On Monday, the U.S. Supreme Court granted certiorari in a proposed class action to determine the scope of a home-buyer’s standing to sue a title insurer company that allegedly violated the Real Estate Settlement Procedures Act of 1974 (RESPA). In First American Financial Corporation, et al. v. Edwards (10‑708), the question before the Court is whether a home-buyer has standing under Article III, § 2 of the United States Constitution to pursue a RESPA claim if the home-buyer cannot establish that the violation resulted in an increase in the amount the home-buyer paid for title insurance services.
The homebuyer, Denise Edwards, alleges that the title insurer, First American, acquired ownership interests in thousands of title agencies across the country in exchange for the agencies’ customer referrals to First American in violation of RESPA. However, Edwards was unable to establish that she was over-charged for title insurance services as a result of these referrals because the applicable state law mandates that title insurers all charge the same price. First American therefore challenged Edwards’ standing to assert the claim, arguing that an economic injury is necessary to meet Article III’s injury-in-fact requirement.
The Ninth Circuit rejected First American’s argument, holding that the statutory text of RESPA does not limit liability to instances in which a plaintiff is overcharged. Rather, the Ninth Circuit concluded that RESPA gives plaintiffs a cause of action despite a lack of economic injury and that the creation of a cause of action is sufficient to establish standing under Article III. The U.S. Supreme Court will review this holding during its next term. The Court’s decision will determine whether RESPA claims can be successfully pursued even in the absence of any economic harm to consumers.