Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_18-cv-06726/USCOURTS-cand-4_18-cv-06726-3/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1681 Fair Credit Reporting Act

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

NICHOLAS DER-HACOPIAN,

Plaintiff,

v.

DARKTRACE, INC.,

Defendant.

Case No. 18-cv-06726-HSG 

ORDER DIRECTING 

SUPPLEMENTAL FILING IN 

SUPPORT OF MOTION FOR 

PRELIMINARY APPROVAL

Re: Dkt. No. 47

Plaintiff Nicholas Der-Hacopian filed an unopposed motion for preliminary approval of 

class action settlement on January 31, 2020. See Dkt. No. 47. The Court held a hearing on the 

motion on February 13, 2020. See Dkt. No. 48. Having reviewed the parties’ settlement 

agreement in detail, see Dkt. No. 47-1 (“SA”), the Court has concerns about the scope of the 

release of claims and seeks supplemental briefing from the parties.

I. BACKGROUND

Plaintiff brought this consumer class action against Defendant Darktrace, Inc. alleging that 

Defendant violated the Fair Credit Reporting Action (“FCRA”), 15 U.S.C. §§ 1681 et seq. See 

generally Dkt. No. 23 (“FAC”). According to the complaint, Defendant requires consumer

reports, known as background checks, to evaluate prospective employees as part of its 

employment application process. See id. at ¶ 13. In July 2018, Plaintiff applied for a job with 

Defendant. See id. at ¶ 12. At Defendant’s request, Plaintiff agreed to Defendant’s requirement 

that he authorize Defendant, and a consumer reporting agency of its choosing, to perform a 

background check on Plaintiff. Id. at ¶¶ 14–15, 22. Plaintiff signed a document titled “Employee 

Authorization to Release Records” (the “Authorization”). Id. at ¶¶ 15–16, & Ex. A. Plaintiff 

alleges that the background check contained erroneous information, and Defendant denied 

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United States District Court

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Plaintiff employment based on the information in the report. See id. at ¶¶ 18–22, 32–33. As a 

result, Plaintiff contends that he suffered financial and reputational harm. See id. at ¶ 36.

According to Plaintiff, Defendant violated the FCRA with these background checks by 

(1) including a release of future liability in the Authorization that it required employment 

applicants to sign authorizing a background check; and (2) using the background check to make an 

adverse employment decision without timely providing the prospective employee with a copy of 

the report and a summary of his or her rights under the FCRA. See id. at ¶¶ 15–27, & Ex. A. 

Section 1681b(b)(2) requires consumer report authorizations to consist “solely of the disclosure 

that a consumer report may be obtained for employment purposes.” 15 U.S.C. 

§ 1681b(b)(2)(A)(i). And § 1681b(b)(3) requires that “in using a consumer report for employment 

purposes, before taking any adverse action based in whole or in part on the report, the person 

intending to take such adverse action shall provide to the consumer to whom the report relates” a 

copy of the report and a written description of the consumer’s rights under the FCRA. See 15 

U.S.C. § 1681b(b)(3)(A)(i), (ii). Based on those facts, the FAC asserted two causes of action 

under Sections 1681(b)(2) and (b)(3) of the FCRA. See FAC at ¶¶ 45–58.

II. DISCUSSION

Despite these relatively narrow allegations, under the settlement agreement class members 

will release Defendant “from any and all claims the Class Member Releasing Parties have under 

15 U.S.C. § 1681b(b)(2) and/or 15 U.S.C. §§ 1681b(b)(3).” See SA at § XII.A. Sections 

1681b(b)(2) and 1681b(b)(3), however, contain additional requirements beyond those at issue in 

this case. As a result, the proposed release of claims will prevent class members from bringing an 

action against Defendant for conduct unrelated to the factual allegations in this case and based on 

facts that counsel may not have fully investigated or reviewed. This expansive release of claims 

appears in tension with Ninth Circuit law, which requires that “[a] settlement agreement may 

preclude a party from bringing a related claim in the future even though the claim was not 

presented and might not have been presentable in the class action, but only where the released 

claim is based on the identical factual predicate as that underlying the claims in the settled class 

action.” Hesse v. Sprint Corp., 598 F.3d 581, 590 (9th Cir. 2010) (quotations omitted) (emphasis 

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added). As drafted, the release of claims is not so limited.

Accordingly, the Court’s inclination is to deny preliminary approval on this basis. 

However, the parties may choose to narrow the scope of the release of claims to track the factual 

predicate in the complaint. The parties are therefore DIRECTED to file a supplemental joint 

statement addressing the scope of the release and discussing how they would like to proceed. To 

the extent the parties intend to revise the settlement agreement, they should attach the amended 

settlement agreement as an exhibit to the stipulation. The parties shall file a joint statement of five

pages or less, exclusive of any exhibits, by April 14, 2020.

IT IS SO ORDERED.

Dated:

______________________________________

HAYWOOD S. GILLIAM, JR.

United States District Judge

Case 4:18-cv-06726-HSG Document 52 Filed 03/31/20 Page 3 of 3