‘Professional Plaintiff’ Targets Firms via FCRA

Meet Cory Groshek. He’s an aspiring rapper who calls himself “Cory Crush.” He’s also a fitness guru who produces YouTube videos featuring himself as “Low Carb Cory.” He also writes scary stories under his own name and has worked as a customer-service representative.

Groshek also has found a pretty lucrative gig targeting companies that unwittingly violate the Fair Credit Reporting Act when they fail to properly disclose their intention to obtain his credit history as part of the hiring process. According to court documents, Groshek has used this tactic to obtain at least $230,000 in legal settlements from companies across the country.

As reported by the Milwaukee Journal Sentinel, Groshek applied to 562 jobs within an 18-month period of time and has admitted to threatening 40 companies with class-action lawsuits on behalf of all their recent hires for technical violations of the federal law unless they pay him a personal settlement to go away. In most cases, the companies decided to simply pay Groshek — about 20 paid him relatively small settlements of between $5,000 and $35,000.

Under the law, the plaintiffs involved in a FCRA class action could be entitled to up to $1,000 per employee should the case succeed. And, Groshek had good reason to believe he’d succeed: According to WebRecon, the number of FCRA class-action suits filed against companies last year doubled to 400 from the number filed in 2014. Companies such as Domino’s, Home Depot, Uber and the parent company of the Food Lion supermarket chain are among those that have agreed to pay millions of dollars each to settle FCRA class-action suits.

A small number of companies opted not to settle with Groshek, however, and Time Warner Cable was among them. He’d applied for, and was offered, an $11-an hour job with the cable giant. Instead of accepting the job, Groshek sent TWC a 2,300-word letter threatening to sue the company over FCRA violations on behalf of all recent hires unless they paid him a settlement of between $5 million to $10 million. TWC refused to settle and Groshek filed suit, which is how his activities came to light.

TWC’s lawyers have filed a motion to dismiss the lawsuit, arguing that Groshek (whom they referred to as a “professional plaintiff”) shouldn’t be allowed to sue because he intentionally initiated any alleged violations and that he violated state extortion laws. Groshek has also filed suit against three other companies that refused to settle; those cases are also pending.

Melissa Sorenson, executive director of the National Association of Professional Background Screeners, told the Journal Sentinel that previous settlements of FCRA claims have emboldened more people to file FCRA class-action lawsuits in recent years.

“It’s opened up an entire area of practice,” she told the paper.

Due to the many technical requirements of the FCRA statute, “there are lots of technical ways to violate the statute, and there are a lot of plaintiffs’ attorneys who recognize that,” Veena Iyer, a labor and employment attorney at Nilan Johnson Lewis told my colleague Mark McGraw for a story on FCRA lawsuits last year.

Many employers unintentionally commit FCRA violations in handling adverse-action notices, sources told McGraw. In particular, employers must ensure that applicants are given a meaningful opportunity to challenge any incorrect information that’s uncovered in a background report. Some of the most common FCRA claims are that employers’ background-check disclosure forms contained language not limited to the disclosure required by the statute, the employer failed to provide a pre-adverse action notice, and the employer did not wait the right amount of time before taking final adverse action against an individual.

“Do not assume that no one will challenge the information in the consumer report,” Doug Kauffman, a partner in Balch & Bingham’s labor and employment group, told McGraw. “Employers who become too mechanical in the application of providing the notice of a potential adverse action, wait seven days, and then automatically send the final adverse action, may effectively skip a key requirement under FCRA to provide a meaningful opportunity to the applicant to correct any misinformation.”