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Background check provider argues for immunity at Fourth Circuit

Courts have previously ruled that sites publishing data acquired from the government or other sources are immune from Fair Credit Reporting Act claims because of a law shielding internet companies from liability for third-party content.

(CN) — A Fourth Circuit panel heard arguments Tuesday in a case brought by three Virginia men who say a company selling background checks online to employers, lenders and insurance companies is not complying with the Fair Credit Reporting Act.

Tyrone Henderson, George Harrison and Robert McBride claimed in a federal class action that they have lost housing or employment opportunities because of inaccurate information reported about them in background checks provided Public Data.

However, a federal judge in the Eastern District of Virginia sided with Public Data, concluding that Section 230 of the Communications Decency Act immunizes the company from liability under the Fair Credit Reporting Act. U.S. District Judge Henry Hudson ruled that this is because Public Data created the background check reports by using data it purchased from government agencies and other third-party companies.

Representing Henderson, Harrison and McBride, attorney Jennifer Bennett argued before a three-judge panel Tuesday that Public Data is not entitled to Section 230 immunity because the information it publishes is not provided by another internet content provider and because the plaintiffs do not seek to hold the company liable as a publisher, only that it comply with the Fair Credit Reporting Act's mandated procedures.

Section 230(c) protects internet companies’ ability to screen their users’ content by preventing the provider or user of an
interactive computer service from being treated as the publisher or speaker of any information provided by another information content provider. The law also prohibits internet companies from being held responsible for content posted by someone else, even when they remove or restrict access to some of that content.

The judges questioned Bennett on how Public Data created or altered the content in its background check reports, which she noted did not exist until the company made them.

"It chooses what data its reports want to contain. So Public Data has decided we're gonna sell background reports and to create these reports we need to buy data. So, it chooses what data that should be. It then goes out and aggregates the data it buys, it parcels it, it summarizes it, including characterizing people's criminal history in ways that don't appear in these records and then it sells the reports through its website," Bennett said.

Arguing on behalf of 20 states that filed an amicus brief in the case, Kyle Highful from the Texas Attorney General's Office asked the court to compare the case with Erie Insurance v. Amazon, in which it held that Section 230 did not shield Amazon because the plaintiff's claims were not trying to hold the retail giant accountable as a publisher, but rather as a provider of a defective product.

An attorney for the Federal Trade Commission, Jack Metzler, also appeared before the court as an amicus party, stating that the court's decision will directly impact the government's ability to enforce the Fair Credit Reporting Act nationwide.

"Can the Federal Trade Commission enforce the Fair Credit Reporting Act on the absence of any publishing?' asked U.S. Circuit Judge Julius Richardson, a Donald Trump appointee.

"It matters when they are gathering the information, that is when they become subject to the Fair Credit Reporting Act and that's before they necessarily provided any reports to anyone," said Metzler said. "We argue that the claims in this case don't depend on any publication and for that reason they don't treat the defendant as the publisher or the speaker."

Attorney Misha Tseytlin of Troutman Pepper, representing Public Data, argued that the company isn't actually a consumer reporting agency as the claims against them allege, but rather an interactive computer service because it “merely passes along information” that it obtains from public sources such as courts by making its searchable public record databases available to its customers.

"If you're not a consumer reporting agency, then the claims fail on the merits, not on 230 grounds," said Richardson, indicating the case could likely be remanded.

U.S. Circuit Judge Steven Agee, a George W, Bush appointee, asked Tseytlin why this case differs from Erie.

"The gravamen of the claim is that we publish an online searchable database and their incorrect understanding of the FCRA means that in order to publish an online searchable database of public records in this country, you must comply with a whole suite of onerous requirements," Tseytlin said. "If that is true then any state could enact even more onerous suites of requirements on any company just for publishing public records in an online searchable database."

Tseytlin asked the judges to imagine if Twitter was required to send an email to every user every time someone tweeted about them.

U.S. Circuit Judge Marvin Quattlebaum, appointed by Donald Trump, brought up a hypothetical situation in which Public Data couldn't gather its information online and had to use mailed or other sources, noting the plaintiffs wouldn't have a Section 230 argument.

The judges did not signal when they intend to issue a ruling.

Follow @Megwiththenews
Categories / Appeals, Civil Rights, Government

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