Palombaro,Jr. v. Emery Federal Credit Union
1:15-cv-00792
S.D. OhioAug 10, 2017Background
- Plaintiffs allege that between 2009 and 2014 Emery Federal Credit Union employees participated in a kickback/referral scheme with Genuine Title, LLC: Genuine Title paid cash and marketing-credit kickbacks (sometimes routed through sham companies) to Emery employees in exchange for referrals of settlement business.
- Plaintiffs identified ~4,452 “Matched Class Loans” from discovery spreadsheets produced by Emery and Genuine Title; HUD-1 settlement statements for named plaintiffs listed Genuine Title but did not disclose kickbacks.
- CFPB and Maryland CPD investigated certain Emery employees; in response Genuine Title backdated and created “sham” title services agreements. Some Emery employees entered stipulated judgments with the CFPB.
- Plaintiffs moved to certify a nationwide class of borrowers on federally related mortgage loans brokered/originated by Emery for which Genuine Title provided settlement services (HUD-1 §1100) between Jan 1, 2009 and Dec 31, 2014.
- The district court conducted the Rule 23 rigorous analysis and granted certification under Rule 23(b)(3), while reserving discretion to tailor or decertify later if manageability or individual issues overwhelm the class.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Ascertainability | Class membership can be determined objectively from Genuine Title and Emery loan lists and HUD-1s. | Emery disputes accuracy of matched list and difficulty verifying unmatched loans. | Court: Plaintiffs met ascertainability; available data and procedures suffice. |
| Numerosity | ~4,000–5,000 affected borrowers; joinder impracticable. | Not disputed. | Court: Numerosity satisfied. |
| Commonality / Typicality | Common questions (existence of referral agreement, referrals, payments/receipt of kickbacks, and equitable tolling/concealment) drive the litigation; named plaintiffs’ claims arise from same scheme. | Emery contends variation across branches/employees and differing damages defeat commonality/typicality. | Court: Commonality and typicality met—widespread scheme generates classwide answers; damages variations not fatal. |
| Predominance (including statute of limitations/equitable tolling and RESPA elements) | Fraudulent concealment (omitted HUD-1 disclosures, sham agreements, regulator investigations) supports classwide equitable tolling and predominance; RESPA elements can be proven with classwide and objective evidence (HUD-1s, payroll/records). | Emery argues RESPA coverage and defenses (statute of limitations, applicability of §8(a)/(b), §8(c)(2) safe-harbor, compensable services, business-purpose loan exemptions) require individualized, loan-by-loan inquiries that predominate. | Court: Predominance satisfied at this stage—concealment evidence supports classwide tolling; RESPA liability and safe-harbor issues amenable to generalized proof; individualized issues do not yet defeat predominance. |
| Superiority | Class action is efficient and necessary given small individual incentives and common conduct. | Emery cites RESPA fee-shifting/treble damages and prior RESPA class denials to argue individual suits may be preferable. | Court: Class action is superior here given concentrated, concealed scheme and available defendant records; recognizes possible future tailoring/decertification. |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (class-certification commonality standard)
- Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147 (rigorous Rule 23(a) analysis)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (predominance and superiority analysis)
- Menominee Indian Tribe of Wis. v. United States, 136 S. Ct. 750 (elements for equitable tolling)
- Egerer v. Woodland Realty, Inc., 556 F.3d 415 (6th Cir.) (equitable tolling applied narrowly; disclosure effects)
- In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig., 722 F.3d 838 (individual damages calculations do not preclude certification)