Supreme Court Action Possible on Four Bank-Related Petitions

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By Chris Bruce

June 17 — The U.S. Supreme Court is expected in the week ahead to discuss in private a closely watched petition filed by Midland Funding LCC that's focused on interest rate and preemption questions.

Although an actual order in that case is not imminent, orders could come next week in three other important banking cases. Two of those involve separate but related petitions by Bank of America and Wells Fargo involving standing requirements under the Fair Housing Act, while the third petition seeks rehearing of a March ruling by the court in an Equal Credit Opportunity Act case.

The most important of the group is the Midland Funding petition, which the U.S. Solicitor General (SG) recently urged the court to deny ( Midland Funding LLC v. Madden, U.S., No. 15-cv-00610, brief filed 5/24/16 ).

The justices are scheduled to confer on the petition June 23. In theory, an order could be issued any time after that, though most don't expect a definitive word until June 27 and perhaps later.

The SG's brief agreed with Midland Funding, a debt-buying unit of San Diego-based Encore Capital Group, that the U.S. Court of Appeals for the Second Circuit erred in a May 2015 decision that said the National Bank Act doesn't preempt state-law usury claims brought by a proposed class plaintiff.

But the SG said there's no need to take the case, citing the absence of a circuit split and other factors.

The SG's opinion carries great weight, but in a June 7 brief, Midland Funding said the importance of the case, added to the prospect of easy handling because of the SG's stance, argues for a grant by the court.

“Particularly in light of the government's unambiguous position, this case would not be a close one on the merits,” the brief said. “In addition, there can be no serious doubt that this case is sufficiently important to warrant one of the scarce spots on the Court's docket, because it presents a question that is critical to the functioning of the national banking system and to the availability of consumer credit.”

Fair Housing Act

By contrast, orders are possible next week in the Bank of America and Wells Fargo petitions, which were scheduled for conference June 16 ( Bank of Am. Corp. v. Miami, U.S., No. 15-cv-01111, petition for certiorari, 3/4/16 ; Wells Fargo & Co. v. Miami, U.S., No. 15-cv-01112, petition for certiorari, 3/4/16 ).

At issue in both petitions is a September ruling by the U.S. Court of Appeals for the Eleventh Circuit that said Miami had standing to sue under the statute.

Bank of America and Wells Fargo filed their petitions in March, saying confusion about the court's own decisions on Fair Housing Act standing is driving lending discrimination claims by local governments.

The court could issue an order in that case as early as June 20.

ECOA Rehearing Sought

Finally, another order could come as soon as June 20 on a petition to rehear a March ruling by the justices in an Equal Credit Opportunity Act (ECOA) case ( Hawkins v. Comm. Bank of Raymore, U.S., No. 14-cv-00520, 3/22/16 ).

In its March ruling, which came shortly after the death of Associate Justice Antonin Scalia, the court by a 4-4 vote upheld a 2014 Eighth Circuit decision that said a loan guarantor is not an “applicant” for purposes of marital-status discrimination under ECOA.

Valerie Hawkins and Janice Patterson, who brought the lawsuit against Community Bank of Raymore in Raymore, Mo., in April filed a petition for rehearing.

The justices were scheduled to discuss that petition in conference June 16.

The case has an extra level of potential significance because of questions about the role of the Consumer Financial Protection Bureau (CFPB), which says guarantors are “applicants” under ECOA.

The CFPB inherited authority for Regulation B and ECOA from the Federal Reserve Board. In its 2014 decision, the Eighth Circuit declined to defer to the Fed's reading of the statute.

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

To contact the editor responsible for this story: Mike Ferullo at mferullo@bna.com