicuous disclosure, in a document that consists solely of the disclosure, that a consumer report would be obtained for employment purposes.
  • Failure to Authorize Claim: that Schumacher did not authorize SC Data to obtain a consumer report.

With regard to the adverse-action claim, it was undisputed that Schumacher’s employment offer was rescinded before she was provided a copy of the background report.  The court, however, concluded that the FCRA doesn’t provide prospective employees a right to explain negative — but accurate — information in a consumer report before an employer may take an adverse employment action. And because Schumacher never claimed the conviction information was inaccurate, the court held that the failure to provide the background report did not cause her to suffer an injury in fact.

Schumacher’s improper-disclosure claim fared no better. She contended that the authorization form SC Data provided did not comply with the FCRA because, among other reasons, the text was in a small font and the authorization violated the requirement that the document “consist solely of the disclosure” since it included extraneous information. But the Eighth Circuit reiterated that a mere technical violation of the disclosure requirement without something more (such as that the additional information caused confusion about the consent being given or that the employee would not have provided consent but for the extraneous information) is insufficient to confer standing. Schumacher did not make any claim that there was something more — neither tangible nor intangible injury. So the court held that she had not established a concrete injury due to the improper disclosure.

Finally, the court rejected Schumacher’s failure-to-authorize claim because she explicitly authorized SC Data to have a criminal-background search conducted.

Photo of Michael J. Zbiegien, Jr. Michael J. Zbiegien, Jr.

Mike has represented companies in nation-wide class actions, including matters related to the Fair Credit Reporting Act, consumer issues, employment issues, and insurance rates. In addition, Mike has experience in disputes related to technology issues, such as IT architecture, intellectual property, social media…

Mike has represented companies in nation-wide class actions, including matters related to the Fair Credit Reporting Act, consumer issues, employment issues, and insurance rates. In addition, Mike has experience in disputes related to technology issues, such as IT architecture, intellectual property, social media and cybersecurity issues. Mike also represents businesses and individuals in lawsuits related to contract disputes, mergers and acquisitions disputes, noncompete agreements and restrictive covenants, business valuation disputes, UCC issues, and commercial leases.