RESPA VIOLATION LITIGATION COULD HINGE ON WHETHER PLAINTIFF HAS STANDING TO SUE WITHOUT AN ACTUAL INJURY IN FACT

Daniel Fisher of Forbes Magazine wrote an article today titled ” “Sleeper” Case Asks Whether Plaintiffs Can Sue Without An Injury.” Mr. Fisher’s article highlights the Edwards v. First American case and discusses the positive impact a Supreme Court’s ruling would have for corporations facing civil and class action lawsuits from consumers who might have a hard time showing actual injury in fact damages.

The Edwards case stems from a real estate settlement procedures act (RESPA) class action where the Edwards’ were required to purchase a title insurance policy from First American. First American’s actions allegedly violated Section 8(c)(2) of RESPA where the federal rules state that affiliated businesses can’t require that borrowers use their affiliated businesses and the civil penalty for violating this rule is treble damages on all fees paid to First American plus attorney’s fees.

The US Supreme Court is looking at standing to sue under Article 3 of the US Constitution in the Edwards case. “First American argues Edward suffered no harm and therefore has no standing to sue under Article III of the Constitution. Under Article III federal courts are limited to hearing “cases” or “controversies” and the Supreme Court has since decided that means somebody who has suffered actual harm or is in imminent danger of it.

Fisher’s business article on Forbes.com explains how the future decision by the Supreme Court in the Edwards case would impact not only the financial services industry but the decision will have a major impact on the automobile industry among others. The ramifications of the Edwards decision by the US Supreme Court could certainly change the way businesses operate because the threat of civil litigation by consumers will be significantly curtailed. A ruling in favor of First American would also put more pressure on regulators to regulate compliance issues.