Jump to Navigation

Dreher Tomkies LLP
Attorneys at Law
2750 Huntington Center
41 South High Street
Columbus, Ohio 43215
Telephone (614) 628-8000
Fax (614) 628-1600



Law Digests Online!
Home
Firm Overview
Practice Areas
Attorney Profiles
Alerts
Multistate Digests
Articles
Representative Clients
Resource Links
Firm Brochure
Contact Us
Save to My Favorites
Print this page
Alerts Contextual Image

CALIFORNIA’S SB1 AFFILIATE SHARING PROVISIONS PREEMPTED ON REMAND

On October 5, 2005, the U.S. District Court for the Eastern District of California granted declaratory judgment in favor of the plaintiffs, the American Bankers Association, the Financial Services Roundtable and the Consumer Bankers Association, in American Bankers Association v. Lockyer. No. Civ. S 04 0778 MCE KJM (E.D. Ca. Oct. 5, 2005). The court held that the affiliate sharing provisions of the California Financial Information Privacy Act, Cal. Fin. Code §§ 4050 et seq. (commonly known as “SB1”), are preempted by the federal Fair Credit Reporting Act. The district court also permanently enjoined enforcement of the affiliate sharing provisions as codified in California Financial Code § 4053(b)(1) to the extent they are preempted by the FCRA preemption provision, 15 U.S.C. § 1681t(b)(2).

The district court previously held that SB1 was not preempted by the FRCA in a June 30, 2004 opinion, but the U.S. Court of Appeals for the Ninth Circuit reversed and remanded the case in June of 2005. The Ninth Circuit declared that FCRA’s affiliate sharing preemption clause preempts SB1 insofar as it attempts to regulate the communication between affiliates of information as that term is used in 15 U.S.C. § 1681a(d)(1) of the FCRA, defining “consumer report” as any written, oral or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living that is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for credit, insurance, employment or other purposes authorized under the FCRA. On remand, the district court determined that, applying this restricted meaning of “information,” no portion of the affiliate sharing provisions of SB1 survives preemption. The district court did stress, however, that the vast majority of protections afforded by SB1 remain untouched by the October 5th decision.

  • Elizabeth Anstaett