Case dismissed – good news for LinkedIn!
On April 14, 2015, the United States District Court, Northern District of California, dismissed a lawsuit against LinkedIn that alleged the company violated the Fair Credit Reporting Act (“FCRA”). Four LinkedIn users had filed a class action lawsuit alleging that they were denied jobs with prospective employers because those employers contacted other LinkedIn users identified by LinkedIn’s “Reference Search” as having worked with them. The “Reference Search” service is only available to premium account holders. The service identifies connections (people) in the premium account holder’s network who share a common past employer with the job applicant. Plaintiffs’ asserted that each of their prospective employers used the Reference Search service, and denied employment based on what they learned from talking with some of the mutual connections identified by the Reference Search service.
The Purpose of The FCRA:
The Court first examined what the FCRA is all about. The Court noted that the purpose of the FCRA is “to protect consumers from the transmission of inaccurate information about them.” The Court further stated that, “[t]o fulfill this need, the FCRA requires consumer reporting agencies to ‘adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy and proper utilization of such information.’” (Emphasis added).
As the Court discussed, a “consumer report” under the FCRA includes any “written, oral or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for … (B) employment purposes; or (C) any other purpose authorized under section 1681b of this title.”
LinkedIn Does Not Provide “Consumer Reports”:
In making its ruling, the Court first focused on whether the results of the Reference Searches were “consumer reports” as defined by the FCRA. The Court found that they are not “consumer reports,” because ” the information contained in these histories came solely from LinkedIn’s transactions or experiences with these same consumers. The FCRA excludes from the definition of consumer report any ‘report containing information solely as to transactions or experiences between the consumer and the person making the report.’” Simply, as the Court also noted, “Plaintiffs’ own allegations show that consumers provide LinkedIn with information about their employment histories so that LinkedIn can publish this information online.” Indeed, “sharing information is precisely why the subjects here or anyone else on LinkedIn provides their employment histories to LinkedIn.” As a result, LinkedIn’s service does not amount to a “consumer report” under the FCRA.
LinkedIn Is Not A “Consumer Reporting Agency”:
Next, the Court also found that Plaintiffs’ allegations do not demonstrate that LinkedIn is a “consumer reporting agency” when it publishes the information during the Reference Searches. According to the Court, “[a]n entity does not become a [consumer reporting agency] solely because it conveys, with the consumer’s consent, information about the consumer to a third party in order to provide a specific product or service that the consumer has requested.” The Court agreed with LinkedIn’s argument that LinkedIn merely “gathers the information about the employment histories of the subjects of the Reference Searches not to make consumer reports but to ‘carry out consumers’ information-sharing objectives.’” Consequently, Plaintiffs’ claims failed for this additional reason.
Further Deficiencies In Plaintiffs’ Claims:
The Court did not stop with the above analysis. It continued and determined that the information provided via the Reference Searches did not “bear on the ‘character, general reputation, mode of living’ and other relevant characteristics of the consumers who are the subjects of these searches.” The Court wrote that the “problem here is that Plaintiffs do not allege that Reference Search results indicate that subjects actually knew or associated with the listed references. Instead, Plaintiffs allege that the Reference Search results list people who once had a common employer with the subject of the search and are in the network of the person who initiated the search.” And ultimately, the Court found that “LinkedIn markets the Reference Search results [as] a way to ‘locate people’ who might be able to communicate bearing on information about the consumer-subjects of these results, not that these results themselves convey bearing on information. And, thus, the information does not meet the definition of a “consumer report,” for this additional reason.
What’s Next For This Case?
In December 2014, I first wrote about this case as a lawsuit to keep an eye on in my post titled “Allegations of LinkedIn Violating the Fair Credit Reporting Act.” In ruling on LinkedIn’s Motion to Dismiss, the Court rejected Plaintiffs’ claims in their entirety. The Court, however, gave Plaintiffs until May 19, 2015 to try to restate their claims by an Amended Complaint. Additionally, the Plaintiffs could attempt to appeal the dismissal.
Employers can rest easier now that the Court has dismissed this case (for now). Those involved in recruiting and checking applicant backgrounds can continue to use LinkedIn (and other social media) without having to follow the requirements of the FCRA. There are still other pitfalls with using social media in recruiting and hiring (see: Employers Be Cautious Using Social Media to Screen Job Applicants), and the law (and technology) constantly changes in this area. So, employers stay tuned…
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