Desiree Gilberg v. Cal. Check Cashing Stores, LLC
913 F.3d 1169 (2019)
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Rule of Law:
Under the Fair Credit Reporting Act (FCRA), a disclosure to a job applicant that a consumer report may be obtained must be in a document that consists 'solely' of the disclosure, which prohibits the inclusion of extraneous information such as various state law disclosures. The disclosure must also be 'clear,' meaning it is reasonably understandable and free of confusing or grammatically incorrect language.
Facts:
- Desiree Gilberg applied for a job with CheckSmart Financial, LLC.
- In addition to an initial application packet, Gilberg was later given a separate one-page form titled 'Disclosure Regarding Background Investigation' to sign.
- This form contained the federal disclosure required by the Fair Credit Reporting Act (FCRA).
- The form also included specific notices and rights for applicants in New York, Maine, Oregon, Washington, California, Minnesota, and Oklahoma.
- The form contained a grammatically incomplete and confusing sentence that began: 'The scope of this notice and authorization is all-encompassing; however, allowing CheckSmart Financial, LLC to obtain...'
- After Gilberg signed the form, CheckSmart obtained a criminal background report on her.
- CheckSmart subsequently hired Gilberg, who worked for the company for five months before voluntarily resigning.
Procedural Posture:
- Desiree Gilberg filed a putative class action lawsuit against CheckSmart in the U.S. District Court for the Eastern District of California, alleging violations of the FCRA and California's ICRAA.
- CheckSmart moved for summary judgment on Gilberg's claims.
- The district court granted summary judgment in favor of CheckSmart, finding that its disclosure form complied with both statutes.
- Gilberg, as the plaintiff-appellant, appealed the district court's judgment to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Does an employer's background check disclosure form violate the Fair Credit Reporting Act's 'standalone document' and 'clear and conspicuous' requirements when it includes extraneous state-law disclosures and contains confusing, grammatically incomplete language?
Opinions:
Majority - Judge Fisher
Yes, the employer's disclosure form violates the Fair Credit Reporting Act's requirements. The court held that the inclusion of extraneous information, even state-mandated disclosures, violates the plain meaning of the statute's requirement that the disclosure be in a document that consists 'solely' of the disclosure. Relying on its precedent in Syed v. M-I, LLC, the court rejected the idea of an implied exception for 'closely related' state law information, stating that the word 'solely' is conclusive and adding such information is as likely to confuse as to inform. Furthermore, the court held the disclosure was not 'clear' because it contained a grammatically incomplete and confusing sentence and combined federal and state disclosures in a way that could mislead a reasonable applicant about their rights. While the disclosure was deemed 'conspicuous' due to its formatting (bolding, headings), its lack of clarity caused it to fail the 'clear and conspicuous' requirement.
Analysis:
This decision reinforces a strict interpretation of the FCRA's disclosure requirements, making it clear that the 'standalone document' rule permits no extraneous text, not even other state-mandated disclosures. It effectively requires employers operating in multiple states to provide state-specific information in a separate document. The ruling also sets a standard for clarity, emphasizing that disclosures must be grammatically correct and logically coherent to be 'reasonably understandable.' This puts a significant compliance burden on employers to meticulously draft and review their background check forms to avoid any language that is not part of the core federal disclosure or could be deemed confusing to a reasonable applicant.
