In El-Aheidab v. Citibank (South Dakota), N.A., 2012 WL 506473 (N.D.Cal. 2012), Judge Chen carved out an exception from FCRA pre-emption of the UCL that we had fought so hard to win in the Howard v. Blue Ridge Bank case. Judge Chen found no impediment to maintaining a UCL claim with an embedded CCRAA claim because Gorman had held that the CCRAA is not pre-empted by FCRA. Judge Chen explained:
With respect to the § 17200 claim, every district court to consider the question has held that such a claim is preempted at least insofar as it is predicated on violations of the FCRA or other statutory claims that are also preempted. See Banga v. Allstate Ins. Co., No. CIV S–08–1518 LKK EFB PS, 2010 WL 1267841, at *5 (E.D.Cal. Mar.31, 2010) (“The Ninth Circuit has implied that the FCRA preempts plaintiff’s UCL claim, and district courts have uniformly found claims of this type to be preempted…. Accordingly, the court concludes that plaintiff’s UCL claim is preempted insofar as it is predicated on violations of 15 U.S.C. §§ 1681s–2(a) and (b).”); Wang v. Asset Acceptance, LLC, 681 F.Supp.2d 1143, 1150 (N.D.Cal.2010) (Wang’s UCL claims are preempted); Howard v. Blue Ridge Bank, 371 F.Supp.2d 1139, 1143–44 (N.D.Cal.2005) (dismissing § 17200 claim as preempted by the FCRA due to Congress’ intent to preclude state law claims against furnishers of information, and instead to subject them solely to the FCRA); Roybal v. Equifax, 405 F.Supp.2d 1177, 1181 (E.D.Cal.2005) (ruling that the FCRA provision preempted all state law claims, including UCL). See also Premium Mortg. Corp. v. Equifax, Inc., 583 F.3d 103, 105 (2d Cir.2009) (finding unfair competition claim preempted under another subsection of § 1681t(b) (1)). In addition, while the Ninth Circuit has not squarely ruled on UCL claims in particular, it has considered the FCRA’s statutory scheme and held that claims arising under other state statutes are preempted unless the FCRA expressly states otherwise. See Carvalho v. Equifax Information Services, LLC, 629 F.3d 876, 888 (9th Cir.2010) (holding that claim under California Civil Code § 1785.25(f) was preempted by the FCRA because it was “not expressly saved from preemption,” as opposed to § 1785.25(a), which was expressly saved). ¶ However, to the extent that Plaintiff attempts to raise a § 17200 claim based on violations of § 1785.25(a), the Ninth Circuit’s decision in Gorman clarifies that the FCRA’s preemption provision “distinguished the imposition of additional legal duties, which are preempted, and the provision of additional remedies or enforcement mechanisms that are not.” Bottoni v. Sallie Mae, Inc. ., No. C 10–03602 LB, 2011 WL 635272, at *15 (N.D. Feb. 11, 2011) (citing Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1171 (9th Cir.2009)). Statutes which impose legal duties are preempted; statutes which merely provide procedural remedies are not. In Gorman, the Ninth Circuit found that a plaintiff could raise a claim under Cal. Civ.Code § 1785.25(a) because the FCRA expressly exempted that section from preemption, even though the FCRA did not also expressly exempt the subsection granting litigants a private right of action to enforce § 1785.25(a). The court found that “these sections [providing a private right of action] merely provide a vehicle for private parties to enforce other sections, which do impose requirements and prohibitions.” Gorman, 584 F.3d at 1171 (emphasis in original). Thus, because the FCRA expressly exempted § 1785.25(a) from preemption, litigants were free to pursue a private right of action under that statute. Id. ¶ Similarly, to the extent Plaintiff bases his § 17200 claim solely on violations of § 1785.25(a), such a claim does not impose any additional substantive duties on [Defendant] and is merely an additional procedural vehicle for enforcing section 1725.25(a). Bottoni, 2011 WL 635272 at *15 (holding that § 17200 claim based on § 1785.25(a) was not preempted by FCRA).
Judge Chen did not explain how one takes property from a consumer under Korea Supply so as to confer UCL standing based on an embedded CCRAA claim. Anyway, Judge Chen also held that FCRA preempted Plaintiff’s common claim for negligence, explaining:
The only circuit courts to have considered the question have adopted the total preemption approach, ruling that § 1681t(b)(1) (F) preempts both state statutory and common law causes of action. In Purcell v. Bank of America, 659 F.3d 622, 624–25 (7th Cir.2011), the Seventh Circuit found that longstanding Supreme Court precedent under Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), holds “that a reference to state ‘laws’ comprises all sources of legal rules, including judicial opinions”; therefore, § 1681t(b) (1)(F)’s reference to the laws of any State necessarily includes common law claims. Id. at 624. The court also found that there was no conflict between the two preemption provisions because “Section 1681h(e) preempts some state claims that could arise out of reports to credit agencies, while § 1681t(b)(1)(F) preempts more of these claims.” Id. at 625. The court held that to “[r]ead[ ] the earlier statute, § 1681h(e), to defeat the later-enacted system in § 1681s–2 and § 1681t(b)(1)(F), would contradict fundamental norms of statutory interpretation.” Id. Reading the two provisions in this way did not render 1681h(e) superfluous, the court found, because § 1681h(e) would still apply in the face of any exceptions to § 1681t(b)(1)(F)’s preemption provision. Id. at 625. The court also rejected the use of the “specific-governs-the-general” canon of statutory construction used by some district courts to conclude that §§ 1681h should prevail over 1681t, finding that each statute was specific in different ways. Id. at 626. ¶ Most recently, in Macpherson v. JPMorgan Chase Bank, N.A., 665 F.3d 45 (2d Cir.2011), the Second Circuit fully adopted the Seventh Circuit’s reasoning, holding that 1681t(b)(1)(F) preempted all causes of action not expressly excepted. The court agreed with the Seventh Circuit that there was no conflict between the two preemption provisions because the operative language in § 1681h(e) did not mandate conduct prohibited by the later-enacted § 1681t(b) (1)(F). It merely exempted certain state common law claims from its preemptive reach. Id. at 48. ¶ The Court notes that the majority of district courts in this circuit have also adopted the total preemption approach applying § 1681t(b)(1)(F) to state statutes and common law. See Smith v. Capital One Financial Corp., No. C 11–3425 PJH, 2012 WL 259515, at *5 (N.D.Cal. Jan.27, 2012) (finding negligence claim preempted); Ali v. Capital One, No. 1:11–cv–02115–LJO–SKO, 2012 WL 260023, at *5 (E.D.Cal. Jan.27, 2012) (finding complete preemption of defamation claim despite apparent tension between § 1681h(e) and § 1681t(b)(1)(F)); Buraye v. Equifax, 625 F.Supp.2d 894, 899 (C.D.Cal.2008) (finding total preemption and noting that [t]he majority of district courts in the Ninth Circuit have found that the FCRA totally preempts state law claims, including common law); Davis v. Maryland Bank, No. 00–04191 SBA, 2002 WL 32713429, at *12 (N.D.Cal. June 19, 2002) (concurring with “the majority of district courts[, which] have held that the FCRA preempts both state statutory and common law causes of action”) (emphasis in original) (collecting cases).FN6 [FN6. As noted above, district courts have disagreed with the total preemption approach in one of two ways. First, some have found that § 1681t(b)(1)(F) applies only to statutory claims, while § 1681h(e) applies only to common law claims. See Weseman v. Wells Fargo Home Mortg., Inc., No. CV 06–1338–ST, 2008 WL 542961, at *4 (D.Or. Feb.28, 2008). This approach has the benefit of ensuring no conflict between the two provisions, but carries the drawback of ignoring the seemingly unambiguous language of § 1681(b)(1)(F). See Spencer v. National City Mortg., ––– F.Supp.2d ––––, 2011 WL 6396509, at *7 (N.D.Ga. Aug.8, 2011) (describing pros and cons of statutory approach). Second, some courts have found that § 1681(t(b)(1)(F) applies only to claims arising after a furnisher has notice of disputed information, and § 1681 h(e) applies only to claims arising before such notice. Id. at *6 (describing temporal approach); Woltersdorf v. Pentagon Federal Credit Union, 320 F.Supp.2d 1222, 1226 (N.D.Ala.2004) (“[T]he absolute bar of the newer § 1681t(b)(1)(F) applies only after a consumer reporting agency notifies the furnisher of credit information of a consumer dispute.”) (emphasis in original). However, this approach ignores the fact that § 1681(t(b)(1)(F) encompasses all duties imposed on furnishers under § 1681s–2, and § 1681 s–2 imposes duties on furnishers both before and after they have notice of a dispute. Spencer, 2011 WL 6396509 at *6.] ¶ Taking into account the conflicting authority on this question, the Court finds that Plaintiff’s negligence claim is preempted. First, the plain language of § 1681t(b)(1)(F) appears to apply to Plaintiff’s claim. The “laws of any State” literally encompasses common law. The Supreme Court held in Erie R.R. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) that “the law of the state” encompasses, without distinction, the law “declared by its Legislature in a statute” as well as the law declared “by its highest court in a decision.” Following that principle, the Court has repeatedly interpreted similar statutes to encompass both statutory and common law claims. See Riegel v. Medtronic, Inc., 552 U.S. 312, 324, 128 S.Ct. 999, 169 L.Ed.2d 892 (2008) (“Absent other indication, reference to a State’s ‘requirements’ includes its common-law duties.”); Cipollone v. Liggett Group, Inc., 505 U.S. 504, 522, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992) (plurality opinion) (“[C]ommon-law damages actions … are premised on the existence of a legal duty, and it is difficult to say that such actions do not impose ‘requirements or prohibitions.’ ”). Thus, by its plain terms, the statute preempts Plaintiff’s common law negligence claim based on conduct governed by § 1681s–2.