versus national city that today is the proper scope of inquiry the application of relevant legal standards we considering certification of a settlement class in the context of a motion for final approval contrary to the well established policy in this circuit of encouraging voluntary settlements particularly in the class action context the district court in this case abused its discretion by eating from the prescribe the role of district court and evaluating what is yeah i'm so glad we've got what is it what is the significant issue in this in this matter what is the uniform policy here and what is the common answer that would be gathered if we were to say commonality we found here subjectively increase the price paid by black and hispanic borrowers irrespective of the objective credit related criteria  honor there's there's two significant issues that lead to the distinction first is the context of the litigation in our case significantly this was a settlement for purposes of certification of a class for purposes of settlement it was not  contested but you so have you still have to have commonality even with us yes your honor the the factors for rule twenty three apply with a settlement class as with a class and litigation but the focus of the court is different restrict it tightly focused role that rule twenty three prescribe for district court requiring them to act as fiduciaries for the absent class members with respect to a settlement the focuses this court has made clear is upon  protection of the absent class members it's not issues with respect to that the manageability for trial issues that could occur at the time of trial but that it's whether due process is protecting the absent class numbers whether the settlement class of employees across the united states approx one and a half million individuals of significance induced the issues the reason there is no commonality no glue that held the class together is because there were literally millions in millions of different decisions there was a dukes had more problems in this class but still the court was quite explicit on the commonality requirements here even to the point of saying that  you had to look at it and look at the issue supervisor by supervisor you are in in the reason that that was necessary to do things because it was purely subjective criteria that were being used for the decision well after and this case after the everybody qualify for the loss of the all the applicants and the comparative qualify for the hogs so there was a discretionary decisions that were made by either the supervisors about the lending the loan officers wise and each one of those an individual decision here or in this case it was one decision and one transaction for the class members this was a product being sold as a low end product there was one transaction after all the class members were objective we qualified on that same objective criteria to qualify that a part rate there was then one decision that was made increase the explain the difference for minorities paying a higher price was race all other factors were controlled and how how did you come to that particular conclusion through the regression regression analysis yes y in this case we had it expert and notably we the parties before reaching the settlement after two years of litigation after substantial depositions document review there was a two day full day mediation where each side had their experts analysis itself was not submit it that is already in the present it is that it is that significant here and that is it might be one thing if the district court had looked at the regression analysis and came to the same conclusion that finding and that is that this was race based decision rather for in the context of our case in the somewhat the findings of our expert was on challenge for purposes of the settlement this was an on opposed motion in contrast to do a contested motion of litigation where the defense is putting forth all of their counter evidence and their expert evidence in this case the parties as this third circuit has said they should be encouraged to settle actions it's going to alleviate expense to the parties it's going to alleviate the burden upon the courts and act class action settlements all should be car all of that is good i don't think you're going to get any disagreement on that but the the point is one of the rea not say that this type of case it particularly along the discrimination case would not be certifiable in fact just recently as plaintiffs admitted there was another nearly identical action against a party massachusetts where the district court edred final approval for a similar type of settlement this case is very distinct from duke's it's a much more narrow scope the limited class there is not the unlimited discretion in dukes it was issues with respect to hiring firing promotions pay raises emotions whether someone would be transferred to another particular position here again it was one transaction one sale and whether or not it would be increased sales but that doesn't mean there is one decision that goes right  it makes it sound as if the end norma's complexity of of the subject issue can be reduced to numbers and you can safely say nothing happened here except a single decision policy being set forth is that parties can not settle this type of action prior to extensive expensive expert discovery including depositions for reports there could never be an early resolution of this type of case resolution if that is the case why shouldn't it have been submitted to the district court and let the court make a finding if the court said yes i agree with you that the rigor of the regression  got to find deuces has changed to some degree at least the landscape on certification ice a question of what has to be done to comply with your in a in a contested class duke's the concern the protection of the defendant where it's a contested motion the courts recognize certification of a class brings with it attentional tremendous liability exposure for damages to the defendants in this case any potential exposure liability has been not going to be determined by the trier of fact therefore the consideration by the court in looking at the class do not need to include considerations of is it fair to the defendant the defendant as this court has said in ehrhardt we make approval where there was a change in the law yeah i know the change the law facet that was their assigned and i believe i was on the panel in there or did not write the opinion nygard did not believe in or heard there was a signed settlement agreement there's no distinction between this and your hard fact you went further than their heart correct or that in effect in their heart where there was no cause of action for the for the plaintiffs at that moment in towing after the law changed here we do have a cause of action the issue is the interpretation of wal mart with respect to a settlement class as opposed to a very broad diverse group in an employment related context which if we denied your which is hanging out this if we denied your petition for permission to appeal which has not been acted on by this court could you not potentially brazier hard question i a subsequent appeal from a final word or governor if plaintiffs would have an argument that to the extent that wal mart would be considered a change in the law then any change in the law should not apply to our green meant that was in effect to prior to wal mart coming into existence if that were the position of the court to change the law we believe that we would certainly recover because our dream it in notably sure you answered my question i said if we did not grant addition for permission to appeal under rule twenty three f and there was a final order entered by the district court you could you then found appeal from the final word or claiming that your case was covered by says so in your petition the erhard question is properly before us yes your honor i think said that the court would consider there to have been a change and a lot if i just add notably in this case in the context of the settlement the parties specifically were aware of the risks of making a class because of wal mart ending to not certify this class is in conflict with the gersh back tears were factor don't or six when considering the fairness of the settlement looks at the ability to maintain a class if the court does not if a court is to consider fairness in the context of it's that the less likely that you could keep it certified the more fair it is and the better able you and seemed to say that it still is a viable cause of action obviously sash to really provide it but has it undermined the the disparate impact kind of action in your view and if not why now you are in the lending discrimination kotex we don't believe it does wal mart we believe certainly applies in the context of war and a little heated matter as opposed to a settlement again we are not our motion was not opposed this was joined in by the defendant so the considerations by the district court should have been fairness in any risk of collusion or conflicts and considerations for the absent class members with respect to wal mart and its effect on disparate impact again for an appointment litigation case it certainly would have an impact the parties need to look very common question is the glue here in our case we do have a common question we do have a group again it's much more narrow than wal mart so if it wal mart would prohibit it so we think the facts in our case are clearly distinct from wal mart and again the contents of settlement v litigation where in litigation defendants the the concern of the court is going to trial they have to consider some of the merits and the merits blend in with the class issues that's what the court in wal mart looked at is here your honor we agree that it is still sizeable class there is individuals there is one transaction for each individual again if this matter would go to trial defendant would be shorter raise issues as to what was the real motivation what was at play with respect to the increased price paid by all the minorities here where there has been a settlement that doesn't have to be a consideration the court does not need to look into the issues of the particular had negotiated any exposure and liability with sophisticated counsel after an extensive period of litigation and mediation they've agreed both parties look at the risks look at the risk of continuing look at all the factors that go into a settlement indeterminate to enter into a good faith arm's length negotiation where they bargained away their right to go to trial the only consideration from the court should be is this fair for the absent class members notably the district court did find the issue in pet foods and related cases has been is the adequacy it is adequacy for the class representative to represent these parties are this record specifically found that the plaintiffs the players were adequate representatives that they would represent the interests of all the class members here it was simply the issue commonality where the court erred by relying on wal mart where wal mart was in a litigation contest it posture please the court david potentially for the national city defendants and the n c the successor in interest first of all i want to read to you ron a simple sentence from the petition for permission by way of a single choice single choice during a single long transaction in the form of a subjective increase or decrease to otherwise objective really determined lo now this is the same same situation that you had in wal mart they alleged a national class they were there were two thousand offices the national city had they they gave out two million loans over eight years but i think the rules the rules are the rules and the rule twenty three has a requirement of commonality and whatever the motivation for it the court has to be satisfied in fact in the in the community bank case the courts even where there is as we have here a stipulation to a class the court has an independent duty an independent duty to satisfy itself that all of the requirements of twenty three have been met and here's what you said in sullivan here's what the majority said in sul she's me i know you were in the dissension i know that i remember that but here's what the majority said in duke's the court held that commonality and put dominance are defeated defeated when it cannot be said that there was a common inflate the prices for rough diamonds and that was what the majority said applied to all of the members of the class and it clearly did now here's what you hear there is no common mode of exercising discretion by all of these wolfs over two thousand offices of thousands of loan officers all over the country they're making this individual decision which i just read to you about whether they should increase or decrease the rates and there's no there's no common mo for them to it mr potentially notwithstanding yes and notwithstanding your knowledge and you entered into the proposed settlement that there was a dispute pending in duke's vs wal mart your client agreed to settle that's correct we changed was the supreme court said on commonality we need to look at this in a broader sense we need to look at the answers not just a question who looked old scope of the law change but here you still had a deal yes but but you're right on the question what's the question the heart was whether the rise it had breached the settlement no you made the issue here and you made the issue here in this appeal twenty three yes ok and the reason to be can i just say why because under our agreement our settlement what i'm saying is what we have here is the wal mart first as duke's decision and i think all of us focused a lot of our efforts on the compare ability between the two cases but what we also have is an erhard first ris similarity and it is proper for this court if we accept petition this promptly before this court i'm having trouble finding the distinction between the two cases well well that the distinction your honor is that the judge as to as this court said in community by the judge and as the supreme court said then when you're sort of find a settlement class you have the obligation to determine whether or not the class satisfies the requirements now and that's as of the time they make the decision you don't go i look at it at some prior time you have a look at it when he makes the decision all right i hear your answer but the judge in her first horizon said on a motion for judgment on all we would have to say is that at the posture where this case was before judge riverina that he did not need to evaluate the impact of the wal mart decision on this case because you had an agreement words to a couple more words about this there have been three district court decisions since since walmart for the same adonikam class that we have here different different lenders but for minority bara suing under color and the f h a for discretionary pricing just as you have here and based on a regression analysis which i'll come to the most and each of those three case there was no common mode of showing how discretion was exercised and of course that's right when you think about it you think about thousands thousands of more wolf this is a third party brokers making loans not just not just two hundred  we could've could've made that case we were cut off at the pass that's just all just that's wrong with that assertion that they didn't get a evidence here is not common in quotes because it is not shared by were all possibly even most individuals in the class averages were community right estimations would not be  individual's claim because any one class member may have an exposure level well above or below the average and that's what happens with regression analysis they give you an average disparity and not disputed an average disparity between in this case the minority borrowers and the quotation marks and it doesn't tell you whether any of the members of this class are above or below that average it doesn't tell you who who was the better who was below it it doesn't even tell you look and find a caucasian barber who had the same basic financial circumstances at the same time and was given another loan and compare the two you can average doesn't tell you anything about the members of the class and that's what cited that was and they said at the teamsters that they said we're not ruling it out there may be cases where could be appropriate but i'm trying to figure out where it is appropriate well under your under your view  view it's not appropriate where again as it were mart that was gender it was gender neutral this is race neutral it there's no claim here that we had any intentional racial discrimination by anybody and in this fairness hearing they said it was really true i understand that but but but even if you assume that there are there regression analysis was a perfect regression analysis that took into consideration all of the independent variables that they should and did it in just the way they s it still only tells you in a discretion based test where the single i just read the lives of a single choice each each determination in the discretion based test it doesn't tell you who was victimized in that class i above or below that which was actually disadvantaged some people were advantaged so it doesn't tell you anything it just gives you an average and that's not a given commonality that's not sufficient and that's what you want to set in dates well you know these cases also have to be looked at because the employment discrimination cases may be different from toxic tort cases unfair lending practices may be different from others it seems that  you have you have a policy of giving discretion to people in handing that discretion down all that policy of the organization generally open the door to still are bound by wal mart and the question is whether there is any common mode common mode for looking at the discretion that was esa sized in this single choice decision made by thousands of more references and third party crocus in over two thousand offices in the entire country when they were making two million loans and one hundred fifty thousand of them went to minority parties thank you again the question the heightened attention of course there is a need to satisfy the elements of rule twenty three the supreme court specifically said the heightened attention should be the interests of the absent class members not to the defendant again that is the distinction  exposures people with significant personal injuries people who had deaf people had just exposure and no exposure in our case first this is the quintessential consumer class action where there are relatively small damages for each class member they could never afford to bring litigation on an individual basis to recover the damages that they suffered here but for the settlement they will have no if the court is that this record is holding they can't even settle this case in court before the  decision maker at national city who decided there would be subjective criteria allowed now notably regulations have since prohibited the subjective evaluation where the decisions need to be based only on the objective part rate that criteria it was the single decision from this company to allow discretion could be part of the equation there was no need for no business necessity just a case of all right all the class members this would be the equivalent if there was an objective standard for if you're just to limit walmart to a promotion if there was objective criteria where every class member had to meet certain objective criteria if they were all qualified for it and then there was an issue a be promoted or not that's what we have here we have the objective criteria everyone is qualified on the same basis they have the rate and then the discretion comes into play well more it was it's naturally and it's it it's subjective expert who would challenge our statistician or sociologist to a testify in these types of cases there is expert testimony alone from sociologists who would testify as to the inherent discrimination whether subconsciously or otherwise that plays a role when these types of loan officers have discretion it's known that something expert can testify to if there were a battle of experts a trial that would be an issue but not all of our concern about here is capable of you know we don't  have to go to the merits as correct your honor and we believe that the court can look at the common issue the defendant decided to inject subjective criteria into the loan making process where there was no need for it and it has since fourth been prohibited to not allow the parties to go forward with the settlement again that would prohibit settlements absent expensive time consuming litigation and full and complete expert discovery further with what the district court did in this case even after there would be expert discovery that this report postulated as to additional possibilities there was no need for that and we in fact it was going to proper the court the party set forth in unopposed common issue there was no overreaching the there was specifically a finding that adequacy the class representative the only concern is are the absent class members rights protected that's what this court has noted in in sullivan to be foods the case law is clear in repeat fruits and again district court may take the proposed settlement into consideration when examining the question of certification settlement is a crucial factor in this case and it's a significant distinction from wal mart or any other class case where it's disputed contest you know that this court can find that the district court believed it was a change in the law and that it was soley because of wal mart where after pulling in early approving the settlement it was the sole basis is wal mart in the commonality analysis from wal mart that was applied where the court found that there was a need for a different application or an analysis of the commonality and again erred by applying a case that is being litigated being contested addressing employment issues as opposed the narrow issues of focus in our case as defenses conceded in their own words there was a single decision for the borrowers at issue here and again it was a single decision from the corporation to allow that subjective criteria to be an that you're going to affect it's probably even a stronger case for the commonality because all the debt has been aggregated and we show it's the nature of this case will show that it was the minorities will show what they paid and th show the class members that they paid extra senate more than x dollars more then caucasians did in this instance the first it's addressing issues for the merits of trouble and that involves individual issues whether defendant would argue at trial that may be an issue to present trial and to defend where defendant would say you can't show the damages or you can't show an individual effect that would be an individual issue concerning proofs evidence and the manageability of trial again by negotiating a resolution here those issues are off of the table  agreed this is what in resolving this litigation should be paid to the class numbers so there's no need to even consider whether a trial if it could be proven when we've got the common issue that's agreed to the issue that the discretion the effect upon the minorities the amount of money or the damages suffered again where it's negotiated in the settlement there is no need for the court to even venture into how would it be determined at trial because as the courts have said starting with income where there isn't a trial the court need not focus on those issues thank you very much case was extremely well argued greece was very helpful fascinating and difficult issues to take the matter under