United States District Court, D. Arizona
Honorable G. Murray Snow United States District Judge.
before the Court is Plaintiff Amanda Mix's motion for
class certification and appointment of class counsel pursuant
to Federal Rule of Civil Procedure 23. (Doc. 65.) Also
pending before the Court is Defendant Sterling Infosystems,
Inc.'s (“Sterling”) motion to dismiss for
lack of jurisdiction. (Doc. 107.) For the following reasons,
the Court denies Mix's motion and denies Sterling's
Fair Credit Reporting Act
enacted the Fair Credit Reporting Act (“FCRA”)
“to ensure fair and accurate credit reporting, . . .
and protect consumer privacy.” Safeco Ins. Co. of
Am. v. Burr, 551 U.S. 47, 52 (2007). FCRA imposes
certain requirements whenever a consumer report produced by a
consumer reporting agency is used for employment purposes. A
consumer report is defined as “any written . . .
communication of any information by a consumer reporting
agency bearing on a consumer's . . . character, general
reputation, personal characteristics, or mode of living which
is used or expected to be used . . . for the purpose of
serving as a factor in establishing the consumer's
eligibility for . . . employment purposes . . . .” 15
U.S.C. § 1681a(d)(1)(B). A consumer reporting agency
(“CRA”) “means any person which . . .
regularly engages . . . in the practice of assembling or
evaluating consumer credit information or other information
on consumers for the purpose of furnishing consumer reports
to third parties . . . .” Id. § 1681a(f).
A consumer report is used for employment purposes when it is
“used for the purpose of evaluating a consumer for
employment . . . .” Id. § 1681a(h).
Within the context of employment, “adverse action . . .
means . . . a denial of employment or any other decision for
employment purposes that adversely affects any current or
prospective employee. . . .” Id. §
person who intends to use a consumer report for employment
purposes may only do so if “a clear and conspicuous
disclosure has been made in writing to the consumer at any
time before the report is procured or caused to be procured,
in a document that consists solely of the disclosure, that a
consumer report may be obtained for employment purposes; and
. . . the consumer has authorized [it] in writing . . .
.” Id. § 1681b(b)(2)(A).
“[B]efore taking any adverse action .
. . the person intending to take such adverse action shall
provide to the consumer to whom the report relates . . . a
copy of the report; and . . . a description in writing”
of the consumer's rights under FCRA. Id. §
1681b(b)(3) (emphasis added). A CRA may only furnish a third
party with a consumer report for employment purposes if the
third party “certifies” to the CRA that the third
party “has complied with” § 1681b(b)(2) and,
if applicable, “will comply with” §
1681b(b)(3). Id. § 1681b(b)(1)(A).
of FCRA subject the offender to varying levels of liability
depending on culpability. “Any person who is negligent
in failing to comply with any requirement [under FCRA] with
respect to any consumer is liable” for “actual
damages” plus the costs of the litigation and
reasonable attorney's fees. Id. § 1681o(a).
“Any person who willfully fails to comply with any
requirement [of FCRA] with respect to any consumer is
liable” for either “actual damages” or
statutory damages of $100 to $1, 000 per violation,
along with costs of and attorney's
fees, and in some cases punitive damages. Id. §
early July 2014, Mix applied for a technical support position
at Defendant Asurion Insurance Services Inc.
(“Asurion”) Mix applied to Asurion through
PeopleScout, a third-party vendor that assists Asurion with
its recruiting efforts. On July 11, 2014, Asurion interviewed
Mix at its office in Phoenix, Arizona. As part of its normal
application process, Asurion required Mix to sign a form
consenting to a background check (including a criminal
background check) conducted by co-defendant Sterling. On July
16, 2014, Mix completed and signed the consent forms
comprising a three- to five-page packet of documents. At the
time of her application Mix understood that the background
check would include a criminal check. The next day, an
Asurion recruiter submitted the pertinent information to
Sterling to begin the background check.
18, 2014, Mix received an email from Asurion extending her a
conditional offer of employment contingent upon, among other
things, the results of her background check. Mix accepted the
offer and agreed to start training on July 28, 2014. Asurion
sent a second confirmation email on July 22, 2014, confirming
that Mix had accepted the offer and would be starting on July
meantime, Sterling ran Mix's background check.
Sterling's background check system is known as its
managed Client Matrix Application service. A client matrix is
unique to each employer-client and consists of a set of
standards that Sterling then uses to score background check
reports for that particular employer. Sterling processed
Asurion's requests for background checks utilizing three
platforms: ScreeningDirect, AISS, and SterlingDirect (East).
The process within each platform is allegedly
indistinguishable, except to the extent that the platforms
employ variations of scoring language. ScreeningDirect's
background check scores included, at that time, green (meets
hiring criteria), yellow (needs further review), or red (does
not meet hiring criteria), as well as Pass or Fail.
ScreeningDirect now scores background checks as Level1,
Level2, or Level3, as well as Pass or Review. SterlingDirect
(East)'s background check scores included, at that time,
Alert, Provisional, or Clear. AISS's background check
scores included, at that time, Alert, Informational, or
the ScreeningDirect platform, Sterling scored Mix's
background check as red. The basis for this was a pending
criminal charge in another state. Mix does not contest that
the charge was pending at the time Sterling ran the report.
Mix does, however, state that at that time she had
“already worked out an agreement with the prosecutor to
get the charge expunged from her record.” (Doc. 65 at
completion of the background check, Sterling's system
automatically emailed Asurion the results, which indicated
that Mix did not meet Asurion's hiring criteria. (Doc.
41-4.) As a result of Mix's background check, Asurion
decided to revoke Mix's employment offer. Thus, on July
25, 2014, soon after receiving and reviewing the results of
Mix's background check, Asurion requested that Sterling
initiate its “Managed Adverse Action” service.
The service triggers the creation of a pre-adverse action
notice letter that Sterling sends to a rejected candidate on
behalf of Asurion. At Asurion, Mix's name was moved to a
document listing candidates who are to be removed because
they “will not start.” (Doc. 65-2 at 12.)
also informed PeopleScout recruiter Marty Grubb that Mix did
not meet Asurion's hiring criteria. Grubb informed Mix
that same day that because of the results of her background
check Asurion was no longer able to offer her employment.
(Doc. 41-3.) Grubb's email further informed Mix that
within a week she would receive a letter from Sterling that
would provide her with a copy of her background check results
and instructions on how to dispute them. PeopleScout also
called and left Mix a voicemail to the same effect.
start date was scheduled for July 28, 2014. Mix received
Sterling's pre-adverse action notice letter dated July
25, 2014 sometime shortly thereafter. (Doc. 41-4.) The letter
had no clear title or subject line, and although the letter
was drafted and sent by Sterling, it appeared to come from
Asurion. The letter explained that Asurion contracts with
Sterling to conduct its background checks, and stated the
Based on this information [from Mix's background check],
subject to you successfully challenging the accuracy of this
information, we have decided to revoke your conditional offer
of employment. STERLING INFOSYSTEMS has not made this
decision and is not able to explain why the decision was
(Id.) The letter included a copy of Mix's
background check as well as a summary of her rights under
FCRA. This is the first instance where Mix was given access
to her background check. The letter further informed Mix that
she could dispute the “accuracy or completeness”
of the results of her background check directly with
Sterling, but that she needed to do so within five business
days of the receipt of the letter, and that if she chose to
dispute the results, she also needed to contact Asurion.
(Id.) The letter provided contact information for
both Sterling and Asurion. (Id.)
not dispute the results of her background check. Pursuant to
the terms of the Managed Adverse Action service, if the
subject of the background check initiates no dispute within
five business days, Sterling, on behalf of Asurion, sends a
final notice of adverse action letter to the applicant. Thus,
Mix eventually received the final notice of adverse action
letter stating that Asurion could no longer consider Mix for
employment. The letter was dated August 1, 2014. (Doc. 100 at
Alleged Violations of FCRA
Mix does not allege that the information provided to Asurion
by Sterling was inaccurate, nor does she allege that she took
any steps to dispute it, Mix does not seek any actual damages
authorized by the statute. Rather, Mix complains of
Defendants' alleged failures to comply with statutory
procedural mandates. She thus seeks to recover the specified
amount of statutory damages for each of the Defendants'
alleged willful failures to provide her with the necessary
procedures. She can make no claims, as authorized by the
statute, based on the alleged negligence of the Defendants.
of Mix's complaint raises several alleged violations of
§ 1681b(b)(3)(A) against Asurion. Mix first alleges that
Asurion violated FCRA when, in response to procuring
Mix's consumer report from Sterling, it took adverse
action against Mix via the July 25, 2014 email from
PeopleScout without first providing Mix with a copy of her
background check or a description of her FCRA rights. Mix
also alleges that Asurion committed a separate violation when
it prevented Mix from starting on July 28, 2014, her original
start date, without first providing her with a copy of her
background check and a description of her FCRA rights.
Finally, Mix alleges that by mailing its final adverse action
letter on August 1, 2014, Asurion failed to give Mix adequate
time to review and dispute the results of her background
check before being terminated.
II alleges that Asurion violated § 1681b(b)(2) when it
requested a consumer report about Mix without first
presenting Mix with a clear and conspicuous written
disclosure document consisting solely of the disclosure.
III alleges various claims in the conjunctive or alternative
against Sterling, again all constituting violations of §
1681b(b)(3)(A). Mix first alleges that Sterling violated the
statute when it took adverse action against Mix without first
providing her with a copy of her background check and a
description of her FCRA rights. Mix alleges Sterling took
adverse action itself when, between July 23 and July 25,
2014, it reported to Asurion the content of Mix's
consumer report and flagged for Asurion that Mix failed to
meet Asurion's employment qualifications. Mix also
alleges that Sterling's July 25, 2014 letter, sent on
behalf of Asurion, which revoked Mix's employment offer
but included a copy of Mix's report and a description of
her FCRA rights, violated the statute, because a copy of her
background check and a description of her rights needed to be
sent in a previous letter to comply with the law. Mix further
alleges that by mailing the final adverse action letter on
August 1, 2014, Sterling failed to give Mix adequate time to
review and dispute the results of her background check before
IV re-alleges Count II, but against Sterling.
alleges that Sterling violated § 1681b(b)(1), which
requires that Sterling only furnish consumer reports to
Asurion if Asurion certifies that it will comply with §
1681b(b)(2) and (b)(3). Mix alleges that Sterling furnished
Asurion with consumer reports knowing that Asurion did not
comply with those sections.
seeks to certify two classes and one sub-class, each
comprising members who, she alleges, ...