7th Cir. Reverses Multi-Million Dollar FCRA Claim for, Among Other Things, Absence of Spokeo Standing

In Rivera v. Allstate Insurance Company, 2018 WL 5624603 (7th Cir. 2018), the Plaintiffs obtained a multi-million dollar award against their former employers in connection with their termination.  The 7th Circuit reversed their defamation claim because they failed to prove special damages entitling them to the award.  As to their FCRA claim, the Plaintiff’s claimed that the Employers violated 15 U.S.C. 1681a(y)(2), which requires that

The question we confront here is whether subsection (y)(2) is sufficiently similar to § 1681b(b)(3)(A) to require the same outcome. The answer is no. Subsection (y)(2) requires only that the employer disclose a “summary” of “the nature and substance” of a “communication” (i.e., a consumer report) obtained from a third party in connection with an investigation into employee misconduct. The summary need not be in writing, and specificity is not required. Finally, the summary is required only after the employer takes an adverse action, not before.A postdecision, summary-only disclosure obligation like this one is a far cry from § 1681b(b)(3)(A), which (to repeat) requires the employer to provide a complete copy of the consumer report and a written explanation of his FCRA rights before taking any adverse action against an employee (or job applicant). That robust disclosure requirement, we held in Robertson, provides substantive protection: it gives the employee or applicant important information at a time and in a form that allows him to correct errors and address the employer’s concerns before any adverse action is taken. And that, we said, brought the case within the line of Supreme Court precedents dealing with informational injuries. 902 F.3d at 694 (citing Fed. Election Comm’n v. Akins, 524 U.S. 11, 118 S.Ct. 1777, 141 L.Ed.2d 10 (1998); Pub. Citizen v. U.S. Dep’t of Justice, 491 U.S. 440, 109 S.Ct. 2558, 105 L.Ed.2d 377 (1989)).Subsection (y)(2), in contrast, performs a mere post hoc notice function; it does little more. In that sense this case is closer to Groshek than to Robertson. Indeed, the disclosure requirement at issue in Groshek applies before the employer may access an employee’s or job applicant’s consumer report and thus provides the entire basis for the statutory informed-consent procedure. If anything, the disclosure requirement in Groshek serves a far stronger notice purpose than does subsection (y)(2), which operates entirely after the fact.And the post hoc summary required by subsection (y)(2) may be quite generalized. It does not provide information at a time or in a form that allows the employee to meaningfully respond and possibly avert an adverse employment action. If the employer’s failure to provide a compliant disclosure in Groshek was a bare procedural violation insufficient to confer standing, then the plaintiffs here have likewise suffered a mere procedural violation unaccompanied by any concrete injury.The plaintiffs insist that Allstate’s failure to comply with subsection (y)(2) left them “hampered in defending themselves before Allstate or potential employers.” But subsection (y)(2) doesn’t protect a substantive “defense” interest. At most it serves a minimal notice function. And the plaintiffs have not explained how the modest, post hoc summary required by subsection (y)—again, a brief oral summary suffices—could possibly have informed a “defense” against Allstate after the fact. We reiterate, moreover, that they failed to identify any prospective employer that refused to hire them based on the 10-K or the Greffin memo, so they have not established that they suffered a concrete informational injury. Nor have they identified any other tangible or intangible harm arising from Allstate’s failure to comply.In short, the FCRA claims rest on a bare procedural violation of subsection (y)(2) unaccompanied by any concrete and particularized harm or risk of harm to an interest protected by the statute. We therefore vacate the FCRA awards and remand with instructions to dismiss these claims for lack of standing.