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Mortgage Bankers Association • Mortgage Fraud

cases when law enforcement abuses its discretion, defendants may resort to the courts and to the political process.

Such a broadly phrased statute only makes sense when its application is tempered by prosecutorial experience and discretion. Law enforcement personnel generally can be trusted to weigh numerous factors in deciding whether to prosecute an offense, such as the effect on public welfare, the relative seriousness of the offense, the precedential value of any judicial ruling, etc. In short, as public servants, law enforcement officials generally can be relied upon to bring only those actions that benefit the public.

of the departure from accepted trade practices, its probable effect on the public welfare, the disruption to settled commercial relationships that enforcement proceedings would entail, whether action is to be taken against a single party or on an industry-wide basis, the form such action should take, the most appropriate remedy, the precedential value of the rule of law sought to be established, and host of other considerations. Above all, there is need to weigh each action against the Commission’s broad range policy goals and to determine its place in the overall enforcement program of the FTC.43

The interests of law enforcement personnel are vastly different from the interests of private litigants. While law enforcement generally can be trusted to exercise its discretion to prosecute only cases where it believes some material harm has been done or where important public policy is served, private litigants do not and will not feel so constrained. The self-interest of private litigants alone could motivate private enforcement actions — even if adverse to the public welfare.

In an analogous context, periodically there are calls for a private right of action under a federal UDAP law, notwithstanding the existence of a federal UDAP law in Section 5 of the Federal Trade Commission Act (FTC Act). Congress considered and rejected creation of a private right of action when the FTC Act was enacted41 and again two decades later when Congress amended the FTC Act.42 Decades later, a private litigant requested that the United States Court of Appeals for the District of Columbia create a private right of action where Congress had not. The D.C. Circuit rejected this request, explaining that the expansive scope of the private right of action in Section 5 of the FTC Act makes sense only when subject to the FTC’s experience and prosecutorial discretion. In language equally applicable here, the court explained:

Inherent in the exercise of this discretion is the interplay of numerous factors: the relative seriousness

The court went on to explain that private litigants could not and would not exercise such discretion:

Private litigants are not subject to the same constraints. They may institute piecemeal lawsuits, reflecting disparate concerns and not a coordinated enforcement program. The consequence would burden not only the defendants selected but also the judicial system. It was to avoid such possibilities of lack of coherence that Congress focused on the FTC as an exclusive enforcement authority.44

Indeed, scholars have recognized what industry has long known:

[T]he incentives for private attorneys bear no resemblance to what motivates classic governmental law enforcement personnel. A government enforcer is charged with promoting the public good and typically is paid the same modest salary regardless of (1) which alleged wrongdoers he or she chooses to pursue, and (2) the size of any settlement or verdict he or she obtains. Private class action attorneys, in contrast, have a very direct interest in the outcome of class action litigation, since they normally keep a hefty portion of the proceeds.45


See, e.g., S. Rep. No. 597, 63d Cong., 2d Sess., at 8-13 (1914); H.R. Rep. No. 1142, 63d Cong., 2d Sess., at 18-19 (1914) (Conference Report).


See, e.g., H.R. Rep. No. 1613, 75th Cong., 1st Sess., at 3 (1937); 83 Cong. Rec. 392-406 (1938).

43 44 45

Holloway v. Bristol-Myers Corp., 485 F.2d 986, 997 (D.C. Cir. 1973). Id. at 997-98.

John H. Beisner et al., Class Action “Cops”: Public Servants or Private Entrepreneurs , 57 STAN. L. REV. 1441 (2005).


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