private right of action under the federal Truth in Saving Act ("TISA"),
and therefore consumers cannot bring enforcement suits under California's
unfair competition law ("UCL") to redress TISA violations.
A copy of the opinion is available at:
Plaintiffs, all of which were deposit account holders at Bank of America
(the "Bank"), brought a putative class action against the Bank alleging
that the Bank failed to properly notify them about price increases on fees
applicable to their deposit accounts, allegedly in violation of TISA.
Specifically, the plaintiffs alleged that the Bank informed the plaintiffs
on their written account statements that there were "upcoming pricing
changes" as detailed in an "enclosed brochure." The plaintiffs claimed
that the notice was not clear and conspicuous, and also claimed that the
notice did it specify the exact increase for their personal accounts or
the precise date the increase would take effect.
Based on the alleged TISA violations, the plaintiffs asserted a single
cause of action for violation of the UCL, claiming that the Bank's
practices were unlawful and unfair. The Bank demurred to the complaint,
arguing that Congress expressly prohibited a private right of action to
enforce TISA, barring the plaintiffs' UCL claim based on TISA. Plaintiffs
countered that they retained their state causes of action -- including a
UCL claim premised on TISA violations -- because TISA does not preempt
state law, nor does it expressly bar enforcement via the UCL.
The trial court sustained the demurrer. It held that the repeal of TISA's
civil enforcement provision showed that Congress intended to bar private
actions, and the UCL cannot be used to "plead around" an absolute bar to
relief. The plaintiffs then appealed.
The appellate court upheld the decision of the trial court. The appellate
court noted that originally "TISA provided a private right of action
against any depository institution that failed to comply with statutory or
regulatory disclosure requirements." However, "[i]n 1996, Congress
amended section 4310, adding a 'sunset clause' that repealed the private
right of action provision on September 30, 2001."
The Court held that "[t]he repeal of section 4310 entirely eliminated the
[private] cause of action, thereby releasing banks from future claims of
private parties to recover actual and statutory damages for TISA
As you may recall, the UCL prohibits "any unlawful, unfair or fraudulent
business act or practice." Members of the public have standing to sue
under the UCL if they have suffered injury in fact, and lost money or
property as a result of unlawful or unfair acts. The UCL "borrows
violations from other laws, making them independently actionable as unfair
However, the appellate court noted that a "UCL claim may not go forward if
it is based on conduct which is absolutely privileged or immunized by
another statute." Further, "a plaintiff may not 'plead around' an
'absolute bar to relief' simply 'by recasting the cause of action as one
for unfair competition.'"
Moreover, "[w]hen specific legislation provides a 'safe harbor,'
plaintiffs may not use the general unfair competition law to assault that
harbor." When determining whether another law bars an action under the
UCL, "courts look for is some basis for concluding that the legislative
body 'intended to bar unfair competition causes of action based on'
violations of the underlying statute."
The plaintiffs argued that the ability of consumers to enforce TISA
protections survives the sunset amendment of section 4310. The Bank
countered that the 2001 repeal of the private right of action authorized
by section 4310 proves that Congress intended to bar private actions
premised on TISA violations, exclusively leaving only federal agencies to
The Court noted that while direct suits to enforce TISA were plainly
foreclosed, there was a question regarding whether indirect suits to
enforce TISA survive the sunset clause.
In deciding there was no indirect right to private suits to enforce TISA,
the Court noted "federal courts are reluctant to allow indirect lawsuits
based on violations of federal law when Congress has not authorized it."
Accordingly, the Court held that California consumers cannot "seek
injunctive relief and restitution against a bank for 'unlawful' conduct
when Congress has clearly rejected a private right to enforce TISA."
The plaintiffs also alleged the Bank's conduct was "unfair" under the UCL,
even if it was not unlawful. The Court noted that the California "Supreme
Court has not announced a definitive test for unfair business practices in
consumer cases, and the intermediate appellate courts have devised a
variety of tests." However, the Court then held that the conduct alleged
by plaintiffs was not "unfair" under the UCL.
Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
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