SUPREME COURT REVIEW NCHER Spring Convention Denver, CO June 7-8, 2016 Copyright 2016 Ballard Spahr LLP. All rights reserved. John L. Culhane, Jr John C. Grugan

2 Noteworthy Supreme Court Cases Decided by the Court -Campbell Ewold Co. v. Gomez (Rule 68 offer of settlement) -Spokeo, Inc. v. Robbins (statutory damages without actual damages) Petition for certiorari denied -Tetzlaff v. ECMC (standard for discharge for undue hardship) -Bible v. USA Funds (collection costs on rehabilitated loans) Put over to next term by way of invitation to Solicitor General to file -Madden v. Midland Funding (ability of assignee to charge bank interest rates) -PHEAA v. Oberg and PHEAA v. Pele (sovereign immunity)

3 Campbell Ewold Co. v. Gomez Held that unaccepted Rule 68 settlement offer does not moot class action even if plaintiff would get complete relief (contract law analysis) Plaintiff brought a TCPA class action over a recruiting text for the U.S. Navy that was sent to his cell phone Defendant made timely offer of judgment consisting of all statutory damages ($1503 per message) plus costs (but not attorneys’ fees) District Court and Ninth Circuit denied motion to dismiss and held that unaccepted settlement offer could not moot individual or class claims Dissent would have held that once offer was made there was no case or controversy and no Article III standing

4 Spokeo, Inc. v. Robins Held that to sue for statutory damages plaintiff must be able to show “concrete” or “real” harm from violation Plaintiff sued for willful FCRA violation based on alleged publication of inaccurate personal information District Court had dismissed for lack of standing but on appeal Ninth Circuit had ruled that violation of FCRA rights was “injury-in-fact” Supreme Court distinguished between “particularization” and “concreteness” (real harm or risk of real harm) and remanded case Decision could discourage class actions or create individualized issues making class certification difficult

5 Tetzlaff v. ECMC Writ seeking new test for “undue hardship” – inability to pay that is likely to persist for significant portion of the repayment period – denied Debtor owed almost $260,000 for federal student loans that were guaranteed by ECMC (plus roughly $19,000 in private student loans) -Debtor alleged he would need $38,000 extra income to pay by age 65 -Debtor alleged that he and his mother were living on her Social Security Bankruptcy court had applied Brunner and denied discharge (no future hardship or past good faith effort to pay) and District Court affirmed Seventh Circuit had also affirmed equating future hardship with “certainty of hopelessness” and adopting per se rule for failure to pay Petition was based on conflict in circuits and argument that “totality of circumstances” is a better fit with text and purpose of Bankruptcy Code

6 Bible v. USA Funds Writ seeking review of deference to be given to agency’s interpretation of its own regulations – in general and in this case – denied Dissent by Justice Thomas criticized giving deference in general and giving deference to agency’s litigation position in particular Plaintiff had filed class action asserting breach of contract and RICO claims due to assessment of collection costs on rehabilitated loan District Court had granted defendant’s motion to dismiss finding HEA preemption and no breach since contract allowed costs Seventh Circuit reversed in split decision, finding no preemption and adopting Department of Education position, set forth in amicus brief, that with first-time default rehabilitating borrower can avoid costs

7 Madden v. Midland Funding Writ seeking review of Second Circuit decision holding debt buyer could not assess interest rate charged by national bank seller Case put off with Solicitor General invited to file Solicitor General has now argued that case was wrongly decided -Right to charge interest includes right to assign the right to charge interest -Application of New York law limits bank as well as assignee -Second Circuit misapplied conflict preemption Nonetheless Solicitor General has also argued for denial of certiorari -No split in the circuits (distinguishing Phipps, Krispin and Lattimore) -Key aspects of preemption analysis were not presented to the lower courts -Defendants could still win on remand under Delaware or New York law

8 PHEAA v. Oberg & PHEAA v. Pele Writs filed seeking review of cases holding PHEAA lacks government immunity from False Claims Act and Fair Credit Reporting Act claims Cases put off with Solicitor General invited to file Fourth Circuit had ruled against PHEAA -Pennsylvania was unlikely to pay judgments against it -PHEAA “operates autonomously” without extensive state control -Most of its revenue comes from loan activities involving non-Pennsylvanians -Only a few instances of treatment as state agency PHEAA has argued that Pennsylvania’s statutes, decisions, and practices overwhelmingly demonstrate that it is a state agency Circuits are split on the proper test and on the level of deference

9 Thank you for inviting us to speak with you! Please contact us if you have any questions. John L. Culhane, Jr. Partner Consumer Financial Services John C. Grugan Partner Consumer Financial Services Litigation