Poore v. Sterling Testing Systems, Inc.

410 F.Supp.2d 557

Edward Phillip POORE, Jr., Plaintiff, v. STERLING TESTING SYSTEMS, INC., Defendant, v. USIS Record Search, Inc. Third Party Defendant.

No. Civ.A. 604CV194KKC.

United States District Court, E.D. Kentucky, At London.

January 19, 2006.

COPYRIGHT MATERIAL OMITTED

John G. Prather, Jr., Law Offices of John G. Prather, Somerset, KY, for Plaintiff.

Brian M. Johnson, Trevor T. Graves, Greenebaum, Doll & McDonald, PLLC, Lexington, KY, for Defendant.

MEMORANDUM OPINION & ORDER

CALDWELL, District Judge.

This matter is before the Court on the Motions for Summary Judgment of the Defendant, Sterling Testing Systems, Inc. ("Sterling") (Rec. No. 41) and of the Third Party Defendant, USIS Record Search, Inc. ("USIS")(Rec. No. 42).¹ For the following reasons, the Court will GRANT the motions in part and DENY the motions in part. The motions will be GRANTED to the extent that they ask the Court to rule as a matter of law that Poore's claim under 15 U.S.C. § 1681d(d)(3) must be dismissed and that Poore is not entitled to punitive damages under FCRA. The motions are otherwise DENIED.

I. FACTS.

The Plaintiff, Edward Phillip Poore, Jr. ("Poore") alleges that by letter dated June 4, 2003, Colgate-Palmolive Company ("Colgate") offered him a job contingent upon satisfactory completion a background check. (Rec. No. 1, Complaint ¶¶ 6-7). On June 6, 2003, Poore signed a "Disclosure and Consent to Investigative Consumer Report," stating that he agreed to allow Sterling to conduct a "background investigation, which may include a reference check, criminal conviction check, credit report or Department of Motor Vehicle report on myself for the mutual benefit of myself and Colgate-Palmolive." (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit K).

Colgate then contracted with Sterling to prepare an "investigative consumer report" on Poore. (Rec. No. 41, Sterling Motion for Summ. J. at 1). Sterling, in turn, contracted with a company called Due Diligence, now known as USIS and referred to as USIS in this Opinion, to perform the criminal history check and provide Sterling with a report. (Rec. No. 41, Sterling Motion for Summ. J. at 1; Rec. No. 42, USIS Motion for Summ. J., Sanders Aff., ¶ 5). USIS did not obtain records from Pulaski County, but instead bought the records from another consumer reporting agency, Advanced Background Check, Inc. ("ABC"). (Rec. No. 42, USIS Motion for Summ. J., Sanders Aff., ¶ 5).

USIS employee Tony Sanders states that, after receiving the records request from Sterling, USIS then transmitted that request to ABC with Poore's date of birth and social security number. Sanders states the report that ABC sent to USIS stated the criminal record had the same social security number and date of birth as were on the request from Sterling. (Rec. No. 42, USIS Motion for Summ. J., Sanders Aff., ¶ 6).

On or about June 12, 2003, Sterling received a report from USIS stating that "Edward Phillip Poore" had been arrested on January 8, 2000 for "operating motor vehicle under influence — 2^nd(M)" and that he had pleaded guilty to the charge. (Rec. No. 41, Sterling Motion for Summ. J., Exhibit B). The report states "Name on Court File: Edward Phillip Poore." It states "Name Given: Edward Phillip Poore." The report states, "County: Pulaski" and "State: KY." The report also provides the Docket # /Case # for the incident. The report also provided a social security number and date of birth. (Rec. No. 41, Sterling Mot. for Summ. J., Ex. C., Rau Aff., ¶ 4).

Valerie Rau, the account manager for the Colgate account at Sterling, states that, "[a] Sterling employee verified the accuracy of the criminal report by checking the social security number and date of birth of Poore that was supplied to Sterling by Colgate with the social security number and date of birth on the criminal report provided by" USIS. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit C, Rau Aff. ¶ 4). Rau states the social security number and date of birth that Colgate gave to Sterling for Poore matched the social security number and date of birth on the criminal report provided by USIS. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit C, Rau Aff. ¶ 5).

Rau states that she then drafted a "notice of intent to take adverse action letter" for Colgate to send to Poore. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit C, Rau Aff. ¶ 8). Rau e-mailed the letter to Colgate employees Kandy Clark, Dee Montgomery and Dorothy Gerner stating that the letter should be sent with the full background report and that Poore should be given five business days from the date the letter is sent to respond. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit D).

On June 18, 2003, Colgate sent Poore a "Notice of Intent to Take Adverse Action" stating:

We wish to notify you that we have tentatively decided not to consider you for employment with Colgate-Palmolive... Specifically, Sterling Testing reported to us your criminal record. Our decision in this regard is wholly or partially based on information contained in a consumer report you authorized us to obtain from Sterling Testing Systems whose address and telephone number are.... Based on the information provided we are rescinding our offer of employment. However, you have the right to dispute directly with Sterling Testing Systems the accuracy or completeness of any information provided by it. If you believe the information listed above is not accurate, please contact Sterling Testing Systems ... within five business days of receipt of this letter. To that end, we have included a free copy of your report for your review. We will not make a final decision regarding your application until June 25, 2003. This will give you an opportunity to contact us before we make a final decision and let us know if you want to dispute the report submitted by Sterling... In accordance with the Fair Credit Reporting Act (the "Act") and any applicable state laws, in addition to the copy or your report, enclosed is a written summary of your rights under the Act, and if required, summary of state law rights.

(Rec. No. 41, Sterling Motion for Summ. J. at Exhibit E).

On June 18, 2003 Courtney Gentile of Colgate then copied Rau on an e-mail to Kandy Clark and Dorothy Gerner stating that Colgate had sent the notice of intent to take adverse action letter to Poore and that, if Poore did not contact Sterling by June 26, 2003, Colgate could move forward with another candidate. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit C, Rau Aff. ¶ 9; Ex.F). By letter dated June 21, 2003 to Colgate, Poore notified Colgate that he intended to dispute with Sterling its report on his criminal record. Poore further stated he did not have a DUI offense on his record as reported by Sterling and enclosed a copy of his driving record. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit G). On June 23, 2003, Poore faxed a letter with his criminal report to Sterling. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibits H & I).

USIS employee Sanders stated that, on June 23 2003, USIS received a notice from Sterling that Poore was disputing his report. (Rec. No. 42, USIS Motion for Summ. J., Sanders Aff., ¶ 10). Sanders stated that USIS forwarded the dispute to ABC. (Rec. No. 42, USIS Motion for Summ. J., Sanders Aff., ¶ 10). Sanders stated that USIS contacted Pulaski County Court directly and learned that the date of birth on the court record was different than the Plaintiff's and that there was no social security number on the court record at all, let alone the Plaintiff's social security number. (Rec. No. 42, USIS Motion for Summ. J., Sanders Aff., ¶ 11). Sanders states USIS then sent a "clear" report on Poore on June 24, 2003. (Rec. No. 42, USIS Motion for Summ. J., Sanders Aff., ¶ 6). (Sanders actually states the clear report was sent on January 24, 2003. The Court presumes he meant June).

Sterling employee Rau states that she notified Colgate employees Gentile, Clark and Gurner on June 24, 2003 by e-mail or by phone that Poore did not have a criminal conviction. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit C, Rau Aff. ¶ 10). She states that she recommended to Gentile on June 25, 2003 by e-mail or by phone to reissue an employment offer letter to Poore with revised dates of employment. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit C, Rau Aff. ¶ 11).

In her deposition, Colgate employee Kandy Clark stated that, when she found out on June 24^th that Poore did not have a criminal record, the job he was originally offered was no longer open. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit J, Clark Dep. at 37). Clark stated that she did not know why Colgate did not offer the job to Poore when it became aware that he did not have a criminal record. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit J, Clark Dep. at 33). She stated that Dorothy Gerner made the decision to hire another applicant before June 25^th. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit J, Clark Dep. at 34). She stated that she called Poore on June 25^th to tell him he would go to the top of Colgate's hiring list. Clark further stated that Poore was the first person brought in during Colgate's next wave of hiring. (Rec. No. 41, Sterling Motion for Summ. J. at Exhibit J, Clark Dep. at 35-36)

Poore then filed this action, asserting that Sterling violated the Fair Credit Reporting Act ("FCRA") at 15 U.S.C. § 1681, et seq. (Rec. No. 1, Complaint ¶¶ 16-21). He also asserts a claim of defamation against Sterling. (Rec. No. 1, Complaint ¶¶ 22-26).

Sterling then filed a Third Party Complaint against USIS, asserting a breach of contract and negligence claim against USIS and a claim for indemnification, asserting that USIS must indemnify Sterling for all expenses it incurs in this action and for all damages, if any, for which Sterling is adjudged liable. (Rec. No. 31, Amended Third Party Complaint). Sterling and USIS have now both filed ...