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U.D. Registry, Inc. Topples California Security Freeze Act

By Luis Salazar
November 17, 2006

In a decision that may have repercussions throughout the United States, a California Court of Appeal has ruled that California's Security Freeze Act violates the First Amendment because it precludes the reporting of information contained in public records. The challenge to the Freeze Act was brought by U.D. Registry, Inc. ('UDR'), a company that maintains information on tens of millions of people in California and elsewhere, providing landlords and property managers with reports about prospective tenants. UDR had challenged California's freeze law, Cal. Civil Code '1785.11.2, as unconstitutional. The appellate court, however, also reversed an injunction that had completely barred the state from enforcing the law, and directed a new injunction be issued barring enforcement against UDR only.

Background

UDR collects credit-related background information about individuals, including unlawful detainer, foreclosure, bankruptcy, and tax lien data. It then sells these consumer credit reports to its members, including landowners, property managers, and others similarly situated. Obviously, UDR's members consider these reports in determining whether to lease real property to a prospective tenant, but the members agree in advance not to use the report for any other purpose or to disclose the information contained therein to others. UDR's reports may also include a record of all inquiries (all who have asked for the consumer's report in the last several years), a summary of the information containing credit reports obtained by U.D. Registry from the better-known consumer reporting agencies (Trans Union, Experian, and/or Equifax), and an unabridged report on all reported credit activities.

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