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On June 5, the U.S. Court of Appeals for the 9th Circuit affirmed a lower court’s decision to decertify a class of callers claiming their cellphone calls were unlawfully recorded, holding that the class representative lacked standing as to its individual claim. According to the opinion, customers of a concrete supplier alleged that calls placed to a phone system that the company began using in 2009 failed to inform callers that their cellphone calls were being recorded. In 2013, the company changed the recording to state that the calls maybe be “monitored or recorded.” The class representative sought to certify a class of all persons whose calls were recorded between the time that the company started using the call recording system in 2009 to when it updated the recording. The district court initially denied certification under the Federal Rule of Civil Procedure Rule 23’s predominance requirement, and later—after certifying the class based on evidence presented concerning the timing of certain recorded calls—decertified the class for failing to satisfy the “commonality” and “predominance” requirements once the concrete supplier identified nine customers who claimed they had actual knowledge of the recording practice during the class period. In addition, the court concluded that the class representative lacked standing to seek damages on its individual claim or injunctive relief because it lacked standing under the 2016 Supreme Court opinion Spokeo, Inc. v. Robins, which required that it show a concrete or particularized injury as a result of the concrete supplier's alleged violation.
On appeal, the 9th Circuit rejected the class’s argument that it “has standing to appeal the decertification order notwithstanding the adverse judgment against it on the merits” due to the following two exceptions to the mootness doctrine that may permit a class representative to appeal decertification even if its individual claims have been mooted: (i) the class representative “retains a ‘personal stake’ in class certification”; or (ii) “the claim on the merits is ‘capable of repetition, yet evading review,’” even though the class representative has lost “his personal stake in the outcome of the litigation.” The appellate court concluded that “neither of these mootness principles can remedy or excuse a lack of standing as to the representative's individual claims.”
On February 13, the U.S. District Court for the District of Nevada rejected a cloud communication company’s motion to dismiss a TCPA class action. According to the opinion, the plaintiffs’ alleged the company “collaborated as to the development, implementation, and maintenance of [a] telemarketing text message program,” which was used by a theater production company to send text messages without prior consent in violation of the TCPA and the Nevada Deceptive Trade Practices Act (NDTPA). The company moved to dismiss the claims, arguing, among other things, that it was not liable under the TCPA because it was a “transmitter” and not an “initiator” of communications. Citing the FCC’s previous determination that, under certain circumstances transmitters may be held liable under the TCPA, the court rejected this argument, concluding that the company took steps necessary to send the automated messages and that its “alleged involvement was to an extent that [it] could be considered to have initiated the contact.” Moreover, the court determined the plaintiff sufficiently alleged injury under the TCPA, concluding that violations of privacy and injury to the “quiet use and enjoyment of [a] cellular telephone” are consistent with the purpose of the TCPA. The court did dismiss the plaintiff’s NDTPA claims, however, holding that the transaction did not involve the sale or lease of goods or services as the law requires.
On January 23, the U.S. District Court for the District of Minnesota denied two financing companies’ (collectively, “defendants”) motions to dismiss an action alleging the defendants violated the Consumer Leasing Act (CLA), TILA, and a Minnesota law prohibiting usurious contracts through a transaction to purchase a puppy. According to the opinion, the plaintiff financed the purchase of a puppy through the defendants, which allowed her to take possession of the puppy in exchange for 24 monthly payments through an agreement styled as a “Consumer Pet Lease.” The agreement had an APR of 120 percent. The plaintiff filed suit against the defendants alleging the companies violated (i) the CLA by failing to disclose the number of payments owed under the agreement prior to execution; (ii) TILA by failing to adequately disclose the finance charge, the APR, and the “total of payments” as required under the Act; and (iii) the state’s usury law cap of 8 percent for personal debt. The defendants moved to dismiss the action challenging the plaintiff’s standing, among other things. The court, rejected the defendants arguments, finding that the consumer adequately alleged injury by stating she “would” have, not “might” have, pursued other funding had the defendants disclosed the actual interest rate. Additionally, the court determined the consumer plausibly alleged a CLA violation because the agreement contains information the plaintiff could view as “conflicting and confusing.” With respect to the TILA claims, the plaintiff argued that, although the agreement is styled as a lease, it is actually a credit sale, and the court rejected one of the defendant’s arguments that it was not a creditor, but rather a servicer not subject to TILA. Lastly, the court held the plaintiff adequately pleaded her state usury claim, but noted the claim’s viability would be better informed by discovery. Accordingly, the court denied the defendants’ motions to dismiss.
8th Circuit holds employee failed to plead injuries in FCRA suit against employer, law firm, and credit reporting agency
On September 6, the U.S. Court of Appeals for the 8th Circuit held that an employee lacked standing to bring claims under the Fair Credit Reporting Act (FCRA) because she failed to sufficiently plead she suffered injuries. An employee brought a lawsuit against her former employer, a law firm, and a credit reporting agency (defendants) alleging various violations of the FCRA after the employee’s credit report that was obtained as part of the hiring process background check was provided to the employee in response to her records request in a wrongful termination lawsuit she had filed. The district court dismissed the claims against the employer and the law firm and granted judgment on the pleadings for the credit reporting agency. Upon appeal, the 8th Circuit, citing the Supreme Court’s 2016 ruling in Spokeo, Inc. v. Robins (covered by a Buckley Sandler Special Alert), concluded the former employee lacked Article III standing to bring the claims. The court found that the former employee authorized her employer to obtain the credit report and failed to allege the report was used for unauthorized purposes, therefore there was no intangible injury to her privacy. Additionally, the court determined that the injuries to her “reputational harm, compromised security, and lost time” were “‘naked assertion[s]’ of reputational harm, ‘devoid of further factual enhancement.’” As for claims against the law firm and credit reporting agency, the court found that the injury was too speculative as to the alleged failures to take reasonable measures to dispose of her information. Further, whether the credit reporting agency met all of its statutory obligations to ensure the report was for a permissible purpose was irrelevant, as she suffered no injury because she provided the employer with consent to obtain her credit report.
2nd Circuit holds NCUA lacks standing to bring derivative suit against two national banks regarding RMBS claims
On August 2, the U.S. Court of Appeals for the 2nd Circuit held that the National Credit Union Administration (NCUA) lacked standing to bring a suit against two national banks on behalf of trusts created by the agency that held residential mortgage-backed securities (RMBS). According to the opinion, in 2009 and 2010, NCUA took control of five failing credit unions, including ownership of certificates the credit unions held in RMBS trusts. NCUA then transferred the certificates into new trusts and a financial institution was appointed, pursuant to an Indenture Agreement, as Indenture Trustee. NCUA subsequently brought derivative claims on behalf of the trusts against two national banks, trustees of the original RMBS trusts. In affirming the lower court’s dismissal of the claims, the appellate panel found that the NCUA did not have derivative standing to sue on behalf of the trusts because the trusts had granted the right, title, and interest to their assets, including the RMBS trusts, to the Indenture Trustee. The 2nd Circuit reasoned that therefore only the Indenture Trustee possesses the claims, and the NCUA did not have the right to sue on behalf of the Indenture Trustee under the Indenture Agreement.
- Amanda R. Lawrence to discuss "Navigating the challenges of the latest data protection regulations and proven protocols for breach prevention and response" at the ACI National Forum on Consumer Finance Class Actions and Government Enforcement
- Tim Lange to discuss "Ease your pain at the state level: Recommendations for navigating the licensing issues in the states" at the Online Lenders Alliance Compliance University
- Amanda R. Lawrence, Aaron C. Mahler, and Jonice Gray Tucker to discuss "Expanded role for the FTC ahead: Implications for bank and nonbank financial institutions" at an American Bar Association Banking Law Committee Webinar
- Buckley Webcast: Flirting with alternatives — Opportunities and challenges created by alternative data, modeling, and technology
- Daniel P. Stipano to discuss "Reporting requirements for credit unions: CTRs and SARs" at the National Association of Federally-Insured Credit Unions BSA Seminar
- Daniel P. Stipano and Moorari K. Shah to discuss "Vendor management: What is the NCUA looking for?" at the National Association of Federally-Insured Credit Unions BSA Seminar
- Sasha Leonhardt and John B. Williams to discuss "Privacy" at the National Association of Federally-Insured Credit Unions Summer Regulatory Compliance School
- Warren W. Traiger to discuss "CRA modernization" at the National Association of Industrial Bankers and the Utah Association of Financial Services Annual Convention
- Benjamin W. Hutten to discuss "Requirements for banking inherently high-risk relationships" at the Georgia Bankers Association BSA Experience Program
- Hank Asbill to discuss "Ethical guidance in conducting internal investigations – The intersection of Yates and Upjohn" at the American Bar Association Southeastern White Collar Crime Institute
- Brandy A. Hood to discuss "RESPA Section 8/referrals: How do you stay compliant?" at the New England Mortgage Bankers Conference
- Daniel P. Stipano to discuss "Risk management in enforcement actions: Managing risk or micromanaging it" at the American Bar Association Business Law Section Annual Meeting
- Daniel P. Stipano to discuss "Navigating the conflicting federal and state laws for doing business with cannabis companies" at the American Bar Association Business Law Section Annual Meeting
- Tim Lange to discuss "Services and value" at the North American Collection Agency Regulatory Association Annual Conference
- Amanda R. Lawrence to discuss "Data privacy litigation" at the Mortgage Bankers Association Regulatory Compliance Conference
- Jonice Gray Tucker to discuss "HMDA data is out, now what?" at the Mortgage Bankers Association Regulatory Compliance Conference
- Daniel P. Stipano to discuss "Assessing the CDD final rule: A year of transitions" at the ACAMS AML & Financial Crime Conference
- Daniel P. Stipano to discuss "Lessons learned from recent enforcement actions and CMPs" at the ACAMS AML & Financial Crime Conference
- Amanda R. Lawrence to discuss "How to balance a successful (and stressful) career with greater personal well-being" at the American Bar Association Women in Litigation Joint CLE Conference