California Judge’s Common Sense Ruling Grants Disney Summary Judgment on FCRA Class Claim

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In a class action lawsuit against Disney under the Fair Credit Reporting Act (FCRA), the Culbersons alleged that Disney was in violation due to obtaining a background check prior to providing the plaintiff with proper disclosure as well as by taking adverse action without adhering to the proper adverse action process. While the Culbersons were able to obtain class certification, Disney prevailed at summary judgment.

The Los Angeles Division of the Superior Court of California granted summary judgment to Disney on February 9th, 2018 on both claims presented by the Culbersons. The court ruled that while the Culbersons may be able to state a claim for the existence of a technical FCRA violation on Disney’s part, there was no willful violation of FCRA.

The Court disagreed with the Culbersons interpretation of FCRA in connection to the adverse action claim. According to FCRA, if an employer intends to take any adverse action against a potential employee due to information obtained in a background check, they must first adhere to pre-adverse action protocol requiring the employer to give the applicant a copy of the background check and a summary of rights before taking the adverse action.

According to the Culbersons, Disney followed their own coding system for applicants including a category for “no hire” that constitutes adverse action. The categorizing of applicants in the Disney hiring system occurs prior to the submission of a copy of the background check and summary of rights to applicants. The Culbersons argued that this procedure constituted Disney actively and willfully failing to follow an appropriate pre-adverse action process.

The Court disagreed. They found that Disney’s “no hire” code did not actually constitute adverse action because it was only an internal decision. Employers are allowed to make internal decisions regarding potential employees without it constituting adverse action. According to the Court’s line of reasoning, Disney was not in violation of FCRA simply because they used an internal coding system for new applicants including a “no hire” category prior to sending out pre-adverse action letters.

Similarly, the Court held that Disney’s background check disclosure did not willfully violate FCRA. It was not determined whether or not the document included “extraneous” information as the Culbersons claimed. The Court declined to address the technical adherence to FCRA’s rule that the background check disclosure be a separate document solely dedicated to this purpose.

If you were not notified prior to adverse action taken by a potential employer, or if you were not properly notified of a background check being used during a pre-screening employment process, please get in touch with one of the experienced California employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP.