Juster v. Workday, Inc.
617 F.Supp.3d 1128
N.D. Cal.2022Background
- Workday extended an at-will offer to Juster conditioned on background checks conducted by HireRight (HR); both employer and HR provided three disclosures (FCRA Disclosure, ICRAA Disclosure, Other Disclosures).
- The FCRA Disclosure listed types of information that may be obtained, including "earnings history," which Juster alleges is barred by Cal. Lab. Code § 432.3 and therefore renders the disclosures unlawful under the FCRA and California ICRAA.
- Juster also alleges Workday improperly used conviction-history information to terminate him and required a confidentiality agreement that unlawfully restricts future disclosure to employers.
- Workday and HR moved to dismiss under Rule 12(b)(6). The district court evaluated whether the FCRA disclosure and authorization requirements were violated and whether HR (a CRA) could be liable under particular FCRA provisions.
- The court dismissed the FCRA claims as pled against both defendants but granted Juster leave to amend his FCRA claims (limited to FCRA), and deferred ruling on state-law claims pending any amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Workday violated FCRA §1681b(b)(2)(A) by including earnings history (i.e., must disclosures be "accurate"/not misleading) | Juster: listing earnings history misled applicants and impermissibly sought salary history barred by CA law | Workday: §1681b(b)(2)(A) requires a clear, conspicuous standalone disclosure, not an accuracy guarantee; an overbroad disclosure does not undermine knowing consent | Court: rejected accuracy-based challenge; disclosure fulfilled FCRA notice/authorization purpose; FCRA claims dismissed as pled but leave to amend granted limitedly |
| Whether the disclosure failed the FCRA "standalone"/"no extraneous info" requirement | Juster: inclusion of earnings history and other details rendered the disclosure non‑standalone and confusing | Workday: a brief explanation of what a consumer report may include is permissible under Walker; such explanatory text is not extraneous | Court: rejected extraneous‑information argument; disclosure allowed concise explanation and was sufficiently standalone |
| Whether HireRight (CRA) can be liable under §1681b(b)(2)(A) for failing to provide disclosures/authorization | Juster: HR failed to provide proper FCRA disclosures/authorization | HR: §1681b(b)(2)(A) governs users/employers who procure reports, not CRAs; other FCRA provisions govern CRAs | Court: §1681b(b)(2)(A) generally applies to employers/users; dismissal as to HR for that provision; allowed limited opportunity to replead different FCRA claims |
| Whether HR can be liable under §1681b(b)(3)(A) or other CRA provisions (managed adjudication/adverse action; §§1681b(b)(1), 1681e(a), 1681d(d)(2)) | Juster: HR’s "Managed Adjudication" produced adverse outcomes without required pre‑adverse notices, and CRA inquiries may have violated state law (earnings history) | HR: managed adjudication reserves final adverse decision to employer; facts do not show HR took adverse action or conducted investigative interviews as defined by FCRA; other statutory duties not plausibly alleged | Court: allegations insufficient to show HR assumed the employer's adverse‑action function or conducted investigative interviews; claims doubtful but Juster may attempt focused amendment (court skeptical) |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard requires factual plausibility)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (antitrust pleading standard informing plausibility rule)
- Walker v. Fred Meyer, Inc., 953 F.3d 1082 (9th Cir. 2020) (clarifies what explanatory material may accompany FCRA standalone disclosure)
- Rubio v. Capital One Bank, 613 F.3d 1195 (9th Cir. 2010) (defines "clear and conspicuous" and misleading disclosures in TILA context)
- Gilberg v. Cal. Check Cashing Stores, Ltd. Liab. Co., 913 F.3d 1169 (9th Cir. 2019) (interprets FCRA standalone requirement)
- Syed v. M-I, Ltd. Liab. Co., 853 F.3d 492 (9th Cir. 2017) (FCRA disclosure/authorization purpose and congressional intent)
- Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057 (9th Cir. 2002) (statutory structure and limits on judicial rebalancing of FCRA provisions)
- Goode v. LexisNexis Risk & Info Analytics Grp., Inc., 848 F. Supp. 2d 532 (E.D. Pa. 2012) (CRA liability where agency effectively made adverse decisions via adjudication)
- Obabueki v. IBM, 145 F. Supp. 2d 371 (S.D.N.Y. 2001) (distinguishes obligations of CRAs and users under §1681b)