Sixth Circuit Affirms Fair Lending Class Certification Denial

Posted on January 19th, 2013 in Courts, Mortgages By BuckleySandler

On January 15, the U.S. Court of Appeals for the Sixth Circuit affirmed a district court’s denial of class certification sought by a proposed class of borrowers alleging that a lender’s mortgage loan pricing policy, which granted discretion to local loan originators, disparately impacted racial minorities. Miller v. Countrywide Bank, N.A., No. 12-5250, 2013 WL 149853 (6th Cir. Jan. 15, 2013). The outcome was expected following the U.S. Supreme Court’s opinion in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), which held that a policy that allows local units discretion to act can only present a common question if the local units share a common mode of exercising that discretion. In this case, the borrowers sued their lender on behalf of a proposed class claiming that the lender’s policy granting local agents discretion to deviate from par rates, within a specified range, when originating loans was racially biased. The appeals court held, as in Dukes, that the borrowers did not assert that the policy guided how local agents exercised their discretion and as such the policy could not have caused or contributed to the alleged disparate impacts. The court rejected the borrowers’ attempts to distinguish Dukes based on the Seventh Circuit’s holding in McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482, 490 (7th Cir.), because that case involved companywide policies that contributed to the alleged disparate impact that arose from the delegation of discretion to individual actors. The Sixth Circuit held that no similar policy existed in this case and affirmed denial of class certification.