Hodge v. Texaco, Inc. ( 1992 )


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  •               IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT
    No. 91-4559
    DAVID J. HODGE,
    Plaintiff-Appellant,
    versus
    TEXACO, INC., ET AL.,
    Defendants-Appellees.
    Appeal from the United States District Court
    for the Western District of Louisiana
    (October 7, 1992)
    Before REAVLEY, HIGGINBOTHAM, and DeMOSS, Circuit Judges.
    HIGGINBOTHAM, Circuit Judge:
    We deal with this case with the applicability of the Fair
    Credit Reporting Act, 
    15 U.S.C. § 1681
     et seq. to workplace drug
    tests.   We find that the FCRA may apply to drug tests in some
    circumstances, but that the tests in this case are excluded from
    coverage under the "transactions and experiences" exclusion.       15
    U.S.C. § 1681a(d).      Accordingly, we affirm the judgment of the
    district court.
    I.
    David Hodge was employed by Texaco as an oil field pumper.
    Texaco tests its employees for drug use as part of evaluating its
    employees' "fitness for duty."        Mobile Health Services ("MHS)
    collected urine samples from Texaco employees at the employees' job
    sites.    On    November       1,    1988,       MHS   conducted       an   unannounced
    examination of employees at Hodge's jobsite. After Hodge failed an
    initial screening test, involving the ability to track a moving
    point of light with his eyes, MHS required him to provide a urine
    sample.
    The sample was sent to Laboratory Specialists, Inc. ("LSI"),
    a laboratory that performs urine testing for Texaco. LSI reported
    that the Hodge sample tested positive for tetrahydrocannabinol,
    evidence of marijuana use.            Upon receiving LSI's report, Texaco
    suspended Hodge without pay and began termination proceedings.
    Hodge's father contacted Gerald Rome, a Texaco executive vice
    president,     and   asked     him    to        investigate      his   son's     pending
    termination.         At     Rome's    request,         another    Texaco       executive
    instructed the New Orleans office to have LSI send a portion of
    Hodge's   urine      sample    to     Dr.       Forest   Tennant,       MD.,    a   drug
    rehabilitation counselor who worked with Texaco in developing its
    drug policies.       Dr. Tennant sent the sample to American Biotest
    Laboratory, Inc., and then reported to Texaco that the test was
    indeed positive.          Texaco terminated Hodge for violating Texaco's
    substance abuse policy.
    Hodge filed this action against LSI and Tennant, contending
    that LSI and Tennant were "consumer reporting agencies" that
    violated the FCRA by failing to use reasonable procedures to
    guarantee maximum possible accuracy in their "consumer reports."
    Hodge also contended that Texaco violated the FCRA by failing to
    2
    disclose the name and address of the drug testing laboratories when
    it terminated him.
    Hodge brought this action against Texaco U.S.A., Laboratory
    Specialists, Inc., Consolidated American Insurance Co., American
    Drug Screens, Inc., and Dr. Forest Tennant, alleging violations of
    the Fair Credit Reporting Act and pendent state-law claims.
    The defendants filed a 12(b)(6) motion to dismiss, contending
    that FCRA did not apply to urinalysis reports.    The district court
    denied the motion.     Hodge and the defendants moved for summary
    judgment on the question of FCRA coverage.    The court granted the
    defendants' motion, reasoning that the FCRA did not apply to the
    drug-screening reports in this case, because these reports were not
    "consumer reports" within the meaning of FCRA.      Hodge v. Texaco
    U.S.A., 
    764 F. Supp. 424
     (W.D. La. 1991).    Hodge appeals from this
    order of summary judgment.
    II.
    Hodge contends that urinalysis reports are "consumer reports"
    under FCRA, when they are used to determine whether an employee
    should be fired.     Under the FCRA, "consumer reporting agencies"
    must follow certain procedures when releasing "consumer reports."
    A "consumer report" is defined as:
    any written, oral, or other communication of any information
    by a consumer reporting agency bearing on a consumer's credit
    worthiness, credit standing, credit capacity, character,
    general reputation, personal characteristics, or mode of
    living which is used or expected to be used . . . for the
    purpose of serving as a factor in establishing the consumer's
    eligibility for . . . (2) employment purposes. . . .       15
    U.S.C. § 1681a(d)
    3
    Workplace drug tests such as those performed by LSI and
    Tennant fall within the plain language of this statute.                   The
    reports of the results of these drug tests are communications
    bearing on Hodge's personal characteristics which were used to
    determine his eligibility for employment.
    Defendants argue that despite the statute's plain language,
    urinalysis tests fall outside the general purposes of the FCRA,
    which is the evaluation of individuals' creditworthiness.           By its
    own terms, however, FCRA applies not only to credit reports, but
    also to reports of consumers' employment eligibility.            Comeau v.
    Brown & Williamson Tobacco Co., 
    915 F.2d 1264
     (9th Cir. 1990).             In
    Peller v. Retail Credit Co., 
    359 F. Supp. 1235
     (N.D. Ga. 1973), the
    court found that lie detector tests revealing a plaintiffs' prior
    use of   marijuana   could   be   "consumer    reports"   if   released    to
    prospective employers by a retail credit company.              The Federal
    Trade Commission, the agency charged with enforcing its provisions,
    has interpreted FCRA to apply to State Motor Vehicle Department
    records, employment agencies' reports, and even university career
    and placement offices' mailings of reference letters.           We find no
    basis in the statutory language or the legislative history to
    conclude that medical-type reports were meant to be excluded from
    its coverage.
    Admittedly, the extension of FCRA to drug-screening reports
    case seems far from the original purposes behind the Act. However,
    Congress has enacted this statutory language which covers a broad
    range of conduct by its very terms.           We cannot depart from the
    4
    plain language of this statute on the basis that Congress must not
    have meant what it said.        Accordingly, we conclude that workplace
    drug test reports are not categorically excluded from coverage
    under FCRA.
    III.
    Determining the general inclusion of drug tests within the
    definition of consumer reports does not end our inquiry into the
    applicability of the FCRA, because the statute also excludes some
    transactions from coverage. Defendants assert that the report from
    LSI to Texaco falls within the scope of § 1681a(d)(A) which
    excludes from coverage "any report containing information solely as
    to transactions or experiences between the consumer and the person
    making the report. . . ."       We agree.
    The "transactions and experiences" provision exempts from
    coverage any report based on the reporter's first-hand experience
    of the subject.    Therefore, a retailing firm's disclosure of its
    own ledger experience with a customer, Porter v. Talbot Perkins
    Children's    Services,   
    355 F. Supp. 174
    ,   177   (S.D.N.Y.   1973))
    (quoting F.T.C.'s consumer credit guide), or a bank's report of its
    own experience with its customers, Smith v. First National Bank,
    
    837 F.2d 1575
    , 1579-80 (11th Cir. 1988), would not constitute a
    "consumer report."    The F.T.C.'s interpretative regulations state
    that, as long as the report is not "based on information from an
    outside source," but rather is based solely on the reporter's own
    first-hand investigations of the subject, the report will fall
    5
    within the "transactions and experiences" exception.                16 C.F.R.
    Appendix, Part 600, at 344 (1991).
    LSI   asserts   that    its   report   consists    of   its   first-hand
    experience in performing the tests on the urine sample, not on
    information gathered from outside sources.             Hodge contends that
    LSI's urinalysis report does not fall within § 1681a(d)(A)'s
    exclusion of first-hand reports for two reasons.                 First, Hodge
    argues that, because LSI relied on MHS's initial collection and
    delivery of the urine sample, their analysis does not constitute a
    report of their own "first-hand experience."           Second, Hodge argues
    that LSI cannot have had first-hand experience with Hodge within
    the meaning of FCRA, because it had no "trade experience" with
    Hodge as, for instance, Hodge's employer, insurer, or creditor. We
    reject both of Hodge's arguments and conclude that LSI's report to
    Texaco was based upon its transactions with Hodge within the
    meaning of the "transactions and experiences" exclusion.
    Hodge's argument that LSI's experience with him was not
    "first-hand," because LSI did not itself collect the urine sample
    reads the "transactions and experiences" exclusion too narrowly.
    MHS's collection of the urine sample was a mechanical preliminary
    task.   LSI did not rely on any information from MHS to produce its
    report that   the    urine   sample   labelled   as    Hodge's     had   tested
    positive for marijuana use. LSI merely reported the results of its
    scientific testing of the urine sample that Hodge provided them.
    Their report was based upon their experiences in testing the
    sample, not upon any outside information.
    6
    Of course, the accuracy of the reports will depend on whether
    LSI actually obtained Hodge's urine sample and not someone else's
    urine for their tests. This information was obtained, however, not
    from any independent experience by MHS, but from forms filled out
    and signed by Hodge himself.     The mere transmittal of the forms and
    the urine through MHS's custody procedures does not change the
    basic nature of LSI's analysis any more than the use of the mails
    to receive information about a customer would break the chain of
    "first-hand experience."
    Hodge's second argument asserts that, unless the reporter has
    a personal business transaction ("trade experience") with the
    subject of the report, then the report cannot fall within the
    "transactions and experiences" exception.         This construction of
    §   1681a(d)(A)   requires   a   strained   reading    of   the   statutory
    provisions and would lead to untenable results.             See Peller v.
    Retail Credit Co., 
    359 F. Supp. 1235
     (N.D. Ga. 1973).                   The
    "transactions and experiences" exception uses broad language in the
    same way as the rest of the definition of a consumer report does
    so.   Neither one contains a limitation to trade experience.             It
    would be incongruous to read such a limitation into the exclusion
    provision while reading the main part of the definition broadly
    enough to sweep in this kind of drug testing.         Hodge cannot have it
    both ways.   Thus, we conclude that LSI's report to Texaco was not
    a consumer report.
    7
    IV.
    Tennant's report to Texaco presents a more difficult case than
    LSI,       because   Tennant's   report     contains    some     second-hand
    information.1        Tennant sent Hodge's urine specimen to American
    Biotest Laboratory for testing and reported ABL's test results
    along with his own test results.            Tennant was, therefore, not
    squarely governed by the exclusion under § 1681a(d)(A) which
    requires that excluded reports contain "solely" information about
    "transactions or experiences between the consumer and the person
    making the report."
    It is difficult to determine from the record the district
    court's basis for dismissing the claim against Tennant sua sponte.
    We conclude, however, that dismissal of the claim against Tennant
    is appropriate for reasons not fully addressed below.            The record
    is completely devoid of evidence that Tennant meets the basic
    requirement for coverage under the FCRA that he be a "consumer
    reporting      agency."     Because   we    conclude   that    Hodge   cannot
    demonstrate the existence of this element of his FCRA claim, we
    affirm the dismissal of his claim.
    The term "consumer reporting agency" is defined in the FCRA as
    "any person which, for monetary fees, dues, or on a cooperative
    nonprofit basis, regularly engages in whole or in part in the
    practice of assembling or evaluating consumer credit information or
    1
    We note that, although it does not change our analysis
    under the FCRA, it is somewhat ironic that Hodge seeks recovery
    under the FCRA on the basis of additional testing which was done
    only at the behest of Hodge's father, a long-time Texaco
    employee.
    8
    other information on consumers for the purpose of furnishing
    consumer reports."    15 U.S.C. § 1681a (emphasis added).      Dr.
    Tennant is a drug rehabilitation counselor who has worked with
    Texaco programs in various states.   The undisputed record evidence
    demonstrates that his involvement with Hodge's drug retesting was
    solely a one-time referral because he happened to be working with
    Texaco Louisiana at the time a retest was requested.   He was asked
    about a lab to use for the retest and recommended ABL.   Because of
    logistical problems, he acted as a go-between for Texaco and ABL.
    Hodge has come forward with no evidence disputing this basic
    scenario and has not demonstrated that Tennant regularly engages in
    the collection of information about consumers.     The requirement
    that a consumer reporting agency engage regularly in the collection
    of information was obviously intended to protect individuals like
    Dr. Tennant who engage in activities that might fall within the
    definition of the FCRA on a casual, one-time basis.       Thus, we
    conclude that Hodge's claim against Tennant was properly dismissed.
    Although Tennant has not raised this argument in a motion for
    summary judgment, we grant judgment for Tennant nonetheless for the
    sake of judicial economy because it is clear that Hodge's claim
    cannot succeed.
    The judgment of the district court is AFFIRMED.
    DeMoss, Circuit Judge, specially concurring:
    10
    I concur in the affirmance of the district court's judgment
    solely for the reasons set forth in Parts III and IV of the panel
    opinion. These reasons seem completely sufficient and adequate for
    our decision and render unnecessary the conclusion in Part II of
    the panel opinion, with which I disagree.
    11