Tag: Class Action Fairness Act

Federal Judge Declines to Dismiss Insurers Dispute Over $57 Million FCRA Settlement April 18, 2023 A pending declaratory relief action brought by an insurance company in the Western District of Missouri could majorly affect the insurance and financial industries. The litigation involves a coverage dispute concerning a $57 million arbitration award that resulted from alleged violations of the Fair Credit Reporting Act (FCRA). In May 2022, the insurance company filed an action for declaratory relief against a consumer reporting agency (CRA) and another defendant. This action happened after the CRA had paid the other defendant over $54 million as part of an arbitration agreement related to job offers allegedly withdrawn due to background checks performed by the CRA. According to the insurance company, the high arbitration award occurred due to collusion. The company also alleged prejudice due to a lack of notice and the opportunity to lower damages. Furthermore, the company requested that the court enter a declaratory judgment. According to the request, the company should not owe a duty to indemnify, and the applicable policy has no coverage. In response to this request, the CRA moved for a dismissal. Before the court ruled on the CRA's Motion to Dismiss, its counsel filed a similar equitable garnishment action in Missouri State Court. This garnishment action asked for a dismissal of the case. According to the action, it paralleled a state action addressing the same issues raised in the case with the insurance company. The court removed and remanded the garnishment action during the pending Motion to Dismiss. Furthermore, the remand order stayed, pending the results of an appeal filed under the Class Action Fairness Act. On February 21, 2023, the Western District denied the Motion to Dismiss by the CRA without prejudice. The court stated it could not grant the Motion before the Eighth Circuit's decision in another case. As such, should the remand order get reversed, then the basis for the dismissal would no longer exist. In addition, the Eighth Circuit considered the outcome of the court affirming the remand order. Establishing this order would change the factors for the court to consider, differing from the argument in the moving papers. Because it would not sufficiently address the considered matters, the court denied the Motion to Dismiss. The Eighth Circuit has not yet made a decision on the insurance company's appeal. However, the CRA has renewed its attempts to have the declaratory relief action dismissed in a separate motion. According to the filed motion, the CRA claims that the Class Action Fairness Act would equate the Eighth Circuit's failure to issue a decision to a denial. This case shows how important it is to partner with a trustworthy background check company. The right partner will conduct accurate screenings that comply with all applicable laws. Pre-employ makes background checks easy and reliable. Speak with a compliance expert today. Source

Tag: Class Action Fairness Act

Federal Judge Declines to Dismiss Insurers Dispute Over $57 Million FCRA Settlement

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