On January 15, 2013, the Sixth Circuit Court of Appeals affirmed a district court’s denial of class certification holding that the plaintiff did not satisfy the commonality requirements established by the United States Supreme Court in Wal-Mart Stores, Inc. v. Dukes, ___ U.S. ____; 131 S.Ct. 2541 (2011). In Miller v. Countrywide Bank, N.A., No. 12-5250, 2013 WL 149853 (6th Cir. Jan. 15, 2013), the Sixth Circuit, explained that Dukes requires plaintiffs to “unite the acts of discretion under a single policy or practice, or through a single mode of exercising discretion” to demonstrate that class certification is appropriate.  The Miller Court held that this common “glue” was absent from in the Miller case.

In Miller, eleven plaintiffs filed a putative class action lawsuit alleging that Countrywide Bank, N.A.’s (“Countrywide”) residential loan-pricing policy created racial disparities that disproportionally impacted African-American and Hispanic borrowers.  Plaintiffs challenged the “subjective component” of Countrywide’s loan-pricing policy that granted local loan officers discretion to charge individual borrowers additional fees or an increased interest rate within a permitted “deviation” from an objective “par rate.”  The plaintiffs filed a motion for class certification and, after the United States District Court for the Western District of Kentucky denied the motion, plaintiffs sought and were granted interlocutory appeal to the Sixth Circuit.

The Sixth Circuit affirmed and held that plaintiffs had not established commonality pursuant to Fed. R. Civ. P. 23(a)(2) because they did not allege the existence of a companywide policy or practice that guided the local agents’ exercise of their discretion.  The Court explained that a compliant addressing “millions of . . . decisions at once” requires evidence of “some glue hold[s] the alleged reasons for all those decisions together.” The Court went on to say that, while a companywide policy might serve as “glue,” a “broad delegation of decision making to the discretion of local managers” in this case was contrary, on its face to a uniform practice.”   

The Court did, however, hold that granting discretion to local agents could arguably form the basis of a disparate-impact theory supported by statistical correlation, but the Court found that “statistical correlation, no matter how robust, cannot substitute for a specific finding of class-action commonality.” Here, however, the Court held that the plaintiffs failed to establish “either a uniform policy or practice, or a common mode amidst the various acts of discretion, beyond the mere act of delegating discretion.”