Court upholds rejection of National City class settlement

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Denying final approval of a $7 million class settlement with National City Bank for alleged discriminatory lending practices was the right move in light of intervening U.S. Supreme Court precedent, an appeals court has ruled.

The decision could make it harder for borrowers to pursue class litigation against banks, but it does not necessarily represent a "death knell" for similar class actions, according to one of the judges.

In 2011, after having granted preliminary approval to the settlement the year before, U.S. District Judge Eduardo Robreno of the Eastern District of Pennsylvania reversed himself, denying final approval because of the U.S. Supreme Court's opinion in Wal-Mart v. Dukes that was issued the same year, heightening the standard for establishing commonality among class members.

In a ruling issued last week, the Philadelphia-based Third U.S. Circuit Court of Appeals refused to reinstate the award, or the class certification, meaning the $7 million settlement for the 153,000 minority customers who sued the former National City Corp. is now void.

National City has since been purchased and absorbed by PNC Financial Services Group Inc., based Downtown.

When asked for briefings on Dukes' impact prior to Judge Robreno's ruling, both sides -- the bank and the black and Hispanic plaintiffs who had alleged they were charged more for mortgages than similarly situated white people -- had continued to support class certification, as the settlement agreement had required them to do, according to the opinion.

The Third Circuit agreed with Judge Robreno's analysis, holding "the scope of the district court's inquiry was fully consistent with Dukes ... the putative class lacks commonality."

Third Circuit Judge Kent A. Jordan wrote the opinion on behalf of the three-judge panel, which included Judges Anthony Scirica and D. Michael Fisher.

In Dukes, a class of about 1.5 million women who worked at Wal-Mart stores across the country had alleged that they had been discriminated against for promotions, but the U.S. Supreme Court held that they failed to meet the commonality requirement because the decisions against promoting them had been made by different and unrelated supervisors for various unknown reasons.

Here, the decisions to add fees and costs to loans for black and Hispanic customers were made by different and unrelated National City brokers across the country.

"The Dukes plaintiffs encountered different managers making different types of employment decisions for different reasons, many of them likely nondiscriminatory in nature. They therefore had not been subjected to a common harm, and the proposed class lacked commonality," Judge Jordan wrote.

"This case bears a striking resemblance to Dukes," he said.

Peter Muhic of Kessler Topaz Meltzer & Check represented the plaintiffs and couldn't be reached for comment.

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Saranac Hale Spencer: sspencer@alm.com or 215-557-2449. Read more articles like this at www.thelegalintelligencer.com.


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