One of the most dangerous legal traps that can ensnare a real estate business—or any employer, for that matter—is a company-wide lawsuit alleging violations of minimum-wage or overtime laws. A new decision by the United States Supreme Court appears to offer employers long-overdue relief from those dangers.
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For over 40 years, putative class members have escaped some of the curbs against late-filed lawsuits that apply to normal cases. Last week, the United States Supreme Court brought back some of those curbs, threatening to reduce the number of spin-off cases that often result from class actions. Lawsuits under the Truth in Lending Act are directly affected.
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Last year, the U.S. Supreme Court answered an important constitutional question: Can Congress authorize a lawsuit in which the plaintiff suffered no financial injury? The court’s disappointing answer (“it depends”) has perplexed courts across the nation. That confusion has spread to an area of vital interest to the real estate industry, the timely recording of satisfactions of mortgages.
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Last week, in a much anticipated decision, the U.S. Supreme Court addressed whether a consumer can sue over violations of statutory rights without herself having suffered an actual, concrete harm. The Supreme Court said “no,” but gave little detail about which injuries are concrete enough to pass constitutional muster. That lingering uncertainty is likely to help at least some companies defeat class certification.
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Five years ago, the U.S. Supreme Court seemed to reject the use of statistical proof in class actions, dismissing the evidence as “a novel project.” But, last week, the high court appeared to reverse course. Its new decision, Tyson Foods, Inc. v. Bouaphakeo, is thoroughly enigmatic and contradictory. It will no doubt spawn endless legal battles, and the real estate industry will have to monitor how lower courts struggle to decipher it.
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Last week, a federal appeals court in California revived a twice-failed bid for class certification by homeowners who claim to have been harmed by a group of so-called captive title agencies. The court said it would not defer to the expansive arguments raised by the Consumer Financial Protection Bureau in the agency’s friend-of-the-court brief. But, as it turns out, the court did exactly that. An upcoming ruling from the U.S. Supreme Court might ultimately change that result.

The case, Edwards v. First American Corporation, has a long and tortured history. Plaintiff Denise Edwards bought a home in Cleveland, Ohio, and used Tower City Title Agency, LLC, as her settlement agent. Before that, First American Title Insurance Company had purchased a 17.5% ownership interest in Tower City, which agreed as part of that deal, to refer future title business to First American. Edwards sued, claiming that, under the Real Estate Settlement Procedures Act (RESPA), the new ownership structure was an unlawful referral arrangement. First American had similar ownership interests with 179 other title agencies all over the country, Edwards asserted.

The trial court denied Edwards’ motion for class certification, but the United States Court of Appeals for the Ninth Circuit reversed that decision. First American then successfully persuaded the U.S. Supreme Court to hear the case on appeal. (Disclosure: In that proceeding, I wrote an amicus brief on behalf of other title insurance underwriters, urging the Supreme Court to accept the case.) The high court was supposed to decide whether the U.S. Constitution allows a plaintiff to sue when that person has suffered no money damages but instead complains only of a violation of statutorily-created rights. Yet, after the case had been fully briefed and set for ruling, the Supreme Court did an about-face and declined to hear the appeal, which it said it had “improvidently granted.”


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