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Serial Plaintiff Uses FCRA To Threaten Employers

July 6, 2016


July 6, 2016

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This is something straight out of an employer’s worst nightmare. Imagine someone applies for a job which has been advertised. However, this person is actually not interested in the job. All they want is for the employer to commit the tiniest legal violation when running background checks. As soon as this happens, they threaten a class action lawsuit and extort thousands of dollars in settlements.

Now, this isn’t some bizarre plot dreamed up by a Hollywood script writer. This is actually real life. There is one individual who has been running such a scheme for years. And now he is locked in a legal tussle with Time Warner Cable.

In January 2015, this individual – Cory Groshek – sent a 2,300-word missive to Time Warner Cable’s representatives. In the letter, Groshek – a 33 year-old from Green Bay – threatened to sue the company for violating the Fair Credit Reporting Act (FCRA).

He warned them that if he sued them, they could end up paying “upwards of $5 or $10 million”. However, for six figures, he could go away. Time Warner Cable’s lawyers called his bluff, and he filed the lawsuit.

Unbeknown to Time Warner Cable, at the time, Groshek had been running this scheme for a while. Over an 18-month time period, he had applied to 562 jobs. His intention wasn’t to get hired. His true intention was to catch the companies violating the FCRA and threaten to sue them.

According to court records, Groshek’s plan has actually been working. The records show that he has received $230,000 in settlements from businesses across the country. By his admission, he has threatened more than 40 companies. This has caused some people to claim that he is using the law to extort employers.

Although the “extortion” is vehemently denied by Groshek’s lawyers, what he has been doing is essentially tantamount to that. According to Time Warner Cable’s lawyers, Groshek admitted applying for hundreds of jobs with the hope of initiating a background check process which could lead to an FCRA violation. He had actually trained himself to spot FCRA violations.

By his own admission, Groshek claims to have first stumbled upon the idea in 2014, after speaking to an attorney about the FCRA. Back then, he realized how easy it was for companies to make FCRA violations during background checks. He therefore “educated himself on the requirements of the FCRA” and set forth on his path of applying for jobs with the hope of catching violators.

Even when Groshek was offered the job, he would either not show up or quit quickly. However, getting the job wouldn’t stop him from threatening an FCRA lawsuit in case violations were committed during the background checks process. In the case of Time Warner Cable, he was actually offered an $11 per hour job. That didn’t stop him from threatening to bring a lawsuit on behalf of all the new hires. It certainly didn’t stop him from filing a lawsuit once his demand for a five-figure settlement wasn’t met.

Groshek has actually been preying on the fact that most companies would rather settle potential FCRA lawsuits than go to court. This is partly due to some unfavorable court rulings in high-profile FCRA lawsuits, which have forced companies to pay out millions of dollars. Some well-publicized examples include Swift Transportation which paid out $4.4 million, Home Depot which paid $3 million and Domino’s which settled for $2.5 million.

Such payouts have typically resulted when individual FCRA lawsuits have turned into class actions. Given that a typical company receives applications from thousands of people annually, turning an FCRA lawsuit into a class action is quite easy. As soon as a single violation is identified, lawyers quickly advertise for anyone who has applied to work with the organization over a specific time period.

Given that the FCRA states that employers can pay damages of up to $1,000 per FCRA violation, once a class action is brought, the bill quickly rises into the millions of dollars. Since courts have so far taken a rather favorable stance towards plaintiffs, most organizations don’t even wait for the court process to run its course. Once a class action lawsuit is filed, they quickly move to settle.

However, most organizations don’t even wait for lawsuits to turn into class actions. They stop the lawsuit from being filed by settling with the claimant. As such, for most organizations, the threat of bringing a lawsuit over FCRA violations is enough for them to reach a settlement.

This is what Groshek has been counting on. By his own admission, he has so far threatened to sue 46 companies which performed background checks on him. His threats have often come with veiled attempts to get a sizeable settlement, depending on the company’s coffers. For instance, in his letter to Time Warner Cable, he wrote:

“I understand that you may be tempted to try to make this issue disappear for a token payment of, say, $500 to $2,500, but I will have you know that such offers would meet my definition of ‘lowball’ offers, and thus will be rejected immediately.”

So far, 20 of the companies Groshek threatened to sue have agreed to pay varying amounts of money in order to settle. These payments have totaled to $230,000. The rest of the companies have called his bluff, and he has ended up suing 3 of them, including Time Warner Cable. All the cases are still in court.

The Time Warner Cable lawsuit currently seems tilted in Groshek’s favor. The company’s lawyers have so far failed to have a judge throw out the case. The lawyers have tried to discredit the Groshek’s suit by branding him a “professional litigator”, a person whose main aim for applying for jobs isn’t to get hired, but to bring lawsuits arising from technical violations committed by employers.

The lawyers have claimed that Groshek’s actions tantamount to extortion – using minor legal technicalities to force employers to shell out financial settlements to him. They have also claimed that Groshek doesn’t care much about the people he’s claiming to bring a class action on behalf of – pointing out that all in all his settlement demands, he has never once asked for settlements to be paid to the other people hired by Time Warner Cable. He only demanded the settlements to be paid to him, so that he can drop the lawsuit.

This tactic has so far failed to yield results. Groshek’s lawyers have dismissed the idea that he is a “professional litigator” by pointing out that he has only filed 3 lawsuits. The lawyers have also stated (and a judge agreed with them) that Groshek’s motivations aren’t relevant to the lawsuit. The most important thing is whether or not Time Warner Cable violated FCRA guidelines.

For now, the legal tussle continues.

The case of Groshek should be a serious wake-up call for employers. Over the last few years, the number of FCRA lawsuits have been rising steadily. WebRecon, a company that tracks litigation states that in 2015 almost 400 FCRA class-action lawsuits were filed. This is nearly double the number of FCRA lawsuits filed in 2014. This steady rise is partly being fueled by the fact that courts have taken a favorable view towards plaintiffs.

Employers now have to bear in mind that not all applicants may actually be interested in job offers. Some may be like Groshek – intent on identifying FCRA violations so that they can threaten lawsuits. Unlike traditional applicants (who typically sue when they have been denied the job), this new breed of applicants can sue even when they have been hired. Therefore, employers have to reexamine their background check processes to ensure that they follow the FCRA regulations to the last tiniest detail.

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