Consum Data Indust Assoc v. State of TX

Court of Appeals for the Fifth Circuit·Decided July 25, 2023·No. 21-51038·Unpublished

Opinion

Case: 21-51038 Document: 00516833688 Page: 1 Date Filed: 07/25/2023

United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit

____________ FILED July 25, 2023 No. 21-51038 Lyle W. Cayce ____________ Clerk

Consumer Data Industry Association,

Plaintiff—Appellee,

versus

State of Texas, through Attorney General Ken Paxton, acting in his official capacity,

Defendant—Appellant.

Appeal from the United States District Court for the Western District of Texas USDC No. 1:19-CV-876

Before Graves, Willett, and Engelhardt, Circuit Judges. * Per Curiam: ** Defendant-Appellant, the State of Texas, through Attorney General Ken Paxton (“Paxton”), 1 appeals the district court’s determination that the

*

Judge Willett concurs in the judgment only.

**

This opinion is not designated for publication. See 5th Cir. R. 47.5.

1

On July 14, 2023, Texas Governor Greg Abbott appointed Angela Colmenero to serve as Interim Attorney General for the State of Texas pending the Texas Senate’s resolution of the articles of impeachment filed against Ken Paxton. See Press Release,

No. 21-51038

Ex parte Young exception to sovereign immunity applies, that Plaintiff- Appellee Consumer Data Industry Association (“CDIA”) has standing, and that CDIA’s claim is ripe for review. On the instant record, we AFFIRM.

I.

Plaintiff-Appellee CDIA is an international trade association that represents the three nationwide credit reporting agencies (“CRAs”)—Experian , Equifax, and Trans Union—and other credit reporting agencies that furnish information concerning Texas consumers. On September 9, 2019, CDIA sued Texas Attorney General Ken Paxton, in his official capacity, contending that Section 20.05(a)(5) of the Texas Business & Commerce Code is preempted by the Federal Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681, et seq., and seeking declaratory and injunctive relief. The Texas statutory provision, § 20.05(a)(5), prohibits CRAs from including information regarding certain medical debt collection accounts in consumer credit reports that are furnished to third-parties. Tex. Bus. & Com. Code § 20.05(a)(5).

Defendant-Appellant Paxton filed motions to dismiss, pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), contending that (1) CDIA has not suffered an “injury in fact” and thus lacks standing; (2) CDIA’s claim is not ripe for review; (3) the State of Texas is entitled to sovereign immunity from suit; and (4) § 20.05(a)(5) is not preempted by the FCRA. On September 28, 2021, the district court denied the motions. Considering the prospective nature of the relief sought by CDIA, and CDIA’s factual allegations, the district court determined that Ex parte Young’s exception to sovereign immunity applies, CDIA has Article III

Office of the Texas Governor (July 10, 2023), https://gov.texas.gov/news/post/governorabbott -appoints-angela-colmenero-as-interim-attorney-general-of-texas.

Case: 21-51038 Document: 00516833688 Page: 3 Date Filed: 07/25/2023

No. 21-51038

standing, and its claim is ripe for review. In rejecting the Rule 12(b)(6) motion, the district court reasoned that CDIA had sufficiently alleged express preemption because the state and federal statutory provisions concern the same subject matter. This interlocutory appeal followed. 2 II.

The statutory provision that CDIA claims is preempted by federal law, and thus seeks to enjoin its enforcement—Section 20.05(a)(5) of the Texas Business and Commerce Code—was enacted in 2019 and became effective on May 31, 2019. It prohibits CRAs from including information regarding certain medical debt collection accounts in consumer credit reports that are furnished to third-parties. Specifically, § 20.05(a)(5) states:

(a) Except as provided by Subsection (b), a consumer reporting agency [“CRA”)] may not furnish a consumer report containing information related to:

***

(5) a collection account with a medical industry code, if the

2

This court’s appellate jurisdiction is generally limited to appeals from “final decisions.” See 28 U.S.C. § 1291. However, “beginning with Cohen v. Beneficial Industrial Loan Corp.,[337 U.S. 541, 548–49 (1949)], the Supreme Court has recognized narrow exceptions to this rule under what is now termed the collateral-order doctrine.” Planned Parenthood Gulf Coast, Inc. v. Phillips, 24 F.4th 442, 448 (5th Cir. 2022). “The collateral- order doctrine permits appeals of interlocutory orders that ‘[1] conclusively determine the disputed question, [2] resolve an important issue completely separate from the merits of the action, and [3] [are] effectively unreviewable on appeal from a final judgment.’” Id. (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978)). When dismissal on grounds of sovereign immunity is denied, interlocutory appeal is permitted under the Cohen collateral-order doctrine. Id. at 448–50. Given the significant overlap in the issues presented in this appeal, we also will review the district court’s interlocutory rulings regarding standing and ripeness. See, e.g., City of Austin v. Paxton, 943 F.3d 993, 1003 n. 3 (5th Cir. 2019) (declining to consider standing on interlocutory appeal of sovereign immunity ruling but citing cases where standing was considered). The same is not true, however, of the district court’s preemption ruling.

Case: 21-51038 Document: 00516833688 Page: 4 Date Filed: 07/25/2023

No. 21-51038

consumer was covered by a health benefit plan at the time of the event giving rise to the collection and the collection is for an outstanding balance, after copayments, deductibles, and coinsurance , owed to an emergency care provider or a facilitybased provider for an out-of-network benefit claim[.]

Tex. Bus.& Com. Code § 20.05(a)(5).

Enforcement of the provisions of Chapter 20 of the Texas Business and Commerce Code—which is entitled “Regulation of Consumer Credit Reporting Agencies”—is addressed in Subchapter D, §§ 20.08–20.13. Notably , both consumers and the Texas Attorney General are granted enforcement authority. A consumer may file an enforcement action in court or, if agreed to by the parties, submit the matter to binding arbitration. Tex. Bus. & Com. Code § 20.08(a). 3 If the CRA’s violation is willful, the CRA is liable to the consumer against whom the violation occurred for the greater of three times the amount of the consumer’s actual damages or $1,000, as well as reasonable attorney fees and court or arbitration costs. Id. § 20.09(a). 4 If a CRA negligently violates the chapter, it can be liable to the consumer for the greater of the actual amount of damages or $500, as well as reasonable attorney fees and court or arbitration costs. Id. § 20.09(b).

3

If the consumer prevails in arbitration and the disputed adverse information in the consumer’s file or record is not stricken or removed in a timely manner, the consumer may bring an action against the noncomplying CRA without regard to the 120-day waiting period otherwise required by § 20.08(d) for successive arbitrations. Tex. Bus. & Com. Code § 20.08(f).

4

In addition to liability imposed under § 20.09(a), a consumer reporting agency that does not correct inaccurate information in a consumer’s file and consumer report before the 10th day after the date on which a judgment is entered against the agency is also liable for $1,000 a day until the inaccuracy is corrected. Tex. Bus. & Com. Code § 20.09(c).

No. 21-51038

The Texas Attorney General’s enforcement power relative to § 20.05(a)(5) is found in §§ 20.11 and 20.12. Section 20.11 states:

§ 20.11 Injunctive Relief; Civil Penalty (a) The attorney general may file a suit against a person for:

Free access — add to your briefcase to read the full text and ask questions with AI

Consum Data Indust Assoc v. State of TX, (5th Cir. 2023).

Consum Data Indust Assoc v. State of TX (Consum Data Indust Assoc v. State of TX) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Related

Cook v. Reno
74 F.3d 97 (Fifth Circuit, 1996)
Ex Parte Young
209 U.S. 123 (Supreme Court, 1908)
Cohen v. Beneficial Industrial Loan Corp.
337 U.S. 541 (Supreme Court, 1949)
Abbott Laboratories v. Gardner
387 U.S. 136 (Supreme Court, 1967)
Coopers & Lybrand v. Livesay
437 U.S. 463 (Supreme Court, 1978)
Babbitt v. United Farm Workers National Union
442 U.S. 289 (Supreme Court, 1979)
Bowsher v. Synar
478 U.S. 714 (Supreme Court, 1986)
Lujan v. Defenders of Wildlife
504 U.S. 555 (Supreme Court, 1992)
MedImmune, Inc. v. Genentech, Inc.
549 U.S. 118 (Supreme Court, 2007)
Choice Inc. of Texas v. Bruce Greenstein
691 F.3d 710 (Fifth Circuit, 2012)
Clapper v. Amnesty International USA
133 S. Ct. 1138 (Supreme Court, 2013)