Consumer Data Indus. Ass'n v. King

• Decision Date: 07 May 2012
• Docket Number: No. 11–2085.,11–2085.
• Citation: 678 F.3d 898
• Parties: CONSUMER DATA INDUSTRY ASSOCIATION, Plaintiff–Appellant, v. Gary K. KING, in his official capacity as Attorney General for the State of New Mexico, Defendant–Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

678 F.3d 898

CONSUMER DATA INDUSTRY ASSOCIATION, Plaintiff–Appellant,

v.Gary K. KING, in his official capacity as Attorney General for the State of New Mexico, Defendant–Appellee.

No. 11–2085.

United States Court of Appeals,Tenth Circuit.

May 7, 2012.

James Chareq of Hudson Cook LLP, Washington, DC (Charles J. Vigil of Rodey, Dickason, Sloan, Akin & Robb, Albuquerque, NM, with him on the brief) for Plaintiff–Appellant.

Philomena Hausler (Luis E. Robles on the brief) of Robles, Rael & Anaya, P.C., Albuquerque, NM, for Defendant–Appellee.

Before KELLY, MURPHY, and O'BRIEN, Circuit Judges.

O'BRIEN, Circuit Judge.

I. INTRODUCTION

New Mexico enacted a law making it easier for victims of identity theft to expunge negative information from their credit reports. Before the law took effect, the Consumer Data Industry Association (“CDIA”), a trade group comprised of hundreds of consumer-data companies, brought a pre-enforcement challenge contending the law is preempted by the federal Fair Credit Reporting Act (“FCRA”). The CDIA sought declaratory and injunctive relief against the New Mexico Attorney General, who, along with aggrieved consumers, has authority to enforce the law through civil suit. Concluding equitable relief against the Attorney General would not adequately redress CDIA's injuries, the district court dismissed the case as non-justiciable. We vacate the district court's judgment and remand for further proceedings.

II. BACKGROUND

Congress enacted the FCRA in 1970 with the aim of protecting the banking system from inaccuracy and abuse in credit reporting. The FCRA creates a uniform set of rules governing the content of consumer reports and the responsibilities of those who maintain them. 15 U.S.C. § 1681 et seq. Together with the Fair Debt Collection Practices Act, the FCRA is the source of most consumer credit rights in the United States.

Congress amended the FCRA in 2003 to add safeguards for victims of identity theft. See Fair and Accurate Credit Transactions Act, Pub.L. No. 108–159, 117 Stat.1952 (2003). Under the amendments, consumer reporting agencies (“CRAs”) must, upon a good-faith request from a consumer, include a fraud alert in the consumer'sfile limiting the extent to which creditors can extend credit to an applicant using the consumer's name without first verifying the applicant's identity. 15 U.S.C. § 1681c–1(a) & (h). They must also block the reporting of any information identified by the consumer as resulting from identify theft. Id. § 1681c–2. The block must generally take effect upon proof of the consumer's identity and receipt of an identity-theft report, but, as a concession to the consumer-data industry, Congress allowed CRAs to override the block if they reasonably determine it was requested in error or on the basis of a misrepresentation. Id. § 1681c–2(c).

The FCRA leaves no room for overlapping state regulations. Congress set out to create uniform, national standards in the area of credit reporting, and the FCRA expressly preempts any state requirement or prohibition relating to, among other things, matters regulated under § 1681i (concerning the time by which CRAs must take certain actions) and § 1681c (concerning the content of consumer reports and a CRA's duties in addressing reports of identity theft). Id. §§ 1681t(b)(1)(B) & (E), 1681t(b)(5)(C).

In 2010, the New Mexico legislature enacted its own identity-theft requirements for CRAs operating in state. See Fair Credit Reporting and Identity Security Act (“FCRISA”), N.M. Stat. Ann.. § 56–3A–1. The law contains several apparent conflicts with the FCRA, but most notable for the purposes of this appeal are sections 56–3A–3.1(D) & (E), which govern CRAs' required response when presented with requests to remove information resulting from identity theft. Federal law permits a CRA to decline such a request if it reasonably determines the request to be fraudulent or erroneous, 15 U.S.C. § 1681c–2(c). New Mexico law, on the other hand, requires a CRA to oblige the request until a court or the affected consumer says otherwise. N.M. Stat. Ann.. § 56–3A–3.1(D) & (E). New Mexico's block-first-ask-later rule is therefore in tension with one of the key legislative compromises of the FCRA—the requirement that CRAs be given an opportunity to investigate suspicious block requests before acceding to them.

If a CRA violates the FCRISA, both the affected consumer and the Attorney General have the right to bring a civil action against the CRA. Id. § 56–3A–5. Relief can take the form of an injunction to prevent further violations, actual damages sustained by the consumer, and civil penalties. Id.

CDIA brought this suit in federal court for declaratory and injunctive relief. It contends certain provisions of the FCRISA are preempted by the FCRA and must give way to federal law under the Supremacy Clause. Asserting associational standing on behalf of some two-hundred-plus members, CDIA contends the preempted law places consumer data companies in an unenviable double-bind: submit to the preempted law and endure the costs of modifying otherwise uniform procedures, or violate the law and face the likelihood of lawsuits and penalties. CDIA obtained a temporary restraining order (TRO) enjoining New Mexico from enforcing sections 56–3A–3.1(D) & (E). The TRO had a nine-month shelf life during which CRAs had no obligation to comply with the challenged provisions or defend suits alleging violations.

Several months later, following briefing from both sides, the district court dissolved the TRO and dismissed the case, asserting the CDIA had failed to prove redressability, an element of constitutional standing. It reasoned that enjoining the Attorney General from enforcing the New Mexico law would redress only part of CDIA's injury; CDIA members would still be exposed to consumer-driven suits, and therefore would still face the dilemma of either paying the costs of complying with the New Mexico law or exposing themselves to liability for violating it. Relying on our decision in Nova Health Sys. v. Gandy, 416 F.3d 1149 (10th Cir.2005), the court concluded that neither an injunction nor a declaratory judgment against the Attorney General would “materially reduce the coercive effect of” the FCRISA, because in either case consumers could still bring private lawsuits in state court.

III. DISCUSSION

A. Whether CDIA has standing to seek injunctive relief against the Attorney General

There are three components to Article III standing—injury, causality, and redressability—and each must be established before a federal court can review the merits of a case. Summers v. Earth Island Inst., 555 U.S. 488, 492–93, 129 S.Ct. 1142, 173 L.Ed.2d 1 (2009). Although CDIA had not yet been injured when it filed suit, the existence of a statute implies the threat of its enforcement, and the association was entitled to bring a pre-enforcement challenge based on the probability of future injury. See Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96 n. 14, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983); Abbott Labs. v. Gardner, 387 U.S. 136, 153–54, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967).

The primary issue on appeal is whether the injury identified in the complaint can be redressed by the relief sought against the Attorney General. It is CDIA's contention that it can, and that the district court's conclusion to the contrary was based on an unduly restrictive conception of redressability. In CDIA's view, if a court can provide the requested relief, thereby improving upon the status quo ante, the claim is justiciable, even if it does not completely redress the claimed injury.

Like the other elements of standing, redressability is meant to foster the “concrete adverseness which sharpens the presentation of issues upon which the court so largely depends for illumination of difficult constitutional questions.” Duke Power Co. v. Carolina Envtl. Study Group, 438 U.S. 59, 72, 98 S.Ct. 2620, 57 L.Ed.2d 595 (1978). “[T]he relevant inquiry is whether ... the plaintiff has shown an injury to himself that is likely to be redressed by a favorable decision.” Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 38, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976). The Supreme Court has rejected interpretations of the rule that demand complete redressability, stressing that a plaintiff need show only that a favorable decision would redress “ an injury,” not “ every injury.” Larson v. Valente, 456 U.S. 228, 243 n. 15, 102 S.Ct. 1673, 72 L.Ed.2d 33 (1982). Hence Massachusetts v. EPA, 549 U.S. 497, 526, 127 S.Ct. 1438, 167 L.Ed.2d 248 (2007), where the Supreme Court concluded that Massachusetts had standing to challenge the EPA's refusal to regulate greenhouse-gas emissions despite the attenuated causal chain linking agency non-action to potential environmental damage. Redressability was satisfied, the Court explained, because the risk of harm “would be reduced to some extent if petitioners received the relief they seek.” Id. (emphasis added).

Echoing this principle, in Chamber of Commerce of U.S. v. Edmondson, 594 F.3d 742, 757 (10th Cir.2010), we decided that a group of business federations could seek an injunction restraining the Oklahoma Attorney General from enforcing a law requiring public employers to condition eligibility for state contracts on the contractor's use of a specific system for verifying the immigration status of its workers. Id. at 750. Oklahoma had argued that a favorable decision against the Attorney General would not materially redress the plaintiffs' primary injury—the choice between paying the costs of complying with the law or being deemed ineligible for state contracts. As the State saw it, that injury had nothing to do with the Attorney General and everything to do with public employers who refused to contract with non-complying businesses. Id.

Still, this Court was satisfied that an injunction against the Attorney General would alleviate the injury to some extent. Id. at 758. Since the...