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State Law Claims Beware: When FCRA Preempts Claims Brought Under Other Laws

Recently, we’ve seen a number of state law and common law claims dismissed because those claims are preempted by FCRA.

In general, a preemption defense argues that, where a state law could conflict with federal law, only the federal law survives.  FCRA contains at least two express preemption provisions.  First, 15 U.S.C. § 1681h(e) preempts common law claims against consumer reporting agencies for their credit reporting activities unless the claims are based in malice or willful intent to injure.  Second, 15 U.S.C. § 1681t(b) provides a list of claims, covering a variety of claims which would relate to the same subject matter as FCRA claims, which are expressly preempted.

Courts do not shy away from dismissing state law claims when preemption issues arise.  To list a few recent examples:

  • Last week, the Eastern District of Pennsylvania dismissed a common law negligence claim because it did not include the malice or willfulness standard of § 1681h(e). Leboon v. Equifax Info. Servs. LLC, No. 18-1978, 2018 WL 4924170 (E.D. Pa. Oct. 10, 2018).
  • Earlier this month, the Western District of Washington dismissed a defamation claim based on FCRA’s preemption provisions. Khmaissi v. Navient Solutions, LLC, No. C16-5994, 2018 WL 4811898 (W.D. Wash. Oct. 4, 2018).
  • In September, the Indiana Court of Appeals affirmed the dismissal of state law contract claims which were preempted by FCRA. Shah v. Wells Fargo Bank, N.A., No. 18A-MF-629, 2018 WL 4659072 (Ind. App. Sept. 25, 2018).
  • The Eastern District of Kentucky recently dismissed a state law claim for the breach of the implied duty of good faith and fair dealing. Scott v. First Southern National. Bank,  5:16-281-KKC, 2018 WL 4568594 (E.D.Ky. Sept. 24, 2018).

Of course, preemption defenses do not always succeed.  Recently, a federal court in Texas allowed claims to move forward under a Texas state law which has the effect of requiring more disclosures than those required by FCRA.  Walters v. Certegy Check Servs. Inc., No. A-17-CV-1100-SS, 2018 WL 4762141 (W.D. Tex. Oct 2, 2018).  Similarly, when a defendant is not engaged in activities subject to FCRA, courts will allow state law claims to move forward against that defendant, even when those state law claims might be preempted by FCRA in other contexts.  Belfon v. Credit Check Total Consumerinfo.com, Inc., 2:18-cv-00408, 2018 WL 4778906 (E.D.N.Y. Oct. 1, 2018).

Given this landscape, prudent defendants should assess how FCRA applies to state law claims asserted against them and whether those claims are preempted.

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