Unfair and Deceptive Acts and Practices: 12.6.3.1 Must the Plaintiff Be Injured?
Not every individual can seek an injunction against merchant misconduct.
Not every individual can seek an injunction against merchant misconduct.
Article III of the U.S.
The UDAP statute itself may also impose standing requirements. Some UDAP statutes are patterned after the UDTPA, which allows private injunctions when a litigant is “likely to be damaged.”832 The test is thus prospective, not retrospective.
Litigants who have been damaged by a practice and seek to enjoin the seller’s future use of that practice may have to respond to a defense that equitable relief is not appropriate where a damage remedy making them whole is adequate.
In many states, it may be possible to use the UDAP statute to void or rescind a sales transaction that involved deception or unfairness. A consumer may prefer this remedy over damages or an injunction. It can return the plaintiffs to the status quo ante or result in the dismissal of a collection action by the seller or its assignees.
Some courts require UDAP plaintiffs who seek rescission to comply with common law requirements such as notice and tender.914 However, the Texas Supreme Court holds that, while a buyer who exercises the UDAP statute’s rescission remedy must surrender any benefits received, the buyer need not comply with common law requirements of notice and tender.915 The Sixth Circuit holds that UCC principles that relate to revocation of acceptance do not apply to rescission under Kentucky’s state UDAP statute.
Where a UDAP statute authorizes a prevailing consumer to recover attorney fees, but the arbitration clause or the rules of the applicable arbitration service provider restrict the award of such fees, this limitation is generally found to be unconscionable.1099 The result should be the same where an award of UDAP attorney fees to a prevailing consumer is mandatory under the statute, but the arbitration service provider rules make this discretionary with the arbitrator.
If, under a UDAP statute, attorney fees are discretionary with the court, then there may be little a consumer can do if the arbitrator decides not to award such fees.
Courts and attorneys may be most accustomed to the lodestar methodology (discussed at § 12.8.11.3.2, infra) that courts use to calculate fees under federal fee-shifting statutes such as the Civil Rights, Truth in Lending, Fair Debt Collection, RICO, Fair Credit Reporting, Equal Credit Opportunity, and Odometer Acts.
There is little UDAP case law about supplementing an attorney’s hourly rate with out-of-pocket expenses. The clear import of the Supreme Court’s approach to these questions is that a court should follow the prevailing billing practice of the community.1454 If certain items are typically included in an hourly rate, they should not also be reimbursed separately. However, if attorneys typically bill for these items separately, the attorney fee award should include separate provisions for these expenses.
In deposing the named plaintiff, the defendant’s attorneys hope to obtain testimony from which they can argue that the plaintiff is not a typical or an adequate class representative. As discussed above, spend sufficient time with the plaintiff to make certain that they have an adequate understanding of the class action device and can articulate that understanding. Review the reasons the plaintiff is bringing this case as a class action and the duties of a class representative, including those regarding settlement of the case.
Federal Rule of Civil Procedure 23(a)(2) requires that issues of law or fact be common to the class.895 Defense challenges to commonality are often, in fact, arguments about whether the case has merit, and therefore are inappropriate.896 However, the Supreme Court, in both Wal-Mart Stores, Inc. v. Dukes,897 and Amgen Inc. v.
The FDCPA provides for statutory damages in class actions, in addition to actual damages, as follows:
(a) Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of—
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The Dodd-Frank Act further reins in the OCC’s ability to preempt state laws by subjecting any preemption determinations to a more rigorous standard of judicial review than agency regulations normally receive. A court reviewing any OCC preemption determination cannot use the deferential Chevron110 standard (which had led some courts to rubber stamp OCC regulations).
There are significant questions about the validity of the OCC’s 2011 preemption regulations. On their face, they do not implement the Dodd-Frank Act’s tighter “prevent or significantly interfere” standard. They mention the Barnett Bank standard, but only in the savings clause as the test for determining whether state laws of general applicability are preserved.
The OCC regulation preempts state law limitations regarding “licensing, registration (except for purposes of service of process), filings, or reports by creditors.”183 Many state credit laws require lenders to be licensed and require them to file annual reports with a state regulator.184 Most of those laws are drafted to apply only to non-bank lenders, but to the extent they do not exclude national banks and federal savings associations they are probably preempted.
The final topic on which the OCC regulation preempts state law limitations is rates of interest.237 But, as acknowledged by a footnote in the OCC’s regulation, national banks are, in fact, required to obey state law regarding interest rates—their home state’s law, which they can export—unless they choose to follow the alternative federal ceiling.238 States other than the bank’s home state cannot, however, impose caps on the interest rates that a national bank can charge.
It should be equally clear that federal banking laws do not preempt state laws regarding creditor remedies. These laws are part of the legal infrastructure within which all businesses operate. State laws that govern the “right to collect debts” are listed in the savings clause of the OCC regulation.288
When state law is preempted as to a national bank, the question arises whether that state law is also preempted as to a non-bank when a credit obligation is assigned to that non-bank.
The Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDA, also sometimes called DIDMCA) preempts state interest rate regulation as to state-chartered banks.328 The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (Riegle-Neal) was amended in 1997 (sometimes called Riegle-Neal II) to preempt state credit regulation other than as to interest rates of out-of-state branches of state-chartered banks.
Key terms in the application of Riegle-Neal II are the definitions of “branch” and “bank.” The term “branch” is strictly defined to mean a physical location: “any branch bank, branch office, branch agency, additional office, or any branch place of business located in” any state or dependency “at which deposits are received or checks paid or money lent,” and “does not include an automated teller machine or a remote service unit.”335 A loan broker or other third party arranging credit
There are two reasons that Riegle-Neal does not impact a state-chartered bank making loans in the state of its charter. Riegle-Neal offers preemption only to branches of out-of-state, state-chartered banks, not to banks making loans in their own state.