2nd Circuit Follows 7th Circuit on FCRA Preemption

The Second Circuit Court of Appeals is the latest court to weigh in on the issue of federal preemption under the Fair Credit Reporting Act.  The Second Circuit’s decision in Macpherson v. JP Morgan Chase Bank comes on the heels of the Seventh Circuit’s opinion in Purcell v. Bank of America, which upheld significant federal preemption under the Fair Credit Reporting Act.

In Macpherson, the plaintiff filed suit in Connecticut state court alleging that defendant JP Morgan Chase furnished false information about his finances to a consumer credit reporting agency which caused a reduction of his credit score.  Defendant removed the case to federal court and then moved to dismiss on the basis that the plaintiff’s claims were preempted by the FCRA.  The district court agreed with defendant and found that the plaintiff’s claims were preempted by § 1681t(b)(1)(F).  The plaintiff appealed.

On appeal, the plaintiff argued that § 1681t(b)(1)(F) conflicts with 1681h(e) because, according to the plaintiff, 1681h(e) specifically authorizes certain state law claims while §1681t(b)(1)(F) preempts them. The plaintiff argued that the court should resolve the conflict by finding that § 1681t(b)(1)(F) preempts only state statutes, and not state common law actions such as his. 

In affirming the district court’s decision, the Second Circuit specifically held that 1681t(b)(1)(F) does notconflict with § 1681h(e) and further held that § 1681h(e) does not insulate state tort actions from preemption.  In arriving at this decision, the Second Circuit found the Seventh Circuit’s opinion inPurcell v. Bank of America to be persuasive and relied on its explanation that the statutory provisions do not conflict because “[s]ection 1681h(e) preempts some state claims that could arise out of reports to credit agencies, § 1681t(b)(1)(F) [simply] preempts more of these claims.”  The court in Macphersonfurther agreed with the Seventh Circuit that “[s]ection 1681h(e) does not create a right to recover for willfully false reports” and that “reading 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.”  After determining that §1681h(e) is compatible with § 1681t(b)(1)(F), the court held that the plaintiff’s state law claims were preempted by the plain language of § 1681t(b)(1)(F).

The Second Circuit is the latest circuit to adopt the emerging “no conflict exists” approach to federal preemption under §1681h(e) and §1681t(b)(1)(F).

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