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Starbucks Prepares to Settle Lawsuits Over Flawed Background Checks

Senior Judge Charles A. Pannell Jr., U.S. District Court for the Northern District of Georgia (Photo: John Disney/ALM)

Two pending class action lawsuits accusing Seattle-based coffee chain Starbucks of violating the Fair Credit Reporting Act by using flawed background reports to reject job applicants are being combined in the U.S. District Court for the Northern District of Georgia in preparation for a settlement.

According to pleadings in the first action, which was filed in December 2016 in the U.S. District Court for the Western District of Washington, the putative class numbers an estimated 8,000 similarly situated job candidates who were the subject of adverse background reports supplied by Accurate Background, the company accused of providing the inaccurate reports.

According to its filings, Starbucks employs about 186,000 people—or “partners”—across the United states and hires roughly 109,000 new partners every year.

The lead plaintiff in that case, Jonathan Rosario, said he applied for a position as a barista in Castle Rock, Colorado, in early 2016 but was turned down when his background check came back showing that he had multiple felony and misdemeanor charges and convictions on his record.

According to his filings, Rosario was finally able to convince Accurate Background that he was the victim of identity theft and that the crimes he was fingered for were actually committed by his adoptive brother.

Despite having a corrected report sent to Starbucks, Rosario “was not able to resuscitate the job opportunity that he had already lost due to the adjudication and Starbucks never ‘reversed’ its adverse action,” said the complaint, filed by Beth Terrell and Erika Nusser of Seattlle’s Terrell Marshall Law Group; and James Francis, John Soumilas and Lauren Brennan of Francis & Mailman in Philadelphia.

Kevin Wills filed another FCRA putative class action in federal court in Atlanta in September 2017. Wills’ complaint said that he had already worked as a barista at Starbucks and had been tentatively approved for a position at a Buford, Georgia, Starbucks in 2015 when Accurate Background provided a report concerning a Minnesota man, Kevin Willis, who had been convicted twice of domestic violence.

Wills had never lived in Minnesota, and his name was obviously not the same, it said; nonetheless, he was told his criminal background barred him from working for Starbucks.

“Starbucks typically does not provide job applicants with a copy of their consumer reports before it takes adverse action against them based on the information in such reports,” a clear violation of the requirements of the FCRA, the complaint said.

Wills' complaint sought to certify anyone who had an adverse action taken against them “based in whole or in part on a consumer report used for employment purposes by Starbucks, and to whom Starbucks did not provide a copy of the consumer report and a written description of rights” as provided by the FCRA at least five days before the adverse action was taken.

The complaint was filed by James Feagle, Kris Skaar, Cliff Dorsen and Justin Holcombe of Skaar & Feagle, which has offices in Tucker and Woodstock, Georgia; and Matthew Dooley and Anthony Pecora of O’Toole, McLaughlin, Dooley & Pecora in Sheffield Village, Ohio.

That case never got to class certification stage, as it was stayed last summer in order for it and the Rosario litigation to be mediated together.

On April 17, Washington District Court Judge Richard Jones ordered the cases consolidated in Georgia before Judge Charles Pannell, with the consent of all parties, “for the purpose of settling both class actions and directing notice to a single nationwide class.”

Both cases involve identical claims, and the classes of job applicants in each case are congruent and encompass nearly 8,100 individuals,” Jones’ order said.

“Now, following years of litigation and several sessions with a private mediator, the parties have reached an agreement in principle to settle both the Rosario case and the Wills case on a class basis.”

“A transfer to the Northern District of Georgia would be more convenient for the parties and witnesses and would also promote the interests of justice by decreasing the possibility of conflicts between the two cases,” it said.

In an email, Rosario attorney Soumilas said there would be no comment on the settlement yet but that they expected to file something with the court within the coming weeks.

Starbucks' defense team includes James Howard and Lauren Rainwater of Davis Wright Tremaine in Seattle, and Harry Winograd and Jessica Wood of Bodker Ramsey Andrews Winograd & Wildstein in Atlanta.

There was no response from Starbucks' lawyers or press department.