Class Action Defense Blog

28 U.S.C. § 1446 - 30 day Time Limit

Class action defendants often benefit if they can remove the case to federal court if possible. CAFA (Class Action Fairness Act of 2005) was enacted to greatly expand access to federal courts in class action cases. Removal of cases to federal court generally is governed by 28 U.S.C. §1446. CAFA is discussed in a separate article.

The procedure for removal is set forth in 28 U.S.C. § 1446. As a general rule the defendant must remove the case to federal court within 30 days of receipt of the complaint or “a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable,” 28 U.S.C. § 1446(b). However, if the basis of removal is diversity jurisdiction, then the matter may not be removed more than one year after the lawsuit was filed. Id. Section 1446 provides in part:

(a) A defendant or defendants desiring to remove any civil action or criminal prosecution from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action.

(b) The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.

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Posted In: Removal & Remand

28 U.S.C. §1446 and Issues Related to Class Action Defense

Class action defendants often benefit if they can remove the case to federal court if possible. CAFA (Class Action Fairness Act of 2005), discussed in a separate article, was enacted to greatly expand access to federal courts in class action cases. Removal of cases to federal court generally is governed by 28 U.S.C. §1446.

As a general rule the defendant must remove the case to federal court within 30 days of receipt of the complaint or “a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable,” 28 U.S.C. § 1446(b) (italics added). The 30-day time limit on removal is discussed in a separate article.

This issue here discussed is whether a defendant is under a duty to inquire into the existence of jurisdictional facts. The Circuit Courts are split on this issue. This article discusses the recent Ninth Circuit opinion on the topic, Harris v. Bankers Life & Cas. Co., 425 F.3d 689 (9th Cir. 2005). Harris is important because it rejects both Moore’s Federal Practice treatise and the Tenth Circuit’s interpretation of a prior Ninth Circuit opinion, Cantrell v. Great Republic Ins. Co., 873 F.2d 1249 (9th Cir. 1989). Both Moore’s Federal Practice 3d, 107.30[3][f] at n.100 (3d ed. 2005), and Akin v. Ashland Chem. Co., 156 F.3d 1030, 1035 n.2 (10th Cir. 1998), cite to Cantrell as imposing a duty upon a defendant to investigate potential reasons for removal within the first thirty days of receiving a complaint. In Harris, the Ninth Circuit recently rejected Moore’s and Akin’s interpretation of Cantrell and clarified its holding in Cantrell.

Continue reading "Harris v. Bankers Life: Duty of Inquiry to Determine Removability to Federal Court" »

Posted In: Removal & Remand, Class Action Court Decisions

28 U.S.C. § 1446 - One Year Limit on Removal

Class action defendants often benefit if they can remove the case to federal court if possible. CAFA (Class Action Fairness Act of 2005) was enacted to greatly expand access to federal courts in class action cases. Removal of cases to federal court generally is governed by 28 U.S.C. §1446. CAFA is discussed in a separate article.

The procedure for removal is set forth in 28 U.S.C. § 1446. As a general rule the defendant must remove the case to federal court within 30 days of receipt of the complaint or “a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable,” 28 U.S.C. § 1446(b). However, if the basis of removal is diversity jurisdiction, then the matter may not be removed more than one year after the lawsuit was filed. Id. The 30-day limit is discussed in a separate article; this article discusses the one-year limitation.

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Posted In: Removal & Remand

Class action litigation is rampant in the United States, and defending against a class action lawsuit is both expensive and time-consuming. In enacting CAFA (Class Action Fairness Act of 2005), Congress acknowledged that class actions are an important and valuable part of the legal system “when they permit the fair and efficient resolution of legitimate claims of numerous parties by allowing the claims to be aggregated into a single action against a defendant that has allegedly caused harm.” However, Congress also recognized that the abusive use of class actions has harmed the public, harmed businesses, and undermined public respect for the judicial system.

In particular, Congress was concerned that many class actions benefited plaintiffs’ counsel more than the public. “Class members often receive little or no benefit from class actions, and are sometimes harmed,” whereas “[plaintiffs’] counsel are awarded large fees, while leaving class members with coupons or other awards of little or no value.” Moreover, certain plaintiffs receive unjustifiable awards at the expense of other class members.

Congress was also concerned that by manipulation of diversity jurisdiction plaintiffs’ counsel had managed to keep cases of “national importance” in state court, and that state courts would “sometimes act[] in ways that demonstrate bias against out-of-State defendants” and enter judgments that would “impose their view of the law on other States and bind the rights of the residents of those States.”

Congress therefore enacted the Class Action Fairness Act (“CAFA”) for several purposes. When a proposed class action settlement awards coupons to class members, then CAFA requires that the federal district court expressly find that the settlement is fair, reasonable and adequate. The federal court also cannot approve such a settlement if attorney fees awarded to class counsel result in a net monetary loss to the class unless the court expressly finds that the monetary loss is substantially outweighed by nonmonetary benefits to the class. CAFA also specifies the calculation of contingent and other attorney fee awards when the proposed class action settlement involves providing coupons to class members. Finally, CAFA prohibits class settlements that give greater benefits to some class members because they are geographically nearer to the court. To ensure the fairness of proposed class settlements, CAFA requires that notice of proposed settlements be served on the appropriate State and Federal officials, and forbids the court from approving such settlements less than 90 das after service of such notice.

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Posted In: Class Action Fairness Act (CAFA)

Class action plaintiff firm Milberg Weiss Bershad & Schulman LLP and two of the firm’s top partners, David Bershad and Steven Schulman, were indicted in mid-May 2006 for paying millions of dollars in kickbacks to clients to serve as plaintiffs. Brooke Masters of The Washington Post reports that the case breaks a familiar trend of corporate defendants cooperating with government prosecutors “such as Computer Associates International Inc., accounting firm KPMG LLP and drugmaker Bristol-Myers Squibb Co., agreeing not to press criminal charges in exchange for sweeping management changes, large financial penalties and help putting individual employees behind bars.”

Masters reports that simply indicted the firm could run it out of business, and explains why the indictment has reopened the debate on whether the Justice Department should indict companies and the basis for concerns that the indictment may have been politically motivated.

Regardless of the motivation for the indictment, if the allegations are true then the firm’s conduct was illegal and the practice had to be stopped. More details may be found in Brooke Masters’ article, “A Law Firm Under Pressure,” printed May 25, 2006, in The Washington Post.

Posted In: Class Actions In The News

Class action plaintiff firm Milberg Weiss Bershad & Schulman LLP and two of the firm’s top partners, David Bershad and Steven Schulman, were indicted in mid-May 2006 for paying millions of dollars in kickbacks to clients to serve as plaintiffs. Lynnley Browning of the New York Times reports that one of the lead plaintiffs in the class action against accounting firm KPMG claims “that he was offered a financial incentive to serve as plaintiff.”

Settlements in class action cases require court approval, and a proposed $153 million settlement in the KPMG action was to be heard by the federal judge on May 26, 2006. For more information, please see Lynnley Browning’s article, “Plaintiff Says Incentives Were Offered in KPMG Case,” printed May 26, 2006, in The New York Times.

Posted In: Class Actions In The News

CAFA (Class Action Fairness Act of 2005) Places Burden of Proof on Plaintiff to Establish Local Controversy Exception to Removal Eleventh Circuit Holds

CAFA contains several provisions that still require judicial interpretation. On May 22, 2006, the Eleventh Circuit considered as a matter of first impression for any Circuit Court of Appeals “the specific question of which party should bear the burden of proof on CAFA’s local controversy exception.” Evans v. Walter Industries, Inc., 449 F.3d 1159, 1164 (11th Cir. 2006). Evans "hold[s] that the plaintiffs bear the burden of proving the local controversy exception," id., at 1165 (italics added). The Court noted that this "places the burden on the party most capable of bearing it" because "plaintiffs have defined the class and have better access to information about the scope and composition of the plaintiff class." Id., at 1164 n.3.

The Eleventh Circuit analyzed the evidence presented to the district court and found it wholly inadequate to establish a local controversy. See Evans, at 1164-68. The court rejected the purported showing that two-thirds of the plaintiff class are Alabama citizens, and rejected further that the token Alabama corporation was a "significant defendant" within the meaning of CAFA. In so doing, Evans appears to have adopted (or at the least to have applied) the test "that a class seeks 'significant relief' against a defendant when the relief sought against that defendant is a significant portion of the entire relief sought by the class." Id., at 1167 (citations omitted).

NOTE: The Eleventh Circuit expressly noted that its opinion concerns only the local controversy exception in 28 U.S.C. § 1332(d)(4)(A), and does not reach the question of the local controversy exception in 28 U.S.C. § 1332(d)(4)(B). Evans, at 1163 n.2.

Posted In: Class Action Fairness Act (CAFA), Class Actions In The News, Removal & Remand, Class Action Court Decisions

When defending against a class action, it is important to understand that special rules apply under Class Action Fairness Act (CAFA) concerning the appealability of remand orders. Whether a federal district court order remanding an action to state court may be reviewed on appeal is important to any defendant, but special rules apply if the action has been removed to federal court under the Class Action Fairness Act of 2005. Because the focus of this article is on appellate review of district orders granting motions to remand a lawsuit to state court a case removed under CAFA, removal and remand are not discussed here; discussions of each may be found in separate articles, as is a discussion concerning appellate review of remand orders in non-CAFA cases.

Put simply, appellate review is available for remand orders in cases governed by the Class Action Fairness Act of 2005. Under CAFA, Congress expressly provided that “notwithstanding section 1447(d), a court of appeals may accept an appeal from an order of a district court granting or denying a motion to remand a class action to the State court from which it was removed if application is made to the court of appeals not less than 7 days after entry of the order.” 28 U.S.C. § 1453(c)(1). A defendant must be wary, however, of the quick fuse on filing its notice of appeal: by its terms, the 7-day time limit runs from “entry of the order,” rather than from “notice of entry of the order.”

CAFA also provides for expedited appellate review of remand orders: “If the court of appeals accepts an appeal under paragraph (1), the court shall complete all action on such appeal, including rendering judgment, not later than 60 days after the date on which such appeal was filed, unless an extension is granted under paragraph (3).” 28 U.S.C. § 1453(c)(2) (italics added). The extensions are limited to either (1) “any period of time” agreed upon by all parties, 28 U.S.C. § 1453(c)(3)(A), or (2) no more than 10 days, 28 U.S.C. § 1453(c)(3)(B). If the Circuit Court fails to rule within the statutory time period, then the appeal is deemed denied. 28 U.S.C. § 1453(c)(4).

Posted In: Class Action Fairness Act (CAFA)

Part III Considerations Regarding Removal to Federal Court

A lender that must defend itself against a class action alleging violations of RESPA may benefit from removing the case to federal court. A defendant may remove a case to federal court if there is any “separate and independent” claim subject to federal question jurisdiction: “A federal court has removal jurisdiction if the plaintiff's claims are either exclusively federal or there is a separate and independent federal question. 28 U.S.C. § 1441. In order for a defendant to remove, the federal claims must appear on the face of plaintiff's well-pleaded complaint. Tingey v. Pixley-Richards West, Inc., 953 F.2d 1124, 1129 (9th Cir. 1992).” Lyons v. Alaska Teamsters Emplr. Serv. Corp., 188 F.3d 1170, 1171 (9th Cir. 1999). A separate article considers removal under CAFA (Class Action Fairness Act of 2005).

In federal court, Rule 23 of the Federal Rules of Civil Procedure governs class actions. Federal courts examine the numerosity, commonality, and typicality of the plaintiff’s claims. The courts also consider whether separate lawsuits would create a risk of inconsistent adjudications that would require the defendant comply with incompatible directions. In state court, however, California Code of Civil Procedure section 382 governs class actions. The “community of interest” requirement for class certification in state court consists of three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. While the standards may appear to be substantively identical, they are quite different in practice. In my opinion, the federal law governing class actions is much better developed than California state law. It is also my opinion that a corporate defendant is well served to remove a case to federal court whenever possible.

Once removed, the federal court may, in its discretion, adjudicate the entire case, including state claims that could not be adjudicated under the federal court’s original jurisdiction. 28 U.S.C. § 1441(c). Removal is proper even if the plaintiff’ federal claim is meritless, see Barraclough v. ADP Auto. Claims Services, 818 F. Supp. 1310, 1312 (N.D. Cal. 1993), and removal is proper even if the relief the plaintiff seeks is unavailable under the federal claim, see Caterpillar Inc. v. Williams, 482 U.S. 386, 391, n.4 (1987).

With respect to RESPA claims, RESPA requires a lender to provide a HUD-1 or HUD-1A settlement statement to “clearly itemize all charges imposed upon the Borrower,” and that this settlement statement is required by 12 U.S.C. § 2603(a). A lender is required also to provide borrowers with “a Good Faith Estimate” (the “GFE”) to include “estimates of the amounts or ranges of all settlement costs likely to be incurred at the closing,” and the GFE is required by 12 U.S.C. § 2604(c) and Regulation X, 24 C.F.R. section 3500.7(a). Thus, if the Complaint alleges that the lender surprised borrowers with additional closing costs, then the basis of the lawsuit is an alleged violation of federal law: if the lender had disclosed properly all closing costs as required by RESPA and Regulation X, then the plaintiff would not have been injured.

Continue reading "Considerations Regarding Removal to Federal Court: Defense Of Class Action Claims Alleging RESPA Violations Part III" »

Posted In: RESPA/TILA Class Actions

Defending Class Action Claims Alleging RESPA Violations

Part II Federal Court versus State Court Jurisdiction

Even though RESPA is a federal statute, many class action lawsuits against lenders alleging RESPA violations are filed in state court. Defending class action RESPA claims requires a careful analysis of the specific statute(s) at issue, as this will dictate whether the actioin may be removed to federal court. While RESPA grants concurrent jurisdiction to state courts as to certain matters, Congress expressly limited concurrent jurisdiction to those sections of RESPA governed only by sections 2605, 2607 and 2608. 12 U.S.C. § 2614. Otherwise, federal jurisdiction is exclusive.

That Congress afforded state courts concurrent jurisdiction only over certain portions of RESPA and retained exclusive federal court jurisdiction over the balance of RESPA is not unique. For example, as the Ninth Circuit has held, “Bankruptcy courts have exclusive jurisdiction over nondischargeability actions brought pursuant to 11 U.S.C. § 523(a)(2), (4), (6) and (15),” Rein v. Providian Fin. Corp., 270 F.3d 895, 904 (9th Cir. 2001) (citations omitted) (italics added), but “Bankruptcy courts and state courts have concurrent jurisdiction over all [other] nondischargeability actions,” id., at n.15 (italics added). “For example, there is concurrent state and federal jurisdiction over § 523(a)(5) nondischargeability actions,” id., at 904 n.15 (citations omitted) (italics added), but a creditor could not seek relief from stay and pursue in state court a nondischargeability claim “with regard to its § 523(a)(2) claims because state courts lack jurisdiction to adjudicate § 523(a)(2) actions,” id., at 904 (italics added).

Plaintiffs’ alleged violations of 12 U.S.C. sections 2603 and 2604 must be heard in federal court because state courts lack jurisdiction to consider them. To hold otherwise would be to conclude that Congress idly specified limitations in 12 U.S.C. § 2614 on the scope of concurrent jurisdiction when it intended that no such limitations exist.

Continue reading "Federal Court versus State Court Jurisdiction: Defense Of Class Action Claims Alleging RESPA Violations Part II" »

Posted In: RESPA/TILA Class Actions

Defending Class Action Claims Alleging RESPA Violations

Part I Overview of Statute and Summary of Jurisidction

Many lenders have had to defend themselves against class actions alleging violations of RESPA. In simplest terms, the Real Estate Settlement Procedures Act (“RESPA”), 12 U.S.C. sections 2601 et seq., and Regulation X (24 C.F.R. sections 3500 et seq.) governs disclosures to borrowers of the closing costs associated with residential loan transactions. RESPA is a “consumer protection” statute, enacted in 1974 to protect borrowers whose loans will be secured by a mortgage against one-to-four family residential property. It serves two main purposes. First, it serves to educate the consumer-borrower about the costs of settlement services (that is, the costs associated with borrowing money). Second, it serves to eliminate “unearned fees,” such as kickbacks or referral fees, as such fees increase the cost of the loan to the borrower.

RESPA requires that both mortgage brokers and lenders make certain disclosures to borrowers at the time the borrower applies for the loan. Specifically, RESPA requires a lender to provide a HUD-1 or HUD-1A settlement statement to “clearly itemize all charges imposed upon the borrower,” 12 U.S.C. § 2603(a). The HUD-1 Settlement Statement itemizes for the borrower the actual settlement costs of the loan transaction. A lender is required also to provide borrowers with “a Good Faith Estimate” (the “GFE”) to include “a good faith estimate of the amount or range of charges for specific settlement services the borrower is likely to incur” at the closing, 12 U.S.C. § 2604(c) and 24 C.F.R. § 3500.7(a). (Other RESPA requirements are discussed in a separate article.)

Federal courts have original jurisdiction in cases involving RESPA violations, see Dominguez v. Alliance Mtg. Co., 226 F. Supp. 2d 907, 914 (N.D. Ill. 2002), and RESPA claims are properly subject to removal, Sicinski v. Reliance Funding Corp., 461 F. Supp. 649, 650-51 (S.D. N.Y. 1978). Unfortunately, case law discussing state versus federal court jurisdiction over RESPA claims often glosses over critical statutory differences enacted by Congress. More specifically, while Congress provided for concurrent state and federal jurisdiction over certain portions of REPSA, federal courts have exclusive jurisdiction over other RESPA violations. 12 U.S.C. § 2614.

For example, the requirement that consumers be timely and accurately informed of the closing costs associated with residential loans is based on federal law. “The Congress finds that significant reforms in the real estate settlement process are needed to insure that consumers throughout the Nation are provided with greater and more timely information on the nature and costs of the settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices that have developed in some areas of the country.” 12 U.S.C. § 2601(a).

In order to redress these concerns, RESPA requires a lender to provide a HUD-1 or HUD-1A settlement statement to “clearly itemize all charges imposed upon the borrower,” 12 U.S.C. § 2603(a). Federal law further requires a lender to provide borrowers with “a Good Faith Estimate” (the “GFE”) that includes “a good faith estimate of the amount or range of charges for specific settlement services the borrower is likely to incur” at the closing, 12 U.S.C. § 2604(c) and 24 C.F.R. § 3500.7(a). The failure to timely or accurately disclose to a borrower the closing costs likely to be incurred in connection with a residential loan transaction violates RESPA.

RESPA requires a lender to provide a HUD-1 or HUD-1A settlement statement to “clearly itemize all charges imposed upon the Borrower,” and that this settlement statement is required by 12 U.S.C. § 2603(a). A lender is required also to provide borrowers with “a Good Faith Estimate” (the “GFE”) to include “estimates of the amounts or ranges of all settlement costs likely to be incurred at the closing,” and the GFE is required by 12 U.S.C. § 2604(c) and Regulation X, 24 C.F.R. section 3500.7(a).

Thus, if, for example, a plaintiff alleges that the lender surprised borrowers with unexpected closing costs, or otherwise failed to disclose certain closing costs not expressly referenced in a HUD-1 or HUD-1A, then the action is based exclusively on federal law. Put simply, under such circumstances, the bottom line is that if the lender had disclosed properly all closing costs as required by RESPA and Regulation X, then the plaintiff would not have been injured. Such a claim, then, is derived entirely from alleged violations of federal law viz., RESPA and Regulation X.

It is well settled that RESPA claims are subject to removal. Sicinski v. Reliance Funding Corp., 461 F. Supp. 649, 650-51 (S.D. N.Y. 1978). Indeed, federal courts have original jurisdiction in cases involving alleged RESPA violations. See Dominguez v. Alliance, 226 F.Supp. 2d at 914 (“Our jurisdiction . . . was predicated on the federal RESPA claims. . . . Having disposed of all claims over which we had original jurisdiction, we decline to exercise our supplemental jurisdiction over the remaining state law claim.” (Italics added.)). Accord Ploog v. Homeside Lending, Inc.¸ 209 F. Supp. 2d 863, 867 (N.D. Ill. 2002) (RESPA claim “only claim over which the Court has original jurisdiction”); DeLeon v. Beneficial Const. Co., 998 F. Supp. 859, 867 (N.D. Ill. 1998).

A lender must be careful to analyze whether the plaintiff’s right to relief depends on the resolution of a substantial, disputed federal question such as whether the lender allegedly violated RESPA and Regulation X. If the Complaint does not advance independent state law claims but, rather, posits theories that are wholly derivative of federal law, then removal may be proper. Moreover, lenders must remember that Congress did not grant concurrent jurisdiction to state courts for all alleged RESPA violations, and must analyze whether jurisdiction over the claims in a complaint is exclusively federal.

Posted In: RESPA/TILA Class Actions

Class action plaintiff firm Milberg Weiss Bershad & Schulman LLP learned on May 18, 2006, that it had been indicted by federal prosecutors in Los Angeles for paying more than $11 million in kickbacks to clients to serve as plaintiffs. The 102-page, 20-count criminal indictment also names two of the firm’s top partners, David Bershad and Steven Schulman. Nathan Koppel and Peter Lattman of the Wall Street Journal reported on the fallout from the indictment, including “the Ohio attorney general firing the powerhouse law firm as counsel in a class-action case.”

Koppel and Lattman report that the indictment alleges the firm “made the alleged kickbacks to gain a strategic edge in the pitched competition to be lead counsel in class actions.” The problem is simple, and concisely framed by the Wall Street Journal: “It is illegal for lead plaintiffs to receive more in compensation than other members of a class.”

The article explains that this could be just the beginning of the end: “Many legal experts say a torrent of challenges to the firm’s role as counsel in class-action cases could threaten the firm’s existence.” The potential fallout from the indictment is thoroughly discussed in Koppel’s and Lattman’s article, “Milberg Dealt Blow as Indictment Fallout Grows,” printed May 20, 2006, in The Wall Street Journal.

Posted In: Class Actions In The News

District Court Properly Granted Defense Motion for Judgment on the Pleadings in Class Action Because no Private Right of Action Exists Under Federal Real Estate Settlement Practices Act (RESPA) Eleventh Circuit Holds

On May 26, 2006, the Court of Appeals for the Eleventh Circuit affirmed a judgment entered on a motion for judgment on the pleadings in a putative class action alleging RESPA (Real Estate Settlement Practices Act) violations on the ground that no private right of action exists under Section 10 of RESPA. Hardy v. Regions Mortgage, Inc., ___ F.3d ___, 2006 WL 1452666 (11^th Cir. 2006). Separate articles discuss various issues presented by claims under RESPA.

In Hardy, plaintiffs refinanced their home with Regions Mortgage in 1996 and later received from Cendant Corporation about a “Shoppers Advantage” program that, for $5 a month, entitled plaintiffs to discounts from certain retailers. Plaintiffs joined the program and authorized Regions to add the $5 monthly charge to their mortgage payment. Time passed, and plaintiffs forgot about the Shoppers Advantage program. In 2003, however, they noticed that the $5 monthly fee “had been paid out of their escrow account but was not listed on their mortgage statements.” Plaintiffs filed a putative class action alleging that Regions had violated RESPA by failing to include the $5 fee on their escrow account statement, and had conspired with Cendant to violate RESPA. The district court granted judgment on the pleadings because the complaint alleged a violation of Section 10 of RESPA, for which no private right of action exists, rather than Section 6 of RESPA, which provides for certain private rights of action.

The Eleventh Circuit affirmed. The Hardy court explained that Section6 of RESPA requires that federally related mortgage lenders disclose that “the loan may be assigned, sold or transferred” during its life, and provides for a private right of action for noncompliance. Section 10 of RESPA, however, requires lenders to “provide annual escrow account statements that clearly itemize ‘the amount of the borrower’s current monthly payment . . . the total amount paid out of the escrow account during the period for taxes, insurance premiums, and other charges . . ., and the balance in the escrow account at the conclusion of the period.’” However, Congress did not provide for private rights of action for noncompliance; rather, “the Secretary shall assess . . . a civil penalty” instead. Because plaintiffs alleged a violation of Section 10 of RESPA, and because there is no private right of action under Section 10, the Eleventh Circuit affirmed the judgment.

NOTE: Because it was unnecessary, the Eleventh Circuit did not discuss the fact that Congress did not afford private rights of action for every conceivable alleged violation of Section 6.

Posted In: Class Action Court Decisions, RESPA/TILA Class Actions