California Federal Court Addresses When a Web Page Consists of a Single Document

As companies rely more on the Internet to make disclosures to consumers, employees, applicants, businesses, and other parties, more questions are bound to be raised as to whether the disclosures are sufficient. In Burnthorne-Martinez v. Sephora USA, Inc. , Case No. 16-CV-02843-YGR, 2016 WL 6892721 (N.D. Cal. Nov. 23, 2016), the United States District Court for the Northern District of California addressed a number of issues, including when a web page may constitute a single document for purposes of complying with the Fair Credit Reporting Act (“FCRA”).

In Burnthorne-Martinez , the plaintiff, Alyssa Burnthorne-Martinez, brought a putative class action against Sephora USA, Inc., for alleged violations of the FCRA and certain California statutes governing consumer reporting agencies. Sephora responded by filing a motion for judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure, seeking to dismiss Counts I, III, and IV. The court denied the motion, but dismissed without prejudice the plaintiff’s claim for negligence in Count I, and the claims in Count IV.

Burnthorne-Martinez was employed by Sephora in California from approximately September 2014 to May 2015. She alleged that the company regularly conducted background checks on her and other current and prospective employees involving consumer, investigative consumer, and/or consumer credit reports. Burnthorne-Martinez alleged that the company’s lengthy disclosure form seeking authorization to conduct background checks violated the FCRA and comparable state laws even if the language in the disclosure form complied with the governing statutes’ requirements, because the disclosure form included “extraneous” information. According to Burnthorne-Martinez, the “extraneous” information violated the FCRA, 15 U.S.C. § 1681b(b)(2)(A) (Count I), and analogous state statutes (Counts III and IV), because the Federal Trade Commission (“FTC”) issued an opinion letter stating that embedding credit reporting disclosures with other material is not proper because the “disclosure [must] be in a stand-alone document . . . to prevent consumers from being distracted by other information side-by-side within the disclosure.” The FTC also has instructed in a separate opinion letter that including a waiver in a disclosure form violates Section 604(b)(2)(A) of the FCRA because that section requires a disclosure to “consist ‘solely’ of the disclosure that a consumer report may be obtained for employment purposes.”

With respect to Count I under the FCRA, a plaintiff must demonstrate that the violation was either willful or negligent. To establish a willful violation, the company’s action must be “objectively unreasonable.” An analysis of objective reasonableness involves an examination of the statutory text, judicial opinions, and guidance from the FTC.

Section 1681b(b)(2)(A)(i) provides that “a person may not procure a consumer report, or cause a consumer report to be procured, for employment purposes with respect to any consumer, unless (i) a clear 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 . . . .” The disclosure Burnthorne-Martinez complained of allegedly was not a “document that consists solely of the disclosure” because, according to Burnthorne-Martinez, it was on a web page that included other content, including a “Certification and Release” section. Sephora argued that the statute was ambiguous in that the statute is unclear what constitutes a “document” and consisting “solely of the disclosure” when web-based applications are involved.

The court concluded that, if a web page is determined to be a single document, it would Sephora’s disclosure would violate the statute. The court, however, noted that, in prior cases, extraneous language was “so closely related [to the disclosures] that it was inherently implausible anyone would include it in a willful attempt to violate the statute (or which reckless disregard for the requirements of the statute).” Thus, the court determined that the inquiry as to whether there can be a violation in this case will turn on whether a web page containing both the disclosure and release constitutes a single “document.”

When looking at what constitutes a single document, the court noted that there was a lack of authority on the issue, as Sephora cited two cases that were factually distinguishable and Burnthorne-Martinez cited no authority. The court noted that the web page at issue has a single “submit” button, which indicates that the web page is intended to be considered as a whole. On the other hand, the court also noted that the web page had two sections, of which one consisted of the material that was supposed to be in a “single document.” Based on these allegations, the court denied the motion for judgment on the pleadings with respect to Count I (the FCRA claim), as it could not conclude that Sephora did not commit a willful violation.

As for the negligence claim involving the FCRA in Count I, Sephora’s arguments concerned whether Burnthorne-Martinez could seek emotional distress damages under the FCRA. The court noted that Sephora did not cite any authority that precluded Burnthorne-Martinez from seeking relief under the FCRA for emotional distress. Thus, it denied Sephora’s motion in this regard, but it still dismissed this part of the claim, without prejudice, and allowed Burnthorne-Martinez to amend her complaint because the damages were conclusory in nature, which is insufficient to state a claim. The court’s other rulings regarding California state statutes are beyond the scope of this post.

The court’s decision in Burnthorne-Martinez is significant in that it is apparently one of a limited number of opinions that analyzes what constitutes a “single document” when looking at a web page. Even then, the opinion does not give any clear guidance, except that it suggests there is no blanket rule and the content and set up of each web page will be analyzed individually. Companies that want to rely on web page disclosures, however, may want to take notice of the court’s concerns with a single submit button for the entire web page. Companies may be better off including multiple submit buttons – one devoted to each particular item where the company wants an individual’s specific acknowledgment and/or where a statute mandates that certain content be isolated from other content.

If you have any questions regarding this post, please contact Stephen B. Stern at sstern@hwlaw.com or (410) 260-6585.

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