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Robertson v. Allied Solutions, LLC

United States Court of Appeals, Seventh Circuit

August 29, 2018

Shameca S. Robertson, on behalf of herself and all others similarly situated, Plain tiff-Appellant,
v.
Allied Solutions, LLC, Defendan t-Appellee.

          Argued February 20, 2018

          Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. l:15-cv-1364-WTL-DML - William T. Lawrence, Judge.

          Before WOOD, Chief Judge, and Easterbrook and Barrett, Circuit Judges.

          WOOD, CHIEF JUDGE.

         Employers rarely extend job offers without first checking the applicant's background and references. They are free to conduct such checks, but they must follow certain rules. Many of those rules come from the Fair Credit Reporting Act (FCRA or Act), 15 U.S.C. §§ 1681-1681x. Shameca Robertson alleges that Allied Solutions, LLC ("Allied") disregarded several of the Act's requirements when she applied for a position with the company. This action, filed on behalf of herself and two proposed classes, seeks to hold Allied accountable for those missteps. The parties tentatively had agreed to settle Robertson's two class claims when the district court on its own initiative raised some concerns about her standing to sue under Article III. It asked for briefing on that issue and then dismissed the entire action for want of jurisdiction.

         At this juncture we accept Robertson's allegations, but we still must examine whether Allied's alleged violations of the Act caused her any concrete injury. Because the answer is in part "yes," we reverse the dismissal for lack of jurisdiction of one of Robertson's claims and remand for further proceedings. The district court's dismissal of the other claim was proper, because its authority to adjudicate must exist before it can resolve the case, even if that resolution is nothing more than a fairness hearing under Federal Rule of Civil Procedure 23(e), followed by approval of a settlement.

         I

         Robertson applied for a position with Allied. It offered her the job, but it ran a background check before she reported to work. Ordinary background checks qualify as consumer reports under the FCRA. See 15 U.S.C. § 1681a(d)(1). Allied thus was required to alert Robertson "clear [ly] and conspicuously]" of its intent to obtain the report and to secure her consent. Id. § 1681b(b)(2)(A). Those disclosures needed to be in writing and unadorned by any additional information. Id. Robertson complains that they were not. Instead, the forms she received were neither clear nor conspicuous, and they included extraneous information. She did not allege, however, that the added information affected her consent to the check.

         Certain "non-conviction information" (the nature of which is immaterial for present purposes) turned up in the course of Robertson's background check. This information prompted Allied to revoke the job offer. A representative from its human resources department passed that word along to Robertson. She alleges that the representative told her only that the offer was being rescinded "because of information in her 'criminal background check' report." An employer that relies in any measure on a background check for an adverse employment decision (including rescinding a job offer, see id. § 1681a(k)) must provide the applicant with a copy of the report and a written description of her rights under the FCRA before acting. Id. § 1681b(b)(3)(A). Allied provided neither to Robertson.

         She responded with this lawsuit. Her complaint includes two claims, each on behalf of a distinct subclass. First, she sued Allied for failing to furnish clear and conspicuous disclosure forms. We call this the notice claim. Second, she sued Allied for taking an adverse employment action based on her background check without first supplying a copy of the report or a written summary of her FCRA rights. This is her adverse-action claim.

         After mediation in April 2016, the parties reached a tentative settlement agreement. A month later, the Supreme Court decided Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016), in which it emphasized that federal jurisdiction exists (as relevant here) only if the plaintiff has alleged an injury that is both concrete and particular to herself. Neither Allied nor the court responded immediately to Spokeo. Several months lat- er, Robertson filed an unopposed motion under Federal Rule of Civil Procedure 23(e) for preliminary approval of the settlement agreement and for certification of two settlement classes. Instead of acting on the motion, however, the district court raised Spokeo on its own and asked the parties first to brief the question whether Robertson had Article III standing. The court then learned that related issues were pending before this court in Groshek v. Time Warner Cable, Inc., 865 F.3d 884 (7th Cir. 2017), and so it delayed ruling. After we ruled in Groshek that an injury functionally indistinguishable from the one underpinning Robertson's notice claim was not concrete and did not confer standing, id. at 887, the district court ordered Robertson to show cause why her case should not be dismissed for the same reason. In its order, the court rejected as "simply wrong" Robertson's assertion that it could approve the settlement agreement without jurisdiction over the underlying case.

         Eventually the district court dismissed the entire case for lack of standing. It held that Groshek compelled that result for Robertson's notice claim. With respect to the adverse-action claim, the court ruled that because Robertson had not pleaded facts connecting the lost offer with Allied's failure to turn over a copy of the background report, it too had to be dismissed. Had Robertson pleaded, for example, that the report was inaccurate or that she favorably could explain the report's content, the court indicated that it might have ruled that she sustained an Article III injury. It refused to permit her to amend her complaint because she never indicated what facts she could allege that would support jurisdiction. She now appeals.

         II

         The Constitution confines "the judicial Power" of the federal courts to "Cases" and "Controversies." U.S. CONST, art. Ill. § 2. Courts police this limit through the standing doctrine, among others. Standing to bring a suit in federal court depends on the plaintiff's having suffered an injury in fact, which she can trace to the defendant's challenged conduct, and which can be redressed by a favorable judicial decision. Spokeo, 136 S.Ct. at 1547. The injury requirement is the critical one in the present case. A qualifying injury must be both concrete and particular to the plaintiff. Id. at 1548. The ...


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