Smith v. Lexisnexis Screening Solutions, Inc.
76 F. Supp. 3d 651
E.D. Mich.2014Background
- Plaintiff David Alan Smith applied to GLWS for a delivery driver position; GLWS provided Smith’s identifying info (first/last name, DOB, SSN) to LexisNexis (Defendant) for a background check but did not supply his middle name.
- LexisNexis’s search of its proprietary criminal database returned Florida convictions for “David Oscar Smith” from bulk data lacking SSNs; those convictions were not Smith’s.
- GLWS rescinded Smith’s job offer based on the report; Smith disputed the record with LexisNexis, which later issued a clean report and Smith was rehired ~6 weeks later.
- Smith sued under the FCRA (15 U.S.C. § 1681e(b)) alleging negligent and willful failure to follow reasonable procedures to assure maximum possible accuracy; a jury returned $75,000 compensatory and $300,000 punitive damages.
- Defendant moved orally under Rule 50(a) for judgment as a matter of law on negligence, willfulness, causation, lost wages, and emotional distress; the court denied the motion, finding sufficient evidence on each issue to submit to the jury.
Issues
| Issue | Smith's Argument | LexisNexis's Argument | Held |
|---|---|---|---|
| Negligence (reasonable procedures under §1681e(b)) | LexisNexis failed to require middle names, failed to investigate an obvious discrepancy between credit report middle initial and criminal record, and relied on incomplete bulk data | Errors stemmed from limited source data and client (GLWS) not providing middle name; proposed alternatives were not shown to be reasonable | Denied JMOL — sufficient evidence for jury that procedures were unreasonable and could have prevented the error |
| Willfulness (reckless or knowing violation) | Defendant’s blanket policies (never requiring middle names, not using Equifax middle initial to investigate discrepancies, not using SSNs in criminal searches, not obtaining full state records) created an unjustifiably high obvious risk | Industry practices, low dispute rate, and efforts to improve data show lack of reckless state of mind; disputes didn’t prove these alternatives would have helped | Denied JMOL — a jury could find the risk was so obvious that Defendant should have known (Safeco standard) |
| Causation (proximate/substantial factor) | The erroneous report was a substantial factor causing GLWS to rescind the offer; GLWS treats fraud convictions as disqualifying | GLWS’s own decision to ‘‘err on the side of caution’’ was an independent intervening act | Denied JMOL — evidence that GLWS would not hire because of the report sufficed for a jury to find Defendant’s error a substantial factor |
| Damages (lost wages and emotional distress) | Testimony established six weeks’ lost wages and provable emotional harm (testimony from Smith and spouse) | Plaintiff contradicted prior deposition (willingness to accept merchandiser job) and emotional distress testimony was conclusory/financially driven | Denied JMOL — credibility and weight were for the jury; testimony met Sixth Circuit standard to submit emotional distress and wage loss to jury |
Key Cases Cited
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (U.S. 2007) (willfulness includes reckless conduct — an objectively unreasonable risk that is known or obvious)
- Cortez v. Trans Union, LLC, 617 F.3d 688 (3d Cir. 2010) (FCRA is remedial and should be read broadly to ensure accurate reporting)
- Nelski v. Trans Union, LLC, 86 Fed.Appx. 840 (6th Cir. 2004) (plaintiff need not identify specific procedural deficiencies to show CRA failed to follow reasonable procedures)
- Philbin v. Trans Union Corp., 101 F.3d 957 (3d Cir. 1996) (describing varying approaches to plaintiff’s burden on reasonable procedures)
- Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329 (9th Cir. 1995) (discussing inference of unreasonable procedures from inaccuracies)
- Boggio v. USAA Fed. Sav. Bank, 696 F.3d 611 (6th Cir. 2012) (a policy that creates an unjustifiably high risk of FCRA violations can support willfulness)