Henderson v. Corelogic National Background Data, LLC
178 F.Supp.3d 320 (2016)
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Rule of Law:
A company that sells bulk criminal history data to other consumer reporting agencies (CRAs) is itself a CRA furnishing "consumer reports" for "employment purposes" under the Fair Credit Reporting Act (FCRA). Such a company cannot evade its FCRA § 1681k(a) obligations merely by selling through intermediaries or by providing data that is not perfectly matched to a single consumer.
Facts:
- CoreLogic National Background Data, LLC (NBD) provides its customers, which are other consumer reporting agencies (CRAs), access to a multistate database of criminal record information.
- The database, managed by NBD's sister company SafeRent, is compiled from bulk-purchased public records that often lack specific identifiers like Social Security Numbers or middle names.
- Tyrone Henderson received a conditional job offer from Interstate Brands Corporation, which was later withdrawn.
- The withdrawal occurred after a CRA, Verifications, Inc., purchased a report from NBD on Henderson that incorrectly included felony convictions belonging to at least one other individual with the same first name, last name, and date of birth.
- James O. Hines, Jr. applied for a job with CareSouth Homecare Professionals and was not hired at that time.
- Hines was not hired after a CRA, ADP, purchased a report from NBD that incorrectly included records belonging to another person with the same name and date of birth, one of which indicated he was a registered sex offender.
- NBD's contracts obligate its customer CRAs to independently verify the records returned in response to their search queries.
Procedural Posture:
- Tyrone Henderson and James O. Hines, Jr. (Plaintiffs) filed a Second Amended Complaint against CoreLogic National Background Data, LLC (NBD) in the U.S. District Court for the Eastern District of Virginia (a federal trial court).
- Count I of the complaint alleged that NBD violated 15 U.S.C. § 1681k(a) of the Fair Credit Reporting Act.
- NBD filed a renewed motion for partial summary judgment, asking the court to rule in its favor on Count I as a matter of law.
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Issue:
Does a company that sells bulk criminal record data to intermediary consumer reporting agencies, which is not specific to a single individual and may contain inaccuracies, furnish "consumer reports" for "employment purposes" that are "likely to have an adverse effect" on a consumer, thereby subjecting it to the requirements of Section 1681k(a) of the Fair Credit Reporting Act?
Opinions:
Majority - Payne, J.
Yes. A company selling bulk criminal data to other CRAs is subject to the requirements of § 1681k(a) of the FCRA. First, NBD's search results constitute "consumer reports" because they "bear on" the specific consumer who is the subject of the inquiry, even if they also contain information about other individuals. NBD’s own internal documents and contracts also identify its products as consumer reports. Second, the reports are furnished for "employment purposes" because NBD knew or expected them to be used for evaluating employment, as evidenced by its contracts. A CRA cannot evade FCRA liability by using an intermediary, as this would create a loophole defeating the statute's purpose. Third, the criminal history information is categorically "likely to have an adverse effect" on employment based on the nature of the information itself, regardless of whether an intermediary filters it before it reaches an employer. Finally, NBD is not entitled to summary judgment on its defense that it maintained "strict procedures," because a report is not "complete" if it lacks sufficient identifying information to link a record to the correct consumer, and merely transcribing bulk data verbatim without independent verification may not satisfy the high standard of "strict procedures," presenting a question for the jury.
Analysis:
This opinion is significant because it prevents "wholesale" data resellers from using an intermediary business model to circumvent their obligations under the Fair Credit Reporting Act. The court affirms that liability under the FCRA follows the data, meaning the original provider cannot delegate its statutory duties to ensure accuracy and completeness to its customers. By classifying bulk, imperfectly matched criminal data as "consumer reports" and holding that the adverse nature of such data is categorical, the decision strengthens consumer protections against inaccurate background checks. This precedent holds data aggregators accountable and makes it harder for them to escape liability for the foreseeable harm their products may cause.
