Does the fact that California’s credit reporting statutes overlap mean those laws are unconstitutional – or is overlap a common feature of statutes that need simply to be harmonized?
The Issue: Companies increasingly run background checks and credit reports on their employees and customers. The credit reports can cover vast and increasing amounts and types of information. Two principal California statutes protect consumers and employees from inaccurate or improper consumer reports and abusive practices – the Consumer Credit Reporting Agencies Act (CCRAA) and the Investigative Consumer Reporting Agencies Act (ICRAA). The two laws cover different areas – basically, credit checks and background checks, respectively – but over years of legislative amendments their coverage has come to overlap a good deal. In 2007, in a bizarre ruling, a California court of appeal held, in Ortiz v Lyon Management Group, that because an employer wouldn’t know which of these two laws applies to a given credit or background check, the ICRAA must be “void for vagueness,” in violation of constitutional Due Process guarantees. Unfortunately, the Ortiz decision, though an outlier, was eventually followed in several federal and state court cases, including the trial court in this case, in which a school bus driver sued his employer for conducting background checks on him without proper notification under the requirements of the ICRAA.
Why It Matters: A distressingly large proportion of credit reports contain errors, many of them serious and difficult for the consumer to correct, often with severe consequences for people’s livelihoods. A decision limiting the scope of the CCRAA and the ICRAA would remove one of the only protections enabling victims to challenge credit error and malfeasance, as well as one of the only deterrents to consumer reporter misconduct. Moreover, nothing in the reasoning of Ortiz would limit its conclusion to the context of background checks, or even employment law. Overlapping statutes are common in criminal law, environmental law, labor and employment law, and property and securities law. Under the appeal court’s reasoning, they should all be struck down. This case offered an opportunity to overturn Ortiz.
Contribution of Public Good: Public Good filed briefs in the California Court of Appeal and the California Supreme Court on behalf of a group of public interest organizations practicing consumer law, employment law, housing law, and other areas of law with overlapping statutes. Public Good argued that, according to the well established doctrine barring the implied repeal of statutes, courts are supposed to harmonize overlapping laws, not strike one or both of them down. And if (as here) complying with the more stringent of the two laws also takes care of complying with the less stringent law – that’s not vagueness, that’s harmony. Our briefs conveyed to the courts the breadth of harm that accepting the Ortiz principle could cause
Amici represented by Public Good: Public Good’s briefs were filed on behalf of the California Reinvestment Coalition, Consumer Action, Consumers for Auto Reliability and Safety, Housing and Economic Rights Advocates, the National Association of Consumer Advocates, the National Employment Law Project, the National Housing Law Project and itself.
Outcome: Plaintiffs won in the court of appeal, with the court explicitly repudiating Ortiz and creating a split among California’s District Courts of Appeal. The court of appeal rejected the odd “void for overlap” doctrine of Ortiz, holding that California’s two principal consumer reporting statutes are not unconstitutionally vague simply because there exist some circumstances in which both apply to the same conduct. Instead, the court found, in those circumstances an employer just has to comply with both laws.
The California Supreme Court recognized the split in the courts of appeal and has agreed to decide what the state’s law should be on the subject on the subject of overlapping statutes, at least in the context of consumer reporting agencies. The case is pending. If this closely watched case turns out as it should, California consumers and employees may soon be able to rely again on the full operation of California’s laws governing credit and background checks.
191 Cal.Rptr.3d 404 (Cal. App., 2d Dist., Div. 4, Aug. 14, 2015), and review granted, 360 P.3d 1022 (Cal. Nov. 24, 2015).