CLASS ACTION DEFENSE BLOG
Welcome to Michael J. Hassen's Blog. Here you will find over 2,000 articles related to class actions.
Federal District Court Holds Use of Word “Section” Instead of “Subsection” in FCRA (Fair Credit Reporting Act) § 1681m(h)(8) was a Drafting Error and Denies Defense Motion for Judgment on the Pleadings
The federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., enacted in 1970, has been described by courts as both “comprehensive” and “complex.” In part, it sets forth statutory requirements governing the use of consumer reports. See 15 U.S.C. § 1681m. In 2003, Congress amended the FCRA by enacting the Fair and Accurate Credit Transactions Act (FACTA). The amendments included adding subsection (h) to § 1681m, which provides: Section 1681m(h)(8) states that no civil actions may be filed for “any failure by any person to comply with this section” (italics added); rather, such violations “shall be enforced exclusively under section 1681s” (italics added), which provides for administrative enforcement of FCRA violations.
Following a so-called “yo-yo” car sale, the consumer/purchaser filed suit in federal court against Brook Road, Inc. alleging violations of various state and federal laws, as well as common law causes of action. Barnette v. Brook Road, Inc., 429 F.Supp.2d 741 (D. Va. 2006). The complaint included an FCRA claim under § 1681m(a) and (b), based on the allegation that the lender had obtained and relied on her credit report, and had engaged in an “adverse action” in reliance on the report, but had failed to provide her with the required notice of the adverse action. Id., at 745. The defense moved for judgment on the pleadings on the grounds that FACTA eliminated private rights of action for all violations of § 1681m; the consumer argued that the use of the word “section” in § 1681m(h)(8) was a typographical error, and that Congress intended to bar private rights of action only for alleged violations of **sub**section (h). Id., at 746.
Class Action Court Decisions FCRA Class Actions Uncategorized
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Federal District Court Denies Defense Motion to Dismiss FCRA Claims Against Consumer Reporting Agency Because a Jury Could Find that it Acted Recklessly in Allowing Public Defender’s Investigator to Access Consumer’s Credit Report Even Though Reasons Given were Facially Valid
A consumer filed suit against credit reporting agencies for violating the federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., after a public defender’s office twice requested and received a credit report for the consumer, an alleged eyewitness to a crime, “in an attempt to impeach his credibility on the theory that his poor credit history created a financial motive to testify against the criminal defendant.” Centuori v. Experian Information Solutions, Inc., 431 F.Supp.2d 1002 (D. Ariz. 2006). The investigator from the public defender’s office gained access to the credit report through a written agreement with Merchants Information Solutions (MIS), which in turn had access to Experian’s consumer records through an agreement whereby MIS promised to ensure that MIS’s customers utilized Experian’s records only for lawful purposes and in compliance with all state and federal laws. In 1998, the public defender’s office had executed a “Permissible Purpose Certificate” for MIS “which listed the permissible and impermissible purposes of access a credit history under the FCRA.” Id., at 1004-05 (footnote omitted).
In 2001, Experian allowed MIS customers direct access to its database via the Internet, thereby saving Experian’s millions of dollars. Experian’s internal policies required that access requests be “properly validated and authorized before access is provided.” Centuori, at 1005. Experian’s policies also generally disallowed access to records by private investigators and attorneys (save for attorneys involved in debt collection) “because of a ‘high risk’ that they would access credit reports for impermissible purposes”; nonetheless, Experian accepted an application from the “Chief Criminal Investigator” of the “Pima County Public Defender,” and provided him with a user ID and password. Id. The access underlying the lawsuit consisted of two requests by the investigator for “collection purposes” and “government fee for service” – both of which are “facially proper purposes under the FCRA,” id., at 1006, though the true purpose is noted above, id., at 1007-08.
Class Action Court Decisions FCRA Class Actions Uncategorized
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Federal District Court Grants Defense Motion to Dismiss TILA Claims Against Lender Upholding Releases Signed by Plaintiffs and Distinguishing Case from Others that Held TILA Releases Void
Two homeowners filed suit against a lender seeking rescission and statutory damages for its alleged failure to make disclosures required under the federal Truth in Lending Act (TILA), 15 U.S.C. §§ 1601 et seq. Tucker v. Beneficial Mortgage Co., ___ F.Supp.2d ___, 2006 WL 1975769 (E.D. Va. 2006). Defense attorneys moved to dismiss the complaint on the grounds that plaintiffs were bound by a class action settlement negotiated by the Virginia Attorney General, and that the action was brought outside TILA’s one-year limitations period. The district court agreed with the defense, specifically holding that plaintiffs released their TILA claims as part of the class action settlement, and that “[p]laintiffs may waive their rights to bring TILA claims in a class action lawsuit.” Slip Opn., at 2.
Briefly, plaintiffs refinanced their home with Beneficial Mortgage in September 2002 – three months before the Virginia Attorney General negotiated a settlement of a consumer class action lawsuit against the lender. Plaintiffs affirmatively joined the settlement and in October 2003 signed a general release absolving Beneficial of liability for “all civil claims . . . whether known or unknown.” Slip Opn., at 3-4 (citation omitted). In September 2004, plaintiffs sought to rescind their Beneficial loan on the grounds that Beneficial “failed to make certain material TILA and Home Ownership and Equity Protection Act (‘HOEPA’) disclosures regarding the loan, including finance charges, the amount financed, and the annual percentage rate.” Id., at 4. Plaintiffs then filed suit in October 2005, alleging that these failures extended their right to rescind the transaction to three years. Id. The district court disagreed.
Class Action Court Decisions RESPA/TILA Class Actions Uncategorized
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Federal District Court Order Granting Defense Motion to Dismiss FCRA Action Against Consumer Reporting Agency Reversed
A consumer (Stephen Levine) opened a store credit card account with a clothing retailer (Structure) through its financial affiliate (World Financial National Network Bank) that the consumer closed in 1998. Credit reports at a consumer reporting agency (Experian Information Solutions) showed that the account had been paid in full and closed. Nonetheless, in 2002 Structure requested credit reports on Levine from Experian, stating that it needed them for purposes of “account review.” Structure had not reported Experian with any new information on Levine’s account during the preceding four years, and Levine had not made any inquiries to Experian or Structure concerning his closed account. Experian provided copies of Levine’s credit report to Structure in May 2002 and in August 2002. Levine sued Experian and Structure for violating the federal Fair Credit Reporting Act (FCRA). 15 U.S.C. §§ 1681 et seq. Experian’s defense attorneys moved to dismiss the complaint. The district court granted the motion on two grounds: (1) “FCRA does not suggest that a credit report may only be permissibly obtained for account review during particular points in the parties’ relationship” and “Experian had not duty to investigate a facially valid request for a consumer report,” and (2) Levine failed to adequately allege damage. Levine v. World Financial Network Nat’l Bank, 437 F.3d 1118, 1119-20 (11th Cir. 2006). The Eleventh Circuit reversed.
Class Action Court Decisions FCRA Class Actions Uncategorized
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Ninth Circuit Remands Case to Federal District Court to Determine Whether Any Portion of the Affiliate-Sharing Provisions of California’s Financial Privacy Act Survive Preemption Under FCRA Separate articles concerning class action defense cases and issues discuss the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., which establishes procedures for reporting and challenging information contained in consumer credit reports, Federal courts have described FCRA’s statutory scheme as “comprehensive” and “complex.
Class Action Court Decisions FCRA Class Actions Uncategorized
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California Court Dismisses Class Action Agreeing With Defense Attorneys that Federal Fair Credit Report Act (FCRA) Does Not Require Terms of Equity Line Offer in Mailer to be a Specific Dollar Figure or Interest Rate, and that No Private Right of Action Exists for Alleged Violations of § 1681m’s Disclosure Requirements
A putative class action was filed against a lender for allegedly violating the federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., by sending out unsolicited mailers offering equity lines of credit in broad amounts (in plaintiff’s case, $15,000 – $300,000) at a range of interest rates (in plaintiff’s case, 5.65% – 16.9%), and by failing to include the disclosures required by § 1681m(d). Putkowski v. Irwin Home Equity Corp., 423 F.Supp.2d 1053, 1055-56 (N.D. Cal. 2006). Defense attorneys moved to dismiss the class action; plaintiff’s lawyer argued that the mailer was nothing more than a “sales pitch” and that it did not constitute a “firm offer” under the FCRA because it “failed to state the rate of interest to be charged or the amount of credit to be extended.” Id., at 1057. The class action defense team also argued that no private right of action exists for alleged violations of § 1681m. The district court agreed with the defense.
Defense attorneys argued that “firm offers of credit” under the FCRA may be “conditional” – that it need not specify the amount of the loan offered or the interest rate, and that “the offeror may later withdraw the offer if the consumer does not meet the creditworthiness criteria.” Putkowski, at 1058. The district court distinguished Cole v. U.S. Capital, Inc., 389 F.3d 719 (7th Cir. 2004) [holding mailer failed to comply with FCRA], and found that the terms of the “offer” set forth in the mailer sent to plaintiff were sufficient “firm” to satisfy FCRA. Id., at 1059-60.
Class Action Court Decisions FCRA Class Actions Uncategorized
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Federal Court Also Holds that Liability for Violations of Fair Credit Reporting Act (FCRA), and that “Willful” Noncompliance Under FCRA’s Punitive Damage Provision Includes Reckless Disregard
In two class action lawsuits filed against insurance companies for alleged violations of the federal Fair Credit Reporting Act separate statement motion to compel responses, 15 U.S.C. §§ 1681 et seq., (1) class action defense attorneys representing Hartford moved for summary judgment on the grounds that the initial rate set for a new policy holder cannot constitute an “adverse action” because there is no “increase” in the rate charged; and (2) class action defense attorneys representing GEICO sought summary judgment claiming the class representative lacked standing, that it did not contract to issue the plaintiff a policy, and that the premium charged would have been the same even if it had not considered plaintiff’s credit history. In each case, the district court granted summary judgment in favor of the insurers; the Ninth Circuit consolidated the cases for purposes of its opinion.
In a case of first impression, the Ninth Circuit Court of Appeals held that if the rate initially set by an insurance company would have been lower but for its reliance on a consumer’s credit report, then a notice of adverse action must be provided under the FCRA. Reynolds v. Hartford Fin. Serv. Group, Inc., 435 F.3d 1081 (9th Cir. 2006). Congress enacted the FCRA to ensure fair and accurate reporting of credit information affecting consumers. The statutory scheme has been characterized by courts as both comprehensive and complex. One aspect of the FCRA requires that consumers be informed of “adverse actions” taken in reliance on credit reports so that they can dispute or explain any negative information contained in such reports. “Adverse action notices advise consumers that an adverse action has been taken against them, and the nature of that action, and alerts them that they may view a copy of the consumer report that triggered the adverse action free of charge and correct any errors affecting their economic well-being.” Id., at 1085.
Class Action Court Decisions FCRA Class Actions Uncategorized
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28 U.S.C. § 1447(d) Bars Review of Class Action Defense Appeal of Order Remanding Case to State Court on Grounds that Federal Court Lacked Subject Matter Jurisdiction Over Action Roberts v. BJC Health System, 452 F.3d 737 (8th Cir. 2006), concerned a putative class action filed in Missouri state court alleging that certain medical procedures were systematically “miscoded” so that patients were overcharged for the procedures. The defense removed the action to federal court on the grounds of federal question subject matter jurisdiction, asserting that ERISA completely preempted the class action claims.
Class Action Court Decisions Removal & Remand Uncategorized
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California Court Rejects Putative Class Action by Shareholder Whose Stock Escheated to the State Against Corporation Confirming Absolute Immunity Defense to UPL Claims
In a class action defense case of first impression, on July 19, 2006, a California appellate court upheld a court order sustaining a demurrer to a putative class action complaint against a corporation for alleged violations of California’s Unclaimed Property law (UPL), California Code Civ. Proc., §§1500-1582. Harris v. Verizon Communications, ___ Cal.App.4th ___, 2006 WL 20008884 (Cal.App. July 19, 2006). The putative class action was premised on the corporation’s alleged failure to provide notice required by the UPL. Specifically, plaintiff Gene Harris worked for GTE Corporation in the 1970s and 1980s, receiving shares in the corporation as a “fringe benefit.” Slip Opn., at 3. In 1990, without notice to Harris and without his knowledge, GTE transferred his shares to the State Controller. In accordance with California law, the Controller sold the shares and held the proceeds; eventually Harris submitted a claim and was 1999 the Controller sent him the funds held on his behalf. _Id._
Despite receiving the funds, Harris filed two class actions. In September 2001, Harris filed a putative class action lawsuit against the State Controller for failure to provide notice to shareholders before selling stock that had escheated to the State. Slip Opn., at 3. That case was resolved in favor of the defense in 2004, when a California appellate court held that the UPL “do[es] not require the Controller to provide notice to apparent owners of escheated stock before the Controller sells the stock.” Harris v. Westly, 116 Cal.App.4thh 214, 224 (Cal.App. 2004). In October 2001, Harris filed a putative class action against GTE for delivering his shares of stock to the Controller without notice. Slip Opn., at 4. The defense demurred; the trial court dismissed the class action against GTE, agreeing that GTE had an absolute immunity defense under the UPL. Id.
Class Action Court Decisions Uncategorized
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Federal District Court Grants Motion to Strike Third-Party Complaint for Indemnity/Contribution Against Parent
Plaintiffs Kristen and William McSherry Jr. (“William Jr.”) filed suit against Capital One FSB and others alleging violations of the federal Fair Credit Reporting Act (FCRA), Fair Debt Collection Practices Act (FDCPA), and Truth in Lending Act (TILA), together with Washington state law claims for defamation and invasion of privacy. McSherry v. Capital One FSB, ___ F.R.D. ___, 2006 WL 1420839 (W.D. Wash. 2006). Capital One filed a third-party complaint against plaintiff’s father, William McSherry Sr., (“William Sr.”) for indemnity and contribution because “[a]ccording to several documents in the record, including Plaintiffs’ complaint, it appears that the debt allegedly incurred by [William Jr.], may have been incurred by [William Sr.].” Slip Opn., at 2. The district court granted plaintiffs’ motion to strike, finding that “[w]hile it does appear that Capital One’s allegedly tortuous actions or omissions would not have occurred but for [William Sr.’s] alleged actions, this is not enough.” _Id_., at 1 and 12.
The federal court began with a summary of federal law on impleader actions, noting that it must be based on “an assertion of the third-party defendant’s derivative liability to the third-party plaintiff” and that it “cannot be used to assert any . . . rights to recovery arising from the same transaction or occurrence as the underlying action.” Slip Opn., at 3-4 (citation omitted). Here, the plaintiffs’ complaint was carefully drafted to seek damages solely based on Capital One’s acts or omissions in response to communications from plaintiffs concerning the debt:
Class Action Court Decisions FCRA Class Actions RESPA/TILA Class Actions Uncategorized
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