John Rodriguez v. Natl City Bank
726 F.3d 372
3rd Cir.2013Background
- African-American and Hispanic borrowers sued National City Bank and National City Corporation alleging disparate impact under the Fair Housing Act and ECOA via a discretionary pricing policy.
- Data from 2001–2008 including loan terms and borrower characteristics were produced during discovery; plaintiffs conducted regression analyses suggesting a nationwide disparity.
- Parties reached a proposed settlement class covering loans from 2004 through the settlement date, with a $7,000,000 settlement fund and various fee allocations.
- District Court preliminarily approved the settlement and certified the class under Rule 23(b)(3); 153,000 members were notified and thousands participated or opted out.
- After Dukes (Wal-Mart) guidance, the District Court denied final settlement approval and class certification for lack of commonality; plaintiffs appealed under Rule 23(f).
- Third Circuit granted permission to appeal to clarify commonality and settled role of the district court in settlement-class review under Rule 23.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the settlement class met Rule 23(a) commonality after Dukes | Plaintiffs argue Dukes allows a broad commonality showing via overall disparity. | National City argues Dukes requires a showing of a common, uniform practice and evidence of common impact. | No; commonality lacking; rigorous analysis required and national regression insufficient. |
| Role of district court in settlement-class certification | Courts should defer to settlement terms and avoid merit-based scrutiny. | District court must independently evaluate Rule 23 requirements. | District court properly conducted independent Rule 23(a) analysis and did not abuse discretion. |
| Burden of proof for Rule 23(a) commonality in settlement context | plaintiffs should rely on settlement record and not delve into merits | Court must require actual evidence of commonality, not speculate | Court requires affirmative evidence of commonality; speculation is insufficient. |
Key Cases Cited
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (U.S. 1997) (settlement-class safeguards and heightened Rule 23 scrutiny)
- Dukes v. Wal-Mart Stores, Inc., 131 S. Ct. 2541 (S. Ct. 2011) (establishes standard for commonality in discretionary-policy cases)
- Sullivan v. DB Inv., Inc., 667 F.3d 273 (3d Cir. 2011) (strong policy favoring settlement but Rule 23 must be satisfied)
- Ehrheart v. Verizon Wireless, 609 F.3d 590 (3d Cir. 2010) (settlement enforcement; limits on post-agreement changes in law)