Alert September 09, 2008

Ninth Circuit Reinstates Part of California Affiliate Information Sharing Law

The Ninth Circuit held that preempted portions of California’s 2004 Financial Information Privacy Act were severable from portions that were not preempted by FCRA. The California law allows consumers to opt out of information sharing arrangements between financial institutions and affiliates. FCRA, meanwhile, prohibits state restrictions on the sharing of information between affiliates. The Ninth Circuit previously held that FCRA preempted the affiliate-sharing provision of the California law to the extent it related to “consumer report” information under FCRA. On remand, the district court found that the California law did not survive FCRA preemption, and even if a portion did survive, it could not be severed from the preempted whole. The Ninth Circuit reversed, noting that not all nonpublic personal information under the California law constituted “consumer report information” under FCRA. It held that California law permits severing the statute as to non-consumer report, nonpublic personal information. Click here for Am. Bankers Ass'n v. Lockyer, No. 05-17163 (9th Cir. Sept. 4, 2008).