Kelchner v. Sycamore Manor Health Center

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
3-3-2005
Kelchner v. Sycamore Manor
Precedential or Non-Precedential: Non-Precedential
Docket No. 04-2552
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 04-2552
LISA R. KELCHNER
Appellant
v.
SYCAMORE MANOR HEALTH CENTER;
PRESBYTERIAN HOMES, INC.
On appeal of a final order
of the United States District Court for the Middle District of Pennsylvania
Civil No: 02-cv-00324
District Judge: The Honorable John E. Jones III
Submitted pursuant to Third Circuit LAR 34.1(a)
on February 10, 2005
Before: BARRY, FUENTES,
and VAN ANTWERPEN, Circuit Judges
(Filed: March 3, 2005)
____________________
OPINION OF THE COURT
_____________________
Fuentes, Circuit Judge.
Petitioner Lisa Kelchner appeals the District Court’s order of partial summary
judgment dismissing her claims under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et
seq. (“FCRA” or “the Act”). The District Court held that Kelchner’s employer, Sycamore
Manor Health Center (“Sycamore”), did not violate the FCRA by requiring Kelchnre to
sign a blanket authorization entitling Sycamore to obtain Kelchner’s credit report in the
future. Because such blanket authorizations are not inconsistent with the requirements of
the FCRA, we will affirm.
I.
As we write only for the parties, we recite only the essential facts. Kelchner had
been employed at Sycamore for about nineteen years when, in February 2001, she and
other employees of Sycamore’s parent, Presbyterian Homes, Inc. (PHI), were asked to
sign an “Annual Statement of Personnel Policy Understanding.” 1 The Annual Statement
would authorize PHI to obtain “investigative consumer reports” that “may involve
personal interviews with sources such as neighbors, friends, or associates” for
“employment related purposes only.” When Kelchner refused to sign the Annual
Statement she was informed that execution of the Statement was a condition of continued
employment and that if she failed to sign the Statement by March 21, 2000, she would be
taken off the active schedule. Because she refused to sign, Kelchner’s work hours were
reduced to zero on March 21, 2001. Kelchner remained on the payroll, however, and on
1
Kelchner was a recreation director at Sycamore, a nursing home.
2
June 12, 2001, PHI sent her a second, revised Annual Statement to be signed by June 19,
2001. The revised Statement sought authorization to obtain “consumer reports”
containing information relating to employees’ “credit standing, character, general
reputation, personal characteristics, or mode of living” for the purposes of investigating
“theft from residents, coworkers, or PHI property; potential fraud in insurance claims; or
other forms of dishonesty.” Kelchner was warned that if she did not sign the revised
Statement, PHI would deem her employment “abandoned.” Kelchner again refused to
sign and her employment at PHI ended on June 30, 2001.
Kelchner claimed that she was wrongfully terminated, and that a class of plaintiffs
employed by PHI and its subsidiary Sycamore signed the authorization forms under
duress due to threat of termination. The District Court held that blanket authorization
forms such as those required by PHI are permissible under the FCRA and certified the
issue for interlocutory appeal. Although it had earlier conditionally certified a plaintiffs
class of all persons employed by PHI from whom PHI sought authorization to procure
consumer reports, the District Court decertified the class when it granted partial summary
judgment to the defendants on Kelchner’s FCRA claims.
II.
Kelchner claims that (1) PHI had no valid employment purpose for which it sought
her credit report authorization; (2) PHI could not require Kelchner and other employees to
sign a blanket, advance authorization form; and (3) that it was improper for PHI to
3
constructively terminate Kelchner upon her refusal to sign the authorization form.2 We
exercise plenary review over the district court's decision to grant summary judgment. See
Marino v. Industrial Crating Co., 358 F.3d 241, 247 (3d Cir. 2004). Under Federal Rule
of Civil Procedure 56(c), summary judgment is proper where no genuine issue of material
fact exists, and where, viewing the facts in the light most favorable to the non-moving
party, the moving party is entitled to judgment as a matter of law. There is no dispute as
to the material facts in this case; at issue are only the requirements of the FCRA, a matter
of statutory interpretation. See Tineo v. Ashcroft, 350 F.3d 382, 389 (3d Cir. 2003)
(holding statutory interpretation is subject to plenary review).
A.
2
Kelchner initially asserted claims under the Employment Retirement Income Security
Act of 1874 (“ERISA”), 29 U.S.C. §§ 1001-1461, as amended by the Consolidated
Omnibus Reconciliation Act of 1985 (“COBRA”), 29 U.S.C. § 1161, et seq., in addition
to her Pennsylvania state law claim of wrongful termination.
We address the issues raised under the FCRA only insofar as they are relevant to
determining whether PHI and Sycamore Manor are liable for wrongful termination. See
Highhouse v. Avery Transportation, 660 A.2d 1374, 1377 (Pa. Super. 1995) (“An
employer’s liability for wrongful discharge rests on whether a ‘well-recognized facet of
public policy is at stake’” and “courts have consistently held that employers violate the
public policy of this Commonwealth by discharging employees for exercising legal
rights”); see also Nazar v. Clark Distribution Sys. Inc., 46 Pa. D. & C4th 28 (Pa. Com. Pl.
2000) (finding discharge violated public policy expressed in federal law). Therefore, our
resolution of this case does not rest on any implication that there would be a private right
of action to bring a claim for equitable relief directly under the FCRA. We exercise
jurisdiction because the District Court had supplemental jurisdiction and because the
merits of plaintiff’s wrongful termination claim “turn on a substantial federal issue” that
is “essential” to her cause of action. U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383,
389 (3d Cir. 2002).
4
The Fair Credit Reporting Act provides that, if certain conditions are met, credit
reports may be issued to employers for “employment purposes.”
15 U.S.C. § 1681b(a)(3)(B). The FCRA defines “employment purposes” as those relating
to “[evaluation of] a consumer for employment, promotion, reassignment or retention as
an employee.” 15 U.S.C. § 1681a(h). Kelchner’s first contention is that, because her
retention as an employee was not in question, PHI had no valid employment purpose for
procuring her credit report.
Kelchner is right that Congress implicitly recognized employees’ privacy interest
in avoiding procurement of their credit reports for invalid purposes. But PHI maintains
that it needs access to employee credit reports in order to investigate theft, fraud and other
dishonesty if and when it arises.3 PHI claims that it newly imposed the requirement that
its employees sign the credit report authorization forms in response to the allegedly broad
scope of its protective and investigative duties as an employer, as well as new constraints
on its access to information about employees under the FCRA. PHI is persuasive that its
ability effectively to investigate allegations pertaining to an employee would be
substantially impaired if it had to wait until the investigation was underway before it
could obtain authorization from her.
3
PHI’s revised disclosure and authorization form also indicated that PHI would obtain
driving records for employees assigned regular driving duties. Although those reports
would also serve a clear employment purpose, that provision is not applicable to
Kelchner.
5
It is important to note that PHI did not actually obtain a credit report on Kelchner.
It sought authorization to do so in the future, if and when the need arose. While we do
not foreclose the possibility that under certain circumstances an employer may have a
valid employment purpose for which to obtain a credit report even before an employee is
the subject of internal investigation, here, PHI sought only authorization to procure a
report if and when the need arose, and the potential needs it identified clearly qualify as
valid employment purposes.
B.
Kelchner’s second contention is that PHI was prohibited from procuring credit
reports regarding its employees based on blanket, one-time authorization forms.
Under the FCRA, an employer may obtain a credit report for employment purposes
if “a clear and conspicuous disclosure has been made in writing to the consumer at any
time before the report is procured or caused to be procured, in a document that consists
solely of the disclosure, that a consumer report may be obtained for employment
purposes; and the consumer has authorized in writing...the procurement of the report by
that person.” 15 U.S.C. § 1681b(b)(2)(A)(i) (emphasis added). The consumer-employee
must authorize disclosure in writing. See 15 U.S.C. § 1681b(b)(2)(A)(ii).
The requirement that an employer obtain authorization “at any time before the
report is procured” is unambiguous. The plain language of the statute authorizes the
employer to obtain an employee’s written authorization at “any time” during the
6
employment relationship. See 15 U.S.C. § 1681b(b)(2)(A)(i); see also Valansi v.
Ashcroft, 278 F.3d 203, 209 (3d Cir. 2002) (“When the statutory language has a clear
meaning, we need not look further.”).
C.
We turn to Kelchner’s final contention. Kelchner claims that employee
authorization under 15 U.S.C. § 1681b(b) must be voluntary in that it cannot be
compelled as a condition of employment. However, we see nothing in the statute that
implies such a limit on an employer’s ability to obtain blanket authorization from an
employee, at least in the context of an at-will employment relationship. But even if we
were to view the statute as ambiguous on this point, we are persuaded by a 1999 advisory
opinion letter issued by the FTC, which opined that the FCRA “does not prohibit an
employer from taking adverse action against an employee or applicant who refuses to
authorize the employer to procure a consumer report.” Oct. 1, 1999, FTC Opinion Letter.
See also Christensen v. Harris County, 529 U.S. 576, 587 (2000) (holding that an opinion
letter by the administering agency is entitled to respect under Skidmore v. Swift & Co.,
323 U.S. 134, 140 (1944)). In sum, we agree that an employer is not prohibited from
terminating an employee if she refuses to authorize her employer to obtain her consumer
credit report.
III.
For all the foregoing reasons, the District Court was clearly correct in its
7
interpretation of the Act and the defendants were entitled to summary judgment on
Kelchner’s claims under the FCRA. We will affirm.