Congress’s Repeal Of The Right To Sue Under TISA Did Not Preclude A Damage Claim For Violating California’s Unfair Competition Law

The federal Truth in Savings Act (TISA) 12 U.S.C. § 4301 et seq. regulates banks’ disclosures to customers. Until 1996, TISA allowed civil damages to be sought for failure to comply with its requirements but the provision authorizing lawsuits (section 4310) was repealed in 1996, effective September 2001. The issue addressed in Rose v. Bank of Am., N.A., 57 Cal. 4th 3 304 P.3d 181, 183-84 (Aug. 1, 2013) is what effect the repeal has on claims brought under California’s unfair competition law (UCL). After the expiration of the right to sue under TISA, the plaintiffs filed a class action against the defendant bank alleging unlawful and unfair business practices based on violations of TISA disclosure requirements. The Bank demurred, arguing that by repealing section 4310 Congress expressly prohibited private rights of action under TISA. The trial court sustained the demurrer and on appeal from the ensuing judgment, the Court of Appeal affirmed, reasoning that Congress’s repeal of section 4310 reflected its intent to bar any private action to enforce TISA. The state supreme court disagreed. It said that although Congress may have ruled out any private enforcement of TISA by repealing former section 43 considerations of congressional intent still favored the plaintiffs. By leaving TISA’s savings clause in place, Congress explicitly approved the enforcement of state laws relating to the disclosure of yields payable or terms for accounts … except to the extent that those laws are inconsistent with the provisions of this subtitle, and then only to the extent of the inconsistency. The UCL is such a state law. The court rejected the Bank’s view that the UCL may not be employed to borrow directly from a federal statute if Congress has decided not to allow private enforcement of the federal law. When Congress permits state law to borrow the requirements of a federal statute, it matters not whether the borrowing is accomplished by specific legislative enactment or by a more general operation of law. Contrary to the Bank’s insistence that plaintiffs are suing to enforce TISA, a UCL action does not enforce the law on which a claim of unlawful business practice is based. By proscribing any unlawful business practice, the UCL borrows violations of other laws and treats them as unlawful practices’ that the UCL makes _independently_ actionable.

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