Case 1:07-cv-11275-NG Document 1 Filed 07/12/07 Page 1 of 25

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

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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

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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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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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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

 
 Case 1:07-cv-11275-NG Document 67 Filed 07/30/08 Page 1 of 27

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”).

Case 1:07-cv-11275-NG Document 67 Filed 07/30/08 Page 2 of 27
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.
-8-

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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-

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"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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Case 1:07-cv-11275-NG Document 67 Filed 07/30/08 Page 19 of 27
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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Case 1:07-cv-11275-NG Document 67 Filed 07/30/08 Page 20 of 27
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
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Case 1:07-cv-11275-NG Document 67 Filed 07/30/08 Page 24 of 27
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
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Case 1:07-cv-11275-NG Document 67 Filed 07/30/08 Page 25 of 27
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.
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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”).
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Case 1:07-cv-11275-NG Document 67 Filed 07/30/08 Page 27 of 27

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.

-27-

 
 Case 1:07-cv-11275-NG Document 69 Filed 08/21/08 Page 1 of 4

Jeffrey A. Apperson Clerk ofCourt

United States District Court Western District ofKentucky
Office ofthe Clerk United States Courthouse 601 West Broadway, Room 106 Louisville, Kentucky 40202-2249
(502) 625-3500 Writers Direct Dial: (502) 625-3538 Email Address: andrea r. kash(a krwd.lIsc()urts.g()V
Vanessa L. Armstrong ChiefDeputy Clerk

August 2 J, 2008

Sarah Thornton, Clerk District of Massachusetts Clerk's Office- Attention Sherry Jones 595 Main Street Worcester, MA 01608
In Re: MDL No. 1974- In Re Countrywide Financial Corporation Mortgage Lending Practices Litigation Conditional Transfer Order No. J
Dear Clerk of Court;
Attached is a certified copy ofCTO I from the Judicial Panel on Multidistrict Litigation ordering the transfer of a case currently pending in your district:
Gillian Miller, et al. v. Countrywide Bank, NA, et aI., CA. 1:07-11275
Pursuant to this order the above-styled case must be transferred to the Western District of Kentucky at Louisville.
Please file the attached certified copy of the CTO in the affected case, and close the case.
Please transmit the record ofthis case to the Western District ofKentucky at Louisville using the CMIECF Case Transfer utility.
If you have any questions, please fee free to contact me by email or at 502-625-3538.

Attachment: Certified Copy of CTO No. I

Sincerely,
Isl:Andrea R. Kash
Andrea R. Kash MDL Case Manager

cc: Judicial Panel on Multidistrict Litigation

Case 1:07-cv-11275-NG Document 69 Filed 08/21/08 Page 2 of 4

A CERTIFIED TRUE COpy
ATIEST
By Denise Morgan-Stone on Aug 07. 2008
FOR THE UNITED STATES JUDiCIAL PANEL ON
MULTIDISTRICT LITIGATION

UNITED STATES JUDICIAL PANEL on
MULTIDISTRICT LITIGATION

UNITED STATES JUDICIAL PANEL ON MULTIDISTRICT LITIGATION
Aug 07, 2008
FILED CLERK'S OFFICE

IN RE: COUNTRYWIDE FINANCIAL CORP. MORTGAGE LENDING PRACTICES LITIGATION

MDLNo.1974

TRANSFER ORDER

Before the entire Pane": 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 defendantsl oppose the motion; if the Panel deems centralization appropriate, they support centralization in the Central District of California.
This litigation presently consists ofthree 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 ofthe papers filed and hearing session held, we find that the actions in this litigation involve common questions offact, 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 ofdiscretionary 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 ofclass certification; and conserve the resources ofthe 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.
I Countrywide Financial Corp.; Countrywide Home Loans, Inc.; and Countrywide Bank, FSB (collectively Countrywide).

Case 1:07-cv-11275-NG Document 69 Filed 08/21/08 Page 3 of 4

- 2IT 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 LlTIGATION

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

Robert L. Miller, Jr. David R. Hansen

Case 1:07-cv-11275-NG Document 69 Filed 08/21/08 Page 4 of 4

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: 1:07-cv-11275 As of: 09/20/2012 05:34 PM EDT 1 of 11
United States District Court District of Massachusetts (Boston) CIVIL DOCKET FOR CASE #: 1:07−cv−11275−NG

CLOSED

Miller et al v. Countrywide Bank, N.A., et al Assigned to: Judge Nancy Gertner Demand: $9,999,000 Cause: 42:405 Fair Housing Act Plaintiff Gillian Miller
Plaintiff

Date Filed: 07/12/2007 Date Terminated: 08/22/2008 Jury Demand: Both Nature of Suit: 890 Other Statutory Actions Jurisdiction: Federal Question
represented by Gary E. Klein Klein Kavanagh Costello, LLP 85 Merrimac Street, 4th Floor Boston, MA 02114 617−357−5500 ext. 15 Fax: 617−357−5030 Email: klein@kkcllp.com ATTORNEY TO BE NOTICED
Gillian R. Feiner Office of the Attorney General (MA) Suite 301 10 Mechanic Street Worcester, MA 01608 617−963−2571 Fax: 617−727−5765 Email: gillian.feiner@state.ma.us TERMINATED: 12/10/2007 ATTORNEY TO BE NOTICED
Kevin Costello Klein Kavanagh Costello, LLP 85 Merrimac Street, 4th Flr. Boston, MA 02114 617−357−5500 Fax: 617−357−5030 Email: costello@kkcllp.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
Shennan Alexandra Kavanagh Klein Kavanagh Costello, LLP 85 Merrimac Street, 4th Flr. Boston, MA 02114 617 357 5500 Fax: 617 357 5030 Email: kavanagh@kkcllp.com ATTORNEY TO BE NOTICED

Case: 1:07-cv-11275 As of: 09/20/2012 05:34 PM EDT 2 of 11

Lakisha Austin

represented by 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

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

Plaintiff Arthur Davis

represented by 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

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

Plaintiff Luella Davis

represented by 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

Case: 1:07-cv-11275 As of: 09/20/2012 05:34 PM EDT 3 of 11
Shennan Alexandra Kavanagh (See above for address) ATTORNEY TO BE NOTICED

V. Defendant Countrywide Bank, N.A.
Defendant Countrywide Home Loans, Inc.
Defendant Countrywide Correspondent Lending

represented by James W. McGarry Goodwin Procter, LLP 53 State Street Exchange Place Boston, MA 02109 617−570−1332 Fax: 617−227−8591 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: mgonnam@goodwinprocter.com ATTORNEY TO BE NOTICED
Thomas M. Hefferon Goodwin Procter LLP 901 New York Avenue, NW 9th Floor East Washington, DC 20001 202−346−4000 Fax: 202−346−4444 Email: thefferon@goodwinprocter.com ATTORNEY TO BE NOTICED
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
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

Case: 1:07-cv-11275 As of: 09/20/2012 05:34 PM EDT 4 of 11

Defendant Full Spectrum Lending, Inc.
Defendant Summit Mortgage LLC
Defendant Loans for Residential Homes Mortgage Corp.
Intervenor Courtroom View Network

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
represented by William A. Worth Prince Lobel 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
represented by Michael R. Hagopian 2 Julie Ann Court North Providence, RI 02904 401−390−3930 Email: michael@hagopianlaw.com TERMINATED: 03/06/2008 LEAD ATTORNEY ATTORNEY TO BE NOTICED
represented by Tricia Jean Bloomer Boies, Schiller &Flexner LLP 10 North Pearl Street 4th Floor Albany, NY 12207 518−434−0600 Fax: 518−434−0665 Email: tbloomer@bsfllp.com LEAD ATTORNEY ATTORNEY TO BE NOTICED

Date Filed 07/12/2007
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: $ 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) (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) (Entered: 07/12/2007)

Case: 1:07-cv-11275 As of: 09/20/2012 05:34 PM EDT 5 of 11

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 08/06/2007 08/24/2007 08/24/2007 09/10/2007 09/10/2007 09/10/2007 09/13/2007

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) (Entered: 07/12/2007)
2 SUMMONS Returned Executed Summit Mortgage LLC served on 7/19/2007, answer due 8/8/2007. (Feiner, Gillian) (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) (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) (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) (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) (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) (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) (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). (Entered: 08/06/2007)
10 SUMMONS Returned Executed Full Spectrum Lending, Inc. served on 7/19/2007, answer due 8/8/2007. (Feiner, Gillian) (Entered: 08/06/2007)
11 SUMMONS Returned Executed Countrywide Correspondent Lending served on 7/19/2007, answer due 8/8/2007. (Feiner, Gillian) (Entered: 08/06/2007)
12 SUMMONS Returned Executed Countrywide Home Loans, Inc. served on 7/19/2007, answer due 8/8/2007. (Feiner, Gillian) (Entered: 08/06/2007)
13 SUMMONS Returned Executed Countrywide Bank, N.A. served on 7/19/2007, answer due 8/8/2007. (Feiner, Gillian) (Entered: 08/06/2007)
Notice of correction to docket made by Court staff. Correction: doc 9 corrected because: to reflect correct dates (Flaherty, Elaine) (Entered: 08/06/2007)
Set Deadlines/Hearings: Loans for Residential Homes Mortgage Corp. answer due 8/24/2007. (Flaherty, Elaine) (Entered: 08/28/2007)
14 ANSWER to Complaint by Loans for Residential Homes Mortgage Corp..(Flaherty, Elaine) (Entered: 09/04/2007)
15 ANSWER to Complaint with Jury Demand by Summit Mortgage LLC.(Worth, William) (Entered: 09/10/2007)
16 MOTION to Dismiss by Countrywide Bank, N.A., Countrywide Correspondent Lending, Full Spectrum Lending, Inc..(Hefferon, Thomas) (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) (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) (Entered: 09/13/2007)

Case: 1:07-cv-11275 As of: 09/20/2012 05:34 PM EDT 6 of 11

09/18/2007 09/19/2007
09/21/2007 10/04/2007
10/15/2007 10/25/2007 11/14/2007
11/16/2007
11/19/2007
11/21/2007 12/07/2007 12/21/2007 01/11/2008 01/17/2008

19 NOTICE by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis of Firm Name Change (Klein, Gary) (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) (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) (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) (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) (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) (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) (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) (Entered: 11/16/2007)
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) (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) (Entered: 11/21/2007)
26 NOTICE of Withdrawal of Appearance by Gillian R. Feiner (Feiner, Gillian) (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) (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) . (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) (Entered: 01/17/2008)

Case: 1:07-cv-11275 As of: 09/20/2012 05:34 PM EDT 7 of 11

01/23/2008 01/23/2008
02/04/2008 02/05/2008 03/05/2008 03/06/2008
03/06/2008 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

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) (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). (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) (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) (Entered: 02/05/2008)
31 MOTION to Withdraw as Attorney by Loans for Residential Homes Mortgage Corp..(Hagopian, Michael) (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) (Entered: 03/06/2008)
Judge Richard G. Stearns: Electronic ORDER entered granting 31 Motion to Withdraw as Attorney. (Flaherty, Elaine) (Entered: 03/06/2008)
33 NOTICE of Appearance by Kevin Costello on behalf of Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis (Costello, Kevin) (Entered: 03/11/2008)
34 REPORT of Rule 26(f) Planning Meeting. (Klein, Gary) (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) (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) (Entered: 04/10/2008)
36 Judge Richard G. Stearns: ORDER OF RECUSAL. case sent to draw clerk to be redrawn(Flaherty, Elaine) (Entered: 04/17/2008)
37 NOTICE of Withdrawal of Appearance by Kevin Costello (Costello, Kevin) (Entered: 04/22/2008)
ELECTRONIC NOTICE of Reassignment. Judge Joseph L. Tauro added. Judge Richard G. Stearns no longer assigned to case. (Sonnenberg, Elizabeth) (Entered: 04/23/2008)
38 Judge Joseph L. Tauro: ORDER entered. ORDER OF RECUSAL.(Abaid, Kimberly) (Entered: 05/07/2008)
ELECTRONIC NOTICE of Reassignment. Judge Nancy Gertner added. Judge Joseph L. Tauro no longer assigned to case. (Gaudet, Jennifer) (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) (Entered: 05/19/2008)

Case: 1:07-cv-11275 As of: 09/20/2012 05:34 PM EDT 8 of 11

05/20/2008 06/04/2008 06/04/2008 06/04/2008
06/04/2008 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

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) (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) (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) (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) (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) (Entered: 06/04/2008)
44 NOTICE of Appearance by Gary E. Klein on behalf of Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis (Klein, Gary) (Entered: 06/04/2008)
45 NOTICE by Gillian Miller, Lakisha Austin, Arthur Davis, Luella Davis Reasons Why Oral Argument Should Be Heard (Klein, Gary) (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) (Entered: 06/04/2008)
47 NOTICE of Appearance by Tricia Jean Bloomer on behalf of Courtroom View Network (Bloomer, Tricia) (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) (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) (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) (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) (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) (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.

Case: 1:07-cv-11275 As of: 09/20/2012 05:34 PM EDT 9 of 11

06/23/2008 06/24/2008 06/27/2008 06/30/2008 07/02/2008 07/08/2008
07/09/2008

(Bloomer, Tricia) (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) (Entered: 06/23/2008)
55 Letter/request (non−motion) from MDL Panel to Judge Gertner re transfer of case to MDL panel. (Gaudet, Jennifer) (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) (Entered: 06/27/2008)
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) (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) (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) (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

Case: 1:07-cv-11275 As of: 09/20/2012 05:34 PM EDT 10 of 11

07/14/2008 07/15/2008 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

argument held, all matters taken under advisement. (Court Reporter: Helena Kline.)(Attorneys present: Atty Klein, Kavanagh, Hefferon, McGarry) (Molloy, Maryellen) (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) (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 Argument Via Secure Internet Feed filed by Courtroom View Network. (Gaudet, Jennifer) (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) (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) (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) (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) (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) (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) (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) (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) (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) (Entered: 07/29/2008)
Judge Nancy Gertner: Electronic ORDER entered denying 16 Motion to Dismiss. (Gaudet, Jennifer) (Entered: 07/31/2008)
67 Judge Nancy Gertner: MEMORANDUM AND ORDER Re: Motion to Dismiss.(Gaudet, Jennifer) (Entered: 07/31/2008)

Case: 1:07-cv-11275 As of: 09/20/2012 05:34 PM EDT 11 of 11

08/07/2008 08/21/2008 08/22/2008 09/26/2008 01/20/2009

68 Informational E−mailed Copy of MDL Conditional Transfer Order in MDL Case 1974 received from the mdl panel.(Jones, Sherry) (Entered: 08/07/2008)
69 Copy of MDL Conditional Transfer Order number 1 in MDL Case 1974 received from MDL Panel. (Hassett, Kathy) (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) (Entered: 08/22/2008)
Case transferred from Massachusetts has been opened in Western District of Kentucky as case 3:08−cv−00448, filed 08/22/2008. (Gaudet, Jennifer) (Entered: 09/26/2008)
Judge Nancy Gertner: Electronic ORDER entered finding as moot 41 Motion to Consolidate Cases; finding as moot 48 Motion for Leave to Appear Pro Hac Vice; ; finding as moot 52 Motion for Leave to File; ; finding as moot 60 Motion to Intervene. The case is closed. (Gaudet, Jennifer) (Entered: 01/20/2009)