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June 14, 2001


The opinion of the court was delivered by: Allen G. Schwartz, District Judge:


This diversity action arises out of the withdrawal of an employment offer to plaintiff Abel Obabueki ("plaintiff") by defendant International Business Machines Corp. ("IBM"). Plaintiff alleges that IBM improperly considered his dismissed misdemeanor conviction in making its

decision to withdraw the offer, and failed to properly inform plaintiff of its intent to withdraw the offer, in violation of the New York State Human Rights Law ("NYSHRL"), N.Y. Exec. Law §§ 296(15), 296(16) ("Sections 296(15) and 296(16)"), and the Fair Credit Reporting Act ("FCRA" or "the Act"), 15 U.S.C. § 1681 et seq. Plaintiff asserts claims against defendant Choicepoint, Inc. ("Choicepoint") under the FCRA and Section 349 of the New York General Business Law as a result of Choicepoint's allegedly improper provision of information related to the conviction to IBM. Currently before the Court are cross-motions for summary judgment on plaintiff's claims against each defendant, and plaintiff's motions to strike certain of each defendant's affirmative defenses. For the reasons set forth below, the motions are granted in part and denied in part.

I. Factual Background*fn1

A. The Parties and Plaintiffs' 1995 Conviction

Plaintiff; a citizen of Connecticut, has a Ph. D. in Materials Science and Engineering and a Master of Business Administration ("MBA") from Stanford University. (IBM's Statement of Undisputed Material Facts ("IBM 56.1") ¶ 1; Plaintiff's Rule 56.1 Counter Statement on IBM Claims ("P1. 56.1 Resp. IBM") ¶ 1.) IBM is a corporation organized and existing under the laws of Delaware with its principal place of business in Armonk, New York. (Amended Complaint ("Compl.") ¶ 3.) Choicepoint*fn2, a corporation organized and existing under the laws of Georgia with its principal place of business in Atlanta, is a consumer reporting agency. (Id. ¶ 4; Plaintiff's Rule 56.1 Statement on Choicepoint Claims ("P1. 56.1 Choicepoint") ¶ 27; Choicepoint's Rule 56.1 Counter Statement ("Choicepoint 56.1 Resp.") ¶ 27.) Choicepoint regularly engages in whole or in part in the practice of assembling or evaluating information on consumers for the purpose of furnishing consumer reports to employers for employment purposes. The information on consumers which Choicepoint compiles and reports to employers is drawn from matters of public record (P1. 56.1 Choicepoint ¶¶ 26, 28, 29; Choicepoint 56.1 Resp.¶¶ 26, 28. 29.)

In 1995, plaintiff was arrested and charged with fraud in obtaining welfare aid.*fn3 He entered a plea of nolo contendere, was ordered to pay restitution for the amount he illegally obtained, was fined $100, served 13 days in jail, and was placed on two years' probation. (IBM 56.1 ¶ 3; P1. 56.1 Reap. IBM ¶ 3; Declaration of Gregory Antollino dated July 4, 2000 in Support of Plaintiff's Motion for Summary Judgment Against Choicepoint ("Antollino Choicepoint Decl"), Ex. E.) On January 27, 1997, plaintiff's conviction was "vacated" and "dismissed" pursuant to California Penal Code § 1203.4 ("Section 1203.4").*fn4 The Order disposing of his case (the "California Order") stated that plaintiff was convicted of a misdemeanor offense, and was discharged from probation prior to the termination of the designated period. (Declaration of Gregory Antollino dated July 18, 2000 in Support of Plaintiff's Motion for Summary Judgment Against IBM ("Antollino IBM Del."), Ex. 3.) The California Order further directed that "the plea, verdict, or finding of guilt . . . be set aside and vacated and a plea of not guilty be entered; and that the complaint be, and hereby is, dismissed." (Id.) Finally, the California Order stated, in parallel language to Section 1203.4, that:

(Plaintiff] is advised that this Order does not relieve him/her of the obligation to disclose the above referenced conviction in response to any direct question contained in any questionnaire or application for public office or for licensure by any State or local agency, or for contracting with the California State Lottery."

(Id.; IBM 56.1 ¶ 5; P1. 56.1 Resp. IBM ¶ 5; see also Section 1203.4.) The record of the conviction was not sealed.*fn5 (IBM 56.1 ¶ 7; P1. 56.1 Resp. IBM ¶ 7.)

Subsequently, plaintiff engaged the services of a private detective to determine what a prospective employer could learn about his conviction by performing a background check (IBM 56.1 ¶ 8; P1. 56.1 Resp. IBM ¶ 8; P1. Dep., Ex. B to Lauri Aff., at 176-82, 461-67.) The detective advised plaintiff that his record was clear and contained no convictions. (IBM 56.1 ¶ 9; P1. 56.1 Resp. IBM ¶ 9.) Plaintiff claims that he conducted a similar investigation on his own, and was unable to locate information containing his conviction. (P1. Dep. at 176-82, 461-67.)

B. Plaintiff's Application for Employment at IBM

At IBM, once a decision is made to make a conditional offer of employment to a candidate, the individual is asked to complete an application form. (IBM 56.1 ¶ 18; P1. 56.1 Resp. IBM ¶ 18.) An applicant must also complete a Security Data Sheet ("SDS"), which requests inter alia that he identify whether he has pleaded guilty or "no contest" to a crime or other offense within the last seven years.*fn6 However, the applicant is expressly requested not to include "arrests without convictions" or "convictions or incarcerations for which a record has been sealed or expunged." (IBM 56.1 ¶ 19; P1. 56.1 Resp. IBM ¶ 19; Ex. M to Lauri Aff.) Both the application form and SDS provide that "any misrepresentation or deliberate omission of a fact . . . will justify terminating consideration" of the application for employment. (IBM 56.1 ¶ 20; P1. 56.1 Resp. IBM ¶ 20.) Further, IBM policy states that the mere identification of a conviction on the SDS will not subject an applicant to disqualification. (IBM 56.1 ¶ 21; P1. 56.1 Resp. IBM ¶ 21.) Rather, the policy requires that the company perform an analysis of whether the crime is related to the position for which the applicant has applied. (IBM 56.1 ¶ 22; P1. 56.1 Reap. IBM ¶ 22.) Specifically, the policy provides that "when reviewing information listed on the SDS (i.e. criminal record history)See Choicepoints's Memorandum Brief in Opposition to Plaintiff's Motion for partial record history) of a potential employee," the Human Resources unit responsible for hiring must perform an analysis of the crime in relation to the job being offered to determine whether placing the applicant in the position would create a risk to the safety or property of others. (IBM 56.1 ¶ 23; P1. 56.1 Reap. IBM ¶ 23.)

In April 1999, Olwyn Spencer ("Spencer"). IBM's Program Director for Market Management, identified the need for a marketing manager position for the company's JAVA Company Software group. Spencer, who is also the Hiring Manager for that group, initially posted the position notice on the IBM website for IBM employees. (IBM 56.1 ¶ 24; P1. 56.1 Resp. IBM ¶ 24.) By August 1999, no internal candidates had emerged. James Bailey ("Bailey"), an IBM recruiter, then sought outside candidates for the position.*fn7 At a certain point, Bailey received plaintiff's resume from another IBM recruiter, and sent it to Kathy Brown ("Brown"), the IBM Account Manager for the JAVA position, who in turn forwarded it to Spencer for consideration. (IBM 56.1 ¶¶ 25-26; P1. 56.1 Resp. IBM ¶¶ 25-26.)

In September 1999, plaintiff interviewed with Spencer for the marketing manager position. Spencer rated plaintiff an outstanding candidate for the job, and he was given a conditional offer of employment, subject to a background check.*fn8 Plaintiff then completed the IBM application form and SDS. (IBM 56.1 ¶¶ 27-29; P1. 56.1 Resp. IBM ¶¶ 27-29; P1. 56.1 IBM ¶¶ 14-15; IBM 56.1 Resp. ¶¶ 14-15; Ex. A. to Compl.) In response to the question regarding prior convictions that were neither "expunged" nor "sealed," plaintiff checked "no." (IBM 56.1 ¶ 30; P1. 56.1 Resp. IBM ¶ 30.)

IBM retained Choicepoint to perform the background check on plaintiff, pursuant to a longstanding agreement (the "IBM-Choicepoint Agreement") whereby Choicepoint renders "background Verification Services" to IBM.*fn9 (P1. 56.1 IBM ¶¶ 21-22; IBM 56.1 Reap. ¶¶ 21-22; Agreement for IBM and Equifax Services, Inc., Ex. O to Antollino Choicepoint Del.)*fn10 On September 28, 1999, an individual working for Inquest, one of Choicepoint's contractors, was sent to the state courthouse in Santa Clara County, California to check for criminal convictions of plaintiff. (Choicepoint's Statement Pursuant to Local Civil Rule 56.1 ("Choicepoint 56.1") ¶ 12; P1. 56.1 Resp. Choicepoint ¶ 12.) The contractor identified plaintiff's former conviction for welfare fraud and reported it to Choicepoint. (Choicepoint 56.1 ¶ 13; P1. 56.1 Resp. Choicepoint ¶ 13; P1. 56.1 Choicepoint ¶ 38; Choicepoint 56.1 Resp. ¶ 38.)

On or about October 5, 1999, IBM received a report from Choicepoint; apparently based on the information Choicepoint had obtained from Inquest, which reflected plaintiff's welfare fraud conviction (the "First Report")*fn11 However, the report failed to mention the dismissal of the conviction pursuant to Section 1203.4. (IBM 56.1 ¶ 31; P1. 56.1 Resp. IBM ¶ 31; P1.56.1 Choicepoint ¶¶ 39-40; Choicepoint 56.1 Reap. ¶¶ 39-40; Ex. B. to Compl.) Upon receiving the First Report, Brown contacted plaintiff and advised him of its contents.*fn12 Plaintiff responded that the conviction had been vacated and the case dismissed, and provided Brown with a copy of the California Order. (IBM 56.1 ¶¶ 33-34; P1. 56.1 Resp. IBM ¶¶ 33-34; P1. Dep. at 236-37, 279-80.) However, plaintiff did not explicitly state that the conviction had been "expunged" or "sealed." (IBM 56.1 ¶ 35; P1. 56.1 Resp. IBM ¶ 35; Pt. Dep. at 236-37, 279-80; Brown Dep., Ex. E to Lauri Aff., at 63-64.)

Several IBM employees then reviewed plaintiff's candidacy in light of the First Report and the California Order. Each of them concluded that plaintiff should have disclosed his conviction on the SDS. (IBM 56.1 ¶¶ 36-45; P1. 56.1 Resp. IBM ¶¶ 36-45.) These individuals were (i) Brown, (ii) Dick Carson ("Carson"), the Policies and Practices Manager, and (iii) Ketzel. (Id.) On October 11, 1999, Ketzel met with Spencer and advised her that plaintiff had lied on his application because he failed to reveal the conviction. (IBM 56.1 ¶ 44; P1. 56.1 Resp. IBM ¶ 44.) On the basis of Ketzel's representations, Spencer determined that the trust necessary to initiate an employment relationship did not exist, and decided to withdraw plaintiff's conditional offer as a result of his alleged misrepresentation on the SDS. (IBM 56.1 ¶ 45; P1. 56.1 Resp. IBM ¶ 45.) Joseph Damassa, an IBM vice president, approved Spencer's decision. (P1. 56.1 IBM ¶ 65-66; IBM 56.1 Reap. ¶¶ 65-66; Spencer Dep., Ex 4 to Antollino IBM Del., at 94-97.) The underlying facts concerning plaintiff's former conviction were not discussed or factored into the decision; IBM contends that the job offer was withdrawn because plaintiff lied on his employment application. (P1. 56.1 IBM ¶ 63; IBM 56.1 Resp. ¶ 63.)

On or about October 13, 1999, Brown called plaintiff and told him that IBM intended to withdraw its conditional offer of employment.*fn13 (IBM 56.1 ¶ 46; P1. 56.1 Resp. IBM ¶ 46; P1. Dep. at 279-81.) By letter dated October 13, 1999, IBM informed plaintiff that it "intend[ed] not to employ [him] based in part on information contained in [the First Report]." Attached to the letter was a copy of the First Report and a written description of plaintiff's rights under the FCRA.*fn14 (Letter from IBM HR-USA Staffing to Plaintiff dated October 13, 1999, Ex. B. to Compl.; IBM 56.1 ¶¶ 47-48; P1. 56.1 Resp. IBM ¶¶ 47-48.) While plaintiff contacted Choicepoint concerning the problems he perceived with the First Report, over the next several days he was unable to present additional evidence concerning the dismissal of his conviction necessary to prompt a reconsideration by IBM of its intended decision to withdraw the offer. By letter dated October 18, 1999, IBM informed plaintiff that the offer was formally withdrawn. (IBM 56.1 ¶ 49; P1. 56.1 Reap. IBM ¶ 49; Letter from IBM to plaintiff dated Oct. 18, 1999, Ex. T to Lauri Aff.)

According to IBM, on or about October 11, 1999, IBM made the decision to reduce the staff of its marketing department. At a certain point, Spencer purportedly determined that the marketing manager position for which plaintiff had applied would not be filled and the job posting was deleted on October 26, 1999. Plaintiff's name purportedly remains in IBM's computer resume database, and IBM states that he has been considered for other positions, most recently in January 2000. (IBM 56.1 ¶¶ 50-52.)

Following the withdrawal of the employment offer, and as a result of plaintiff's complaint to Choicepoint, Choicepoint obtained his California court file, and, upon review of the file, issued an amended report to IBM (the "Second Report"). (P1. 56.1 IBM ¶¶ 75-76; IBM 56.1 Resp. ¶¶ 75-76.) The Second Report, which IBM received on October 20, 1999, contains no mention of plaintiff's conviction, and reflects a clear record. (Ex. C to Compl.) Certain of IBM's Human Resources staff who had considered the First Report, including Brown, Bailey and Carson, received and examined the Second Report. (P1. 56.1 IBM ¶¶ 79-81; IBM 56.1 Resp. ¶¶ 79-81; Exs. 10, 16 to Antollino IBM Decl.) However, IBM did not re-offer the marketing manager position to plaintiff. (P1. 56.1 IBM ¶ 78; IBM 56.1 Resp. ¶ 78.) Spencer testified that she finds it difficult to imagine a circumstance where she would hire plaintiff, because he failed to reveal the vacated conviction. (P1. 56.1 IBM ¶ 83; IBM 56.1 Resp.¶ 83.)

C. Instant Action

Plaintiff filed an action against IBM and Choicepoint, Inc. on November 12, 1999, and an Amended Complaint on December 2, 1999. Plaintiff filed an action against two of Choicepoint's subsidiaries, Choicepoint Services, Inc. and Choicepoint Business and Government Services. Inc., on December 29, 1999. The two cases were consolidated on April 14, 2000.

Plaintiff alleges that IBM violated Sections 296(15) and 296(16) of the NYSHRL on the ground that IBM withdrew its offer of employment based on plaintiff's conviction. He also alleges that IBM violated the FCRA, 15 U.S.C. § 168lb(b)(1A), 1681b(b)(3) ("Sections 168lb(b)(1)(A) and 168lb(b)(3)") because it took adverse action against plaintiff without properly giving him notice that it was taking such action, and without properly certifying to Choicepoint that, inter alia it would provide such notice. IBM now moves for summary judgment on each of plaintiff's claims; plaintiff cross-moves for summary judgment solely as to his Section 296(16) and FCRA claims. Plaintiff also moves to strike IBM's affirmative defense of unclean hands.*fn15

Plaintiff alleges that Choicepoint violated the FCRA in not properly providing information concerning his conviction to IBM under the terms of the Act, in particular 15 U.S.C. § 1681b(b)(1)(A), 168le(b) ("Section 168le(b)"), and 1681k ("Section 1681k"). He also asserts that Choicepoint violated Section 349 of the New York General Business Law by engaging in deceptive acts and practices with respect to its contract with IBM concerning the provision of such information. Plaintiff now moves, and Choicepoint cross-moves, for summary judgment on each of these claims. Plaintiff also moves to strike Choicepoint's third affirmative defense of unclean hands, and its sixth affirmative defense as it pertains to Inquest, the thirdparty contractor hired by Choicepoint. This latter defense, which the parties refer to as the "third party liability" defense, asserts that Choicepoint is not liable for certain damages alleged by plaintiff, because such damages resulted from the acts or omissions of entities other than Choicepoint.

II. Discussion

A. Summary Judgment Standard

A district court may grant summary judgment only if it is satisfied that "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248 (1986). The burden rests on the moving party to demonstrate the absence of a genuine issue of material fact, which may be satisfied if it can point to the absence of evidence necessary to support an essential element of the non-moving party's claim. Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). All inferences and ambiguities arc resolved in favor of the party against whom summary judgment is sought. Gallo v. Prudential Residential Servs., L.P., 22 F.3d 1219, 1223 (2d Cir. 1994) (citations omitted).

If the moving party meets its burden, the opposing party must produce evidentiary proof in admissible form sufficient to raise a material question of fact to defeat the motion for summary judgment, or in the alternative, demonstrate an acceptable excuse for its failure to meet this requirement. AGV Prods., Inc. v. Metro-Goldwyn-Mayer. Inc., 115 F. Supp.2d 378, 386 (S.D.N.Y. 2000); see also Brady v. Town of Colchester, 863 F.2d 205, 210 (2d Cir. 1988) ("[W]here the moving party has attempted to demonstrate that the nonmoving party's evidence is insufficient as a matter of law to establish his claim, the burden shifts to the nonmoving party to come forward with persuasive evidence that his claim is not 'implausible'.") (citation omitted). When reasonable minds could not differ as to the import of the proffered evidence, then summary judgment is proper. Anderson. 477 U.S. at 250-52; Bryant v. Maffucci 923 F.2d 979, 982 (2d Cir. 1991). Moreover, "mere conclusory allegations, speculation or conjecture will not avail a party resisting summary judgment." Cifarelli v. Village of Babylon, 93 F.3d 47, 51 (2d Cir. 1996). On cross-motions for summary judgment, the rule governing inferences and burdens of proof is the same as for a unilateral summary judgment motion. AGV Prods., 115 F. Supp.2d at 386 (citing ...

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