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Premium Mortgage Corp. v. Equifax

October 5, 2009

PREMIUM MORTGAGE CORP., ON BEHALF OF ITSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLANT,
v.
EQUIFAX, INC., A GEORGIA CORPORATION, TRANS UNION LLC, A DELAWARE LIMITED LIABILITY COMPANY, EXPERIAN INFORMATION SOLUTIONS, INC., AN OHIO CORPORATION, AND EQUIFAX INFORMATION SERVICES, LLC, A GEORGIA LIMITED LIABILITY COMPANY, DEFENDANTS-APPELLEES, CREDIT PLUS, INC., A MARYLAND CORPORATION, INDIVIDUALLY AND AS A REPRESENTATIVE OF SIMILARLY SITUATED DEFENDANTS, DEFENDANT.



SYLLABUS BY THE COURT

Appeal from an order of the United States District Court for the Northern District of New York (Telesca, J.), entered on September 30, 2008, dismissing all claims against Equifax, Inc., Trans Union LLC, Experian Information Solutions, Inc., and Equifax Information Services, LLC.

AFFIRMED.

Per curiam.

Argued: September 11, 2009

Amended: October 14, 2009

Before: PARKERand WESLEY,Circuit Judges, and RESTANI, Judge.

Plaintiff Premium Mortgage Corp. commenced this putative class action on behalf of itself and similarly situated mortgage lenders, bringing nine state-law claims against several consumer credit reporting agencies -*fn1 defendants Equifax Inc., Trans Union LLC, Experian Information Solutions, Inc., and Equifax Information Services, LLC (collectively, the "Credit Bureau defendants") - and Credit Plus, Inc. ("Credit Plus"), an intermediate "reseller" of consumer credit information. The United States District Court for the Northern District of New York (Telesca, J.), dismissed plaintiff's claims against the Credit Bureau defendants on preemption grounds, and granted plaintiff permission to file this partial appeal pursuant to Rule 54(b) of the Federal Rules of Civil Procedure.*fn2

Background

Plaintiff's claims relate to defendants' sale of mortgage "trigger leads" to third-party lenders. Trigger leads are generated during the process by which mortgage brokers such as plaintiff evaluate consumer loan applications; according to plaintiff, these "leads" indicate that, "within the past 24 to 48 hours, a particular individual [has] expressed a desire to [a] mortgage bank" to obtain a loan. In order to assess an applicant's creditworthiness after receiving a loan application, plaintiff purchases an aggregated credit report from an intermediate reseller of consumer credit information, such as Credit Plus. The reseller, in turn, purchases individual credit reports from each of the Credit Bureau defendants and bundles the information for use by plaintiff.

The Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1381 et seq. requires a mortgage broker seeking to purchase a credit report to disclose the reason for its purchase. As relevant in this case, plaintiff's requests for consumer credit reports are motivated by the fact that a consumer recently applied for a loan. The disclosure of this information to the reseller, and ultimately to the Credit Bureau defendants, generates a trigger lead.

The crux of this dispute is plaintiff's challenge to defendants' practice of permitting other lenders to purchase "pre-screened" consumer reports, see 15 U.S.C. § 1681b(c), (e), that, in essence, contain trigger leads. According to plaintiff, these trigger leads constitute its "proprietary customer information" because "such information is not readily known in the industry and it cannot be obtained except through extraordinary effort . . . ." However, the prescreened reports in question use the information conveyed by a trigger lead as a screening criterion in order to generate a list of consumers who are in the market for mortgages and other loan facilities. The lenders purchasing these lists then compete with plaintiff and similarly situated mortgage brokers by offering terms on loans to the customers.

Based on these allegations, plaintiff brought nine state-law claims, including misappropriation of trade secrets, fraud, unfair competition, tortious interference "with contractual or prospective business relations," breach of contract "of which class members were intended beneficiaries," and unjust enrichment. The Credit Bureau defendants moved to dismiss plaintiff's claims against them, arguing that the claims are preempted by the FCRA, and, alternatively, that the allegations in the Amended Class Action Complaint (the "complaint") fail to state a claim. Judge Telesca granted the motion and held that the FCRA expressly preempts each of plaintiff's claims against the Credit Bureau defendants. Plaintiff appeals.

Discussion

We review de novo a district court's application of preemption principles. See, e.g., Drake v. Lab. Corp. of Am. Holdings, 458 F.3d 48, 56 (2d Cir. 2006). "When addressing questions of express or implied pre-emption, we begin our analysis with the assumption that the historic police powers of the States are not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress." Altria Group, Inc. v. Good, 129 S.Ct. 538, 543 (2008) (internal quotation omitted). However, "[s]ince the existence of preemption turns on Congress's intent, we are to 'begin as we do in any exercise of statutory construction[,] with the text of the provision in question, and move on, as need be, to the structure and purpose of the Act in which it ...


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