Jones v. Halstead Management Company, LLC et al. is a class action lawsuit against Halstead Management Company, LLC (Halstead), Brown Harris Stevens LLC Group, Brown Harris Stevens, LLC, and Terra Holdings, LLC (collectively, the Halstead Defendants). The lead plaintiff is Kevin A. Jones, a Manhattan resident who was offered a job as doorman/porter by Halstead – a large New York based real estate company. Kevin A. Jones has no criminal conviction history, but a background check performed by Sterling Infosystems, Inc. (Sterling) mixed him up with a Kevin M. Jones, who has several criminal convictions according to a Sterling background report. Halstead revoked Mr. Jones’ offer after receiving the Sterling report. On May 2, 2014, LAC and its co-counsel, Francis & Mailman P.C., filed a class action complaint against Halstead and the Brown Harris Stevens entities in the U.S. District Court for the Southern District of New York.

On August 22, 2014, Plaintiff filed an amended class action complaint adding Halstead’s parent company, Terra Holdings, LLC, to the lawsuit. The amended complaint charged the Halstead Defendants with violating background screening laws by rescinding job offers based on background reports without providing applicants or employees with requisite pre-adverse action notice. Pursuant to section 1681b(b)(3)(A) of the Fair Credit Reporting Act (FCRA), an employer who intends to take adverse action based on information in a consumer report must provide the applicant with notice of that fact before taking adverse action, and must include with the notice a copy of the background report and summary of the applicant’s rights under the FCRA. This requirement provides applicants with an opportunity to dispute or address the information contained in the report.

The amended complaint also added a claim against Halstead Defendants for failure to provide job applicants with a stand-alone disclosure form. Section of 1681b(b)(2)(A) of the FCRA requires employers to provide a clear and conspicuous form consisting solely of the disclosure that a background check may be obtained for employment purposes. This requirement ensures that applicants clearly understand that a background check may be performed on them and that they will not be confused by extraneous information (e.g., liability releases, employment information unrelated to the procurement of a background check, etc.).

Prior to the filing of the amended complaint, the Halstead and the Brown Harris Stevens entities filed a third-party complaint against Sterling (the background screening company) claiming that Sterling should be responsible for any damages alleged in the lawsuit.

On January 15, 2015, Plaintiff filed a motion to certify the class for the claim challenging the failure to provide a stand-alone disclosure form, and pursued the pre-adverse action notice claim on an individual basis.

On January 27, 2015, the Court denied Halstead Defendants’ and Sterling’s motions to dismiss both claims in the amended complaint. With respect to Plaintiff’s claim for willful and negligent failure to provide a stand-alone disclosure form to individuals undergoing a background check, the Court stated that “the Sterling Disclosure does not appear to be a standalone disclosure” because all of the “extraneous additions to the form stretched what should be a simple disclosure form to two full pages of eye-straining typeface writing.” The Court also decided that Plaintiff’s claim that his job offer was revoked without the requisite pre-adverse action notice should not be dismissed because there are factual questions about the actual state of Halstead’s decision-making that could not be resolved on a motion to dismiss.  With regard to the Halstead entities’ third-party complaint against Sterling, the Court allowed the Halstead entities to pursue their indemnification and contribution claims against Sterling but the Court dismissed the negligence and negligent misrepresentation claims.

On September 3, 2015, Plaintiff and Halstead Defendants entered into a class action settlement agreement whereby Defendants agreed to pay a total settlement amount of approximately $1 million in addition to settlement administration costs. Key terms of the agreement include:

  • Payment of $325 to each Class Member, amounting to $583,375 payment to the Settlement Fund. The Class is comprised of approximately 1,700 individuals who were not provided with stand-alone disclosure forms as required by section 1681b(b)(2) of the FCRA.
  • The Class is defined as: “all natural persons residing within the United States and its Territories regarding whom, from May 1, 2012 through November 12, 2014, the Defendants procured or caused to be procured a consumer report for employment purposes using a written disclosure containing language substantially similar in form to the disclosure forms provided to Plaintiff.”
  • Defendants’ acknowledgement that they have implemented changes to their business practices as a result of the lawsuit, specifically the engagement of a new vendor to replace Sterling (the consumer reporting agency that ran the erroneous background check on Mr. Jones) and the use of new forms to comply with stand-alone disclosure form requirement under the FCRA.

On September 4, 2015, with Defendants’ consent, Plaintiff filed a motion for preliminary approval of the class action settlement and notice to the class.  On December 11, 2015, the Court granted preliminary approval of the settlement agreement, provisionally certifying the Class as defined in the agreement.

After a final approval hearing on May 5, 2016, the court issued a final order finding that the class action settlement is “fair, reasonable and adequate to members of the class,” and certified a class of individuals as defined in the agreement.

LAC Attorneys: Monica Welby and Sally Friedman

LAC Co-Counsel and Lead Counsel: Francis & Mailman, P.C.


 

Significant Court Documents:

Aug. 22, 2014 – Amended Class Action Complaint – PDF

Jan. 27, 2015 – Order Denying MTD the Amended Complaint – PDF

Sept. 4, 2015  – Settlement Agreement

Dec. 11, 2015 – Revised Exhibit A to Settlement – Notice to Class

Dec. 11, 2015 – Order Preliminarily Approving Settlement and Directing Notice to Class

May 5, 2016 – Order Final Approval of Class Action Settlement

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