Litigation

This past week, co-defendants in a class action related to the theft of cryptocurrency engaged in their own lawsuit over alleged security failures.  IRA Financial Trust, a retirement account provider offering crypto-assets, sued class action co-defendant Gemini Trust Company, LLC, a crypto-asset exchange owned by the Winklevoss twins, following a breach of IRA customer accounts.  IRA claims that Gemini failed to secure a “master key” to IRA’s accounts, and that hackers were able to exploit this alleged security flaw to steal tens of millions of dollars of cryptocurrency.  This lawsuit demonstrates the growing trend of cryptocurrency thefts resulting from cyber breaches, and ensuing litigation activity.…

Continue Reading Litigation Between FinTech Companies Follows Class Action Over Cryptocurrency Theft

A recent class action refiled in federal court against Shopify highlights a growing trend of lawsuits against companies related to the theft of cryptocurrency, particularly as a result of internal company threats. See Forsberg et al v. Shopify, Inc. et al, 1:22-cv-00436 (D. Del.). Despite not itself being a repository for or facilitating the…

England’s Court of Appeal has decided that the Competition Appeals Tribunal (the “CAT”) erred in rejecting certification of former financial ombudsman Walter Merricks’ class action against MasterCard, for £14 billion.  As a result, the CAT will now reconsider whether to certify the class.  The decision has lowered the bar that will need to be cleared in this and future class actions in order to achieve certification.  In this alert, we consider the decision and its implications for the UK’s fledgling class action regime.
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Continue Reading English Competition Appeals Tribunal to Reconsider £14 Billion Class Action Against MasterCard

On January 9, 2019, a divided three-judge panel of the Ninth Circuit held that the Federal National Mortgage Association, or Fannie Mae, is not a “consumer reporting agency” within the meaning of the Fair Credit Reporting Act (the “FCRA”). The case, Zabriskie v. Federal National Mortgage Association, was brought by prospective borrowers who were unable to refinance their current mortgage loans due to allegedly erroneous information in their credit histories, as reported by Fannie Mae software that is commonly used by mortgage lenders.
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Continue Reading Fannie Mae is Not a Consumer Reporting Agency Under the FCRA, Ninth Circuit Says

On Wednesday, April 18th, the SEC introduced a much-anticipated package of proposed rules and formal guidance concerning the standards of conduct for financial professionals. The more than 1,000-page proposal, which emerged eight years after Congress required the agency to conduct a study on the topic, addresses whether investment advisers and broker-dealers should have identical or…

On January 3, 2018, in Italian Colors Restaurant v. Becerra, No. 15-15873, a three-judge panel of the U.S. Court of Appeals for the Ninth Circuit invalidated an application of a California law that would prohibit merchants from imposing a surcharge on credit card payments. The California law would allow offering discounts for payments by…

On September 8, 2017, the U.S. District Court for the Northern District of California entered an order granting a civil penalty and injunctive relief in a CFPB case against mortgage loan servicer Nationwide Biweekly Administration, Inc. (“Nationwide”), its wholly-owned subsidiary Loan Payment Administration, and the principal of Nationwide. In its suit, the CFPB alleged that the defendants engaged in abusive and deceptive practices and violated the Telephone Sales Rule (“TSR”) in the course of offering its mortgage payment program.

Among the notable aspects of this case was the court’s interpretation of the relevant statute of limitations period. The Dodd-Frank Act generally sets a statute of limitations for the Bureau of “3 years after the date of discovery of the violation to which an action relates.” 12 U.S.C. § 5564(g)(1). Prior to this decision, no court had ruled on how to interpret the Dodd-Frank “date of discovery” provision.

Here, the court found that “mere receipt of a consumer complaint” does not cause the statute to run, and moreover that such an interpretation would be “unworkable.” Instead, the court wrote that even a “credible and specific” consumer complaint would “at most” provide “inquiry notice” and that the statute begins running only after the CFPB “actually” discovers facts allegedly constituting a violation of law or until a “reasonably diligent plaintiff would have” discovered those facts. In other words, the clock does not begin to run until the Bureau has had enough time to conduct a preliminary investigation into the wrongdoing alleged in a consumer complaint.…

Continue Reading Federal Court Takes Expansive View of CFPB Statute of Limitations, Limits Restitution

On August 25, 2017, a federal judge for the U.S. District Court for the District of Georgia dismissed five payment processor defendants from a CFPB lawsuit, following what the Court described as the repeated failure by the Bureau to follow court discovery orders. In particular, the Bureau refused to provide factual evidence supporting the elements…