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Court Sustains Pro Se Claim That Law Firm Illegally Used an Employment Background Check in Litigation

Tuesday, February 14, 2012
Benzing v. Tharrington-Smith, LLP, No. 10–CV–00533, 2012 BL 13753 (E.D.N.C. Jan. 19, 2012The U.S. District Court for the Eastern District of North Carolina denied defendants' motion to dismiss a claim under the Fair Credit Reporting Act, 15 U.S.C. § 1681 ("FCRA") which alleged that defendants obtained a pre-employment screening report to use against plaintiff in a domestic violence and child custody dispute. The court held that plaintiff sufficiently alleged that defendants willfully obtained the report for an impermissible purpose.

Plaintiff Claimed Law Firm Obtained a Background Check

Charles Benzing brought a suit pro se against law firm Tharrington Smith, LLP and Alice Stubbs for "Federal Crime," "Distribution of Non-Public Information," and "Slander and Defamation," claiming that they had a background check performed on him under false pretenses. Benzing at 2. Benzing claimed that he and his former girlfriend Katey Regan were in state court litigation in connection with her request for a protective order and a child custody dispute. Benzing also claimed that Regan was represented by Stubbs, a lawyer at Tharrington Smith, and that Stubbs, on behalf of the law firm, requested that the Castle Branch Employment Screening Company conduct a background check under the guise of pre-employment screening. Benzing also claimed that the use of his Social Security number in connection with the screening was illegal, and that the information obtained in the screening was later used in connection with hearings on the protective order and child custody. He further claimed Stubbs gave information from the employment screening to Regan and one of his former business partners, with the intention of damaging his reputation, and used the information against him in court proceedings, in violation of the FCRA. The FCRA limits the circumstances under which a consumer reporting agency may provide a consumer's credit report:
[a] person shall not use or obtain a consumer report for any purpose unless (1) the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this section; and (2) the purpose is certified… by a prospective user of the report through a general or specific certification.
15 U.S.C. § 1681b(f). The law permits furnishing a consumer report:
To a person which it has reason to believe ... intends to use the information for employment purposes ... or ... otherwise has a legitimate business need for the information (i) in connection with a business transaction that is initiated by the consumer; or (ii) to review an account to determine whether the consumer continues to meet the terms of the account.
Benzing at 5 (quoting 15 U.S.C. § 1681b(a)(3)(B) & (F)). A person who willfully or negligently obtains a consumer's credit report without a permissible purpose may be civilly liable to the consumer, the court wrote. To state a claim for willful or negligent misuse or acquisition, plaintiff must allege facts showing that "(i) there was a consumer report; (ii) the defendants used or obtained it, (iii) the defendants did so without a permissible statutory purpose, and (iv) the defendants acted with the specified culpable mental state." Id. (citing Cappetta v. GC Services LP, 654 F. Supp. 2d 453, 461 (E.D. Va. 2009)).

Background Check May Be "Consumer Report"

The court rejected defendants' argument that did not obtain a "consumer report," noting that the FCRA defines that term as
any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for—(A) credit or insurance to be used primarily for personal, family, or household purposes; (B) employment purposes; or (C) any other purpose authorized under section 1681b of this title [subject to various exclusions].
Benzing at 6 (quoting 15 U.S.C. § 1681a(d)(1)). A "consumer reporting agency" ("CRA") is any person which, for monetary fees ... regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports. Id. at 7 (quoting 15 U.S.C. § 1681a(f)). The court found that Benzing sufficiently alleged that Castle was a CRA, based on its self-description as an "employment screening company" that assembled information for employers to evaluate job applicants. Id. In addition, Castle's report summarized court records on Benzing, which the court found bore on Benzing's "credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living" under 15 U.S.C. § 1681a(d)(1). Id. at 8. The court also found the Benzing alleged sufficient facts to infer that Castle prepared the report expecting it to be used for a hiring decision. Observing that pro se complaints are liberally construed, the court found that Benzing sufficiently alleged that defendants obtained a consumer report ostensibly for employment screening that was actually meant to be used against him in litigation.

Plaintiff Sufficiently Alleged Willful Violation of FCRA

Benzing alleged that defendants obtained the consumer report to use in court proceedings on domestic violence and child custody. The court found that such a use is not permitted under the FCRA. Defendants argued that Benzing's claim must be dismissed because he failed to state whether their violation of the statute was negligent or willful, under and 1681n(a), respectively. Benzing clearly claimed a willful violation, the court observed, by alleging that defendants obtained his consumer report "under the guise" of pre-employment screening. "It is difficult to comprehend how one could 'negligently' offer up a false purpose to a consumer reporting agency," the court wrote. Benzing at 11. Accordingly the court found that Benzing stated a claim under the FCRA for a willful use of a consumer report without a permissible purpose, and denied defendants' motion to dismiss. DisclaimerThis document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy.©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.

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