385 F.3d 256 | 3rd Cir. | 2004
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 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 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
In Veneman’s submission, the District applicants would become so frustrated that Court abused its discretion when it they wou ld withdra w th eir loan certified what she describes as a sprawling applications, or that delays would result in and unmanageable class action seeking disqualification or other justification for $2.8 billion in damages from the USDA. denial of the applications. In Chiang’s She complains that the class definition is submission, this became known in the overbroad, and that it is internally local USDA office as the “Impossible inconsistent insofar as it encompasses Yes”: an application would be given out, every Virgin Islander who applied or but the USDA would make it impossible attempted to apply for any of the different for the putative applicant to have the Rural Housing Service (“RHS”) [1] credit application fairly processed. Furthermore, Chiang alleges corruption in the administration of the loan program The Rural Housing Service is an [1] 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 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 , 417 U.S. 156, 177- amend the class definition to allege racial 78 (1974). and gender, rather than national origin,
Between January 1, 1981 and January discrimination; any decision on such 10, 2000, thousands of Virgin Islanders amendment will be for the District Court requested loan applications from the in the first instance. Additionally, for USDA in order to purchase or make reasons explained infra , we will further repairs on homes. As noted above, Chiang modify the certification order to eliminate alleges that all class members who the reference to the class members’ requested home loan applications were “belief” in discrimination, thereby forced to put their names on an illegal removing such a subjective criterion from waiting list instead of actually being given the class definition. an application. [2] Chiang contends that the 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 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 filed on his or her behalf. [4] In March 1997, instructions and regulations, and that no 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 percentage of the National number of issue. [3]
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
Chiang also contends that because [3] 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 [4] then used as a reason for putting class 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, 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.
On February 28, 2003, the District The USD A team co n duc ted a n Court filed its decision certifying the class investigation and documented what under Rule 23(b)(3). [6] The Court found Chiang styles the “Highway to Nowhere” that the FAC alleged “a pattern and in an internal USDA report entitled “Civil practice of discrimination against each Rights Compliance Review for the U.S. class member.” It concluded that the Virgin Islands, October 19-29, 1997.” The pattern and practice manifested itself in report—which was never officially three ways: (1) some members were adopted by the USDA—identified two denied an application package and told to specific techniques used to deny class put their names on an unlawful waiting members access to the loans. [5] Those list; (2) RHS provided other members with techniques were (1) creating the phony, applications, but then made it impossible illegal “waiting list,” and (2) implementing for them to obtain credit by deliberately the “impossible yes” scheme. (See JA delaying and frustrating the process so that 384-411). This lawsuit followed. the program would run out of funds, the 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). 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, 508 F.2d 239 (3d Cir. 1975)). We review gender, or national origin. the District Court’s decisions on class
certification for abuse of discretion. See In In making these findings, the District re LifeUSA Holding Inc. , 242 F.3d 136, Court rejected Veneman’s argument that 143 (3d Cir. 2001). The District Court the class definition improperly turned on a abuses its discretion only if its decision class members’ state of mind—i.e., “rests upon a clearly erroneous finding of whether they “believed” themselves to fact, an errant conclusion of law or an have suffered discrimination. It rejected improper application of law to fact.” In re Veneman’s argument that Rule 23(a)’s Gen. Motors Corp. Pick-Up Truck Fuel requirements were not met. The Court Tank Prods. Liab. Litig. , 55 F.3d 768, 783 also found that the class was sufficiently (3d Cir. 1995). cohesive to warrant adjudication by class action given that the common question in B. Rule 23(a) each count was whether the USDA’s
In any class certification, the threshold practice and policy discriminated against issue is whether the four requisites of Rule Blacks, Hispanics, women, and/or Virgin 2 3 ( a ) , nu m er os ity, com mo nality, Islanders as a class, and that this common typicality, and adequacy, are met. Rule question predominated over differences in 23(a) states: the factual circumstances of the individual plaintiffs. The Court additionally held that One or more members of a class adjudicating this case as a class action was m a y s u e o r b e s u e d as superior to having numerous individual representative parties on behalf of lawsuits brought against the USDA. all only if (1) the class is so
numerous that joinder of all On July 22, 2003, a motions panel of members is impracticable, (2) there this Court granted Veneman’s petition for are questions of law or fact permission to take an interlocutory appeal common to the class, (3) the claims under Fed. R. Civ. P. 23(f). The District or defenses of the representative Court had jurisdiction pursuant to 28 parties are typical of the claims or U.S.C. § 1331. We have jurisdiction over defenses of the class, and (4) the this appeal pursuant to 28 U.S.C. § representative parties will fairly 1292(e). and adequately protect the interests II. Class Certification of the class. 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 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; 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 431 U.S. 324, 336 (1977) (holding that a refusal to issue notification stating reasons pattern or practice would be present “only for failure to process; the failure to issue where the denial of rights consists of notices of available funding and requests something more than an isolated, sporadic for information needed to process a loan; incident, but is repeated, routine, or of a the refusal to notify class members of next generalized nature”). Chiang has alleged quarter fu nd ing av ailability; the such a practice here. We will therefore concealment of class members’ attempts to affirm the class certification insofar as it access programs by refusal to enter their deals with the waiting list and associated information in national database; the techniques. 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 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 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. See, e.g.,
Similarly, we need not decide what the Carnegie v. Household Int’l, Inc. , 376 F.3d applicable test would be to rebut the prima 656, 661 (7th Cir. 2004) (Posner, J.) (“[I]t facie case. Veneman would have us hold may be that if and when the defendants are that a “but for” test applies, and that determined to have violated the law putative class members would have to separate proceedings of some character show that but for the discrimination, a loan will be required to determine the would have been granted in each particular entitlements of the individual class case. Chiang, on the other hand, argues members to relief.”); Mullen v. Treasure that the burden-shifting framework set Chest Casino, LLC , 186 F.3d 620, 623 (5th forth in McDonnell Douglas Corp. v. Cir. 1999). [7] 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 , 554 F. Supp. 447, c la s s d e f i n it i o n b a s e d o n o u r 448-49 (N.D.N.Y. 1981) (“Protections understanding of the main thrust of afforded by the ECOA should be applied Chiang’s claims, but we leave it open to in the same manner as those created by” the plaintiffs to seek to amend the class the EEOC), aff’d , 697 F.2d 302 (2d Cir. definition should they actually want to 1982). But see Latimore v. Citibank Fed. allege racial and gender, rather than Sav. Bank , 151 F.3d 712, 713-15 (7th Cir. national origin, discrimination. We agree 1998) (holding that lack of direct with Veneman, however, that plaintiffs’ competition between applicants in credit current allegations of both kinds of context renders analogy to Title VII cases discrimination prese nt an in ternal flawed). contradiction. Although we have not previously held certification without fitting neatly into any that “Virgin Islanders” is a legitimate other category. While we note that many designation of national origin for purposes of these issues seem to relate at least in of a federal discrimination claim, we have part to the commonality prong of Rule certainly implied it. See Moravian Sch. 23(a)(2), we will nonetheless analyze them Advisory Bd. of St. Thomas v. Rawlins , 70 under Veneman’s convenient heading of F.3d 270, 278 (3d Cir. 1995) (Becker, J. “overbreadth.” concurring) (tacitly assuming that “Virgin a. 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 USDA by July 1, 1997. [8] However, we DiMarco-Zappa v. Cabanillas, 238 F.3d 25, 36 (1st Cir. 2001); c.f. Fuentes v. believe that the issue of timeliness goes to Perskie , 32 F.3d 759, 763 (3d Cir. 1994) the merits of the case, not to the definition (accepting the District Court’s conclusion of the class. The claims therefore can not that the plaintiff made out a prima facie be prejudged to deny certification. See case of employment discrimination based Huff v. ND Cass Co. , 485 F.2d 710, 714 on his Puerto Rican heritage), and see no (5th Cir. 1973) (en banc) (holding that reason to distinguish the cases as to the requiring a class representative to prove national origin designations. the merits of his or her claim before being
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 [8] See Omnibus Consolidated & Emergency “overbroad.” In Veneman’s universe, it 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). 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 , 117 F.R.D. 75, 80 (E.D. Pa. classes share references to Blacks, 1987) (holding that a statute of limitations Hispanics, and loan discrimination, they defense goes to the merits and hence is not actually have little in common. In an appropriate objection in the context of Williams , plaintiff farmers filed suit class certification). against defendant the USDA claiming that
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 , 1997 U.S. Dist. LEXIS 1683 (D.D.C. Feb. the Court ruled that the farmers’ bare 14, 1997), a case in which the plaintiffs allegation of a “common thread of defined their class as: discrimination” did not satisfy the
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 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 agree. [10] See, e.g. , NOW v. Scheidler , 172 Veneman also argues that the class is 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. , 745 F.2d 248, 263 (3d Cir. 1984) if its members can be ascertained by (upholding District Court’s refusal to reference to objective criteria and that certify class where proposed class when membership in a class is defined consisted of two groups with inherently solely by state of mind, the class is conflicting interests). More specifically, Veneman urges us to decertify the class on [10] Chiang argues that class certification the basis that there is a significant risk of based on a “belief in discrimination” was intra-class conflicts between those class already stipulated to by the USDA in a members who received loans and those previous class action for discrimination. who did not, as well as between those who In Pigford v. Glickman , where a class of have claims concerning their properties African American applicants for loans and those who do not. filed racial discrimination complaints against the USDA, the final consent decree
We do not see any of the purported included the phrase “All African American conflicts of interests that Veneman claims farmers … [who] believed that they were are present here. Rather, we believe that discriminated against on the basis of race.” the class definition properly identifies a Pigford v. Glickman , 185 F.R.D. 82, 92 group of people who attempted to gain (D.D.C. 1999). While this is true, we fail to see how the USDA’s prior stipulation to [9] For further discussion of merits language in a consent decree before a allegations in class definitions, see infra , different court affects the class definition Part II.B.3.d. in this case. 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, 2003 U.S. Dist. LEXIS 11897, discriminated against.” “Claim” seems to at *6-*7 (S.D.N .Y. July 15, 2003) be a mere substitute for “believe” and “a (explaining that membership in a class class defined with reference to the state of should rest on objective criteria that are mind of its members will not be allowed to administratively feasible for the court to proceed under Rule 23.” 7A Wright, rely on to determine whether a particular Miller & Kane, Federal Practice & individual is a member of the class). Procedure § 1760, at 124-26. Moreover,
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 , 417 U.S. 156, 177 (1974); see to all Virgin Islander loan applicants: also 5 James Wm. M oore et al., Moore’s whether USDA engaged in a pattern of Federal Practice ¶ 23.21[3][c] (3d ed. discrimination via phony waiting lists and 1999) (“A class definition is inadequate if delaying tactics. This issue is properly a court must make a determination of the adjudicated on behalf of a class consisting merits of the individual claims to of all Virgin Islander applicants during the determine whether a particular person is a relevant period; if it is adjudicated against member of the class.”). 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 “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 , 521 U.S. 591, 623-24 (1997). received, housing credit, services, 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, 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 certified under Rule 23(c)(4)(A). [11] individual proof. However, she points out 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 [11] We note that the relief sought is required by Rule 23(b)(3).” Eisenberg v. primarily for monetary damages and not Gagnon , 766 F.2d 770, 786 (3d Cir. 1985). for injunctive relief. Perhaps anticipating the potentially problematic aspect of this
To be sure, there are cases where the posture in a case where— were liability question of damages is so central that it established—damages calculations would can, in some sense, overtake the question probably be extremely individualized, of liability. But as noted in Bogosian v. Chiang acknowledges that “it may come to Gulf Oil Corp. , 561 F.2d 434, 456 (3d Cir. pass that the trial court deems injunctive 1977): relief the better remedy and finds that damages are minimal.” (Chiang Brief,
[I]t has been commonly recognized p.38). Whether that would be the more that the necessity for calculation of logical path we do not say, but we do note damages on an individual basis should that unlike in cases where the primary not preclude class determination when relief sought is injunctive in nature, see the common issues which determine Baby Neal v. Casey , 43 F.3d 48 (3d Cir. liability predominate. If for any reason 1994), Chiang seeks only ancillary the district court were to conclude that injunctive relief: the primary relief she there would be problems involved in seeks is 2.8 billion dollars in damages. proving damages which would Given that each class member will likely outweigh the advantages of class find him- or herself in very different certification, it should give appropriate circumstances in terms of establishing consideration to certification of a class damages, we think it unlikely that the limited to the determination of liability. calculation of damages will be suitable for class determination. However, should
(citations omitted). Chiang make it to that stage, we once again defer to the District Court in the first
That does not seem to be the case here, instance to evaluate whether damages can and we are satisfied, based upon the be adjudicated on a class wide basis. to the question of the alleged waiting list 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.