CFPB Issues Final Decision in In Re: PHH Corp.: First Agency Decision in Contested Administrative Proceeding

by K&L Gates LLP

Earlier this month, the Consumer Financial Protection Bureau (CFPB) issued the Director’s final decision in the CFPB’s enforcement action against PHH Corp. (PPH). The decision is the agency’s first ruling in a contested administrative proceeding and sheds light on how the agency—at least under the leadership of Director Richard Cordray—will approach these matters. Most strikingly, Director Cordray overturned several key rulings by the Administrative Law Judge (ALJ), resulting in a decision requiring PHH to pay over $109 million in disgorgement, nearly 17 times as much as the $6.4 million recommended by the ALJ.

Director Cordray’s decision sets forth the agency’s view on numerous Real Estate Settlement Procedures Act (RESPA) interpretation issues: the statute of limitations applicable to administrative enforcement actions; when a RESPA claim accrues; whether the continuing violation doctrine applies; what constitutes a referral; and, most importantly, what conduct Section 8(c)(2) of RESPA protects. The decision also establishes precedent for how the CFPB might handle future administrative proceedings, including what standard of review applies, how to calculate disgorgement, and the propriety of civil money penalties. Below, we set forth the background of the case, explain the CFPB’s administrative process, and discuss the more important substantive and procedural aspects of the decision.

The CFPB brought an enforcement action against PHH under RESPA, which prohibits the payment of kickbacks in exchange for referrals in the real estate market. 12 U.S.C. § 2607(a), (b). The CFPB alleged that PHH—a mortgage lender—received kickbacks from mortgage insurers to whom PHH referred business. The CFPB alleged that those kickbacks took the form of reinsurance premiums that the mortgage insurers paid to PHH’s re-insurance subsidiary, Atrium, for mortgage re-insurance. The CFPB’s case rested on evidence that showed that PHH referred substantially more business to mortgage insurers who purchased reinsurance from Atrium than those who did not, and evidence that the reinsurance did not actually transfer substantial risk to Atrium commensurate with the premiums it was paid.

Rather than file suit in federal district court, as it has in almost all of its other contested enforcement actions, the CFPB instead chose to file an administrative claim before an ALJ. Following trial, the ALJ ruled in favor of the CFPB, finding that many of the mortgage reinsurance premiums received by PHH were prohibited kickbacks that were paid in exchange for PHH’s referral of mortgage insurance business.  Based on rulings that the RESPA violations at issue occurred when the underlying loans closed, as opposed to when the reinsurance premiums were paid to Atrium, and that disgorgement was appropriately based on the net premiums received by PHH (after deducting the claims it paid out on the reinsurance), the ALJ recommended that PHH be ordered to disgorge more than $6.4 million. Both parties appealed different aspects of the ALJ’s decision to the Director, who issued last week’s decision.

Substantive RESPA Issues
The PHH decision is notable for the number of statutory interpretation issues it addresses. Depending on whether or not the Court of Appeals affords the agency’s interpretations deference (an issue discussed below), these interpretations may have wide-ranging impact on the real estate industry and future CFPB enforcement actions.

No Statute of Limitations Applies to RESPA Administrative Actions
Director Cordray agreed with the ALJ that although RESPA provides a three-year limitations period for enforcement actions brought in federal court, no statute of limitations applies to administrative enforcement actions brought by the CFPB. PHH at 10-12. Like the ALJ, Director Cordray relied on the Supreme Court’s decision in BP America Production Co. v. Burton, 549 U.S. 84 (2006), in reaching this decision. In BP, the Supreme Court held that the term “action” as used in a statute of limitations provision applies to “judicial, not administrative proceedings.” Id. at 91. Applying the same reasoning to RESPA’s statute of limitations provision, Director Cordray reasoned that it too only applies to actions brought in federal court. Recognizing that the Department of Housing and Urban Development (HUD), which enforced RESPA prior to the CFPB’s creation, did not have administrative enforcement authority and that the three-year limitations provision therefore applied to HUD’s enforcement powers until the creation of the CFPB, Director Cordray held that the CFPB cannot pursue claims that arose more than three years before the CFPB assumed enforcement authority on July 21, 2011 (because such claims would have been barred as of that date and could not be revived).

On its face, the Director’s determination with respect to the inapplicability of the statute of limitations appears to comport to Supreme Court precedent. The result, however, is rather extraordinary in light of the fact that CFPB has prosecutorial discretion to elect its forum and can obtain the very same remedies—including civil money penalties—in either federal district court or administratively. If the Court of Appeals upholds this aspect of the decision, the CFPB could be free to pursue any RESPA claims that have accrued since July 21, 2008, and seek substantial penalties for any such violations that occurred after July 21, 2011, when the Dodd-Frank Act’s civil penalty provisions became effective, without regard to any statute of limitations.

RESPA Claims Accrue Upon Payment or Receipt of the Kickback
The critical aspect of Director Cordray’s decision that resulted in the substantial increase in the dollar value of the disgorgement that PHH was ordered to pay was his determination that the RESPA violations at issue accrued when the mortgage insurers paid PHH for the reinsurance, and not at the time the underlying mortgage loans closed. To date, the leading authority on this question was the Fifth Circuit’s decision in Snow v. First American Title, 332 F.3d 356 (5th Cir. 2003). Snow held that the RESPA violation in that case occurred at the time of loan closing. Id. at 358-59. The Director distinguished Snow on the grounds that the payments there at issue—for title insurance—were all made at the time of closing, noting that Snow itself recognized that where “purchasers pay for a settlement service … at a time other than the closing, … ‘the date of the occurrence of the violation’ presumably would be the date of payment, not the unrelated closing.” PHH at 23 (quoting Snow, 332 F.3d at 359 n.3). In PHH, the borrowers paid the underlying mortgage insurance premium—which in turn led to the reinsurance premium/kickback payment to Atrium—each month with their mortgage payment. “Because of this crucial factual distinction,” PHH concluded, “Snow’s reasoning does not apply here.” PHH at 23.

Relying on the statutory language rendering it a violation to give or accept a thing of value for the referral of settlement services, Director Cordray focused on the payment of reinsurance premiums to Atrium as the violative conduct, as opposed to the consumers’ payments of the underlying mortgage insurance premium. In this way, too, Director Cordray differed from Snow, which held that it was the consumer’s payment for title insurance—and not the subsequent payment of the title insurance company’s commission to its agent—that constituted the violation because the title agent earned the commission at the time of the consumer’s payment. Snow, 332 F.3d at 359 (relying on the definition of “thing of value” as including “credits representing monies that may be paid at a future date”). After discussing the fact that the consumers in PHH paid for their mortgage insurance in installments over time, Director Cordray then concluded that each time the mortgage insurers made a payment to PHH they violated the statute, without ever acknowledging this difference with Snow. PHH at 23.

It is this holding that resulted in most of the substantial increase in the disgorgement amount ordered by the Director. The ALJ had held that the RESPA violations occurred at the time of the closing of the underlying loans, and thus limited disgorgement to those loans that had closed after July 21, 2008 (three years prior to the CFPB’s gaining its authority to bring administrative enforcement actions). Director Cordray instead included all payments made by the mortgage insurers to Atrium after July 21, 2008, regardless of when the underlying loans closed. This substantially expanded the number of payments subject to disgorgement.

The Continuing Violation Doctrine Does Not Apply to RESPA
Director Cordray did reject one key argument advanced by Enforcement Counsel—that the continuing violation doctrine applied and allowed for disgorgement for the entire 18-year course of PHH’s conduct, going all the way back to 1995. Recognizing that the continuing violation doctrine typically applies “‘in cases involving a pattern or policy of employment discrimination in which there has been no single act of discrimination sufficient to trigger the running of the limitations period,’” PHH at 26 (quoting Velazquez v. Chardon, 736 F.2d 831, 833 (1st Cir. 1984)), the Director held that because “violations of section 8 of RESPA are individually actionable acts,” the continuing violation doctrine does not apply. Id. at 26-27. A contrary ruling could have exposed PHH to even greater liability.[1]

Indirect Referrals are Actionable Under RESPA
PHH argued that providing incentives to its correspondent lenders to select mortgage insurers that had entered into captive reinsurance agreements with Atrium did not constitute “referrals” under RESPA because that conduct influenced correspondent lenders as opposed to borrowers. Director Cordray summarily rejected this argument, finding that “[a] referral is an action directed to a person that affects the selection of a mortgage service paid for by any person.” PHH at 14 (citing 12 C.F.R. § 1024.14(f)). The Director’s citation to the regulatory provision defining referral, however, is not accurate. The regulation does not state that a referral is an action that affects the selection of a settlement service paid for by any person. Rather, the regulation provides that a referral is an action that affects any person’s selection of a settlement service provider where “such person” will pay for the settlement service. 12 C.F.R. § 1024.14(f). That is, the plain language of the regulation requires that the “any person” being influenced be the same person who will pay for the settlement service for the influence to constitute a referral. Without acknowledging this point, the Director does note that PHH’s conduct “indirect[ly] influence[d]” borrowers (who paid for the mortgage insurance) and thus constituted a referral.

RESPA Section 8(c)(2) Does Not Shield Market-Value Payments
Perhaps the most far-reaching holding of PHH is Director Cordray’s interpretation of Section 8(c)(2) of RESPA. That section provides that “[n]othing in [section 8] shall be construed as prohibiting… the payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or services actually performed.” 12 U.S.C. § 2607(c)(2).

The ALJ, relying on a 1997 HUD interpretive letter, concluded that section 8(c)(2) provides an affirmative defense to section 8(a) claims: that is, if the reinsurance was actually provided and the payments for that reinsurance did not exceed its value, then there would be no violation, even if the arrangement would otherwise violate Section 8(a). PHH at 14-15 (describing ALJ’s ruling). The 1997 HUD letter relied upon by the ALJ addressed captive reinsurance arrangements such as Atrium. The letter provided that “so long as payments for reinsurance under captive reinsurance arrangements are solely ‘payments for goods or facilities actually furnished or for services actually performed,’ these arrangements are permissible under RESPA.” PHH at 18 (quoting HUD Letter at 1). The letter went on to note that:

If the lender or its reinsurance affiliate is merely given a thing of value by the primary insurer in return for this referral, in monies or in the opportunity to participate in a money-making program, then section 8 would be violated. If, however, the lender’s reinsurance affiliate actually performs reinsurance services and compensation from the primary insurer is bona fide and does not exceed the value of the reinsurance, then such payments would be permissible under subsection 8(c).

PHH at 18 (quoting HUD Letter at 3) (emphasis added). Relying on the letter, the ALJ focused his analysis on whether the reinsurance resulted in a real transfer of risk and whether the price of the reinsurance was commensurate with the risk transferred. PHH at 15.

Director Cordray rejected this approach. Instead, he held that Section 8(c)(2) requires not only that any payments constitute reasonable compensation for “services actually performed,” but also that the payments be “bona fide,” which he interpreted to mean that they not be “tied in any way to a referral of business.” PHH at 17. Thus, payments made at market value for services rendered are not insulated from Section 8(a) liability if those services and the resulting payments are the result of the referral of settlement service business. Relying in part on the regulatory definition of “thing of value”—which includes “the opportunity to participate in a money-making program,” 12 C.F.R. § 1024.14(d); see also PHH at 18 (quoting HUD Letter at 3)—the Director held that providing someone with business in exchange for referrals, even if the business is paid for at market rates, violates Section 8(a) and is not exempted by Section 8(c)(2).

This holding is consistent with the position the CFPB took in the Consent Order it issued against Lighthouse Title.  There, the CFPB stated that “[e]ntering a contract is a ‘thing of value’ within the meaning of Section 8, even if the fees paid under that contract are fair market value for the goods or services provided. Entering a contract with the agreement or understanding that in exchange the counterparty will refer settlement services related to federally related mortgage loans violates Section 8(a).” Lighthouse Consent Order, ¶¶ 20-21 (emphasis added). In Lighthouse, the respondent had entered marketing services agreements with various counterparties. The CFPB found that the respondent had entered into those agreements with the understanding that in return the counterparties would refer closings and title insurance business to it. Id. ¶ 12. While the CFPB also found that the payments under the marketing services agreements were not based on fair market value, it went further and noted that merely entering into the contracts, with the understanding that referrals would follow, violated the law.

The message from the CFPB is now clear: no matter what the amount of payments made for services rendered, any quid pro quo agreement in which one party receives business as a result of referring settlement service business to another party is, in the CFPB’s view, a violation of Section 8(a). Unless the PHH decision is reversed on appeal, this holding could have far-reaching consequences in the real estate industry, where the common understanding has been that Section 8(c)(2) provides substantially broader safe harbor from RESPA claims so long as any payments made constitute reasonable compensation for services provided. This may be the aspect of the Director’s decision most vulnerable on appeal, particularly if the Court of Appeals determines, as discussed further below, that the rule of lenity applies, and that the CFPB is therefore not entitled to deference in its interpretation of the statute.

The CFPB Administrative Process

The Administrative Process Provides for an Expedited Decision
The PHH matter was the CFPB’s first contested administrative proceeding. As such, it presents the first opportunity to see how the CFPB intends to apply its administrative rules. Under the Dodd-Frank Act, the CFPB has a rather unique ability to choose whether to bring claims in federal district court or before an ALJ, and can get the very same remedies regardless of which forum it chooses. In light of this, the CFPB’s Rules of Practice for Adjudication Proceedings, which govern matters brought administratively, were consciously crafted to create a litigation path that is different from that otherwise available to the CFPB in federal court. Most markedly, the CFPB’s Rules limit discovery and impose strict time limitations on cases filed before an ALJ, requiring a recommended decision no later than 300 days after Enforcement Counsel first files its Notice of Charges. 12 C.F.R. §§ 1081.206-10; 1081.400. In the PHH case, the CFPB filed its Notice of Charges on January 29, 2014.

Exactly 300 days later, on November 25, 2014, the ALJ issued his recommended decision in the matter. If the case had been brought in federal district court, it is almost certain that no decision would have been issued by that date—in all likelihood, the parties would still have been engaged in discovery at that time.

The CFPB Missed a Key Deadline
Interestingly, the Director seems not to have complied with another related deadline in the CFPB’s rules. Following the ALJ’s recommended decision, the Rules provide that the CFPB is to notify the parties that the case has been submitted for final decision “at the expiration of the time permitted for filing of reply briefs.” 12 C.F.R. § 1081.405(d). The Director must then issue a final decision within 90 days of the notice. Id. This 90-day provision is, in fact, required by the Dodd-Frank Act itself. 12 U.S.C. § 5563(b)(3). In PHH, although the parties’ reply briefs were filed on February 20, 2015, as required by the Director’s scheduling order, the Director’s decision was not issued for 104 days after that date. The docket does not indicate whether or when the CFPB issued the required notice to the parties that the case had been submitted for decision. Clearly, however, either that notice was delayed or the Director’s decision fell outside the 90-day window. The two-week delay displays a surprising willingness to depart from the strict timelines set forth in the statute and the Rules. If nothing else, it sets a disappointing precedent for future ALJs’ compliance with the 300-day rule cited above—for if the Director is free to disregard the deadlines that are found in the Act itself, what is to stop ALJs from disregarding the Rules-based 300-day limit?

The Director Applied De Novo Review and a Preponderance of the Evidence Standard
Director Cordray’s decision contains some important, if unsurprising, procedural rulings that establish precedent that presumably will be applied in future administrative actions. First, he determined that his review as to both facts and law was de novo, such that no deference was owed to the ALJ’s findings of fact or conclusions of law. PHH at 9. Director Cordray based this determination on the provision in the CFPB’s Rules that provides that the Director shall “exercise all powers which he or she could have exercised if he or she had made the recommended decision.” 12 C.F.R. § 1081.405(a). While not surprising given the language of the rule, what is surprising is the degree to which the Director felt free to depart from the ALJ’s rulings, not just in legal interpretation but in the remedy ordered. The clear message is that Director Corday really will exercise de novo review in such cases, and will not hesitate to disagree with legal or factual findings made by the ALJ. The Director also made clear that the proceeding was governed by a “preponderance of the evidence standard.” PHH at 9, citing SEC v. Steadman, 450 U.S. 91, 95-102 (1981).

Both Parties Appealed, But the Director Always Has the Final Say
In this case, both the CFPB’s Enforcement Counsel and PHH appealed aspects of the ALJ’s ruling. Even absent such appeals, however, the final decision in contested administrative proceedings belongs to the Director. In cases where no appeal is filed, the Director may either affirm the ALJ’s ruling within 40 days or else must ask for additional briefing. 12 C.F.R. § 1081.402. If a party intends to seek judicial review of the ALJ’s decision, it must first file a timely appeal to the Director. The failure to file such an appeal waives the right to further judicial review. 12 C.F.R. § 1081.402(c).

PHH’s Options for Further Review: Reconsideration or Appeal
PHH now faces two possible avenues for further review. First, it can seek reconsideration from the Director within 14 days of the decision. 12 C.F.R. § 1081.406. Such reconsideration, however, is limited to “new questions raised by the final decision… and upon which the petitioner had no opportunity to argue.” Id. Given the extensive briefing of the contested matters at issue, reconsideration does not appear to be a promising course of action for PHH. Its second avenue of review is to seek judicial review either in the D.C. Circuit or in the 3rd Circuit—where PHH’s principal office is located. 12 U.S.C. § 5563(b)(4). Any such appeal must be filed within 30 days of the CFPB’s order. Id. And, indeed, the company has indicated it plans to pursue such an appeal.

PHH Can Pay Into Escrow Pending Appeal
The CFPB’s Rules provide that final orders are effective 30 days from the date of issuance, and that filing an appeal does not operate as a stay. 12 C.F.R. § 1081.407(e); see also 12 U.S.C. § 5563(b)(5). In his decision, the Director provided that if PHH appeals the order to the Court of Appeals, it can choose to pay the disgorgement amount into an escrow account. PHH at 37. He did not, however, provide for any stay of the injunctive provisions of the order, and it appears unlikely he would grant such a stay pending appeal. See 12 C.F.R. § 1081.407. Absent a stay by the Court of Appeals, the injunctive provisions—including rather onerous record-keeping provisions—will take effect early next month. Allowing PHH to pay the disgorgement amount into an escrow account pending appeal seems designed to limit the likelihood of the Court of Appeals granting a stay of that aspect of the CFPB’s order.

Standard of Review on Appeal & the Rule of Lenity: Deference or Not?
While PHH is entitled to judicial review, that review, unlike the Director’s review of the ALJ decision, may not be de novo. Rather, in the ordinary course, the Court of Appeals would likely afford substantial deference to the CFPB’s legal determinations interpreting the statute at issue and its implementing regulations. See generally Chevron v. Natural Resources Defense Council, 467 U.S. 837 (1984). While the CFPB’s factual findings will have to be supported by substantial evidence, 5 U.S.C. § 706(2)(E), its legal interpretations made in the course of an adjudication proceeding would ordinarily be afforded deference and upheld unless they are arbitrary and capricious. 5 U.S.C. § 706(2)(A); see United States v. Mead Corp., 533 U.S. 218, 230 (2001).

One possible basis to avoid such deference in this case is the rule of lenity, which provides that ambiguities in criminal statutes should be interpreted in favor of defendants. As Justice Scalia has recently noted, there is a question as to whether Chevron deference should be applied to statutes such as RESPA that contain both civil and criminal prohibitions, in light of the rule of lenity and the courts’ role in interpreting criminal statutes. Whitman v. United States, 574 U.S. __ (2014) (Scalia, J., statement respecting denial of certiorari); see also Carter v. Welles-Bowen Realty, Inc., 736 F.3d 722, 729 (6th Cir. 2013) (discussing application of rule of lenity to RESPA) (Sutton, J., concurring). Director Cordray summarily rejected PHH’s argument that the rule of lenity compelled adoption of PHH’s interpretation of RESPA section 8(c)(2). PHH at 20. Notwithstanding having spent five pages articulating his interpretation of that provision and disavowing and distinguishing a prior HUD letter regarding the same issue—suggesting that alternative interpretations are at least plausible—the Director concluded in a single sentence that the rule of lenity does not apply because “the text, structure and goals of section 8(c)(2) and RESPA as a whole” did not leave any ambiguity as to its meaning. PHH at 20. A reviewing court might well disagree as to the possible ambiguities in Section 8(c)(2). Rather than affording deference to the agency’s interpretation of such ambiguous statutory provisions, the Court might instead determine that the rule of lenity applies, and adopt the interpretation most favorable to PHH. This appears to be an area of substantial risk for the CFPB on appeal, given the judicial interest shown in this issue and the novelty of the CFPB’s interpretation. The same is true in varying degrees with respect to the other statutory and regulatory interpretations discussed above.

Disgorgement Based on Gross Revenue
Reversing the ALJ, Director Cordray also ordered PHH to disgorge all of the reinsurance premiums that it received since July 21, 2008, without deduction for claims actually paid to the mortgage insurers. PHH at 33-34. The Director grounded this decision on the principal that disgorgement is based on ill-gotten gains, as opposed to ill-gotten profit, and that the wrongdoer is not entitled to offset expenses incurred in the course of its illegal conduct. Unless it is reversed on appeal, this broad view of disgorgement is likely to have ramifications in other CFPB enforcement actions, as the CFPB Enforcement staff is likely to seek such disgorgement in other cases where it cannot obtain consumer restitution. The notion that it is improper to deduct expenses incurred by a party in the course of the conduct that the CFPB believes to be illegal is thus likely to make its way into CFPB settlement demands as well as its demands in contested litigation.

No Civil Money Penalty
Among the more surprising aspects of Director Cordray’s decision is his determination that civil money penalties are not appropriate. For an agency that has aggressively pursued such penalties in most of its enforcement actions, the Director’s decision to forgo penalties in this case is notable. In reaching this determination, Director Cordray noted that penalties were only available for payments received by PHH after July 21, 2011 (the effective date of the Dodd-Frank Act), and that “the vast majority of PHH’s conduct over the period encompassed by its reinsurance agreements” preceded that date. PHH at 38. He also determined that the award of disgorgement was a “just and sufficient remedy” to fulfill the CFPB’s goals. Id.

On the one hand, the Director’s decision seems uniquely limited to the facts and procedural posture of the case at hand—where he had already imposed monetary remedies nearly 17 times that ordered by the ALJ, and where the vast majority of the conduct at issue was not subject to penalties because it predated the Dodd-Frank Act. Facing the likelihood of appeal, declining to impose civil money penalties was a way to mitigate the magnitude of his departure from the ALJ’s order, without adopting precedential legal positions that would impact future CFPB cases. On the other hand, the Director specifically noted that some of the statutory factors governing the imposition of penalties did not favor mitigation (including PHH’s size, lack of good faith, and the gravity of the violations), PHH at 37, yet he still declined to impose any penalties. Parties involved in CFPB enforcement proceedings should use this precedent to argue that civil money penalties are not appropriate in their case, because other remedies are sufficient to achieve the CFPB’s goals.

More Captive Reinsurance Cases?
To date, the CFPB has settled with five different mortgage insurers involved in captive reinsurance arrangements. The case against PHH was the CFPB’s only action involving a mortgage lender/reinsurer. Other mortgage lenders/reinsurers who were involved in the captive reinsurance arrangements that were the subject of the CFPB settlements may be on the CFPB’s radar screen. The CFPB Enforcement staff may now feel emboldened by the Director’s decision to pursue these additional parties. On the other hand, given PHH’s impending appeal, and the CFPB’s position that there is no statute of limitations applicable to administrative RESPA cases, those other parties may push back against CFPB efforts to take action against them before the Court of Appeals has a chance to rule on the myriad issues discussed above. It will be interesting to see whether the CFPB brings any additional cases in this area before PHH’s appeal is finalized.

Director Cordray has sent a clear message that he intends to exercise the full scope of his authority as the final decision maker in contested administrative litigation brought by the CFPB. While parties still must develop a factual record and present legal arguments to the ALJ in such cases, it is clear that the Director will not necessarily afford deference to either the factual determinations or legal conclusions made by the ALJ. And while the Director took two notable positions in favor of PHH—holding that the continuing violation doctrine does not apply and declining to impose civil money penalties—his decision as a whole is consistent with the CFPB’s approach to interpret the laws it is charged with enforcing in a manner most favorable to consumers. Thus, Director Cordray’s rulings as to of the applicable statute of limitations, the accrual of RESPA claims, the definition of referral, and, most importantly, the scope of Section 8(c)(2) of RESPA all represent an expansive view of the agency’s authority in this area. PHH’s appeal will have ramifications on two fronts—both the CFPB’s interpretation of RESPA and the CFPB’s administrative authority in general. Depending on the substance and tone of the ruling, it could have important ramifications for the CFPB’s enforcement of RESPA and its conduct of administrative proceedings in the years to come.

[1] Notably, the CFPB has argued that the continuing violation doctrine applies in other RESPA cases. See CFPB’s Opposition to Defendants’ Motion for Judgment on the Pleadings, at 18-19, in CFPB v. Borders & Borders, No. 3:13-cv-01047-CRS-DW (W.D. Ky.), Dkt 42. Presumably, the Director’s determination that the doctrine does not apply to cases involving Section 8 of RESPA will be binding on the CFPB in the Borders litigation as well.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

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This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.