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  • 8th Circuit affirms $17 million class settlement for retailer data breach

    Courts

    On June 13, the U.S. Court of Appeals for the 8th Circuit affirmed the district court’s ruling approving a $17 million class settlement to resolve consumer claims related to a 2013 data breach, which resulted in the compromise of at least 40 million credit cards and theft of personal information of up to 110 million people. The settlement, which consists of $10 million in consumer redress and almost $7 million in plaintiffs’ attorney fees, was preliminarily approved in 2015 by the district court (previously covered by InfoBytes here) but was remanded back to the court by the 8th Circuit for failing to conduct the appropriate pre-certification analysis. After the district court recertified the class, two settlement challengers appealed, arguing that the class was not properly certified as there were not separate counsel for the subclasses and that the court erred in approving the settlement because the award of attorney’s fees was not reasonable. The appellate court disagreed, holding that no fundamental conflict of interest required separate representation for named class members and class members who suffered no actual losses. The court also concluded that the 29 percent in total monetary payment to the plaintiffs’ attorneys was “well within the amounts [the court] has deemed reasonable in the past” and therefore, the district court did not error in its discretion.

     

    Courts Appellate Eighth Circuit Class Action Data Breach Privacy/Cyber Risk & Data Security

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  • 8th Circuit affirms dismissal of FDCPA claims, rules false or misleading statements must be material to be actionable

    Courts

    On April 19, the U.S. Court of Appeals for the 8th Circuit affirmed a district court’s decision to grant a debt collector’s motion for judgment on the pleadings, concluding that false or misleading statements under the Fair Debt Collection Practices Act (FDCPA) must be material to be actionable. According to the opinion, the Conciliation Court for the 4th Judicial District of Minnesota previously issued a judgment finding that the debt collector failed to demonstrate “an entitlement to relief” when the debt collector sought payment (including statutory interest) for unpaid medical services. The plaintiff-appellant subsequently filed suit against the debt collector alleging that the debt collector’s conduct before the conciliation court violated the FDCPA. The district court issued a decision—which the 8th Circuit affirmed—holding that the debt collector’s “inadequate documentation of the assignment did not constitute a materially false representation” and, although the debt collector was ultimately unable to collect on the debt, loss of a collection action, standing alone, did not establish a violation of the FDCPA under the materiality standard. Additionally, the 8th Circuit held that the debt collector did not engage in unfair practices under the FDCPA when the debt collector attempted to collect interest on the debt under a Minnesota statute simply because the debtor may have had a legal defense to application of the statute.

     

    Courts Eighth Circuit Appellate FDCPA Debt Collection

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  • 8th Circuit reverses district court’s decision, rules plaintiff failed to demonstrate actual damages under RESPA

    Courts

    On April 3, the U.S. Court of Appeals for the 8th Circuit reversed a district court’s decision, which granted summary judgement in favor of a consumer (plaintiff) who claimed a mortgage loan servicer violated the Real Estate Settlement Procedure Act (RESPA) and the Minnesota Mortgage Originator and Servicer Licensing Act when it failed to adequately respond to his qualified written requests concerning erroneous delinquency allegations. The district court ruled that the plaintiff suffered actual damages of $80 under his RESPA claims when the loan servicer “made minimal effort to investigate the error” and failed to provide the plaintiff with requested information about his loan history since origination. The “pattern or practice” of non-compliance also, in the district court’s view, justified $2000 in statutory damages. The plaintiff also received a separate damage award, attorney’s fees and costs under the Minnesota statute. However, under RESPA, a plaintiff must demonstrate proof of actual damages resulting from a loan servicer’s failure, and the three-judge panel argued that the plaintiff “failed to prove actual damages” because the loan servicer’s “failure to comply with RESPA did not cause [the plaintiff’s] alleged harm.” The panel opined that while the loan servicer failed to (i) conduct an adequate investigation following the plaintiff’s request as to why there was a delinquency for his account, and (ii) failed to provide a complete loan payment history when requested, its failure to comply with RESPA involved pre-2011 payment history for which the plaintiff eventually requested and received the relevant loan payment records at no cost. In fact, the panel stated, the only evidence of actual damages was the $80 the plaintiff spent for bank account records, but that expense concerned a separate dispute about whether the plaintiff missed two payments in 2012 and 2013, which the plaintiff eventually acknowledged that he did, in fact, fail to make. Since the loan servicer did not commit an error with respect to the missed payments, the court concluded that the $80 spent by plaintiff were not the result of the loan servicer’s failure to investigate and provide information related to the pre-2011 payment history. To the contrary, with respect to responding to the plaintiff’s inquiries regarding the missing payments, the loan servicer had “complied with its duties under RESPA.”

    Furthermore, the panel stated that the plaintiff failed to provide evidence that the loan servicer engaged in a “pattern or practice of noncompliance.” The 8th Circuit remanded the case back to the district court with directions to enter judgment in favor of the loan servicer on the RESPA claims and for further proceedings on claims under the Minnesota statute.

    Courts Appellate Eighth Circuit RESPA Mortgage Servicing Mortgages State Issues

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  • 8th Circuit holds lender properly delivered TILA disclosures

    Courts

    On February 28, the U.S. Court of Appeals for the 8th Circuit affirmed a district court’s decision to grant summary judgment in favor of a national mortgage lender concluding that a borrower’s signed acknowledgment of receipt of TILA’s material disclosures and rescission notice created a rebuttable presumption that the borrowers had received the required number of notices under the law. According to the opinion, the borrowers sought to rescind their mortgage loan on a date close to three-years after settlement, arguing that the lender did not provide the requisite number of copies of required disclosures under TILA. TILA allows for rescission within three days of settlement unless the lender fails to deliver the required notice or material disclosures, which extends the rescission period to three years. After the lender denied the borrower’s request for rescission, a district court dismissed the action as untimely, asserting that the suit must be filed within the same three-year window. Ultimately, in 2015, the Supreme Court held that the three-year period applied to the borrower’s notice of rescission, and not the filing of the lawsuit.

    On remand, the district court granted summary judgment in favor of the lender. In affirming the district court’s decision, the 8th Circuit disagreed with the borrower’s position that while they signed an acknowledgment of receipt of the required disclosures, the acknowledgment did not state that each “acknowledge receipt of two copies each.” The circuit court concluded that the signed acknowledgment is “unambiguous and gives rise to the presumption” of proper delivery and each signature by the borrower indicates personal receipt of two copies each.

    Courts Eighth Circuit Appellate TILA Mortgages Disclosures U.S. Supreme Court

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