Federal District Court Adopts “Statutory” Approach to Determining FCRA Preemption and Denies Defense Motion to Dismiss Consumer’s Common Law Defamation Claim on Grounds of FCRA Preemption
In Beuster v. Equifax Information Serv., 435 F.Supp.2d 471, 2006 WL 1669790 (D. Md. 2006), a Maryland federal court rejected a defense motion to dismiss a defamation claim against a lender on the grounds that it was preempted by the federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq. A consumer, Hans Beuster, failed to qualify for a loan to refinance his home because of a derogatory report in his credit history concerning a credit card account with Bank One. The report stated that Beuster’s owed more than $10,000 on his Bank One account and that it had been sent to collection; Beuster disputed the item, insisting that he never applied for or received the credit card in question. In January 2005, in response to his inquiry, Bank One told Beuster that it was unable to find his credit card application. Nonetheless, when Beuster contacted consumer reporting agency Experian to dispute the derogatory report, Experian responded in February 2005 that the information had been verified by Bank One. In March, Beuster sent letters to consumer reporting agencies Experian, Equifax and Trans Union – enclosing an affidavit and a police report – disputing the derogatory information. This time, Experian agreed to remove the account information from Beuster’s credit report; Equifax and Trans Union, however, responded that Bank One had verified the derogatory item and so they would continue to reflect it in their reports. Slip Opn., at 1-3.
Beuster filed suit in federal court against Bank One, Equifax and Trans Union: as to Bank One, Beuster alleged an FCRA violation and a claim for common law defamation. Slip Opn., at 3. The defense moved to dismiss the defamation claim on the grounds that section 1681t(b)(1)(F) “is a total bar to any state statutory or common law causes of action.” Id., at 6-7. The district court disagreed.
First, the court analyzed the three approaches courts have employed in analyzing FCRA preemption claims: “(1) a ‘total’ pre-emption approach, (2) a ‘temporal’ approach, and (3) a ‘statutory’ approach.” Slip Opn., at 8 (citation omitted). The district court rejected the “total” preemption approach, concluding that it “‘ignores well-established principles of statutory constructions.'” Id., at 9 (citation omitted). The court also rejected the “temporal” preemption approach, concluding that it is “equally violative of the . . . principles of statutory construction.” Id., at 14. Under the “statutory” preemption approach, the court concluded that Beuster’s defamation claim “is not pre-empted by § 1681t(b)(1)(F).” Id., at 17. The court further concluded that it was not preempted by § 1681h(e) because the complaint adequately alleged malice. Id., at 17-19.