Supreme Court hears arguments on real estate lawsuits, jurisdiction
Supreme Court hears arguments on real estate lawsuits, jurisdiction
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[JURIST] The US Supreme Court heard oral arguments [day call, PDF] Monday in two cases. In First American Financial Corp v. Edwards [transcript, PDF; JURIST report], the court heard arguments on whether a plaintiff has standing to sue, on behalf of a nationwide class, claiming a real estate company violated the Real Estate Settlement Procedures Act of 1974 [text] without claiming that the violation affected the services rendered. RESPA makes it illegal for settlement service companies to receive a kickback involving any federally related mortgage loan. The plaintiff argues that her title agent improperly referred her to First American Financial [corporate website] in violation of RESPA seeking to recover settlement service charges despite not showing that First American Financial was more expensive or provided inadequate service. The US Court of Appeals for the Ninth Circuit held [opinion, PDF] that the payment of the service charges established an injury in fact sufficient to satisfy Article III standing because RESPA’s text does not limit liability to cases where the plaintiff is overcharged. Counsel for the petitioner, First American, argued:

Article III requires a private plaintiff to show injury in fact, which means at a minimum that the alleged illegal conduct made her worse off. Factual injury does not automatically follow from violation of a statutory duty owed to the plaintiff, and Ms. Edwards has not alleged the type of harm alleged by plaintiffs in the common law cases that she invokes—no misappropriation of her property, no loss of desired opportunity or benefit, no injury to reputation.

Counsel for the respondent argued:

For at least 280 years the law has been clear that when someone breaches a duty of loyalty owed to you by taking a kickback or otherwise introducing a conflict into a transaction, you can sue on the basis of that alone, without showing a further harm in terms of economic loss.

Counsel for the US government argued as amicus curiae on behalf of the respondent.

In Mims v. Arrow Financial Services, LLC [transcript, PDF; JURIST report], the court heard arguments on whether Congress divested the federal district courts of their federal question jurisdiction [28 USC § 1331 text] over private actions brought under the Telephone Consumer Protection Act [FCC summary, PDF]. The US Court of Appeals for the Eleventh Circuit held [opinion, PDF] that federal courts lack jurisdiction over private actions under the act. Counsel for the petitioner argued:

The Federal question jurisdiction statute … broadly grants Federal courts jurisdiction over all actions arising under Federal law unless Congress has provided otherwise. That grant of jurisdiction encompasses rights of action that are created and governed by substantive Federal law. The Telephone Consumer Protection Act sets for forth such a right of action. It provides detailed substantive standards and it grants a private right of action to recover for their violation. The TCPA permits that action to be filed in a State court if the State court allows such action, but it says nothing one way or another about whether the action may also be filed in Federal court.

Counsel for the respondent argued that “this Court … should hold that Congress did not intend for private TCPA claims to be brought in Federal court.”