9th Circuit Affirms Preemption of CCRAA
In Carvalho v. Equifax Information Services, LLC, the U.S. Court of Appeals for the Ninth Circuit affirmed the dismissal of plaintiff's claim under California's Consumer Credit Reporting Agency Act (CCRAA), Civil Code 1785.1 et seq., as preempted by the Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681t(b)(1)(F).
In Carvalho, plaintiff incurred medical bills of $118. Plaintiff's carrier denied coverage for the bills, plaintiff failed to pay, and the provider sent the balance to a collection agency. After collection efforts, plaintiff refused to pay the invoice, and the collection agency reported the debt to the CRAs. Plaintiff disputed the debt with the CRAs in a series of letters. The CRAs reinvestigated various times and the furnisher verified the debt after each reinvestigation.
Plaintiff filed a putative class action complaint against the furnisher and the CRAs in Monterey County Superior Court alleging violation of the California CCRAA. The Superior Court granted the furnisher's demurrer based on preemption of the CCRAA by the FCRA. The CRAs then removed the case to federal court based on the Class Action Fairness Act, 28 U.S.C.1332(d) (CAFA). Plaintiff moved to remand; the district court denied the motion. Plaintiff moved for class certification and for leave to amend her complaint; the district court denied plaintiff's motions and granted the CRAs' motions for summary judgment. Plaintiff appealed.
On appeal, plaintiff argued: (1) removal by the CRAs was untimely; (2) the Superior Court's order granting the furnisher's demurrer based on preemption was error; and (3) the district court's orders granting summary judgment and denying leave to amend were error.
The Ninth Circuit first held that removal was timely. The Court rejected plaintiff's arguments that defendants should have had notice of removability from pre-litigation settlement negotiations or from plaintiff's state court civil case cover sheet.
Regarding preemption, the Court held that the furnisher's CCRAA claim was preempted by the FCRA. The Court first noted that under Ninth Circuit caselaw, only California Civil Code 1725(a), and its accompanying private right of action provisions in sections 1785.25(g) and 1785.31, are exempted from FCRA preemption. Because plaintiff failed to argue section 1725(a) in opposition to the furnisher's demurrer, the Court held plaintiff had abandoned the argument and could not raise it on appeal. The Court then held that plaintiff's claim alleging inadequate investigation under section 1725(f) is preempted by FCRA.
Finally, the Court upheld the Orders granting summary judgment and denying plaintiff leave to amend.
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