IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

 

No. 91-4559

 

DAVID J. HODGE,

Plaintiff-Appellant,

versus

TEXACO, INC., ET AL.,

Defendants-Appellees.

 

Appeal from the United States District Court

for the Western District of Louisiana

 

(October 7, 1992)

Before REAVLEY, HIGGINBOTHAM, and DeMOSS, Circuit Judges.

HIGGINBOTHAM, Circuit Judge:

We deal with this case with the applicability of the Fair

Credit Reporting Act, 15 U.S.C. § 1681 et seq. to workplace drug

tests. We find that the FCRA may apply to drug tests in some

circumstances, but that the tests in this case are excluded from

coverage under the "transactions and experiences" exclusion. 15

U.S.C. § 1681a(d). Accordingly, we affirm the judgment of the

district court.

I.

David Hodge was employed by Texaco as an oil field pumper.

Texaco tests its employees for drug use as part of evaluating its

employees' "fitness for duty." Mobile Health Services ("MHS)

collected urine samples from Texaco employees at the employees' job
2

sites. On November 1, 1988, MHS conducted an unannounced

examination of employees at Hodge's jobsite. After Hodge failed an

initial screening test, involving the ability to track a moving

point of light with his eyes, MHS required him to provide a urine

sample.

The sample was sent to Laboratory Specialists, Inc. ("LSI"),

a laboratory that performs urine testing for Texaco. LSI reported

that the Hodge sample tested positive for tetrahydrocannabinol,

evidence of marijuana use. Upon receiving LSI's report, Texaco

suspended Hodge without pay and began termination proceedings.

Hodge's father contacted Gerald Rome, a Texaco executive vice

president, and asked him to investigate his son's pending

termination. At Rome's request, another Texaco executive

instructed the New Orleans office to have LSI send a portion of

Hodge's urine sample to Dr. Forest Tennant, MD., a drug

rehabilitation counselor who worked with Texaco in developing its

drug policies. Dr. Tennant sent the sample to American Biotest

Laboratory, Inc., and then reported to Texaco that the test was

indeed positive. Texaco terminated Hodge for violating Texaco's

substance abuse policy.

Hodge filed this action against LSI and Tennant, contending

that LSI and Tennant were "consumer reporting agencies" that

violated the FCRA by failing to use reasonable procedures to

guarantee maximum possible accuracy in their "consumer reports."

Hodge also contended that Texaco violated the FCRA by failing to
3

disclose the name and address of the drug testing laboratories when

it terminated him.

Hodge brought this action against Texaco U.S.A., Laboratory

Specialists, Inc., Consolidated American Insurance Co., American

Drug Screens, Inc., and Dr. Forest Tennant, alleging violations of

the Fair Credit Reporting Act and pendent state-law claims.

The defendants filed a 12(b)(6) motion to dismiss, contending

that FCRA did not apply to urinalysis reports. The district court

denied the motion. Hodge and the defendants moved for summary

judgment on the question of FCRA coverage. The court granted the

defendants' motion, reasoning that the FCRA did not apply to the

drug-screening reports in this case, because these reports were not

"consumer reports" within the meaning of FCRA. Hodge v. Texaco

U.S.A., 764 F. Supp. 424 (W.D. La. 1991). Hodge appeals from this

order of summary judgment.

II.

Hodge contends that urinalysis reports are "consumer reports"

under FCRA, when they are used to determine whether an employee

should be fired. Under the FCRA, "consumer reporting agencies"

must follow certain procedures when releasing "consumer reports."

A "consumer report" is defined as:

any written, oral, or other communication of any information

by a consumer reporting agency bearing on a consumer's credit

worthiness, credit standing, credit capacity, character,

general reputation, personal characteristics, or mode of

living which is used or expected to be used . . . for the

purpose of serving as a factor in establishing the consumer's

eligibility for . . . (2) employment purposes. . . . 15

U.S.C. § 1681a(d)
4

Workplace drug tests such as those performed by LSI and

Tennant fall within the plain language of this statute. The

reports of the results of these drug tests are communications

bearing on Hodge's personal characteristics which were used to

determine his eligibility for employment.

Defendants argue that despite the statute's plain language,

urinalysis tests fall outside the general purposes of the FCRA,

which is the evaluation of individuals' creditworthiness. By its

own terms, however, FCRA applies not only to credit reports, but

also to reports of consumers' employment eligibility. Comeau v.

Brown & Williamson Tobacco Co., 915 F.2d 1264 (9th Cir. 1990). In

Peller v. Retail Credit Co., 359 F. Supp. 1235 (N.D. Ga. 1973), the

court found that lie detector tests revealing a plaintiffs' prior

use of marijuana could be "consumer reports" if released to

prospective employers by a retail credit company. The Federal

Trade Commission, the agency charged with enforcing its provisions,

has interpreted FCRA to apply to State Motor Vehicle Department

records, employment agencies' reports, and even university career

and placement offices' mailings of reference letters. We find no

basis in the statutory language or the legislative history to

conclude that medical-type reports were meant to be excluded from

its coverage.

Admittedly, the extension of FCRA to drug-screening reports

case seems far from the original purposes behind the Act. However,

Congress has enacted this statutory language which covers a broad

range of conduct by its very terms. We cannot depart from the
5

plain language of this statute on the basis that Congress must not

have meant what it said. Accordingly, we conclude that workplace

drug test reports are not categorically excluded from coverage

under FCRA.

III.

Determining the general inclusion of drug tests within the

definition of consumer reports does not end our inquiry into the

applicability of the FCRA, because the statute also excludes some

transactions from coverage. Defendants assert that the report from

LSI to Texaco falls within the scope of § 1681a(d)(A) which

excludes from coverage "any report containing information solely as

to transactions or experiences between the consumer and the person

making the report. . . ." We agree.

The "transactions and experiences" provision exempts from

coverage any report based on the reporter's first-hand experience

of the subject. Therefore, a retailing firm's disclosure of its

own ledger experience with a customer, Porter v. Talbot Perkins

Children's Services, 355 F. Supp. 174, 177 (S.D.N.Y. 1973))

(quoting F.T.C.'s consumer credit guide), or a bank's report of its

own experience with its customers, Smith v. First National Bank,

837 F.2d 1575, 1579-80 (11th Cir. 1988), would not constitute a

"consumer report." The F.T.C.'s interpretative regulations state

that, as long as the report is not "based on information from an

outside source," but rather is based solely on the reporter's own

first-hand investigations of the subject, the report will fall
6

within the "transactions and experiences" exception. 16 C.F.R.

Appendix, Part 600, at 344 (1991).

LSI asserts that its report consists of its first-hand

experience in performing the tests on the urine sample, not on

information gathered from outside sources. Hodge contends that

LSI's urinalysis report does not fall within § 1681a(d)(A)'s

exclusion of first-hand reports for two reasons. First, Hodge

argues that, because LSI relied on MHS's initial collection and

delivery of the urine sample, their analysis does not constitute a

report of their own "first-hand experience." Second, Hodge argues

that LSI cannot have had first-hand experience with Hodge within

the meaning of FCRA, because it had no "trade experience" with

Hodge as, for instance, Hodge's employer, insurer, or creditor. We

reject both of Hodge's arguments and conclude that LSI's report to

Texaco was based upon its transactions with Hodge within the

meaning of the "transactions and experiences" exclusion.

Hodge's argument that LSI's experience with him was not

"first-hand," because LSI did not itself collect the urine sample

reads the "transactions and experiences" exclusion too narrowly.

MHS's collection of the urine sample was a mechanical preliminary

task. LSI did not rely on any information from MHS to produce its

report that the urine sample labelled as Hodge's had tested

positive for marijuana use. LSI merely reported the results of its

scientific testing of the urine sample that Hodge provided them.

Their report was based upon their experiences in testing the

sample, not upon any outside information.
7

Of course, the accuracy of the reports will depend on whether

LSI actually obtained Hodge's urine sample and not someone else's

urine for their tests. This information was obtained, however, not

from any independent experience by MHS, but from forms filled out

and signed by Hodge himself. The mere transmittal of the forms and

the urine through MHS's custody procedures does not change the

basic nature of LSI's analysis any more than the use of the mails

to receive information about a customer would break the chain of

"first-hand experience."

Hodge's second argument asserts that, unless the reporter has

a personal business transaction ("trade experience") with the

subject of the report, then the report cannot fall within the

"transactions and experiences" exception. This construction of

§ 1681a(d)(A) requires a strained reading of the statutory

provisions and would lead to untenable results. See Peller v.

Retail Credit Co., 359 F. Supp. 1235 (N.D. Ga. 1973). The

"transactions and experiences" exception uses broad language in the

same way as the rest of the definition of a consumer report does

so. Neither one contains a limitation to trade experience. It

would be incongruous to read such a limitation into the exclusion

provision while reading the main part of the definition broadly

enough to sweep in this kind of drug testing. Hodge cannot have it

both ways. Thus, we conclude that LSI's report to Texaco was not

a consumer report.
 

1We note that, although it does not change our analysis

under the FCRA, it is somewhat ironic that Hodge seeks recovery

under the FCRA on the basis of additional testing which was done

only at the behest of Hodge's father, a long-time Texaco

employee.

8

IV.

Tennant's report to Texaco presents a more difficult case than

LSI, because Tennant's report contains some second-hand

information.1 Tennant sent Hodge's urine specimen to American

Biotest Laboratory for testing and reported ABL's test results

along with his own test results. Tennant was, therefore, not

squarely governed by the exclusion under § 1681a(d)(A) which

requires that excluded reports contain "solely" information about

"transactions or experiences between the consumer and the person

making the report."

It is difficult to determine from the record the district

court's basis for dismissing the claim against Tennant sua sponte.

We conclude, however, that dismissal of the claim against Tennant

is appropriate for reasons not fully addressed below. The record

is completely devoid of evidence that Tennant meets the basic

requirement for coverage under the FCRA that he be a "consumer

reporting agency." Because we conclude that Hodge cannot

demonstrate the existence of this element of his FCRA claim, we

affirm the dismissal of his claim.

The term "consumer reporting agency" is defined in the FCRA as

"any person which, for monetary fees, dues, or on a cooperative

nonprofit basis, regularly engages in whole or in part in the

practice of assembling or evaluating consumer credit information or
10

other information on consumers for the purpose of furnishing

consumer reports." 15 U.S.C. § 1681a (emphasis added). Dr.

Tennant is a drug rehabilitation counselor who has worked with

Texaco programs in various states. The undisputed record evidence

demonstrates that his involvement with Hodge's drug retesting was

solely a one-time referral because he happened to be working with

Texaco Louisiana at the time a retest was requested. He was asked

about a lab to use for the retest and recommended ABL. Because of

logistical problems, he acted as a go-between for Texaco and ABL.

Hodge has come forward with no evidence disputing this basic

scenario and has not demonstrated that Tennant regularly engages in

the collection of information about consumers. The requirement

that a consumer reporting agency engage regularly in the collection

of information was obviously intended to protect individuals like

Dr. Tennant who engage in activities that might fall within the

definition of the FCRA on a casual, one-time basis. Thus, we

conclude that Hodge's claim against Tennant was properly dismissed.

Although Tennant has not raised this argument in a motion for

summary judgment, we grant judgment for Tennant nonetheless for the

sake of judicial economy because it is clear that Hodge's claim

cannot succeed.

The judgment of the district court is AFFIRMED.

DeMoss, Circuit Judge, specially concurring:
11

I concur in the affirmance of the district court's judgment

solely for the reasons set forth in Parts III and IV of the panel

opinion. These reasons seem completely sufficient and adequate for

our decision and render unnecessary the conclusion in Part II of

the panel opinion, with which I disagree.