contracts

Byrd v. United States

Issues 

Does a driver in sole possession of a rental car and with the renter’s permission to operate the car, but not included as a driver on the rental agreement, have a reasonable expectation of privacy that is entitled to constitutional protection?

Terrence Byrd was pulled over by a Pennsylvania police officer for violating a state driving law. Eventually, the officer and another police officer discovered that Byrd was driving a rental car but was not a named driver on the rental agreement. Moreover, the officers also discovered that Byrd had a criminal record that included drug, weapon, and assault charges. Ultimately, the officers asked Byrd for permission to search the car, which they assert that Byrd granted, and, the officers found both heroin and illegal body armor in the car. Byrd challenged the stop and search arguing that it was unlawful. The District Court held that the stop and search was lawful. On appeal, the Third Circuit further recognized that the driver of a rental car who is not listed on the rental agreement did not have a reasonable expectation of privacy. The Supreme Court will likely resolve the Circuit conflict regarding whether a reasonable expectation of privacy exists for a driver in sole possession of a rental vehicle that is not listed as a driver on the rental agreement.

Questions as Framed for the Court by the Parties 

The Fourth Amendment protects people from suspicionless searches of places and effects in which they have a reasonable expectation of privacy. Does a driver in sole possession of a rental vehicle reasonably expect privacy in the vehicle where he has the renter’s permission to drive the vehicle but is not listed as an authorized driver on the rental agreement?

In Harrisburg, Pennsylvania, a state police officer pulled petitioner Terrence Byrd over for violating a state driving law. United States v. Byrd at 2. The police officer, eventually accompanied by another officer, found that Byrd was driving a rental car but that Byrd’s name was not on the rental agreement. Id. at 3.

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Epic Systems Corp. v. Lewis

Issues 

Does the National Labor Relations Act prohibit the enforcement of agreements between employers and employees requiring individual employees to waive the right to participate in collective litigation, collective actions, and collective arbitration under the Federal Arbitration Act? 

At issue in this case is whether employment contracts barring employees from collectively arbitrating disputes with employers are illegal under the National Labor Relations Act (“NLRA”). Employees argue that preventing collective arbitration interferes with the NLRA’s Section 7 protections of “concerted activity” for “mutual aid and protection”. Employers counter that the Federal Arbitration Act governs the arbitration agreements, under which they are enforceable. Employers also contend that enforcing the agreements protects freedom of contract, thus promoting efficiency and protecting judicial resources. Employees respond that collective arbitration allows them to share the costs and risks of litigation, thereby allowing them to pursue claims that, in the aggregate, may reveal abusive practices by employers. One on hand, freedom of contract in the interest of judicial economy may be harmed if the Court does not uphold the validity of the waivers. On the other hand, if the Court does uphold the validity of the waivers, it will may become more difficult for employees to challenge abusive work practices in their workplaces.

Questions as Framed for the Court by the Parties 

Whether the collective-bargaining provisions of the National Labor Relations Act prohibit the enforcement under the Federal Arbitration Act of an agreement requiring an employee to arbitrate claims against an employer on an individual, rather than collective, basis.

The Court here considers three consolidated cases: Epic Systems Corp. v. Lewis, Ernst & Young, LLP v. Morris, et al., and National Labor Relations Board (“NLRB”) v. Murphy Oil USA, Inc. Epic Systems, Ernst & Young, and Murphy Oil (“Employers”) urge the Court to uphold class action and collective arbitration waivers between employers and employees.

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Kindred Nursing Centers v. Clark

Issues 

Does the Federal Arbitration Act preempt a state-law contract rule that requires a power of attorney to expressly refer to arbitration agreements before an attorney-in-fact can bind her principal to such an agreement? 

Court below: 

The Court must consider whether federal law preempts state law regarding arbitration clauses in powers-of-attorneys. Kindred Nursing Centers argues that state law, which requires principals to explicitly authorize an agent to enter into arbitration agreements, violates the Federal Arbitration Act. Contrarily, Janis E. Clark and Beverly Wellner argue that state law governs contract formation and that state law requires powers-of-attorneys to adhere to the expressed intentions of the principal in a contract. The case will determine whether powers-of-attorney must explicitly grant the agent the power to bind the grantor to an arbitration agreement and may impact elder care and estate planning practices across the United States.

Questions as Framed for the Court by the Parties 

Whether the Federal Arbitration Act preempts a state-law contract rule that singles out arbitration by requiring a power of attorney to expressly refer to arbitration agreements before the attorney-in-fact can bind her principal to an arbitration agreement.

Petitioners Kindred Nursing Centers et al. (“Kindred Nursing”) operate nursing homes and rehabilitation centers, including the Winchester Centre for Health and Rehabilitation. See Kindred Nursing Centers v. Clark, 478 S.W.3d 306 (Ky. 2015). Respondents Janis E.

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Hawkins v. Community Bank of Raymore

Issues 

  1. Do loan guarantors have the same rights and protections that their applicant spouses are given by the Equal Credit Opportunity Act?
  2. Does the Federal Reserve Board have the authority to define guarantors as applicants for purposes of the Equal Credit Opportunity Act?

 

The Supreme Court will consider whether protections for applicants in the Equal Credit Opportunity Act (“ECOA”) also extend to spouses who sign guaranties, and whether the Federal Reserve Board (the “Fed”), in promulgating Regulation B, permissibly expanded the definition of “applicant” in the ECOA to include such guarantors. See Brief for Petitioners, Hawkins & Patterson at i, 8; Brief for Respondent, Community Bank of Raymore at i. The loan guarantors in this case (Hawkins and Patterson) maintain that ECOA’s protections for applicants extend to guarantors, because the ECOA does not explicitly exclude them, and Regulation B clarifies that the ECOA definition of applicants includes guarantors. See Brief for Petitioners at 16, 56. Accordingly, Hawkins and Patterson assert that they have standing to sue to invalidate the loan agreement as illegal and unenforceable under ECOA.  See id. at 51. Raymore, the creditor here, counters that the plain language of the ECOA protects only applicants, not guarantors. See Brief for Respondent at 1721. Raymore contends that any attempt by the Fed, through Regulation B, to expand the definition of “applicant” in the ECOA to include guarantors was impermissible. See id. at 46. The Supreme Court’s  decision in this case  could affect the cost of borrowing and change the underwriting standards and costs for loans to married business owners.

Questions as Framed for the Court by the Parties 

  1. Whether “primarily and unconditionally liable” spousal guarantors are unambiguously excluded from being Equal Credit Opportunity Act applicants because they are not integrally part of “any aspect of a credit transaction”; and
  2. Whether the Federal Reserve Board has authority under the ECOA to include by regulation spousal guarantors as “applicants” to further the purposes of eliminating discrimination against married women.

This case begins with a loan dispute between Valerie Hawkins and Janice Patterson, as guarantors, and the Community Bank of Raymore, (“Raymore”), as creditorSee Hawkins v. Cmty. Bank of Raymore, 761 F.3d 937, 939 (8th Cir.

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DIRECTV, Inc. v. Amy Imburgia et al.

Issues 

Can parties to a consumer arbitration agreement incorporate otherwise preempted state law into their agreement, or does the Federal Arbitration Act preempt that law in all cases?

 

The Supreme Court will decide whether an arbitration provision in a Customer Agreement purportedly governed by the Federal Arbitration Act (“FAA”) requires the application of state law preempted by, or independent from, the FAA. See Brief for Petitioner, DIRECTV, Inc. at 1.  DIRECTV argues that the parties intended to arbitrate all disputes, that state law is always subject to the preemptive force of federal law, and that in any  event  the FAA requires courts to resolve ambiguities in favor of arbitration. See id. at 18-19. Imburgia counters that the FAA requires agreements to be interpreted according to their express terms and that courts should interpret the express reference to state law in the agreement as California state contract law, independent from the preemptive force of federal law. See Brief for Respondent, Amy Imburgia et al. at 15. The Court’s decision may affect the enforcement of arbitration agreements in other contexts, as well as impact the way in which state courts interpret arbitration agreements. See Brief of Equal Employment Advisory Council as Amicus Curiae, in Support of Petitioner at 21–25.

Questions as Framed for the Court by the Parties 

Did the California Court of Appeal err by holding, in direct conflict with the Ninth Circuit, that a reference to state law in an arbitration agreement governed by the Federal Arbitration Act requires the application of state law preempted by the Federal Arbitration Act?

In September 2008, Amy Imburgia and a class of litigants filed a class action complaint against DIRECTV in California Superior Court, alleging violations of state contract law after receiving a series of early termination fees following the cancellation of their accounts with the company. See Imburgia v. DIRECTV, Inc., 225 Cal. App.

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DIRECTV, Inc. v. Amy Imburgia et al. (14–462)

Issues 

Can parties to a consumer arbitration agreement incorporate otherwise preempted state law into their agreement, or does the Federal Arbitration Act preempt that law in all cases?

The Supreme Court will decide whether an arbitration provision in a Customer Agreement purportedly governed by the Federal Arbitration Act (“FAA”) requires the application of state law preempted by, or independent from, the FAA. See Brief for Petitioner, DIRECTV, Inc. at 1.  DIRECTV argues that the parties intended to arbitrate all disputes, that state law is always subject to the preemptive force of federal law, and that in any event the FAA requires courts to resolve ambiguities in favor of arbitration. See id. at 18-19. Imburgia counters that the FAA requires agreements to be interpreted according to their express terms and that courts should interpret the express reference to state law in the agreement as California state contract law, independent from the preemptive force of federal law. See Brief for Respondent, Amy Imburgia et al. at 15. The Court’s decision may affect the enforcement of arbitration agreements in other contexts, as well as impact the way in which state courts interpret arbitration agreements. See Brief of Equal Employment Advisory Council as Amicus Curiae, in Support of Petitioner at 21–25.

Questions as Framed for the Court by the Parties 

Did the California Court of Appeal err by holding, in direct conflict with the Ninth Circuit, that a reference to state law in an arbitration agreement governed by the Federal Arbitration Act requires the application of state law preempted by the Federal Arbitration Act?

In September 2008, Amy Imburgia and a class of litigants filed a class action complaint against DIRECTV in California Superior Court, alleging violations of state contract law after receiving a series of early termination fees following the cancellation of their accounts with the company. See Imburgia v. DIRECTV, Inc., 225 Cal. App.

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Hawkins v. Community Bank of Raymore (14-520)

Issues 

  1. Do loan guarantors have the same rights and protections that their applicant spouses are given by the Equal Credit Opportunity Act?
  2. Does the Federal Reserve Board have the authority to define guarantors as applicants for purposes of the Equal Credit Opportunity Act?

The Supreme Court will consider whether protections for applicants in the Equal Credit Opportunity Act (“ECOA”) also extend to spouses who sign guaranties, and whether the Federal Reserve Board (the “Fed”), in promulgating Regulation B, permissibly expanded the definition of “applicant” in the ECOA to include such guarantors. See Brief for Petitioners, Hawkins & Patterson at i, 8; Brief for Respondent, Community Bank of Raymore at i. The loan guarantors in this case (Hawkins and Patterson) maintain that ECOA’s protections for applicants extend to guarantors, because the ECOA does not explicitly exclude them, and Regulation B clarifies that the ECOA definition of applicants includes guarantors. See Brief for Petitioners at 16, 56. Accordingly, Hawkins and Patterson assert that they have standing to sue to invalidate the loan agreement as illegal and unenforceable under ECOA.  See id. at 51. Raymore, the creditor here, counters that the plain language of the ECOA protects only applicants, not guarantors. See Brief for Respondent at 1721. Raymore contends that any attempt by the Fed, through Regulation B, to expand the definition of “applicant” in the ECOA to include guarantors was impermissible. See id. at 46. The Supreme Court’s decision in this case could affect the cost of borrowing and change the underwriting standards and costs for loans to married business owners.

Questions as Framed for the Court by the Parties 

  1. Whether “primarily and unconditionally liable” spousal guarantors are unambiguously excluded from being Equal Credit Opportunity Act applicants because they are not integrally part of “any aspect of a credit transaction”; and
  2. Whether the Federal Reserve Board has authority under the ECOA to include by regulation spousal guarantors as “applicants” to further the purposes of eliminating discrimination against married women.

This case begins with a loan dispute between Valerie Hawkins and Janice Patterson, as guarantors, and the Community Bank of Raymore, (“Raymore”), as creditor. See Hawkins v. Cmty. Bank of Raymore, 761 F.3d 937, 939 (8th Cir.

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Jesinoski v. Countrywide Home Loans

Issues 

May a borrower simply provide written notice to a creditor to exercise a statutory right to rescind a home-secured loan under the Truth In Lending Act, or must the borrower file a lawsuit to exercise that right?

This case presents the Supreme Court with an opportunity to determine the procedural requirements for exercising the right to rescission under the Truth In Lending Act (“TILA”). The Jesinoskis argue that if a creditor fails to strictly comply with TILA’s terms, then borrowers only need to provide written notice in order to rescind a loan any time within a three-year period. Meanwhile, Countrywide maintains that any rescission occurring after the first three days of the loan requires a lawsuit if the rescission is contested by the creditor. This case ultimately will determine who bears the cost of litigation in rescinding home-secured loans, and also determines the scope of TILA’s protection for borrowers.

Questions as Framed for the Court by the Parties 

The Truth in Lending Act provides that a borrower “shall have the right to rescind the transaction until midnight of the third business day following . . . the delivery of the information and rescission forms required under this section ... by notifying the creditor ... of his intention to do so.” 15 U.S.C. § 1635(a). The Act further creates a “[t]ime limit for [the] exercise of [this] right,” providing that the borrower’s “right of rescission shall expire three years after the date of consummation of the transaction” even if the “disclosures required ... have not been delivered.” Id. § 1635(f). 

The question presented is: 

Does a borrower exercise his right to rescind a transaction in satisfaction of the requirements of Section 1635 by “notifying the creditor” in writing within three years of the consummation of the transaction, as the Third, Fourth, and Eleventh Circuits have held, or must a borrower file a lawsuit within three years of the consummation of the transaction, as the First, Sixth, Eighth, Ninth, and Tenth Circuits have held?

On February 23, 2007, Larry and Cheryle Jesinoski refinanced their home for a $611,000 loan from Countrywide Home Loans. See Jesinoski v. Countrywide Home Loans, Inc., No. 11-cv-0474-DWF-FLN, 2012 WL 1365751, at *1 (D. Minn. Apr. 19, 2012).

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The authors would like to thank Professor Cynthia Farina for her guidance.

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Ray Haluch Gravel Co. v. Central Pension Fund

Issues 

Can a district court’s decision that does not resolve a request for contractual attorney’s fees be a “final decision” under 28 U.S.C. § 1291?

On June 17, 2011, a federal district court issued a decision on a dispute between Ray Haluch Gravel Company and the Central Pension Fund (“CPF”). Although this order addressed the central issue of whether or not Haluch owed certain contributions to CPF, it did not address attorney’s fees and costs. The district court issued a second order on June 25, 2011 on attorney’s fees and costs. CPF filed an appeal on both orders, but the thirty day statute of limitations for notice of appeal had expired on the first order. The First Circuit accepted the appeal, stating that the first order was not a “final judgment” under 28 U.S.C. § 1291 because the contractual attorney’s fees decided in the second order were an issue on the merits, rendering the second order the final judgment. Haluch argues that under Budinich v. Becton Dickinson & Company, attorney’s fees should always be considered collateral to the merits, and a separate judgment on the merits should be considered final. CPF argues that Budinich applies only to statutory fees, which are considered costs, whereas contractual fees are considered damages and therefore part of the merits, rendering any judgment that does not resolve an issue concerning the merits—i.e., damages in the form of contractual fees—a non-final judgment. The Court’s decision will clarify what constitutes a “final judgment” and guide litigants seeking to make timely appeals.

Questions as Framed for the Court by the Parties 

In Budinich v. Becton Dickinson & Co., 486 U.S. 196 (1988), this Court held that a district court’s decision on the merits that left unresolved a request for statutory attorney’s fees was a “final decision” under 28 U.S.C. § 1291. The question presented in this case, on which there is an acknowledged conflict among nine circuits, is whether a district court’s decision on the merits that leaves unresolved a request for contractual attorney’s fees is a “final decision” under 28 U.S.C. § 1291. 

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Facts

Petitioner Ray Haluch Gravel Company (“Haluch” or “the Company”) began as a gravel company and later became a landscape supply company. See Cent. Pension Fund of Int’l Union of Operating Engineers & Participating Employers v. Ray Haluch Gravel Co., 695 F.3d 4 (1st Cir.

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Northwest, Inc. v. Ginsberg

Issues 

Does the Airline Deregulation Act preempt a state claim for breach of an implied covenant of good faith and fair dealing concerning a frequent flyer program?

S. Binyomin Ginsberg sued Northwest Airlines, now Delta Airlines, after Northwest terminated his “WorldPerks” frequent flyer membership. Ginsberg asserted four state contract causes of action. Northwest argues that Ginsberg’s claims are preempted under the Airline Deregulation Act (“ADA”) of 1978, which preempts states from enacting or enforcing laws related to the price, route, or service of airline transportation. The District Court for the Southern District of California granted Northwest’s motion to dismiss the complaint. The Court of Appeals for the Ninth Circuit reversed, holding—in conflict with other circuit courts—that Ginsberg’s claim for breach of an implied covenant of good faith and fair dealing was not preempted. The Ninth Circuit reasoned that nothing in the ADA suggested that Congress intended to displace state common law contract claims that were only peripherally related to deregulation. The Supreme Court granted certiorari to resolve the circuit split over whether state contract claims are preempted by the Airline Deregulation Act. The Court will also determine whether the Act preempts claims arising out of frequent flyer programs. The Court’s decision will impact the balance of state and federal regulatory interests under the ADA, and the scope of other federal preemption regimes.

Questions as Framed for the Court by the Parties 

Did the court of appeals err by holding, in conflict with the decisions of other Circuits, that respondent’s implied covenant of good faith and fair dealing claim was not preempted under the ADA because such claims are categorically unrelated to a price, route, or service, notwithstanding that respondent’s claim arises out of a frequent flyer program (the precise context of Wolens) and manifestly enlarged the terms of the parties’ voluntary undertakings, which allowed termination in Northwest’s sole discretion. 

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