Category: Litigation & Enforcement Actions

1
Upcoming Amendments to Bankruptcy Rule 3002 to Impact Bankruptcy Filing Practices for Mortgagees
2
CFPB Promulgates, House Seeks to Repeal, Final Arbitration Agreements Rule
3
District Court Set to Rule on Cross Motions for Summary Judgment in First Amendment Challenge to TCPA
4
Financial Choice Act Moves to the House Floor
5
Balancing Act: Supreme Court Rules That Filing a Proof of Claim for Stale Debt Does Not Violate the Fair Debt Collection Practices Act
6
Financial Institutions & Services Litigation Group Highlights Key Legal Issues at MBA Conference
7
U.S. Supreme Court Sides with Merchants in Credit Card Surcharge Case, But the Fight Isn’t Over Yet
8
Delaware’s No-Usury-Cap Rule Deemed Unenforceable as Contrary to New York Public Policy in FDCPA Class Action
9
Federal Government Not Successful in Moving to Dismiss First Amendment Challenge to TCPA
10
Eighth Circuit Requires Further Review of Data Breach Settlement Involving Class Members Who Have No Loss

Upcoming Amendments to Bankruptcy Rule 3002 to Impact Bankruptcy Filing Practices for Mortgagees

By: Phoebe S. Winder, Ryan M. Tosi, David A. Mawhinney  

Effective December 1, 2017, certain amendments to the Federal Rules of Bankruptcy Procedure (“the Bankruptcy Rules”) recently adopted by the Supreme Court will impact the allowance of secured claims in bankruptcy. Below, we focus on the amendments to Bankruptcy Rule 3002, which will serve to:

  • Clarify that Rule 3002 applies to secured claims in cases pending under chapters 7, 12, or 13 of the Bankruptcy Code.
  • Shorten the deadline for filing proofs of claim to seventy (70) days after the bankruptcy filing.

 To read the full alert, click here.       

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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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.

Balancing Act: Supreme Court Rules That Filing a Proof of Claim for Stale Debt Does Not Violate the Fair Debt Collection Practices Act

By: Phoebe S. Winder, Andrew C. Glass, Gregory N. Blase, Sean R. Higgins, David A. Mawhinney, Theresa A. Roozen, and Brandon R. Dillman

The U.S. Supreme Court has held that the filing of a proof of claim in bankruptcy proceedings with respect to time-barred debt is not a “false, deceptive, misleading, unfair, or unconscionable” act within the meaning of the Fair Debt Collection Practices Act (“FDCPA”) when there continues to be a right to repayment after the expiration of the limitations period under applicable state law. The Court’s decision in Midland Funding, LLC v. Johnson [1] resolved a split among the federal courts of appeal about the application of the FDCPA to proofs of claim in bankruptcy proceedings. While the decision is favorable for creditors, applicable state law (Alabama, in this case) played a key role in the Court’s conclusion that the creditor held a “claim” under the Bankruptcy Code. Creditors must be aware of and review the relevant state law in the jurisdiction of collection to determine whether the filing of a proof of claim could be deemed false, deceptive, or misleading.

To read the full alert, click here.

 

Financial Institutions & Services Litigation Group Highlights Key Legal Issues at MBA Conference

Members of the K&L Gates Financial Institutions & Services Litigation Group will speak on key topics at the upcoming the MBA’s Legal Issues and Regulatory Compliance Conference in Miami, FL (May 7-10).

Olivia Kelman will review the Home Mortgage Disclosure Act (HMDA) as well as other lending-related requirements of the Fair Housing Act and the Equal Credit Opportunity Act (ECOA) on Sunday afternoon (May 7).

Andrew C. Glass will address major litigation and enforcement trends, including cases heard or pending before the Supreme Court and other federal courts on Monday afternoon (May 8).

Paul F. Hancock will discuss fair lending issues affecting business models and practices, a topic of particular interest with the entrance of a new administration, on Monday afternoon (May 8). Paul also will facilitate a fair lending roundtable discussion later that same afternoon.

In addition, many of our group’s attorneys are attending the conference. We look forward to seeing you all in Miami!

U.S. Supreme Court Sides with Merchants in Credit Card Surcharge Case, But the Fight Isn’t Over Yet

By Andrew C. GlassGregory N. Blase, Soyong Cho, and Jeremy M. McLaughlin

On March 29, 2017, the U.S. Supreme Court ruled that a New York statute restricting credit card surcharges regulated commercial speech. Yet, Expressions Hair Design v. Schneiderman (No. 15-1391) did not decide whether such restrictions violated the First Amendment. Rather, the Court remanded the matter to the Second Circuit to decide that question. Nine other states and Puerto Rico have similar statutes, some of which are also being challenged in court.

To read the full alert, click here.

Delaware’s No-Usury-Cap Rule Deemed Unenforceable as Contrary to New York Public Policy in FDCPA Class Action

By Andrew C. Glass, Roger L. Smerage, and Brandon R. Dillman

The Southern District of New York recently refused to enforce Delaware’s no-usury-cap rule in a long-running Fair Debt Collection Practices Act (“FDCPA”) class action, concluding that the rule violates New York public policy. See Madden v. Midland Funding, LLC, 2017 WL 758518 (S.D.N.Y. Feb. 27, 2017). In Madden, the plaintiff claimed that the defendants charged her an interest rate in excess of the limit imposed by New York law, triggering a violation of the FDCPA. The case has a long history. We first addressed the case in a client alert after the Second Circuit determined that National Bank Act preemption does not apply to debt purchased by independent, third parties. The United States Supreme Court declined to review the Second Circuit’s decision, a ruling about which we blogged.

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Federal Government Not Successful in Moving to Dismiss First Amendment Challenge to TCPA

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

A North Carolina federal district court recently denied a motion by the federal government to dismiss claims raising a First Amendment challenge to a portion of the Telephone Consumer Protection Act (“TCPA”). See American Ass’n of Political Consultants v. Lynch, Case No. 5:16-00252-D (E.D.N.C.). At this early stage of the case, the government did not address the substance of the constitutional challenge. Rather, the government asserted that the court did not have jurisdiction over the case and that the political organizations which filed the suit did not have standing to maintain suit. The court, however, rejected the government’s arguments and allowed the case to proceed.

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Eighth Circuit Requires Further Review of Data Breach Settlement Involving Class Members Who Have No Loss

By Andrew C. Glass, Matthew N. Lowe, and Brandon R. Dillman

In a decision that could affect the resolution of future data breach class actions, the Eighth Circuit recently set aside the settlement in the Target Corp. data breach litigation. See In re Target Corp. Customer Data Security Breach Litig., No. 15-3909, — F.3d —, 2017 WL 429261 (8th Cir. Feb. 1, 2017). The litigation arose from claims that in 2013, hackers compromised credit and debit card data of up to 110 million Target customers. The parties ultimately agreed to a settle on a class basis. According to the settlement agreement, Target agreed to establish a $10 million settlement fund, which would be allocated first to class members with documented losses and then to members with asserted, but undocumented, losses. Members who had “suffered no loss from the security breach [would] receive nothing from the settlement fund,” but would still be “bound under the settlement to release Target from liability for any claims” that may someday arise in the future. Id. at *1.

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