A District Court judge in Virginia has dismissed a Fair Credit Reporting Act case against a background screening company that was accused of including criminal records in a background check that had been expunged five years ago.
The background: The plaintiff applied for employment in March 2023, received a conditional offer, and authorized a background check as part of the hiring process. The employer relied on a third-party screening provider, which in turn sourced information from the defendant, a consumer reporting agency that compiles and sells background reports.
- The report included criminal convictions that had been pardoned in 2020 and expunged in 2021. The plaintiff alleged that the inclusion of these records caused the employer to rescind the job offer. According to the complaint, the expungement order required that the records be removed from court files and prohibited disclosure without a court order.
- The plaintiff brought claims under the FCRA, alleging failure to follow reasonable procedures to ensure maximum possible accuracy, along with state law claims for negligence and defamation. He argued that reporting expunged records defeated the purpose of the expungement and relied on outdated or incomplete data.
The ruling: Judge Rossie D. Alston of the District Court for the Eastern District of Virginia dismissed the case, finding that the plaintiff failed to plausibly allege that the information reported was inaccurate under the FCRA.
- Central to the ruling was the judges interpretation of “accuracy.” Citing recent Fourth Circuit precedent, Judge Alston emphasized that information must be “objectively and readily verifiable” as incorrect to qualify as inaccurate.
- Here, the judge concluded that the reported convictions were historically true, even if later expunged. As the opinion explained, expungement does not erase the underlying fact that a conviction occurred. The court noted that “expungement creates legal fictions, but it does not and cannot undo historical facts or convert once-true facts into falsehoods.”
- The court also highlighted a practical challenge for data furnishers and reporting agencies. Because expungement records may not be publicly available, the defendant could not have verified or supplemented its data to reflect the expungement. As a result, the alleged omission was not considered objectively verifiable or actionable under the FCRA.
- The negligence claim was dismissed under Delaware’s economic loss doctrine, with the court finding that the alleged harms were primarily economic. The defamation claim also failed because the reported information was deemed substantially true.
- Notably, the court rejected the defendant’s attempt to compel arbitration, finding that it was not a party to the arbitration agreement and could not enforce it under equitable estoppel principles.
