On January 10, 2018, the U.S. District Court for the Eastern District of Virginia denied Plaintiff Tiffanie Branch’s renewed motion for class certification in Branch v. Government Employees Insurance Company, No. 3:16-cv-1010, 2018 WL 358504 (E.D. Va. Jan. 10, 2018). In particular, the Court found that the facts underlying her allegations were too individualized and specific to merit class certification. Because of this deficiency, Branch failed to meet, among other criteria, the predominance criterion required by Rule 23(b)(3) of the Federal Rules of Civil Procedure. This post examines the interaction between predominance and Article III standing.
In August 2016, Branch accepted a job offer with Defendant GEICO, contingent upon the results of a background check. The background report included a felony conviction that Branch had not disclosed on her application. GEICO preliminarily graded Branch’s report as “Fail” because of the conviction and then contacted Branch by phone. During the call, Branch explained that the conviction was a misdemeanor, not a felony. While Branch averred that GEICO had rescinded the job offer over the phone, GEICO maintained that it had advised her that she would receive a pre-adverse action letter with a copy of the background check and a summary of her rights, including instructions on how to dispute the background report. GEICO sent Branch the letter the next day, and later sent an adverse action letter, indicating that GEICO would not hire her.
On December 30, 2016, Branch filed a putative class action, alleging that GEICO’s hiring process violated section 1681(b)(3)(A) of the Fair Credit Reporting Act (“FCRA”). That section mandates that, prior to taking an adverse action upon a consumer report for employment purposes (such as a background check), the prospective employer must provide a copy of the consumer report and a disclosure of consumer rights. Branch alleged that GEICO’s act of grading applicants “Fail” was an final decision rather than a preliminary one and that thus the adverse action occurred before GEICO provided any notice to the applicant. Branch sought to certify a class of similarly situated individuals who sought employment from GEICO and had their background reports graded “Fail” before GEICO sent the individuals a copy of their reports and a summary of their rights.
In response, GEICO argued that its grading process was not final. GEICO defended that its policy and practice was to grade a background report, provide the applicant a pre-adverse action notice and an opportunity to dispute the report if it was graded “Fail,” and then take final action only after the cure period had expired. GEICO noted that about 25% of applicants graded “Fail” had their grades changed after disputing their background reports. GEICO argued that Branch could not show that common issues would predominate at trial because her claim turned on her individualized allegation that GEICO rescinded her job offer over the phone.
Class Certification: Predominance and Article III Standing
In addition to Rule 23(a)’s requirements for class certification—numerosity, commonality, typicality, and adequacy of representation—a class must also fit within one of the prescribed conditions of Rule 23(b). EQT Prod. Co. v. Adair, 764 F.3d 347, 357 (4th Cir. 2014). In this instance, Branch argued that her proposed class satisfied Rule 23(b)(3) because “questions of law or fact common to class members predominate over any questions affecting only individual members . . . .” Fed. R. Civ. P. 23(b)(3) (emphasis added).
The Court held that this argument failed in part because of Article III, which necessitated that Branch define her class in a way so that each member had standing. At a minimum, each member must have suffered an injury in fact to satisfy Article III standing. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). The court reasoned that, as defined, the class left open the “possibility that some class members did not suffer injuries.” The court noted that it was not the designation of the “Fail” grade on an employment application in response to a criminal background check that created the adverse action in violation of FCRA. Rather, it was only if GEICO diverted from its hiring policy by immediately rescinding a job offer upon the “Fail” designation without a meaningful period to dispute the designation. In other words, the court explained, what purportedly happened to Branch did not necessarily happen to the absent class members. Consequently, the court held that this particularized inquiry “cause[d] individual injury issues to predominate,” sinking Branch’s attempt to certify her defined class.
Implications for Businesses
Businesses facing class action lawsuits should consider all options for defeating class certification. Although the United States Supreme Court has not yet decided whether each putative class member must have standing for a class to be certified, the courts of appeals and the district courts are giving greater scrutiny to this issue. Businesses should investigate claims early to see if there are differences between the named plaintiff and the individuals he or she seeks to represent. Even minor differences, if relevant, can defeat certification.