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Amici Case Summaries

CBA frequently appears as an amicus curiae ("friend of the court") or a party in litigation where the issues in dispute are of widespread importance or concern to the banking industry.  The following is a brief list of cases CBA has recently been involved with on behalf of the industry.

 

American Express Company v. Italian Colors Restaurant [Arbitration Issue]
  • June 26, 2009, CBA filed a Brief of Amici Curiae in support of American Express' Petition for Writ of Certiorari to the Supreme Court of the United States.  The issue regarded the legitimacy of arbitration agreements.  CBA and Amici argued The United States Court of Appeals for the Second Circuit fundamentally misapplied the intent of the Federal Arbitration Act and furthermore adopted a hostile approach to the individual arbitration of disputes arising from or relating to contractual mandates.

Final Disposition

  • To date, the petition is pending. The Court has asked for the views of the United States Solicitor General.
McCoy v. Chase Manhattan Bank [Disclosure Issue]
  • May 7, 2009, CBA filed Motion for Leave to File Brief of Amici Curiae to the U.S. Court of Appeals for the Ninth Circuit, in support of Chase Manhattan Bank.  CBA also sent an accompanying Brief of Amici Curiae in support of Chase's Petition for Panel Rehearing and Rehearing En Banc.  The issue was one of disclosure and a card issuer's responsibility to provide additional notice in the event of an increase in interest rate based upon the occurrence of a specific event, even if the initial cardholder agreement conveyed the relevant information and consequences.   The CBA and Amici argued that a "contemporaneous notice" requirement would contradict Regulation Z's timing of disclosures and notice requirements, and deference should be given to regulatory action and interpretation.

Final Disposition

  • The Court denied Chase's Petition for Panel Rehearing and Rehearing En Banc.  Chase Manhattan Bank has since filed Petition for Writ of Certiorari to the Supreme Court of the United States and is awaiting an answer. (Per David Moon, counsel for Amici Curiae)

Vallies v. Sky Bank [TILA Disclosures / Detrimental Reliance / Damages Issue]

  • May 5, 2009, CBA filed Brief of Amici Curiae to the U.S. Court of Appeals for the Third Circuit, in support of Sky Bank and affirmance of an Order of the U.S. District Court for the Western District of Pennsylvania.  The issue regarded Truth-In-Lending Act (TILA) disclosures, actual damages, and detrimental reliance, specifically whether the "actual damage" provision of TILA requires detrimental reliance by a consumer in order to realize the damages.  CBA and Amici argued that because of legislative intent the district court correctly held, "that the ‘actual damage' provision of the TILA's civil liability section necessarily requires a showing of detrimental reliance." 

Final Disposition

  • The Third Circuit opinion was filed on December 31, 2009, siding with Appellee Sky Bank and Amici, holding that TILA requires a plaintiff to prove detrimental reliance in order to recover actual damages for alleged disclosure violations.  Though the Court noted the statute was unambiguous on this point, it examined the legislative history, the subject of the amicus brief, and concluded that it fully supported its holding.  The decision is in line with others which have recognized the inequity of exposing lenders to potentially ruinous liability for purely technical TILA disclosure violations that cause no real or actual damage to anyone. 

Cuomo v. Clearing House Association, LL.C. and Office of the Comptroller of the Currency [Preemption Issue]

  • April 1, 2009, CBA filed a Brief of Amici Curiae to the Supreme Court of the United States in support of Clearing House Association and Office of the Comptroller of the Currency.  The issue was one of preemption and a state's ability to examine and regulate a national bank's exercise of its federally authorized banking powers.  CBA and Amici argued that it was Congress' intent to "displace all state laws that would interfere with the exercise of national banks federally authorized banking powers." 

In sum, CBA and Amici argued that the OCC's regulation to forbid states from exercising "visitorial powers," as granted by the language of the National Bank Act, preempts any State attempt to "investigate and enforce actions regarding the exercise of national banks' lending powers."

Final Disposition

  • June 29, 2009, in a 5-4 decision, The Court held in favor of the Petitioner Cuomo and the State of New York.  Though the state could not investigate and enforce actions regarding the exercise of national banks' lending powers in the role of "sovereign-as-supervisor", it could do so in the role of "sovereign-as-law-enforcer" in order to prosecute enforcement actions in state court.

Litman v. Cellco Partners d/b/a Verizon Wireless [Arbitration / Pre-Emption Issue]

  • February 26, 2009, CBA filed Brief of Amici Curiae to the U.S. Court of Appeals for the Third Circuit, in support of Appellee Cellco Partnership d/b/a Verizon Wireless and affirmance of an order of the U.S. District Court of New Jersey, Trenton.  The appeal stemmed from the Third Circuit's February 24, 2009 opinion in Homa v. American Express Co., No. 07-2921, 2009 WL 440912 (3d Cir. Feb. 24, 2009) (holding that the Federal Arbitration Act does not preempt the opinion of the New Jersey Supreme Court in Muhammad v. County Bank, 912 A.2d 88 [N.J. 2006]).  Counsel for Litman filed a motion for summary action in which he argued that Homa was dispositive.  The issue became whether there is a principled basis for distinguishing Homa from the earlier Third Circuit opinion in Gay v. CreditInform, 511 F.3d 369 (3d Cir. 2007) (which concluded that the FAA preempted the Pennsylvania Superior Court opinions in Thibodeau v. Comcast Corp.,Lytle v. CitiFinancial Servs., 810 A.2d 643 (Pa. Super. 2002)).  CBA and Amici argued that the district court correctly held, "that the FAA preempts the rule established by Muhammad that, in the context of a standard-form small-dollar retail contract, the parties may not select individual arbitration over class-action proceedings."  912 A.2d 874 (Pa. Super. 2006), and

Final Disposition

  • Oral arguments were held November 5, 2009. Parties are awaiting the Court's decision.

Alexander v. Wells Fargo [Arbitration Issue]

                (Coleman v. American General Financial Services)  

  • May 22, 2008, CBA filed a Memorandum of Amici Curiae in Support of American General Financial Services' petition to the Supreme Court of Ohio to accept jurisdiction.  The issue regarded the legitimacy of arbitration agreements.  CBA and Amici argued for a reversal of the Eighth District Court of Ohio's holding regarding arbitration agreements and their benefit, scope, enforceability, and applicability to statutory claims.  CBA and Amici supported the position that, because of their benefit to consumers, arbitration agreements should be enforced and the scope of the agreement should be construed liberally in favor of arbitration.          

Final Disposition

  • The Supreme Court of Ohio granted review
  • November 21, 2008, CBA filed a Brief of Amici Curiae in Support of Wells Fargo Financial Ohio 1, Inc. (a case consolidated with Coleman v. American General Financial Services)
Final Disposition
  • On consolidated appeal, the Supreme Court of Ohio reversed and remained the Eighth District Court's decision.  The Court agreed with Wells Fargo and their Amici and upheld the arbitration agreement.

Cross Country Bank v. New York [Disclosure Requirements / Pre-Emption Issue]

  • October 28, 2008, CBA filed a Brief of Amici Curiae in support of Cross Country Bank's Petition for Writ of Certiorari to the Supreme Court of the United States.  The issue was one of preemption and whether the state of New York could attempt to regulate credit card disclosures, based on state statutes designed to address unfair and deceptive practices, when Congress specifically delegated the task of setting national standards for credit card solicitation disclosures to the Federal Reserve Board through the Truth-In-Lending Act (TILA).  CBA and Amici argued that Congress comprehensively preempted all state law in the area of disclosure of information in any credit or charge card application or solicitation via rulemaking by the Federal Reserve.  Therefore, the New York Court of Appeals' decision to uphold the New York state law regarding unfair and deceptive practice is in direct conflict with the Supremacy Clause.

Final Disposition

  • January 21, 2009, the Petition for Writ of Certiorari was denied.

Vaden v. Discover Bank [Arbitration / Jurisdiction Issues]

  • August 8, 2008, CBA filed a Brief of Amici Curiae to the Supreme Court of the United States in support of Discover Bank.  The two issues presented to the Court regarded federal-question jurisdiction and its relationship to compulsion of arbitration pursuant to Section 4 of the Federal Arbitration Act (FAA), regardless of jurisdiction over the subject matter of the case arising out of the parties' underlying controversy, absent an arbitration agreement.  CBA and Amici argued that when there is a Section 4 FAA cause of action, there will arise federal court jurisdiction, subject to clear and limited exceptions.

Final Disposition

  • March 9, 2009, in a 5-4 decision, the Supreme Court of the United States held that a federal court may look through a petition to compel arbitration to determine whether it has jurisdiction over the petition and furthermore that the District Court lacked jurisdiction to entertain petition to compel arbitration.

Wilborn v. Bank One Corporation [Mortgage Modification and Accompanying Attorney's Fee Issue]

  • December 4, 2007, CBA filed a Brief of Amici Curiae to the Supreme Court of Ohio, in support of Bank One Corporation.  The issue concerned the collection of attorney's fees as a condition of a mortgage reinstatement, mortgage modification, or an alternate agreement to work out a mortgage default by means other than foreclosure litigation.  CBA and Amici argued that the payment of reasonable expenses, including reasonable attorney's fees, by the borrower, should be allowed if called for by a provision in the mortgage loan contract, mortgage modification agreement, or any other contractual agreement that gives a defaulting borrower the right to cure a default and compel the dismissal of a foreclosure action.

Final Disposition

  • February 3, 2009, The Supreme Court of Ohio found in favor of Bank One Corporation's position, holding "that a provision in a residential-mortgage contract requiring a defaulting borrower to pay a lender's reasonable attorney fees as a condition of terminating pending lender-initiated foreclosure proceedings on a defaulted loan and reinstating the loan is not contrary to Ohio statutory or decisional law or against Ohio public policy."  Therefore, contractually requiring the borrower to pay the lender's attorney fees was acceptable.
Graham v. Dunkley, and Nilt Inc. [Pre-Emption Issue]
  • April 17, 2007, CBA filed a Brief of Amici Curiae to the New York Supreme Court Appellate Division-Second Department, in support of defendants Rayon Dunkley and Nilt, Inc.  The issue  concerned whether the lessor of a vehicle could be vicariously liable for an accident caused by the lessee of the vehicle, when New York state law calls for the lessor's vicarious liability and the "Graves Amendment" (49 U.S.C. § 30106) does not.  In sum, does the federal law preempt the state law?  CBA and Amici argued that the New York state law was preempted by federal law, and therefore defendant Nilt Inc. was not vicariously liable for the accident caused by the lessee.

Final Disposition

  • February 1, 2008, the Court found in favor of defendant Nilt Inc.'s position, holding that "Congress had the authority, pursuant to the Commerce Clause, to enact the Graves Amendment, thereby preempting conflicting New York law."  And, furthermore, "actions against rental and leasing companies based solely on vicarious liability may no longer be maintained."

Andrews v. Chevy Chase Bank [Class Action / TILA Issue]

  • April 4, 2007, CBA filed a Brief of Amici Curiae to the U.S. Court of Appeals for the Seventh Circuit, in support of Chevy Chase Bank and appeal from an order of the U.S. District Court for the Eastern District of Wisconsin.  The issue considered whether the Truth-In-Lending Act (TILA) allows for rescission of mortgages on a class action basis. CBA and Amici argued that rescission of a mortgage is an individual remedy that should not be grouped into class action under TILA.

Final Disposition

  • September 24, 2008, the Court sided with Chevy Chase Bank and Amici and held "as a matter of law that a class action for the rescission remedy under TILA may not be maintained."

Beneficial Corporation v. Christ [TILA Disclosure Violations and Available Remedies Issue]

  • March 19, 2007, CBA filed a Brief of Amici Curiae to the U.S. Court of Appeals for the Eleventh Circuit, in support of Beneficial Corporation.  Two issues were presented.  The first regarded whether the Truth-In-Lending Act (TILA), through its silence on the matter, provides for private injunctive relief, which in turn would lead to the availability of a certified class action suit.  The second issue was whether plaintiffs were allowed restitution or disgorgement under the Declaratory Judgment Act.  CBA and Amici argued that actual damages arising out of TILA disclosure violations are not recoverable on a class-wide basis.  And furthermore, courts have rejected attempts by consumer litigants to invoke equitable unjust enrichment remedies (such as restitution or disgorgement) arising out of TILA disclosure violations.

Final Disposition

  • October 28, 2008, the Court vacated the district court's certification of an injunctive class and vacated the award of injunctive relief and "restitution and disgorgement."  The Court held in favor of Beneficial Corporation

Pacific Capital Bank v. State of Connecticut [Pre-Emption Issue]

  • February 14, 2007, CBA filed a Brief of Amici Curiae to the U.S. Court of Appeals for the Second Circuit, in support of Pacific Capital Bank.  The issue concerns preemption and whether national banks can be subjected to state regulation and control of certain loans (Refund Anticipation Loans), when the only viable means of offering those loans to the public is with the assistance of tax preparers.  CBA and Amici argued that in the area of national banking, pre-emption is the rule rather than the exception, and that the National Banking Act has broad preemptive reach which precludes States from regulating the banking operations of national banks.

Final Disposition

  • September 12, 2008, the U.S. Court of Appeals for the Second Circuit held for Pacific Capital Bank, concluding that the Connecticut statute at issue was preempted by the National Banking Act.
Safeco Insurance v. GEICO General Insurance Co. v. Edo [Notice Requirement Issue]
  • Consumers brought class actions against insurers.  U.S. District Court for District of Oregon granted summary judgment for insurers in both actions, and consumers appealed.  Appeals were consolidated.  Appellate court reversed and remanded.  November 13, 2006, CBA filed a Brief of Amici Curiae in support of Safeco and GEICO's Petitions for Writ of Certiorari to the Supreme Court of the United States.  The issue concerned whether "willful failure", as a standard of performance, covers "reckless disregard", in the context of notice obligations pertaining to "adverse actions" under The Fair Credit Reporting Act (FCRA).  CBA and Amici argued that a "willful failure" or "willful violation" of a FCRA requirement requires actual knowledge on the part of the defendant that the conduct violated the FCRA.  In sum, they argued that "willful failure" should not cover "reckless disregard" because of the lack of intent element in a "reckless disregard" standard.

CBA and Amici also argued that the "adverse action" trigger of FCRA notice requirements should not extend to every insurance customer who does not receive the best coverage at the lowest possible rate, specifically during initial rates charged. 

Final Disposition

  • June 4, 2007, the Court decided that "the Court of Appeals correctly held that reckless disregard of a requirement of FCRA would qualify as a willful violation within the meaning of the statute."  And, initial rates charged for new insurance policies may be "adverse actions" under FCRA.  However, the Court further found that "GEICO did not violate the statute, and that while Safeco might have, it did not act recklessly."  Therefore both Safeco and GEICO were safe from liability.
Watters v. Wachovia Bank [Pre-Emption Issue]
  • November 3, 2006, CBA filed a Brief of Amici Curiae to the Supreme Court of the United States in support of Wachovia Bank.  The issue was one of pre-emption.  The question presented to the Court was whether a national bank's exercise of federally authorized powers, which would indisputably be immune from state control if conducted in the bank itself, can be subjected to state control simply because the bank elects to exercise those powers through a state-chartered subsidiary corporation.  CBA and Amici argued that in the area of national banking, pre-emption is the rule rather than the exception, and that the National Banking Act has broad preemptive reach which precludes States from regulating the banking operations of national banks.

Final Disposition

  • April 17, 2007, the Court holding for Wachovia Bank, concluded that under the National Bank Act, a national bank's mortgage business, whether conducted by the bank itself or through the bank's operating subsidiary, is subject to superintendence of the Office of the Comptroller (OCC), and not to the licensing, reporting, and visitorial regimes of the several states in which the subsidiary operates. 

McKenna et al. v. First Horizon Home Loan [Class Action / TILA Issue]

  • November 2006, CBA filed Brief of Amici Curiae to the U.S. Court of Appeals for the First Circuit, in support of First Horizon Home Loan Corporation.  The issue questioned whether under the Truth-In-Lending Act (TILA), and thus the Massachusetts Consumer Credit Cost Disclosure Act (MCCCDA), class action suits were maintainable for claims focusing on rescission of mortgage loans.  CBA and Amici argued that Congress did not intend to permit the certification of rescission classes and furthermore, rescission of a mortgage is an individual remedy that should not be grouped into class action under TILA. 

Final Disposition

  • January 29, 2007, the court held "that class certification is unavailable as a matter of law for TILA rescission claims (including declaratory rescission claims)."  Given the unavailability of class-action treatment for rescission claims (including declaratory rescission claims) under TILA and, thus, under the MCCCDA, the court reversed the district court's class certification decision, vacated the class certification order, and remanded the case for further proceedings consistent with the opinion. 

Putkowski v. Irwin Home Equity [Prescreened Solicitation Issue]

  • September 20, 2006, CBA filed a Brief of Amici Curiae in support of Irwin Home Equity.  The issue concerned prescreened solicitations offering credit to consumers and their Fair Credit Reporting Act (FCRA) requirements regarding specificity towards a particular borrower.  CBA and Amici argued that in the FCRA, Congress provided that solicitations may contain highly conditional offers, subject to a subsequent application and detailed post-solicitation underwriting and verification.  To require a more specified solicitation, catering to a specific borrower, would substantially alter the way such solicitations are made and possibly end such solicitations all together. 

Final Disposition

  • March 23, 2006, the U.S. District Court for the Northern District of California granted Irwin Home Equity's Motion to Dismiss, and dismissed Putkowski's complaint with prejudice.  The court found the FCRA did not support plaintiff's suggestion that a firm offer of credit could not contain a range of credit or interest rates, or that it must be of sufficient "value" when judged by a later arbiter.  The court also found that 15 U.S.C.S. § 1681m(h)(8) of FCRA expressly provided that there was no private right of action for violations of § 1681m.  Putkowski appealed and CBA filed Brief of Amici Curiae.  [KQ1]

Levine v. First National Bank of Commerce [Due-on-Sale Clause and Pre-emption Issue]

  • July 27, 2006, CBA filed Brief of Amici Curiae to the Supreme Court of Louisiana, in support of First National Bank of Commerce.  The issue concerned whether a bond for deed is considered a "transfer of interest" to trigger a due-on-sale clause promulgated by the Federal Home Loan Bank Board under 12 U.S.C §1701j-3(a)(1).  CBA and Amici argued that a bond for deed transfers interest in the property and that the Garn-St. Germain Act authorizes due-on-sale clause enforcement to apply to that particular type of transfer of interest. 

Final Disposition

  • December 15, 2006, the Supreme Court of Louisiana agreed with First National Band of Commerce, holding that a bond for deed transferred an interest in the subject property and, thus, triggered the due-on-sale clause in the mortgage.  A sale of the entirety of the mortgaged property was not necessary to trigger the due-on-sale clause in the mortgage.  And, furthermore, federal law explicitly preempted state law regarding the effect of a bond for deed on a due-on-sale clause in the mortgage. February 16, 2007, petition for re-hearing was denied. 

Pacific Shore Funding v. Lozo [TILA Damages Issue]

  • June 23, 2006, CBA submitted a letter to the Supreme Court of California in support of Pacific Shore Funding's petition for review and/or de-publication of the Court of Appeals' decision.  The issue concerned whether "paid-off" loans are eligible for rescission under the Truth in Lending Act (TILA).  CBA and Amici argued that Congress was clear in its intent to limit damages under TILA to amounts that are proportional to the infraction.  To otherwise allow consumers, who have paid off their loans, to exercise the right of rescission would result in a windfall for the consumer and go against Congressional intent.

Final Disposition

  • July 19, 2006, the Supreme Court of California denied Pacific Shore Funding's petition for review and/or de-publication.

Barrett v. JP Morgan Chase Bank [TILA Damages Issue]

  • May 16, 2006, CBA filed Motion for Leave to Appear as Amici Curiae with accompanying Brief of Amici Curiae to the U.S. Court of Appeals for the Sixth Circuit, in support of JP Morgan Chase Bank's petition for rehearing and suggestion for rehearing en banc.  The issue concerned whether "paid off" loans are eligible for rescission under the Truth-in-Lending Act (TILA).  CBA and Amici argued that Congress was clear in its intent to limit damages under TILA to amounts that are proportional to the infraction.  To otherwise allow consumers, who have paid off their loans, to exercise the right of rescission would result in a windfall for the consumer and go against Congressional intent.

Final Disposition

  • September 15, 2006, the U.S. Court of Appeals for the Sixth Circuit denied the petition for rehearing and rehearing en banc.
Sally v. Option One Mortgage Corp. [Mandatory Arbitration Agreement Issue]
  • April 10, 2006, CBA filed a Brief of Amici Curiae to the Supreme Court of Pennsylvania in support of Option One Mortgage Corp.  The issue presented to the court and certified by the U.S. Court of Appeals for the Third Circuit questioned whether an arbitration agreement, consummated in connection with a residential mortgage loan, which exempts from binding arbitration certain creditor remedies, while requiring the submission of other claims to arbitration, is unconscionable under Pennsylvania law and is therefore unenforceable.  CBA and Amici argued that arbitration, including mandatory arbitration, provides a benefit to consumers.  And furthermore, under both the Federal Arbitration Act and Pennsylvania law parties may carve out foreclosure proceedings from an arbitration agreement without rendering their agreement unconscionable.

Final Disposition

  • May 31, 2007, the Supreme Court of Pennsylvania, holding for Option One Mortgage Corp., concluded that "the exception from mandatory arbitration for foreclosure contained within the Option-One/Salley arbitration agreement, in and of itself, does not render the agreement presumptively unconscionable under Pennsylvania law."

Smith v. Wells Fargo Bank, N.A., et al. [Pre-emption Issue]

  • April 3, 2006, CBA submitted a letter to the Supreme Court of California in support of Wells Fargo's petition for review and/or de-publication of the Court of Appeals' decision.  The issue regarded pre-emption and whether there is a state law private right of action under California's Unfair Competition Law (UCL) and the Consumer Legal Remedies Act (CLRA) against a national bank, or whether the causes of action are preempted under regulations promulgated by the Office of the Comptroller of the Currency (OCC).  CBA argued that the Court of Appeals' decision permitting a private cause under UCL and CLRA, against a national bank, violates settled law of federal preemption and express Congressional intent.  Therefore, the Court of Appeals' decision should be granted review or de-publicized.   

Final Disposition

  • April 26, 2006, the Supreme Court of California denied Wells Fargo's petition for review and/or de-publication.
Bankwest, Inc. v. Baker [Pre-emption Issue]
  • April 2006, CBA submitted an En Banc Brief, as Amici Curiae of the Court, to the U.S. Court of Appeals for the Eleventh Circuit, urging reversal of the Court's affirmation of the U.S. District Court for the Northern District of Georgia's prior holding.  The issue regarded the State of Georgia's ability to prevent banks from making "payday" loans, to Georgia consumers, through non-bank agents.  CBA and Amici presented their brief to the court as friends of the court, rather than friends of payday lending.  They argued that the Federal Deposit Insurance Act (the "Act") empowers a state-chartered bank, insured by the Federal Deposit Insurance Corporation (FDIC), to charge the interest rate authorized by the state in which it is located on all interstate loans and expressly preempts state laws to the contrary.  To hold otherwise, by implying that a state can charge interest rates allowed by the Act only when the bank has the predominant economic interest in a loan, could impede significantly the authority of banks to make loans on an interstate basis at the interest rates allowed by the banks' home states as authorized by federal statute.

Final Disposition

  • April 28, 2006, the appellate court en banc held the issue had become moot when, in response to regulatory action by the FDIC, banks had abandoned their servicing agreements and were no longer in position to offer, or resume offering, payday loans.  The Court vacated its prior decision and dismissed the appeal.

Perry v. First National Bank [Pre-screened offers of credit Issue]

  • March 10, 2006, CBA filed Brief of Amici Curiae to the U.S. Court of Appeals for the Seventh Circuit, in support of Appellee First National Bank d/b/a First National Credit Card and affirmance of an order of the U.S. District Court for the Northern District of Illinois, Eastern Division.  The issue concerned "prescreened" offers of credit based on credit bureau information, and specifically whether First National Bank violated the Fair Credit Reporting Act (FCRA) by failing to include a clear and conspicuous statement of certain disclosures required under §615(d)(1) of FCRA.  CBA and Amici argued that the district court was correct in dismissing Perry's "clear and conspicuous" claim. They supported their argument, citing to Congressional intent.  "Congress provided in §615(h)(8)(A) that no private right of action shall exist for ‘any failure by any person to comply with this section,' i.e., ‘section' 615 of the FCRA."

Final Disposition

  • August 25, 2006, the U.S. Court of Appeal for the Seventh Circuit concluded that the credit card solicitation offered value to the consumer and affirmed the district court's decision in full.

[KQ1] No final disposition of appeal found