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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ANA RAMIREZ, et al.,

Plaintiffs,

v.

GREENPOINT MORTGAGE

FUNDING, INC.,

Defendant.

NO. C08-0369 TEH

ORDER GRANTING

PLAINTIFFS’ MOTION FOR

CLASS CERTIFICATION

This matter came before the Court on June 28, 2010, on the motion for class

certification filed by Plaintiffs Ana and Ismael Ramirez and Jorge Salazar (collectively,

“Plaintiffs”). Plaintiffs allege that Defendant GreenPoint Mortgage Funding, Inc.

(“GreenPoint”) violated federal fair lending and housing laws by giving its authorized

brokers discretion to mark up the price of wholesale mortgage loans, a policy that led

minority borrowers to be charged disproportionately high rates compared to similarly

situated whites. They now ask the Court to certify a class of African-American and Hispanic

borrowers who obtained wholesale mortgage loans through GreenPoint from 2004 through

2007. For the reasons set forth below, Plaintiffs’ motion is GRANTED.

BACKGROUND

Plaintiffs Ana and Ismael Ramirez and Jorge Salazar each used brokers to obtain

wholesale mortgage loans from GreenPoint. In this lawsuit, they challenge GreenPoint’s

policy for pricing such loans. In 2005, the Ramirezes refinanced their home in

Massachusetts, taking out a $469,000 loan with a 30-year term and a disclosed Annual

Percentage Rate, or “APR,” of 6.191 percent. Salizar obtained a $475,000 loan, with a

30-year term and disclosed APR of 7.181 percent, by refinancing his home and rental

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property in San Diego, California in 2006. The Ramirezes were assisted by First Call

Mortgage Company, and Salizar used the services of TLN Financial; both were mortgage

brokers authorized to originate loans with GreenPoint.

In the wholesale market, independent mortgage brokers act as intermediaries between

borrowers and wholesale mortgage lenders like GreenPoint. A broker identifies prospective

borrowers and facilitates the loan origination process, transmitting a borrower’s application

to a lender for a determination of whether or not to fund the loan. Its reliance on brokers

enabled GreenPoint to fund mortgages in areas where it had not established any brick-andmortar retail presence of its own. GreenPoint worked with tens of thousands of authorized

brokers when it was in the wholesale mortgage business, which it exited in late 2007. 

GreenPoint typically sold the wholesale mortgages it funded into secondary markets, where

they were repackaged into mortgage-backed securities. The company originated as much as

93 percent of its loans through wholesale brokers from 2004 to 2007, and was at one time the

fifth largest originator of mortgage loans through the wholesale channel in the United States.

The pricing of GreenPoint’s mortgage loans consisted of an objective and a subjective

component. GreenPoint relied on objective risk factors – such as FICO score, property

value, and loan-to-value ratio – to determine credit parameters and set prices for its loan

products. This information was communicated to brokers on a rate sheet listing GreenPoint’s

“par” interest rate, which did not result in any broker compensation. That objective

component of loan pricing is not at issue here. 

Plaintiffs’ allegations relate to GreenPoint’s discretionary pricing policy, which

governed brokers’ compensation for their services. GreenPoint paid brokers a “yield spread

premium” or “rebate” when they set the interest rate higher than par; brokers were also

permitted to charge loan origination and processing fees. GreenPoint did not set any

objective criteria for the imposition of these higher rates and fees, which were set by the

brokers according to their discretion. Brokers were paid more for loans that cost more to the

borrower, but their compensation was capped at 5 percent of the loan amount. GreenPoint

monitored the fees charged by its brokers to ensure they complied with its policies.

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 The ECOA makes it unlawful “for any creditor to discriminate against any applicant,

with respect to any aspect of a credit transaction – (1) on the basis of race, color, religion,

national origin, sex or marital status, or age (provided the applicant has the capacity to

contract).” 15 U.S.C. § 1691(a). The FHA makes it unlawful “for any person or other entity

whose business includes engaging in residential real estate-related transactions to

discriminate against any person in making available such a transaction, or in the terms or

conditions of such a transaction, because of race, color, religion, sex, handicap, familial

status, or national origin.” 42 U.S.C. § 3605(a).

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 This Court previously concluded, in denying GreenPoint’s motion to dismiss, that

disparate impact claims are cognizable under both the FHA and ECOA. See Order Denying

Mot. to Dismiss (Doc. 48) at 4-6; see also Harris v. Itzhaki, 183 F.3d 1043, 1051 (9th Cir.

1999) (disparate impact claims allowable under FHA); Miller v. Am. Express Co., 688 F.2d

1235, 1239-40 (9th Cir. 1982) (disparate impact claims allowable under ECOA).

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Plaintiffs contend that the discretionary policy resulted in minority borrowers –

defined here to include African Americans and Hispanics – receiving less favorable loan

pricing than similarly situated whites. Citing such disparities, Plaintiffs allege that

GreenPoint engaged in discriminatory mortgage lending practices in violation of the Equal

Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691, and the Fair Housing Act (“FHA”), 42

U.S.C. § 3605.1

 They bring these claims under a disparate impact theory, challenging

“practices that are facially neutral in their treatment of different groups but that in fact fall

more harshly on one group than another and cannot be justified by business necessity.” Int’l

Bhd. of Teamsters v. United States, 431 U.S. 324, 335 n.15 (1977) (addressing disparate

impact claims in Title VII employment context).2

Plaintiffs now move to certify a class under Federal Rule of Civil Procedure 23(b)(3). 

GreenPoint opposes the motion.

LEGAL STANDARD

Plaintiffs, as the parties requesting class certification, must demonstrate that they have

met all four requirements of Federal Rule of Civil Procedure 23(a) and the requirements of at

least one part of Rule 23(b). Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186 (9th

Cir. 2001), amended by 273 F.3d 1266 (9th Cir. 2001). Rule 23(a) allows a class to be

certified

only if (1) the class is so numerous that joinder of all members is

impracticable; (2) there are questions of law or fact common to

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the class; (3) the claims or defenses of the representative parties

are typical of the claims or defenses of the class; and (4) the

representative parties will fairly and adequately protect the

interests of the class.

Fed. R. Civ. P. 23(a); see also Zinser, 253 F.3d at 1186. That is, the class must satisfy the

requirements of numerosity, commonality, typicality, and adequacy.

Rule 23(b) provides for the maintenance of several different types of class actions. 

Plaintiffs seek to certify the class under Rule 23(b)(3), which requires a showing “that the

questions of law or fact common to class members predominate over any questions affecting

only individual members, and that a class action is superior to other available methods for

fairly and efficiently adjudicating the controversy.”

Before certifying a class, a district court must determine that the requirements of Rule

23 “are actually met, not simply presumed from the pleadings.” Dukes v. Wal-Mart Stores,

Inc., 603 F.3d 571, 582 (9th Cir. 2010) (en banc). The Court must “perform a rigorous

analysis to ensure that the prerequisites of Rule 23(a) have been satisfied.” Id. at 581 (citing

Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160-61 (1982)). Such analysis “will often,

though not always, require looking behind the pleadings to issues overlapping with the merits

of the underlying claims.” Id. at 594. However, the court may not consider whether the

party seeking class certification has stated a cause of action or is likely to prevail on the

merits. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178 (1974). If a district court concludes

that the moving party has met its burden of proof, then the court has broad discretion to

certify the class. Zinser, 253 F.3d at 1186.

DISCUSSION

Plaintiffs propose to represent a class defined as “[a]ll African-American or Hispanic

persons throughout the United States to whom GreenPoint originated a residential-secured

loan in GreenPoint’s wholesale lending channel between January 1, 2004 and January 1,

2008.” Pls.’ Mot. at 11. As they request certification under Rule 23(b)(3), Plaintiffs present

evidence showing the predominance of common issues and the superiority of a class action,

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in addition to evidence going to Rule 23(a)’s requirements of numerosity, commonality,

typicality, and adequacy.

GreenPoint’s challenges to the certification of such a class fall in two broad

categories. First, GreenPoint argues that the named Plaintiffs cannot satisfy the requirements

of typicality and adequacy, because false statements in their loan applications cast doubt on

their integrity and subject them to unique defenses. Plaintiffs are also atypical because –

according to GreenPoint – they suffered no injury and therefore have no standing, as their

financing was superior to that obtained by similarly situated white borrowers. Second,

GreenPoint contends that Plaintiffs cannot show either the existence or predominance of

common questions. The disparity in loan terms is explained not by race, GreenPoint argues,

but by other legitimate variables that Plaintiffs’ expert was unable to account for, such as the

amount of work each broker performed for a borrower. Since the inquiry into those other

factors would require the Court to examine the loans of each prospective class member,

GreenPoint contends that proceeding as a class action would be inappropriate.

The Court begins by examining the four elements of Rule 23(a). If Plaintiffs meet

those requirements, the Court will move onto the predominance and superiority inquiries

under Rule 23(b)(3).

I. Rule 23(a)

A. Numerosity

To satisfy Rule 23(a)(1), Plaintiffs must show that “the class is so numerous that

joinder of all members is impracticable.” From 2004 through 2007, GreenPoint made at least

94,000 loans to African-American and Hispanic borrowers across the United States. 

GreenPoint does not dispute this figure or the impracticability of joinder, and the Court

agrees with Plaintiffs that joinder of all class members would be impracticable. The

numerosity requirement is therefore satisfied.

//

//

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 The Court relies in part on disparate impact case law under Title VII of the 1964

Civil Rights Act, because “Title VII discrimination analysis” is applied “in examining Fair

Housing Act discrimination claims.” Harris v. Itzhaki, 183 F.3d 1043, 1051 (9th Cir. 1999).

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B. Commonality

To demonstrate commonality under Rule 23(a)(2), Plaintiffs must “establish common

questions of law and fact.” Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 594 (9th Cir.

2010) (en banc) (emphasis in original). “[A]nswering those questions,” on the other hand,

“is the purpose of the merits inquiry, which can be addressed at trial and at summary

judgment.” Id. It is not necessary that members of the proposed class “share every fact in

common or completely identical legal issues.” Rodriguez v. Hayes, 591 F.3d 1105, 1122 (9th

Cir. 2010). Rather, the “existence of shared legal issues with divergent factual predicates is

sufficient, as is a common core of salient facts coupled with disparate legal remedies within

the class.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). “The

commonality test is ‘qualitative rather than quantitative’ – one significant issue common to

the class may be sufficient to warrant certification.” Dukes, 603 F.3d at 599. For a civil

rights claim, commonality is satisfied “where the lawsuit challenges a system-wide practice

or policy that affects all of the putative class members.” Armstrong v. Davis, 275 F.3d 849,

868 (9th Cir. 2001). “[I]ndividual factual differences among the individual litigants or

groups of litigants will not preclude a finding of commonality.” Id.

To make out a prima facie case of discrimination under the disparate impact theory,

Plaintiffs would have to show “a significant disparate impact on a protected class caused by a

specific, identified . . . practice or selection criterion.” Stout v. Potter, 276 F.3d 1118, 1121

(9th Cir. 2002).3

 Plaintiffs contend that the discretionary policy had a disparate impact on

minority borrowers, causing them to receive less favorable loan pricing than similarly

situated whites. Although Plaintiffs need not prove their claim at the class certification stage,

they need to demonstrate that doing so will hinge on common questions of fact and law. 

Plaintiffs make this showing through the expert report of Harvard Law School

professor Howell E. Jackson (“Professor Jackson”), whose analysis of GreenPoint’s

mortgage data leads him to conclude that “minorities paid more for Greenpoint wholesale

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 A basis point is equal to 1/100th of a percentage point.

5

 Regression analysis allows Professor Jackson to compare the relationship between a

“dependent variable” – here, the APR – and various “explanatory” variables. 

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mortgage loans than whites with similar risk-characteristics.” Jackson Report (Doc. 178) at

6. Relying on the annual percentage rate, or “APR,” as a representation of loan costs,

Professor Jackson compares the amount paid by white and minority borrowers for

GreenPoint wholesale loans originated from 2004 to 2007. He finds that the mean APR for

whites was 69.5 basis points lower than that of African Americans, and 56.5 basis points

lower than that of Hispanics.4

 However, those raw figures do not account for legitimate

factors that could explain such differences. To compare similarly situated whites and

minorities, Professor Jackson performs regression analysis, a statistical method that allows

him to control for legitimate underwriting characteristics that affect the cost of a loan.5

Professor Jackson concludes that the APRs of African Americans are 9.4 basis points, and

those of Hispanics 7.6 basis points, higher than those of similarly situated whites, a

difference that cannot be explained by legitimate risk factors or valid business justifications. 

Critically for purposes of class certification, Professor Jackson’s analysis relies on evidence

common to the class and does not require any individualized inquiry.

Plaintiffs offer numerous questions of fact and law that are common to the class. The

discretionary pricing strategy that they challenge was carried out uniformly, Plaintiffs

contend, and its adverse effects were felt in the same way by Plaintiffs and all class members. 

Whether GreenPoint’s policy resulted in a pricing disparity between white and minority

borrowers, whether those disparities are justified by legitimate differences in

creditworthiness, and whether less discriminatory alternatives exist are all questions common

to the class, according to Plaintiffs. Furthermore, Professor Jackson’s statistical analysis

demonstrates that the pricing disparities are class-wide and attributable to GreenPoint’s

discretionary policy.

GreenPoint, however, disputes Plaintiffs’ ability to establish their claims using

common proof. Although Professor Jackson’s analysis was based on GreenPoint’s own data,

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GreenPoint contends that he would have to mine the data of the more than 27,000 brokers

who originated the loans at issue here to properly evaluate Plaintiffs’ claims. This is because

Professor Jackson cannot account for two key factors that may legitimately explain the price

disparities between whites and minorities: the effort a broker exerted on a given borrower’s

loan, and the broker’s “pull-through” rate (i.e. how frequently a broker’s submitted loan

applications result in funded loans). GreenPoint’s expert, Dr. Marsha J. Courchane (“Dr.

Courchane”), asserts that the absence of such data makes it impossible to tell whether

legitimate broker fee differentials explain the minority loan disparity. Dr. Courchane, an

economist with a Ph.D. from Northwestern University, states that she cannot find evidence of

“any pattern of substantive or economically significant disparate impact” when using

statistical techniques similar to those of Professor Jackson. Courchane Report (Doc. 182-1)

at 5. She argues that the evidence of disparate impact drops to levels that are not

“economically significant” when the regression analysis is conducted separately for

individual categories of loans; by aggregating the loan products together, Professor Jackson

overstates the effect of race and ethnicity. She also demonstrates that minorities were

disproportionately represented by brokers with lower pull-through rates, who therefore had to

charge more per loan to cover their work on unsuccessful loan applications. GreenPoint

argues that these alleged flaws in Professor Jackson’s analysis eviscerate Plaintiffs’ common

questions and necessitate inquiry into the individual factors that played into the pricing of

each loan. GreenPoint also relies on the expert report of Laura J. Borrelli, a mortgage

litigation consultant, who opines that disparate treatment can only be proven by “an

extensive, literal loan by loan review of each borrower’s mortgage file,” and not by Professor

Jackson’s proposed regression analysis. Borrelli Report (Doc. 182-3) at 11. 

Professor Jackson, in reply, stands by his conclusion that common methods and proof

can be used to demonstrate the disparate impact of GreenPoint’s pricing policies on class

members. He points out that the disparities identified by Dr. Courchane’s analysis, while

smaller than his own findings, are both statistically and economically significant: a disparity

of five basis points would cost a typical African-American borrower $579 more than a

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typical white borrower, and a typical Hispanic borrower $705 more than a typical white

borrower, over the first five years of a loan. Three mortgage brokers deposed in this case

testified that there was no correlation between the race of a borrower and the amount of work

the broker had to perform, providing anecdotal evidence to refute GreenPoint’s contention

that the identified disparity could be explained by disparities in broker effort. Having rerun

his regressions with new variables to account for GreenPoint’s arguments, Professor Jackson

concludes that none of Dr. Courchane’s arguments explain the disparity in mortgage prices

for minority borrowers; race and ethnicity remain statistically significant. Plaintiffs also

offer rebuttal from Professor Patricia A. McCoy of the University of Connecticut School of

Law, who argues that “policies and practices instituted by GreenPoint and a regulatory

environment that together were common to the class allowed GreenPoint’s mortgage brokers

to overcharge customers in general and to charge even more to black and Hispanic

borrowers.” McCoy Report (Doc. 204) at 8.

Plaintiffs’ reliance on statistical evidence to fulfill the commonality requirement is

well founded in Ninth Circuit precedent. In its recent en banc ruling in Dukes v. Wal-Mart

Stores, Inc., 603 F.3d 571 (9th Cir. 2010), the Ninth Circuit affirmed the certification of a

class of female Wal-Mart employees with respect to allegations that women received lower

pay – and fewer promotions – than their male colleagues in violation of Title VII of the 1964

Civil Rights Act. In finding commonality, the court relied on factual evidence of a companywide policy governing pay and promotion decisions and a strong corporate culture vulnerable

to gender bias, as well as statistical evidence showing significant disparities between men

and women in compensation and promotion that could “be explained only by gender

discrimination.” Id. at 599-613. The court observed that it is “well established that

plaintiffs may demonstrate commonality by presenting statistical evidence, which survives a

‘rigorous analysis,’ sufficient to fairly raise a common question concerning whether there is

class-wide discrimination.” Id. at 603-04. The Ninth Circuit also recognized that “subjective

decision making is a ‘ready mechanism[] for discrimination’ and that courts should scrutinize

it carefully.” Id. at 612 (quoting Sengupta v. Morrison-Knudsen Co., 804 F.2d 1072, 1075

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(9th Cir. 1986)) (alteration in original). Subjective practices that operate to discriminate have

been found by courts across the country to “satisfy the commonality and typicality

requirements of Rule 23(a).” Id. (quoting Shipes v. Trinity Indus., 987 F.2d 311, 316 (5th

Cir. 1993)).

As in Dukes, Plaintiffs are challenging a subjective policy that applied to all of

GreenPoint’s authorized brokers and, hence, every member of the proposed class – all of

whom negotiated their mortgages through brokers subject to the GreenPoint policy. The

claims of all class members hinge on a common question: whether GreenPoint’s

discretionary pricing policy had a disparate impact on minority borrowers. Plaintiffs propose

to answer that question using statistical evidence that, according to Professor Jackson, shows

minorities paid more for their loans than similarly situated whites. Plaintiffs’ theory of

liability therefore stands on common questions of fact and law. Although GreenPoint casts

doubt on the viability of that theory, the Court may not “decline to certify the class on the

basis of a mere potentiality” that plaintiffs’ theory of liability will not prevail. United Steel

Workers v. ConocoPhillips Co., 593 F.3d 802, 810 (9th Cir. 2010). “[I]t is the plaintiff’s

theory that matters at the class certification stage, not whether the theory will ultimately

succeed on the merits.” Dukes, 603 F.3d at 587 (citing United Steel Workers, 593 F.3d at

809-10) (emphasis in original). 

GreenPoint’s arguments amount to an attack on the merits of Professor Jackson’s

analysis, which is premature at this stage of litigation. “[D]isputes over whose statistics are

more persuasive are often not disputes about whether the plaintiffs raise common issues or

questions, but are really arguments going to proof of the merits.” Dukes, 603 F.3d at 591. 

Only an argument that one party’s statistics are “unreliable or based on an unaccepted

method” would have to be resolved at the class certification stage, requiring the Court to

“determine whether the potentially problematic statistics [are] even capable of raising a

common question.” Id. at 591-92. However, GreenPoint does not fault the reliability of

Professor Jackson’s methodology; it simply purports to have a better way. Such “statistical

disputes . . . encompass the basic merits inquiry and need not be proved to raise common

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 GreenPoint argues that Plaintiffs’ approach exhibits the same flaws that the Fourth

Circuit identified when it decertified a class in Broussard v. Meineke Discount Muffler

Shops, Inc., 155 F.3d 331 (4th Cir. 1998). The court found that the calculation of lost profits

to the plaintiff Meineke franchisees, who were alleging the misallocation of advertising funds

by Meineke, was too “dependent upon consideration of the unique circumstances pertinent to

each class member.” Id. at 343 (quoting Boley v. Brown, 10 F.3d 218, 223 (4th Cir. 1993)). 

However, the district court there erred by allowing “the jury to calculate lost profits without

reference to any” of the many other factors affecting “the profitability of each Meineke

franchise.” Id. Here, by contrast, Professor Jackson has accounted for the other variables

affecting APR.

11

questions and demonstrate the appropriateness of class resolution.” Id. at 594. The

commonality requirement is therefore satisfied.6

C. Typicality

Under the “permissive standards” of Rule 23(a)(3), “representative claims are

‘typical’ if they are reasonably co-extensive with those of absent class members; they need

not be substantially identical.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir.

1998). “The test of typicality is whether other members have the same or similar injury,

whether the action is based on conduct which is not unique to the named plaintiffs, and

whether other class members have been injured by the same course of conduct.” Hanon v.

Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (internal quotation marks and citation

omitted). However, “a named plaintiff’s motion for class certification should not be granted

if ‘there is a danger that absent class members will suffer if their representative is

preoccupied with defenses unique to it.’” Id. (quoting Gary Plastic Packaging Corp. v.

Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 176, 180 (2d Cir. 1990)). Although

typicality “tend[s] to merge” with the commonality requirement, Gen. Tel. Co. of Sw. v.

Falcon, 457 U.S. 147, 157 n.13 (1982), “each factor serves a discrete purpose,” Dukes, 603

F.3d at 613 n.37. “Commonality examines the relationship of facts and legal issues common

to class members, while typicality focuses on the relationship of facts and issues between the

class and its representatives.” Dukes, 603 F.3d at 613 n.37. Plaintiffs represent that their

claims are typical because they – like all prospective class members – were subject to and

affected by GreenPoint’s discretionary pricing policy. GreenPoint argues that the named

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Plaintiffs are not typical for two reasons: they will be preoccupied by unique defenses based

on false information included in their loan applications, and they lack standing because they

were not harmed by GreenPoint’s pricing policy.

1. Unique Defenses

Ana and Ismael Ramirez both signed or initialed each page of their loan application,

including a statement acknowledging the making of false statements to be a federal crime. 

According to the Ramirezes’ deposition testimony, however, much of the information

included in the application was false. The application overstated their monthly income by

thousands of dollars, represented Mr. Ramirez as being self-employed when he was

unemployed, and listed a bank account balance approximately four times its actual level. 

Salazar’s application, likewise, overstated his bank account balance by nearly $40,000, and

gave an actual gross income one-and-a-half times what he actually earned. Salazar, like the

Ramirezes, signed each page of his application, which warns against making false

statements. 

However, there is also ample evidence suggesting Plaintiffs were unaware that

misstatements were included in their applications. English is a second language for all three

Plaintiffs. Mr. Ramirez can neither read nor write in English; Salazar does not speak

English, but can read “a little.” The Ramirezes worked with Kathy Objio, a broker with First

Call Mortgage Company, to whom they had given copies of their tax returns and bank

statements, and who filled out their loan application over the telephone. The Ramirezes did

not read the application before signing it. Salazar testified that he worked with a broker

named Jimmy affiliated with TLN Financial, to whom he provided paycheck stubs, bank

statements, and other documents. Salazar did not fill out the application himself, and did not

know who had. Both Salazar and Mr. Ramirez expressed surprise during their depositions

when shown the misinformation on their applications. Salazar responded to the listed

balance of his bank account by laughing and saying, “If I had that kind of money, I would be

living in Tijuana,” where he is from. Salazar Depo. 11:16-23, 111:21-24. Mr. Ramirez

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expressed outrage at the misrepresentations, repeating, “Oh, my God,” and asking of

GreenPoint’s counsel, “Why do these people do this type of thing when they’re not supposed

to do it? . . . Why do they say I have my own company, that I’m self-employed? . . . Because

this places you in a bad situation, it makes you look like a liar.” I. Ramirez Depo. 25:17-22,

28:4-11, 29:21-30:7.

GreenPoint argues that the false statements in Plaintiffs’ loan applications subject

them to unique equitable defenses such as unclean hands, rendering them unable to satisfy

the typicality requirement. Unclean hands is an equitable doctrine that “closes the doors of a

court of equity to one tainted with inequitableness or bad faith relative to the matter in which

he seeks relief, however improper may have been the behavior” of the other party. Ellenburg

v. Brockway, Inc., 763 F.2d 1091, 1097 (9th Cir. 1985). “‘It is fundamental to [the]

operation of the doctrine that the alleged misconduct by the plaintiff relate directly to the

transaction concerning which the complaint is made.’” Dollar Systems, Inc. v. Avcar Leasing

Systems, Inc., 890 F.2d 165, 173 (9th Cir. 1989) (quoting Arthur v. Davis, 126 Cal. App. 3d

684, 693-94 (1981)) (alteration in original).

GreenPoint relies on two district court cases from outside the Ninth Circuit to

demonstrate the availability of an unclean hands defense for disparate impact claims under

the ECOA. In Riggs National Bank v. Linch, a court in the Eastern District of Virginia

addressed whether guarantors of a promissory note could raise the ECOA as an affirmative

defense in an action to collect on the defaulted note. 829 F. Supp. 163 (E.D. Va. 1993). 

After concluding that the ECOA could not be a basis for invalidating the underlying

guarantee, the court – in a footnote – addressed the plaintiff bank’s argument that the

“unclean hands” doctrine barred any recovery by a defendant guarantor who had submitted a

false financial statement. Id. at 169 n.7. The court concluded that, since the guarantor’s

“conduct was knowing and willful, . . . the doctrine of unclean hands would bar [him] from

any recovery, even if [the bank] had violated the ECOA.” Id. A court in the Middle District

of Florida relied on Riggs in reaching the same conclusion. Beaulialice v. Federal Home

Loan Mortgage Corp., No. 8:04-cv-2316-T-24-EAJ, 2007 U.S. Dist. LEXIS 15846, at *31

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(M.D. Fla. Mar. 6, 2007) (“Defendant has shown that Plaintiff misrepresented facts on her

application in order to secure the loan, and this deception bars her claims.”). 

However, the Supreme Court ruled in 1995 that the equitable defense of employee

misconduct could not preclude employer liability for violating the Age Discrimination in

Employment Act (“ADEA”). In McKennon v. Nashville Banner Publishing Co., the Court

overturned the Sixth Circuit’s conclusion that the question of discrimination was rendered

“irrelevant” by after-acquired evidence of employee wrongdoing that would have, by itself,

resulted in her discharge. 513 U.S. 352, 356-57 (1995). The Court observed that the unclean

hands defense “has not been applied where Congress authorizes broad equitable relief to

serve important national policies.” Id. at 360. The ADEA reflects such a policy, the Court

concluded, bearing as its purpose “the elimination of discrimination in the workplace,” and

carrying remedies meant to deter discrimination and to compensate those harmed by it. Id. at

358. Misconduct could, however, affect the availability of remedies; the employee’s

wrongdoing was relevant “to take due account of the lawful prerogatives of the employer in

the usual course of its business and the corresponding equities that it has arising from the

employee’s wrongdoing.” Id. at 361.

“The purpose of the ECOA,” like that of the ADEA, “is to eradicate . . .

discrimination,” only in the provision of credit rather than the workplace. United States v.

ITT Consumer Financial Corp., 816 F.2d 487, 489 (9th Cir. 1987). The ECOA also allows

the district court to “grant such equitable and declaratory relief as is necessary to enforce the

requirements imposed” under the statute. 15 U.S.C. § 1691e(c). The declaration of purpose

for the FHA is to “provide, within constitutional limitations, for fair housing throughout the

United States.” 42 U.S.C. § 3601. As for remedies, in addition to actual and punitive

damages, the FHA allows a court to “grant as relief, as the court deems appropriate, any

permanent or temporary injunction, temporary restraining order, or other order (including an

order enjoining the defendant from engaging in such practice or ordering such affirmative

action as may be appropriate).” Id. § 3613(c)(1). As the ECOA and FHA both represent

Congress’s authorization of “broad equitable relief to serve important national policies,”

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McKennon, 513 U.S. at 360, the unclean hands defense should not be applicable here. 

Indeed, the Fifth Circuit reached that very conclusion in Moore v. U.S. Department of

Agriculture, concluding that “after-acquired evidence of [plaintiffs’] poor credit history” –

which would have supplied an independent basis for denying the plaintiffs’ application to

purchase a property – “cannot defeat [defendant’s] liability” under the ECOA but “can aid

the court in assessing . . . damages.” 55 F.3d 991, 995-96 (5th Cir. 1995) (citing McKennon

v. Nashville Banner Publ’g Co., 115 S. Ct. 879, 883-87 (1995)). 

 However, GreenPoint relies on this Court’s ruling in Ganley v. County of San Mateo,

No. C06-3923 TEH, 2007 U.S. Dist. LEXIS 26467 (N.D. Cal. Mar. 22, 2007), to argue that

McKennon does not foreclose the unclean hands defense. In Ganley, the Court considered a

plaintiff’s motion to strike 22 affirmative defenses raised in the defendant’s answer to a

complaint alleging that the plaintiff had been removed from permanent public employment

without due process in violation of 42 U.S.C. § 1983. While acknowledging that the

Supreme Court had refused to apply the unclean hands doctrine in the ADEA context, the

Court observed that “no available case law exists to suggest that the defense is inapplicable

in the context of § 1983 actions.” Ganley, 2007 U.S. Dist. LEXIS 26467, at *14. In the

absence of “controlling or persuasive precedent to the contrary,” the Court found it “prudent

to deny Plaintiff’s motion to strike the defense of unclean hands.” Id. at *14-15.

This Court’s ruling in Ganley is distinguishable, however. A motion to strike is only

“proper when a defense is insufficient as a matter of law,” which requires that the Court “be

convinced that there are no questions of fact, that any questions of law are clear and not in

dispute, and that under no set of circumstances could the defense succeed.” Id. at *3

(internal citations omitted). Given that standard, the Court declined to strike a defense that

no court had explicitly held inapplicable to § 1983 actions. The standard here is not nearly as

exacting: the Court is assessing whether Plaintiffs may be subject to unique defenses that

would diminish their ability to represent the interests of other class members. The Court

need not be satisfied that the defense could succeed “under no set of circumstances,” but

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 Even if the defense were applicable, Plaintiffs’ evidence suggests that they were

unaware that false statements were included in their applications, in which case they would

not have “unclean hands” in the first place.

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rather has to weigh the likelihood of such a defense rendering the named Plaintiffs

inadequate class representatives.

The threat of an unclean hands defense will not defeat the adequacy of the named

Plaintiffs. Whereas this Court in Ganley could find no authority applying McKennon in the

§ 1983 context, there is a strong basis for concluding that McKennon applies to ECOA. 

Although the Ninth Circuit has not addressed that question, the Fifth Circuit has – concluding

that the unclean hands defense is unavailable. Moore, 55 F.3d at 996. Furthermore, this

Court finds that the rationale of McKennon is clearly applicable to the ECOA and the FHA,

which – like the ADEA – reflect Congress’s authorization of “broad equitable relief to serve

important national policies.” McKennon, 513 U.S. at 360. The unclean hands defense is

therefore inapplicable here, and the false statements in Plaintiffs’ loan applications cannot

defeat typicality.7

2. Standing

GreenPoint further argues that Plaintiffs cannot satisfy the typicality requirement

because they lack standing to assert a disparate impact claim. Constitutional standing is

comprised of three elements: (1) “injury in fact,” (2) “a causal connection between the injury

and the conduct complained of,” and (3) a likelihood, rather than mere speculation, “that the

injury will be redressed by a favorable decision.” Lujan v. Defenders of Wildlife, 504 U.S.

555, 560-61 (1992) (internal citations and quotation marks omitted). GreenPoint contends

that Plaintiffs were not injured by its discretionary pricing policy because they received loans

that were priced more favorably than similarly situated white borrowers, in contrast to their

allegations that the policy resulted in less favorable terms for minorities. Since typicality

requires that the named plaintiffs “have the same or similar injury” as other class members,

Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992), GreenPoint insists that

Plaintiffs are not typical of the class they seek to represent.

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This question, like that of commonality, pits the parties’ experts against one another. 

Plaintiffs’ expert, Professor Jackson, argues that their claims are typical of the class because

each “was subject to the same Discretionary Pricing Policy that disproportionately affected

minority borrowers.” Jackson Report at 43. However, GreenPoint notes that Professor

Jackson only determines that minority borrowers on average paid higher APRs than white

borrowers, not that these Plaintiffs did so. Relying on Professor Jackson’s own model, Dr.

Courchane found that the Ramirezes’ actual APR of 6.19 percent was lower than that of

similarly situated white borrowers (6.48 percent); Salazar’s APR of 7.18 percent was

likewise lower than that of comparable whites (7.82 percent). GreenPoint therefore argues

that Plaintiffs cannot show that the discretionary policy actually affected them; absent any

injury, they lack standing to bring these claims.

In reply, Professor Jackson defends his approach, in which “each member of the

plaintiff class would be entitled to a measure of damages reflecting an estimate of the

average loss to class members.” Jackson Reply at 27. Professor Jackson points out that

“there will always be some variation in actual APRs that result in some borrowers getting

better loan terms than our models predict.” Id. at 29. Although the named Plaintiffs may

have obtained better rates than similarly situated whites, Professor Jackson contends that

“absent discriminatory practices, they would likely have had an even lower rate.” Jackson

Depo. at 225:15-17. Since the named Plaintiffs were subject to the same policy as other class

members, proof of the policy’s disparate impact on the class establishes that Plaintiffs – as

members of that class – were injured by that policy, according to Plaintiffs.

Determining what price a minority borrower would have paid in a “but for” world is

no simple proposition. Although Professor Jackson’s regression model, estimated over

hundreds of thousands of observations, indicates that GreenPoint’s policy had a disparate

impact on a group of 94,000 minorities, how to predict what any one of those borrowers’

rates would have been absent the discretionary policy is subject to debate. Professor Jackson

would apply the average effect felt by all minorities to the individual, a methodology that

shows injury to Plaintiffs. That approach is consistent with the theory that the individual’s

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APR, while lower than the predicted APR of a similarly situated white borrower, would have

been even lower but for GreenPoint’s discretionary policy. Dr. Courchane would only

compare the individual to the model’s representation of a similarly situated white borrower,

which reveals the named Plaintiffs to be better off than their white counterparts and suggests

that they did not suffer the injury of which they complain. Arguments about “whose

statistics are more persuasive . . . are really arguments going to proof of the merits,” but an

argument that “the other party’s statistics were unreliable or based on an unaccepted method .

. . may be an issue the district court would have to resolve” on class certification. Dukes v.

Wal-Mart Stores, Inc., 603 F.3d 571, 591-92 (9th Cir. 2010). As neither party argues that the

other’s methodology is inherently flawed, the Court need not and cannot choose between

them at this stage. Plaintiffs present a viable theory demonstrating that the named Plaintiffs

suffered the same injury felt by the other members of the proposed class.

The Ninth Circuit confronted a similar typicality issue in Dukes, where it observed

that “individual employees in different stores with different managers may have received

different levels of pay or may have been denied promotion or promoted at different rates.” 

Dukes, 603 F.3d at 613. The court concluded, however, that the district court’s finding of

typicality was not an abuse of discretion, because “the discrimination they claim to have

suffered occurred through alleged common practices – e.g., excessively subjective decision

making in a corporate culture of uniformity and gender stereotyping.” Id. Here, similarly,

Plaintiffs attribute the alleged discrimination to the discretionary pricing policy, a common

practice that governed the pricing of all class members’ mortgages. Since they were subject

to that policy, and have advanced a viable theory showing the harm produced by that policy,

Plaintiffs have satisfied the typicality requirement.

D. Adequacy

The legal adequacy of the class representatives is determined by the resolution of two

questions: “(1) do the named plaintiffs and their counsel have any conflicts of interest with

other class members and (2) will the named plaintiffs and their counsel prosecute the action

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vigorously on behalf of the class?” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir.

1998). GreenPoint contends that Plaintiffs are inadequate class representatives because the

false statements in their mortgage applications call into question their integrity. Relying on

Second Circuit authority, GreenPoint stresses that “courts may consider the honesty and

trustworthiness of the named plaintiff” on a motion for class certification. Savino v.

Computer Credit, Inc., 164 F.3d 81, 87 (2d Cir. 1998).

GreenPoint acknowledges that “the role of the brokers in perpetuating these

falsehoods is not yet clear,” but still insists that “there is ample evidence from which to infer

that the Plaintiffs were willing participants in, if not the initiators of, this pattern of

deception.” Opp’n at 11. However, the Court cannot conclude on the record before it that

Plaintiffs lack the integrity necessary to be adequate class representatives. Plaintiffs’

evidence demonstrates that they did not fill out the loan applications that contained the false

information, and indeed did not even read the applications before signing them. Professor

Jackson has also offered authority showing the “proclivity of mortgage brokers to exploit the

ignorance and misunderstandings of individual borrowers.” Jackson Reply at 6.

The concerns about Plaintiffs’ integrity raised by GreenPoint are insufficient to bar

class certification. The Court is satisfied by Plaintiffs’ counsel’s experience in prosecuting

class actions, and has seen no evidence of any disqualifying conflicts of interest between

Plaintiffs and other class members. The Court therefore concludes that Plaintiffs are

adequate class representatives, which means that all four requirements of Rule 23(a) have

been met.

II. Rule 23(b)(3)

Since Plaintiffs have satisfied the four prongs of Rule 23(a), the Court now turns to

the two requirements of Rule 23(b)(3): whether common questions predominate, and whether

adjudicating the case as a class action is superior to other methods. Both requirements were

added to the Federal Rules “to cover cases ‘in which a class action would achieve economies

of time, effort, and expense, and promote . . . uniformity of decision as to persons similarly

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situated, without sacrificing procedural fairness or bringing about other undesirable results.’” 

Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 615 (1997) (quoting Fed. R. Civ. P. 23(b)(3)

Adv. Comm. Notes to 1966 Amendment). 

A. Predominance

 Predominance, which “tests whether proposed classes are sufficiently cohesive to

warrant adjudication by representation,” is a “far more demanding” standard than Rule

23(a)’s commonality requirement. Amchem Prods., 521 U.S. at 623-24. Rule 23(b)(3)

requires the Court to find “that the questions of law or fact common to class members

predominate over any questions affecting only individual members.” Whereas Rule 23(a)(2)

is satisfied by the presence of common questions, “Rule 23(b)(3) requires a district court to

formulate some prediction as to how specific issues will play out in order to determine

whether common or individual issues predominate in a given case.” Dukes v. Wal-Mart

Stores, Inc., 603 F.3d 571, 593 (9th Cir. 2010) (internal quotation marks and citation

omitted).

GreenPoint attacks predominance by resurrecting its arguments against commonality. 

Here, however, Plaintiffs carry the higher burden of showing not only that common issues

exist, but that they predominate. Since legitimate factors can explain the disparities between

the APRs of minority and white borrowers, GreenPoint contends that “the only way to

proceed here would be to examine each broker and each transaction.” Opp’n at 22. Even if

Plaintiffs established a prima facie case of discrimination, “GreenPoint would be entitled to

(and would in fact) present evidence on a transaction-by-transaction basis to show that there

was not discrimination.” Id. 

Since the standard for assessing predominance is higher than that of commonality, the

Court’s finding of common issues of fact and law does not dictate the result here. Although

individualized issues cannot defeat commonality where common issues exist, they can

foreclose the conclusion that such issues predominate. Assessing predominance therefore

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requires a closer examination of Plaintiffs’ claims and how those claims are to be proven at

trial.

A plaintiff bringing a disparate impact claim under the FHA or the ECOA must

establish “‘(1) the occurrence of certain outwardly neutral . . . practices, and (2) a

significantly adverse or disproportionate impact on persons of a particular [type] produced by

the [defendant’s] facially neutral acts or practices.’” Budnick v. Town of Carefree, 518 F.3d

1109, 1118 (9th Cir. 2008) (quoting Pfaff v. United States HUD, 88 F.3d 739, 746 (9th Cir.

1996)). To make out a prima facie case, the plaintiff must “show at least that the defendant’s

[policy] had a discriminatory effect.’” Pfaff, 88 F.3d at 745 (quoting Keith v. Volpe, 858

F.2d 467, 482 (9th Cir. 1988)); see also Budnick, 518 F.3d at 1118 (“A plaintiff need not

establish discriminatory intent but the discriminatory impact must be proven; an inference of

discriminatory impact is not sufficient.”). “Statistical analysis is admissible to establish

disparate impact.” Budnick, 518 F.3d at 1118. To rebut the prima facie case, a defendant

must supply “a legally sufficient, nondiscriminatory reason” for the policy, i.e. a “compelling

business necessity.” Pfaff, 88 F.3d at 746-47. A defendant charged with discrimination may

also “diffuse a prima facie case against him, and hence avoid the need to supply a legally

sufficient, nondiscriminatory reason in rebuttal, by successfully challenging the statistical

basis of this case.” Id. at 746.

Plaintiffs’ claim challenges GreenPoint’s discretionary pricing policy, not the

individual actions of its 27,000 authorized brokers. The key question is whether that policy

had a disparate impact – whether it fell “more harshly on one group than another and cannot

be justified by business necessity.” Int’l Bhd. of Teamsters v. United States, 431 U.S. 324,

335 n.15 (1977). The relevant evidence, as with most disparate impact cases, will focus on

“statistical disparities, rather than specific incidents, and on competing explanations for those

disparities.” Watson v. Ft. Worth Bank & Trust, 487 U.S. 977, 987 (1988). Professor

Jackson’s analysis provides evidence of the disparate impact on a class-wide basis. 

Competing explanations for those disparities are examined by way of regression analyses

that assess the effect of competing variables. GreenPoint can defend against Plaintiffs’ case

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in two ways: by demonstrating that its discretionary policy had a valid business justification,

and by challenging the statistical basis for Plaintiffs’ claim. See Pfaff, 88 F.3d at 746-47. In

either case, the defense applies across the class. Common questions therefore appear to

predominate.

However, GreenPoint contends that it will be entitled to present evidence on a brokerby-broker and transaction-by-transaction basis to demonstrate that disparities were based on

legitimate, non-discriminatory factors. The work performed by a broker can vary

considerably from customer to customer, ranging from filling out a loan application and

advising customers about the maximum mortgage they can afford to assisting borrowers in

repairing damaged credit. GreenPoint argues that the amount of work a broker expends on

an application, and facts particular to each broker – like overhead costs – constitute

legitimate variation that may account for the racial and ethnic disparities alleged by

Plaintiffs.

GreenPoint appears to misapprehend the basis for Plaintiffs’ claim. The brokers are

not being sued; GreenPoint is. Plaintiffs identify GreenPoint’s policy as the basis for the

disparate impact. Such claims are proven not by sifting through every incident and weighing

anecdotal justifications for each, but by considering how a common policy collectively

affects a group. The inquiry will focus on “statistical disparities,” not “specific incidents.” 

Watson, 487 U.S. at 987. Defending against this lawsuit will not require the kind of brokerby-broker assessment GreenPoint envisions. Rather, it will require GreenPoint to

demonstrate that its discretionary pricing policy was justified by valid business reasons, or

that there was no disparate impact in the first place.

At hearing, GreenPoint directed the Court to cases outside the Ninth Circuit in which

class certification was denied for claims similar to Plaintiffs’ – alleging racial discrimination

in the pricing of car loans – because they faltered at the predominance inquiry. In Rodriguez

v. Ford Motor Credit Co., Judge Conlon of the Northern District of Illinois denied class

certification with respect to allegations that “Ford Credit’s finance charge policy allows the

individual dealerships to impose a higher finance charge markup on Hispanic customers than

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 GreenPoint’s counsel did not specify which opinion he was citing: the original

district court decision certifying a class under Rule 23(b)(2) but denying Rule 23(b)(3)

certification, Coleman v. GMAC, 196 F.R.D. 315 (M.D. Tenn. 2000); the Sixth Circuit’s

decision vacating the 23(b)(2) certification, 296 F.3d 443 (6th Cir. 2002); or the district

court’s grant of class certification under Rule 23(b)(2) on remand following amendment of

the complaint, 220 F.R.D. 64 (M.D. Tenn. 2004). Since counsel cited the decision for its

denial of 23(b)(3) certification, the Court assumes he was referencing the first of those

decisions.

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other similarly situated non-Hispanic customers.” No. 01 C 8526, 2002 U.S. Dist. LEXIS

7280, at *4 (N.D. Ill. Apr. 18, 2002). Although the Rodriguez plaintiffs intended to rely on

statistical evidence to establish discrimination, Judge Conlon concluded that they failed to

show that “legitimate consideration[s], such as creditworthiness, . . . did not play any role in

the interest rate charged to Hispanic customers.” Id. at *15-16. She therefore concluded that

“a trial would require an individualized inquiry into the reasons for thousands of credit

decisions.” Id. at *16. Here, to the contrary, Professor Jackson’s regression analysis

controlled for legitimate factors and – if credited by the finder of fact – forecloses such

explanations for minority borrowers’ loan rates.

In oral argument, GreenPoint also cited – for the first time – Coleman v. GMAC, in

which Judge Trauger of the Middle District of Tennessee denied certification under Rule

23(b)(3) after concluding that common issues did not predominate.8

 196 F.R.D. 315 (M.D.

Tenn. 2000). The plaintiff in Coleman alleged that she and other African-American

borrowers were charged a higher markup for car loans from GMAC than white borrowers. 

The GMAC pricing system at issue in Coleman was comprised, as here, of two components: 

an objective “risk-related rate” set by GMAC, as well as a “subjective non risk related

markup” determined by the dealers. Id. at 318. Judge Trauger concluded that the plaintiff

had failed to establish that individual factors – such as “negotiation skills, buyer preferences,

and self-assessment of creditworthiness” – “played no role in whether a finance charge

markup was charged and the amount of any such markup.” Id. at 322. Common issues

therefore did not predominate, and certification under Rule 23(b)(3) was inappropriate. 

Again, however, the court’s decision hinged on the plaintiff’s failure to show that legitimate

factors did not explain the disparity in loan rates; here, Plaintiffs have made such a showing. 

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 Yield spread premiums are “fees paid by mortgage lenders to mortgage brokers that

are based on the difference between the interest rate at which the broker originates the loan

and the par, or market rate offered by the lender.” Schuetz, 292 F.3d at 1005. 

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Whether that showing will convince a trier of fact is a question that must await the merits

phase.

GreenPoint further contends, citing the Ninth Circuit’s ruling in Schuetz v. Banc One

Mortgage Corp., 292 F.3d 1004 (2002), that it is impermissible in the Ninth Circuit “to

certify a class where analysis of mortgage brokers’ compensation is required.” Opp’n at 20. 

However, Schuetz has no bearing on the Court’s analysis here. The plaintiff in Schuetz

argued that “yield spread premiums”9

 were unlawful kickbacks under the Real Estate

Settlement Procedures Act, and sought to certify “a class of borrowers whose loan

settlements included a yield spread premium payment.” Schuetz, 292 F.3d at 1008. Once it

concluded that “[y]ield spread premiums are not illegal per se,” the court found that “whether

they amount to a prohibited referral in any particular case depends upon the services

provided by the broker and the total compensation paid for those services.” Id. at 1014. For

that reason, individual issues predominated and class certification was inappropriate. Schuetz

does not support GreenPoint’s sweeping conclusion that class certification is never

appropriate where broker compensation is at issue.

The issue here is not whether the compensation paid to individual brokers was

reasonable in individual cases. Rather, the question that Plaintiffs raise is whether

GreenPoint’s discretionary pricing policy had a disparate impact on a class of 94,000

minority borrowers. Proof of disparate impact is based not on an examination of individual

claims, but on a statistical analysis of the class as a whole. Plaintiffs have demonstrated their

ability to show – using classwide proof – that GreenPoint’s discretionary pricing policy

caused higher rates to be charged to minority borrowers, and that legitimate factors are

unable to explain this disparity. To rebut this prima facie case, GreenPoint will have to

attack Plaintiffs’ statistical analysis or show a legitimate business justification for its

discretionary pricing policy, which will again call for classwide proof. Plaintiffs have carried

their burden of showing the predominance of common questions.

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B. Superiority

The final requirement for certification is “that a class action is superior to other

available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P.

23(b)(3). The superiority inquiry “requires determination of whether the objectives of the

particular class action procedure will be achieved in the particular case,” which “necessarily

involves a comparative evaluation of alternative mechanisms of dispute resolution.” Hanlon

v. Chrysler Corp., 150 F.3d 1011, 1023 (9th Cir. 1998). Among the pertinent factors in

assessing superiority are “the class members’ interests in individually controlling the

prosecution or defense of separate actions” and “the likely difficulties in managing a class

action.” Fed. R. Civ. P. 23(b)(3). The superiority inquiry focuses “on the efficiency and

economy elements of the class action so that cases allowed under subdivision (b)(3) are those

that can be adjudicated most profitably on a representative basis.” Zinser v. Accufix 

Research Institute, Inc., 253 F.3d 1180, 1190 (9th Cir. 2001).

GreenPoint contends that the class action format would be unmanageable because the

Court will have to consider the individual circumstances of each broker and each loan. The

Court has already discredited that argument. Plaintiffs demonstrate that a class action is

superior for reasons of efficiency and manageability. Professor Jackson calculated an

average monetary recovery over five years per loan to be $1,093 for African-American

borrowers, and $1,076 for Hispanic borrowers; those numbers decline to $579 and $705,

respectively, when he alters his analysis to account for GreenPoint’s critiques. Such amounts

are too low for class members to bring individual claims; recovery would only be feasible via

class action. The class action is manageable because liability will be determined based on

common statistical proof, and remedies can be calculated on a class-wide basis. A class

action is therefore superior to other methods for adjudicating these claims.

III. Rule 23(g)

Having determined that Plaintiffs have met Rule 23’s requirements for class

certification, the Court must also appoint class counsel. See Fed. R. Civ. P. 23(g) (“[A] court

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that certifies a class must appoint class counsel.”). On May 19, 2008, the Court appointed

the law firms of Bonnett Fairbourn Friedman & Balint, P.C. (“Bonnett Fairbourn”) and

Roddy Klein & Ryan (“Roddy Klein”) to serve as Co-Lead Interim Class Counsel, and the

law firm of Chavez & Gertler to serve as Liaison Interim Class Counsel. See Fed. R. Civ. P.

23(g)(3); Pre-Trial Order No. 1 (Doc. 53) at 1-2. The Court, finding that these law firms

continue to satisfy the requirements of Rule 23(g)(1), appoints Bonnett Fairbourn and Roddy

Klein as Co-Lead Class Counsel, and Chavez & Gertler as Liaison Class Counsel.

CONCLUSION

For the reasons set forth above, Plaintiffs’ motion for class certification is

GRANTED. Plaintiffs have satisfied the four prongs of Rule 23(a), as well as the

predominance and superiority requirements of Rule 23(b)(3). A class of “[a]ll AfricanAmerican or Hispanic persons throughout the United States to whom GreenPoint originated a

residential-secured loan in GreenPoint’s wholesale lending channel between January 1, 2004

and January 1, 2008” is hereby certified. Plaintiffs Ana Ramirez, Ismael Ramirez, and Jorge

Salazar are appointed class representatives. The law firms of Bonnett Fairbourn and Roddy

Klein are appointed as Co-Lead Class Counsel, and Chavez & Gertler as Liaison Class

Counsel.

IT IS FURTHER ORDERED THAT the parties shall appear for a case management

conference on Monday, August 30, 2010, at 1:30pm. The parties shall file a joint case

management statement no fewer than seven days prior to the conference.

IT IS SO ORDERED.

Dated: 7/20/10 

THELTON E. HENDERSON, JUDGE

UNITED STATES DISTRICT COURT

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