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11th Cir. Rejects FCRA Claim, Adopts ‘Maximum Possible Accuracy’ Standard

background checkThe U.S. Court of Appels for the Eleventh Circuit recently held that a consumer report that was factually accurate with clear instructions on how to further confirm the report’s accuracy, was not misleading and complied with the federal Fair Credit Reporting Act’s “maximum possible accuracy” standard.

A copy of the opinion in Erickson v. First Advantage Background Services Corp. is available at:  Link to the Opinion.

A father, Keith Erickson, formerly Keith Dodgson, volunteered to coach his son’s Little League baseball team. As part of his application, he authorized a background check which included a search of registered sex-offender records.

The Little League gave Erickson’s information to a consumer reporting agency, which searched its own database for matching criminal and sex-offender registry records.

Some jurisdiction’s databases, including the one here, only contain sex offenders’ names and birth years (not complete dates of birth) and therefore, to cast a wide net, the reporting agency searches records using only an applicant’s first and last name in such a jurisdiction. The Little League was aware of this practice.

The consumer reporting agency’s search returned a sex-offender record for a “Keith Dodgson” in Pennsylvania and the agency prepared a report for the Little League.

The report stated: “This Record is matched by First Name, Last Name ONLY and may not belong to your subject. Your further review of the State Sex Offender Website is required in order to determine if this is your subject.” The report then directed Little League to Pennsylvania’s sex-offender data to compare the “demographic data and available photographs,” noting that Little League might “conclude that the records do not belong to” Erickson.

The reporting agency also sent Erickson a letter informing him that he “share[d] the same name with a known criminal or registered sex offender” and that the record would be sent to Little League for review. The letter noted that “Little League is aware this record may not be yours” and explained that Little League was “committed” to investigating further if it planned to deny Erickson’s application based on the report.

Erickson was aware that this record related to his father, who shared the same name. Erickson then called the reporting agency and Little League to explain but ultimately decided not to coach his son’s team because of this humiliation. In addition, he changed his last name from Dodgson to Erickson.

Two months later, Erickson sued the consumer reporting agency alleging that the company failed to “follow reasonable procedures to assure maximum possible accuracy” of the information concerning Erickson in the report, in violation of the Fair Credit Reporting Act. 15 U.S.C. § 1681e(b).

After Erickson rested his case at trial, the reporting agency moved for judgment as a matter of law which the trial court granted, finding that Erickson had failed to establish two essential elements of his case: that the report was inaccurate, and that it caused him harm. This appeal followed.

The Eleventh Circuit began its review by offering background on the federal Fair Credit Reporting Act as a whole, first noting that one of the FCRA’s stated purposes is to ensure fair and accurate reporting about consumers. 15 U.S.C. § 1681(a)–(b). To that end, it imposes various requirements on consumer reporting agencies. One of those requirements is that consumer reporting agencies “follow reasonable procedures” to ensure “maximum possible accuracy” of information in consumer reports. 15 U.S.C. § 1681e(b).

The Eleventh Circuit previously established that to make a claim for a violation of § 1681e(b), a plaintiff must show at least two things: that a consumer report was inaccurate, and that the inaccurate report caused him to suffer damages. Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156, 1161 (11th Cir. 1991).

Here, the Court first considered whether the report provided to Little League was accurate, that is, whether it complied with the “maximum possible accuracy” standard of § 1681e(b).

The Eleventh Circuit explained that to reach “maximum possible accuracy,” information must be factually true and also unlikely to lead to a misunderstanding.

The Court further explained that under this standard, a report that contains factually incorrect information is plainly inaccurate under the FCRA, as well as a report that contains factually correct information but nonetheless misleads its users as to its meaning or implication. Similar rulings exist in other circuits. Dalton v. Cap. Associated Indus., Inc., 257 F.3d 409, 415 (4th Cir. 2001); Sepulvado v. CSC Credit Servs., Inc., 158 F.3d 890, 895 (5th Cir. 1998); Twumasi-Ankrah v. Checkr, Inc., 954 F.3d 938, 942 (6th Cir. 2020); Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1163 (9th Cir. 2009).

In sum, the Eleventh Circuit held, a report must be factually incorrect, objectively likely to mislead its intended user, or both, to violate the maximal accuracy standard of the FCRA.

Applying this standard, the Eleventh Circuit found that the report was factually correct in that it stated that a registered sex offender in Pennsylvania shared Erickson’s first and last name and did not wrongfully attribute that record to Erickson. In fact, the report explained that the matching record might not be Erickson’s at all.

Analyzing the second prong, whether the report was misleading, the Eleventh Circuit found the only objectively reasonable interpretation of the report was one that was not misleading. Specifically, the Little League knew what it would get, a search based only on first and last name. And it also knew that it could not attribute any of those matched records to an applicant without conducting further research first.

The Court noted that the report reminded Little League that “further review of the State Sex Offender Website” was required in order to determine if the record was Erickson’s.

The Eleventh Circuit distinguished this report from large-print headlines or promises that are belied by the lengthy fine print at the bottom or reports with vague equivocations like “the criminal history cited may not be 100 percent accurate” acknowledging those situations could potentially be misleading.

However, here the report’s language made clear what the report was and was not, and it was prepared consistent with the expectations of the requester. Therefore, because Erickson’s claim that the report was not maximally accurate could not go on, the Court did not consider the trial court’s independent ground for granting judgment as a matter of law — that the report did not cause Erickson harm.

Accordingly, the Eleventh Circuit affirmed the judgment of the trial court.

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The attorneys of Maurice Wutscher are seasoned business lawyers with substantial experience in business law, financial services litigation and regulatory compliance. They represent consumer and commercial financial services companies, including depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, financial asset buyers and sellers, loss mitigation companies, third-party debt collectors, and other financial services providers. They have defended scores of putative class actions, have substantial experience in federal appellate court litigation and bring substantial trial and complex bankruptcy experience. They are leaders and influencers in their highly specialized area of law. They serve in leadership positions in industry associations and regularly publish and speak before national audiences.

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