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Banga v. Allstate Insurance Co.

March 31, 2010

KAMLESH BANGA, PLAINTIFF,
v.
ALLSTATE INSURANCE COMPANY AND DOES 1 THROUGH 10 INCLUSIVE, DEFENDANTS.



ORDER

Plaintiff brings claims against defendant Allstate Insurance Company concerning plaintiff's homeowner's insurance policy. Because plaintiff is proceeding pro se, this case was assigned to a magistrate judge under Local Rule 302(c)(21) (formerly L.R. 72-302(c)(21)) and 28 U.S.C. § 636(b)(1).

Defendant moved to dismiss plaintiff's claims. Plaintiff opposed this motion and moved for leave to file an amended complaint. On September 22, 2009, the magistrate judge filed findings and recommendations regarding these two motions. These were served on the parties and contained notice that any objections to the findings and recommendations were to be filed within ten days. Defendant filed objections on October 9, 2009, and they were considered by the undersigned.*fn1 In addition, plaintiff prematurely filed a "Third Amended Complaint" on October 21, 2009, which defendant moved to dismiss on November 9, 2009. On December 28, 2009, plaintiff acknowledged that the Third Amended Complaint was filed prematurely and therefore moved to withdraw that amended complaint. Because the Third Amended Complaint was filed without leave to amend, plaintiff's motion to withdraw that complaint will be granted and defendant's motion to dismiss that complaint will be denied as moot.

This court reviews de novo those portions of the proposed findings of fact to which objection has been made. 28 U.S.C. § 636(b)(1); McDonnell Douglas Corp. v. Commodore Business Machines, 656 F.2d 1309, 1313 (9th Cir. 1981). As to any portion of the proposed findings of fact to which no objection has been made, the court assumes its correctness and decides the motions on the applicable law. See Orand v. United States, 602 F.2d 207, 208 (9th Cir. 1979). The magistrate judge's conclusions of law are reviewed de novo. See Britt v. Simi Valley Unified Sch. Dist., 708 F.2d 452, 454 (9th Cir. 1983).

The court adopts the magistrate judge's findings and recommendations in full, except as they pertain to the unfair competition law ("UCL") claim.*fn2 The magistrate judge concluded that the UCL claim failed insofar as it was predicated on violations of 15 U.S.C. §§ 1681m(a) and 1681s-2(a), because these statutes did not themselves provide a private cause of action. Conversely, the magistrate judge concluded that the UCL claim could proceed insofar as it was predicated on a violation of 15 U.S.C. § 1681s-2(b), because this section did provide a cause of action. Under California law, the mere presence or absence of a private right of action in a statute does not determine whether a violation of that statute may serve as the predicate of a UCL claim. The court nonetheless concludes that the UCL claim fails as to all three predicates.

I. Discussion

Plaintiff's first amended complaint ("FAC") alleges that defendant violated the federal Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681m(a),*fn3 by taking an action adverse to plaintiff on the basis information contained in a consumer report without providing notice to plaintiff. FAC ¶¶ 11-14. The FAC alleges that this same conduct violated California's Unfair Competition Law, Cal. Bus. & Prof. Code § 17200 ("UCL").

Plaintiff's proposed second amended complaint ("SAC") alleges that defendant violated the FCRA by making false reports to a credit reporting agency, SAC ¶¶ 15-19, and by failing to notify plaintiff that defendant had reported negative information to a credit reporting agency, SAC ¶ 21. These claims implicate two other provisions of the FCRA, respectively, 15 U.S.C. §§ 1681s-2(a) and (b). The SAC alleges that this conduct also violated California's Unfair Competition Law. The SAC further alleges various common law claims, violation of the California Consumer Credit Reporting Act, and violation of California Civil Code § 1785.26(b)-(c) (itself a section of the California Consumer Credit Reporting Act).

The court adopts the magistrate judge's findings and recommendations regarding all but the unfair competition law claim. To summarize those recommendations, the FRCA claims seeking to enforce 15 U.S.C. §§ 1681m(a) and 1681s-2(a) fail because FCRA does not provide a private right of action for enforcement of these claims. Plaintiff adequately alleges claims under 15 U.S.C. § 1681s-2(b) and California Civil Code § 1785.25(a). The remaining non-UCL claims fail because plaintiff has not adequately alleged that defendant violated an obligation imposed upon it.

Plaintiff's UCL claim must proceed, if at all, on the basis of conduct that is "unlawful" because it is in violation of one of the above statutes, as explained in findings and recommendations. Conduct that is prohibited by a statute may be actionable under the UCL even if the predicate statute does not provide a private right of action. Stop Youth Addiction, Inc. v. Lucky Stores, Inc., 17 Cal. 4th 553, 561 (1998) (rejecting the argument that plaintiff "should not be permitted to use the UCL to obtain relief, indirectly, for violation of an underlying statute . . . that [plaintiff] is not authorized to enforce directly."), id. at 566 (rejecting the argument that "a private UCL claim is barred whenever the predicate statute fails to afford a private right of action."). Thus, the mere fact that the FCRA does not provide a private right of action for enforcement of 15 U.S.C. §§ 1681m(a) and 1681s-2(a) does not preclude plaintiff from bringing a UCL claim predicated on violation of those sections.*fn4

Nonetheless, the UCL cannot be used to "'plead around' [an] absolute bar[] to relief contained in other possible causes of action." Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 182 (1999). Insofar as plaintiff's UCL claim is predicated on a violation of 15 U.S.C. § 1681m(a), 15 U.S.C. § 1681m(h)(8)(B) is a "bar" to relief. Insofar as the UCL claim is predicated on violations of 15 U.S.C. §§ 1681s-2(a) and (b), the claim is preempted by 15 U.S.C. § 1681t(b)(1)(F).

A. Section 1681m(a)

Section 1681m, relating to "requirements on users of consumer reports," contains the following paragraph:

(8) Enforcement.

(A) No civil actions. Sections 616 and 617 [15 U.S.C. ยงยง 1681n and 1681o] shall not apply to any failure by any ...


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