Ninth Circuit Holds that District Courts May Reject, But May Not Select, Lead Plaintiffs' Counsel in Class Actions Brought Under the Private Securities Litigation Reform Act

Posted on November 11, 2009 by Sheppard Mullin

By John Stigi and Christina Costley

In In re Cohen, No. 09-70378, 2009 WL 3681701 (9th Cir. Nov. 5, 2009), the United States Court of Appeals for the Ninth Circuit reversed an order by the United States District Court for the Northern District of California that rejected co-lead plaintiff’s selection of counsel and instead appointed a firm selected by the district court.  Calling the district court’s selection of counsel “clearly erroneous,” the Ninth Circuit took the unusual step of issuing a writ of mandamus vacating the district court’s appointment of counsel and holding that, under the plain language of the Private Securities Litigation Reform Act of 1995 (“Reform Act”), the district court has the power to reject, but not to select, lead counsel in a securities fraud class action.
 

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Third Circuit Holds That Plaintiffs Alleging Respa Violations Under Section 8 Need Not Show An Overcharge To Have Article III Standing To Sue

Posted on November 2, 2009 by Sheppard Mullin

By John Stigi and Martin White

In Alston v. Countrywide Financial Corp., 2009 WL 3448264 (3d Cir. October 28, 2009), the United States Court of Appeal for the Third Circuit confronted the issue of whether consumer plaintiffs alleging a violation of section 8 of the Real Estate Settlement Procedures Act of 1974 (“RESPA”), codified in relevant part at 12 U.S.C. § 2607(d)(2), need to show a monetary injury “in the form of an overcharge” to have standing to bring a private right of action against a mortgage lender. The Third Circuit concluded that plaintiffs need not suffer an overcharge because the “plain language of RESPA section 8 indicate[s] that Congress created a private right of action without requiring an overcharge allegation.” Rather, plaintiffs must only allege that a defendant received a “kickback” or offered a “sham service” under RESPA section 8(a) and 8(b) –– regardless of whether plaintiffs have suffered a monetary harm –– to have Article III standing to sue in the Third Circuit. This decision paves the way for class action litigation against other lenders asserting claims under Section 8 of RESPA.
 

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