Banking Win Still Eases Lawsuits Alleging Procedural Wrongs

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By Chris Bruce

Nov. 23 — A federal appeals court ruling for a bank in a Truth in Lending Act case makes it easier for plaintiffs to allege violations of procedures mandated by law ( Strubel v. Comenity Bank , 2d Cir. App., No. 15-cv-00528, 11/23/16 ).

In a 43-page ruling, the U.S. Court of Appeals for the Second Circuit Nov. 23 blocked a putative class suit by Abigail Strubel, who said Comenity Bank of Columbus, Ohio, failed to make proper disclosures as required by the Truth in Lending Act.

Although the bank won the case, the court rejected the bank’s reading of Spokeo Inc. v. Robins, a U.S. Supreme Court ruling earlier this year that said plaintiffs must show “concrete injury” to meet standing requirements. Comenity Bank said allegations of a “bare procedural violation” don’t meet that test, but the Second Circuit disagreed.

“Having alleged such procedural violations, Strubel was not required to allege `any additional harm’ to demonstrate the concrete injury necessary for standing,” the Second Circuit said, quoting Spokeo.

Even so, the court said Strubel’s claims failed for other reasons and upheld a district court that dismissed her lawsuit.

Strubel was represented by Brian L. Bromberg and Jonathan R. Miller of Bromberg Law Office in New York. In a Nov. 23 e-mail to Bloomberg BNA, Bromberg said the decision will help consumers in general.

“Although we are disappointed at having lost the appeal, we believe that, overall, the decision is pro-consumer and reflects the importance of allowing consumers to act as private attorneys general to protect their rights and to ensure compliance by lenders,” he said.

Some Claims Allowed

According to the Second Circuit, an alleged procedural violation “can by itself manifest concrete injury where Congress conferred the procedural right to protect a plaintiff’s concrete interests and where the procedural violation presents a `risk of real harm’ to that concrete interest.”

But even where Congress has accorded procedural rights to protect a concrete interest, “a plaintiff may fail to demonstrate concrete injury where violation of the procedure at issue presents no material risk of harm to that underlying interest,” the Second Circuit said.

The case also raised questions about the degree to which Truth in Lending Act disclosures must track model forms. The court rejected allegations by Strubel on that point, saying the bank’s disclosures were “substantially similar” to the model disclosures.

The Consumer Financial Protection Bureau filed two friend-of-the-court briefs in the case. The most recent brief said Strubel suffered concrete harm consistent with standing requirements.

Comenity Bank was represented by Martin C. Bryce Jr. of Ballard Spahr in Philadelphia, and David M. Bizar of Seyfarth Shaw in Boston.

The CFPB was represented by agency counsel Nandan M. Joshi.

To contact the reporters on this story: Chris Bruce in Washington at cbruce@bna.com

To contact the editor responsible for this story: Michael Ferullo at MFerullo@bna.com

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