Smith v. LexisNexis Screening Solutions, No. 15-2329 (6th Cir. Sept. 13, 2016)

By Paul Mollica

The Sixth Circuit reviews and affirms a $75,000 jury verdict for a job applicant whose employment background check was negligently performed, but vacates an award for punitive damages, under the Fair Credit Reporting Act (FCRA). The case involves a scenario where an applicant’s common first and last names triggered a false criminal report.

Smith v. LexisNexis Screening Solutions, No. 15-2329 (6th Cir. Sept. 13, 2016):

The panel summarizes the facts —

“Great Lakes Wine and Spirits contracted with LexisNexis to carry out criminal history checks for employment applicants. Great Lakes provided Lexis with David Alan Smith’s date of birth but not his middle name. Lexis’s check returned a fraud conviction of a man named David Oscar Smith, resulting in six weeks’ delay in David Alan Smith’s being hired. Lexis had requested, but not required, the input of a middle name, and did not cross-reference the criminal history report with a credit report that showed Smith’s middle initial.”

Smith filed an action against the credit reporting agency LexisNexis under FCRA, 15 U.S.C. § 1681e(b), for failing to follow reasonable procedures that would assure maximum possible accuracy in the information it reported to the prospective employer.

for the lost six-weeks’ salary ($2,640), plus the distress and reputational injury suffered, a jury awarded Smith $75,000 in compensatory damages against LexisNexis, and an other $300,000 as punitive damages against it for willfulness. The district court denied post-trial judgment as a matter of law and a motion for a new trial, though it shaved the punitive award to $150,000.

The panel affirms the judgment and the compensatory damages.

Concerning liability for negligence, the panel – though finding the case “close” – held There was enough evidence in the record to support the negligence verdict:

“‘David Smith’ is an exceedingly common first-and-last-name combination-to the tune of over 125,000 individuals living in the United States. The jury could conclude that a reasonably prudent CRA, when presented with such a common name, would have required addition al identifying information-like a middle name-to heighten the accuracy of its reports. The fact that requiring a middle name is an inarguably reasonable procedure (considering Lexis already had a field for middle names on the form that Great Lakes filled out) is what tips the scales against Lexis.”

But the panel orders the punitive award tossed on the ground that the plaintiff could not prove willfulness, which entails “an unjustifiably high risk of harm that is neither known or so obvious that it should be known.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 68 (2007). A single inaccuracy based on LexisNexis’s failure to ask for the maximum number of data points, the panel holds, could not support the award. “Lexis’s low dispute rate [reportedly 0.2%] showed that its procedures had been generally reliable,” and “Lexis corrected the mistake not long after Smith complained – There was no protracted process before the record was set straight.”

The panel upholds the $75,000 award. plaintiff and his spouse testified about the stress of Smith being out of work caused. “Smith testified that he had to borrow money from family members to make ends meet, which made him feel ‘ashamed.’ Smith further testified that the owner of a party store in town jokingly called Smith his ‘favorite felon,’ a comment that a reasonable jury could conclude caused embarrassment and anger.”

The panel also holds that the award was not excessive. “Although the $72,360 [the award minus the lost back pay] might be a higher per-week amount than the awards in many of the cases Lexis cites, juries are not required to award compensatory damages based only on the temporal extent of suffering.”