Last Friday, in a long anticipated decision, the Ninth Circuit delivered a big win for consumers in the published opinion in Syed v. M-I, LLC. No. 14-17186, ___ F. 3d ___, 2017 WL 242559, at *1 (9th Cir. Jan. 20, 2017), available at http://cdn.ca9.uscourts.gov/datastore/opinions/2017/01/20/14-17186.pdf. Lawyers at Berger Montague represented amici the National Association of Consumer Advocates and the National Consumer Law Center at the Ninth Circuit.
In Syed, the Ninth Circuit became the first circuit court to weigh in on three issues which have split the district courts over the past few years: (1) whether a defendant violates the FCRA’s stand-alone disclosure requirement, 15 U.S.C. § 1681b(b)(2) by including a liability release in the disclosure document, (2) whether including a liability release is a willful violation of the FCRA, and (3) whether a violation of § 1681b(b)(2) satisfies the concrete injury requirement of Article III.
The district court found the stand-alone disclosure provision to be ambiguous as to whether a liability release could be included in a disclosure and thus dismissed Syed’s claim for failing to adequately allege that the employer willfully violated the statute. The Ninth Circuit reversed.
Article III Standing
The Court first found that Syed had standing:
Syed has established Article III standing. A plaintiff who alleges a “bare procedural violation” of the FCRA, “divorced from any concrete harm,” fails to satisfy Article III’s injury-in-fact requirement. Spokeo, Inc. v. Robins, — U.S.—, 136 S. Ct. 1540, 1549 (2016). However, Syed alleges more than a “bare procedural violation.” The disclosure requirement at issue, 15 U.S.C. § 1681b(b)(2)(A)(i), creates a right to information by requiring prospective employers to inform job applicants that they intend to procure their consumer reports as part of the employment application process. The authorization requirement, § 1681b(b)(2)(A)(ii), creates a right to privacy by enabling applicants to withhold permission to obtain the report from the prospective employer, and a concrete injury when applicants are deprived of their ability to meaningfully authorize the credit check. By providing a private cause of action for violations of Section 1681b(b)(2)(A), Congress has recognized the harm such violations cause, thereby articulating a “chain[ ] of causation that will give rise to a case or controversy.” See Spokeo, 136 S. Ct. at 1549 (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 580 (1992) (Kennedy, J., concurring)). Therefore, Syed has Article III standing to bring this lawsuit. See Thomas v. FTS USA, LLC, —F. Supp. 3d—, No. 3:13–cv–825, 2016 WL 3653878, at *4–12 (E.D. Va. June 30, 2016) (holding that an improper disclosure under 15 U.S.C. § 1681b(b)(2)(A) causes “a concrete injury sufficient to confer standing”).
Id. at *4.
Liability Waivers and Disclosure Documents
As for the merits, the court found that the FCRA unambiguously prohibits the inclusion of a liability waiver in a disclosure document and a liability waiver is not an authorization. First, the Court rejected the argument that by allowing the authorization to be included in the disclosure, Congress opened the door to including other information, including liability releases.
Congress’s express exception to the “solely” requirement, allowing the disclosure document to also contain the authorization to procure a consumer report, does not mean that the statute contains other implicit exceptions as well. See United States v. Johnson, 529 U.S. 53, 58 (2000). Indeed, in light of Congress’s express grant of permission for the inclusion of an authorization, the familiar judicial maxim expressio unius est exclusio alterius counsels against finding additional, implied, exceptions. See Tenn. Valley Auth. v. Hill, 437 U.S. 153, 188 (1978). We therefore reject M-I’s contention that a liability waiver is an implicit exception to the “solely” requirement in 15 U.S.C. § 1681b(b)(2)(A)(i).
Id. at *6.
M-I’s Statute Interpretation
The Court went on to find that that M-I’s interpretation of the statue was not “objectively reasonable.” In reaching this conclusion, it did not matter that there was no prior authoritative guidance on the issue due to the clarity of the statutory language.
M-I also contends that its interpretation of the statute is objectively reasonable in light of the dearth of guidance from federal appellate courts and administrative agencies. No court of appeals has spoken to the issue of whether a disclosure document provided pursuant to Section 1681b(b)(2)(A) may permissibly include a liability waiver. Nor has an administrative agency promulgated authoritative guidance on the issue.5
A lack of “guidance,” however, does not itself render MI’s interpretation reasonable. The Supreme Court has analogized the assessment of whether a FCRA violation may give rise to a claim for statutory damages to the determination of whether government employees may be held personally liable in suits for damages. Safeco, 551 U.S. at 70. In the qualified immunity context, we have held that “when an officer’s conduct is so patently violative of the constitutional right that reasonable officials would know without guidance from the courts that the action was unconstitutional, closely analogous pre-existing case law is not required to show that the law is clearly established.” Boyd v. Benton Cty., 374 F.3d 773, 781 (9th Cir. 2004) (internal quotation marks omitted). Similarly, at least one circuit court of appeals has concluded that, in the FCRA context, a “lack of definitive authority does not, as a matter of law, immunize [a party] from potential liability” for statutory damages. Cortez v. Trans Union, LLC, 617 F.3d 688, 721 (3d Cir. 2010).
Despite the apparent dearth of guidance on the issue at the time M-I procured Syed’s consumer report, M-I’s inclusion of a liability waiver in the statutorily mandated disclosure document comports with no reasonable interpretation of 15 U.S.C. § 1681b(b)(2)(A). Therefore, we conclude that MI’s interpretation was “objectively unreasonable.”
Id. at *7–8
Willful Violation of the Statute
Lastly, the Court found that given the clarity of the FCRA, the inclusion of the liability release was a willful violation of the statute:
We must determine whether M-I’s interpretation of 15 U.S.C. § 1681b(b)(2)(A) to permit a liability waiver in a disclosure document crossed the “negligence/recklessness line.” See Safeco, 551 U.S. at 69. It is possible to imagine an interpretation of 15 U.S.C. § 1681b(b)(2)(A) that would be objectively unreasonable without rising to the level of recklessness. For instance, the Seventh Circuit has held that a company did not recklessly disregard the FCRA’s mandate of “clear and conspicuous” disclosure by using six-point type, even if the company’s actions were negligent. Murray v. New Cingular Wireless Servs., Inc., 523 F.3d 719, 726–27 (7th Cir. 2008) (Easterbrook, J.) (qualifying that such a practice “would be reckless today,” given intervening legal authority).
Here, however, the term we are called upon to construe is not subject to a range of plausible interpretations. To the contrary, 15 U.S.C. § 1681b(b)(2)(A) unambiguously forecloses the inclusion of a liability waiver in a disclosure document. Thus, we need not consider M-I’s subjective interpretation of the FCRA in determining whether it acted in reckless disregard of the statutory language, and therefore willfully. Indeed, M-I concedes that this question may be resolved purely as a matter of law.6 Because the statute unambiguously bars M-I’s interpretation, whether or not M-I actually believed that its interpretation was correct is immaterial. See Reardon v. ClosetMaid Corp., No. 2:08–cv–01730, 2013 WL 6231606, at *11 (W.D. Pa. Dec. 2, 2013) (holding that there was “no issue of material fact” about whether defendant violated 15 U.S.C. § 1681b(b)(2)(A) willfully and granting plaintiff summary judgment).7
Notwithstanding that we are the first federal appellate court to construe Section 1681b(b)(2)(A), this is not a “borderline case.” See Cortez, 617 F.3d at 722. An employer “whose conduct is first examined under [a] section of the Act should not receive a pass because the issue has never been decided.” Id.
M-I ran an “unjustifiably high risk of violating the statute.” See Safeco, 551 U.S. at 70 (internal quotation marks omitted). In other words, M-I acted in “reckless disregard of statutory duty.” Its violation of the FCRA was therefore willful under 15 U.S.C. § 1681n. See Safeco, 551 U.S. at 56–57.
Id. at *8–9.
The Syed opinion is a win for consumers and recognizes the importance of the FCRA’s important privacy protections for job applicants and employees.
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