On October 21, Judge Victor Marrero of the United States District Court for the Southern District of New York issued an order in Lacewell v. Office of the Comptroller of the Currency (No. 18-cv-8377) striking down the Office of the Comptroller of the Currency’s (“OCC”) special purpose national bank charter for fintechs (“FinTech Charter”). After years of challenging the FinTech Charter—a charter authorizing fintechs to engage in non-depository banking activities—the New York Department of Financial Services (“NYDFS”) has, for now, succeeded in overturning the charter. The OCC defended its authority by arguing that 12 CFR Part 5.20(e)(1) is consistent with the National Bank Act (“Act”) and authorizes the OCC to issue special purpose charters to nondepository banking institutions. The Court disagreed, finding that the National Bank Act only authorizes the OCC to charter depository institutions. The Court concluded that the Act allows the OCC to charter institutions engaged in the “business of banking,” and the “business of banking” necessarily includes accepting deposits. Therefore, the FinTech Charter is beyond the OCC’s authority.Read More
On behalf of the American Bankers Association, Consumer Bankers Association, and Housing Policy Council, K&L Gates Partner Paul F. Hancock and Associate Olivia Kelman crafted a comment that was submitted to the U.S. Department of Housing and Urban Development (“HUD”) on October 18, 2019, addressing the proposed amendments to HUD’s interpretation of the Fair Housing Act’s disparate impact standard. The preamble to the proposed rule states that HUD “proposes to amend” its disparate impact regulation “to better reflect the U.S. Supreme Court’s 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., 135 S. Ct. 2507 (2015).”  In that decision, the Supreme Court articulated the standards for, and limitations on, disparate impact claims under the Fair Housing Act. The comment explains that the proposed amendments properly reflect binding precedent and provide necessary guidance regarding the application of the law, and supports the amendments in HUD’s Proposed Rule, with some suggested modifications. A copy of the comment is available here.Read More
The D.C. Circuit Court of Appeals recently reaffirmed its position that a plaintiff can establish Article III standing (federal court subject matter jurisdiction) based solely on the risk of potential future harm following a data breach involving his or her personal information. The decision continues the split between the federal circuit courts of appeals regarding the issue.
In re Office of Personnel Management arose out of an alleged 2014 data breach of the eponymous office (the “OPM”). The plaintiffs, current and former federal employees and their unions, sought to represent a putative class of individuals whose personal information, including social security numbers, addresses, and birth dates, was allegedly exposed in the breach. The plaintiffs asserted that certain putative class members had experienced financial fraud or identity theft as a result of the breach and that other members faced the “ongoing risk that they … will become victims of financial fraud and identity theft in the future.” The district court ruled that the plaintiffs lacked standing to sue, holding that the putative class members who had allegedly experienced financial fraud had not pleaded facts demonstrating that the fraud was traceable to the OPM, and that the members who had only pleaded risk of future injury did not plausibly allege that such injury was either substantial or clearly impending.Read More
The U.S. Supreme Court Limits Parties Entitled to Seek Removal of Class Action Claims Under CAFA
In a recent decision addressing federal court jurisdiction, the U.S. Supreme Court held that third-party counterclaim defendants cannot remove class action claims to federal court, holding that they are not “defendants” entitled to remove the action from state court to federal court under either the general removal statute,  or the federal Class Action Fairness Act (“CAFA”).  In a 5-4 decision in the matter of Home Depot U.S.A., Inc. v. Jackson,  the Court concluded that only a party sued by the original plaintiff is entitled to remove, and that CAFA’s expansion of removal authority to “any defendant” does not apply to third-party defendants that are not parties to the original action.Read More
In a recent 8-3 en banc decision, the Ninth Circuit affirmed the approval of an estimated $210 million class action settlement in In re Hyundai and Kia Fuel Economy Litigation. The Hyundai decision is significant because it reversed an earlier, controversial decision by a three-judge panel of the Ninth Circuit, which rejected the nationwide settlement because the district court failed to “rigorously analyze potential differences in state consumer protection laws” before certifying the class for settlement. The Ninth Circuit’s en banc decision offers some clarity for both plaintiffs and defendants attempting to settle class action litigation in the Ninth Circuit, especially those involving proposed nationwide classes.Read More
Extensive data about mortgage lending activity collected pursuant to the Home Mortgage Disclosure Act (“HMDA”) was just made available to the public for the first time on March 29, 2019. More detail about borrowers, about underwriting, and about loan features is now available than ever before, and that information also is easier for the public to access than it ever has been. The mortgage lending industry should expect that the expanded HMDA data will receive significant attention and scrutiny from private organizations and individuals, and the data is certain to spark controversy about the racial, ethnic and gender fairness of mortgage lending.Read More
In December of 2018, the Senate confirmed Kathy Kraninger as the second Director of the Consumer Financial Protection Bureau (“CFPB”). The path Director Kraninger will chart is uncertain, but the CFPB has already begun initiating changes to which the financial services industry should pay attention. For instance, in mid-December 2018, the CFPB issued a proposed rule to modify its No-Action Letter Program (the “Program”) and to establish a regulatory “sandbox” (a formal process to temporarily exempt companies from certain statues and regulations so they can test new products with consumers). Below, we provide a brief history of the Program as well as a discussion of the key elements of the proposed rule.
The U.S. Supreme Court has issued numerous decisions over the past decade addressing arbitration agreements.  In one of the Roberts Court’s first forays into the arbitration arena, the Court held that class or collective arbitration is only available where the parties have affirmatively agreed to resolve their disputes through such procedures.  But who determines whether the parties have so agreed — a court or an arbitrator?
The U.S. Supreme Court to Address Whether Counterclaim Defendants Can Remove Class Action Claims Under CAFA
On September 27, 2018, the United States Supreme Court granted the petition for writ for certiorari in Home Depot U.S.A., Inc. v. Jackson, No. 17-1471 (“Home Depot”), to address two issues: (1) whether, under the federal Class Action Fairness Act (“CAFA”), a third-party defendant can remove to federal court class action claims that are brought as counterclaims by the defendant/third-party plaintiff; and (2) whether the Supreme Court’s holding in Shamrock Oil & Gas Co. v. Sheets  — that an original plaintiff may not remove a counterclaim against it — extends to third-party counterclaim defendants.  Resolution of these issues by the Supreme Court may have significant implications for any counterclaim or third-party defendant (and possibly any counterclaim defendant) seeking to remove a class action or a mass action from state to federal court.
On June 28, 2018, California Governor Jerry Brown signed into law the California Consumer Privacy Act of 2018 (“CCPA”). CCPA grants new privacy rights to Californian residents and applies a notice and consent framework to most businesses operating in California that collect personal information from those residents.