First American Financial Corp. v. Edwards

Concerning Standing and Liquidated Damages for Federal Statutory Rights

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  • Supreme Court to Hear Privacy Case Against Spokeo: The Supreme Court will hear an important privacy case concerning the disclosure of personal information in violation of the Fair Credit Reporting Act. Spokeo claimed that the plaintiff's lacked lacked "standing" to sue after the company disclosed data protected by the FCRA. The Ninth Circuit disagreed and ruled for the plaintiffs. In the Spokeo case, the Solicitor General has filed a brief in support of the plaintiffs. EPIC filed an amicus curiae brief in First American v. Edwards, a similar case before the Court in 2011. (Apr. 27, 2015)
  • Supreme Court Dismisses Challenge to Congress's Ability to Define Harm: The Supreme Court today dismissed First American v. Edwards, a challenge to the ability of plaintiffs to sue for a violation of statutory rights established by Congress. The lower court ruled that the plaintiffs had standing because "[t]he injury required by Article III can exist solely by virtue of statutes creating legal rights, . . .." The Supreme Court held that its decision to review the case was "improvidently granted," which means that the lower court opinion stands. EPIC filed a "friend of the court" brief, responding to briefs from several prominent Internet companies that supported the challenge. EPIC argued that Congress must maintain the power to define injuries and provide remedies, and that this was particularly important for privacy protection. For more information, see EPIC: First American v. Edwards. (Jun. 28, 2012)
  • Supreme Court Hears Arguments in Constitutional "Standing" Case: The US Supreme Court heard arguments on Monday in First American Financial Corp. v. Edwards. At issue is whether Congress can pass a law that gives customers the ability to sue companies that engage in illegal kickback schemes for mortgage settlement services, or whether those customers must also show additional injury. A federal appeals court held that the existence of the kickback arrangement violated the Real Estate Settlement Procedures Act of 1974, and was an "injury in fact" for the Constitutional standing requirement. After several Internet firms filed a brief in support of First American Financial, arguing that privacy laws with similar enforcement provisions result in "no injury" claims, EPIC filed a brief in support of respondent and argued that enforcement provisions in federal statues are the cornerstone of federal privacy law. For more information, see EPIC: First American v. Edwards. (Nov. 28, 2011)
  • EPIC Urges Supreme Court to Affirm Congress' Power to Pass Effective Privacy Laws: EPIC filed a "friend of the court" brief in the United States Supreme Court urging the Court to affirm Congress' power to enact strong statutes that protect consumer privacy. First American v. Edwards presents the question of whether a person can sue to enforce a provision of the Real Estate Settlement Procedures Act (RESPA), which gives individuals a right to untainted real estate referral services, and enforces this right by specifying an amount of damages for which violators are liable. Surprisingly, Facebook, Linkedin, Yahoo, and Zynga filed a brief in support of the bank First American and arguing against enforcement of privacy statutes in certain circumstances. EPIC then filed a brief in support of the consumer Edwards and argued that if the Court did not uphold statutory damage provisions, "it would become virtually impossible to enforce privacy safeguards in the United States." Statutory damage provisions help ensure compliance with Fair Information Practices, the foundation of modern privacy law. For more information, see EPIC: First American v. Edwards, and EPIC: Privacy Act. (Oct. 17, 2011)

Question Presented

Whether a private purchaser of real estate settlement services has standing to sue under Article III of the U.S. Constitution for a violation of the Real Estate Settlement Procedures Act of 1974, when the violation did not affect price, quality, or other characteristics of the settlement services provided.

Supreme Court Dismissal

On June 28, 2012 the Supreme Court ordered that the Writ of Certiorari in First American Financial Corp v. Edwards be "dismissed as improvidently granted." Thus, the Ninth Circuit's opinion below is final and the plaintiffs in this case have standing. The Ninth Circuit held that "[t]he injury required by Article III can exist solely by virtue of 'statutes creating legal rights, the invasion of which creates standing.'" 610 F.3d 514, 516 (9th Cir. 2010) (citing Fulfillment Servs. Inc. v. UPS, 528 F.3d 614, 618 (9th Cir. 2008)). The District Court for the Central District of California also denied Defendants' motion to dismiss complaint for lack of standing. 517 F. Supp. 2d 1199 (C.D. Cal. 2007). Given the straightforward and (seemingly) uncontroversial opinions below, it was unclear at first why the Supreme Court chose to grant Certiorari in this case. The Court's order makes clear that Certiorari should not have been granted and the lower court's opinion is the correct outcome.

Supreme Court Dismissal

On June 28, 2012, the U.S. Supreme Court voted to dismiss the Writ of Certiorari in First American Financial Corporation v. Edwards as improvidently granted. As a result of the Court's dismissal, the Ninth Circuit's opinion in First American is final and binding.


The Real Estate Settlement Procedures Act of 1974 ("RESPA") aims to stop kickbacks and referral fees between companies associated with real estate settlements, such as settlement agents and title insurance companies. Specifically, it forbids any person from accepting "any fee, kickback, or thing of value" connected to a referral agreement involving real estate settlement services. 12 U.S.C. § 2607(a). Under a liquidated damages provision in the law, consumers may sue violators of RESPA for "three times the amount of any charge paid for such settlement service." Id. § 2607(d)(2).

In September of 2006, Denise Edwards purchased a home in Cleveland, Ohio. She then sought to purchase title insurance and was referred to First American Title by her settlement agent. After discovering an exclusive relationship between First American and her settlement agent, Ms. Edwards sued First American in a federal district court in California, alleging that the company had violated RESPA by paying $2 million in exchange for exclusive referral agreements with her settlement agent. See Edwards v. First American Corp., 517 F. Supp. 2d 1199 (C.D. Cal. 2007).

First American countered by arguing that the lawsuit should be dismissed because Ms. Edwards lacked standing to sue in federal court. Id. at 1202. Standing is a jurisdictional hurdle that plaintiffs must clear in order to have the underlying merits of their claims decided by a federal court. Without standing, it has been said, figuratively, that a plaintiff cannot even "open the courthouse door." See Doe v. Chao, 540 U.S. 614, 624-625 (2004). In order to have standing, a person must have suffered some kind of harm that is traceable to the defendant and likely to be redressed by a favorable court decision. Courts have held that standing is a requirement imposed by Article III of the U.S. Constitution, which restricts the judicial power to "Cases" and "Controversies."

First American claimed that Ms. Edwards had not suffered an actual injury because the cost of title insurance in Ohio is regulated so that all insurance companies charge the same price, and thus any illegal referral agreement between First American and the settlement agent did not result in Ms. Edwards paying a higher price than she would have paid in the absence of a referral agreement. District courts are divided on the issue of standing in RESPA cases for which an overcharge is lacking, with some requiring an overcharge and others allowing consumers to recover three times the value of any charge paid for settlement services. Id. at 1202-03.

The district court rejected First American's argument, siding with the courts that found standing even in the absence of an overcharge. Such an approach, the court reasoned, is more faithful to a congressional amendment that changed the law to allow recovery of three times the amount of "any charge" paid for settlement service. The court concluded that Ms. "Edwards need not have suffered an overcharge to invoke the protection of RESPA." Id. at 1204.

On appeal, the Ninth Circuit agreed with the district court. The Ninth Circuit noted that Congress has the power to create standing by defining legal rights and injuries. Congress clearly gave victims of RESPA violations the right to three times the amount of any charge paid. Thus, having created the right to be free from referral-tainted settlement services, Congress created standing for those like Ms. Edwards who were injured when this right was violated. See Edwards v. First American Corp., 610 F.3d 514 (9th Cir. 2010).

After First American's efforts to seek rehearing in the Ninth Circuit were rejected, the company petitioned to have the Supreme Court hear the case and decide whether a private purchaser of real estate settlement services who did not suffer an overcharge or any change to "quality[] or other characteristics of the settlement services provided" has standing to sue for a violation of RESPA. The Court granted certiorari on June 20, 2011. First American v. Edwards, 131 S. Ct. 3022 (2011).

To date, the case has attracted 14 "friend of the court" briefs supporting First American's position. Many of these briefs come from companies that are not connected to the retail services industry, such as the Consumer Data Industry Association, Experian, and Facebook.

Concerned about "unjustified and burdensome litigation" from privacy laws that contain statutory damages provisions similar to RESPA's, Facebook argued that the Court should make clear that "the mere allegation of a violation of one of these [privacy] laws" will not give a plaintiff standing to sue in court. See Brief for Amici Curiae Facebook, Inc., LinkedIn Corp, Yahoo! Inc., and Zynga Inc. in support of petitioners, First American v. Edwards, 131 S. Ct. 3022 (2011). Facebook admitted that a privacy-law violation "might" create an injury sufficient to create standing, provided it "go[es] beyond merely conclusory assertions of a generalized sense of embarrassment or some other vague emotional impact . . . ." Id. at 21.

EPIC's Interest in First American

Many privacy laws create private rights that allow citizens to sue to enforce their provisions. In many of these privacy cases, as in First American, there is no economic harm—or at least none that can be easily measured. Thus, the only injury is the violation of the statute. If the Court holds, as amici Facebook and others want it to, that these types of statutory injuries are not enough to create standing, than millions of consumers who suffer violations of these laws will not be able to get through the courthouse door.

Additionally, nearly every privacy law is similar to RESPA in that they contain statutory or liquidated damages provisions. Because most privacy harms are difficult to quantify and thus to prove in court, liquidated damages provide a long-standing and widely-acceptable means of compensating injured plaintiffs. Liquidated damages also encourage plaintiffs to sue for privacy violations and deter would-be violators. A ruling that requires plaintiffs to prove actual damages would decrease the effectiveness of enforcement of federal privacy laws, and place increased burdens on injured consumers.

In Kehoe v. Fidelity Federal Bank and Trust, 421 F.3d 1209 (11th Cir. 2005), the Eleventh Circuit held that individuals suing to recover for violations under the Driver's Privacy Protection Act do not need to demonstrate actual harm in order to recover monetary damages. EPIC filed a "Friend of the Court" brief, arguing that "Liquidated Damages Are Critical to Effecting Congress' Intent to Prevent Indiscriminate Sale of Personal Information." In this brief, EPIC described the function and importance of liquidated damages in statutes that protect privacy.

In Doe v. Chao, 540 U.S. 614 (2004), the Supreme Court held that an individual must prove he has suffered actual harm before he can receive a $1,000 minimum statutory award when the government wrongfully discloses his Social Security Number. EPIC filed a "Friend of the Court" brief that argued that "Liquidated Damage Provisions Are a Long-Standing Technique to Provide Remedies for Privacy Violations." EPIC argued that judges and privacy scholars had long accepted the value of liquidated damages in compensating victims for unquantifiable harms, and in ensuring effective enforcement of the federal privacy laws.

Legal Documents

Supreme Court Documents

Ninth Circuit Circuit Court of Appeals

U.S. District Court for the Central District of California


Supreme Court Opinions

Circuit Court Opinions

  • Krottner v. Starbucks Corp., 628 F.3d 1139 (9th Cir. 2010)
  • Pisciotta v. Old Nat. Bancorp, 499 F.3d 629 (7th Cir 2007)
  • Kehoe v. Fidelity Federal Bank and Trust, 421 F.3d 1209 (11th Cir. 2005)

Law Review Articles and Books


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