California Fourth District Appellate Justice Truc Do
SAN DIEGO — Workers in California don't need to prove they were harmed by employer background checks to target their employers with lawsuits accusing them of violating a state law governing background checks and other consumer reports, a state appeals court has ruled.
The law, known as the California Investigative Consumer Reporting Agencies Act, defines companies’ rights and enables plaintiffs who prove violations to recover compensation for actual damages or up to $10,000, if that amount is greater than the alleged demonstrated loss.
San Diego County Superior Court Judge Carolyn Caietti rejected a complaint from Tina Parsonage targeting Walmart over background checks and pre-hiring screening.
That ruling was overturned on appeal by the California Fourth District Appellate Court. Justice Truc Do wrote the panel’s opinion, filed Feb. 4; Justices Terry O’Rourke and Martin Buchanan concurred.
The outcome reached a conclusion similar to that spelled out in a Jan. 21 ruling from the California Second District Appellate Court, in a case brought by tenants against prospective landlords over background screenings.
According to court documents, Parsonage applied to work for Walmart in June 2018. The retailer offered her a sales associate position pending a background check, which included her electronic viewing and receipt of a disclosure and signing authorization.
She filed her lawsuit in September 2021, alleging Walmart violated the ICRAA because it hadn’t identified “the name, address and telephone number” of the agency investigating her. She further said the inclusion in the disclosure paperwork of six possible agencies violated the law’s “clear and conspicuous manner” clause and also claimed the company failed to offer a checkbox allowing her to request a copy of the report.
In her summary judgment ruling, Judge Caietti agreed Parsonage lacked standing because she couldn't prove she suffered any legal damage from what amounted to “technical violations.” While Parsonage argued those violations alone entitled her to recovery, she also said her background report falsely stated she was twice charged and once convicted of driving a commercial vehicle while on a suspended license, while her actual record indicated those offenses didn’t involve a commercial vehicle.
Like the Second District opinion, Do traced the history of the ICRAA and the state’s credit reporting law as remedies to perceived shortcomings in the federal Fair Credit Reporting Act, including the difficulty of determining damages suffered from a credit denial.
Do noted the statutory penalties work to push companies to ensure accuracy and legal compliance and that lawmakers amended the laws to increase dollar amounts over time, while also amending laws to address developing concerns for issues like identity theft.
“The Legislature’s primary purpose in enacting ICRAA was, and remains, to provide consumers notice that an entity will obtain an investigative consumer report and notice of what is contained in the report so the consumer may attempt to cure any errors,” Do wrote. “The statutory language premises standing on noncompliance with the requirements for providing such notice.”
Although lawmakers specified plaintiffs could recover actual damages when demonstrated, the panel said, that didn’t foreclose other plaintiffs from recovering a statutory penalty or require evidence of actual damages in order to sue. In that sense the consumer reporting law is different from the credit reporting statute, which limits recovery to those who showed actual damages.
The panel further rejected Walmart’s arguments about potential distinctions between the terms “statutory damages” and “penalties” as it relates to standing, noting the Second District ruling on the tenant-landlord dispute agreed with earlier rulings disregarding the same semantics issue.
“The legislative history comports with our conclusion that, regardless of the label, ICRAA does not require a showing of injury beyond violation to confer standing,” Do wrote. “The Legislature repeatedly expressed its goal of more stringently regulating not only the content of investigative consumer reports but the scope and notice of their dissemination.”
Do further noted the law offers protection to employers who should have a vested interest in accurate information about job seekers and said all of lawmakers’ goals in enacting and updating the ICRAA “can be achieved without requiring a showing of concrete injury.”
With Parsonage’s standing established, the panel also joined the Second District opinion in rejecting the logic of other rulings regarding the FCRA’s statutory damages provision. Do reiterated the importance of viewing the ICRAA not as an analogue to the federal law, but a more stringent protection for Californians.
The University of California Berkeley Center for Consumer Law & Economic Justice and Public Justice filed a support brief on Parsonage’s behalf — through Seth Mermin, David Nahmias and Jordan Hefcart — arguing “neither the California Constitution nor the Legislature has ever established a heightened default requirement for standing for those who seek access to California’s courts of general jurisdiction,” Do wrote, adding the panel agreed in questioning “the basis for requiring a plaintiff to demonstrate an injury-in-fact unless the relevant statute provides otherwise.”
Parsonage is represented by Pancer Law Corporation and Leah Nicholls.
The employers are represented by Horvitz & Levy and Constangy, Brooks, Smith & Prophete.
