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11th Circuit holds deaf plaintiff not required to file complaint with FCC before filing lawsuit under other federal disability rights laws
On September 28, the U.S. Court of Appeals for the 11th Circuit vacated a district court’s decision to grant a Florida city’s (City) motion to dismiss for lack of subject matter jurisdiction, holding that (i) the Twenty-First Century Communications and Video Accessibility Act of 2010 (CVAA) did not require the appellant to exhaust his remedies before the FCC prior to commencing a lawsuit under other federal disability statutes; and (ii) the primary-jurisdiction doctrine does not apply to this case.
According to the opinion, the appellant, a deaf individual, alleged that none of the video content stored on the City’s four webpages provided closed captioning, in violation of the Rehabilitation Act and the Americans with Disabilities Act. The district court dismissed the action without prejudice, holding the CVAA requires exhaustion of remedies by the FCC as a prerequisite to the filing of a lawsuit.
On appeal, the 11th Circuit rejected as “an overbroad reading of the statute” the City’s argument that the CVAA contains an exhaustion requirement for claims brought under other disability rights statutes. In support of its position that the FCC only has exclusive jurisdiction over closed captioning complaints brought under the relevant section of the CVAA, the Court cited a 9th Circuit decision, which concluded “the FCC’s exclusive jurisdiction over complaints under the CVAA does nothing to extinguish [the plaintiff’s] right to pursue broader relief for online captioning under [California state law].” In rejecting the City’s primary-jurisdiction argument, the 11th Circuit first cited instances where the FCC—in a report to Congress and in a communication to this plaintiff in an unrelated action—took the position that the CVAA does not require plaintiffs to exhaust administrative remedies as a prerequisite to bringing lawsuits under other federal statutes. The Court also applied the two-factor primary jurisdiction doctrine test, concluding that (i) the FCC has no expertise with respect to the claims under the other federal disability rights statutes before the lower court; and (ii) “this case presents no special need for uniformity.”
On September 24, the U.S. Court of Appeals for the 11th Circuit affirmed the district court’s dismissal of two class actions on grounds that the “filed-rate doctrine” precludes the plaintiffs’ claims. In their complaints, the plaintiffs alleged that their loan servicers charged “inflated amounts” for lender-placed insurance by receiving “rebates” or “kickbacks” from an insurance company without passing the savings on to consumers. The district court dismissed the actions with prejudice, holding that the filed-rate doctrine barred the plaintiffs’ claims. On appeal, the 11th Circuit upheld the lower court’s decision, finding that the plaintiffs’ allegations challenged the insurance company’s filed rate. As a result, the court determined that the plaintiffs’ allegations were textbook examples of claims barred by the nonjusticiability principle, which provides that duly-empowered administrative agencies have exclusive say over the rates charged by regulated entities because agencies are more competent than the courts at the rate-making process.
On June 27, the U.S. Court of Appeals for the 11th Circuit affirmed summary judgment for a mortgage servicer, concluding that reporting the consumer as delinquent to credit bureaus during a forbearance plan is neither inaccurate nor materially misleading under the Fair Credit Reporting Act (FCRA). According to the opinion, a borrower enrolled in a forbearance plan with her mortgage servicer, which allowed for a “monthly forbearance plan payment” of $25 while the remaining payment balance accrued and became due at the end of the plan. Before the borrower agreed to the plan, a representative for the servicer explained to the borrower that because she was not paying the actual contractual payment under the note, the monthly payments would still be considered late. The mortgage servicer reported the borrower past due for the duration of the plan, and the borrower subsequently filed suit alleging violations of the FCRA. In affirming the lower court’s decision, the appeals court found that while the borrower made timely payments under the forbearance plan, the payments were not the ones she was contractually bound to make under the mortgage note. Additionally, the appeals court found that the borrower did not establish that the forbearance plan legally modified the original note and, therefore, the information the servicer reported to the credit bureaus was not inaccurate and was also not materially misleading “particularly in light of [the servicer’s] additional affirmative statement that [the borrower] was paying under a partial payment agreement.”
On June 19, the U.S. Court of Appeals for the 11th Circuit held that a plaintiff’s claims against a national restaurant chain for allegedly operating a website that was not compliant with the Americans with Disabilities Act (ADA) are not moot despite a previous settlement with a separate plaintiff. The plaintiff sued the restaurant chain seeking declaratory and injunctive relief, requesting that the court (i) order the restaurant to alter its website and make it accessible to individuals with disabilities as required by Title III of the ADA; and (ii) order the restaurant chain to continually update and maintain that accessibility. Prior to the plaintiff’s filing, the restaurant chain reached a settlement in an earlier case with similar claims. The district court held that the plaintiff’s claims were moot because the restaurant chain had already agreed to the remedy the plaintiff sought in the previous settlement and had begun the process of its remediation plan by placing an accessibility notice on its website. On appeal, the 11th Circuit disagreed with the lower court, holding that the plaintiff’s claims are not moot, finding that the restaurant chain has not yet successfully remediated its website and the plaintiff’s request for an injunction against the restaurant chain if the website is not brought into compliance is still viable. The appellate court also noted that the current plaintiff would have no way of enforcing the settlement’s remediation plan because he was not a party to that action.
11th Circuit vacates FTC data security cease and desist order issued against medical testing laboratory
On June 6, the U.S. Court of Appeals for the 11th Circuit vacated an FTC cease and desist order (Order) that directed a Georgia-based medical testing laboratory to overhaul its data security program, ruling that the Order was unenforceable because it lacked specifics on how the overhaul should be accomplished. In 2013, the FTC claimed that the laboratory’s violation of Section 5(a) of the FTC Act constituted an “unfair act or practice” by allegedly failing to implement and provide reasonable and appropriate data security for patient information. The now defunct laboratory argued, among other things, that the FTC did not have the authority under Section 5 to regulate how it handled its data security measures. But the three-judge panel chose not to rule on the broader question about the scope of the FTC’s Section 5 data security authority, choosing to focus its decision on the Order. As previously covered in InfoBytes, in 2016 the FTC reversed an Administrative Law Judge’s Initial Decision to dismiss the 2013 FTC complaint, ordering the laboratory to, among other things, employ reasonable security practices that complied with FTC standards.
After the Order was issued, the laboratory asked the 11th Circuit to decide whether the FTC’s Order was “unenforceable because it does not direct it to cease committing an unfair ‘act or practice’ within the meaning of Section 5(a).” The 11th Circuit agreed to stay enforcement of the Order and ultimately permanently vacated it. “In the case at hand, the cease and desist order contains no prohibitions,” the panel wrote. “It does not instruct [the laboratory] to stop committing a specific act or practice. Rather, it commands [the laboratory] to overhaul and replace its data security program to meet an indeterminable standard of reasonableness. This command is unenforceable.” The court concluded that “[t]his is a scheme that Congress could not have envisioned.”
On May 10, the U.S. Court of Appeals for the 11th Circuit held that a national bank did not waive its right to arbitration with respect to the unnamed plaintiffs in five class actions. The decision stems from multiple class action filings against that bank and over a dozen other banks in 2008 and 2009, alleging unlawful overdraft practices. In late 2009, the actions were consolidated and the bank filed answers to the five complaints, in each answer stating, “[a]bsent members of the putative classes have a contractual obligation to arbitrate any claims they have against [the bank].” The bank originally chose to not move for arbitration against the named class members, but after the Supreme Court decision in AT&T Mobility LLC v. Concepcion, the bank filed a motion to compel the named plaintiffs to arbitrate. The appellate court affirmed the district court’s denial of the motion. The bank then moved to compel arbitration against the unnamed class members, which the district court denied and the appellate court vacated, holding that the lower court lacked jurisdiction to rule on the arbitration obligations without a class certification. After the district court granted class certification, the bank moved to compel arbitration against the unnamed class members again and the district court denied the motion, holding that the bank “acted inconsistently with its arbitration rights” during the precertification litigation efforts.
In vacating the district court’s decision, the appellate court concluded that the bank had not acted inconsistently with respect to the unnamed plaintiffs and had expressly stated it wished to preserve arbitration rights against those class members when the matter became ripe. The panel vacated the district court’s order and remanded for further proceedings.
On April 23, the U.S. Court of Appeals for the 11th Circuit upheld a district court’s decision to deny a global money services business’s motion to compel arbitration under the doctrine of equitable estoppel. According to the unpublished opinion, the plaintiff-appellee—a customer of a now defunct cryptocurrency exchange (defunct exchange)—filed a proposed class action against the money services business and the CEO of the defunct exchange, alleging that when the money services business liquidated bitcoin into cash for two accounts that the CEO opened, it aided and abetted the defunct exchange’s breach of fiduciary duty and the CEO’s theft of customer assets. The customer claimed that the money services business had a duty under the Bank Secrecy Act (BSA) to monitor or investigate the CEO’s actions, detect the CEO’s theft of customer assets, and report the CEO’s suspicious activity to appropriate authorities. However, the business argued that when the CEO opened his accounts, he agreed to be bound by an arbitration clause in the user agreement, and that therefore, under the doctrine of equitable estoppel, the customer was bound by the arbitration clause because the customer’s claims were based on the user agreement. The district court rejected the business’s argument and found that the customer was not asserting any rights or benefits that arose out of the user agreement but rather on duties created under the BSA. The 11th Circuit affirmed the district court’s decision, stating that the customer’s claims were predicated on duties the defendant-appellant owed under federal statutes and regulations as well as state common law and not on enforcing the terms of the user agreement, and, therefore, the customer could not be compelled to arbitrate the claim.
On January 22, the U.S. Court of Appeals for the Eleventh Circuit denied an Ohio-based bank’s request for a rehearing en banc. Last August, the three-judge panel reinstated a suit accusing the bank of violating the Telephone Consumer Protection Act (TCPA) when it allegedly made “over 200 automated calls” to the consumer plaintiff who claimed to have partially revoked her consent by telling the bank to stop calling at certain times. As previously covered in InfoBytes, the appellate court’s August 2017 decision to remand the case for trial concluded that “the TCPA allows a consumer to provide limited, i.e., restricted, consent for the receipt of automated calls,” and that “unlimited consent, once given, can also be partially revoked as to future automated calls under the TCPA.” Furthermore, the decision made clear that the lower court erred in its decision to grant summary judgment in favor of the bank “because a reasonable jury could find that [the consumer plaintiff] partially revoked her consent to be called in ‘the morning’ and ‘during the workday’” during a phone call with a bank employee.
However, in its en banc rehearing petition, the bank argued that the “ruling is likely to create ambiguity amongst both consumers and callers regarding the ability of consumers to impose arbitrary limits on communications . . . despite the FCC’s consistent and unwavering proclamation that in order to revoke consent, consumers must clearly request no further communications.” The appellate court’s decision to deny the petition provides no explanation aside from noting that none of its active judges requested that the court be polled on a rehearing en banc.
On September 22, a three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit reversed and remanded, while affirming in part, a lower court’s decision concerning whether a voicemail left by a debt collector constitutes a “communication” and how “meaningful disclosure” should be interpreted under the Fair Debt Collection Practices Act (FDCPA). The panel answered the first issue by noting that the FDCPA’s definition of “communication” includes “the conveying of information regarding a debt [either] directly or indirectly to any person through any medium.” Therefore, the panel opined, under the statutory language, the only requirement for the voicemail to qualify as a communication was that it convey to the consumer that the call concerned a debt—which it did. Accordingly, the appellate court reversed the district court’s dismissal of the claim under section 1692e of the FDCPA and remanded for further proceedings consistent with their findings.
However, the panel agreed with the lower court’s interpretation of “meaningful disclosure” under section 1692d of the FDCPA—which protects consumers from “harassment and abuse” by prohibiting debt collectors from “placing telephone calls without meaningful disclosure of the caller’s identity.” Specifically, the panel held that a debt collector need only provide the name of the company and the nature of its debt collection business on the call. The statute does not require disclosure of the individual employee’s name as this additional information would not be useful to a consumer. Consequently, the appellate court upheld the district court’s decision to dismiss the claim under section 1692d.
On September 26, a three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit held that a customer is bound to a mandatory arbitration clause in his deposit account agreement with a national bank. In doing so, the appellate court reversed the Florida district court’s decision, which denied the national bank’s motion to compel arbitration. In 2010, the customer filed a putative class action over the charging of overdraft fees associated with a bank account he held jointly with his wife. The case concerns an account agreement signed by the customer when he transferred an existing account into the joint account in 2001. The appellate court reasoned that the customer “was on notice that signing the 2001 signature card represented the start of a new contractual relationship” and therefore, subject to the updated arbitration clause.
The CFPB’s new arbitration rule, which went into effect September 18, does not allow companies subject to the rule to use arbitration clauses to stop consumers from being part of a class action. However, as previously discussed in InfoBytes, the House passed a disapproval resolution under the Congressional Review Act to repeal the rule. A similar measure is expected to be considered by the Senate within the next week.
- Kathryn L. Ryan to discuss "NMLS usage" at the NMLS Annual Conference & Training
- Jeffrey S. Hydrick to discuss "State legislative update" at the NMLS Annual Conference & Training
- Kathryn L. Ryan to speak at the "Business model primer" at the NMLS Annual Conference & Training
- Daniel P. Stipano to discuss "Dynamic customer due diligence and beneficial ownership from KYC to ongoing CDD and the new rule implementation" at the Puerto Rican Symposium of Anti-Money Laundering
- Michelle L. Rogers to discuss "Preparing for servicing exams in the current regulatory environment" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Jon David D. Langlois to discuss "Regulatory risks of convenience fees" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- APPROVED Webcast: NMLS Annual Conference & Ombudsman Meeting: Review and recap
- Brandy A. Hood to discuss "Keeping your head above water in flood insurance compliance" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Melissa Klimkiewicz to discuss "Servicing super session" at the Mortgage Bankers Association National Mortgage Servicing Conference & Expo
- Daniel P. Stipano to discuss "Lessons learned from recent high profile enforcement actions" at the Florida International Bankers Association AML Compliance Conference
- Moorari K. Shah to provide "Regulatory update – California and beyond" at the National Equipment Finance Association Summit
- Sasha Leonhardt and John B. Williams to discuss "Privacy" at the National Association of Federally-Insured Credit Unions Spring Regulatory Compliance School
- Aaron C. Mahler to discuss "Regulation B/fair lending" at the National Association of Federally-Insured Credit Unions Spring Regulatory Compliance School
- Heidi M. Bauer to discuss "'So you want to form a joint venture' — Licensing strategies for successful JVs" at RESPRO26
- Jonice Gray Tucker to discuss "Small business & regulation: How fair lending has evolved & where are we heading?" at CBA Live
- Jonice Gray Tucker to to discuss "DC policy: Everything but the kitchen sink" at CBA Live
- Daniel P. Stipano to discuss "Lessons learned from ABLV and other major cases involving inadequate compliance oversight" at the ACAMS International AML & Financial Crime Conference
- Daniel P. Stipano to discuss "A year in the life of the CDD final rule: A first anniversary assessment" at the ACAMS International AML & Financial Crime Conference
- Moorari K. Shah to discuss "State regulatory and disclosures" at the Equipment Leasing and Finance Association Legal Forum
- Hank Asbill to discuss "Pay no attention to the man behind the curtain: Addressing prosecutions driven by hidden actors" at the National Association of Criminal Defense Lawyers West Coast White Collar Conference
- Daniel P. Stipano to discuss "Keep off the grass: Mitigating the risks of banking marijuana-related businesses" at the ACAMS AML Risk Management Conference
- Daniel P. Stipano to discuss "Mid-year policy update" at the ACAMS AML Risk Management Conference
- Benjamin W. Hutten to discuss "Requirements for banking inherently high-risk relationships" at the Georgia Bankers Association BSA Experience Program