VIOLATIONS OF THE FCRA

COUNT I
16. As described in Paragraphs 10 through 15, from at least mid-2004 through June
2006, RTS failed to provide pre-adverse action notices to approximately 24 employees as to
whom RTS took adverse action based in whole or in part on the individuals’ consumer reports,
prior to taking that action.
17. By and through the acts and practices described in Paragraph 16, Defendant has
violated Section 604(b)(3) of the FCRA, 15 U.S.C. § 1681b(b)(3).
COUNT II
18. As described in Paragraphs 10 through 15, from at least mid-2004 through June
2006, RTS failed to provide adverse action notices to approximately 24 employees as to whom
RTS took adverse action based in whole or in part on the individuals’ consumer reports, after
taking that action.
19. By and through the acts and practices described in Paragraph 18, Defendant has
violated Section 615(a) of the FCRA, 15 U.S.C. § 1681m(a).
FTC ACT VIOLATION
20. Pursuant to Section 621(a) of the FCRA, 15 U.S.C. § 1681s(a), the acts and
practices alleged in Paragraphs 16 through 19 also constitute unfair and deceptive acts or
practices in violation of Section 5(a)(1) of the FTC Act, 15 U.S.C. § 45(a).

THIS COURT’S POWER TO. GRANT RELIEF

21. Section 621(a) of the FCRA, 15 U.S.C. § 1681s(a), authorizes the Court to award

monetary civil penalties of not more than $2,500 for each knowing violation of the FCRA that

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properties of BNSF, UP, and N&S.

11. In mid-2004, some of these railroads began requiring RTS to obtain background
checks on all of its job applicants and employees. Only individuals who pass the background
check receive an ID badge, which is necessary to obtain admission onto the railroads’ properties.

12. To obtain the background checks, RTS contracted with e-Verifile.com, a
consumer reporting agency that conducts background checks utilizing the “e-RAILSAFE”
system. The e-RAILSAFE background checks include, among other things, a review of the
applicant’s or employee’s criminal background records. These background checks are
“consumer reports” within the meaning of Section 603(d) of the FCRA, 15 U.S.C. § 1681a(d).

13. The background checks obtained by RTS are used in determining whether to hire
applicants or retain employees, and thus are consumer reports obtained for “employment
purposes” within the meaning of Section 603(h) of the FCRA, 15 U.S.C. § 1681a(h).

14, Employees and job applicants who fail the background check are denied an ID
badge and are placed on administrative leave indefinitely without pay or benefits (in the case of
an employee) or not hired (in the case of an applicant). These actions are “adverse actions”
within the meaning of Section 603(k) of the FCRA, 15 U.S.C. § 1681a(k).

15. From at least mid-2004 through June 2006, RTS took adverse action against 24 of
its employees by placing them on administrative leave without pay or benefits based in whole or
in part on information found in their background checks. In each of these cases, RTS failed to
provide a pre-adverse action notice to the employee, as is required by Section 604(b)(3) of the
FCRA, 15 U.S.C. § 1681b(b)(3), and the adverse action notice RTS provided to the employee

failed to contain any of the information required by FCRA Section 615(a), 15 U.S.C. § 1681m(a).

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constitutes a pattern or practice of violations of the statute. Defendant’s violations of Sections
604(b)(3) and 615(a) of the FCRA, 15 U.S.C. §§ 1681b(b)(3) and 1681m(a), as alleged in this
Complaint, were knowing and constituted a pattern or practice of violations.

22. Each instance in which Defendant has failed to comply with Section 604(b)(3) or
615(a) of the FCRA, 15 U.S.C. §§ 1681b(b)(3) and 1681m(a), constitutes a separate violation of
the FCRA for the purpose of assessing monetary civil penalties,

23. Under Section 621(a) of the FCRA, 15 U.S.C. § 1681s(a), and Section 13(b) of the
FTC Act, 15 U.S.C. § 53(b), this Court is authorized to issue a permanent injunction prohibiting
Defendant from violating the FCRA and the FTC Act.

PRAYER FOR INJUNCTIVE AND MONETARY RELIEF

WHEREFORE, Plaintiff requests that this Court, pursuant to 15 U.S.C. §§ 45(a)(1),
53(b), 56(a), and 1681s, and pursuant to the Court’s own equitable powers:

(1) Enter judgment against Defendant and in favor of Plaintiff for each violation
charged in this Complaint;

(2)' Award Plaintiff monetary civil penalties from Defendant for each violation of the
FCRA alleged in this Complaint;

(3) Enter a permanent injunction to prevent future violations of the FCRA and the
FTC Act by Defendant;

(4) Order Defendant to pay the costs of this action; and

(5) Award Plaintiff such other and additional relief as the Court may determine to be

just and proper.


UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WASHINGTON

AUG OS 2009

UNITED STATES OF AMERICA,
Plaintiff,

v.
RAIL TERMINAL SERVICES, LLC,

a limited liability company,
Defendant.

LLL Lage

Le SSS SSS SS YS

COMPLAINT FOR CIVIL PENALTIES,
INJUNCTIVE AND OTHER EQUITABLE RELIEF

Plaintiff, the United States of America, acting upon notification and authorization to the
Attorney General by the Federal Trade Commission (“FTC” or “Commission”), for its Complaint
alleges that:

1 Plaintiff brings this action under Sections 5(a), 13(b), and 16(a) of the Federal
Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 45(a), 53(b), and 56(a), and Section 621{a) of
the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681s(a), to obtain monetary civil penalties
and injunctive and other equitable relief from Defendant for engaging in acts or practices
violating Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the FCRA, 15 U.S.C. §§ 1681-

1681x.


Dated: FOR THE PLAINTIFF
UNITED STATES OF AMERICA:

Of Counsel:

- TONY WEST
JESSICA RICH Assistant Attorney General
Acting Associate Director Civil Division
Division of Privacy and Identity Protection US. Department of Justice
REBECCA E, KUEHN JEFFREY C. SULLIVAN
Assistant Director United States Attorney
Division of Privacy and Identity Protection Western District of Washington.
SANDRA MCCARTHY ‘La Ya
Attorney
Division of Privacy and Identity Protection BRIAN C. AES

Assistant United States Attorney

MOLLY CRAWFORD 700 Stewart Street, Suite 5220
Attomey Seattle, Washington 98101
Division of Privacy and Identity Protection 206-553-0882

Federal Trade Commission
Washington, D.C. 20580

EUGENE M. THIROLF
Director

KENNETH L. JOST
Deputy Director
Office of Consumer Litigation

id
\

ArH PHEDPS

Tria] Attorney

Office of Consumer Litigation
U.S. Department of Justice
PO Box 386

Washington, D.C. 20044
202-307-6154
Alan.Phelps@usdoj.gov

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JURISDICTION AND VENUE

2. This Court has jurisdiction over this matter under 28 U.S.C. §§ 1331, 1337(a),
1345, and 1355 and under 15 U.S.C. §§ 45(a), 53(b), 56(a), and 1681s.

3. Venue in the Western District of Washington is proper under 15 U.S.C. § 53(b)
and under 28 U.S.C. §§ 1391(b)-(c) and 1395(a).

DEFENDANT

4, Defendant Rail Terminal Services, LLC (“RTS”), is a Delaware limited liability
company, with its principal place of business at 1131 SW Klickitat Way, Seattle, Washington
98134. RTS transacts or has transacted business in this district.

THE FAIR CREDIT REPORTING ACT

5. The FCRA was enacted in 1970, became effective on April 25, 1971, and has
been in force since that date.

6. Section 621 of the FCRA, 15 U.S.C. § 1681s, authorizes the Commission to use
all of its functions and powers under the FTC Act to enforce compliance with the FCRA by all
persons subject thereto except to the extent that enforcement specifically is committed to some
other governmental agency, irrespective of whether the person is engaged in commerce or meets
any other jurisdictional tests set forth by the FTC Act.

7. Under Sections 604(b)(3) and 615(a) of the FCRA, 15 U.S.C. §§ 1681b(b)(3) and
1681m(a), any person who uses an individual’s consumer report for “employment purposes” and,
based in whole or in part on the report, takes “adverse action” with respect to that individual,

must send notices to the individual, both before and after taking the adverse action, that include

2.


certain specified information and documents.

8. The term “adverse action” is defined by Section 603(Kk) of the FCRA, 15 U.S.C. §
1681a(k), to include, inter alia, “a denial of employment or any other decision for employment
purposes that adversely affects any current or prospective employee.” Under Section 603(h) of
the FCRA, 15 U.S.C. § 1681a(h), the term “employment purposes” means “for the purpose of
evaluating a consumer for employment, promotion, reassignment or retention as an employee.”

9. Pursuant to Section 604(b)(3) of the FCRA, 15 U.S.C. § 1681b(b)(3), the notice
provided to the individual prior to the adverse action (“pre-adverse action notice”) must include
copies of (1) the consumer report upon which the decision is based, and (2) the Summary of
Consumer Rights Under the FCRA, 16 C.F.R. Part 698, Appendix F. Pursuant to Section 61 5(a)
of the FCRA, 15 U.S.C. § 1681m{(a), the notice provided to the individual after the adverse
action (“adverse action notice”) must include (1) the name, address, and telephone number of the
consumer reporting agency (“CRA”) that furnished the report; (2) a statement that the CRA did
not make the decision to take the adverse action and is unable to provide the consumer the
specific reasons why the adverse action was taken; (3) notice of the consumer’s right to obtain a
free copy of the report from the CRA upon Tequest within 60 days; and (4) notice of the
consumer’s right to dispute with the CRA the accuracy or completeness of information in the

consumer report.

DEFENDANT’S BUSINESS PRACTICES

10. Defendant provides transportation services on a contract basis to certain railroads,
including the Burlington Northern Santa Fe (“BNSF”), Union Pacific (“UP”), and Norfolk &

Southern CN&S”) Railroads. As part of these services, some of RTS’s employees work on the

3.