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Mix v. Asurion Insurance Services Inc.

United States District Court, D. Arizona

December 14, 2016

Amanda Mix, Plaintiff,
v.
Asurion Insurance Services Incorporated, et al., Defendants.

          ORDER

          Honorable G. Murray Snow United States District Judge.

         Pending 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 motion.

         BACKGROUND

         I. Fair Credit Reporting Act

         Congress 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. § 1681a(k)(1)(B)(ii).

         A 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).

         Violations 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, [1]along with costs of and attorney's fees, and in some cases punitive damages. Id. § 1681n(a).

         II. Factual Background

         In 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[2] (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.[3]

         On July 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 28, 2014.

         In the 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 Clear.

         Using 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 11).

         Upon 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.)

         Asurion 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.

         Mix's 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 following:

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 made.

(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.)

         Mix did 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 22.)

         III. Alleged Violations of FCRA

         Because 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.

         Count I 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.

         Count 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.

         Count 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 being terminated.

         Count IV re-alleges Count II, but against Sterling.

         Count V 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.

         Mix seeks to certify two classes and one sub-class, each comprising members who, she alleges, ...


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