An amicus brief filed by the Consumer Financial Protection Bureau (“CFPB”) in Edwards v. First American Financial Corp., urging the U.S. Court of Appeals for the Ninth Circuit to abide by the CFPB’s interpretation of the Real Estate Settlement Procedures Act (“RESPA”) has been rejected by the appellate court, which found the Bureau’s interpretation of the statute warranted no Chevron deference because the Bureau only has authority to interpret regulations, not statutes.
This suit was originally filed in 2007 as a class action by a consumer alleging that two First American companies violated RESPA by paying kickbacks to title agencies for referrals. The complaint alleged that First American attempted to hide the kickbacks by purchasing ownership interests in the two title agencies. A district court ruled that the plaintiff had Article III standing but denied class certification. The Ninth Circuit affirmed but remanded the case to allow the plaintiff to conduct further discovery and renew the class certification motion.
The Ninth Circuit’s ruling was appealed to the U.S. Supreme Court, which dismissed the certiorari petition, sending the case back to the district court. The district court again denied class certification, saying that in order to prove a RESPA violation, the plaintiff had to prove that First American overpaid for its ownership interests in the two title agencies, thus providing a “thing of value” in exchange for referrals as required by RESPA.
Upon appeal, the CFPB filed an amicus brief in the Ninth Circuit, arguing that safe harbor does not extend to every transfer of “things of value’ like the ownership interests in the title agencies. The Bureau contended that the purchase of ownership interests in exchange for referrals could be considered “things of value” regardless of the price paid. Therefore, according to the CFPB, there is a RESPA violation if the referrals were conditional on First American’s purchase of the ownership interests in the title agencies.
On August 24, 2015, the Ninth Circuit vacated the district court’s denial of class certification except for those transactions that First American conducted after the suit was filed. While the Ninth Circuit agreed with CFPB’s argument that safe harbor did not apply to the ownership interests, it stated that the Court did so not as a matter of deference, but because the Bureau’s interpretation was consistent with the language in RESPA.
As the Ninth Circuit noted, “Here, CFPB is interpreting the statute, not the regulation. An agency’s interpretation of the statute — when presented in an amicus brief — is not promulgated in the exercise of its forma rule-making authority, so no Chevron deference is warranted.”
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