Ninth Circuit Holds Debtor’s Claim Under California Consumer Credit Reporting Act Preempted Under the Federal Fair Credit Reporting Act

On August 18, the U.S. Court of Appeals for the Ninth Circuit affirmed the district court’s grant of summary judgment for defendants in an action concerning alleged violations of the California Consumer Credit Reporting Agencies Act (CCRAA). Carvalho v. Equifax Information Services LLC, 2010 WL 323947, No. 09-15030 (9th Cir. Aug. 18, 2010). In this matter, the Debtor had filed a class action complaint in California state court under the CCRAA alleging that the defendant consumer reporting agencies (CRAs) failed to properly "reinvestigate" a disputed credit report. The case was removed from state court to federal district court after the CRAs learned, during discovery, that the case met the $5 million amount in controversy requirement under the Class Action Fairness Act of 2005, 28 U.S.C. §13320(d). The CRAs moved for summary judgment, which the district court granted. On appeal, the debtor challenged the court’s decision and claimed that the notice of removal was untimely filed; that the federal Fair Credit Reporting Act (FCRA) did not pre-empt her state law causes of action; and that the CRAs violated the CCRAAs reinvestigation provision. The Ninth Circuit rejected the debtor’s challenge. In upholding the district court’s grant of summary judgment, the court held that: (i) removal was timely, because the debtor’s complaint failed to indicate an amount in controversy necessary to trigger the 30 day period for removing a class action to federal court; (ii) the debtor’s claim under the CCRAA that the collection agency failed to assist in the reinvestigation of the dispute was preempted by the FCRA; and (iii) the debtor’s claim that the reported debt was misleading, rather than inaccurate, failed to establish a prima facie reinvestigation claim under the CCRAA.