Author - K&L Gates

1
Ninth Circuit Doubles Down on Lack of Standing under Spokeo in FACTA Cases
2
No Rubber Stamp: Ninth Circuit Reverses Certification of Nationwide Class Settlement Due to Failure to Account for Variations in State Law
3
Back from the Dead: The D.C. Circuit Breaths Life Into RESPA Section 8 Safe Harbor
4
A First in the Second (Circuit): On Remand, District Court Breaks New Ground by Vacating Arbitrator’s Class Certification Award
5
Ninth Circuit Clarifies Amount in Controversy Standard Where Borrower Seeks Only “Temporary” Foreclosure Stay Pending Loan Modification Review
6
CFPB Promulgates, House Seeks to Repeal, Final Arbitration Agreements Rule
7
District Court Set to Rule on Cross Motions for Summary Judgment in First Amendment Challenge to TCPA
8
District Court Gives CFPB Rare Loss on the Merits by Granting Summary Judgment on Respa Section 8 Claims
9
CFPB Director Informs Consumer Advisory Board That Bureau Will Not Shy Away from Issuing Debt Collection Proposed Rule
10
Financial Choice Act Moves to the House Floor

Ninth Circuit Doubles Down on Lack of Standing under Spokeo in FACTA Cases

By  Gregory N. BlaseAndrew C. Glass, and Roger L. Smerage

Recently, the Ninth Circuit held in Bassett v. ABM Parking Services, Inc. that an allegation that a business violated the Fair and Accurate Credit Transactions Act (“FACTA”) by printing a credit card expiration date on a customer’s receipt is, by itself, insufficient to establish Article III standing under Spokeo, Inc. v. Robins. (For more information, read K&L Gates alerts on the Bassett decision and FACTA standing jurisprudence.) Now, in Noble v. Nevada Checker Cab Corp., No. 16-16573 (9th Cir. Mar. 9, 2018), the Ninth Circuit reached the same conclusion with respect to an alleged FACTA violation arising out of the printing of the first digit of the card number in addition to the last four digits. In doing so, the Ninth Circuit appears to be sending a strong signal to potential FACTA plaintiffs that something more than a technical violation is necessary to have standing to pursue statutory damages in federal court under FACTA.

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No Rubber Stamp: Ninth Circuit Reverses Certification of Nationwide Class Settlement Due to Failure to Account for Variations in State Law

By David D. Christensen and Matthew N. Lowe

The Ninth Circuit recently clarified in In re Hyundai and Kia Fuel Economy Litigation that district courts must carefully scrutinize class settlements to ensure that they satisfy each of the prerequisites of Rule 23, especially for Rule 23(b)(3) classes, and that courts cannot substitute the fairness of a settlement for the proper certification analysis. Of particular note, the court emphasized the need to analyze whether potential material differences in the applicable states’ laws preclude certification of a nationwide settlement class.

To read the full alert, click here.

Back from the Dead: The D.C. Circuit Breaths Life Into RESPA Section 8 Safe Harbor

By Brian M. ForbesDavid D. Christensen and Matthew N. Lowe

Through its recent en banc decision in PHH Corp. v. Consumer Financial Protection Bureau, the D.C. Circuit reinstated the holding of the three-judge panel regarding the safe harbor provision in Section 8(c) of the Real Estate Settlement Procedures Act (RESPA). Specifically, the court reaffirmed that under Section 8(c), payments made by one settlement service provider to another do not violate Section 8(a), even if made in connection with a captive relationship or a referral, when the payments are reasonably related to the market value of the goods, services, or facilities provided. Although potentially overshadowed by the portion of the en banc court’s holding that the leadership structure of the Consumer Financial Protection Bureau (CFPB) is constitutional, the panel court’s reinstated holding regarding RESPA’s Section 8(c) safe harbor is notable and important for the simple confirmation that the safe harbor “is what it is.”

To read the full alert, click here.

A First in the Second (Circuit): On Remand, District Court Breaks New Ground by Vacating Arbitrator’s Class Certification Award

By Andrew C. GlassRobert W. Sparkes, IIIRoger L. Smerage, and  Elma Delic

In what appears to be a first-of-its-kind ruling, the District Court for the Southern District of New York recently concluded that a federal district court has the authority to vacate an arbitrator’s class certification award based on the due process rights of absent class members. That this potentially ground-breaking decision arose from the long-standing litigation in Jock v. Sterling Jewelers, Inc. is no surprise. Over the course of a decade in Jock, the district court and the Second Circuit Court of Appeals have rendered multiple decisions addressing the proper role of a court in reviewing an arbitrator’s authority to determine whether parties have agreed to class arbitration. In the latest decision, the district court became the first court to apply Justice Alito’s concurrence in Oxford Health Plans LLC v. Sutter to strike down an arbitrator’s ruling. The Jock court determined that, absent an express class arbitration provision in each putative class member’s arbitration agreement, an arbitrator does not have the authority to bind absent class members to a class judgment—even if they signed the same form of arbitration agreement as the named plaintiffs. As discussed below, this novel decision could have significant implications.

To read the full alert, click here.

Ninth Circuit Clarifies Amount in Controversy Standard Where Borrower Seeks Only “Temporary” Foreclosure Stay Pending Loan Modification Review

By David D. Christensen and Matthew N. Lowe

The Ninth Circuit recently limited the availability of diversity jurisdiction for certain cases with claims involving mortgage loan modifications. Specifically, in Corral v. Select Portfolio Servicing, Inc., the Ninth Circuit held that, where the plaintiff-borrower “seeks only a temporary stay of foreclosure pending review of a loan modification application … the value of the property or amount of indebtedness are not the amounts in controversy.” — F.3d —-, 2017 WL 6601872, at *1 (9th Cir. Dec. 27, 2017). Rather, to satisfy the amount in controversy requirement in such cases, parties must demonstrate that the value of the temporary delay in foreclosure exceeds $75,000, “such as the transactional costs to the lender of delaying foreclosure or a fair rental value of the property during pendency of the injunction” (in addition to any compensatory damages plaintiffs may be seeking). Id. at *5.

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CFPB Promulgates, House Seeks to Repeal, Final Arbitration Agreements Rule

By Andrew Glass and Roger Smerage

Recently, the Consumer Financial Protection Bureau (CFPB) promulgated its final arbitration agreement rule. The rule comes more than 11,000 comments, 13 months, and one change in presidential administration after the CFPB issued its proposed rule in May 2016. (K&L Gates previously reported on the issuance of the proposed rule here.) Yet despite its long history, Congress began taking steps to repeal the rule almost immediately.

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District Court Set to Rule on Cross Motions for Summary Judgment in First Amendment Challenge to TCPA

By Andrew C. Glass, Gregory N. Blase, Christopher J. Valente, Michael R. Creta, and Natasha C. Pereira

Last week, a bi-partisan coalition of political groups and the federal government completed briefing cross motions for summary judgment in American Association of Political Consultants, Inc., et al. v. Sessions, Case No. 5:16-cv-00252-D (E.D.N.C.). The case challenges the constitutionality of a portion of the Telephone Consumer Protection Act (“TCPA”). The plaintiffs contend that the TCPA’s prohibition on making auto-dialed calls or texts to cell phones without the requisite consent, 47 U.S.C. § 227(b)(1)(A)(iii) (the “cell phone ban”), imposes a content-based restriction on speech that fails to pass strict scrutiny and is unconstitutionally under-inclusive (the plaintiffs’ complaint is discussed here). The government is defending the statute’s constitutionality (previously discussed here).

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District Court Gives CFPB Rare Loss on the Merits by Granting Summary Judgment on Respa Section 8 Claims

By David D. Christensen and Matthew N. Lowe

In a win for real estate settlement service providers, another federal court has rebuffed the Consumer Financial Protection Bureau’s (“CFPB”) aggressive interpretation and enforcement of Section 8 of the Real Estate Settlement Procedures Act, 12 U.S.C. §§ 2601-2617 (“RESPA”). Specifically, in Consumer Financial Protection Bureau v. Borders & Borders, PLC, the District Court for the Western District of Kentucky recently granted the defendants’ summary judgment motion and dismissed the CFPB’s RESPA Section 8(a) claims. See 2017 WL 2989183 (W.D. Ky. July 13, 2017).

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CFPB Director Informs Consumer Advisory Board That Bureau Will Not Shy Away from Issuing Debt Collection Proposed Rule

By Brian M. Forbes,  Gregory N. Blase, Andrew C. Glass and Roger L. Smerage

In prepared remarks delivered to the Consumer Advisory Board on Thursday, June 8, 2017, Consumer Financial Protection Bureau Director Richard Cordray explained that the CFPB is moving forward with its long-anticipated debt collection rules. K&L Gates previously chronicled the CFPB’s efforts to promulgate debt collection rules here, here, and here.

The Director emphasized his view that new debt collection rules are necessary because of the age of the Fair Debt Collection Practices Act—enacted in 1977—and the statute’s inability to fit modern methods of communication. According to the Director, the forthcoming rules would benefit consumers and industry participants by clarifying what constitutes unfair collection practices. Substantively, the Director focused on the portion of the CFPB’s July 2016 outline aimed at ensuring that debt collectors possess correct information about debts they are seeking to collect and consumers who owe those debts. In a notable shift, the Director indicated that the CFPB is prepared to issue a single set of debt collection rules relating to the gathering of information by and transfer of information between first-party creditors and third-party debt collectors. Acknowledging that the shift will require the CFPB to take some additional time to iron out “intertwined issues,” the Director suggested that the CFPB will try to fast-track other aspects of its proposed rulemaking, including the information third-party debt collectors must disclose to consumers and the manner in which third-party debt collectors interact with consumers.

K&L Gates will continue to monitor and report on further developments.

Financial Choice Act Moves to the House Floor

By Daniel F. C. CrowleyBruce J. HeimanWilliam A. KirkKarishma Shah PageMark A. Roszak and Eric A. Love

On May 4, the House Financial Services Committee (“HFSC”) concluded its three-day markup of H.R.10, the Financial Choice Act (“FCA”), a bill to reform the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The HFSC reported the bill favorably to the full House by a vote of 34-26. All 19 Democratic amendments were rejected on party-line votes. Republicans did not offer any amendments but focused their efforts on raising concerns about the extent to which Dodd-Frank has stifled economic growth and put taxpayer money at risk. Committee members debated a number of the more controversial provisions of the FCA, including Title VII to restructure the Consumer Financial Protection Bureau (“CFPB”) and remove its unfair, deceptive, or abusive acts or practices (“UDAAP”) authority; Section 841 to repeal the Department of Labor’s conflict of interest-fiduciary duty rule; Section 111 to repeal the Federal Deposit Insurance Corporation’s (“FDIC”) Orderly Liquidation Authority; Title IX to repeal the Volcker Rule; and numerous reforms to the Securities and Exchange Commission’s (“SEC”) shareholder proxy voting rules.

To read the full alert, click here.

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