On November 28, 2011, the U.S. Supreme Court will hear argument in First American Financial Corporation, et al. v. Edwards, U.S. Supreme Court Docket No. 10-708, October 2011, on appeal from Edwards v. First Am. Corp., 610 F.3d 514 (9th Cir. 2010). As previously discussed, this case has the potential to curtail the recent rise of no-harm class actions. See the October 12, 2011 article U.S. Supreme Court to Tackle Issue of No-Harm Class Actions and the September 26, 2001 article No Harm, No Class: Damage Element Still Standing in the Sixth Circuit.
Respondent Denise P. Edwards and her amici curiae have now weighed in before the Court, and a number of legal and policy arguments resound. But Respondent primarily urges the Court to find Article III standing through application of the “no-further-inquiry rule.” Specifically, she asks the Court to find under the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2607, that a statutorily-defined injury confers Article III standing and, by implication, class action treatment even without any allegation of or any further inquiry into whether there is any separate economic harm.
Respondent asserts, and the Ninth Circuit agreed, that a technical violation of RESPA by the presence of an improper kickback agreement in the relevant transaction is enough without other damages to meet Article III standing requirements because RESPA provides the remedy of three times the amount of “any charge paid” for title settlement services under an illegal kickback agreement. See 12 U.S.C. § 2607(d)(2).According to Respondent, a party’s right to receive services free from kickbacks is one of a number of long-recognized rights, many now statutory, that are concrete interests capable of protection wholly apart from economic harm. Thus, she asks the Court to apply this longstanding “no-further-inquiry rule,” which she claims here requires courts to hear challenges to conflicted transactions without looking into whether the conflict caused economic harm.
By thereby advocating that Congress can define injuries, Respondent’s position places squarely at issue the ultimate question of whether Congress legislate around the three Article III standing requirements of injury, harm and redressability by merging injury and harm into one under a statutory scheme.
To date, nine different groups have submitted amicus briefs in support of Respondent, from economists to others currently suing under RESPA to the Toyota Economic-Loss Plaintiffs. Predictably, some of the amici curiae are interested because they recognize that this case may impact dozens of other statutory schemes, at both the federal and state levels, that permit suit and recovery for a violation of a statute, irrespective of actual harm.
For example, the Electronic Privacy Information Center’s (EPIC) amicus brief focuses upon the impact the Court’s decision may have on the application of privacy laws carrying statutory damages. The brief of AARP, Center for Responsible Lending, National Consumer Law Center, National Consumers League and Public Citizen, Inc. focuses on consumer-protection statutory schemes. The National Association of Independent Land Title Agents’ amicus brief supports Respondents’ pro-consumer position by, among other things, highlighting enforcement difficulties with RESPA if separate damages are required. A group of economists through the amicus brief of Birny Birnbaum, M.S., M.C.P.; Joshua Fischman, J.D., Ph.D.; and Robert E. Litan, J.D., M. Phil., Ph.D. took a slightly different approach in advancing a theory of actual harm to consumers of title insurance, as a whole, when improper kickback arrangements exist. See full list of and links to amicus briefs.
The overlay of class action treatment is still what makes the case pivotal, however. Whether Edwards can pursue her RESPA claim when she cannot allege she was overcharged for title insurances services or that her title insurance was diminished or impaired looks like an interesting, but discrete, issue. A decision that she can, however, means likely class action treatment for everyone who engaged in similar transactions and, indeed, anyone who can cite any technical statutory violation even if they do not believe they were aggrieved by it.