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Court of Appeal Revives California Background Check Law

On Wednesday, August 12, 2015, the California Court of Appeal, Second Appellate District, upheld the constitutionality of The Investigative Consumer Reporting Agencies Act (“ICRAA”), Civ. Code 1786, et seq.  The ICRAA governs agencies with regard to investigative consumer reports, e.g., reports containing information on a consumer’s character, general reputation, personal characteristics, or mode of living.  The law is meant to regulate agencies that gather this information to provide to employers, landlords, and others for use by those persons in making employment, rental, and other decisions.

At the trial court level, the court dismissed the  ICRAA claims brought by employees of First Student, Inc. and First Transit, Inc. based upon the holding of Ortiz v. Lyon Mgmt Group, Inc., 157 Cal. App. 4th 604 (2007) (Ortiz).  In Ortiz, the appellate court held that the ICRAA was “unconstitutionally vague.” In the Ortiz court’s view, the ICRAA and another statute, the Consumer Credit Reporting Agencies Act (“CCRAA”), which governs agencies with regard to consumer credit reports, present a statutory scheme that requires information in consumer reports to be categorized as either character information (governed by the ICRAA) or creditworthiness information (governed by the CCRAA).  When the information can be categorized as both, the court in Ortiz felt that the statutory scheme cannot be constitutionally enforced because it does not give adequate notice of which act governs that information.

The California Court of Appeal in Connor v. First Student, Incdisagreed with the analysis in Ortiz.  “There is nothing in either the ICRAA or the CCRAA that precludes application of both acts to information that relates to both character and creditworthiness.  Therefore, we conclude the ICRAA is not unconstitutionally vague as applied to such information.”