FCRA: PA District Court Grants Motion to Dismiss “Willfulness” Claims
A recent decision by the U.S. District Court for the Eastern District of Pennsylvania has further strengthened the U.S. Supreme Court’s “objectively unreasonable” standard for willful Fair Credit Reporting Act violations. In Goode v. LexisNexis Risk and Information Analytics Group, Inc., the federal court ruled that no willful violation of the FCRA can occur as a matter of law if the challenged practice was not “objectively unreasonable” under the text of the FCRA, “especially given that no court of appeals had spoken on the issue.”
Indeed, the Goode court explicitly rejected the plaintiffs’ argument that the issue of willfulness was inappropriate to resolve at the motion to dismiss stage. Specifically, the court held: “Courts frequently state that willfulness is a question of fact for the jury. However, those cases usually involve questions of fact as to what the defendant knew at the time of the alleged violation. That is not an issue in this case. The issue of willfulness in this case turns on whether the law was clear at the time of the alleged violation.”
In Goode, a class of plaintiffs brought suit against LexisNexis for prematurely adjudicating their employment applications on behalf of the client-employer prior to sending a pre-adverse action letter as required by the FCRA. On March 22, 2012, the court ultimately held that the defendant’s interpretation of “adverse action” was not objectively unreasonable given the lack of authoritative case law or guidance from the Federal Trade Commission.
Like the Third Circuit’s recent ruling in Long v. Hilfiger, the Goode decision is significant in its affirmation of the Supreme Court’s Safeco standard for “willfulness” claims. The ruling’s implications are positive for FCRA defendants, especially those defending against class claims, since eliminating any finding of “willfulness” limits a plaintiff’s recovery to actual damages, costs, and attorneys’ fees – and eliminates the class-action option as a remedy. More specifically, however, Goode stands for the proposition that courts may decide “willfulness” claims at the motion to dismiss stage, as a matter of law. For FCRA defendants, this means reduced litigations costs in addition to the exponential reduction in damages that would result from the rejection of a plaintiff’s “willful” allegations.
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