Editor's Note
June is crowded with celebrations. It feels like a Tokyo subway. June is the month of weddings, graduations, flag days, and dad daze. June 15 is the 800th anniversary of the Magna Carta. This month we acclaim Summer Solstice, Gay Pride Month, and National Aquarium Month. And who could forget National Accordion Awareness Month? Seriously? Anyone "un-aware" of an oncoming accordion deserves to be smacked. Just ask Darwin. In June, we applaud Candy Month, which means July is Cavity Month. Cow-befrienders rejoice with Dairy Month, and cat-lovers revel in National Adopt-a-Cat Month. This month, there are days to honor donuts, ice cream soda, chocolate ice cream, chocolate éclairs, yo-yos, sewing machines, and nursing assistants. "Enough already," you're probably thinking, "get to the transition." Thanks for asking.
Forget all that. June is when our Summer Issue lands in your inbox. In this issue, the CFPB reports that arbitration is bad and litigation is good, Congress hints at Dodd-Frank reform, we have mortgage stuff, operations stuff, preemption and privacy and TCPA stuff, a little of this and a lot of that. Lots to celebrate. Alas, no accordion music.
Until next time, have a great summer and, when you're finished, kindly put the bop back in the bop shoo-bop shoo-bop and return the ram to the rama-lama ding-dong. My baby said.
ARBITRATION
The Other Shoe Drops
The CFPB released its long-awaited Report to Congress on arbitration agreements in consumer financial contracts. The Report's conclusion, and Director Richard Cordray's remarks, were as expected: that consumers are better served by litigation and particularly, class action litigationthan by agreements to arbitrate disputes. The Report addresses nine key areas, including the prevalence and features of arbitration agreements, consumer understanding of arbitration agreements, the types and resolutions of claims in arbitration and in court, and the value of class action settlements. Although the Report comes in at over 700 pages, the CFPB recognized that it lacked sufficient information to evaluate several critical areas. Want to know more? Read our Client Alert.
For more information, contact James McGuire at jmcguire@mofo.com or Nancy Thomas at nthomas@mofo.com.
Like Oil and Water
Another court has considered the interplay between the Bankruptcy Code and the Federal Arbitration Act, this time in a case about a payday loan servicer's proof of claim. Moses v. CashCall, 781 F.3d 63 (4th Cir. 2015). Plaintiff filed for bankruptcy, and the servicer CashCall filed a proof of claim. Plaintiff then filed an adversary proceeding (1) seeking a declaratory judgment that the loan was void and (2) asserting a claim for violation of a state debt collection statute. CashCall moved to withdraw its proof of claim or, in the alternative, to compel arbitration. The court affirmed the lower courts' conclusion that plaintiff's declaratory judgment claim was a constitutionally core claim under the Bankruptcy Code, so sending that claim to arbitration would "inherently conflict with the Bankruptcy Code's purposes." Id. at 72. However, the court reversed the lower courts' refusal to send the debt collection claim to arbitration because the claim was not a constitutional core claim and its connection to the core declaratory judgment claim was too attenuated to overcome the presumption in favor of arbitration.
For more information, contact Mike Miller at mbmiller@mofo.com.
BELTWAY
You Sue Me, I'll Sue You
On April 17, 2015, Quicken Loans Inc. filed suit against the DOJ and HUD. See Quicken Loans Inc. v. United States, Case No. 2:15- cv-11408 (E.D. Mich.). Quicken asserts that despite being ranked the highest-quality lender issuing FHA-backed loans, the company has been unfairly subject to a lending practices investigation for more than three years. As part of that investigation, Quicken, the largest FHA lender, alleges that it has been subject to intimidation and threats from the DOJ and HUD's inspector general. Quicken claims to be a target of a political agenda under which the DOJ...
