“The [Fair Credit Reporting Act] preempts state law defamation or negligent reporting claims unless the plaintiff consumer proves ‘malice or willful intent to injure’ him.”
How later courts described this case
- “The [Fair Credit Reporting Act] preempts state law defamation or negligent reporting claims unless the plaintiff consumer proves ‘malice or willful intent to injure’ him.”
Written by the judges who cited it.
The opinion
IN THE UNITED STATES DISTRICT COURT May 24, 2022
FOR THE SOUTHERN DISTRICT OF TEXAS Nathan Ochsner, Clerk
HOUSTON DIVISION
OGOCHUKWO J. OKWO, §
§
§
Plaintiff, §
§
VS. § CIVIL ACTION NO. H-21-4063
§
HOUSTON METHODIST THE §
WOODLANDS, et al., §
§
Defendants. §
MEMORANDUM AND OPINION
Ogochukwo J. Okwo applied for a job with Houston Methodist The Woodlands Hospital
and received a conditional offer of employment. The conditions included a background check.
Houston Methodist withdrew that offer when a background report it obtained from PreCheck, Inc.
reported that Okwo had a criminal record.
Okwo sued PreCheck and Houston Methodist, representing himself. He alleges that they
violated several provisions of the Fair Credit Reporting Act, including 15 U.S.C. § 1681d (Count
I), 15 U.S.C. § 1681e and § 1681k(a) (Count II), 15 U.S.C. § 1681i(a)(1), (7) (Counts III and IV),
15 U.S.C. § 1681h (Count V), 15 U.S.C. § 1681n (Count VI), and 15 U.S.C. § 1681o (Count VII).
Okwo also sued PreCheck for libel under Section 73.001 of the Texas Civil Practice and Remedies
Code (Count VIII) and both PreCheck and Houston Methodist for withdrawing, or causing the
withdraw of, the employment offer based on Okwo’s race and Nigerian national origin (Count IX).
Okwo seeks back pay, reinstatement or front pay in lieu of reinstatement, and what he labels as
compensatory and punitive damages of $300,000, nominal, compensatory and exemplary
damages, and court costs. (Docket Entry No. 1 at ¶¶ 18.1–18.6).
Houston Methodist moved to dismiss all the claims against it, and PreCheck answered and
moved to dismiss the claims under § 1681h(e), 15 U.S.C. § 1681n, and Title VII. (Docket Entry
Nos. 11, 14). Okwo has responded to Houston Methodist’s motion to dismiss, and Houston
Methodist has replied. (Docket Entry Nos. 18, 20).
After careful consideration of the pleadings, the parties’ arguments, and the applicable law,
the court grants Houston Methodist’s motion to dismiss and PreCheck’s motion for partial
dismissal. No claims remain against Houston Methodist. The claims in Counts II, III, IV, V, VII,
and VIII remain against PreCheck. The dismissals are without prejudice and with leave to amend.
Okwo may file an amended complaint no later than June 20, 2022. The initial pretrial conference
is rescheduled for July 22, 2022, at 10:30 a.m. C.D.T. by video. A zoom link will be separately
sent.
The reasons are explained below.
I. Background1
On November 2, 2020, Ogochukwo J. Okwo received a conditional offer from Houston
Methodist for a medical technologist position that would start on November 30, 2020. (Docket
Entry No. 1 at ¶¶ 3.1, 5.1). One of the conditions for the offer was the “successful completion of
a criminal and education background check.” (Id. at ¶ 3.1). Okwo authorized Houston Methodist
to conduct the background check through PreCheck, Inc., a records search provider, and answered
several questions representing that he had “never been convicted of, pled guilty, no contest, or
nolo contendere to a misdemeanor or felony within the applicable statutory period.” (Id. at ¶¶ 3.1,
4.2, 4.3).
1 Because the defendants have moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), this court
accepts as true the complaint’s factual allegations. Ashcroft v. al-Kidd, 563 U.S. 731, 734 (2011).
PreCheck used personal identifiers such as Okwo’s full name, physical address, social
security number, and Texas driver’s license number to search public record sources and verify
Okwo’s answers relating to his criminal background. (Id. at ¶ 5.3). PreCheck located Cause No.
1593301 relating to Okwo and included the information in a written report to Houston Methodist.
(Id.).
Cause No. 1593301, filed on June 4, 2018, was titled “Felony Charge: Assault Family
Violence-2nd Offender,” and stated in relevant part:
IN THE NAME AND BY AUTHORITY OF THE STATE OF
TEXAS:
Before me, the undersigned Assistant District Attorney of Harris
County, Texas, this day appeared the undersigned affiant, who under
oath says that he has good reason to believe and does believe that in
Harris County, Texas, OGOCHUKWU J OKWO, . . . on or about
August 5, 2017, did then and there unlawfully, intentionally, and
knowingly cause bodily injury to Mellodiemolly Gibson-Okwi . . .
a member of the Defendant’s family, by throwing liquid bleach into
the Complainant’s face and eyes.
It is further presented that before the commission alleged above, the
Defendant, on February 8, 2010, in the County Criminal Court at
Law No. 5 of Harris County, Texas, in Cause No. 1636879, was
convicted of Assault-Family Member which was committed against
a member of the Defendant’s family.
(Id. at ¶ 6.1.1). The final disposition of Cause No. 1593301 was “dismissed.” (Id. at ¶ 6.1.5).
PreCheck searched for a record of any punishment and found none, but it noted on the report to
Houston Methodist “that a lack of identifiers on either the sanctions record or provided by [the]
applicant may result in PreCheck reporting ‘No Sanctions or Matches Found.’” (Id. at ¶ 6.1).
On November 20, 2020, Houston Methodist sent an email to Okwo warning him that it
might take adverse action on his application based on information in the PreCheck report. (Id. at
¶ 7.1). On December 16, 2020, Houston Methodist emailed Okwo the following adverse action
notification:
Based in whole or in part on information contained in that consumer
report, we have denied your application for employment, are not
promoting you, are terminating your employment, or are
withdrawing your conditional offer of employment.
(Id.). Okwo emailed back to PreCheck and Houston Methodist that the incidents in the PreCheck
report were not convictions based on trials, guilty pleas, pleas of no contest, or pleas of nolo
contendere. (Id.). PreCheck responded to Okwo by email on February 10, 2021, that its report
accurately reflected that the charge was “dismissed.” (Id.). On February 22, 2021, Okwo sent a
request by priority mail to PreCheck for a copy of the “reinvestigation procedure used to determine
the accuracy and completeness of the information” in the PreCheck report. He alleges that he
received nothing in response to his request. (Id. at ¶ 7.4).
Okwo alleges that in July 2021, he discovered that Houston Methodist had received an
incorrect PreCheck report that had listed Cause No. 1593301 as a felony conviction instead of as
dismissed, and that the reported felony conviction caused Houston Methodist to rescind Okwo’s
offer of employment. (Id. at ¶ 7.5).
II. The Legal Standard
“The filings of a pro se litigant are to be liberally construed, . . . and a pro se complaint,
however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted
by lawyers[.]” Coleman v. United States, 912 F.3d 824, 828 (5th Cir. 2019) (emphasis and
alterations in original) (citation and internal quotation marks omitted). But “pro se plaintiffs must
still plead factual allegations that raise the right to relief above the speculative level.” Chhim v.
Univ. of Tex. at Austin, 836 F.3d 467, 469 (5th Cir. 2016) (per curiam) (citation omitted).
Rule 12(b)(6) allows dismissal if a plaintiff fails “to state a claim upon which relief can be
granted.” FED. R. CIV. P. 12(b)(6). Rule 12(b)(6) must be read in conjunction with Rule 8(a),
which requires “a short and plain statement of the claim showing that the pleader is entitled to
relief.” FED. R. CIV. P. 8(a)(2). “[A] complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Rule 8 “does not require
‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-
harmed-me accusation.” Id. at 678 (quoting Twombly, 550 U.S. at 555). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S.
at 556). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more
than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S.
at 556).
“A complaint ‘does not need detailed factual allegations,’ but the facts alleged ‘must be
enough to raise a right to relief above the speculative level.’” Cicalese v. Univ. Tex. Med. Branch,
924 F.3d 762, 765 (5th Cir. 2019) (quoting Twombly, 550 U.S. at 555). “Conversely, when the
allegations in a complaint, however true, could not raise a claim of entitlement to relief, this basic
deficiency should be exposed at the point of minimum expenditure of time and money by the
parties and the court.” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (alterations omitted)
(quoting Twombly, 550 U.S. at 558).
A court reviewing a motion to dismiss under Rule 12(b)(6) may consider “(1) the facts set
forth in the complaint, (2) documents attached to the complaint, and (3) matters of which judicial
notice may be taken under Federal Rule of Evidence 201.” Inclusive Cmtys. Project, Inc. v.
Lincoln Prop. Co., 920 F.3d 890, 900 (5th Cir. 2019).
III. Analysis
A. Count I
Okwo alleges that PreCheck and Houston Methodist violated 15 U.S.C. § 1681d of the Fair
Credit Reporting Act by failing to verify public record information in a consumer investigative
report. Section 1681d(a) of the Fair Credit Reporting Act provides:
A person may not procure or cause to be prepared an investigative
consumer report on any consumer unless--
(1) it is clearly and accurately disclosed to the consumer that
an investigative consumer report including information as to
his character, general reputation, personal characteristics,
and mode of living, whichever are applicable, may be made,
and such disclosure (A) is made in a writing mailed, or
otherwise delivered, to the consumer, not later than three
days after the date on which the report was first requested,
and (B) includes a statement informing the consumer of his
right to request the additional disclosures provided for under
subsection (b) of this section and the written summary of the
rights of the consumer prepared pursuant to section 1681g(c)
of this title; and
(2) the person certifies or has certified to the consumer
reporting agency that--
(A) the person has made the disclosures to the
consumer required by paragraph (1); and
(B) the person will comply with subsection (b).
15 U.S.C. § 1681d(a) (emphasis added). Houston Methodist argues that Okwo has not pleaded a
claim under this section because he has not alleged facts that he was subject to an “investigative
consumer report.” Okwo responds that he meets the requirements of § 1681d because Houston
Methodist and PreCheck notified him that he may be subject to a “consumer report” or an
“investigative consumer report.” (Docket Entry No. 18 at 3).
Under the Act,
[t]he term “consumer report” means 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 or collected in
whole or in part for the purpose of serving as a factor in establishing
the consumer’s eligibility for—
(A) credit or insurance to be used primarily for personal, family, or
household purposes;
(B) employment purposes; or
(C) any other purpose authorized under section 1681b of this title.
15 U.S.C. § 1681a(d)(1).
The term “investigative consumer report” means a consumer report
or portion thereof in which information on a consumer’s character,
general reputation, personal characteristics, or mode of living is
obtained through personal interviews with neighbors, friends, or
associates of the consumer reported on or with others with whom he
is acquainted or who may have knowledge concerning any such
items of information. However, such information shall not include
specific factual information on a consumer’s credit record obtained
directly from a creditor of the consumer or from a consumer
reporting agency when such information was obtained directly from
a creditor of the consumer or from the consumer.
15 U.S.C. § 1681a(e).
Houston Methodist is correct that Okwo has not alleged that PreCheck, or Houston
Methodist through PreCheck, conducted an investigative consumer report. Okwo alleges that
PreCheck searched public records to compile a consumer report but does not allege that any
“personal interviews” were conducted with “neighbors, friends or associates,” as required for a
report to be “investigative” under the Act. (See Docket Entry No. 1 at ¶ 6.1).
Because Okwo has not pleaded facts showing that PreCheck performed an “investigative
consumer report” within the meaning of the Act, Count I is dismissed as to both Houston Methodist
and PreCheck, with leave to replead.
B. Count II
Okwo alleges that PreCheck and Houston Methodist violated 15 U.S.C. § 1681e and §
1681k(a) of the Fair Credit Reporting Act by failing to establish and follow reasonable procedures
to assure maximum accuracy of public information in the PreCheck report and by failing to
maintain strict procedures to ensure that adverse public record information contained in the report
was complete and up to date.
Under § 1681e,
Whenever a consumer reporting agency prepares a consumer report
it shall follow reasonable procedures to assure maximum possible
accuracy of the information concerning the individual about whom
the report relates.
15 U.S.C. § 1681e(b). Under § 1681k,
A consumer reporting agency which furnishes a consumer report for
employment purposes and which for that purpose compiles and
reports items of information on consumers which are matters of
public record and are likely to have an adverse effect upon a
consumer’s ability to obtain employment shall--
(1) at the time such public record information is reported to
the user of such consumer report, notify the consumer of the
fact that public record information is being reported by the
consumer reporting agency, together with the name and
address of the person to whom such information is being
reported; or
(2) maintain strict procedures designed to insure that
whenever public record information which is likely to have
an adverse effect on a consumer’s ability to obtain
employment is reported it is complete and up to date. For
purposes of this paragraph, items of public record relating to
arrests, indictments, convictions, suits, tax liens, and
outstanding judgments shall be considered up to date if the
current public record status of the item at the time of the
report is reported.
15 U.S.C. § 1681k(a).
Under the Act, “consumer reporting agency” means
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 other
information on consumers for the purpose of furnishing consumer
reports to third parties, and which uses any means or facility of
interstate commerce for the purpose of preparing or furnishing
consumer reports.
15 U.S.C. § 1681a(f).
Houston Methodist argues that Okwo cannot state a claim against it under 15 U.S.C. §
1681e or § 1681k because it is not a consumer reporting agency. Okwo admits that he has not
pleaded that Houston Methodist is a “consumer reporting agency,” but he argues that he alleged
that Houston Methodist was a “user of a consumer report.” (Docket Entry No. 18 at 4).
Sections 1681e and 1681k are clear that they apply to the acts of consumer reporting
agencies, not users of the report. Okwo has failed to state a claim against Houston Methodist under
Count II. The claim is dismissed, with leave to replead.
C. Counts III and IV
Okwo alleges that PreCheck and Houston Methodist violated 15 U.S.C. § 1681i of the Fair
Credit Reporting Act for failing to conduct a reinvestigation to determine whether the disputed
information in the report was inaccurate and by failing to provide Okwo with a description of the
reinvestigation procedure no later than 15 days after he requested one.
15 U.S.C. § 1681i provides, in part:
(1) Reinvestigation required
(A) In general
Subject to subsection (f) and except as provided in
subsection (g), if the completeness or accuracy of any item
of information contained in a consumer’s file at a consumer
reporting agency is disputed by the consumer and the
consumer notifies the agency directly, or indirectly through
a reseller, of such dispute, the agency shall, free of charge,
conduct a reasonable reinvestigation to determine whether
the disputed information is inaccurate and record the current
status of the disputed information, or delete the item from
the file in accordance with paragraph (5), before the end of
the 30-day period beginning on the date on which the agency
receives the notice of the dispute from the consumer or
reseller.
. . .
(6) Notice of results of reinvestigation
(A) In general
A consumer reporting agency shall provide written notice to
a consumer of the results of a reinvestigation under this
subsection not later than 5 business days after the completion
of the reinvestigation, by mail or, if authorized by the
consumer for that purpose, by other means available to the
agency.
. . .
(7) Description of reinvestigation procedure
A consumer reporting agency shall provide to a consumer a
description referred to in paragraph (6)(B)(iii) by not later than 15
days after receiving a request from the consumer for that
description.
15 U.S.C. § 1681i(a).
Again, it is clear that § 1681i applies to consumer reporting agencies. For the reasons
described earlier, Houston Methodist is not a consumer reporting agency, nor does Okwo claim it
to be. In his response, Okwo voluntarily withdraws Counts III and IV against Houston Methodist.
(Docket Entry No. 18 at 5). Counts III and IV under 15 U.S.C. § 1681i against Houston Methodist
are dismissed as voluntarily withdrawn.
D. Count V
Okwo alleges that PreCheck and Houston Methodist violated 15 U.S.C. § 1681h of the Fair
Credit Reporting Act by furnishing false information in a consumer report with malice or willful
intent to injure such consumer.
15 U.S.C. § 1681h(e) states that
no consumer may bring any action or proceeding in the nature of
defamation, invasion of privacy, or negligence with respect to the
reporting of information against any consumer reporting agency,
any user of information, or any person who furnishes information to
a consumer reporting agency, based on information disclosed
pursuant to section 1681g, 1681h, or 1681m of this title, or based on
information disclosed by a user of a consumer report to or for a
consumer against whom the user has taken adverse action, based in
whole or in part on the report except as to false information
furnished with malice or willful intent to injure such consumer.
15 U.S.C. § 1681h(e). As Houston Methodist explains, this section does not provide an
independent cause of action. Instead, it is an express limitation on the requirements for state law
defamation and negligence claims. See Young v. Equifax Credit Information Services, Inc., 294
F.3d 631, 638 (5th Cir. 2002) (“The [Fair Credit Reporting Act] preempts state law defamation or
negligent reporting claims unless the plaintiff consumer proves ‘malice or willful intent to injure’
him.”).
In his response, Okwo admits that he cannot state a claim under Texas state law against
Houston Methodist for defamation, negligence, or invasion of privacy, and seeks to abandon this
claim against Houston Methodist. The claim against Houston Methodist is dismissed as
voluntarily withdrawn.
E. Count VI
Okwo alleges that PreCheck and Houston Methodist owe damages to Okwo under 15
U.S.C. § 1681n of the Fair Credit Reporting Act for failure to comply with the Act’s requirements.
15 U.S.C. § 1681n states in part that
[a]ny person who willfully fails to comply with any requirement
imposed under this subchapter with respect to any consumer is liable
to that consumer in an amount equal to the sum of—
(1)(A) any actual damages sustained by the consumer as a
result of the failure or damages of not less than $100 and not
more than $1,000; or
(B) in the case of liability of a natural person for obtaining a
consumer report under false pretenses or knowingly without
a permissible purpose, actual damages sustained by the
consumer as a result of the failure or $1,000, whichever is
greater;
(2) such amount of punitive damages as the court may allow;
and
(3) in the case of any successful action to enforce any
liability under this section, the costs of the action together
with reasonable attorney's fees as determined by the court.
15 U.S.C. § 1681n(a). Houston Methodist argues that Okwo has not alleged facts to support an
inference that Houston Methodist acted willfully. The Supreme Court has defined willfulness
under the Fair Credit Reporting Act as encompassing violations of the Act done knowingly and
with reckless disregard. Further,
a company subject to the [Act] does not act in reckless disregard of
it unless the action is not only a violation under a reasonable reading
of the statute’s terms, but shows that the company ran a risk of
violating the law substantially greater than the risk associated with
a reading that was merely careless.
Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 69 (2007). Okwo argues that he has pleaded facts
showing that Houston Methodist acted willfully because after he put Houston Methodist on notice
that he was not a convicted felon, Houston Methodist allegedly continued to reference Okwo as a
felon and failed to conduct an independent inquiry.
But Okwo has not identified the “requirement” under the Act that Houston Methodist failed
to comply with. Okwo has not stated a claim against Houston Methodist for a willful violation,
because he has not pleaded facts that a violation occurred in the first instance. Okwo’s claim under
15 U.S.C. § 1681n against Houston Methodist is dismissed, with leave to replead.
As to PreCheck, accepting the allegations as true that it incorrectly reported that Okwo had
a felony on its background report, and failed to follow proper reinvestigation procedures, Okwo
has not made additional allegations that PreCheck violated requirements of the act knowingly or
in reckless disregard. Okwo’s claim under 15 U.S.C. § 1681n against PreCheck is also dismissed,
with leave to replead.
F. Count VII
Okwo alleges that PreCheck and Houston Methodist owe damages to Okwo under 15
U.S.C. § 1681o for failure to comply with the requirements of the Fair Credit Reporting Act.
15 U.S.C. § 1681o states in part that
[a]ny person who is negligent in failing to comply with any
requirement imposed under this subchapter with respect to any
consumer is liable to that consumer in an amount equal to the sum
of--
(1) any actual damages sustained by the consumer as a result
of the failure; and
(2) in the case of any successful action to enforce any
liability under this section, the costs of the action together
with reasonable attorney's fees as determined by the court.
15 U.S.C. § 1681o(a). Okwo admits in his response that he has not pleaded that Houston Methodist
committed a “negligent” violation at this time and seeks to withdraw this claim. The claim against
Houston Methodist under 15 U.S.C. § 1681o is dismissed as voluntarily withdrawn.
G. Count VIII
PreCheck has not moved to dismiss Okwo’s claim that it libeled Okwo when it allegedly
reported to Houston Methodist that Okwo was a felon. The claim under § 73.001 of the Texas
Civil Practice and Remedies Code against PreCheck remains.
H. Count IX
Okwo alleges that PreCheck and Houston Methodist violated Title VII of the Civil Rights
Act of 1964 by withdrawing, or causing the withdraw of, the employment offer on the basis of
Okwo’s race and Nigerian national origin.
Okwo’s allegations that he was discriminated against are scant. He alleges that
[o]n or about August 22, 2020, I applied for an open position with
[Houston Methodist’s] Woodlands location (58534) for which I was
qualified. I received a conditional job offer, contingent upon the
completion of a background check.
[Houston Methodist] uses PreCheck, a third party vendor to conduct
background investigations of applicants. On 11/20/2020 I received
notice that [Houston Methodist] was going to rescind my job offer
based on PreChecks report of my background investigation. I
provided documents to both [Houston Methodist] and PreCheck
disputing their findings. I also followed the identified background
appeal process to no avail. On December 16, 2020, [Houston
Methodist] rescinded my offer of employment. [Houston
Methodist] made no attempt to conduct an individualized
assessment or independent background investigation and, instead,
relied on false and inaccurate information to withdraw my offer of
employment.
I believe that I have been discriminated against because of my Race
and Color – Black and national origin – Nigerian in violation of Title
VII of the Civil Rights Act of 1964 (Title VII), as amended.
(Docket Entry No. 1 at § 8.1).
Okwo has not pleaded direct evidence that he was discriminated against on the basis of
race, color, or national origin. To state a prima facie case of discrimination using circumstantial
evidence, Okwo must demonstrate that he: (1) is a member of a protected class, (2) was qualified
and applied for the job; (3) the employer rejected him for the job despite his qualifications; and (4)
was replaced by someone outside his protected group or was treated less favorably than other
similarly situated employees outside the protected group. McCoy v. City of Shreveport, 492 F.3d
551, 556 (Sth Cir. 2007).
Okwo has not alleged that he was treated less favorably than someone outside his protected
group. Okwo has failed to state a claim for discrimination against Houston Methodist and
Precheck. Okwo’s Title VII claims are dismissed as to both Houston Methodist and PreCheck,
with leave to replead.
IV. Conclusion
Houston Methodist’s motion to dismiss, (Docket Entry No. 11), and PreCheck’s motion
for partial dismissal, (Docket Entry No. 14), are granted. No claims remain against Houston
Methodist. Counts H, IU, IV, V, VU, and VIII remain against PreCheck. The dismissals are
without prejudice and with leave to amend. Okwo’s motion for leave to amend his original
complaint, (Docket Entry No. 24), is moot. Okwo may file an amended complaint no later than
June 20, 2022. The initial pretrial conference is rescheduled for July 22, 2022, at 10:30 a.m.
C.D.T. by video. A zoom link will be separately sent.
SIGNED on May 24, 2022, at Houston, Texas.
Crer To
Lee H. Rosenthal
Chief United States District Judge
15