Supp. 543, 550 (N.D. Ill. 1993). The court is entitled to make common sense assumptions in
considering plaintiffs’ good faith estimate. Buycks-Roberson v. Citibank Federal Savings Bank,
162 F.R.D. 322, 329 (N.D. Ill. 1995).

Plaintiffs estimate that the nationwide class exceeds 10,000 members. According to Ford
Credit, it purchased approximately 2,068,000 retail installment contracts from approximately 7,500
dealers in the United States during 2001. Ford Credit Response Ex. 2. As of January 2002, Ford
Credit was receiving payments on approximately 6,000,000 retail installment contracts entered into
in the United States. /d. At the request of Ford Credit’s counsel, economist Janet R. Thornton
reviewed the transaction data of the retail installment contracts purchased by Ford Credit from five
Chicago area dealerships, Arlington Heights Ford, Bert Weinman Ford, Spring Hill Ford,
Zimmerman Ford and Webb Chevrolet, from January 1, 2000 to December 31, 2001. Ford Credit
Response Ex. I. Of the 10,641 contracts purchased from these dealerships, 2,930 contracts
contained a finance charge markup.

Ford Credit does not request or receive any information on the race or national origin of its
customers. Ford Credit Response Ex. 2. To obtain this information, plaintiffs intend to utilize an
expert to conduct a random sample of Ford Credit’s customers to identify race and ethnicity in an
effort to predict the demographic composition of Ford Credit’s customer database. P1. Motion Ex.
G-F. In the meantime, plaintiffs opine that Hispanics comprise approximately 12% of the United
States population. Pl. Motion p. 7. Although plaintiffs fail to provide any demographic support for
their estimate, the court may take judicial notice of census information. See Barnett v. Daley, 32

F.3d 1196, 1198 (7th Cir. 1994). See also Fed. R. Evid. 201(b)Gudicial notice may be taken of any


finance charges, including buyer preferences, negotiation skills and creditworthiness, all of which
must be evaluated in light of the 7,500 individual dealerships’ policies and practices. Relying on
their proposed experts’ reports, plaintiffs counter that these factors do not have any bearing on
whether Ford Credit’s finance charge policy has a disparate impact on, or results in the disparate
treatment of, Hispanics.
3. Manageability of Trial

Although plaintiffs correctly point out that the individualized factors identified by Ford
Credit are not relevant to plaintiffs’ prima facie case of discrimination, these factors are relevant
to Ford Credit’s defense. Under either theory of discrimination, Ford Credit may utilize variable
individualized factors to establish that the finance charge markup is based on a legitimate
consideration, such as creditworthiness, rather than race. Plaintiffs fail to show that these factors
did not play any role in the interest rate charged to Hispanic customers. Therefore, a trial would
require an individualized inquiry into the reasons for thousands of credit decisions. As this court
has previously held, “where liability determinations are both individual and fact-intensive, class
certification under Rule 23(b)(3) is improper.” Roman y. First Franklin Financial Corp., No. 00
C 7228, 2001 WL 322563, at *2 (N.D. Ill. March 3, 2001).
IL. Motion to Dismiss Counterclaims and Conditional Counterclaims

For purposes of a motion to dismiss, the court accepts all well-pleaded allegations in the
counterclaim as true and draws all reasonable inferences in favor of the nonmovant. See Stachon
v. United Consumers Club, Inc.,229 F.3d 673, 675 (7th Cir. 2000). Ford Credit counterclaims that
Maria de los Angeles Romero and Hector Romero defaulted on their contractual obligations for the

purchase of a 1999 Ford Explorer. Counterclaim § 3. Ford Credit similarly counterclaims that


3. Typicality

Typicality is closely related to the question of commonality. Keele, 149 F.3d at 595. A
“plaintiff's claim is typical if it arises from the same event or practice or course of conduct that
gives rise to the claims of other class members and his or her claims are based on the same legal
theory.” Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir. 1992), quoting De La Fuente v.
Stokley-Van Camp, Inc., 713 F.2d 225, 232 (7th Cir. 1983). Plaintiffs’ claims fall within this
definition. Each plaintiff was subject to a finance charge markup pursuant to Ford Credit’s finance
charge policy. Plaintiffs sue Ford Credit under the ECOA, § 1981 and § 1982, alleging violations
of the same statutory sections under the same legal theories. The typicality requirement of Rule
23(a) is satisfied.
4, Adequacy of Representation

The final subsection of Rule 23(a) requires that the representative parties fairly and
adequately represent the class. This determination has two elements: (1) the adequacy of the named
plaintiffs’ counsel; and (2) the adequacy of representation provided by the named plaintiffs in
protecting the different, separate and distinct interests of class members. Retired Chicago Police,
7 F.3d at 598. “A class is not fairly and adequately represented if class members have antagonistic
or conflicting interests.” Secretary of Labor vy. Fitzsimmons, 805 F.2d 682, 697 (7th Cir. 1986).

Plaintiffs satisfy both requirements. First, plaintiffs’ counsel has provided firm and
individual biographies summarizing their qualifications and experience. Lead counsel Kenneth
Wexler has been involved in numerous class actions, including Jn re Synthroid Marketing
Litigation, MDL No. 1182 (N.D. Hl. 1995) and In re Lithotripsy Antitrust Litigation, 188 F.R.D.

310(N.D. Ill. 1999). Second, the class representatives do not appear to have interests antagonistic


fact that is “capable of accurate and ready determination by resort to sources whose accuracy cannot
reasonably be questioned”).

In the 2000 United States Census, Hispanics comprised 12.5% of the United States
population and 12.3% of the Illinois population. See www.census.gov. Moreover, Hispanics
comprised 19.9% of the population of Cook County, Illinois where Arlington Heights Ford, Bert
Weinman Ford and Webb Chevrolet are located, and 23.7% of the population of Kane County,
Illinois where Spring Hill Ford and Zimmerman Ford are located. /d. Based on these numbers, the
court may reasonably infer that plaintiffs meet the numerosity requirement of Rule 23(a).

2. Commonality

Rule 23(a)(2) requires plaintiffs to demonstrate that there are questions of law or fact
common to the class. “A common nucleus of operative fact is usually enough to satisfy the
commonality requirement of Rule 23(a)(2).” Keele v. Wexler, 149 F.3d 589, 594 (7th Cir. 1998).
A common nucleus of operative fact is found where “the defendants have engaged in standardized
conduct towards members of the proposed class.” Jd.

Plaintiffs allege that Ford Credit allowed dealerships to exercise their discretion under Ford
Credit’s finance charge policy in imposing a higher finance charge markup on Hispanic customers
than other similarly situated non-Hispanic customers. Commonality may be found where the
defendant operates under a general policy of discrimination manifested through entirely subjective
decision making practices. General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 159 n.
15 (1982). Based on this standard, plaintiffs have satisfied the commonality requirement of Rule

23(a).


blurred in ‘pattern and practice’ cases such as this one, because statistics can be used to prove both
disparate treatment and disparate impact.” EEOC y. Chicago Miniature Lamp Works, 947 F.24292,
297 (7th Cir. 1991). Although plaintiffs focus on a disparate impact theory for all their claims,
plaintiffs may not proceed with a disparate impact case under § 1981 or § 1982. See General
Building Contractors Ass'n, Inc. v. Pennsylvania, 458 U.S. 375, 391 (1982). Moreover, Ford Credit
disputes whether plaintiffs may proceed under a disparate impact theory under the ECOA. Without
deciding this open issue, the court evaluates plaintiffs’ motion for class certification under both
theories.

Plaintiffs may prove a prima facie case of both disparate treatment and disparate impact
discrimination through statistical evidence alone. EEOC v. O & G Spring & Wire Forms Specialty
Co., 38 F.3d 872, 876 (7th Cir. 1994). If plaintiffs establish a prima facie case of discrimination
through statistical evidence, the burden then shifts to Ford Credit. In a pattern or practice disparate
treatment case, Ford Credit must provide a “nondiscriminatory explanation for the apparently
discriminatory result.” /nternational Brotherhood of Teamsters v. United States, 431 U.S. 324, 360
n. 46 (1977). In a disparate impact case, Ford Credit must prove the finance charge policy has a
“manifest relationship” to the creditworthiness of the applicant. 4. B. & S. Auto Service, Inc. v.
South Shore Bank of Chicago, 962 F. Supp. 1056, 1061 (N.D. Ill. 1997). See also Griggs v. Duke
Power Co., 401 U.S. 424, 431-33 (1971).

2. Evidence

Plaintiffs’ proposed experts claim they can perform a valid statistical analysis measuring the

discriminatory effect of Ford Credit’s finance charge policy on Hispanics. Pl. Motion Ex. E-F. In

response, Ford Credit has identified several individualized factors that may explain the disparity in


Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge
or Magistrate Judge

Suzanne B. Conlon

Sitting Judge if Other
than Assigned Judge

CASE NUMBER 01 C 8526 DATE 4/18/2002
CASE RUDI RODRIGUEZ, et al. vs. FORD MOTOR CREDIT CO.
TITLE

MOTION:

{In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the motion being presented.]

DOCKET ENTRY:

() QO Filed motion of [ use listing in “Motion” box above.]
(2) o Brief in support of motion due.
@G) Oo Answer brief to motion due. . Reply to answer brief due.
(4) a] Ruling/Hearing on set for at
(5) QO Status hearing[held/continued to] [set for/re-set for] on set for at
(6) im) Pretrial conference[held/continued to] [set for/re-set for] on set for at :
(7) Oo Trial[set for/re-set for] on at
(8) im [Bench/Jury trial} [Hearing] held/continued to at
(9) oO This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) (General Rule2! OO FRCP41(a)(1) [2 FRCP41(a)(2).
ao) i [Other docket entry] Plaintiffs’ motions for class certification [35-1] and to dismiss defendant's
counterclaims [45-1] are denied. Plaintiffs’ motion to dismiss defendant’s conditional counterclaims [45-
2} is moot. ENTER MEMORANDUM OPINION AND ORDER.
aby a [For further detail see order attached to the original minute order.]
No notices required, advised in open court. Document
. . Number
No notices required. wider of notices
V | Notices mailed by judge's staff. APR { 9 20 2

Notified counsel by telephone. date dockere

Docketing to mail notices.

Mail AO 450 form. . . penn

Jeputy initials

Copy to judge/magistrate judge.
4ris/2002

date mailed notice

courtroom
deputy’s
initials

ft
; Lie
eb bb

Date/time received in.)
Centrat Clerk's Office

nailing depty

Wet



Under § 1367(c), the court may decline to exercise supplemental jurisdiction if the
counterclaims: (1) raise a novel or complex issue of state law; (2) predominate over the original
claim; (3) remain after dismissal of the original claim; or (4) require dismissal for compelling
reasons in exceptional circumstances, Ford Credit’s counterclaims are basic breach of contract
claims that neither raise any novel, complex issues of state law nor predominate over plaintiffs’
claims. Therefore, the court will exercise supplemental jurisdiction over Ford Credit’s
counterclaims.

Finally, plaintiffs move to dismiss Ford Credit’s conditional counterclaims against the
putative class members pursuant to Rule 12(b)(1), (b)(2) and (b)(6). Ford Credit’s conditional
counterclaims are premised entirely on class certification. Based on the denial of class certification,
plaintiffs’ motion to dismiss Ford Credit’s conditional counterclaims is moot.

CONCLUSION
Plaintiffs’ motions for class certification and to dismiss defendant’s counterclaims are

denied. Plaintiffs’ motion to dismiss defendant’s conditional counterclaims is moot.

April 18, 2002 ENTER:

tant 13. Cubrr.

zanne B. Conlon
United States District Judge

11


Ismael Vasquez defaulted on his contractual obligations for the purchase of a 1995 Ford Bronco.
ld. at § 4. Ford Credit alleges that these individual plaintiffs are “indebted to Ford Credit in an
amount to be determined by motion or at trial. /d. at {{] 3-4. In ruling on a motion to dismiss, the
court considers “whether relief is possible under any set of fact that could be established consistent
with the allegations.” Pokuta v. Trans World Airlines, Inc., 191 F.3d 834, 839 (7th Cir. 1999),
citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957).

Plaintiffs first argue that Ford Credit’s counterclaims against the individual plaintiffs fail
to state a claim upon which relief can be granted. Ford Credit alleges the existence of financing
contracts, the individual plaintiffs’ breaches, and that damages resulted from the breaches. These
allegations are sufficient to state the elements of breach of contract claims. See Bennett v. Schmidt,
153 F.3d 516, 517 (7th Cir. 1998)(“Complaints need not plead law or match facts to every element
of a legal theory”).

Plaintiffs next argue the court lacks jurisdiction over the counterclaims because they are
permissive rather than compulsory. The court may “maintain supplemental jurisdiction over
counterclaims, whether compulsory or permissive, so long as the counterclaims ‘are so related’ to
the original claims that they form the same case or controversy.” Rothman v. Emory University, 123
F.3d 446, 454 (7th Cir. 1997), citing 28 U.S.C. § 1367(a). Ford Credit alleges the individual
plaintiffs breached the standard form finance contract at issue in plaintiffs’ suit. Although a
counterclaim for recovery of a defaulted debt related to the underlying contract “falls within the
outer boundary of § 1367(a),” the counterclaim nevertheless falls within the court’s jurisdiction.
Channell v, Citicorp National Services, Inc., 89 F.3d 379, 386 (7th Cir. 1996). The court must then

determine whether to decline to exercise supplemental jurisdiction.

10


to the class and have a sufficient interest in the outcome to litigate the case vigorously. The class
representatives, like the putative class members, have claims for economic damages allegedly
caused by Ford Credit’s finance charge policy. Therefore, the adequacy of representation
requirement of Rule 23(a) is satisfied.

B. Rule 23(b) Requirements

The court must then turn to the requirements of Rule 23(b). Plaintiffs request divided
certification under Rule 23(b)(2) and (3). Specifically, plaintiffs ask the court to certify a Rule
23(b)(2) class for equitable relief and a Rule 23(b)(3) class for damages. See Lemon v.
International Union of Operating Engineers, Local 139, 216 F.3d 577, 581 (7th Cir. 2000). The
Seventh Circuit has “made clear that mixed class actions that seek both equitable and compensatory
relief must satisfy the formalities of Rule 23(b)(3).” Ameritech Benefit Plan Committee v.
Communication Workers of America, 220 F.3d 814, 820 (7th Cir. 2000), citing Jefferson v.
Ingersoll Intern., Inc., 195 F.3d 894 (7th Cir. 1999).

Rule 23(b)(3) requires a showing that “questions of law or fact common to the members of
the class predominate and that a class action is superior to other available methods for the fair and
efficient adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3). In considering Rule 23(b)(3)’s
requirements, the court must review the substantive elements of plaintiffs’ cause of action, the proof
necessary for the various elements and the manageability of the trial on these issues. Simer v. Rios,
661 F.2d 665, 672 (7th Cir. 1981).

1. Plaintiffs’ Cause of Action
Plaintiffs intend to prove Ford Credit discriminated against Hispanics through the use of

statistical evidence. “The line between disparate impact and disparate treatment cases is most


determination of certification issues.” Dhamer v. Bristol-Myers Squibb Co., 183 F.R.D. 520, 530
(N.D. Ill. 1998).

Plaintiffs bear the burden of establishing the requirements for class certification. Retired
Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 596 (7th Cir. 1993). Under Rule 23(a),
plaintiffs must prove: (1) the class is so numerous that joinder of all members is impracticable
(“numerosity”); (2) there are questions of law or fact common to the class (“commonality”); (3) the
claims or defenses of the representative parties are typical of the claims or defenses of the class
(“typicality”); and (4) the representative parties will fairly and adequately protect the interests of
the class (“adequacy of representation”). Fed. R. Civ. P. 23(a). If all four elements of Rule 23(a)
are satisfied, plaintiffs must then satisfy one of the subsections of Rule 23(b). Fed. R. Civ. P.23(b).
A. Rule 23(a) Requirements

Ford Credit does not dispute that plaintiffs meet the requirements of Rule 23(a). Rather,
Ford Credit’s challenge to class certification centers on the requirements of Rule 23(b).
Nevertheless, the court is not limited to arguments made by the party opposing class certification.
The court must undertake an independent analysis to determine whether all requirements of Rule
23 are satisfied. See In re General Motors Corp. Engine Interchange Litigation, 594 F.2d 1106,
1124 (7th Cir. 1979).

1. Numerosity

Rule 23(a)(1) requires that the proposed class be so numerous that joinder of all members
is impracticable. To establish numerosity, plaintiffs are not required to provide an exact number
of class members. Marcial v. Coronet Insurance Co., 880 F.2d 954, 957 (7th Cir. 1989). However,

plaintiffs must provide a good faith estimate of the class size. Allen v. City of Chicago, 828 F.


BACKGROUND

Plaintiffs, who are Hispanic, received financing from Ford Credit to purchase automobiles.
Amended Complaint 8. According to plaintiffs, Ford Credit subjected them and other Hispanics
to a discriminatory finance charge policy based on race. Id. at ff] 2, 51, 63, 66. Under Ford Credit’s
finance charge policy, the annual percentage rate (“APR”) charged for financing consists of: (1)
the minimum interest rate at which Ford Credit will finance the transaction (“buy rate’’); and (2) the
finance charge over the buy rate (“finance charge markup”). /d. at {| 22-27. Plaintiffs claim that
Ford Credit’s finance charge policy allows the individual dealerships to impose a higher finance
charge markup on Hispanic customers than other similarly situated non-Hispanic customers. Id.
at 92, 4, 28, 51, 63, 66. Ford Credit counterclaims that certain named plaintiffs and putative class
members have defaulted on their financing contracts. Counterclaim {{ 3-4; Conditional
Counterclaim ff 1-3.

DISCUSSION

1 Motion for Class Certification

In their motion for class certification, plaintiffs propose the following class:

All Hispanic individuals who obtained financing from Ford Motor Credit Company

in connection with an automotive purchase pursuant to a retail installment contract

in the United States from January 1, 1990 to the present.
In deciding a motion for class certification, the court may not consider the merits of the underlying
claim. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78 (1974). However, the court may look
beyond the pleadings to determine whether the requirements of Rule 23 have been met. Szabo v.
Bridgeport Machines, Inc., 249 F.3d 672, 677 (7th Cir. 2001). The court must “understand the

claims, defenses, relevant facts and applicable substantive law in order to make a meaningful


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
RUDI RODRIGUEZ, et al. )
) No. 01 C 8526
Plaintiffs, )
) Suzanne B. Conlon, Judge
v. )
) DOCKETED
FORD MOTOR CREDIT Co. ) 02
) npr 19 2
Defendant. )

MEMORANDUM OPINION AND ORDER

Plaintiffs Rudi Rodriguez, Armando Alvarez, Norma Alvarez, Claudia Pineda, Ismael
Vasquez, Francisco Ramirez, Josefina Ramirez, Maria de los Angeles Romero and Hector Romero
brought this purported national class action against Ford Motor Credit Company (“Ford Credit”)
for discrimination in violation of the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691
et seqg., 42 U.S.C. § 1981 (“§ 1981”) and 42 U.S.C. § 1982 (“§ 1982”). Ford Credit counterclaimed
against named plaintiffs Armando Alvarez, Norma Alvarez, Ismael Vasquez, Maria de los Angeles
Romero and Hector Romero as well as any putative class members for breach of contract. Plaintiffs
thereafter voluntarily dismissed the claims of Rudi Rodriguez, Armando Alvarez and Norma
Alvarez without prejudice. Ford Credit then withdrew the counterclaims against Armando Alvarez
and Norma Alvarez. The remaining named plaintiffs (collectively, “plaintiffs”) move for class
certification pursuant to Federal Rule of Civil Procedure 23. Plaintiffs also move to dismiss the

counterclaims pursuant to Federal Rules of Civil Procedure 12(b)(1), (b)(2) and (b)(6).

| Lay