Litigation & Enforcement Actions – Page 11 – Consumer Financial Services Watch

STATEMENT OF PAUL F. HANCOCK, K&L GATES LLP, ON DECISION OF U.S. SUPREME COURT UPHOLDING ‘DISPARATE-IMPACT LIABILITY’ UNDER THE FAIR HOUSING ACT

Jun 25 2015

The Court’s decision today resolves an important legal issue about which there has been principled disagreement among White House administrations, as well as among advocacy and industry groups, for decades. While the Court, by a razor thin margin, upheld the application of disparate impact under the Fair Housing Act, the Court also imposed important limitations on the application of the legal theory. For example, the Court held that a racial imbalance, without more, does not establish a case of discrimination, and directed lower courts to “examine with care” the claims presented at the pleading stage. The Court further directed that remedial orders in disparate impact cases must “concentrate on the elimination of the offending practice” and employ “race-neutral [remedial] means.” The limitations that were announced were believed necessary by the Court to “avoid serious constitutional questions that might arise” and “to protect potential defendants against abusive disparate-impact claims.”

CFPB Issues Final Decision in In Re: PHH Corp.: First Agency Decision in Contested Administrative Proceeding

Jun 24 2015

Earlier this month, the Consumer Financial Protection Bureau (CFPB) issued the Director’s final decision in the CFPB’s enforcement action against PHH Corp. (PPH). The decision is the agency’s first ruling in a contested administrative proceeding and sheds light on how the agency—at least under the leadership of Director Richard Cordray—will approach these matters. Most strikingly, Director Cordray overturned several key rulings by the Administrative Law Judge (ALJ), resulting in a decision requiring PHH to pay over $109 million in disgorgement, nearly 17 times as much as the $6.4 million recommended by the ALJ.

FCC Empowers TCPA Plaintiffs At Peril Of Businesses

Jun 22 2015

By: Martin L. Stern, Andrew C. Glass, Gregory N. Blase, Joseph C. Wylie

At its June 18, 2015, open meeting, a sharply divided Federal Communications Commission made good on Chairman Tom Wheeler’s recent promise to bolster the Telephone Consumer Protection Act’s already strict rules and to bring about “one of the most significant FCC consumer protection actions since it established the Do-Not-Call Registry with the FTC in 2003.” While plaintiffs’ class action lawyers are likely to applaud the new measures, businesses are concerned that the new rules could unfairly restrict legitimate communications with customers.

Supreme Court Grants Cert. to Consider Whether Offer of Complete Relief Moots TCPA Class Action

May 27 2015

By: Andrew C. Glass, Joseph C. Wylie II, Gregory N. Blase, Jennifer J. Nagle, Eric W. Lee

The United States Supreme Court recently granted certiorari in a Telephone Consumer Protection Act class action challenging text messages which a U.S. Navy vendor sent to recruit new sailors. In Campbell-Ewald Company v. Gomez, No. 14-857, the Supreme Court will review (1) whether a defendant’s offer to provide complete relief as to individual claims deprives the plaintiff of Article III standing, and (2) whether such an offer can also prevent a putative class plaintiff from proceeding where no class has yet been certified.

Proposed Arbitration Fairness Act Would Ban Pre-Dispute Arbitration Clauses in Consumer Contracts

May 06 2015

By: Andrew C. Glass, Robert W. Sparkes, III, Roger L. Smerage, Eric W. Lee

Two members of Congress are seeking to expand the reach of a federal ban on pre-dispute arbitration agreements to cover nearly all consumer contracts. The proposed legislation would have a widespread effect, barring the use of pre-dispute arbitration provisions in credit card agreements, auto loan agreements, wireless telephone service contracts, and many other types of consumer-facing agreements that often contain such provisions.

Spokeo, Inc. v. Robins: U.S. Supreme Court to Consider Whether Plaintiffs Have Standing to Assert a Statutory Violation without Alleging any Actual Harm

May 05 2015

By: Andrew C. Glass, Brian M. Forbes, Gregory N. Blase, Robert W. Sparkes, III, Roger L. Smerage, Eric W. Lee

The United States Supreme Court has granted certiorari to decide whether a statutory violation alone, unaccompanied by any actual harm to the plaintiff, is sufficient to establish Article III standing. See Spokeo, Inc. v. Robins, No. 13-1339 (U.S. Apr. 27, 2015).

Client of Blast Fax Solutions Provider Hit with $22 Million TCPA Judgment

Apr 14 2015

By: Joseph C. Wylie II, Molly K. McGinley, Nicole C. Mueller

A new decision once again highlights the dangers that companies face if their independent contractors engage in conduct that violates the Telephone Consumer Protection Act, and highlights the need to monitor contractor compliance with the TCPA. In City Select Auto Sales, Inc. v. David/Randall Assocs., Inc., a federal court in New Jersey recently found a roofing company, David/Randall Associates, liable for $22.4 million under the TCPA for the actions of its blast fax solutions provider, Business to Business Solutions (B2B).

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U.S. Supreme Court Allows DOL Interpretation on Overtime for Mortgage Loan Officers

Mar 16 2015

By: Thomas H. Petrides, John L. Longstreth

On March 9, 2015, the U.S. Supreme Court held that the U. S. Department of Labor (DOL) could issue a controversial “Administrator’s Interpretation,” which had concluded in 2010 that loan officers in the mortgage banking industry generally do not qualify as exempt from overtime under the administrative exemption of the federal Fair Labor Standards Act (FLSA). The Supreme Court reversed a ruling of the U.S. Court of Appeals for the D.C. Circuit that had struck down the DOL administrative ruling. The Mortgage Bankers Association had challenged the 2010 Interpretation in court, arguing that because the DOL had previously issued an Opinion Letter in 2006 determining that loan officers could generally qualify as exempt from overtime under the administrative exemption, the DOL could not change its prior position without first issuing a written notice and allowing a comment period pursuant to the Administrative Procedure Act. However, the Supreme Court in a 9-0 decision ruled that because the 2006 DOL Opinion Letter was itself merely an interpretation of an existing rule and not a new rule with the force and effect of law, DOL could reverse its prior position and issue a new interpretation without a prior notice and comment rulemaking.

CFPB Targets Pre-Dispute Arbitration Agreements in Consumer Financial Services Contracts in New Report to Congress

Mar 16 2015

By: Andrew C. Glass, Robert W. Sparkes, Roger L. Smerage

In the wake of the Great Recession, numerous federal government actors have sought to limit, and in some cases, eliminate, the inclusion of pre-dispute arbitration agreements in consumer financial services contracts. For instance, in 2010, as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), Congress amended the federal Truth-in-Lending Act to prohibit the use of pre-dispute arbitration provisions in residential mortgage contracts and home-equity line-of-credit agreements. See 15 U.S.C. § 1639c(e)(1). Now, acting pursuant to a mandate provided by the Dodd-Frank Act, see 12 U.S.C. § 5518(a), the Consumer Financial Protection Bureau (“CFPB”) has joined the hunt. On March 9, 2015, the CFPB issued a report to Congress that appears to put the use of such agreements in all consumer financial services agreements – including credit card, checking account, and payday loan agreements – in the agency’s cross-hairs.

The Supreme Court to Consider Whether Spousal Loan Guarantors Are “Applicants” for Credit under ECOA

Mar 06 2015

By: Andrew C. Glass, Olivia Kelman

The United States Supreme Court has granted certiorari to decide whether the Equal Credit Opportunity Act (“ECOA”) excludes loan guarantors from the definition of “applicants” entitled to bring suit under the Act. See Hawkins v. Community Bank of Raymore, No. 14-520 (U.S. Mar. 2, 2015). Specifically, the Court will decide whether the Federal Reserve Board exceeded its authority in its 2003 amendment to Regulation B, the regulation implementing ECOA, to purportedly bring guarantors within the ambit of ECOA’s protection. The Court’s decision may have far-reaching implications for lenders extending credit guaranteed by a non-borrower.

Catagory:Litigation & Enforcement Actions