A federal District Court judge in Nevada has dismissed a case filed by several trade associations against the Commissioner of the Financial Institutions Division (“FID”) of the Nevada Department of Business and Industry and the Nevada Attorney General. The case was brought in response to a 2019 amendment (SB 311) that changed Nevada law to allow an applicant for credit who has no credit history, but who is or was married, to request that the creditor deem the applicant’s credit history to be identical to that of the applicant’s spouse during the marriage.
The American Financial Services Association, the Nevada Credit Union League, and the Nevada Bankers Association sued the regulator and AG, arguing that the law (1) is preempted by the Fair Credit Reporting Act and the Equal Credit Opportunity Act, (2) violates privacy rights and data security rules by requiring creditors to obtain and disseminate private financial information, and (3) is “hopelessly unworkable, and impossible to comply with in practice.”
In granting dismissal, Judge Andrew Gordon accepted the argument put forth by the defendants in their motion to dismiss that the controversy was unripe for judicial review. Specifically, applying a three-part test, the court concluded that (1) the trade groups had not articulated a “concrete plan” to violate SB 311, (2) there existed no specific warning or threat of SB 311 being enforced (via public or private enforcement), and (3) the fact that SB 311 had not previously been enforced undercut the trade groups’ arguments and “weighs more heavily towards allowing FID time to issue implementing regulations.”
In analyzing the ripeness issue, the court also concluded that the plaintiffs had not alleged facts showing actual, present harm, rejecting the groups’ assertion that they have been exposed to legal and reputational risks, forced to violate data furnishing agreements, and obstructed their ability to conduct normal banking business by trying to comply with SB 311.
Because the dismissal addresses none of the trade groups’ substantive concerns about SB 311, the fight over this law is likely to continue. While the FID is in the process of promulgating regulations, it seems unlikely that a rulemaking will be able to resolve the issues that the trade groups have identified with SB 311.