Alert March 22, 2012

Recent Consumer Financial Services Decisions

Goodwin Procter helped defeat class certification in three recent cases involving consumer financial services.  In In re Countrywide Financial Corporation Mortgage Marketing & Sales Practices Litigation, 2011 U.S. Dist. LEXIS 118034 (S.D. Cal. Oct. 11, 2011), the plaintiffs sought to certify a class of over 500,000 borrowers who received mortgage loans from subsidiaries of Countrywide Financial Corporation, alleging claims under RICO and California’s Unfair Competition Law, as well as for unjust enrichment.  Among other reasons for denying certification, the court found that there was no uniform misrepresentation or actionable omission and that reliance could not be presumed because borrowers took out their mortgage loans for a wide variety of reasons.

Two days later, the U.S. District Court for the Western District of Kentucky denied class certification in In re Countrywide Financial Mortgage Lending Practices Litigation, 2011 U.S. Dist. LEXIS 118695 (W.D. Ky. Oct. 13, 2011).  That multi-district litigation consolidated four nationwide class actions alleging claims for disparate impact discrimination under the Fair Housing Act and the Equal Credit Opportunity Act.  The court found class certification inappropriate because, among other reasons, there was no evidence that “every member of the class suffered the same injury, or any injury at all.”

Finally, the U.S. District Court for the Southern District of California denied a motion to certify a class consisting of nearly 60,000 California borrowers representing billions of dollars in originated loans in Peralta v. Countrywide Home Loans, Inc., 2011 WL 6325877 (S.D. Cal. Dec. 16, 2011).  In Peralta, the plaintiff challenged the loan documents and disclosures she received in connection with her payment option mortgage loan.  In denying class certification, the court held that the plaintiffs’ claims did not satisfy the commonality or predominance requirements under Rule 23 because despite the alleged uniformity of the loan documents, borrowers received non-uniform written and oral communications concerning the challenged loan terms.