A plaintiff's putative class action suit in the Southern District of Ohio under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., has been thrown out because she could not show that the employer's initial assessment or grading of her eligibility for the position was an adverse action.
On June 2, 2014, plaintiff Deloris Reid applied for a job with grocery retailer Kroger. Reid disclosed that she had been convicted of a misdemeanor assault a year earlier. She then interviewed with the store's Administrative Assistant, Nancy Austin, who contacted Reid several days later and offered her a position contingent on her passing a background check.
Kroger utilized General Information Solutions, Inc. ("GIS") to provide background checks and to assign "preliminary grades" based on a matrix provided by Kroger. Kroger maintained the ability to review the preliminary grades before making a decision on whether to hire an applicant.
About three weeks after Reid submitted her application, GIS returned the background check, which indicated that Reid had previously been convicted of felony assault on June 11, 2013. Kroger reviewed Reid's background report and confirmed GIS' initial grade of "Not Clear for Hire," triggering GIS to send a pre-adverse action letter.
Reid disputed her report with her contact at the store, Austin, who claimed she could not help her. Reid then disputed the report directly with GIS. GIS investigated the matter and determined that the charges had been reduced to a misdemeanor, and provided a corrected report to Kroger. However, Reid was still ineligible for hire based on the temporal proximity of her misdemeanor assault conviction, and GIS sent a final adverse action notice.
In her suit, Reid claimed that Kroger violated the FCRA by taking an adverse action without providing her with a copy of her initial background check and description of her FCRA rights. Reid based this on the claim that her initial grade was in fact an adverse action because her offer of employment was effectively revoked.
The Court rejected this argument, finding instead that the grade was only preliminary, relying on the fact that Kroger's preliminary grade was subject to change. In rejecting Reid's claim that the dispute process was "illusory," the Court found that the evidence showed that Reid remained under consideration for employment pending the resolution of her dispute. Moreover, Reid remained ineligible for hire even after she successfully disputed the information in her background report.
Additionally, the Court gave little credence to Reid's argument that the employee at the store telling her she could not help her demonstrated the illusory nature of the dispute process. "The FCRA does not require users of consumer reports, like Kroger, to make individual employees, like Ms. Austin, available to assist applicants, like Ms. Reid, with their disputes," the Court reasoned. Such a requirement goes beyond the obligations imposed by the FCRA.
Plaintiffs' attorneys have been advancing this theory that any negative grading constitutes an adverse action. However, this Court showed that it is not willing to accept such a theory. To avoid liability on such claims, however, employers need to show that the dispute process is meaningful. Kroger prevailed on summary judgment because it could show that Reid's job remained available through the dispute process.
A copy of the court's opinion can be found here.
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