CURRENT MONTH (September 2018)

Banking Law

OCC Committee on Banking Supervision Announces 2019 Operating Plan

By Nicole DeSantis, Rabobank, N.A.

On September 26, 2018, the OCC Committee on Banking Supervision (“CBS”) released its Fiscal Year 2019 Bank Supervision Operating Plan (the “Plan”). The CBS is responsible for setting forth the OCC’s supervision priorities and objectives. The CBS 2019 priorities emphasize  (i) cybersecurity and operational resiliency; (ii) commercial and retail credit loan underwriting; (iii) BSA/AML compliance; (iv) consumer compliance change management processes relating to the Home Mortgage Disclosure Act and integrated mortgage disclosure requirements under TILA, RESPA and the Military Lending Act; and (v) internal controls and end-to-end processes necessary for product and service delivery.

CAFA Amount in Controversy Includes Future Attorney’s Fees

By Eric Tsai, Maurice Wutscher LLP

The U.S. Court of Appeals for the Ninth Circuit reversed a trial court’s order remanding a putative class action lawsuit to state court on the ground that the defendant removing party failed to prove that the amount in controversy exceed $5 million, as required for jurisdiction under the Class Action Fairness Act (“CAFA”).  The Ninth Circuit held that the amount in controversy for jurisdiction under CAFA includes all attorneys’ fees that the plaintiff would be entitled to under a contract or statute, including future fees incurred after the date of removal.  Relatedly, the U.S. Court of Appeals for the Eighth Circuit held that CAFA jurisdiction cannot be defeated by a pre-class certification damages stipulation limiting attorneys’ fees to ensure that the amount in controversy remained under $5 million. The Eighth Circuit found that the trial court properly included in the jurisdictional amount future attorneys’ fees that may be awarded based on the expected length of the litigation, the risk and complexity involved, and the hourly rates charged. These rulings have practical implications for parties challenging federal jurisdiction under CAFA in complex class actions.

Consumer Finance Law

Ninth Circuit Defines “Automatic Telephone Dialing System” Under the TCPA

By Kristina A. Del Vecchio, Joseph & Cohen, P.C.

In light of the D.C. Circuit’s March 2018 opinion in ACA International v. Federal Communications Commission, the Ninth Circuit formulated its own definition of an automatic telephone dialing system (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”). In ACA International, the D.C. Circuit invalidated certain provisions of the Federal Communications Commission’s (“FCC”) 2015 ruling interpreting the TCPA, including the FCC’s interpretation of what type of device qualifies as an automatic telephone dialing system (“ATDS”). In Marks v. Crunch San Diego LLC, the Ninth Circuit took the opportunity to answer the question “whether, in order to be an ATDS, a device must dial numbers generated by a random or sequential number generator or if a device can be an ATDS if it merely dials numbers from a stored list.” Finding that the D.C. Circuit’s ruling effectively invalidated all of the FCC’s previous orders defining an ATDS, the Ninth Circuit adopted a broad definition of an ATDS, holding that it “is not limited to devices with the capacity to call numbers produced by a ‘random or sequential number generator,’ but also includes devices with the capacity to dial stored numbers automatically.” The Ninth Circuit also addressed - but did not provide a definitive answer to - the question to what extent an ATDS device must function without human intervention to be considered an ATDS. It rejected Crunch’s argument that a device must be fully automatic, meaning it operates without any human intervention at all, to qualify as an ATDS. The Court instead noted that: “Common sense indicates that human intervention of some sort is required before an autodialer can begin making calls, whether turning on the machine or initiating its functions. Congress was clearly aware that, at the very least, a human has to flip the switch on an ATDS.”  

7th Circuit Holds Plaintiff’s Settlement of Parallel Claim Against Another Defendant Mooted FDCPA Claim

By Ernest P. Wagner, Maurice Wutscher LLP

In reversing a trial court’s judgment against a law firm defendant, the United States Court of Appeals for the Seventh Circuit found in  Portalatin v. Blatt, Hasenmiller, Leibsker & Moore, LLC that the Plaintiff’s settlement with the creditor for the same indivisible injury mooted the Plaintiff’s FDCPA claims for statutory damages, attorneys’ fees, and costs against the law firm defendant. Plaintiff sued her creditor and its law firm alleging they violated 15 U.S.C. § 1692i(a)(2) of the FDCPA because they failed to sue her “in the judicial district or similar legal entity” where she signed the contract or resides when the debt collector files suit. Plaintiff settled with the creditor for $5,000 and a release of the underlying debt. The Seventh Circuit held that Plaintiff was only entitled to recover FDCPA statutory damages capped at $1,000 for her indivisible injury once. Thus, Plaintiff’s settlement with the creditor mooted her FDCPA statutory damages claim against the law firm and Plaintiff was not entitled to attorneys’ fees or costs from the law firm. The district court therefore erred by failing to dismiss the mooted statutory‐damages claim.

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