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Sixth Circuit Affirms Denial of Class Certification

Posted in News and Analysis, Recent Cases

Last week, in Miller v. Countrywide Bank, No. 12-5250, the Sixth Circuit applied the U.S. Supreme Court’s Wal-Mart v. Dukes decision to affirm a denial of class certification.  Specifically, the Sixth Circuit concluded that the district court did not abuse its discretion in finding that Dukes foreclosed the proposed class from establishing commonality. 

As in Dukes, the Countrywide plaintiffs challenged a company-wide policy granting broad discretion to local agents.  The Countrywide policy gave local agents discretion to raise or lower a borrower’s interest rate within a set range.  The plaintiffs claimed that this policy led Countrywide to charge minority borrowers higher interest rights.

The Sixth Circuit noted, however, that under Dukes, a policy of granting discretion to local supervisors does not constitute a uniform employment practice.  And without a uniform employment practice uniting each claim, the class could not satisfy commonality.  Instead, the Sixth Circuit looked for “some other glue” holding together the local agents’ acts.  The act of delegating discretion, and a range within which discretion was exercised, did not alone provide that glue. 

In this case, concluded the Sixth Circuit, no uniform policy or practice guided how local actors exercised their discretion.  Without any underlying “single policy or practice, or . . . single mode of exercising discretion,” the class failed to show commonality.  Left unclear by Countrywide is where exactly the line falls between a single mode or practice, and merely separate acts.

Offering some hint, the Sixth Circuit distinguished McReynolds v.  Merrill Lynch, a Seventh Circuit decision permitting class certification where delegation was broadly delegated.  In McReynolds, Merrill Lynch had adopted a company-wide policy permitting brokers to form client-sharing teams, leaving team selection in the hands of local brokers.  African Americans were underrepresented on these teams.  A second company-wide policy distributed accounts in way that rewarded brokers who formed teams.  Distinguishing McReynolds, the Sixth Circuit observed that the Merrill Lynch policies not only enabled individual acts of bias but also amplified the discriminatory impact of that discretion on minorities.  In Countrywide, by contrast, no additional policy exacerbated the disparate impact associated with local discretion.