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Federal Judge in California brings down the curtain on a FCRA class action against Paramount Pictures

Class actions alleging technical violations of the Fair Credit Reporting Act (FCRA) against employers who obtain consumer reports on job applicants are all the rage, generating large settlements and headlines (at least in legal circles).  Perhaps bucking this trend, a federal judge in California recently dismissed a putative class action case in its infancy against Paramount Pictures Corporation.  Peikoff v. Paramount Pictures Corporation, No. 15-cv-00068-VC, Docket No. 13, March 25, 2015.

The plaintiff, Michael Peikoff, alleged that he applied for a job with Paramount Pictures Corporation in February 2011.  As part of the application process, Peikoff was presented with and executed an application that included the following language:

“I authorize the references listed above, as well as other individuals whom Paramount contacts, to provide Paramount with any and all information concerning my previous employment and any other pertinent information. Further, I release all parties and persons from all liability from any damages that my result from furnishing such information to Paramount as well as from any use or disclosure of such information by Paramount or any of its agents, employees or representatives.”

Following his execution of the application, Paramount obtained a consumer report on Peikoff from a credit reporting agency.  Peikoff alleges Paramount breached the FCRA, 15 U.S.C. § 1681(b)(2), by procuring the consumer report without making the required disclosure “in a document that consists solely of the disclosure” and by including the disclosure and authorization form in an application for employment and to obtain a release from Peikoff.  Peikoff sought to represent a class of all similarly situated individuals for whom Paramount obtained a credit report in the same manner.

Paramount moved to dismiss, arguing that the authorization paragraph that Paramount included in its “Disclosure and Authorization” form complies with FCRA and that the inclusion of the certification was not “objectively unreasonable,” as required to establish the necessary element of willfulness under FCRA.  See Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 69 (2007).

The court acknowledged a number of district court decisions finding the inclusion of a liability waiver provision in a FCRA disclosure to violate § 1681(b)(b)’s requirement that the document “consists solely of the disclosure.”  The court distinguished those cases because the liability waivers at issue in those matters were independent from the disclosure and authorization.  In Paramount’s case, the court found that the one-sentence certification included in its form, “if not part of the statutorily permitted authorization, was closely related to it, and would similarly serve to focus the consumer’s attention on the disclosure.” The court found that even if Paramount’s disclosure did not strictly comport with FCRA’s requirement that the document consist solely of the disclosure and the authorization, “it is not plausible that Paramount acted in reckless disregard of the requirements of the FCRA by using this language.”  The court granted Paramount’s motion, and dismissed Peikoff’s complaint with prejudice.

Employers can hope that the Peikoff decision may signal a trend away from courts sanctioning class actions based on hyper-technical violations of FCRA.