American Bankers Ass'n v. Gould

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
AMERICAN BANKERS ASSOCIATION; 
THE FINANCIAL SERVICES
ROUNDTABLE; CONSUMER BANKERS
ASSOCIATION,
Plaintiffs-Appellants,
v.
HOWARD GOULD, in his official
capacity as Commissioner of the
Department of Financial No. 04-16334
Institutions of the State of
California; WILLIAM P. WOOD, in  D.C. No.
his official capacity as CV-04-00778-MCE
Commissioner of the Department
of Corporations of the State of
California; JOHN GARAMENDI, in his
official capacity as Commissioner
of the Department of Insurance of
the State of California; BILL
LOCKYER, in his official capacity
as Attorney General of California,
Defendants-Appellees.

7309
7310 AMERICAN BANKERS ASS’N v. GOULD
AMERICAN BANKERS ASSOCIATION; 
THE FINANCIAL SERVICES
ROUNDTABLE; CONSUMER BANKERS
ASSOCIATION,
Plaintiffs-Appellants,
v.
HOWARD GOULD, in his official
capacity as Commissioner of the
Department of Financial No. 04-16560
Institutions of the State of
California; WILLIAM P. WOOD, in  D.C. No.
CV-04-00778-MCE
his official capacity as
OPINION
Commissioner of the Department
of Corporations of the State of
California; JOHN GARAMENDI, in his
official capacity as Commissioner
of the Department of Insurance of
the State of California; BILL
LOCKYER, in his official capacity
as Attorney General of California,
Defendants-Appellees.

Appeal from the United States District Court
for the Eastern District of California
Morrison C. England, District Judge, Presiding
Argued and Submitted
December 6, 2004—San Francisco, California
Filed June 20, 2005
Before: Alex Kozinski, William A. Fletcher, and
Jay S. Bybee, Circuit Judges.
Opinion by Judge William A. Fletcher
AMERICAN BANKERS ASS’N v. GOULD 7313
COUNSEL
E. Edward Bruce, Keith A. Noreika, Covington & Burling,
Washington, D.C.; Richard A. Jones, Covington & Burling,
San Francisco, California, for the plaintiffs-appellants.
Kimberly Gauthier, California Department of Corrections,
Sacramento, California; Catherine Z. Ysrael, Office of the
California Attorney General, San Diego, California, for the
defendants-appellees.
Nancy L. Perkins, Arnold & Porter, Washington, D.C., for
amicus America’s Community Bankers.
Bruce E. Clark, Sullivan & Cromwell, New York, New York,
for amicus Clearing House Association.
William H. Jordan, Alston & Bird, Atlanta, Georgia, for
amicus Investment Company Institute, et al.
L. Richard Fischer, Morrison & Foerster, Washington, D.C.,
for amicus Citizens for a Sound Economy.
Thomas J. Segal, Office of Thrift Supervision, Washington,
D.C., for amicus Office of Thrift Supervision.
Horace G. Sneed, Washington, D.C., for amicus Office of the
Comptroller of the Currency.
Kathryn R. Norcross, Federal Deposit Insurance Corporation,
Washington, D.C., for amicus Federal Deposit Insurance Cor-
poration.
Richard M. Ashton, Bd of Governors of the Federal Reserve
System, Washington, D.C., for amicus Board of Governors of
the Federal Reserve System.
7314 AMERICAN BANKERS ASS’N v. GOULD
Hattie M. Ulan, National Credit Union Administration, Alex-
andria, Virginia, for amicus National Credit Union Adminis-
tration.
John F. Daly, Federal Trade Commission, Washington, D.C.,
for amicus Federal Trade Commission.
Scott D. McKinlay, E-Loan, Inc., Pleasanton, California, for
amicus E-Loan, Inc.
Julie Brill, Office of the Attorney General, Montpelier, Ver-
mont, for amici State of Vermont, et al.
OPINION
W. FLETCHER, Circuit Judge:
The question in this appeal is whether the federal Fair
Credit Reporting Act (“FCRA”) preempts the California
Financial Information Privacy Act (commonly known as
“SB1”) insofar as it regulates the exchange of information
among financial institutions and their affiliates. The district
court granted summary judgment to the Attorney General,
holding that SB1 is not preempted in any respect. We reverse.
We hold that the FCRA preempts at least some part of SB1’s
affiliate-sharing provisions. Because there is a possibility that
some part of these provisions may survive preemption, we
remand to the district court for further proceedings consistent
with this opinion.
I. Background
The FCRA was passed in 1970 with the stated purpose of
requir[ing] that consumer reporting agencies adopt
reasonable procedures for meeting the needs of com-
AMERICAN BANKERS ASS’N v. GOULD 7315
merce for consumer credit, personnel, insurance, and
other information in a manner which is fair and equi-
table to the consumer, with regard to the confidenti-
ality, accuracy, relevancy, and proper utilization of
such information in accordance with the require-
ments of this subchapter.
15 U.S.C. § 1681(b). To accomplish this goal, the FCRA reg-
ulates the issuance and use of “consumer reports” by “con-
sumer reporting agencies.” The term “consumer report” is
defined by the FCRA as “any written, oral, or other communi-
cation of any information by a consumer reporting agency
bearing on a consumer’s credit worthiness, credit standing,
credit capacity, character, general reputation, personal charac-
teristics, or mode of living” that is or is expected to be used
for determining eligibility for credit and employment, and for
a few other authorized purposes (such as production in
response to a court order). Id. § 1681a(d)(1) (emphasis
added). As will become apparent below, the key to this appeal
is the meaning of “information,” as used in this and other pro-
visions of the FCRA.
The FCRA defines a “consumer reporting agency” as an
entity that, subject to certain conditions, “regularly engages
. . . in the practice of assembling or evaluating consumer
credit information or other information on consumers for the
purpose of furnishing consumer reports to third parties.” Id.
§ 1681a(f). The FCRA imposes fairly stringent restrictions on
credit reporting practices. Among its many provisions, it lim-
its the circumstances under which consumer reporting agen-
cies are permitted to furnish consumer credit reports, id.
§ 1681b, restricts the information that may be included in
consumer reports, id. § 1681c, and requires consumer report
information to be disclosed to consumers who request it, id.
§ 1681g. The FCRA authorizes actual and punitive damages
for violation of its provisions. Id. §§ 1681n, 1681o.
The original version of the FCRA left financial institutions
uncertain about whether the communication of information to
7316 AMERICAN BANKERS ASS’N v. GOULD
affiliated institutions constituted a “consumer report” subject
to the requirements of the FCRA. In 1996, in response to
these concerns, Congress amended the FCRA. The 1996
amendments exclude some communications of some kinds of
information between affiliate financial institutions from the
definition of “consumer report.” Because such communica-
tions do not come within the definition of “consumer report,”
they are not subject to the requirements of the FCRA. See id.
§ 1681a(d)(2)(A)(i-iii).
Two exclusions are important here. The first provides that
the term “consumer report” does not include any “communi-
cation . . . among persons related by common ownership or
affiliated by corporate control,” id. § 1681a(d)(2)(A)(ii), of
“information solely as to transactions or experiences between
the consumer and the person making the report,” id.
§ 1681a(d)(2)(A)(i) (emphasis added). In the terminology
used by the financial industry, the information at issue in this
exception is “experience information” — i.e., information
obtained by financial institutions from their own dealings with
their customers.
The second provides that the term “consumer report” does
not include any “communication of other information among
persons related by common ownership or affiliated by corpo-
rate control, if it is clearly and conspicuously disclosed to the
consumer that the information may be communicated among
such persons and the consumer is given the opportunity,
before the time that the information is initially communicated,
to direct that such information not be communicated among
such persons.” Id. § 1681a(d)(2)(A)(iii) (emphasis added). In
industry terminology, this second category is known as “non-
experience” information.
At the same time, Congress added a preemption clause to
the FCRA providing that
[n]o requirement or prohibition may be imposed
under the laws of any State . . . with respect to the
AMERICAN BANKERS ASS’N v. GOULD 7317
exchange of information among persons affiliated by
common ownership or common corporate control,
except that this paragraph shall not apply [to a cer-
tain Vermont statute].
Id. § 1681t(b)(2) (emphasis added) (hereinafter, the “affiliate-
sharing preemption clause”). As originally enacted, the
affiliate-sharing preemption clause did not apply to more-
protective state laws enacted after January 1, 2004, that stated
explicitly their intent to supplement the FCRA. See 15 U.S.C.
§ 1681t(d)(2)(2000) (repealed by Pub. L. No. 108-159,
§ 711(3), 117 Stat. 1952 (Dec. 4, 2003)). In 2003, however,
Congress amended the FCRA in the Fair and Accurate Credit
Transactions Act of 2003 (the “FACT Act”) to eliminate the
sunset provision for the affiliate-sharing preemption clause.
FACT Act, Pub. L. No. 108-159, § 711(3), 117 Stat. 1952(2003).
In addition, the FACT Act prohibits affiliates from using
information “that would be a consumer report, but for [the
affiliate-sharing exemptions of § 1681a(d)(2)(A)]” for “mar-
keting purposes,” unless such use is disclosed and consumers
are given an opt-out opportunity. 15 U.S.C. § 1681s-3(a)(1).
The FACT Act also establishes exceptions to these opt-out
requirements under certain circumstances, see id. § 1681s-
3(a)(4), such as when the consumer and the affiliate have a
“pre-existing business relationship,” id. § 1681s-3(a)(4)(A).
Finally, the FACT Act expands the scope of the affiliate-
sharing preemption clause as follows:
Requirements with respect to the use by a person of
information received from another person related to
it by common ownership or affiliated by corporate
control, such as the requirements of this section, con-
stitute requirements with respect to the exchange of
information among persons affiliated by common
ownership or common corporate control, within the
meaning of section 1681t(b)(2) of this title.
7318 AMERICAN BANKERS ASS’N v. GOULD
Id. § 1681s-3(c) (emphasis added).
In 2003, California enacted the California Financial Infor-
mation Privacy Act, commonly called SB1. SB1 regulates the
disclosure of personal information about California consum-
ers by financial institutions doing business in the state. Cal.
Fin. Code §§ 4050-4060. In relevant part, it provides:
A financial institution shall not disclose to, or share
a consumer’s nonpublic personal information with,
an affiliate unless the financial institution . . . noti-
fie[s] the consumer annually in writing . . . that the
nonpublic personal information may be disclosed to
an affiliate of the financial institution and the cus-
tomer has not directed that the nonpublic personal
information not be disclosed.
Id. § 4053(b)(1).1 Following the annual notification required
by § 4053(b)(1), a consumer “shall be provided a reasonable
opportunity prior to disclosure of nonpublic personal informa-
tion to direct that nonpublic personal information not be dis-
closed.” Id. § 4053(d)(3). SB1 exempts certain closely
affiliated institutions from these requirements, provided the
disclosing and receiving institutions use the same brand, oper-
ate within the “same line of business” (limited to “banking,”
“insurance,” and “securities”) and are regulated by the same
agency. Id. § 4053(c)(1)-(3).
In 2004, the American Bankers Association, the Financial
Services Roundtable, and the Consumer Bankers Association
(collectively “the Associations”) brought suit in federal dis-
trict court, seeking declaratory and injunctive relief against
California Attorney General Bill Lockyer and the other state
officials responsible for the enforcement of SB1 (collectively
“the Attorney General”). The Associations contend that SB1’s
1
SB1 also limits sharing of information with nonaffiliated parties. Id.
§ 4053(a). The Associations have not challenged this part of SB1.
AMERICAN BANKERS ASS’N v. GOULD 7319
opt-out provisions for affiliate information sharing are pre-
empted by the FCRA, and allege that they would suffer irrep-
arable injury if SB1 were enforced against them. The
Associations and the Attorney General cross-moved for sum-
mary judgment. Relying in part on the federal Gramm-Leach-
Bliley Act (“GLBA”), the district court granted summary
judgment to the Attorney General. The Associations appealed.
We review the district court’s grant of summary judgment
de novo. Universal Health Servs., Inc. v. Thompson, 363 F.3d
1013, 1019 (9th Cir. 2004). We must determine, viewing the
evidence in the light most favorable to the nonmoving party,
whether there are any genuine issues of material fact and
whether the district court correctly applied the relevant sub-
stantive law. Olsen v. Idaho State Bd. of Med., 363 F.3d 916,
922 (9th Cir. 2004).
II. Analysis
A. Scope of the FCRA’s Affiliate-Sharing Preemption
Clause
[1] In interpreting a preemption clause, “[w]e must give
effect to [its] plain language unless there is good reason to
believe Congress intended the language to have some more
restrictive meaning.” Shaw v. Delta Air Lines, Inc., 463 U.S.
85, 97 (1983)). In interpreting the scope of a preemption
clause, we generally presume that Congress has not intended
to preempt state law, starting “with the assumption that the
historic police powers of the States [are] not to be superseded
by [federal legislation] unless that is the clear and manifest
purpose of Congress.” Cipollone v. Liggett Group, Inc., 505
U.S. 504, 516 (1992) (internal brackets, citation, and quota-
tion marks omitted); see also Oxygenated Fuels Ass’n Inc. v.
Davis, 331 F.3d 665, 668 (9th Cir. 2003) (“[T]here is a gen-
eral presumption against preemption in areas traditionally reg-
ulated by states.”). “Congressional purpose is the ultimate
7320 AMERICAN BANKERS ASS’N v. GOULD
touchstone of preemption analysis.” Id. (internal quotation
marks omitted).
[2] In construing the affiliate-sharing preemption clause of
the FCRA, § 1681t(b)(2), we start with the premise that “the
words of a statute must be read in their context and with a
view to their place in the overall statutory scheme.” Food &
Drug Admin. v. Brown & Williamson Tobacco Corp., 529
U.S. 120, 133 (2000) (internal citation and quotation marks
omitted). Our goal in interpreting a statute is to understand the
statute “as a symmetrical and coherent regulatory scheme”
and to “fit, if possible, all parts into a . . . harmonious whole.”
Id. (internal citations and quotation marks omitted).
[3] We construe the affiliate-sharing preemption clause to
preempt all state “requirement[s]” and “prohibition[s]” on the
communication of “information” between affiliated parties.
See 15 U.S.C. § 1681t(b)(2). However, as used in the affiliate-
sharing preemption clause and elsewhere in the FCRA, “in-
formation” has a restricted meaning. It does not include all
information. Rather, it includes only the sort of information
described in the definition of “consumer report” in
§ 1681a(d)(1):
information . . . bearing on a consumer’s credit wor-
thiness, credit standing, credit capacity, character,
general reputation, personal characteristics, or mode
of living which is used or expected to be used or col-
lected in whole or in part for the purpose of serving
as a factor in establishing the consumer’s eligibility
for —
(A) credit or insurance to be used primarily for
personal, family, or household purposes;
(B) employment purposes; or
(C) any other purpose authorized under section
1681b of this title.
AMERICAN BANKERS ASS’N v. GOULD 7321
Id. § 1681a(d)(1).
As we read the FCRA, the term “information” is used in the
restricted sense of § 1681a(d)(1) in other provisions of the
statute. For example, § 1681a(d)(2), the subsection immedi-
ately following, uses “information” in the same way. For the
subset of “information” known as “experience information,”
communication of such information between affiliates is
excluded from the definition of a “consumer report.” See
§ 1681a(d)(2)(A)(ii). Similarly, for the subset known as “non-
experience information,” communication of such information
between affiliates is excluded from the definition of “con-
sumer report” provided that there has been adequate opt-out
notice to the consumer. See § 1681a(d)(2)(A)(iii).
[4] The affiliate-sharing preemption clause of the FCRA
was added to the statute as part of the same 1996 package of
amendments as § 1681a(d)(2).2 We believe it reasonable to
construe the term “information,” as it is used in the preemp-
tion clause, to have the same meaning as “information” in the
FCRA’s other provisions relating to information and informa-
tion sharing between affiliates. See id. §§ 1681a(d)(1),
(2)(A)(ii)-(iii), § 1681s-3(a)(1). That is, the word “informa-
tion” in the affiliate-sharing preemption clause refers to the
information described in the definition of a “consumer report”
contained in § 1681a(d)(1).
[5] This interpretation of “information” is supported by the
2003 FACT Act provisions limiting the use of information
shared among affiliates to facilitate marketing solicitations.
These requirements apply only to “communication of infor-
mation that would be a consumer report, but for [subsections
§§ 1681a(d)(2)(A)(i)-(iii), which exclude information shared
2
Section 1681a(d)(2)(A) was slightly amended in 2003 to incorporate a
reference to the restrictions in § 1681a(d)(3) on the sharing of medical
information and those in § 1681s-3 on the use of consumer information for
marketing purposes.
7322 AMERICAN BANKERS ASS’N v. GOULD
among affiliates from the definition].” Id. § 1681s-3(a)(1).
Notably, when Congress adopted the FACT Act, it also clari-
fied that “[r]equirements with respect to the use . . . of infor-
mation [shared among affiliates]” are covered by the affiliate-
sharing preemption clause. Id. § 1681s-3(c) (emphasis added).
That is, Congress precluded states from regulating the sharing
of information among affiliates at the same time as it
expanded the reach of the FCRA to regulate affiliates’ sharing
of such information. We find this compelling evidence that
Congress saw the affiliate-sharing preemption clause as paral-
lel and identical in scope to the FCRA’s other affiliate
information-sharing provisions.
[6] We therefore hold that the affiliate-sharing preemption
clause preempts SB1 insofar as it attempts to regulate the
communication between affiliates of “information,” as that
term is used in § 1681a(d)(1). That is, SB1 is preempted to the
extent that it applies to information shared between affiliates
concerning consumers’ “credit worthiness, credit standing,
credit capacity, character, general reputation, personal charac-
teristics, or mode of living” that is used, expected to be used,
or collected for the purpose of establishing eligibility for
“credit or insurance,” employment, or other authorized pur-
pose. See id. § 1681a(d)(1). On remand, the district court must
determine whether, applying this restricted meaning of “infor-
mation,” any portion of the affiliate-sharing provisions of SB1
survives preemption and, if so, whether it is severable from
the portion that does not. We express no opinion on either of
these questions.
B. Applicability of the Gramm-Leach-Bliley Act
[7] The Gramm-Leach-Bliley Act (“GLBA”) was adopted
in 1999 to eliminate barriers to affiliation among banks and
other depository institutions, securities firms, and insurance
companies. See Gramm-Leach-Bliley Act, Pub. L. No. 106-
102, 113 Stat. 1338 (1999) (codified as amended in scattered
sections of 12, 15, 16 and 18 U.S.C.). The GLBA explicitly
AMERICAN BANKERS ASS’N v. GOULD 7323
states that none of its provisions — except for one explicit
amendment not relevant here, see Pub. L. No. 106-102,
§ 506(a)-(b) — “shall be construed to modify, limit, or super-
sede the operation of the Fair Credit Reporting Act.” 15
U.S.C. § 6806. Thus, the preemptive scope of the FCRA is
unaffected by the GLBA, and insofar as SB1 is preempted by
the FCRA, we do not find the GLBA to be relevant. See Bank
of Am. v. City & County of San Francisco, 309 F.3d 551, 565
(9th Cir. 2002) (refusing to apply savings clause of one statute
to limit the preemption clause of another).
REVERSED and REMANDED for further proceedings
consistent with this opinion. Costs to Appellants.