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Supreme Court agrees to review constitutionality of CFPB’s funding, but not on an expedited basis
The Supreme Court granted the CFPB's request to review the U.S. Court of Appeals for the Fifth Circuit’s decision in Community Financial Services Association of America v. Consumer Financial Protection Bureau but so far has not expedited consideration of the case. Without quick action to expediate consideration by the Court, all CFPB actions will be open to challenge until the Supreme Court issues a decision. At the current pace, the CFPB could remain in this limbo until June of 2024.
In this case, the 5th Circuit held that Congress violated the Constitution’s Appropriations Clause when it created what that Court described as a “perpetual self-directed, double-insulated funding structure” for the agency. As a result, the CFPB’s 2017 Payday Lending Rule is invalid because the CFPB would not have been able to issue it “without its unconstitutional funding.” The implication, as the CFPB itself pointed out in its petition for certiorari, is that all past and future actions that relied on the same funding mechanism—basically everything the agency has ever done or will ever do—are invalid as well.
Although the CFPB had ninety days to seek review of the 5th Circuit’s decision, it took the unusual step of filing the petition in less than 30 days, and specifically urged the Supreme Court to “set this case for argument this Term,” to guarantee a decision by June or early July of this year. The Court’s order issued Monday simply states that the CFPB’s petition is granted, without setting an expediated briefing schedule. As a result, without the Court taking some immediate steps to speed up consideration, the case will be decided under the Court’s standard briefing schedule. This means the matter will be briefed over the next several months with oral argument likely next fall, as part of the Supreme Court’s October 2023 Term. Although a decision could come out any time after oral argument, cases as significant as this case often come out towards the end of the term, i.e., by June 2024.
The Supreme Court’s unwillingness to expedite consideration of the case to date has serious practical implications for the CFPB’s ability to push forward its ambitious agenda. As the CFPB has itself acknowledged, the 5th Circuit’s decision binds lower courts in that circuit unless and until it is overturned. It will likely encourage challenges to CFPB rulemakings and potentially other actions in that circuit. Even outside of the 5th Circuit, lower courts adjudicating CFPB enforcement actions may be unwilling to move those cases forward until the Supreme Court provides direction on this fundamental funding issue. Thus, for the time being, we can expect more challenges and more delays in CFPB enforcement actions.
For financial institutions, our advice remains the same as when the 5th Circuit’s decision was issued. Generally, companies should maintain their day-to-day focus on compliance, as the CFPB may weather this latest constitutional challenge with its full authority, including its enforcement power, intact. In addition, other Federal agencies—for example, the Federal banking agencies, the National Credit Union Administration, the Federal Trade Commission—and state attorneys general and/or state regulators often have overlapping authority to enforce Federal consumer financial law. Finally, companies should continue to assume that rules issued by the Bureau are valid and that they will not be penalized for good-faith reliance on such rules.
Illinois Supreme Court says BIPA claims accrue with every transmission
On February 17, the Illinois Supreme Court issued a split decision holding that under the state’s Biometric Information Privacy Act (BIPA), claims accrue “with every scan or transmission of biometric identifiers or biometric information without prior informed consent.” The plaintiff filed a proposed class action alleging a defendant fast food chain violated BIPA sections 15(b) and (d) by unlawfully collecting her biometric data and disclosing the data to a third-party vendor without first obtaining her consent. According to the plaintiff, the defendant introduced a biometric-collection system that required employees to scan their fingerprints in order to access pay stubs and computers shortly after she began her employment in 2004. Under BIPA (which became effective in 2008), section 15(b) prohibits private entities from collecting, capturing, purchasing, receiving through trade, or otherwise obtaining “a person’s biometric data without first providing notice to and receiving consent from the person,” whereas Section 15(d) provides that private entities “may not ‘disclose, redisclose, or otherwise disseminate’ biometric data without consent.” While the plaintiff asserted that the defendant did not seek her consent until 2018, the defendant argued, among other things, that the action was untimely because the plaintiff’s claim accrued the first time defendant obtained her biometric data. In this case, defendant argued that plaintiff’s claim accrued in 2008 after BIPA’s effective date. Plaintiff challenged that “a new claim accrued each time she scanned her fingerprints” and her data was sent to a third-party authenticator, thus “rendering her action timely with respect to the unlawful scans and transmissions that occurred within the applicable limitations period.” The U.S. District Court for the Northern District of Illinois agreed with the plaintiff but certified its order for immediate interlocutory appeal after “finding that its decision involved a controlling question of law on which there is substantial ground for disagreement.”
The U.S. Court of Appeals for the Seventh Circuit ultimately found that the parties’ competing interpretations of claim accrual were reasonable under Illinois law, and agreed that “the novelty and uncertainty of the claim-accrual question” warranted certification to the Illinois Supreme Court. The question certified to the high court asked whether “section 15(b) and (d) claims accrue each time a private entity scans a person’s biometric identifier and each time a private entity transmits such a scan to a third party, respectively, or only upon the first scan and first transmission[.]”
The majority held that the plain language of the statute supports the plaintiff’s interpretation. “With the subsequent scans, the fingerprint is compared to the stored copy of the fingerprint. Defendant fails to explain how such a system could work without collecting or capturing the fingerprint every time the employee needs to access his or her computer or pay stub,” the high court said. The majority rejected the defendant’s argument that a BIPA claim is limited to the initial scan or transmission of biometric information since that is when the individual loses the right to control their biometric information “[b]ecause a person cannot keep information secret from another entity that already has it.” This interpretation, the majority wrote, wrongfully assumes that BIPA limits claims under section 15 to the first time a party’s biometric identifier or biometric information is scanned or transmitted. The Illinois Supreme Court further held that “[a]s the district court observed, this court has repeatedly held that, where statutory language is clear, it must be given effect, ‘even though the consequences may be harsh, unjust, absurd or unwise.’” However, the majority emphasized that BIPA does not contain language “suggesting legislative intent to authorize a damages award that would result in the financial destruction of a business,” adding that because “we continue to believe that policy-based concerns about potentially excessive damage awards under [BIPA] are best addressed by the legislature, . . . [w]e respectfully suggest that the legislature review these policy concerns and make clear its intent regarding the assessment of damages under [BIPA].”
The dissenting judges countered that “[i]mposing punitive, crippling liability on businesses could not have been a goal of [BIPA], nor did the legislature intend to impose damages wildly exceeding any remotely reasonable estimate of harm.” “Indeed, the statute’s provision of liquidated damages of between $1000 and $5000 is itself evidence that the legislature did not intend to impose ruinous liability on businesses,” the dissenting judges wrote, cautioning that plaintiffs may be incentivized to delay bringing claims for as long as possible in an effort to increase actionable violations. Under BIPA, individuals have five years to assert violations of section 15—the statute of limitations recently established by a ruling issued by the Illinois Supreme Court earlier this month (covered by InfoBytes here).
2nd Circuit says collection letter sent on law firm letterhead did not violate FDCPA
On February 13, the U.S. Court of Appeals for the Second Circuit affirmed summary judgment in favor of a defendant law firm accused of violating the FDCPA when it sent the plaintiff a collection letter on law firm letterhead. The plaintiff claimed both that the letter overshadowed her validation notice by failing to advise her that her validation rights were not overridden because her account had been placed with a law firm and that the letter falsely implied it was a communication from an attorney even though no attorney was meaningfully involved in collecting the debt, which courts have found is prohibited under the FDCPA. The district court granted summary judgment to the defendant on both grounds. The district court held that “because there was meaningful attorney involvement in the collection of plaintiff’s debt,” the letter was not required to include a disclaimer regarding the lack of attorney involvement in the debt collection effort. Additionally, the district court held that because the letter did not refer to any consequences should the plaintiff fail to repay the outstanding debt, “the mere fact that [the] Collection Letter is printed on law firm letterhead does not, by itself, imply an immediate threat of legal action overshadowing a validation notice in violation of the FDCPA.” The plaintiff appealed.
In affirming the grant of summary judgment, the appellate court rejected the plaintiff’s argument that, because several of the steps the attorney supposedly followed were “performed by non-attorneys,” were “automated,” or could have been completed in a minimal amount of time, there was not meaningful attorney involvement. According to the 2nd Circuit, even if these facts were true, they did not refute the attorney’s “statement that he conducted a meaningful legal analysis of [plaintiff’s] account and ‘formed an opinion about how to manage [the] case.’” “We have never established a specific minimum period of review time to qualify as meaningful attorney involvement, and the only function that [plaintiff] has identified that [defendant] did not perform before approving the letter was establishing a specific plan to sue in the event of non-payment.” Consequently, the appellate court concluded that the FDCPA did not require the defendant to provide a disclaimer in its initial collection letter to the plaintiff.
Supreme Court “relist” of CFPB petition for certiorari threatens prolonged legal limbo
The Supreme Court recently had the opportunity to grant the CFPB’s pending petition for certiorari seeking review of the U.S. Court of Appeals for the Fifth Circuit’s holding in Community Financial Services Association of America v. Consumer Financial Protection Bureau. The 5th Circuit found that the agency’s funding structure is unconstitutional, potentially voiding everything the CFPB has done or could do. The Justices considered the petition at their conference this past Friday, but the Court neither granted nor denied the petition. Instead, it “relisted” the petition for consideration at its conference this Friday, February 24.
The Court’s decision functions as a delay and does not necessarily suggest an ultimate denial of the petition. In recent practice, petitions have been relisted before being granted. Practically, this action makes it less likely that the case will be decided this term, leaving the agency, and the rules it issues, in a state of legal limbo for as much as another year or more. The possibility that the case will not be decided during this Supreme Court term may leave the CFPB’s actions subject to successful challenges in federal district courts in states subject to the 5th Circuit decision (Texas, Mississippi and Louisiana).
The CFPB was no doubt hoping to avoid this possible outcome. It filed the petition less than 30 days after the 5th Circuit’s decision and urged the Court to act quickly to decide the case during the current term, which typically ends in late June. In the petition the CFPB explained that the 5th Circuit’s decision would negatively impact the “CFPB’s critical work administering and enforcing consumer financial protection laws … because the decision below vacates a past agency action based on the purported Appropriations Clause violation, the decision threatens the validity of all past CFPB actions as well.” The CFPB argued that refusal to decide the case this term “threatens the ability of the CFPB to function and risks severe market disruption. Delaying review until next term would likely postpone resolution of the critical issues at stake until sometime in late 2023 and more likely 2024.”
The CFPB’s timeline was complicated by the Court’s agreement to extend the briefing schedule on the petition, in part to accommodate briefing on the Community Financial Services Association of America’s conditional cross-petition, which seeks review on other aspects of the 5th Circuit’s decision. The Court’s delay in acting on the CFPB’s petition complicates matters further. It is still possible that the Court could agree to hear the case and set it for expedited briefing so that it can be decided this term, but every indication so far is that the Court is in no hurry to decide this matter, even if it complicates life for the CFPB. Stay tuned. We may get action on the petition by the Court either Friday or next Monday.
Find continuing InfoBytes coverage here.
CFPB urges Supreme Court review of 5th Circuit decision
The CFPB recently filed a reply brief in its petition for a writ of certiorari asking the U.S. Supreme Court to review whether the U.S. Court of Appeals for the Fifth Circuit erred in holding that the Bureau’s funding structure violates the Appropriations Clause of the Constitution, and to consider the appellate court’s decision to vacate the agency’s 2017 final rule covering “Payday, Vehicle Title, and Certain High-Cost Installment Loans” (Payday Lending Rule or Rule) on the premise that it was promulgated at a time when the Bureau was receiving unconstitutional funding. (Covered by InfoBytes here.)
Last month, the respondents filed an opposition brief urging the Supreme Court to deny the Bureau’s petition on the premise that the 5th Circuit’s decision does not warrant review—“let alone in the expedited and limited manner that the Bureau proposes”—because the appellate court correctly vacated the Payday Lending Rule, which, according to the respondents, has “multiple legal defects, including but not limited to the Appropriations Clause issue.” (Covered by InfoBytes here.) The respondents also maintained that the case “is neither cleanly presented . . . nor ripe for definitive resolution at this time,” and argued that the Supreme Court could address the validity of the Payday Lending Rule without addressing the Bureau’s funding issue. Explaining that the 5th Circuit’s decision “simply vacated a single regulation that has never been in effect,” the respondents claimed that the appellate court should have addressed questions about the Rule’s validity before deciding on the Appropriations Clause question. The respondents filed a cross-petition for writ of certiorari arguing that if the Supreme Court decides to hear the case, it should vacate the rule based on the unconstitutional removal restriction, and because it exceeds the Bureau’s statutory authority since “the prohibited conduct falls outside the statutory definition of unfair or abusive conduct.”
In its reply brief, the Bureau challenged the respondents’ assertion that the agency’s funding was “unprecedented,” noting that the respondents “cannot meaningfully distinguish the CFPB’s funding from Congress’s longstanding and concededly valid practice of funding agencies from standing sources outside annual spending bills.” The Bureau also argued that the respondents failed to rehabilitate the appellate court’s disruptive remedy and could not justify the district court’s failure to conduct a severability analysis. Even if any unconstitutional features could be severed, that would not justify the “extraordinarily disruptive remedy of automatic vacatur” of the Payday Lending Rule, the Bureau said. Furthermore, the Bureau contended that the respondents offered no sound basis for declining to review the appellate court’s decision in the current Supreme Court term.
According to the Bureau, the decision “carries immense legal and practical consequences that override any interest in ‘further percolation’” and “has already affected more than half of the Bureau’s 22 active enforcement actions” where five have been stayed and motions for relief are pending in seven other courts. Emphasizing that the 5th Circuit’s decision “threatens the validity of virtually all past CFPB actions, including numerous regulations that are critical to consumers and the financial industry,” the Bureau stressed that the proper course would be to grant its petition, set the case for argument in April, and add the additional questions raised by respondent in their cross-petition.
11th Circuit advances TILA suit weighing agency theory of liability
On February 6, the U.S. Court of Appeals for the Eleventh Circuit reversed a district court’s finding of summary judgment in favor of a financing company concerning alleged violations of TILA. The plaintiff agreed to purchase air conditioning repairs by taking out a loan with a company that finances home-improvement loans for heating and air conditioning products. According to the plaintiff, the repair company lied about the price of the loan and prevented him from viewing the loan paperwork. The plaintiff sued the defendants for violations of TILA and various state consumer protection laws, claiming he was not provided certain required disclosures and maintaining that had he received the disclosures he would not have accepted the loan. The plaintiff eventually decided to cancel the order before the work was commenced and was told he would have to contact the financing company to cancel the loan. The plaintiff was not released from the unpaid loan for work that never happened, and the negative payment history was reported to the credit bureaus.
The financing company argued that the plaintiff’s injuries are not traceable to the disclosure paperwork because the repair company never showed him the paperwork. The plaintiff countered that the repair company was not independent of the financing company because it was acting as the financing company’s agency. Under the “agency theory of liability,” the plaintiff argued that the financing company is liable under TILA for the repair company’s failure to provide the required disclosures. The district court ruled, however that the plaintiff lacked standing based on the finding that his injuries were not traceable to the financing company’s TILA violation, and that the plaintiff had not alleged that the repair company was acting as the financing company’s agent to provide the required disclosures.
On appeal, the 11th Circuit concluded that the plaintiff had standing to raise his agency-based TILA claim against the financing company. As a threshold matter, the appellate court first recognized that the plaintiff suffered a concrete injury (e.g., time spent disputing his debt; the impact on his credit; money spent sending documents to his attorney; and feelings of anxiousness), noting that injury and traceability were separate analyses. With respect to traceability, the appellate court next reviewed whether there was “a causal connection” between the plaintiff’s injuries and the challenged action of the financing company. The 11th Circuit accepted one theory of traceability—a theory of agency. “TILA liability attaches not only to the provision of incorrect disclosures, but also to the failure to provide any disclosures at all,” the appellate court explained, stating that in this case, the plaintiff argued that the repair company was acting as an agent of the financing company for the purpose of providing the disclosures. While expressing no opinion on the merits of the claim, the 11th Circuit concluded that the plaintiff had adequately pled that the financing company contracted with the repair company “who at all times acted as its agent” and that the financing company “is vicariously liable for the harms and losses” caused by the repair company’s misconduct by virtue of this agency relationship.
8th Circuit affirms almost $20 million in damages and attorney’s fees in RMBS action
On February 2, the U.S. Court of Appeals for the Eighth Circuit affirmed a district court order requiring a mortgage lender to pay $5.4 million in damages and $14 million in attorney’s fees for selling mortgages that did not meet agreed-upon contractual representations and warranties to a now-defunct company that packaged and resold the loans to residential mortgage-back securities (RMBS) trusts. The now-defunct company was sued by the RMBS trusts after loans underlying the securitizations began defaulting at a high rate during the 2008 financial crisis. A liquidating trust was established to oversee wind-down measures after the company filed for bankruptcy. The liquidating trust later began suing originators for indemnification over the allegedly defective mortgages. In 2020, the district court ruled in favor of the liquidating trust and entered judgment for $5.4 million in damages, $10.6 million in attorney’s fees, $3.5 million is costs, $2 million in prejudgment interest, and $520,212 in “post-award prejudgment interest.” The district court found, among other things, that the lender had breached its client contracts, and that in doing so, contributed to the now-defunct company’s “losses, damages, or liabilities within the scope of the contractual indemnity.” The court also found the liquidating trust’s damages methodology to be reasonable and nonspeculative. The lender appealed, disagreeing with how the underlying contracts were interpreted, as well as the allocation of multi-party damages and the post-trial award of fees, costs, and interest.
On appeal, the 8th Circuit disagreed, concluding that the terms of the parties’ contract made the lender liable. The appellate court also rejected the lender’s contention that it should not be expected to pay the claims against the now-defunct company because they were extinguished in bankruptcy, and that the methodology used to calculate the damages was inaccurate. In awarding $5.4 million in indemnification damages, the appellate court held that the district court properly found that the expert’s “‘calculation of damages was reasonable and non-speculative,’ and that his methodology produced a reasonably certain measure of [the liquidating trust’s] indemnifiable damages.” The 8th Circuit further concluded that the fee award was fair and that the district court had accounted for the complexity of the case and the importance of conducting a detailed loan-by-loan analysis. The appellate court also accused the lender of relitigating already decided issues and driving up the costs. However, the 8th Circuit did order the district court to recalculate the post-judgment interest award using guidance under 28 U.S.C. § 1961(a) rather than the 10 percent prejudgment interest rate under Minnesota law.
D.C. Circuit says CFPB’s Prepaid Rule does not mandate model disclosures for payment companies
On February 3, the U.S. Court of Appeals for the D.C. Circuit reversed a district court’s decision that had previously granted summary judgment in favor of a payment company and had vacated two provisions of the CFPB’s Prepaid Rule: (i) the short-form disclosure requirement “to the extent it provides mandatory disclosure clauses”; and (ii) the 30-day credit linking restriction. As previously covered by InfoBytes, the company sued the Bureau alleging, among other things, that the Bureau’s Prepaid Rule exceeded the agency’s statutory authority “because Congress only authorized the Bureau to adopt model, optional disclosure clauses—not mandatory disclosure clauses like the short-form disclosure requirement.” The Bureau countered that it had authority to enforce the mandates under federal regulations, including the EFTA, TILA, and Dodd-Frank, and argued that the “EFTA and [Dodd-Frank] authorize the Bureau to issue—or at least do not foreclose it from issuing—rules mandating the form of a disclosure.”
The district court concluded, among other things, that the Bureau acted outside of its statutory authority, and ruled that it could not presume that Congress delegated power to the agency to issue mandatory disclosure clauses just because Congress did not specifically prohibit it from doing so. Instead, the Bureau can only “‘issue model clauses for optional use by financial institutions’” since the EFTA’s plain text does not permit the Bureau to issue mandatory clauses, the district court said. The Bureau appealed, arguing that both the EFTA and Dodd-Frank authorize the Bureau to promulgate rules governing disclosures for prepaid accounts, and that the decision to adopt such rules is entitled to deference. (Covered by InfoBytes here.) However, the Bureau maintained that the Prepaid Rule “does not make any specific disclosure clauses mandatory,” and stressed that companies are permitted to use the provided sample disclosure wording or use their own “substantially similar” wording.
In reversing and remanding the ruling, the appellate court unanimously determined that because the Bureau’s Prepaid Rule does not mandate “specific copiable language,” it is not mandating a “model clause,” which the court assumed for purposes of the opinion that the Bureau was prohibited from doing. While the Prepaid Rule imposes formatting requirements and requires the disclosure of certain enumerated fees, the D.C. Circuit stressed that the Bureau “has not mandated that financial providers use specific, copiable language to describe those fees.” Moreover, formatting is not part of a “model clause,” the appellate court added. And because companies are allowed to provide “substantially similar” disclosures, the appellate court held that the Bureau has not mandated a “model clause” in contravention of the EFTA. The appellate court, however, did not address any of the procedural or constitutional challenges to the Bureau’s short-form disclosures that the district court had not addressed in its opinion, but instead directed the district court to address those questions in the first instance.
9th Circuit orders district court to reassess $7.9 million civil penalty against payments company
On January 27, the U.S. Court of Appeals for the Ninth Circuit ordered a district court to reassess its decision “under the changed legal landscape since its initial order and opinion” in an action concerning alleged misrepresentations made by a bi-weekly payments company. The Bureau filed a lawsuit against the company in 2015, alleging, among other things, that the company made misrepresentations to consumers about its bi-weekly payment program when it overstated the savings provided by the program and created the impression the company was affiliated with the consumers’ lender. In 2017, the district court granted a $7.9 million civil penalty proposed by the Bureau, as well as permanent injunctive relief, but denied restitution of almost $74 million sought by the agency. (Covered by InfoBytes here.) The company appealed the district court’s conclusion that it had engaged in deceptive practices in violation of the Consumer Financial Protection Act, while the Bureau cross-appealed the district court’s decision to deny restitution. The 9th Circuit consolidated the appeals for consideration.
During the pendency of the cross-appeals, the U.S. Supreme Court issued a decision in 2020 in Seila Law LLC v. CFPB, in which it determined that the director’s for-cause removal provision was unconstitutional but was severable from the statute establishing the Bureau (covered by a Buckley Special Alert). Following Seila, former Director Kathy Kraninger ratified several prior regulatory actions (covered by InfoBytes here), including the enforcement action brought against the company. At issue in the company’s appeal is whether the Bureau has authority to pursue its claims, including whether the agency’s funding mechanism is unconstitutional and whether its case is distinguishable from other actions and is entitled to dismissal for the Bureau director’s unconstitutional for-cause removal provision.
The appellate court declined to offer a position on these issues, and instead left them for the district court to consider. The 9th Circuit noted that since the district court’s 2017 order, “sister circuit courts have split” on the funding issue. “We vacate the district court’s order and remand, allowing it to reassess the case under the changed legal landscape since its initial order and opinion,” the appellate court wrote, directing the district court to “provide further consideration to [the company’s] argument on the constitutionality of the Bureau’s funding mechanism.” With respect to the Bureau’s appeal of the restitution denial, the 9th Circuit remanded the case to allow the district court to consider the effect CFPB v. CashCall and Liu v. SEC may have on the action (covered by InfoBytes here and here), as well as whether the agency “waived its claim to legal restitution by characterizing it only as a form of equitable relief before the district court.”
4th Circuit affirms certification of class action in tribal lending case
On January 24, the U.S. Court of Appeals for the Fourth Circuit concluded that a district court did not abuse its discretion when certifying a class action. The lawsuit alleges an individual who orchestrated an online payday lending scheme violated the Racketeer Influenced and Corrupt Organization Act (RICO), engaged in unjust enrichment, and violated Virginia’s usury law by partnering with federally-recognized tribes to issue loans with allegedly usurious interest rates. (Covered by InfoBytes here.) The plaintiffs alleged the defendant partnered with the tribes to circumvent state usury laws even though the tribes did not control the lending operation. The district court stated that, as there was “no substantive involvement” by the tribes in the lending operation and that the evidence showed that the defendant was “functionally in charge,” the lending operation—which allegedly charged interest rates exceeding Virginia’s 12 percent interest cap—could not claim tribal immunity.
After the district court certified two borrower classes, the defendant appealed, arguing, among other things, that “[b]orrowers entered into enforceable loan agreements with lending entities in which they waived their right to bring class claims against him,” and that “common issues do not predominate so as to permit class treatment in this case.” Specifically, the defendant claimed that his role in the lending operations changed throughout the class period, and that individualized “proof” and “tracing” would be necessary to prove that he “participated in the direction of the affairs of the alleged enterprise” or that he received some portion of each borrower’s interest payments.
On appeal, the 4th Circuit disagreed with the defendant’s assertions. It found no reason to question the district court’s conclusion that the defendant was the “de facto” head of the lending operations throughout the class period. “And the fact that [the defendant] served as the ‘de facto head’ of the lending operations for the entire class period supports the district court’s determination that the Borrowers will be able to use common proof to show that [the defendant] ‘participated in the direction of the’ lending operations such that common questions predominate over individual questions[,]” the appellate court stated. The 4th Circuit further concluded that the “record supports the district court’s conclusion that [the defendant] lied when he said he was never involved in receiving or demanding payments on [the lending operation’s] loans.”