Cal. Court of Appeal Finds Broad FCRA Pre-Emption

FCRA’s pre-emptive reach is broad, preempting even California’s Confidentiality of Medical Information Act.  The Court of Appeal in Brown v. Mortensen 2010 WL 324749 (2010) explained:

As previously noted, we have found no cases addressing the interplay of the CMIA and the FCRA. However, multiple federal district courts have addressed the scope of FCRA preemption under section 1681t(b)(1)(F). For example, in Pirouzian v. SLM Corp. (S.D.Cal.2005) 396 F.Supp.2d 1124, 1130, the court held the FCRA preempted the plaintiff’s claims under the Rosenthal California Fair Debt Collection Practices Act (“CFDCPA”) (Civ.Code § 1788 et seq.). There, the plaintiff alleged that the defendant (i) failed to tell credit reporting agencies that the plaintiff disputed the debt at issue and (ii) failed to correct the erroneous information. The district court determined that those claims related to the responsibilities of those who furnish information to consumer reporting agencies as governed by section 1681s-2. (Pirouzian, 396 F.Supp.2d at p. 1130.) In so finding, the court rejected the plaintiff’s argument that, because the FCRA regulates the reporting of credit information while the CFDCPA regulates the collection of debts, the FCRA could not preempt his CFDCPA claims. ( Ibid.) The court explained that “statutes that do not overtly regulate credit reporting may still have the effect of regulating that area.” ( Ibid.)  Similarly, in Howard v. Blue Ridge Bank (N.D.Cal.2005) 371 F.Supp.2d 1139, the court held the FCRA preempted the plaintiff’s unfair competition claim brought under California Business and Professions Code, section 17200 (“section 17200”). There, the plaintiff brought multiple claims (including the section 17200 claim as well as FCRA claims) against various defendants. (Howard, 371 F.Supp.2d at p. 1142.) The plaintiff’s claims stemmed from allegedly inaccurate and derogatory information furnished to and reported by consumer reporting agencies. ( Ibid.) The court rejected the plaintiff’s argument that the FCRA did not preempt his section 17200 claim because section 17200 is not inconsistent with the FCRA, but merely provides an additional state remedy for the conduct giving rise to the FCRA claim. ( Id. at p. 1143.) The court noted that “[w]hile furnishers may be liable to private litigants under 15 U.S.C. § 1681s-2(b) based on the information they provide to credit agencies, [citation], it appears that Congress intended the FCRA to be the sole remedy against these furnishers.” (Ibid.) Thus, the court concluded that “Congress intended the FCRA to preempt state laws regarding the duties of furnishers and the remedies available against them, rather than allowing different liabilities for furnishers depending on the state of suit.” ( Id. at p. 1144.)  And, in Roybal v. Equifax (E.D.Cal.2005) 405 F.Supp.2d 1177, the court dismissed the plaintiffs’ state law claims because the court found they were preempted by the FCRA. There, the plaintiffs brought federal and state claims against multiple defendants based on inaccurate information being furnished to and reported by consumer reporting agencies. ( Id. at p. 1178.) The plaintiffs’ state law claims were for negligence, negligent misrepresentation as well as for violations of section 17200, the CFDCPA, and the Consumer Legal Remedies Act (Civ.Code § 1750 et seq.). ( Id. at p. 1178, fn. 1.) The court found that the plaintiffs’ state law claims arose solely from the alleged furnishing of inaccurate information to credit reporting agencies. ( Id. at p. 1182.) The court concluded, therefore, that the FCRA preempted the plaintiffs’ state law claims “in their entirety.” ( Ibid.) FN4  FN4. In addressing the scope of FCRA preemption, many courts have wrestled with the apparent tension between section 1681t(b)(1)(F)-which expressly preempts claims relating to the responsibilities of furnishers of information to credit reporting agencies-and section 1681h(e)-which permits state common law claims against those who furnish false information to credit reporting agencies with malice or willful intent to injure. (See Gorman v. Wolpoff & Abramson, LLP (9th Cir.2009) 584 F.3d 1147, 1166 [noting that “[a]ttempting to reconcile the two sections has left district courts in disarray”].) We need not tackle any such tension, however, as the Browns’ claims are based on statute, not common law.  In Sanai, Division Seven of this court held the FCRA preempted the plaintiff’s common law tort claims, which were based on the defendants’ acts of furnishing information to consumer reporting agencies. (Sanai, supra, 170 Cal.App.4th at p. 773.) There, the plaintiff’s landlord had hired the defendants to report to consumer credit reporting agencies a debt plaintiff allegedly owed the landlord. Upon learning of the negative information on his credit reports, the plaintiff sued the defendant furnishers of information, alleging causes of action for slander, libel, intentional and negligent interference with prospective economic advantage, intentional and negligent infliction of emotional distress, violations of the Consumer Credit Reporting Agencies Act (Civ.Code § 1785.1 et seq.) and violations of the FCRA. (Sanai, supra, 170 Cal.App.4th at pp. 752-753.) Division Seven affirmed the trial court’s order granting judgment on the pleadings as to the plaintiff’s state common law claims. The court held that section 1681t(b)(1)(F) “totally preempts all state common law tort claims against furnishers of credit information arising from conduct regulated by 15 U.S.C. § 1681s-2, including [the plaintiff’s] common law tort claims against [the defendants].” ( Sanai, supra, 170 Cal.App.4th at p. 773.)