Sayed v M-I, LLC, 1/20/17, 9C
Under the Fair Credit Reporting Act (FCRA), an employer may not procure a prospective employee’s consumer report unless a “clear and conspicuous disclosure has been made in writing to the consumer at any time before the report is procured . . . in a document that consists solely of the disclosure . . .” 15 U.S.C. § 1681b(b)(2)(A). Employer’s disclosure form also contained a release of liability. Employee filed a putative class action against employer for statutory and punitive damages under the FCRA. The district court dismissed the case with prejudice for employee’s inability to plead willfulness Held: Reversed
The FCRA provides for actual damages for negligent violations; it provides for statutory damages for willful violations only. While no appellate case or administrative regulation had spoken on the validity of including a liability waiver in the disclosure, the court found that defendant’s conduct comported with no reasonable interpretation of 15 U.S.C. § 1681b(b)(2)(A), and was objectively unreasonable.
The Supreme Court has specifically distinguished recklessness from negligence in the FCRA context, noting that a violation is only reckless (and therefore willful) where an employer adopts a reading of the statute that runs a risk of error “substantially greater than the risk associated with a reading that was merely careless.” Because the statute barred defendant’s reading, whether it actually believed that its interpretation was correct was immaterial. The court concluded that defendant ran an “unjustifiably high risk of violating the statute,” and that its conduct was willful as a matter of law.