IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

MICHAEL J. CHRISTIAN, BETY 

FLEMMING, EARTHA C. JOHNSON, as 

Attorney-in-Fact for MINNIE ALICE 

LARK, and CLAUDIA DORTCH, on 

behalf of themselves and all others 

similarly situated,

Plaintiffs,

v.

GENERATION MORTGAGE 

COMPANY,

Defendant.

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No. 12 C 5336

Judge John J. Tharp, Jr.

MEMORANDUM OPINION

Plaintiffs have sought reconsideration of the Court’s order granting Generation Mortgage 

Company’s motion to bifurcate class and merits discovery in this matter. Dkt. 83 (“Order”). That

motion was predicated on the plaintiffs’ efforts to obtain data from tens of thousands of 

individual loan files for use in a statistical analysis comparing the loan terms offered to members 

of the putative classes (African Americans and single females) to those outside those classes.

Generation argued that it should not be required to undergo such hugely burdensome and 

expensive class-wide discovery unless and until the plaintiffs have obtained certification of the 

putative classes. The plaintiffs argue that they need class-wide discovery in order to make the 

showing of commonality necessary to obtain class certification.
Although framed as a discovery dispute, at its core this dispute involves the relevance of 

the statistical analysis the plaintiffs wish to conduct with Generation’s loan data.1 Relying on 

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), the Court concluded that the proposed 

regression analysis would not suffice to establish that Generation’s mortgage brokers exercised 

their pricing discretion in a discriminatory manner because “a statistical disparity in the loan 

terms received by African-Americans and/or single women says nothing about the cause of the 

disparity.” Order at 4. The Court therefore granted Generation’s bifurcation motion, limited 

initial discovery in the case to evidence pertinent to the question of whether Generation’s brokers 

exercised their pricing discretion in a common manner, and held that the statistical evidence 

needed for the plaintiffs’ proposed regression analysis is not relevant to that question.

Plaintiffs’ primary argument for reconsideration asserts that the Court erroneously 

assumed that “plaintiffs’ statistical analysis of loan data will not control for all the factors that 

may account for any observed disparities in interest rates and origination fees.” If by “may 

account for” the plaintiffs mean “cause,” it is true enough that the Court drew that conclusion—

for two substantial reasons. First, the plaintiffs conceded the point in their response. And second, 

the Supreme Court’s opinion in Wal-Mart compels the conclusion.

In their response to Generation’s motion to bifurcate, the plaintiffs acknowledged that 

their complaint “does not assert that regression analysis alone will resolve the class or 

commonality questions”; rather, “statistical analysis of loans will uncover whether this policy 

had a common effect.” Resp., Dkt. 73, at 14 (emphasis added). See also id. at 1 and 12 (statistical 

analysis necessary but “not sufficient” to show commonality). That is because the data the 

1 The plaintiffs maintain that publicly available loan data that lenders are required by 

federal regulation to report are not adequate to support a competent statistical analysis.

2
plaintiffs seek will, at best, establish “the common effect of Generation’s nationwide policy.”

Surreply, Dkt. 80, at 2 (emphasis added).

A common effect does not establish a common cause for that effect, even in a disparate

impact case. That is the Supreme Court’s teaching in Wal-Mart; which “reiterates that statistical 

correlation, no matter how robust, cannot substitute for a specific finding of class-action 

commonality.” In re Countrywide Financial Corp. Mortgage Lending Practices Litig., 708 F.3d 

704, 709 (6th Cir. 2013) (citing Wal-Mart, 131 S. Ct. at 2555, and affirming the denial of 

certification of class of borrowers because plaintiffs statistical evidence of disparity was 

insufficient to establish that the disparity was the product of a single cause). As the plaintiffs 

have acknowledged, disparate impact is a necessary but not sufficient condition to establish their 

claim.

In the context of a class disparate impact claim, the plaintiffs must identify a “specific 

employment practice” that is the common cause of the disparate impact. Wal-Mart, 131 S. Ct. at 

2555. As noted in this Court’s original opinion, the plaintiffs attempted to do this by attributing 

the alleged disparate impact to Generation’s policy of affording pricing discretion to its brokers,

but Wal-Mart squarely rejected the proposition that a company’s policy of permitting discretion 

to managers can serve as the common link between individual claims in a disparate impact case.2

Id. at 2554-55. The “bare existence of delegated discretion,” id. at 2555, is no policy at all—or, 

viewed another way, it is a policy against having a policy. Id. at 2554. Wal-Mart holds that 

showing that such a non-policy produces disparate impact “does not suffice” to satisfy Rule 23’s 

commonality requirement. Id. at 2556.

2 As noted in the Court’s original opinion, both the plaintiffs’ pricing discrimination and 

reverse-redlining class theories depend on evidence that brokers exercised their pricing 

discrimination in a common manner that produced a disparate impact.

3
Notwithstanding this unequivocal holding, the plaintiffs continue to argue that 

Generation’s policy of pricing discretion does suffice as the common cause of the alleged 

disparate impact because that policy cabins the discretion afforded to brokers by setting a 

minimum rate. Generation’s brokers, in other words, only have discretion to increase the rate, not 

to lower it, and because they receive more compensation for higher rates, the plaintiffs argue that 

the policy incentivizes brokers to increase rates above the minimum approved rate. The Court 

rejected this purported distinction as illusory;3 the rationale for any company policy—including 

the policy of giving hiring and promotion discretion to local managers that was at issue in WalMart—presumably can be linked to the company’s desire to increase profits. That does not 

change the fact that in affording discretion to managers, or here, brokers, the company replaces 

centralized decisionmaking with localized decisionmaking. And in that context, as Wal-Mart

holds, there is no “glue” to tie those individualized decisions together in a class action.

Plaintiffs argue that they “are not required to pinpoint exactly which business practice” 

caused a disparate impact, Supp. Br., Dkt. 106 at 4-5; they cite 42 U.S.C § 2000e-2(k)(1)(B)(i)

for the proposition that “the elements of a decision-making process may not be capable of 

separation for analysis, in which case it may be appropriate to challenge the decision-making 

process as a whole.” Id. But that argument merely rephrases the proposition that Wal-Mart

rejected, namely that it suffices to identify a general policy of managerial discretion as the 

3 Plaintiffs are correct that, in the context of a disparate impact claim, the policy at issue 

need not be facially discriminatory, but it must be put into practice in a uniform matter; 

otherwise it is simply not a “policy” (or, as the Wal-Mart Court observed, it is a policy not to 

have a policy) and cannot be said to be the cause of a disparate impact. A policy that allows 

brokers to decide what to charge is not a uniform policy, even if it requires the brokers to charge 

a minimum rate. That brokers have incentives to increase rates above the minimum approved 

rates says nothing about the manner or degree in which brokers will exercise their discretion. 

Indeed, any policy of pricing discretion can be said to incentivize brokers to charge rates above a 

minimum rate—namely, zero; the only distinction applicable to Generation’s pricing discretion 

policy is that the minimum rate is higher than zero.

4
common cause of a disparate impact on a protected group. 131 S. Ct. at 2555-56 (rejecting the 

identification of a policy of delegated discretion as sufficient identification of a specific policy 

on which to base a disparate impact claim). As the Supreme Court observed in Watson v. Fort 

Worth Bank & Trust, 487 U.S. 977, 990 (1988), and reiterated in Wal-Mart, 131 S. Ct. at 2554, a 

policy of permitting managerial discretion “should itself raise no inference of discriminatory 

conduct.” Accordingly, merely lumping together an amalgamation of subjective individual

decisions does not satisfy this standard. See, e.g., Davis v. Cintas Corp., 717 F.3d 476, 497 (6th 

Cir. 2013) (affirming summary judgment where plaintiff failed to identify the challenged 

employment practice with more particularity than aggregating all of the subjective elements of a 

hiring system). The Seventh Circuit has similarly left no room for doubt on this score:

For disparate impact claims, a plaintiff must establish that a 

particular employment practice causes a disparate impact on a 

member of a protected class. To satisfy this burden, the plaintiff is 

responsible for isolating and identifying the specific employments 

[sic] practices that are allegedly responsible for any observed 

statistical disparities. Notably, it is not enough to simply allege that 

there is a disparate impact on workers, or point to a generalized 

policy that leads to such an impact. Failure to identify the specific 

practice could lead to employers being held liable for the myriad of 

innocent causes that may lead to statistical imbalances.

Pell v. Allstate Ins. Co., 675 F.3d 709, 717 (7th Cir. 2012) (emphasis added).

In advancing this argument, moreover, the plaintiffs fail to distinguish between the 

requirements for an individual disparate impact claim and the additional requirements for 

certification of a class. As the Court explained in Wal-Mart, that an individual may advance a 

disparate impact claim based on the existence of a policy of discretion “does not lead to the 

conclusion that every employee in a company using a system of discretion has such a claim in 

common.” 131 S. Ct. at 2554. What is required, rather, is the identification of “a common mode 

of exercising discretion that pervades the entire company.” Id. at 2554-55. Given the pricing 

5
discretion afforded to Generation’s brokers, the putative class members must focus on the 

implementation of that discretion by the brokers; to tie their claims together in a class, they are 

required to show (among other things) that the brokers exercised their discretion in a common, 

discriminatory, manner.

Which brings us back to the question of the utility of the plaintiffs’ proposed regression 

analysis. As noted, the plaintiffs conceded in their response and surreply to the defendant’s 

bifurcation motion that their proffered statistical analysis does not suffice to establish 

commonality: plaintiffs do “not assert that regression analysis alone will resolve the class or 

commonality questions.” Plt’s Amended Response (Dkt. 73) at 14 (emphasis in original); see 

also id. at 1 and 12 (statistical analysis “not sufficient” to show commonality). That concession 

should end the debate, because the plaintiffs also concede that they have no other means to 

establish commonality:

The only possible way to know whether Generation’s brokers 

exercised their pricing discretion in a common direction is for 

Generation to produce the evidence of each pricing decision of 

each broker for each borrower in the class period. There simply is 

no “other means” in existence for discovering and showing 

“whether Generation’s brokers exercised their pricing discretion in 

a common manner.” By making the well-intentioned but 

uninformed suggestion that plaintiffs use “other means” to 

discover and establish the point, the Court is, in effect challenging 

plaintiffs to drive a car from which it has removed the wheels.

Plt’s Mem. in Support of Motion for Reconsideration, Dkt. 89 at 6-7 (quoting Order).4

4 In conflating “common direction” with “common manner,” this statement betrays the 

plaintiffs’ misunderstanding of Wal-Mart. The problem they face is not in showing that 

Generation’s brokers exercised their pricing discretion in “a common direction”; rather, it is in 

showing that the brokers exercised their pricing discretion in a common manner. Direction is 

effect; manner is cause. That the brokers collectively exercised their discretion so as to increase 

prices (i.e., in a common direction) does not show that any individual broker exercised his or her 

discretion to raise prices for the same reason or on the same basis (i.e., in a common manner).

6
Despite their initial and repeated concessions that statistical evidence does not suffice to 

prove causation, the plaintiffs argue inconsistently in their motion for reconsideration that the 

Court “improperly assumes ... that plaintiffs’ statistical analysis will not effectively isolate and 

demonstrate that the cause of any disparities in interest rates and origination fees is racial or 

gender discrimination.” Id. at 2. Now, the plaintiffs maintain, statistical analysis does suffice to 

prove causation. Confronting the implications of their concession, the plaintiffs have simply 

changed their tune.5

Even if reversing course were a permissible basis on which to seek reconsideration (and it 

is not), the argument flies in the face of the Court’s opinion in Wal-Mart. Simply put, Wal-Mart

held that the identification of “potential” discrimination through statistical analysis is insufficient 

to satisfy Rule 23(a)’s commonality requirement where the decision makers are vested with 

independent discretion. The Court expressly rejected as “insufficient to establish that 

respondents’ theory can be proved on a classwide basis,” 131 S. Ct. at 2555, not one, but two, 

regression analyses that the plaintiffs had commissioned. The Court explained that even if the 

And to establish commonality, the plaintiffs must “a common mode”—i.e., manner—“of 

exercising discretion that pervades the entire company.” Wal-Mart, 131 S. Ct. at 2555.

5 For the reasons discussed below, it is not necessary to resolve the question definitively 

in this opinion, but the plaintiffs were likely on firmer ground when they acknowledged the 

limitations of the statistical analysis they are seeking to conduct. As numerous courts have 

explained, the relationships revealed through regression analysis reflect correlation, not 

causation. Baylie v. Federal Reserve Bank of Chicago, 476 F.3d 522, 524 (7th Cir. 2007),

illustrates the point by explaining that statistical analysis may show a correlation between an 

increased incidence of cancer and the use of x-rays, “[b]ut it will not tell us whether a given 

person who develops cancer did so because of the x-ray.” See also, e.g., Tagatz v. Marquette 

University, 861 F.2d 1040, 1044 (7th Cir. 1988) (a statistically significant correlation does not 

establish causation; such data “do not show that the difference is due to a particular attribute ... 

which the members of the better-off group have and the members of the worse-off group lack”).

See generally Rubinfeld, Reference Manual on Multiple Regression at 310, in Reference Manual 

on Scientific Evidence, Federal Judicial Center (3d ed. 2011) (“Causality cannot be inferred by 

data analysis alone; rather, one must infer that a causal relationship exists on the basis of an 

underlying causal theory that explains the relationship between the ... variables.”).

7
analyses established commonalities at the national or regional level (as they purported to do), 

they would still fail to “establish the existence of disparities at individual stores, let alone raise 

the inference that a company-wide policy of discrimination is implemented by discretionary 

decisions at the store and district level.” Id.

The plaintiffs argue that Wal-Mart did not categorically reject the possibility that a 

sufficiently thorough regression analysis could suffice to establish commonality and maintain 

that the regression analysis that their expert will conduct will be better than those the Court 

deemed insufficient in Wal-Mart. But they are wrong as to the first predicate, making the second 

irrelevant. In rejecting the plaintiffs’ proffered statistical evidence, the Supreme Court explained:

There is another, more fundamental, respect in which respondents’ 

statistical proof fails. Even if it established (as it does not) a pay or 

promotion pattern that differs from the nationwide figures or the 

regional figures in all of Wal-Mart’s 3,400 stores, that would still 

not demonstrate that commonality of issue exists. ... [M]erely 

proving that the discretionary system has produced a racial or 

sexual disparity is not enough. ... Other than the bare existence of 

delegated discretion, respondents have identified no ‘specific 

employment practice’—much less one that ties all their 1.5 million 

claims together. Merely showing that Wal-Mart’s policy of 

discretion has produced an overall sex-based disparity does not 

suffice.

131 S. Ct. at 2555-56 (emphasis in original).

This Court directed the parties to present supplemental briefs on “the meaning and 

relevance of the Supreme Court's discussion in Wal-Mart of the more fundamental respect in 

which respondents' statistical proof fails, set forth at 131 S. Ct. 2555-56.” Dkt. 95. Remarkably, 

the plaintiffs contend that the import of this passage is that the statistical analysis offered in WalMart “merely identified aggregate national and regional disparities.” Plt’s Supplemental Brief, 

Dkt. 106, at 2. According to the plaintiffs, it was critical to the Court’s analysis in Wal-Mart that 

8
“the plaintiffs did not even attempt to establish disparities at Walmart’s individual stores or to 

control for the possibility that regional disparities could be driven by just a few stores.” Id.

The plaintiffs’ reading cannot be squared with the Supreme Court’s language or analysis.

While the Court noted the failure of the plaintiffs to account for potential regional and store-bystore disparities, that was not the “fundamental” problem with the regression analyses they 

offered. “More fundamental,” the Court said, was the inability to show by statistical evidence 

that all of the discretionary decisions at issue had been the result of a common mode of 

exercising discretion by all of those in whom that discretion was vested. 131 S. Ct. at 2555. The 

Supreme Court expressly rejected the argument, urged by the plaintiffs here, that had the 

regression analysis been sufficiently comprehensive to account for disparities on even a store-bystore basis, it would have passed muster: “Even if it established ... a pay or promotion pattern 

that differs from the nationwide figures or the regional figures in all of Wal-Mart’s 3,400 stores, 

that would still not demonstrate that commonality of issue exists.” Id. (emphasis added). Even 

then, the Court concluded, the statistical evidence would show only that the policy of discretion 

had produced a sex-based disparity, not that every observed disparity (whether one national 

disparity or 3400 store-by-store disparities) was the product of a common mode of exercising 

discretion. In other words, the Supreme Court concluded—as did this Court in its original 

opinion—that a statistical disparity showing a disparate impact (in Wal-Mart, fewer promotions 

and lower pay; here, less favorable loan terms) is simply inadequate to establish commonality

when the “policy” under review is a general policy that affords widespread discretion over the 

decisions at issue—that is, “a policy against having uniform practices.” 131 S. Ct. at 2554. 

In short, the “fundamental” problem with the arguments advanced by the Wal-Mart 

plaintiffs and reasserted by the plaintiffs here, is that there is no common practice to analyze. 

9
Statistical analysis—no matter how rigorous—cannot solve the commonality problem when 

every decision under review is discretionary. This is not a question of the statistician’s skill but 

of the supervisor’s subjectivity. A policy of discretion allows each supervisor, or here, broker, to 

base pricing decisions on a unique—not common—combination of subjective and objective 

factors. By definition, in this context, there can be no “common” practice.

It is perhaps unsurprising, then, that the plaintiffs do not identify a single post-Wal-Mart

case in which a court has determined that any statistical analysis has sufficed to establish 

common causation where a company vests managers (or here, brokers) with independent 

discretion to make the allegedly discriminatory decisions.6 To the contrary, it appears (as 

defendant contends) that courts considering such arguments have uniformly rejected them. The 

Seventh Circuit has plainly held that “when multiple managers exercise independent discretion, 

conditions at different stores (or sites) do not present a common question.” Bolden v. Walsh 

6 Which is not to say that the plaintiffs did not try to do so. Remarkably, however, the 

cases that they argue for this proposition are Wal-Mart and Bolden. Both cases held open the 

possibility that it may be possible to establish commonality based on the discretionary acts of a 

single supervisor, but that provides no help to the plaintiffs, who do not propose a brokerspecific class. See Bolden, 688 F.3d at 899 (“Our plaintiffs have not proposed the certification of 

superintendent-specific classes). The plaintiffs also invoke McReynolds v. Merrill Lynch, Pierce, 

Fenner & Smith, Inc., 672 F.3d 482 (7th Cir. 2012) for the same proposition, but as Bolden

pointed out, that case involved “a single national policy” imposed by the company that “was the 

missing ingredient in Wal-Mart.” 688 F.3d at 898. Finally, the plaintiffs also cited two district 

court cases as evidence that “Wal-Mart does not prohibit national disparate impact class actions 

based on a discretionary decision-making system that is neutral on its face,” Amended Response 

at 17, but neither case bears that weight. In Conor B. ex rel. Vigurs v. Patrick, 278 F.R.D. 30 (D. 

Mass. 2011), the district court declined to decertify a class post-Wal-Mart where the alleged 

common cause of the class members’ injuries were “specific and overarching systemic 

deficiencies within DCF that place children at risk of harm,” not “the discretion exercised by 

individual case workers.” Id. at 34. Similarly, in M.D. v. Perry, 2011 U.S. Dist. LEXIS 152121, 

the district court declined to grant a stay of proceedings pending appeal of its class certification 

order in light of Wal-Mart where the alleged injuries to the class were caused by identified 

deficiencies in the state’s foster care system rather than a policy of discretion. Plaintiffs’ reliance 

on such inapposite cases only serves to confirm the lack of relevant authority to support their 

argument.

10
Constr. Co., 688 F.3d 893, 896 (7th Cir. 2012). See also Vang v. Kohler Co., 488 F. App’x 146, 

147 (7th Cir. 2012) (remanding class certification decision for reconsideration in light of WalMart and Bolden; “Under Wal-Mart and Bolden such variable circumstances do not present a 

common question.”). 7

More recently, in cases substantially similar to this one, the Sixth and Third Circuits

affirmed district court decisions premised on Wal-Mart’s holding that statistical correlation 

cannot establish commonality of cause for a disparate impact when loan officers operate under a 

policy of pricing discretion. In Countrywide Financial Corp. Mortgage Lending Practices Litig., 

the Sixth Circuit affirmed the district court’s denial of class certification in a case in which the 

putative class claimed that Countrywide’s loan pricing policy, which permitted its local agents 

broad discretion to depart from par rates that had been set solely by reference to objective 

factors. 708 F.3d at 706. The plaintiffs presented statistical evidence to support their claim “that 

vesting local agents with discretion to deviate from objective par rates led Countrywide” to 

charge minority borrowers rates that were 11-12 basis points higher than the rates paid by whites. 

Noting the similarity between the claims of the plaintiffs in the two cases, the Sixth Circuit

concluded that although statistical analysis remains relevant to proving disparate impact, it has 

no role to play in establishing commonality where the policy at issue is a policy that affords 

substantial discretion: “Wal-Mart reiterates that statistical correlation, no matter how robust, 

7 The plaintiffs also cite the use of statistical evidence in regulatory inspections and 

investigations, but that says nothing at all about whether such evidence satisfies the class 

certification standards imposed by Rule 23. Further, that the FHA and ECOA “explicitly 

authorize claims and statistical proof of disparate impact,” or that the Department of Justice 

“relies on statistical proof of disparate impact,” as the plaintiffs argue, says nothing relevant at 

all about whether such evidence can be used to establish common causation; those materials 

reflect only that statistical analysis may be used to establish discriminatory effect. No one doubts 

that statistical analysis can be relevant evidence to prove discriminatory impact, and the Court’s 

decision did not suggest otherwise.

11
cannot substitute for a specific finding of class-action commonality.” Id. at 709. See also Davis,

717 F.3d at 488-89 (affirming summary judgment denying disparate impact claims based on, 

inter alia, the district court’s determination that the plaintiffs’ statistical evidence “did not 

support a finding of companywide gender discrimination”).

In Rodriguez v. National City Bank, 726 F.3d 372 (3d Cir. 2013), the Third Circuit 

explained why statistical correlation falls short where the “policy” under evaluation is one that 

permits localized discretion. There, the circuit court affirmed a district court’s rejection of a class 

action settlement in a discriminatory lending case on the basis that the proposed settlement class 

could not be certified. Relying on Wal-Mart, the Rodriguez court rejected the plaintiffs’ 

argument that their regression analysis sufficed to establish common causation because it 

controlled for all of the objective factors that could have influenced the cost of mortgage loans. 

Even assuming that truth of that assertion (which is the same claim the plaintiffs make here), the 

Third Circuit held that the regression analysis could not establish a common cause for the higher 

average loan costs charged to minorities because it could not account for subjective factors that 

may have influenced the pricing decisions made by the defendants’ loan officers:

Even if Plaintiffs had succeeded in controlling for every objective 

credit-related variable ... the regression analyses do not even 

purport to control for individual, subjective consideration. A loan 

officer may have set an individual borrower’s interest rate and fees 

based on any number of non-discriminatory reasons, such as 

whether the mortgage loans were intended to benefit other family 

members who were not borrowers, whether borrowers 

misrepresented their income or assets, whether borrowers were 

seeking or had previously been given favorable loan-to-value terms 

not warranted by their credit status, whether the loans were part of 

a beneficial debt consolidation, or even concerns the loan officer 

may have had at the time for the financial institution irrespective of 

the borrower.

12
726 F.3d at 384.8

The same holds true here. A policy of discretion affords brokers the opportunity to 

exercise their pricing discretion in a multitude of ways that are purely subjective. Perhaps the 

broker deems one borrower to be a better source of future referrals and so extends a slightly 

better deal. Another borrower may be a better negotiator, having obtained pre-loan counseling 

that is recommended by the FDIC.9 Another borrower may have options available, such as 

selling his home, that make him more price sensitive. Further, as Rodriguez points out, 726 F.3d 

at 384, factors that have nothing at all to do with the borrower may influence the exercise of the 

broker’s pricing discretion. One broker’s economic situation may dictate an approach to pricing 

that is more, or less, aggressive; another’s pricing calculus may factor in the intrinsic rewards of 

helping people stay in their homes while others may be in it only for the money. The potential 

distinctions in how individual brokers exercise their pricing discretion are endless, which 

explains why a regression analysis cannot control for them. These sorts of factors cannot be ruled 

out as a factor in a pricing decision that is the product of individual discretion, so even if 

statistics prove that purely objective factors do not account for a disparate impact, it cannot be 

8 The Court notes as well that the Federal Reserve Board, whose work in this area both 

experts have cited, has warned that “idiosyncratic factors make it extremely difficult to draw 

definitive conclusions about discrimination from statistical analysis alone.” Heeding that 

warning, the initial affidavit of Dr. Ashton, plaintiffs’ expert, speaks only about the use of such 

analysis to identify “potential” discrimination and nowhere states that regression analysis can 

suffice to establish causation. Similarly, the affidavit submitted by the defendant of Dr. Collins 

points out that regression analysis is generally used to establish correlations, not causation, 

because controlling for all of the potential variables relevant to a causation determination is 

extremely difficult in the simplest of situations, much less in the context of a claim that myriad 

brokers vested with independent discretion all exercised that discretion in the same way—an 

analysis that would have to account not just for credit-related factors but also factors unique to 

each broker and each borrower.

9 See Reverse Mortgages: What Consumers and Lenders Should Know, located at 

https://www.fdic.gov/regulations/examinations/supervisory/insights/siwin08/reverse_mortgages.

html (last visited Sep. 12, 2014).

13
said that all such pricing decisions are the product of a common exercise of discretion by the 

brokers.

The plaintiffs do not purport to be able to control for subjective factors; rather, they 

contend that they have accounted, and can control, for all relevant objective factors and that there 

are no subjective factors to consider because this case is involves HECM’s (Home Equity 

Conversion Mortgages), a species of reverse mortgages. Because HECM’s are secured by a 

portion of a borrower’s equity in the home, various credit factors that influence the pricing of 

conventional mortgage loans are not considered in pricing HECM’s. The plaintiffs maintain that 

the limited number of objective factors that influence the pricing of HECM’s makes it possible to 

construct a regression analysis that controls for all of them. But even assuming, arguendo, that a

regression analysis controls for all objective factors that are material to a pricing decision, it 

cannot control for subjective factors because, by definition, information about those factors lies 

outside the objective loan data on which a regression analysis would be based. The plaintiffs’

effort to distinguish Rodriguez on this basis plainly fails; in Rodriguez, the Court assumed that 

the statistical analyses that had been conducted controlled for all of the objective factors relevant 

to the loan pricing decision. 726 F.3d at 384. Notwithstanding that assumption, however, the 

Court recognized that a policy of discretion necessarily introduces subjectivity into the pricing 

equation. Plaintiffs’ contention that subjective factors play no role in discretionary loan pricing 

decisions ignores the reality of human interaction as well as the multiple personal, 

environmental, and market factors that might affect a negotiation over the terms of a loan.10

10 The plaintiffs’ further argument that the presence of subjective factors is irrelevant 

because even non-discriminatory factors can cause a disparate impact fails (again; see infra at 5-

6) to distinguish between the requirements for proving an individual disparate treatment claim 

and the additional requirements of showing that each claim in a class of such claims has the same 

causal factor.

14
Plaintiffs’ complaint that they are being required to prove the merits of their claims while 

prohibiting them from conducting the discovery necessary to do so thus misses the point: the 

discovery they seek will not permit them to prove common causation.11 Even if they were 

permitted to conduct the statistical discovery they seek, they would necessarily fall short of 

establishing causation without other evidence to show that the defendant’s brokers exercised 

their discretion in a uniform manner. And the plaintiffs concede that there is no such evidence:

“There simply is no other means in existence for discovering and showing whether Generation’s 

brokers exercised their pricing discretion in a common manner.” Dkt. 89 at 6-7.

The plaintiffs’ assertion that the Court has “impose[d] on plaintiffs a requirement to show 

disparate treatment in connection with their disparate impact claim,” Motion at 4, is also offbase. The court’s opinion was based on the plaintiffs’ confessed inability to establish causation, 

not intent. That there is no requirement to prove discriminatory intent in a disparate impact case 

does not relieve the plaintiffs from the obligation to establish a common cause of the 

disproportionate impact. Wal-Mart and Bolden establish that, where the impact is the product of 

the exercise of independent discretion by many different actors, statistical evidence does not 

suffice to establish a common cause for the alleged discriminatory effect. 

The plaintiff also reassert a point that the Court did not expressly address in its original 

opinion, namely, that discovery of statistical evidence of a disparate impact is required even to 

prove an individual disparate impact claim. The plaintiffs maintain that, even if this case cannot 

go forward as a class action, they are entitled to the same discovery in order to prove their 

11 In any event, it is well established that resolution of class issues may require decisions 

that reach the merits of some aspects of a putative class claim. As the Seventh Circuit has 

observed, citing Wal-Mart, “that cannot be helped.” Jamie S. v. Milwaukee Public Schools, 668 

F.3d 481, 493 (7th Cir. 2012). The overlap of class and merits discovery does not excuse

compliance with the “rigorous analysis” of commonality required by Rule 23. Wal-Mart, 131 S. 

Ct. at 2551.

15
individual claims and so there is no basis to bar access to the statistical data they seek. This point 

might have some resonance if there were a realistic possibility that the plaintiffs were interested 

in pursuing individual claims, but in this case it actually supports the Court’s view that 

bifurcation is appropriate. In advancing this argument, the plaintiffs have forgotten (or simply 

have ignored) their averment that “individual cases are not economically feasible” to pursue. 

Third Amended Complaint, Dkt. 107, at ¶ 194. At a minimum, that concession casts substantial 

doubt on the plaintiffs’ interest in pursuing their individual claims and warrants bifurcation in 

order to establish first and definitively whether a class claim may go forward. See Rule 

23(c)(1)(A) (courts should make class certification decisions “at an early practicable time”). It 

would not be fair or just to bootstrap from an insubstantial prospect that individual claims will be 

pursued the enormous discovery burden that the plaintiffs seek to impose in this case. See, e.g., 

Harris v. Comscore, Inc., 2012 WL 686709, at *4 (N.D. Ill. Mar. 2, 2012) (unlikelihood that 

plaintiffs would pursue individual claims weighs in favor of requiring class discovery to precede 

merits discovery); Manual for Complex Litigation § 21.14 at 256 (“in cases that are unlikely to 

continue if not certified, discovery into aspects of the merits unrelated to certification ... can 

create extraordinary and unnecessary expense and burden”). In view of the plaintiffs’ concession 

about the economic viability of their individual claims, there seems little reason to indulge the 

fiction that the plaintiffs intend to pursue those individual claims absent a class claim. If, 

however, the putative class claim is put to rest (whether by withdrawal or dismissal), and the 

plaintiffs nevertheless opt to go forward with their individual claims, they will not be precluded 

by this order from seeking statistical evidence relevant to establishing disparate impact (scaled 

appropriately to the context of each individual’s claim). The Court’s bifurcation ruling does not 

prejudice the plaintiffs’ individual claims in any way.

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Finally, the Plaintiffs’ contention that “the Court’s ‘dim’ view of plaintiffs’ ability to 

certify a class . . . appears to have led to its decision to bifurcate discovery” puts the conclusion 

before the predicate. The Court’s reference to the plaintiffs’ seemingly dim prospects for 

certifying a class is the result, not the cause, of its determination that the statistical analysis the 

plaintiffs sought “will not—even if it shows, as plaintiffs expect, that African-Americans and 

single women paid more for their loans with Generation than did others—suffice to ‘glue’ their 

claims together in in a way that satisfies Rule 23(a)(2)’s commonality requirement.” It is the 

product as well of the plaintiffs’ repeated concessions that they can propose no other means to 

establish a common cause of class injury. Where there is no reason to believe that “discovery 

could make a difference to the issue of certification in this case, [there is] no reason to delay the 

inevitable.” Ladik v. Wal-Mart Stores, Inc., 291 F.R.D. 263, 273 (W.D. Wis. 2013) (granting 

defendant’s motion to dismiss class certification claim on the pleadings because under Wal-Mart 

they could not establish a common cause for a disparate impact). Law suits without “a 

reasonably founded hope that the discovery process will reveal relevant evidence” should not go 

forward. Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 347 (2005) (internal punctuation 

and citation omitted). If, as the plaintiffs maintain, there is no evidence—other than statistical 

evidence of a disparate impact—to show that Generation’s brokers exercised their pricing 

discretion in a common manner, that is a reason to stop the plaintiffs at the gates, not to permit 

them to inflict enormous costs by engaging in discovery that is bound to prove futile.

* * * * *

The plaintiffs suggest that the Court has concluded that “there is no way—either 

statistically, mathematically or empirically—to prove causation in support of a disparate impact 

claim.” Not so. The Court has merely concluded—as Wal-Mart holds—that statistical analysis, 

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no matter how rigorous, cannot establish that a company policy that permits brokers to set loan 

rates on the basis of individual, subjective, criteria, constitutes a common cause of injury across a 

class comprising customers of many different brokers. The Court therefore agrees with the 

defendant that discovery of the class-wide statistical data that the plaintiffs seek should not be 

permitted and class and merits discovery should otherwise be bifurcated. The motion for 

reconsideration is therefore denied. This ruling does not foreclose the plaintiffs from pursuing 

other evidence relevant to establish any of the requirements of Rule 23.

Date: September 12, 2014 John J. Tharp, Jr.

United States District Judge

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