Alert January 27, 2009

Federal Appeals Court Rules that Plaintiff Has Standing to Bring RESPA Claim Absent a Concrete Injury

In what appears to be the first Federal Circuit Court opinion on this issue, the Sixth Circuit ruled that a plaintiff has a statutorily-authorized private right of action under the Real Estate Settlement Procedures Act and constitutional standing to sue despite failing to allege that he was over-charged for any settlement service or otherwise had been demonstratively injured. Plaintiff brought a RESPA claim alleging that the title company was improperly splitting fees with other service providers in exchange for referrals. Plaintiff never alleged that he was over-charged for the services at issue, but instead claimed that he was harmed by the lack of impartiality of the settlement service referral given the relationship between the various providers. The Court held that RESPA’s text, legislative history and regulatory scheme supports a private right of action even in the absence of an overcharge or other concrete injury. The Court also held that the injury in fact test for standing was satisfied by the “deprivation of a right conferred by RESPA . . . the right to receive referral services untainted by kickbacks or fee splitting.” The Court likened the injury to those suffered by “testers” under the Fair Housing Act who have the right to receive “truthful information concerning the availability of housing” even if they “fully expect to receive false information and have no intention of buying or renting a home.” Click here for a copy of Carter v. Welles-Bowen Realty, Inc., No. 07-3965 (6th Cir. Jan. 23, 2009).