IN RE: COMMUNITY BANK OF NORTHERN VIRGINA MORTGAGE LENDING PRACTICES LITIGATION
No. 13-4273
United States Court of Appeals for the Third Circuit
July 29, 2015
Before: FISHER, JORDAN, and GREENAWAY, JR., Circuit Judges.
PRECEDENTIAL. Argued January 20, 2015. PNC Bank NA, successor to CBNV, Appellant. On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. No. 2-03-cv-00425). District Judge: Hon. Arthur J. Schwab.
Joel E. Tasca, Esq.
Ballard Spahr
1735 Market St.
51st Floor
Philadelphia, PA 19103
Counsel for Appellant
Scott C. Borison, Esq.
Legg Law Firm
5550 Buckeystown Pike
Frederick, MD 21703
R. Bruce Carlson, Esq. [ARGUED]
Gary F. Lynch, Esq.
Carlson Lynch Sweet & Kipela
115 Federal St.
Suite 210
Pittsburgh, PA 15122
Daniel O. Myers, Esq.
100 Park St.
Traverse City, MI 49684
David M. Skeens, Esq.
Roy F. Walters, Esq. [ARGUED]
Walters, Bender, Strohbehn & Vaughan
1100 Main St.
Suite 2500
P.O. Box 26188
Kansas City, MO 64196
Robert S. Wood, Esq.
Richardson, Patrick, Westbrook & Brickman
1037 Chuck Dawley Boulevard
Building A
Mount Pleasant, SC 29464
Counsel for Appellees
OPINION OF THE COURT
TABLE OF CONTENTS
Page
I. Background. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
A. The Alleged Illegal Lending Scheme . . 7
B. Community Bank I. . . . . . . . . . . . . . . . . 10
C. Community Bank II . . . . . . . . . . . . . . . . 13
D. Post-Community Bank II Proceedings. . 17
II. Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
A. Adequacy of Representation . . . . . . . . . 23
B. Conditional Certification. . . . . . . . . . . . 30
C. Other Rule 23 Requirements. . . . . . . . . 31
1. Ascertainability . . . . . . . . . . . . . 31
2. Commonality. . . . . . . . . . . . . . . 34
3. Predominance . . . . . . . . . . . . . . 38
a. Standing . . . . . . . . . . . . . 40
b. Equitable Tolling . . . . . . 40
i. Active Misleading 43
ii. Reasonable Due Diligence . . . . . . . 47
c. RESPA Claims . . . . . . . . 51
d. TILA/HOEPA Claims. . . 54
e. RICO Claims . . . . . . . . . 57
4. Superiority . . . . . . . . . . . . . . . . . 59
5. Manageability . . . . . . . . . . . . . . 61
III. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
JORDAN, Circuit Judge.
I. Background
This is the third appeal from the certification of a class based on allegations of an illegal home equity lending scheme involving two banks, specifically CBNV and Guaranty National Bank of Tallahassee (“Guaranty”), and also involving GMAC-Residential Funding Corporation n/k/a Residential Funding Corporation, LLC (“Residential Funding”), a company that purchased mortgage loans from those banks. See In re Cmty. Bank of N. Va. (Community Bank I), 418 F.3d 277 (3d Cir. 2005); In re Cmty. Bank of N. Va. (Community Bank II), 622 F.3d 275 (3d Cir. 2010). The two previous appeals involved certification of settlement classes, but this appeal involves certification of a litigation class. Much of the factual and procedural history of this case is set out in detail in our two prior opinions, but we reiterate the relevant portions here.
A. The Alleged Illegal Lending Scheme
The Plaintiffs describe a predatory lending scheme affecting numerous borrowers nationwide and allegedly masterminded by the Shumway Organization (“Shumway”), a residential mortgage loan business operating in Chantilly, Virginia. Through a variety of entities, including EquityPlus Financial, Inc. (“Equity Plus”), Equity Guaranty, LLC (“Equity Guaranty”), and various title companies, Shumway offered high-interest mortgage-backed loans to financially strapped homeowners.
As a non-depository lender, Shumway was subject to fee caps and interest ceilings imposed by various state mortgage lending laws. The Plaintiffs aver that, in an effort to circumvent those limitations, Shumway formed associations with several banks, including CBNV and Guaranty. Shumway allegedly arranged payments to CBNV and Guaranty to disguise the source of its loan origination services so that fees for those services would appear to be paid solely to the banks, which were depository institutions. The Plaintiffs allege that, in reality, the overwhelming majority of fees and other charges associated with the loans were funneled through the two banks to Shumway via Equity Plus (in the case of loans made by CBNV) and Equity Guaranty (in the case of loans made by Guaranty). After Virginia banking regulators expressed concern to CBNV regarding the legality of the arrangement, the deal between CBNV and Equity Plus was allegedly restructured in October 1998 so that Equity Plus became a “consultant” to CBNV that provided no settlement services yet still received the lion‘s share of fees paid in exchange for those services.
According to the Plaintiffs, Residential Funding derived a significant portion of its business from the securitization of “jumbo” mortgages2 and especially High-Loan-to-Value loans.3 The Plaintiffs allege that Residential Funding purchased a majority and perhaps all of the loans
originated by CBNV and Guaranty, despite knowing that those entities passed most of the origination and title service fees to Shumway. Because Residential Funding derived substantial income from the settlement fees, the Plaintiffs allege that it ignored unlawful settlement practices and actively worked with CBNV and Guaranty to expand the loan volume generated by the scheme.
In the early 2000s, a number of putative class actions arising out of the alleged Shumway scheme were filed by various plaintiffs (the “Original Plaintiffs”) and were eventually consolidated in the United States District Court for the Western District of Pennsylvania.4 The Original Plaintiffs asserted claims arising under the
Corrupt Organizations Act (“RICO”),6 and Pennsylvania law. The putative class consisted of approximately 44,000 borrowers.
B. Community Bank I
On July 14, 2003, the Original Plaintiffs and certain defendants, including CBNV, Guaranty, and Residential Funding, proposed a nationwide class action settlement, which was approved by the District Court. Under the terms of the settlement, the
it did not contest the requirements for class certification.7 The order approving the settlement was appealed by a group of plaintiffs (the “Objector Plaintiffs”) who argued that claims under the
Home Ownership and Equity Protection Act (“HOEPA”)9 should also have been asserted on behalf of the putative class.
We vacated the order approving the settlement and remanded the case because, among other things, the District Court had not adequately analyzed the propriety of class certification under
C. Community Bank II
On remand, the District Court approached its analysis in two steps. First, it addressed the viability of potential TILA/HOEPA claims. Second, it addressed adequacy of representation and other Rule 23 requirements. While the parties were briefing the viability issue, the Original Plaintiffs entered into new settlement negotiations with the defendants, which resulted in a new settlement agreement (the “Modified Settlement Agreement”). The Modified Settlement Agreement took the availability of TILA/HOEPA claims into account and increased the settlement amount for class members who were able to assert such claims.
The District Court then heard oral argument on the viability of potential TILA/HOEPA claims. In discussing the case, the Original Plaintiffs and the Objector Plaintiffs agreed with the District Court that a
On December 1, 2006, the District Court informed the parties that it intended to appoint an “independent body” to evaluate the fairness of the Modified Settlement Agreement.
The Objector Plaintiffs once more appealed, challenging both the District Court‘s certification order and its earlier ruling regarding the adequacy of representation. We again vacated the District Court‘s order, finding that the Court had erred in a number of ways. Without actually deciding the issue, we expressed doubts about the District Court‘s
for equitable tolling under
Looking at the adequacy requirement, we concluded, that the District Court had “incorrectly evaluated the adequacy of the named plaintiffs and class counsel.”
We also noted that, as to class counsel, the adequacy requirement assures that counsel possesses adequate experience, will vigorously prosecute the action, and will act at arm‘s length from the defendant.
presented in Community Bank II, we stated that, while “class counsel is not inadequate simply because they have not asserted every claim that could theoretically be pled against a defendant,” class counsel‘s explanation for not asserting TILA/HOEPA claims on behalf of the class “deserve[d] more scrutiny” than the Court had given it.
Following remand, the Original Plaintiffs abandoned settlement negotiations and joined forces with the Objector Plaintiffs, and on October 4, 2011, the Plaintiffs filed a Joint Consolidated Amended Complaint (the “Complaint”) that now includes TILA/HOEPA claims, along with RESPA and RICO claims. The Complaint originally named as Defendants CBNV, the Federal Deposit Insurance Corporation (“FDIC”) as the Receiver for Guaranty,12 PNC
Bank as Successor to CBNV,13 and Residential Funding. Residential Funding subsequently filed a Notice of Bankruptcy and Effect of Automatic Stay, and all claims against it were stayed. The District Court also granted the FDIC‘s Motion to Dismiss for lack of subject matter jurisdiction.14 As a result, the only active claims remaining before the District Court at the certification stage were those asserted against CBNV and its successor in interest, PNC.
On June 21, 2013, the Plaintiffs moved for certification of a general class and of five subclasses. The general class was defined as: “All persons nationwide who obtained a second or subordinate, residential, federally related, non purchase money, mortgage loan from CBNV that was secured by residential real property used by the Class Members as their principal dwelling, for the period May 1998-December 2002.” (App. at 1271.) The five subclasses were defined as:
Sub-Class 1: (RESPA [Affiliated Business Association] Disclosure Sub-Class) (Plaintiffs: Philip and Jeannie Kossler) – All persons nationwide who obtained a second or
subordinate, residential, federally related, non purchase money, mortgage loan from CBNV that was secured by residential real property used by the Class Members as their principal dwelling for the period May 1998-October 1998;
Sub-Class 2: (RESPA Kickback Sub-Class) (Plaintiffs: Brian and Carla Kessler; John and Rebecca Picard) – All persons nationwide who obtained a second or subordinate, residential, federally related, non purchase money, mortgage loan from CBNV that was secured by residential real property used by the Class Members as their principal dwelling for the period October 1998-November 1999;
Sub-Class 3: (TILA/HOEPA Non-Equitable Tolling Sub-Class) (Plaintiffs: Kathy and John Nixon; Flora Gaskin; and, Tammy and David Wasem) – All persons nationwide who obtained a second or subordinate, residential, federally related, non purchase money, mortgage loan from CBNV that was secured by residential real property used by the Class Members as their principal dwelling for the period May 1, 2001-May 1, 2002;
Sub-Class 4: (TILA/HOEPA Equitable Tolling Sub-Class) (Plaintiffs: All [named] plaintiffs other than the Nixons, Gaskins and Wasems) – All persons nationwide who obtained a second or subordinate, residential, federally related, non purchase money, mortgage loan from
CBNV that was secured by residential real property used by the Class Members as their principal dwelling for the period May 1998-December 2002;
Sub-Class 5: (RICO Sub-Class) (Plaintiffs: John and Rebecca Picard; Brian and Carla Kessler) – All persons nationwide who obtained a second or subordinate, residential, federally related, non purchase money, mortgage loan from CBNV that was secured by residential real property used by the Class Members as their principal dwelling for the period May 1998-November 1999.
(App. at 1271-1272.) The Plaintiffs requested that all named class representatives be appointed as representatives of the general class and that the designated class representatives be appointed as representatives of the requested subclasses. The Plaintiffs also requested that two law firms be appointed as co-lead counsel and that a handful of other lawyers and law firms be appointed as class counsel.
On July 31, 2013, the District Court granted class certification.15 The Court‘s certification ruling relied heavily on our dicta in Community Bank I discussing the requirements of Rule 23, and it approved the general class and subclasses proposed by the Plaintiffs. The order did not make provision for separate counsel for the subclasses. In analyzing the
adequacy requirement, the District Court relied primarily on Dewey v. Volkswagen Aktiengesellschaft, 681 F.3d 170 (3d Cir. 2012), in which we stated that only “fundamental” intra-class conflicts will defeat the adequacy requirement. Id. at 183-84. Because the Original Plaintiffs and the Objector Plaintiffs each asserted TILA/HOEPA claims in the Complaint, the District Court concluded that there is no fundamental conflict between the subclasses. PNC has now appealed the class certification order.16
II. Discussion17
The fundamental question in this appeal is whether the litigation class, including its subclasses, was properly certified. To be certified, a class must satisfy the four requirements of
If the
As noted at the outset, PNC advances three principal arguments against certification, contending first that there is a class conflict that undermines the adequacy of representation provided by class counsel; second, that the District Court erred by conditionally certifying the class; and, third, that the putative class does not satisfy the demands of
A. Adequacy of Representation
The adequacy requirement primarily examines two matters: the interests and incentives of the class representatives, and the experience and performance of class counsel. Community Bank I, 418 F.3d at 303. PNC does not question the adequacy of the class representatives. The argument it raises is directed instead at class counsel. In particular, it asserts that “the ‘fundamental’ intra-class conflict found by this Court continues to exist because the District Court failed to appoint separate counsel to represent the subclasses it created.”19 (Reply Br. at 1.)
According to PNC, the Supreme Court‘s decision in Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999), requires that separate counsel be appointed for each subclass. In Ortiz, the Supreme Court stated:
[I]t is obvious after Amchem [Prods., Inc. v. Windsor, 521 U.S. 591 (1997)] that a class divided between holders of present and future claims (some of the latter involving no physical injury and attributable to claimants not yet born) requires division into homogeneous subclasses under Rule 23(c)(4)(B) , with separate representation to eliminate conflicting interests of counsel. See Amchem, 521 U.S. at 627, ... (class settlements must provide “structural assurance of fair and adequate representation for the diverse groups and individuals affected“).
527 U.S. at 856. But PNC provides precious little support for its assertion that the situation in Ortiz is present here and that class counsel is conflicted or somehow otherwise inadequate. The passing argument PNC does present fails to persuade us that, in light of Ortiz and the case it relies on, Amchem, the District Court abused its discretion when it chose not to appoint separate counsel for each subclass. In fact, an argument like PNC‘s was specifically rejected by the United States Court of Appeals for the Eighth Circuit in Professional Firefighters Association of Omaha, Local 385 v. Zalewski, 678 F.3d 640, 646-47 (8th Cir. 2012). As the court in that case explained:
Ortiz and Amchem were massive tort class actions prompted by the elephantine mass of asbestos cases that defied customary judicial administration. The Supreme Court found the exceedingly divergent interests of present and future claim holders in those cases required separate counsel to address adequately the conflict. But the need for separate representation under the atypical circumstances of Ortiz and Amchem does not make appointing separate counsel the only acceptable means of addressing any conflicting interests of class members, and providing structural assurance of fair and adequate representation for the entire class.
678 F.3d at 646 (brackets, citations, and internal quotation marks omitted). In other words, the circumstances that required separate counsel in Ortiz simply were not present in Professional Firefighters, nor do we think they are present here.
The principal purpose of the adequacy requirement is to determine whether the named plaintiffs have the ability and the incentive to vigorously represent the claims of the class. Community Bank II, 622 F.3d at 291. We have explained that “the linchpin of the adequacy requirement is the alignment of interests and incentives between the representative plaintiffs and the rest of the class.” Dewey, 681 F.3d at 183. More important for our purposes, however, is the corollary principle that class counsel may not, consistent with Ortiz, represent an entire class if subgroups within the class have interests that are significantly antagonistic to one another. We must therefore ascertain the alignment of interests within the class and whether conflicts, if any, are serious enough to require separate counsel for each subclass.
Not every intra-class conflict is consequential, but certain ones are what we have called “fundamental.” Dewey, 681 F.3d at 184. A “fundamental” conflict exists, for example, when some class members “have been harmed by the same conduct that benefitted other members of the class.” Id. (internal quotation marks omitted). To be “fundamental,” a conflict must touch on “‘the specific issues in controversy.‘” Id. (quoting Alba Conte & Herbert B. Newberg, Newberg on Class Actions § 3:26 (4th ed. 2002)). While it may be wise to appoint separate counsel even before a serious conflict fully emerges, the requirement to put separate counsel in place arises when a conflict ceases to be
In Community Bank II, we stated that there was “an obvious and fundamental intra-class conflict of interest” that precluded a finding of adequacy of representation. 622 F.3d at 303. Elaborating, we explained that the conflict of interest stemmed from the fact that the named class representatives had untimely claims under RESPA, TILA, or HOEPA that would require equitable tolling to survive and yet they sought to represent at the settlement negotiating table a sizeable subgroup of class members who had timely claims. Id. We said that the “most obvious remedy” for this conflict “would be to create subclasses.” Id. at 304. On remand, the District Court considered the Plaintiffs’ proposed five subclasses, which had been formed “to ameliorate the statute of limitations problems” that we identified in Community Bank I and Community Bank II. (App. at 18.) The Court noted that CBNV‘s conduct “was the same as to all class members” and characterized the distinction between the subclasses as merely “a temporal one, that is, when [actionable] conduct occurred.” (Id.) In short, the Court effectively concluded that there was not a fundamental conflict any longer, now that subclasses had been formed and the putative class was to be certified for litigation rather than settling for a fixed amount.
Unfortunately, PNC spends practically no effort in this appeal trying to demonstrate that any intra-class conflict should now be viewed as “fundamental,” even though that issue is essential to its leading argument. It relies on Community Bank II‘s statement that a fundamental class conflict existed, which defeated certification of the settlement class. PNC accuses the District Court and the Plaintiffs of disregarding, “in the starkest manner possible, an explicit command of [the Third Circuit].” (Opening Br. at 18.) But PNC fails to address the basic change in circumstances that has occurred since Community Bank II: we are no longer dealing with a settlement class and a fixed sum to satisfy claims. The Original Plaintiffs and the Objector Plaintiffs have jointly filed a new Complaint that asserts RESPA, TILA/HOEPA, and RICO claims on behalf of all subclasses. Those new circumstances are materially different from the scenarios presented in Community Bank I, Community Bank II, or the other cases cited by PNC, in which subclasses were jockeying for pieces of a limited settlement pie. By contrast, the subclasses here are not competing for limited settlement funds. All class members can assert all of their available claims, and all class members can, at least in theory, recover all of their damages without impacting the recovery of any other class members.
PNC has provided no reason to believe that, in this new context, the named class representatives of each subclass will not vigorously represent the interests of their fellow class members. They are all pursuing damages under the same statutes and the same theories of liability, and the differences among them will not, at least as things presently stand, pit one group‘s interests against another. Cf. In re Corrugated Container Antitrust Litig., 643 F.2d 195, 208 (5th Cir. 1981) (“[S]o long as all class members are united in asserting a common right, such as achieving the maximum possible recovery for the class, the class interests are not antagonistic for representation purposes.” (internal quotation marks omitted)). There is thus no fundamental intra-class conflict to prevent class certification, Rodriguez v. W. Publ‘g Corp., 563 F.3d 948, 960 (9th Cir. 2009) (stating parenthetically that the adequacy requirement consists of an “absence of antagonism” (internal quotation marks omitted)), nor is there any derivative conflict of interest
In summary, the conflict that existed when a settlement class was facing a fixed pool of resources to resolve all claims is, for the time being, no longer a problem that can rightly be called fundamental. Appointing separate counsel, therefore, was not a necessary prerequisite for certification of the subclasses.
We would be remiss, however, if we did not note a problem growing on the horizon, and it is a familiar one by now in this case. If the District Court determines that any subclass‘s equitable tolling arguments fail, it may well be necessary to appoint separate counsel to represent newly divergent interests. Whether to make any adjustments now, rather than later, is for the District Court to consider when and as it sees fit. The conflict is only a potential one now and not yet imminent. On this record, we cannot say that the District Court abused its discretion in deciding that the adequacy requirement has been satisfied, notwithstanding the joint representation of the subclasses. Cf. Gunnells v. Healthplan Servs., Inc., 348 F.3d 417, 430 (4th Cir. 2003) (“To defeat the adequacy requirement ... a conflict must be more than merely speculative or hypothetical.” (internal quotation marks omitted)); In re Ins. Brokerage Antitrust Litig., MDL No. 1663, 2007 WL 2589950, at *11 (D.N.J. Sept. 4, 2007), aff‘d, 579 F.3d 241 (3d Cir. 2009) (“[A] conflict will not be sufficient to defeat class action unless that conflict is apparent, imminent, and on an issue at the very heart of the suit.” (internal quotation marks and brackets omitted)); Alba Conte & Herbert B. Newberg, Newberg On Class Actions § 3:58 (5th ed. 2011) (“A conflict must be manifest at the time of certification rather than dependent on some future event or turn in the litigation that might never occur.“); id. § 9:48 (4th ed. 2002) (“When the divergent interests will arise only [later] ..., generally the use of subclasses may be deferred until such time as the potential conflicts arise in fact.“).
B. Conditional Certification
Following certification, the District Court agreed to give the Plaintiffs an opportunity to conduct further discovery touching on merits-related issues. PNC argues that, in doing so, the District Court conditionally certified the class – an approach that PNC asserts is “entirely backwards” and represents a prohibited practice. (Opening Br. at 29.) See Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349, 358 (3d Cir. 2013) (“Certification may not be granted because the plaintiff promises the class will be able to fulfill Rule 23‘s requirements, with the caveat that the class can always be decertified if it later proves wanting. To certify a class in this manner is effectively to certify the class conditionally, which Rule 23 does not permit.“); see also In re Nat‘l Football League Players Concussion Injury Litig., 775 F.3d 570, 579 (3d Cir. 2014) (explaining that the Supreme Court and Congress specifically amended Rule 23 to preclude conditional certification of putative class actions).
PNC relies upon statements made by the Court at a status conference held on August 28, 2013, a month after it had certified the class, to argue that the class was conditionally certified. For instance, at one point the Court stated, “I want to know what documents you‘re looking for that will prove your theory not only of the case, but be supportive of the fact that this should be a class action proceeding as opposed to individual cases.” (App. at 1824.) After reviewing the transcript of the entire status conference, however, we conclude that the District Court did not impermissibly certify the class on a conditional
C. Other Rule 23 Requirements
1. Ascertainability
“[A]n essential prerequisite of a class action, at least with respect to actions under
PNC asserts that some borrowers may have declared bankruptcy since entering into mortgage loans with CBNV and therefore a bankruptcy estate rather than the borrower may now be the real party in interest. As PNC sees it, that puts at issue the standing of each putative class member and renders ascertainment of the class impossible without substantial individualized inquiry. To determine the standing of each putative class member, PNC claims it would be necessary to determine each of the following facts: (1) whether the putative class member filed for bankruptcy; (2) if so, whether the putative class member disclosed the claims in the bankruptcy proceeding that it now seeks to assert in the class action; and (3) if no such disclosure was made, whether the bankruptcy trustee abandoned the claims such that they may be pursued here.
That argument is mired in speculation, and Carrera, the case upon which PNC primarily relies, provides no support. In Carrera, the plaintiff sought to certify a nationwide class to sue Bayer Corporation and Bayer Healthcare (collectively “Bayer“) for false and deceptive advertising practices in connection with a product called “One-A-Day WeightSmart.” Id. at 304. Bayer did not sell the weight-loss pills directly to consumers. Id. Instead, the pills were sold in retail stores, which meant that Bayer had no list of purchasers. Id. Acknowledging that class members were unlikely to have documentary proof of purchase, the plaintiff proposed two ways to ascertain the class: scour retailer records of online sales or solicit affidavits from prospective class members attesting that they purchased One-A-Day WeightSmart. Id. On those facts, we determined that the plaintiff had not met his burden of showing that the class was ascertainable because he failed to adduce sufficient evidence showing that the first method could identify even a single purchaser of One-A-Day WeightSmart and because the second method would result in too much individualized inquiry. Id. at 308-12. The case before us now does not appear to present the evidentiary problems at issue in Carrera. On the contrary, PNC possesses all of the relevant bank records needed to identify the putative class members.
PNC‘s ruminations about bankruptcy are not persuasive. First, we have held that only named plaintiffs, and not unnamed class members, need to establish standing. In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 306-07 (3d Cir. 1998); see also Lowden v. T-Mobile USA, Inc., 512 F.3d 1213, 1215 n.1 (9th Cir. 2008) (“In a class action, standing is satisfied if at least one named plaintiff meets the requirements.“). Second, unlike in Carrera and other cases in which putative class members were not ascertainable, the Plaintiffs here have identified a reliable, repeatable process whereby members of the putative class may be identified: consult CBNV‘s business records and then follow a few steps to determine whether the borrower is the real party in interest. PNC has cited no authority holding that such an inquiry is onerous enough to defeat the ascertainability requirement. And, even if the inquiry were difficult, PNC has adduced no evidence whatsoever suggesting that many – or even any – members of the class are actually embroiled in bankruptcy proceedings. Because PNC relies solely on speculation, it has not demonstrated that the District Court abused its discretion in ruling for the Plaintiffs on this issue.
2. Commonality
“A putative class satisfies
That said, the Supreme Court has emphasized that the claims of each
We noted in Community Bank I, in dicta, our impression that the commonality requirement was satisfied in this case. 418 F.3d at 303 (“[T]he named plaintiffs share at least one question of fact or law with the grievances of the prospective class.” (internal quotation marks omitted)). Relying on Community Bank I, the District Court concluded that the commonality requirement was satisfied because “the claims of all class members ... depend on the existence of the Shumway scheme” and “[t]he viability of these claims is ascertainable by examining identical loan documents.” (App. at 15 (internal quotation marks omitted).) PNC asserts that the District Court erred in that conclusion in a number of ways. First, it contends that each class member‘s loan documents will “differ markedly on matters including interest rates, the existence/amount of discount fees, the title services provided, the amounts charged and prepayment features.” (Opening Br. at 34.) Second, it asserts that, because fees charged to putative class members varied in type and amount, resolution of the disputed factual issues regarding those fees would require loan-by-loan analysis of each fee paid and each service performed. PNC thus argues that class certification is foreclosed by Wal-Mart.
We disagree. In Wal-Mart, the Supreme Court explained how the commonality standard applies when the complained-of conduct is a discretionary corporate policy that allegedly has a discriminatory effect. The putative class in that case consisted of “all women employed at any Wal-Mart domestic retail store at any time since December 26, 1998, who have been or may be subjected to Wal-Mart‘s challenged pay and management track promotions policies and practices.” 131 S. Ct. at 2549 (brackets and internal quotation marks omitted). Plaintiffs representing that enormous class of about 1.5 million women alleged that Wal-Mart‘s policy of “allowing discretion by local supervisors over employment matters” produced a disparate discriminatory impact, evidenced by a statistical analysis of the company‘s employment information. Id. at 2547, 2554 (emphasis omitted). The Supreme Court concluded that such evidence was insufficient to establish commonality. While acknowledging that “giving discretion to lower-level supervisors can,” in some circumstances, “be the basis of Title VII liability under a disparate-impact theory,” id. at 2554, the Supreme Court in Wal-Mart quoted Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 994 (1988), to emphasize that such claims must do more than “merely prov[e] that the discretionary system has produced a racial or sexual disparity” – they must also identify “the specific employment practice that is challenged,” Wal-Mart, 131 S. Ct. at 2555 (internal quotation marks omitted). Moreover, Wal-Mart explained that, to bring a case as a class action, the named plaintiffs must show that each
The claims at issue here differ markedly from those in Wal-Mart. Unlike the Wal-Mart plaintiffs, the Plaintiffs in this case have alleged that the class was subjected to the same kind of illegal conduct by the same entities, and that class members were harmed in the same way, albeit to potentially different extents. Specifically, the Plaintiffs allege that CBNV operated a residential mortgage assembly line that included unlawful loans characterized by illegal kickbacks, materially inaccurate disclosures of the annual percentage rates (“APR“) to be applied, and repeated mail and wire fraud. As the Plaintiffs rightly point out, the following questions are common to each class member and will generate common answers:
- Whether the structure created by CBNV and the loan production officers resulted in an unlawful kickback scheme that was a per se violation of RESPA.
- Whether CBNV‘s uniform method of excluding certain title charges from the APR calculation resulted in inaccurate TILA/HOEPA disclosures.
- Whether CBNV‘s acts tolled the claims of class members.
- Whether the evidence presented proves a RICO conspiracy.
While some individualized determinations may be necessary to completely resolve the claims of each putative class member in this case, those are not the focus of the commonality inquiry. Instead, we must determine whether the Plaintiffs have sufficiently demonstrated that “the defendant‘s conduct was common as to all of the class members.” Sullivan, 667 F.3d at 298. In our judgment, they have.
3. Predominance
“Issues common to the class must predominate over individual issues.” In re Prudential Ins., 148 F.3d at 313-14. This requirement under
Quoting our dicta in Community Bank I, the District Court noted that “‘[a]ll plaintiffs’ claims arise from the same alleged fraudulent scheme.‘” (App. at 19 (quoting Community Bank I, 418 F.3d at 309).) The Court also repeated our statement that “the record ... supports a finding of ... predominance.” (App. at 19; see also Community Bank II, 622 F.3d at 284.)
PNC argues that the predominance requirement is not satisfied for a number of reasons: first, because a determination of putative class members’ standing based on prior bankruptcies is highly individualized, it defeats the predominance requirement; second, equitable tolling is required for many of the putative class members’ RESPA and TILA/HOEPA claims to remain viable, and equitable tolling is a highly individualized inquiry; third, various elements of the Plaintiffs’ RESPA claims require individual analysis; fourth, the Plaintiffs’ TILA/HOEPA claims present substantial individualized issues; and fifth, the Plaintiffs’ RICO claims contain individual issues that would predominate. None of those arguments succeeds.
a. Standing
PNC asserts that, “[b]ecause a determination of putative class members’ standing (or lack thereof) based on prior bankruptcies is highly individualized, it defeats the predominance requirement as well.” (Opening Br. at 37.) PNC offers no additional argument or elaboration on this assertion. For the reasons discussed above regarding ascertainability and standing, the argument is unpersuasive and requires no further consideration. See supra pp. 31-34.
b. Equitable Tolling
According to PNC, equitable tolling is a “highly individualized” inquiry that is not susceptible to common proof, and inquiries about equitable tolling will predominate in the litigation. (Opening Br. at 37-38.)
Equitable tolling permits a plaintiff to sue after the statutory time period for filing a complaint has expired “(1) [if] the defendant has actively misled the plaintiff respecting the plaintiff‘s cause of action, (2) [if] the plaintiff in some
extraordinary way has been prevented from asserting his or her rights, or (3) [if] the plaintiff has timely asserted his or her rights mistakenly in the wrong forum.” Oshiver v. Levin, Fishbein, Sedran & Berman, 38 F.3d 1380, 1387 (3d Cir. 1994); see also Miller v. N.J. State Dep‘t of Corr., 145 F.3d 616, 618 (3d Cir. 1998) (holding that equitable tolling is an appropriate remedy when principles of equity would make a rigid application of the statute of limitations unfair).
The Plaintiffs invoke equitable tolling based on what they allege is fraudulent concealment, and they thereby seek to preserve the timeliness of certain putative class members’ RESPA and TILA/HOEPA claims.20 The fraudulent concealment
PNC argues that the “actively misled” and “reasonable due diligence” components will require individualized fact finding, which undermines any claim of predominance.
i. Active Misleading
As PNC points out, “a plaintiff seeking to demonstrate fraudulent concealment of a claim must prove that the defendant took affirmative steps to mislead the plaintiff with respect to the claim.” (Opening Br. at 41.) See Oshiver, 38 F.3d at 1391 n.10 (refusing to apply equitable tolling to the plaintiff‘s failure-to-hire claim because the plaintiff did not allege that the defendant affirmatively misled her). PNC also notes that proof of active misleading generally requires a plaintiff to demonstrate “‘efforts by the defendant – above and beyond the wrongdoing upon which the plaintiff‘s claim is founded – to prevent the plaintiff from suing in time.‘” (Opening Br. at 41-42 (quoting Cada v. Baxter Healthcare Corp., 920 F.2d 446, 451 (7th Cir. 1990)).) PNC contends that, as a result, “‘[f]or a RESPA claim to warrant equitable tolling, mere silence or nondisclosure is not enough to trigger estoppel[;] the adversary must commit some affirmative independent act of concealment upon which the plaintiffs justifiably rely in order to toll the statute.‘” (Opening Br. at 42 (brackets in original) (emphasis omitted) (quoting Garczynski v. Countrywide Home Loans, Inc., 656 F. Supp. 2d 505, 516 (E.D. Pa. 2009)).) Similarly, PNC asserts that, in the TILA context, “‘[t]he fraudulent act that forms the basis of a claim for damages under the TILA will not satisfy the factual showing required to invoke the equitable tolling doctrine of fraudulent concealment.‘” (Opening Br. at 42 (brackets in original) (quoting Poskin v. TD Banknorth, N.A., 687 F. Supp. 2d 530, 551 (W.D. Pa. 2009)).) Thus, PNC argues, because each putative class member must demonstrate an independent misrepresentation (in addition to the allegedly misleading loan closing documents) that he or she relied upon, more individualized inquiry is necessary to resolve the equitable tolling issue embedded in the Plaintiffs’ RESPA
The Plaintiffs counter that no independent act of concealment is necessary where the wrong is “self-concealing.” (Answering Br. at 33.) See Osterneck v. E.T. Barwick Indus., Inc., 825 F.2d 1521, 1535 n.28 (11th Cir. 1987) (stating that where concealment is inherent in the nature of the wrong, all that is necessary to toll the statute of limitations is a plaintiff‘s due diligence in seeking to discover the fraud). They also contend that “[n]owhere in any of the seminal Third Circuit equitable tolling decisions is there any mandate that some further act of concealment is necessary to invoke the doctrine where the wrong is self-concealing.” (Answering Br. at 34 n.16 (citing Oshiver, 38 F.3d 1380; Ramadan v. Chase Manhattan Bank, 156 F.3d 499 (3d Cir. 2006); Cetel, 460 F.3d 494).
Because the Plaintiffs have advanced a sufficiently credible argument that PNC‘s predecessor in interest, CBNV, did commit an affirmative act of concealment, we do not need to decide whether mere silence is enough to allow the case to proceed.
The Plaintiffs are able to claim an independent act of concealment with respect to each loan because CBNV allegedly misrepresented material facts in the HUD–1 settlement statements used in closing the loans of every class member, and those misrepresentations arguably support application of equitable tolling. More specifically, the additional act of concealment perpetrated by CBNV was, according to the Plaintiffs, providing a HUD–1 that contained false representations as to the destination of the settlement fees (for the RESPA claims) and a false representation that a title company performed a bona fide title search and title examination (for the TILA/HOEPA claims). See Reiser v. Residential Funding Corp., 420 F. Supp. 2d 940, 947 (S.D. Ill. 2004) (holding that plaintiffs adequately pled equitable tolling as to their RESPA and TILA claims by alleging that defendants had misrepresented and concealed facts relating to fees represented on the HUD–1 statements), rev‘d in part on other grounds, 380 F.3d 1027 (7th Cir. 2004).
PNC, of course, disagrees that transmission of a HUD–1 to a class member can constitute an “independent act” of concealment sufficient to invoke the doctrine of equitable tolling as to the RESPA or TILA/HOEPA claims. Its argument is primarily based on Moll v. U.S. Life Title Insurance Company of New York, 700 F. Supp. 1284 (S.D.N.Y. 1988), which rejected the argument that we now accept – that transmission of a misleading HUD–1 constitutes an independent act of concealment. The Moll plaintiffs argued that the HUD–1s “falsely stated that US Life would receive the full premium charged for the title insurance,” when in fact portions of that premium were allegedly “kicked back” to another entity. Id. at 1292-93. But Moll reasoned that the HUD–1s made no representation as to “the ultimate disposition of those charges,” and particularly, that the HUD–1s did not represent that the defendant “was ‘accepting’ (i.e., retaining for its own account) the premium charged.” Id. at 1291-92 (additional internal quotation marks omitted). Instead, Moll concluded that the HUD–1s simply reported the charges actually assessed to and paid by the plaintiffs, and the forms did so without warranting anything about the validity or ultimate disposition of the disputed charges. Because the amounts listed were accurate – that is, they were the amounts that plaintiffs had actually paid – Moll concluded that transmission of a HUD–1 did not constitute an independent act of concealment because it did not contain any false information. Id. at 1292-93.
The settlement agent shall state the actual charges paid by the borrower and seller on the HUD–1, or by the borrower on the HUD–1A. The settlement agent must separately itemize each third party charge paid by the borrower and seller. All origination services performed by or on behalf of the loan originator must be included in the loan originator‘s own charge. Administrative and processing services related to title services must be included in the title underwriter‘s or title agent‘s own charge. The amount stated on the HUD–1 or HUD–1A for any itemized service cannot exceed the amount actually received by the settlement service provider for that itemized service, unless the charge is an average charge in accordance with paragraph (b)(2) of this section.21
HUD–1s that deviate from the requirements of section 3500.8 thus can be materially misleading because transmission of a HUD–1 impliedly warrants compliance with that section‘s specific requirements. We therefore conclude that inclusion of misleading information in a HUD–1 can constitute an independent act of concealment. Cf. White v. PNC Fin. Servs. Grp., No. 11-7928, 2014 WL 4063344, at *2-4 (E.D. Pa. Aug. 18, 2014); Barlee v. First Horizon Nat‘l Corp., No. 12-3045, 2013 WL 706091, at *4-5 (E.D. Pa. Feb. 27, 2013). Under the facts of this case, a common question as to active misleading predominates over any individualized issues.
ii. Reasonable Due Diligence
To qualify for equitable tolling, however, the Plaintiffs must show not only an act of concealment, but reasonable diligence on their own part as well. “To demonstrate reasonable diligence, a plaintiff must establish that he pursued the cause of his injury with those qualities of attention, knowledge, intelligence and judgment which society requires of its members for the protection of their own interests and the interests of others.” Mest v. Cabot Corp., 449 F.3d 502, 511 (3d Cir. 2006) (brackets and internal quotation marks omitted).
Relying on Riddle v. Bank of America Corp., No. 12-1740, 2013 WL 6061363 (E.D. Pa. Nov. 18, 2013) aff‘d, 588 F. App‘x 127 (3d Cir. 2014), PNC argues that the reasonable diligence component of the equitable tolling inquiry is not susceptible to common proof but, instead, that each class member will need to be queried about his individual knowledge and attempts to discover his claims before the limitations period expired. Addressing the merits of equitable tolling and not the issue of certification in the putative class
The rationale for holding that participation in the mortgage loan process can establish the “due diligence” element of equitable tolling was explained in Bradford v. WR Starkey Mortgage, LLP, No. 2:06-CV-86, 2008 WL 4501957 (N.D. Ga. Feb. 22, 2008), in which the court stated, “Plaintiff had no reason to suspect that defendant, or any other lender, might be improperly marking-up settlement charges, and the due diligence requirement does not demand that plaintiff inquire about the various fees at issue.” Id. at *3. Bradford specifically rejected the same argument made here by PNC, saying that, “[h]aving flouted the regulation, defendant cannot now try to penalize plaintiff for trusting the validity of the settlement costs delineated on his HUD–1 Statement.” Id. at *3 n.6.
We agree with that conclusion. Due diligence does not mean that borrowers must presume their bank is lying or dissembling and therefore that further investigation is needed. Reading the blizzard of paper that sweeps before them is ample diligence in itself. In short, a borrower ought to be able to rely on the documents provided by a financial institution. Indeed, RESPA and TILA/HOEPA were passed, in large part, because Congress recognized that the average borrower is incapable of detecting many unfair lending practices, including fraud. “[W]hile the law of fraud does not endorse a ‘hear no evil, see no evil approach,’ neither does it require that an aggrieved party have proceeded from the outset as though he were dealing with thieves.” Jones v. Childers, 18 F.3d 899, 907 (11th Cir. 1994) (additional quotation marks omitted). “A plaintiff ... cannot be expected to exercise diligence unless there is some reason to awaken inquiry and direct diligence in the channel in which it would be successful. This is what is meant by reasonable diligence.” Sheet Metal Workers, Local 19 v. 2300 Grp., Inc., 949 F.2d 1274, 1282 (3d Cir. 1991) (internal quotation marks omitted). The Complaint here does not allege any facts disclosed on the face of the HUD–1s or that were otherwise provided to the Plaintiffs that should have awakened inquiry and demanded some further diligence. We conclude, therefore, that the Plaintiffs’ allegation that the class fully participated in all aspects of the mortgage loan transactions by “reviewing their loan documentation” is sufficient to satisfy the reasonable diligence requirement for equitable tolling in this case. (App. at 307, ¶ 409.) Cf. White, 2014 WL 4063344, at *5-6. In addition, proving that class members did, in fact, fully participate in the loan process in that fashion does not cause the issue of equitable tolling to predominate over issues common to the whole class.
We do not address whether the class members are actually entitled to equitable
c. RESPA Claims
PNC advances several arguments for why the Plaintiffs’ RESPA claims – quite apart from equitable tolling concerns – present individualized issues that would predominate in this litigation and should therefore prevent class certification.22 First, it asserts that, to litigate the RESPA claims, the putative class will be required to demonstrate on a loan-by-loan basis that no services were provided in exchange for the alleged kickbacks. But the Complaint alleges that Equity Plus performed absolutely no services to earn the transferred (i.e., kicked-back) portion of the fees, which is at least plausible in light of the contractual arrangement between Equity Plus and CBNV.23 While that allegation places a potentially onerous evidentiary burden on the Plaintiffs, it also leads us to conclude that, on the present record and at this stage of the case, PNC‘s arguments fail to show that the District Court abused its discretion.
Second, PNC asserts that “there are several different types of [fees] that Plaintiffs are complaining about, and not all putative class members paid every such fee.” (Opening Br. at 48.) PNC contends that, as a result, the fact-finder will be required to determine what fees were assessed to each individual class member and whether Equity Plus performed services in exchange for each fee, and that such individual determinations would predominate in the litigation. That argument is also unpersuasive because, again, Equity Plus – the recipient of the settlement fees at issue in this case – allegedly performed no mortgage broker services in exchange for the fees and was contractually precluded from providing any services.
PNC‘s third and fourth arguments can be addressed simultaneously. The third argument is that any claims premised on alleged violations of the affiliated business arrangement (“ABA“) disclosure requirements of RESPA would require loan-by-loan analysis of the ABA disclosures.24 The fourth argument is that any claims
Finally, PNC argues that a damages issue precludes class certification. While RESPA permits recovery “in an amount equal to three times the amount of any charge paid,”
In sum, none of these issues defeats the Plaintiffs’ showing of predominance as to the RESPA claims.
d. TILA/HOEPA Claims
PNC advances three arguments for why the Plaintiffs’ TILA/HOEPA claims present individualized issues that would predominate at trial and thereby prevent class certification. First, it asserts that those claims will require the class to show that its members paid fees that were not “‘bona fide and reasonable in amount.‘” (Opening Br. at 51 (quoting
Second, PNC contends that the Plaintiffs’ TILA/HOEPA claims premised on deficient HOEPA disclosures will require loan-by-loan analysis because the loan documents were not uniform from putative class member to putative class member. But, even assuming that PNC is correct, those possible issues do not affect the principal violations of TILA/HOEPA alleged in the Complaint and so do not undermine the District Court‘s decision on predominance.
Third, PNC contends that the Plaintiffs’ TILA/HOEPA claims premised on CBNV‘s failure to provide HOEPA notices to borrowers three days before closing will also require significant individual inquiry because numerous CBNV files contain the borrower‘s signed acknowledgment of timely receipt of the HOEPA notice or an overnight mail receipt demonstrating timely delivery, all of which demonstrates that there was no uniform policy to not provide notices. The Plaintiffs respond that, while their Complaint alleges that CBNV failed to provide timely HOEPA disclosures and that such a failure is grounds for relief under TILA/HOEPA, PNC‘s argument is beside the point of their claim. The Plaintiffs say that the primary means by which CBNV violated the advance notice provisions was by including inaccurate – not untimely – information in the HOEPA disclosure, and that the inaccuracy of CBNV‘s HOEPA disclosures can be proven with classwide evidence. Therefore, the Plaintiffs argue, PNC‘s contention that each class member must testify as to whether he received his HOEPA disclosure in a timely manner misses the mark because the timeliness of the disclosure is not the alleged basis of liability.
While the Plaintiffs’ argument downplays the actual language of their pleading – language that does assert the timeliness of the HOEPA disclosures as a basis of liability, completely separate from the accuracy of the disclosures – PNC has failed to demonstrate that the District Court erred in determining that the timeliness issue does not create evidentiary problems that will predominate in the litigation. The timeliness issue might be systematically resolved as to each class member by either consulting CBNV‘s files, which contain signed acknowledgements of delivery and mail receipts, or by inspecting mail carriers’ documentation. More importantly, though, even if individualized
e. RICO Claims
PNC also advances three arguments for why the Plaintiffs’ RICO claims present individualized issues that would predominate and should therefore prevent class certification.26 First, PNC asserts that there is no support for the Plaintiffs’ contention that reliance may be presumed for purposes of their RICO claim and thus it will be necessary for each class member to prove individual reliance. The Plaintiffs respond that they can prove their RICO claims with the same classwide evidence that will be used to prove the RESPA and TILA/HOEPA claims. And, they say, “where proof of the RICO violation is demonstrated through common evidence of a common scheme, reliance may be inferred on a classwide basis.” (Answering Br. at 52.) Again, on this record and in this context, we do not believe that the District Court abused its discretion in accepting the Plaintiffs’ position.
Second, PNC asserts that the question of whether each settlement fee at issue was somehow improper will require a loan-by-loan and fee-by-fee analysis and, therefore, that individualized fact inquiries at the damages stage of each RICO claim preclude class certification. That argument, though, is mistaken. The Plaintiffs do not allege that Equity Plus performed inadequate services in exchange for fees. Their argument, again, is that class-wide evidence demonstrates that Equity Plus performed no services in exchange for settlement charges.
Third, PNC argues that the Plaintiffs cannot “set forth ... [classwide] proof [of] actual monetary loss,” as is required to sustain a RICO claim. (Opening Br. at 59 (internal quotation marks omitted).) Individual issues will predominate, says PNC, because the Plaintiffs will need to demonstrate the difference between the fees that they paid and the fees that they should have paid. Once more, for the reasons set forth above, that argument fails – the Plaintiffs do not assert that Equity Plus rendered inadequate services for which class members are entitled to claw back part of the fee. They assert that Equity Plus performed no services and was entitled to no fee at all. For that reason, it was not an abuse of discretion for the District Court to conclude in effect that individualized inquiry will not be necessary.
4. Superiority
Rule 23(b)(3) requires that class treatment be “superior to other available methods for fairly and efficiently adjudicating the controversy,” and it provides a non-exhaustive list of factors to consider in
The District Court relied on our statement in Community Bank I that there is “no reason ... why a Rule 23(b)(3) class action is not the superior means to adjudicate this matter.” Id. The District Court also observed that “class members would face some difficult, if not insurmountable, tolling issues if they were required to file suit on their own behalf at this time.” (App. at 19.)
PNC‘s response is that the District Court erred on the superiority issue in that “[t]olling of individual suits based on previously-filed class action litigation ... is a non-issue because of the class action tolling rule”27 and that “[a]n individual plaintiff would be in the same position, vis-à-vis the statute of limitations, as he or she would be as a class member.” (Opening Br. at 61.) PNC also asserts that, because putative class members’ HOEPA claims average well over $28,000 and because they are pursuing statutory claims that permit recovery of their attorneys’ fees, this case involves the sorts of claims that individuals would have an incentive to pursue on their own.
Those assertions, however, fail to account for the “difficult, if not insurmountable” issues noted by the District Court that class members would need to overcome in filing individual lawsuits “almost a decade after [class members] first received notice that this case had been prosecuted and settled for them.” (App. at 19). In addition, PNC does not consider the tremendous burden that presiding over tens of thousands of nearly identical cases alleging RESPA, TILA, HOEPA, and RICO claims would impose on the courts. The District Court did not abuse its discretion in finding that the superiority requirement is satisfied in this case.
5. Manageability
Finally, PNC argues that the District Court erred on manageability. It first says that “the same factors that defeat commonality and predominance ... also make this case unmanageable as a class action.” (Opening Br. at 62.) Because we have concluded that the District Court cannot be faulted for deciding that the commonality and predominance requirements for class certification have been satisfied, this tag-along argument fails.
PNC further contends that the District Court‘s acknowledgement that damages issues would require individualized inquiry – while dismissing as “premature” and “speculative” any consideration of solutions to address that difficulty – “is tantamount to an affirmative finding that the manageability requirement is not satisfied.”
III. Conclusion
Thus ends the third and, one hopes, the last quinquennial presentation of class certification questions to this court in this case. PNC has failed to demonstrate that the District Court abused its discretion as to any certification issue or requirement, and we will therefore affirm.
Notes
(Answering Br. at 46.)The APR is calculated through a mathematical formula derived from the Amount Financed ([i.e.,] funds actually available to the borrower) and [the] Finance Charge ([i.e.,] the costs incidental to the extension of credit). These two numbers are mutually exclusive; a settlement charge is allocated to either one or the other, but not to both. Title related charges like the line 1102 fee, a title search or title abstract fee, or the line 1103 a title examination fee may be excluded from the calculation of the Finance Charge (resulting in a lower APR), but only if those fees are “bona fide and reasonable in amount.”
12 CFR § 226.4(c)(7) .