Appeals Court Dismisses ADA Case Against Department of Labor FCU

A federal appeals court on Thursday threw out a case against the Washington, D.C.-based Department of Labor Federal Credit Union – a move some said could be the beginning of the end of a years-long saga involving credit unions, their websites and the Americans with Disabilities Act.

The decision affirmed a lower court’s finding that the plaintiff, who is blind and took the credit union to court over its website’s alleged noncompliance with the ADA, wasn’t eligible to join the credit union and thus couldn’t sue over the matter.

“[The plaintiff] is not a member of the credit union, he is not eligible to become a member of the credit union, he has no plans to become eligible to be a member of the credit union, and no action we take could possibly make him eligible to become a member of the credit union. Under these specific circumstances there can be no injury in fact,” the appeals court wrote.

“The Federal Credit Union Act of 1934 positively forbids [the plaintiff] from taking advantage of any of the credit union’s products or services because he does not share the ‘common bond’ of those who may become its members,” it also said. “That law severs any connection between the credit union and [the plaintiff] that could plausibly serve to particularize his alleged injury.”

The decision could become one of the final chapters in a saga that has embroiled over 100 credit unions throughout the country in similar lawsuits from dozens of plaintiffs, many represented by the same law firm.

The bulk of those cases have since settled for undisclosed amounts, but a few credit unions have chosen to fight. Some of their cases are still working their way through the district court system. A handful of credit unions have prevailed there.

Department of Labor FCU, which has $91 million in assets and about 6,800 members, is one of them. In February 2018, a district court judge in Virginia threw out its case, stating that, among other things, the plaintiff’s membership ineligibility left no standing to sue. The plaintiff later appealed, setting the stage for this latest decision from three judges in the Fourth Circuit Court of Appeals.

John Bredehoft, an attorney at Kaufman & Canoles who represents Department of Labor FCU, called the appellate court’s decision a straightforward win for credit unions.

“The decision should spell the end for wide-ranging suits against credit unions by multiple-case plaintiffs who have no connection to the credit union other than pulling up the website once or twice,” he told CU Times. “These kinds of cases have been, by far, the major portion of the cases filed in Virginia and nationally against credit unions.”

However, the decision may not stop actual credit union members from suing over the same issues, Bredehoft noted.

NAFCU and CUNA, both of which filed “friend of the court” briefs in the case, lauded the decision.

“The court’s decision is a major step forward in our defense of credit unions facing predatory lawsuits exploiting a law designed to protect disabled Americans,” CUNA President/CEO Jim Nussle said in a statement.

“This is an important decision for credit unions – it’s the first dismissal at the appellate level, which is likely to set a heavier precedent than those we’ve already seen from lower court cases,” NAFCU EVP of government affairs and general counsel Carrie Hunt said.

Although the appellate court was careful to explain the role field of membership played in its decision, it steered clear of stating whether and how websites in general should make provisions for users with disabilities.

“The opinion does not decide whether websites are places of ‘public accommodation,’ or what the correct technology or standard should be if the credit union websites are covered by the ADA,” Bredehoft said.

A similar appeals case pending against the Herndon, Va.-based Northwest Federal Credit Union, which has $3.5 billion in assets and about 266,000 members, may soon provide more clarity on that, he noted.

The appellate court acknowledged the broader social questions associated with the case, however.

“Our decision is not born of any lack of sympathy for people with visual impairments. Those who do not suffer from impairments of this nature must be alert and sensitive to the formidable challenges such impairments impose on the navigation of everyday life … But to ignore the requirement of an injury in fact in this case would be to transform constitutional standing into a null item,” it said.