Case 3:08-cv-00448-JGH Document 1 Filed 07/12/07 Page 1 of 25 PageID #: 1

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

GILLIAN MILLER, LAKISHA AUSTIN, and ARTHUR and LUELLA DAVIS on behalf of themselves and all others similarly situated,
Plaintiffs, vs. COUNTRYWIDE BANK, A DIVISION OF TREASURY BANK, N.A., COUNTRYWIDE HOME LOANS, INC., COUNTRYWIDE CORRESPONDENT LENDING, FULL SPECTRUM LENDING, INC., LOANS FOR RESIDENTIAL HOMES, CORP. and SUMMIT MORTGAGE LLC,
Defendants.

) ) ) ) ) C.A. NO. ) ) ) ) ) ) ) ) ) ) JURY TRIAL DEMANDED ) ) ) ) )

CLASS ACTION COMPLAINT

Plaintiffs, Gillian Miller, Lakisha Austin and Arthur and Luella Davis ("Plaintiffs"), on

behalf of themselves and all others similarly situated, by their undersigned attorneys, allege as

follows:

1.

This is a class action brought by Plaintiffs, on behalf of themselves and other

similarly situated black homeowners, against Countrywide Bank, A Division of Treasury Bank,

N.A., Countrywide Home Loans, Inc. and its wholly- owned subsidiaries, Countrywide

Correspondent Lending and Full Spectrum Lending, Inc. (collectively "Countrywide" or

"Defendants"), under the Equal Credit Opportunity Act, 15 U.S.C. § 1691, et seq. (“ECOA”) and

the Fair Housing Act, 42 U.S.C. § 3601 et seq. Plaintiffs seek remedies for themselves and the

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Class (defined in ¶ 18, below) for the discriminatory effects of the Defendants' home financing

policies and practices.

2.

As described below, the Defendants have established a specific, identifiable and

uniform credit pricing system, a component of which, referred to herein as the Discretionary

Pricing Policy, authorizes unchecked, subjective surcharge of additional points and fees to an

otherwise objective risk-based financing rate. In other words, after a finance rate acceptable to

the Defendants is determined by objective criteria (e.g., the individual’s credit history, credit

score, debt-to-income ratio and loan-to-value ratios), the Defendants' credit pricing policy

authorizes additional discretionary financing charges and interest mark-ups. These subjective,

additional finance charges have a widespread discriminatory impact on black applicants for

home mortgage loans, in violation of ECOA and the FHA.

3.

The Defendants have established policies for retail and wholesale access to their

loan products that subject black financing applicants to a significantly higher likelihood of

exposure to discretionary points, fees and interest mark-ups. These costs drive up the average

cost of a mortgage loan made by one of the defendants to black applicants.

4.

Plaintiffs seek declaratory and injunctive relief, disgorgement and restitution of

monies disparately obtained from black borrowers.

JURISDICTION AND VENUE

5.

Plaintiffs invoke the jurisdiction of this Court pursuant to 28 U.S.C. § 1331,

which confers original jurisdiction upon this Court in a civil action arising under federal law.

6.

Venue is proper in this Court pursuant to 28 U.S.C. 1391(b) inasmuch as the

unlawful discriminatory practice is alleged to have been committed in this District, Defendants

regularly conduct business in this District, and the named Plaintiffs reside in this District.

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PARTIES

7.

Plaintiff, Gillian Miller, is a black homeowner who resides at 1485 River Street,

Hyde Park, Massachusetts 02136.

8.

Plaintiff, Lakisha Austin, is a black homeowner who resides at 17 Richmere

Road, Mattapan, Massachusetts 02126.

9.

Plaintiffs, Arthur and Luella Davis, are black homeowners who reside at 36R

Richfield Street, Boston, MA 02125.

10. Defendant, Countrywide Bank, a Division of Treasury Bank, N.A. ("Countrywide

Bank") is a mortgage lender with a place of business at 1199 North Fairfax Street, Suite 500,

Alexandria, VA, 22314.

11. Defendant, Countrywide Home Loans, Inc. ("Countrywide Home Loans") is a

mortgage lender with a principal place of business at 4500 Park Granada Blvd., Calabasas, CA

91302.

12. Defendant, Countrywide Correspondent Lending ("Countrywide Correspondent")

purchases mortgage loans from other lenders. Countrywide Correspondent Lending, is a wholly

owned subsidiary of defendant Countrywide Home Loans, Inc, and has a principal place of

business at 4500 Park Granada Blvd., Calabasas, CA 91302.

13. Defendant, Full Spectrum Lending, Inc. ("Full Spectrum") originates sub-prime

mortgage loans. Full Spectrum Lending is a wholly owned subsidiary of defendant Countrywide

Home Loans, Inc., and has a principal place of business at 4500 Park Granada Blvd., Calabasas,

CA 91302. Full Spectrum Lending is part of Countrywide Home Loans' Retail Channel.

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14. Unless otherwise stated, the Plaintiffs will refer to Countrywide Bank, Countrywide Home Loans and its wholly owned subsidiaries Countrywide Correspondent and Full Spectrum collectively as "Countrywide" or "Defendants."
15. Defendant, Summit Mortgage, LLC, (“Summit”) is a mortgage lender with a principal place of business at 301 Edgewater Place, Suite 310, Wakefield, MA 01880.
16. Defendant, Loans For Residential Homes Mortgage Corp. ("Loans For Residential Homes Mortgage") is a mortgage broker with a principal place of business at 5586 Post Road, East Greenwich, RI 02818.
CLASS ALLEGATIONS 17. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full. 18. This class action is brought pursuant to ECOA and the FHA by the individual named Plaintiffs on behalf of themselves and all black consumers (the “Class”) who obtained a Countrywide home mortgage loan in the United States between January 1, 2001 and the date of judgment in this action (the “Class Period”) and who were subject to Countrywide's Discretionary Pricing Policy pursuant to which they paid discretionary points, fees or interest mark-ups in connection with their loan. 19. Plaintiffs sue on their own behalf and on behalf of a class of persons under Rules 23(a) and (b)(2) and (b)(3) of the Federal Rules of Civil Procedure. 20. The phrase "Discretionary Pricing Policy" refers to Countrywide's policy of authorizing its loan officers, brokers and correspondent lenders to impose subjective, discretionary charges and interest mark-ups, that are included in the finance charge loans they originate.
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21. Plaintiffs do not know the exact size or identities of the proposed Class, since such information is in the exclusive control of the Defendant. Plaintiffs believe that the Class encompasses many thousands or tens of thousands of individuals who are geographically dispersed throughout the United States. Therefore, the proposed class is so numerous that joinder of all members is impracticable.
22. All members of the Class have been subject to and affected by the same Discretionary Pricing Policy. There are questions of law and fact that are common to the Class, and predominate over any questions affecting only individual members of the Class. These questions include, but are not limited to the following:
a. the nature, scope and operations of Countrywide's Discretionary Pricing Policy; b. whether Countrywide Bank and Countrywide Home Loans and its subsidiaries,
including, without limitation, Countrywide Correspondent and Full Spectrum, are creditors under the ECOA because, for example, in the ordinary course of its business they participate in the decision of whether or not to extend credit to consumers; c. whether Countrywide's Discretionary Pricing Policy is a facially neutral credit pricing system that has effected racial discrimination in violation of ECOA; d. whether there are statistically significant disparities between the amount of the discretionary charges imposed on black persons and the amount of the discretionary charges imposed on white persons that are unrelated to creditworthiness; e. whether any legitimate business reason for the Discretionary Pricing Policy can be achieved by a credit pricing system less discriminatory in its impact;
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f. whether the Court can enter declaratory and injunctive relief; and g. the proper measure of disgorgement or damages. 23. The claims of the individual named Plaintiffs are typical of the claims of the Class and do not conflict with the interests of any other members of the Class in that both the Plaintiffs and the other members of the Class were subject to the same Discretionary Pricing Policy that has disproportionately affected black homeowners. 24. The individual named Plaintiffs will fairly and adequately represent the interests of the Class. They are committed to the vigorous prosecution of the Class’ claims and have retained attorneys who are qualified to pursue this litigation and have experience in class actions – in particular, consumer protection and discrimination actions. 25. A class action is superior to other methods for the fast and efficient adjudication of this controversy. A class action regarding the issues in this case does not create any problems of manageability. 26. In the alternative, Countrywide has acted or refused to act on grounds generally applicable to the case, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole.
ALLEGATIONS OF CLASS-WIDE DISCRIMINATION 27. Countrywide is one of the largest mortgage-lending companies in the United States. Countrywide publicly promotes its home financing expertise by means of nationwide advertising campaigns. In its advertisements, Countrywide solicits persons to apply for financing with Countrywide either in one of its offices or through one of the mortgage brokers whom Countrywide has authorized to accept applications on its behalf.
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28. Countrywide makes home-mortgage loans directly to consumers through its various subsidiaries, including sub-prime loans through its subsidiary Full Spectrum.
29. Countrywide also makes home-mortgage loans that are arranged by its network of mortgage brokers. Those loans are made in reliance on Countrywide’s credit-granting policies and with the participation of Countrywide.
30. Countrywide also obtains business through a network of correspondent lenders, such as Summit, which originates loans that Countrywide funds. Those loans are made in reliance on Countrywide’s credit-granting policies and with the participation of Countrywide.
31. Due to Countrywide’s policies as to where to place its offices and how to market its products, black borrowers are more likely than white borrowers to apply for credit from Countrywide through its sub-prime subsidiary, Full Spectrum, or from an authorized broker or a correspondent lender.
32. Because of the Discretionary Pricing Policy, loans obtained from Countrywide through Full Spectrum or Countrywide’s network of brokers or correspondent lenders are more expensive, on average, than loans obtained directly from Countrywide.
33. Based on the latest available Home Mortgage Disclosure Act (“HMDA”) data, available from the Department of Housing and Urban Development, blacks who borrow from Countrywide are over three times more likely than whites to have received a high-APR loan to purchase a home and over two times more likely to have received a high-APR to refinance their home.
34. A high-APR loan is a loan whose APR is at least three percentage points higher than the interest rate on U.S. Treasury securities of the same maturity, at the time the loan was made.
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35. While credit differences may explain some part of the disparities in rate and terms, Countrywide's Discretionary Pricing Policy accounts for a significant portion of the disparity.
36. Countrywide's Discretionary Pricing Policy is unrelated to a borrower’s objective credit characteristics such as credit history, credit score, debt-to-income ratio and loan-to-value ratios and results in purely subjective charges that affect the rate otherwise available to borrowers.
37. Countrywide provides authorized mortgage brokers and correspondent lenders with substantial information about its loan programs, rates and credit criteria, as well as its policies for compensating mortgage brokers and correspondent lenders who arrange business for it.
38. Countrywide authorizes mortgage brokers who have signed a contract with it to accept applications on its behalf, quote financing rates and terms on it (within the limitations set by Countrywide), inform credit applicants of Countrywide's financing options and to originate finance transactions using Countrywide’s forms, in accordance with its policies.
39. Countrywide authorizes its correspondent lenders to make loans based on its credit-granting policies. Countrywide funds these loans before or shortly after they are consummated.
40. In all of the home-mortgage-finance-transactions at issue, Countrywide advances the funds to make the loans and bears some or all of the risk of default. Countrywide provides its loan officers, brokers and correspondent lenders with credit applications, loan contracts and other required financing forms, as well as instructions on filling out such documents necessary to complete home mortgage transactions.
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41. After a customer provides credit information to one of Countrywide's loan officers, brokers, or correspondent lenders, Countrywide computes a financing rate through an objective credit analysis that, in general, discerns the creditworthiness of the customer.
42. These credit analyses consider numerous risk-related variables of creditworthiness, including credit bureau histories, payment amounts, debt ratio, bankruptcies, automobile repossessions, charge-offs, prior foreclosures, payment histories, credit score, debtto-income ratios, loan-to-value ratios and other risk-related attributes or variables. On information and belief, Countrywide uses these variables to determine a “mortgage score” for each credit applicant.
43. Based on these objective risk-related variables and the resulting mortgage score, Countrywide derives a risk-based financing rate at which it would provide a home mortgage, often called the “Par Rate.” Alternatively, experienced Countrywide loan officers, brokers and correspondent lenders can estimate the risk-related Par Rate by referring to the applicant’s credit bureau determined credit score.
44. Although Countrywide's initial analysis applies objective criteria to calculate this risk-related Par Rate, Countrywide then authorizes a subjective component in its credit pricing system —the Discretionary Pricing Policy — to impose additional non-risk charges. On information and belief, the applicable Par Rates and authorized discretionary charges are communicated by Countrywide to its Loan Officers, brokers and correspondent lenders via regularly published “rate sheets.” Such rate sheets are published by Countrywide via intranet and internet.
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45. The discretionary charges are paid by the customer as a component of the total

finance charge (the “Contract APR”), without the homeowner knowing that a portion of their

Contract APR was a non-risk-related charge.

46. Loan officers, brokers and correspondent lenders have discretion, within the limits

set by Countrywide, to impose discretionary mark-ups as additional points in interest – “a rate

mark-up”. When there is a rate mark-up, Countrywide shares the additional income, even if the

loan is originated by a broker or correspondent lender.

47. Countrywide's Discretionary Pricing Policy, by design, causes persons with

identical or similar credit scores to pay different amounts for the cost of credit. As a result of

using a subjective pricing component that is designed to charge persons with the same credit

profiles different amounts of finance charge, the objective qualities of the initial credit analysis

used to calculate the Par Rate are undermined and the potential for race bias becomes inherent in

the transaction.

48. The Discretionary Pricing Policy, although facially neutral (insofar as

Countrywide uses the same or effectively the same policy for all credit applicants), has a

disproportionately adverse effect on blacks compared to similarly situated whites in that blacks

pay disparately more discretionary charges (both in frequency and amount) than similarly

situated whites. Statistical analysis of discretionary charges imposed on black and white

customers of other mortgage companies that use credit pricing systems structured like that of

Countrywide has revealed that blacks, after controlling for credit risk, are substantially more

likely than similarly situated whites to pay such charges.

49.

Loan officers, brokers and correspondent lenders are agents of Countrywide for

the purpose of setting credit price, which is always set based on Countrywide's policy.

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50. The disparate impact suffered by blacks is a direct result of Countrywide's Discretionary Pricing Policy in that Countrywide designed, disseminated, controlled, implemented and profited from the Discretionary Pricing Policy creating the disparate impact.
51. Countrywide has a non-delegable duty to ensure that its mortgage financing structure and policies do not have a disparate impact on legally protected classes, such as blacks. Despite having such a non-delegable duty, Countrywide has chosen to use, and on information and belief, continues to use, a commission-driven, subjective pricing policy that it knows or should have known has a significant and pervasive adverse impact on black homeowners.
52. The disparities between the terms of Countrywide's transactions involving black homeowners and the terms involving whites homeowners cannot be a product of chance and cannot be explained by factors unrelated to race, but, instead, are the direct causal result of the use of the discriminatory Discretionary Pricing Policy.
53. There are no legitimate business reasons justifying Countrywide's discriminatory Discretionary Pricing Policy that could not be achieved by a policy that has no discriminatory impact or a greatly reduced discriminatory impact.
ALLEGATIONS OF NON-DISCLOSURE – FRAUDULENT CONCEALMENT (TOLLING)
54. Commission-driven, discretionary pricing systems – such as those in the real estate mortgage industry that are structurally similar to the system utilized by Countrywide – have been found to produce significant discriminatory effects. Knowledge concerning the significant and pervasive discriminatory impact of such commission-driven, discretionary credit pricing systems has been widely circulated throughout the financing industry for several years, particularly since 1994, as a result of numerous high profile actions by the United States
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Department of Justice and federal regulatory agencies. Countrywide, as one of the largest mortgage companies in the United States, has known or should have known that its credit pricing system causes blacks to pay the Defendant more for mortgage financing than the amounts paid by white customers with identical or effectively identical credit scores. The following various regulatory settlements involved discriminatory pricing policies structurally similar to Countrywide's pricing policy and were widely reported through the financing industry:
United States v. Blackpipe State Bank, Civ. Act. No. 93-5115 (D. S.D. filed November 16, 1993)(charging American Indians higher interest rates) United States v. First National Bank of Vicksburg, No. 5:94 CV 6(B)(N) (S.D. Miss. filed Jan. 21, 1994) (charging African-Americans higher interest rates) United States v. Huntington Mortgage Co., No. 1; 95 CV 2211 (N.D. Ohio filed October 18, 1995)(charging African-Americans higher fees) United States v. Security State Bank of Pecos, No. SA 95 CA 0996 (W.D.Tex. filed October 15, 1995)(charging Hispanics higher interest rates) United States v. First National Bank of Gordon, No. CIV-96-5035 (W.D.S.D. filed April 15, 1996)(charging American Indians higher interest rates) United States v. Fleet Mortgage Corp., No. 96-2279 (E.D.N.Y. filed May 7, 1996)(charging African-Americans and Hispanics higher interest rates) United States v. Long Beach Mortgage Co., No. CV-96-6159 (C.D. Cal. filed Sept. 5, 1996)(charging African-Americans, Latinos, women and persons over age 55 higher interest rates) 55. Despite the fact that Countrywide has known or should have known of the discriminatory effect of its credit pricing policy, none of the loan documents inform the customer that its finance rates are subjective and not based solely on risk-related characteristics. 56. Although, pursuant to Countrywide's Discretionary Pricing Policy, the final credit rate that a customer pays for credit is subjective, Countrywide's advertisements, marketing materials and financing documents universally create and foster the image that Countrywide
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offers non-negotiable, competitive finance rates that are objectively set by Countrywide based on credit-risk factors.
57. Despite spending millions of dollars annually on advertising, marketing materials, and the creation and distribution of Countrywide financing documents that falsely create and foster the image that Countrywide offers competitive rates that are objectively set, the Defendant never discloses the truth to its credit applicants concerning the fact that: (a) its credit rates are subjective and can vary significantly among persons with identical credit profiles, and (b) that it has authorized and provided a financial incentive to its loan officers, authorized brokers and correspondent lenders to subjectively increase the credit rate above the rate otherwise available to homeowners.
58. Countrywide's black customers, due to the inherent nature of the Countrywide's undisclosed pricing system and due to Countrywide's deception and concealment, have no way of knowing or suspecting (a) the existence of Countrywide's subjective credit pricing policy; (b) that they were charged additional subjective credit charges; and (c) that they were charged a disproportionately greater amount for their cost of credit than similarly situated white persons.
FACTUAL ALLEGATIONS Facts Relating To Plaintiff Gillian Miller
59. Gillian Miller resides at 1485 River St., Hyde Park, MA with her 3 children, ages 11, 14, and 20.
60. In late 2005, early 2006, when Ms. Miller was seeking financing to purchase the Hyde Park home, her realtor referred her to Rachel Kemp of Summit Mortgage.
61. Ms. Miller met with Ms. Kemp on several occasions to discuss the terms of financing. The meetings took place at Dunkin Donuts and at Ms. Miller's place of employment.
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62. On January 31, 2006, Ms. Miller entered into a mortgage transaction with Summit Mortgage as lender. The transaction was divided into two loans.
63. The larger loan (Loan No. 53060025) was a 30-year, adjustable rate loan with a disclosed APR of 11.522%. The loan amount was $259,200.00. According to the note, the loan had a six-month variable rate feature.
64. According to the HUD-One Settlement Statement, Ms. Miller paid $9,423.34 in settlement charges in connection with the larger loan, including, a 2% or $5,184 loan origination fee to Summit Mortgage, a $300 processing fee to Summit Mortgage LLC, and a $275 underwriting fee to Summit Mortgage, LLC. In addition, Ms. Miller paid a $300 application fee to Summit Mortgage LLC outside closing.
65. The smaller loan (Loan No. 53060026), which had a loan amount of $64,800, is a 15-year fixed rate loan with a balloon feature, providing for a final payment of $55,245.25. The APR of the smaller loan is 11.317%.
66. True and correct copies of Truth-in-Lending disclosure and HUD-One Settlement Statement provided in connection with Loan No. 53060025 are attached hereto and labeled Exhibit 1 and Exhibit 2, respectively.
67. True and correct copies of Truth-in-Lending disclosure and HUD-One Settlement Statement provided in connection with Loan No. 53060026 are attached hereto and labeled Exhibit 3 and Exhibit 4, respectively.
68. On information and belief, Countrywide Correspondent Lending table-funded the loans originated by Summit Lending.
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69. At the time of the transaction, Ms. Miller had a credit score that would have qualified with many lenders for a mortgage in the prime-market. Instead, Ms. Miller received mortgages at sub-prime rates and on sub-prime terms.
70. According to Countrywide Correspondent Lending's commitment letter, dated January 26, 2006, Ms. Miller had a CHL credit grade of AA+.
71. By notice dated January 31, 2006, the date the loans closed, Summit Mortgage assigned, sold or transferred the mortgage loans to Countrywide Home Loans, Inc.
72. On information and belief, unbeknownst to Ms. Miller, the contract APR on the mortgage loans was actually a combination of an objective, risk-based calculation and a totally subjective, discretionary component added pursuant to the Countrywide's Discretionary Pricing Policy.
73. On information and belief, Ms. Miller was subject to Countrywide's Discretionary Pricing Policy.
74. On information and belief, Ms. Miller was charged a disproportionately greater amount in non-risk-related credit charges than similarly situated white persons. Facts Relating to Plaintiff Lakisha Austin
75. Lakisha Austin resides at 17 Richmere Road, Mattapan, with her one-year old son.
76. Ms. Austin purchased her Mattapan home in September 2004 with financing from Full Spectrum.
77. When Ms. Austin was seeking financing to purchase the Mattapan home, her realtor at Burton Associates referred her to Countrywide Home Loan Consultant, Mark Coleman.
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78. Mr. Coleman is featured on Burton Associates' promotional materials and its website and, on information and belief, does some business out of Burton Associates' Dorchester office.
79. Mr. Coleman provided Ms. Austin a Full Spectrum loan application, which she completed and submitted via email.
80. On September 22, 2004, Ms. Austin entered into a mortgage transaction with Full Spectrum as lender. The transaction was divided into two loans.
81. The larger loan (Loan No. 83247007) was a 30-year, adjustable rate loan with a disclosed APR of 8.156%. The loan amount was $297,600.00. According to the note, the loan had a three-year variable rate feature, and payments made during the first three years would only apply to interest.
82. According to the HUD-One Settlement Statement, Ms. Austin paid $10,954.99 in settlement charges in connection with the larger loan, including, a 2% or $5,952 loan discount fee to Full Spectrum, and a $535 processing fee to Full Spectrum.
83. Ms. Austin believes and therefore avers that she was not provided with a “discount” of any kind on the rate in the transaction.
84. Ms. Austin was never offered an alternative loan with a higher rate that did not involve payment of discount points, and therefore had no opportunity to evaluate whether the “discount” would be advantageous to her.
85. The smaller loan (Loan No. 66997971), which had a loan amount of $74,400, is a 20-year fixed rate loan with an APR of 10.094%.
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86. True and correct copies of Truth-in-Lending disclosure and HUD-One Settlement Statement provided in connection with Loan No. 83247007 are attached hereto and labeled Exhibit 5 and Exhibit 6, respectively.
87. True and correct copies of Truth-in-Lending disclosure and HUD-One Settlement Statement provided in connection with Loan No. 66997971 are attached hereto and labeled Exhibit 7 and Exhibit 8, respectively.
88. At the time of the transaction, Ms. Austin had a credit score that would have qualified with many lenders for a mortgage in the prime-market. Instead, Ms. Austin received mortgages at sub-prime rates and on sub-prime terms.
89. On information and belief, unbeknownst to Ms. Austin, the contract APR on the mortgage loans was actually a combination of an objective, risk-based calculation and a totally subjective, discretionary component added pursuant to the Countrywide's Discretionary Pricing Policy.
90. On information and belief, Ms. Austin was subject to Countrywide's Discretionary Pricing Policy.
91. On information and belief, Ms. Austin was charged a disproportionately greater amount in non-risk-related credit charges than similarly situated white persons. Facts Relating to Plaintiff Arthur and Luella Davis
92. Arthur and Luella Davis ("the Davises") reside at 36R Richfield Street, Boston, Massachusetts.
93. In May or June 2005, the Davises received a telephone call from loan broker Kevin Igle, a loan broker for Loans for Residential Home Mortgages “Residential Home Mortgages,” a Rhode Island mortgage brokerage.
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94. The Davises refinanced their Dorchester home on August 31, 2005 with a loan arranged by Residential Home Mortgages.
95. The lender in the transaction was Countrywide Bank. 96. The August 31, 2005 refinance transaction (Loan No. 97460612) was a 30-year, adjustable rate loan with a disclosed APR of 8.269%. The loan amount was $231,000.00. 97. According to the HUD-One Settlement Statement, the Davises paid $8,335.27 in settlement charges in connection with their loan, including, a $4,500.00 broker fee and $499.00 broker processing fee to Loans for Residential Homes. In addition, Loans For Residential Homes received a 2% or $4,620.00 yield spread premium from Countrywide Bank, which was paid outside closing. 98. True and correct copies of Truth-in-Lending disclosure and HUD-One Settlement Statement provided in connection with the loan are attached hereto and labeled Exhibit 9 and Exhibit 10, respectively. 99. On information and belief, unbeknownst to the Davises, the contract APR on the mortgage loans was actually a combination of an objective, risk-based calculation and a totally subjective, discretionary component added pursuant to Countrywide's Discretionary Pricing Policy. 100. On information and belief, the Davises were subject to Countrywide's Discretionary Pricing Policy. 101. On information and belief, the Davises were charged a disproportionately greater amount in non-risk-related credit charges and fees than similarly situated white persons.
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COUNT I (DISCRIMINATION IN VIOLATION OF THE EQUAL CREDIT OPPORTUNITY ACT
AGAINST ALL DEFENDANTS EXCEPT SUMMIT BY PLAINTIFFS ON BEHALF OF THE CLASS)
102. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full. 103. Countrywide is a creditor as defined in ECOA, and in the ordinary course of its business, participated in the decision of whether or not to extend credit to the Plaintiffs, the proposed Class representatives herein, and all prospective Class members. 104. Countrywide designed, disseminated, controlled, implemented and profited from the discriminatory policy and practice alleged herein — the Discretionary Pricing Policy — which has had a disparate economic impact on blacks compared to similarly situated whites. 105. All actions taken by the Countrywide loan officers and Countrywide’s brokers and correspondent lenders were in accordance with the specific authority granted to them by Countrywide and were in furtherance of Countrywide's policies and practices. 106. As a result of Countrywide's Discretionary Pricing Policy, Countrywide has collected more in finance charges from blacks than from similarly situated white persons, for reasons totally unrelated to credit risk. 107. Countrywide's Discretionary Pricing Policy violates the Equal Credit Opportunity Act. 108. Plaintiff and prospective class members are aggrieved persons as defined in ECOA by virtue of having been subject to the discriminatory, Discretionary Pricing Policy.
COUNT II (DISCRIMINATION IN VIOLATION OF THE FAIR HOUSING ACT AGAINST ALL DEFENDANTS EXCEPT SUMMIT BY
PLAINTIFS ON BEHALF OF THE CLASS) 109. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full.
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110. Countrywide engaged in residential real estate-related transactions with respect to the Plaintiffs, the proposed Class representatives herein, and all prospective Class members.
111. Countrywide's Discretionary Pricing Policy has resulted in discrimination with respect to the Plaintiffs, the proposed Class representatives herein, and all prospective members of the Class.
112. As a result of Countrywide's Discretionary Pricing Policy, Countrywide has collected more in finance charges from blacks than from similarly situated white persons, for reasons totally unrelated to credit risk.
113. Countrywide's Discretionary Pricing Policy violates the Fair Housing Act and constitutes actionable discrimination on the basis of race.
114. Plaintiff and the Class are aggrieved persons as defined in FHA by virtue of having been subject to the discriminatory, Countrywide's Discretionary Pricing Policy.
COUNT III (DISCRIMINATION IN VIOLATION OF THE EQUAL CREDIT OPPORTUNITY ACT AGAINST SUMMIT BY PLAINTIFF GILLIAN MILLER ON BEHALF OF HERSELF, INDIVIDUALLY) 115. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full. 116. Summit is a creditor as defined in ECOA, and in the ordinary course of its business, participated in the decision of whether or not to extend credit to the Plaintiff. 117. The Plaintiff, Ms. Miller, is a member of a protected class. 118. Following her credit application, Summit extended credit to Ms. Miller on subprime rather than prime terms because of her race. 119. During the same period, Summit extended credit to similarly situated white borrowers on prime terms. 120. Summit's conduct violates the Equal Credit Opportunity Act.
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121. Ms. Miller is an aggrieved person as defined in ECOA by virtue of having been subject to this disparate treatment.
COUNT IV (DISCRIMINATION IN VIOLATION OF THE FAIR HOUSING ACT AGAINST SUMMIT BY PLAINTIFF GILLIAN MILLER ON
BEHALF OF HERSELF, INDIVIDUALLY) 122. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full. 123. Summit engaged in residential real estate-related transactions with respect to Ms. Miller. 124. The Plaintiff, Ms. Miller, is a member of a protected class. 125. Following her credit application, Summit extended credit to Ms. Miller on subprime rather than prime terms because of her race. 126. During the same period, Summit extended credit to similarly situated white borrowers on prime terms. 127. Summit's conduct violates the FHA. 128. Ms. Miller is an aggrieved person as defined in FHA by virtue of having been subject to this disparate treatment.
COUNT V (DISCRIMINATION IN VIOLATION OF THE EQUAL CREDIT OPPORTUNITY ACT AGAINST LOANS FOR RESIDENTIAL HOMES BY PLAINTIFFS ARTHUR AND LUELLA DAVIS ON BEHALF OF
THEMSELVES, INDIVIDUALLY) 129. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full. 130. Loans For Residential Homes is a creditor as defined in ECOA, and in the ordinary course of its business, participated in the decision of whether or not to extend credit to the Plaintiff. 131. The Davises are members of a protected class.
21

Case 3:08-cv-00448-JGH Document 1 Filed 07/12/07 Page 22 of 25 PageID #: 22
132. Following their credit application, Loans For Residential Homes discriminated against the Davises by charging them discretionary fees in amounts in excess of fees they charged similarly situated white borrowers.
133. Loans For Residential Homes' conduct violates the Equal Credit Opportunity Act. 134. The Davises are aggrieved persons as defined in ECOA by virtue of having been subject to this disparate treatment.
COUNT VI (DISCRIMINATION IN VIOLATION OF THE FAIR HOUSING ACT AGAINST LOANS FOR RESIDENTIAL HOMES BY PLAINTIFFS ARTHUR AND LUELLA DAVIS ON BEHALF OF THEMSELVES,
INDIVIDUALLY) 135. Plaintiffs repeat and re-allege every allegation above as if set forth herein in full. 136. Loans For Residential Homes engaged in residential real estate-related transactions with respect to the Davises. 137. The Davises are members of a protected class. 138. Following their credit application, Loans For Residential Homes discriminated against the Davises by charging them discretionary fees in amounts in excess of fees they charged similarly situated white borrowers. 139. Loans For Residential Homes' conduct violates the Fair Housing Act. 140. The Davises are aggrieved persons as defined in FHA by virtue of having been subject to this disparate treatment.
PRAYER FOR RELIEF WHEREFORE, the Plaintiffs respectfully request the following relief: On behalf of the Class:
22

Case 3:08-cv-00448-JGH Document 1 Filed 07/12/07 Page 23 of 25 PageID #: 23
a. Certify this case as a class action and certify the named Plaintiffs herein to be adequate class representative and her counsel to be class counsel;
b. Enter a judgment, pursuant to 15 U.S.C. 1691e(c) and/or 42 U.S.C. § 3613, declaring the acts and practices of Defendants complained of herein to be in violation of ECOA and the FHA;
c. Grant a permanent or final injunction, pursuant to 15 U.S.C. 1691e(c) and/or 42 U.S.C. § 3613(c), enjoining the Defendants, and the Defendants' agents and employees, affiliates and subsidiaries, from continuing to discriminate against plaintiffs and the members of the Class because of their race through further use of the Discretionary Pricing Policy or any non-riskrelated Discretionary pricing policy employed by the Defendants;
d. Order the Defendants, pursuant to 15 U.S.C. § 1691e(c) and/or 42 U.S.C. § 3613(c), to adopt and enforce a policy that requires appropriate training of the Defendants' employees and its brokers and correspondent lenders to prevent discrimination;
e. Order Countrywide Home Loans, pursuant to 15 U.S.C. § 1691e(c) and/or 42 U.S.C. § 3613(c), to monitor and/or audit the racial pattern of its financings to ensure the cessation of discriminatory effects in its home mortgage transactions;
f. Order disgorgement, pursuant to 15 U.S.C. § 1691e (c), of all disproportionate non-risk charges imposed on blacks by the Defendants' Discretionary Pricing Policy; and order the equitable distribution of such charges, as restitutionary relief, to all appropriate class members;
g. Order actual and punitive damages to the Plaintiff and the class pursuant to 42 U.S.C. § 3613(c);
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Case 3:08-cv-00448-JGH Document 1 Filed 07/12/07 Page 24 of 25 PageID #: 24
h. Award Plaintiffs the costs of this action, including the fees and costs of experts, together with reasonable attorneys’ fees, pursuant to 15 U.S.C. § 1691e(d) and/or 42 U.S.C. § 3613(c); and
i. Grant Plaintiffs and the Class such other and further relief as this Court finds necessary and proper. On behalf of Ms. Miller:
j. Order actual and punitive damages to the Plaintiff pursuant to 42 U.S.C. § 3613(c);
k. Award Ms. Miller the costs of this action, including the fees and costs of experts, together with reasonable attorneys’ fees, pursuant to 15 U.S.C. § 1691e(d) and/or 42 U.S.C. § 3613(c); and
l. Grant Ms. Miller such other and further relief as this Court finds necessary and proper. On behalf of the Davises:
m. Order actual and punitive damages to the Davises pursuant to 42 U.S.C. § 3613(c);
n. Award the Davises the costs of this action, including the fees and costs of experts, together with reasonable attorneys’ fees, pursuant to 15 U.S.C. § 1691e(d) and/or 42 U.S.C. § 3613(c); and
o. Grant the Davises such other and further relief as this Court finds necessary and proper.
JURY TRIAL DEMANDED Plaintiffs demand a trial by jury on all issues so triable.
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Case 3:08-cv-00448-JGH Document 1 Filed 07/12/07 Page 25 of 25 PageID #: 25

DATE: July 12, 2007

Respectfully submitted, On Behalf of the Plaintiffs,
/s/ Gary Klein Gary Klein
Gary Klein (BBO # 560769) Shennan Kavanagh (BBO # 655174) Gillian Feiner (BBO # 664152) RODDY KLEIN & RYAN 727 Atlantic Avenue Boston, MA 02111-2810 Telephone: (617) 357-5500 ext. 15 Facsimile: (617) 357-5030
Marvin A. Miller Matthew E. VanTine Lori A. Fanning MILLER LAW LLC 115 South LaSalle Street, Suite 2910 Chicago, IL 60603 Telephone: (312) 332-3400
Samuel H. Rudman Robert M. Rothman Mark S. Reich LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 58 South Service Road, Suite 200 Melville, NY 11747 Telephone: (631) 367-7100 Facsimile: (631) 367-1173
Thomas M. Sobol (BBO # 471770) Gregory Matthews (BBO # 653316) HAGENS BERMAN SOBOL SHAPIRO LLP One Main Street, 4th Floor Boston, MA 02142 Telephone: (617) 475-1950 Facsimile: (617) 482-3003
25

 
 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

GILLIAN MILLER, LAKISHA AUSTIN, ARTHUR DAVIS, and LUELLA DAVIS,
Plaintiffs,
v.
COUNTRYWIDE BANK, N.A., COUNTRYWIDE HOME LOANS, INC., COUNTRYWIDE CORRESPONDENT LENDING, FULL SPECTRUM LENDING, INC., SUMMIT MORTGAGE LLC, and LOANS FOR RESIDENTIAL HOMES MORTGAGE CORP.,
Defendants. GERTNER, D.J.

) ) ) ) ) Civil Action No. 07cv11275-NG ) ) ) ) ) ) ) ) )

MEMORANDUM AND ORDER RE: MOTION TO DISMISS July 30, 2008

I. INTRODUCTION

Plaintiffs Gillian Miller, Lakisha Austin, and Arthur and

Luella Davis (collectively “plaintiffs”), on behalf of themselves

and all other similarly situated African-American borrowers,

bring this putative nationwide class action against Countrywide

Bank, a division of Treasury Bank, N.A., Countrywide Home Loans,

Inc., and its wholly-owned subsidiaries, Countrywide

Correspondent Lending (“Countrywide Correspondent”), and Full

Spectrum Lending, Inc. (“Full Spectrum”) (collectively

“Countrywide” or “defendants”). Plaintiffs also assert claims

against two retail mortgage lenders, Summit Mortgage, LLC

(“Summit”), and Loans for Residential Homes Mortgage Corp.

(“LFRHM”).

Plaintiffs allege that Countrywide’s Discretionary Pricing Policy ("pricing policy") has a widespread discriminatory impact on African-American applicants for home mortgage loans, in violation of the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. §§ 1691-1691(f), and Fair Housing Act (“FHA”), 42 U.S.C. §§ 36013619.1 That system, plaintiffs allege, makes African-Americans who borrow from Countrywide over three times more likely than white borrowers to receive a high-APR2 home loans and two times more likely to receive a high-APR refinancing loan.3 This disparity, plaintiffs contend, is not explained by any objective indicia of creditworthiness, such as credit history, credit score, debt-to-income ratio, or loan-to-value ratio. Instead, they argue that a significant portion of the disparity is explained by Countrywide’s pricing policy, which explicitly allows for subjective price markups at the point of sale -markups above the fees set according to Countrywide’s objective, risk-based criteria. These subjective markups, in turn, have a disparate impact on African-American home buyers.
1 Plaintiff Miller asserts individual claims against Summit under the ECOA and FHA; there are no class claims against Summit. Plaintiffs Arthur and Luella Davis bring individual claims against LFRHM under both the ECOA and FHA.
2 A high-APR loan is a loan whose APR is at least three percentage points higher than the interest rate on United States Treasury Securities of the same maturity at the time the loan was made.
3 Plaintiffs cite recent Home Mortgage Disclosure Act (“HMDA”) data from HUD.
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If the facts alleged in the complaint are to be believed -which they must at this point in the litigation -- the net effect of Countrywide’s pricing policy is a classic case of disparate impact: White homeowners with identical or similar credit scores pay different rates and charges than African-American homeowners, because of a policy that allows racial bias to play a part in the pricing scheme.
The case is currently before the Court on Defendants’ Motion to Dismiss (document # 16) under Fed. R. Civ. P. Rule 12(b)(6). For the reasons that follow, defendants’ motion is DENIED.
II. FACTS Plaintiffs are all African-American homeowners residing in
the greater Boston area who obtained home mortgages through Countrywide, its subsidiaries, or the two named retail mortgage lenders between January 1, 2001, and the date of this action (“Class Period”).4
Countrywide is one of the largest mortgage lenders in the United States. It makes home loans directly through its various subsidiaries, such as Full Spectrum, as well as through a network of independent mortgage brokers. Countrywide also obtains
4 Gillian Miller obtained her loan in 2006 through Summit, which, in turn, sold the loan to Countrywide. Lakisha Austin obtained her loan through Full Spectrum in 2004. Arthur and Luella Davis refinanced their home through LFRHM in 2005.
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business through a network of correspondent lenders, such as Summit and LFRHM, that originate loans and then sell them to Countrywide.
According to the complaint, Countrywide’s pricing policy works like this: Countrywide obtains customers’ credit information through its loan officers, brokers, or correspondent lenders. Based on these objective criteria, Countrywide computes a “par rate.” Agents, brokers, or correspondent lenders at the point of sale, however, are allowed to impose additional charges, fees, and rates that are unrelated to objective risk factors. Countrywide communicates not only the applicable par rates, but also the additional discretionary charges to its loan officers, brokers, and correspondent lenders through regularly published “rate sheets.”5
As a result of the additional discretionary charges, the complaint alleges, African-American borrowers pay disproportionately high interest and fees on their home loans. Additionally, African-American borrowers are more likely than white borrowers to apply for credit from Countrywide through its sub-prime subsidiary, Full Spectrum, or from an authorized broker or correspondent lender, which are on average more expensive than
5 Plaintiffs also allege that for all of the transactions at issue here, Countrywide advances the funds to make the loans and bears some or all of the risk of default. Countrywide also provides its loan officers, brokers, and correspondent lenders with credit applications, loan contracts, and other required financing forms, as well as instructions on filling out such documents.
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loans obtained directly from Countrywide. To be sure, plaintiffs concede that creditworthiness may explain part -- but only part - of the disparity in credit rates. But they insist that most of the discrepancies between the rates paid by African-American and white borrowers cannot be explained by any objective criterion whatsoever.
The individual plaintiffs’ allegations track the disparate impact allegations. On January 31, 2006, Plaintiff Miller financed her home in Hyde Park with two loans obtained through Summit. According to the complaint, Countrywide “table-funded” the loans, meaning that the loans were underwritten by Countrywide and then sold to Countrywide. Plaintiff Austin purchased her home in September 2004 with financing from Full Spectrum. And plaintiffs Arthur and Luella Davis refinanced their home in August 2005 through LFRHM. All of the named plaintiffs allege that they ended up paying more for their loan in fees and increased interest rates than they would have but for Countrywide’s discriminatory pricing policy and the application of subjective pricing criteria.6
III. DISCUSSION
6 Plaintiffs Miller and Austin, in particular, alleges that they received sub-prime loans even though they qualified for a prime-market rate.
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Countrywide moves to dismiss plaintiffs’ complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief can be granted. Countrywide also moves to dismiss Plaintiffs Miller and Davis’ claims, arguing that they assert disparate treatment claims against third parties (Summit and LFRHM) rather than disparate impact claims against Countrywide or its subsidiaries.
The crux of Countrywide’s dismissal argument is that plaintiffs have not alleged a sufficiently specific discriminatory policy to support a disparate impact claim under the ECOA or the FHA. Defendants rely principally on Smith v. City of Jackson, 544 U.S. 228 (2005), and Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, (2007). In City of Jackson, the Supreme Court rejected a disparate impact claim under the Age Discrimination in Employment Act (“ADEA”) because the targeted policy lacked sufficient specificity. In Twombly, the Court rejected the lax pleading standard of Conley v. Gibson, 355 U.S. 41, 45-46 (1957), and held that a complaint must be dismissed if it fails to allege a set of facts sufficient to create a “plausible” entitlement to relief.7 Twombly, 127 S. Ct. at 1966.
7 Plaintiffs note, however, that while their allegations must be plausible, there is no heightened pleading requirement. See Erickson v. Pardus, 127 S. Ct. 2197, 2200 (2007) (per curiam) (Twombly is not inconsistent with Fed. R. Civ. P. 8(a)(2)); Simmons v. Galvin, 2007 WL 2507740, at *17 (D. Mass. Aug. 30, 2007).
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The two cases in combination, defendants suggest, is devastating
to this complaint.
A. Plaintiffs’ Prima Facie Disparate Impact Claim
In order to properly assert a disparate impact claim,
plaintiffs must plead 1) a specific and actionable policy, 2) a
disparate impact, and 3) facts raising a sufficient inference of
causation. See City of Jackson, 544 U.S. at 241.
1. Specific and Actionable Policy
The “specific and actionable policy” that plaintiffs
challenge is Countrywide’s discretionary pricing policy, which
allows Countrywide’s retail salesmen, independent brokers, and
correspondent lenders to add various charges and fees based on
subjective non-risk factors, and which, in turn, has a racially
discriminatory impact on African-American borrowers. Plaintiffs’
claim is directly in the mold of the Supreme Court’s decision in
Watson v. Fort Worth Bank, 487 U.S. 977 (1988). Watson held that
an employer’s deference to the subjective decisionmaking of
front-line employees may serve as the basis for a disparate impact claim.8 Id. at 990-91. There, the Court wrote:
8 Watson expanded the disparate impact theory of Griggs v. Duke Power Company, 401 U.S. 424 (1971). The issue in Griggs was whether Title VII prohibited an employer from requiring a high school education or passing of a standardized general intelligence test as a condition of employment when 1) neither standard was shown to be significantly related to successful job performance, 2) both requirements operated to disqualify African-American applicants at a substantially higher rate than white applicants, and 3) the jobs in question formerly had been filled only by white employees as part of a longstanding practice of giving preference to whites. 401 U.S. 425-429. There, the Supreme Court reasoned that Title VII was directed “to the consequences of employment practices, not simply the motivation.” Id. at 432.
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If an employer’s undisciplined system of subjective decisionmaking has precisely the same effects as a system pervaded by impermissible intentional discrimination, it is difficult to see why Title VII’s proscription against discriminatory actions should not apply. In both circumstances, the employer’s practices may be said to ‘adversely affect [an individual’s] status as an employee, because of such individual’s race, color, religion, sex, or national origin.’
Id. at 990-91 (quoting 42 U.S.C. § 2000e-2(a)(2)). Watson’s
focus on subjective decisionmaking has particular resonance here,
where the fundamental question under the ECOA and the FHA is
creditworthiness, rather than, say, vague notions of suitability
for this or that employment under Title VII. While Countrywide
plainly identifies the objective standards that define
creditworthiness in the par rate, it nevertheless enables its
agents, brokers, and correspondent lenders to add other charges
at their own discretion, untethered from an objective assessment
of creditworthiness, and easily amenable to bias.
The question before the Court, however, is whether
plaintiffs have alleged Countrywide’s policy with sufficient
specificity. In City of Jackson the Supreme Court noted:
The objective of Title VII was broadly conceived, “to achieve equality of employment opportunities and remove barriers that have operated in the past to favor an identifiable group of white employees over other employees.” Id. at 429-30.
In Watson, the Court extended the rationale in Griggs to situations in which employment decisions are based not on precise or formal criteria -- such as educational attainment or test results -- but on the subjective assessments of supervisors familiar with the candidates and with the job to be filled. 487 U.S. at 999.
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[I]t is not enough simply to allege that there is a disparate impact . . . or point to a generalized policy that leads to such an impact. Rather, the [plaintiff] is “‘responsible for isolating the specific . . . practices that are allegedly responsible for any observed statistical disparities.’”
544 U.S. at 241 (quoting Ward’s Cove Packing Co. v. Atonio, 490
U.S. 642, 656 (1989) (quoting Watson, 487 U.S. at 994)).
The criticism the Court leveled at plaintiff’s case in City
of Jackson does not apply to the case at bar. City of Jackson
involved a challenge under the ADEA to a pay increase plan that
resulted in proportionately greater raises going to police
officers under the age of 40. Id. at 230. The Supreme Court
held that plaintiffs had “done little more than point out that
the pay plan at issue is relatively less generous to older
workers,” and had “not identified any specific test, requirement
or practice within the pay plan that has an adverse impact on
older workers.” Id. at 241. And more was required in part
because of the statute at issue. The ADEA expressly exempts liability for acts “based on reasonable factors other than age.”9
Thus, plaintiff was obliged to parse those factors on which pay
plan was based, which were "reasonable," which were age-based and
9 The ADEA by its terms requires greater specificity than the statutes at issue here. In pertinent part, the ADEA provides that “it shall not be unlawful for an employer . . . to take any action otherwise prohibited under . . . this section where age is a bona fide occupational qualification reasonably necessary to the normal operation of the particular business, or where the differentiation is based on reasonable factors other than age.” 29 U.S.C. § 623(f)(1) (emphasis added).
-9-

"unreasonable." Since the plaintiffs did not do so, the Court
found that they could not maintain a disparate impact claim under the ADEA.10 Id.
The allegations here are different. Plaintiffs have
identified the practice at issue: establishing a par rate keyed
to objective indicators of creditworthiness while simultaneously
authorizing additional charges keyed to factors unrelated to
those criteria, and readily amendable to bias. They claim that
the net effect of that discretionary pricing policy is the discriminatory treatment of African-American homebuyers.11
Defendants, however, assert that this “pricing policy” is
really no policy at all: Countrywide simply permits loan officers
to negotiate loan interest rates, charges, and points that are
higher than the par rate (which is based on objective risk
factors). The complaint boils down to a claim that Countrywide
should not be able to have a policy of selling its product for
what people will pay for it after negotiating in the shadow of market forces.12
10 Plaintiffs note that in City of Jackson the Court affirmed lower court’s granting of summary judgment for the city, not a motion to dismiss.
11 The complaint alleges that “[s]tatistical analysis of discretionary charges imposed on black and white customers of other mortgage companies that use credit pricing systems structured like that of Countrywide . . . revealed that blacks, after controlling for credit risk, are substantially more likely than similarly situated whites to pay such charges.” Compl. ¶ 48 (document # 1).
12 Defendants cite a 1985 Ninth Circuit opinion written by now-Justice Kennedy for the proposition that policies that turn on competitive market forces do not “yield to disparate impact analysis.” AFSCME v. Washington, 770
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The "market forces" argument is troubling. It is precisely
because the market could not self-correct for discrimination that
statutes like Title VII, the FHA, and ECOA were necessary. See,
e.g., Corning Glass Works v. Brennan, 417 U.S. 188, 195 n.3
(1974). The market, after all, traditionally valued “customer
preferences,” even when those preferences derived from racial and
gender-based stereotypes. See, e.g., Diaz v. Pan Am. World
Airways, Inc., 442 F.2d 385 (5th Cir. 1971), cert. denied, 442
U.S. 950 (1971). Indeed, the “market” not infrequently led
employers to impose job requirements that bore no relationship to
F.2d 1401, 1406 (9th Cir. 1985). Their argument could not be more overstated. AFSCME involved a broad based and innovative challenge to the wages set by the state of Washington. Id. at 1403. Plaintiffs sought to apply disparate impact theory to a novel comparable worth claim, challenging the disparities of pay between men and women employed in different jobs of comparable worth. Id. They argued that a wage system in which wages reflected prevailing market rates rather than the comparable worth of individual jobs, resulted in femalepredominated jobs being paid less than male-predominated jobs. Id.
The Ninth Circuit rejected the claim, saying: “A compensation system that is responsive to supply and demand and other market forces is not the type of specific, clearly delineated employment policy contemplated by Dothard and Griggs; such a compensation system, the result of a complex of market forces, does not constitute a single practice that suffices to support a claim under disparate theory.” Id. at 1406.
Drawing on this reasoning, defendants in the instant case argue that allowing a disparate impact claim here would prevent the pricing of loans from being responsive to supply and demand. However, the Ninth Circuit’s decision in AFSCME was less about whether courts must defer to market forces in the face of disparate impact claims than it was about the specificity of the underlying claim. The Court rejected the claim as simply too diffuse, since an analysis of “comparable worth” would require an assessment “too multifaceted to be appropriate for disparate impact analysis.” Id. at 1406. According to the Court, disparate impact analysis is “confined to cases which challenge a specific clearly delineated employment practice applied at a single point in the job selection process.” Id. at 1405. The claim in AFSME claim made no such distinctions and arguably invited the courts in to second guess wages across all levels, involving all jobs.
To say that “market forces” justify discriminatory treatment of AfricanAmericans (or women, or ethnic minorities) as a broad proposition would be to overturn the discrimination statutes of the past thirty years.
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job performance. Griggs v. Duke Power Company, 401 U.S. 424 (1971).
In any case, the “market forces” argument has been rejected in cases that present issues directly analogous to those at bar. See Jones v. Ford Motor Credit Co., 2002 WL 88431 (S.D.N.Y. Jan. 22, 2002) (plaintiff properly pleaded disparate impact claim where financing for car was based on subjective criteria beyond creditworthiness); Smith v. Chrysler Fin. Co., 2003 WL 328719 (D.N.J. Jan. 15, 2003) (same). In Jones, for example, the Court denied Ford’s motion to dismiss where plaintiffs had alleged that Ford’s policy of authorizing car dealers to subjectively mark up otherwise objective, risk-based finance charge rates had a disparate impact on African-American consumers and violated the ECOA. 2002 WL 88431, at *4 (citing, inter alia, C.F.R. § 202.6 n.2).13 Both Jones and Smith provide strong support for Plaintiffs’ position.
Where the allocation of subjective decisionmaking authority is at issue, the “practice” Countrywide has enacted effectively amounts to the absence of a policy, an approach that allows racial bias to seep into the process. Allowing this “practice” to escape scrutiny would enable companies responsible for complying with anti-discrimination laws to “insulate” themselves
13 C.F.R. § 202.6 n.2 indicates that Congress intended an “effects test” concept.
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by “refrain[ing] from making standardized criteria absolutely determinative.” Watson, 487 U.S. at 990. This is especially the case here: It is difficult to imagine why subjective criteria, unrelated to creditworthiness, should play any part in determining a potential borrower’s eligibility for credit.
Accordingly, I find that plaintiffs have identified a sufficiently specific policy to meet the standards of Rule 12(b)(6).14
2. Disparate Impact Next, defendants argue that plaintiffs have failed to properly plead disparate impact. Defendants claim that because Plaintiffs do not expressly allege that African-Americans receive higher rates than similarly situated whites, the claim must fail.15 Plaintiffs have alleged that African-American borrowers are three time more likely to obtain a high-APR home mortgage and two time more likely to obtain a high-APR home refinancing loan than white borrowers. They further allege that these differences cannot be wholly explained by objective credit risk criteria. Two of the individual plaintiffs even claim that they were steered
14 This conclusion is in keeping with the decision in the parallel case of Garcia v. Countrywide, 07-1161-VAP (C.D. Cal. Jan. 17, 2008).
15 Defendants cite a recent report by a group of Federal Reserve economists that “strongly indicates” that HMDA data, standing alone, does not show disparate discriminatory impacts. Plaintiffs cite reports to the contrary. This is an argument better suited for summary judgment or trial.
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into less advantageous sub-prime loan terms despite being eligible for prime-market loans. The inference is clear -- that African-American borrowers are charged higher fees and rates than similarly situated white borrowers.
In effect, defendants’ challenge goes to questions of proof rather than the adequacy of the pleading. Plaintiffs may well be unable to prove that race -- rather than objective criteria of creditworthiness that may correlate with race -- accounts for any disparate impact in Countrywide’s pricing of its loans. However, that is a question for a later stage in this proceeding.
3. Causal Connection Defendants next argue that plaintiffs have not adequately pled a causal connection between the identified policy and the alleged disparate impact. They rely heavily on the Supreme Court’s decision in Ward’s Cove, a Title VII case in which plaintiffs alleged that a number of employment practices -- such as nepotism, separate hiring channels, and rehire preferences -had a disparate impact on minority employees.16 490 U.S. at 657. The plaintiffs in Ward’s Cove based their claim on statistics showing a disproportionately low percentage of minorities in the
16 Congress modified the holding in Ward’s Cove in the Title VII context through the Civil Rights Act of 1991. However, Ward’s Cove continues to apply in non-Title VII disparate impact cases. See City of Jackson, 544 U.S. at 240 (characterizing the Court’s construing of disparate impact claims as “narrow”).
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job positions at issue. Id. The Court held that plaintiffs had not made out a prima facie case, writing:
Respondents will . . . have to demonstrate that the disparity they complain of is the result of one or more of the employment practices that they are attacking here, specifically showing that each challenged practice has significantly disparate impact on employment opportunities for whites and nonwhites. Id.; see also Collette v. St. Luke’s Roosevelt Hosp., 132 F. Supp. 2d 256, 276 (S.D.N.Y. 2001). As in Ward's Cove, defendants argue that plaintiffs have only alleged “bottom line” disparities without providing a theory of how the targeted policy caused the disparity. Plaintiffs, after all, concede that objective credit risk criteria that tend to correlate with race may explain some of the discrepancy. This concession, Countrywide argues, is devastating; it undermines any allegation of causation and requires dismissal of the class claim. Moreover, Countrywide argues that plaintiffs have ignored the role that plaintiffs themselves played in setting the rates of their loans since the discrepancies are allegedly the result of mutually negotiated agreements. But this complaint is not Ward's Cove. Plaintiffs have identified the mechanism by which the disparate impact is effected. They cite reports demonstrating that the very practice at issue here, the practice of granting markup discretion to brokers and/or employees, leads to discriminatory results when
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engaged in by other mortgage companies, and further, that those results are comparable to the impact claimed here. In fact, plaintiffs in Jones cited similar data in their complaint, which subsequently survived a motion to dismiss.
Ultimately, the question of causation -- to what extent the discrepancies between black and white customers of Countrywide -is explainable by objective data or race is premature. Plaintiffs’ complaint plainly gives rise to a fair inference of causation; the question of proof will become an issue at later stages in the proceedings.
B. The Miller and Davis Claims Plaintiffs Miller and Arthur and Luella Davis have filed individual disparate treatment cases against Summit and LFRHM (“Individual Claims”).17 Countrywide argues that these disparate treatment claims against independently operated third parties may not serve as the basis for class action disparate impact claims against Countrywide. Defendants assert that they have found no legal authority suggesting that a company may be found liable under a disparate impact theory for the discriminatory conduct of a third party. Specifically, they point to EEOC v. Joe’s Stone Crab, Inc., 220 F.3d 1263 (11th Cir. 2000), in which the Court rejected
17 In both cases, the loans were originated through Summit and LFRHM, respectively, and then sold to Countrywide.
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plaintiffs’ disparate impact theory, reasoning that allowing plaintiffs to proceed on a disparate impact theory where the underlying allegations were merely the aggregation of many disparate treatment claims (involving intent) would risk “the potential conflation of disparate treatment and disparate impact claims.” Id. at 1278.
First, it should be noted that the disparate impact claim in Joe’s Stone Crab did not fail because of the Court’s concern that it involved the acts of third parties. Rather, what the Court was concerned about, conflating disparate treatment and disparate impact claims, makes little sense in the light of Watson. Watson explicitly allows for a challenge to the use of subjective criteria under an adverse impact theory.18 See, e.g., Allen v. Seidman, 881 F.2d 375, 380-81 (7th Cir. 1989) (Title VII case holding that disparate impact theory appropriate where bank examiner test, which involved an unstructured personal interview, had adverse effect on African-Americans).
In any event, this case -- at least according to the complaint -- is not about third party liability. Countrywide’s responsibility, if any, flows directly from its own participation
18 Indeed, this approach is not unlike the approach taken in jury selection cases, when the challenged practice involved the “key man” system. See Castaneda v. Partida, 430 U.S. 482, 484 (1977). Jury service should involve objective criteria -- citizenship, age, etc. Instead, certain jurisdictions left the selection of jurors to prominent citizens, the key men, who exercised their discretion in a way that excluded racial and ethnic minorities from jury service. Id.
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in the transactions as the “creditor” which set the markup policy at issue. The ECOA defines a “creditor” as “any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew, or continue credit.” 15 U.S.C. § 1691a(e) (emphasis added); see also 12 C.F.R. § 202.2(1).19 Thus, plaintiffs argue, Congress clearly intended to extend liability to mortgage lenders in this situation.
Further, plaintiffs assert that Countrywide is wholly embroiled in the decisions of these lenders. It authorizes mortgage brokers and correspondent lenders to accept applications on its behalf; to quote its financing rates and terms; to inform applicants of Countrywide’s financing options; and to originate finance transactions using its forms and in accordance with its pricing policy. Moreover, according to the complaint, correspondent lenders make loans based on Countrywide’s creditgranting policies and funds these loans before or shortly after they are consummated with Countrywide’s funds. In fact, in all of the home mortgage finance transactions at issue in this case, Countrywide is alleged to have advanced the funds to make the loans and borne some or all of the risk of default. It also provides brokers and correspondent lenders with credit
19 The FHA definition is the same.
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applications, loan contracts, and other forms, as well as instructions.
As such, the “third-party” problem is no problem at all.
C. Statute of Limitations Finally, Countrywide argues that plaintiff Austin’s ECOA and FHA claims are time-barred by the statutes’ respective two-year statutes of limitations. 15 U.S.C. § 1691e(f); 42 U.S.C. § 3613(a)(1)(A). According to Countrywide, the statutes of limitations began to run on the date Austin signed her closing documents -- September 22, 2004. The initial complaint in this case was filed on July 12, 2007, nearly three years later. Thus, Countrywide argues, Austin’s claims are barred. Plaintiffs, for their part, argue that since the claim is directed at a policy that has a discriminatory effect on the her, and since that policy continues, the statute of limitations has not run. Alternatively, plaintiff contends that this Court should apply a discovery rule to these facts, holding that the statute of limitations began to run not at the time of the closing, but at the time a plaintiff discovered or should have discovered that she had been injured. Finally, plaintiffs contend that the statute of limitations is tolled by defendants’ fraudulent concealment of their discriminatory practices.
1. Continuing Violation Theory
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In 1982, the Supreme Court in Havens Realty Corp. v.
Coleman, 455 U.S. 363 (1982), endorsed a continuing violation
theory for the purposes of dealing with the statute of
limitations for private lawsuits under the FHA. The plaintiffs
in Havens Realty accused a real estate firm and one of its agents
of illegal racial steering, citing five specific incidents in
which black and white testers were directed to homes in different
areas. Id. at 380. Although only one of these incidents
occurred within the applicable limitations period, the Court held
that plaintiffs’ claims that defendants’ racial steering had
“deprived them of the benefits of interracial association arising
from living in an integrated neighborhood” were timely, saying:
[A] ‘continuing violation’ of the Fair Housing Act should be treated differently from one discrete act of discrimination. Statutes of limitations such as that contained in [the FHA] are intended to keep stale claims out of the courts. Where the challenged violation is a continuing one, the staleness concern disappears. [Defendants'] wooden application of [the FHA’s statute of limitations], which ignores the continuing nature of the alleged violation, only undermines the broad remedial intent of Congress embodied in the Act. . . . [W]e therefore conclude that where a plaintiff, pursuant to the Fair Housing Act, challenges not just one incident of conduct violative of the Act, but an unlawful practice that continues into the limitations period, the complaint is timely when it is filed within
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180 days of the last asserted occurrence of that practice.20
Id. at 380-81 (citations omitted). Under the Havens Realty
theory, plaintiff Austin is challenging not just a single
incident of conduct but a continuing policy and practice --
namely the discretionary pricing policy which enables racial
discriminatory practices, unrelated to creditworthiness -- the
effects of which she continues to experience.21
Countrywide counters by citing to the Supreme Court’s
decision in Ledbetter v. Goodyear Tire & Rubber Co., 127 S. Ct.
2162 (2007). In Ledbetter, the Court considered whether a Title
VII plaintiff’s pay discrimination claim represented a modified
continuing violation, with each unequal paycheck giving rise to a
separate claim with its own limitations period, or whether this
type of claim challenged the decision that produced the uneven
pay, in which case the limitations would run once the
20 The 180-day limitation was later extended to one year for administrative complaints and two years for private lawsuits by the 1988 Fair Housing Amendments Act. 42 U.S.C. § 3613(a)(1)(A). The Act endorses the continuing violation theory by identifying the starting time for the statute of limitations as either when a discriminatory housing practice “occurred” or when it “terminated.” Id. Indeed, according to the legislative history, the use of the term “termination” was “intended to reaffirm the concept of continuing violations, under which the statute of limitations is measured from the date of the last occurrence of the unlawful practice.” Richard G. Schwemm, Barriers to Accessible Housing: Enforcement Issues in 'Design and Construction' Cases Under the Fair Housing Act, 40 U. Rich. L. Rev. 753, 841 n.413 (2006) (quoting H.R. Rep. No. 100-711, 33 (1988), reprinted in 1988 U.S.C.C.A.N. 2173, 2194).
21 It is continuation of the policy that distinguish Austin’s claim from the type of “single incident” claim the Court found to be time-barred in Havens Realty. 455 U.S. at 381.
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discriminatory decisions were made or known to plaintiff. Id. at 2167. Ledbetter claimed that earlier in her career, outside of the limitations period, she had received several poor performance evaluations from male supervisors and that as a result her pay had not increased as much as it would have if she had been evaluated fairly. Id. at 2165-66. She claimed that each pay check, including those in the limitations period, reflected the past pay decisions. Id. The Eleventh Circuit rejected her claim; the Supreme Court agreed.
The Court concluded that the core of Ledbetter’s claim was the earlier disparate treatment; she claimed no intentional discrimination continuing into the limitations period. Id. at 2169. The Court further concluded that “current effects alone cannot breathe life into prior, uncharged discrimination” and that Ledbetter should have filed after the discriminatory pay decision was made and communicated to her. Id. at 2169.
But the instant case is distinguishable for two reasons: First, plaintiff Austin makes a Havens Realty type claim, challenging a policy that continues into the limitations period. Second, this is a disparate impact case, where both the challenged policy and its disparate effects continue in the relevant period. As one commentator has noted:
[T]he distinction drawn by the Ledbetter majority between claims attacking a discriminatory pay structure and those
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addressing decisions specific to an individual employee comports with the purposes served by the modified form of the continuing violations doctrine. A discriminatory pay structure or policy is likely to affect the rights of an evolving class of claimants, in addition to the plaintiff before the court. Therefore, . . . permitting challenges to these policies by anyone injured by them within the limitations period -- regardless of how long ago a particular policy was instituted, when the plaintiff learned of it, or when the policy was first applied to the plaintiff -eliminates the prospect of repetitive lawsuits directed at the same unlawful conduct.
Kyle Graham, The Continuing Violations Doctrine, 43 Gonz. L. Rev.
271, 325-326 (2008).
As such, I find that plaintiff Austin’s claim is not time-
barred.
2. Discovery Rule
Plaintiffs argue in the alternative that the Court should
apply the discovery rule, holding that the limitations period
began to run on the date on which plaintiff discovered or should
have discovered that she had been injured by the defendants’
conduct. The reasons are obvious: This is not a case in which
there is a clear injury the moment the papers were signed.
Austin, after all, was not turned down for a loan. Thus, she is
unlike the “testers” in Havens Realty, for example, or a person
denied a job or fired, or who has plainly endured an adverse
result. Austin received the loan on certain terms; she could not
-23-

have known that the terms were different and more onerous than those of similarly situated white borrowers. Nor is this a case in which the information necessary to perfect the claim is readily available through plaintiff’s diligence. While it is difficult to find out the salary of other employees in a Ledbetter type action for pay equity, it is surely more daunting to find out about nationwide patterns of racial disparity in mortgage lending. Nor do we want to enact a rule that forces plaintiff to sue when she first received these loans, presuming, without any basis, that as an African-American woman she was bound to be discriminated against.
Defendant counters by citing the Supreme Court’s decision in TRW, Inc. v. Andrews, 534 U.S. 19 (2001). In Andrews, the Court held that a discovery rule would not be appropriate unless the statute governing the area of the law “cries out” for application of the discovery rule or otherwise is “silent on the issue” of when the limitations period begins to run. Id. at 27, 28. The Court found that the statute at issue in Andrews, the Fair Credit Reporting Act (“FCRA”), was not in fact silent on the question. A subsection of the FCRA calls for the application of the rule in action brought under the FCRA, allowing cases to be brought “not later than the earlier of” two years “after the date of discovery by the plaintiff of the violation that is the basis for such liability” or five years “after the date on which the violation
-24-

that is the basis for such liability occurs." 15 U.S.C. § 1681p. In short, the statute made explicit reference to a discovery rule, and keyed it to a specific statutory limitations period.
There is no comparable mention in either the ECOA or the FHA of a discovery rule. Under the ECOA, the statute of limitations is two years from “the date of the occurrence of the violation.” 15 U.S.C. § 1691e(f). The FHA provides that a plaintiff must file a lawsuit within two years after the “occurrence or the termination of an alleged discriminatory housing practice or the breach of a conciliation agreement entered into under this subchapter, whichever occurs last.” 42 U.S.C. § 3613(a)(1)(A). The question is whether these statutes are the functional equivalent of the FCRA -- whether by using the word “occurrence” Congress necessarily intended to exclude a discovery rule, just as clearly as it did under the FCRA.22
22 In Skwira v. United States, 344 F.3d 64 (1st Cir. 2003), the relevant statute provided that a tort claim under the Federal Tort Claims Act (“FTCA”), 28 U.S.C. § 2401(b), must be presented “within two years after such claim accrues.” “Accrual” could mean either injury in fact, or when the injury was discovered. As such, the Court concluded that, unlike the FCRA as interpreted by the Supreme Court in Andrews, the FTCA had no express provision indicating which rule or rules of accrual should apply. It then moved on to examine other laws in which the discovery rule was appropriate. It noted two factors that should instruct courts in deciding whether the discovery rule applies: whether it is possible that the plaintiff would be left without a remedy due to the cause of action arising after the statutory period, and whether the nature of the cause of action relies on knowledge possessed by someone other than the plaintiff. Id. at 73.
-25-

Lower courts interpreting the FHA and the ECOA are divided.23 Compare Wide ex rel. Wilson v. Union Acceptance Corp., 2002 WL 31730920, at *5 (S.D. Ind. November 19, 2002) (applying discovery rule to ECOA), and Jones v. Citibank Fed. Sav. Bank, 844 F. Supp. 437, 440-42 (N.D. Ill. 1994) (applying discovery rule to FHA), with Claybrooks v. Primus Auto. Fin. Servs., Inc., 363 F. Supp. 2d 969 (M.D. Tenn. 2005) (applying Sixth Circuit rule and finding that the claim accrued on the date when each purchaser signed his or her retail installment contract; statute of limitation not tolled by discovery rule), and Moseke v. Miller & Smith, 202 F. Supp. 2d 492 (E.D. Va. 2002)(discovery rule does not apply to § 3604(f)(3)(C)’s designand-construction requirements under the FHA).
I need not resolve this issue given my conclusion that Austin’s case fits within a continuing violations framework.
D. Fraudulent Concealment In order to toll a statute of limitations for fraudulent concealment, a plaintiff must show 1) that defendant engaged in fraud or deliberate concealment of material facts related to her wrongdoing; and 2) that the plaintiff exercised due diligence, but was nonetheless unable to discover the facts. See HernandezJimenez v. Calero-Toledo, 604 F.2d 99, 101 (1st Cir. 199).
23 See also, Middlebrook v. City of Bartlett, 341 F. Supp. 2d 950, 956 (W.D. Tenn. 2003) (a “federal civil rights claim accrues when a plaintiff knows or has reason to know of the injury that is the basis of the plaintiff's action”).
-26-

Allegations of fraudulent concealment must also conform to the requirements of Fed. R. Civ. P. 9(b). See Varney v. R.J. Reynolds Tobacco Co., 118 F. Supp. 2d 63, 68 (D. Mass. 2000).
Plaintiffs allege generally that Countrywide “spent millions of dollars” to foster an image that its rates were objectively set, knowing that their credit pricing system allowed certain fees and rates to be added based on subjective factors unrelated to creditworthiness.
The allegations in the complaint, however, are simply too vague and to satisfy Rule 9(b). Plaintiffs do not identify what was said in the advertisements; how the comments were fraudulent or misrepresented the actual state of facts; whether Austin relied on these statement, etc. Accordingly, I find that the complaint fails to adequately plead any of these requirements.
IV. CONCLUSION For the aforementioned reasons, Defendants’ Motion to
Dismiss (document # 16) is DENIED.

SO ORDERED. Date: July 30, 2008

/s/Nancy Gertner
NANCY GERTNER, U.S.D.C.

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 Case 3:08-cv-00448-JGH Document 68 Filed 08/07/08 Page 1 of 3 PageID #: 1928

UNITED STATES JUDICIAL PANEL on
MULTIDISTRICT LITIGATION

Aug 07, 2008

IN RE: COUNTRYWIDE FINANCIAL CORP. MORTGAGE LENDING PRACTICES LITIGATION

MDL No. 1974

TRANSFER ORDER
Before the entire Panel*: Plaintiffs in the District of Massachusetts action have moved, pursuant to 28 U.S.C. § 1407, for coordinated or consolidated pretrial proceedings of this litigation in the District of Massachusetts. Plaintiffs in the remaining two actions agree that centralization is appropriate, but suggest centralization in either the Central District of California or Northern District of Illinois. The Countrywide affiliated defendants1 oppose the motion; if the Panel deems centralization appropriate, they support centralization in the Central District of California.
This litigation presently consists of three actions listed on Schedule A and pending in three districts as follows: one action each in the Central District of California, the Northern District of Illinois and the District of Massachusetts.
On the basis of the papers filed and hearing session held, we find that the actions in this litigation involve common questions of fact, and that centralization under Section 1407 in the Western District of Kentucky will serve the convenience of the parties and witnesses and promote the just and efficient conduct of the litigation. All actions share factual questions relating to whether Countrywide engaged in discriminatory residential lending practices, including the imposition of discretionary fees/charges, which increased the cost of financing and resulted in higher loans for minority borrowers than similarly situated non-minority borrowers. Centralization under Section 1407 will eliminate duplicative discovery; avoid inconsistent pretrial rulings, especially on the issue of class certification; and conserve the resources of the parties, their counsel and the judiciary.
Given that this litigation involves three purported nationwide class actions, many districts would be an appropriate transferee forum. Accordingly, we have selected the Western District of Kentucky, where Judge John G. Heyburn II can guide this litigation ably.

* Judge Heyburn took no part in the disposition of this matter.
1 Countrywide Financial Corp.; Countrywide Home Loans, Inc.; and Countrywide Bank, FSB (collectively Countrywide).

Case 3:08-cv-00448-JGH Document 68 Filed 08/07/08 Page 2 of 3 PageID #: 1929

- 2 IT IS THEREFORE ORDERED that, pursuant to 28 U.S.C. § 1407, the actions listed on Schedule A are transferred to the Western District of Kentucky and, with the consent of that court, assigned to the Honorable John G. Heyburn II for coordinated or consolidated pretrial proceedings.
PANEL ON MULTIDISTRICT LITIGATION

J. Frederick Motz Acting Chairman
John G. Heyburn II, Chairman* Kathryn H. Vratil

Robert L. Miller, Jr. David R. Hansen

Case 3:08-cv-00448-JGH Document 68 Filed 08/07/08 Page 3 of 3 PageID #: 1930

IN RE: COUNTRYWIDE FINANCIAL CORP. MORTGAGE LENDING PRACTICES LITIGATION

MDL No. 1974

SCHEDULE A

Central District of California Gabriel Garcia v. Countrywide Financial Corp., et al., C.A. No. 5:07-1161
Northern District of Illinois Sonia Jenkins, et al. v. Countrywide Home Loans, Inc., C.A. No. 1:08-2935
District of Massachusetts Gillian Miller, et al. v. Countrywide Bank, N.A., et al., C.A. No. 1:07-11275

 
 Case 3:08-cv-00448-JGH Document 114 Filed 01/15/13 Page 1 of 12 PageID #: 2692 (1 of 12)

Deborah S. Hunt Clerk

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
100 EAST FIFTH STREET, ROOM 540 POTTER STEWART U.S. COURTHOUSE
CINCINNATI, OHIO 45202-3988

Tel. (513) 564-7000 www.ca6.uscourts.gov

Filed: January 15, 2013

Ms. Wendy J. Harrison Bonnett, Fairbourn, Friedman & Balint 2325 E. Camelback Road, Suite 300 Phoenix, AZ 85016
Mr. Thomas M. Hefferon Goodwin Procter 901 New York Avenue, N.W. Washington, DC 20001
Mr. Gary Klein Klein Kavanagh Costello 85 Merrimac Street, Fourth Floor Boston, MA 02114
Mr. James W. McGarry Goodwin Procter 53 State Street Boston, MA 02109
Mr. Stuart T. Rossman National Consumer Law Center Seven Winthrop Square, Fouth Floor Boston, MA 02110
Re: Case No. 12-5250, Gillian Miller, et al v. Countrywide Bank, N.A., et al Originating Case No.: 3:08-md-1974
Dear Counsel,
The court today announced its decision in the above-styled case.

Case 3:08-cv-00448-JGH Document 114 Filed 01/15/13 Page 2 of 12 PageID #: 2693 (2 of 12)

Enclosed is a copy of the court's opinion together with the judgment which has been entered in conformity with Rule 36, Federal Rules of Appellate Procedure.
Yours very truly,
Deborah S. Hunt, Clerk

cc: Ms. Vanessa L. Armstrong Enclosures Mandate to issue.

Cathryn Lovely Deputy Clerk

Case 3:08-cv-00448-JGH Document 114 Filed 01/15/13 Page 3 of 12 PageID #: 2694 (3 of 12)

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b) File Name: 13a0018p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT _________________

In re: COUNTRYWIDE FINANCIAL CORP. MORTGAGE LENDING PRACTICES LITIGATION _____________________________________

X -

-

GILLIAN MILLER et al.,

,>

Plaintiffs-Appellants, -

-

v.

-

-

COUNTRYWIDE BANK, N.A. et al.,

-

Defendants-Appellees.

-

N

No. 12-5250

Appeal from the United States District Court for the Western District of Kentucky at Louisville. No. 3:08-md-1974—John G. Heyburn II, District Judge.

Argued: December 5, 2012

Decided and Filed: January 15, 2013

Before: MOORE, GILMAN, and KETHLEDGE, Circuit Judges.

_________________

COUNSEL
ARGUED: Gary Klein, KLEIN, KAVANAGH & COSTELLO, LLP, Boston, Massachusetts, for Appellants. Ja mes W. McGarry, GOODW IN PROCTER LLP, Boston, Massachusetts, for Appellees.ON BRIEF: Gary Klein, KLEIN, KAVANAGH & COSTELLO, LLP, Boston, Massach usetts, W endy J. Harrison, BONNETT, FAIRBOURN, FRIEDMAN & BALINT, P.C., Phoenix, Arizona, for Appellants. aJmes W. McGarry, GOODW IN PROCTER LLP, Boston, Massachusetts, T homas M. Hefferon, GOODWIN PROCTER LLP, Washington, D.C., for Appellees.

1

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No. 12-5250

Miller et al. v. Countrywide Fin. Corp. et al.

Page 2

_________________
OPINION _________________
KAREN NELSON MOORE, Circuit Judge. Eelven individuals (“the plaintifs”) who obtained hom e loans from Defe ndant-Appellee Countrywide Bank, N.A. (“Countrywide”) seek class certification to challenge alleged racial disparit ies dating back to 2002 and resulting fromCountrywide’s loan-pricing policy for home mortgages. In re Countrywide Fin. Mortg. Lending Practices Litig. , No. 08-MD-1974, 2011 W L 4862174, at *1 (W .D. Ky. Oct. 13, 2011) [here inafter In re Countrywide ]. The only issue before this panel is whether the district court abused its discretion in finding that the plaintiffs’ proposed class failed to satisfy Federal Rule of Civil Procedure 23(a)’ s commonality requirem ent. W e conclude th at the district court did not abuse its discretion, and we AFFIRM.
I. BACKGROUND AND PROCEDURE
At issue is Countrywide’s loan-pricing ploicy, which dictated howits home loans were priced across three channels of loan origination1. The cost of a borrower’s loan is expressed as an annual percentage rate (“APR”), which is measured in basis points, or hundredths of a percent. Countrywide established a borrower’s APR through its loanpricing policy, which has two components. The first, objective component determined an applicable “par rate” based on objectivefactors about the borrower and about the loan sought.2 The plaintiffs prese nt no com plaints relating to Countrywide’s objective calculation of par rates. R. 54 (Pls.’ Mot. for Class Cert. at 5) (Page ID #811).

1Countrywide originat ed home loans through reta il, wholesale, and correspondent channels. Retail loan officers originated loans directly on Countrywide’s behalf. W holesale mortgage brokers submitted borrower inform ation for conside ration; if Countrywide agreed to provide the loan, then it permitted the mortgage broker to negotiate additional fees. Third-party correspondent lenders produced loans conforming to Countrywide’s underwriting guidelines, which Countrywide purchased. Bank of America acquired Countrywide’s home mortgage services in July 2008.
2Objective factors included market interest rates, “income, property value, and loanamount,” In re Countrywide, 2011 WL 4862174, at *1, aswell as “the loan-to value ratio, theborrower’s credit score, the intended use of the property, the requesteddate of closing, and the location of the property,” Appellee Br. at 6.

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Page 3

The second, subjective component permitted local agents—be they loan officers,

mortgage brokers, or correspondent lenders—to deviate from the par rate as follows.

Loan officers and mortgage brokers could increase or decease a borrower’s interest rate,

and could charge borrowers with fees, provided that the total deviation fell wi thin a

specified range of the par rate. Appellee Br. at 6–9. Count rywide compensated loan

officers and brokers for securing loans, and in som

e instances increased their

compensation when a loan had a higher interest rate or additional fees.

3 As to

correspondent lenders, Countrywide purchas ed only those loans t hat satisfied its

underwriting requirements, and paid a premium for loans with higher interest rates or

extra fees. In re Countrywide, 2011 WL 4862174, at *1. Plaintiffs allege that, in all

channels, Countrywide’s agents had broad discretion to deviate from par rate, provided

that they stayed within the applicable boundaries dictating the range of a cceptable

deviations from par. Appellant Br. at 6–7.

The plaintiffs challenge the subjectivecomponent of Countrywide’s loan-pricing policy, which they claim disparately impacts minority borrowers. Id. at 5. They allege that vesting local agents with discretion to deviate from objective par rates led Countrywide to charge African-American borrowers on average 11.64 basis points and Hispanic borrowers 12.50 basis points over the APR paid by their white counterparts. R. 54 (Pls.’ Mot. for Class Cert. at 12) (Page ID #818). Plaintiffs seek to certify a class consisting of “[a]ll African-American and Hispanic borrowers to whom Countrywide originated a residential-secured loan, including correspondent loans, between January 1, 2002 and the present.” Id. at 18 (Page ID #824). They seek dam ages, injunctive relief, and de claratory relief for alleged violations of the Equal Credit Opportunity Act, 15 U.S.C. § 1691, the Fair Housing Act, 42 U. S.C. § 3601, and the Civil Rights Act, 42 U.S.C. §§ 1981–82.Id. at 24–25 (Page ID #830–31); Appellant Br. at 2.

3Countrywide’s Fu ll Spectrum L ending Division—a segm ent of Countrywide’s retail channel—did not perm it loan officers to charge intere st rates above par. Appellee Br. at 35; R. 62-4 (Swain Dep. at 111–13) (Page ID #2166–67).

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Under the Federal Rules of Civil Procedure, a plaintiff seeking to certify a class must satisfy four requirements under Rule 23(a)and at least one of several requirements under Rule 23(b). F ED. R. CIV. P. 23. Our attention here i s on whether the plaintiffs have established that “there are questions of law or fact common to the class.” FED. R. CIV. P. 23(a)(2). The district judge found th at the proposed class cannot satisfy Rule 23(a)(2)’s commonality requirement in light ofWal-Mart Stores, Inc. v. Dukes, — U.S. —, 131 S. Ct. 2541 (2011) (discussing F ED. R. CIV. P. 23(a)(2)). The district court denied certification, for which the plaintiffs sought an interlocutory appeal pursuant to Federal Rule of Civil Procedure 23(f). We exercised our discretion to hear the appeal.
II. STANDARD OF REVIEW
“‘The district court maintains substantial discretion in determining whether to certify a class.’” Beattie v. CenturyTel, Inc., 511 F.3d 554, 559 (6th Cir. 2007) (quoting Reeb v. Ohio Dep’t of Rehab. & Corr,. 435 F.3d 639, 643 (6th Cir. 2006)),cert. denied, 555 U.S. 1032 (2008). A districtcourt’s decision “‘will bereversed only upon a strong showing that the district court’s decsiion was a clear abuse of discretion.’”Gooch v. Life Investors Ins. Co. of Am., 672 F.3d 402, 417 (6th Cir. 2012) (quotingBeattie, 511 F.3d at 559–60). “An abuse of discretion occurs i f t he district court relies on clearly erroneous findings of fact, applies the wronglegal standard, misapplies the correct legal standard when reaching a conclusion, or m akes a clear error of judgm ent.” Young v. Nationwide Mut. Ins. Co., 693 F.3d 532, 536 (6th Cir. 2012).
III. COMMONALITY CLAIM
The plaintiffs’ core contention is that the district court abused its discretion by failing to distinguish their challenge to Countrywide’s subjective loan-pricing policy from the failed cha llenge to W al-Mart’s subjective pay-and-prom otion practices in Dukes.4 The Supreme Court inDukes faced a proposed class of 1.5 million women—all

4The plaintiffs alsocomplain that the district court required that all class members suffer the same damages in order to satisfy co mmonality under Rule 23(a) . “ Commonality requires the plaintiff to demonstrate that the class members ‘have suffered the same injury.’” Dukes, 131 S. Ct. at 2551(quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 (1982)). The district court’s opinion is unclear on this point; the court uses the word “injury,” but appears to have focused on damages. To the extent that the

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current or former Wal-Mart employees—alleging systematic discrimination on matters of pay and prom otion in violation of Title VII of the Civil Rights Act. Subject to boundaries on the size of salary increases and on the minimal eligibility qualifications for promotion, “pay and promotion decisions at Wal-Mart are generally committed to local managers’ broad discretion, which is exercised in a largely subjective m anner.” Dukes, 131 S. Ct. at 2547 (internal quotation marks omitted).

To demonstrate “questions of law or fact common to the class,” FED. R. CIV. P.

23(a)(2), a plaintiff m ust show that the claim s in the proposed class “depend upon a

common contention . . . of such a natu

re that it is capable of classwide

resolution—which means that determination of its truth or falsity will resolve an issue

that is central to the validity of eachone of the claims in one stroke.” Dukes, 131 S. Ct.

at 2551. For a suit seeking to address “m illions of em ployment decisions at once,”

demonstrating a common contention means showing that “some glue hold[s] the alleged

reasons for all those de cisions together.” Id. at 2552 (em phasis in original). A

companywide policy could serve as glue if it affected all class m embers and caused a

disparate impact. But in the context of a broad delegation of decisionm aking to the

discretion of local managers, the Court observed the following:

The only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s “policy” of allowing discretion by local supervisors over em ployment matters. On its fa ce, of course, that is just the opposite of a uniform employment practice that would provide the commonality needed for a class action; it is a policyagainst having uniform employment practices.

Id. at 2554 (emphasis in original). Instead,the Court considered whether there was some other gl ue—“a com mon m ode of exercising discretion that pervades the entire company”—holding these individual decisions together. Id. at 2554–55. Stating that “it is quite unbelievable that all managers would exercise their discretion in a common way without som e com mon direction,” id. at 2555, t he Cour t concluded that the

district court conflated damages with injury and thusexpected class members to suffer the same damages, it did so in error. See In re Whirlpool Corp. Front-Loading WasherProds. Liab. Litig., 678 F.3d409, 420 (6th Cir. 2012); Gooch, 672 F.3d at 428.

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plaintiffs had not identified a common contention—one uniting millions of individual discretionary actions by local managers—that was suitable for classwide resolution.

The district court did not abuse its discretion in finding thatDukes forecloses the instant proposed class from establishing commonality. Both cases challenge policies that grant broad discretion to local agents : Countryw ide to local agents w ho varied home-loan prices, and Wal-Mart to managers who made pay-and-promotion decisions. In both cases, the exercise of discretion is cabined inside clear boundaries: Wal-Mart managers could grant pay raises only of a certain amount and could promote only prequalified employees, while Countrywide agents could vary hom e loans only within a specified range of the predetermined par rate. In neither case do plaintiffs allege that local actors exceeded these boundaries. And in neither case is it asserted that, for acts of discretion taken within these boundaries, a uni form policy or practice guides how local actors exercise their discretion, such that the corporate guidance caused or contributed to the alleged disparate impacts. The plaintiffs claim that “[t]he discretion Countrywide has given its s ales for ce is exercised in a com mon way—by lim ited variation of the par rate.” Appellant Br. a7t . This statement conflates range with mode. Both Wal-Mart and Countrywide placed clearboundaries on how far a local exercise of discretion could go, but in neither case do plaintiffs demonstrate that this range, rather than discretionary decisions made within this range, disparately impacted the proposed class. On this point, Dukes is clear: class members must unite acts of discretion under a single policy or practice, or through a si ngle mode of exercising discretion, and the mere presence of a range within which acts of discretion take place will not suffice to establish commonality.

In see king to distinguish Dukes, the plaintiffs direct us to a recent opinion

involving a class that fell on the opposite side than didDukes of “the line that separates

a com pany-wide practice from an exercise of discretion by local m

anagers.”

McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc. , 672 F.3d 482, 490 (7th

Cir.), cert. denied, — U.S. —, 133 S. Ct. 338 (2012). We need not decide whether

Case 3:08-cv-00448-JGH Document 114 Filed 01/15/13 Page 9 of 12 PageID #: 2700 (9 of 12)

No. 12-5250

Miller et al. v. Countrywide Fin. Corp. et al.

Page 7

McReynolds was correctly decided because, even under McReynolds’s approa ch t o Dukes, the plaintiffs at bar would fail to satisfy commonality.
McReynolds involved 700 African-Am erican br okers a nd form er brokers of Merrill Lynch, who challenged two com panywide policies. First, a “team ing policy” permitted brokers to create teams that shared clientele across members; joining a team proved financially advantageous for many brokers. Merrill Lynch left team selection largely to the discretion of local brokers. Second, an “account-distribution policy” distributed the clients of departing brokersaccording to criteria that made team members more likely than lone brokers to secure di stributed clients. The two policies together allegedly worked a disparate impact on the earnings of African Americans, who were underrepresented on team s as com pared to their whi te c ounterparts. Although both Merrill Lynch’s brokers and W al-Mart’s managers held discretion that, as exercised, created a disparate impact, McReynolds diverged from Dukes, according to the Seventh Circuit, because “the exercise of that dsicretion is influenced by the two company-wide policies at issue . . . [that] exacerbateracial discrimination by brokers.” Id. at 489. The Seventh Circuit determined that a common contention existed as to whether it was lawful for Merrill Lynch to adopt companywide policies that enabled individual acts of bias and then amplified their effect on minorities. Id. Because the policies themselves provided commonality “glue,” the court did not further require the plaintiffs to show that teams had exercised their discretion to select members according to a common mode. Id. at 490 (stating that the district court overlooked “ht e incremental causal effect . . . of those company-wide policies.”).
Essential to McReynolds, and m issing from the instant litigation, were companywide policies that contributed to the alleged disparate impact that arose from the delegation of discretion to individual brokers. See Bolden v. Walsh Constr. Co. , 688 F.3d 893, 898 (7th Cir. 2012) (“This single national policy [inMcReynolds] was the missing ingredient in [Dukes].”) Merrill Lynch adopted a policy that permitted teams to form and to exercise their discretion inadmitting new members, and adopted a second policy that exacerbated the disparity arisingfrom the delegation of discretion. No such

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No. 12-5250

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Page 8

uniform policy exists here—outside of thatheld to be legally insufficient inDukes—that contributes to the disparate pricing of home loans. Without a similar policy to provide a common contention, the plaintiffs must show that a common mode unites individual acts of discretion by Countrywide’s agents, which they have not done.
Finally, the plaintiffs protest thatDukes does not “prevent a commonality finding in all disparate impact cases involving the exercise of discretion.” Appellant Br. at 16. We agree. See Dukes, 131 S. Ct. at 2554 (“[W]e have recognized that, ‘in appropriate cases,’ giving discretion to lower-level supervisors can be the basis ofTitle VII liability under a disparate-impact theory.” (quotingWatson v. Fort Worth Bank & Trus,t487 U.S. 977, 991 (1988))). They also argue that Dukes does not prohibit—as they believe the district court mistakenly assumed—the use of statistical evidence to prove a disparateimpact theory. Again, we agree. The Supreme Court has relied, and the Sixth Circuit continues to rely, on statistical analysis in disparate-impact cases. See Watson, 487 U.S. at 987 (“The evidence in these ‘disparate im pact’ cases usually focuses on statistical disparities, rather than specific incidents.”); Bondurant v. Air Line Pilots Ass’n, Int’l , 679 F.3d 386, 394 (6th Cir. 2012). Dukes does not disturb this practice. Rather,Dukes reiterates that statistical correlation, no m atter how robust, cannot s ubstitute for a specific finding of class-action com monality. Dukes, 131 S. Ct. at 2555 (“ [M]erely proving that the discretionary system has produced a racial or sexual disparity is not enough” where plaintiffs are unable to “‘idetnif[y] the specific employment practice that is challenged’” (quoting Watson, 487 U.S. at 994 (O’Connor, J., concurring)); see also Watson, 487 U.S. at 994 (O’Connor, J ., c oncurring) (“[T]he plaintiff m ust offer statistical evidence of a kind and degree sufficient to show that the practice in question has caused the [disparate impact]”) (emphasis added). As explained above, the plaintiffs have failed to establish either a uniform policy or practice, or a common mode amidst the various acts of discretion, beyond the mere act of delegating discretion, that caused the disparate impact alleged.

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No. 12-5250

Miller et al. v. Countrywide Fin. Corp. et al.

Page 9

IV. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s order denying class certification.

Case 3:08-cv-00448-JGH Document 114 Filed 01/15/13 Page 12 of 12 PageID #: 2703 (12 of 12)

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

No. 12-5250
In re: COUNTRYWIDE FINANCIAL CORP. MORTGAGE LENDING PRACTICES LITIGATION ____________________________________

FILED
Jan 15, 2013
DEBORAH S. HUNT, Clerk

GILLIAN MILLER et al., Plaintiffs - Appellants,

v.

COUNTRYWIDE BANK, N.A. et al., Defendants - Appellees.

Before: MOORE, GILMAN, and KETHLEDGE, Circuit Judges.

JUDGMENT

On Appeal from the United States District Court for the Western District of Kentucky at Louisville.

THIS CAUSE was heard on the record from the district court and was argued by counsel.

IN CONSIDERATION WHEREOF, it is ORDERED that the district court’s denial of class certification is AFFIRMED.

ENTERED BY ORDER OF THE COURT

Deborah S. Hunt, Clerk

 
 Case 3:08-cv-00448-JGH Document 115 Filed 08/12/13 Page 1 of 1 PageID #: 2704

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE

____________________________________

)

In re: COUNTRYWIDE FINANCIAL )

MORTGAGE LENDING PRACTICES )

LITIGATION )

)

________________________________ )

)

This document relates to

)

)

GILLIAN MILLER )

(D. Mass. 1:07-cv-11275)

)

____________________________________)

Judge John G. Heyburn II MASTER FILE NO. 08-md-1974 MDL No. 1974

[ ORDER OF DISMISSAL WITH PREJUDICE

This matter comes before the Court on the Parties’ Stipulation of Voluntary Dismissal

With Prejudice.

IT IS HEREBY ORDERED that the Stipulation of Voluntary Dismissal With Prejudice is

GRANTED. The claims of Gillian Miller are hereby dismissed, with prejudice, without costs

and fees, and waiving all rights of appeal.

August 12H, 2e0y1b3 urn,

__________________________________ J.

 
 Case 3:08-cv-00448-JGH Document 116 Filed 08/12/13 Page 1 of 1 PageID #: 2705

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE

____________________________________

)

In re: COUNTRYWIDE FINANCIAL )

MORTGAGE LENDING PRACTICES )

LITIGATION )

)

________________________________ )

)

This document relates to

)

)

LAKISHA AUSTIN )

(D. Mass. 1:07-cv-11275)

)

____________________________________)

Judge John G. Heyburn II MASTER FILE NO. 08-md-1974 MDL No. 1974

ORDER OF DISMISSAL WITH PREJUDICE

This matter comes before the Court on the Parties’ Stipulation of Voluntary Dismissal

With Prejudice.

IT IS HEREBY ORDERED that the Stipulation of Voluntary Dismissal With Prejudice is

GRANTED. The claims of Lakisha Austin are hereby dismissed, with prejudice, without costs

and fees, and waiving all rights of appeal.

August 12, 2013
Heyburn,

__________________________________ J.

 
 Case 3:08-cv-00448-JGH Document 117 Filed 08/12/13 Page 1 of 1 PageID #: 2706

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE

____________________________________

)

In re: COUNTRYWIDE FINANCIAL )

MORTGAGE LENDING PRACTICES )

LITIGATION )

)

________________________________ )

)

This document relates to

)

)

ARTHUR and LUELLA DAVIS

)

(D. Mass. 1:07-cv-11275)

)

____________________________________)

Judge John G. Heyburn II MASTER FILE NO. 08-md-1974 MDL No. 1974

[

ORDER OF DISMISSAL WITH PREJUDICE

This matter comes before the Court on the Parties’ Stipulation of Voluntary Dismissal

With Prejudice.

IT IS HEREBY ORDERED that the Stipulation of Voluntary Dismissal With Prejudice is

GRANTED. The claims of Arthur Davis and Luella Davis are hereby dismissed, with prejudice,

without costs and fees, and waiving all rights of appeal.

August 12, 2013
Heyburn,

__________________________________ J.

 
 Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 1 of 18
INTAPP,MDL1974,PROTOR,STAYED
U.S. District Court Western District of Kentucky (Louisville) CIVIL DOCKET FOR CASE #: 3:08−cv−00448−JGH

Miller et al v. Countrywide Bank, N.A., et al Assigned to: Chief Judge John G. Heyburn, II Demand: $9,999,000 Multi−district Litigation Case: 3:08−md−01974−JGH
Case in other court: Massachusetts, 1:07−cv−11275 Cause: 42:405 Fair Housing Act
Plaintiff

Date Filed: 08/22/2008 Jury Demand: Both Nature of Suit: 890 Other Statutory Actions Jurisdiction: Federal Question

Gillian Miller

represented by Andrew S. Friedman Bonnett, Fairbourn, Friedman &Balint, P.C. 2325 E. Camelback Road, Suite 300 Phoenix, AZ 85016 602−274−1100 Fax: 602−274−1199 Email: afriedman@bffb.com ATTORNEY TO BE NOTICED

Gary E. Klein Klein Kavanagh Costello, LLP 85 Merrimac Street, 4th Floor Boston, MA 02114 617−357−5500 Fax: 617−357−5030 Email: klein@roddykleinryan.com ATTORNEY TO BE NOTICED

Gillian R. Feiner Office of the Attorney General (MA) One Ashburton Place Boston, MA 02108 617−963−2571 Fax: 617−727−5765 Email: gillian.feiner@state.ma.us TERMINATED: 12/10/2007 ATTORNEY TO BE NOTICED

Kevin Costello Roddy, Klein and Ryan 727 Atlantic Avenue Boston, MA 02111 617−357−5500 ext. 20 Fax: 617−357−5030 Email: costello@roddykleinryan.com TERMINATED: 05/06/2008 ATTORNEY TO BE NOTICED

Matthew E. Van Tine Miller Law LLC 115 S. LaSalle Street Suite 2910 Chicago, IL 60603 312−332−3400 Fax: 312−676−2676 Email: mvantine@millerlawllc.com ATTORNEY TO BE NOTICED

Ronald R. Parry Parry, Deering, Futscher &Sparks PSC

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 2 of 18

411 Garrad Street P.O. Box 6218 Covington, KY 41012−2618 859−291−9000 Fax: 859−291−9300 Email: rparry@pdfslaw.com ATTORNEY TO BE NOTICED

Shennan A. Kavanagh Klein Kavanagh Costello, LLP 85 Merrimac Street, 4th Floor Boston, MA 02114 617−357−5500 ext. 12 Fax: 617−357−5030 Email: kavanagh@roddykleinryan.com ATTORNEY TO BE NOTICED

Plaintiff Lakisha Austin

represented by Andrew S. Friedman (See above for address) ATTORNEY TO BE NOTICED

Gary E. Klein (See above for address) ATTORNEY TO BE NOTICED

Gillian R. Feiner (See above for address) TERMINATED: 12/10/2007 ATTORNEY TO BE NOTICED

Kevin Costello (See above for address) TERMINATED: 05/06/2008 ATTORNEY TO BE NOTICED

Matthew E. Van Tine (See above for address) ATTORNEY TO BE NOTICED

Ronald R. Parry (See above for address) ATTORNEY TO BE NOTICED

Shennan A. Kavanagh (See above for address) ATTORNEY TO BE NOTICED

Plaintiff Arthur Davis

represented by Andrew S. Friedman (See above for address) ATTORNEY TO BE NOTICED

Gary E. Klein (See above for address) ATTORNEY TO BE NOTICED

Gillian R. Feiner (See above for address) TERMINATED: 12/10/2007 ATTORNEY TO BE NOTICED

Kevin Costello (See above for address)

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 3 of 18

TERMINATED: 05/06/2008 ATTORNEY TO BE NOTICED

Matthew E. Van Tine (See above for address) ATTORNEY TO BE NOTICED

Ronald R. Parry (See above for address) ATTORNEY TO BE NOTICED

Shennan A. Kavanagh (See above for address) ATTORNEY TO BE NOTICED

Plaintiff Luella Davis

represented by Andrew S. Friedman (See above for address) ATTORNEY TO BE NOTICED

Gary E. Klein (See above for address) ATTORNEY TO BE NOTICED

Gillian R. Feiner (See above for address) TERMINATED: 12/10/2007 ATTORNEY TO BE NOTICED

Kevin Costello (See above for address) TERMINATED: 05/06/2008 ATTORNEY TO BE NOTICED

Matthew E. Van Tine (See above for address) ATTORNEY TO BE NOTICED

Ronald R. Parry (See above for address) ATTORNEY TO BE NOTICED

Shennan A. Kavanagh (See above for address) ATTORNEY TO BE NOTICED

V. Defendant Countrywide Bank, N.A.

represented by Byron E. Leet Wyatt, Tarrant &Combs, LLP − Louisville 500 West Jefferson Street, Suite 2800 Louisville, KY 40202 502−562−7354 Fax: 502−589−0309 Email: bleet@wyattfirm.com ATTORNEY TO BE NOTICED
Christopher Tyson Gorman Wyatt, Tarrant &Combs LLP − Louisville 500 West Jefferson Street, Suite 2800 Louisville, KY 40202−2898 502−562−7332

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 4 of 18

Fax: 502−589−0309 Email: tgorman@wyattfirm.com ATTORNEY TO BE NOTICED

James W. McGarry Goodwin Procter 53 State Street Boston, MA 02109 617−570−1332 Fax: 617−523−1231 Email: jmcgarry@goodwinprocter.com ATTORNEY TO BE NOTICED

Michelle R. Gonnam Goodwin Procter LLP Exchange Place 53 State Street Boston, MA 02109 617−570−8328 Fax: 617−523−1231 Email: kywd_ecf_deadletter@kywd.uscourts.gov ATTORNEY TO BE NOTICED

Thomas M. Hefferon Goodwin Procter LLP−Washington DC 901 New York Avenue NW Washington, DC 20001 202−346−4029 Fax: 202−346−4444 Email: thefferon@goodwinprocter.com ATTORNEY TO BE NOTICED

Defendant Countrywide Home Loans, Inc.

represented by Byron E. Leet (See above for address) ATTORNEY TO BE NOTICED

Christopher Tyson Gorman (See above for address) ATTORNEY TO BE NOTICED

James W. McGarry (See above for address) ATTORNEY TO BE NOTICED

Michelle R. Gonnam (See above for address) ATTORNEY TO BE NOTICED

Thomas M. Hefferon (See above for address) ATTORNEY TO BE NOTICED

Defendant Countrywide Correspondent Lending

represented by Byron E. Leet (See above for address) ATTORNEY TO BE NOTICED

Christopher Tyson Gorman (See above for address) ATTORNEY TO BE NOTICED

James W. McGarry (See above for address)

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 5 of 18

ATTORNEY TO BE NOTICED

Michelle R. Gonnam (See above for address) ATTORNEY TO BE NOTICED

Thomas M. Hefferon (See above for address) ATTORNEY TO BE NOTICED

Defendant Full Spectrum Lending, Inc.

represented by James W. McGarry (See above for address) ATTORNEY TO BE NOTICED

Michelle R. Gonnam (See above for address) ATTORNEY TO BE NOTICED

Thomas M. Hefferon (See above for address) ATTORNEY TO BE NOTICED

Defendant Summit Mortgage LLC

represented by William A. Worth Prince, Lobel, Glovsky &Tye LLP 100 Cambridge Street Suite 2200 Boston, MA 02114 617−456−8005 Fax: 617−456−8100 Email: waworth@plgt.com ATTORNEY TO BE NOTICED

Defendant
Loans for Residential Homes Mortgage Corp.

represented by Michael R. Hagopian Hagopian Law Office 212 Greenwich Avenue Warwick, RI 02886 401−384−8080 Fax: 401−384−8082 Email: michael@hagopianlaw.com TERMINATED: 03/06/2008 LEAD ATTORNEY

Intervenor − Pending
Courtroom View Network TERMINATED: 09/16/2008

represented by Tricia Jean Bloomer Boles Schiller &Flexner LLP 10 N. Pearl Street Albany, NY 12207 518−434−0600 Fax: 518−434−0665 Email: tbloomer@bsfllp.com TERMINATED: 02/20/2009 LEAD ATTORNEY

Date Filed 07/12/2007

# Docket Text
1 COMPLAINT against Summit Mortgage LLC, Loans for Residential Homes Mortgage Corp., Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc. Filing fee: $

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 6 of 18

07/12/2007 07/12/2007 07/24/2007 07/26/2007
07/27/2007 07/27/2007 07/27/2007 07/30/2007 07/30/2007 08/06/2007 08/06/2007 08/06/2007 08/06/2007 08/06/2007

350, receipt number 1590027, filed by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis. (Attachments: # 1 Civil Action Cover Sheet# 2 Category Form# 3 Exhibit 1−10)(Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 07/12/2007)
ELECTRONIC NOTICE of Case Assignment. Judge Richard G. Stearns assigned to case. If the trial Judge issues an Order of Reference of any matter in this case to a Magistrate Judge, the matter will be transmitted to Magistrate Judge Sorokin (Nici, Richard) [Transferred from mad on 8/22/2008.] (Entered: 07/12/2007)
Summons Issued as to Summit Mortgage LLC, Loans for Residential Homes Mortgage Corp., Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc.. (Nici, Richard) [Transferred from mad on 8/22/2008.] (Entered: 07/12/2007)
2 SUMMONS Returned Executed Summit Mortgage LLC served on 7/19/2007, answer due 8/8/2007. (Feiner, Gillian) [Transferred from mad on 8/22/2008.] (Entered: 07/24/2007)
3 STIPULATION (Joint Stipulation and Order to Extend Time to Answer or Otherwise Respond to the Complaint) by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc.. (McGarry, James) [Transferred from mad on 8/22/2008.] (Entered: 07/26/2007)
4 NOTICE of Appearance by James W. McGarry on behalf of Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc. (McGarry, James) [Transferred from mad on 8/22/2008.] (Entered: 07/27/2007)
5 NOTICE of Appearance by Thomas M. Hefferon on behalf of Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc. (Hefferon, Thomas) [Transferred from mad on 8/22/2008.] (Entered: 07/27/2007)
6 CORPORATE DISCLOSURE STATEMENT by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc.. (McGarry, James) [Transferred from mad on 8/22/2008.] (Entered: 07/27/2007)
7 NOTICE of Appearance by Gillian R. Feiner on behalf of Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis (Feiner, Gillian) [Transferred from mad on 8/22/2008.] (Entered: 07/30/2007)
8 NOTICE of Appearance by Shennan Alexandra Kavanagh on behalf of Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis (Kavanagh, Shennan) [Transferred from mad on 8/22/2008.] (Entered: 07/30/2007)
9 SUMMONS Returned Executed by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis. Loans for Residential Homes Mortgage Corp. served on 7/20/2007 (Feiner, Gillian) Modified on 8/6/2007 (Flaherty, Elaine). [Transferred from mad on 8/22/2008.] (Entered: 08/06/2007)
10 SUMMONS Returned Executed Full Spectrum Lending, Inc. served on 7/19/2007, answer due 8/8/2007. (Feiner, Gillian) [Transferred from mad on 8/22/2008.] (Entered: 08/06/2007)
11 SUMMONS Returned Executed Countrywide Correspondent Lending served on 7/19/2007, answer due 8/8/2007. (Feiner, Gillian) [Transferred from mad on 8/22/2008.] (Entered: 08/06/2007)
12 SUMMONS Returned Executed Countrywide Home Loans, Inc. served on 7/19/2007, answer due 8/8/2007. (Feiner, Gillian) [Transferred from mad on 8/22/2008.] (Entered: 08/06/2007)
13 SUMMONS Returned Executed Countrywide Bank, N.A. served on 7/19/2007, answer due 8/8/2007. (Feiner, Gillian) [Transferred from mad on 8/22/2008.] (Entered: 08/06/2007)

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 7 of 18

08/06/2007 08/24/2007 08/24/2007 09/10/2007 09/10/2007 09/10/2007 09/13/2007 09/18/2007 09/19/2007
09/21/2007 10/04/2007
10/15/2007 10/25/2007 11/14/2007
11/16/2007

Notice of correction to docket made by Court staff. Correction: doc 9 corrected because: to reflect correct dates (Flaherty, Elaine) [Transferred from mad on 8/22/2008.] (Entered: 08/06/2007)
Set Deadlines/Hearings: Loans for Residential Homes Mortgage Corp. answer due 8/24/2007. (Flaherty, Elaine) [Transferred from mad on 8/22/2008.] (Entered: 08/28/2007)
14 ANSWER to Complaint by Loans for Residential Homes Mortgage Corp..(Flaherty, Elaine) [Transferred from mad on 8/22/2008.] (Entered: 09/04/2007)
15 ANSWER to Complaint with Jury Demand by Summit Mortgage LLC.(Worth, William) [Transferred from mad on 8/22/2008.] (Entered: 09/10/2007)
16 MOTION to Dismiss by Countrywide Bank, N.A., Countrywide Correspondent Lending, Full Spectrum Lending, Inc..(Hefferon, Thomas) [Transferred from mad on 8/22/2008.] (Entered: 09/10/2007)
17 MEMORANDUM in Support re 16 MOTION to Dismiss filed by Countrywide Bank, N.A., Countrywide Correspondent Lending, Full Spectrum Lending, Inc.. (Hefferon, Thomas) [Transferred from mad on 8/22/2008.] (Entered: 09/10/2007)
18 NOTICE of Appearance by Michelle R. Gonnam on behalf of Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc. (Gonnam, Michelle) [Transferred from mad on 8/22/2008.] (Entered: 09/13/2007)
19 NOTICE by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis of Firm Name Change (Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 09/18/2007)
20 STIPULATION AND ORDER TO EXTEND TIME TO RESPOND TO THE DEFENDANTS' MOTION TO DISMISS by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis, Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc.. (Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 09/19/2007)
21 NOTICE of Appearance by Matthew E. Van Tine on behalf of Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis (Van Tine, Matthew) [Transferred from mad on 8/22/2008.] (Entered: 09/21/2007)
Judge Richard G. Stearns : ELECTRONIC ENDORSEMENT re 20 Stipulation, filed by Arthur Davis, Countrywide Bank, N.A., Countrywide Correspondent Lending, Luella Davis, Full Spectrum Lending, Inc., Gillian Miller, Countrywide Home Loans, Inc., Lakisha Austin "Stipulation approved UNTIL 10/15/07." (Flaherty, Elaine) [Transferred from mad on 8/22/2008.] (Entered: 10/04/2007)
22 Opposition re 16 MOTION to Dismiss Filed By Countrywide And Memorandum In Support Thereof filed by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis. (Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 10/15/2007)
ELECTRONIC NOTICE of Hearing on Motion 16 MOTION to Dismiss : Motion Hearing set for 1/18/2008 02:30 PM in Courtroom 21 before Judge Richard G. Stearns. (Johnson, Mary) [Transferred from mad on 8/22/2008.] (Entered: 10/25/2007)
23 DECLARATION OF GARY KLEIN FOR THE PURPOSE OF SUBMITTING SUPPLEMENTAL AUTHORITY DIRECTLY RELEVANT TO COUNTRYWIDE'S MOTION TO DISMISS by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis. (Attachments: # 1 Declaration Exhibits 1 − 6)(Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 11/14/2007)
24 MOTION for Leave to File a Reply Brief (Countrywide's Unopposed Motion for Leave to File a Reply Brief in Further Support of Motion to Dismiss) by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc.. (Attachments: # 1 Reply Brief in Support of the Countrywide Defendants' Motion to Dismiss)(McGarry, James) [Transferred from mad on 8/22/2008.] (Entered: 11/16/2007)

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 8 of 18

11/19/2007
11/21/2007 12/07/2007 12/21/2007 01/11/2008 01/17/2008 01/23/2008 01/23/2008
02/04/2008 02/05/2008 03/05/2008 03/06/2008 03/06/2008

Judge Richard G. Stearns : Electronic ORDER entered granting 24 Motion for Leave to File; Counsel using the Electronic Case Filing System should now file the document for which leave to file has been granted in accordance with the CM/ECF Administrative Procedures. Counsel must include − Leave to file granted on (date of order)− in the caption of the document. (York, Steve) [Transferred from mad on 8/22/2008.] (Entered: 11/21/2007)
25 REPLY to Response to Motion re 16 MOTION to Dismiss (Reply Brief In Support of the Countrywide Defendants' Motion to Dismiss) filed by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc.. (McGarry, James) [Transferred from mad on 8/22/2008.] (Entered: 11/21/2007)
26 NOTICE of Withdrawal of Appearance by Gillian R. Feiner (Feiner, Gillian) [Transferred from mad on 8/22/2008.] (Entered: 12/07/2007)
27 DECLARATION of Gary Klein for the Purpose of Submitting Supplemental Authority Directly Relevant to Countrywide's Motion to Dismiss by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4)(Roddy, John) [Transferred from mad on 8/22/2008.] (Entered: 12/21/2007)
ELECTRONIC NOTICE OF RESCHEDULING: "due to a Court conflict, the motion to dismiss hearing is re−scheduled to Thursday, 3/20/2008 at 02:30 PM in Courtroom 21 before Judge Richard G. Stearns. " Mary Johnson, Deputy Clerk.(Johnson, Mary) . [Transferred from mad on 8/22/2008.] (Entered: 01/11/2008)
28 Assented to MOTION to Continue Hearing to April 3, 2008 or April 4, 2008 by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc..(McGarry, James) [Transferred from mad on 8/22/2008.] (Entered: 01/17/2008)
29 Opposition re 28 Assented to MOTION to Continue Hearing to April 3, 2008 or April 4, 2008 filed by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis. (Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 01/23/2008)
Judge Richard G. Stearns: Electronic ORDER entered denying 28 Motion to Continue. "In light of the fact that this Court's calendar cannot accommodate an earlier hearing date other than March 20, 2008, the Court must deny defendants' request for a continuance and the hearing will remain on the calendar for March 20, 2008 at 2:30 P.M. SO ORDERED." R. G. Stearns, USDJ. (Johnson, Mary) Modified on 1/23/2008 (Johnson, Mary). [Transferred from mad on 8/22/2008.] (Entered: 01/23/2008)
30 Assented to MOTION to Continue Hearing to April 3, 2008 by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc..(McGarry, James) [Transferred from mad on 8/22/2008.] (Entered: 02/04/2008)
Judge Richard G. Stearns: Electronic ORDER entered granting 30 Motion to Continue. Hearing re−scheduled to Thursday, 4/10/2008 at 02:30 PM in Courtroom 21 before Judge Richard G. Stearns. (Johnson, Mary) [Transferred from mad on 8/22/2008.] (Entered: 02/05/2008)
31 MOTION to Withdraw as Attorney by Loans for Residential Homes Mortgage Corp..(Hagopian, Michael) [Transferred from mad on 8/22/2008.] (Entered: 03/05/2008)
32 DECLARATION of Gary Klein for the Purpose of Submitting Supplemental Authority Directly Relevant to Countrywide's Motion to Dismiss by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4)(Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 03/06/2008)
Judge Richard G. Stearns: Electronic ORDER entered granting 31 Motion to Withdraw as Attorney. (Flaherty, Elaine) [Transferred from mad on 8/22/2008.] (Entered: 03/06/2008)

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 9 of 18

03/11/2008 03/14/2008 04/08/2008 04/10/2008
04/17/2008 04/22/2008 04/23/2008 05/06/2008 05/08/2008 05/19/2008 05/20/2008 06/04/2008 06/04/2008 06/04/2008
06/04/2008

33 NOTICE of Appearance by Kevin Costello on behalf of Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis (Costello, Kevin) [Transferred from mad on 8/22/2008.] (Entered: 03/11/2008)
34 REPORT of Rule 26(f) Planning Meeting. (Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 03/14/2008)
35 Response by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc. to Plaintiffs' Submissions of "Supplemental Authority". (Attachments: # 1 Exhibit A)(McGarry, James) [Transferred from mad on 8/22/2008.] (Entered: 04/08/2008)
Clerk's Notes for proceedings held before Judge Richard G. Stearns: Motion Hearing held on 4/10/2008 re 16 MOTION to Dismiss filed by Countrywide Bank, N.A., Countrywide Correspondent Lending, Full Spectrum Lending, Inc. After a hearing, the court takes the matter under advisement. (Court Reporter: Gibbons, James)(Attorneys present: Gary E. Klein and Shennan Alexandra Kavanagh for plaintiffs; Thomas M. Hefferon and James W. McGarry for defendants) (Prussia, Kevin) [Transferred from mad on 8/22/2008.] (Entered: 04/10/2008)
36 Judge Richard G. Stearns: ORDER OF RECUSAL. case sent to draw clerk to be redrawn(Flaherty, Elaine) [Transferred from mad on 8/22/2008.] (Entered: 04/17/2008)
37 NOTICE of Withdrawal of Appearance by Kevin Costello (Costello, Kevin) [Transferred from mad on 8/22/2008.] (Entered: 04/22/2008)
ELECTRONIC NOTICE of Reassignment. Judge Joseph L. Tauro added. Judge Richard G. Stearns no longer assigned to case. (Sonnenberg, Elizabeth) [Transferred from mad on 8/22/2008.] (Entered: 04/23/2008)
38 Judge Joseph L. Tauro: ORDER entered. ORDER OF RECUSAL.(Abaid, Kimberly) [Transferred from mad on 8/22/2008.] (Entered: 05/07/2008)
ELECTRONIC NOTICE of Reassignment. Judge Nancy Gertner added. Judge Joseph L. Tauro no longer assigned to case. (Gaudet, Jennifer) [Transferred from mad on 8/22/2008.] (Entered: 05/08/2008)
39 DECLARATION Fourth Declaration of Gary Klein for the Purpose of Submitting Supplemental Authority Directly Relevant to Countrywide's Motion to Dismiss by Gillian Miller. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2)(Costello, Kevin) [Transferred from mad on 8/22/2008.] (Entered: 05/19/2008)
ELECTRONIC NOTICE of Hearing on 16 MOTION to Dismiss : Motion Hearing set for 7/9/2008 03:15 PM in Courtroom 2 before Judge Nancy Gertner. (Molloy, Maryellen) [Transferred from mad on 8/22/2008.] (Entered: 05/20/2008)
40 NOTICE by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis To Transfer Actions For Consolidated And Coordinated Pretrial Proceedings Pursuant To 28 U.S.C. § 1407 (Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 06/04/2008)
41 MOTION to Consolidate Cases Under 28 U.S.C. § 1407 To Transfer For Consolidated And Coordinated Pretrial Proceedings by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis.(Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 06/04/2008)
42 EXHIBIT re 41 MOTION to Consolidate Cases Under 28 U.S.C. § 1407 To Transfer For Consolidated And Coordinated Pretrial Proceedings − Exhibit Volume by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis. (Attachments: # 1 Exhibit A, # 2 Exhibit B − Part 1, # 3 Exhibit B − Part 2, # 4 Exhibit B − Part 3, # 5 Exhibit C − Part 1, # 6 Exhibit C − Part 2)(Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 06/04/2008)
43 MEMORANDUM in Support re 41 MOTION to Consolidate Cases Under 28 U.S.C. § 1407 To Transfer For Consolidated And Coordinated Pretrial Proceedings filed by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis. (Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 06/04/2008)

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 10 of 18

06/04/2008 06/04/2008 06/04/2008
06/18/2008 06/18/2008 06/18/2008 06/18/2008 06/18/2008
06/19/2008 06/19/2008 06/23/2008 06/24/2008 06/27/2008

44 NOTICE of Appearance by Gary E. Klein on behalf of Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis (Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 06/04/2008)
45 NOTICE by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis Reasons Why Oral Argument Should Be Heard (Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 06/04/2008)
46 CERTIFICATE OF SERVICE by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis re 42 Exhibit, 44 Notice of Appearance, 40 Notice (Other), 43 Memorandum in Support of Motion, 45 Notice (Other), 41 MOTION to Consolidate Cases Under 28 U.S.C. § 1407 To Transfer For Consolidated And Coordinated Pretrial Proceedings. (Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 06/04/2008)
47 NOTICE of Appearance by Tricia Jean Bloomer on behalf of Courtroom View Network (Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 06/18/2008)
48 MOTION for Leave to Appear Pro Hac Vice for admission of Jonathan Sherman Filing fee $ 50, receipt number 01010000000002007151. by Courtroom View Network. (Attachments: # 1 Certificate of Jonathan Sherman)(Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 06/18/2008)
49 MOTION to Intervene Pursuant to Fed. R. Civ. P. 24 and to Provide Audio−Visual Coverage of Argument Via Secure Internet Feed by Courtroom View Network. (Attachments: # 1 Verified Intervention Complaint for Relief Pursuant to Local Rule 83.3)(Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 06/18/2008)
50 MEMORANDUM in Support re 49 MOTION to Intervene Pursuant to Fed. R. Civ. P. 24 and to Provide Audio−Visual Coverage of Argument Via Secure Internet Feed filed by Courtroom View Network. (Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 06/18/2008)
51 DECLARATION re 49 MOTION to Intervene Pursuant to Fed. R. Civ. P. 24 and to Provide Audio−Visual Coverage of Argument Via Secure Internet Feed, 50 Memorandum in Support of Motion by Courtroom View Network. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2 Part A, # 3 Exhibit 2 Part B, # 4 Exhibit 3, # 5 Exhibits 4−7, # 6 Exhibit 8, # 7 Exhibits 9−20, # 8 Exhibits 21−22, # 9 Exhibit 23 Part A, # 10 Exhibit 23 Part B, # 11 Exhibit 23 Part C, # 12 Exhibit 23 Part D)(Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 06/18/2008)
52 MOTION for Leave to File Amended Memorandum of Law in Support of Motion to Intervene Pursuant to Fed. R. Civ. P. 24 and to Provide Audio−Visual Coverage of Argument Via Secure Internet Feed by Courtroom View Network.(Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 06/19/2008)
53 Amended MEMORANDUM in Support re 49 MOTION to Intervene Pursuant to Fed. R. Civ. P. 24 and to Provide Audio−Visual Coverage of Argument Via Secure Internet Feed (Correcting Docket Entry #50) filed by Courtroom View Network. (Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 06/19/2008)
54 MOTION to Stay July 9, 2008 Hearing on Countrywide Defendants' Motion to Dismiss by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc.. (Attachments: # 1 Exhibit A)(McGarry, James) [Transferred from mad on 8/22/2008.] (Entered: 06/23/2008)
55 Letter/request (non−motion) from MDL Panel to Judge Gertner re transfer of case to MDL panel. (Gaudet, Jennifer) [Transferred from mad on 8/22/2008.] (Entered: 06/24/2008)
56 RESPONSE to Motion re 54 MOTION to Stay July 9, 2008 Hearing on Countrywide Defendants' Motion to Dismiss filed by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis. (Klein, Gary) [Transferred from mad on 8/22/2008.] (Entered: 06/27/2008)

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 11 of 18

06/30/2008 07/02/2008 07/08/2008
07/09/2008 07/14/2008 07/15/2008

Judge Nancy Gertner: Electronic ORDER entered denying 54 Motion to Stay July 9, 2008 Hearing on Countrywide Defendants' Motion to Dismiss by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc. (Gaudet, Jennifer) [Transferred from mad on 8/22/2008.] (Entered: 06/30/2008)
57 Opposition re 49 MOTION to Intervene Pursuant to Fed. R. Civ. P. 24 and to Provide Audio−Visual Coverage of Argument Via Secure Internet Feed filed by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C)(McGarry, James) [Transferred from mad on 8/22/2008.] (Entered: 07/02/2008)
Judge Nancy Gertner: Electronic ORDER entered reserving ruling on 49 Motion to Intervene Pursuant to Fed. R. Civ. P. 24 and to Provide Audio−Visual Coverage of Argument Via Secure Internet Feed by Courtroom View Network. "Courtroom View Network ("CVN") moves to intervene pursuant to Fed. R. Civ. P. 24 and to provide audio−visual coverage of oral argument via secure internet feed. The proceeding in which CVN seeks to intervene is a putative nationwide class action suit involving allegations of racially discriminatory mortgage lending practices. The purpose of the intervention is to permit CVN to "narrowcast" the proceedings over the Internet. The term narrowcast refers to the practice of making content or information available only to those individuals who have subscribed to the service, rather than the general public. Defendants oppose the narrowcasting and the intervention. It should be noted that similar class actions have been filed in two other venues and, further, that the plaintiffs have filed a motion under 28 U.S.C. § 1407 to transfer the pending cases to a single district for pretrial proceedings. That the matter will shortly be considered by the Judicial Panel on Multidistrict litigation. The proceeding that triggered this motion to intervene is the hearing on defendants' motion to dismiss scheduled for July 9, 2008. The hearing involves only legal argument; no witnesses will appear; no jurors will be impaneled. While CVN's motion seeks to have the content available to those who have subscribed to the service, it is clear that the Court could issue a narrower order, i.e. one limiting distribution of the content to the parties to this case and their counsel, or the parties in the relevant parallel proceedings across the country. The Court will defer ruling on this motion for several reasons: The motion was filed on June 18, 2008. The defendants opposition papers were received on July 2, 2008. Both sides have raised important questions: How should the Court construe the language of Local Rule 83.3 which permits broadcast by "order of the court?" Does Local Rule 83.3 suggest that an individual judge may order broadcasting in an individual case, or does such a decision require a collective decision by all of the judges of this Court? If an individual judge is authorized to make such an order, what criterion should inform that decision? For example, is streaming video to counsel comparable to streaming transcript which has been permitted in some cases? Moreover, if these cases are consolidated under § 1407, to what degree would such a service save costs to all of the parties? Is intervention appropriate under Rule 24, in any case? In light of the multiple questions raised and the relatively short amount of time the parties have been given to address them, the Court will defer ruling on CVNs motion to allow for full consideration of all the implications of such an intervention." (Gaudet, Jennifer) [Transferred from mad on 8/22/2008.] (Entered: 07/08/2008)
Electronic Clerk's Notes for proceedings held before Judge Nancy Gertner: Motion Hearing held on 7/9/2008 re 16 MOTION to Dismiss filed by Countrywide Bank, N.A.,Countrywide Correspondent Lending, Full Spectrum Lending, Inc. Oral argument held, all matters taken under advisement. (Court Reporter: Helena Kline.)(Attorneys present: Atty Klein, Kavanagh, Hefferon, McGarry) (Molloy, Maryellen) [Transferred from mad on 8/22/2008.] (Entered: 07/09/2008)
58 Withdrawal of motion: 49 MOTION to Intervene Pursuant to Fed. R. Civ. P. 24 and to Provide Audio−Visual Coverage of Argument Via Secure Internet Feed filed by Courtroom View Network.. (Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 07/14/2008)
Judge Nancy Gertner: Electronic ORDER entered withdrawing 49 Motion to Intervene Pursuant to Fed. R. Civ. P. 24 and to Provide Audio−Visual Coverage of

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 12 of 18

07/18/2008 07/23/2008 07/23/2008 07/23/2008
07/23/2008 07/23/2008 07/24/2008 07/29/2008
07/29/2008 07/30/2008 07/30/2008 08/07/2008

Argument Via Secure Internet Feed filed by Courtroom View Network. (Gaudet, Jennifer) [Transferred from mad on 8/22/2008.] (Entered: 07/15/2008)
59 CORPORATE DISCLOSURE STATEMENT by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc.. (McGarry, James) [Transferred from mad on 8/22/2008.] (Entered: 07/18/2008)
60 Amended MOTION to Intervene Pursuant to Fed. R. Civ. P. 24 For the Limited Purpose of Applying to Provide Audio Visual Coverage of Proceedings Via Secure Internet Feed by Courtroom View Network. (Attachments: # 1 Verified Intervention Complaint for Relief Pursuant to Local Rule 83.3)(Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 07/23/2008)
61 MEMORANDUM in Support re 60 Amended MOTION to Intervene Pursuant to Fed. R. Civ. P. 24 For the Limited Purpose of Applying to Provide Audio Visual Coverage of Proceedings Via Secure Internet Feed filed by Courtroom View Network. (Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 07/23/2008)
62 DECLARATION re 60 Amended MOTION to Intervene Pursuant to Fed. R. Civ. P. 24 For the Limited Purpose of Applying to Provide Audio Visual Coverage of Proceedings Via Secure Internet Feed by Courtroom View Network. (Attachments: # 1 Exhibit A, # 2 Exhibit 1, # 3 Exhibit 2 Part A, # 4 Exhibit 2 Part B, # 5 Exhibit 3, # 6 Exhibit 4−7, # 7 Exhibit 8, # 8 Exhibit 9−20, # 9 Exhibit 21−22, # 10 Exhibit 23 Part A, # 11 Exhibit 23 Part B, # 12 Exhibit 23 Part C, # 13 Exhibit 23 Part D, # 14 Exhibit 24)(Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 07/23/2008)
63 DECLARATION re 60 Amended MOTION to Intervene Pursuant to Fed. R. Civ. P. 24 For the Limited Purpose of Applying to Provide Audio Visual Coverage of Proceedings Via Secure Internet Feed by Courtroom View Network. (Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 07/23/2008)
64 Joint MOTION for Extension of Time to File Response/Reply for 14 Days from Decision by JPML Re Plaintiffs' Motion to Transfer for Consolidated and Coordinated Pretrial Proceedings by Courtroom View Network.(Bloomer, Tricia) [Transferred from mad on 8/22/2008.] (Entered: 07/23/2008)
Judge Nancy Gertner: Electronic ORDER entered granting 64 Joint Motion for Extension of Time to File Response/Reply for 14 Days from Decision by JPML Re Plaintiffs' Motion to Transfer for Consolidated and Coordinated Pretrial Proceedings. (Gaudet, Jennifer) [Transferred from mad on 8/22/2008.] (Entered: 07/24/2008)
65 Transcript of Motion Hearing held on July 9, 2008, before Judge Gertner. Court Reporter: Helana E. Kline at 508/525−7769. The Transcript may be purchased through the Court Reporter, viewed at the public terminal, or viewed through PACER after it is released. Redaction Request due 8/18/2008. Redacted Transcript Deadline set for 8/26/2008. Release of Transcript Restriction set for 10/24/2008. (Scalfani, Deborah) [Transferred from mad on 8/22/2008.] (Entered: 07/29/2008)
66 NOTICE is hereby given that an official transcript of a proceeding has been filed by the court reporter in the above−captioned matter. Counsel are referred to the Court's Transcript Redaction Policy, a copy of which is attached to this entry.. (Scalfani, Deborah) [Transferred from mad on 8/22/2008.] (Entered: 07/29/2008)
Judge Nancy Gertner: Electronic ORDER entered denying 16 Motion to Dismiss. (Gaudet, Jennifer) [Transferred from mad on 8/22/2008.] (Entered: 07/31/2008)
67 Judge Nancy Gertner: MEMORANDUM AND ORDER Re: Motion to Dismiss.(Gaudet, Jennifer) [Transferred from mad on 8/22/2008.] (Entered: 07/31/2008)
68 Informational E−mailed Copy of MDL Conditional Transfer Order in MDL Case 1974 received from the mdl panel.(Jones, Sherry) [Transferred from mad on 8/22/2008.] (Entered: 08/07/2008)

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 13 of 18

08/21/2008 08/22/2008 08/22/2008 08/22/2008 08/22/2008 08/22/2008 08/27/2008
09/09/2008 09/15/2008 09/19/2008
09/19/2008 09/19/2008 09/22/2008
09/24/2008

69 Copy of MDL Conditional Transfer Order number 1 in MDL Case 1974 received from MDL Panel. (Hassett, Kathy) [Transferred from mad on 8/22/2008.] (Entered: 08/21/2008)
Case transferred to the Western District of Kentucky pursuant to Conditional Transfer Order entered by the MDL Panel on 8/7/08. Transmittal of the record done electronically. (Gaudet, Jennifer) [Transferred from mad on 8/22/2008.] (Entered: 08/22/2008)
70 Case transferred in from District of Massachusetts; Case Number 1:07−cv−11275. Original file with documents numbered 1 − 69, electronic certified copy of transfer order and docket sheet received. (MLG) (Entered: 08/22/2008)
71 Case Assignment (Random Selection): Case Assigned to Chief Judge John G. Heyburn II. (MLG) (Entered: 08/22/2008)
Remark: Case Assignment NEF has been electronically sent to all counsel, and mailed to Thomas Hefferon advising of case transfer information (MLG) (Entered: 08/22/2008)
Cases associated to 3:08−MD−1974 (MLG) (Entered: 08/22/2008)
72 ORDER signed by Chief Judge John G. Heyburn, II on 8/27/2008. Telephonic Status Conference is set for 9/22/2008 at 02:00 PM before Chief Judge John G. Heyburn II. Conference Statement due by 9/15/2008. Parties to comply with remainder of Order as set forth. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH−DW cc: Counsel (RLK) (Entered: 08/27/2008)
73 ANSWER to 1 Complaint by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending and Full Spectrum Lending, Inc. (Attachments: # 1 letter) (NM) (Entered: 09/11/2008)
74 NOTICE of Withdrawal by Courtroom View Network re 60 Amended MOTION to Intervene Pursuant to Fed. R. Civ. P. 24 For the Limited Purpose of Applying to Provide Audio Visual Coverage of Proceedings Via Secure Internet Feed (Bloomer, Tricia) (Entered: 09/15/2008)
75 NOTICE of Appearance by Christopher Tyson Gorman and Byron E. Leet on behalf of Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc., Countrywide Financial Corporation, Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Full Spectrum Lending, Inc., Countrywide Financial Corporation, Countrywide Home Loans Inc, Countrywide Home Loans, Inc., Countrywide Bank, N.A., Countrywide Financial Corporation, Countrywide Bank, A Division of Treasury Bank, N.A., Countrywide Home Loans Inc, Countrywide Mortgage Ventures, LLC Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH (Gorman, Christopher) Modified on 9/22/2008: add atty (RLK). (Entered: 09/19/2008)
76 ERROR: Duplicate entry. See 75 . Modified on 9/22/2008 (RLK). (Entered: 09/19/2008)
77 ERROR: Duplicate entry. See 75 . Modified on 9/22/2008 (RLK). (Entered: 09/19/2008)
78 NOTICE OF DOCKET CORRECTION Re: PDF re: 75 Notice of Appearance. Due to computer problems on Friday 9/19/2008, ECF notification of 75 Notice of Appearance of Byron E. Leet and C. Tyson Gorman as co−counsel for the Countrywide Defendants was not sent to parties. Document is attached to this entry for notification purposes. (RLK) (Entered: 09/22/2008)
79 PROTECTIVE ORDER REGARDING CONFIDENTIAL TRADE SECRET AND PRIVATE CONSUMER INFORMATION signed by Chief Judge John G. Heyburn, II on 9/23/2008. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGHcc: Counsel (RLK) (Entered: 09/24/2008)

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 14 of 18

10/09/2008 10/09/2008
12/03/2008 12/18/2008 01/20/2009
01/20/2009 02/12/2009 02/20/2009 03/19/2009

80 PRACTICE &PROCEDURE ORDER signed by Chief Judge John G. Heyburn, II on 10/8/2008. Attorneys Andrew S. Friedman, Gary Klein, and Ron R. Parry are designated to act on an interim basis on behalf of the Plaintiffs and the Class in this action and all subsequent related and consolidated actions. Clerk of Court and Parties to comply with remainder of Order as set forth. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGHcc: Counsel (RLK) (Entered: 10/09/2008)
81 CASE MANAGEMENT ORDER No. 1 signed by Chief Judge John G. Heyburn, II on 10/8/2008. Telephonic Status Conference was held on 9/22/2008. Non−Expert Discovery for Class Certification Issues due by 5/31/2009. Opening Expert Witness Disclosures on Class Issues due by 6/30/2009. Rebuttal Expert Witness Disclosure on Class Issues due by 8/15/2009. Expert Discovery Cut−Off for Class Issues due by 9/15/2009. Motion for Class Certification due by 10/15/2009, with Response due by 11/30/2009, and Reply due by 1/4/2010. Griffin v. Countrywide Bank, et al (3:08CV−482−H) shall be made a member case in the Master Docket (3:08md−1974). Further deadlines will be established after resolution of the class certification issue. Status Conference is set for 12/15/2008 at 2:00 PM before Chief Judge John G. Heyburn II. Parties to comply with remainder of Order as set forth. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc: Counsel (RLK) (Entered: 10/09/2008)
82 NOTICE of Appearance by Guy A. Hanson on behalf of Plaintiffs. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH (RLK) (Entered: 12/05/2008)
83 ORDER FROM STATUS CONFERENCE signed by Judge John G. Heyburn, II on 12/17/2008. Status Conference was held on 12/15/2008. Further Status Conference is set for 3/5/2009 at 02:00 PM before Judge John G. Heyburn II. Counsel shall appear in person. (Court Reporter Dena Legg.) Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc:counsel (RLK) (Entered: 12/18/2008)
84 NOTICE OF FILING OF OFFICIAL TRANSCRIPT of Status Conference Proceedings held on 12/15/2008, before Judge John G. Heyburn II. Court Reporter Dena Legg, Telephone number (502) 625−3778. Transcript may be viewed at the court public terminal or purchased through the Court Reporter before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 2/10/2009. Redacted Transcript Deadline set for 2/20/2009. Release of Transcript Restriction set for 4/20/2009. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH (RLK) (Entered: 01/20/2009)
85 Notice of Filing Official Transcript re Transcript of Status Conference held on 12/15/2008, before Judge John G. Heyburn II re DN 16 in 3:08−md−01974−JGH, DN 67 in 3:08−cv−00450−JGH, DN 43 in 3:08−cv−00454−JGH, DN 84 in 3:08−cv−00448−JGH, and DN 16 in 3:08−cv−00482−JGH. Please review the complete Notice for instructions. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH (RLK) (Entered: 01/20/2009)
86 ORDER (eboc) by Judge John G. Heyburn, II on 2/11/2009. Status Conference currently set for 3/5/2009 at 2:00 PM is reset for a Status Conference on 4/7/2009 at 02:00 PM before Judge John G. Heyburn II. Counsel shall appear in person. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc: Counsel (RLK) (Entered: 02/12/2009)
87 NOTICE of Request to Receive No Further Notices by Courtroom View Network. (Docketed by Clerk. Was docketed by Counsel only in the MDL master case and not in the related case.) (RLK) (Entered: 02/23/2009)
88 SEALED MOTION (NOTICE: The original paper document will be shredded 60 days after filed date.) Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH,

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 15 of 18

03/30/2009 04/07/2009
04/09/2009
04/16/2009 04/21/2009 04/23/2009 04/30/2009

3:08−cv−00482−JGH (RLK) (Entered: 03/20/2009)
89 ORDER (eboc) by Judge John G. Heyburn, II on 3/30/2009. Status Conference currently set for 4/7/2009 is reset for 4/27/2009 at 02:00 PM before Judge John G. Heyburn II. Counsel shall appear in person. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc: Counsel (RLK) (Entered: 03/30/2009)
90 Unopposed MOTION for Extension of Time to File Response/Reply as to (19 in 3:08−cv−00482−JGH) SEALED MOTION NOTICE: The original paper document will be shredded 60 days after filed date. by Defendants Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Financial Corporation, Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Financial Corporation, Countrywide Home Loans, Inc., Countrywide Home Loans, Inc., Countrywide Bank, N.A., Countrywide Financial Corporation, Countrywide Home Loans, Inc. Responses due by 4/17/2009 (Attachments: # 1 Proposed Order) Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH (Gorman, Christopher) (Entered: 04/07/2009)
91 ORDER signed by Judge John G. Heyburn, II on 4/8/2009, GRANTING (22) Motion for Extension of Time to File Response/Reply in case 3:08−md−01974−JGH; (90) Motion for Extension of Time to File Response/Reply in case 3:08−cv−00448−JGH; (72) Motion for Extension of Time to File Response/Reply in case 3:08−cv−00450−JGH; (48) Motion for Extension of Time to File Response/Reply in case 3:08−cv−00454−JGH; and (21) Motion for Extension of Time to File Response/Reply in case 3:08−cv−00482−JGH. Countrywide to file Response to the Motion to Compel by 4/16/2009. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc: Counsel (RLK) (Entered: 04/09/2009)
92 SEALED RESPONSE to Motion re (19 in 3:08−cv−00482−JGH, 20 in 3:08−md−01974−JGH, 70 in 3:08−cv−00450−JGH, 46 in 3:08−cv−00454−JGH, 88 in 3:08−cv−00448−JGH) NOTICE: The original paper document will be shredded 60 days after filed date.by Countrywide Bank, N.A., Countrywide Home Loans, Inc., Countrywide Financial Corporation. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH. Replies due by 4/30/2009. (TLB) (Entered: 04/17/2009)
93 ORDER signed by Judge John G. Heyburn, II on 4/20/2009. Request to continue the Status Conference set for 4/27/2009 at 2:00 PM is DENIED. The Status Conference shall remain on the Court's docket. Any replies to the pending Motion to Compel shall be advanced and filed on or before 4/23/2009. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc:counsel (RLK) (Entered: 04/21/2009)
94 SEALED REPLY (NOTICE: The original paper document will be shredded 60 days after filed date.) Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH (RLK) (Entered: 04/23/2009)
95 ORDER FROM STATUS CONFERENCE signed by Judge John G. Heyburn, II on 4/29/2009. Status Conference was held on 4/27/2009 to discuss the pending Motion to Compel. Motion to Compel is SUSTAINED. Motion for Leave to File Excess Pages is also SUSTAINED. Plaintiff to provide Defendants with a list of requested points, then Defendants to produce the data by 6/30/2009. All rate sheets shall be produced to Plaintiffs by 6/30/2009. Following deadlines amended: Non−Expert Discovery for Class due by 9/30/2009; Opening Expert Witness on Class Issues due by 10/30/2009; Rebuttal Expert Witness on Class Issues due by 12/15/2009; Expert Discovery for Class due by 1/15/2010; and Motion for Class Certification due by 2/15/2010, with Responses due by 3/30/2010, and Replies due by 5/4/2010. Further Status Conference is set for 7/27/2009 at 02:00 PM before

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 16 of 18

05/11/2009
05/11/2009 07/14/2009 07/28/2009 09/30/2009 10/02/2009 10/05/2009 10/07/2009

Judge John G. Heyburn II. Parties to comply with remainder of Order as set forth. (Court Reporter Alan W. Wernecke.) Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc: Counsel (RLK) (Entered: 04/30/2009)
96 NOTICE OF FILING OF OFFICIAL TRANSCRIPT of Status Conference held on 4/27/2009, before Judge John G. Heyburn II. (Court Reporter Alan W. Wernecke, Telephone number (502) 625−3779.) Transcript may be viewed at the court public terminal or purchased through the Court Reporter before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 6/1/2009. Redacted Transcript Deadline set for 6/11/2009. Release of Transcript Restriction set for 8/10/2009. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH (RLK) (Entered: 05/11/2009)
97 Notice of Filing Official Transcript re Status Conference held on 4/27/2009. (78 in 3:08−cv−00450−JGH, 96 in 3:08−cv−00448−JGH, 27 in 3:08−cv−00482−JGH, 29 in 3:08−md−01974−JGH, 54 in 3:08−cv−00454−JGH) Please review the complete Notice for instructions. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH (RLK) (Entered: 05/11/2009)
98 ORDER signed by Judge John G. Heyburn, II on 7/14/2009. Court concludes that documents provided by Countrywide Financial Corp. for review are discoverable. Countrywide to produce the documents bearing production numbers CW−CA 000001 through CW−CA 001020. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc:counsel (RLK) (Entered: 07/14/2009)
99 ORDER FROM TELEPHONIC STATUS CONFERENCE signed by Judge John G. Heyburn, II on 7/28/2009. Status Conference was held on 7/27/2009. Further Telephonic Status Conference is set for 10/5/2009 at 02:00 PM before Judge John G. Heyburn II. Parties to comply with remainder of Order as set forth. (Court Reporter Dena Legg.) Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc: Counsel (RLK) (Entered: 07/28/2009)
100 MOTION for Extension of Time to Complete Discovery by Plaintiffs Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis. Responses due by 10/12/2009. (Attachments: # 1 Proposed Order) (DOCKETED BY CLERK −− Pleading docketed by Counsel in Master File. Should have also been docketed in all cases related to MDL.) (RLK) (Entered: 10/01/2009)
101 RESPONSE to Motion re 100 MOTION for Extension of Time to Complete Discovery filed by Countrywide Home Loans, Inc.. Replies due by 10/16/2009. (Pleading docketed by Counsel in Master File. Should have also been docketed in all cases related to MDL.) (RLK) (Entered: 10/06/2009)
Proceedings held before Judge John G. Heyburn, II: Telephonic Status Conference was held on 10/5/2009. (Court Reporter Alan Wernecke.) Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH (RLK) (Entered: 10/07/2009)
102 ORDER FROM TELEPHONIC STATUS CONFERENCE signed by Judge John G. Heyburn II on 10/7/2009. Status Conference was held on 10/5/2009. Motion to Extend Discovery (34) in case 3:08−md−01974−JGH, (100) in case 3:08−cv−00448−JGH, (82) in case 3:08−cv−00450−JGH, (58) in case 3:08−cv−00454−JGH, and (31) in case 3:08−cv−00482−JGH is SUSTAINED. Non Expert Discovery for Class due by 11/30/2009. Opening Expert Witness on Class Issues due by 1/28/2010. Rebuttal Expert Witness on Class Issues due by 3/29/2010. Expert Discovery for Class due by 5/28/2010. Motion for Class Certification due by 7/27/2010, with Responses due by 9/25/2010, and Replies due by 11/19/2010. Further Telephonic Status Conference is set for 12/18/2009 at 2:00 PM. Co−lead class counsel for Plaintiff to arrange the conference call. Parties to comply with remainder of Order as set forth. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH cc: Counsel (RLK) (Entered:

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 17 of 18

12/16/2009 12/29/2009 12/29/2009 03/10/2010 04/29/2010
06/22/2010 06/29/2010 06/29/2010

10/07/2009)
103 ORDER (EBOC) by Judge John G. Heyburn, II on 12/16/2009.Telephonic Status Conference scheduled for 12/18/2009 is RESET for 12/21/2009 03:00 PM before Judge John G. Heyburn II. Co−lead counsel for the plaintiff shall arrange the conference call. Parties to comply with remainder of Order. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc: Counsel (AEP) (Entered: 12/16/2009)
104 ORDER MODIFYING DEADLINES signed by Judge John G. Heyburn, II on 12/29/2009. The deadlines are amended as follows: Non−Expert Discovery for Class due by 3/1/2010. Opening Expert Witness On Class Issues due by 4/28/2010. Rebuttal Expert Witness On Class Issues due by 6/29/2010. Expert Discovery for Class due by 8/27/2010. Motion for Class Certification due by 10/27/2010, with Responses due by 12/22/2010 and Replies due by 2/15/2011. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc: Counsel (AEP) (Entered: 12/29/2009)
105 Order signed by Judge John G. Heyburn, II re: Telephonic Status Conference held on 12/29/2009. Further Telephonic Status Conference set for 3/8/2010 03:00 PM before Judge John G. Heyburn II. Parties to comply with remainder of Order. (Court Reporter Alan Wernecke.) Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH cc: Counsel (AEP) (Entered: 12/29/2009)
106 ORDER FROM TELEPHONIC STATUS CONFERENCE signed by Judge John G. Heyburn, II: Telephonic Status Conference held on 3/8/2010.A Further Telephonic Status Conference is set for 4/23/2010 02:00 PM before Judge John G. Heyburn II. Co−lead class counsel for the plaintiff shall arrange the conference call. Parties to notify the deputy clerk of the individuals who will participate no later than 4/19/2010. (Court Reporter Alan Wernecke) Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc: Counsel (AEP) (Entered: 03/10/2010)
107 ORDER FROM TELEPHONIC STATUS CONFERENCE signed by Judge John G. Heyburn, II re: Telephonic Status Conference held on 4/29/2010. The oral motion to extend discovery is SUSTAINED. The deadlines are amended as follows: Opening Expert Witness on Class Issues due by 6/28/2010; Rebuttal Expert Witness on Class Issues due by 8/16/2010; Expert Discovery for Class due by 9/27/2010; Motion for Class Certification due by 11/30/2010; Responses to Motions for Class due by 1/24/2011; Reply to Motion for Class due by 3/15/2011. A Further Telephonic Status Conference is set for 6/25/2010 02:00 PM before Judge John G. Heyburn II. Co−lead counsel for the plaintiff shall arrange the conference call. Parties to notify the deputy clerk of the individuals who will participate no later than 6/22/2010. (Court Reporter Alan Wernecke.) Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc: Counsel (AEP) (Entered: 04/29/2010)
108 Joint STATUS REPORT and MOTION to Modify Deadlines) (Attachments: # 1 Proposed Order) by Lakisha Austin, Countrywide Bank, N.A., Countrywide Home Loans, Inc., Arthur Davis, Luella Davis, Gillian Miller. (McGarry, James) Modified on 6/23/2010: changed event from status report to motion to satisfy motion report (AEP). (Entered: 06/22/2010)
109 Proceedings held before Judge John G. Heyburn, II: Status Conference held on 6/29/2010. (Court Reporter Alan Wernecke) Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGH (AEP) (Entered: 06/29/2010)
110 ORDER FROM TELEPHONIC STATUS CONFERENCE signed by Judge John G. Heyburn, II on 6/29/2010 re the Status Conference held on 6/25/2010. 46 Motion to Extend Discovery is SUSTAINED. The following deadlines are amended as follows: Opening Expert Witness on Class Issues due by 9/28/2010;

Case: 3:08-cv-448 As of: 09/20/2012 07:04 PM EDT 18 of 18

11/09/2010 12/06/2011
03/08/2012

Rebuttal Expert Witness on Class Issues due by 11/16/2010; Expert Discovery for Class due by 12/31/2010; Motion for Class Certification due by 2/28/2011; Responses to Motion for Class due by 4/15/2011; Reply to Motion for Class due by 5/31/2011. A Further Telephonic Status Conference is set for 11/22/2010 at 2:00 PM before Judge John G. Heyburn II. Co−lead class counsel for the plaintiff shall arrange the conference call. Each party shall notify the deputy clerk of the individuals who will participate no later than 11/17/2010. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc: Counsel (AEP) (Entered: 06/29/2010)
111 Unopposed MOTION to Modify Interim Deadlines by Defendants Countrywide Bank, N.A., Countrywide Home Loans, Inc. Responses due by 12/3/2010 (Attachments: # 1 Proposed Order) (McGarry, James) (Entered: 11/09/2010)
112 Order for proceedings held before Judge John G. Heyburn, II: Telephone Conference held on 11/28/2011, Case stayed. Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH, 3:08−cv−00450−JGH, 3:08−cv−00454−JGH, 3:08−cv−00482−JGHcc:counsel (KJA) (Entered: 12/06/2011)
113 USDA Order re (90 in 3:08−md−01974−JGH) Notice the petition for permission to appeal is GRANTED. The motions to file the petition, appendix and response under seal are GRANTED Associated Cases: 3:08−md−01974−JGH, 3:08−cv−00448−JGH (DAK) (Entered: 03/08/2012)

 
 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE MASTER FILE NO. 08-MD-1974
MDL No. 1974
In re: COUNTRYWIDE FINANCIAL MORTGAGE LENDING PRACTICES LITIGATION
MEMORANDUM OPINION AND ORDER Before the Court is a Motion for Class Certification filed by plaintiffs Gillian Miller, Lakisha Austin, Arthur and Luella Davis, Gabriel Garcia, Sonia Jenkins, Anton Griffin, German Pena, Bernice Smith, Guadalupe Marchan, and Rosendo Quinones (“Plaintiffs”). Defendant Countrywide Bank, N.A.1 (“Countrywide”) opposes the motion, and both parties have filed supplemental briefs discussing the impact of Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011) on the question of class certification. After reviewing all of the submissions and for the reasons set forth in the opinion below, the Court will deny Plaintiff’s Motion for Class Certification.
I. Plaintiffs are African-American or Hispanic consumers who obtained one or more home mortgage loans from Countrywide between 2005 and 2007. Pls.’ Class Cert. Report ¶ 72. They allege Countrywide discriminated against them by charging higher rates and other costs on home
1 Also listed as defendants are Countrywide Home Loans, Inc., Countrywide Correspondent Lending, Countrywide Financial Corp., Full Spectrum Lending, Inc., Loans for Residential Homes Mortgage Corp., and Summit Mortgage, LLC. Bank of America acquired Countrywide’s home lending and mortgage servicing businesses on July 1, 2008.

mortgage loans than loans provided to similarly-situated non-minority customers. According to Plaintiffs, a facially discriminatory policy did not produce this unfair treatment. Instead, their theory is that Countrywide’s race-neutral policy of allowing its loan officers and third-party mortgage brokers to exercise circumscribed discretion to increase the cost of any given mortgage loan produced an unlawful disparate impact on minority borrowers. They seek to certify a class defined as “[a]ll African-American and Hispanic borrowers to whom Countrywide originated a residential-secured loan, including correspondent loans, between January 1, 2002 and the present.” Pls.’ Mot. Class Certification 18.
Countrywide was one of the nation’s largest mortgage lenders during the class period. Countrywide originated loans through three primary channels: retail, wholesale, and correspondent. In the retail channel, Countrywide employees (“loan officers”) originated mortgage loans through brick-and-mortar branch offices and call centers. In the wholesale channel, third-party brokers originated mortgage loans through Countrywide’s Wholesale Lending Division. The broker would collect information from the borrower and submit it to Countrywide for underwriting and approval, then negotiate any additional broker fees with the borrower. Countrywide did not control how brokers charged such fees, except to place a cap on the total amount of fees it would allow on a Countrywide loan. Finally, Countrywide also purchased completed loans through its correspondent lending channel. Countrywide conditioned purchase of these loans on conformity with its underwriting guidelines.
Countrywide’s loan pricing contained both objective and subjective components. As Plaintiffs describe it, the objective component used a number of risk-based underwriting criteria–for example, credit score, income, property value, and loan amount, among others–to
2

establish a “par rate” interest rate. Loan officers and mortgage brokers then had discretion to
adjust this par rate and add fees, subject to a cap. Increasing the interest rate and fees on a loan
also increased the compensation to the broker or loan officer. Likewise, correspondent lenders
had discretion to add charges and increase interest rates and Countrywide paid more for higher-
rate loans. The total cost of the loan to the borrower, expressed as an Annual Percentage Rate
(“APR”), was a combination of the par rate established through a standardized underwriting
process and the discretionary fee and rate mark-ups negotiated between the borrower and loan
officer or broker.
Plaintiffs rely upon the report of Dr. Ian Ayres, a legal scholar and economist well-versed
in statistical analysis, in support of their disparate impact claim. Based on data obtained from
Countrywide on nearly three million loans made between July 2005 and June 2007, Dr. Ayres
concludes that the data “show[] that minorities paid more for Countrywide mortgage loans than
whites with similar risk-characteristics.” Pls.’ Class Cert. Report ¶ 10. More specifically, his
regression analysis finds that African-Americans and Hispanics paid 11.64 and 12.50 basis points2 more in APR, respectively, than similarly-situated whites. The analysis controlled for a host of risk-based factors.3 Dr. Ayres notes that Countrywide regularly performed similar tests
2 A “basis point” is equal to one hundredth of a percentage point and is used to denote differences in interest rates.
3 Dr. Ayers’ preferred model to test for disparate impact controlled for the same factors as other models–including month of interest rate lock, lien status (subordinate v. first), and credit score–as well as loan amount, loan type (government, conventional, HELOC, unknown), loan product category (including bond product and the interaction of loan term, initial fixed-rate period for ARMs, interest-only, pay option, and balloon payment presence), LTV bin (for first lien loans), CLTV bin (for subordinate lien loans), total debt-to-income ratio bin, cashout refinance, property type interacted with occupancy type, self-employed borrower or co-borrower, lender-paid mortgage insurance, escrow waiver, presence of a co-applicant, prepayment penalty presence and length, documentation type, credit report items (bankruptcy, foreclosure, obligation, delinquency, and lawsuit), concurrent funding/close, state, and metropolitan area (MSA). Pls.’ Class Cert. Report Table 5.
3

to measure potential disparities in loan costs between minority and white borrowers, using similar regression techniques. These tests also showed African-Americans and Hispanics received higher-cost loans than white borrowers with similar risk characteristics. Pls.’ Class Cert. Report ¶ 70.
Plaintiffs challenge the subjective component of Countrywide’s loan pricing, which they term the “Discretionary Pricing Policy.” They do not object to the underwriting process that produces the par rates. Plaintiffs allege that giving loan officers and brokers pricing discretion, while tying their compensation to higher rates and fees, caused minority borrowers to pay higher APRs on mortgage loans than similarly-situated non-minority borrowers. Based on this alleged disparate impact, Plaintiffs claim that Countrywide has violated the anti-discrimination provisions of the Equal Credit Opportunity Act, 15 U.S.C. § 1691, the Fair Housing Act, 42 U.S.C. § 3601, and the Civil Rights Act, 42 U.S.C. §§ 1981-1982.
II. Before certifying a putative class, the Court must perform a “rigorous analysis” to ensure the class first meets the requirements of Rule 23(a) and then one of the Rule 23(b) subsections. Reeb v. Ohio Dep’t of Rehab.& Corr., 435 F.3d 639, 644 (6th Cir. 2006). In light of the Supreme Court’s Wal-Mart decision, Plaintiffs seek only injunctive relief under 23(b)(2) and monetary relief under 23(b)(3). However, the Wal-Mart holding as to 23(a) requirements in the context of a disparate impact theory of discrimination obviates any need for discussion of 23(b), as Plaintiffs in this case do not clear the 23(a) threshold. See Wal-Mart, 131 S. Ct. 2541, 255057 (2011).
4

A. Rule 23(a) imposes four prerequisites before a party may proceed as a representative of a class: numerosity, commonality, typicality, and adequate representation. Coleman v. Gen. Motors Acceptance Corp., 296 F.3d 443, 446 (6th Cir. 2002) (citing Fed. R. Civ. P. 23(a)). The class must be “so numerous that joinder of all members is impracticable...[with] questions of law or fact common to the class.” Fed. R. Civ. P. 23(a). The representative parties’ claims or defenses must be typical of those of the class and the representative parties must be able to “fairly and adequately protect the interests of the class.” Id. These requirements work to “limit the class claims to those fairly encompassed by the named plaintiff’s claims.” Wal-Mart, 131 S. Ct. at 2550 (quoting Gen. Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 156 (1982)). The proposed class easily meets the numerosity requirement. Therefore, the requirements of commonality and typicality become the focus of the Court’s attention. Though these two factors tend to merge, Falcon, 457 U.S. at 157, the “crux of this case,” as in Wal-Mart, “is commonality.” Wal-Mart, 131 S. Ct. at 2550. “Commonality requires the plaintiff to demonstrate that the class members ‘have suffered the same injury.’” Id. at 2551 (quoting Falcon, 457 U.S. at 157). It is not enough merely to claim that all class members suffered a disparate-impact injury is insufficient; “their claims must depend upon a common contention,” the determination of which “will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id. A court’s 23(a) analysis will frequently “overlap with the merits of the plaintiff’s underlying claim.” Id. (citing Falcon, 457 U.S. at 160).
5

B. Here, the underlying claim is that Countrywide’s “Discretionary Pricing Policy,” though facially race-neutral, had a disparate impact on minority borrowers.4 Disparate impact suits, like disparate treatment suits, are claims for unlawful discrimination, which “are often by their very nature class suits, involving classwide wrongs.” Falcon, 457 U.S. at 157. However, the mere fact that “racial discrimination is...class discrimination” does not define a class of persons that have suffered the same injury as a representative plaintiff. Id. The putative class representative must demonstrate that the class members suffered the same discrimination that he or she suffered. Class certification will not obtain where the only commonality among members is their race and their relation to the defendant. Plaintiffs’ expert calculated a disparate impact by first comparing the average APR paid by African-American and Hispanic borrowers (8.464% and 8.123%, respectively) to the average APR paid by white borrowers (7.602%). Plaintiffs’ expert then controlled for “businessjustified” factors. See supra n.3. The disparate impact that Dr. Ayres found is an average of the cost differences between minority borrowers and similarly-situated non-minority borrowers. After controlling for the “business-justified” factors, the difference between the average APR paid by white borrowers and that paid by non-white borrowers narrowed to 11.64 and 12.5 basis points, or 0.116 and 0.125 percentage points. Although Dr. Ayres bases his model on classwide data, that fact alone does not support a
4 Subjective decision-making can be a policy upon which a disparate impact claim is predicated. Watson v. Fort Worth Bank & Trust, 487 U.S. 977 (1988); see also Ramirez v. Greenpoint Mortg. Funding, Inc., 633 F. Supp. 2d 922, 927-28 (N.D. Cal. 2008) (recognizing ECOA and FHA disparate impact claims based on mortgage lender’s discretionary pricing policy); Taylor v. Accredited Home Lenders, Inc., 580 F. Supp. 2d 1062, 1068 (S.D. Cal. 2008) (same); Barrett v. H & R Block, No. 08-10157-RWZ, 2011 WL 1100105, at *1 n.5 (D. Mass. March 21, 2011) (same).
6

conclusion that every member of the class suffered the same injury, or any injury at all. The analysis does not show that every minority borrower would have paid 11.64 or 12.50 basis points less in APR, but for their minority status. Some may have paid even less than what the average measured disparate impact predicts; some may not have paid less at all. Moreover, the average differences between groups may well be within the range expected from the exercise of nondiscriminatory discretion among thousands of loan officers and brokers working from hundreds of separate offices. More would be required to prove any individual or collective claim in these circumstances.
The Wal-Mart decision makes clear that, absent a showing of a common direction or common method of exercising discretion, statistical evidence of average disparities will not suffice to meet Rule 23(a)’s commonality requirement. When plaintiffs are suing “about literally millions of . . . decisions at once,” there must be “some glue holding the alleged reasons for all those decisions together,” Wal-Mart, 131 S. Ct. at 2552, so that the claims of the representative party and the class are capable of resolution by a “common answer.” Id. at 2551.
Here, even accepting Plaintiffs’ statistical analysis, they have not “identified a common mode of exercising discretion” to support commonality. Id. at 2554. Too many variables prevent the conclusion that even an unconscious discriminatory motive or thought similarly animated thousands of mortgage rate decisions. However, the idea that thousands of loan officers in hundreds of separate locations around the country would exercise their discretion in a similar discriminatory fashion as to each purported class member defies belief. Whether an individual loan officer or a single office did so, might be a different question.
Although certification of this type of class was more debatable pre-Wal-Mart, the
7

Supreme Court has explained that Rule 23(a) commonality requires more than what Plaintiffs have demonstrated here. Compare Ramirez v. Greenpoint Mortg Funding, Inc., 268 F.R.D. 627, 635 (N.D. Cal. 2010) (pre-Wal-Mart certification of class challenging discretionary mortgage pricing on disparate impact theory), and Barrett v. H & R Block, No. 08-10157-RWZ, 2011 WL 1100105, at *5 (D. Mass. March 21, 2011) (same), with In re Wells Fargo Residential Mortg. Lending Discrimination Litigation, No. 08-MD-01930, 2011 WL 3903117 (N.D. Cal. Sept. 6, 2011) (post-Wal-Mart denial of class certification of plaintiffs alleging disparate impact discrimination based on a policy of discretionary mortgage loan pricing). Plaintiffs do not meet the commonality requirement and cannot be certified as a class.
Being otherwise sufficiently advised, IT IS HEREBY ORDERED that Plaintiffs’ Motion for Class Certification is DENIED. The Court will set a conference in the near future.
October 11, 2011
cc: Counsel of Record
8