Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28 Page 29 Page 30 Page 31 Page 32 Page 33 Page 34 Page 35 Page 36For more information, please visit www.lenderlawwatch.com or www.enforcementwatch.com 33 32 MAJOR APPELLATE CASES TO WATCH IN 2017 In 2016, Goodwin reported on several key rulings from the Supreme Court and various appellate courts that had the potential to change the legal landscape of the financial services industry. In 2017, we will be monitoring the subsequent proceedings in high-profile cases that addressed the constitutionality of the CFPB and refined the injury-in-fact requirements for Article III standing. We will also be watching several cases pending before the Supreme Court, including cases on the reach of debt collection rules and on the constitutionality of state “no-surcharge” laws. PHH Corp. v. Consumer Financial Protection Bureau The D.C. Circuit made headlines in October 2016 when it held in PHH Corp. v. Consumer Financial Protection Bureau, No. 15-1177, that the CFPB’s structure—which concentrates broad authority, under more than a doz- en statutes, in a single director who serves a longer term than the President and can only be removed for cause—violates separation-of-powers principles and is unconstitutional. The court ordered that the “for cause” provision be severed from the CFPB’s enabling statute, thereby making the CFPB director removable by the President at will. That holding took on new significance after Donald Trump was elected president and the future role of the CFPB became less clear. The CFPB petitioned the D.C. Circuit for rehearing en banc on November 18, 2016, and at the court’s invitation, the Justice Department filed a brief for the United States on December 8, 2016, also supporting rehearing en banc. Whether the D.C. Circuit grants rehearing, whether its ruling en banc changes the outcome of the case, and what additional steps the losing party might pursue will all be topics of great interest for the financial services industry over the coming months. Robins v. Spokeo Inc. In May 2016, the Supreme Court issued its highly anticipated ruling in Spokeo Inc. v. Robins, No. 13-1339, vacating the Ninth Circuit’s holding that the plaintiff had standing because he had sufficiently alleged harm in the form of an alleged violation of the Fair Credit Reporting Act (FCRA). The Supreme Court found the Ninth Circuit’s injury-in-fact analysis was incomplete and remanded the case for further proceedings, but the opinion left open the question of when (if ever) a pure statutory violation could be sufficient to establish a concrete injury-in-fact. That question was the focus of oral argument before the Ninth Circuit on December 13, 2016, but it remains to be seen whether the Ninth Circuit will rule on the issue (in which case another pe- tition for certiorari to the Supreme Court is possible), or whether it will take advantage of its de novo review to decide the case on other grounds. The remanded case before the Ninth Circuit is styled Robins v. Spokeo, Inc., No. 11-56843. Midland Funding, LLC v. Johnson In January 2017, the Supreme Court heard oral argu- ment in Midland Funding, LLC v. Johnson, No. 16-348, to decide two questions: (1) whether a debt collector that knowingly files an accurate but time-barred claim in a bankruptcy proceeding violates the FDCPA, and (2) if so, whether the later-enacted Bankruptcy Code (which governs the filing of proofs of claims) precludes the application of the FDCPA in this situation. In May 2016 the Eleventh Circuit answered in the affirmative on the first question and in the negative on the second, but this position is in conflict with holdings from several other circuits that filing claims on time-barred debts in a bankruptcy proceeding does not violate the FDCPA. Expressions Hair Design v. Schneiderman Finally, the Supreme Court is considering whether “no-surcharge” laws unconstitutionally suppress free speech in Expressions Hair Design v. Schneiderman, No. 15-1391. The petitioners in this case challenge a New York law prohibiting merchants from imposing a surcharge on customers who pay with a credit card instead of cash. The petitioners argue that, since merchants are permitted to offer a “cash discount” to customers who pay cash, the law’s effect is to unconsti- tutionally regulate the way merchants communicate a price differential that ultimately will be the same wheth- er it is presented as a “credit surcharge” or a “cash discount.” The Second Circuit disagreed, holding that keeping sticker prices low and then imposing a credit surcharge at the point of sale is a substantively differ- ent economic practice than increasing sticker prices and then offering a cash discount, so the New York law is an acceptable form of direct economic regulation and does not implicate the First Amendment. Several states have enacted “no-surcharge” laws similar to New York’s, so the Supreme Court’s decision on how to treat such laws may have broad significance. The Supreme Court heard oral argument in the case January 10, 2017, and some Justices seemed skeptical of the idea that the statute implicated free speech.