Court Opinion

ID: 3016814
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Date Created: 2015-10-13 22:16:08.560836+00
Date Added: 2024-06-11T18:05:26.123297
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Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

3-3-2005

Kelchner v. Sycamore Manor
Precedential or Non-Precedential: Non-Precedential

Docket No. 04-2552

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Recommended Citation
"Kelchner v. Sycamore Manor" (2005). 2005 Decisions. Paper 1479.
http://digitalcommons.law.villanova.edu/thirdcircuit_2005/1479

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                                                                 NOT PRECEDENTIAL

                          UNITED STATES COURT OF APPEALS
                               FOR THE THIRD CIRCUIT

                                       No. 04-2552

                                  LISA R. KELCHNER

                                        Appellant

                                            v.

                      SYCAMORE MANOR HEALTH CENTER;
                          PRESBYTERIAN HOMES, INC.

                                On appeal of a final order
        of the United States District Court for the Middle District of Pennsylvania
                                  Civil No: 02-cv-00324

                     District Judge: The Honorable John E. Jones III

                    Submitted pursuant to Third Circuit LAR 34.1(a)
                                 on February 10, 2005

                               Before: BARRY, FUENTES,
                          and VAN ANTWERPEN, Circuit Judges

                                 (Filed: March 3, 2005)

                                ____________________

                               OPINION OF THE COURT
                                _____________________

Fuentes, Circuit Judge.
         Petitioner Lisa Kelchner appeals the District Court’s order of partial summary

judgment dismissing her claims under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et

seq. (“FCRA” or “the Act”). The District Court held that Kelchner’s employer, Sycamore

Manor Health Center (“Sycamore”), did not violate the FCRA by requiring Kelchnre to

sign a blanket authorization entitling Sycamore to obtain Kelchner’s credit report in the

future. Because such blanket authorizations are not inconsistent with the requirements of

the FCRA, we will affirm.

                                               I.

         As we write only for the parties, we recite only the essential facts. Kelchner had

been employed at Sycamore for about nineteen years when, in February 2001, she and

other employees of Sycamore’s parent, Presbyterian Homes, Inc. (PHI), were asked to

sign an “Annual Statement of Personnel Policy Understanding.” 1 The Annual Statement

would authorize PHI to obtain “investigative consumer reports” that “may involve

personal interviews with sources such as neighbors, friends, or associates” for

“employment related purposes only.” When Kelchner refused to sign the Annual

Statement she was informed that execution of the Statement was a condition of continued

employment and that if she failed to sign the Statement by March 21, 2000, she would be

taken off the active schedule. Because she refused to sign, Kelchner’s work hours were

reduced to zero on March 21, 2001. Kelchner remained on the payroll, however, and on

  1
      Kelchner was a recreation director at Sycamore, a nursing home.

                                               2
June 12, 2001, PHI sent her a second, revised Annual Statement to be signed by June 19,

2001. The revised Statement sought authorization to obtain “consumer reports”

containing information relating to employees’ “credit standing, character, general

reputation, personal characteristics, or mode of living” for the purposes of investigating

“theft from residents, coworkers, or PHI property; potential fraud in insurance claims; or

other forms of dishonesty.” Kelchner was warned that if she did not sign the revised

Statement, PHI would deem her employment “abandoned.” Kelchner again refused to

sign and her employment at PHI ended on June 30, 2001.

       Kelchner claimed that she was wrongfully terminated, and that a class of plaintiffs

employed by PHI and its subsidiary Sycamore signed the authorization forms under

duress due to threat of termination. The District Court held that blanket authorization

forms such as those required by PHI are permissible under the FCRA and certified the

issue for interlocutory appeal. Although it had earlier conditionally certified a plaintiffs

class of all persons employed by PHI from whom PHI sought authorization to procure

consumer reports, the District Court decertified the class when it granted partial summary

judgment to the defendants on Kelchner’s FCRA claims.

                                              II.

       Kelchner claims that (1) PHI had no valid employment purpose for which it sought

her credit report authorization; (2) PHI could not require Kelchner and other employees to

sign a blanket, advance authorization form; and (3) that it was improper for PHI to

                                              3
constructively terminate Kelchner upon her refusal to sign the authorization form.2 We

exercise plenary review over the district court's decision to grant summary judgment. See

Marino v. Industrial Crating Co., 358 F.3d 241, 247 (3d Cir. 2004). Under Federal Rule

of Civil Procedure 56(c), summary judgment is proper where no genuine issue of material

fact exists, and where, viewing the facts in the light most favorable to the non-moving

party, the moving party is entitled to judgment as a matter of law. There is no dispute as

to the material facts in this case; at issue are only the requirements of the FCRA, a matter

of statutory interpretation. See Tineo v. Ashcroft, 350 F.3d 382, 389 (3d Cir. 2003)

(holding statutory interpretation is subject to plenary review).

                                             A.

  2
    Kelchner initially asserted claims under the Employment Retirement Income Security
Act of 1874 (“ERISA”), 29 U.S.C. §§ 1001-1461, as amended by the Consolidated
Omnibus Reconciliation Act of 1985 (“COBRA”), 29 U.S.C. § 1161, et seq., in addition
to her Pennsylvania state law claim of wrongful termination.
       We address the issues raised under the FCRA only insofar as they are relevant to
determining whether PHI and Sycamore Manor are liable for wrongful termination. See
Highhouse v. Avery Transportation, 660 A.2d 1374, 1377 (Pa. Super. 1995) (“An
employer’s liability for wrongful discharge rests on whether a ‘well-recognized facet of
public policy is at stake’” and “courts have consistently held that employers violate the
public policy of this Commonwealth by discharging employees for exercising legal
rights”); see also Nazar v. Clark Distribution Sys. Inc., 46 Pa. D. & C4th 28 (Pa. Com. Pl.
2000) (finding discharge violated public policy expressed in federal law). Therefore, our
resolution of this case does not rest on any implication that there would be a private right
of action to bring a claim for equitable relief directly under the FCRA. We exercise
jurisdiction because the District Court had supplemental jurisdiction and because the
merits of plaintiff’s wrongful termination claim “turn on a substantial federal issue” that
is “essential” to her cause of action. U.S. Express Lines Ltd. v. Higgins, 281 F.3d 383,
389 (3d Cir. 2002).

                                              4
       The Fair Credit Reporting Act provides that, if certain conditions are met, credit

reports may be issued to employers for “employment purposes.”

15 U.S.C. § 1681b(a)(3)(B). The FCRA defines “employment purposes” as those relating

to “[evaluation of] a consumer for employment, promotion, reassignment or retention as

an employee.” 15 U.S.C. § 1681a(h). Kelchner’s first contention is that, because her

retention as an employee was not in question, PHI had no valid employment purpose for

procuring her credit report.

       Kelchner is right that Congress implicitly recognized employees’ privacy interest

in avoiding procurement of their credit reports for invalid purposes. But PHI maintains

that it needs access to employee credit reports in order to investigate theft, fraud and other

dishonesty if and when it arises.3 PHI claims that it newly imposed the requirement that

its employees sign the credit report authorization forms in response to the allegedly broad

scope of its protective and investigative duties as an employer, as well as new constraints

on its access to information about employees under the FCRA. PHI is persuasive that its

ability effectively to investigate allegations pertaining to an employee would be

substantially impaired if it had to wait until the investigation was underway before it

could obtain authorization from her.

  3
   PHI’s revised disclosure and authorization form also indicated that PHI would obtain
driving records for employees assigned regular driving duties. Although those reports
would also serve a clear employment purpose, that provision is not applicable to
Kelchner.

                                              5
       It is important to note that PHI did not actually obtain a credit report on Kelchner.

It sought authorization to do so in the future, if and when the need arose. While we do

not foreclose the possibility that under certain circumstances an employer may have a

valid employment purpose for which to obtain a credit report even before an employee is

the subject of internal investigation, here, PHI sought only authorization to procure a

report if and when the need arose, and the potential needs it identified clearly qualify as

valid employment purposes.

                                             B.

       Kelchner’s second contention is that PHI was prohibited from procuring credit

reports regarding its employees based on blanket, one-time authorization forms.

       Under the FCRA, an employer may obtain a credit report for employment purposes

if “a clear and conspicuous disclosure has been made in writing to the consumer at any

time before the report is procured or caused to be procured, in a document that consists

solely of the disclosure, that a consumer report may be obtained for employment

purposes; and the consumer has authorized in writing...the procurement of the report by

that person.” 15 U.S.C. § 1681b(b)(2)(A)(i) (emphasis added). The consumer-employee

must authorize disclosure in writing. See 15 U.S.C. § 1681b(b)(2)(A)(ii).

       The requirement that an employer obtain authorization “at any time before the

report is procured” is unambiguous. The plain language of the statute authorizes the

employer to obtain an employee’s written authorization at “any time” during the

                                              6
employment relationship. See 15 U.S.C. § 1681b(b)(2)(A)(i); see also Valansi v.

Ashcroft, 278 F.3d 203, 209 (3d Cir. 2002) (“When the statutory language has a clear

meaning, we need not look further.”).

                                             C.

       We turn to Kelchner’s final contention. Kelchner claims that employee

authorization under 15 U.S.C. § 1681b(b) must be voluntary in that it cannot be

compelled as a condition of employment. However, we see nothing in the statute that

implies such a limit on an employer’s ability to obtain blanket authorization from an

employee, at least in the context of an at-will employment relationship. But even if we

were to view the statute as ambiguous on this point, we are persuaded by a 1999 advisory

opinion letter issued by the FTC, which opined that the FCRA “does not prohibit an

employer from taking adverse action against an employee or applicant who refuses to

authorize the employer to procure a consumer report.” Oct. 1, 1999, FTC Opinion Letter.

See also Christensen v. Harris County, 529 U.S. 576, 587 (2000) (holding that an opinion

letter by the administering agency is entitled to respect under Skidmore v. Swift & Co.,

323 U.S. 134, 140 (1944)). In sum, we agree that an employer is not prohibited from

terminating an employee if she refuses to authorize her employer to obtain her consumer

credit report.

                                             III.

       For all the foregoing reasons, the District Court was clearly correct in its

                                              7
interpretation of the Act and the defendants were entitled to summary judgment on

Kelchner’s claims under the FCRA. We will affirm.