The "no conflict exists" approach to reconciling sections 15 U.S.C. § 1681t(b)(1)(F) and §1681h(e) of the Fair Credit Reporting Act adopted by the Seventh Circuit in Purcell v. Bank of America and the Second Circuit in Macpherson v. JP Morgan Chase Bank continues as the emerging trend in federal preemption analysis under the FCRA.
In El-Aheidab v. Citibank, the plaintiff filed suit in California Superior Court alleging causes of action for negligence and statutory violations of Section 17200 of the California Business & Professions Code and Section 1785.25 of the California Civil Code.
Specifically, plaintiff alleged that defendant Citibank wrongfully reported to credit reporting agencies that he owed an outstanding loan balance, even though no such balance was in fact owed, which ruined plaintiff's credit and prevented him from purchasing a home at favorable terms. Defendant Citibank removed the action to federal court and then moved to dismiss plaintiff's complaint on the basis that plaintiff's statutory and common law claims were preempted by the FCRA.
In considering the plaintiff's statutory claim pursuant to Section 17200 of the Bus. & Prof. Code, the court noted that "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." However, the court granted plaintiff leave to amend his complaint to the extent his 17200 claim is based solely on violations of section 1785.25(a), which prohibits the furnishing of credit information to any consumer reporting agency if the person knows or should know the information is incomplete or inaccurate, because 15 U.S.C. § 1681t(b)(1)(F) of the FCRA expressly exempted this provision from preemption. The court also dismissed plaintiff's 1785.25 claim with leave to amend as it was unclear whether the claim was brought under 1785.25(a), and therefore exempted from preemption by the FCRA, or under other sections of 1785.25 which are preempted.
With respect to plaintiff's negligence claim, the court found that this claim was completely preempted by the plain language of § 1681t(b)(1)(F). In noting that the majority of courts in the district have also adopted the total preemption approach, the court agreed with the Seventh and Second Circuits inPurcell v. Bank of America and Macpherson v. JP Morgan Chase Bank, respectively, that § 1681t(b)(1)(F) is not inconsistent with §1681h(e). The court reasoned that there was no logical or policy reason why Congress would enact a comprehensive preemption scheme applicable to state statutes but not to common law and observed that under a contrary interpretation, the prescription of § 1681t(b)(1)(F) could be easily circumvented by characterizing a claim as a common law claim rather than a statutory one even where the underlying conduct is identical. Accordingly, the court dismissed plaintiff's negligence claim with prejudice.