Nguyen-Wilhite v. Tapestry, Inc.

Background

Huong Thu Nguyen-Wilhite brought a one-count claim against Tapestry, Inc. under the Fair Credit Reporting Act (FCRA), a federal law governing consumer reports, including employment background checks. She alleged that Tapestry used background reports to take adverse employment actions without first providing the required report and summary of rights. She sought certification under Federal Rule of Civil Procedure 23 of a class covering people in the United States and its territories whose employment background checks received a “decisional” score and whose status was placed “On Hold” during the proposed class period.

Tapestry used First Advantage Background Services Corp. to conduct background checks. When First Advantage identified a “decisional” item, Tapestry reviewed the report. If its hiring criteria were not met, Tapestry could place the applicant “on hold,” which triggered a pre-adverse-action letter, a copy of the report, a summary of FCRA rights, and an opportunity to dispute the report. If the applicant did not successfully dispute the information within five business days, First Advantage sent an adverse letter and changed the status to “ineligible.”

Nguyen-Wilhite had previously worked at a Coach store. After she reapplied for a position, Tapestry conditionally cleared her to begin working while her background check was pending. She began working, but Tapestry later learned that the report showed a petty-theft conviction. The store removed her from the schedule, and Tapestry then placed her background check “on hold” and sent a pre-adverse letter. She disputed the report, but First Advantage did not accurately record the dispute, and an adverse letter was sent stating that Tapestry had rescinded her conditional offer. The report was later corrected.

Class-certification standard

To certify a class under Rule 23, the plaintiff had to establish numerosity, commonality, typicality, and adequate representation. She also had to show that common issues predominated over individual issues and that a class action was superior to other methods of resolving the dispute. The court was required to assess these requirements based on the evidence.

Court’s analysis

The court found that numerosity was satisfied. Tapestry acknowledged that at least 105 applicants received pre-adverse-action letters based on information in their background reports during the proposed class period. The court also found commonality because Tapestry used a standardized background-check process and the proposed questions—whether placing an applicant “on hold” was an adverse action and whether Tapestry acted willfully—could be considered with classwide evidence.

The court found that adequate representation was satisfied because Tapestry did not challenge counsel’s qualifications or identify a conflict between Nguyen-Wilhite and other class members.

The court found, however, that typicality was not satisfied. It relied on an earlier decision holding that an employer’s internal decision to rescind an offer, before the employer formally takes adverse action and while the applicant has an opportunity to dispute the report, is not itself an adverse action under the FCRA. The court concluded that Tapestry’s ordinary process—placing an applicant “on hold,” sending a pre-adverse letter, and allowing a dispute—was analogous to that process. The court stated that an internal “on hold” decision, without more, was not an adverse action under the FCRA.

Nguyen-Wilhite’s situation differed from the ordinary process because she had already been conditionally cleared to start working before her later background-check result caused her to be placed “on hold.” The court found that she had not identified another class member who had been conditionally cleared, begun working, and then been placed “on hold” after a later-completed background check. Because her claim depended on those unusual circumstances, the court concluded that her claim was not typical of the proposed class.

The court also found that predominance was not satisfied. It reasoned that determining whether Tapestry took adverse action would require individualized evidence about each class member’s experience and whether Tapestry departed from its usual procedures. The court further noted that Nguyen-Wilhite had not shown a systematic defect in Tapestry’s process, such as evidence that the dispute process was futile or merely a pretext. The court also found that potential individual statute-of-limitations questions added to the predominance problems.

Finally, the court found that superiority was not satisfied. Although uniform procedures and relatively small potential recoveries could ordinarily support a class action, the court concluded that individualized determinations of liability would make the case difficult to manage and would reduce the efficiency of proceeding as a class.

Disposition

The court held that Nguyen-Wilhite had not established typicality, predominance, or superiority. Judge Jennifer L. Rochon therefore denied the motion for class certification and directed the Clerk of Court to terminate the motion at docket entry 47.