* 153,000 minority borrowers cannot sue as group-3rd Circuit
* 2011 Supreme Court decision in Wal-Mart v Dukes cited
By Jonathan Stempel
Aug 12 In a decision that could make it harder
for borrowers to pursue private litigation as a group against
banks, a federal appeals court said a lawsuit accusing PNC
Financial Services Group Inc of discriminating against
black and Hispanic borrowers cannot proceed as a class action.
While saying its decision was not a "death knell" for other
class actions, the 3rd U.S. Circuit Court of Appeals refused to
revive class certification for more than 153,000 minority
customers of the former National City Corp., which
Pittsburgh-based PNC bought in 2008.
Monday's decision by a three-judge panel of the Philadelphia
appeals court marks the latest fallout from a landmark June 2011
U.S. Supreme Court ruling, Wal-Mart Stores Inc v. Dukes,
that made it harder to sue corporate defendants as a group.
"Here, as in Dukes, the exercise of broad discretion by an
untold number of unique decision-makers in the making of
thousands upon thousands of individual decisions undermines the
attempt to claim, on the basis of statistics alone, that the
decisions are bound together by a common discriminatory mode,"
Circuit Judge Kent Jordan wrote for the panel.
Peter Muhic, a partner at Kessler, Topaz, Meltzer & Check
representing the borrowers, did not immediately respond to
requests for comment.
Marcey Zwiebel, a PNC spokeswoman, declined to comment. PNC
is one of the 10 largest U.S. commercial banks.
Minority borrowers contended that National City, which had
been based in Cleveland, had a "discretionary pricing policy"
that gave loan officers broad subjective power to tack on
points, fees and other costs.
They said this caused them to pay $350 to $1,100 more per
loan than similarly situated Caucasian borrowers, violating the
federal Fair Housing Act and Equal Credit Opportunity Act.
NO DEATH KNELL
Without admitting wrongdoing, National City had agreed to a
$7 million settlement. In July 2010, U.S. District Judge Eduardo
Robreno preliminarily approved that accord and preliminarily
certified a class of borrowers from 2004 to the present.
But in September 2011, citing the Wal-Mart ruling, Robreno
reversed himself, saying the borrowers would likely have to show
disparate impact for "each loan officer or at minimum each group
of loan officers working for a specific supervisor."
Writing for the appeals court, Jordan said the case bore a
"striking resemblance" to the Wal-Mart case, where the Supreme
Court had refused to let as many as 1.5 million female employees
sue as a group for gender bias.
Jordan said the National City borrowers, who got loans from
more than 1,400 branches, did not show a corporate policy that
resulted in loan discrimination nationwide, affecting "all class
members in all regions and bank branches in a common way."
He also said there might have non-discriminatory grounds on
which to set rates and fees, such as whether borrowers
misrepresented income or assets, whether appraisals looked fair,
and whether loans were part of debt consolidation plans.
The plaintiffs "have not met their burden of demonstrating
that the defendant's conduct was common as to all of the class
members," he wrote. "That conclusion is not, as plaintiffs
imply, the death knell for all disparate impact class actions.
When a challenged policy affects class members in roughly the
same manner, that class can likely establish commonality."
The case is Rodriguez et al v. National City Bank et al, 3rd
U.S. Circuit Court of Appeals, No. 11-8079.