This morning, the Supreme Court issued its decision in Jesinoski v. Countrywide Home Loans, involving the exercise of a borrower's "right of rescission" under the Truth in Lending Act (TILA). TILA requires that a bank provide its borrowers r with certain disclosures; if it fails to do so the borrower may elect to rescind the loan for three years after the date of closing. The question in Jesinoski was what the borrower needs to do to effectuate the rescission -- did they need only to notify the bank that they were electing to rescind, or did they need to actually file a lawsuit within the three year period. In a 9-0 decision, the Court held that only notification was necessary.
This is a case near and dear to my heart, because I worked on it as a clerk for Judge Murphy (I normally wouldn't reveal my involvement, but Judge Murphy emailed me this morning to "advertise your role in this widely," and far be it from me to ignore an order from a federal judge). Technically, the case I worked on was Keiran v. Home Capital, Inc., 720 F.3d 721 (2013), but they're the same case -- Jesinoski was a per curium opinion by the 8th Circuit bound by Keiran; the only reason that the former was the SCOTUS case was because for a variety of technical reasons it presented a cleaner case to review. The majority in Keiran had held that a lawsuit must be filed within the three year timeline; Judge Murphy dissented and took the (now-vindicated) position that only notification was required.
Not to put to fine a point on it, but we were clearly in the right, and the five page Scalia opinion (shortest of the year, according to SCOTUSblog) explaining why is all the time this question really deserved. The statutory text (15 U.S.C. 1635(a)) is crystal clear: "[T]he obligor shall have the right to rescind the transaction . . . by notifying the creditor, in accordance with regulations of the [Consumer Financial Protection Bureau], of his intention to do so." The implementing regulations say the same thing ("To exercise the right to rescind, the consumer shall notify the creditor of the rescission by mail, telegram or other means of written communication."), and pretty much any other tool of statutory interpretation (the view of the implementing agency, the canon of construction for a remedial statute like TILA) points in favor of that outcome.
But if it was so obvious, why did it come out the other way in the 8th Circuit? And not just there -- the Supreme Court was resolving a deep circuit split that pitted (off the top of my head) the 8th, 9th, and 10th Circuits against the 3rd and 4th Circuits. I don't think it's a left/right divide -- unanimity of the Supreme Court aside, following the decision in Keiran two Republican appointees on the 8th Circuit (Judges Colloton and Melloy) went out of their way to express their view that the majority had gotten it wrong and Judge Murphy's dissent was correct. Rather, it seems clear to me that it was simply a case of an attorney mismatch.
I watched the oral arguments in Keiran, and the disparity in talent was quite evident. The lenders were represented by a former Scalia clerk who was simply superb -- one of the best advocates we saw all year. The homeowners were represented by a random mortgage foreclosure defense attorney, who was decidedly mediocre (the CFPB also had an attorney who argued briefly on behalf of the homeowner -- my coclerks and I divided in our appraisal of her -- I found her average at best, my colleagues thought she was pretty solid). One side had eloquent and polished presentation with well-crafted, sophisticated arguments; the other was bumbling and disjointed and did little to give the court guidance as to the right outcome (which could start and end with the clear statutory language). The mismatch in talent canceled out the mismatch in legal justification, and so the result was a deep divide in the lower courts. Once the case went to the Supreme Court, by contrast, the homeowners got much better representation -- plenty of firms are willing to take a prestigious SCOTUS case for little or no fee, simply for prestige -- and when that imbalance was rectified the outcome of the case was assured.
Clerking is an interesting experience. It gives you an inside look at how the sausage is made, which, like most sausage-production, can be equal parts fascinating and horrifying. It also does wonders to alleviate the sense of imposter syndrome -- because a lot of lawyers are bad. Nothing did more to make me feel qualified to be a lawyer -- a good lawyer, even -- than reading the submitted briefs during my clerkship. But while this did wonders for my self confidence, and emphasized that yes I could make a difference, it was also quite sobering. Good representation matters. A lot. And it is no mystery and no coincidence that for the most part it is the big banks that get the former Supreme Court clerks and the poor homeowners who get the remains (or worse, the grifters). Judges, no more than any one else, are not superhuman, and they can be swayed by good advocacy even where the law unadorned seems to obviously suggest another result. Here, the right outcome was reached in the end. It isn't always.
Tuesday, January 13, 2015
Good Lawyers Make Good Results
Posted by David Schraub at 3:54 PM 3 comments:
Labels: banks, supreme court
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