7th Circuit Weighs in on FCRA Preemption

The Seventh Circuit Court of Appeals issued an opinion this month upholding significant federal preemption under the Fair Credit Reporting Act.  In Purcell v. Bank of America, the Court held that 15 U.S.C. 1681t(b)(1)(F) does not conflict with 15 U.S.C. 1681h(e) and therefore FCRA preempts all state law causes of action, whether based on statute or common law.

In Purcell, plaintiff filed a complaint in Indiana state court alleging that defendant Bank of America incorrectly reported that she was behind on loan payments. Defendant removed the case to federal court, then moved to dismiss. The district court held that plaintiff had no private right of action under 15 U.S.C. 1681s-2(a) and that plaintiff had not properly stated a cause of action under 15 U.S.C. 1681-2(b).  Among other things, the district court rejected defendant's argument that 15 U.S.C. 1681t(b)(1)(F) preempts both statutory and common law claims arising out of credit reporting, and instead applied the statutory approach to FCRA preemption.  Defendant appealed.

The 7th Circuit reversed, holding that 1681t(b)(1)(F) preempts all of plaintiff's state law causes of action.  The Court rejected the district court's narrow interpretation of "laws" in the preemption provision of 1681t(b) to mean only state statutory claims and not state common law claims. 

The Court also rejected the district court's conclusion that there is a conflict between the preemption provisions of 1681t(b)(1)(A) and 1681h(e).  Specifically, the Court stated:  ". . .we do not perceive any inconsistency between the two statutes. Section 1681h(e) preempts some state claims that could arise out of reports to credit agencies; §1681t(b)(1)(F) preempts more of these claims."

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