Consum Data Indust Assoc v. State of TX

CourtCourt of Appeals for the Fifth Circuit
DecidedJuly 25, 2023
Docket21-51038
StatusUnpublished

This text of Consum Data Indust Assoc v. State of TX (Consum Data Indust Assoc v. State of TX) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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

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, Case: 21-51038 Document: 00516833688 Page: 2 Date Filed: 07/25/2023

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 rep- resents the three nationwide credit reporting agencies (“CRAs”)—Ex- perian, 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, con- tending 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 stat- utory 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/governor- abbott-appoints-angela-colmenero-as-interim-attorney-general-of-texas.

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

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 contain- ing 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.

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

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 co- insurance, owed to an emergency care provider or a facility- based 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. No- tably, both consumers and the Texas Attorney General are granted enforce- ment 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 attor- ney fees and court or arbitration costs. Id. § 20.09(b).

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Consum Data Indust Assoc v. State of TX, Counsel Stack Legal Research, https://law.counselstack.com/opinion/consum-data-indust-assoc-v-state-of-tx-ca5-2023.