Last Friday, the Sixth Circuit declined to expand the rights of Kentucky counties to seek enforcement of a Kentucky statute.  In an unpublished opinion, Boyd County v. MERSCORP, Inc., the Sixth Circuit upheld the district court’s decision to dismiss a lawsuit brought by forty-one Kentucky counties as a class action lawsuit against Mortgage Electronic Registration Systems, Inc. (MERS) and its shareholders.  The district court dismissed the suit on the grounds that Kentucky counties lack the power to enforce the relevant state statute.

The counties party to this lawsuit claimed that MERS violates Kentucky’s recording statutes when it reassigns promissory notes secured by a mortgage without recording the transfer.  The relevant statute, Ky. Rev. Stat. § 382.360(3), requires: “When a mortgage is assigned to another person, the assignee shall file the assignment for recording with the county clerk . . . .” The district court analyzed the claim as seeking a private right of action under Ky. Rev. Stat. § 446.070, Kentucky’s negligence per se statute, despite the fact that the counties did not invoke § 446.070 in their complaint.  The Sixth Circuit affirmed the district court’s reasoning that Christian Cnty. Clerk ex rel Kem v. Mortgage Electronic Registration Systems, Inc., 515 F. App’x 451 (6th Cir. 2013) would bar counties from bringing claims for unjust enrichment and claims under § 446.070, because counties are not within the class of persons the legislature intended to protect with the recording statute.

The counties, rather than raising a claim under § 446.070, presented a novel argument.  They claimed that as subdivisions of the state, “Kentucky law empowers [counties] to seek enforcement of a statute in which the county has an interest.”  The Sixth Circuit declined the opportunity to expand counties’ rights under Kentucky law, observing that “such legal innovations are better addressed by Kentucky courts.”  The court refused, however, to certify the case to the Kentucky Supreme Court, notwithstanding the counties’ urging to do so.  Sixth Circuit precedent encourages the court to decline certification to state court when the parties did not request certification until after the district court unfavorably resolved the issue. See e.g., Geronimo v. Caterpillar, Inc., 440 F. App’x 442, 449 (6th Cir. 2011).  In other words, certification should not be a strategic second bite at the apple.  This decision, however, offers a wrinkle.  While the parties to this suit did not request certification until after they received an unfavorable decision, that decision did not address the state-law issue in question that was the subject of the certification request.  As certification is discretionary by the Sixth Circuit, Boyd County offers the lesson that delay by the party seeking certification will often spell the denial of the request.  Therefore, for those considering certification (a subject we have previouslydiscussed), ask early and often!

This post was written by Lauren Maynard, a summer associate in SPB’s Cincinnati office.