Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Your final Jeopardy question for Monday, Nov. 28: It is the “strangest” statute that Chief Justice John Roberts Jr. has ever seen. Correct answer: What is the federal Telephone Consumer Protection Act, which prohibits robocalls and unsolicited faxes while giving consumers the right to sue over violations? “I’ve never seen a statute remotely like this before,” said Roberts during arguments in Mims v. Arrow Financial Services. He and the other justices struggled with whether Congress, in creating a private right of action for consumers, limited them to suits only in state courts. The case was one of two argued on Monday in which consumers sought access to the federal courts to enforce consumer protection laws and companies, fearing class action litigation, sought to narrow the reach of those laws. In a day that only civil procedure scholars could love, the justices explored federal question jurisdiction and the telephone act, and Article III standing and the federal Real Estate Settlement Procedures Act. The conundrum in the telephone act stems from its silence on whether private actions can be filed in federal courts. The act explicitly gives exclusive federal jurisdiction to public actions brought by state attorneys general. It also has a provision, stating: “A person or entity may, if otherwise permitted by the laws or rules of a State, bring an action in an appropriate court of that State.” “But [the statute] says nothing one way or another about whether the action may also be filed in federal court,” said Scott Nelson of Public Citizen, counsel to Marcus Mims. The federal question jurisdiction statute, he argued, “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.” Justice Stephen Breyer and some other justices expressed concern that permitting federal jurisdiction over what are primarily small claims would thwart Congress’ intention of providing a quick, easy and cheap way for consumers to seek the act’s remedies (damages of $500 per violation). Defendants could remove those actions from small claims court to federal court, said Breyer, and increase the time and costs of resolving the claims. But Nelson said that would be a self-defeating strategy for defendants. Experience with these claims, he said, has shown that those filed in federal court tend to be class actions. Former Solicitor General Gregory Garre of Latham & Watkins, counsel to Arrow Financial, argued that the text, structure, purpose and legislative history of the act prove that Congress intended private actions to be brought in state court where permitted by state law. He said the law’s provision stating that private actions “may, if otherwise permitted” by state laws or rules shows that Congress intended state courts to be the forum for adjudicating violations of the act. Justice Antonin Scalia asked Garre what law would apply to actions brought by state attorneys general in federal court and what law would apply to private actions brought in state court. Garre responded that federal law would govern the federal court actions and state law limitations would apply to private actions. “So the state law limitations don’t apply if it’s a suit in federal court by an attorney general?” asked Scalia. “I mean it is so weird. I can’t understand that.” Justice Elena Kagan noted that it is a “momentous thing” for Congress to divest federal courts of jurisdiction over a cause of action created by Congress and which has federal law as the rule of decision. “And this is one peculiar way of divesting those federal courts of jurisdiction,” she said of Garre’s argument. Justice Ruth Bader Ginsburg noted that when federal law creates a cause of action, the rule has always been there is federal question jurisdiction. After considerable back and forth among the justices and Garre about the implications of confining actions to state courts, Kagan said, “Both sides agree [the statute] is odd, and all nine justices agree it’s odd. I mean, I think we can say that this statute is odd. And the question is: where do we go from there? And what is the default position? If it’s odd and we can’t figure it out, the default position seems to be federal courts have jurisdiction over federal questions.” But a persistent Garre replied, “Yes, it’s odd, but it’s odd in a way that one must presume that Congress actually meant what it was doing in several different ways here. I think it gets to a point where you just can’t presume that Congress didn’t mean the impact of its words here. So we would urge this Court to give effect to them.” In First American Financial v. Edwards, the justices appeared divided as they examined whether Denise Edwards had Article III standing to bring a federal suit against American Financial for violating the anti-kickback provisions in the Real Estate Settlement Procedures Act. American Financial, a title insurance company, held an ownership interest in the title company used by Edwards to buy her home. The two companies had arrangement in which the title company referred its customers to American Financial for their title insurance policies. Edwards ultimately seeks to bring a class action lawsuit. The Supreme Court has held that Article III standing requires a plaintiff to have suffered an “injury in fact.” The U.S. Court of Appeals for the 9th Circuit held that standing is established alone by a violation of the act regardless of whether Edwards was overcharged (which she was not) or suffered any economic loss. Representing First American, Aaron Panner of Washington, D.C.’s Kellogg, Huber, Hansen, Todd, Evans & Figel, 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.” The violation of a statutory right, he said, does not create injury for constitutional purposes and Congress cannot legislate that it does because that would raise separation of powers issues. Jeffrey Lamken of D.C.’s MoloLamken, representing Edwards, and Assistant to the Solicitor General Anthony Yang disagreed. “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,” said Lamken. “The invasion of your right to conflict-free service was itself a sufficiently concrete and particularized injury in fact.” Yang noted that at the time of the framing of the Constitution, there were many types of injuries recognized that only had an invasion of a legally protected right, for example, breaches of agreements and trespasses. In Edwards case, he said, “She paid money for a service that she got, and it was unlawfully tainted by a kickback and that’s the type of thing that traditionally can be enforced in court.” Marcia Coyle can be contacted at [email protected].

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.