Branch v. Government Employees Insurance Company, No. 3:2016cv01010 - Document 73 (E.D. Va. 2017)
Court Description: MEMORANDUM OPINION. See for complete details. It is so ORDERED. Signed by District Judge Robert E. Payne on 12/18/2017. (nbrow)
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Branch v. Government Employees Insurance Company Doc. 73 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division DEC I 9 20l7 TIFFANIE BRANCH, individually and on behalf of all others similarly situated, CLERK, U.S. DISTRICT COURT RICHMOND, VA Plaintiff, v. Civil Action No. 3:16-cv-1010 GOVERNMENT EMPLOYEES INSURANCE COMPANY, Defendant. MEMORANDUM OPINION This matter SUMMARY JUDGMENT is before (ECF No. the 39). Court on GEICO'S MOTION FOR For the reasons set forth below, the motion will be denied. BACKGROUND A. Procedural Background On December Class Action 30, 2016, Complaint on Tiffanie behalf Branch of ("Branch") herself and filed all a others similarly situated, alleging that Government Employees Insurance Company ("GEICO") violated Credit Reporting Act Section ( "FCRA") . 1681b (b) (3) (A) ECF No. 1. of the Fair Branch then filed an Amended Class Action Complaint on April 11, 2017, which is the operative complaint here. ECF No. 23. Dockets.Justia.com The parties' the class initial briefing on GEICO' s motion concerned originally composed that Branch proposed, of individuals who were assigned a "Fail" grade by GEICO because of any deficiency in their background reports. at oral argument, Id. <JI 56. However, Branch's counsel indicated that Branch would narrow the class to those individuals who were assigned a "Fail" grade by GEICO specifically because of the criminal history in their background reports. 60) September 27, at 42:16-20; 5:21-6:5. addressing As a the result, summary narrowed class, ECF No. October the 3, 2017 Transcript 2017 Transcript parties judgment filed issues in (ECF No. (ECF No. supplemental the context 56) at briefs of the 65, and this opinion addresses only that class. B. Factual Background 1. Branch's Application to GEICO Branch applied for employment with GEICO, and, on August 26, 2016, Branch accepted GEICO's offer to join the company as a Liability Claims background check. Representative, Around the same which time, was contingent Branch also on a completed GEICO's Supplemental Information Form for use in connection with the background check. On that form, criminal a conviction December larceny. 2 Branch listed, 2015 conviction as her only for petit On Branch September from a 2, GEICO consumer requested reporting a background agency, General check Information Services ("GIS"). GIS completed Branch's background report Report") and indicated record: as sent that it Branch to GEICO had two on September criminal on 21. The convictions ("the Report on her the December 2015 misdemeanor petit larceny conviction, well as, conviction. inaccurately, Camacho Deel. a (ECF 2011 No. felony 40-4), peti t Ex. 2 larceny at 10. On September 21, after reviewing the Report, a GEICO employee, Brit Collins, assigned it a preliminary grade of "Fail." 1 Later that ("Parker"), day, another GEICO employee, Latoria called Branch regarding the contents of the Report. The exact details of the conversation are disputed. that Parker told her that GEICO's job offer Branch said was because of the 2011 felony conviction in the Report. the other Parker hand, testified that she informed rescinded Parker, on Branch that she would receive a letter from GIS about the Report because GEICO had concluded that Branch's criminal history would preclude her from employment at GEICO, accuracy of the Report. and that she could The parties agree, however, dispute the that Branch The basis for the "Fail" grade is disputed but immaterial here, as that fact does not affect whether assigning the "Fail" grade was an adverse action. 1 3 told Parker that the 2011 she had pled night, Branch petit further explaining that she had been charged with felony that That misdemeanor Parker, but felony. a conviction, larceny a was larceny grand not conviction guilty to e-mailed a reduced misdemeanor charge. On September 22, letter rights containing ("the 2016, on GEICO's behalf, GIS sent Branch a the Report Pre-Adverse and Action a summary Letter"). of Branch's Branch FCRA could not recall whether she ever initiated a dispute with GIS about the accuracy of her Report. But, the record is that, neither GIS nor GEICO had heard from Branch, by October 3, so GIS sent Branch a letter stating that GEICO would not be hiring her based on the contents of the Report ("the Adverse Action Letter"). 2. GEICO's Job Application Process GEICO's Adjudication Process"), background Process Camacho for for period, Camacho Deel. to an use of process Background Deel., policy off er the check Ex. 1, 4. Checks which background is described ("the was reports in its Adjudication GEICO's during official the class Once GEICO extends a conditional job applicant, the applicant must complete a Supplemental Information Form, which contains information that a GEICO employee enters into GIS's system. Adjudication Process at 3-5. GIS then generates a background 4 report and marks each portion of the report as either "Pass" or "Review," depending on whether that requirements. part satisfies GEICO's employment eligibility Once GIS completes the background report, a GEICO employee reviews it and assigns it a grade of "Pass" or "Fail," based on whether the GEICO's meets report eligibility requirements. 2 Adjudication Process at 6. This review occurs in all report cases, even "Pass." GEICO' s if GIS has given the a notation of "Fail" grade may be appropriate if the report contains felony convictions or certain misdemeanor convictions, or if the report shows a conviction that was not disclosed on the Supplemental Information Form. As GIS in Branch's sends the business-day case, after GEICO assigns Pre-Adverse "cure period" Action Letter, during which a "Fail" grade, initiating the a seven- applicant can Branch disputes that these employees do "anything more than audit [] or confirm [] that GIS correctly followed the existing criminal records matrix in adjudicating the applicant." Pl. Opp. (ECF No. 45) at 4. But the cited testimony does not use the term "matrix." The Adjudication Process says that GEICO employees use a Criminal Matrix to decide whether to assign a background report a grade of "Pass" or "Fail." See Adjudication Process at 6. GEICO employees' testimony suggests that this is the "matrix" that Branch is referencing. See Parker Dep. (ECF No. 40-3) at 76:14-77:9, 78:12-19; Collins Dep. (ECF No. 40-5) at 44:15-45:8, 45:24-47:15. However, neither the Adjudication Process nor that testimony supports Branch's statement that GIS uses the Criminal Matrix, and no evidence indicates that GIS even has possession of the Matrix. Therefore, even assuming that this fact is material, there is no genuine dispute about which entity grades the report. See Matherly v. Andrews, 859 F.3d 264, 280 (4th Cir. 2017) . 2 5 address grade. the deficiency in the report that led to the When the "Fail" grade relates to the report's history, "Fail" criminal the applicant must contact GIS directly to dispute the report's accuracy. Nonetheless, a GEICO employee must review the GIS system throughout the cure period to see if the applicant has addressed grade. with GIS the deficiency If the applicant has done so, leading to the "Fail" that employee is required to change the grade from "Fail" to "Pass." Id. at 7. GIS then mails an Adverse Action Letter to any applicant whose background report still has a "Fail" grade at the end of the cure period, failed to, because the applicant could not, or cure the inaccuracy. After GIS sends that letter, GEICO employee the either offer. The informs the applicant Adjudication Process that GEICO has precludes a rescinded informing the applicant of the rescission before that point. Id. at 7-8. During based on the class criminal period, history GEICO to the assigned background a "Fail" reports grade of 426 applicants. 3 The final grades for the reports of 96 individuals were eventually changed to "Pass." In addition, the final grades Branch disputed the corresponding number and all related figures for the original class because they were based on inadmissible hearsay. Assuming that statement applies to these new numbers, as is suggested by Branch's continued hearsay objection, this argument is without merit. See infra Section II. 3 6 for the reports of 14 applicants were eventually changed to "No Grade." Suppl. Camacho Deel. (ECF No. 68-1) <JI 8.a-.b. This change would have occurred because the applicant did not proceed with the application background from such report, withdrawing Process at 8. process as for failing consideration Finally, reasons the for a unrelated drug position. to screening the or Adjudication the final grades for the reports of 316 applicants from the putative class remained "Fail" at the end of the cure period. Suppl. Camacho Deel. <JI 8.b. DISCUSSION I. Legal Standard Under Fed. R. Civ. P. 56, a court "shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Catrett, 477 U.S. Fed. 317 R. Civ. P. 56(a). In Celotex Corp. v. (1986), the Supreme Court stated that Rule 56 requires the entry of summary judgment "after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322. To enter summary judgment, fact, "there can be no genuine issue as to any material since a complete failure of proof concerning an essential 7 element of the nonmoving party's case renders all other facts immaterial." Id. at 323 (internal quotations omitted). When reviewing a motion for summary judgment, a court must interpret the facts light most Elec. Indus. (1986); and any inferences drawn therefrom in the favorable Co. Lee v. to v. the nonmoving Zenith Radio Town of Seaboard, party. Corp., 863 See 475 Matsushita U.S. F.3d 323, 574, 327 587 (4th Cir. 2017). To successfully oppose a motion for summary judgment, the nonmoving party must there are specific facts that would create a genuine issue for trial. See Anderson v. Liberty demonstrate Lobby, However, "'[c]onclusory suffice' to judgment, oppose 'nor does 859 F.3d at 280 312 F.3d 645, a Inc., or the 477 (4th U.S. supported that 242, 250 (1986). allegations motion do for not summary scintilla of evidence.'" Matherly, (quoting Thompson v. 649 court speculative properly a mere to Cir. 2002)). Potomac Elec. "Where Power Co., the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, disposition appropriate." United States v. Lee, by summary 943 F.2d 366, judgment 368 is (4th Cir. 1991). II. Admissibility of Information from GEICO's Spreadsheet It is first necessary to address Branch's argument that, in deciding GEICO's motion, the Court 8 cannot consider certain information provided by GEICO about the applicants whose reports received a "Fail" grade during the relevant time period because that information is inadmissible hearsay. A. Legal Standard Rule 56 limits the type of evidence that can be considered on a motion for summary judgment. asserting support that the materials a electronically stipulations . the party be . genuinely disputed must by . . citing to record, stored .' "[a] cannot fact assertion in Under that rule, including information, particular depositions, affidavits or parts documents, declarations, interrogatory answers, admissions, of or other materials." Fed. R. Civ. P. 56 ( c) ( 1) (A) . However, "[a] party may object that the material cited to support . . . a fact cannot be presented in a form that would be admissible in evidence." Id. 56(c) (2). For the non-objecting party to then have that evidence considered, in that party must "identif [y] admissible Supp. 3d 648, form." 654 Jones (E.D. Va. v. W. 2016) facts that could be put Tidwater Reg' 1 Jail, 187 F. (internal quotations omitted) (emphasis in original). B. Parties' Arguments In paragraphs 25-30 of its Statement of Material Undisputed Facts, GEICO presented information produced to Branch, which from a contained 9 spreadsheet details that about it all individuals whose background reports were assigned a "Fail" grade at any time during the hiring process between December 29, 2014 and January 15, 2017. GEICO did not include the spreadsheet as an exhibit, but a GEICO employee, provided Camacho for a declaration Deel. the 11-12. <JI<JI individuals declaration, with and the the show that meaningful has given opportunity <JI spreadsheet. similar in a spreadsheet information supplemental is attached 8. GEICO relies on this evidence assigned change to ("Camacho"), the class corresponding applicants from narrowed thereto. Suppl. Camacho Deel. to details Camacho in Karen Camacho a "Fail" that grade have during grade a the subsequent cure period. Branch contends Court cannot that the consider here. spreadsheet is Camacho's spreadsheet are therefore also hearsay. hearsay that the statements based on the GEICO concedes that the spreadsheet is hearsay, but asserts that it can be presented in an admissible 1006, form thereby question is at trial satisfying whether the through Rule Fed. 56(c) (2) . 4 spreadsheet could R. Evid. Thus, be the 803 ( 6) or relevant admitted under either provision. GEICO also contends, and Branch does not dispute, that Camacho's testimony is based on her personal knowledge. Therefore, the Court can consider the statements in her declarations as long as the spreadsheet is admissible. See Fed. R. Ci v. P. 5 6 ( c) ( 4) . 10 4 C. Analysis 1. Rule that Rule 803 (6) 803(6), "[a] the recor d of "business ac t , an records" event, exception, condition, provides opinion, or diagnosis" is admissible if: (A) the record was made at someone with knowledge; by . or near the time (B) the record was kept in the course of regularly conducted activity of a business . . . , (C) making the record was a that activity; a regular practice of all these conditions are shown by the testimony of the custodian or another qualified witness . . . ' and ( D) (E) the opponent does not show that the source of information or the method or circumstances of preparation indicate a lack of trustworthiness. Courts have compiled consistently from a computer business record, Int' 1, Inc. (9th Cir. 539 v. that database "evidence is also that has Lumbermens Mut. Cas. Co., accord United States v. 2002) ("Computer data 576 been admissible provided it meets the criteria" above. 2009); (7th Cir. held as U-Haul F.3d 1040, Fujii, 301 a 1043 F.3d 535, compiled and presented in computer printouts prepared specifically for trial is admissible under Rule 803(6) Coverage Corp., 38 . . . ") ; F.3d 627, Potamkin Cadillac Corp. 632 11 (2d Cir. 1994) ("A v. B. R. I. business record may include data later printed out for stored electronically on computers presentation original computer data business duty accordance (internal though the in quotations printouts 803 (6) argues court, compilation was with omitted)) . 5 themselves course of business." Fujii, GEICO in that it for the spreadsheet. prepared regular The are not satisfy business kept of GIS, as the to a practice." applies in the "even ordinary (emphasis omitted). each element of Rule Each listing contains data recorded at or near the time by someone with knowledge, or by automated action, long pursuant exception 301 F.3d at 539 can so and either manually and that recording is a regular practice which maintains the information on behalf of GEICO; the data are maintained in the course of GEICO's routine background check process; Christopher conditions. and either Truesdale Branch makes Camacho or ("Truesdale"), three a GIS can assertions employee, testify in underlying records are GIS' s business records, such to response: as these ( 1) the not GEICO' s; ( 2) this case is different than those cited above because Truesdale used "specialized queries to gather the information," rather Although the Fourth Circuit has not affirmatively recognized this principle, one court in the circuit has cited these cases favorably. See Sprint Nextel Corp. v. Simple Cell Inc., 248 F. Supp. 3d 663, 672-73 (D. Md. 2017). 12 5 than printing it out; and ( 3) Camacho is not an appropriate custodian witness. All the three arguments underlying records fail. First, belong to the evidence GEICO. It is shows true that that the information that GEICO seeks to introduce is "resident in GIS's database. this /1 Truesdale Deel. database on GEICO' s (ECF No. 40-6) behalf. Suppl. 4. But GIS maintains Camacho Deel. 5. In addition, both GEICO and GIS employees access the database on a regular basis, and several categories of information spreadsheet are entered solely by GEICO employees. Branch cites and entered no cases by, holding that one Id. in the 5-6. information accessible to, company's employees becomes another company's business records simply because the database in which that information is entered resides on the second company's servers. Moreover, whether the records are GEICO's or GIS's makes no difference, because Rule 803(6) does not require that "'that the records be prepared by the party who has custody documents and seeks to introduce them into evidence.' Assocs. III v. Stone, Jack B. Weinstein 60 F.3d 95, & Margaret Evidence§ 803.08[8] [a] (2d ed. SSB v. C.W. Haynes & Co., A. 101 (2d Cir. 1995) Berger, /1 of the Phoenix (quoting 5 Weinstein's Federal 2006)); see also Midfirst Bank, 893 F. Supp. 1304, 1310 (D.S.C. 1994) 13 ("Business records of an entity are another entity made the records . required is proof practice to get that it document." Phoenix As socs., omitted). GIS spreadsheet data. Suppl. regularly to the from business the provides when GIS Camacho Deel. the sends 5. entity's person 60 F. 3d at 101 GEICO even though ."). Instead, "all that is was information admissible who regular created the (internal quotations information GEICO in the background report Branch's concern Accordingly, about which entity creates the records is misplaced. Second, change the gathering "regular information practice" through analysis a here. query As does an not initial matter, Branch cannot distinguish all the cases cited by GEICO; the proponent in U-Haul International, for example, "quer [ied] the computer to compile the information to create the summaries" that were held admissible under Rule 803(6). 576 F.3d at 1045. Furthermore, Branch's approach ignores the realities of modern business litigation, where many business records are kept in databases . . . . [P]roducing limited data from a larger database is more akin to reviewing a set of documents in response to a discovery request and producing only responsive documents, than it is creating a new data compilation or document for the purposes of litigation. Health Alliance 121, 129 Network, (S.D.N.Y. 2007). Inc. v. Cont'l Cas. Co., 245 F.R.D. For that reason, "a smaller subset of 14 data provided as evidence from [a] database" is admissible under Rule 803 (6) if all the rule's elements are met. in Sprint Nextel, the court observed that, Id. Similarly, where "a proponent queries a database in order to extract data that is responsive to ongoing litigation," Rule 803(6) generally makes the compiled information admissible records . Supp. not [is] 3d at qualify 67 3. as as long as because Under this business approach, records they databases redundancies") . The queries identified background reports, reproduced the and information Camacho shows Truesdale's 2 48 F. certain summaries would they data are compiled through from been ha [d] fields them from Deel. responsive alterations." 11. queries in those in a the Branch's least three to remove spreadsheet, class logical fields simply at edited leading to GEICO' s arranged of (spreadsheets were not business pertinent spreadsheet. that if "combine[d] different . contrast, content presented with minimal "selective extraction." See id. records "the members' manner, verbatim spreadsheet copied information from her report to the spreadsheet. and by and on the entry pasted Compare Camacho Deel., Ex. 2 at 8 with Suppl. Camacho Deel., Attachment at 4. As a result, the spreadsheet more closely resembles the "printouts" with "minimal alterations," making it a business record. 15 Third, Camacho's supplemental declaration is an appropriate custodian witness. a shows that Camacho stated that, she "[a]s result of my access to the GIS system and my review of the data GIS stores on GEICO's behalf, I have direct personal knowledge about the type of data available on that database, how it is Deel. stored, 5. and how it can be accessed." Suppl. Camacho She then explains what information each field in the spreadsheet includes, entered in GIS' s and system. how Id. that 6. information This is originally knowledge satisfies the minimal requirement that a testifying employee be "familiar with the record-keeping practices of a business." Nader v. Blair, 549 F. 3d 953, to 963 testify (4th Cir. about Truesdale likely Truesdale Deel. witnesses who 2 008) . the compilation would-a 2. can Even if Camacho did not qualify point that Accordingly, testify that: of the Branch GEICO ( 1) underlying does has the not data, dispute. identified information for two each applicant was entered into GIS's system at or near the time that information was generated; (2) the persons who entered information had knowledge of the data they entered; and information was kept in the course of conducted business activity. See U-Haul Int'l, Thus, the background report data the regularly 576 F.3d at 1044. summarized spreadsheet is admissible under Rule 803(6). 16 GEICO's (3) the in GEICO's Because GEICO can satisfy the business record requirements for the data in the spreadsheet, not address (" [ T] he whether Rule summaries records. 1006 it asserts that the Court need applies have suggested that the Rule 8 03 ( 6) end inquiry. 1340-41 (5th See Cir. United 1992) States (finding v. at 1046 business Some courts, analysis does not Loney, summary id. the Rule 1006 does not apply."). however, the See constituted themselves Thus, here. of 95 9 data F. 3d 1332, admissible under Rule 1006 after concluding that underlying data qualified as business records) ; Sprint Nextel, 2 48 F. Supp. 3d at 67 3 (" [T] he court is inclined to view the spreadsheets as summaries of relevant se. ") . As information a result, rather the Court than will 'business examine records' whether per GEICO can satisfy Rule 1006 before considering the spreadsheet here. 2. Under Rule 1006 Rule summary . to 100 6, prove proponent " [ t] he the content of may voluminous use a writings, recordings, or photographs that cannot be conveniently examined in court." However, for this proponent must make the originals examination reasonable "the or time records copying, and or place." summarized summary to be or both, Fed. must 17 R. admissible, duplicates by other Evid. otherwise 1006. be "[t] he available parties In at for a addition, admissible in evidence." United States v. 2004) . Rule Janati, The records in GEICO' s 803(6), as discussed 374 F.3d 263, 272 (4th Cir. spreadsheet are admissible under above. Thus, the sole remaining question is whether GEICO has made those records available to Branch, or is capable of doing so. GEICO argues that it met this requirement by offering, during a July 20, 2017 telephonic meet-and-confer conference, to give Branch a written explanation for how the compiled, and information Branch's to make available counsel electronically agreed to background members' class respond spreadsheet was Branch's at to this report request. offer if he determined that Branch needed any information beyond what was in the spreadsheet, but never did so. Branch contends that the offer did not satisfy Rule 1006 because an explanation of how the spreadsheet was put together is not the same as the original data itself. This record demonstrates information underlying the contemplated by Rule that GEICO has made the spreadsheet available in the manner 1006. During the July 20 call, GEICO's counsel stated that he would provide an explanation of how the spreadsheet was compiled "evaluate it and then assess whether you so that Branch's counsel could tell me if you need to know more to intend to 18 take a position that [the spreadsheet]'s inauthentic or insufficient." ECF No. 68-5 at 56:20-24. Branch correctly points out that an explanation of the summarized data's Evid. 1006. the which is what must be provided. "original []" data itself, R. to Fed. compilation After all, is the not purpose equivalent of the availability requirement is "to afford a process to test the accuracy of the chart's summarization." Janati, 374 F.3d at 273. It would be impossible for Branch to do so if she only had an explanation about the Even if database summary's printing would compilation, out be the unduly and not relevant burdensome, the underlying data. information from GEICO conceivably could GIS's produce a copy of the database to Branch, Gen. Refractories Co. v. First State Ins. Co., No. CIV.A. 04-3509, 2015 WL 3450391, at *9-10 (E.D. Pa. May 29, 2015), or designate a place and time for Branch's counsel to inspect the database. It has done neither. However, discovery that record failure shows is that not Branch dispositive had all the because the information needed to ensure the accuracy of the spreadsheet. GEICO objected to Branch's document request for "[a]ll records for all applicants" assigned a "Fail" grade during the class period as unduly burdensome, given the quantity of that information, produced the spreadsheet instead. ECF No. also produced all of the data from GIS' s 19 and 49-3 at 35. But GEICO database for Branch before the July 20 call. And GEICO' s counsel made clear-both before and during that call-that GEICO would provide additional information from necessary to the assist database for Branch's other class in counsel members reviewing as the spreadsheet. Branch never responded to these repeated proposals; in fact, Branch's counsel stated during the July 20 call that Branch did not want 68-5 at 51: 12-15. the offers for other class members' information. ECF No. This failure by Branch's counsel to take up additional information from the database shows that Branch has received all the information she needs to review the spreadsheet as a summary. See United States v. Jamieson, 427 F. 3d 394, 410-11 Rule 1006. (6th Cir. 2005) . GEICO can therefore satisfy To hold otherwise would be an exercise in formalism. For the foregoing reasons, GEICO has shown that put the spreadsheet in admissible form under Rules 1006. Branch's Accordingly, spreadsheet fails, Rule 56(c) (2) it could 8 03 ( 6) objection to and the and the Court will therefore consider it and Camacho's declarations in deciding GEICO's motion. III. Adverse Action under Section 1681b(b) (3) (A) GEICO because the argues action that it it is entitled takes-assigning a to summary "Fail" judgment grade to an applicant's background report-does not qualify as adverse action under the FCRA. 20 A. Legal Standard Section 168lb(b) (3) (A) requires that: [I] n using a consumer report for employment purposes, before taking any adverse action based in whole or in part on the report, the person intending to take such adverse action shall provide to the consumer to whom the report relates(i) a copy of the report; and (ii) a description in writing of the rights of the consumer under this subchapter, as prescribed by the Bureau under section 168lg(c) (3) of this title. Therefore, to implicate this provision, an employer must first form an intent to take adverse action, and then must give notice to the consumer before the employer takes such adverse action. Costa v. Family Dollar Stores of Va., Inc., 195 F. Supp. 3d 841, 844 (E.D. Va. 2016). The FCRA contains any U.S.C. current § catch-all or that adverse In addition, action is the employment adversely affects employee." prospective 168la(k) (1) (B) (ii). definition, purposes In phrase adverse action may be "a denial of employment or any employment here. the context, for relevant for action." decision are definitions "adverse other Two several 15 under "an the action FCRA' s taken or determination that is-(I) made in connection with an application 21 that was made by . . . any consumer . . . , and (II) adverse to the interests of the consumer." 6 Id.§ 1681a(k) (1) (B) (iv). B. Parties' Arguments GEICO asserts that summary judgment is appropriate because assigning a "Fail" grade to a report is a reflection of GEICO's intent to itself. take GEICO adverse action, characterizes statutory interpretation, Court can resolve 168 lb (b) ( 3) (A) 's provide notice at the language to a the which is summary is consumer and not issue a the here as a action matter question of law that judgment stage. straightforward: who adverse will be And of the Section an employer must subject to adverse action based on the contents of a background report only where the employer "intend [ s] words, notice is not to take such adverse action." In other required unless the employer has already decided to take adverse action based on a report. 6 GEICO contends that this definition is not relevant here, but the Court has recognized that it might apply to an employer's actions based on a background report. See Manuel v. Wells Fargo Bank, Nat' 1 Ass'n, 123 F. Supp. 3d 810, 820-21 (E.D. Va. 2015); see also Goode v. LexisNexis Risk & Info. Analytics Grp., Inc., 848 F. Supp. 2d 532, 540-41 (E.D. Pa. 2012). However, the parties focus their dispute on Section 168la (k) (1) (B) (ii), and Branch does not seriously advance any argument under subsection (iv). Accordingly, the Court does not address whether GEICO' s actions qualify as adverse action under that provision. 22 GEICO relies primarily on two cases, Manuel and Costa, which involved facts that were very similar to those presented in this action, summary yet reached opposite conclusions on motions for judgment. In Manuel, reviewed defendant background reports generated by a third party, criminal First Advantage, to determine if current or prospective employees were eligible for positions. 123 F. Supp. 3d at 814. If an employee was deemed ineligible, defendant entered a code noting that, causing First Advantage to send a "Pre-Adverse Action Notice." Id. at 815. the employee five-day did cure not dispute period, First the background Advantage then report sent If during an a "Adverse Action Notice." Id. The Court observed that coding the employee as ineligible was not a final decision affecting the employee, "pending" decision not to hire, which "meaningful opportunity to dispute." Id. evidence indicated that the employee at 823. defendant the but rather a had a Moreover, the willing to "was investigate any background checks . . . that a consumer believed were incorrect or unfair." Id. Nonetheless, the Court denied summary judgment because it concluded that there was a disputed issue action of fact as to when the against plaintiffs find that defendant and that "[a] actually took adverse reasonable jury could [defendant]' s adverse hiring decision was final when 23 it was first relayed to First Advantage because comfortable adhering to that decision without [defendant] reviewing was it if code to the individual did not file a dispute." Id. Similarly, applicants' in Costa, background criteria. 195 F. Supp. First Advantage reports based 3d at 843. assigned on a defendant's hiring If a report was coded as "Not Recommended," then First Advantage sent the applicant the report and a statement of FCRA rights. a dispute Packet, within five leading to an days Id. An applicant could initiate after independent receiving the First review by defendant. 7 Letter If no dispute was lodged, then First Advantage sent a second letter on defendant's behalf rescinding conditional the off er of coding an employment. Id. Unlike Manuel, the Costa court concluded that applicant as "Not Recommended" was not adverse action, was "an internal decision from suffer any adverse effect." Id. instead defendant's termination court 7 of granted a rescission current summary which at 84 6. of a employee. judgment, the applicant d [id] not The adverse action was conditional See since it id. job off er Accordingly, distinguishing Manuel on or the the The court noted that defendant changed an applicant's code from "Not Recommended" to "Recommended" in 35% of cases where the applicant initiated a dispute after receiving the First Letter Packet. Costa, 195 F. Supp. 3d at 843. 24 grounds that "[n]othing in the record here creates any such jury question legal [as in Manuel]. effects applicant as of not the The facts are not at issue, facts. the And . . recommended is not act adverse only the of coding action under an the FCRA as a matter of law." Id. GEICO contends that, grade only indicates job offer, under under these cases, GEICO' s intent to withdraw a not the adverse action itself. the Adjudication Process, assigning a "Fail" GEICO conditional Indeed, says GEICO, cannot rescind a conditional offer unless the applicant has failed to dispute or has failed to cure the report's defects after receiving the PreAdverse Action process works Letter. Furthermore, effectively, says GEICO, the dispute as more than 20% of all applicants whose reports were initially assigned a "Fail" grade because of criminal history ultimately received a "Pass" grade. according to GEICO, Therefore, the assignment of the "Fail" grade and the sending of the Pre-Adverse Action Letter have the precise effect that the process FCRA intended-that to allow consumers is, to to "slow [] dispute or down discuss the [hiring] potentially harmful information." Id. at 845. In response, "Fail" grade is Branch asserts that GEICO's assignment of the effectively a final decision to withdraw a conditional offer. Branch makes three main points in support of 25 this argument. First, she contends that the cases cited by GEICO regarding internal decisions not being adverse actions do not apply here, because GEICO's communication of the "Fail" grade to GIS has an actual effect: sending the notices, successful dispute starting the automatic process of which an applicant cannot stop without a with GIS. Second, under Manuel, whether GEICO's assignment of a "Fail" grade is an adverse action is a fact question. Given the factual similarity between this case and Manuel, Branch argues, the Court necessarily must reach the same existence conclusion about fact. Finally, Branch the asserts of that a dispute there is no of material meaningful dispute process for applicants to resolve inaccuracies in their criminal Letter. employee, histories Indeed, after says they Branch, receive the fact the Pre-Adverse that Parker, Action a GEICO characterized the cure period as allowing applicants to "have a chance to change GEICO's mind" permits an inference that GEICO has already reached a final decision when it assigns a "Fail" grade, favor. and that inference must be drawn in Branch's 8 Branch also points to Beverly v. Wal-Mart Stores, Inc., No. CIV.A. 3:07CV469, 2008 WL 149032 (E.D. Va. Jan. 11, 2008) in arguing that the effectiveness of GEICO's cure process is irrelevant if adverse action has already occurred. But the facts of that case are just as different from the facts here as they were from the facts in Manuel, where the Court found Beverly 26 8 C. The Analysis issue here is whether GEICO took an adverse action against Branch and other class members when it assigned a "Fail" grade. This Court and others have consistently recognized that an employer's formation of intent to take adverse action and the adverse action itself are distinct. See Manuel, 123 F. Supp. 3d at 822; see also Costa, 195 F. Supp. 3d at 844-45; Moore v. Rite Aid Headquarters Corp., 33 F. Supp. 3d 569, 574 Put otherwise, the adverse "[t] he action (E.D. Pa. 2014). formation of such intent . . . cannot be itself." Manuel, 123 F. Supp. 3d at 822 (internal quotations omitted); see also Moore, 33 F. Supp. 3d at 574 ("[A]n internal decision to rescind an offer, standing alone, cannot be considered an adverse action."). Branch is correct that, whether coding action is a But an as the Court previously has held, applicant fact question. in a Manuel, categorizing an employer's certain way 123 F. Supp. action as a is an adverse 3d at 822-23. tentative internal decision or a final decision depends on the evidence about the particular background check process at issue. If, as in Manuel, the process is structured so that an applicant will necessarily suffer adverse action after his report is given a particular inapposite. Manuel, 123 F. Supp. 3d at 822 n.8. Therefore, the Court declines to consider Beverly in deciding if GEICO's "Fail" grade was an adverse action. 27 grade, then what is apparently an internal decision may actually be a final decision. 574 ("An employer designating some cannot future decision' if, Moreover, summary in fact, dispute of fact jury See id. satisfy 33 F. 1681b(b) (3) § Supp. by 3d at formally point in time as the moment of 'final that decision already has been made."). judgment as at 823; Moore, is improper if there is a genuine to how the background check process works, since a would need to determine whether, based on the facts, the employer's action was an internal decision or a final one. See Manuel, 123 F. Supp. 3d at 823. In contrast, where it is undisputed that an applicant has a legitimate opportunity to cure inaccuracies in a receiving an adverse employment decision, report before assigning a "Fail" grade does not necessarily cause any adverse effect, and summary judgment could be appropriate. See Costa, 195 F. Supp. 3d at 846; Ramos v. Genesis Healthcare, LLC, 141 F. Supp. 3d 341, 34849 (E.D. Pa. 2015) (internal decision was not adverse action because employer remained in contact with prospective employee after coding GEICO must concerning him show as that applicants' ineligible there for is ability to no employment). genuine cure the Accordingly, dispute defects reports after receiving the Pre-Adverse Action Letter. 28 of in fact their The record has evidence that supports both parties on this issue. The language, review of Pre-Adverse stating that your Action Letter "GEICO has contains or will be application within the next tentative completing their few days, and may take action based on the enclosed report." Camacho Deel., Ex. at 1. for 2 The Adjudication Process also allows seven business days applicants to cure deficiencies, a longer time than the five-day period in Costa and Manuel. Adjudication Process at 3. Moreover, the Process explicitly prohibits GEICO employees from rescinding the conditional offer to the applicant at any point before the cure period has expired, id. GEICO must time give the applicant that at 8, to indicating that cure. In Branch's case, Parker even reached out to Branch after GEICO assigned her a "Fail" grade, which is inconsistent with Branch's contention that GEICO made a final decision. See Ramos, 141 F. Supp. 3d at 349. The legitimacy GEICO's of demonstrated by applicants' process cure is further success in correcting inaccuracies. 96 of 426 individuals with an initial "Fail" grade because of their criminal histories-more than 20% of the class-were able to change their grades Suppl. Camacho Deel. to "Pass" 8.a-.b. through this dispute process. This evidence shows that GEICO's cure period is not just a "pro forma" one, 29 and that applicants instead have a "real" chance "to change [GEICO]'s Magallon v. Robert Half Int'l, Inc., 311 F.R.D. 2015). Indeed, process in the Costa presence was a of a factor 625, similarly in the 633 (D. Or. effective court's defendant's coding was not adverse action. mind." finding See 195 F. cure that Supp. 3d at 843. Most of evidentiary Branch's support 9 responses or assertion that GEICO' s are to these otherwise points either unconvincing. lack Branch's internal decision is transformed into a final one merely because GEICO communicates the "Fail" grade to GIS is unavailing because GIS is acting in this case as GEICO's agent. See Costa, 195 F. Supp. 3d at determining when adverse action occurs, [defendant] party]"). process outsources Similarly, for criminal Branch parts does background GEICO is "not the producer[] of 845 "[i] t its not explain inaccuracies Thus, it is purposes of matters not that process is to how [a third the cure insufficient. of the report and the information that's contained [t]here," GEICO 30(b) (6) Dep. 82: 4-5. (for (ECF No. 40-2) at unclear why Branch would expect GEICO to For instance, Branch cites several pages of the GEICO Rule 30(b) (6) deposition to show that GIS, not GEICO, actually grades the reports. However, that argument is plainly inconsistent with the Adjudication Process, and none of those pages support the statements for which Branch cites them. See Adjudication Process at 2 ("GIS does not and will not determine a candidate's eligibility to work at GEICO."). 30 9 correct GIS's mistakes, delegated other tasks the Adjudication particularly when GEICO in the hiring process Process requires GEICO has to GIS. employees already Moreover, to review GIS's system on a regular basis during the cure period to see if the applicant addresses the deficiencies leading to the "Fail" grade, and to change the grade from "Fail" to "Pass" applicant does so. Adjudication Process at 7. if the there is no substantive difference between having applicants go through GIS or GEICO to correct inaccuracies in their criminal histories. Finally, that the purpose of GEICO's dispute process is to convince GEICO to change its mind is not evidence of a final decision, but rather the very manner in which dispute processes are supposed to operate under the FCRA. See Magallon, 311 F.R.D. at 633 ("[T]o comply with the [FCRA], an employer who intends to take adverse action must give the applicant an opportunity to change the employer's mind."). Branch cites no cases recognizing the supposed distinction between before the action decision Brief decision process (ECF No. after 70) at the 9-10. "changing starts" employer And, an employer's mind and "changing an adversehas made it." Pl. Suppl. even though the Adjudication Process refers to the initial grade for a background report as GEICO' s "final" hiring decision, the evidence of GEICO' s process shows that label to be nominal in practice. 31 cure Despite those facts in GEICO' s favor, Branch's testimony that Parker told her, before the Adverse Action Letter was even sent, that GEICO was rescinding her offer creates a genuine dispute about the finality of GEICO's decision when it assigns a "Fail" grade. deviated This from evidence the shows Adjudication only that a Process-which GEICO employee requires waiting until the end of the cure period to inform an applicant of the rescission of an offer-in one instance. right to Yet, even if GEICO is (and it likely is) that a single deviation is not material whether GEICO has taken adverse action as to every class member, this factual dispute is material to the question whether GEICO took adverse action as to Branch in particular. disputed reached evidence, a assigned final her a a jury could decision "Fail" period meaningless to infer that rescind grade, GEICO Branch's thereby making in Branch's case. From the already offer the when ensuing Furthermore, had there it cure is no evidence that any GEICO employee contacted Branch after her call with Parker expressed or during "remain [ed] internally the call, involved in discussed so GEICO addressing the concerns cannot be [Branch]' s said Branch to challenge" have after that point. Ramos, 141 F. Supp. 3d at 349. GEICO assigning has a presented "Fail" grade substantial is a 32 evidence tentative to rather show than that final decision. The language about Process gave Pre-Adverse an applicant's applicants a the background reports, any background incorrect": Action Letter contained employment, "meaningful the Adjudication opportunity to and GEICO "was willing to checks that a[n tentative applicant] dispute" investigate believed were these are all factors weighing in favor of summary judgment. See Manuel, 123 F. Supp. 3d at 823. At the same time, unlike in Costa and Ramos, there is a genuine dispute as to the finality of GEICO's decisionmaking process at the grading stage and GEICO' s subsequent possibility that Adjudication Process involvement Parker and informed applicants, have might with deviated Branch of her given the from the offer being rescinded immediately after GEICO assigned her a "Fail" grade. As a result, "[a] reasonable jury could find that adverse hiring decision was final when it was first [GEICO]'s relayed to [GIS]" because this evidence shows that GEICO had made up its mind to rescind Branch's offer notwithstanding any cure period. Manuel, 123 F. Supp. 3d at 823. Accordingly, the Court cannot resolve the adverse action issue at the summary judgment stage. Given the factors discussed above, in Branch's case, a jury could, at least consider GEICO's assignment of a "Fail" grade a final decision rather than an internal one, such that it could not be reversed following appropriate dispute by Branch. 33 As a result, there is a genuine material dispute about whether GEICO took adverse action against Branch when it assigned her a "Fail" grade, making summary judgment on Branch's claim inappropriate. 10 CONCLUSION For the foregoing reasons, GEICO'S MOTION FOR SUMMARY JUDGMENT (ECF No. 39) will be denied. It is so ORDERED. Isl Robert E. Payne Senior United States District Judge Richmond, Virgini;c> Date: December -t-0--, 10 2017 Of course, this result, as to Branch and her individual claim, does not necessarily mean that the case is suitable to proceed as a class action. That is the subject of a different motion. 34
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