Ninth Circuit Re-affirms Fair Credit Reporting Act’s Strict Disclosure Standards

A disclosure form that included other, state-mandated disclosure information violated the Fair Credit Reporting Act’s (FCRA) standalone document requirement, the Ninth Circuit held. Gilberg v. Cal. Check Cashing Stores, LLC, No. 17-16263 (9th Cir. Jan. 29, 2019). In doing so, the Ninth Circuit relied on Syed v. M-I, LLC, 853 F.3d 492 (9th Cir. 2017), where the Court held the plain language of the FCRA requires that the disclosure be “in a document that consists solely of the disclosure,” and that a disclosure form which included a liability waiver in the same document violated the “standalone document requirement.”

The FCRA requires that employers provide job applicants with a “clear and conspicuous disclosure” that the employer may obtain a consumer report on the applicant.

The Court rejected the defendant’s argument that the extraneous information in its form consisted “of other, state-mandated disclosure information, which furthers rather than undermines FCRA’s purpose.” The Ninth Circuit emphasized the FCRA clearly states that the disclosure must be in a document that consists solely of the disclosure and that no exceptions to this requirement should be implied into the statute. The Court also noted that the presence of the state-mandated disclosures did not further the FCRA’s purpose as they were “as likely to confuse as . . . to inform.”

The Ninth Circuit then held that the form also was not “clear and conspicuous.” The Court quoted one section of the form which it held was unclear because a reasonable person would not understand the language:

The scope of this notice and authorization is all-encompassing; however, allowing CheckSmart Financial, LLC to obtain from any outside organization all manner of consumer reports and investigative consumer reports now and, if you are hired, throughout the course of your employment to the extent permitted by law.

The Court further held the disclosure was unclear because it combined both the FCRA and state-mandated disclosures, which could confuse a reasonable person.

Although the Court held that the disclosure was sufficiently “conspicuous” and noted with approval its use of capitalized, bolded, and underlined headers, it stressed that the form must be both clear and conspicuous and, therefore, did not comply with the FCRA’s “clear and conspicuous” requirement.

Given the Ninth Circuit’s strict interpretation of the FCRA’s “standalone document requirement” and emphasis on clarity, employers within that circuit should ensure that their disclosure forms: (1) do not contain any extraneous materials; and (2) are written in plain English and without any “legalese.”

Please contact Jackson Lewis for assistance in complying with the FCRA.

Standing in Data Breach Litigation: Will the U.S. Supreme Court Weigh In?

The U.S. Supreme Court may finally weigh in on the hottest issue in data breach litigation, whether a demonstration of actual harm is required to have standing to sue. Standing to sue in a data breach class action suit, largely turns on whether plaintiffs establish that they have suffered an “injury-in-fact” resulting from the data breach. Plaintiffs in data breach class actions are often not able to demonstrate that they have suffered financial or other actual damages resulting from a breach of their personal information. Instead, plaintiffs will allege that a heightened “risk of future harm” such as identity theft or fraudulent charges is enough to establish an “injury-in-fact”.

Please click here to access our Workplace Privacy, Data Management & Security Report blog discussing this important issue.

Second Circuit Sheers Cosmetology Student’s Claims in Intern-or-Employee Case

Concluding that a student at a for-profit cosmetology academy was the “primary beneficiary” of the hours he spent training at the academy’s salon, the Second Circuit Court of Appeals has upheld the district’s court’s determination that the student was an intern, and not an not employee entitled to minimum wage or overtime under the FLSA or the New York Labor Law. Velarde v. GW GJ, Inc., 2019 U.S. App. LEXIS 3536 (2d Cir. Feb. 5, 2019). The Second Circuit has jurisdiction over New York, Connecticut and Vermont.

Please click here to access our Wage & Hour Law Update blog discussing this recent decision.

Airline Ordered to Pay Flight Attendants $77 Million in Damages

A class of flight attendants in a case involving alleged violations of California’s wage and hour laws was awarded $77 million in damages. In so doing, the judge rejected the airline’s challenges to the plaintiff’s damages model and reduced the damages requested by the workers by only $8 million. Bernstein et al. v. Virgin America Inc., No. 3:15-cv-02277 (N.D. Cal. Jan. 16, 2019).

The lawsuit, which was filed in 2015, alleged that Virgin did not pay its flight attendants for all time spent before, after, and between flights, for completing written reports, for time spent training and for undergoing required drug testing. Additionally, it alleged that Virgin did not allow the class of flight attendants to take meal or rest breaks, and that the airline failed to pay overtime and minimum wages.

The court granted class certification in November 2016 to a class of more than 1,000 flight attendants who worked for Virgin on or after March 2011. Virgin later moved for summary judgment arguing, among other things, that the California Labor Code did not apply to the class members’ claims because they all did not work principally or exclusively in California. The court rejected that argument, reasoning that Virgin made decisions about how it would pay its flight attendants and then proceeded in accordance with those decisions exclusively from its headquarters in California and, therefore, California law applied. The class later moved for, and won, summary judgment on their claims against the airline.

This decision, which likely will be appealed, highlights for employers the importance of compliance with not only federal wage and hour laws, but the various state wage and hour laws in which employers operate. Please contact Jackson Lewis with any questions about this case.

Court Decertifies Class of Female Drivers’ Hostile Work Environment Claims, Trims Retaliation Claims

Finding that the case involved “actions perpetuated by one individual against another individual in an isolated environment, not conduct in a common environment directed against several women at once,” Chief Judge Leonard Strand decertified a class of female truck drivers that alleged they were subject to a hostile work environment. Sellers v. CRST Expedited, Inc., No. C15-117-LTS (N.D. Iowa Jan. 15, 2019).

He also granted partial summary judgment to the company on the drivers’ separate claim that they suffered retaliation when they complained about harassing conduct under the company’s policies.

The court explained that, unlike in a race discrimination case that focuses on the employer’s racial animus underlying employment decisions, which can be proven by common evidence, a “pattern or practice” sexual harassment suit for damages requires individualized proof because liability focuses “on the gravity of the conduct to which the claimant was exposed.” The conduct at issue here involved “actions perpetuated by one individual against another individual in an isolated environment, not conduct in a common environment directed against several women at once.” As a result, the court held that the plaintiffs could not produce common evidence to show the class was exposed to conduct severe or pervasive enough such that a reasonable person would be offended. Accordingly, the plaintiff could not satisfy Rule 23’s commonality, predominance, or superiority requirements. The court remarked that “the allegedly offensive actions, not the employer’s alleged polices are what create difficulties in trying hostile work environment claims as a class.” It concluded the drivers could proceed individually, but not as a class.

In a separate discussion, the court granted summary judgment to the company on the plaintiff’s retaliation claim. Although the court explained there were triable issues on whether the company’s policy for handling complaints of harassment resulted in lower pay to women who used it, or whether the company’s policy of removing complainants from a truck in which an alleged harasser was assigned, could be considered adverse employment actions, the plaintiffs could not demonstrate there was a retaliatory motive behind any of the policies. The court held the company’s reasons for having the policy, including protecting a complainant’s safety and well-being and complying with licensing and other truck ownership rules, were not retaliatory or pretextual. The court reasoned the plaintiffs’ proof that the company knew the policy had an impact on pay, and was working to explore alternative policies, was inadequate to show the retaliatory intent required for the plaintiffs’ claims to prevail.

Please contact Jackson Lewis with any questions about defending class or collective actions.

 

 

Older Applicants Cannot Utilize ADEA to Challenge Neutral Hiring Criteria, Seventh Circuit Rules

The Age Discrimination in Employment Act does not permit non-employees to bring claims under a disparate impact theory, the Seventh Circuit has ruled. Kleber v. CareFusion Corp. (7th Cir. Jan. 23, 2019). Accordingly, in Illinois, Indiana, and Wisconsin, job applicants will not be able to challenge hiring decisions that are neutral, but which disproportionately exclude job applicants over 40.

Divergence of ADEA from Title VII

Title VII was enacted in 1964 and the ADEA was enacted in 1967. For approximately 25 years, courts generally treated standards of proof under the ADEA and Title VII as interchangeable. Thus, the Supreme Court’s 1971 Title VII ruling in Griggs v. Duke Power Co. also applied to ADEA claims. The Court found a cause of action in Title VII for non-intentional disparate impact where neutral “practices that are fair in form, but discriminatory in operation.”

That began to change for ADEA plaintiffs in 1993, when the Supreme Court, in Hazen Paper Co. v. Biggins, cast doubt on whether the ADEA permitted any disparate impact claims. Finally, in 2009, the Supreme Court, in Gross v. FBL Financial Services, Inc., ruled that unlike Title VII, ADEA disparate treatment plaintiffs face a “but-for” standard to establish discrimination.

Facts and Procedural History

After Dale Kleber, then 58, was not hired for a senior in-house position at CareFusion’s law department, he filed an ADEA lawsuit. The job description required applicants to have three to seven years’ legal experience. Kleber had more than seven years’ of relevant experience. One of Kleber’s claims was that CareFusion’s maximum experience requirement had a disparate impact on him, an older attorney. The district court dismissed Kleber’s disparate impact claim. On appeal, a three-judge panel reversed the dismissal. The Seventh Circuit then granted en banc review.

Opinion

The eight-judge majority focused on the plain language of Section 4(a)(2) of the ADEA, which makes it unlawful for an employer “to limit, segregate or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age.” In light of “any individual” being surrounded by “employees,” the Court said the essential meaning of Section 4(a)(2) was that it protected employees only. The Court also drew distinctions between the text of the ADEA and that of Title VII (which does permit applicants to bring disparate impact claims).

There were two separate dissenting opinions among four dissenting judges.

Implications

The Seventh Circuit joins the Eleventh Circuit in ruling that the ADEA does not provide disparate impact protections for job applicants.

ADEA disparate impact plaintiffs already face other challenges in such claims. Unlike race and gender, employers are less likely to collect age information from applicants. Without readily available age information about an employer’s applicant pool, ADEA plaintiffs are forced to use alternative sources of information about the availability of workers over 40.

Actual Harm Not Required to Sue Under Illinois Biometric Information Privacy Law

Earlier today, the Illinois Supreme Court handed down a significant decision concerning the ability of individuals to bring suit under the Illinois Biometric Information Privacy Act (BIPA). In short, individuals need not allege actual injury or adverse effect, beyond a violation of his/her rights under BIPA, in order to qualify as an “aggrieved” person and be entitled to seek liquidated damages ($1000 per negligent violation/$5,000 per intentional or reckless violation) and injunctive relief under the Act.

Please click here to access our Workplace Privacy, Data Management & Security Report blog discussing this recent decision.

Supreme Court: Interstate Transport Companies’ Independent Contractor-Drivers are Exempt from FAA

In New Prime, Inc. v. Oliveira, the U.S. Supreme Court held that the Federal Arbitration Act’s (FAA) Section 1 exemption applies to transportation workers, regardless of whether they are classified as independent contractors or employees. No. 17-340 (Jan. 15, 2018). Please click here to access our article discussing this recent decision.

New Guidance from the Northern District of California for Class Action Settlements

The U.S. District Court for the Northern District of California has published procedural guidance for parties submitting class action settlements for preliminary and final approval in the Northern District. Details of the Northern District’s procedural guidance for Class Action Settlements may be accessed here.

The new guidance may be a response to the Ninth Circuit’s ruling in Espinosa v. Ahearn (In re Hyundai & Kia Fuel Econ. Litig.) 2018 U.S. App. LEXIS 1626 (Jan. 23, 2018) regarding the “rigorous analysis” required by district courts in reviewing class certification, and the “heightened” attention needed for reviewing class action settlements in particular.

The Northern District’s detailed procedural guidance provides a roadmap of topics and issues for parties to consider during class action settlement negotiations, when drafting class notices, and in preparing and submitting preliminary and final approval documents. While many of these issues are generally known and discussed amongst experienced class action counsel, some of the more granular considerations include requests to provide information about “lead counsel’s firms’ history of engagements with the settlement administrator over the last two years,” consulting “relevant prior orders by the judge” related to incentive awards, and submitting information about lead counsel’s “past comparable class settlements.”

Parties attempting to avoid unnecessary delay or denial of approval in the Northern District would be well-served by carefully reviewing and following the Court’s new guidelines when appropriate, in addition to the specific orders of their presiding judge.

Please contact Jackson Lewis with any questions about the guidance.

 

 

Criticizing Lower Court, Third Circuit Reverses Class Certification in Suit Alleging Pay Violations

A three-judge panel of the Third Circuit has struck down U.S. District Judge Arthur J. Schwab’s decision granting class certification in a suit brought by mortgage loan officers claiming they were denied overtime pay by their employer. Reinig v. RBS Citizens, NA, No. 17-3464 (3d Cir. Dec. 31, 2018).

In reversing the lower court’s Rule 23 certification, the panel criticized Judge Schwab for doing a substandard job of outlining the classes and claims at issue, forcing the appeals court “to comb through and cross-reference multiple documents in an attempt to cobble together the parameters defining the class and a complete list of the claims, issues, and defenses to be treated on a class basis.” Even “wading through” all of those documents still did not provide the Court a clear picture of the suit’s classes and claims. The Third Circuit noted that, while it does not impose a “strict format” for compliance with Rule 23, it has explicitly rejected orders that force it to “cobble together various statements” and “comb the entirety of its text” in search of “isolated statements that may add up to a partial list of class claims, issues, or defenses.”

The Third Circuit found the District Court’s ruling wanting in other aspects, as well. The panel concluded that there was not enough evidence to determine whether the loan officers had sufficiently shown the employer had an unofficial policy that contradicted its official policy on off-the-clock work to satisfy the commonality and predominance prongs of Rule 23. It found the District Court’s “barebones analysis” did not permit it to conclude that the lower court undertook the “rigorous review” required for Rule 23 certification. For example, the panel said it was unclear how Judge Schwab reconciled contradictory testimony and other evidence cited by the defendant that undermined the plaintiffs’ claim of a companywide “policy to violate the policy.” These and other concerns left the Third Circuit with serious doubts about the lower court’s conclusions, forcing it to vacate the District Court’s order and remand the case with instructions to conduct a “rigorous” examination of the factual and legal allegations underpinning the plaintiffs’ claims before deciding if class certification was warranted.

Despite that, though, the Third Circuit declined to review Judge Schwab’s decision to grant Fair Labor Standards Act (FLSA) collective action certification. The panel reasoned that it could not exercise pendent appellate jurisdiction over the issue because, while related, the Rule 23 class certification and FLSA collective action certification issue were still “fundamentally different creatures.” Thus, it reasoned that it did not have jurisdiction to disturb the lower court’s ruling on that separate issue.

Please contact Jackson Lewis with any questions about this case or class and collective actions.

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