Hodge v. Texaco, Inc. ( 1992 )

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
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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)
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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
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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
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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.
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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.
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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.
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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:
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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.
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