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Court Revives U.S. Bank Repossession Class Action Lawsuit

By Matt O’Donnell


U.S. Bank
The 9th Circuit Court has revived a class action lawsuit against U.S. Bank over post-repossession notices, overturning an lower Court’s decision to dismiss the case.
Plaintiff Jose Aguayo filed the U.S. Bank class action lawsuit in 2007 after the bank repossessed and sold his Ford Expedition. The sale did not bring enough money to cover the initial loan, so the bank charged Aguayo for the deficient remainder. 
Aguayo challenged action, claiming in the class action lawsuit that he should not have to pay the deficiency because U.S. Bank’s post-repossession noticed failed to meet the requirements of the Rees-Levering Act, a California state law meant to protect consumers from “excessive charges” and that “requires full disclosure of all items of cost at all points in the life of a vehicle purchase transaction.” U.S. Bank argued that the state law was pre-empted by the federal National Bank Act (NBA) because it interfered with the “federal authority to carry on the business of banking free from state-law restrictions.”
A federal judge agreed with U.S. Bank and dismissed the class action lawsuit, finding that U.S. Bank’s post-repossession notices are  “credit-related” documents that fall under federal law, not the California consumer protection law. However, a unanimous decision filed August 1, 2011 by the 9th Circuit found that the lower Court had overlooked the importance of the bank law’s savings clause, which bars pre-emption of state laws relating to contracts and debt collection. The judges also found that U.S. Bank’s post-repossession notices were not “credit-related documents.”
The newly revived U.S. Bank repossession class action lawsuit is seeking monetary relief for all California consumers who had to cover the deficiency of their repossessed vehicle sales in the last four years. It is also seeking an injunction preventing U.S. Bank from making improper deficiency claims in the future. 
The case is Aguayo v. U.S. Bank, Case No. 09-56679.


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Updated August 2nd, 2011


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