Stewart v. Accurate Background, LLC

Background

Damarcus Stewart alleged that Accurate Background, LLC, which provides background and employment-screening services, failed to use reasonable procedures to ensure that criminal-record information in its reports was as accurate as possible. He alleged that Accurate Background reported misdemeanor convictions even though the records had been expunged by court order, and that later reports omitted the expungement information. Stewart alleged that he was denied employment opportunities and suffered lost opportunities, reputational harm, and emotional distress.

Stewart asserted one individual defamation claim and six representative claims under the federal Fair Credit Reporting Act, California’s Consumer Credit Reporting Agencies Act, California’s Investigative Consumer Reporting Agencies Act, and California’s Unfair Competition Law. The parties reached a class settlement after written discovery and mediation, before formal class certification or other motion practice. The settlement was initially approved preliminarily, but the court required further review of the proposed attorneys’ fees and Stewart’s individual payment. The parties then modified the agreement.

Settlement terms

The modified agreement creates a non-reversionary settlement fund of $383,750, meaning unused funds will not return to Accurate Background. The settlement class includes 230 people in the United States and its territories who, during the specified period, received an employment-related consumer report from Accurate Background containing certain expunged, sealed, dismissed, or otherwise removed criminal-record information; disputed the information; and received an amended report related to that information.

After deductions for fees, costs, administration expenses, and Stewart’s service award, $253,000 will be distributed to participating class members. Each of the 230 class members will automatically receive $300, and the remaining $184,000 will be distributed on a proportional basis to class members who submit a simple attestation of harm, subject to a maximum payment of $5,000 per person. Any remaining funds meeting the agreement’s conditions will go to the San Jose State University Record Clearance Project.

Notice and class certification

The settlement administrator sent notice by email and postcard or mail. The court found that notice reached more than 99 percent of the class. Twenty-one valid claims had been submitted, no class member had opted out, and the court had received no objections.

For settlement purposes, the court certified the class under Federal Rule of Civil Procedure 23. It found that the class satisfied the requirements of numerosity, commonality, typicality, adequate representation, predominance, and superiority. The court also applied heightened scrutiny because the settlement was reached before formal class certification. It found that the modified agreement was fair, reasonable, and adequate and that the negotiations did not show collusion.

Fees, costs, and service award

The court approved $97,750 in attorneys’ fees, finding that amount reasonable under both the percentage-of-recovery and lodestar methods. The fee request was 25.5 percent of the settlement fund, close to the Ninth Circuit’s 25 percent benchmark. Counsel reported spending 410 hours on investigation, pleadings, discovery, mediation, settlement drafting, notice, and approval-related motions. The court also approved $10,000 in litigation costs and a $5,000 service award for Stewart.

Order

The court granted the motion for final approval of the class action settlement as to the Final Settlement Agreement. It also granted the modified motion for attorneys’ fees, costs, and Stewart’s service award. The court retained jurisdiction over matters involving interpretation, implementation, and enforcement of the order and settlement agreement, and ordered the parties to file a post-distribution accounting by March 20, 2025. The order did not determine whether Accurate Background was liable for the alleged violations.