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InfoBytes
CONSUMER FINANCE HEADLINES & DEADLINES FOR OUR CLIENTS AND FRIENDS
Topics – Covered This Week (Click to View)
FEDERAL ISSUES
GAO Reports that CTR Exemptions Could Increase without Effecting Law Enforcement. On February 21, the Government Accountability Office (GAO) issued a report titled, Bank Secrecy Act: Increased Use of Exemption Provisions Could Reduce Currency Transaction Reporting While Maintaining Usefulness to Law Enforcement Efforts. The report discusses (i) the usefulness of Currency Transaction Reports (CTRs) to law enforcement; (ii) depository institutions' costs of meeting CTR requirements; and (iii) ways to encourage use of exemptions to avoid unnecessary CTRs. The GAO reported, among other things, the following as deficiencies of the CTR program: (i) linking law enforcement's use of CTRs to specific outcomes is difficult because agencies do not track their use of CTRs; (ii) Financial Crimes Enforcement Network does not routinely publish summary information on law enforcement uses of CTR data; (iii) institutions generally are unable to quantify the costs of CTRs; (iv) almost all institutions reported that they have not completely automated all steps for CTRs; and, (v) a number of factors deter the use of exemptions to the CTR requirement. Institutions cited as deterrents to the use of exemptions uncertainty about the documentation required to demonstrate that some customers are in fact eligible, concern that federal banking regulators would find fault with their exemption determinations, the need to file an exemption form and annually review the supporting data, and the need for biennial renew eligibility for some customers. The report recommends removing regulatory deterrents and providing additional guidance and web-based materials to assist depository institutions in avoiding filing unnecessary CTRs without harming law enforcement efforts. A copy of this report is available at http://www.gao.gov/docsearch/abstract.php?rptno=GAO-08-355.
OCC Lowers Assessment Fees for National Banks. On February 19, the Office of the Comptroller of the Currency (OCC) published an interim final rule restructuring and lowering assessment fees for national banks. The fee schedule, which had not been altered since 1992, now includes a top bracket for national banks with $250 billion in assets or more. As the rule reduces the regulatory restrictions, the OCC elected to make the interim final rule effective immediately upon publication. However the OCC will solicit comments on the new fee schedule until March 20, 2008 prior to issuing a final rule. For a copy of the rule, please see http://www.occ.treas.gov/fr/fedregister/73fr9012.pdf.
OTS Issues Trust Referral Bulletin. On February 20, the Office of Thrift Supervision (OTS) issued a bulletin regarding disclosure and other compliance requirements for trust account referral fee programs. Although the OTS does not place limitations on the size of the referral fee, the program must satisfy fiduciary obligations and avoid conflicts of interest. Institutions must disclose certain information to trust account customers, in particular: the nature of the relationship between the referring party and the institution; a description of the referral fee program; and a statement of the services that will be performed. Savings institutions must engage in sufficient oversight to ensure that the referral fee program is in compliance with all OTS regulations. Finally, the OTS reminds institutions that any referral fees may not result in the customer paying an additional amount for trust account services. For a full copy of this bulletin, please see http://www.ots.treas.gov/docs/8/84295.pdf.
STATE ISSUES
Maryland Emergency Regs Require Servicers to File Reports on Activities. On February 19, the Joint Committee on Administrative, Executive and Legislative Review of the Maryland General Assembly passed an emergency regulation imposing certain reporting requirements on mortgage loan servicers licensed under the Maryland Mortgage Lender Law. The emergency regulation requires that mortgage loan servicers report the following information that occurred in the preceding month to the Commissioner of Financial Regulation on the 20th of every month: (i) the number of mortgage loans serviced; (ii) the number mortgage loans being serviced that are in default, broken down by 30, 60, and 90-day delinquencies; (iii) information on the loss mitigation activities untaken by the servicer, such as workout arrangements and the actions taken by servicers to determine which borrowers are at a heightened risk of default on their mortgage loans; (iv) the number of foreclosure actions which the servicer has commenced in Maryland; (v) information regarding to adjustable rate mortgages; and (vi) any other information required by the Commissioner. The rule authorizes the Commissioner to publish this information for the public, excluding any personally identifying information regarding borrowers. The rule comes as Maryland Gov. Martin O’Malley has called for an “emergency work-session” with lenders to address the foreclosure crisis. The emergency regulation went into effect immediately upon passage. The first report is due March 20th, although the emergency rule notes that a grace period may be permitted for the first month. For more information, please see http://www.dllr.state.md.us/finance/mlemerreg.htm.
California Considers Legislation Excluding Forgiven Mortgage Debt from Taxable Income. On February 21, the Revenue and Taxation Committee of the California Senate passed a bill through to the Senate Appropriations Committee that would allow taxpayers to exclude forgiven mortgage debt from taxable income. The bill, S.B.1055, would allow borrowers who successfully negotiated with their lenders to receive some form of forgiveness on their original debt obligation to exclude the forgiven sums from their taxable income. S.B. 1055 substantially conforms with a similar federal law enacted last year (the Mortgage Debt Relief Act, reported in InfoBytes, Dec. 21, 2007), but S.B. 1055 would apply to debt that was discharged between January 1, 2007 and January 1, 2009, unlike the federal law which extends to January 1, 2010. For a full text of the S.B. 1055 please see http://info.sen.ca.gov/pub/07-08/bill/sen/sb_1051-1100/sb_1055_bill_20080107_introduced.pdf.
COURTS
FCRA Preempts North Carolina Restrictions on Collection Practices. A federal district court in North Carolina recently held that the Fair Credit Reporting Act (FCRA) preempted claims brought under the state’s unfair and deceptive acts and practices (UDAP) and collection agencies laws. See Davis v. Trans Union, LLC, 526 F. Supp.2d 577 (W.D.N.C. 2007). The plaintiff in the case alleged, among other things, that Sterling and King, Inc., a debt collector, “coerced, oppressed, and fraudulently misled while seeking to collect [a] disputed debt,” in violation of North Carolina law. According to the court, the claims implicated section 1681t(b)(1)(F) of FCRA, which provides that “[n]o requirement or prohibition may be imposed under the laws of any State … with respect to any subject matter regulated under . . . section 1681s-2 of [FCRA], relating to the responsibilities of persons who furnish information to consumer reporting agencies.” Relying on precedent, the court concluded that FCRA preempted the plaintiff’s North Carolina statutory claims. However, the court upheld the plaintiff’s common law defamation claim, which specifically alleged that Sterling reported false information “willfully, maliciously, and with an intent to injure the Plaintiff,” and was therefore sufficient to avoid FCRA preemption. The court also refused to dismiss the plaintiff’s FCRA and Fair Debt Collection Practices Act claims. For a copy of the opinion, please see http://www.buckleykolar.com/publications/documents/DavisvTransUnionLLC.pdf.
Court Rejects Summary Judgment in FCRA Case, Relying on Safeco. In a recent unreported decision, a California federal district court denied summary judgment to a retail merchant facing allegations that it willfully violated the Fair Credit Reporting Act (FCRA). Soualian v. International Coffee & Tea, LLC, 2008 WL 410618, No. 07-0502 (C.D. Cal. Feb. 9, 2008). In particular, the plaintiff alleged that the defendant merchant Coffee Bean willfully violated FCRA when it printed the last five digits of her credit card and her card expiration date on her receipt. In its opinion, the Court referred to the recent U.S. Supreme Court decision in Safeco Ins. Co. of America v. Burr, 127 S.Ct. 2201 (2007) (see InfoBytes Special Alert, June 4, 2007), in which the Supreme Court clarified the meaning of "willful" as it pertains to FCRA, stating that it encompasses a "knowing or reckless violation." Coffee Bean argued that (i) that Safeco's holding on willful violations referred to an unrelated provision of FCRA and therefore does not apply in this case, and (ii) that the reckless standard requires a showing of a risk of harm. The Court rejected both arguments. It stated that the Safeco decision interpreted the civil liability section of FCRA, which applies to any requirement under FCRA, including the one at bar, and also that the Safeco court only used the phrase "risk of harm" to explain if there was a reckless disregard of a statutory duty, not that the traditional "risk of harm" inquiry from tort law be read into the FCRA. Consequently, the Court rejected Coffee Bean's motions for summary judgment and for partial summary judgment. For a copy of this decision, please see http://www.buckleykolar.com/publications/documents/SoualianvInternationalCoffeeTeaLLC.pdf.
State Appellate Court Affirms Liability for TCPA Violation. A New York state appeals court recently affirmed a trial court decision that unsolicited faxes entitled “Attorney Malpractice Report” that summarized legal events and discussed an attorneys services were “commercial” and violated the Telephone Consumer Protection Act (TCPA). Stern v. Bluestone, 2008 NY Slip Op 00611. The TCPA prohibits unsolicited faxes that have the effect and purpose of advertising services, directly or indirectly, and authorizes a private right of action to enjoin violation of the TCPA and to recover actual monetary loss from such violation and/or receive $500 in damages for each violation, whichever is greater. In this case, the plaintiff alleged that he received fourteen faxes from the defendant between November 25, 2003 and March 29, 2005 in violation of the TCPA. The plaintiff sought statutory damages for each fax sent, as well as treble damages for the defendant’s willful and knowing violation of the TCPA. The plaintiff also sought injunctive relief from further faxes. The trial court granted partial summary judgment as to liability, and found that because the defendant attorney had been sued previously for violating the TCPA, he was aware of the TCPA and should have known that his conduct violated the statute. Thus, the trial court found that the defendant willfully and knowingly violated the TCPA. In affirming the trial court’s decision, the appellate court held that the faxes had the purpose and effect of indirectly advertising the commercial availability of legal services because they included the name of the defendant’s law firm, contact information, and website information, which advertises his professional services. The court reasoned that merely stating on the faxes that they are not advertisements of the availability of services does not make it so. The appellate court further noted that the defendant is liable for faxes sent to the plaintiff’s fax machine despite being sent to the attention of another person; otherwise, the court held, a fax sender could easily avoid the purpose of the TCPA by putting an incorrect name on the addressee portion of the fax. Lastly, the appellate court held that the appropriate statute of limitations period for TCPA actions is four years, and therefore, the dismissal of the defendant’s statute-of-limitations defense was correctly granted. The dissent disagreed as to whether the faxes constituted advertisements as a matter of law, and felt the determination should be left to a jury. For a copy of the slip opinion, please see http://www.nycourts.gov/reporter/3dseries/2008/2008_00611.htm.
Class Notification Approved in ADA Suit over Target Website. A federal district court approved class notification procedures in National Federation of the Blind v. Target Corp No. 06-01802 (N.D. Cal., Jan. 25, 2008), a suit brought under the Americans with Disabilities Act (ADA) accusing Target of discriminating against the blind by not providing information on their website in a form accessible to the visually impaired. The class was certified last spring (reported in InfoBytes, May 4, 2007). The notification is being partially conducted online, using email and the website available at http://www.nfbtargetlawsuit.com/. Eligible class members will have 70 days from when the notice is e-mailed or sent by post to opt out. For a copy of this opinion, please see http://www.buckleykolar.com/publications/documents/NationalFederationoftheBlindvTargetCorp.pdf.
MISCELLANY
HOPE NOW Servicers Implement 30-Day Foreclosure Pause. On February 12, six members of the HOPE NOW Alliance, the voluntary industry initiative to fight the foreclosure crisis endorsed by the Bush Administration (see InfoBytes, Dec. 7, 2007), announced they would offer defaulting borrowers a program to temporarily “freeze” the foreclosure process. According to HOPE NOW, Bank of America, Citigroup, Countrywide, Chase, Washington Mutual, and Wells Fargo, under a program entitled “Project Lifeline,” will now offer borrowers of all types an opportunity to pause the foreclosure process. Under the program, servicers will contact “seriously delinquent” borrowers, and encourage them to contact the servicer regarding restructuring or workout alternatives, as well as, “if appropriate,” pausing the foreclosure process for 30 days to consider possible plans. For the official HOPE NOW press release, see http://www.fsround.org/hope_now/pdfs/February12-HOPENOWPressRelease.pdf.
FIRM NEWS
We are pleased to announce that Bob Serino has become a partner at Buckley Kolar. Mr. Serino, former Deputy Chief Counsel of the OCC, is a prominent member of the banking bar in Washington. Before becoming Deputy Chief Counsel, Mr. Serino had been the founding director of the OCC’s Enforcement and Compliance Division. He is a recognized national expert on Anti-Money Laundering / Bank Secrecy Act compliance and has extensive experience handling enforcement and regulatory issues before federal and state financial regulatory agencies. For more information about Mr. Serino, please see http://www.buckleykolar.com/attorneys/rserino.php.
Maryland Emergency Regs Require Servicers to File Reports on Activities. On February 19, the Joint Committee on Administrative, Executive and Legislative Review of the Maryland General Assembly passed an emergency regulation imposing certain reporting requirements on mortgage loan servicers licensed under the Maryland Mortgage Lender Law. The emergency regulation requires that mortgage loan servicers report the following information that occurred in the preceding month to the Commissioner of Financial Regulation on the 20th of every month: (i) the number of mortgage loans serviced; (ii) the number mortgage loans being serviced that are in default, broken down by 30, 60, and 90-day delinquencies; (iii) information on the loss mitigation activities untaken by the servicer, such as workout arrangements and the actions taken by servicers to determine which borrowers are at a heightened risk of default on their mortgage loans; (iv) the number of foreclosure actions which the servicer has commenced in Maryland; (v) information regarding to adjustable rate mortgages; and (vi) any other information required by the Commissioner. The rule authorizes the Commissioner to publish this information for the public, excluding any personally identifying information regarding borrowers. The rule comes as Maryland Gov. Martin O’Malley has called for an “emergency work-session” with lenders to address the foreclosure crisis. The emergency regulation went into effect immediately upon passage. The first report is due March 20th, although the emergency rule notes that a grace period may be permitted for the first month. For more information, please see http://www.dllr.state.md.us/finance/mlemerreg.htm.
HOPE NOW Servicers Implement 30-Day Foreclosure Pause. On February 12, six members of the HOPE NOW Alliance, the voluntary industry initiative to fight the foreclosure crisis endorsed by the Bush Administration (see InfoBytes, Dec. 7, 2007), announced they would offer defaulting borrowers a program to temporarily “freeze” the foreclosure process. According to HOPE NOW, Bank of America, Citigroup, Countrywide, Chase, Washington Mutual, and Wells Fargo, under a program entitled “Project Lifeline,” will now offer borrowers of all types an opportunity to pause the foreclosure process. Under the program, servicers will contact “seriously delinquent” borrowers, and encourage them to contact the servicer regarding restructuring or workout alternatives, as well as, “if appropriate,” pausing the foreclosure process for 30 days to consider possible plans. For the official HOPE NOW press release, see http://www.fsround.org/hope_now/pdfs/February12-HOPENOWPressRelease.pdf.
California Considers Legislation Excluding Forgiven Mortgage Debt from Taxable Income. On February 21, the Revenue and Taxation Committee of the California Senate passed a bill through to the Senate Appropriations Committee that would allow taxpayers to exclude forgiven mortgage debt from taxable income. The bill, S.B.1055, would allow borrowers who successfully negotiated with their lenders to receive some form of forgiveness on their original debt obligation to exclude the forgiven sums from their taxable income. S.B. 1055 substantially conforms with a similar federal law enacted last year (the Mortgage Debt Relief Act, reported in InfoBytes, Dec. 21, 2007), but S.B. 1055 would apply to debt that was discharged between January 1, 2007 and January 1, 2009, unlike the federal law which extends to January 1, 2010. For a full text of the S.B. 1055 please see http://info.sen.ca.gov/pub/07-08/bill/sen/sb_1051-1100/sb_1055_bill_20080107_introduced.pdf.
GAO Reports that CTR Exemptions Could Increase without Effecting Law Enforcement. On February 21, the Government Accountability Office (GAO) issued a report titled, Bank Secrecy Act: Increased Use of Exemption Provisions Could Reduce Currency Transaction Reporting While Maintaining Usefulness to Law Enforcement Efforts. The report discusses (i) the usefulness of Currency Transaction Reports (CTRs) to law enforcement; (ii) depository institutions' costs of meeting CTR requirements; and (iii) ways to encourage use of exemptions to avoid unnecessary CTRs. The GAO reported, among other things, the following as deficiencies of the CTR program: (i) linking law enforcement's use of CTRs to specific outcomes is difficult because agencies do not track their use of CTRs; (ii) Financial Crimes Enforcement Network does not routinely publish summary information on law enforcement uses of CTR data; (iii) institutions generally are unable to quantify the costs of CTRs; (iv) almost all institutions reported that they have not completely automated all steps for CTRs; and, (v) a number of factors deter the use of exemptions to the CTR requirement. Institutions cited as deterrents to the use of exemptions uncertainty about the documentation required to demonstrate that some customers are in fact eligible, concern that federal banking regulators would find fault with their exemption determinations, the need to file an exemption form and annually review the supporting data, and the need for biennial renew eligibility for some customers. The report recommends removing regulatory deterrents and providing additional guidance and web-based materials to assist depository institutions in avoiding filing unnecessary CTRs without harming law enforcement efforts. A copy of this report is available at http://www.gao.gov/docsearch/abstract.php?rptno=GAO-08-355.
OCC Lowers Assessment Fees for National Banks. On February 19, the Office of the Comptroller of the Currency (OCC) published an interim final rule restructuring and lowering assessment fees for national banks. The fee schedule, which had not been altered since 1992, now includes a top bracket for national banks with $250 billion in assets or more. As the rule reduces the regulatory restrictions, the OCC elected to make the interim final rule effective immediately upon publication. However the OCC will solicit comments on the new fee schedule until March 20, 2008 prior to issuing a final rule. For a copy of the rule, please see http://www.occ.treas.gov/fr/fedregister/73fr9012.pdf.
OTS Issues Trust Referral Bulletin. On February 20, the Office of Thrift Supervision (OTS) issued a bulletin regarding disclosure and other compliance requirements for trust account referral fee programs. Although the OTS does not place limitations on the size of the referral fee, the program must satisfy fiduciary obligations and avoid conflicts of interest. Institutions must disclose certain information to trust account customers, in particular: the nature of the relationship between the referring party and the institution; a description of the referral fee program; and a statement of the services that will be performed. Savings institutions must engage in sufficient oversight to ensure that the referral fee program is in compliance with all OTS regulations. Finally, the OTS reminds institutions that any referral fees may not result in the customer paying an additional amount for trust account services. For a full copy of this bulletin, please see http://www.ots.treas.gov/docs/8/84295.pdf.
FCRA Preempts North Carolina Restrictions on Collection Practices. A federal district court in North Carolina recently held that the Fair Credit Reporting Act (FCRA) preempted claims brought under the state’s unfair and deceptive acts and practices (UDAP) and collection agencies laws. See Davis v. Trans Union, LLC, 526 F. Supp.2d 577 (W.D.N.C. 2007). The plaintiff in the case alleged, among other things, that Sterling and King, Inc., a debt collector, “coerced, oppressed, and fraudulently misled while seeking to collect [a] disputed debt,” in violation of North Carolina law. According to the court, the claims implicated section 1681t(b)(1)(F) of FCRA, which provides that “[n]o requirement or prohibition may be imposed under the laws of any State … with respect to any subject matter regulated under . . . section 1681s-2 of [FCRA], relating to the responsibilities of persons who furnish information to consumer reporting agencies.” Relying on precedent, the court concluded that FCRA preempted the plaintiff’s North Carolina statutory claims. However, the court upheld the plaintiff’s common law defamation claim, which specifically alleged that Sterling reported false information “willfully, maliciously, and with an intent to injure the Plaintiff,” and was therefore sufficient to avoid FCRA preemption. The court also refused to dismiss the plaintiff’s FCRA and Fair Debt Collection Practices Act claims. For a copy of the opinion, please see http://www.buckleykolar.com/publications/documents/DavisvTransUnionLLC.pdf.
FCRA Preempts North Carolina Restrictions on Collection Practices. A federal district court in North Carolina recently held that the Fair Credit Reporting Act (FCRA) preempted claims brought under the state’s unfair and deceptive acts and practices (UDAP) and collection agencies laws. See Davis v. Trans Union, LLC, 526 F. Supp.2d 577 (W.D.N.C. 2007). The plaintiff in the case alleged, among other things, that Sterling and King, Inc., a debt collector, “coerced, oppressed, and fraudulently misled while seeking to collect [a] disputed debt,” in violation of North Carolina law. According to the court, the claims implicated section 1681t(b)(1)(F) of FCRA, which provides that “[n]o requirement or prohibition may be imposed under the laws of any State … with respect to any subject matter regulated under . . . section 1681s-2 of [FCRA], relating to the responsibilities of persons who furnish information to consumer reporting agencies.” Relying on precedent, the court concluded that FCRA preempted the plaintiff’s North Carolina statutory claims. However, the court upheld the plaintiff’s common law defamation claim, which specifically alleged that Sterling reported false information “willfully, maliciously, and with an intent to injure the Plaintiff,” and was therefore sufficient to avoid FCRA preemption. The court also refused to dismiss the plaintiff’s FCRA and Fair Debt Collection Practices Act claims. For a copy of the opinion, please see http://www.buckleykolar.com/publications/documents/DavisvTransUnionLLC.pdf.
Court Rejects Summary Judgment in FCRA Case, Relying on Safeco. In a recent unreported decision, a California federal district court denied summary judgment to a retail merchant facing allegations that it willfully violated the Fair Credit Reporting Act (FCRA). Soualian v. International Coffee & Tea, LLC, 2008 WL 410618, No. 07-0502 (C.D. Cal. Feb. 9, 2008). In particular, the plaintiff alleged that the defendant merchant Coffee Bean willfully violated FCRA when it printed the last five digits of her credit card and her card expiration date on her receipt. In its opinion, the Court referred to the recent U.S. Supreme Court decision in Safeco Ins. Co. of America v. Burr, 127 S.Ct. 2201 (2007) (see InfoBytes Special Alert, June 4, 2007), in which the Supreme Court clarified the meaning of "willful" as it pertains to FCRA, stating that it encompasses a "knowing or reckless violation." Coffee Bean argued that (i) that Safeco's holding on willful violations referred to an unrelated provision of FCRA and therefore does not apply in this case, and (ii) that the reckless standard requires a showing of a risk of harm. The Court rejected both arguments. It stated that the Safeco decision interpreted the civil liability section of FCRA, which applies to any requirement under FCRA, including the one at bar, and also that the Safeco court only used the phrase "risk of harm" to explain if there was a reckless disregard of a statutory duty, not that the traditional "risk of harm" inquiry from tort law be read into the FCRA. Consequently, the Court rejected Coffee Bean's motions for summary judgment and for partial summary judgment. For a copy of this decision, please see http://www.buckleykolar.com/publications/documents/SoualianvInternationalCoffeeTeaLLC.pdf.
State Appellate Court Affirms Liability for TCPA Violation. A New York state appeals court recently affirmed a trial court decision that unsolicited faxes entitled “Attorney Malpractice Report” that summarized legal events and discussed an attorneys services were “commercial” and violated the Telephone Consumer Protection Act (TCPA). Stern v. Bluestone, 2008 NY Slip Op 00611. The TCPA prohibits unsolicited faxes that have the effect and purpose of advertising services, directly or indirectly, and authorizes a private right of action to enjoin violation of the TCPA and to recover actual monetary loss from such violation and/or receive $500 in damages for each violation, whichever is greater. In this case, the plaintiff alleged that he received fourteen faxes from the defendant between November 25, 2003 and March 29, 2005 in violation of the TCPA. The plaintiff sought statutory damages for each fax sent, as well as treble damages for the defendant’s willful and knowing violation of the TCPA. The plaintiff also sought injunctive relief from further faxes. The trial court granted partial summary judgment as to liability, and found that because the defendant attorney had been sued previously for violating the TCPA, he was aware of the TCPA and should have known that his conduct violated the statute. Thus, the trial court found that the defendant willfully and knowingly violated the TCPA. In affirming the trial court’s decision, the appellate court held that the faxes had the purpose and effect of indirectly advertising the commercial availability of legal services because they included the name of the defendant’s law firm, contact information, and website information, which advertises his professional services. The court reasoned that merely stating on the faxes that they are not advertisements of the availability of services does not make it so. The appellate court further noted that the defendant is liable for faxes sent to the plaintiff’s fax machine despite being sent to the attention of another person; otherwise, the court held, a fax sender could easily avoid the purpose of the TCPA by putting an incorrect name on the addressee portion of the fax. Lastly, the appellate court held that the appropriate statute of limitations period for TCPA actions is four years, and therefore, the dismissal of the defendant’s statute-of-limitations defense was correctly granted. The dissent disagreed as to whether the faxes constituted advertisements as a matter of law, and felt the determination should be left to a jury. For a copy of the slip opinion, please see http://www.nycourts.gov/reporter/3dseries/2008/2008_00611.htm.
Class Notification Approved in ADA Suit over Target Website. A federal district court approved class notification procedures in National Federation of the Blind v. Target Corp No. 06-01802 (N.D. Cal., Jan. 25, 2008), a suit brought under the Americans with Disabilities Act (ADA) accusing Target of discriminating against the blind by not providing information on their website in a form accessible to the visually impaired. The class was certified last spring (reported in InfoBytes, May 4, 2007). The notification is being partially conducted online, using email and the website available at http://www.nfbtargetlawsuit.com/. Eligible class members will have 70 days from when the notice is e-mailed or sent by post to opt out. For a copy of this opinion, please see http://www.buckleykolar.com/publications/documents/NationalFederationoftheBlindvTargetCorp.pdf.
State Appellate Court Affirms Liability for TCPA Violation. A New York state appeals court recently affirmed a trial court decision that unsolicited faxes entitled “Attorney Malpractice Report” that summarized legal events and discussed an attorneys services were “commercial” and violated the Telephone Consumer Protection Act (TCPA). Stern v. Bluestone, 2008 NY Slip Op 00611. The TCPA prohibits unsolicited faxes that have the effect and purpose of advertising services, directly or indirectly, and authorizes a private right of action to enjoin violation of the TCPA and to recover actual monetary loss from such violation and/or receive $500 in damages for each violation, whichever is greater. In this case, the plaintiff alleged that he received fourteen faxes from the defendant between November 25, 2003 and March 29, 2005 in violation of the TCPA. The plaintiff sought statutory damages for each fax sent, as well as treble damages for the defendant’s willful and knowing violation of the TCPA. The plaintiff also sought injunctive relief from further faxes. The trial court granted partial summary judgment as to liability, and found that because the defendant attorney had been sued previously for violating the TCPA, he was aware of the TCPA and should have known that his conduct violated the statute. Thus, the trial court found that the defendant willfully and knowingly violated the TCPA. In affirming the trial court’s decision, the appellate court held that the faxes had the purpose and effect of indirectly advertising the commercial availability of legal services because they included the name of the defendant’s law firm, contact information, and website information, which advertises his professional services. The court reasoned that merely stating on the faxes that they are not advertisements of the availability of services does not make it so. The appellate court further noted that the defendant is liable for faxes sent to the plaintiff’s fax machine despite being sent to the attention of another person; otherwise, the court held, a fax sender could easily avoid the purpose of the TCPA by putting an incorrect name on the addressee portion of the fax. Lastly, the appellate court held that the appropriate statute of limitations period for TCPA actions is four years, and therefore, the dismissal of the defendant’s statute-of-limitations defense was correctly granted. The dissent disagreed as to whether the faxes constituted advertisements as a matter of law, and felt the determination should be left to a jury. For a copy of the slip opinion, please see http://www.nycourts.gov/reporter/3dseries/2008/2008_00611.htm.
Class Notification Approved in ADA Suit over Target Website. A federal district court approved class notification procedures in National Federation of the Blind v. Target Corp No. 06-01802 (N.D. Cal., Jan. 25, 2008), a suit brought under the Americans with Disabilities Act (ADA) accusing Target of discriminating against the blind by not providing information on their website in a form accessible to the visually impaired. The class was certified last spring (reported in InfoBytes, May 4, 2007). The notification is being partially conducted online, using email and the website available at http://www.nfbtargetlawsuit.com/. Eligible class members will have 70 days from when the notice is e-mailed or sent by post to opt out. For a copy of this opinion, please see http://www.buckleykolar.com/publications/documents/NationalFederationoftheBlindvTargetCorp.pdf.
Court Rejects Summary Judgment in FCRA Case, Relying on Safeco. In a recent unreported decision, a California federal district court denied summary judgment to a retail merchant facing allegations that it willfully violated the Fair Credit Reporting Act (FCRA). Soualian v. International Coffee & Tea, LLC, 2008 WL 410618, No. 07-0502 (C.D. Cal. Feb. 9, 2008). In particular, the plaintiff alleged that the defendant merchant Coffee Bean willfully violated FCRA when it printed the last five digits of her credit card and her card expiration date on her receipt. In its opinion, the Court referred to the recent U.S. Supreme Court decision in Safeco Ins. Co. of America v. Burr, 127 S.Ct. 2201 (2007) (see InfoBytes Special Alert, June 4, 2007), in which the Supreme Court clarified the meaning of "willful" as it pertains to FCRA, stating that it encompasses a "knowing or reckless violation." Coffee Bean argued that (i) that Safeco's holding on willful violations referred to an unrelated provision of FCRA and therefore does not apply in this case, and (ii) that the reckless standard requires a showing of a risk of harm. The Court rejected both arguments. It stated that the Safeco decision interpreted the civil liability section of FCRA, which applies to any requirement under FCRA, including the one at bar, and also that the Safeco court only used the phrase "risk of harm" to explain if there was a reckless disregard of a statutory duty, not that the traditional "risk of harm" inquiry from tort law be read into the FCRA. Consequently, the Court rejected Coffee Bean's motions for summary judgment and for partial summary judgment. For a copy of this decision, please see http://www.buckleykolar.com/publications/documents/SoualianvInternationalCoffeeTeaLLC.pdf.
© Buckley Kolar, LLP 2005. INFOBYTES is not intended as legal advice to any person or firm. It is provided as a client service and information contained herein is drawn from various public sources, including other publications.
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