Fair Credit Reporting Act Preempts State Law Defamation Claim Over Background Check

Recently, the Sixth Circuit found that the Fair Credit Reporting Act (“FCRA”) preempted a former employee’s state law defamation claim against his former employer.  While the FCRA can impose burdensome requirements on the entities that fall within its scope, including consumer reporting agencies (“CRAs”), furnishers, or users of consumer reports, the FCRA can also serve as a shield against certain state law tort claims.

In McKenna v. Dillion Transportation, LLC,  plaintiff, a truck driver named Frank McKenna, sued his former employer, Dillon Transportation, LLC, for defamation, alleging that Dillon improperly reported to HireRight, LLC, a background checking company that he had been involved in a trucking  accident resulting in his inability to obtain future employment.  Dillon moved to dismiss the lawsuit on the grounds that the FCRA preempted McKenna’s claim.  Specifically, Dillon argued that Section 1681t(b)(1)(F) prohibits states from imposing a requirement or prohibition “with respect to any subject matter regulated under” Section 1681s-2, the FCRA section relating to furnishers’ responsibilities.  The district court agreed with Dillon and McKenna subsequently appealed.

Affirming the district court, the Sixth Circuit explained that the FCRA “preempts state common law claims involving a furnisher’s reporting of information to consumer reporting agencies” and found that the district court properly concluded that McKenna was a consumer, Dillon was a furnisher, and HireRight was a CRA.  Notably, the Court found that the definition of CRA “generally includes companies like HireRight that sell employment-history reports.”  The Court also rejected McKenna’s alternative argument that Department of Transportation regulations, which he argued would have authorized his lawsuit, took priority over the FCRA.  According to the Court, it could harmonize both statutes, and FCRA preemption would still control.

McKenna shows how FCRA preemption can provide protection in some cases for employers against potentially costly state tort actions.  It also demonstrates judicial willingness to apply the provisions of the FCRA to employee background check companies. 

Janae Barrett, a Law Clerk – Admission Pending (not admitted to the practice of law) in the firm’s New York office, contributed to the preparation of this post.