LinkedIn's “Reference Search” Service Doesn't Violate Fair Credit Reporting Act--Sweet v. LinkedIn

LinkedIn’s “Reference Search” Service Doesn’t Violate Fair Credit Reporting Act–Sweet v. LinkedIn

Screen Shot 2015-04-24 at 2.47.24 PMPlaintiffs alleged that potential employers found references about them through LinkedIn’s Reference Searches functions, they were denied employment as a result, and thus LinkedIn violated the Fair Credit Reporting Act.

LinkedIn users, including prospective employers, generally can search LinkedIn user profiles using its “proprietary search technology.” The Reference Search tool specifically provides: (1) the candidate’s employment history as provided to LinkedIn, and (2) a list of other members in the prospective employer’s network who worked at the same employers as the job candidate, with the theory that some of those other members worked with the job candidate and therefore can provide insights about the job candidate that supplement or replace any references the job candidate might supply him/herself. LinkedIn does not provide any reference information directly, but it encouraged prospective employers to use LinkedIn’s introduction function to contact prospective references identified via the Reference Search tool so they could obtain references directly from the other members. (Interestingly, it does not tell the job candidates when prospective employers run searches on them using the Reference Search tool.)

Is the information provided a Consumer Report? The court says that LinkedIn’s provision of information culled from a person’s LinkedIn profile does not implicate the FCRA. LinkedIn is making available information that consumers share with LinkedIn (for the purpose of being widely disseminated—i.e., on their profiles) and this falls within the “transactions or experiences” exclusion to the definition of “consumer report”. The court also says that the list of prospective references is not information “pertaining to” plaintiffs, so this does not cause an FCRA problem.

Is LinkedIn acting as a Consumer Reporting Agency? Second, the court says that LinkedIn is not acting as a consumer reporting agency. The definition for a CRA is an entity which:

for . . . fees, regularly engages in . . . the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties.

The hook is the means by which LinkedIn gathers the information. Rather than gathering it for the purpose of furnishing credit reports, the court says that LinkedIn gathers the information to “carry out consumers’ information-sharing objectives.”

Does the information bear on the consumers’ “character, reputation, or mode of living?” Third, the court says that plaintiffs do not sufficiently allege that the Reference Search bears on “character, general reputation, mode of living” or other consumer-credit-relevant characteristics. Plaintiffs alleged that listing whether a particular subject has contacts in a geographic location shows whether the subject is “well connected” and in the extreme cause, inclusion of “notorious” references (such as Bernie Madoff) bears on credit-relevant characteristics. But the problem with this is that LinkedIn never said that the subjects knew the particular references; the results suggest only that the searcher may know someone who had a common employer with the job candidate. (See the Forbes article making this point). The court notes that, in order to be a consumer report, the report must contain information about the person–information “about people other than the consumer who is allegedly the subject of the report” may not qualify.

Are the Reference Searches used as a factor in employment? Finally, the court also says that it’s not clear Reference Searches are “used as a factor in determining whether the subjects . . . are eligible for employment.” While the underlying information obtained using the service may be, there is no allegation that any of the information provided by LinkedIn (e.g., “John Doe and Jane Doe may have overlapped at Acme Corporation; contact Jane to find a reference about John”) figured in an employment decision. Plaintiffs’ allegations do not sufficiently state that putative employers used the results themselves, rather information derived from the results, in refusing to hire them.

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This is a super-interesting ruling. The conclusions appear defensible, and it is thorough in its treatment of plaintiffs’ arguments. Still, I wonder if plaintiffs will consider appealing just to hear what the 9th Circuit has to say. The court distinguished between the underlying reference information (which LinkedIn did not provide) and pointers to the source of references (which LinkedIn provide). Given that prospective employers could have culled this information from LinkedIn directly, this distinction makes sense. (If LinkedIn had polled the prospective references itself and presented the responses to the requestor, this would have presented a different scenario under the FCRA.)

The FTC has an expansive view of what constitutes a credit report. See generally the NY Times story on this lawsuit when it was filed. This ruling makes it look like there’s at least one judge who takes a more limited view. Left unresolved by this ruling is the legality of the practice of providing “a score”, which the FTC went after Spokeo for. Query as to how this ruling affects the ability of sharing economy companies to provide the likes of employers and landlords the means of accessing reference-related information while not providing such information directly (envision AirBNB telling employers or landlords: “find hosts John Doe has stayed with and ask them about their experience with John Doe”).

The court ultimately says that LinkedIn did not market the searches as credit reports, but raps LinkedIn for its marketing practices. Marketing departments probably see this as par for the course, and don’t seem to get any more careful about the statements they make.

LinkedIn also offers the ability to apply for jobs through LinkedIn, which apparently one of the plaintiffs did. Does this ruling suggest that people who take that route may have slightly less protection if they submit their application directly through LinkedIn?

LinkedIn lost an argument in the publicity rights case (Perkins v. LinkedIn) that it was merely carrying out the user’s wishes in publicizing user profiles and encouraging contacts to join LinkedIn. It’s surely heartened to see a variant of that argument win here.

Case Citation: Sweet v. LinkedIn Corp., 2015 WL 1744254 (N.D. Cal. Apr. 14, 2015). The complaint.

Related posts:

9th Circuit Says Plaintiff Had Standing to Sue Spokeo for Fair Credit Reporting Violations

Court Revisits and Dismisses Fair Credit Reporting Act Lawsuit Against Spokeo — Robins v. Spokeo, Inc.

Court Allows Fair Credit Reporting Act Claims Against Spokeo to Move Forward — Robins v. Spokeo

LinkedIn Can’t Shake Publicity Rights Claims Based on Reminder Emails

Email Harvesting: Repeated Emails From LinkedIn May Violate Publicity Rights

Privacy Claims Based on LinkedIn’s Security Promises Survive Motion to Dismiss