Kemp v. Superior Court of Orange Cnty.

• Decision Date: 22 December 2022
• Docket Number: G061122, G061124
• Citation: 86 Cal.App.5th 981,302 Cal.Rptr.3d 788
• Parties: R. KEMP, Petitioner, v. The SUPERIOR COURT OF ORANGE COUNTY, Respondent; Accurate Background LLC, Real Party in Interest. Accurate Background LLC, Petitioner, v. The Superior Court of Orange County, Respondent; R. Kemp, Real Party in Interest.
• Court: California Court of Appeals Court of Appeals

86 Cal.App.5th 981

302 Cal.Rptr.3d 788

R. KEMP, Petitioner,

v.The SUPERIOR COURT OF ORANGE COUNTY, Respondent;

Accurate Background LLC, Real Party in Interest.

Accurate Background LLC, Petitioner,

v.The Superior Court of Orange County, Respondent;

R. Kemp, Real Party in Interest.

G061122, G061124

Court of Appeal, Fourth District, Division 3, California.

Filed December 22, 2022

Outten & Golden, Jahan C. Sagafi, Molly J. Fransden, San Francisco, Ossai Miazad, Christopher M. McNerney, Julio Sharp Wasserman, for Petitioner and Real Party in Interest.

Troutman Pepper Hamilton Sanders, Ronald I. Raether, Jr., Irvine, Elizabeth Holt Andrews, San Francisco, and Jessica R. Lohr, San Diego, for Petitioner and Real Party in Interest.

No appearance by Respondent.

OPINION

MOORE, ACTING P. J.

* * * Under the federal Fair Credit Reporting Act (FCRA), a regulated agency may report a person's prior conviction to a prospective employer no matter how long ago it occurred. ( 15 U.S.C. § 1681c(a)(5).) Conversely, under the California Investigative Consumer Reporting Agencies Act (ICRAA) and the California Consumer Credit Reporting Agencies Act (CCRAA), an agency is prohibited from reporting a "conviction of a crime that, from the date of disposition, release, or parole, antedate the report by more than seven years."¹ ( Civ. Code, §§ 1785.13, subd. (a)(6), 1786.18, subd. (a)(7).)²

Generally, a state legislature can "offer greater protection to the consumer" than Congress. (See Cisneros v. U.D. Registry, Inc. (1995) 39 Cal.App.4th 548, 577, 46 Cal.Rptr.2d 233.)

In 2011, plaintiff R. Kemp was convicted, released from prison, and placed on parole. In 2020, Amazon.com, Inc. (Amazon) offered Kemp a job in Sacramento. Defendant Accurate Background LLC (Accurate) provided a background report to Amazon revealing Kemp's criminal conviction. Amazon then withdrew its job offer.

Because Kemp's 2011 conviction predated the 2020 report by more than seven years, he filed a complaint alleging Accurate: 1) violated the ICRAA, 2) violated the CCRAA, and 3) derivatively violated the state's Unfair Competition Law (UCL).

Accurate filed a demurrer. Kemp's parole ended in 2014, which predated the 2020 report by less than seven years. Accurate argued under the ICRAA and the CCRAA, "the term ‘parole’ refers to the end of the parole period," thus barring liability. Alternatively, Accurate argued the federal FCRA preempts the state ICRAA, and therefore Kemp's ICRAA claim is barred as a matter of law.

The trial court overruled Accurate's demurrer, in part, finding "the plain meaning of ‘from the date of ... parole’ refers to the start date of conditional release." The court sustained Accurate's demurrer, in part, finding "the FCRA preempts the ICRAA claim." Accurate and Kemp both filed petitions for extraordinary writ relief in this court. We issued orders to show cause.³

We hold the phrase from the date of parole refers to the start date of parole, and the FCRA does not preempt Kemp's ICRAA claim. Thus, we direct the trial court to vacate its prior order, which partially sustained Accurate's demurrer, and to issue a new order overruling the demurrer in its entirety.

IFACTS AND PROCEDURAL HISTORY

At some point in 2011, Kemp was convicted of a crime and went to prison (no further details are in the record). In December 2011, Kemp was released from prison and was placed on parole. In December 2014, Kemp's parole ended.

In March 2020, Amazon offered Kemp a job in Sacramento, pending a background check. The following month, Accurate provided Amazon with a report, which included information about Kemp's 2011 conviction. Due to Kemp's 2011 criminal conviction, Amazon withdrew its offer of employment.

In July 2021, Kemp filed an amended class action complaint against Accurate stating three causes of action: 1) a violation of the ICRAA, 2) a violation of the CCRAA, and 3) a derivative violation of the UCL.

In August 2021, Accurate filed a demurrer. Accurate argued the ICRAA and CCRAA claims were barred because Kemp's parole ended in 2014, which predated the report by less than seven years. Alternatively, Accurate argued the federal FCRA preempted Kemp's state ICRAA claim (Accurate did not argue the CCRAA claim was preempted). Accurate also argued the UCL claim was barred as it was derivative of the ICRAA and CCRAA claims.

In December 2021, the trial court overruled Accurate's demurrer as to the parole issue but sustained it as to the preemption issue (the ICRAA claim).

IIDISCUSSION

In its demurrer, Accurate argued: (1) the phrase from the date of parole refers to the end of parole, and (2) the federal FCRA preempts the state ICRAA. We disagree. These are pure legal issues involving statutory interpretation, so our review is de novo. (See Lopez v. Ledesma (2022) 12 Cal.5th 848, 857, 290 Cal.Rptr.3d 532, 505 P.3d 212.)

When interpreting a statute, a court's role "is to determine the Legislature's intent so as to effectuate the law's purpose." ( People v. Murphy (2001) 25 Cal.4th 136, 142, 105 Cal.Rptr.2d 387, 19 P.3d 1129.) "We begin as always with the statute's actual words, the ‘most reliable indicator’ of legislative intent, ‘assigning them their usual and ordinary meanings, and construing them in context. If the words themselves are not ambiguous, we presume the Legislature meant what it said, and the statute's plain meaning governs. On the other hand, if the language allows more than one reasonable construction, we may look to such aids as the legislative history of the measure and maxims of statutory construction. In cases of uncertain meaning, we may also consider the consequences of a particular interpretation, including its impact on public policy.’ " ( Even Zohar Construction & Remodeling, Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 830, 837-838, 189 Cal.Rptr.3d 824, 352 P.3d 391.)

In this discussion, we will: A) review the statutory framework of the three relevant acts; B) analyze the phrase from the date of parole as used in the ICRAA and the CCRAA; and C) analyze whether the federal FCRA preempts the state ICRAA.

A. Statutory Framework

"In 1970, the Legislature enacted CCRAA. [Citation.] The act governed ‘credit rating reports’ that included consumer credit record and standing reports. That same year, Congress passed the [FCRA]. [Citation.] FCRA defined a ‘consumer report’ to include an individual's ‘credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.’ [Citation.] FCRA distinguished between consumer reports that contained information obtained by personal interviews, and consumer reports that were gathered by other means." ( Connor v. First Student, Inc. (2018) 5 Cal.5th 1026, 1032, 236 Cal.Rptr.3d 826, 423 P.3d 953 ( Connor ).)

"In 1975, our Legislature repealed the 1970 CCRAA and enacted ICRAA [citation] and CCRAA [citation] to govern consumer background reports, including checks conducted for employment purposes. The statutes were modeled after FCRA and were intended to serve complementary, but not identical, goals. Both ICRAA and CCRAA had similar purposes. They were enacted to ensure that consumer reporting agencies ‘exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy.’ " ( Connor, supra , 5 Cal.5th at p. 1032, 236 Cal.Rptr.3d 826, 423 P.3d 953.)

"As originally enacted, ICRAA applied to consumer reports that included character information obtained only through personal interviews." ( Connor, supra , 5 Cal.5th at p. 1032, 236 Cal.Rptr.3d 826, 423 P.3d 953.) In 1998, "our Legislature amended ICRAA to eliminate the personal interview limitation and expand the statute's scope to include character information ... ‘obtained through any means.’ " ( Id. at pp. 1033-1034, 236 Cal.Rptr.3d 826, 423 P.3d 953, fn.omitted.)

Under the ICRAA, an investigative consumer report is a report bearing "on a consumer's character, general reputation, personal characteristics, or mode of living." ( § 1786.2 (c).) Under the CCRAA, a consumer credit report is a report "bearing on a consumer's credit worthiness, credit standing, or credit capacity." ( § 1785.3 (c).) Under the FCRA, there is no distinction made between the two types of reports; a consumer report is simply referred to as a " ‘consumer report.’ " ( 15 U.S.C. § 1681a(d).)

Because a consumer's character and credit information often overlap, the ICRAA and the CCRAA may apply to the same report. (See Connor, supra , 5 Cal.5th at p. 1036, 236 Cal.Rptr.3d 826, 423 P.3d 953 ["a regulated party is expected to know and follow the requirements of both statutes"].) Both the ICRAA and the CCRAA allow California consumers to pursue a civil cause of action against a regulated agency or a user of a report that either willfully or negligently violates its provisions. ( §§ 1785.31 et seq., 1786.50 (a).)

A conviction touches on a person's character and credit worthiness, so such information is subject to regulation under both state statutes. (See Connor, supra , 5 Cal.5th at p. 1031, 236 Cal.Rptr.3d 826, 423 P.3d 953.) Under the ICRAA and the CCRAA, agencies are prohibited from reporting: "Records of arrest, indictment, information, misdemeanor complaint, or conviction of a crime that, from the date of disposition, release, or parole , antedate the report by more than seven years." ( §§ 1785.13 (a)(6), 1786.18 (a)(7), italics added.)

B. From The Date of Parole

Accurate argues the phrase from the date of parole as used in the ICRAA and the CCRAA really means: from the date of the end of parole. We disagree.

" ‘Parole is the conditional release of a prisoner who has already served part of his or her state prison sentence. Once released from confinement, a prisoner on parole ... is constructively a prisoner in the legal custody of state prison authorities until officially discharged from parole.’ " ( In re Taylor (2015) 60 Cal.4th 1019, 1037, 184 Cal.Rptr.3d 682, 343 P.3d 867.) Unless waived by the California...