[Whole Foods] discloses to you that a consumer report regarding your credit history, criminal history and other background information and/or an investigative consumer report containing information as to your character, general reputation, personal characteristics and/or mode of living may be obtained from personal interviews or other sources in connection with your application for any purpose at any time during your employment.”

The plaintiff was also given a “Consent and Release of Information” form, which stated: “I further understand and authorize [Whole Foods] or those authorized by them to procure a consumer report on me as part of a process of consideration as an employee … I release all parties from liability for any damages which may result from the disclosure of any information outlined herein.”

Although Whole Foods intended for the Disclosure Statement to satisfy Section 1681(b)(2)(A)(i) of the FCRA and each form was a separate single page document, the simultaneous presentation of the consent form rendered the disclosure meaningless, the plaintiff argued. Whole Foods knew that it was required to provide a stand-alone form, the plaintiff added, citing FCRA-related articles posted online by the third-party the company used to run the background checks.

The court agreed. “Based on the allegations, with all inferences drawn in favor of plaintiff, if both the disclosure and the consent forms combined and read as one document with the waiver and release included simultaneously with the disclosure, the complaint states a claim for relief,” the judge said, denying Whole Foods’ motion to dismiss the suit. The court also allowed the plaintiff’s contention that Whole Foods “willfully” violated the FCRA to move forward. Under the statute, reckless and knowing violations constitute willful violations, the court noted, and the plaintiff presented sufficient allegations that the defendant knew it was required to provide a stand-alone form separate from the employment application and yet failed to do so.

“The allegations that defendant had access to legal advice and guidance from the FTC yet it knew that its conduct was inconsistent with that guidance and the plain terms of the statute, are sufficient to withstand attack at this stage of the proceedings on a motion to dismiss,” the judge wrote.

The decision provides an important reminder to employers that class actions alleging technical violations of the FCRA, particularly Section 1681(b)(2)(A)(i), remain popular with plaintiffs with statutory damages from $100 to $1,000 for a willful violation available.

Whole Foods is facing an identical suit in California federal court while other companies have settled similar cases for significant amounts, such as the recent deal Publix Super Markets struck with a class in Tennessee federal court for $6.8 million, a $2.5 million payout by Domino’s Pizza, and a settlement agreement for $3 million between grocery chain Food Lion and job applicants.

Read the court order here.