California Consumer Finance Litigation Lawyer & Attorney : O'Rielly & Roche Law Firm : San Francisco, Oakland, Bay Area, Los Angeles

The Ninth Circuit has partially revived a part of California's erstwhile Financial Information Privacy Law.  In American Bankers Association v. Lockyer, the Court held California Financial Code §4053(b)(1) has non-preempted applications and reformed that section to sever its preempted portions.

American Bankers v. Lockyer is a preemption dispute that is as old as the 2003 California Financial Information Privacy Act, California Financial Code §4050 et seq., commonly known as SB1.  In American Bankers Association v. Gould, 412 F.3d 1081 (9th Circuit 2005), plaintiffs alleged that the federal Fair Credit Reporting Act ("FCRA") preempted SB1's regulation of information sharing between financial institutions and their affiliates.  The Ninth Circuit held that the regulation of nonpublic personal information in 15 U.S.C. 1681t(b)(2) preempted any application to consumer report information in section 4053(b)(1). 

The Court remanded for a determination whether any portion of SB1's affiliate sharing regulations in section 4053(b)(1) survived preemption and whether any preempted section was severable.  On remand, the district court held that no portion of section 4053(b)(1) survived preemption and that the preempted applications were not severable.  Defendants appealed.

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The Federal Reserve's Division of Consumer and Community Affairs released its updated and revised Consumer Compliance Handbook.  The Handbook, intended to provide comprehensive background information on federal consumer compliance statutes and regulations to Federal Reserve examiners, is a critical resource for compliance personnel at any financial institution.  The Handbook contains comprehensive resources and background information regarding regulations and statutes on deposits, credit, fair lending, the Community Reinvestment Act, and other applicable laws. 

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In Brack v. Omni Loan Company, Ltd., the Fourth District California Court of Appeal last week held that a Nevada choice of law provision in defendant's loan agreement was not enforceable, because "the application of Nevada law would conflict with fundamental California policy" and because "California had a greater interest in the parties' transaction than Nevada."

Defendant Omni, a Nevada corporation with its principal place of business in Nevada, provided a personal loan to plaintiff borrower Joshua Brack, a nonresident member of the military stationed at California's Camp Pendleton.  Omni's loan agreement contained a choice of law provision in favor of Nevada law.  Brack repaid the loan in full in 2002.

In 2003, Brack filed a class action against Omni, alleging violations of the California Finance Lenders Law (Fin.Code §22000 et seq.), the Consumers Legal Remedies Act ("CLRA") (Civ. Code §1750 et seq.) and California's Unfair Competition Law (Bus. and Prof. Code §17200).  After a trial on Omni's Nevada choice of law defense, the trial court entered judgment in favor of Omni.  Brack moved to set aside the judgment.  The trial court denied the motion and Brack appealed.
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Since certain of its provisions became effective in December 2006, the Fair and Accurate Credit Transactions Act of 2003 ("FACTA") has spawned a torrent of class actions around the country based primarily on alleged technical violations of the new law, enacted primarily as a protection against identity theft.  Many of these cases centered on technical ambiguities in the statute and related regulations that left open serious questions, like whether a merchant who properly truncated a credit card number, but failed to omit the card's expiration date, had willfully failed to comply with FACTA.  (See 15 U.S.C. 1681g.)

On June 3, 2008, President Bush signed the Credit and Debit Card Receipt Clarification Act, retroactively amending the statute "to declare that any person who printed an expiration date on any receipt provided to a consumer cardholder at a point of sale (POS) or transaction between December 4, 2004, and the enactment of this Act, but otherwise complied with FCRA requirements for such receipt, shall not be in willful noncompliance by reason of printing such expiration date on it." 

This revision does not remove all liability in this circumstance—a merchant may still be liable for actual damages for a negligent violation—but the amendment significantly reduces the prospect of onerous statutory penalties for a willful violation and, as a result, makes class certification in these cases less likely.

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