Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES NEWS: High Court lets stand California UCL claim based on Truth in Savings Act, (Jul 1, 2014)

By John W. Arden, J.D., LL.M.

A California Supreme Court decision, holding that borrowers could maintain California Unfair Competition Law (UCL) claims based on violations of the federal Truth in Savings Act, will not be reviewed by the U.S. Supreme Court. The high court yesterday denied Bank of America’s petition for certiorari (Rose v. Bank of America, N.A., Dkt. 13-662).

Borrowers brought suit against the bank, alleging unfair business practices under the California UCL based on violations of the federal Truth in Savings Act (TISA) disclosure requirements and seeking restitution, injunctive relief, and attorney fees. Lower state courts rejected the suit, ruling that Congress precluded private enforcement of TISA by repealing the provision authorizing private suits.

The California Supreme Court held that the UCL claims based on TISA were not barred by the TISA savings clause. Bank of America argued that the UCL may not be employed to borrow directly from a federal statute if Congress has decided not to allow private enforcement. The state high court disagreed, finding that considerations of congressional intent favored the borrowers. “By leaving TISA’s savings clause in place, Congress explicitly approved the enforcement of state laws ‘relating to the disclosure of yields payable or terms for accounts . . . except to the extent that those laws are inconsistent with the provisions of this subtitle, and then only to the extent of the inconsistency.’”

The borrowers were not seeking to enforce TISA or recover damages for TISA violations, the California Supreme Court observed. Rather, they sought the equitable remedies of restitution and injunctive relief under the UCL’s prohibition of unfair competition. Thus, the borrowers’ UCL claims could be based solely on a TISA violation, despite the TISA prohibition on private suits, the court concluded.

In its petition for review, Bank of America asked the U.S. Supreme Court whether a state law that borrows other statutes as predicates for liability may be used to privately enforce a federal law, shich Congress has not authorized private enforcement and foreclosed indirect enforcement, based on a savings clause that permits states to enact their own laws relating to the subject of the federal legislation.

Companies: Bank of America, N.A.

News: StateUnfairTradePractices CaliforniaNews