Ellis et al v. J.P. Morgan Chase & Co. et al, No. 4:2012cv03897 - Document 224 (N.D. Cal. 2015)
Court Description: ORDER DENYING PLAINTIFFS' MOTION FOR CLASS CERTIFICATION; DENYING PLAINTIFFS' MOTION TO STRIKE by Judge Yvonne Gonzalez Rogers denying 169 Motion to Certify Class; denying 191 Motion to Strike ; denying as moot 201 Motion for Leave to Respond to Plaintiffs' Evidentiary Objections. (fs, COURT STAFF) (Filed on 12/17/2015)
Download PDF
<![CDATA[
Ellis et al v. J.P. Morgan Chase & Co. et al Doc. 224 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 DIANA ELLIS, et al., 8 Plaintiffs, 9 vs. Case No.: 12-cv-03897 YGR ORDER DENYING PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION; DENYING PLAINTIFFS’ MOTION TO STRIKE 10 J.P. MORGAN CHASE & CO., et al., Re: Dkt. Nos. 169, 191, 201 United States District Court Northern District of California 11 Defendants. 12 13 Before the Court is plaintiffs Diana Ellis, James Schillinger, and Ronald Lazar’s 14 (collectively, “Plaintiffs”) motion for class certification. (Dkt. No. 169, “Mtn.”) Plaintiffs also 15 move to strike declarations submitted by Defendants J.P. Morgan Chase & Co., J.P. Morgan 16 Chase Bank, N.A., and Chase Home Finance (collectively, “Defendants” or “Chase”) in 17 opposition to Plaintiffs’ motion to certify. (Dkt. No. 191, “Mtn. Strike.”)1 Having carefully 18 considered the papers submitted and the pleadings in this action, oral argument held September 1, 19 2015, and for the reasons set forth below, the Court hereby DENIES Plaintiffs’ motion for class 20 certification and DENIES Plaintiffs’ motion to strike. 21 22 I. FACTUAL BACKGROUND Chase is comprised of three relevant heritage institutions: Heritage Chase, EMC Mortgage 23 Company (“EMC”), and Washington Mutual Bank (“Washington Mutual”).2 (Dkt. No. 182-30, 24 “Evans Decl.,” ¶ 33.) In 2008, Heritage Chase acquired the mortgage servicing portfolios of EMC 25 1 26 27 28 The Court resolves the six administrative motions to seal documents submitted in connection with the substantive motions via separate order entered this date. 2 The Court refers to Chase, as it existed prior to the acquisitions, as “Heritage Chase.” EMC, Washington Mutual, and Heritage Chase are collectively referred to herein as the heritage institutions. Dockets.Justia.com 1 and Washington Mutual. (Id.) Pertinent to this litigation, Chase and its heritage institutions have 2 acted as servicers on home mortgage loans throughout the proposed class period. In this role, 3 Defendants are responsible for providing certain services to protect a mortgage lenders’ interest in 4 the property securing the loan. Among those services are property inspections, which the servicer 5 orders to inspect the property that secures a delinquent loan when a borrower goes into default on 6 their mortgage. (Dkt. No. 182-19, “Jolley Decl.,” Exh. R. at JOLLEY0062.) Defendants then 7 passed the cost of the property inspection (with no “mark-up”) along to the borrower absent the 8 application of an exclusion, such as the delinquent loan being in bankruptcy. (Dkt. No. 169-2, 9 “Pifko Decl.,” Exh. 24 at 482-83.) 10 Prior to 2006, Heritage Chase used a variety of software platforms to service its mortgage United States District Court Northern District of California 11 loans. (Evans Decl. ¶ 6.) Beginning in 2006, Heritage Chase began to use a single automated 12 software management system, Fidelity Mortgage Servicing Package (“MSP”), to manage the 13 process of ordering and charging borrowers for property inspections. (Id. ¶¶ 6, 9.) The mortgage 14 portfolios of EMC and Washington Mutual were migrated to MSP in 2009. (Id. ¶ 33.) 15 MSP is generally programmed to order an initial property inspection once a borrower is 16 forty-five (45) days delinquent on loan payments and every thirty (30) to thirty-five (35) days 17 thereafter if the borrower remains delinquent. (Pifko Decl., Exhs. 2, 3, 11, 23.) Despite this 18 general rule, MSP is programmed to use certain criteria to determine whether to order property 19 inspections. (Evans Decl. ¶¶ 8-16.) These criteria have changed over time, and Chase 20 periodically updates MSP to reflect these adjustments. (Id. ¶ 31.) EMC and Washington Mutual 21 had their own written policies and coding instructions with respect to ordering property 22 inspections when Heritage Chase acquired them in 2008. (Id. ¶ 33.) Chase first wrote an entity- 23 wide policy for ordering and charging for property inspections in 2011, which continues to be 24 amended periodically. (Id.) 25 Chase and/or the heritage institutions were the servicers on named Plaintiffs’ mortgages. 26 Plaintiffs now challenge Defendants’ practice of using MSP to order property inspections and 27 charging borrowers for same. Specifically, Plaintiffs allege that Defendants’ practices were not 28 authorized by Plaintiffs’ mortgages. Plaintiffs seek to recover the property inspection fees they 2 1 previously paid to Defendants. Where the fees were assessed but not paid, Plaintiffs request 2 injunctive relief to remove the property inspection fees from their mortgage loan accounts. 3 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 II. PLAINTIFF’S PROPOSED CLASS DEFINITIONS AND CLAIMS Plaintiffs move to certify five classes: 1. California Injunctive Relief Class All residents of California who had a loan serviced by Chase Home Finance LLC or J.P. Morgan Chase Bank, N.A., including their affiliates and predecessors, from January 1, 2003 through May 31, 2013, and whose accounts were assessed, but who have not paid, fees for one or more property inspections. 2. Nationwide Unjust Enrichment Class All residents of the United States of America who had a loan serviced by Chase Home Finance LLC or J.P. Morgan Chase Bank, N.A., including their affiliates and predecessors, from January 1, 2003 through May 31, 2013, and who paid fees for one or more property inspections. 3. California Fraud/UCL/Rosenthal Act Class All residents of California who had a loan serviced by Chase Home Finance LLC or J.P. Morgan Chase Bank, N.A., including their affiliates and predecessors, from January 1, 2003 through May 31, 2013, and who paid fees for one or more property inspections. 4. Tennessee Fraud Class All residents of Tennessee who had a loan serviced by Chase Home Finance LLC or J.P. Morgan Chase Bank, N.A., including their affiliates and predecessors, from January 1, 2003 through May 31, 2013, and who paid fees for one or more property inspections. 5. Oregon Fraud Class All residents of Oregon who had a loan serviced by Chase Home Finance LLC or J.P. Morgan Chase Bank, N.A., including their affiliates and predecessors, from January 1, 2003 through May 31, 2013, and who paid fees for one or more property inspections. 25 (Mtn. at 10-11.) Plaintiffs seek to certify the California Injunctive Relief Class pursuant to 26 Federal Rule of Civil Procedure 23(b)(2), and the Nationwide Unjust Enrichment Class, California 27 Fraud/UCL/Rosenthal Act class, Tennessee Fraud Class, and Oregon Fraud Class as damages 28 classes pursuant to Rule 23(b)(3). 3 1 2 3 III. MOTION FOR CLASS CERTIFICATION A. Legal Standard Rule 23, which governs class certification, contains two sets of distinct requirements that 4 Plaintiffs must meet before the Court may certify any of the proposed classes. First, Plaintiffs 5 must meet all of the requirements under Rule 23(a). Second, each class must meet at least one of 6 the prongs of Rule 23(b), depending on the nature of the class. Under Rule 23(a), the Court may certify a class only where “(1) the class is so numerous 8 that joinder of all members is impracticable; (2) there are questions of law or fact common to the 9 class; (3) the claims or defenses of the representative parties are typical of the claims or defenses 10 of the class; and (4) the representative parties will fairly and adequately protect the interests of the 11 United States District Court Northern District of California 7 class.” Fed.R.Civ.P. 23(a). Courts refer to these four requirements as “numerosity, commonality, 12 typicality and adequacy of representation.” Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 13 588 (9th Cir. 2012). In addition to the four requirements set forth in Rule 23(a), most courts have 14 implied an additional threshold requirement: that the members of the class are readily 15 ascertainable. See Xavier v. Philip Morris USA, Inc., 787 F.Supp.2d 1075, 1089 (N.D.Cal. 2011) 16 (“the party seeking certification must demonstrate that an identifiable and ascertainable class 17 exists”); Herrera v. LCS Fin. Servs. Corp., 274 F.R.D. 666. 672 (N.D.Cal. 2011) (“[w]hile Rule 18 23(a) is silent as to whether the class must be ascertainable, courts have held that the rule implies 19 this requirement). If Plaintiffs establish that the threshold requirements of Rule 23(a) are met, 20 Plaintiffs then have the burden to show “through evidentiary proof” that a class is appropriate for 21 certification under one of the provisions in Rule 23(b). Comcast Corp. v. Behrend, 133 S.Ct. 22 1426, 1432 (2013). 23 “[A] court’s class-certification analysis must be ‘rigorous’ and may ‘entail some overlap 24 with the merits of the plaintiff’s underlying claim.’” Amgen Inc. v. Conn. Ret. Plans & Trust 25 Funds, 133 S.Ct. 1184, 1194 (2013) (quoting Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 26 2551 (2011)); see also Mazza, 666 F.3d at 588. The Court considers the merits to the extent that 27 they overlap with the Rule 23 requirements. Ellis v. Costco Wholesale Corp., 657 F.3d 970, 983 28 (9th Cir. 2011). The Court must resolve “any factual disputes necessary to determine whether 4 1 there was a common pattern and practice that could affect the class as a whole.” Id. (emphasis in 2 original). “When resolving such factual disputes in the context of a motion for class certification, 3 district courts must consider ‘the persuasiveness of the evidence presented.’” Aburto v. Verizon 4 Cal., Inc., 2012 WL 10381, at *2 (C.D. Cal. Jan. 3, 2012) (quoting Ellis, 657 F.3d at 982). 5 Ultimately, the district court must exercise its discretion to determine whether a class should be 6 certified. Califano v. Yamasaki, 442 U.S. 682, 703 (1979). 7 8 9 B. Analysis With the exception of numerosity, Chase argues that Plaintiffs have failed to meet their burden with respect to all class certification requirements. The Court begins with an analysis of the Rule 23(a) factors. Finding at the outset that Plaintiffs have not met their burden on Rule 11 United States District Court Northern District of California 10 23(a)(2)’s commonality requirement, the Court does not proceed any further in the analysis. 12 13 1. Numerosity The numerosity requirement under Rule 23(a)(1) is undoubtedly met here and Chase does 14 not contend otherwise. Plaintiffs submit that there are more than 1.5 million putative class 15 members in the nationwide class. (Pifko Decl., Exh. 28.) With potentially more than one million 16 class members residing in fifty states, at least as to the nationwide class, the Court agrees that 17 numerosity is satisfied. 18 19 2. Commonality Rule 23(a)(2) requires that the party seeking certification show “there are questions of law 20 or fact common to the class.” Fed.R.Civ.P. 23(a)(2). To satisfy this requirement, a common 21 question “must be of such a nature that it is capable of class-wide resolution – which means that 22 the determination of its truth or falsity will resolve an issue that is central to the validity of each of 23 the claims in one stroke.” Dukes, 131 S.Ct. at 2545. The existence of common questions itself 24 will not satisfy the commonality requirement, and instead, “[w]hat matters to class certification … 25 is… the capacity of a classwide proceeding to generate common answers apt to drive the 26 resolution of the litigation.” Id. at 2551 (emphasis in original). Under the commonality inquiry, 27 “Plaintiffs need not show that every question in the case, or even a preponderance of questions, is 28 capable of classwide resolution. So long as there is ‘even a single common question,’ a would-be 5 1 class can satisfy the commonality requirement of Rule 23(a)(2).” Wang v. Chinese Daily News, 2 Inc., 737 F.3d 538, 544 (9th Cir. 2013) (quoting Dukes, 131 S.Ct. at 2556). 3 Here, Plaintiffs propose one common question as suitable for determination on a classwide basis for all classes. The question, as framed by Plaintiffs, is whether Chase’s automated MSP 5 system generated unauthorized property inspection fees that were then assessed to borrowers’ 6 accounts by not taking individual circumstances of borrowers into account. (Mtn. at 13-14.) This 7 question, Plaintiffs argue, would drive the ultimate resolution of their claims because it would 8 establish liability class-wide. In that regard, Plaintiffs contend that Chase had a uniform practice 9 that applied to every property inspection it ordered beginning on January 1, 2003, and through 10 May 31, 2013. Thus, in Plaintiffs’ view, the legality of Chase’s purportedly uniform practice 11 United States District Court Northern District of California 4 spanning more than a decade is the central issue in this case. To support this proposition, 12 however, Plaintiffs present the Court with no evidence in their opening motion. Plaintiffs’ moving 13 papers contain no citation to the record with respect to commonality. (See Mtn. at 13-14.) 14 Instead, Plaintiffs summarily contend that Defendants “uniformly applied” the challenged practice 15 to all class members through the Chase MSP system. (Mtn. at 13:22-23) (emphasis removed.) As 16 a result of Plaintiffs’ lack of evidence, the Court’s inquiry is inevitably guided by Defendants’ 17 arguments and evidence presented in opposition to class certification. 18 Not surprisingly, Chase fundamentally disagrees with Plaintiffs’ premise, i.e., that Chase 19 employed a uniform system of ordering and charging for property inspections.3 In and of 20 themselves, factual disputes do not defeat class certification. The crux of Defendants’ argument is 21 not a dispute of fact. Rather, it is the absence of evidence of a common practice. Defendants 22 maintain that Chase’s practices varied over time, depending on heritage institution, depending on 23 investor, and from borrower to borrower. Without showing a uniform practice, Defendants argue 24 that Plaintiffs have not established a common question applicable to the class as a whole (much 25 3 26 27 28 Defendants also argue that, even if Plaintiffs established that Chase had a uniform practice, they cannot show “in one stroke” that all class members were charged for unlawful property inspections. See Dukes, 131 S.Ct. at 2551. In other words, even if Plaintiffs generated a common question vis-à-vis a uniform policy, the inquiry could not generate a common answer using common proof. Because the Court finds that Plaintiffs did not meet their burden to establish a uniform policy, the Court need not reach this secondary inquiry. 6 1 less satisfy predominance under Rule 23(b)(3) for the damages classes). The Court agrees. 2 Absent a showing that Chase had a policy to which class members were uniformly subject for the 3 entire proposed class period, Plaintiffs’ motion must fail. 4 Principally, Plaintiffs did not establish that Chase and its heritage institutions had uniform policies throughout the more than ten year class period. Indeed, Heritage Chase did not even 6 move to the centralized MSP system for purposes of ordering property inspections until 2006 – 7 three years into the proposed class period. (Evans Decl., ¶¶ 6, 36.) Prior to 2006, Heritage Chase 8 “used a variety of software platforms to service its mortgage loans.” (Id. ¶ 6.) Plaintiffs do not 9 rebut this evidence in reply. Moreover, Heritage Chase, EMC, and Washington Mutual were 10 separate entities with separate loan servicing policies prior to 2009. (Id. ¶ 33.) When Chase 11 United States District Court Northern District of California 5 purchased EMC and Washington Mutual in 2008, each entity “had their own written policies and 12 coding instructions with respect to ordering property inspections.” (Id.; see Dkt. No. 182-39, 13 “Slifko Decl.,” ¶ 18.) In 2009, the Washington Mutual and EMC portfolios were migrated to MSP 14 for purposes of ordering property inspections. (Evans Decl. ¶ 33.) To that point, Plaintiffs 15 acknowledge that in 2009 Chase “consolidate[d] the pre-2009 policies and procedures from the 16 various heritage entities.” (Reply at 4:1-2.) Finally, Chase also opines that, since 2009, their 17 policy and practices have continued to change in response to amendments to investor guidelines. 18 (Id. ¶¶ 36, 38-40; Slifko Decl., ¶ 18.) In fact, Chase presents evidence that it did not have an 19 entity-wide written policy on property inspections in place until 2011, and that the policy 20 continues to be amended periodically. (Evans Decl. ¶ 33.) 21 Plaintiffs’ response to this fundamental issue wholly ignores Defendants’ evidence that 22 Heritage Chase did not use MSP until 2006 and that the policy continued to evolve through 2013. 23 Plaintiffs present no evidence – much less a preponderance – from which the Court could 24 conclude these different internal policies do not affect the commonality analysis. Quesada v. Banc 25 of America Inv. Services, Inc., 2013 WL 623288, at *4 (N.D.Cal. Feb. 19, 2013) (“The party 26 seeking class certification bears the burden of demonstrating by a preponderance of the evidence 27 that all four requirements of Rule 23(a) … are met”). Plaintiffs’ only counterpoint with respect to 28 changes over time focuses on differences among the heritage institution polices. Namely, 7 1 Plaintiffs argue that Chase has failed to identify differences among the property inspection policies 2 of the three heritage institutions. Critically, though, Defendants do not have any such burden on 3 class certification. Dukes, 131 S.Ct. at 2551 (“[a] party seeking class certification must 4 affirmatively demonstrate his compliance with [Rule 23]”); Quesada, 2013 WL 623288, at *4. 5 Plaintiffs cannot shift their burden to Defendants simply because Plaintiffs present no evidence of 6 their own. Thus, the Court concludes that Plaintiffs have not proffered evidence of a uniform 7 policy throughout the entire class period, especially with respect to each heritage institution. 8 9 Chase has also presented evidence that it did not have a monolithic policy as indicated by Plaintiffs because inspection practices varied based on the loan investor. Chase’s portfolio of serviced mortgages was comprised of loans guaranteed or owned by numerous institutions, 11 United States District Court Northern District of California 10 including HUD, FHA, Freddie Mac, Fannie Mae, Chase itself, and other private investors. (Evans 12 Decl. ¶ 10.) These investors have different requirements that Chase, as the loan servicer, must 13 follow in ordering property inspections after a borrower becomes delinquent. According to Jack 14 Evans, Vice President of Property Preservation for Chase, “Chase’s MSP system is programmed 15 to account for these investor-by-investor differences.” (Id. ¶ 11.) Specifically, the MSP system is 16 programmed to treat HUD-insured mortgages differently than others: 17 18 19 20 21 22 23 [W]hen the data in Chase’s MSP system indicates that a mortgaged property covered by HUD insurance is occupied by the borrower, Chase will not order a property inspection in the absence of special circumstances. This practice has been in place for many years. Moreover, from at least 2008 through 2014, one of the ways that Chase complied with HUD guidance was to have its vendors send out preinspection mailers asking the borrower to confirm their occupancy of the property. If the borrower responded that they were occupying the property, Chase would block an inspection on the property. 24 25 (Id.) Plaintiffs’ only response to Mr. Evan’s testimony is a conclusory statement that MSP was 26 not able to account for investor differences, based on evidence presented for the first time in reply. 27 Plaintiffs submit in reply an email from Mr. Evans they construe as a concession that MSP was 28 unable to accommodate investor differences. (Dkt. No. 197-2, “Supp. Pifko Decl.,” Exh. 33; 8 1 Reply at 2:5-14.) As an initial matter, the Court hesitates to “consider new arguments or evidence 2 presented for the first time in reply” on class certification where the moving party carries the 3 evidentiary burden. In re Flash Memory Antitrust Litig., 2010 WL 2332081, at *5 (N.D. Cal. June 4 9, 2010).4 Plaintiffs had the initial obligation to present evidence necessary to satisfy the 5 requirements for class certification in their opening motion. Id. That Plaintiffs chose to devote 6 only one and a half pages of its thirty-page motion to the central issue of commonality is to their 7 own detriment. Further, Plaintiffs extend Mr. Evans’ email beyond its logical conclusion, and 8 Defendants have been left unable to place his statements in context given Plaintiffs’ improper 9 presentation of the evidence for the first time on reply. Thus, Plaintiffs’ post hac attempt to discredit Mr. Evans is not well taken, particularly when this email was never shown to or 11 United States District Court Northern District of California 10 authenticated by Mr. Evans at his deposition. (See Dkt. No. 202 at 3:8-10.) Plaintiffs carry the 12 burden on class certification to demonstrate that Chase uniformly applied a policy of ordering and 13 charging for property inspections, and they have failed to do so. 14 Defendants additionally argue that the Chase MSP system cannot be construed as 15 implementing a uniform policy class-wide because it was programmed to account for borrower 16 circumstances. Among the factors that determined whether a property inspection would be 17 ordered or charged to a borrower were whether: (i) the property was abandoned, tenant-occupied, 18 or in foreclosure; (ii) the borrower communicated an intent to occupy the property; (iii) the 19 borrower had a home equity loan or a first mortgage; (iv) the borrower entered into a repayment 20 plan or loss mitigation plan; (v) state and local inspection requirements required deviation; and 21 (vi) a manual or customized decision was made by Chase to cancel the order. (Id. ¶¶ 7-19; Slifko 22 Decl. ¶¶ 7-11; Oppo. at 10-12.) In reply, Plaintiffs contend that their evidence established that the 23 Chase MSP system had a uniform policy regardless of investor or individual borrower 24 circumstances. The Court disagrees. Plaintiffs’ evidence only establishes that, as a general rule, 25 MSP ordered a first property inspection after forty-five (45) days of delinquency and every thirty 26 (30) days thereafter. (Pifko Decl., Exhs. 2, 3, 11, 23; Reply at 2:10-14.) Chase does not contest 27 4 28 See Section III(C), infra, addressing Defendants’ evidentiary objections to evidence presented by Plaintiffs for the first time in reply, including Mr. Evans’ email. 9 1 this general rule. Instead, Chase presents evidence showing that individualized exceptions applied 2 to the policy such that it cannot be construed as uniformly applied to all class members. Thus, it is 3 apparent that the proposed classes would include borrowers who were not subject to the general 4 policy, or who were at least subject to sub-policies, such that the class members were not “subject 5 to the same allegedly [unlawful] practice.” Ellis v. Costco Wholesale Corp., 657 F.3d 970, 983 6 (9th Cir. 2011); Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1272-72 (11th Cir. 2009) (the district 7 court was “demonstrably incorrect” to certify a class that would include persons who were “also 8 subject to other policies” because “issues involving the [allegedly common policy] alone are not 9 common to the entire class”) (emphasis supplied). A review of the named Plaintiffs’ mortgage accounts proves the point. The named 11 United States District Court Northern District of California 10 Plaintiffs’ property inspection fee histories demonstrate that Chase did not operate under a 12 uniform policy.5 With respect to plaintiff Ellis, her loan account originated with Washington 13 Mutual. (Dkt. No. 182-57, “Devine Decl.,” ¶ 12.) She first became delinquent on her payments in 14 2008, before the heritage intuitions migrated to the Chase MSP system.6 (Id. ¶ 19.) The first 15 inspection of her property was ordered by Washington Mutual’s mortgage servicing platform. (Id. 16 ¶ 20.) Throughout her loan’s delinquency, Defendants ordered a total of twenty-five property 17 inspections, of which only seven were assessed to her account. (Id. ¶ 38.) Moreover, two of the 18 seven charged fees were later waived by Chase. (Id.) With respect to plaintiff Lazar, Chase did 19 not order an initial property inspection until more than a year after his account first became 20 delinquent because he requested a loan modification. (Id. ¶¶ 47-48.) Likewise, only six 21 inspections were ordered on the property securing plaintiff Schillinger’s mortgage during his more 22 than forty-three (43) months of delinquency. (Id. ¶ 88.) And, of those six inspections, only four 23 5 24 25 26 27 28 The Court recognizes that this plaintiff-specific analysis is normally undertaken in connection with typicality under Rule 23(a)(3). As the Supreme Court has recognized, however, the “commonality and typicality requirements of Rule 23(a) tend to merge.” General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, n. 13 (1982). This is especially true here where certification is inappropriate for the fundamental reason that common questions do not exist even among the named Plaintiffs. 6 Although Washington Mutual sold her loan to private investors, Washington Mutual continued to act as the servicer of her mortgage until Chase purchased Washington Mutual. (Devine Decl. ¶¶ 17-18.) 10 1 were assessed to his loan account. (Id.) Thus, the named Plaintiffs illustrate that Chase did not 2 have a policy that was implemented uniformly regardless of individual borrower circumstances as 3 Plaintiffs contend. Contrary to Plaintiffs’ assertions, the evidence shows the Chase MSP system 4 ordered property inspections discriminately, not uniformly. 5 In support of certification, Plaintiffs principally rely on a case from the Southern District of 6 Iowa involving property inspections ordered and charged by Wells Fargo. See Huyer v. Wells 7 Fargo & Co., 295 F.R.D. 332 (S.D. Iowa 2013). There, the court found that the “common 8 question of whether [Wells Fargo’s property inspection] policy constitutes a RICO and/or a UCL 9 violation is certainly amenable to a common answer, which will drive the resolution of this litigation.” Id. at 338. This question, as framed by the court, necessarily assumed a common 11 United States District Court Northern District of California 10 policy by Wells Fargo. Indeed, the Huyer court found the Supreme Court’s analysis in Dukes 12 “inapplicable to and/or distinguishable from this case,” because, in that court’s view, Huyer was 13 more similar to post-Dukes cases involving “a company-wide [policy] that was applied uniformly” 14 to all class members. Id. (quoting Bouaphakeo v. Tyson Foods, Inc., 2011 WL 3793962, at *3-4 15 (N.D. Iowa Aug. 25, 2011) (internal quotations omitted)). Not so here. For the reasons discussed 16 above, Plaintiffs failed to establish that Chase applied a policy uniformly to all class members. 17 Huyer is therefore inapposite. 18 For the foregoing reasons, the Court finds that Plaintiffs have not established that a 19 common question applies to all class members. Plaintiffs’ motion therefore fails under Rule 20 23(a)(2). Plaintiffs’ motion for class certification is DENIED. 21 22 C. Evidentiary Objections The parties filed two sets of evidentiary objections in conjunction with Plaintiffs’ motion 23 for class certification. First, Plaintiffs filed a document entitled “Evidentiary Objections to 24 Evidence Submitted with Opposition to Class Certification,” appended to their twenty-page reply. 25 (Dkt. No. 197-1.) Plaintiffs’ objections were not filed in compliance with Local Rule 7-3(c), 26 which provides that “[a]ny evidentiary and procedural objections to the opposition must be 27 contained in the reply brief or memorandum.” Plaintiffs filed their objections as a separate 28 document outside of their reply brief. On that basis, the objections are DENIED. Accordingly, 11 1 Defendants’ unopposed motion for leave to respond to Plaintiffs’ evidentiary objections (Dkt. No. 2 201) is DENIED AS MOOT. Second, and in compliance with Local Rule 7-3(d)(1), Defendants filed objections to 3 4 Plaintiffs’ reply evidence. (Dkt. No. 202.) Defendants object to the supplemental declaration of 5 Mark Pifko and its attendant exhibits (Supp. Pifko Decl., Exhs. 33-43) as improperly presented for 6 the first time in reply. See Quesada v. Banc of America Inv. Serv’s, Inc., 2013 WL 623288, at *4 7 (N.D.Cal. Feb. 19, 2013) (plaintiffs bear the burden of demonstrating “by a preponderance of the 8 evidence” that the requirements of Rule 23 are satisfied); Flash Memory Antitrust Litig., 2010 WL 9 2332081, at *15 (declining to look at new reply evidence because “such evidence should have been proffered with Plaintiffs’ moving papers,” as it is plaintiffs’ initial burden to demonstrate the 11 United States District Court Northern District of California 10 existence of a certifiable class). In making the instant decision, however, the Court does not rely 12 on the evidence to which Defendants object. To the extent the Court examined Mr. Evans’ email 13 (Supp. Pifko Decl., Exh. 33), supra, the Court finds it does not support Plaintiffs’ position. 14 Defendants’ evidentiary objections to Plaintiffs’ reply evidence are therefore DENIED AS MOOT. 15 16 IV. PLAINTIFFS’ MOTION TO STRIKE DEFENSE DECLARATIONS Defendants relied on a number of witness declarations in opposition to Plaintiffs’ motion 17 for class certification, attaching the declarations thereto as exhibits. Plaintiffs now move to strike 18 certain declarations on two grounds. First, with respect to the declaration of Joseph G. Devine, Jr., 19 Plaintiffs contend the Court should exercise its authority under Rule 37 to strike Mr. Devine’s 20 declaration because he was not previously disclosed as a witness.7 Second, Plaintiffs ask the 21 Court to invoke the sham affidavit rule to strike specific paragraphs in Deidre Slifko’s declaration 22 as inconsistent with her prior deposition testimony.8 The Court considers Plaintiffs’ arguments in 23 7 24 25 26 Plaintiffs additionally move to strike the declarations of Gary Miller and Tonya Petrides under Rule 37. Defendants offered these declarations in connection with the predominance inquiry under Rule 23(b)(3). The Court does not reach the predominance inquiry and, therefore, relied on neither the Miller nor Petrides declarations in making its decision. Consequently, Plaintiffs’ motion to strike the Miller and Petrides declarations is DENIED AS MOOT. 8 27 28 Plaintiffs also move to strike the testimony of Mr. Evans as a sham. Specifically, Plaintiffs attacked his testimony on the term “Quality Right Party Contact.” The Court does not reach this issue in making the instant decision. Thus, Plaintiffs’ motion to strike portions of the Evans declaration is DENIED AS MOOT. 12 1 turn. A. Devine Declaration: Previously Undisclosed Witness 2 3 Rule 37(c)(1) provides in pertinent part: “If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or 5 witness to supply evidence on a motion, at a hearing, or at a trial, unless the failure was 6 substantially justified or is harmless.” Fed.R.Civ.P. 37(c)(1); Hoffman v. Constr. Protective Serv., 7 Inc., 541 F.3d 1175, 1179 (9th Cir. 2008). Factors used to determine whether the evidence should 8 be allowed include: (i) whether a party has been “surprise[d],” and their ability to “cure the 9 surprise,” (ii) whether “allowing the evidence would disrupt the trial,” (iii) “the importance of the 10 evidence,” and (iv) “the nondisclosing party’s explanation for its failure to disclose the evidence.” 11 United States District Court Northern District of California 4 San Francisco Baykeeper v. W. Bay Sanitary Dist., 791 F.Supp.2d 719, 733 (N.D.Cal. 2011) 12 (internal quotations omitted). The burden is on the party facing a motion to strike to show that the 13 failure was substantially justified or is harmless. Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 14 259 F.3d 1101, 1106-07 (9th Cir. 2001). 15 Here, it is undisputed that Chase did not disclose Mr. Devine during the discovery period. 16 Plaintiffs argue that Defendants’ failure to do so caused Plaintiffs prejudice because they first 17 learned of Mr. Devine when Defendants filed their opposition. Plaintiffs claim that they could 18 have “deposed [Mr. Devine], explored and/or investigated [his] substance with other witnesses and 19 documents, and prepared rebuttal evidence if necessary.” (Mtn. Strike at 8:1-3.) Plaintiffs further 20 claim that Chase’s belated disclosure cannot be harmless because discovery had closed and 21 briefing on the class certification motion was substantially complete when they learned of Mr. 22 Devine. 23 Given the nature of the Devine declaration, the Court agrees with Chase that the failure to 24 disclose Mr. Devine previously was both substantially justified and harmless. As to the first issue, 25 Chase merely substituted one witness for an equivalent witness out of convenience to a previously 26 disclosed witness. See San Francisco Baykeeper, 791 F.Supp.2d at 733-35 (refusing to strike the 27 testimony of three undisclosed witnesses when two other witnesses were disclosed on the same 28 subject matter). In 2012, Chase disclosed Jeffrey Nack pursuant to Rule 26 as a witness with 13 1 information regarding Chase’s “business records relating to Plaintiffs’ mortgages, including 2 account histories, customer service notices, and correspondence between Chase Defendants and 3 Plaintiffs.” (Dkt. No. 223-1, “Albertstone Decl.,” Exh. 1 at 2.) Due to scheduling reasons, Mr. 4 Nack was unable to submit a declaration in time to oppose Plaintiffs’ certification motion. 5 However, Mr. Nack submitted a declaration in opposition to the motion to strike opining that he 6 reviewed Mr. Devine’s declaration and that he expects he would have provided the same 7 testimony had his schedule allowed. (Dkt. No. 204-4 ¶¶ 4-5.) 8 Plaintiffs argue that convenience does not satisfy the Rule 37 standard that Defendants be 9 substantially justified in offering Mr. Devine’s testimony in place of Mr. Nack’s.9 Plaintiffs rely on an extra-circuit district court decision for the proposition that courts regularly exclude 11 United States District Court Northern District of California 10 declarations of “substitute” witnesses like Mr. Devine. Certain Underwriters at Lloyds v. SSDD, 12 LLC, 301 F.R.D. 391 (E.D. Mo. 2014). In Underwriters, the court granted a motion in limine to 13 exclude the testimony of a newly disclosed witness at trial, with specific reference to the fact that 14 the witness was disclosed only seven weeks before trial. Id. at 395. Unlike here, the substitute 15 witness in Underwriters was no substitute at all. The undisclosed witness in Underwriters was an 16 additional person responsible for preparing a document at issue in the litigation who may have had 17 additional knowledge of how the document was prepared. Thus, Underwriters is not persuasive. 18 Mr. Devine acted as a true substitute for Mr. Nack by authenticating and summarizing Chase’s 19 business records. The Court finds Defendants were substantially justified in offering the Devine 20 declaration for that limited purpose. See San Francisco Baykeeper, 791 F.Supp.2d at 733-35. 21 As to harmlessness, the Devine declaration does nothing more than authenticate and 22 summarize Plaintiffs’ loan records that were all produced in discovery.10 See De la Torre v. 23 CashCall, Inc., 56 F.Supp.3d 1073, 1094 (N.D. Cal. 2014) (finding no “prejudice,” i.e. harm, 24 9 25 26 27 Plaintiffs also suggest that defense counsel made the substitution because they realized last minute that Mr. Nack could not testify as to the same matters as Mr. Devine. This not only ignores – without any justification – Mr. Nack’s declaration that he could have provided the same testimony and remains able to do so at trial, but also launches unwarranted character attacks on defense counsel. The Court will not entertain this unsubstantiated accusation. 10 28 Plaintiffs admit that all but one of these documents were produced timely by Chase. One publically available document was not previously produced. 14 1 where the declaration “function[ed] largely to authenticate documents Plaintiffs already have, 2 rather than to provide any opinion on the underlying issues”), overturned on other grounds by 56 3 F.Supp.3d 1105 (N.D. Cal. 2014). Moreover, Plaintiffs hardly can claim any surprise that Chase 4 would present loan records of the named Plaintiffs in opposition to the certification motion. Nor 5 did Plaintiffs take any steps to cure any surprise. Plaintiffs could have, but chose not to, request 6 more time to file their reply and seek to obtain discovery from Mr. Devine in the interim. Instead, 7 Plaintiffs waited more than three weeks to move to strike. No attempt was made to cure any 8 alleged prejudice to Plaintiffs. 9 In addition, Plaintiffs never sought to depose Mr. Nack or any other witness concerning these documents, suggesting that Plaintiffs would also not have deposed Mr. Devine even if given 11 United States District Court Northern District of California 10 the opportunity. See Davenport v. Charter Communications, LLC, 302 F.R.D. 520, 528 (E.D. Mo. 12 2014) (declining to strike declarations submitted by defendants in opposition to class certification 13 when “Plaintiffs never sought to depose the [previously disclosed witness]” and “the Court 14 doubt[ed] whether Plaintiffs would have deposed any of the new declarants even if they were 15 identified earlier”). Finally, Plaintiffs’ protestation that the Devine declaration contains 16 “unfounded statements” and “unsupported inferences” is itself unsupported. (MTS Reply at 3:1- 17 24.)11 The Court is satisfied that the substitution of Mr. Devine was harmless. 18 Accordingly, Plaintiffs’ motion to strike the declaration of Mr. Devine is DENIED. B. Slifko Declaration: Sham Affidavit Rule 19 20 The sham affidavit rule precludes a party from creating an issue of fact by affidavit 21 contradicting her testimony. Van Asdale v. Int’l Game Technology, 577 F.3d 989, 998 (9th Cir. 22 2009) (citing Kennedy v. Allied Mutual Ins. Co., 952 F.2d 262, 266-67 (9th Cir. 1991)). 23 Contradictory testimony is not automatically disposed of, but rather “the district court must make 24 a factual determination that the contradiction was actually a ‘sham.’” Id. Moreover, “the 25 inconsistency between a party’s deposition testimony and subsequent affidavit must be clear and 26 unambiguous to justify striking the affidavit.” Id. at 998-99. An affidavit is not a sham where it 27 11 28 Regardless, the Court does not rely on the paragraphs Plaintiffs cite as “unfounded” and “unsupported.” (See Devine Decl. ¶¶ 9-11, 21-22.) 15 1 merely “elaborate[es] upon, explain[s], or clarify[ies] prior testimony.” Messick v. Horizon 2 Industries, Inc., 62 F.3d 1227, 1231 (9th Cir. 1995). The rule is a narrow one that is most often 3 invoked at summary judgment to prevent parties from manufacturing factual disputes. Van 4 Asdale, 577 F.3d at 998. Courts should apply the rule “with caution.” Id. Plaintiffs cite In re ConAgra Foods, Inc., 90 F.Supp.3d 919 (C.D. Cal. 2015), for the 5 6 proposition that, although the rule is typically invoked on summary judgment, the sham affidavit 7 rule has been used to strike declarations at the class certification stage. In ConAgra, Judge 8 Morrow did entertain motions to strike declarations submitted in support of class certification as 9 shams, but ultimately declined to strike them. Id. Here, as in ConAgra, the Court is unable to find that Ms. Slifko’s deposition testimony regarding the differences in the policies of the heritage 11 United States District Court Northern District of California 10 institutions12 clearly and unambiguously contradicts her declaration. In her deposition, Ms. Slifko 12 testified that she was not “familiar with what the procedures and policies were before 2008.” 13 (Albertstone Decl., Exh. 5 at 194.) Ms. Slifko now testifies that the heritage institutions “each 14 [had] different rules for charging borrowers for property inspections.” (Slifko Decl. ¶ 18.) These 15 two statements are not clearly and unambiguously in conflict with one another. See Van Asdale, 16 577 F.3d at 998. It is entirely plausible that Ms. Slifko is aware that each heritage institution had 17 separate policies without knowing their specific contents. The Court therefore declines to strike 18 paragraph 18 in Ms. Slifko’s declaration. Plaintiffs’ motion on this ground is DENIED.13 19 20 21 V. CONCLUSION For the foregoing reasons, the Court DENIES Plaintiffs’ motion for class certification and DENIES Plaintiffs’ motion to strike. 22 23 24 12 This is the only portion of the challenged testimony on which the Court relies in making the instant decision. Plaintiffs’ motion with respect to Ms. Slifko is otherwise DENIED AS MOOT. 13 25 26 27 28 Even in the absence of paragraph 18 in Ms. Slifko’s declaration, the Court’s commonality analysis would remain unchanged for at least two reasons. First, Mr. Evans corroborates Ms. Slifko’s testimony that the heritage institutions had separate policies for ordering property inspections prior to 2009. (Evans Decl. ¶ 33.) Second, and most importantly, Defendants do not have the burden on class certification to show the absence of a uniform policy. Plaintiffs must establish a common question, which can be accomplished by the presence of a common policy applied uniformly to all class members. Plaintiffs failed to do so regardless of Defendants’ evidence of variations among the heritage institutions’ policies. 16 1 This Order terminates Docket Nos. 169, 191, 201. 2 IT IS SO ORDERED. 3 Dated: December 17, 2015 4 5 _______________________________________ YVONNE GONZALEZ ROGERS UNITED STATES DISTRICT COURT JUDGE 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
