Posted Sep 28, 2011 10:30 am CDT
A case pending before the U.S. Supreme Court considers whether consumers who suffer no financial injuries have standing to sue for statutory violations under Article III of the Constitution.
The case before the court involves “the mundane business of title insurance,” Forbes reports. “But companies from Facebook to the automobile manufacturers have weighed in with briefs urging the high court to overturn a 9th Circuit decision that they say would allow lawyers to assemble class actions any time they discover a company has violated a law or regulation.”
Mayer Brown lawyer Donald Falk calls the case “the big sleeper of the term,” Forbes says. He filed an amicus brief (PDF) on behalf of automakers that argues plaintiffs unaffected by a legal violation do not have standing to sue.
The San Francisco-based 9th U.S. Circuit Court of Appeals had allowed the class action filed by Cleveland homebuyer Denise Edwards. She had sued First American Title Insurance for paying an alleged kickback to a title agency that agreed to sell First American policies exclusively. Edwards did not suffer any financial injury, however, because an Ohio law required uniform pricing for title insurance.
The 9th Circuit ruled (PDF) that Edwards had standing to sue for the statutory injury created by the Real Estate Settlement Procedures Act. RESPA bars the payment of any fee or kickback for referrals, and provides for damages of three times the amount paid for the improper service.
The U.S. Supreme Court will consider only the standing issue. The case, First American Financial Corp. v. Edwards, will be argued Nov. 28. SCOTUSblog links to documents in the case.