Barnes & Noble sued for alleged breach of Fair Credit Reporting Act

An HR employee knew little about the law, California court says

BY Bernise Carolino 27 May 2022

A jury may find that a company acted recklessly when it delegated its compliance with the Fair Credit Reporting Act (FCRA) to a HR employee who knew little about the law, a California court said in a recent case.

In Hebert v. Barnes & Noble, Inc., the plaintiff applied to work for Barnes & Noble in 2018. First Advantage, the company’s consumer reporting agency, emailed the plaintiff a link to a website displaying the company’s consumer report disclosure and requested her authorization to procure a consumer report. She clicked the link, viewed the disclosure, and allowed Barnes & Noble to obtain her consumer report.

In 2019, the plaintiff filed a case seeking statutory damages, punitive damages, attorney’s fees, and costs from Barnes & Noble. The suit was brought on behalf of a putative class of individuals from whom the company had gotten consumer reports within the last five years.

She claimed that the company willfully violated the FCRA’s standalone disclosure requirement by including extraneous information unrelated to the procurement of a consumer report in its consumer report disclosure.

In a motion for summary judgment, Barnes & Noble argued that the plaintiff could not show that the company’s violation of the standalone disclosure requirement was willful.

The trial court granted summary judgment in Barnes & Noble’s favor. The court held that:

The plaintiff failed to establish the element of willfulness since what occurred was a mistake;
A miscommunication over a document stamp or watermark on a vendor-supplied form caused the alleged breach;
The company relied in good faith on counsel’s advice, which negated a finding of willfulness.

The California Court of Appeal for the Fourth District, Division One reversed the judgment and directed the trial court to deny the company’s motion for summary judgment. There was a triable issue of material fact on whether the company willfully breached the FCRA, the appellate court ruled.

According to the appellate court, a reasonable jury could potentially find the following, based on the evidence:

Barnes & Noble’s alleged FCRA violation was willful;
The company acted willfully because it breached a clear FCRA provision;
At least one of the company’s employees – Barnes & Noble’s manager of employee relations – knew about the extraneous information in the disclosure before it was shown to job applicants;
The company may have inadequately trained its employees on FCRA compliance;
The company may have failed to impose a monitoring system to ensure that its disclosure complied with the FCRA.

The appellate court then said that jury could possibly determine that Barnes & Noble acted recklessly by doing the following:

delegating all its FCRA compliance responsibilities to a human resources employee who admitted to having very little knowledge about the legislation;
allowing its final disclosure form to go live without review or oversight from other employees, such as its employee relations director or its legal affairs director for human resources, who testified that they never viewed the documents uploaded to First Advantage’s staging website.