Banking and Finance Law Daily Time limit for reporting criminal charge begins on filing
Wednesday, May 15, 2019

Time limit for reporting criminal charge begins on filing

By Richard A. Roth, J.D.

The seven-year time limit for including a criminal charge in a consumer report begins when the charge is filed, not when the case later is dismissed, according to the U.S. Court of Appeals for the Ninth Circuit. The court also decided that California's Investigative Consumer Reporting Agencies Act is not unconstitutionally vague when it is applied to tenant screening reports.

A consumer who was denied the opportunity to rent an apartment based on information in his consumer report has been given the opportunity to pursue allegations that the reporting company violated the Fair Credit Reporting Act, California's Investigative Consumer Reporting Agencies Act, and the state's Unfair Competition Law by including information about a previous criminal case. According to the U.S. Court of Appeals for the Ninth Circuit, the FCRA said the dismissal of the criminal charge was too old to be reported. The trial court judge erroneously rejected the state law claims for more technical reasons, the appellate court added (Moran v. The Screening Pros, LLC, May 14, 2019, Smith, M.).

As outlined in the appellate court opinion, the consumer applied to rent an apartment in 2010. A tenant screening report prepared by The Screening Pros listed several previous encounters with the criminal justice system: a 2000 misdemeanor drug-use charge that was dismissed in 2004; two felony charges filed and dismissed in 2006; and a 2006 conviction for misdemeanor embezzlement.

The apartment building management cited the 2006 criminal conviction in denying the rental application. The consumer claimed that the earlier charges also had been considered, and his subsequent suit under the FCRA, ICRAA, and UCL relied on the 2000 charge.

District court rejection. The U.S. district court judge either dismissed or granted summary judgment against all of the consumer's claims. According to the appellate court, the judge:

  • dismissed the ICRAA claims because the law conflicted with California's Consumer Credit Reporting Agencies Act in a way that made the ICRAA unconstitutionally vague;
  • dismissed the UCL claims because they relied on the ICRAA claims to establish that Screening Pros had engaged in an impermissible practice; and
  • granted summary judgment against the FCRA claim because the dismissal was an item of adverse information that could be reported for the next seven years.

The appellate court reversed all of the district judge's decisions.

Constitutionality. The appellate court first said that the district judge's ruling on the constitutionality of the ICRAA was foreclosed by an intervening California Supreme Court decision.

California enacted two laws on consumer reports in 1975. One, the CCRAA, applied to consumer credit reports. The other, the ICRAA, applied to investigative consumer reports. Respectively, the laws as enacted covered creditworthiness and character, the appellate court said. However, a subsequent ICRAA amendment broadened that Act's coverage to include some consumer credit reports, such as tenant screening reports.

Screening Pros argued that this created an overlap that made it impossible for screening companies to know which law applied to their reports. However, the assertion had to be rejected, the appellate court said, because the California Supreme Court had decided both laws were clear enough to be interpreted and applied (Connor v. First Student, Inc., 423 P.3rd, (2018)).

The appellate court declined to consider Screening Pro's alternative argument that the ICRAA claims either were preempted or displaced by the FCRA. The argument was waived because the company should have raised it in its reply brief, not a subsequent supplemental brief, and had not done so.

Unfair competition. The dismissal of the UCL claim, which was predicated on the alleged ICRAA violation, also was reversed. The appellate court instructed the district court judge to consider whether the consumer had stated a case for restitution and an injunction.

FCRA. The FCRA allows adverse information, including information on criminal cases other than convictions, to be reported only for seven years, the court pointed out. However, the consumer and Screening Pros disagreed on when the seven-year reporting window opened—when the charge was filed or when it was dismissed. The district court judge decided the date of the dismissal was the trigger, and that was incorrect, the appellate court said.

The FCRA text says that “civil suits, judgments, and records of arrest” can be reported for seven years after the “date of entry,” the appellate court observed. Only criminal convictions can be reported for longer than seven years. So, the issue for consideration was the date of entry of the 2000 criminal case—the date the charge was filed or the date the case was dismissed.

The criminal charge was an adverse event, and it triggered the seven-year reporting window, the court said.

On the other hand, the dismissal of a criminal charge is not necessarily an item of adverse information. It would be adverse only to the extent that it disclosed the earlier charge. Both events, the charge and the dismissal, were part of the same criminal record, the court decided, and allowing the dismissal to reopen the reporting window would circumvent Congress's intended seven-year time limit.

Dissent. A lengthy dissent by Senior Circuit Judge Kleinfeld disagreed with the majority opinion on the interpretation of the FCRA. According to the dissenting opinion, the fact that the dismissal revealed the previous criminal charge made it an adverse item of information that could be reported for the next seven years.

To support his argument, the dissenter opined that in the case of misdemeanor charges, “Arrests and charges amount to mere accusations subject to a presumption of innocence, but dismissals are typically more like convictions, and follow guilty pleas.” In other words, while a record of a dismissal might not be as adverse as a record of conviction, it still is an adverse item of information.

The case is No. 12-57246.

Attorneys: Devin Heng Fok (Law Offices of Devin H. Fok) and Deepak Gupta (Gupta Wessler PLLC) for Gabriel Felix Moran. Colby A. Petersen (Jacobson, Russell, Saltz & Fingerman LLP) for The Screening Pros, LLC.

Companies: The Screening Pros, LLC

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