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Consumer Class Actions: 19.2.1 Overview
Many statutory claims in consumer class actions provide for an award of “reasonable” statutory attorney fees to the consumer in a “successful action,” often referred to as the prevailing party.21 This is a second, independent basis for the award of attorney fees in a class action, distinct from an award based on a common fund theory.22 Even when claims are initiated pursuant to a statute with a fee-shifting provision, “where a class action results in a common-fund settlement for the benefit
Consumer Class Actions: 19.3.3 The Two Competing Common Fund Methods: Percentage of Fund Versus Lodestar
Over time, the courts have shifted their views on the correct approach to computing attorney fees under a common fund theory—use of a lodestar or use of a percentage of the common fund. Prior to the 1970s, the federal courts awarded fees in common fund cases based on a percentage of the benefit conferred.84 From 1973 to around 1985, the lodestar method, often with a multiplier, was temporarily in vogue in the federal courts.85
Consumer Class Actions: 19.3.7.2 The Hourly Rate
Under the lodestar method, the court first multiplies the attorney’s reasonable hourly rate by the number of hours reasonably expended to arrive at a lodestar. In common fund cases, when this lodestar is used to cross-check the reasonableness of a fee computed as a percentage of the recovery, it is often multiplied by a specific number (called a multiplier) to take into consideration the contingent nature of the case, the degree of success, and other factors.191
Consumer Class Actions: 14.10.1 Court Options When All or Part of a Recovery Cannot Be Paid Directly to Class Members
Cy pres or fluid recovery259 are procedural devices in class actions that, with court approval, distribute money damages indirectly for the benefit of the class of persons on whose behalf the litigation was brought rather than directly to class members.260 Cy pres awards ideally should be used to provide indirect benefit to absent members of the plaintiff class or to further the rights that formed the basis for the underlying litigation, which itself is an indirect benefit
Consumer Class Actions: 19.4.1 Overview
There are three possible ways to resolve a class case successfully and to receive attorney fees. The first is to win the case after trial or summary judgment and later petition the court for fees. The second is to negotiate a settlement of the class claims, have the court approve the settlement, and later negotiate or petition for fees.267 The third is to negotiate a settlement that covers both the recovery for the class and an award of fees.
Consumer Class Actions: 5.9 Reviewing the Complaint with the Client
Conduct a thorough review of the underlying facts with the potential class representative before the complaint is filed. Make sure that the class representative understands the factual allegations that form the basis of the defendant’s wrongful conduct. To the extent possible, educate the class representative on the basic legal theories under which the case will be prosecuted.
Consumer Credit Regulation: 3.2.2.7 Judicial Review of Preemption Determinations; Skidmore vs. Chevron deference
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).
Consumer Credit Regulation: 3.2.2.8 Is There a Presumption Against Preemption?
The Supreme Court has often articulated a presumption against the preemption of state laws:
Consumer Credit Regulation: 3.2.2.9 Dodd-Frank Act’s Effective Date and Impact on Prior Law
The Dodd-Frank Act amendments concerning preemption took effect on July 21, 2011.142 The Dodd-Frank Act provides that Title X, which encompasses the preemption amendments,
Consumer Credit Regulation: 3.2.3.2 Differences Between OCC’s 2004 and 2011 Rules
When the OCC amended its non-mortgage lending rule in 2011, it did not make any change to its enumerations of state laws that were or might not be preempted. It did, however, amend its general standards as to when a state law might or might not be preempted.
Mortgage Lending: 5.8.2 Elements of a Claim of Unconscionability
A practical definition or test for unconscionability is elusive.
Consumer Credit Regulation: 3.2.3.3 Do the 2011 OCC Regulations Comply with the Dodd-Frank Act?
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.
Consumer Credit Regulation: 3.2.4.1 Introduction
This section examines the application of preemption principles and the OCC rule to specific non-mortgage lending practices and loan features. It first examines the ten topics on which the OCC regulation, if it is valid, preempts state law limitations. It then analyzes the savings clause and several types of state laws that are generally carved out from preemption.
Consumer Credit Regulation: 3.2.4.2 Licensing, Registration, or Reports
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.
Consumer Credit Regulation: 3.2.4.3 Insurance and Other Credit Enhancements or Risk Mitigants; Debt Cancellation Contracts
The OCC regulation preempts state law limitations concerning “[t]he ability of a creditor to require or obtain insurance for collateral or other credit enhancements or risk mitigants, in furtherance of safe and sound banking practices.”187 Significantly, the language of the rule refers only to the ability to require or obtain insurance, not to any other aspect of insurance.
Consumer Credit Regulation: 3.2.4.4 Loan-to-Value Ratios
The regulation preempts state law limitations regarding loan-to-value ratios.202 There do not appear to be any cases that apply or illuminate this provision.
Consumer Credit Regulation: 3.2.4.5 Credit Terms
The OCC regulation provides that state law limitations concerning
the terms of credit, including the schedule for repayment of principal and interest, amortization of loans, balance, payments due, minimum payments, or term to maturity of the loan, including the circumstances under which a loan may be called due and payable upon the passage of time or a specified event external to the loan
Consumer Credit Regulation: 3.2.4.6 Escrow Accounts
The OCC regulation preempts state law limitations regarding “escrow accounts, impound accounts, and similar accounts.”213 Escrow account issues are unlikely to arise in the typical non-mortgage consumer loan, and no cases have been found that apply or illuminate this provision outside the mortgage context.
Consumer Credit Regulation: 3.2.4.7 Security Interests
The regulation preempts state law limitations regarding “security property, including leaseholds.”214 No cases have been found that apply or illuminate this provision to preempt state law, but it probably means that states cannot limit the types of collateral a national bank or federal savings association can take as security for a loan. Courts have held that state repossession protections and procedures are not preempted.215
Consumer Credit Regulation: 3.2.4.9 Disclosure and Advertising
The OCC regulation preempts state law limitations concerning “disclosure and advertising, including laws requiring specific statements, information, or other content to be included in credit application forms, credit solicitations, billing statements, credit contracts, or other credit-related documents.”218
Consumer Credit Regulation: 3.2.4.11 Rates of Interest on Loans; Non-Interest Fees and Charges
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.