kickbacks

Oral argument: Feb. 21, 2012

Appealed from: United States Court of Appeals for the Fifth Circuit (Nov. 17, 2010)

REAL ESTATE SETTLEMENT PROCEDURES ACT, SETTLEMENT SERVICES, KICKBACKS, REFERRAL

Quicken Loans charged three couples with mortgage discount fees that were allegedly unearned. One couple, the Freemans, initiated a civil action under Section 2607(b) of the Real Estate Procedures Act of 1974 (“RESPA”), claiming that RESPA prohibits a settlement services provider from charging any unearned fees. The district court dismissed the suit, holding that Section 2607(b) only applies to fees split with another culpable party. The Fifth Circuit affirmed. Now, after consolidating their case with the other couples’ claims, the Freemans argue that the Fifth Circuit’s decision should be overturned because the intent of RESPA was to proscribe all unearned fees, including fees charged by settlement service providers acting unilaterally. Quicken Loans counters that Congress intended to restrict only split fees, protecting consumers such as the Freemans through extensive disclosure requirements. The Supreme Court’s decision will clarify the judicial interpretation of Section 2607(b) and determine which fees RESPA forbids.

Oral argument: Nov. 30, 2011

Appealed from: United States Court of Appeals for the Ninth Circuit (June 21, 2010)

In this case, the Supreme Court will decide whether a plaintiff has Article III standing to sue under the Real Estate Settlement Procedures Act (“RESPA”) when the plaintiff alleges no injury-in-fact. Respondent Denise Edwards contends that she has standing because, through RESPA, Congress identified a specific harm resulting from a conflict of interest between title insurance service firms and title agents who enter exclusive agreements to exchange referrals for kickbacks. Edwards argues that Congress tethered that harm to a certain class of plaintiffs, which includes Edwards. Respondent First American Financial Corporation rejoins that a plaintiff must allege a personal and concrete harm to gain Constitutional standing. Under this standard, First American asserts that Edwards alleged no such harm and thus lacks standing to sue. The Court’s decision here has the potential to greatly enhance plaintiffs’ ability to organize class actions and obtain relief for statutory violations in various industries and differing legal frameworks.