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BANK OF AMERICA v. CITY OF DALY CITY

July 29, 2003

BANK OF AMERICA, N.A., ET AL., PLAINTIFFS,
v.
CITY OF DALY CITY, CALIFORNIA, ET AL., DEFENDANTS



The opinion of the court was delivered by: Claudia Wilken, District Judge

ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

Plaintiffs Bank of America, N.A.; Bank of America, N.A. (USA); Bank of America Investment Services, Inc.; Bank of America Insurance Services, Inc.; Wells Fargo Bank, N.A.; Wells Fargo Bank Nevada, N.A.; Wells Fargo Insurance, Inc.; and Wells Fargo Home Mortgage Co., Inc. have sued challenging local consumer privacy ordinances as preempted under federal law. Defendants are the City of Daly City, California; County of San Mateo, California; County of Contra Costa, California; and various county and municipal officers. Plaintiffs filed a motion for summary judgment pursuant to Rule 56, Federal Rules of Civil Procedure. Defendants oppose Plaintiffs' motion and [ Page 2]

have filed a cross-motion for summary judgment, which Plaintiffs oppose. The matter was heard on May 30, 2003. After consideration of all the papers filed by the parties and oral argument on the motion, the Court GRANTS Plaintiffs' motion in part and DENIES it in part and GRANTS Defendants' motion in part and DENIES it in part. The Court declares that the ordinances at issue are preempted under federal law to the extent that the ordinances restrict the sharing of confidential consumer information between financial institutions and their affiliates. The Court enjoins enforcement of the ordinances to that extent. The Court upholds the ordinances' restrictions on the sharing of information between financial institutions and non-affiliated third parties.

BACKGROUND*fn1

I. The Parties

Plaintiff Bank of America, N.A. ("Bank of America") is a national banking association. Plaintiffs Bank of America, N.A. (USA) ("BAUSA"); Bank of America Investment Services, Inc. ("BAI"); and Bank of America Insurance Services, Inc. ("BAISI") are affiliates of Bank of America that use Bank of America's customer information to conduct business and to sell credit card, securities and other products to Bank of America customers.

Plaintiff Wells Fargo Bank, N.A. ("Wells Fargo Bank") is also a national banking association. Plaintiffs Wells Fargo [ Page 3]

Bank Nevada, N.A. ("WFBN"); Wells Fargo Insurance, Inc. ("WFII"); and Wells Fargo Home Mortgage Co., Inc. ("WFHM") are affiliates of Wells Fargo Bank that use Wells Fargo customer information to sell credit card, insurance and mortgage products to Wells Fargo Bank customers.

All Plaintiffs maintain offices or conduct business and other activities in Daly City, San Mateo County and Contra Costa County, California.

Defendant City of Daly City, California is a municipal corporation. Defendants Michael P. Guingona, Adrienne Tissier, Maggie Gomez, Gonzalo Torres, Carol L. Klatt, Helen R. Flowerday and Stanley Gustavson are Daly City officials.

Defendant San Mateo County, California is an unincorporated organization exercising local government authority, pursuant to State law, over unincorporated areas of San Mateo County. Defendants Jerry Hill, Rose Jacobs Gibson, Mark Church, Richard S. Gordon, Michael D. Nevin, John Maltbie and Tom Casey are San Mateo County officials.

Defendant Contra Costa County, California is an unincorporated organization exercising local government authority, pursuant to State law, over unincorporated areas of Contra Costa County. Defendants John M. Gioia, Gayle B. Uilkema, Donna Gerber, Mark DeSaulnier, Federal Glover, John W. Sweeten and Silvano B. Marchesi are Contra Costa County officials.

II. Facts

Plaintiffs challenge Contra Costa County Ordinance No. [ Page 4]

2002-30 (CCO), which was enacted September 24, 2002 and amended November 5, 2002 and February 25, 2003; Daly City Ordinance No. 1295 (DCO), which was enacted September 9, 2002 and amended November 12, 2002; and San Mateo County Ordinance No. 04126 (SMO), which was enacted August 6, 2002 and amended Nov. 5, 2002. Plaintiffs seek a judicial declaration that the ordinances are preempted by the Fair Credit Reporting Act (FRCA), 15 U.S.C. § 1681 et seq., the Gramm-Leach-Bliley Act (GLBA), 15 U.S.C. § 6801 et seq. and the National Bank Act (NBA), 12 U.S.C. § 21 et seq. They also seek a permanent injunction barring Defendants from enforcing the ordinances and attorneys' fees pursuant to 42 U.S.C. § 1983 and 1988.

The three ordinances, which are substantially similar, are intended to afford consumers greater financial privacy protection than is provided in the federal GLBA. See CCO § 518-4.202(a); DCO § 5.92.010(a); SMO § 5.140.010(a).

The ordinances bar financial institutions operating in the relevant jurisdictions from disclosing or sharing confidential consumer information to affiliates or non-affiliated third parties without written notice to the consumer and a consent acknowledgment from the consumer. See CCO § 518-4.602(a); DCO § 5.92.020(a); SMO § 5.140.030(a). Essentially, the ordinances require financial institutions to obtain a consumer's consent, or "opt-in," prior to releasing confidential information about the consumer, rather than merely requiring the banks to allow consumers to "opt-out" of such information disclosures. The ordinances expressly apply to disclosures to financial [ Page 5]

institutions' affiliates, as well as to disclosures to non-affiliated third parties. However, the ordinances include numerous exceptions to this prohibition against disclosing or sharing confidential consumer information without opt-in. See CCO § 518-4.606; DCO § 5.92.040; SMO § 5.140.050.

DISCUSSION

I. Legal Standard

Summary judgment is properly granted when no genuine and disputed issues of material fact remain, and when, viewing the evidence most favorably to the non-moving party, the movant is clearly entitled to prevail as a matter of law. Fed.R.Civ.P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288-89 (9th Cir. 1987).

The moving party bears the burden of showing that there is no material factual dispute. Therefore, the court must regard as true the opposing party's evidence, if supported by affidavits or other evidentiary material. Celotex, 477 U.S. at 324; Eisenberg, 815 F.2d at 1289. The court must draw all reasonable inferences in favor of the party against whom summary judgment is sought. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir. 1991).

Where the moving party bears the burden of proof on an issue at trial, it must, in order to discharge its burden of showing that no genuine issue of material fact remains, make a prima facie showing in support of its position on that issue. [ Page 6]

See UA Local 343 v. Nor-Cal Plumbing, Inc., 48 F.3d 1465, 1471 (9th Cir. 1994). That is, the moving party must present evidence that, if uncontroverted at trial, would entitle it to prevail on that issue. See id.; See also Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264-65 (5th Cir. 1991). Once it has done so, the non-moving party must set forth specific facts controverting the moving party's prima facie case. See UA Local 343, 48 F.3d at 1471.

Where the moving party does not bear the burden of proof on an issue at trial, the moving party may discharge its burden of showing that no genuine issue of material fact remains by demonstrating that "there is an absence of evidence to support the nonmoving party's case." Celotex, 477 U.S. at 325. If the moving party shows an absence of evidence to support the non-moving party's case, the burden then shifts to the opposing party to produce "specific evidence, through affidavits or admissible discovery material, to show that the dispute exists." Bhan v. NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991), cert. denied, 502 U.S. 994 (1991). Here, no facts material to the Court's decision on this motion are disputed. The issue is one of law.

II. Plaintiffs' Motion

A. Preemption by ...


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