PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

Nos. 08-3621, 08-3790, 08-3791 & 08-3857

 

IN RE: COMMUNITY BANK OF NORTHERN VIRGINIA

AND GUARANTY NATIONAL BANK OF

TALLAHASSEE SECOND MORTGAGE LOAN

LITIGATION (MDL 1674)

Objecting Class Members,

Appellants (08-3621)

(Pursuant to Fed. R. App. P. 12(a))

Alabama and Georgia Objecting Class

Members,

Appellants (08-3790)

(Pursuant to Fed. R. App. P. 12(a))

Richard H. Heady, Jr., Robert Rowley, Arline

Rowley, Galen Hurt, Darrell Turner, Michael

Rich, Edna Rich, Patrick Franklin, Michael

Graham, Tracy Graham, Eric Lewis, Barbara

Lewis, David Davidson, Michael Moore, Karla

Moore, Anthony Dixon and Kathy Dixon.

Appellants (08-3791)

(Pursuant to Fed. R. App. P. 12(a))
2

Troy Elliott, Lorrain Oswald and Ruth D. 

Mathis-Wisseh,

Appellants (08-3857)

(Pursuant to Fed. R. App. P. 12(a))

 

No. 09-2001

 

JOHN DRENNEN; ROWENA DRENNEN; 

DAVID GARNER; DIANE GARNER;

SHAWN STARKEY; LORENE STARKEY,

Appellants

v.

PNC BANK NATIONAL ASSOCIATION; 

GMAC-RESIDENTIAL FUNDING

CORPORATION, a Minnesota Corporation; 

HOMECOMINGS FINANCIAL NETWORK INC., 

a Delaware Corporation

 

Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. Civil Action Nos. 2-02-cv-01201, 

2-03-cv-00425, 2-05-cv-00688 and

2-05-cv-01386)

District Judge: Honorable Gary L. Lancaster
Judge Scirica completed his term as Chief Judge on May *

4, 2010.

The Honorable John E. Jones, III, United States District **

Judge for the Middle District of Pennsylvania, sitting by

designation.

3

 

Argued April 20, 2010

Before: SCIRICA , Chief Judge, AMBRO, Circuit Judge and *

JONES , District Judge **

(Opinion filed: September 22, 2010)

Garrett M. Hodes, Esquire

David M. Skeens, Esquire

J. Michael Vaughan, Esquire

Roy Frederick Walters, Esquire (Argued)

Walters, Bender, Strohbehn & Vaughan

1100 Main Street

2500 City Center Square

P.O. Box 26188

Kansas City, MO 64196

Michael J. Cartee, Esquire

John J. Lloyd, Esquire

Cartee & Lloyd

2210 Eighth Street, Suite B
4

Tuscaloosa, AL 35401

C. Knox McLaney, III, Esquire

McLaney & Associates

509 South Court Street

Montgomery, AL 36104

Franklin R. Nix, Esquire

Law Offices of Franklin R. Nix

1020 Foxcroft Road, N.W.

Atlanta, GA 33032-2624

John W. Sharbrough, III, Esquire

The Sharbrough Law Firm

156 St. Anthony Street

Mobile, AL 36603

Scott C. Borison, Esquire

Legg Law Firm

5500 Buckeystown Pike

Frederick, MD 21703

J. Jerome Hartzell, Esquire (Argued)

Hartzell & Whiteman

2626 Glenwood Avenue, Suite 500

Raleigh, NC 27608

Mallam J. Maynard, Esquire

Financial protection Law Center, Suite 342

P.O. Box 390

Wilmington, NC 28402
5

Robert B. Smith, Esquire

Smith, Cohen & Mork

445 Fort Pitt Boulevard

210 Fort Pitt Commons

Pittsburgh, PA 15219

Counsel for Appellants

Eric G. Calhoun, Esquire

Travis & Calhoun

1000 Providence Towers East

5001 Spring Valley Road

Dallas, TX 75244

R. Bruce Carlson, Esquire (Argued)

Gary F. Lynch, Esquire

Carlson Lynch

36 North Jefferson Street

P.O. Box 7635

New Castle, PA 16107

Daniel O. Myers, Esquire

A. Hoyt Rowell, III, Esquire

Richardson, Patrick, Westbrook & Brickman

1037 Chuck Dawley Boulevard, Building A

Mount Pleasant, SC 29464

Kevin Oufnac, Esquire

Richardson, Patrick, Westbrook & Brickman

174 East Bay Street

Charleston, SC 29401
6

Thomas L. Allen, Esquire (Argued)

Roy W. Arnold, Esquire

David J. Bird, Esquire

Donna M. Doblick, Esquire

Nina M. Faber, Esquire

Reed Smith

225 Fifth Avenue

Pittsburgh, PA 15222

Darryl J. May, Esquire (Argued)

Ballard Spahr

1735 Market Street, 51st Floor

Philadelphia, PA 19103

David G. Oberdick, Esquire

Meyer, Unkovic & Scott

535 Smithfield Street

1300 Oliver Building

Pittsburgh, PA 15222

F. Douglas Ross, Esquire

Odin, Feldman & Pittleman

9302 Lee Highway, Suite 1100

Fairfax, VA 22031

J. Scott Watson, Esquire

Federal Deposit Insurance Corporation

Appellate Litigation Section VS-7008

3501 North Fairfax Drive

Arlington, VA 22226
7

Counsel for Appellees

 

OPINION OF THE COURT

 

AMBRO, Circuit Judge 

Table of Contents

I. Factual and Procedural Background. .............. 10

A. The Alleged Predatory Lending Scheme.. . . . . . . 10

B. The Separate Class Actions and the Initial 

 Settlement.. ....................... 11

C. The Objectors....................... 17

D. The Prior Appeal.......................... 21

E. The Proceedings on Remand.. . . . . . . . . . . . . . . . 23

1. The Hobson Action................... 23

2. The Objectors Withdraw Their Motion to

Intervene. ....................... 24

3. The District Court’s Viability Briefing.. . . 25

4. The Modified Settlement. . . . . . . . . . . . . . 27

5. The District Court Determines the

TILA/HOEPA Claims 

Are Not Viable................... 30

6. The District Court Appoints a “Friend of 

the Court. ....................... 32

7. The District Court Denies the Objectors’

Renewed Motion to Intervene,

Conditionally Re-Certifies the Class, 
8

and Preliminarily Approves the 

Modified Settlement. . . . . . . . . . . . . . . 34

8. The District Court Certifies the Class and

Approves the Modified Settlement.. . . 36

II. Jurisdiction and Standards of Review. ............ 37

III Discussion.................................... 38

A. Class Certification......................... 39

1. Legal Standards. .................... 39

2. Statute-of-Limitations Issues at the Class

Certification Stage. . . . . . . . . . . . . . . . 42

3. The District Court’s Analysis. . . . . . . . . . . 49

a. The District Court’s Relation-Back

Analysis. .................. 50

b. The District Court’s Equitable 

Tolling Analysis.. . . . . . . . . . . . 64

4. Adequacy of Representation.. . . . . . . . . . . 70

a. The Class Representatives. . . . . . . . 70

b. Class Counsel. ................ 73

5. The North Carolina Objectors. . . . . . . . . . 83

B. The Fairness of the Settlement. . . . . . . . . . . . . . . 89

C. The Objectors’ Renewed Motion to Intervene. . . 93

D. The Objectors’ Renewed Petition for Mandamus 

to Recuse the District Judge. . . . . . . . . . . . . . 95

IV. Conclusion. ................................ 100

This is the second appeal from the certification of a

consolidated “settlement only” nationwide class action that
9

alleged an illegal home equity lending scheme involving two

banks and a company that purchased second mortgage loans

from them. Certain members of the class (the “Objectors”)

contest the District Court’s decisions certifying that class and

approving the class settlement. As it was in the prior appeal, the

principal dispute remains the named plaintiffs’ and class

counsel’s decision not to make claims against the defendants

under the Truth in Lending Act, 15 U.S.C. § 1601 et seq.

(“TILA”), and the Home Ownership and Equity Protection Act

(“HOEPA”), id. § 1639. The Objectors contend that the failure

to do so renders the named plaintiffs and class counsel

inadequate class representatives. 

We conclude that the District Court—by approaching the

adequacy-of-representation questions on remand as though it

were ruling on a motion to amend pursuant to Federal Rule of

Civil Procedure 15(c) or a motion to dismiss pursuant to Rule

12(b)(6)—applied the wrong legal standard in ruling on class

certification under Rule 23. We thus reluctantly vacate again

the Court’s certification decision and its approval of the class

settlement, and remand for further proceedings. In doing so, we

continue to reject (i) the claim that the District Court abused its

discretion in denying the Objectors’ renewed motion to

intervene, and (ii) their renewed petition for mandamus to

recuse the District Judge in this case.
CBNV was acquired by Mercantile Bankshares Corp. in 1

2005. Mercantile is now owned by PNC Bank, N.A.

10

I. Factual and Procedural Background

A. The Alleged Predatory Lending Scheme

The complex factual and procedural history of these

matters is set out at length in our prior opinion, and we only

summarize it here. See In re Community Bank of N. Va., 418

F.3d 277 (3d Cir. 2005)(“Community Bank I”). These class

actions involve the alleged predatory lending scheme of the

Shumway/Bapst Organization (“Shumway”), a residential

mortgage loan business involved in facilitating the making of

high-interest, mortgage-backed loans to debt-laden homeowners.

Because Shumway is not a depository lender—and thus subject

to fee caps and interest ceilings under various state laws—it

allegedly formed relationships with defendants Community

Bank of Northern Virginia (“CBNV”) and Guarantee National

Bank of Tallahassee (“GNBT”), both financially distressed

banks, to circumvent those restrictions. This allegedly 1

permitted Shumway to conceal the origin of the loans, thus

creating the appearance that fees were paid solely to a

depository institution when “[i]n reality . . . the overwhelming

majority of fees and other charges associated with the loans

were funneled to Shumway.” Id. at 284. 

The class action complaint claimed defendant GMAC
In March 2004, the Comptroller of the Currency 2

declared GNBT to be “unsafe and unsound,” and appointed as

receiver the Federal Deposit Insurance Corporation. Id. at 293.

The FDIC was then substituted for GNBT as the real party in

interest in the class action. 

11

Residential Funding Corporation (“RFC”) was a co-conspirator

in this scheme, deriving a substantial portion of its business by

purchasing “jumbo” and high “loan-to-value” loans from CBNV

and GNBT in the secondary market. The named plaintiffs

asserted that RFC acted with knowledge that CBNV and GNBT

were mere “straw parties” used to funnel origination and title

services fees to Shumway. Because these fees were

incorporated into the principal on the loan, RFC purportedly

benefitted from the practice through increased interest income.

In 2001, the federal Comptroller of the Currency

investigated and audited GNBT, and imposed tighter restrictions

on the bank. Shortly thereafter, RFC announced that it would no

longer purchase high interest mortgage loans like those

originated by CBNV and GNBT. RFC’s withdrawal, in turn,

caused the Shumway organization to shut down in early 2003.2

B. The Separate Class Actions and the Initial

Settlement

The consolidated class actions before us began as six

separate class actions. The first—Davis v. CBNV, which named
 In addition to Carlson Lynch Ltd., the class is also 3

represented by the Charleston, South Carolina law firm of

Richardson, Patrick, Westbrook & Brickman, LLC. 

12

CBNV and RFC as defendants—was filed in Pennsylvania state

court in May 2001 as a putative state-wide class action and was

later removed to federal court (on federal preemption grounds).

The first action to name GNBT and RFC as defendants was

Ulrich v. GNBT, filed in the District Court for the Western

District of Pennsylvania in September 2002 as a putative

nationwide class action. The remaining four actions are: Sabo

v. CBNV, filed in federal court in September 2002 as a putative

nationwide class action; and Picard v. CBNV (October 2002),

Mathis v. GBNT (November 2002), and Kessler v. RFC

(February 2003), all filed in Pennsylvania state court as putative

state-wide class actions and later removed to federal court in the

Western District. R. Bruce Carlson of Carlson Lynch Ltd.,

located in Sewickley, Pennsylvania, was the lead plaintiffs’

attorney in all six actions, and was subsequently appointed as

class counsel by the District Court.3

These actions asserted claims against CBNV, GNBT, and

RFC under the Real Estate Settlement Procedures Act

(“RESPA”), 12 U.S.C. § 2601 et seq.; the Racketeer Influenced

and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et

seq.; and the usury, unfair trade practices, and consumer

protection laws of Pennsylvania. Section 8(a) of RESPA

prohibits the giving or accepting of any “fee, kickback, or thing
13

of value” in exchange for referrals of federally related mortgage

loans. 12 U.S.C. § 2607(a). Section 8(b) prohibits the giving or

accepting of “any portion,split, or percentage” of unearned fees.

Id. § 2607(b). Plaintiffs alleged that defendants violated

RESPA in both ways: (1) by charging excessive origination fees

(often as high as 10% of the loan principal) and paying them as

“kickbacks” to Shumway in exchange for its mortgagesolicitation services; and (2) by charging title services fees for

services that were never performed. Plaintiffs alleged that RFC,

as the assignee of the closed loans, was derivatively liable for

the banks’ conduct. See 15 U.S.C. § 1641(d)(1). 

In July 2003, the named plaintiffs and the defendants

(collectively, the “Settling Parties”) moved for preliminary

approval of a proposed nationwide class action settlement (the

“Initial Settlement”). The settlement class was defined to

include all persons (1) who entered into a loan agreement with

CBNV or GNBT, (2) whose loan was secured by a second

mortgage or deed of trust on property located in the United

States, and (3) whose loan was purchased by RFC. There was

no time restriction on the class, which encompassed

approximately 44,000 loans (dating back to as early as 1998).

In reaching the Initial Settlement, the Settling Parties

agreed that the “realistic best-case scenario for RESPA damages

on a per-loan basis” was $4,765 ($3,675 for origination fees and

$1,090 for title service fees). With a class of approximately

44,000 members, the Settling Parties concluded that the total
RESPA provides that “[a]ny person or persons who 4

violate the prohibitions or limitations of this section shall be

jointly and severally liable to the person or persons charged for

the settlement service involved in the violation in an amount

equal to three times the amount of any charge paid for such

settlement service.” 12 U.S.C. § 2607(d)(2). Thus, if the

settlement fees charged by defendants violated RESPA, an

individual plaintiff would (assuming he or she prevailed at trial

or on summary judgment) be entitled to three times the amount

of those fees. The Settling Parties did not factor in the potential

trebling of damages under RESPA, which would push up the

“best-case” recovery per class member to more than $14,000

(and more than $600 million for the class as a whole).

14

“best-case” recovery for the class (after averaging the amount of

individual fees charged) was approximately $200 million. 

4

The Initial Settlement committed defendants to pay up to

$33 million, with class members receiving between $250 and

$925 each. The settlement fund would be allocated among class

members based on two core factors: (1) when the class

member’s loan closed; and (2) the class member’s state of

residence when the loan closed. 

First, $23.2 million would be distributed automatically

based on the date the loans closed. The approximately 14,000

class members whose loans closed within one year of the

“relevant complaints”—i.e., the earliest class action complaint

filed against the bank that made the loan to the class member,
15

the Davis Complaint (for CBNV borrowers) and the Ulrich

Complaint (for GBNT borrowers)—would receive $600

automatically. This structure reflected the hurdle posed by

RESPA’s one-year statute of limitations, which begins to run

“from the date of the occurrence of the violation,” 12 U.S.C.

§ 2614, i.e., the date the loan closed, see, e.g., Snow v. First Am.

Title Ins. Co., 332 F.3d 356, 359–61 (5th Cir. 2003). As the

Settling Parties explain, “[t]his was a negotiated compromise of

a vigorously disputed issue”: whether the named plaintiffs in the

other four actions, as well as the absent class members, could

rely on the filing dates of the Davis and Ulrich complaints to

make their RESPA claims timely. (Settling Parties’ Br. at 71.)

Class members whose loans closed more than one year

before the Davis or Ulrich complaints were filed would

automatically receive $250 (less than half of the automatic

payment to class members with timely claims). However, these

class members were eligible to receive an additional $302 (for

a total of $552) based on their answers to questions in a claims

submission form designed to determine whether they could rely

on equitable tolling as a defense to the expiration of the one-year

limitations period. 

Finally, class members could receive an additional $325

if they resided in one of 21 “Qualifying States” where class

counsel determined that class members could have pursued state
 The “Qualifying States” are: Colorado, Idaho, Illinois, 5

Indiana, Iowa, Kansas, Maine, Maryland, Missouri, New Jersey,

North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina,

Tennessee, Utah, Washington, Wisconsin, Wyoming, and

Virginia. 

For ease of reference, we collectively refer to the six 6

consolidated class actions before us in this appeal as the

“consolidated Kessler action.”

16

law claims against CBNV, GNBT, and/or RFC. 

5

The Initial Settlement provided for “an extremely

generous fee” of $8.1 million to class counsel, Community Bank

I, 418 F.3d at 315, and incentive fee payments to the named

plaintiffs of $1,500 each. It also included a broad release of all

claims that were (or could have been) asserted in the litigation.

The release specifically included claims that could have been

brought under TILA and HOEPA, including claims for actual

damages, statutory damages, and rescission. 

Less than a week after the Settling Parties’ filed their

motion, the District Court entered an order (1) consolidating

these six actions into the Kessler action (2) “conditionally” 6

certifying a class for settlement purposes; and (3) preliminarily

approving the Initial Settlement. The Court also directed that

notice be sent to members of the class advising them of the

settlement and of their right to opt out. Later that year (in

November 2003), the Court approved the filing of an amended
 In Community Bank I, we rejected the Objectors’ 7

argument that the District Court lacked subject matter

jurisdiction over the Kessler action. Though no federal question

appeared on the face of the initial Kessler complaint, we held

that the filing of the Consolidated Amended Complaint—which

explicitly asserted federal causes of action in all six actions

(including claims under RESPA and RICO)—cured the

jurisdictional defect. 418 F.3d at 293–98.

17

consolidated class action complaint action for all six actions (the

“Consolidated Amended Complaint”) to cure what the Court

viewed as a potential jurisdictional problem regarding the

Kessler action (as noted, the action into which the six class

actions had been consolidated).7

C. The Objectors

As noted, none of the named plaintiffs brought claims

against the defendants under TILA or HOEPA. This prompted

several plaintiffs’ firms—whom we shall refer to collectively as

“counsel for the Objectors”—to mail letters to members of the

putative class urging them to communicate with those law firms

regarding the settlement, and, in some instances, urging them to

opt out of the class. 418 F.3d at 287–88. A principal reason

given was the allegedly inadequate consideration paid by the

defendants for release of the class members’ TILA and HOEPA

claims. 
18

TILA is a federal consumer protection statute, intended

to promote the informed use of credit by requiring certain

uniform disclosures from lenders. The statute is implemented

by Regulation Z, 12 C.F.R. §§ 226.1 et seq., which requires

creditors who make loans secured by a borrower’s principal

dwelling to provide those borrowers with certain material

disclosures, id. § 226.18. HOEPA, enacted as an amendment to

TILA, applies to a special class of regulated loans that are made

at higher interest rates and are subject to special disclosure

requirements. See 15 U.S.C. § 1639. In particular, HOEPA

requires lenders to disclose to their borrowers the annual

percentage rate (“APR”) of sums due for the use of monies

loaned and the amount of regular monthly payments. Id.

§ 1639(a)(2). According to the Objectors, the vast majority of

class members’ loans are subject to HOEPA. Like claims for

damages under RESPA, TILA/HOEPA damages claims are

subject to a one-year statute of limitations. Id. § 1640(e).

The Objectors allege that defendants violated TILA and

HOEPA by understating materially the APR in the disclosure

forms they were required to give borrowers when the loans

closed. The calculation of the APR must incorporate “finance

charges,” as defined in Regulation Z, 12 C.F.R. § 226.4. See

also 15 U.S.C. § 1605(a). Although fees for title abstracts and

title examinations ordinarily are excluded from the definition of

“finance charges,” id. § 226.4(c)(7)(i), and therefore not

incorporated into the calculation of the APR, the Objectors

contended that the fees charged by CNBV and GNBT were
 Though not the focus of their arguments on appeal, we 8

note that the Objectors alleged that defendants violated

TILA/HOEPA in two other ways: (1) failing to give borrowers

a one-page HOEPA disclosure document three days prior to the

loan closing; and (2) including a prepayment penalty provision

on loan documents that did not identify one of the five

circumstances in which the lender could enforce that provision.

“[A]ny creditor who fails to comply with any 9

requirement imposed under” TILA is liable to the borrower “in

an amount equal to the sum of . . . any actual damage sustained

by [the borrower] as a result of the failure.” 15 U.S.C.

§ 1640(a)(1). In addition to actual damages, a violation of TILA

with respect to a loan governed by HOEPA entitles the borrower

to an award of statutory damages in “an amount equal to the sum

19

neither “bona fide” nor “reasonable”—and thus should have

been factored into the calculation of the APR, id.

§ 226.4(c)(7)—because (1) no title examinations were

performed, and (2) no true abstracts of title were obtained.

Instead, the Objectors alleged that borrowers were charged for

“property reports” (which allegedly are neither “true” title

examinations nor abstracts) by entities affiliated with Shumway,

and that this charge was illegally marked up and passed on to the

borrower. 

8

The Objectors contend that each class member’s claims

under TILA/HOEPA are worth as much as $52,000 per loan,

which figure includes actual, statutory, and rescission damages.9
of all finance charges and fees paid by the consumer, unless the

creditor demonstrates that the failure to comply is not material.”

Id. § 1640(a)(4). Finally, when a borrower exercises the right of

rescission (as a result of a violation of TILA), he or she is

entitled to a return of all finance and other charges made in

connection with the loan. See id. § 1635. 

In a class action asserting a violation of TILA, the total

class recovery may not exceed $500,000 or one percent of the

creditor’s net worth (whichever is less). Id. § 1640(a)(2)(B).

The Parties do not dispute, however, that this cap does not apply

to the special HOEPA statutory damages provision. See

Elizabeth Renuart & Kathleen Keest, Truth in Lending § 8.8.3.1,

at 626 (Nat’l Consumer Law Ctr., 6th ed. 2007 & Supp. 2009)

(citing 15 U.S.C. § 1640(a)(4)).

20

Together with the defendant’s potential liability under RESPA

(including trebled damages), the Objectors contend that the

actual value of the claims being released is almost $3 billion

(approximately $67,000 per class member).

By October 2003, 435 class members had opted out of

the class settlement. Two weeks later, the District

Court—“without conducting a hearing, setting a briefing

schedule or otherwise allowing [the Objectors] any practical

opportunity to be heard”—granted the Settling Parties’ joint

motion to invalidate those opt-outs. Community Bank I, 418

F.3d at 288. The Court entered an order that “followed verbatim

the Order proposed by the [S]ettling [P]arties” extending the

opt-out period to November 2003. Id. Finally, the Court
21

entered an order barring the objecting law firms from

communicating with any member of the class, and denied the

Objectors’ motion to intervene “without explanation.” Id. at

289, 291. 

D. The Prior Appeal

The District Court held a hearing on the fairness of the

Initial Settlement on November 14, 2003, and heard argument

from the Settling Parties and the Objectors. On December 4,

2003, the Court entered a final order approving the settlement.

The Objectors timely appealed.

In Community Bank I, we vacated the District Court’s

certification of the class and approval of the settlement,

concluding that the Court had erred in several ways, including

by: (1) failing to make an independent inquiry as to whether the

Rule 23 class action requirements were satisfied; (2) improperly

enjoining counsel for the Objectors from communicating with

absent class members; and (3) denying the Objectors’ motion to

intervene without “reasoning or discussion.” Id. at 314. As a

result, we declined “to address definitively the substantive

nature of the settlement.” Id. at 318.

With respect to the District Court’s certification decision,

we concluded that three of the four Rule 23(a)

requirements—numerosity, typicality, and commonality—were

met, as well as the Rule 23(b)(3) predominance and superiority
22

requirements. Id. at 303–10. We expressed serious concerns,

however, as to whether the adequacy requirement of Rule 23(a)

could be met, specifically in the context of whether the named

plaintiffs and class counsel were adequate representatives in

light of their failure to assert colorable TILA/HOEPA claims. 

We were particularly concerned in Community Bank I

with the Settling Parties’ invoking the statute-of-limitations

defense to justify declining to bring TILA/HOEPA claims. We

noted that the Settling Parties themselves had represented to our

Court and the District Court that “approximately 14,000

members of the class have loans that . . . closed ‘within one year

of the date of filing of the relevant complaint.’” Id. at 305.

Accordingly, it “appear[ed] that one-third of the class may have

affirmative TILA and HOEPA claims that are not time barred.”

Id. We doubted whether the named plaintiffs’ interests were

“sufficiently aligned with those of the absent class members” if

the District Court determined that the TILA/HOEPA claims

were “viable,” noting that, “[b]ecause the one-year statutory

period for filing an affirmative TILA or HOEPA claim has

lapsed for all named plaintiffs, [they] appear to have no

incentive to maximize such claims for the approximately 14,000

class members who may still retain this valuable cause of

action.” Id. at 306–07.

In that light, “[a]t the very least . . . consideration should

have been given to the feasibility of dividing the class into subclasses so that a court examining the proposed settlement could
23

have judged the fairness of the settlement as it applied to

similarly situated class members.” Id. at 307. We thus directed

that, should the District Court find on remand that class

certification is appropriate, it also “should determine whether

subclasses are necessary or appropriate.” Id. at 310. 

We also expressed concern over whether “the absent

class members’ interests were sufficiently pursued by class

counsel”:

We have already noted that class counsel never

asserted colorable TILA and HOEPA claims.

However, those claims were part of the settlement

release. Failure to pursue such claims may

suggest that class counsel [abdicated] their duty to

the class in favor of the enormous class-action fee

offered by defendants.

Id. at 307–08. Though we emphasized that we were not

“preclud[ing] the possibility that the adequacy of class

representation c[ould] be established on a more developed

record,” we “instructed [the Court] to examine carefully this

matter on remand.” Id. at 308.

E. The Proceedings on Remand

1. The Hobson Action
24

To begin, we note another putative nationwide class

action relevant to (though not a part of) these appeals. While the

appeal in Community Bank I was pending, counsel for the

Objectors filed a putative nationwide class action—captioned

Hobson v. Irwin Union Bank and Trust Co., et al.—in the

federal District Court for the Northern District of Alabama.

According to the Objectors, Hobson “was filed to address the

inadequacy of the Settling Plaintiffs and their failure to pursue,

but nonetheless release, TILA/HOEPA claims,” as well as to

represent persons who (1) were victims of the Shumway

predatory lending scheme, but (2) whose loans were not

purchased by RFC (and thus did not fall within the class).

(Objectors’ Br., No. 08-3621, at 22.) 

In May 2005, the Judicial Panel for Multidistrict

Litigation transferred Hobson to the Western District of

Pennsylvania. After our remand in Community Bank I, the

attorneys for the Hobson plaintiffs filed (1) a motion for class

certification (in Hobson), (2) a motion to appoint one of the law

firms representing the Objectors—Walters, Bender, Strohbehn

& Vaughn—as interim lead class counsel (in the Hobson action,

as well as the consolidated Kessler action), and (3) a motion to

file a Proposed Second Amended Class Action Complaint (in

the consolidated Kessler action). 

2. The Objectors Withdraw Their Motion to

Intervene
25

In November 2005, the District Court held a conference

call with counsel for the Settling Parties and the Objectors to

discuss how to proceed on remand. Class counsel advised the

Court that it intended to continue to pursue approval of the

Initial Settlement. The Court then asked Michael Vaughn, Esq.

(of the Walters, Bender firm) whether he still wished to pursue

intervention. Mr. Vaughn responded no, explaining that he

believed the transfer of Hobson to the MDL proceeding was an

adequate way to seek the assertion of the potential

TILA/HOEPA claims, and that the intervention issue had

essentially been “moot[ed] by the MDL transfer” of Hobson. 

3. The District Court’s Viability Briefing

During the same conference call, the District Court also

appointed a Steering Committee—composed of various lawyers

from the law firms representing the class, the defendants, and

the Objectors—to establish a briefing schedule to address the

merits of the potential TILA/HOEPA claims. The Court

explained that it envisioned a bifurcated analysis on remand: (1)

it would first address the viability of potential TILA/HOEPA

claims; and (2) then address adequacy and the other Rule 23

elements. Mr. Vaughn agreed with this structure:

The Court: I think the first thing we have to do is

determine the viability of these claims. If I

determine that they are viable, then I think the

argument as to whether or not the named
26

representative you have can adequately represent

those members of your class who have such

claims . . . is Question No. 2.

Mr. Vaughn: We agree with that, Your Honor.

The Court: If I say they’re not viable because of

statute of limitations, or the elements can’t be

met, or something like that, then I think that the

wind might be out of your sails here.

Mr. Vaughn: Your Honor, I think you’re right.

The Steering Committee negotiated a briefing schedule

allowing all interested parties to submit briefs on the viability

issue. The scheduling order also provided for an exchange of

certain loan files, and stipulated that no other formal discovery

would occur. 

Counsel for the Objectors and the defendants submitted

extensive briefing dealing with the TILA/HOEPA issues. Class

counsel, however, did not brief the issue. Instead, they

submitted a filing to the District Court stating that they (i)

“expect[ed] that counsel for the Defendants group will file with

the Court an initial ‘viability’ brief that thoroughly discusses the

legal backdrop of the class-based TILA/HOEPA claims that are

in dispute,” and (ii) concluded, “after much reflection, that [the]

Court would not benefit from a brief by [the named plaintiffs]
27

that would discuss much of the same authority set forth in the

initial brief filed by the Defendants.” Counsel “elected to wait

and see which arguments . . . are advanced in the initial

submission” by the Objectors, and thereafter file a brief

with a comprehensive recitation of relevant facts

that demonstrates: 1) what [counsel] learned

through their investigation into the underlying

conduct in dispute; 2) how that factual

information bears upon the class-based

TILA/HOEPA theories at issue; and[] 3) the

strategy underlying the specific legal claims that

they elected to pursue in this litigation, given the

facts that they learned in their investigation. 

Though class counsel in fact submitted this brief, the District

Court, as we discuss below, did not discuss it in ruling on the

viability question. 

4. The Modified Settlement

As the parties were briefing the viability issue, the

Settling Parties entered into new settlement negotiations to

“explore a possible enhancement to the [Initial] Settlement.”

(Settling Parties’ Br. at 24.) Counsel for the Objectors initially

participated in those negotiations, including unsuccessful

mediation before retired District Court Judge Nicholas Politan

of the District of New Jersey. 
28

During the summer of 2006, the Settling Parties (who

were not joined by counsel for the Objectors) negotiated an

“enhanced” settlement (the “Modified Settlement”) with the

assistance of former Third Circuit Judge Timothy Lewis.

According to the Settling Parties, “[t]he renewed settlement

negotiations considered the alleged monetary damages Class

members ostensibly could have sought assuming . . . that the

posited TILA/HOEPA claims had been pleaded and could

potentially survive a Rule 12(b) motion.” (Settling Parties’ Br.

at 25.) The Settling Parties determined that the potential

“actual” (i.e., compensatory) damages the Objectors were

claiming under TILA/HOEPA amounted to, on average,

approximately $415 per loan. (Id.) However, because of

“Defendants’ perception of the strength of their statute of

limitations . . . defenses,” they refused to make any additional

paymentsto any member of the Class in exchange for the release

of their potential TILA/HOEPA liability without first

determining whether a given Class Member had some basis for

relying on equitable tolling. Accordingly, the Settling Parties

proposed a claim form containing the following questions for

class members to answer:

1. Did you read your Settlement Statement

(Form HUD-1) prior to obtaining your

loan?

2. At the time that you obtained your . . .

loan, did you believe that the Statement of
29

Settlement Charges listed on your HUD-1

was accurate?

3. At the time that you obtained your . . .

loan, did you believe that the Settlement

Charges listed on your HUD-1 were for

services actually performed?

4. At the time that you obtained your CBNV

[or GNBT] loan, did you believe that the

Settlement Charges listed on your HUD-1

were reasonable and appropriate?

The Modified Settlement provided that if a class member

responds to these questions “appropriately,” he or she is entitled

to an additional $332, representing approximately 80% of the

class member’s potential actual damages under TILA and

HOEPA. The defendants agreed to pay up to an additional

$14.6 million to those persons, for a total of $47.6 million. 

In addition, the Modified Settlement reduced the amount

of attorneys’ fees that class counsel would petition the Court to

approve from $8.1 million to $7.5 million. Defendants also

agreed to pay “up to an additional $2 [million] in attorneys’ fees

and costs”—presumably, to counsel for the Objectors—“if so

ordered by the Court.” The Modified Settlement followed the

terms of the Initial Settlement in all other material respects. 
At the outset of the hearing, class counsel notified the 10

Court of the Modified Settlement. 

30

5. The District Court Determines the

TILA/HOEPA Claims Are Not Viable

The District Court held oral argument on the viability

issues in July 2006. It asked Counsel for the Objectors what 10

“standard” it should use to determine the viability of the

TILA/HOEPA claims. Counsel for the Objectors agreed with

the District Court that our Court had intended for it to apply a

Rule 12(b)(6) standard, as did class counsel. At the same time,

Counsel for the Objectors argued that the statute-of-limitations

defense could not be determined using such a standard, as it

presented factual questions that “[r]arely can . . . be disposed of

by . . . a motion to dismiss.” By contrast, counsel for the

defendants argued that a Rule 12(b)(6) standard was

inappropriate, arguing that our Court “did not contemplate that

this viability standard . . . could be satisfied just by showing the

12(b)(6) standard was satisfied.” 

The District Court disagreed with the defendants’

counsel, explaining that the question should be whether, “taking

[the Objectors’] allegations as true, does a claim exist under

TILA or HOEPA?” The Court stated that it believed such a

cause of action could be adequately stated under Rule 12(b)(6),

but characterized the merits of the statute-of-limitations defense

as a “tough one.” 
31

In October 2006, the District Court issued a 33-page

“Memorandum” (the “2006 Memorandum”) in which it

determined that the proposed TILA/HOEPA claims for damages

and rescission were not viable. At the outset, the Court

explained that it had interpreted our decision in Community

Bank I as directing it to 

apply a hybrid standard of review. Namely, the

court of appeals directed this court to examine

whether the Class Plaintiffs were inadequate

representatives under Rule 23. The court of

appeals questioned whether the Class Plaintiffs

were inadequate if they failed to assert

TILA/HOEPA claims that were “viable.” Thus,

it appears that the court of appeals intended this

court to examine whether the Class Plaintiffs were

inadequate representatives under Rule 23 because

they failed to assert TILA/HOEPA claims which

could have survived a Rule 12(b)(6) motion to

dismiss.

In the end, the Court agreed with the defendants’ “principal

argument” regarding the viability question: “that the

TILA/HOEPA claims for damages are not viable because they

are time barred.” 

We discuss the District Court’s viability conclusions at

length below. To summarize, it first agreed with the defendants
In February 2008, the Objectors filed with our Court a 11

petition for mandamus and permission to appeal under Federal

Rule of Civil Procedure 23(f). We denied that petition in March

2008. 

32

that no class member could bring a timely claim under TILA or

HOEPA for damages or rescission, as no such amended

pleading could satisfy the requirements of Federal Rule of

Procedure 15(c), and thus could not relate back to any earlier

complaint in the consolidated Kessler action. In addition, the

Court determined (while applying a Rule 12(b)(6) standard) that

no class member could rely on equitable tolling to save their

otherwise time-barred claims.

 The Objectors filed a motion asking the District Court to

reconsider its 2006 Memorandum, and alternatively asked it to

certify the Memorandum for an interlocutory appeal pursuant to

28 U.S.C. § 1292(b). The Court denied both motions.11

6. The District Court Appoints a “Friend of

the Court”

The District Court held a conference call with counsel for

the Settling Parties and the Objectors on December 1, 2006, and

expressed its intent to appoint an “independent body” to

evaluate the fairness of the Modified Settlement. The Court

made clear that it would not ask this “independent body” to

“evaluate the case in terms of whether the requirements of Rule
 The Objectors renew that challenge before our Court, 12

arguing that the District Court’s appointment of Judge Ziegler

was improper because he was not appointed as an expert or a

special master. See Fed. R. Civ. P. 53(c); see also Manual for

Complex Litigation (Fourth) § 21.632 (2004) (“Whether the case

has been certified as a class at an earlier stage or presented for

certification and settlement approval at the same time, the judge

can have a court-appointed expert or special master review the

proposed settlement terms, gather information necessary to

understand how those terms affect the absent class members,

and assist the judge in determining whether the fairness,

reasonableness, and adequacy requirements for approval are

met.”). Because the Objectors did not challenge the

appointment until oral argument before Judge Ziegler—and

despite having six weeks between receiving notice of the

33

23 have been met or not.” Counsel for the Objectors raised no

objection to the Court’s proposal at this time.

The Court later chose retired Chief Judge Donald Ziegler

of the District Court for the Western District of Pennsylvania to

serve as a “friend of the court,” and to provide a “non-binding

advisory opinion” as to whether the Modified Settlement was

“fair and reasonable” under Rule 23. In March 2007, the

Settling Parties and the Objectors presented oral arguments to

Judge Ziegler regarding the fairness of the Modified Settlement.

However, counsel for some of the Objectors objected to the

process, arguing to Judge Ziegler that his appointment was

improper. 

12
appointment and the argument—they have waived this

challenge, and we decline to address it. See, e.g., Fajardo

Shopping Ctr., S.E. v. Sun Alliance Ins. Co. of P.R., 167 F.3d 1,

6 (1st Cir. 1999).

34

Judge Ziegler issued his advisory opinion in July 2007,

and concluded that the Modified Settlement was fair,

reasonable, and adequate. He reasoned that the named plaintiffs

faced significant obstacles to their RESPA and RICO claims if

the case proceeded to trial, including the possibility that they

would be unable to prove that defendants had charged them fees

(e.g., title fees and origination fees) for services that were not

actually performed. However, Judge Ziegler did not consider

whether the Modified Settlement was fair in the context of the

Objectors’ arguments that the class members’ TILA/HOEPA

claims were significantly more valuable, noting that the District

Court “ha[d] already concluded that there are no viable

TILA/HOEPA claims” and that he was not authorized to “revisit

that issue.” 

7. The District Court Denies the Objectors’

Renewed M o tion to Inte rvene,

Conditionally Re-Certifies the Class, and

Preliminarily Approves the Modified

Settlement

By the Fall of 2007, the Settling Parties and the Objectors

had fully briefed the Settling Parties’ motion for conditional re-
35

certification of the class and preliminary approval of the

Modified Settlement. After a hearing on those motions, on

November 9, 2007, the Walters, Bender firm filed a “renewed”

motion to intervene in the consolidated Kessler action, arguing

that the Modified Settlement was the product of collusion

between class counsel and counsel for defendants.

In January 2008, the District Court conditionally recertified the Class, preliminarily approved the Modified

Settlement, re-appointed class counsel, and re-appointed the

named plaintiffs as class representatives. The Court also denied

the Objecting Class Member’s Renewed Motion to Intervene as

untimely, stating that

the Objectors orally withdrew their motion to

intervene in November of 2005. Although the

court will direct the Settling Parties to submit a

revised notice plan and provide the class with an

additional period to opt out, under the unique

circumstances of this case, the Objectors[’]

renewed motion is untimely. . . . They have

identified no persuasive reason why they failed to

pursue intervention in the interim other than their

dissatisfaction with the court’s rulings to date.

The Settling Parties then filed a proposed plan for

disseminating notice to the class, which the District Court

approved. Only 55 members submitted timely opt-outs. Among
36

the class members who chose not to opt out were the named

plaintiffs in the Hobson action. 

8. The District Court Certifies the Class and

Approves the Modified Settlement

The District Court held a final fairness hearing on June

30, 2008, during which it heard at length from class counsel and

counsel for the Objectors. The Objectors argued, among other

things, that (1) the Court erred when it appointed Judge Ziegler

to issue an advisory opinion on the fairness of the Modified

Settlement; (2) the Modified Settlement did not extract

sufficient consideration for the class members’ TILA/HOEPA

claims (or the RESPA, RICO, and state law claims the named

plaintiffs had pled); and (3) the defendants—in particular RFC

and PNC Bank (the successor to CBNV)—could withstand a far

greater judgment. 

On August 14, 2008, the Court issued a Memorandum

and Order certifying the class and approving the modified

settlement. With respect to the adequacy requirement, it relied

solely on its 2006 Memorandum, in which it had

concluded that the [proposed TILA/HOEPA]

claims were time-barred. Thus, Class Counsel’s

strategic decision to pursue other legal theories in

this case in no way renders them inadequate. In

any event, . . . the proposed settlement accounts
37

for the risk that some members of the class could

have established sustainable TILA/HOEPA

claims and provides for an award where

appropriate.

As a result of these determinations, the Court never considered

the creation of a subclass. 

The Court then examined the fairness of the Modified

Settlement in light of the factors announced in Girsh v. Jepson,

521 F.2d 153 (3d Cir. 1975), and concluded that they counseled

in favor of approving the Modified Settlement as fair,

reasonable, and adequate. It further concluded that,

notwithstanding the named plaintiffs’ failure to bring

TILA/HOEPA claims, the Modified Settlement was fair,

reasonable, and adequate because it provided “class members

with additional relief for such claims, even though th[e] court

found them to be time-barred.” 

The Objectors timely appealed to our Court.

II. Jurisdiction and Standards of Review

The District Court had jurisdiction under 28 U.S.C.

§ 1331 because the Consolidated Amended Complaint asserted

claims under federal law (i.e., RESPA and RICO). See

Community Bank I, 418 F.3d at 293–98. The Court had

supplemental jurisdiction over the state law claims under 28
38

U.S.C. § 1367(a). We have appellate jurisdiction under 28

§ U.S.C. 1291. 

We review a district court’s certification of a class for

abuse of discretion. In re Schering Plough Corp. ERISA Litig.,

589 F.3d 585, 595 (3d Cir. 2009); Community Bank I, 418 F.3d

at 298. A district court abuses its discretion if its “decision rests

upon a clearly erroneous finding of fact, an errant conclusion of

law, or an improper application of law to fact.” In re Hydrogen

Peroxide Antitrust Litig., 552 F.3d 305, 312 (3d Cir. 2008)

(internal quotation marks and citation omitted). However,

“whether an incorrect legal standard has been used [in ruling on

class certification] is an issue of law to be reviewed de novo.”

Id. (internal quotation marks and citation omitted); accord

Regents of Univ. of Cal. v. Credit Suisse First Boston (USA),

Inc., 482 F.3d 372, 380 (5th Cir. 2007).

III. Discussion

We begin by noting that several of the Objectors’ claims

of error underwhelm. In particular, we see nothing to support

their attacks on the District Court’s impartiality, or their

repeated insinuations that the Court intentionally disregarded

our mandate in Community Bank I. From our independent

review of the record, the Court made great efforts to address the

concerns we expressed in our prior opinion, and attempted to

follow an orderly procedure on remand in ruling on class

certification and the fairness, adequacy, and reasonableness of
39

the settlement.

That said, we nonetheless conclude that the proceedings

on remand went off course. To provide needed context, we first

discuss the legal standards that apply to the Rule 23

requirements at issue in this case, as well as the extent to which

the merits of statute-of-limitations defenses may become

relevant to a district court’s evaluation of those requirements.

We then turn to the District Court’s certification decision here,

and conclude that the Court—by approaching the adequacy of

representation requirement as though it were ruling on a motion

to amend a pleading under Rule 15(c), or a motion to dismiss

under Rule 12(b)(6)—engaged in an analysis that was neither

required nor contemplated by Rule 23. From there, we discuss

our continuing concerns regarding whether the named plaintiffs

and class counsel are adequate class representatives, paying

particular attention to: (a) the statute-of-limitations problems

faced by the named plaintiffs’ claims (whether under RESPA,

TILA, or HOEPA); and (b) class counsel’s decision not to bring

TILA/HOEPA claims on behalf of the class. We address finally

the Objectors’ argument that the Court abused its discretion in

denying their renewed motion to intervene, as well as their

request that we reassign this matter to a different District Court

Judge on remand, both of which we reject. 

A. Class Certification

1. Legal Standards
40

“Rule 23 is designed to assure that courts will identify the

common interests of class members and evaluate [(1)] the

named plaintiffs’ and [(2)] counsel’s ability to fairly and

adequately protect class interests.” In re General Motors Corp.

Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 799

(3d Cir. 1995). Every putative class must satisfy the four

requirements of Rule 23(a): (1) the class must be “so numerous

that joinder of all members is impracticable” (numerosity); (2)

there must be “questions of law or fact common to the class”

(commonality); (3) “the claims or defenses of the representative

parties” must be “typical of the claims or defenses of the class”

(typicality); and (4) the named plaintiffs must “fairly and

adequately protect the interests of the class” (adequacy of

representation, or simply adequacy). Fed. R. Civ. P.

23(a)(1)–(4). If those requirements are met, a district court must

then find that the class fits within one of the three categories of

class actions in Rule 23(b). The District Court certified this

class action under Rule 23(b)(3), which requires that (i)

common questions of law or fact predominate (predominance),

and (ii) the class action is the superior method for adjudication

(superiority). 

“Confronted with a request for a settlement-only class

certification, a district court need not inquire whether the case,

if tried, would present intractable management problems, for the

proposal is that there be no trial.” Amchem Prods., Inc. v.

Windsor, 521 U.S. 591, 620 (1997) (internal citation omitted).

However, the “other specifications of [Rule 23]—those designed
41

to protect absentees by blocking unwarranted or overbroad class

definitions—demand undiluted, even heightened, attention in

the settlement context.” Id.

The sole disputed Rule 23 requirement in this case, as it

was in Community Bank I, is adequacy of representation, both

as to the named plaintiffs and their counsel. “The inquiry that

a court should make regarding the adequacy of representation

requisite of Rule 23(a)(4) is to determine that the putative

named plaintiff has the ability and the incentive to represent the

claims of the class vigorously, . . . and that there is no conflict

between the individual’s claims and those asserted on behalf of

the class.” Hassine v. Jeffes, 846 F.2d 169, 179 (3d Cir. 1988).

This inquiry is vital, as “class members with divergent or

conflicting interests [from the named plaintiffs and class

counsel] cannot be adequately represented . . . .” In re Diet

Drugs Prods. Liab. Litig., 385 F.3d 386, 395 (3d Cir. 2004).

“Although questions concerning the adequacy of class

counsel were traditionally analyzed under the aegis of the

adequate representation requirement of Rule 23(a)(4) . . . those

questions have, since 2003, been governed by Rule 23(g).”

Sheinberg v. Sorenson, 606 F.3d 130, 132 (3d Cir. 2010). That

subsection lists several non-exclusive factors that a district court

must consider in determining “counsel’s ability to fairly and

adequately represent the interests of the class,” Fed. R. Civ. P.

23(g)(1)(B), including: (1) “the work counsel has done in

identifying or investigating potential claims in the action,” (2)
42

“counsel’s experience in handling class actions, other complex

litigation, and the types of claims asserted in the action,” (3)

“counsel’s knowledge of the applicable law,” and (4) “the

resources that counsel will commit to representing the class.”

Fed. R. Civ. P. 23(g)(1)(A). 

“Realistically, for purposes of determining adequate

representation, the performance of class counsel is intertwined

with that of the class representative.” Pelt v. Utah, 539 F.3d

1271, 1288 (10th Cir. 2008). As our own Judge Aldisert has

explained, “[e]xperience teaches that it is counsel for the class

representative and not the named parties . . . who direct and

manage [class] actions. Every experienced federal judge knows

that any statements to the contrary [are] sheer sophistry.”

Greenfield v. Villager Indus., Inc., 483 F.2d 824, 832 n.9 (3d

Cir. 1973).

2. Statute-of-Limitations Issues at the Class

Certification Stage

Objectors argue that the District Court erred in

considering the merits of the defendants’ statute-of-limitations

defenses to the potential TILA/HOEPA claims in ruling on class

certification. As noted, the Court determined that any potential

claims possessed by the class under TILA/HOEPA were not

viable because they were time-barred; thus the named plaintiffs

and class counsel were not inadequate for failing to bring them.

Relying on the Supreme Court’s decision in Eisen v. Carlisle &
43

Jacquelin, 417 U.S. 156 (1974), the Objectors contend that “the

[D]istrict [C]ourt’s inquiry into the merits of the TILA/HOEPA

claims . . . was unnecessary for purposes of a Rule 23 analysis

and cannot be sustained as permissible.” (Objectors’ Br., No.

08-3261, at 73.) 

In Eisen, the Supreme Court stated that there is “nothing

in either the language or history of Rule 23 that gives a court

any authority to conduct a preliminary inquiry into the merits of

a suit in order to determine whether it may be maintained as a

class action.” 417 U.S. at 177. As we explained in Hydrogen

Peroxide, this statement in Eisen led to “uncertainty” as to

whether district courts are categorically prohibited from

evaluating the merits of a class claim at the certification stage,

even where merits questions overlap with a Rule 23

requirement. 552 F.3d at 316. This tension—between a district

court’s obligation to make findings regarding the Rule 23

requirements, and the apparent bar on “conduct[ing] a

preliminary inquiry into the merits of” a class claim—is

reflected in how courts have confronted statute of limitations at

the class certification stage. 

In general, a “statute of limitations is an affirmative

defense, and the burden of establishing its applicability to a

particular claim rests with the defendant.” Bradford-White

Corp. v. Ernst & Whinney, 872 F.2d 1153, 1161 (3d Cir. 1989)

(internal quotation marks and citations omitted); see also Fed.

R. Civ. P. 8(c). Thus, many courts have refused to consider
See, e.g., Int’l Woodworkers of Am. v. Chesapeake Bay 13

Plywood Corp., 659 F.2d 1259, 1270 (4th Cir. 1981) (“Courts

passing upon motions for class certification have generally

refused to consider the impact of such affirmative defenses as

the statute of limitations on the potential representative’s

case.”); In re VMS Sec. Litig., 136 F.R.D. 466, 477 (N.D. Ill.

1991) (“[I]nasmuch as the statute-of-limitations defense

addresses the merits of [the] plaintiff’s claims, it is beyond the

scope of a motion for class certification.”); In re Baldwin-United

Corp. Litig., 122 F.R.D. 424, 427 (S.D.N.Y. 1986) (reasoning

that defendant’s challenge to the commonality requirement,

based on individual questions with respect to timeliness, was

“outside the scope of Rule 23 and indeed defies the principle

enunciated in Eisen”); Rishcoff v. Commodity Fluctuations Sys.,

Inc., 111 F.R.D. 381, 382–83 (E.D. Pa. 1986) (“[I]ssues relating

to whether certain claims may be barred by the statute of

limitations are irrelevant to the question of whether a class

should be certified and will not be considered in determining the

propriety of allowing the case to proceed as a class action.”);

Dameron v. Sinai Hosp. of Balt., Inc., 595 F. Supp. 1404, 1409

(D. Md. 1984) (refusing to “cloud the issue of adequate

representation [under Rule 23] with the statute of limitations

problem,” and noting that “[i]f the named plaintiff’s claim is

barred by [the] statute of limitations, a proper plaintiff may be

substituted to represent the class”); Chevalier v. Baird Sav.

Ass’n, 72 F.R.D. 140, 150 (E.D. Pa. 1976) (“Since the merits of

44

statute-of-limitations issues at the class certification stage,

reasoning that such an inquiry veers impermissibly into whether

the named plaintiffs and the class can prevail on their claims.13
a plaintiff’s claim are irrelevant for the purposes of a class

action motion, it is of no moment that some of the class’s claims

may be time barred as defendants assert.”).

45

However, our Court and other circuit courts have since

rejected the proposition that Eisen categorically prohibits the

evaluation of the merits of class claims at the certification stage.

In Hydrogen Peroxide, we interpreted Eisen to mean only that

a merits inquiry is precluded at the class certification stage

where it “is not necessary to determine a Rule 23 requirement.”

552 F.3d at 317. Indeed, as the Supreme Court recognized a few

years after it decided Eisen,

[e]valuation of many of the questions entering

into determination of class action questions is

intimately involved with the merits of the claims.

The typicality of the representative’s claims or

defenses, the adequacy of the representative, and

the presence of common questions of law or fact

are obvious examples.

Coopers & Lybrand v. Livesay, 437 U.S. 463, 469 n.12 (1978)

(internal quotation marks and citation omitted). Thus, “[i]n

reviewing a motion for class certification, a preliminary inquiry

into the merits is sometimes necessary to determine whether the

alleged claims can be properly resolved as a class action.”

Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d

154, 168 (3d Cir. 2001); accord Hydrogen Peroxide, 552 F.3d
46

at 320 (“[B]ecause each requirement of Rule 23 must be met, a

district court errs as a matter of law when it fails to resolve a

genuine legal or factual dispute relevant to determining the

requirements.”). 

Situations abound where statute-of-limitations issues

overlap with certain of the Rule 23 requirements. For example,

defendants may contend that statute-of-limitations defenses

preclude a finding of typicality under Rule 23(a), either because

the named plaintiffs’ claims are untimely (and thus not typical

of the class), see, e.g., Franze v. Equitable Assurance, 296 F.3d

1250, 1254 (11th Cir. 2002), or because the proposed class

includes numerous class members with untimely claims

(rendering the named plaintiffs’ timely claims atypical), see,

e.g., Doe v. Chao, 306 F.3d 170, 184 (4th Cir. 2002). Relatedly,

defendants may oppose class certification on the ground that

class members with untimely claims must rely on equitable

tolling to save their claims, which presents an individual

question of law and fact that could predominate over common

questions under Rule 23(b)(3), see, e.g., In re Linerboard

Antitrust Litig., 305 F.3d 145, 160–62 (3d Cir. 2002), or

challenge the predominance requirement in light of the

“presence of idiosyncratic statute-of-limitations issues” among

the laws of various states in a nationwide class action, see Waste

Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 295–96 (1st

Cir. 2000). 

Statute-of-limitations issues also touch the adequacy
47

requirement. See, e.g., Goodman v. Lukens Steel Co., 777 F.2d

113, 124 (3d Cir. 1985) (named plaintiffs were inadequate

representatives in class action challenging discriminatory

practices in the initial assignment of newly hired employees,

because “[a]ll of the named plaintiffs . . . were originally hired

outside the [statute-of-] limitations period, and therefore, none

ha[d] a viable complaint about discrimination in initial

assignment”). Indeed, the merits of a statute-of-limitations

defense to the named plaintiffs’ claims may be relevant to

evaluating their adequacy as class representatives in the same

way any type of defense may be relevant to that inquiry, i.e.,

named plaintiffs may be inadequate representatives if their

claims are extremely weak as compared to the rest of the class.

As Judge Posner explained,

if when class certification is sought it is already

apparent . . . that the class representative’s claim

is extremely weak, this is an independent reason

to doubt the adequacy of his representation. . . .

One whose own claim is a loser from the start

knows that he has nothing to gain from the victory

of the class, and so he has little incentive to assist

or cooperate in the litigation; the case is then a

pure class action lawyer’s suit.

Robinson v. Sheriff of Cook County, 167 F.3d 1155, 1157 (7th

Cir. 1999) (internal citations omitted). Thus, to the extent the

claims of the named plaintiffs—as compared with the rest of the
48

class—are subject to fatal statute-of-limitations defenses, that

inquiry may be relevant to whether they can adequately

represent absent class members whose claims do not suffer from

timeliness problems. Cf. Beck v. Maximus, Inc., 457 F.3d 291,

297 (3d Cir. 2006) (“the challenge presented by a defense

unique to a class representative” is that “the representative’s

interest might not be aligned with those of the class, and the

representative might devote time and effort to the defense at the

expense of issues that are common and controlling for the

class”). 

However, the extent to which a district court may

consider the merits of claims in ruling on a class-certification

motion has limits. “When a district court properly considers an

issue overlapping the merits in the course of determining

whether a Rule 23 requirement is met, it does not do so in order

to predict which party will prevail on the merits.” Hydrogen

Peroxide, 552 F.3d at 317 n.17; see also Hassine, 846 F.2d at

178 (“The ability of a named plaintiff to succeed on his or her

individual claims has never been a prerequisite to certification

of the class.”). Thus, merits inquiry is not permissible “when

[the] merits issue is unrelated to a Rule 23 requirement.” In re

Initial Pub. Offering Sec. Litig., 471 F.3d 24, 41 (2d Cir. 2006);

see also Vallario v. Vandehey, 554 F.3d 1259, 1266 (10th Cir.

2009) (the merits of the class claims “may not serve as the focal

point of [the] class certification analysis”). Stated another way,

it remains true that “[i]n determining the propriety of a class

action, the question is not whether the plaintiff or plaintiffs have
49

stated a cause of action . . . but rather whether the requirements

of Rule 23 are met.” Eisen, 417 U.S. at 178 (emphasis added)

(internal quotation marks and citation omitted).

In the context of this precedent, we cannot agree with the

Objectors that the District Court was categorically prohibited

from evaluating the merits of defendants’ statute-of-limitations

defenses to potential TILA/HOEPA claims in ruling on class

certification. We must determine, however, whether the District

Court’s analysis of the merits of those defenses was necessary

to make findings on Rule 23 requirements—specifically here the

adequacy-of-representation requirements under Rules 23(a)(4)

and 23(g). 

3. The District Court’s Analysis

As noted, the District Court interpreted our decision in

Community Bank I as instructing it to evaluate the viability of

potential TILA/HOEPA class claims before evaluating the

adequacy of the named plaintiffs and their counsel. Compare

418 F.3d at 306 (“If the Court determines that the TILA and

HOEPA claims [of class members] are viable, there may be

serious questions whether the named plaintiffs’ interests are

sufficiently aligned with those of absent class members as

required by Rule 23(a).”). The District Court’s reasoning

appears to be that, if these claims could not survive a Rule

12(b)(6) motion to dismiss (and thus were not viable), neither

the named plaintiffs nor their counsel were inadequate for
50

failing to bring them.

a. The District Court’s Relation-Back

Analysis

Though the District Court purported to approach this

question using a Rule 12(b)(6) standard, its analysis actually

dealt with Rule 15(c), which governs the circumstances where

an amended pleading “relates back to the date of the original

pleading.” Fed. R. Civ. P. 15(c). The Court focused on Rule

15(c)(1)(C), which governs the circumstances in which an

amended pleading that “changes the party or the naming of the

party against whom a claim is asserted” relates back to the date

of the initial pleading. Fed. R. Civ. P. 15(c)(1)(C). Such an

amended pleading only relates back if (1) it “asserts a claim or

defense that arose out of the conduct, transaction, or occurrence

set out—or attempted to be set out—in the original pleading”;

and (2) the “party to be brought in by amendment . . . knew or

should have known that the action would have been brought

against it, but for a mistake concerning the proper party’s

identity.” Id.

The Court approached the relation-back question—i.e.,

whether an amended pleading asserting TILA/HOEPA claims

could relate back to any earlier complaint—not by reference to

a hypothetical amended complaint that the existing named

plaintiffs could file, but by reference to an amended complaint

filed by absent members of the class. In particular, the Court
The first ground on which the District Court relied in 14

concluding that no class member had a timely TILA/HOEPA

claim was its interpretation of our decision in Community Bank

I as directing it to “focus on whether TILA/HOEPA damage

claims were timely and thus . . . viable as of the November 10,

2003 filing date” of the Consolidated Amended Complaint. The

Court emphasized that in Community Bank I, our Court had

noted—in the context of explaining why a substantial group of

class members appeared to have timely TILA/HOEPA

claims—that “[t]he age of the named plaintiffs’ loans when the

relevant complaints were filed ranged from twenty-eight months

(in the case of [named plaintiff Thomas] Mathis) to fifty-six

months (in the case of [named plaintiff Ruth] Davis).” 418 F.3d

at 306–07 (emphasis added). The District Court noted that these

time spans corresponded to the November 2003 filing of the

Consolidated Amended Complaint; i.e., Davis’s loan closed on

February 22, 1999 (56 months before the November 2003

Consolidated Amended Complaint), and Mathis’s loan closed on

June 7, 2001 (28 months before the Consolidated Amended

Complaint). The District Court believed that our Court was

“fully aware of the importance of this issue,” and speculated that

had we “intended the statute of limitations analysis to focus on

any of the earlier filed complaints[,] [we] would have said so.”

Unfortunately, it appears that a misplaced record citation

51

focused on the complaint (and the proposed second amended

consolidated complaint) filed by Counsel for the Objectors in

the Hobson action. The Court concluded that those complaints

could not possibly relate back to any complaint in the

consolidated Kessler action for several reasons,14
in our opinion in Community Bank I led the District Court

astray. In the portion of our opinion to which the District Court

referred, we cited to an October 2003 “Amended Summary

Chart of the Named Plaintiffs’ Recoverable Damages Under

RESPA,” filed as an exhibit to the Objectors’ “Notice of

Objections” to the class settlement. This chart set out the age of

each named plaintiff’s loan as of the next scheduled loan

payment—i.e., at the end of October 2003—apparently for the

purpose of calculating damages. Unsurprisingly, the time span

between the date that Mathis’s and Davis’s loans closed and the

filing of this chart (the end of October 2003) was essentially the

same as the time span between the dates those loans closed and

the filing date of the Consolidated Amended Complaint

(November 10, 2003). 

Aside from this misstatement in our prior opinion, we

struggle to see how the District Court could have “fairly read”

Community Bank I as directing it to evaluate the timeliness

question from the date of the filing of the Consolidated

Amended Complaint. Our references to the “relevant

complaints” throughout that opinion were to the Davis and

Ulrich complaints; as noted, the Settling Parties used these dates

to distinguish between class members with timely and untimely

RESPA claims. See, e.g., 418 F.3d at 317 n.33 (noting, in

connection with the class members’ RESPA claims, that “[t]he

relevant complaint is Davis for the CBNV borrowers and Ulrich

for the GBNT borrowers”). Indeed, our decision in Community

Bank I makes no sense if we intended the District Court to

assess the timeliness of class members’ potential TILA/HOEPA

claims as of the date the Consolidated Amended Complaint was

52
filed. As we noted in Community Bank I, in March 2002 RFC

announced “it was no longer willing to purchase high interest

mortgage loans like the ones sold by Shumway.” Id. at 284.

Thus, the latest a class member’s loan could have closed was

March 2002. If so, no class member could have a timely

TILA/HOEPA claim, as the November 2003 Consolidated

Amended Complaint was filed more than one year after March

2002. 

53

including that: (1) they named new defendants in addition to

CNBV, GNBT, and RFC, and thus could not relate back under

Rule 15(c)(1)(C) (because the named plaintiffs had not failed to

sue those defendants as a result of any “mistake”); and (2) no

complaint in the Hobson action could relate back to the Davis or

Ulrich complaints in any event because “Rule 15(c), by its

terms, only applies to amended pleadings in the same action as

the original, timely pleading,” Bailey v. N. Ind. Public Serv. Co.,

910 F.2d 406, 413 (7th Cir. 1990).

This approach appearsto assume that the reasons why the

existing class members chose not to plead TILA/HOEPA claims

in their initial complaints, and later refused to amend their

complaints to assert those claims, were irrelevant. The Court

approached the adequacy question from a perspective that in

effect asked whether, assuming the existing named plaintiffs

were inadequate representatives for failing to bring those claims,

that failure could be remedied by any other member of the class.

Answering that question in the negative, the Court’s analysis
54

reduces to the conclusion that the existing named plaintiffs are

made adequate because there is no remedy for their inadequate

representation. 

The Settling Parties advance a similar argument before us

on appeal: they contend that the only way TILA/HOEPA claims

could be asserted in this litigation is if “Class Counsel or the

Objectors . . . s[ought] leave from the district court to add a new

named plaintiff whose TILA/HOEPA claims had not expired.”

(Settling Parties’ Br. at 79 (emphasis in original).) Moreover,

because the existing named plaintiffs obviously did not fail to

name any other class member as a named plaintiff as the result

of a “mistake concerning the proper party’s identity,” Fed. R.

Civ. P. 15(c)(1)(C), the Settling Parties contend that an amended

pleading adding a new named plaintiff to assert TILA/HOEPA

claims could not possibly relate back to any complaint in the

consolidated Kessler action. In sum, the Settling Parties contend

that every class member’s potential TILA/HOEPA claim is

fatally time-barred. 

We need not definitively resolve here this Rule 15(c)

question. As we explain further below, see infra Part III.A.4,

the District Court—by approaching the adequacy requirements

from this perspective—did not consider the serious remaining

questions regarding whether (a) the named plaintiffs’ interests

are aligned with those of the absent class members, and (b) class

counsel has “vigorously prosecuted the action” on behalf of the

class. General Motors, 55 F.3d at 801. However, because the
55

Parties have devoted so much of their arguments to the Rule

15(c) issue (both before us and before the District Court), we

think it appropriate to take a detour to explain our serious doubts

regarding the Settling Parties’ argument. 

Rule 15(c)(1)(C) does not expressly refer to the addition

of a new plaintiff; it facially applies only to an amendment that

“changes the party or the naming of the party against whom a

claim is asserted.” Fed. R. Civ. P. 15(c)(1)(C) (emphasis

added). However, our Court (and other courts) have also

applied its requirements to the addition of new plaintiffs. See

Nelson v. Allegheny County, 60 F.3d 1010, 1014 n.7 (3d Cir.

1995); see also Advisory Committee Notes on the 1996

Amendments to Fed. R. Civ. P. 15 (“The relation back of

amendments changing plaintiffs is not expressly treated in

revised rule 15(c) since the problem is generally easier [than that

of amendments changing defendants]. Again the chief

consideration of policy is that of the statute of limitations, and

the attitude taken in . . . Rule 15(c) toward change of defendants

extends by analogy to amendments changing plaintiffs.”). The

Settling Parties contend that Nelson is dispositive here, and

would bar any new-named plaintiff in these actions from filing

an amended pleading that could relate back to an earlier-filed

complaint. We disagree. 

In Nelson, anti-abortion protestors filed a class action

against the City of Pittsburgh after they were arrested for

protesting on the grounds of a private clinic. Id. at 1011. After
 Aside from Nelson, the other cases cited by the Settling 15

Parties in support of this argument are off point, as none

involved an amended pleading in a class action that sought

solely to substitute a new named plaintiff. See Young v. Lepone,

305 F.3d 1, 16–17 (1st Cir. 2002) (holding that amended

pleading naming new plaintiffs in a non-class action could not

56

the District Court denied class certification, the named plaintiffs

filed an amended complaint asserting individual claims. Id.

After two more years passed, the plaintiffs filed a fourth

amended complaint adding two new plaintiffs. Id. at 1011–12.

We affirmed the District Court’s dismissal of these new

plaintiffs’ claims as time-barred: though it was undisputed that

the statute of limitations was tolled for these individuals (as well

as the entire class) until the District Court denied class

certification, they had waited an additional two years to add

themselves as named plaintiffs in the remaining individual

action, and could not satisfy Rule 15(a)(1)(C)’s requirements.

Id. at 1013–15. 

The two plaintiffs whose claims were dismissed in

Nelson were “new parties” because, after class certification had

been denied, they waited too long to seek to join the action

through filing an amended complaint. By contrast, it is not at all

clear that an absent class member in our case—assuming he or

she were added as a named plaintiff to file an amended pleading

asserting TILA/HOEPA claims—would constitute a “new party”

for purposes of Rule 15(c). 

15
relate back under Rule 15(c)); In re Bausch & Lomb, Inc. Sec.

Litig., 941 F. Supp. 1352, 1363–65 (W.D.N.Y. 1996) (holding

that amended pleading in securities class action that sought to

name additional plaintiffs and defendants could not relate back

under Rule 15(c)).

57

As the Supreme Court has explained, absent members of

a class—at least in relation to an applicable statute-oflimitations period—are essentially “parties” to the class action

while a certification decision is pending. See Am. Pipe &

Constr. Co. v. Utah, 414 U.S. 538, 550 (1974) (when a putative

class action is filed, “the claimed members of the class st[and]

as parties to the suit until and unless they receive[] notice

thereof and cho[o]se not to continue” (emphasis added)).

However, under the Settling Parties’ theory, an amended class

complaint that adds a new named plaintiff could never relate

back to the initial complaint—even where the substitution was

necessary because the existing named plaintiff had died or no

longer had standing to pursue claims on behalf of the

class—because the failure to name that party as a plaintiff in the

initial complaint was not the result of a “mistake concerning the

proper party’s identity.” Fed. R. Civ. P. 15(c)(1)(C). As our

Seventh Circuit colleagues have explained, such a result fails the

purpose of the class action device:

Relation back to add named plaintiffs in a class

action suit is of particular importance because of

the interests of the unnamed class members.
Indeed, class counsel conceded as much in their 16

Proposed Findings of Fact and Conclusions of Law submitted to

the District Court in 2003:

Any claim, including those actually asserted by

58

Suppose Mr. X files a class action and after the

statute of limitations has run the defendant settles

with X. If a named plaintiff cannot be substituted

for X with relation back to the date of the filing of

the original complaint, the class will be barred

from relief.

Phillips v. Ford Motor Co., 435 F.3d 785, 788 (7th Cir. 2006).

In this context, the better conclusion may be that an

amended complaint adding a class member as a new named

plaintiff need only satisfy Rule 15(c)(1)(B) to relate back to an

earlier complaint. Under that subsection, the plaintiff must

demonstrate only that his or her TILA/HOEPA claims “arose

out of the conduct, transaction, or occurrence set out . . . in the

original pleading.” Fed. R. Civ. P. 15(c)(1)(B). Moreover, it

strikes us as straightforward that the hypothetical TILA/HOEPA

claims asserted by the Objectors arose out of the same

“transaction”—i.e., the allegedly fraudulent disclosures (and the

omitted material disclosures) made in connection with the

closing of the class members’ loans—as the named plaintiffs’

RESPA claims.16
plaintiffs and the alternative claims that the

objectors allege should have been asserted, would

derive from the same factual predicate: that

plaintiffs were charged excessive origination fees

and excessive fees for title services in connection

with their second mortgage loans.

59

Finally, even assuming an amended pleading adding a

class member as a new named plaintiff could not relate back

under Rule 15(c), the “class action tolling” doctrine—over

which the Objectors have spilled a considerable amount of ink

before our Court and the District Court—may come into play.

In American Pipe & Construction Co., the Supreme Court held

that where class certification has been denied because of the

failure to demonstrate that the class was sufficiently numerous,

“the commencement of the original class suit tolls the running

of the statute [of limitations] for all purported members of the

class who make timely motions to intervene after the court has

found the suit inappropriate for class action status.” 414 U.S. at

553. The Court explained that refusing tolling in such a

circumstance would

frustrate the principal function of a class suit,

because then the sole means by which members of

the class could assure their participation in the

judgment if notice of the class suit did not reach
60

them until after the running of the limitation

period would be to file earlier individual motions

to join or intervene as parties—precisely the

multiplicity of activity which Rule 23 was

designed to avoid in those cases where a class

action is found “superior to other available

methods for the fair and efficient adjudication of

the controversy.”

Id. at 551 (quoting Fed. R. Civ. P. 23(b)(3)). The Court later

extended its holding in American Pipe to “all asserted members

of the class, not just as to interveners.” Crown, Cork & Seal Co.

v. Parker, 462 U.S. 345, 350 (1983) (internal quotation marks

and citation omitted). 

Our Court has applied American Pipe tolling in other

circumstances. In Haas v. Pittsburgh National Bank, 526 F.2d

1083 (3d Cir. 1975), we held that the “broad tolling principle”

in American Pipe applied to the claims of a named plaintiff

substituted for the initial lead plaintiff (who, the District Court

concluded, lacked standing after the class had been certified).

Id. at 1097. In McKowan Lowe & Co., Ltd. v. Jasmine, Ltd., 295

F.3d 380 (3d Cir. 2002), we held that American Pipe tolling

applied to an intervener seeking to become lead plaintiff in a

class action where the District Court had previously denied class

certification “for reasons unrelated to the appropriateness of the

substantive claims for certification.” Id. at 389. Finally, in

Yang v. Odom, 392 F.3d 97 (3d Cir. 2004), we extended our
61

application of American Pipe tolling in McKowan to the filing

of a subsequent class action “where certification was denied in

the prior suit based on the lead plaintiffs’ deficiencies as class

representatives.” Id. at 99. In light of these precedents, the

Objectors’ argument seems to be that, if the named plaintiffs

were judged inadequate based on their failure to bring

TILA/HOEPA claims on behalf of the class, the class action

tolling doctrine would toll the statute of limitations with respect

to those claims in either (1) a subsequent action or (2) the

current action (following substitution or intervention of a new

named plaintiff after the class is decertified). 

The Settling Parties counter that class action tolling

would be unavailable to the Objectors—even if class

certification in the consolidated Kessler action were denied due

to inadequate representation—because no TILA/HOEPA claims

have been asserted in that action. They note that some courts

have suggested that class action tolling only applies to claims

that are identical to those asserted in the initial class action that

was decertified. See Raie v. Cheminova, Inc., 336 F.3d 1278,

1283 (11th Cir. 2003); Weston v. AmeriBank, 265 F.3d 366,

368–69 (6th Cir. 2001); Spann v. Community. Bank of N. Va.,

No. 03-C-7022, 2004 WL 691785, at *4–7 (N.D. Ill. Mar. 30,

2004); Southwire Co. v. J.P. Morgan Chase & Co., No. MDL

1303, 2004 WL 414799, at *18 (W.D. Wis. Mar. 3, 2004); see

also Johnson v. Ry. Express Agency, Inc., 421 U.S. 454, 467

(1975) (noting that “the tolling effect given to the timely prior

filings in American Pipe . . . depended heavily on the fact that
 Though our Court has not yet weighed in on this 17

debate, we have agreed that a “substantively identical” class

action filed after the denial of class certification due to

deficiencies of the class representative qualifies for class action

tolling. Yang, 392 F.3d at 112.

62

those filings involved exactly the same cause of action

subsequently asserted”).

However, there is a competing line of authority on that

question. See Cullen v. Margiotta, 811 F.2d 698, 720 (2d Cir.

17

1987) (“Notwithstanding the differences between the legal

theories advanced by plaintiffs in the state court action and those

advanced in the present action, we are persuaded that the

American Pipe doctrine has applicability to the present action.”),

overruled on other grounds by Agency Holding Corp. v. MalleyDuff & Assocs., Inc., 483 U.S. 143 (1987); Tosti v. City of L.A.,

754 F.2d 1485, 1489 (9th Cir. 1985) (“We find no persuasive

authority for a rule which would require that the individual suit

must be identical in every respect to the class suit for the statute

to be tolled.”); accord, e.g., Arivella v. Lucent Techs., Inc., 623

F. Supp. 2d 164, 180 (D. Mass. 2009); In re Enron Corp. Sec.

Litig., 465 F. Supp. 2d 687, 717–19 (S.D. Tex. 2006); Barnebey

v. E.F. Hutton & Co., 715 F. Supp. 1512, 1528–29 (M.D. Fla.

1998); In re Indep. Serv. Orgs. Antitrust Litig., No. MDL 1021,

1997 WL 161940, at *3–6 (D. Kan. Mar. 12, 1997). These

Courts have reasoned that, where claims brought in a subsequent

suit share a common factual and legal nexus with those brought
63

in the prior class action, there is no persuasive reason for

refusing to apply class action tolling, as the defendant will

already have received adequate notice of the substantive nature

of the claims against it and likely would rely on the same

evidence and witnesses in mounting a defense. Cf. Crown, Cork

& Seal, 462 U.S. at 355 (Powell, J., concurring) (cautioning that

class action tolling should apply only to subsequent claims that

“concern the same evidence, memories, and witnesses as the

subject matter of the original class suit” (internal quotation

marks and citation omitted)). Under this theory, the Objectors

have a strong argument that their TILA/HOEPA claims could

qualify for class action tolling, as those claims appear to share

a common factual and legal nexus with the RESPA claims the

named plaintiffs have asserted; i.e., both claims are predicated

on defendants’ alleged predatory lending scheme and the

charging of fraudulent and excessive closing fees.

In the end, we need not resolve in this case the difficult

questions of whether (1) a substituted named plaintiff in a class

action may file an amended pleading that relates back to the

initial pleading only if he or she can satisfy the requirements of

Rule 15(c)(1)(C), or (2) the class action tolling doctrine would

apply in a subsequent class action—or to the claims of a new,

substituted named plaintiff in that same action—following a

determination that the named plaintiffs were inadequate for

failing to plead potentially meritorious claims on behalf of the

class. We simply note that the Court’s apparent

conclusion—that the failure to assert colorable TILA/HOEPA
We pause to acknowledge our own error in Community 18

Bank I, where we incorrectly suggested that the three-year

limitations period for claims for rescission under TILA was a

statute of limitation “subject to equitable tolling.” 418 F.3d at

305. In Beach v. Ocwen Federal Bank, 523 U.S. 410 (1998), the

Supreme Court held that the three-year period in 15 U.S.C.

§ 1635(f)—which provides that the right of rescission “shall

expire” three years after the loan closes, id.—is not a statute of

limitations, but a statute of repose, i.e., one “governing the life

of the underlying right.” 523 U.S. at 417.

The Objectors—primarily those from Maryland, Appeal

No. 08-3791, represented by the Legg Law Firm,

LLC—challenge the District Court’s conclusion that a classwide

claim for rescission could not be asserted in the consolidated

Kessler action, arguing that (1) even if equitable tolling could

not apply to save any class member’s claim, class action tolling

64

claims could not be remedied through any mechanism, even

assuming that the class representatives were inadequate for

failing to bring those claims (and despite their being released as

part of the settlement)—is a path we find troubling.

b. The District Court’s Equitable

Tolling Analysis

Aside from the District Court’s Rule 15(c) analysis, it

also determined, while purportedly applying a Rule 12(b)(6)

standard, that no class member could rely on equitable tolling to

save an otherwise untimely TILA/HOEPA claim. The Court 18
could; and (2) contrary to the Court’s finding that no class

member had asserted his or her rescission rights, there is in fact

a small group of class members who timely submitted rescission

demands to their lenders. We need not resolve that dispute; as

we discuss later, see infra at 82 n.27, we agree with the District

Court that class counsel is not inadequate for declining to pursue

a classwide rescission claim.

65

reasoned that no class member could show any “active

misleading”—apart from the alleged fraudulent disclosures and

omissions in the HUD-1 Statements provided to borrowers by

the defendant banks—necessary to support the invocation of

equitable tolling based on a fraudulent concealment theory. 

We are concerned that the District Court—in the context

of making a determination as to class certification under Rule

23—concluded, as a matter of law and finding of fact, that no

member of the 44,000 person class could rely on equitable

tolling to save an otherwise untimely TILA/HOEPA claim.

Moreover, we have doubts regarding the Court’s conclusion

even if a Rule 12(b)(6) analysis were appropriate. It relied on

our decision in Oshiver v. Levin, Fishbein, Sedran & Berman,

38 F.3d 1380 (3d Cir. 1994), an employment discrimination

case, where we affirmed the dismissal (under Rule 12(b)(6)) of

an untimely failure-to-hire claim, noting that “nowhere in the

complaint [did the plaintiff] allege that [her employer] misled

her, actively or otherwise, with respect to this claim.” Id. at

1391 n.10. However, we also vacated the dismissal of the
66

plaintiff’s untimely discriminatory discharge claim, noting that

the equitable tolling issue “was raised in the context of a motion

to dismiss pursuant to [Rule] 12(b)(6),” and, “[t]herefore, all

that was required of [the plaintiff] at this stage was that she

plead the applicability of the doctrine,” which she had done. Id.

at 1391–92 (listing the “factual inquiries [that] must be

undertaken before a proper resolution of the equitable tolling

issue can be reached”). 

Indeed, our Court (and our sister circuit courts) have

reasoned that, because the question whether a particular party is

eligible for equitable tolling generally requires consideration of

evidence beyond the pleadings, such tolling is not generally

amenable to resolution on a Rule 12(b)(6) motion. See, e.g.,

Huynh v. Chase Manhattan Bank, 465 F.3d 992, 1003–04 (9th

Cir. 2006) (“Generally, the applicability of equitable tolling

depends on matters outside the pleadings, so it is rarely

appropriate to grant a Rule 12(b)(6) motion to dismiss (where

review is limited to the complaint) if equitable tolling is at

issue.”); Reiser v. Residential Funding Corp., 380 F.3d 1027,

1030 (7th Cir. 2004) (rejecting RFC’s argument that plaintiffs’

claims were “untimely under the one-year periods of limitations

contained in both the TILA and the RESPA,” and noting that

“because the period of limitations is an affirmative defense it is

rarely a good reason to dismiss under Rule 12(b)(6)”). 

In any event, whether the type of fraudulent concealment

alleged by the Objectors (and, as we discuss below, that asserted
 We perceive an even more fundamental problem with 19

the application of a Rule 12(b)(6) standard here: i.e., it is not

clear to what pleading the Court should have applied that

standard. Cf. Robin J. Effron, The Plaintiff Neutrality Principle:

Pleading Complex Litigation in the Era of Twombly and Iqbal,

51 Wm. & Mary L. Rev. 1997, 2022 (2010) (“The procedural

differences between a Rule 12(b)(6) motion to dismiss and a

Rule 23 certification proceeding . . . indicate that there would be

some practical problems in applying the Twombly/Iqbal

[plausibility] standard in the class certification context. Namely,

to what documents would the standard apply?”). Indeed, even

the Settling Parties appear to acknowledge that a Rule 12(b)(6)

analysis is here a bridge too far. See Settling Parties’ Br. at 49

(“[T]he whole thrust of the Objectors’ complaints (then and

now) is that no . . . TILA/HOEPA claims were pleaded in the

Consolidated Amended Complaint. A Rule 12 motion to

dismiss thus would have been a spectacularly inappropriate way

to determine the viability of hypothesized claims that had never

been pleaded.” (emphases in original)).

In addition, it appears that the District Court relied only

on the briefs filed by the defendants, and not class counsel, in

connection with its viability inquiry. This no doubt is

concerning, as it comes close to relieving the named plaintiffs

and class counsel of their burden to prove that the Rule 23

requirements were met. See, e.g., Johnston v. HBO Film Mgmt.,

67

by the named plaintiffs in connection with their untimely

RESPA claims) can, as a matter of law, provide a successful

basis for equitable tolling under TILA/HOEPA was not before

the District Court. Its analysis of the merits of the equitable 19
Inc., 265 F.3d 178, 183 (3d Cir. 2001).

 We note that, to the extent the District Court should not 20

have considered the merits of defendant’s statute-of-limitations

defenses in making its class certification decision, that error was

certainly encouraged by counsel for the Objectors. Indeed, it

was those very counsel who urged the Court to use a Rule

12(b)(6) standard in assessing the viability of their proposed

TILA/HOEPA claims (though the Objectors contend the statuteof-limitations defenses should not be a part of that analysis).

Though counsel for the Objectors now complain that the Court’s

viability briefing was “amorphous and unstructured,” they were

members of the Steering Committee the Court assigned to

establish that briefing structure, and in any event they have not

explained how a “properly structured motion to dismiss or

motion for summary judgment” would have been a more

appropriate procedure on remand. (Objectors’ Br., No. 08-3621,

at 38–39.) 

In this light, the Settling Parties contend that the

Objectors should be estopped from challenging the District

Court’s viability analysis, or be deemed to have waived any such

challenge. We disagree. “While a party can waive his or her

ability to appeal a ruling for failure to object, there can be no

waiver . . . of the Judge’s duty to apply the correct legal

standard.” United States v. Ali, 508 F.3d 136, 144 n.9 (3d Cir.

2007). Nor can a party “‘waive’ the proper standard of [our

68

tolling theory advanced by the Objectors was essentially an

inquiry into “which party [would] prevail on the merits” of the

TILA/HOEPA claims the Objectors sought to assert.20
appellate] review.” Brown v. Smith, 551 F.3d 424, 428 n.2 (6th

Cir. 2008). This is particularly true in the class action context,

where “the district court acts as a fiduciary who must serve as a

guardian of the rights of absent class members[.]” General

Motors, 55 F.3d at 785 (internal quotation marks and citation

omitted); see also Stirman v. Exxon Corp., 280 F.3d 554, 563

n.7 (5th Cir. 2002) (rejecting argument that defendant had

waived challenge to class representative’s adequacy by not

raising it in the District Court, and noting that, “[e]ven if [the

defendant] had stipulated to certification, the court was bound

to conduct its own thorough [R]ule 23(a) inquiry”). Thus, while

we certainly agree that the Objectors are partly to blame for the

approach the District Court took, we cannot agree that the

Court’s analysis is thereby insulated from our appellate review.

69

Hydrogen Peroxide, 552 F.3d at 317 n.17.

* * * * *

In sum, the Rule 23 requirements “differ in kind from

legal rulings under Rule 12(b)(6)” (and, for that matter, Rule

15(c)). Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 676

(7th Cir. 2001). We conclude that the merits inquiries the

District Court conducted here—i.e., whether a new plaintiff

could file an amended pleading asserting TILA/HOEPA claims

consistent with Rule 15(c), or adequately plead a basis for

equitable tolling under Rule 12(b)(6)—were unnecessary to

evaluate the adequacy requirement under Rule 23(a)(4). 
70

4. Adequacy of Representation

As discussed, we conclude that the District Court

incorrectly evaluated the adequacy of the named plaintiffs and

class counsel. Added to that, we continue to have

concerns—essentially the same as those we identified in

Community Bank I—regarding whether the named plaintiffs and

their counsel are adequate class representatives. To aid the

Court on remand, we explain our concerns (and the inquiries we

think worthwhile to consider) below, focusing specifically on (a)

the apparent intra-class conflict with respect to the statute-oflimitations problem, which may raise questions regarding the

named plaintiffs’ adequacy under Rule 23(a)(4); and (b) class

counsel’s justifications for the decision not to assert

TILA/HOEPA claims on behalf of the class, which may raise

questions regarding counsel’s adequacy under Rule 23(g). 

a. The Class Representatives

As noted, the adequacy requirement is designed “to

uncover conflicts of interest between named parties and the

class they seek to represent.” Amchem, 521 U.S. at 625. Here,

there is an obvious and fundamental intra-class conflict of

interest (the same we identified in Community Bank I): the

named plaintiffs’ claims—whether under RESPA, TILA, or

HOEPA—are untimely, and they must rely on equitable tolling

to save them. Notwithstanding that substantial hurdle to their

claims, they seek to represent a sizeable subgroup of the
 The named plaintiffs who received loans from CBNV, 21

and the dates their loans closed, are: Ruth Davis (Feb. 22, 1999),

Phillip and Jeanine Kossler (July 28, 1998), William and Ellen

Sabo (Oct. 15, 1999), John and Rebecca Picard (Nov. 30, 1999),

Brian and Carla Kessler (Apr. 30, 1999), and Nora H. Miller

(Apr. 30, 1999). 

The named plaintiffs who received loans from GNBT,

and the dates their loans closed, are: Russell and Kathleen

Ulrich (Aug. 8, 2000), Thomas Mathis (June 7, 2001), Stephen

and Amy Haney (May 23, 2001), Patrice Porco (Sept. 9, 2000),

Robert and Rebecca Clark (Mar. 1, 2001), and Edward Kruska

(May 5, 2001).

71

class—approximately 14,000 persons—with timely claims. Cf.

McAnaney v. Astoria Fin. Corp., No. 04-CV-1101, 2007 WL

2702348, at *12 (E.D.N.Y. Sept. 12, 2007) (holding that named

plaintiffs in a TILA class action were inadequate representatives

because their claims were time-barred). 

As noted, a claim for damages under TILA and

HOEPA—just like a claim for damages under RESPA, see 12

U.S.C. § 2614—is subject to a one-year limitations period that

begins to run from the date the loan closed, 15 U.S.C. § 1640(e).

 There are 19 named plaintiffs in the consolidated class actions

before us. Each named plaintiff’s loan closed more than one

year before either the Davis action (with respect to the Plaintiffs

who received their loans from CBNV) or the Ulrich action (with

respect to the Plaintiffs who received their loans from GNBT)

was filed. (As noted, the Settling Parties used the filing dates 21
72

of these actions to distinguish between class members with

timely RESPA claims, and those who would have to rely on

equitable tolling, for purposes of distributing the Initial and

Modified Settlements.) Accordingly, not only is every named

plaintiff’s potential claim for damages under TILA/HOEPA

time-barred, the RESPA claims the named plaintiffs did bring

are also time-barred, and they must rely on equitable tolling to

prevail on either type of claim. By contrast, a significant

percentage of class members’ loans closed within one year of

the Davis or Ulrich complaint, and they need not rely on

equitable tolling—a doctrine that courts approach “warily,”

Seitzinger v. Reading Hosp. and Med. Ctr., 165 F.3d 236, 240

(3d Cir. 1999)—to save their timely, and thus more valuable,

claims. Cf. Ortiz v. Fibreboard Corp., 527 U.S. 815, 857 (1999)

(class which included class members whose asbestos claims

arose before and after the defendant’s insurance policy expired

should have been divided into subclasses, as those class

members whose claims arose before the policy expired “had

more valuable claims” than those whose claims arose after). 

The terms of the Modified Settlement exemplify this

conflict of interest, at least with respect to the potential

TILA/HOEPA claims. See General Motors, 55 F.3d at 801.

Though the Modified Settlement (like the Initial Settlement)

distinguishes between class members whose loans closed within

and outside of one year before the Davis and Ulrich complaints

were filed (for purposes of the RESPA claims), it apportions the

additional monies paid to reflect potential TILA/HOEPA
73

damages claims as though every class member is required to

establish a basis for equitable tolling to be eligible for relief. As

noted, that is not the case. Accordingly, the District Court’s

apparent “conclusion that the settlement—which (supposedly)

maximized class recovery—satisfied the requirement that class

members’ interests not be antagonistic ignores the conspicuous

evidence of such an intra-class conflict in the very terms of th[e]

settlement.” Id. at 800–01.

The District Court—having determined that no other

class member could assert a timely TILA/HOEPA claim under

Rules 15(c) and 12(b)(6)—did not consider this intra-class

conflict. It should do so on remand. As we noted in Community

Bank I, however, this intra-class conflict is by no means fatal to

whether these cases can be maintained as a class action. The

most obvious remedy would be to create subclasses, as we

suggested in our prior opinion. See Community Bank I, 418

F.3d at 310 (“[I]f the District Court were to find [on remand]

that class certification is appropriate, the Court should determine

whether sub-classes are necessary or appropriate . . . .”); see also

In re Ins. Brokerage Antitrust Litig., 579 F.3d 241, 271 (3d Cir.

2009).

b. Class Counsel

“Courts examining settlement classes have emphasized

the special need to assure that class counsel: (1) possessed

adequate experience; (2) vigorously prosecuted the action; and
74

(3) acted at arm’s length from the defendant.” General Motors,

55 F.3d at 801. We did not elaborate in Community Bank I on

the type of inquiry a district court should engage in when

addressing class counsel’s adequacy in light of the decision to

bring some, but not other, potentially colorable claims on behalf

of the class, and we need not do so definitively here. For

present purposes, it is sufficient to note a few general principles.

First, a “mere disagreement over litigation strategy . . .

does not, in and of itself, establish inadequacy of

representation.” Bradley v. Milliken, 828 F.2d 1186, 1192 (6th

Cir. 1987); see also, e.g., United States v. City of N.Y., 198 F.3d

360, 367 (2d Cir. 1999) (“Representation is not inadequate

simply because [an attorney denied appointment as class

counsel] . . . ha[s] different views on the facts, the applicable

law, or the likelihood of success of a particular litigation

strategy”); Daggett v. Comm’n on Governmental Ethics and

Election Practices, 172 F.3d 104, 112 (1st Cir. 1999) (noting

that “the use of different arguments as a matter of litigation

judgment is not inadequate representation per se”); DeBoer v.

Mellon Mortg. Co., 64 F.3d 1171, 1175 (8th Cir. 1995) (“The

fact that [objecting class members] do not approve of the

settlement terms does not, of itself, demonstrate that . . . class

counsel provided inadequate representation.”). Were it

otherwise, disagreements over strategy “would require

decertification any time an objection is raised to a class,

certainly not the standard envisioned by Rule 23.” Id. at 1175.
 Though not addressed by the parties, similar issues 22

arise where objecting class members challenge a class

representative’s adequacy in light of the representative’s

decision not to join as a defendant an entity against whom a

colorable claim could be asserted. In such cases, courts have

considered whether the decision not to join a particular

defendant could be characterized as “strategic,” or, if not, is

indicative of antagonistic interests between the named plaintiffs,

their counsel, and certain absent class members. See, e.g., Feder

v. Elec. Data Sys. Corp., 429 F.3d 125, 135 (5th Cir. 2005);

Paper Sys. Inc. v. Mitsubishi Corp., 193 F.R.D. 601, 611 (E.D.

Wis. 2000); Dubin v. Miller, 132 F.R.D. 269, 273 (D. Colo.

1990) (though “a class plaintiff need not join every possible

defendant, plaintiff is obligated to supply a persuasive reason for

the non-joinder” (emphasis in original)). 

75

As Rule 23 makes clear, however, “the work counsel has

done in identifying or investigating potential claims in the

action” is an important factor when evaluating class counsel’s

adequacy. Fed. R. Civ. P. 23(g)(1)(A)(i). Though we certainly

agree that class counsel is not inadequate simply because they

have not asserted every claim that could theoretically be pled

against a defendant, cf. Wal-Mart Stores, Inc. v. Visa U.S.A.

Inc., 396 F.3d 96, 113 (2d Cir. 2005), neither is the decision

regarding the claims to assert in the action totally shielded from

judicial scrutiny. In particular, where class counsel’s proffered 22

reasons for the “strategic” decision not to bring certain

claims—i.e., obstacles faced by the claims, either as to

certification or proof—also apply to the claims that have been
In addition, the Settling Parties—despite their agreement 23

that the filing date of the Davis complaint would be used to

distinguish between CBNV borrowers with timely and untimely

RESPA claims—now dispute before us that any amended

pleading asserting TILA/HOEPA claims could relate back to the

initial Davis complaint. They contend that, because that

complaint asserted claims only on behalf of a putative statewide

class of CBNV-borrowers, any amended complaint asserting

TILA/HOEPA claims on behalf of the nationwide class could

only relate back to the second amended complaint in Davis

(filed on June 12, 2002), which broadened the scope to a

putative quasi-nationwide class of CBNV borrowers. See Cliff

v. Payco Gen. Am. Credits, Inc., 363 F.3d 1113, 1131–33 (11th

76

asserted, a district court may have reason to question whether

class counsel has “vigorously prosecuted the action” on behalf

of the class. General Motors, 55 F.3d at 801. 

In that light, we believe that the statute-of-limitations

justification for class counsel’s decision not to bring

TILA/HOEPA claims—the only hurdle to pleading those claims

that the District Court considered—deserves more scrutiny. For

example (and as discussed previously), the Settling Parties

(including class counsel) contend that no class

member—including the named plaintiffs—could rely on

equitable tolling to save a potential TILA/HOEPA claim. This

position is surprising, as class counsel has taken the opposite

position with respect to the named plaintiffs’ untimely RESPA

c l a im s. I n t heir C ons o l i dat ed A m ended 2 3
Cir. 2004) (holding that an amended complaint expanding the

class action to assert a nationwide class did not relate back under

Rule 15(c) to the initial complaint, which asserted only a

statewide class). As a result, the Settling Parties estimate that

the “actual number of borrowers whose loans closed within one

year of the filing of the first complaints alleging multistate

classes” is approximately 8,451 (rather than 14,000). (Settling

Parties’ Br. at 74.) 

As noted, however, this position, which class counsel

(along with defendants) have now taken with respect to the

TILA/HOEPA claims, directly conflicts with the position taken

for the RESPA claims (as illustrated by the terms of the Initial

and Modified Settlements). That is, if CBNV borrowers cannot

rely on the filing date of the Davis complaint to make their

potential TILA/HOEPA claims timely, neither may they do so

with respect to the RESPA claims that the named plaintiffs have

asserted in this litigation.

Moreover, there appears to be conflicting authority

regarding whether an amended pleading asserting a nationwide

class can relate back to an initial pleading asserting a smaller

class. The Seventh Circuit Court has concluded, though in the

context of determining whether removal under the Class Action

Fairness Act was appropriate, that an amended pleading

expanding a statewide class action to a nationwide class action

does not result in the “commencement” of a new suit because

such an amended pleading relates back to the first pleading. See

Schillinger v. Union Pac. R.R. Co., 425 F.3d 330, 334 (7th Cir.

2005) (“[T]he expansion of a proposed class does not change the

parties to the litigation nor does it add new claims.”); see also

77
Schorsch v. Hewlett-Packard Co., 417 F.3d 748, 751 (7th Cir.

2005) (“Amendments to class definitions do not commence new

suits.”). Though we need not resolve this question here, we

simply note again the seemingly inconsistent positions that class

counsel has taken with respect to the RESPA claims that have

been pled and the TILA/HOEPA claims that have not.

78

Complaint, the named plaintiffs specifically alleged facts

suggestive of fraudulent concealment as to the class’s RESPA

claims, including that the defendants concealed, among other

things, (1) the actual recipient of the origination fees charged,

and (2) “[t]he fact that virtually no services were performed in

exchange for the supposed ‘title fees’ imposed upon Plaintiffs

and the Class.” The Objectors rely on similar allegations to toll

on equity grounds the TILA/HOEPA claims, including that the

defendants (1) falsely represented on the HUD-1A Settlement

Statements that they were charging the borrower for title

“abstracts” and “examinations,” when in reality the charges

were for “property reports”; and (2) intentionally concealed

documents from borrowers that would have revealed these facts.

In that light, the Settling Parties’ description of the basis for the

Objectors’ equitable tolling theory—that “the banks should have

disclosed that the title companies [employed by defendants]

were not providing any services in exchange for the title

examination fee or the alleged markup of the title abstract fee”

(Settling Parties’ Br. at 91)—applies equally to the named
 Though we do not resolve the question in this case, we 24

note that the Settling Parties’ theory of fraudulent

concealment—i.e., that fraudulent concealment requires some

further act than the failure to disclose information that would

reveal the fraudulent nature of origination or title fees, or

misrepresenting the nature of those fees—would effectively

render equitable tolling in the RESPA, TILA, or HOEPA

context a dead letter. Cf. Ellis v. General Motors Acceptance

Corp., 160 F.3d 703, 708 (11th Cir. 1998) (disallowing

equitable tolling via a fraudulent concealment doctrine for TILA

claims “would lead to the anomalous result that a statute

designed to remediate the effects of fraud would instead reward

those perpetrators who concealed their fraud long enough to

time-bar their victims’ remedy”); accord Ramadan, 156 F.3d at

502. 

Notably, class counsel recently took the opposite position

in a separate lawsuit asserting RESPA claims. See Bradford v.

WR Starkey Mortg., LLP, No. 06-CV-86, 2008 WL 4501957, at

*3 (N.D. Ga. Feb. 22, 2008) (agreeing with plaintiffs that “[t]he

HUD-1 Statement does not accurately reflect defendant’s

charges, and the dissemination of documents concealing this

information constitutes an affirmative act of concealment that

justifies tolling the statute of limitations”); accord Pedraza v.

United Guar. Corp., 114 F. Supp. 2d 1347, 1357 (S.D. Ga.

2000); see also Haynes v. HomeEq Servicing Corp., No. 04-

1081, 2006 WL 2167375, at *5 (M.D. Tenn. Aug. 1, 2006)

(“[A]ctions based on fraud, or in which a fraud was

self-concealing, d[o] not require further fraudulent acts.”); Veal

79

plaintiffs’ equitable tolling theory for their RESPA claims. 

24
v. Crown Auto Dealerships, Inc., No. 04-CV-323, 2006 WL

435693, at *3 (M.D. Fla. Feb. 21, 2006) (“It can be reasonably

inferred from Plaintiff’s allegations that because of the alleged

inadequate disclosures, he was not aware of his TILA cause of

action within one year of the [transaction].”).

80

Class counsel’s position is all the more surprising

because, in contrast to claims under the TILA, our Court has

never addressed whether RESPA claims are subject to equitable

tolling, and there is conflicting circuit court precedent on the

question. Compare Lawyers Title Ins. Corp. v. Dearborn Title

Corp., 118 F.3d 1157, 1166–67 (7th Cir. 1997) (holding that

RESPA’s statute of limitations is subject to equitable tolling),

with Hardin v. City Title & Escrow Co., 797 F.2d 1037, 1038

(D.C. Cir. 1986) (holding that RESPA’s statute of limitations is

“a jurisdictional prerequisite to suit and as such not subject to

equitable tolling”); see also Egerer v. Woodland Realty, Inc.,

556 F.3d 415, 424 & n.18 (6th Cir. 2009) (reserving the question

of whether RESPA’s statute of limitations is subject to equitable

tolling); Snow, 332 F.3d at 361 n.7 (same). 

We acknowledge that the time-bar problem was not class

counsel’s only justification for declining to bring TILA/HOEPA

claims against the defendants. As we discussed in Community

Bank I, those additional justifications were: (1) most of the

putative class members had executed HOEPA disclosure forms;

(2) TILA/HOEPA claims could not be certified as a class action

because of individualized issues that could predominate; and (3)
We note that, since Community Bank I, our Court has 25

held that detrimental reliance is an element of a claim for actual

damages under TILA. See Vallies v. Sky Bank, 591 F.3d 152,

158 (3d Cir. 2009) (“Without detrimental reliance, only statutory

damages are available [under TILA].”).

 In Community Bank I, we intimated that “[t]he District 26

Court, on analysis, may find that these ex post rationales are not

compelling.” 418 F.3d at 305. First, we noted that a signed

disclosure acknowledgment may not necessarily be dispositive

of a lender’s (or assignee’s) liability under HOEPA for failing

to provide the required disclosures within the requisite three-day

period. Id. (citing 15 U.S.C. §§ 1639(a)(2)(A), 1641(d)).

Second, we believed that the Settling Parties had provided “no

persuasive support for the proposition that TILA and HOEPA

claims cannot be asserted as part of a class action,” and noted

that the statute “explicitly contemplates the possibility of a class

action suit.” Id. (citing 15 U.S.C. § 1640(a)(2)(B)). Finally, we

were skeptical that the need to prove detrimental reliance was an

individualized issue that could preclude class treatment. Id.

81

establishing actual damages on a classwide basis would be

difficult because a TILA claim for actual damages requires

proof of detrimental reliance. 418 F.3d at 305. The Settling 25 26

Parties jointly advance several additional reasons on appeal,

including (and notwithstanding the fact that they engaged in no

formal discovery on remand) the supposed discovery of

“significant evidence” rebutting the Objectors’ theory that no

title services were performed in exchange for the fees charged.
 That exception is class counsel’s decision not to plead 27

claims for rescission under TILA. As the District Court

recognized, other circuit courts that have addressed the issue are

unanimous that a claim for rescission under TILA cannot be

maintained on a classwide basis. See Andrews v. Chevy Chase,

545 F.3d 570, 574 (7th Cir. 2008) (“The variations in the

transactional ‘unwinding’ process that may arise from one

rescission to the next make it an extremely poor fit for the classaction mechanism.”); McKenna v. First Horizon Home Loan

Corp., 475 F.3d 418, 421, 423 (1st Cir. 2007) (reasoning that

“[t]he rescission process is intended to be private, with the

creditor and debtor working out the logistics of a given

rescission,” and concluding that “Congress did not intend

rescission suits to receive class-action treatment”); James v.

Home Constr. Co. of Mobile, 621 F.2d 727, 731 (5th Cir. 1980)

(same). Though we need not weigh in here on that question, we

agree with the District Court that, in light of this authority, class

counsel was not inadequate for declining to pursue a classwide

rescission claim on remand. 

82

(Settling Parties’ Br. at 106.) 

We emphasize that the determination of whether class

counsel is adequate, including whether they acted reasonably in

declining to assert certain potential claims on behalf of the class,

is committed to a district court’s sound discretion, as it is in a

better position than we to evaluate class counsel’s performance.

Unfortunately, the District Court, with one exception, did not 27

discuss any of class counsel’s justifications for declining to
 There are approximately 800 North Carolina class

28

members who received loans from CBNV and are members of

the settlement class in the consolidated class actions before us.

83

assert TILA/HOEPA claims, instead focusing solely on the

statute-of-limitations arguments advanced by the defendants.

See Settling Parties’ Br. at 111 (acknowledging that the District

Court “elected not to reach these arguments in light of its

determination that the claims were time-barred”). We do not

deal with those justifications in the first instance, and remand

for the Court to do so. Cf. Hydrogen Peroxide, 552 F.3d at 307

(“In deciding whether to certify a class under Fed. R. Civ. P. 23,

the district court must . . . consider all relevant evidence and

arguments presented by the parties.”).

We again stress that we do not hold that class counsel are

necessarily inadequate representatives for the class (or any

subclass that is created). We conclude, however, that class

counsel’s justifications for their decision not to plead

TILA/HOEPA claims against the defendants on behalf of the

class merit closer scrutiny.

5. The North Carolina Objectors

We turn to the objections to the District Court’s

certification decision lodged by three class members from North

Carolina (Troy Elliott, Lorraine Oswald, and Ruth MathisWisseh), represented by Jerome Hartzell of the North Carolina 28
 Mr. Bumpers opted out of the class, and thus is not a 29

party to these appeals.

84

law firm Hartzell & Whiteman, LLP. These class members

argue that the Court abused its discretion in determining that the

named plaintiffs were adequate class representatives for class

members from North Carolina. 

We have not yet discussed the unique procedural history

applicable to the North Carolina Objectors, and only briefly do

so here. In September 2001, Mr. Elliott and another

individual—Travis Bumpers —filed a putative class action 29

against CBNV and Chase Manhattan Bank in the Superior Court

of Wake County, North Carolina (Bumpers v. Community Bank),

asserting state law claims under North Carolina’s Unfair Trade

Practices Act. See N.C. Gen. Stat. § 75-1.1. The case was

removed on the basis of alleged federal preemption and then

remanded back to state court. 

In May 2003, the Bumpers plaintiffs moved for class

certification in state court. In June 2003, the defendants

removed the case again to federal court, and the plaintiffs again

moved to remand. The case was then voluntarily transferred to

the District Court in our case for inclusion as part of the MDL

proceeding. In addition, the District Court permitted the

Bumpers plaintiffs to intervene in the consolidated Kessler

action. 
85

From December 2005 onward, counsel for the Bumpers

plaintiffs repeatedly requested that the District Court rule on its

2003 motion to remand. At the same time, counsel filed a

motion (in March 2006) in the consolidated Kessler action in

support of the creation of a separate subclass of North Carolina

borrowers. In addition, the Attorney General of North Carolina

submitted a statement to the District Court opposing “the

uniform settlement in In re Community Bank to the extent that

it proposes to treat North Carolina borrowers the same as other

class members who are not entitled to the protections of North

Carolina law.” 

In January 2008 (and before the class was re-certified and

the Modified Settlement approved), the District Court finally

ruled on and granted the 2003 motion to remand. The Court

simultaneously denied as “moot” the North Carolina Objectors’

motion for a subclass of North Carolina borrowers. 

On remand in North Carolina state court, the Bumpers

plaintiffs (1) filed a motion for summary judgment, and (2)

pursued their May 2003 motion for class certification.

However, in March 2008, the District Court granted defendants’

motion to enjoin the state class proceedings in Bumpers. 

Though class proceedings were enjoined, the named

plaintiffs in Bumpers proceeded with their motion for summary

judgment. The North Carolina Superior Court granted partial

summary judgment in favor of Bumpers and Troy Elliott,
 CBNV appealed that judgment, but the North Carolina 30

Court of Appeals dismissed it, ruling that the appeal was

interlocutory because the Superior Court’s order expressly left

the issue of attorneys’ fees to be decided. Bumpers v.

Community Bank of N. Va., 675 S.E.2d 697 (N.C. Ct. App.

2009). After oral argument in the current appeals, the Supreme

Court of North Carolina reversed the Court of Appeals’

decision, and concluded that “an unresolved request for attorney

fees does not prevent finality of a judgment disposing of all

issues in the underlying substantive claim.” Bumpers, 695

S.E.2d at 446. As of this writing, the Court of Appeals on

remand has not yet ruled on the merits of the appeal. 

86

concluding that CBNV had violated North Carolina’s Unfair

Trade Practices Act in two ways: (1) by charging a “loan

discount fee” for providing a loan that was not in fact

discounted; and (2) assessing “settlement charges” that were

“redundant fees covering the same services and duplicative of

the ‘origination fees’ charged by” CBNV. Bumpers v.

Community Bank of N. Va., 695 S.E.2d 442, 444 (N.C. 2010).

The Court awarded damages in the amounts of $10,401.67 and

$10,999, respectively, to Bumpers and Elliott. 

30

Counsel for the Bumpers plaintiffs then filed objections

to certification and approval of the Modified Settlement in the

consolidated Kessler action, and appeared at the June 2008 final

fairness hearing. Counsel argued that the North Carolina

borrowers’ state law claims were uniquely valuable because: (1)

they are subject to mandatory treble damages, see N.C. Gen.
87

Stat. § 75-16; (2) a four-year statute of limitations applies to

those claims, id. § 75-16.2, a far more generous limitations

period than under RESPA or TILA/HOEPA; and (3) there was

now demonstrable evidence of the unique value of these claims,

as the Bumpers plaintiffs had engaged in extensive discovery in

state court, proven liability, and won significant, trebled

damages.

The District Court did not address the North Carolina

Objectors’ arguments until the very end of its August 2008

Memorandum approving the settlement. The Court stated:

Remarkably, [counsel for the plaintiffs in

Bumpers] now objects to the settlement because

we did not create a sub-class of North Carolina

borrowers. The sole purpose of the requested

sub-class would be to assert the same North

Carolina state law claims over which they

previously argued—successfully—that this court

has no subject matter jurisdiction. This objection

is without merit.

(Emphasis in original.)

We agree with the North Carolina Objectors that, to the

extent the District Court rejected their adequacy challenge based

on its perceived lack of subject matter jurisdiction over their

state law claims, it erred. As our Court has held, “a judgment
 We are not persuaded by the Settling Parties’ 31

suggestion that any adequacy-of-representation problem was

cured because North Carolina borrowers dissatisfied with the

Modified Settlement could have opted out of the class. Cf. In re

Diet Drugs, 431 F.3d at 145 (“In a class where opt out rights are

afforded, [due process] protections are adequate representation

by the class representatives, notice of the class proceedings, and

the opportunity to be heard and participate in the class

proceedings.”) (citing Phillips Petroleum Co. v. Shutts, 472 U.S.

88

pursuant to a class settlement can bar later claims based on the

allegations underlying the claims in the settled class action.

This is true even though the precluded claim was not presented,

and could not have been presented, in the class action itself.”

In re Prudential Ins. Co. of Am. Sales Practice Litig., 261 F.3d

355, 366 (3d Cir. 2001) (emphasis added). It follows that absent

class members with claims being released as part of a class

settlement, even those over which a district court lacks subject

matter jurisdiction, are not barred from challenging the

adequacy of class representatives or the fairness of the

settlement.

The Settling Parties counter that the District Court was

not required to “appoint named class representatives from every

state in order to approve a settlement that releases state law

claims.” (Settling Parties’ Br. at 140.) We no doubt agree with

that statement, but this was not the argument made to the

District Court. Though we express no opinion on whether the 31
797, 811–12 (1985)). 

89

North Carolina Objectors’ claims are “uniquely” valuable as

compared to the other class members’ state law claims, we

conclude their arguments merited more discussion than the

Court gave them. Cf. Community Bank I, 418 F.3d at 309–10

(directing the Court to “pay particular attention to the prevalence

of colorable TILA, HOEPA, and other claims that the individual

class members may have which were not asserted by class

counsel” (emphasis added)). We request that the Court on

remand consider the North Carolina Objectors’ arguments and

determine whether the creation of a subclass is necessary to

represent their interests adequately.

B. The Fairness of the Settlement

The Settling Parties argue that, “even if the [D]istrict

[C]ourt’s analysis about the viability of the posited

TILA/HOEPA claims were flawed . . . , the Modified Settlement

still should be approved, given that it fairly compensates Class

members for those hypothetical claims.” (Settling Parties’ Br. at

161.) We disagree, as there is no “harmless error” doctrine that

applies to cure a class representative’s inadequacy in light of

what may appear to be a “fair” settlement. As the Supreme

Court has recognized, 

[w]here differences among members of a class are

such that subclasses must be established, we
90

know of no authority that permits a court to

approve a settlement without creating subclasses

on the basis of consents by members of a unitary

class, some of whom happen to be members of the

distinct subgroups. The class representatives may

well have thought that the Settlement serves the

aggregate interests of the entire class. But the

adversity among subgroups requires that the

members of each subgroup cannot be bound to a

settlement except by consents given by those who

understand that their role is to represent solely the

members of their respective subgroups.

Amchem, 521 U.S. at 627 (quoting In re Joint E. and S. Dist.

Asbestos Litig., 982 F.2d 721, 742–43 (2d Cir. 1992)). Indeed,

“the determination whether ‘proposed classes are sufficiently

cohesive to warrant adjudication’ must focus on ‘questions that

preexist any settlement.’” Ortiz, 527 U.S. at 858 (quoting

Amchem, 521 U.S. at 622–23); see also General Motors, 55 F.3d

at 795 (“[T]he inquiry into the settlement’s fairness cannot

conceptually replace the inquiry into the propriety of class

certification.”). Accordingly, because the settlement appears to

lack “structural assurance of fair and adequate representation for

the diverse groups and individuals affected,” Amchem, 521 U.S.

at 627, we again decline “to address definitively” the substantive
Appeal No. 09-2001 was filed by the plaintiffs in 32

Drennan v. Community Bank of Northern Virginia, a non-class

action asserting claims for rescission against CBNV and RFC

that was transferred to the District Court. These

plaintiffs—John and Rowena Drennan, David and Diane

Garner, and Shawn and Lorene Starkey—did not opt out of the

Modified Settlement, but nonetheless argue that their rescission

claims were not within the scope of the settlement’s release.

The District Court disagreed and granted defendants’ motion to

dismiss their claims. In light of our decision to vacate the

Court’s certification order and approval of the Modified

Settlement, we do not address this argument.

 In its most extreme form, this position is exemplified 33

by the briefs filed by counsel for the Objectors from Alabama

and Georgia, attorney Franklin R. Nix. Mr. Nix—believing that

“the state of the record is such that merely voiding the ‘modified

settlement’ and returning the case to its status quo ante would

91

fairness of the settlement. Community Bank I, 418 F.3d at 318. 32

However, nothing we have said should be interpreted as

concluding that the total compensation provided in Modified

Settlement could not be approved as fair, adequate, or

reasonable. In particular, we are troubled by the Objectors’

apparent belief that any settlement that does not fully account

for (1) trebled damages under RESPA, and (2) the full measure

of statutory (in addition to actual) damages under TILA and

HOEPA, is hopelessly inadequate, unfair, and unreasonable.33
saddle class members with only more of the ‘law’s

delay’”—urges us not only to vacate the settlement, but to

remand this case (to a different District Court Judge) with

instructions to enter an order granting summary judgment “for

all class members . . . as to liability and damages for violations

of TILA, TILA rescission, HOEPA, and RESPA[.]” (Objectors’

Br., No. 08-3790, at 1, 28.) We agree with the Settling Parties

that Mr. Nix’s request “is beyond unorthodox and has no

support in the law, the rules of procedure, or the record.”

(Settling Parties’ Br. at 50 n.6.) We therefore reject it. 

92

 Contrary to the Objectors’ contentions, we know of no authority

that requires a district court to assess the fairness of a settlement

in light of the potential for trebled damages. Compare Suffolk

Cty. v. Long Island Lighting, 907 F.2d 1295, 1324 (2d Cir.

1990) (“[I]t is inappropriate to measure the adequacy of a

settlement amount by comparing it to a possible trebled base

recovery figure.”), with Rodriguez v. West Publishing Corp.,

563 F.3d 948, 964–65 (9th Cir. 2009) (“We have never

precluded courts from comparing the settlement amount to both

single and treble damages. By the same token, we do not

require them to do so in all cases.”). 

In any event, the District Court—having determined that

the TILA/HOEPA claims were not viable because they were

time-barred—never addressed the fairness of the settlement in

light of the potential statutory damages available under TILA

and HOEPA, and we do not do so in the first instance. We point
93

out, however, that the Objectors’ contentions that the statutory

damages available in a TILA/HOEPA class action are

“automatic,” and that “there is no judicial discretion involved in

the award to be made to the Class Members,” are simply

incorrect. (Objectors’ Br., No. 08-3621, at 91.) The statute

makes clear that, although there is no cap on claims for statutory

damages in a class action asserting violations of the disclosure

requirements for loans subject to HOEPA, see supra at 14 n.9,

a district court nonetheless has discretion—after considering

several specifically stated factors—in determining the amount

of the award to the class. See 115 U.S.C. § 1640(a) (“In

determining the amount of award in any class action, the court

shall consider, among other relevant factors, the amount of any

actual damages awarded, the frequency and persistence of

failures of compliance by the creditor, the resources of the

creditor, the number of persons adversely affected, and the

extent to which the creditor’s failure of compliance was

intentional.” (emphasis added)). 

C. The Objectors’ Renewed Motion to Intervene

In addition to their challenges to the District Court’s class

certification decision and approval of the Modified Settlement,

the Objectors also contend that the Court abused its discretion

when it denied as untimely their November 2007 motion to

intervene. In light of our conclusion that the Court erred in

evaluating the adequacy requirement, little turns on this

question; on remand, the Court should revisit whether the named
94

plaintiffs and class counsel are adequate class representatives,

and the Objectors may again seek to intervene in that context.

In any event, we conclude that the Court did not abuse its

discretion in denying the Objectors’ renewed motion to

intervene.

In Community Bank I, we stated that “[t]he time frame in

which a class member may file a motion to intervene

challenging the adequacy of class representation must be at least

as long as the time in which s/he may opt-out of the class.” 418

F.3d at 314. Moreover, a motion to intervene made within that

time period is “presumptively timely.” Id. The Objectors note

that they filed their renewed motion to intervene in November

2007, before the opt-out period had ended. Accordingly, they

contend that their renewed motion was timely. 

However, we also stressed in Community Bank I that the

“[t]imeliness of an intervention request ‘is determined by the

totality of the circumstances.’” Id. (quoting United States v.

Alcan Aluminum, Inc., 25 F.3d 1174, 1181 (3d Cir. 1994)). As

noted, the Objectors withdrew their 2003 motion to intervene on

remand, apparently believing that the MDL transfer of the

Hobson action would permit them an opportunity, in effect, to

depose existing class counsel and take over these consolidated

class actions. The record reveals that this expectation was

unfounded; the Court never told the Objectors it would permit

them to file an amended consolidated complaint for all of the

consolidated actions, and made clear during the November 2005
95

conference that it intended to address class certification and

approval of the Modified Settlement in the consolidated Kessler

action before dealing with any matters in the other transferred

cases. 

 In any event, once the District Court determined (in

October 2006) that the TILA/HOEPA claims were not viable,

the Objectors were on notice that their interests would not be

adequately pursued by the named plaintiffs and their counsel.

The Objectors nonetheless waited almost a year before filing

their renewed motion to intervene. See Joseph M. McLaughlin,

McLaughlin on Class Actions: Law and Practice § 4:36, at 769

(6th ed. 2010) (“This ‘sit back and wait’ approach [is

impermissible] where the would-be intervenors should

reasonably know that their interests will no longer be

represented by the named plaintiff, as where the named

plaintiffs’ litigation decisions indicate that they have abandoned

[certain] claims . . . .”). In these circumstances, we cannot say

that the Court abused its discretion in denying as untimely the

Objectors’ renewed motion to intervene.

D. The Objectors’ Renewed Petition for Mandamus

to Recuse the District Judge

Following oral argument in Community Bank I, the

Objectors moved to reassign these actions to a different District

Court Judge in the event we vacated the Court’s certification

and settlement approval decisions. They purported to move
96

under 28 U.S.C. § 2106, which authorizes federal appellate

courts to

affirm, modify, vacate, set aside or reverse any

judgment, decree, or order of a court lawfully

brought before it for review, [or] remand the

cause and direct the entry of such appropriate

judgment, decree, or order, or require such

further proceedings to be had as may be just

under the circumstances.

Id. (emphasis added). We construed the Objectors’ motion as a

petition for mandamus, seeking an order from our Court

directing the District Court Judge to recuse himself under 28

U.S.C. 455, which provides as follows:

(a) Any justice, judge, or magistrate of the United

States shall disqualify himself in any proceeding

in which his impartiality might reasonably be

questioned.

(b) [The judge] shall also disqualify himself in the

following circumstances:

(1) Where he has a personal bias or

prejudice concerning a party, or personal

knowledge of disputed evidentiary facts

concerning the proceeding[.]
We note that the District Court could not have certified 34

its 2006 Memorandum for appellate review under 28 U.S.C.

§ 1292(b) or Federal Rule of Civil Procedure 54(b), as it was an

interlocutory ruling on a question of law, not an order or a

judgment. See Link v. Mercedes-Benz of N.A., Inc., 550 F.2d

860, 863 (3d Cir. 1977) (en banc) (“[O]ur jurisdiction extends

only to orders of the district court.”); see also Wright & Miller,

97

Id.; Community Bank I, 418 F.3d at 319–20. We denied the

Objectors’ petition for mandamus, noting that they had “ma[d]e

no allegation that the District Court derived its alleged bias from

an extrajudicial source,” but instead relied solely on “rulings or

statements made by the District Court during the course of the

proceedings.” Id. at 320; see also Liteky v. United States, 510

U.S. 540, 555 (1994) (“[J]udicial rulings alone almost never

constitute a valid basis for a bias or partiality motion.”). 

Before oral argument in the current appeals, the

Objectors again moved to reassign these actions to a different

District Court Judge—“pursuant to [our Court’s] supervisory

powers and authority under 28 U.S.C. § 2106,” Mot. at 1—in the

event we again remand. In support of their claims of bias, they

rely on the following: (1) the District Court’s ex parte

conferences with the Settling Parties during the course of the

proceedings before our decision in Community Bank I; (2) the

erroneous legal conclusions in the Court’s 2006 Memorandum,

and its refusal to certify that Memorandum for an interlocutory

appeal; and (3) the Court’s supposed failure to advance the 34
Federal Practice and Procedure § 3930 n.2 (district courts do

not have the authority to certify “issues” to a court of appeals). 

Particularly baseless are the two new “extrajudicial 35

sources” supposedly suggestive of bias that the Objectors

identify: (1) that the District Court Judge was a speaker at Reed

Smith LLP’s “Diversity Retreat” in 2005 (Reed Smith represents

RFC in this case); and (2) one of the Judge’s former law clerks,

now a United States Magistrate Judge, was a partner at Reed

Smith for 13 years. Mot. at 28–29. Not only are these facts

wholly inadequate to show objective bias, we note that the

Objectors never raised these concerns with the District Judge.

In that light, we believe Judge Ziegler aptly characterized (in his

“advisory” ruling) the Objectors’ attacks on the District Judge:

We should note that, while criticism of a district

court’s unfavorable rulings and procedures are

common and expected, Objectors’ counsel has, in

98

MDL proceeding (specifically, its failure to rule on motions in

the Hobson action filed by counsel for the Objectors). 

We again construe the Objectors’ motion as a petition for

mandamus. As is evident from the above, however, the

Objectors once more rely on little more than the “rulings or

statements made by the District Court during the course of the

proceedings” in support of their renewed petition. Community

Bank I, 418 F.3d at 320. The Objectors’ other allegations of

bias on the part of the District Court border on the frivolous,35
our view, exceeded the bounds of professional

conduct by making unwarranted, unnecessary and,

quite frankly, silly attacks on the district court in

its legal brief. . . . These attacks serve only to

reduce the civility and decorum of the

proceedings[.] 

 In this context, we believe it appropriate to re-state our 36

closing admonition from Community Bank I:

We note as well that the District Court was

besieged by opposing groups of lawyers who

flooded it with numerous motions, arguments, and

counter-arguments, which undoubtedly made it

99

and we are troubled by their accusations—which we see nothing

in the record to support—that the District Court intentionally

disregarded our mandate in Community Bank I in order to reach

a pre-determined result. E.g., Mot. at 14 (accusing the District

Court Judge of “disregard[ing] this Court’s mandate . . . in order

to again reach the same result [he] intended all along—approval

of the class action settlement”); id. at 16 (accusing the Judge of

being “intellectually dishonest and duplicitous”); see also

Objectors’ Br., No. 08-3790, at 2 (requesting that our Court

remand this case “to a different district court unburdened by

hidden agendas”). Accordingly, and notwithstanding our

conclusion that the District Court erred in re-certifying the class,

we deny the Objectors’ petition for mandamus.36
difficult for the Court to engage in the reflection

needed to exercise its fiduciary duty to assure that

the settlement process was procedurally fair. . . .

We believe it is the responsibility of counsel,

consistent with their obligations to their clients, to

assist the district courts in their difficult tasks of

managing often unwield[y] class actions by

eliminating unnecessary motions, exercising

restraint in filing objections, and treating

opposing counsel with the civility that should

characterize attorney relations.

418 F.3d at 320 n.37. 

100

IV. Conclusion

In summary, we conclude the District Court applied an

incorrect legal standard, and thus abused its discretion, in

determining that the named plaintiffs and class counsel are

adequate representatives for the class. In addressing the

adequacy requirements on remand, the Court should in

particular consider, consistent with the standards we have

discussed, (1) whether a subclass of class members with timely

RESPA and/or TILA/HOEPA claims should be created; and (2)

whether class counsel are adequate representatives for the class,

and/or any subclasses that may be created, in light of counsel’s

justifications given for their decision not to bring TILA/HOEPA

claims on behalf of the class.