WASHINGTON, Nov 28 (Reuters) - In a case pitting business
against consumer groups, U.S. Supreme Court justices on Monday
questioned whether individuals can sue a company over an
alleged kickback scheme without showing it caused them harm.
Justice Anthony Kennedy, who often holds the decisive vote
among the five conservatives and four liberals on the court,
said during the arguments, "The question is whether there is an
injury. The (U.S.) Constitution requires an injury."
Justices asked whether Cleveland home buyer Denise Edwards
could sue her title insurance company despite acknowledging she
suffered no specific harm, such as paying a higher price or
receiving defective real estate settlement services.
Edwards sued her title insurance company, First American
Financial Corp, under a 1974 federal real estate settlement law
that bars kickbacks and certain referral fee arrangements.
She paid $455 for title insurance as part of a 2006 home
purchase while the seller paid an additional $273. She alleges
First American had an arrangement with her Ohio settlement
agency to refer title insurance business exclusively to First
American.
Edwards was supported by 11 states, the National Consumers
League and the consumer advocacy organization Public Citizen.
Groups representing home builders, title insurance companies,
mortgage bankers, realtors and the U.S. Chamber of Commerce
backed the company before the Supreme Court.
The U.S. title insurance industry has said that allowing
such lawsuits would result in "widespread and staggering"
potential liability.
Edwards' attorney Jeffrey Lamken argued that the law has
been clear for 280 years that an individual can sue, without
showing harm in terms of economic loss, over the legal right to
have services free from any kickback or conflict of interest.
KICKBACK OR COMMISSION?
Justice Antonin Scalia questioned if there was anything
wrong with the deal. "I'm not even sure it's proper to call it
a kickback. It's a commission. These people are agents for the
title insurance company and they get a commission on every sale
of title insurance that that they make," he said.
Justice Samuel Alito said he had problems with Lamken's
argument. "We are looking for whether there is an injury in
fact," he said.
Chief Justice John Roberts said past cases had required a
concrete, not a conjectural, harm. He said it sounded
conjectural that the quality or price of the title insurance
had suffered from the alleged kickbacks.
Assistant Solicitor General Anthony Yang, representing the
federal government, supported Edwards and said an individual
had the right to a kickback-free referral.
Aaron Panner, a Washington, D.C., attorney representing
First American, said such lawsuits required two key parts -
violation of a law or legal duty and the claim the violation
caused the plaintiff to suffer some adverse impact.
To support his argument, he said federal antitrust lawsuits
required that plaintiffs show they had suffered financial
injury, that defamation lawsuits required harm to reputation
and that discrimination lawsuits also required an injury.
A ruling is expected by the end of June.
The Supreme Court case is First American Financial Corp v.
Edwards, No. 10-708.
For First American: Aaron Palmer of Kellogg, Huber, Hansen,
Todd, Evans & Figel.
For Edwards: Cyril Smith of Zuckerman Spaeder.
(Reporting by James Vicini)
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