Litigation Update: Alliance Hospitality Management Faced with Lawsuit

Angela Preston


This Post was Updated on February 9, 2015

Litigation Update

Alliance Hospitality Management is the newest company to face litigation for its background screening practices. The hospitality management company is facing a Fair Credit Reporting Act (FCRA) lawsuit filed last week in the Western District of Wisconsin. A class action complaint was filed on January 30, 2015, alleging that the company violated portions of the Fair Credit Reporting Act in its employment background screening process. The target was again, the portion of the FCRA that requires a “clear and conspicuous disclosure” about the background check that is made in writing “made before the report is procured or caused to be procured.” A representative of the company has stated that the allegations are false and that a separate disclosure was, in fact, obtained.  

Case Name: Cory Groshek v. Alliance Hospitality Management, LLC, Case No. 15-cv-65, U.S. District Ct. for Western District of Wisconsin.

File Date: January 30, 2015

Cause of Action: Class Action, Fair Credit Reporting Act 15 § U.S.C. 1681, Disclosure

According to the complaint, Cory Groshek applied for a job on or before August 8, 2012, claiming he received a conditional offer of employment on that date. According to Alliance, the conditional offer of employment was from BPJ Management Inc., and not Alliance Hospitality Management. The complaint takes issue with a disclosure with the heading “Candidate Release Authorization.” It also alleges extraneous information in the document, including, but not limited to, the waiver of liability on the same page as the Candidate Release Authorization.

Alliance maintains that the “The Candidate Release Authorization” was for public records, but not for the actual consumer report. According to the company, authorization to access consumer reports was “soley” disclosed in a separate document as required by FCRA. The company uses a professional CRA for its background screening.

The suit is seeking statutory damages of not less than $100 and not more than $1,000 for each violation.

It’s telling to note that the named plaintiff in this case has recently filed a similar class action against Time Warner. It is clear that class action law firms are capitalizing on the technical requirements of the FCRA and are targeting large employers. It’s become a race to the courthouse to file as many of these class action suits as possible.  The pattern in these cases is to shoot first and sort out the facts later.

Final Word

Employers, it’s a good idea to review your forms. Dig out those forms, and review them for clarity. Make sure the disclosure stands on its own, and make sure they contain no disclaimers or extraneous information. For more information on how to avoid being the next target, click here to see my latest post with an FCRA round-up and tips on how to avoid being the next member of the FCRA Class Action Club. As always, consult with your legal counsel and a background screening professional.

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Angela Preston
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Angela Preston

Vice President of Compliance & General Counsel at EmployeeScreenIQ
Angela Preston has more than 20 years as a licensed attorney and over 10 years in the background screening area. She serves on the Board of Directors of the National Association of Professional Background Screeners (NAPBS), is a member of the NAPBS Background Screening Credentialing Council (BSCC), and is actively involved in the Society for Human Resource Management (SHRM) and ASIS International. Angela is also a member of the Ohio State and Columbus Bar Associations. Angela has direct oversight and management of compliance programs, and will provide guidance in complex legal matters including state and federal legislation, EEO law, client education, adjudication, pre/adverse action process, NAPBS Accreditation and client and vendor contract management.
Angela Preston
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  • Name Carrie Tweeten

    The conditional offer of employment was from BPJ Management Inc. not Alliance Hospitality Management.

    “The Candidate Release Authorization” was for public records. The waiver was for public records. Congress never intended for a consumer to waive their rights under the FCRA. However, Public records are not governed by FCRA.

    Authorization to access consumer reports was “soley” disclosed in a separate document as required by FCRA. The document is not supplemental but the actual authorization.

    The plaintiffs’ law firm specializes in class action lawsuits not FCRA.

    Alliance Hospitality Management uses the services of Sterling, a background screening professional.

    • Angela Preston

      Hi Carrie,
      Thank you for your comment and for presenting Alliance’s position in this matter. I will update the post to reflect your comments. It is great to get your side of the story, since employers are being hammered with these suits. Incidentally, the Plaintiff in the Alliance case has also sued Time Warner, making similar allegations. One minor point I wanted to clarify is that public record information, when included in a consumer report, is governed by the FCRA. However, if there was a separate document as you mention, it would be covered.