Court Decertifies 6.5 Million Member Class in Background Check Suit

Employment Law


A California federal court decertified a class of millions of Walmart employees after concluding that the named plaintiffs lacked Article III standing to bring their challenge to the employer’s use of background checks.

Each of the three named plaintiffs applied for a job at Walmart, and each was subsequently hired after a credit and background report was conducted. They later filed a putative class action alleging that the employer ran afoul of the Fair Credit Reporting Act (FCRA) as well as California’s Investigative Consumer Reporting Agency Act (ICRAA) by willfully including extraneous information in the disclosure forms and inadequately informing them of their rights.

Last January, U.S. District Judge David O. Carter certified a class of approximately 6,547,400 individuals who applied for a job at Walmart between June 2012 and March 2019. Walmart responded with a motion to decertify, arguing that the named plaintiffs lacked standing.

Judge Carter agreed, granting the motion.

Even assuming that Walmart’s written disclosures were inadequate under the FCRA, the plaintiffs failed to identify an injury stemming from the statutory violation that could suffice to support Article III standing, the court said.

Pursuant to the U.S. Supreme Court’s Spokeo v. Robins decision, a statutory violation must also be accompanied by a “concrete injury”—either a de facto, actually existing injury or “the risk of real harm”—to establish standing.

But the named plaintiffs alleged only a “bare procedural violation,” the court said. All of them testified in their depositions that they understood that Walmart might conduct a background check and none of them objected. In fact, two of the plaintiffs welcomed the check, the court noted, because they wanted to be hired.

“[T]he only injury plaintiffs identify is that, as a result of defendant’s deficient disclosure forms, they ‘have been injured including, but not limited to, having their privacy and statutory rights invaded in violation of the FCRA,’ or, put differently, that defendant ‘obtained plaintiffs’ personal information in violation of their statutorily protected rights,’” the court wrote. “If, as the Supreme Court has established, there is a category of ‘bare procedural violation,’ then it must certainly encompass the wrongdoing alleged in plaintiffs’ first cause of action.”

Case law from other California federal courts backed this conclusion, Judge Carter added, citing decisions holding that when job applicants have not claimed that the disclosure forms impaired their understanding or that they would not have authorized the background check had the disclosure form complied with the FCRA, they were unable to establish standing.

The court distinguished the U.S. Court of Appeals, Ninth Circuit’s decision in Syed v. M-I, LLC, where the FCRA plaintiff learned after the fact that he had been subjected to a background check.

“Named plaintiffs, however, understood that defendant might run a background check, and because they wanted defendant to hire them, they consented to the potential background checks,” the court said. The “named plaintiffs have not adduced any evidence that their substantive rights were violated.”

As the plaintiffs’ claims under the ICRAA mirrored the FCRA claims, they similarly failed for lack of standing. Judge Carter decertified the class and remanded the case to state court.

To read the order in Pitre v. Wal-Mart Stores, Inc., click here.

Why it matters: Finding no evidence that the plaintiffs’ substantive rights under the FCRA or ICRAA were violated, the court said their “bare procedural violation,” without more, was insufficient to satisfy the Article III injury-in-fact standing requirement.