Submitted August 23, 2018 [*]
from the United States District Court for the Central
District of California No. 2:12-cv-05808-SVW-AGR Stephen V.
Wilson, District Judge, Presiding
Gupta and Peter Conti-Brown, Gupta Beck PLLC, Washington
D.C.; Meredith Desautels, Lawyers' Committee for Civil
Rights of the San Francisco Bay Area, San Francisco,
California; Joshua E. Kim, A New Way of Life Reentry Project,
Los Angeles, California; Devin H. Fok, Law Offices of Devin
H. Fok, Alhambra, California; Craig Davis, Law Offices of
Craig Davis, San Francisco, California; for
Michael J. Saltz, Colby A. Petersen, and Blair Schlecter,
Jacobson Russell Saltz Nassim & de la Torre LLP, Los
Angeles, California, for Defendant-Appellee.
Bradley and Nandan M. Joshi, Attorneys; David M. Gossett,
Assistant General Counsel; To-Quyen Truong, Deputy General
Counsel; Meredith Fuchs, General Counsel; Consumer Financial
Protection Bureau, Washington, D.C.;
Theodore (Jack) Metzler, Attorney; John F. Daly, Deputy
General Counsel for Litigation; Jonathan E. Neuchterlein,
General Counsel; Office of the General Counsel, Federal Trade
Commission, Washington, D.C.; for Amici Curiae Consumer
Financial Protection Bureau and Federal Trade Commission.
S. Hightower and Rod M. Fliegel, Littler Mendelson P.C., San
Francisco, California, for Amicus Curiae National Multifamily
Resident Information Council.
K. McCay and Helene Simvoulakis-Panos, Pahl & McCay APLC,
San Jose, California, for Amicus Curiae California Apartment
Koshy, East Bay Community Law Center, Berkeley, California,
for Amici Curiae East Bay Community Law Center; Asian
Americans Advancing Justice - Asian Law Caucus; American
Civil Liberties Union of Southern California; Bay Area Legal
Aid; The California Reinvestment Coalition; The Center for
Employment Opportunities; Drug Policy Alliance; Ella Baker
Center; The University of California Hastings Civil Justice
Clinic; Housing and Economic Rights Advocates; Legal Action
Center; Legal Services for Prisoners with Children; The
National Consumer Law Center; The National Employment Law
Project; The National Housing Law Project; Public Good;
Rubicon Programs; and Safer Foundation.
Before: ANDREW J. KLEINFELD, MILAN D. SMITH, JR., and
JACQUELINE H. NGUYEN, Circuit Judges.
panel reversed the district court's judgment in favor of
the defendant in an action under the federal Fair Credit
Reporting Act and California's Investigative Consumer
Reporting Agencies Act and Unfair Competition Law.
being denied housing due to disclosures appearing in a tenant
screening report, Gabriel Moran brought suit against The
Screening Pros, LLC. The district court dismissed in part and
granted summary judgment in part.
district court held that the ICRAA, which regulates
"investigative consumer reports," was
unconstitutionally vague as applied to tenant screening
reports due to the ICRAA's overlap with California's
Consumer Credit Reporting Agencies Act. The panel concluded
that the district court's holding was foreclosed by
Connor v. First Student, Inc., 423 P.3d 953 (Cal.
2018), and The Screening Pros' new arguments in favor of
dismissal of the ICRAA claims were waived. The panel reversed
and remanded to the district court to consider the merits of
the ICRAA claims and to decide whether Moran stated a UCL
claim predicated on The Screening Pros' alleged ICRAA
as to the FCRA claims, the panel held that 15 U.S.C. §
1681c(a) permits consumer reporting of a criminal charge for
only seven years following the date of entry of the charge,
rather than the date of disposition. Further, the dismissal
of a charge does not constitute an adverse item and may not
be reported after the reporting window for the charge has
ended. The panel concluded that Moran sufficiently stated
claims pursuant to the FCRA because the tenant screening
report's inclusion of a 2000 charge fell outside of the
permissible seven-year window. The panel remanded for further
in part and dissenting in part, Judge Kleinfeld joined in
Parts I and II of the analysis, addressing the ICRAA and UCL
claims. Dissenting from Part III, addressing the FCRA claims,
Judge Kleinfeld wrote that the dismissal of the charge was
reportable under the plain language of the statute.
SMITH, CIRCUIT JUDGE
being denied housing due to disclosures appearing in a tenant
screening report, Plaintiff-Appellant, Gabriel Moran brought
suit against Defendant-Appellee, The Screening Pros (TSP),
alleging violations of the federal Fair Credit Reporting Act
(FCRA), 15 U.S.C. § 1681, California's Investigative
Consumer Reporting Agencies Act (ICRAA), Cal. Civ. Code
§ 1786, and California's Unfair Competition Law
(UCL), Cal. Bus. & Prof. Code § 17200.
district court dismissed all but one cause of action and
granted summary judgment on the remaining FCRA claim. We
reverse the district court on all claims and remand for
provides tenant screening reports to property owners who
desire to know certain information about potential tenants of
their properties. The reports include both general character
and creditworthiness information. In February 2010, Moran
applied for housing with Maple Square Apartments (Maple
Square), an affordable housing development. At Maple
Square's request, TSP prepared a tenant screening report
on Moran (Report), which disclosed four criminal matters in
his background: a May 16, 2000 misdemeanor charge for being
under the influence of a controlled substance (2000 Charge),
dismissed on March 2, 2004; two June 2006 charges for
burglary and forgery, dismissed that same month; and a June
2006 conviction for misdemeanor embezzlement from an elder
dependent adult. After reviewing the Report, Maple Square
denied Moran's rental application due to his 2006
embezzlement conviction and, Moran alleges, the three
2012, Moran instituted this action against TSP alleging six
claims pursuant to the ICRAA,  two claims pursuant to the UCL,
three claims pursuant to the FCRA. The Report's inclusion
of the 2000 Charge, later dismissed in 2004, served as the
predicate offense of most of these claims.
moved to dismiss ten of the eleven claims, but did not seek
dismissal of one claim pursuant to § 1681i of the
FCRA-failure to reinvestigate disputed consumer information.
The district court granted the motion for all ICRAA claims
because it determined that the ICRAA was unconstitutionally
vague as applied to tenant screening reports. The district
court also granted dismissal of the UCL claims because it
concluded that injunctive and restitutionary relief were not
available to Moran. The court initially granted in part and
denied in part the motion to dismiss the FCRA claims.
Specifically, the court denied the motion for Moran's
claim that TSP violated the FCRA by including Moran's
2000 Charge because more than seven years had passed since
the charge was entered. On reconsideration, the district
court reversed itself, and dismissed all of the challenged
FCRA claims because it determined that the reporting period
for a criminal charge begins on the "date of
disposition" instead of the date of entry. The district
court granted summary judgment on the remaining FCRA claim
given its ruling that the Report "did not contain any
obsolete information in violation of [§] 1681c."
Moran timely appealed.
case first came before us in 2012. After oral argument and
submission of the case, we stayed proceedings pending the
California Supreme Court's decision in Connor v.
First Student Inc., 423 P.3d 953 (Cal. 2018), because
Connor addressed the question of whether the ICRAA
is unconstitutionally vague due to a partial overlap with the
Consumer Credit Reporting Agencies Act (CCRAA), Cal. Civ.
Code § 178. Once the state proceedings concluded, the
parties filed supplemental briefs discussing Connor.
Upon receipt of the supplemental briefing, we again took this
case under submission.
AND STANDARD OF REVIEW
jurisdiction pursuant to 28 U.S.C. § 1291. We review de
novo a district court's dismissal for failure to state a
claim. Dougherty v. City of Covina, 654 F.3d 892,
897 (9th Cir. 2011). We also review de novo issues of
statutory construction. Ileto v. Glock, Inc., 565
F.3d 1126, 1131 (9th Cir. 2009). When California law is at
issue, "[o]ur duty as a federal court . . . 'is to
ascertain and apply the existing California law.'"
Munson v. Del Taco, Inc., 522 F.3d 997, 1002 (9th
Cir. 2008) (quoting Mangold v. Cal. Pub. Utils.
Comm'n, 67 F.3d 1470, 1479 (9th Cir. 1995)).
"We are bound by pronouncements of the California
Supreme Court on applicable state law." Carvalho v.
Equifax Info. Servs., LLC, 629 F.3d 876, 889 (9th Cir.
2010) (citing Munson, 522 F.3d at 1002).
1975, California enacted two statutory schemes: the CCRAA and
the ICRAA. Cal. Civ. Code §§ 1785, 1786. The
California legislature passed these statutes (which are
modeled after the FCRA) to ensure that reporting agencies
"exercise their grave responsibilities with fairness,
impartiality, and a respect for the consumer's right to
privacy." Cal. Civ. Code §§ 1785.1(c),
1786(b). The CCRAA regulates "consumer credit
reports," defined as "any written, oral or other
communication of any information by a consumer credit
reporting agency bearing on a consumer's credit
worthiness, credit standing, or credit capacity." Cal.
Civ. Code § 1785.3(c). The ICRAA regulates
"investigative consumer reports," originally
defined as "a consumer report in which information on a
consumer's character, general reputation, personal
characteristics, or mode of living is obtained through
personal interviews." Cal. Civ. Code § 1786.2(c)
(1975). The statutes were intended to cover separate
information: the CCRAA governed creditworthiness, while the
ICRAA governed character information. Cal. Civ. Code
§§ 1785.3(c) (1975), 1786.2(c) (1975).
1998, the California legislature broadened the definition of
investigative consumer reports to include consumer reports
"obtained through any means," not just through
personal interviews. Cal. Civ. Code § 1786.2(c). This
expanded the reach of the ICRAA, and some consumer reports,
including tenant screening reports, now qualified as both
"consumer credit reports" and "investigative
this statutory backdrop, TSP argued that the ICRAA is
unconstitutionally vague as applied to tenant screening
reports due to the ICRAA's overlap with the CCRAA.
Relying on California Court of Appeal decisions Ortiz v.
Lyon Mgmt. Grp., Inc., 69 Cal.Rptr.3d 66, 75 (Ct. App.
2007) and Trujillo v. First Am. Registry, Inc., 68
Cal.Rptr.3d 732, 740 (Ct. App. 2007), TSP argued before the
district court that it was not clear whether the ICRAA or the
CCRAA governed tenant screening reports, which contained both
creditworthiness and character information. Without the
benefit of Connor, the district court agreed with
TSP, and held that this lack of clarity rendered the ICRAA
unconstitutionally vague as applied to tenant screening
California Supreme Court authoritatively foreclosed this
argument in Connor. Connor recognized the
overlap between the ICRAA and CCRAA but held that "[a]ny
partial overlap between the statutes does not render one
superfluous or unconstitutionally vague. They can coexist
because both acts are sufficiently clear . . . ." 423
P.3d at 959 (citing United States v. Batchelder, 442
U.S. 114, 123 (1979)). While Connor analyzed this
issue as applied to employer background checks, we find that
it has equal force in the context of tenant screening
reports. The California Supreme Court specifically
disapproved Ortiz-a case that held that the ICRAA
was unconstitutionally vague as applied to tenant screening
reports-finding that it failed to give meaning to the 1998
ICRAA amendment and instead "relied on the history of
[the ICRAA and the CCRAA] as originally enacted."
Id. at 958. Connor's analysis and
disapproval of Ortiz compels a similar outcome for
tenant screening reports.
supplemental brief, TSP raises two arguments for the first
time to support the district court's dismissal of the
ICRAA claims. First, TSP asserts that Moran's ICRAA
claims are preempted by the FCRA, 15 U.S.C § 1681t(b).
Second, TSP argues that the ICRAA, Cal. Civ. Code §
1786.52(a), prohibits lawsuits for the same act or omission
addressed in pending claims pursuant to the FCRA.
an appellee waives any argument it fails to raise in its
answering brief." United States v. Dreyer, 804
F.3d 1266, 1277 (9th Cir. 2015) (en banc); see Clem v.
Lomeli, 566 F.3d 1177, 1182 (9th Cir.2009). Yet, we have
"discretion to make an exception to waiver under three
circumstances: (1) 'in the "exceptional" case
in which review is necessary to prevent a miscarriage of
justice or to preserve the integrity of the judicial
process,' (2) 'when a new issue arises while appeal
is pending because of a change in the law,' and, (3)
'when the issue presented is purely one of law and either
does not depend on the factual record developed below, or the
pertinent record has been fully developed.'"
Ruiz v. Affinity Logistics Corp., 667 F.3d 1318,
1322 (9th Cir. 2012) (citing Bolker v. Comm'r,
760 F.2d 1039, 1042 (9th Cir. 1985)).
creatively contends that we should exercise our discretion
under the second exception to consider these new arguments
because they were only possible post-Connor.
According to TSP, Connor "expressly confirms
that [the] ICRAA was amended in 1998" after Congress
expanded the FCRA and added a preemption provision which
applies here. Connor also "mak[es] [the] ICRAA
applicable for the first time since this case was
filed." We find both arguments meritless, and TSP's
new arguments waived.
was not needed to prove that the California legislature
amended the ICRAA in 1998. A cursory review of the
statute's legislative history clearly shows the adoption
of the 1998 amendment, which TSP itself cited in its
answering brief. Thus, TSP was clearly aware of all facts and
law needed to make its federal preemption argument at the
time of initial briefing, and it should have done so if it
wished to argue that point.
TSP claims that the ICRAA was not applicable after
Ortiz and Trujillo,  so it did not
think it necessary to present other statutory arguments.
Prior to Connor, no California Supreme Court
decision bound a federal court to find the ICRAA
unconstitutionally vague. "In the absence of such a
decision, a federal court must predict how the highest state
court would decide the issue using intermediate appellate
court decisions, decisions from other jurisdictions,
statutes, treatises, and restatements as guidance."
In re Kirkland, 915 F.2d 1236, 1239 (9th Cir. 1990).
We were obligated to conduct an independent analysis framed
by the doctrine of "constitutional doubt" that
requires a "statute  be construed, if fairly possible,
so as to avoid . . . the conclusion that it is
unconstitutional." Almendarez-Torres v. United
States, 523 U.S. 224, 237 (1998) (quoting United
States v. Jin. Fuey Moy, 241 U.S. 394, 401 (1916)). The
ICRAA, then, remained potentially applicable in federal
court, even as applied to tenant screening reports, and TSP
should have raised alternate statutory arguments at the time
of initial briefing.
the district court's holding is now foreclosed by
Connor, and TSP's new arguments are waived, we
reverse and remand to the district court to consider the
merits of Moran's ICRAA claims.
regulates competition by prohibiting "any unlawful,
unfair or fraudulent business act or practice." Cal.
Bus. & Prof. Code § 17200. Even though "the
scope of conduct covered by the UCL is broad, the remedies
are limited" to injunctive and restitutionary relief.
Theme Promotions, Inc. v. News Am. Mktg. FSI, 546
F.3d 991, 1008 (9th Cir. 2008) (citing Korea Supply Co.
v. Lockheed Martin Corp., 63 P.3d 937, 943 (Cal. 2003)).
Moran sought both forms of relief. The district court
dismissed Moran's claim for injunctive relief holding
that the FCRA preempts this remedy for a UCL claim predicated
on an FCRA violation. The district court also dismissed his
claim for restitutionary relief because disgorgement of
profits is not an authorized remedy under the UCL.
Moran does not appeal these conclusions, he argues instead
that the UCL claims were also predicated on TSP's alleged
ICRAA violations. The district court did not address these
arguments, and instead, only analyzed Moran's UCL claims
after concluding that the ICRAA was unconstitutionally vague.
Since we hold that the ICRAA is not unconstitutionally vague,
we remand for the district court to decide in the first
instance whether Moran has stated a UCL claim.
appeals the district court's dismissal of his FCRA claims
based upon the Report's inclusion of Moran's 2000
Charge. While both parties agree that the 2000 Charge is
classified as an "adverse item of information" and
thus falls under § 1681c(a)(5), they disagree on which
date triggers the seven-year reporting window-the date of
entry of charge or the date of dismissal of charge-and thus,
whether inclusion of the 2000 Charge was proper. The district
court recognized that this was an issue of first impression
and while initially holding that the date of entry triggered
the window, the court later found the "date of
disposition" or date of dismissal to be the appropriate
trigger. We disagree, and hold that the district court's
initial holding was correct: the date of entry triggers the
seven-year window for a criminal charge. Thus, we find that
TSP improperly included the 2000 Charge in its Report since
more than seven years had passed since its date of entry, but
we make no finding as to willful noncompliance.
Background of the FCRA
enacted the FCRA with the express purpose of ensuring that
consumer reporting agencies (CRAs) provide 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."
15 U.S.C. § 1681(b). The FCRA seeks to protect consumers
by limiting the type of information a CRA may disclose about
an individual. See Guimond v. Trans Union Credit Info.
Co., 45 F.3d 1329, 1333 (9th Cir. 1995) ("The
legislative history of the FCRA reveals that it was crafted
to protect consumers from the transmission of inaccurate
information about them . . . .").
relevant portion of the original 1970 statute provided:
[N]o consumer reporting agency may make any consumer report
containing any of the following ...