Case Information
*2 MARTIN; CARMEN GONZALEZ; STAPLETON, Circuit Judges . M. NARTEL GREEN; SHIRLEY
WILLIAMS; MARIA BLYDEN; (Filed September 20, 2004) GONZALO RIVERA; BLANCHE R.
RAWLINS; RHEA L. JOHNSON;
MARILYN RIVERA; KEITH R. DOUGLAS B. INMAN, ESQ.
WILLIAMS; AL BRUNN; EMERYL (ARGUED)
CHRISTOPHER; CHARLES G. Sayre & Chavez JOHNSON; VELSINA L. GEORGE; 7 Church Street
KALEEN CLOUDEN; EUNICE Christiansted, St. Croix GOMES; RUTH DUBLIN; USVI 00820 KIMBERLEY L. OLIVER; ELENA
HERBERT; LAWRENCE CHRISTIAN; Attorney for Appellees
MARJORIE JOHN; LAVERNE WILLIAMS; REVEREND JAMES PETER D. KEISLER, ESQUIRE CHRISTIAN, on behalf of themselves Assistant Attorney General
and all others similarly situated DAVID M. NISSMAN, ESQUIRE *3 United States Attorney Credit Opportunity Act, 15 U.S.C. § 1691 ERNEST BATEGNA, ESQUIRE et seq. (“ECOA”), which makes it Assistant United States Attorney “unlawful for any creditor to discriminate ROBERT M. LOEB, ESQUIRE against any applicant, with respect to any CHARLES W. SCARBOROUGH, aspect of a credit transaction . . . on the ESQUIRE, COLETTE G. MATZZIE, basis of race, color, religion, national ESQUIRE (ARGUED) origin, sex or marital status, or age.” 15 Attorneys, Appellate Staff U.S.C. § 1691(a). To establish a prima Civil Division, PHB Room 9149 facie case under ECOA the class members U.S. Department of Justice must show that (1) plaintiff was a member 601 D. Street, NW of a protected class; (2) plaintiff applied Washington, DC 20530-0001 for credit from defendants; (3) plaintiff
was qualified for the credit; and (4) despite Attorneys for Appellant qualification, plaintiff was denied credit. See Matthiesen v. Banc One Mortgage ______________________ Corp ., 173 F.3d 1242, 1246 (10th Cir. 1999).
OPINION OF THE COURT
According to Chiang, the regional _______________________ USDA office in Vermont, which had jurisdiction over the U.S. Virgin Islands, BECKER, Circuit Judge . kept Virgin Islanders “out of the system” by implementing a “phony,” illegal This is an interlocutory appeal by the waiting list on which thousands of Virgin defendant, United States Secretary of Islanders, almost all of whom were Black, A g r i c u l tu r e , A n n M . V en e m an Hispanic, or female, had their names (“Veneman”) pursuant to Fed. R. Civ. P. placed instead of being given an actual 23(f), in which she challenges a class loan application in violation of USDA certification granted by the District Court policy, instructions, and regulations, . in a civil rights case brought against her in These applicants were told that they would her official capacity. The lead plaintiff is receive applications when they became Gail Watson Chiang (“Chiang”), the available but, even after years of waiting, representative of the putative class, who, most never did. According to Chiang, not along with thirty-eight other plaintiffs, only were applications available, but the alleges systematic discrimination against Virgin Islands was the only locality in the persons who are “Black, Hispanic, women, United States where this type of waiting and/or Virgin Islanders,” over a period of list was implemented. Thus, Chiang nineteen years, in the administration of submits, the so-called “waiting list” was loan programs intended to help low not a true waiting list at all, but was rather income rural families obtain homes and a device used to deny class members loan make repairs to existing homes. The applications altogether. claims are made primarily under the Equal *4 Chiang also alleges that the USDA female and /or Virgin Islanders who administrators in Vermont further applied or attempted to apply for, instructed Virgin Islands officials to give and/or received, housing credit, applications only to those class members services, home ownership, assistance, on the waiting list who became a t r a in i n g , a n d / o r e d u c a t io n a l “problem,” and then told local employees opportunities from the USDA through “you know what to do with it.” This its Rural Development offices (and message was uniformly understood by predecessor designations) located in local USDA officials to mean that the the U.S. Virgin Islands at anytime applications were not to be processed, but between January 1, 1981 and January rather that actions were to be taken to 10, 2000, and who believe they were make it difficult or impossible for the discriminated against on the basis of inquiring parties to meet qualifications and race, gender or national origin. deadlines, the intention being that the applicants would become so frustrated that they wou ld withdra w applications, or that delays would result in denial of the applications. In Chiang’s submission, this became known in the disqualification or other justification for local USDA office as the “Impossible but the USDA would make it impossible for the putative applicant to have the Yes”: an application would be given out, application fairly processed. th eir loan Court abused its discretion when it $2.8 billion in damages from the USDA. Rural Housing Service (“RHS”) overbroad, and that it is internally and unmanageable class action seeking She complains that the class definition is certified what she describes as a sprawling every Virgin Islander who applied or attempted to apply for any of the different inconsistent insofar as it encompasses credit [1] In Veneman’s submission, the District
Furthermore, Chiang alleges corruption in the administration of the loan program [1] The Rural Housing Service is an in the Virgin Islands—in the rare instances agency of the USDA. Formerly known in which loans were approved—through as the Rural Housing and Community favoritism to local contractors who were Development Service, “RHS” is a not building homes in a safe and successor agency to the Farmers Home workmanlike manner. This resulted, it is Administration, which ceased to exist in said, in placing Virgin Islanders into 1994. RHS operates a broad range of i n a d e q u ate a n d u n s a f e h o u s in g , programs to address rural America’s r e presentin g a fu rt he r f o rm o f need for single-family and multi-family discrimination against Virgin Islanders. housing as well as health facilities, fire and police stations, and other community At the behest of Chiang, the District structures. To promote its goals, RHS Court granted a Rule 23(b)(3) certification administers direct loan guarantees and to a class of grants through state and local offices All persons who are Black, Hispanic, located throughout the nation.
and benefit programs during a nineteen- chart for our consideration which she year period (from 1981 to 2000), including claims was the primary document used by those with non-credit claims, those with USDA employees to determine eligibility, untimely claims, and Caucasian loan contending that those employees did not applicants who the complaint alleges have any particular knowledge or skill, but benefitted from the discrimination. rather, were mere clerks charged with matching income to columns on the chart. In Veneman’s view, not only is the According to Chiang, the evaluations of class so sweeping that the threshold eligibility constituted neither in-depth nor requirements of Rule 23(a) likely are not discre tionary assess men ts of th e satisfied, but even if the class definition circumstances of each applicant, and hence were deemed to meet Rule 23(a)’s are subject to common proof. standards, the class fails Rule 23(b)(3)’s more stringent requirements because Veneman is surely correct that the common issues do not predominate over plaintiff in an ECOA case must establish individual ones and class treatment would that he or she was qualified for loan not be superior to individual adjudications. eligibility as part of the prima facie case. Central to Veneman’s contention is the The record developed thus far leaves us in argument that to prevail on his or her some doubt as to the validity of Chiang’s individual claims under ECOA, each class contentions about the susceptibility of member would need to demonstrate that eligibility determinations to common the USDA’s proffered reason for denial of proof. Nevertheless, we believe that this credit (or loan for defective property) was question will be best resolved by the a pretext for discrimination on the basis of District Court in the first instance. We race, gender or national origin. According have no doubt, however, that the question to Veneman, liability on these claims can of the existence vel non of the “phony” only be determined through case-by-case waiting list—and associated techniques inquiries into the specifics of each used to prevent Virgin Islanders from transaction, and most particularly, the loan gaining access to loan applications and eligibility of each putative class member. loans—is a matter appropriate for class If the class member could not have determination. We will therefore affirm obtained the loan, then he or she cannot that portion of the District Court order succeed in his or her claim of certifying the class pursuant to Rule discrimination, regardless of the existence 23(c)(4), which allows a class action to be of the alleged waiting list. maintained with respect to particular issues— in this case the waiting list— while Chiang counters this with the simultaneously reserving for the District contention that determination of loan Court the authority to determine whether eligibility would, in fact, be susceptible to eligibility for loans can be certified as a class proof because those determinations question suitable for class adjudication. were purely ministerial in nature. In her supplemental exhibit 1, Chiang submits a We are not troubled by the seeming *6 internal contradiction in the class the eligibility facet of liability, we will definition because, inasmuch as the vacate the District Court’s order in all plaintiffs’ primary claim is that they were other respects.
discriminated against for being Virgin
I. Facts and Procedural History
Islanders, a cognizable class, we will treat
the claim as such and modify the District
We begin with a recitation of the
Court’s certification order accordingly.
allegations supporting class certification,
While some claims allege individual
derived both from the first amended
gender and race discrimination,
the
complaint and from extensive informal
number of such complaints appears to be
class action discovery (largely exchange of
small, and we think that certifying a class
documents). We note that it is not
of Virgin Islanders best captures the
necessary for the plaintiffs to establish the
merits of
their case at
the class
plaintiffs’ arguments. Since 76% of the
population of the U.S. Virgin Islands is
certification stage, and that, in determining
black and 14% is Hispanic, it is possible
whether a class will be certified, the
that the claims of racial and national origin
substantive allegations of the complaint
discrimination may overlap. We therefore
must be taken as true.
See Eisen v.
leave to the plaintiffs the option to seek to
Carlisle & Jacquelin
,
and gender, rather than national origin, discrimination; any decision on such in the first instance. Additionally, for amendment will be for the District Court modify the certification order to eliminate , we will further infra reasons explained the reference to the class members’ the class definition. removing such a subjective criterion from “belief” in discrimination, thereby 10, 2000, thousands of Virgin Islanders USDA in order to purchase or make [2] requested home loan applications were repairs on homes. As noted above, Chiang alleges that all class members who requested loan applications from the forced to put their names on an illegal waiting list instead of actually being given an application. Chiang contends that the Between January 1, 1981 and January
As the foregoing suggests, the issues to be dealt with on a class basis do not [2] From 1995 to 1999, Chiang worked present predominance, superiority, or as a special assistant to the Governor of manageability problems. See Fed. R. Civ. the Virgin Islands. Although she filed P. 23(b)(3). Neither do we find any merit this suit as a private citizen, she explains in Veneman’s untimeliness claims, which that she first became aware of the extent are not properly before us at this stage of of the discrimination problem due to her the case. Finally, because the other governmental position which led her to aspects of the case are not suitable for receive “hundreds, if not thousands, of class determination, i.e., inclusion of the oral complaints from Virgin Islanders c l a s s - b a s e d c l a i m s o f c o r r u p t regarding what was perceived as a administration, and, on the present record, longstanding and widespread systematic *7 existence of this list, generated in the According to Chiang, each named USDA regional office in Vermont which plaintiff in this law suit filed a had jurisdiction over the Virgin Islands, discrimination complaint with the USDA was in direct contravention of USDA prior to this action, or authorized one to be instructions and regulations, and that no filed on his or her behalf. [4] In March 1997, equivalent list existed anywhere else in the record to support the contention that the United States. Chiang represents that the amount of funding is tied to the number justification USDA gave for placing class of persons who seek loans. The members on the waiting list was that (1) methodology for allocation of housing the USDA did not have any applications funds can be found in 7 C.F.R. §§ and (2) applications were not being given 1940.552 and 1940.565. The formula is out because the USDA had no money based on (1) the State’s percentage of the available for loans. However, Chiang National number of rural occupied contends that applications were, in fact, substandard units; (2) the State’s available, and that a certain low level of percentage of the N ational rural funding was also available despite her population; (3) the State’s percentage of allegation that the USDA failed to seek or the National rural population in places of obtain proper levels of funding for rural less than 2,500 population; (4) the State’s housing loans for each of the 19 years at issue. [3] percentage of the National number of rural households between 50 and 80 discrimination” and that she was percent of the area median income; and “inundated with complaints of USDA (5) the State’s percentage of the National discrimination from all quarters.” number of rural households below 50
percent of the area median income. On this record, it appears that none of these [3] Chiang also contends that because factors are derived from the USDA’s class members were placed on the application database.
alleged waiting list, they were never To the extent that Chiang alleges an entered into the official USDA database unfair allocation of funds to the Virgin which tracks the number of loan Islands, as opposed to discriminatory applications in each jurisdiction. She behavior on the part of the USDA in further submits that due to that lack of administering those funds, she seeks data entry, the level of need for funding relief in the wrong forum and would be was never properly assessed and so was better served directing her complaint never allocated to the Virgin Islands. elsewhere.
The lack of funding, she maintains, was
then used as a reason for putting class [4] Those authorizations were apparently members on the waiting list, thereby directed to Chiang in the course of her keeping them out of the database and employment in the Governor’s office. creating a vicious circle. When she fielded complaints about the
There is, however, no basis in the USDA’s alleged discriminatory behavior, *8 Chiang and 48 other named plaintiffs filed requirements of Fed. R. Civ. P. 23(a) had an administrative class program complaint not been met. Veneman also argued that of discrimination with the USDA’s Office the class definition was fatally overbroad of Civil Rights in Washington, D.C. The because it failed to define the class by named plaintiffs claim never to have reference to any discriminatory practice, received any type of acknowledgment of included untimely claims and claims their complaints from the USDA. arising out of RHS’s non-credit benefit However, in response to mounting programs, and was not limited by race or discrimination complaints, the USDA sent gender as it included all Virgin Islanders. an investigative team to the Virgin Islands. The USD A investigation and documented what Chiang styles the “Highway to Nowhere” Rights Compliance Review for the U.S. Virgin Islands, October 19-29, 1997.” The in an internal USDA report entitled “Civil the “impossible yes” scheme. (See JA [5] Those techniques were (1) creating the phony, illegal “waiting list,” and (2) implementing specific techniques used to deny class members access to the loans. adopted by the USDA—identified two report—which was never officially 384-411). This lawsuit followed. team co n duc ted a n The Court found class member.” It concluded that the under Rule 23(b)(3). Court filed its decision certifying the class [6] practice of discrimination against each put their names on an unlawful waiting denied an application package and told to pattern and practice manifested itself in three ways: (1) some members were applications, but then made it impossible list; (2) RHS provided other members with for them to obtain credit by deliberately that the FAC alleged “a pattern and the program would run out of funds, the delaying and frustrating the process so that On February 28, 2003, the District
The plaintiffs filed their initial
complaint on January 11, 2000 and filed
their first amended complaint (“FAC”) on [6] The District Court explicitly chose March 23, 2001. The FAC named 39 “not to certify this class under (b)(2)” plaintiffs and sought class certification. because even though “Rule 23(b)(2) Veneman opposed class certification on certification can be particularly well-suited t h e grou nds th at the t hre shold to civil rights actions charging class discrimination . . . certification is not proper where ‘the appropriate final relief she would ask the complainant to give her relates exclusively or predominantly to permission to lodge an officia l money damages.’” (Op. 14, note 4) discrimination complaint with the USDA.
(quoting Advisory Committee Notes to
[5]
Veneman refuses to be bound by the
Rule 23 (b) (2)). The District Court
contents of the report, calling it an
concluded that, although some measures of
“unofficial and preliminary draft” filled
injunctive relief were sought, “the
with “hearsay and baseless innuendo.”
equitable remedies probably do not
(Reply Brief, P.7, note1).
predominate.” (Op. 14, note 4).
*9
applicant would become ineligible or the
requisites of Rule 23(a) and at least one
applicant would give up; and (3) even
part of Rule 23(b) are met.
See Baby Neal
plaintiffs who did obtain loans were
v. Casey
, 43 F.3d 48, 55 (3d Cir. 1994)
denied services such as loan workouts and
(citing
Wetzel v. Liberty Mutual Ins. Co.
,
payment moratoria because of their race,
A. Standard of Review Fed. R. Civ. P. 23(a). In order to obtain class certification, Veneman does not now contest plaintiffs must establish that all four numerosity, typicality, or adequacy of *10 representation. Rather, she focuses on the revocation, alteration, or termination of commonality prong, arguing that the credit; and collection procedures).” 12 eligibility determinations for loans are not C.F.R. § 202.2(m) (emphasis added). A susceptible to common proof. She also potential creditor’s refusal to provide an argues that the definition contains an application form is also part of a “credit internal contradiction, and that the class as transaction” within the meaning of the certified is fatally overbroad. statute, see Rosa v. Park West Bank & Trust Co. , 214 F.3d 213 (1st Cir. 2000).
1. Commonality Indeed, a refusal to provide a loan Veneman’s first objection to the class application “on the basis of race, color, certification is that there are not sufficient religion, national origin, sex or marital “questions of law or fact common to the status, or age” would be a prototypical class.” See Fed. R. Civ. P. 23(a)(2). But ECOA violation, as it would deny the commonality standard of Rule 23(a)(2) members of a protected class any access to is not a high bar: it does not require credit.
identical claims or facts among class Plaintiffs here allege discrimination at member, as “the commonality requirement several different points in the credit will be satisfied if the named plaintiffs application process, from refusal to share at least one question of law or fact provide application forms when requested, with the grievances of the prospective through delaying tactics in the processing class.” Johnston v. HBO Film Mgmt ., 265 of applications, to discrimination in F.3d 178, 184 (3d Cir. 2001). We find that administration of loan proceeds. Given the Chiang’s allegations of discriminatory broad language of 12 C.F.R. § 202.2(m), conduct directed at the entire class do we think that all of these forms of present a common question of law. discrimination fall under the purview of a
As noted above, ECOA makes it “credit transaction,” and so constitute “unlawful for any creditor to discriminate ECOA violations. Thus, even though against any applicant, with respect to any many putative class members never even aspect of a credit transaction . . . on the made it to the official application process basis of race, color, religion, national because they were denied applications in origin, sex or marital status, or age.” 15 the first instance, their requests for—and U.S.C. § 1691(a). The regulations denial of—applications are nevertheless governing ECOA define a “credit cognizable under ECOA.
transaction” as “every aspect of an As presented by Chiang, and as applicant’s dealings with a creditor certified by the District Court, the heart of regarding an application for credit or an the complaint alleges discriminatory existing extension of credit (including, but attempts to keep class members from not limited to, information requirements; having access to rural housing loan investigation procedures; standards of programs in the Virgin Islands. Chiang creditworthiness; terms of credit; submits that the so-called “phony” waiting furn ishing of credit information; *11 list and the other practices that allegedly denial of access to housing programs; and contributed to prevent Virgin Islanders the unlawful discouragement and refusal to from having access to loans are all process applications by way of the susceptible to common proof. Those “impossible yes.” multifarious practices include the
following:
the
refusal
to accept
In our view, these claims allege a
submission of loan applications from class
uniform course of conduct common to all
members; the refusal to issue loan
class members subject to common proof in
applications; the refusal to process loan
a single trial. In
Hoxworth v. Blinder,
applications; the refusal to provide reasons
Robinson & Co.
, 980 F.2d 912, 924 (3d
for failing to process the loan applications;
Cir. 1992), we held that a “uniform
the unlawful denial of access
to
scheme” or “uniform course of conduct”
established procedures and national
would support a finding of predominance
funding computer systems; the refusal to
even where injuries resulting from a
notify class members of eligibility for
fraudulent securities scheme were different
loans and assistance; the refusal to employ
for each class member; while imposing a
mandated priority funding system; the
h i g h e r s t a n d a r d , p re p o n d e r a n c e
refusal to engage in mandated processing
presupposes commonality.
See also Int’l
procedures to determine eligibility; the
Brotherhood of Teamsters v. United States
,
concealment of discriminatory acts by
failure to advise class members about
requirements for keeping loan applications If the waiting list and associated active; the unlawful denial of access to techniques claims are resolved in non-program loans; the refusal to advise plaintiffs’ favor, they will have satisfied class members of their right to review and the first two prongs of the ECOA prima appeal; the unlawful refusal to provide for facie case: membership in a protected administrative review of non-appealable class (viz., Virgin Islanders: see infra Part decisions; the failure to investigate and II.B.2) and application (or, here, attempted process discrimination complaints; the application) for credit. The third and denial of acces s to non-pro gram fourth prongs, however—that the applicant procedures for assumption of existing was qualified for the credit and that, USDA loans and properties; the systematic despite that qualification, defendant denied *12 the credit— may prove harder to calculation is far from easy to perform, adjudicate on a class-wide basis. especially when applicants may have
unstable work histories, the work in Chiang contends that the issues are question may be seasonal, or continued appropriate for class certification because employment may be questionable—to determinations of loan eligibility are a name just a few of the possible variables. purely ministerial matter. At oral Veneman also submits that class members argument before this Court, counsel for would need to show that the property for Chiang submitted a chart concerning which they sought a loan met the criteria income limit qualifications for certain for collateral on the loan. See 7 C.F.R. §§ RHS loans. Counsel argued that the one- 3550.56-57. In short, she disputes the page document demonstrated that notion that loan eligibility could be a qualification for the loans at issue was a mechanical question proper for class mechanical function that could be adjudication.
undertaken by any low-level clerk simply
b y r e a d i n g t h e c h a r t . S e e Federal Rule of Civil Procedure http://www.rurdev.usda.gov; see also 7 23(c)(4) provides that “[w]hen appropriate C.F.R. § 3550. (A) an action may be brought or
maintained as a class action with respect to
Veneman, on the other hand, submits
particular issues . . . .” Rule 23(c)(4) both
that determining eligibility for loans is
imposes a duty on the court to insure that
quite complex and involves the exercise of
only those questions which are appropriate
discretion. She contends that in order to
for class adjudication be certified, and
show that he or she was qualified for a
gives it ample power to “treat common
loan, each applicant would need to
things in common and to distinguish the
demonstrate that he or she met each of the
distinguishable.”
Jenkins v. United Gas
regulatory requirements including income
Corp.
, 400 F.2d 28, 35 (5th Cir. 1968).
limitations and ability to repay the loan.
Because we believe
that
the
two
See
7 C.F.R. § 3550.53. According to
questions—the existence of the phony
these regulations, two different kinds of
waiting list and associated techniques on
income must be considered: repayment
the one hand, and the feasibility of class-
income and eligibility income.
See
7
wide determinations of loan eligibility on
C.F.R. § 3550.54. Repayment income
the other—are easily distinguishable, we
measures the income which the applicants
will affirm certification on the former and
have available to repay the loan, while
leave it to the district court to determine
eligibility income is based on the income
whether class certification might be
of all members of
the household.
appropriate on the latter. We note in this
Veneman submits that although it may
regard that courts commonly use Rule
seem mechanical to take an applicant’s
23(c)(4) to certify some elements of
hourly income and multiply it by the
liability for class determination, while
number of yearly working hours, such a
leaving other elements to individual
*13
a d j u d i ca t i o n — o r , p e r h a p s m o r e
realistically, settlement.
, 376 F.3d
Carnegie v. Household Int’l, Inc.
determined to have violated the law
separate proceedings of some character
may be that if and when the defendants are
656, 661 (7th Cir. 2004) (Posner, J.) (“[I]t
Mullen v. Treasure
members to relief.”); ,
Green , 411 U.S. 792 (1973), applies because ECOA should be construed in [7] B e c a u s e w e a r e n o t decid ing th e accordance with the law of Title VII question of appropriateness of class discrimination cases.
certifica tion for loan e ligibilit y We have not yet had occasion to decide determinations, we need not rule on whether it is appropriate to shift the burden Chiang’s “Motion to Correct the Record to a defendant to rebut a prima facie claim and Reply” in which she wishes to of discrimination under ECOA. Several of introduce two exhibits. The first document our sister Courts of Appeals have so held, was presented to us only during the course but one Court of Appeals has questioned of oral argument and consists of the one whether the McDonell Douglas model can page income qualification chart. Since the be imported from the field of employment District Court will be called upon to make discrim ina tion to that of credit the determination as to whether class discrimination. See Lewis v. ACB Bus. certification is appropriate for determining Servs., Inc. , 135 F.3d 389, 406 (6th Cir. the question of loan eligibility, that Court 1998) (holding that ECOA’s legislative should decide how to proceed with the history suggests reviewing claims of request. The second document relates to discrimination using the same burden evidence (past loan applications) allegedly allocation system found in Title VII); destroyed by the USDA (willfully Moore v. United States Dept. of according to Chiang; in the process of Agriculture , 55 F.3d 991, 995 (4th Cir. routine destruction of records, according to 1995) (noting that the McDonnell Douglas Veneman). To the extent that the alleged test would apply to ECOA case but for the intentional destruction of this evidence fact that plaintiffs had direct evidence of would have bearing on class certification discrimination); Mercado-Garcia v. Ponce by making it impossible for the USDA to Fed. Bank , 979 F.2d 890, 893 (1st Cir. undertake the individual review of all class 1992) (noting that the language of ECOA members’ application files that it and EEOA is “nearly identical”); Bhandari advocates, the District Court will again be v. First Nat’l Bank of Commerce , 808 F.2d in a better position to evaluate that request. 1082, 1100-01 (5th Cir. 1987) (explaining
2. Internal Contradiction Islanders who applied or attempted to apply for . . . and . . . were discriminated The USDA highlights an internal against on the basis of national origin.” contradiction in the class definition, and
argues that this contradiction is so
We modify the class definition to
egregious that it renders the class, if not
include all “Virgin Islanders,” rather than
fatally overbroad, then at least logically
to include only “persons who are Black,
impossible. In certifying the class, the
Hispanic, [and/or] female,” because we
District Court defined its members as “all
understand Chiang to be alleging mainly
persons who are Black, Hispanic, female
discrimination against
all
Virgin Islanders,
and/or Virgin Islanders.” The USDA
rather than racial discrimination
among
argues that a class consisting of Blacks,
Virgin Islanders. However, at various
Hispanics, women, and/or Virgin Islanders
points in her submissions, Chiang does in
is inherently contradictory as it would
fact appear to be alleging individual racial
necessarily both include and exclude white
and gender discrimination against Black,
males. We agree. However, rather than
Hispanic, and female Virgin Islanders (and
decertify the class, as the USDA urges us
in favor of
white male Virgin Islanders).
to do, we prefer to take a less drastic
The number of specific complaints in these
course and simply modify the class
areas appears to be small in comparison to
definition to remove the ambiguity.
See
the claims of discrimination against all
28 U.S.C. § 2106 (entitling us to “affirm,
Virgin Islanders. We note that 76% of the
modify, vacate, set aside or reverse any
population of the U.S. Virgin Islands is
judgment, decree, or order”). Pursuant to
Black, and 14% is Hispanic,
see
U.S.
the modification, the class definition in
Census Bureau, Population and Housing
relevant part will now read “[a]ll Virgin
P r o f i l e :
2 0 0 0 ,
a t
http://www.census.gov/Press-Release/w
ww/2002/usvistatelevel.pdf; thus, it is
that language of ECOA is “closely related”
quite possible that claims of racial and
to that of EEOA and “was intended to be
national-origin discrimination might
interpreted similarly”);
Williams v. First
overlap here. At all events, we reform the
Fed. Sav. & Loan Ass’n
,
Islander” is an acceptable designation of
national origin in a federal discrimination
First, Veneman argues that the class
suit). To the extent that the USDA objects
definition includes untimely claims. She
to the inclusion of the term Virgin
submits that, by attempting to encompass
Islanders in the class definition, we
credit discrimination claims dating back to
understand the objection to be based on the
January 1, 1981, Chiang’s definition
confusion it creates when contrasted to
ignores ECOA’s two-year statute of
persons who are “Black, Hispanic, [or]
limitations.
Veneman contends that
female,” rather than on the ground that
having brought suit on January 11, 2000,
“Virgin Islander” cannot be a legitimate
the class may not sue based on acts of
national origin designation. We have held,
discrimination predating January 11, 1998,
for example, that the term Puerto Rican
with the only exception being for those
can designate national origin for purposes
individuals who
filed an “eligible
of a federal discrimination suit,
see, e.g.
,
complaint” about such an act with the
DiMarco-Zappa v. Cabanillas,
238 F.3d
[8]
USDA by July 1, 1997. However, we
25, 36 (1st Cir. 2001);
c.f. Fuentes v.
believe that the issue of timeliness goes to
Perskie
,
able to represent a class is reversible 3. Overbreadth error); see also Eisen v. Carlisle & Jaquelin , 417 U.S. 156, 178 (1974) (“In Veneman also contends that class determining the propriety of a class action, certification should be set aside on the
ground
that
the certified class
is
“overbroad.” In Veneman’s universe, it
[8]
See
Omnibus Consolidated & Emergency
Supplemental Appropriations Acts, 1999,
seems that overbreadth is being used as a
Pub. L. No. 105-277, § 741, 112 Stat. 2681-30
catch-all to address a number of issues that
(Oct. 21, 1998) (codified at 7 U.S.C. § 2279
do seem potentially to bear on class
note).
*16
the question is not whether the plaintiff or
FmHA.”
Williams
, at *14 (emphasis
plaintiffs have stated a cause of action or
added). The USDA argues that Chiang’s
will prevail on the merits, but rather
proposed class is an exact parallel to that
whether the requirements of Rule 23 are
rejected in
Williams
. We disagree.
met.”) (citation omitted);
Gruber v. Price
Besides the fact that both putative
Waterhouse
,
the Farmers Hom e Administration
b.
(FmHA) discriminated against them based
Second, Veneman argues that in this
on race or national origin. Like the
case the District Court approved a class
putative class here, the farmers sought
definition that was explicitly rejected in
recovery under
the Equal Credit
Williams v. Glickman
, Civ. No. 95-1149,
Opportunity Act. However, in
Williams
,
requirement that potential class plaintiffs All African American or Hispanic make a “specific presentation” identifying American persons who, between the common questions of law or fact. 1981 and the present, have suffered Chiang’s class, on the other hand, did just from racial or national origin that in alleging the existence of a uniform discrimination in the application for scheme aimed at preventing class members or the servicing of loans or credit from gaining access to loans. We from the FmHA (now Farm therefore find Williams distinguishable. Services Agency) of the USDA,
which has caused them to sustain It is no objection to Chiang’s class that economic loss and/or mental the allegations of a uniform scheme are not anguish/emotion [sic] distress contained in the class definition itself: we damages. read Williams to hold that the proposed Williams , at *10. class was “overly broad” because of the plaintiffs’ varied factual allegations of In Williams , the Court rejected this discrimination, lacking Rule 23(a)(2) definition as overbroad, finding that “[I]t is commonality, rather than because of any not limited to any specific policy or lack of specificity in the class definition practice which is alleged to be itself. In fact, Judge Flannery objected to discriminatory; instead, the class purports the inc lusion o f all egations of to include those blacks and Hispanic discrimination in the class definition, farmers who have suffered any type of holding that “[b]ecause the Court must discrimination in their dealings with the *17 answer numerous fact-intensive questions access to the USDA’s Rural Housing before determining if an individual may program in the Virgin Islands and were join the class, the proposed class is not systematically denied that access. The fact clearly defined.” Williams , 1997 U.S. that some class members were able to Dist. LEXIS 1683, at *13. Thus Williams make more progress than others does not cannot stand for the proposition that all translate into intra-class conflict, nor does allegations of a uniform scheme of it mean that the class as defined is fatally discrimination must be included in the overbroad.
class definition— rather, it stands for the d.
opposite proposition, that class definitions Finally, Veneman argues that defining must be free of merits allegations that a class by reference to those who “believe” require extensive factual findings. [9] t h e y w e r e disc riminate d agai n st
undermines the validity of the class by c. introducing a subjective criterion into what should be an objective evaluation. We Veneman also argues that the class is agree. See, e.g. [10] , NOW v. Scheidler , 172
overbroad because it consists of two
F.R.D. 351, 357, 1997 U.S. Dist. LEXIS
groups with conflicting interests.
See
4036, at *9 (N.D. Ill. Mar. 28, 1997)
Penn. Dental Ass’n v. Medical Serv. Ass’n
(explaining that an identifiable class exists
of Penn.
,
generally deemed unascertainable); Zapka relief. The putative class members’ belief v. Coca-Cola Co. , No. 99 CV 8238, 2000 that they were discriminated against is U.S. Dist. LEXIS 16552, at *7 (N.D. Ill. irrelevant at the class certification stage. Oct. 26, 2000) (noting that an identifiable
class does not exist if membership in the
For similar reasons, we decline to
class is contingent on the state of mind of
modify the class definition to include
the prospective members);
Fears v.
Virgin Islanders who “claim that they were
Wilhelmina Model Agency, Inc.
, No. 02
discriminated against,” or those who “were
Civ. 4911,
the
Manual
for Complex Litigation
While Veneman is technically correct,
(Second)
has recommended that courts
we think the issue to be a red herring, for
should “avoid class definitions that depend
“belief” seems to us to be mere surplusage.
on . . . the seeking of relief (for example,
It is clear enough that Chiang and the other
persons claiming
injury or seeking
named plaintiffs believe that they were
damages from some stated practice),”
discriminated against.
See, e.g.
, Fed. R.
Manual for Complex Litigation (Second)
§
Civ. P. 11(b) (requiring that pleadings
30.14 (1985), though we note that later
represent a reasonable belief that claims
editions of the
MCL
have eliminated that
are warranted by law and have evidentiary
stricture,
see Manual
for Complex
support). Such belief in discrimination,
Litigation (Fourth)
§ 21.222 (2004).
however, is not a prerequisite for inclusion
Limiting the class to those who were in
in
the putative class. Our earlier
fact discriminated against would seem to
modification to the class definition,
see
prejudge the merits of the case, contrary to
supra
Part II.B.2, makes clear that we are
the teaching of
Eisen v. Carlisle &
certifying a class to try an issue common
Jacquelin
,
Veneman, then further proceedings will be
appropriate to determine which, if any, We will therefore modify the class class members are actually entitled to definition to eliminate the notion of *19 “belief.” In combination with our first incorporate the commonality requirement modification, see supra Part II.B.2. the of 23(a), it is possible that “even if Rule class will now be defined as: 23(a)’s commonality requirement is
satisfied . . . the predominance criterion is
All Virgin Islanders who applied or
far more demanding..”
Amchem Prods. v.
attempted to apply for, and/or
Windsor
,
h o m e ownership, assistance, The District Court certified this class training, and /or e duc ational pursuant to Fed. R. Civ. P. 23(b)(3). In opportunities from the USDA relevant part, the Rule reads: through its Rural Development
o f f i c e s ( a n d p r e d e c e s s o r An action may be maintained as a designations) located in the U.S. class action if the prerequisites of Virgin Islands at any time between subdivision (a) are satisfied, and in January 1, 1981 and January 10, addition:
2000. . . .
(3) the court finds that the Thus, with the modifications we have questions of law or fact common to made to the class definition, and keeping the members of the class in mind the caveats about loan eligibility predominate over any questions we have set forth, we are confident that the affecting only individual members, waiting list question satisfies all four and that a class action is superior to requisites of Rule 23(a). other available methods for the fair
and efficient adjudication of the C. Rule 23(b) controversy.
In addition to meeting the prerequisites Veneman argues that, in this case, of Rule 23(a), the plaintiffs must common issues do not predominate over demonstrate that the class would satisfy individual ones.
any one of the three subsections under
Rule 23(b). Rule 23 addresses the In order to predominate, the common commonality required to demonstrate issues must constitute a “significant part” cohesiveness for class certification in two of the individual cases. Jenkins v. Raymark subsections, (a)(2) and (b)(3). Rule Industries, Inc. , 782 F.2d 468, 472 (5th 23(a)(2) requires that plaintiffs prove that Cir. 1986); see also Watson v. Shell Oil , “there are questions of law or fact common 979 F.2d 1014, 1022 (5th Cir. 1992). to the class.” As explained in Part II.B.1, Veneman contends that because the supra , the relatively low Rule 23(a)(2) damages sought, on the order of 2.8 billion commonality requirement is easily dollars, are so high, and will require such satisfied here. However, because the Rule exacting, specific, individual proof, that 23(b)(3) predominance requirements those individual questions are, in reality, *20 the predominant issues in the case. analysis set forth earlier in this opinion,
that both the predominance and the Chiang concedes that the eventual superiority requirements of Rule 23(b) are calculations of damages will require easily met with respect to the issues individual proof. However, she points out certified under Rule 23(c)(4)(A). [11] that it is settled law that the necessity for
proving damages individually does not III. Conclusion defeat class predominance or class
certification. “The presence of individual
For the foregoing reasons, we will
questions as to [each class member] does
affirm the class certification pursuant to
not mean that the common questions of
Rule 23(c)(4)(A) only insofar as it relates
law and fact do not predominate over
questions affecting individual members as
Eisenberg v.
required by Rule 23(b)(3).” ,
and related techniques, and will modify the
class definition to provide for a class of:
All Virgin Islanders who applied or
attempted to apply for, and/or
received, housing credit, services,
h o m e ownership, assistance,
training, and /or e duc ational
opportunities from the USDA
through its Rural Development
o f f i c e s ( a n d p r e d e c e s s o r
designations) located in the U.S.
Virgin Islands at any time between
January 1, 1981 and January 10,
2000.
The certification will be vacated in all
other respects. The District Court should
reevaluate the appropriateness of class
certification on certain discrete issues such
as the eligibility facet of liability and the
calculation of damages, and may entertain
any applications for revision of the class
definition in accordance with this opinion.