Lack Of Predominance, Superiority, And Ascertainability Foreclose Mortgagors’ Proposed Class Action Alleging Kickbacks In Violation Of RESPA


The Central District of California denied certification of a putative nationwide class of mortgagors, holding that numerous individualized issues precludeda finding of predominance, superiority, or ascertainability.  In particular, the plaintiffs alleged that defendant’s subsidiary escrow companies violated the Real Estate Settlement Procedures Act’s kickback prohibition by accepting payments from delivery companies, such as UPS, FedEx, and OnTrac, in exchange for referring their delivery services to defendant’s escrow subsidiaries.  The plaintiffs sought certification of a nationwide class consisting of all individuals who, in the past 15 years, were charged by any of the defendant’s subsidiaries an overnight delivery fee for mortgage processing and closing documents.  The defendant characterized the charges at issue as “marketing fees” that were beyond the realm of RESPA and argued that the plaintiffs’ class definition raised numerous individualized issues.

In analyzing certification, the court first found that the plaintiffs met Rule 23(a)’s commonality requirement.  In so doing, the court explained that “the question of whether [the defendant] violated [RESPA] by accepting ‘any fee, kickback, or thing of value pursuant to’ the marketing-fee arrangements . . . is common to the putative class.”  The court also found that such a common question was subject to a common answer.

The court then analyzed Rule 23(b)(3)’s predominance and superiority requirements, as well as the putative class’s ascertainability, noting that the “crux of this case is predominance” and, quoting the Supreme Court’s decision in Amchem Products, Inc. v. Windsor, that the “predominance element is ‘far more demanding’ than Rule 23(a)’s commonality requirement.”  In performing the predominance analysis, the court found the following individualized issues regarding the plaintiffs’ RESPA claim: (1) whether each putative class member obtained a federally related mortgage loan; (2) whether any of the exemptions contained in 24 C.F.R. § 3500.5(b) applied to each putative class member’s loan; (3) whether RESPA’s one-year statute of limitations barred each putative class member’s claim; (4) whether any of the exceptions to the statute of limitations applied to each putative class member’s claim; and (5) whether documents needed to substantiate the putative class members’ claims would be available, given the temporal scope of the class definition.  In sum, the court explained that that while it could “readily discern a common question that would govern [the plaintiffs’] proposed class, RESPA prerequisites will quickly swallow the litigation in a sea of class-member-specific inquiries.”  The court also found that “for largely the same reasons” the proposed class failed the superiority and ascertainability requirements.  

Henson v. Fid. Nat’l Fin., Inc., No. 14-cv-01240 (C.D. Cal. June 18, 2014).


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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