Retail Credit Company v. Dade County, Florida

• Decision Date: 25 April 1975
• Docket Number: No. 74-1104-Civ-CA.,74-1104-Civ-CA.
• Citation: 393 F. Supp. 577
• Parties: RETAIL CREDIT COMPANY, Plaintiff, v. DADE COUNTY, FLORIDA, Defendant.
• Court: U.S. District Court — Southern District of Florida

393 F. Supp. 577

RETAIL CREDIT COMPANY, Plaintiff, v. DADE COUNTY, FLORIDA, Defendant.

No. 74-1104-Civ-CA.

United States District Court, S. D. Florida.

March 31, 1975.

As Amended April 25, 1975.

COPYRIGHT MATERIAL OMITTED

Earl D. Waldin, Jr., Smathers & Thompson, Miami, Fla., for plaintiff.

Robert A. Ginsburg, Asst. County Atty., Miami, Fla., for defendant.

MEMORANDUM OPINION

ATKINS, District Judge.

This is an action for declaratory judgment and injunction brought by plaintiff Retail Credit Company against defendant Dade County, Florida in which the validity of Dade County Ordinance No. 74-55 as amended by Ordinance No. 74-87¹ is in question. This Court has federal question and diversity jurisdiction over the subject matter and the parties pursuant to Title 28, United States Code, Sections 1331 and 1332. The matter in controversy exceeds, exclusive of interest and costs, the sum of Ten Thousand Dollars ($10,000.00). Plaintiff, a Georgia corporation, has a permit to do business in the State of Florida and is licensed to do business in Dade County, Florida. Pending the outcome of this litigation, this Court granted a preliminary injunction precluding enforcement of Dade County Ordinance No. 74-55 against plaintiff Retail Credit Company.

Retail Credit Company bases its claim for relief on the grounds: that parts of the Ordinance are inconsistent with the federal Fair Credit Reporting Act, 15 United States Code, §§ 1681-1681t,² that the Ordinance constitutes an unauthorized undue burden on interstate commerce, and that the Ordinance violates the due process clause of the Fourteenth Amendment by shifting the burden of proof to the accused in a criminal prosecution as well as prohibiting an otherwise legitimate business activity by precluding plaintiff's Field Representatives from going upon private residential property without invitation.³

The FCRA was aimed at problems in connection with consumer reporting agencies.⁴ Congress found that fair and accurate credit reporting is vital to the banking system to maintain efficiency as well as promote public confidence in that system. Further, Congress also recognized the need to "insure that consumer reporting agencies exhibit their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy," 15 U.S.C. § 1681(a)(4). In Congress' words:

It is the purpose of this subchapter § 1681(b) to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this subchapter. Id. (b).

I. INCONSISTENCY OF ORDINANCE WITH THE FEDERAL FAIR CREDIT REPORTING ACT

Despite Congress' recognition, stated within the FCRA § 1681(a)(2) that consumer investigation and evaluation is done through an "elaborate mechanism," Congress has spoken to allow state regulation consistent with the provisions of the FCRA.⁵ In determining whether the Ordinance is consistent with the provisions of the FCRA, this Court's inquiry will not be limited to whether there is a direct conflict between the Ordinance and the FCRA, e. g. McDermott v. Wisconsin, 228 U.S. 115, 33 S.Ct. 431, 57 L.Ed. 754 (1913); E. B. Elliott Adv. Co. v. Metropolitan Dade Co., 425 F.2d 1141 (5 Cir. 1970), cert. den. 400 U.S. 805, 91 S.Ct. 12, 27 L.Ed.2d 35 or even whether simultaneous compliance with both the Ordinance and the FCRA is impossible, e. g. Florida Avocado Growers v. Paul, 373 U.S. 132, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963). Rather, the inquiry shall extend to whether the Ordinance frustrates the effectiveness or purpose of the FCRA, cf. Perez v. Campbell, 402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 233 (1971); Hill v. Florida ex rel. Watson, 325 U.S. 538, 65 S.Ct. 1373, 89 L.Ed. 1782 (1945), and whether the Ordinance denies a right or benefit conferred by the FCRA. See, United Mine Workers v. Arkansas Oak Flooring Co., 351 U.S. 62, 76 S.Ct. 559, 100 L.Ed. 941 (1956); Silverman v. State Bar, 405 F. 2d 410 (5 Cir. 1968).

A. Disclosure of Sources

The FCRA provides that when information in the files of a consumer reporting agency is disclosed to a consumer, the sources of information acquired solely for preparing an investigative consumer report "need not" be disclosed to the consumer. FCRA § 1681g(a)(2). The Ordinance, on the other hand, goes further and requires disclosure of the sources. Ordinance Sec. 8A-272(a). Thus, at first glance it appears that compliance with the Ordinance would not entail violating the FCRA since the Ordinance is merely stricter than the FCRA. See, e. g., E. B. Elliott Adv. Co. v. Metropolitan Dade County, supra, where a Dade County ordinance which prohibited commercial advertising signs within 200 feet of any expressway right of way was held not "inconsistent" with a state statute which prohibited erection of signs within 15 feet of any federal or state highway outside incorporated city or town.⁶ However, in view of the circumstances, the sequence of events leading to enactment of the FCRA, and the evidence of legislative intent available, this Court holds that disclosure of the sources of investigative information mandated by the Ordinance is inconsistent with the provisions of the FCRA.

The House and Senate prior to enactment of the FCRA had before them testimony that disclosure of sources of investigative information could potentially result in the "drying up" of those sources. Hearings on S. 823 before the Subcommittee on Financial Institutions of the Senate Committee on Banking and Currency, 91st Cong., 1st Session (1961) 173, 179-180, 347-348; hereinafter referred to as to the Senate Hearings; hearings on H.R. 16340 before the Subcommittee on Consumer Affairs of the House Committee of Banking and Currency, 91st Cong., 2nd Session (1970) 460, 466-467, 508, 511, 520 hereinafter referred to as the House Hearings. The August 28, 1969 version of S. 823 § 166(c) and the March 5, 1970 version of H.R. 16340 § 32 provided that if an individual disputed an allegation by an unidentified source and was unable to refute the allegation adequately, he could demand the names of the sources. However, in both the October 4, 1969 version of S. 823 and in the August 17, 1970 version of H.R. 16340 this proposal for source disclosure was omitted. The latter version of H.R. 16340 required only disclosure of consumer credit information by consumer reporting agencies. The Conference Report, Statement of Managers on the Part of the House, H.R.Rep.No. 91-1587, 91st Cong., 2nd Session (1970) at 29, U.S.Code Cong. & Admin.News 1970, pp. 4411, 4415, revealed that conferees of both Houses of Congress intended § 1681g "to permit the consumer to examine all the information in his file except for sources of investigative information . . ." Thus, it appears that investigative information source disclosure was considered in committee hearings, contained in prints of the principal bills before the committees, and deliberately omitted from the final bill.⁷ Accordingly, this Court holds that disclosure of sources of investigative information as provided for in the Ordinance is inconsistent with the provisions of the FCRA. The FCRA already provides substantial safeguards to protect consumers from inaccurate information in that Congress has provided a procedure whereby a consumer can, upon request, obtain the nature and substance of all information on that consumer in the files of the consumer reporting agency at the time of the request, § 1681g(a)(1). A procedure is provided whereby incomplete or inaccurate information can be corrected if reinvestigation solves the dispute; or, if reinvestigation does not solve the dispute, subsequent consumer reports distributed to users of the reports shall so note that the information is disputed. FCRA § 1681i. Furthermore, should the consumer decide to bring an action under the FCRA §§ 1681-1681t, as a plaintiff in the suit, he may discover the sources of investigative information under appropriate discovery procedures in court.

B. Disclosure of Medical Information

The FCRA makes an express exception from its disclosure requirements for medical information.⁸ Medical information is defined in the FCRA as "information or records obtained, with the consent of the individual to whom it relates, from licensed physicians or medical practitioners, hospitals, clinics, or other medical or medically related facilities. FCRA § 1681a(i).⁹ Since the Ordinance makes no exception in its disclosure requirements for medical information, Ordinance Sec. 8A-272, plaintiff Retail Credit Co. contends that the Ordinance is "inconsistent" with the FCRA.

Legislative history on the question of disclosure to consumers of medical information reveals that such disclosure was not required "in order to protect the traditional relationship between the doctor supplying the information and his patient," 116 Cong.Rec. 17634 (Oct. 9, 1970), "the rationale was that raw medical information should only be tendered with the counsel of a physician or other medically trained personnel . . ." H.R.Rep.No. 91-158F, 91st Cong., 2nd Sess. (1970) 28. Furthermore, subsequent amendments were proposed and rejected which would have required disclosure of medical information to consumers under certain circumstances.¹⁰ Therefore, this Court finds an express Congressional purpose to prevent disclosure of medical information to the consumer and the exclusion of an exception to disclosure of medical information under the ordinance is "inconsistent" with the FCRA under § 1681t.

However, testimony at trial revealed that plaintiff Retail Credit Company was concerned primarily with information related about a consumer's health by non-medical personnel, e. g., neighbors of that consumer. Since this type of...