Role (Or Lack Thereof) Of Class Action Lawsuits When Exercising Rescission Rights Under TILA

The apparent lack of a role of class action lawsuits when enforcing rescission rights under the Federal Truth In Lending Act is the subject of a recent law review article in the Loyola of Los Angeles Law Review. From the synopsis:

• The Truth in Lending Act (TILA) provides two primary civil remedies for aggrieved borrowers who received misleading loan disclosures: damages and rescission. While the damages remedy expressly caps class-action damages recoveries, TILA’s rescission remedy is completely silent as to class-action treatment.

• Despite a split on the district-court level regarding the applicability of the class-action device to TILA rescission, the only two federal Circuit Courts of Appeal to consider the issue have foreclosed the right of borrowers to seek class-wide rescissory relief for TILA disclosure errors.(1)

• This Article examines the judicial analysis in these two cases and finds that both courts erroneously construed TILA rescission in favor of lender rights and overstepped their constitutionally delegated power by completely foreclosing a right absent clear congressional intent.

For the article, see Class Retreat From Mass Deceit: Assessing Class Action Compatibility With Truth In Lending Act Rescission.

(1) See:

• Andrews v. Chevy Chase Bank, 545 F.3d 570 (7th Cir. 2008),
• McKenna v. First Horizon Home Loan Corp., 475 F.3d 418 (1st Cir. 2007).

See also, James v. Home Constr. Co. of Mobile, Inc., 621 F.2d 727 (5th Cir. 1980), in which the 5th Circuit Court of Appeals, without much of a discussion or analysis, agreed with a lower court ruling finding that class actions were not warranted by the language of Section 1635, that the rescission remedy was a "purely personal remedy" and that an obligor could not start a class action, merely by filing an individual claim.