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Martin v. First Advantage Background Services Corp.

United States District Court, D. Minnesota

March 26, 2014


Daniel Gray Leland and Joni M. Thome, Baillon Thome Jozwiak & Wanta, Counsel for Plaintiff.

Debra L. Weiss and Jenny L. Sautter, Meagher & Greer; Jason A. Spak, Picadio Sneath Miller & Norton, Counsel for Defendant First Advantage Background Services, Corp.


MICHAEL J. DAVIS, Chief District Judge.


This matter is before the Court on Defendant First Advantage Background Services' Motion for Summary Judgment [Docket No. 43]. The Court heard oral argument on October 22, 2013.

Because the Court concludes that there is a genuine dispute of material fact regarding whether Defendant reasonably responded to Plaintiff's initial dispute of his background report, the Court grants in part and denies in part Defendant's Motion for Summary Judgment.


A. Factual Background

1. Mahlon Martin's 1997 Offense

In 1997, Mahlon Martin ("Plaintiff"), was arrested when a sheriff's uniform was found in his car. (Leland Decl., Docket No. 54, Martin Dep. 84:12-85:24.) Police charged Plaintiff with a felony as a result. (Martin Dep. 86:9-14.) Plaintiff pled guilty to the charge of impersonating a police officer, which is a misdemeanor. (Martin Dep. 87:2-9.) The Ramsey County court suspended Plaintiff's sentence and required him to serve a year of unsupervised probation. (Martin Dep. 84:4-8; 87:2-16.) If Plaintiff completed probation successfully, the court would dismiss the case. (Martin Dep. 87:2-16.) Plaintiff completed probation without incident, and the court dismissed the matter in 1998 as a result. (Martin Dep. 89:15-90:23.) However, the matter was not expunged at that time. (Martin Dep. 17:7-21.)

2. Wells Fargo and the SAFE Act

In 2008, the United States Congress enacted the Secure and Fair Enforcement for Mortgage Licensing Act (the "SAFE Act"). 12 U.S.C. § 5101 (2008). The SAFE Act required mortgage originators to provide FBI background check results and general criminal history reports to a nationwide mortgage registry. Id . § 5104(a). As an employer of mortgage originators, Wells Fargo was required under the SAFE Act to ensure that its mortgage originators underwent the background check process; if it did not do this, Wells Fargo could not continue employing the mortgage originators. 12 C.F.R. § 208.103(a)(2) (2010).

Pursuant to Section 19 of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), Wells Fargo could not employ a mortgage originator who had been convicted of a crime involving dishonesty. 12 U.S.C. § 1829(a)(1) (2011). However, FIRREA provides a "de minimis" exception to this rule for certain types of crimes; an individual could nonetheless remain employed if they (i) had committed only one offense; (ii) that offense was punishable by a fine of less than $1, 000 and a jail term of less than one year, and no jail time was served; (iii) any sentence was entered at least five years before the individual began working; and (iv) the offense did not involve a banking institution. (Spak Decl., Ex. D, Gates Dep. 31:17-32:16; Ex. D-12, 63 Fed. Reg. 66, 187, 66, 185 (Dec. 1, 1998).) Wells Fargo began screening its employees in January 2011 to comply with the SAFE Act. (Gates Dep. 9:16-20; 28:8-23.) It hired Defendant First Advantage Background Services ("First Advantage") to provide reports needed for the screening process. (O'Connor Decl., Docket No. 29, ¶¶ 3-4; Ex. K, at 1-2.)

3. Plaintiff's Employment with Wells Fargo

Plaintiff was hired by Wells Fargo as a Collector in August 2009. (Martin Dep. 20-21.) Plaintiff then worked for Wells Fargo as a Telesales Specialist from October 2010 to February 2011. (Martin Dep. 28-30, 32, 194:14-18; Spak Decl., Ex. C-9, at MM 157.) A Telesales Specialist is a type of mortgage loan originator who takes mortgage applications and negotiates terms of loans. (Martin Dep. 28-30, 32, 194:14-18; Spak Decl., Ex. C-9, at MM 157.) Plaintiff served in this position until he was terminated in February 2011. (Martin Dep. 194:14-18.)

4. Defendant Prepares the Report on Plaintiff

Before 2011, Plaintiff had undergone two initial background checks with Wells Fargo, and neither resulted in termination of his employment. (Martin Dep. 241:4-242:24.) Between October 2010 and February 2011, Plaintiff was told that he had to submit to a background check in order for Wells Fargo to comply with the SAFE Act. (Martin Dep. 32.) Plaintiff consented to allowing Defendant to check his background and provide Wells Fargo with a report. (Martin Dep. 32:14-33:3; Spak Decl., Exs. C-11, C-12.) Around January 2011, Wells Fargo actually began the process of screening its employees to comply with the SAFE Act. (Gates Dep., at 9:6-9:20.)

Defendant then prepared a background report on Plaintiff. (Broom Decl., Docket No. 47, ¶¶ 16-17; Ex. A, at FABSC 13.) The FBI report obtained by Defendant yielded no information regarding the disposition of a 1997 Ramsey County, Minnesota assault charge matching Plaintiff's fingerprints. (Broom Decl. ¶¶ 16-17; Ex. A, at FABSC 13.) Therefore, under its contract with Wells Fargo, Defendant was required to investigate Plaintiff's underlying court records to address the FBI's missing information. (See Broom Decl. ¶¶ 6, 16-17; Ex. B, at FABSC 58; Ex. C, at FABSC 323.)

Specifically, Defendant's contract with Wells Fargo required that, if the FBI's records were incomplete, then Defendant would supplement their report by contacting courts and obtaining records to complete the information provided. (Broom Decl. ¶¶ 6, 8; O'Connor Decl., Ex. K, at FABSC 62, 83.) This process is called "rap sheet reconciliation." (O'Connor Decl., Ex. K, at FABSC 62, 83.) When conducting rap sheet reconciliation, Defendant uses trained fourmember teams who consult court records or equally credible sources, enter information into a computer system to prepare the final report, and consult one another and a manager about their work, which is checked before the final report is created. (Broom Decl. ¶¶ 11-12, 14-15.) With this process, Defendant's reports are accurate more than 99.975% of the time. (O'Connor Decl. ¶¶ 4-7.)

Defendant performed rap sheet reconciliation on Plaintiff's FBI record. (Broom Decl. ¶ 17.) On January 21, 2011, team members requested Plaintiff's criminal records from the Ramsey County courthouse by mail. (Broom Decl. ¶ 18; Ex. D, at FABSC 54.) Sometime thereafter, Defendant received Plaintiff's records, and the records showed that no charges had been filed against Plaintiff for aggravated assault. (See Broom Decl. ¶¶ 19-21.) However, the records also showed that Plaintiff had been arrested for impersonating an officer and charges had been filed for that offense. (Broom Decl. ¶¶ 19-21.)

A First Advantage team-member then input the information into Defendant's computer system, and another employee checked the entry. (Broom Decl. ¶¶ 19, 21.) The final First Advantage Report (the "Report") appeared as follows:

COMMENTS: Criminal court records were researched in RAMSEY County, MN, with the following results obtained:?

(Broom Decl., Ex. A, at FABSC 4.) Defendant believed that this information was accurate. (Broom Decl. ¶ 23; O'Connor Decl. ¶ 8.) At his deposition, Plaintiff agreed that the majority of this report was correct, but the sentence "JAIL: 1 YEAR" was incorrect. (Martin Dep. 96-101, 106-07.) Plaintiff also stated that use of the phrase "Sentence... GUILTY" on the Report was also incorrect, but he did not explicitly state that any other portion of the Report was inaccurate. (Martin Dep. 106-07.) After the Report was created, "at or around" February 1, 2011, the official court records that were used to make the Report were not filed or stored for future reference due to an apparent employee mistake. (Leland Decl., Ex. 13, Interrog. Answer No. 3.)

5. Plaintiff's Termination

Upon reviewing the Report, Wells Fargo decided that it could not continue to employ Plaintiff because he had committed a dishonesty crime. (Gates Dep. 38:14-39.) Wells Fargo also concluded that the de minimis exception did not apply to Plaintiff because the penalty associated with his dishonesty crime (one year in jail) was too severe to meet the exception. (Gates Dep. 38:14-39.) Wells Fargo also determined that Plaintiff did not meet the de minimis exception because it seemingly applied Texas law by mistake (due to the "TX" in the case number listed in the Report: "62-TX-97-041983") and concluded that the maximum fine under Texas law was too high to meet de minimus criteria. (Gates Dep. 5:24-6:2, 42-44; Spak Decl., Ex. D-3, at WF 865.)

Plaintiff's supervisor, Kai Larson, met with Plaintiff on February 4, 2011 and notified him that his employment was being terminated. (Martin Dep. 38:15-25.) Larson gave Plaintiff a letter during their meeting, which stated:

As discussed in our conversation on 02/04/2011, your background was recently screened/rescreened in order to meet S.A.F.E. Act requirements. As a result of the background screening, a record was found making you ineligible for employment with Wells Fargo. Due to this, your employment has been terminated effective 02/04/2011.

(Leland Decl., Ex. 4.) The letter also stated that Plaintiff could call Tami Burnham, an Employee Relations Consultant at Wells Fargo, if he had questions about his termination. (Leland Decl., Burnham Dep. 7:5-6; Leland Decl., Ex. 4.)

6. Plaintiff's Two Disputes of the Report

On February 4, 2011, the same day Plaintiff was terminated, Plaintiff contacted Burnham, as the letter indicated. (Martin Dep. 40.) Burnham told Plaintiff that he had been terminated because of a 1997 charge for impersonating an officer. (Leland Decl., Burnham Dep. 12-13.) Plaintiff then visited the Ramsey County courthouse and received a copy of his court records. (Martin Dep. 12-13.) The records provided:

CASE CHARGES Ct Statute Type Description Disposition 1 609.475 Charging Impersonating Dismissed Officer... TERMS OF DISPOSITION OR SENTENCE: COUNT 1 Ct Offense Statute Description Offense Disposition Date 1 05/29/1997 609.475 Impersonating Dismissed Officer

(Leland Decl., Ex. 8.) The records went on to state in the "Comments" section: "PG-STAY IMP 1 YR CT-1) NO S/S. VACATE & DISM IF NO ...

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