This week, the Ninth Circuit addresses the standards for liability under the Fair Credit Reporting Act and rebuffs a pre-enforcement First Amendment challenge to a state law concerning public unions.
The Court holds that a credit reporting agency’s erroneous interpretation of the Fair Credit Reporting Act as allowing the reporting of a criminal charge that was filed outside of, but dismissed within, the statute’s seven-year window, was not negligent.
Panel: Judges Berzon, Bea, and Bennett (D. Md.), with Judge Bea writing the opinion.
Key Highlight: “We cannot say, nor could any other reasonable fact finder, that on this record Defendant’s violation of [the FCRA] was negligent, much less willful.”
Background: In February 2010, Gabriel Moran applied to live in Maple Square, a low-income housing development in Fremont, California. Maple Square hired credit reporting agency The Screening Pros LLC (Pros) to conduct a background check, and denied Moran’s application after Pros reported that he had three dismissed criminal charges and a conviction. The conviction and two of the dismissed charges were filed in 2006, but the oldest dismissed charge was filed in 2000 and dismissed in 2004. Moran filed suit, alleging (among other things) that Pros had committed grossly negligent and willful violations of the FCRA by reporting more than seven-year-old criminal information. The district court dismissed the relevant claims, but the Ninth Circuit reversed, holding that the credit report’s inclusion of the 2000 charge “fell outside of the permissible seven-year window.” On remand, the district court held that Pro’s FCRA violation was not willful or negligent, and granted summary judgment for Pros.
Result: The Ninth Circuit affirmed. “To prove a negligent violation [of the FCRA],” the Court explained, “a plaintiff must show that the defendant acted pursuant to an objectively unreasonable interpretation of the statute.” And to prove a willful violation, a plaintiff “a plaintiff must show not only that the defendant’s interpretation was objectively unreasonable, but also that the defendant ran a risk of violating the statute that was substantially greater than the risk associated with a reading that was merely careless.” The Ninth Circuit’s prior decision interpreting the FCRA did not show that Pros’ reading was unreasonable because the FCRA “does not specifically state the date that triggers the reporting window,” and the Court had previously resorted to extra-textual interpretative aids, including legislative history and statutory purpose, in reaching its determination. The proper reading of the FCRA “arose as a matter of first impression during this lawsuit,” Pros “introduced evidence that its interpretation was consistent with industry norms,” and the only available federal guidance at the time “appeared to permit reporting the charge.” For those reasons, Pros’ erroneous reading of the statute was reasonable, and its violation was neither negligent nor willful.
The Court holds that a group of elected local government officials lacked Article III standing to bring a pre-enforcement First Amendment challenge to California law prohibiting public employers from discouraging public employees from becoming employee organization members.
Panel: Judges Callahan, Owens, and Forrest, issuing a per curiam opinion.
Key Highlight: “[S]ection 3550 does not regulate Plaintiffs’ individual speech, and any restrictions the statute does impose on Plaintiffs’ ability to speak on behalf of their employers do not injure Plaintiffs’ constitutionally protected individual interests.”
Background: Plaintiffs, a group of elected local government officials, brought a pre-enforcement First Amendment challenge to California Government Code section 3550, which states in part that “[a] public employer shall not deter or discourage public employees . . . from becoming or remaining members of an employee organization.” Cal. Gov’t Code § 3550. The district court dismissed on the ground that the plaintiffs lacked standing because section 3550 applies only to “public employers,” not to plaintiffs individually. The court also held that the challenge was not ripe for review for the same reasons, plus the fact that plaintiffs had not identified any hardship that would result if they could not obtain pre-enforcement review.
Result: The Ninth Circuit affirmed, but remanded for the limited purpose of amending the judgment to reflect that the dismissal is without prejudice. Plaintiffs claimed to have a well-founded fear that sanctions would be entered against their employers under California Government Code section 3550 based on plaintiffs’ speech being attributed to their employers and this would cause plaintiffs to suffer reputational harm, harm to their abilities to serve as effective elected officials, and harm to their abilities to get reelected. The Court rejected the argument and held that plaintiffs lacked Article III standing to bring a pre-enforcement challenge because they did not show that the challenged policy applied to them and is likely to be enforced in a way that causes the feared harm. The Court explained that section 3550 does not regulate speech made by the plaintiffs in their individual capacities, and any restrictions the statute imposes on the plaintiffs’ ability to speak on behalf of their employers do no injure plaintiffs’ constitutionally protected individual interests. Although plaintiffs asserted that PERB would erroneously attribute statements plaintiffs made in their individual capacities—such as campaign statements, and statements made during debates and to constituents—to their public employers, resulting in section 3550 violations, neither the record nor authorities cited by plaintiffs demonstrated that there is a credible threat that section 3550 would be enforced in that manner. The Court declined to hold that an agent’s speech can only be attributed to the agent’s principal if the agent both has actual authority to make the statement and expressly claims to be speaking on behalf of the principal, a test that plaintiffs said would alleviate their concerns with section 3550. The Court also affirmed the district court’s denial of leave to amend because plaintiffs did not state what additional details they would add to their complaint if given the opportunity to do so. The Court remanded, however, because since the dismissal was for lack of Article III jurisdiction it should have been without prejudice, rather than with prejudice.