On March 13, 2008, a minority homeowner filed a class-action lawsuit in the U.S. District Court for the District of Massachusetts against private banks and lenders, Citifinancial Services and Citigroup Inc., under the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq. ("ECOA"), the Fair Housing Act, 42 U.S.C. § 3601 et seq. ("FHA"), 42 U.S.C. § 1981, and 42 U.S.C. § 1982. The plaintiffs alleged that the defendants maintained a pattern or practice that had a discriminatory impact on minority applicants in their home financing policies and practices. Specifically, the plaintiffs alleged that the defendants' policy authorizing unchecked, subjective surcharge of additional points and fees to an otherwise objective risk-based financing rate, had a discriminatory impact on minority homeowners, creating a significantly higher likelihood of exposure to discretionary points and fees. Plaintiff sought damages, declaratory and injuctive relief. On May 21, 2008, plaintiff filed an amended complaint, adding two named plaintiffs.
On July 21, 2008, the defendants filed a motion to dismiss the amended complaint on the basis of a failure to state a claim. On August 14, 2008, the Lawyers' Committee for Civil Rights Under Law of the Boston Bar Association, a non-profit organization established to provide pro bono legal counsel in cases of race and national origin discrimination, filed a motion to amicus brief. It opposed the motion to dismiss and argued that the weight of the precedent supports disparate impact claims under ECOA and FHA. On March 31, 2009, the Court (Mark L. Wolf) allowed the filing of the amicus brief and denied the motion to dismiss. The reasoning of the court is not available from PACER.
In the meantime, two of the individuals plaintiffs filed for bankruptcy. Trustee in bankruptcy filed a motion to substitute party and dismiss the action on October 22, 2009, which was granted by the Court on April 16, 2010, and their complaint was dismissed with prejudice. On May 12, 2010, the plaintiffs filed a second amended complaint, substituting the plaintiffs. The complaint reiterated the original allegations.
The parties went into mediation and reached a settlement. On August 1, 2011, the parties file a motion for preliminary approval of the settlement agreement. Under the agreement, the defendants agreed and represented: 1) to provide telephonic housing counseling services; 2) to continue non-discretionary pricing policy; 3) to enhance its Fair Lending policy to address concerns raised in this litigation; 4) to have personnel trained in fair lending. Some class members were eligible for a $90 check or a credit of $200 against closing costs. The defendant agreed to pay $400,000 in attorney's fees and $15,000 in service fees to the plaintiffs.
However, the Court denied the motion on December 22, 2011, as it ordered the parties to file memorandum explaining the effects of the Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), on certifying class in the present case. The parties filed their memorandums, and the Court issued an order of preliminary approval on March 6, 2012. The order certified class of "all African-American and Hispanic borrowers (including, without limitation, individual borrowers, joint-borrowers, and co-borrowers) who obtained a loan between January 1, 2004 and June 24, 2011."
Following a fairness hearing, the Court issued a final judgment approving the order August 10, 2012. That ended the case.
Zhandos Kuderin - 07/30/2014
compress summary
