Court's Interpretation of ICRAA Impacts Statutory Damage Limitations

In January, a federal judge determined that statutory penalties associated with the California Investigative Consumer Reporting Act (ICRAA) are allowable per background report, not per violation

In Garcia v. Quest Group Consulting, the plaintiff alleged that the defendant had violated the terms of the ICRAA and also asserted claims under the California Private Attorney General Act (PAGA) for alleged violations of the California Labor Code. Garcia claimed that she was hired as a youth care worker by Quest to supervise unaccompanied migrant children who were being temporarily housed in California. During her employment, the plaintiff alleges that the defendant violated sections of the California Labor Code. Garcia further claims that the consumer report secured by Quest was done so based on a deficient disclosure form.

Originally, Quest removed the case to federal court based on diversity jurisdiction (requires an amount in controversy of $75,000). While the parties agreed that PAGA claims totaled $2,125, they disagreed on the potential liability of the ICRAA claim, which generated the basis of the motion to remand. ICRAA's damages provision states that a user who operates out of compliance with ICRAA is liable for any damages sustained by the subject as a result of the lack of compliance, or (except in the case of class actions) $10,000, whichever is greater.

Quest contended that the amount in question was $120,000 based on Garcia's multiple, separate, ICRAA statutory violation allegations. The plaintiff argued that the claim amount was only $20,000 (representing $10,000 each for the two individuals that comprise "Quest" as the defendant). Garcia further argued that while she alleged multiple technical violations of the ICRAA, only one potential statutory penalty per background report was permissible.

Ultimately, the court agreed with the plaintiff's interpretation. The court arrived at this decision namely based on the language included in Section 1786.50(a) of the Act, which states that "a defendant who fails to comply with 'any requirement ... with respect to an investigative consumer report' is liable to the consumer for actual damages, or $10,000, whichever sum is greater."

Employers are encouraged to review the terms of state and federal consumer reporting acts to gain an understanding of potential financial liabilities. Furthermore, employers should review the monetary stipulations associated with jurisdictional assignments as it pertains to consumer reporting act violation claims.

Posted: March 21, 2022

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This document and/or presentation is provided as a service to our customers. Its contents are designed solely for informational purposes, and should not be inferred or understood as legal advice or binding case law, nor shared with any third parties. Persons in need of legal assistance should seek the advice of competent legal counsel. Although care has been taken in preparation of these materials, we cannot guarantee the accuracy, currency or completeness of the information contained within it. Anyone using this information does so at his or her own risk.

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