Court of Appeal (Cal.) Says In Unpublished Opinion that the FCRA Pre-Empts the Rosenthal Act

Defendants contend this claim [violation of section 1788.17 —Ed.] is preempted by title 15 of the United States Code, section 1681t (governing credit reporting). . . . The violations plaintiff alleges here—that defendants wrongly reported the same debt twice and continued to do so after being informed that plaintiff disputed the debt; failed to include notice of the dispute; and failed to conduct a proper investigation—fall comfortably within the preempted “subject matter” regulated by 15 United States Code section 1681s-2.  Indeed, plaintiff does not argue otherwise. Instead, she contends her claim under section 1788.17 is not preempted because the wrongs she alleges also fall within the scope of section 1785.25(a)—the exception to the exception of the general rule of non-preemption. (15 U.S.C. § 1681t(b)(F)(ii).) S. . . We disagree.  Plaintiff’s argument is undercut by the fact that subdivisions (c) and (f) of section 1785.25—which are not saved from preemption—more specifically govern the conduct alleged here. Section 1785.25 (c) provides that so long as the accuracy of the information is in dispute, the person providing the information “may not furnish the information to any consumer credit reporting agency without also including a notice that the information is disputed by the consumer.” (Compare, 15 U.S.C. section 1681s-2 subdivision (a)(3).) And section 1785.25 subdivision (f) provides that once a notice of dispute is received, the person who provided the information “shall [ ] complete an investigation with respect to the disputed information and report to the consumer credit reporting agency the results of that investigation….” (Compare, 15 U.S.C. section 1681s-2 subdivision (b).) Thus, if the saving of section 1785.25(a) from preemption had been intended to include all matters pertaining to the accuracy or completeness of information reported to credit agencies, the statute would not have restricted the savings to subdivision (a).  Plaintiff relies on two federal cases to support her argument that the claim under section 1788.17 is not preempted. Those cases hold that an unfair competition action (under Bus. & Prof. Code § 17200) alleging damage for wrongful credit reporting, is preempted by the federal Credit Reporting Act “insofar as it is predicated on violations of the [federal Credit Reporting Act] or other statutory claims that are also preempted. [Citations.]” (El-Aheidab v. Citibank (S.D.), N.A. (N.D.Cal. Feb. 15, 2012) 2012 U.S. Dist. LEXIS 19038, *17 (El-Aheidab).) Such claims, however, are not preempted “to the extent that Plaintiff attempts to raise a § 17200 claim based on violations of § 1785.25(a).” (Id. at *18.) . . .Neither El-Aheidab nor Gorman control here because section 1788.17 does not merely “provide a vehicle for private parties to enforce [§ 1785.25]” but instead imposes “requirements and prohibitions” in addition to those set forth in the federal Credit Reporting Act, namely, the requirements and prohibitions found in sections 1692b to 1692j of the federal Debt Collection Practices Act.  Plaintiff alternatively argues that section 1788.17 is not preempted by 15 United States Code section 1681t because section 1788.17 does not impose “state law” requirements or prohibitions but merely incorporates federal requirements and prohibitions. The analysis is not so straightforward. Section 1788.17 grafts the federal debt collection regulations onto the state debt collection regulations. The preempting statute—15 U.S.C. section 1681t—and section 1785.25, subdivision (a) do not govern debt collection practices. They govern credit reporting. A claim that a debt collection agency is furnishing inaccurate information does not implicate either section 1788.17 or 15 US.C. § § 1692b to 1692j unless the furnisher is also “collecting or attempting to collect a consumer debt.” (§ 1788.17.) As plaintiff herself argues, the statutory schemes bespeak an intent to regulate furnishers of information and debt collectors separately “even if they are doing both at the same time.” (Italics added.) The converse, therefore must also be true: If they are not doing both at the same time, then the regulations apply separately to each activity—e.g., if a furnisher of information is not also attempting to collect a debt, then the debt collection proscriptions and requirements would not apply. Plaintiff’s position appears to be that those who are improperly furnishing credit information can also be subject to debt collection regulations by way of state law so long as those regulations emanate from federal law. But where Congress has expressly preempted specific subject matters of credit reporting (15 U.S.C. § 1681s-2) we think it is for Congress and not the states to decide whether an additional layer of regulation imported from federal debt collection law should be applied to those who are furnishing information to credit agencies. . . . We see no reason to apply debt collection proscriptions to credit reporting merely because the reporting is being done by a debt collection agency, where Congress has determined that the proscriptions of the FCRA and of section 1785.25, subdivision (a) suffice to protect the consumer’s rights with respect to credit reporting activities.