Home > Uncategorized > The FCRA will preempt state law claims, like it or not, noisily or silently

The FCRA will preempt state law claims, like it or not, noisily or silently

April 21, 2011

Much ink has been and will be spilled over the two – count them, two – preemption provisions in the FCRA.  One of them is at 15 USC 1681h(e) and the other is at 1681t(b).  Neither of them preempts all state laws pertaining to credit reports, which is why the ink gets spilled.

One issue that comes up from time to time is whether common law claims for, say, negligence are preempted by the FCRA.  The answer is “usually” – common law claims “in the nature of defamation, invasion of privacy, or negligence” are preempted unless the defendant acted “with malice or willful intent to injure.”

The typical way that state-law claims get raised in under the FCRA is as sort of “what if” claims.  The plaintiff’s lawyer thinks, “What if the defendant acted with malice or willful intent to injure?  Wouldn’t it be nice to get punitive damages?  I think that in my complaint alleging FCRA violations, I will also allege a common law gross negligence claim on the basis of malice, and just hope that something good comes up in discovery.”  Usually, nothing good comes up in discovery, and the claims get dismissed.  I think of this as “noisy preemption” in that the FCRA claim is being litigated and it is therefore obvious that the case involves the FCRA.

But there’s another possible scenario.  For any number of reasons, a plaintiff may want to file a standard negligence claim related to a consumer report in state court, FCRA preemption be damned.  Sometimes state courts are friendlier to plaintiffs.  Sometimes the plaintiff’s lawyer may be more familiar with state court procedures – or may think that the defendants’ lawyers are unfamiliar with them.  So the question is:  could a consumer file a lawsuit in state court alleging a common law claim involving a consumer report … and just not mention the FCRA?  If so, would the claim still be preempted?

The District of New Jersey recently found that the answer to this question is “yes.”  The FCRA will preempt a common law cause of action under 1681h(e) whether or not the plaintiff mentions the FCRA in his or her complaint.  Burrell v. DFS Services, LLC, No. 10-2706, 2011 U.S. Dist. LEXIS 21408 (D.N.J. Mar. 3, 2011).  In Burrell, the issue was obvious – the plaintiff filed a complaint that mentioned the FCRA and then tried to file an amended complaint that didn’t.  But the court’s reasoning should apply even if the plaintiff’s first complaint fails to mention the FCRA.  This is “silent” preemption.  You can’t escape the FCRA.

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