LinkedIn Ducks Credit Reporting Class Action

SAN JOSE, Calif. (CN) - Professional networking site LinkedIn dodged class action claims that it gives consumer reports of prospective employees to paid users in violation of federal credit-reporting laws.

Lead plaintiffs Tracee Sweet, Lisa Jaramillo, James Ralston, and Tiffany Thomas filed their class action against LinkedIn in Federal Court this past October, claiming that the company furnishing potential employers - and any LinkedIn member that has a premium subscription - with consumer reports packaged as reference reports, without meeting all the requirements under the federal Fair Credit Reporting Act.

According to the complaint, employers looking to hire can view names and employment positions of other LinkedIn members who are "linked" to the candidate because they have worked together.

Once the employer pays the required subscription fee, it can generate its own list of what LinkedIn calls "trusted references" for the potential employee. But LinkedIn never informs the prospective employee that a third party has been given the information, the plaintiffs said in their complaint.

Employers and other premium subscription users can then use LinkedIn's search function to view the profile of any trusted reference and message them through the company's internal messaging system, InMail. But the accuracy of the report relies on both the honesty of the candidate and the trusted references used to research the applicant, according to the complaint.

The plaintiffs claimed they were offered and then denied jobs because of faulty information provided by the trusted references.

LinkedIn moved to dismiss the case, arguing that the plaintiffs could not show the reference searches meet the definition of a credit report under FCRA. The company also said employment histories contained in the reference searches are generated from direct experiences and transactions with users, and that FCRA doesn't apply since users provide employment histories knowing the information will be published online.

Furthermore, LinkedIn said plaintiffs can't show that the company aggregates the information for the purpose of handing consumer reports over to third parties, and that the information has no bearing on the prospective employee's character.

U.S. Magistrate Judge Paul Grewal found on Tuesday that - for now, at least - the plaintiffs' claims lack merit. He agreed with LinkedIn that the definition of a consumer report does not include everything an employer would use to evaluate a job candidate.

"Even if plaintiffs are correct that the consumer report definition encompasses communications that could be used for the purpose enumerated in FCRA, as LinkedIn notes, this definition would not extend to all communications 'with any attenuated connection to employment,'" Grewal wrote. "Further, plaintiffs reliance on cases in which courts held that communications could be consumer reports if they fell within one of the purposes authorized under FCRA is misplaced."

He added: "Likewise, plaintiffs' position that their allegation that the reference search results are used, expected to be used and marketed by LinkedIn to be used 'for employment purposes' is sufficient 'at this stage of the litigation' lacks merit."

However, Grewal granted the plaintiffs another change to amend their complaint, saying "the court is not yet persuaded that plaintiffs' defects are beyond cure."

They have until May 19 to file an amended complaint.

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