Party Crashers: CFPB Files Amicus Briefs in Private Lawsuits, Seeks Referrals

Since late 2011, the Consumer Financial Protection Bureau has been quietly filing amicus curiae (or friend-of-the-court) briefs in some federal appellate cases brought by private litigants. The Bureau is now publicizing its amicus program–and it is actively seeking additional case referrals.  According to the Bureau, “strong candidates” include cases which have been, or imminently will be, filed with a federal appellate court or a state supreme court and which address important issues under the federal consumer financial protection statutes and regulations enforced by the Bureau.

To date, the Bureau has filed amicus briefs in six appellate cases. Not surprisingly, in each case the Bureau advocated for the consumer’s position, in essence becoming a potent and authoritative ally of the consumer plaintiff’s attorney. In several cases, the Bureau sought to reverse an emerging consensus of federal appeals courts.

Amicus briefs filed in four cases addressed the same question: Whether a lawsuit filed by a consumer who has given the mortgage lender timely notice of rescission (under Section 125 of the Truth in Lending Act) is barred as untimely if it is filed over three years after the closing. The briefs were filed in the following cases: Rosenfeld v. HSBC Bank, USA (brief filed March 26, 2012, 10th Cir.), Wolf v. Federal National Mortgage Association (brief filed April 13, 2012, 4th Cir.), Sobieniak v. BAC Home Loans Servicing, L.P. (brief filed April 13, 2012, 8th Cir.), and Sherzer v. Homestar Mortgage Services (brief filed April 13, 2012, 3rd Cir.). The Courts of Appeals for the Ninth and (in an unpublished case) the Third Circuits had previously held that such lawsuits are barred as untimely, while a few lower courts had reached the opposite conclusion. (After these cases were briefed, the Court of Appeals for the Fourth Circuit, in a separate case not briefed by the Bureau, accepted the Bureau’s position.) 

The other two cases pertain to alleged violations of the Fair Debt Collection Practices Act (FDCPA). In Birster v. American Home Mortgage Servicing, Inc. (filed December 21, 2011, 11th Cir.), the Bureau contended that the activities of a loan servicer engaged in foreclosing on a security interest are not exempt from the FDCPA. In Marx v. General Revenue Corporation (filed January 26, 2012, 10th Cir.), the Bureau asserted that the FDCPA generally bars debt collectors from contacting third parties in connection with debt collection activities, and that a successful defendant in a civil action under the FDCPA may only recover costs from the plaintiff if the lawsuit was brought in bad faith for the purpose of harassment. 

How effective has the Bureau’s amicus program been to date?  Opinions have been issued in three of the briefed cases, and the score to date is 1-2. 

The Court of Appeals for the Tenth Circuit rejected the Bureau’s positition in both Rosenfeld and Marx. (In its opinion in Rosenfeld, the Court diplomatically noted that the amici briefs (by both the Bureau and industry trade groups) were “helpful”, though it stressed that it would “exercise appropriate care…to keep [its] primary focus on the parties’ arguments.”) 

The Bureau’s sole victory to date is in an unpublished opinion in Birster, where the Court of Appeals for the Eleventh Circuit essentially agreed with the Bureau’s position, though it based its decision on a precedential case not cited in the Bureau’s brief.