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Reardon v. Closetmaid Corporation

United States District Court, Third Circuit

December 2, 2013

R. CATHY REARDON, on behalf of herself and all similarly situated individuals, Plaintiffs,


MARK R. HORNAK, District Judge.

This is a civil action brought pursuant to the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (the "FCRA"). Plaintiff Cathy Reardon, on behalf of herself and all similarly situated individuals, alleges that the Defendant, ClosetMaid Corporation ("ClosetMaid"), disqualified applicants for employment on the basis of consumer reports in a manner violative of the FCRA. Specifically, Plaintiffs allege that ClosetMaid obtained and relied upon consumer reports without obtaining the appropriate disclosures specifically required by 15 U.S.C. § 1681b(b)(2)(A) (the "Disclosure Claim"). Plaintiffs further allege that ClosetMaid failed to provide applicants for employment a reasonable amount of time to dispute the information contained in the consumer reports, and requisite statutory notice of adverse action, prior to refusing to hire them based on such reports, in violation of 15 U.S.C. § 1681b(b)(3) (the "Pre-Adverse Action Claim"). Plaintiffs seek statutory and punitive damages and attorneys' fees.

This case is currently set for trial beginning January 6, 2014.[1] The parties have filed cross-motions for summary judgment, ECF Nos. 90, 94. In addition, ClosetMaid has moved to decertify the Pre-Adverse Action Sub-Class, ECF No. 98, and Plaintiffs have moved to strike the declarations submitted by three ClosetMaid Human Resource Representatives (the "Declarations"), ECF No. 108. For the following reasons, both the Plaintiffs' Motions for Summary Judgment and ClosetMaid's Motions will be granted in part and denied in part. Specifically, with respect to the Disclosure Claim, Plaintiffs' Motion for Summary Judgment as to liability and willfulness as to certain members of the Disclosure Class is granted and is denied in all other respects. With respect to the Pre-Adverse Action Claim, ClosetMaid's Motion for Summary Judgment as to the 22 members of that Sub-Class who experienced no adverse employment action at all, and as to the 3 members who were provided with pre-adverse action notices sufficiently in advance of ClosetMaid's adverse action against them to fulfill the applicable statutory requirements is granted, and is denied in all other respects. ClosetMaid's Motion to Decertify and Plaintiffs' Motion to Strike are also both denied, but without prejudice.


A. Factual Background

On December 13, 2006, Ms. Reardon applied for a job as a Territory Supervisor for ClosetMaid. As part of the employment application, ClosetMaid provided Ms. Reardon with a document entitled, "Authorization to Obtain a Consumer Credit Report and Release of Information for Employment Purposes" (the "Authorization Form"), as well as a second document entitled, "Notice of Intent to Obtain a Consumer Credit Report" (the "Notice Form"). See ECF No. 97-6 at 3-9. The Authorization Form provides that "[p]ursuant to [the FCRA], I hereby authorize ClosetMaid... to conduct a comprehensive review of my background through a consumer report and/or investigative consumer report." Id. at 5. The Authorization Form also contains a waiver of rights provision, which states that "I hereby release ClosetMaid... from any and all liability for damages of whatever kind, which may at any time, result to me.. because of compliance with this authorization and request to release." Id. The Notice Form provides that "as a condition of my consideration for employment with ClosetMaid, [.. ClosetMaid may obtain a consumer report." Id. at 3. The Notice Form further provides that "pursuant to the [FCRA], if any adverse action is to be taken based upon [a] consumer report, a copy of the report and summary of the consumer's rights will be provided to me if requested." Id. Ms. Reardon signed both documents and returned them to ClosetMaid along with her employment application.

During the time period between Ms. Reardon's application date and July 1, 2009, when ClosetMaid began using different notice and authorization forms altogether, ClosetMaid included an Authorization Form as part of every employment application provided to applicants whom ClosetMaid was interested in pursuing. ECF No. 95; ClosetMaid Concise Statement of Material Facts ("ClosetMaid SOF") ¶ 13. ClosetMaid did not, however, always include a Notice Form. ECF No. 93-3 at 16; Reardon Responsive Concise Statement of Material Facts ("Plaintiffs RSOF") ¶ (citing ECF No. 93-3 (Fed. R. Civ. P. 30(b)(6) Deposition of ClosetMaid Corporation (Catherine Beal, designated) ("ClosetMaid Dep.")) at 59:10-18). In fact, the Notice Form was discontinued at some point for purposes of "simplification." Id.

According to Jennifer Boring, a Human Resources Representative at ClosetMaid, ClosetMaid's employment application and hiring procedures were position-specific and are "not necessarily a linear process." ECF No. 93-4 (Deposition of Jennifer Boring ("Boring Dep.")) at 51:17-18. Catherine Beal, ClosetMaid's Vice President of Human Resources, testified that ClosetMaid's procurement and review of an applicant's consumer report occurred towards the end of the recruiting process and only for applicants whom ClosetMaid has "selected to hire." ECF No. 93-3, ClosetMaid Dep. at 49:10-50:12. However, according to Ms. Beal the review of an applicant's consumer report was not necessarily the absolutely, positively final step in the application process. Id. at 66:19-67:08. For example, ClosetMaid also might have subjected applicants to some additional pre-hire processes, such as drug testing. Id.

After receiving Ms. Reardon's employment application, ClosetMaid obtained a consumer report about her from LexisNexis. That report contained negative information, which Ms. Reardon contends is incorrect. On December 18, 2006, ClosetMaid sent a letter to Ms. Reardon enclosing the consumer report and a summary of rights under the FCRA (the "Pre-Adverse Action Notice"). ECF. No. 97-10 at 2. In that letter, ClosetMaid stated that it would wait "five business days from the date of this letter before it makes a decision on your application." On December 22, 2006, four business days later, ClosetMaid sent Ms. Reardon a second letter (the "Adverse Action Notice") stating that "[title Company has now decided not to offer you the position you applied for based in whole or in part upon" the consumer report. ECF No. 97-11 at 2.

Plaintiffs contend that from December 1, 2006 to June 30, 2009, ClosetMaid obtained consumer reports as to 1, 829 job applicants, 1, 494 of whom were hired, and 299 who were not hired. Plaintiffs RSOF ¶ 45 (citing Beal Dep. Ex. 9). According to Plaintiffs, ClosetMaid has sent to only 3 individuals, not including Ms. Reardon, a copy of his or her consumer report and a summary of rights under the FCRA. Plaintiffs RSOF ¶ 44. In each of those 3 instances, ClosetMaid sent the pre-adverse action notice on May 1, 2008, and the adverse action notice on May 13, 2008, 8 business days later. See ECF. No. 93-11 at Exhibit A.

B. Procedural Background

This action was originally filed on December 19, 2008.[2] In the First Amended Class Action Complaint ("FAC") filed on April 16, 2009, Ms. Reardon sought to represent individuals who executed forms permitting ClosetMaid to obtain a consumer report as part of an employment application (the "Disclosure Class") and, within that class, a sub-class of individuals whom ClosetMaid did not hire based in whole or in part upon information contained in the consumer report (the "Pre-Adverse Action Sub-Class"). FAC ¶ 44, ECF No. 16. On April 27, 2011, the Court entered an order granting class certification noting that "[i]f it becomes clear that most [hiring] decisions were not made in a centralized fashion, ClosetMaid should move for decertification of, at a minimum, the subclass." ECF No. 51 at 17; 2011 WL 1628041 (W.D. Pa. Apr. 27, 2011). The Disclosure Class purportedly consists of approximately 1, 800 individuals and the Pre-Adverse Action Sub-Class consists of approximately 77 individuals.

On May 24, 2013, Plaintiffs filed a Motion for Partial Summary Judgment As to Liability seeking summary judgment as to (1) all individuals in the Disclosure Class who signed a disclosure/consent form containing a waiver of rights provision, and (2) all individuals in the Pre-Adverse Action Sub-Class. Plaintiffs properly excluded from their motion all individuals who submitted Exclusion Requests pursuant to the September 28, 2012 Notice of Class Action.[3] ECF No. 90 Ex. 1. On the same day, ClosetMaid filed its Motion for Summary Judgment against Plaintiffs as to all claims, ECF No. 94, and its Motion to Decertify the Pre-Adverse Action Sub-Class, ECF No. 98. On June 25, 2013, Plaintiffs filed a Motion to Strike the Declarations of ClosetMaid Human Resources Representatives Jennifer Boring, Patricia Dameron, and Merlyn Hernandez-Opio. ECF No. 108.

Oral argument was held on July 19, 2013. On August 2, 2013, the parties, at the Court's request, submitted supplemental briefing to address the factual issue of how and when in the hiring process ClosetMaid used an applicant's consumer report to assess the applicant's qualifications, and to identify the record evidence relating to this issue. ECF Nos. 125-126.


A. Summary Judgment - Federal Rule of Civil Procedure 56

Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law, " Fed.R.Civ.P. 56(a); Celotex Corp., v. Catrett, 477 U.S. 317, 322-23 (1986). The parties must support their position by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials." Fed.R.Civ.P. 56(c)(l)(A). In other words, summary judgment may be granted only if there exists no genuine issue of material fact that would permit a reasonable jury to find for the nonmoving party measured against the standard fixed by the applicable substantive law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

In reviewing the record evidence submitted, the court is to draw all reasonable inferences in favor of the non-moving party. See Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000); Matsushita Elec. Indus. Co, v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986); Huston v. Procter & Gamble Paper Prod, Corp., 568 F.3d 100, 104 (3d Cir. 2009) (citations omitted). It is not the court's role to weigh the disputed evidence and decide which is more probative, or to make credibility determinations. See Anderson, 477 U.S. at 255; Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004); Boyle v. Cnty, of Allegheny, 139 F.3d 386, 393 (3d Cir. 1998). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 247-48. An issue is "genuine" if a reasonable jury could possibly hold in the non-movant's favor with regard to that issue. See id. "Where the record taken as a whole could not lead a reasonable trier of fact to find for the nonmoving party, there is no genuine issue for trial." Matsushita, 475 U.S. at 587; Huston, 568 F.3d at 104.

B. Motion to Strike - Federal Rule of Civil Procedure 12(f)

Federal Rule of Civil Procedure 12(f) permits a court to strike "an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f). "The purpose of a motion to strike is to clean up the pleadings, streamline litigation, and avoid unnecessary forays into immaterial matters." Craker v. State Farm Mut. Auto. Ins. Co., No. 11-0225, 2011 WL 1671634, at *5 (W.D. Pa. May 3, 2011) (citation omitted). Motions to strike under Rule 12(f) are committed to the discretion of the district court, but will usually be denied unless the allegations have no possible relation to the controversy, will cause unfair prejudice, or will confuse the issues in the case, Adams v, Cnty. of Erie, 2009 WL 4016636, at *1 (W.D. Pa. Nov. 19, 2009) (citations omitted).

C. Motion to Decertify - Federal Rule of Civil Procedure 23(c)(11(C)

"An order that grants or denies class certification may be altered or amended before final judgment." Fed.R.Civ.P. 23(c)(1)(C). Pursuant to this rule, district courts may decertify a class where appropriate after the case develops. See Barnes v. Am. Tobacco Co., 161 F.3d 127, 140 (3d Cir. 1998). In making the determination of whether to amend or reconsider a class certification, courts have routinely made such assessments under an analysis that focuses on whether changed circumstances have arisen in the case. See, e.g., Eisenberg v. Gagnon, 766 F.2d 770, 787 (3d Cir. 1985) (noting that "class actions depend on the continuing supervision of the district court, including reconsideration of the efficacy of class action treatment as the circumstances change"); In re General Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 55 F.3d 768, 793 n. 14 (3d Cir. 1995) ("Under Rule 23(c)(1), the court retains the authority to re-define or decertify the class until the entry of final judgment on the merits.").

A district court "retains the discretion to decertify or modify the class so that the class action encompasses only the issues that are truly common to the class." Baby Neal for & by Kanter v. Casey, 43 F.3d 48, 63 (3d Cir. 1994). See also Fed.R.Civ.P. 23(c)(4); Sullivan v. DB Investments, Inc., 667 F.3d 273, 322 (3d Cir. 2011) ("[D]istrict court retains the authority to decertify or modify a class at any time during the litigation if it proves to be unmanageable.") (citation omitted).


A. Disclosure Claims Under 15 U.S.C. § 1681b(b)(2)(A)

As noted above, Plaintiffs allege that ClosetMaid violated the FCRA by failing to provide the appropriate disclosures to applicants for employment prior to obtaining their consumer reports, in violation of section 1681b(b)(2)(A), Specifically, Plaintiffs contend that ClosetMaid's inclusion of a waiver of rights provision in the Authorization Form contravenes the FCRA's requirement that a "clear and conspicuous" disclosure appear "in a document that consists solely of the disclosure." 15 U.S.C. § 1681b(b)(2)(A)(i) (emphasis added). Finally, Plaintiffs argue that ClosetMaid's violation of the FCRA's disclosure requirement was willful as a matter of law, thereby triggering an award of damages under section 1681n(a)(1)(A).

1. Sufficiency of the Disclosure

Pursuant to the FCRA, consumer reports may be issued to employers for "employment purposes." 15 U.S.C. § 1681b(a)(3)(B). An employment purpose is defined as a purpose relating to the evaluation of "a consumer for employment, promotion, reassignment or retention as an employee." 15 U.S.C. § 1681a(h). The FCRA requires, in pertinent part, that prior to procuring a consumer report on an applicant for employment, an employer must: (1) provide a clear and conspicuous disclosure to each applicant in writing "that a consumer report may be obtained for employment purposes"; and (2) obtain the applicant's authorization for the report in writing. 15 U.S.C. § 1681b(b)(2)(A). Section 1681b(b)(2)(A)(i) specifies that the disclosure ...

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