Scott v. Full House Mktg.

1

DERRICK PEREZ SCOTT, Plaintiff, v. FULL HOUSE MARKETING, INC., Defendant.

No. 1:21-cv-242

United States District Court, M.D. North Carolina

March 4, 2024

MEMORANDUM OPINION AND ORDER

OSTEEN, JR., DISTRICT JUDGE

Derrick Perez Scott (“Plaintiff”) alleges one claim against Full House Marketing, Inc. (“Defendant”) for willful violation of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681b(b)(3)(A), or, in the alternative, negligent violation of 15 U.S.C. § 1681b(b)(3)(A). (Doc. 23.) Defendant moves for summary judgment, (Doc. 51), and moves for Rule 11 sanctions against Plaintiff and his attorneys, (Doc. 53). Plaintiff moves for partial summary judgment on his claim that Defendant negligently violated the FCRA. (Doc. 55.) These motions (Docs. 51, 53, 55), are ripe for disposition. For the reasons set forth herein, this court will deny both motions for summary judgment and Defendant's motion for sanctions.

I. FACTUAL BACKGROUND

When considering cross motions for summary judgment, “the court must take care to resolve all factual disputes and any competing, rational inferences in the light most favorable to the party opposing that motion.” Rossignol v Voorhaar, 316 F.3d 516, 523 (4th Cir. 2003) (citation and internal quotation marks omitted). The following facts, except where noted, are undisputed.

Defendant is an employment agency that offers marketing, training, and staffing support for residential property management organizations. (Ex. 1, Declaration of Rebecca Rosario (“Rosario Decl.”) (Doc. 51-1) ¶ 3.)^[1] As part of its hiring process, Defendant uses background checks, or “consumer reports.” (See id. ¶ 14.)

Employers who use consumer reports for employment purposes must comply with several requirements under the Fair Credit Reporting Act (“FCRA”). 15 U.S.C. §§ 1681a, 1681b. Relevant to this case, an employer must comply with the pre-adverse action notice requirement. 15 U.S.C. § 1681b(b)(3). “[B]efore taking any adverse action based in whole or in part on the report,” an employer must “provide to the consumer to whom the report relates -- (i) a copy of the report; and (ii) a description in writing of the rights of the consumer.” Id. § 1681b(b)(3)(A).

Defendant retained a third-party consumer reporting agency, Resolve Partners, LLC (“Resolve”), to prepare consumer reports and send pre-adverse action letters to applicants. (Rosario Decl. (Doc. 51-1) ¶ 14.)

Plaintiff initially applied for employment with Defendant in January 2019, but did not hear back. (Ex. A, First Deposition of Derrick Perez Scott (“Scott Dep. 1”), Scott v. Resolve Partners, LLC, No. 19-cv-1077, (M.D. N.C. ), ECF No. 105-1 at 44- 45.)^[2] Plaintiff applied again for a job with Defendant as a leasing agent on March 15, 2019. (Rosario Decl. (Doc. 51-1) ¶ 6; Ex. 4, Second Deposition of Derrick Perez Scott (“Scott Dep. 2”) (Doc. 51-4) at 13.) Plaintiff authorized Defendant to procure a consumer report for hiring purposes, which included a criminal background check. (Scott Dep. 2 (Doc. 51-4) at 90-91.) Resolve prepared an employment report which contained inaccurate information about Plaintiff, namely that he had been previously charged with three criminal offenses. (Ex. A, 30(b)(6) Deposition of Rebecca Rosario on Behalf of Full House Marketing, Inc. (“Rosario Dep.”) (Doc. 61-2) at 31-32.) In reality, these charges were associated with a Derrick Lee Scott. (Id.) On March 27, 2019, Resolve completed Plaintiff's report and shared it with Defendant. (Id. at 49.) Defendant did not hire Plaintiff in March. (Scott Dep. 2 (Doc. 51-4) at 44; Rosario Dep. (Doc. 61-2) at 14.)

Plaintiff applied again for employment with Defendant on May 5, 2019. (Rosario Dep. (Doc. 61-2) at 15.) In reviewing Plaintiff's May application, Defendant used the same inaccurate report from March. (Ex. E, Deposition of Simone Salazar (“Salazar Dep.”), Scott v. Resolve Partners, LLC, No. 19-cv-1077, (M.D. N.C. ) ECF No. 105-5 at 237.) On May 6, 2019, one of Defendant's employees, Laurisa Brooks, who had been in communication with Plaintiff about his application, texted Plaintiff that his background was not within Defendant's guidelines and terminated the hiring process.^[3] (Scott Dep. 2 (Doc. 51-4) at 219-20.) Plaintiff replied, “Can you tell me why?” and Defendant instructed him to direct any questions to Resolve. (Ex. F (“Text Message”) (Doc. 55-7) at 2.) That same day, Plaintiff contacted Resolve, and Resolve sent Plaintiff an email with a copy of his inaccurate consumer report. (Ex. G (“May 6, 2019 Letter”) (Doc. 55-8) at 2, 6-12.) On May 7, 2019, Plaintiff contacted Resolve to dispute his report. (Salazar Dep. (Doc. 105-5) at 217.) Resolve removed the criminal charges from Plaintiff's report, and on May 31, 2019, Resolve emailed Plaintiff a copy of his corrected report. (Id. at 223.)

There is conflicting evidence as to whether Defendant would have hired Plaintiff if his consumer report did not contain the inaccurate criminal offenses. Defendant's representative initially testified that she “felt confident in plaintiff before requesting the background check.” (Rosario Dep. (Doc. 61-2) at 46.) However, it was subsequently revealed that Plaintiff included false statements on the resume that he included as part of his application. (Scott Dep. 2 (Doc. 51-4) at 18, 23.) Defendant's representative stated in a declaration that if Defendant “had learned that Plaintiff had lied on his job application, [Defendant] would have stopped considering his application immediately.” (Rosario Decl. (Doc. 51-1) ¶ 12.)

It is not disputed that Plaintiff received a copy of his consumer report in May. (See Pl.'s Mem. of Law in Supp. of Mot. for Partial Summ. J. Re. Def. Full House Marketing, Inc.'s Liability as to Count 1 of the Second Am. Compl. (“Pl.'s Br.”) (Doc. 56) at 15.) It is disputed whether Defendant, or Resolve, acting on behalf of Defendant, sent Plaintiff a copy of his consumer report in March.

There are multiple relevant documents in the record. The first is a letter dated March 27, 2019, from Resolve to Plaintiff, titled “Notice to Consumer of Request of Consumer Report for Employment Purposes.” (Ex. B (“Contemporaneous Notice”) (Doc. 51-1) at 8; Ex. I, Decl. of Hans W. Lodge (Doc. 55-10) at 2.) The Contemporaneous Notice informed Plaintiff that Defendant requested a consumer report for employment purposes. (Salazar Dep. (Doc. 105-5) at 158-59.)

The second document is attached to Defendant's summary judgment motion. It is an undated^[4] “Pre-Adverse Action Letter,” from Defendant to Plaintiff. (Ex. C (“Pre-Adverse Action Letter”) (Doc. 51-1) at 10.) The letter states:

We are writing to inform you that in evaluating your application for employment we have received the enclosed consumer report. This notification is provided because we may make an adverse decision that may be based, in whole or part, on this report. . . . A summary of your rights as a consumer is enclosed.

(Id.)

The third document is a letter dated May 6, 2019, sent to Plaintiff, after Plaintiff requested a copy of his consumer report. The May 6, 2019 Letter states: “Attached is a copy of your consumer report as you requested. Also attached is a summary of your rights under the Fair Credit Reporting Act.” (May 6, 2019 Letter (Doc. 55-8) at 2.)

Another document is Resolve's internal report on Plaintiff. (Ex. B (“Internal Report”) (Doc. 51-3) at 7-10.) Resolve uses a third-party software, Tazworks, to generate consumer reports. (Salazar Dep. (Doc. 105-5) at 136-37.) Tazworks also allows Resolve to send notifications to consumers “relating to the consumer's background check.” (Ex. 2, Decl. of David Tanner (“Tanner Decl.”) (Doc. 51-2) ¶ 4.) The Internal Report reflects these notifications. (Ex. 3, Decl. of Michelle Bondurant (“Bondurant Decl.”) (Doc. 51-3) ¶ 6.)

With its motion, Defendant attached a summary of rights and a copy of Plaintiff's consumer report to the Pre-Adverse Action Letter. (See Pre-Adverse Action Letter (Doc. 51-1) at 10-18.) Plaintiff attached a summary of rights and a copy of Plaintiff's consumer report to the May 6, 2019 Letter. (See May 6, 2019

Letter (Doc. 55-8).) Plaintiff argues that May 6, 2019, was the first time Plaintiff was provided a copy of his consumer report. (Pl.'s Br. (Doc. 56) at 15.) Defendant argues Plaintiff's consumer report was attached to the Pre-Adverse Action Letter sent March 27, 2019. (Mem. in Supp. of Mot. for Summ. J. (“Def.'s Br.”) (Doc. 52) at 11-13.) Plaintiff argues in turn that the Pre-Adverse Action Letter “purportedly emailed to Plaintiff in March 2019 did not include a copy of Plaintiff's consumer report.” (Pl.'s Br. (Doc. 56) at 21.)

A. Factual Disputes

The parties' motions for summary judgment revolve around two disputed facts: (1) whether a consumer report was sent to Plaintiff in March; and (2) whether Defendant's employee, Laurisa Brooks, sent a text message to Plaintiff in March telling him he did not pass the background check.

1. Evidence of the Consumer Report

Defendant points to the following evidence in support of its argument that Plaintiff's consumer report was sent to him in March.^[5]

Rebecca Rosario (“Rosario”) is the President and owner of Full House. (Rosario Decl. (Doc. 51-1) ¶ 2; Rosario Dep. (Doc. 61-2) at 5.) She made the following statements in a declaration dated September 8, 2022:

16. Resolve prepared and sent a pre-adverse action letter to Plaintiff and billed [Defendant] for doing so.

17. On March 27, 2019, Resolve sent a letter called a “Contemporaneous Notice” via email to Plaintiff Derrick Scott. A copy of this letter is attached as Exhibit B.

18. A “pre-adverse action” letter was also sent to Plaintiff on the same day. A copy of the pre-adverse action letter is attached as Exhibit C.

19. That pre-adverse

...