Plaintiffs bring this claim against Ford Motor Credit Company ("FMCC"), individually and on behalf of similarly situated African-Americans, alleging that certain of FMCC's lending practices violate the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq. ("ECOA"). Defendant FMCC is a wholly owned subsidiary of the Ford Motor Company, and is engaged in the business of purchasing retail finance contracts from dealers of new and used motor vehicles. Plaintiffs contend that FMCC maintains a policy of allowing these dealers to "mark-up" the financing rate on the contracts it purchases based on subjective criteria unrelated to creditworthiness. According to plaintiffs, this policy has a disparate impact on African-American customers, such that they pay more to finance vehicles with FMCC than do similarly situated Caucasian customers. In order to remedy this alleged disparity, plaintiffs ask the Court to grant declaratory and injunctive relief, and also seek disgorgement of profits improperly gained.

By notice dated October 5, 2004, plaintiffs filed a renewed motion for class certification. In that motion, plaintiffs seek certification of a class comprising "all African-American customers who obtained non-recourse financing from FMCC in the United States pursuant to Ford Credit's `Retail Plan — Automotive' between January 1, 1990 and the date of judgment." ("Pl. Memo. of Law in Supp. of Mot. for Class Cert., p. 2 ("Class Memo.")). Plaintiffs argue that this class should be certified under Rule 23(b)(2), or, in the alternative, urge this Court to: (i) certify some or all of plaintiffs' claims under Fed.R.Civ.P. 23(b)(3); (ii) certify a hybrid class under Fed.R.Civ.P. 23(b)(2) and 23(b)(3); or (iii) bifurcate the claims and partially certify a 23(b)(2) class for purposes of liability and injunctive relief, reserving decision on certification of a class for plaintiffs' claim to disgorgement. Defendants oppose certification in any form for a number of reasons.

Having considered the parties' memoranda and supplemental submissions, along with evidence presented at a hearing on November 12, 2004, the Court adopts plaintiffs' third alternative proposal, and GRANTS the motion for partial class certification pursuant to Federal Rules 23(b)(2) and 23(c)(4) for the limited purposes of determining whether FMCC is liable under 15 U.S.C. § 1691(a)(1) and, if so, whether declaratory and injunctive relief is appropriate. Plaintiffs' motion to certify a class for all other purposes is denied without prejudice to renew following the liability stage of these proceedings.

Background

The purchase and financing of a car typically involves two separate commercial transactions. The first is familiar to most, and occurs when a customer walks into a vehicle dealership, negotiates a sale price, and then completes a financing contract. The second is less familiar, a though no less important: after the terms of the financing contract have been set, the dealer sells it as "commercial paper" to a finance company such as FMCC, Bank of America, or Chase Manhattan Bank. In return, the dealer receives the full value of the vehicle, is divested of the risk of future loan defaults, and may also receive a "dealer reserve" payment, which is more fully described below.

Of course, prior to selling the financing contract to FMCC, the dealer must set its terms with the customer. One of the key terms, and the focus of this case, is the annual percentage rate ("APR"). Under FMCC's credit pricing policy, which dealers must adhere to if they wish to sell a contract to FMCC, the "typical" APR consists of two components: a risk-based "buy rate" set by FMCC, and a "mark-up" set by the dealer. Although the APR is the sum of these two components, customers are generally informed only of the "final" APR figure.

For this reason, plaintiffs characterize dealers as "credit arrangers" for FMCC.

The buy rate portion of the APR can be thought of as the risk-related interest rate that FMCC requires a contract to bear before it will consider purchasing it. Because it is risk-related, the buy rate depends on entirely objective factors, including the length of the installment contract, the kind of vehicle purchased, and the credit characteristics of the buyer. FMCC sets its buy rates pursuant to a highly automated and uniform credit scoring system, and in some cases even publishes buy rates for contracts having a particular set of characteristics. (February 25, 2004 Decl. of James C. Horr, ¶ 11 ("Horr Decl.")). In this way, dealers are generally aware of FMCC's buy rate when they sit down to negotiate a finance contract with a customer.

The second component of the APR, and the subject of this lawsuit, is the dealer mark-up. ("Mark-Up Policy"). Pursuant to the Mark-Up Policy, dealers are permitted to add up to 3% to the buy rate set by FMCC. In contrast to the buy rate, plaintiffs contend that the mark-up is entirely subjective. For example, if FMCC determines that a customer has a poor credit history, it may set the buy rate for his contract at, say, 11%, which means that FMCC will not buy the financing contract for that customer's purchase unless it bears at least an 11% APR. The dealer negotiating with the customer will either know or have a good idea of the buy rate, and will accordingly attempt to set the APR between 11% and 14% if he wants to sell the contract to FMCC.

Prior to November 1, 2002, dealers were permitted to mark-up the APR to the limit of state usury laws, or, if the state in question had no limit, to a maximum of 26% for new vehicles or used vehicles less than one-year old, and 36% otherwise.

In the event that the dealer negotiates an APR that includes a mark-up, FMCC will make an immediate payment to the dealer. This payment is commonly referred to as "dealer reserve," and is a function of the difference between the buy rate and the final APR. Thus, the greater the mark-up, the greater the dealer reserve. In this way, dealers profit from marking up contracts before they are sold to FMCC, with one caveat. Although "dealers with whom [FMCC] does business are entitled to receive 100% of the [mark-up] as dealer reserve", (Horr Decl., ¶ 26), most dealers elect to receive a smaller percentage — generally 75% — to avoid "chargebacks."

The Court notes that dealer reserve is not paid where the contract contains a special or promotional APR; instead, dealers are paid a set percentage of the amount financed for each contract sold to FMCC. (Horr Decl., ¶ 29). At any given time, there are hundreds of promotional rates offered in different regions of the country. ( Id., ¶ 30). Although the parties disagree over the relevance of this group of contracts, it is clear that customers wishing to take advantage of the promotional offers must first go to a dealership and complete a credit application approved by FMCC. At this stage, the dealer is free to enter a financing arrangement with the customer at a non-promotional APR rate. Plaintiffs allege that this discretion has a disparate impact on African-American customers because "statistical analysis of FMC[C]'s data reveals that white borrowers are more likely to receive . . . special APR contracts." (January 9, 2004 Expert Report of Ian Ayres, pp. 3-4 ("Ayres Report")). Whether or not that is true, the allegation is relevant to the question of impact, and the Court will not exclude this group of contracts at this stage.

Chargebacks occur if a customer defaults on an installment contract or pays the full value of the contract before the termination date, both of which have the effect of reducing FMCC's profit on the finance charge. Because dealers electing to receive 100% of the APR spread must reimburse FMCC for those lost profits, a majority elect to take approximately 75% of the APR spread up front (80% for used cars). (Horr Decl., ¶ 27). Those that elect this option receive a sort of guarantee; once a customer makes the first three monthly payments, future defaults and/or prepayments will not result in a chargeback. ( Id.). Dealers who do not elect this option are subject to chargebacks for the life of the contract. ( Id.).

Plaintiffs do not challenge the process by which FMCC sets the buy rate — to the contrary, plaintiffs concede that the buy rate is based exclusively on a customer's creditworthiness, and is therefore race-neutral. They allege, however, that the Mark-Up Policy is based on wholly subjective factors unrelated to creditworthiness, and has a discriminatory impact because it subjects African-Americans customers to higher mark-ups, and therefore higher APRs, than similarly situated Caucasian customers. Indeed, plaintiffs allege that as a result of the Mark-Up Policy, African-Americans pay on average twice the amount of mark-up paid by Caucasian customers.

Setting aside the merits of this claim, the Court now turns to the procedural history of the case, which has some bearing on the issues raised by plaintiffs' motion for class certification.

Procedural History

Plaintiffs filed their first class action complaint on October 31, 2000, and the case was initially assigned to Judge McKenna. On May 17, 2001, plaintiffs filed an amended complaint, having previously been granted leave to do so over FMCC's objections. FMCC responded a short time later by moving to dismiss plaintiffs' claims, arguing, inter alia, (i) that it was not a "creditor" within the meaning of the term under ECOA, (ii) that plaintiffs had failed to state a claim under their disparate impact theory, and (iii) that named plaintiff Vincent E. Jackson's claim was time-barred under ECOA's two-year statute of limitations. 15 U.S.C. § 1691e(f).

By Memorandum and Order dated January 22, 2002, Judge McKenna denied FMCC's motion to dismiss on all three grounds, holding (i) that FMCC was a "creditor" within the meaning of 15 U.S.C. § 1691a(e) and 12 C.F.R. § 202.2(1), (ii) that disparate impact claims are allowable under ECOA for the same reasons they are permitted under the Civil Rights Act of 1991, (iii) that equitable and declaratory relief are available under ECOA, and (iv) that Vincent E. Jackson's claim was not time-barred because he was unaware of the alleged discrimination when he purchased his vehicle. Jones, et al. v. Ford Motor Credit Co., 2002 WL 88431 at *3-*5 (S.D.N.Y. Jan. 22, 2002).

Shortly thereafter, on February 5, 2002, FMCC filed its answer to plaintiffs' first amended complaint. At the same time, FMCC brought counterclaims against certain of the named plaintiffs, alleging that they were in default on the loan obligations that formed the basis of their disparate impact claim. FMCC also asserted "conditional counterclaims" against putative class members who might default on payment obligations to FMCC. On March 7, 2002, plaintiffs responded by moving to dismiss FMCC's counterclaims, arguing that they are permissive and do not have an independent basis of federal jurisdiction.

By memorandum and order dated June 17, 2002, Judge McKenna granted plaintiffs' motion to dismiss, agreeing that FMCC's counterclaims were permissive under Rule 13 of the Federal Rules of Civil Procedure, and therefore dismissing them for lack of independent federal jurisdiction. In the alternative, Judge McKenna ruled that even if FMCC's counterclaims were within reach of the supplemental jurisdiction statute, 28 U.S.C. § 1367, the court would rely on 28 U.S.C. § 1367(c) and decline to exercise jurisdiction. Jones, et al. v. Ford Motor Credit Co., 2002 WL 1334812, at *2 (S.D.N.Y. June 17, 2002). On April 24, 2003, after securing a Rule 54(b) judgment, FMCC appealed the dismissal.

A counterclaim is deemed permissive under Rule 13(b) if it does not arise out of the "transaction or occurrence that is the subject matter of the opposing party's claim." Fed.R.Civ.P. 13(b).

Section 1367(c) states:

A district court may decline to exercise supplemental jurisdiction over a claim under subsection (a) if (1) the claim raises a novel or complex issue of State law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.

A series of discovery disputes and extensions followed, and the case was subsequently reassigned to this Court on November 6, 2003. As a result of these delays, plaintiffs did not file the present motion for class certification until January 9, 2004. While that motion was pending, on February 5, 2004, the Second Circuit vacated Judge McKenna's June 17, 2002 decision and remanded FMCC's counterclaims with instructions for the district court to first "rule on the class certification motion, and then, in light of that ruling, to proceed to determine whether to exercise or decline supplemental jurisdiction" under 28 U.S.C. § 1367 over the counterclaims. Jones, et al. v. Ford Motor Credit Co., 358 F.3d 205, 215 (2d Cir. 2004).

On March 1, 2004, defendant FMCC responded to plaintiffs' motion for class certification, arguing at length that none of the proposed class representatives were adequate under Rule 23(a), and also contending that the class cannot be certified under Rule 23(b)(2) because, inter alia, plaintiffs' claims give rise to too many individualized issues. (Def. Memo. in Opp. to Pl. Mot. for Class Cert., pp. 23-28 ("Class Opp.")). Plaintiffs responded on March 15, 2004, but also indicated that they would file a motion to intervene additional class representatives, which they did two days later. (Pl. Reply Memo. of Law, pp. 13-14 ("Class Reply")). By memorandum opinion and order dated July 15, 2004, this Court granted that motion. Jones, et al. v. Ford Motor Credit Co., 2004 WL 1586412 (S.D.N.Y. July 15, 2004).

Thereafter, on August 13, 2004, plaintiffs filed a second amended complaint reflecting the addition of eight new proposed class representatives, bringing the total to nine. Following additional discovery directed at the new class representatives, plaintiffs submitted a supplemental memorandum in support of their motion for class certification. ("Pl. Supp. Memo."). On September 29, 2004, FMCC duly responded, again arguing, inter alia, that the group of intervenors is "riddled with unique defenses that render class treatment unsuitable." (Resp. to Pl. Supp. Memo., p. 11 ("Def. Supp. Memo.")). On November 12, 2004, this Court held a hearing on the issue of class certification. Having considered the arguments presented at that hearing, along with the parties' extensive briefing on the question of class certification, the Court turns to the merits of the certification motion.

Plaintiffs October 5, 2004 renewed motion for class certification was filed by nine plaintiffs: the eight intervenors added to the August 13, 2004 second amended complaint, Demetrius Chaney, Henry and Connie Wilson, Karlton and Jacqueline Sutton (the "Suttons"), Raymond Whitley and Michael and Jacqueline Waters (the "Waters"), along with one of the original named plaintiffs, Vincent E. Jackson. (Pl. Renewed Mot. for Class Cert., p. 1).

Discussion

A district court's analysis of a class certification request generally proceeds in two steps, both of which are governed by Rule 23. As a threshold matter, the court must be persuaded, "after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied." General Telephone C. v. Falcon, 457 U.S. 147, 161 (1982). Rule 23(a) provides:

(a) Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

If a court determines that the Rule 23(a) requirements have been met, it must then decide whether the class is maintainable pursuant to one of the subsections of Rule 23(b), which govern, inter alia, the form of available relief and the rights of absent class members. In this case, plaintiffs urge the Court to certify a class under either subsection (2) or (3) of Rule 23(b), which provides, in part:

(b) Class Actions Maintainable. An action may be maintained as a class action if the prerequisites of subdivision (a) are satisfied, and in addition: . . .

(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; or

(3) the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

Fed.R.Civ.P. 23(b).

Before beginning this two-step Rule 23 analysis, the Court takes notice of several guiding principles. First, district courts are "afforded substantial leeway in deciding issues of class certification," Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147, 162 (2d Cir. 2001), and it is proper "to view a class action liberally in the early stages of litigation, since the class can always be modified or subdivided as issues are refined for trial." Woe v. Cuomo, 729 F.2d 96, 107 (2d Cir. 1984); General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 160 (1982) ("Even after a certification order is entered, the judge remains free to modify it in light of subsequent developments in the litigation."); Fed.R.Civ.P. 23(c)(1).

Federal Rule 23(c)(1) provides in relevant part: "An order under this subdivision may be conditional, and may be altered or amended before the decision on the merits." Fed.R.Civ.P. 23(c)(1).

Second, the class certification decision is not an "occasion for examination of the merits of the case." In re Visa Check/Mastermoney Antitrust Litig., 280 F.3d 124, 135 (2d Cir. 2001); see also Eisen v. Carlisle Jacquelin, 417 U.S. 156, 177-78 (1974). Nonetheless, district courts are allowed to look past the pleadings for the limited purpose of deciding if the Rule 23 requirements have been met, Johnston v. HBO Film Mgmt., Inc., 265 F.3d 178, 186-89 (2d Cir. 2001) (holding that it is "not only . . . appropriate, but also necessary" to look past the pleadings when deciding whether to certify a class), although that determination neither requires nor invites resolution of disputed issues of fact. See, e.g., Caridad v. Metro-North Commuter R.R., 191 F.3d 283, 292 (2d Cir. 1999) (noting that class plaintiffs "need not demonstrate at [the class certification] stage that they will prevail on the merits.").

Finally, although plaintiffs have the burden of establishing that the requirements of Rule 23 have been met, Caridad, at 291, they are not required to make an extensive evidentiary showing, Follette v. Vitanza, 658 F.Supp. 492, 505 (N.D.N.Y. 1987), vacated in part on other grounds, 671 F.Supp. 1362 (N.D.N.Y. 1987), and a court must assume the truth of the allegations in the pleadings when considering the propriety of certification. Shelter Realty Corp. v. Allied Maint. Corp., 574 F.2d 656, 661, n. 15 (2d Cir. 1978); DeAllaume v. Perales, 110 F.R.D. 299, 305 (S.D.N.Y. 1986) ("[F]or purposes of determining class certification issues, the allegations are taken as true and the merits of the complaint are not examined.")

With these principles in mind, the Court turns to the Rule 23 analysis.

A. Rule 23(a)

As noted above, the first step is to test the proposed class against the four requirements of Rule 23(a), numerosity, commonality, typicality, and adequacy. Although there is a great deal of overlap among the four requirements, each retains independent significance, and each must be rigorously applied before a class action may be properly certified. Falcon, 457 U.S. 147, 158 n. 13; see also Ingles v. City of New York, 2003 WL 402565 at *6 (S.D.N.Y. 2003); Davis v. Lenox Hill Hospital, 2004 WL 1926086 at * 6 (S.D.N.Y. 2004) ("The adequacy criteria tend to merge with the commonality and typicality requirements."). The Court will address the requirements seriatim.

1. Rule 23(a)(1) — Numerosity

The purpose of the numerosity requirement is to promote judicial economy by avoiding a multiplicity of actions. See, e.g., Robidoux v. Celani, 987 F.2d 931, 935-36 (2d Cir. 1993). Rule 23(a)(1) requires that the proposed class be "so numerous that joinder of all members is impracticable." Fed.R.Civ.P. 23(a)(1). "Impracticability means difficulty or inconvenience of joinder [not] . . . impossibility of joinder," In re Blech Sec. Litig., 187 F.R.D. 97, 103 (S.D.N.Y. 1999) (citation omitted), and the Second Circuit has observed that "numerosity is presumed at a level of 40 members." Consolidated Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir.), cert. denied, 515 U.S. 1122 (1995), citing, 1 Newberg on Class Actions 2d (1985 Ed.) § 3.05.

Applying these principles, the Court finds that the numerosity requirement is clearly met in this case. Plaintiffs' experts have credibly estimated that the class would contain at least 99,000 current and former FMCC customers, and FMCC does not argue otherwise. Indeed, FMCC itself characterizes the class as a "nationwide [group] of 15 years of Ford Credit customers." (Class Opp., p. 1); (Class. Memo., p. 16). Given that there is likely to be substantial geographic dispersion in such a large class, joinder would certainly be impracticable.

2. Rule 23(a)(2) — Commonality

The commonality requirement is satisfied where the "issues involved are common to the class as a whole," such that they "turn on questions of law applicable in the same manner to each member of the class." Califano v. Yamasaki, 442 U.S. 682, 701 (1971). This requirement is not quantitative in nature; that is, it is possible to satisfy Rule 23(a)(2) where only a single issue is common to the members of the proposed class, as long as resolution of that issue will advance the litigation. Savino v. Computer Credit, Inc., 173 F.R.D. 346, 352 (E.D.N.Y. 1997), aff'd, 164 F.3d 81 (2d Cir. 1998). For this reason, the commonality requirement is "easily met in most cases," especially where the "party opposing the class has engaged in some course of conduct that affects a group of persons and gives rise to a cause of action." 1 Newberg on Class Actions § 3.10 (4^th ed.); Franklin v. City of Chicago, 102 F.R.D. 944, 949 (N.D.Ill. 1984) (where the question of law involves "standardized conduct of the defendant toward[s] members of the proposed class, a common nucleus of operative fact is typically presented and the commonality requirement . . . is usually met.").

In discrimination cases commonality does not mandate that all class members make identical claims and arguments, but requires that "the gravamen of the [c]omplaint is that defendants discriminated against class members in the same general fashion." Open Hous. Ctr., Inc. v. Samson Management Corp., 152 F.R.D. 472, 476 (S.D.N.Y. 1993). In this case, plaintiffs allege that the Mark-Up Policy affected them in the same manner, namely, by causing them to pay higher financing charges than similarly situated Caucasians. This is a disparate impact claim, which, under Title VII case law, prohibits policies or practices that are neutral on their face and not intended to discriminate but that nevertheless have a disparate impact on a protected group. Robinson, supra, at 160 (citing Griggs v. Duke Power Co., 401 U.S. 424, 432 (1971)).

By comparison, a disparate treatment claim rests on proof of intentional discrimination. In the class action context, intentional discrimination is established by proof of a patter-or-practice of widespread acts of discrimination. In both disparate impact and pattern-or-practice disparate treatment cases, statistical evidence is generally critical to establishing a prima facie showing of disparity in treatment or impact. See Robinson, supra at 158-160.

FMCC nonetheless argues that plaintiffs cannot meet the commonality requirement because their claims are "based on decisions made by thousands of individual vehicle dealerships." (Class Opp., p. 24). In support of this argument, FMCC cites Garcia v. Veneman, 211 F.R.D. 15 (D.D.C. 2002), a case it claims to be "[e]xactly on point". ( Id.). In Garcia, a group of Hispanic farmers brought ECOA claims for disparate impact and disparate treatment against the United States Department of Agriculture ("USDA"), challenging the manner in which the USDA's loan and disaster benefit program was administered. The Garcia court described the proposed class as follows:

The thousands of Hispanic farmers plaintiffs seek to represent have dealt with hundreds, if not thousands, of local FSA officials, in more than 2,700 county offices across the country, over a 19-year period.

Garcia, at 22. In order to fit their claim within the disparate impact model, which requires a "policy" of some sort, the Garcia plaintiffs had to establish commonality based on the theory that, although clearly decentralized, the decision making process at issue was "entirely subjective", and was therefore amenable to class treatment under the Supreme Court's decision in General Telephone Co. v. Falcon, 457 U.S. 147 (1982). Garcia, at 20.

In footnote 15 of Falcon, the Supreme Court observed that, under certain circumstances, disparate treatment claims could be certified as class actions where a defendant-employer "operated under a general policy of discrimination" and the "discrimination manifested itself . . . in the same general fashion, such as through entirely subjective decisionmaking processes." 457 U.S. 147, 159 n. 15 (1982). Thus, the Falcon decision sanctioned the class treatment of disparate treatment claims against employers where the claims were based on a "general policy of discrimination" involving "entirely subjective" decisions. In a subsequent opinion, Garcia v. Veneman, 224 F.R.D. 8 (D.D.C. 2004) (" Garcia II"), which was issued following limited discovery on the question of commonality, the court explained its decision to refuse certification:

The plaintiffs in this case have not identified a USDA credit or disaster benefit practice established at the national level that comes close in specificity to the example of a common question offered by the Supreme Court in Falcon. Without such specificity, Falcon teaches against class certification, except possibly in the "conceivabl[e]" case where there is both "significant proof" that the defendant "operated under a general policy of discrimination" and "the discrimination manifested itself . . . in the same general fashion, such as through entirely subjective decisionmaking processes."

Garcia II, at 10. Thus, the Garcia court ultimately concluded that because there were numerous objective factors in the challenged USDA credit processes, the "subjectivity quotient" was not high enough to fall within the rubric of Falcon footnote 15. Garcia II, 224 F.R.D. 8, 14-15.

The challenged "policy" in this case is distinguishable. Plaintiffs have alleged that FMCC's Mark-Up Policy affords dealers absolute discretion to raise the APR on contracts purchased by FMCC — albeit within a limited range — and is therefore within the ambit of Falcon, as well as the Second Circuit's holding in Caridad v. Metro-North Commuter R.R., 191 F.3d 283 (2d Cir. 1999). In Caridad, plaintiffs were a group of African-American Metro-North employees seeking class certification on their claim that the delegation to supervisors, pursuant to company-wide policies, of discretionary authority over promotions and discipline was a "policy" that gave rise to common questions of fact, and therefore satisfied the commonality requirement for class certification. Caridad, at 292. Applying footnote 15 of Falcon, the Second Circuit agreed, noting that "the fact that the [plaintiffs] challenge the subjective components of [a] company-wide employment practice does not bar a finding of commonality under either the disparate treatment or disparate impact model." Id. Indeed, according to the Second Circuit, it is "beyond dispute" that the disparate impact analysis may be applied to subjective, as well as objective, employment practices. Id.

It is not apparent that the Second Circuit reads Falcon footnote 15 as strictly limiting class actions in pattern-or-practice discriminatory treatment or discriminatory impact cases to those where the challenged policy is "entirely" subjective, Id., at 292, although other circuits may do so. See Bacon v. Honda of America, Mfg., Inc., 370 F.3d 565 (6^th Cir. 2004). The issue is of no moment in this case as plaintiffs allege that defendant's Mark-Up Policy is, in fact, entirely subjective. ( See, e.g., Class Memo., p. 19).

FMCC attempts to distinguish both Caridad and Falcon by arguing that neither applies where the subjective decision is made in the context of an ordinary business transaction — as here — rather than the employment context. According to FMCC, the difference is that, unlike an employee, a customer negotiating with a dealer over finance rates can walk away at any point. (Def. Sur-Reply, p. 7). The Court is not persuaded, and sees no reason to depart from the accepted rule that in deciding ECOA cases courts will look to Title VII law. Garcia, 224 F.R.D. 8, at 12 n. 3.

Following Caridad, at least one district court in this Circuit held the commonality requirement to be satisfied where the challenged "policy" was the subjective aspect of an employer's decision-making process. In Latino Officers Association City of New York v. City of New York, 209 F.R.D. 79 (S.D.N.Y. 2002), the court held that "[t]he delegation of discretionary authority to supervisors for disciplinary purposes constitutes a policy or practice sufficient to satisfy the commonality requirement." 209 F.R.D. 79, at 88. As FMCC does in this case, the Latino Officers defendant argued that commonality could not be found because the plaintiffs "felt the brunt of the alleged discrimination in different ways." Id., at 88. In rejecting this argument, the court explained that, as long as the plaintiffs allege to have been injured by the same illegal acts, the nature of the injuries was not relevant to the commonality determination. Rather, the court noted, it is enough if the "legal theories . . . are common throughout the class." Id.

In this case, plaintiffs legal theory is clearly common throughout the class — indeed, to prevail they will have to establish the following issues of law and fact: (i) that FMCC's policy is facially neutral and has a disparate impact in violation of the ECOA; (ii) that there is a statistically significant disparity between the financing costs paid by like African-American and Caucasian customers; (iii) if there is a disparity, that it is not due to a legitimate business necessity, such as differences in creditworthiness or the cost of servicing loans; and (iv) if there is a business necessity, that there is a less discriminatory alternative.

It is true, of course, that plaintiffs must make some showing at the class certification stage that "the challenged practice . . . has a disparate impact" on the proposed class. Caridad, at 292. To make that initial showing where, as here, "the [challenged] decision-making process is difficult to review because of the role of subjective assessment," significant statistical disparities are sufficient to demonstrate a "class-wide impact." Id.; see also International Brotherhood of Teamsters v. United States, 431 U.S. 324, 340 n. 20 (1977) (citations and internal quotations marks omitted) (noting that statistics may be the "only available avenue of proof" in disparate impact cases). Plaintiffs have introduced preliminary statistical evidence tending to show that African-American customers pay more to finance vehicle purchases through FMCC than do similarly situated Caucasian customers. In particular, plaintiffs have submitted two expert reports.

The first, prepared by Dr. Ian Ayres, a professor at Yale Law School, provides a detailed explanation of how and why aggregated statistical analyses will be sufficient to prove plaintiffs' case at trial. (January 9, 2004 Expert Report of Ian Ayres ("Ayres Report")). Dr. Ayres' central opinions are as follows: (i) FMCC maintains customer databases sufficient to isolate the effects of particular borrower attributes, including creditworthiness, through aggregate statistical analyses (Ayres Report, pp. 1-2); (ii) the racial disparities present in FMCC's customer pool are not driven by differences in the cost of providing lending services ( Id., p. 3); (iii) it is inappropriate to consider individualized factors such as borrower negotiation skill when determining whether the Mark-Up Policy has a disparate impact because those factors do not relate to FMCC's or the dealers' cost of doing business ( Id., pp. 2-3); and (iv) there is evidence in the record that the disparate impact plaintiffs' point to is caused at least in part by facially neutral FMCC policies.

The second report was prepared by Dr. Mark Cohen, an economist and professor at Vanderbilt University (January 9, 2004 Expert Report of Mark A. Cohen "(Cohen Report")). Building on Dr. Ayres' opinions, the Cohen Report applies statistical analyses to the question of whether FMCC's credit pricing policy has a disparate impact on African-Americans in 14 states. The key findings of the Cohen Report are as follows: in those 14 states (i) 48.5% of African-American borrowers are charged a mark-up of some sort, compared to only 30.9% of Caucasian borrowers (Cohen Report, p. 1); (ii) African-American borrowers on average pay more than twice the amount of mark-up when compared to similarly situated Caucasian borrows ( Id., p. 2); and (iii) both of the first two conclusions are "highly statistically significant" ( Id.).

FMCC has submitted two expert reports and a declaration in opposition to plaintiffs' reports. One of the expert reports, prepared by professor George L. Priest, essentially calls into question Dr. Ayres' conclusion that statistical analyses alone will be sufficient to establish a disparate impact in this case. (February 27, 2004 Expert Report of George L. Priest ("Priest Report")). According to the Priest Report, both Drs. Ayres and Cohen "misunderstand or mischaracterize the economic relationships among buyers, dealers, and finance companies such as [FMCC] in the purchase and financing of an automobile." (Priest Report, p. 2). In particular, Priest contends that plaintiffs' experts "neglect the multi-faceted character of the purchase-finance transaction," and in that way "seriously distort what will be necessary to establish" a disparate impact at trial. (Priest Report, p. 10).

Professor Priest is a colleague of Dr. Ayres' on the faculty of Yale Law School.

The second report, prepared by Raymond Henderson, deals with the manipulation of the FMCC customer data used by Drs. Ayres and Cohen in their reports, and is therefore not directly at issue at this stage of the proceedings.

FMCC also submits the declaration of Dr. Janet R. Thornton, an economist with a private consulting company, the ERS Group. (February 26, 2004 Declaration of Dr. Thornton ("Thornton Decl.")). Dr. Thornton's declaration is focused on rebutting Dr. Cohen's statistical analyses, and sets forth the following conclusion: "[A] reliable measure of [disparate impact] cannot be determined simply by comparing the average difference between the rate differentials paid by African-American customer and those paid by customers of another race. A simple comparison of that nature compares individuals who are fundamentally dissimilar based on [many other factors not taken into account]" by Dr. Cohen's analyses. (Thornton Decl., ¶ 46).

Having reviewed these reports, and regardless of their ultimate persuasiveness, the Court concludes that plaintiffs have carried their burden under Caridad by showing that the "challenged practice" — the Mark-Up Policy — is "causally related" to the claimed disparate impact. Caridad, at 292. As in Caridad, plaintiffs in this case have submitted evidence "tend[ing] to establish" that being Africican-American has a statistically significant — and negative — effect on the terms of their financing agreements with FMCC. Id., at 293. Although "more detailed statistics might be required" to prevail at trial, plaintiffs' have satisfied their burden at this stage, and the Court will not engage in a comparative analysis of the parties' reports. Id. ("statistical dueling" not appropriate at the certification stage.).

Courts in other jurisdictions have considered ECOA challenges to nearly identical "mark-up" policies and reached the same conclusion on the issue of commonality. See, e.g., Claybrooks v. PRIMUS Automotive Financial Services, Inc., Civil No. 3:02-0382 (M.D. Tenn. Jan. 18, 2005) (Trauger, J.) (finding that the "dealer's markup of [the] buy rate . . . is a distinct step and is alleged to be based on purely subjective factors" and is "common to all class members."); Coleman v. General Motors Acceptance Corp., 220 F.R.D. 64, 73-74 (M.D. Tenn. 2004) (disparate impact challenge to GMAC's mark-up policy presented common issues of law and fact); Cason v. Nissan Motor Acceptance Corp., 212 F.R.D. 518, 520 (M.D. Tenn., 2002) (disparate impact challenge to NMAC's mark-up policy presented common issues of law and fact); Rodriguez v. Ford Motor Credit Co., 2002 WL 655679, at *3 (N.D. Ill. 2002) (Rule 23(a)(2) satisfied where "plaintiffs allege that [FMCC] allowed dealerships to exercise their discretion . . . in imposing higher finance charge markup[s] on Hispanic customers than [on] similarly situated non-Hispanic customers."). Indeed, this Court is not aware of any decision premised on a similar "mark-up" policy that rejects class certification on commonality grounds.

3. Typicality

Rule 23(a)(3) "requires that the claims of the class representatives be typical of those of the class, and is satisfied when each class member's claim arises from the same course of events, and each class member makes similar legal arguments to prove the defendant's liability." Marisol A. v. Giuliani, 126 F.3d 372, 376 (2d Cir. 1997). The typicality criterion does not require that the "factual predicate of each claim be identical to that of all class members"; rather, it "requires that the disputed issue of law or fact `occupy essentially the same degree of centrality to the named plaintiff's claim as to that of other members of the proposed class.'" Caridad, 191 F.3d 283, 293 (2d Cir. 1999) quoting Krueger v. New York Telephone Co., 163 F.R.D. 433, 442 (S.D.N.Y. 1995). The critical question is how closely the common question(s) relate to the cause(s) of action alleged.

FMCC challenges plaintiffs' ability to satisfy Rule 23(a)(3) on a number of grounds, both with respect to the class as a whole and certain of the named plaintiffs. The Court will address FMCC's class-wide arguments before considering those directed at individual class members.

a. Class-Wide Arguments

FMCC first contends that typicality does not exist in this case because, in order to succeed at trial, plaintiffs will have to demonstrate that class members paid more to finance their vehicle purchases that did "similarly situated" white customers. According to FMCC, the resulting case-by-case comparison will reveal that not all class members have been harmed by FMCC's policy, thereby destroying the typicality of the class members' claims. It is well established, however, that not all class members have to be aggrieved by a defendant's allegedly harmful conduct if a challenged policy is generally applicable to the class as a whole. Walters v. Reno, 145 F.3d 1032, 1047 (9^th Cir. 1998) ("Even if some class members have not been injured by the challenged practice, a class may nevertheless be appropriate.") (citation omitted). Indeed, it is enough to satisfy Rule 23(a)(3), where, as here, it is alleged that "the same unlawful conduct was directed at or affected both the named plaintiff and the class sought to be represented." Robidoux, 987 F.2d 931, 936-37 (2d Cir. 1993).

Each of the named plaintiffs is African-American, and each alleges that the Mark-up Policy affected him in the same way — by causing him to pay more for financing than similarly situated Caucasians. Each of the proposed class members is also African-American, which means that the members will prevail at trial if the named plaintiffs are able to prove that the Mark-Up Policy has a disparate impact on African-Americans. Conversely, they will lose if plaintiffs fail to show a disparate impact. Such correlation is the epitome of "typicality" under Rule 23(a)(3). See, e.g., Sprague v. Gen. Motors Corp., 133 F.3d 388, 399 (6^th Cir. 1998) (noting that the typicality requirements is meant to ensure that "as goes the claim of the named plaintiff, so go the claims of the class").

However, although this argument does not destroy typicality, it does raise standing issues, which the Court will address. It is axiomatic that the "irreducible constitutional minimum of standing" contains three elements:

First, the plaintiff must have suffered an injury in fact — an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of. . . . Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (citations, footnote, and internal quotation marks omitted). As alleged, and construing all ambiguities in their favor, plaintiffs' claim clearly satisfies the second and third Lujan requirements: (i) plaintiffs' preliminary statistical evidence is enough to show that, as alleged, the harm is "fairly traceable to the defendant's allegedly unlawful conduct"; and (ii) plaintiffs' injury is "likely to be redressed by the requested relief," because the Policy can be modified or even eliminated to reduce the subjectivity of the mark-up. Allen v. Wright, 468 U.S. 737, 751 (1984) (internal quotation marks omitted). This final point is further supported by the fact that in November 2002 FMCC did modify the Mark-Up Policy by imposing a 3% mark-up "cap." Plaintiffs' statistics expert, Dr. Cohen, found that as a result of this modification, certain financing disparities between like African-American and Caucasian FMCC customers were reduced by approximately one-half. (Cohen Report, pp. 13-15).

That leaves just the first requirement. It is of course well established that "[a] plaintiff seeking injunctive or declaratory relief cannot rely on past injury to satisfy the injury requirement but must show a likelihood that he or she will be injured in the future." Deshawn E. ex rel. Charlotte E. v. Safir, 156 F.3d 340, 344 (2d Cir. 1998). By letter dated January 6, 2005, FMCC notified the Court of a recent decision in the District of New Jersey holding that a class of plaintiffs challenging a mark-up policy did not have standing to seek declaratory and injunctive relief because there was little or no risk of future injury.

In that decision, Silvan S. Smith v. Chrysler Financial Company, L.L.C., No. 00-CV-6003, 2004 WL 3201002 (D.N.J. Dec. 30, 2004), plaintiffs brought a nearly identical ECOA challenge to Chrysler Financial Company's mark-up policy. Defendant argued that plaintiffs did not have standing under the "injury in fact" requirement. The court agreed:

Under any interpretation of the facts of this case, Plaintiffs have failed to establish a real and immediate threat that they will suffer an injury as the result of any actions or policies of Defendant. The injury which Plaintiffs allege, that they may want to buy another Chrysler in the future and may be discriminated against by Defendant, is simply too speculative, especially in light of the fact that Defendant may not ever be involved in the financing of Plaintiffs' hypothetical future Chrysler purchases.

Id., at * 4. For this reason, the court held that plaintiff's were without standing to sue for declaratory and/or injunctive relief. Id.

For several reasons, this Court declines to rule similarly. First, although "past exposure to illegal conduct does not in itself show a present case or controversy regarding injunctive relief", this is only true if the injury is "unaccompanied by any continuing, present adverse effects." City of Los Angeles v. Lyons, 461 U.S. 95, 102 (1983) (internal quotation marks and citation omitted). Thus, a plaintiff seeking injunctive relief has standing if the injury complained of is "ongoing." See, e.g., Banchieri v. City of New York, 2001 WL 1018351 (S.D.N.Y. 2001) (holding that "plaintiff seeking injunctive relief under the ADA and the Rehabilitation Act must show that the discrimination she suffered is ongoing" to have standing) (internal quotation marks omitted).

In one sense, of course, if the Mark-Up Policy has a disparate impact, any African-American who financed his or her vehicle through FMCC, who is currently making payments on that vehicle, and who was charged a higher mark-up than a similarly situated Caucasian customer, is suffering an "ongoing" injury — to wit, he or she is paying too much in finance charges every month. See Deshawn E., 156 F.3d 340, 344-45 (2d Cir. 1998) (plaintiffs demonstrated a sufficient likelihood of future harm at the hands of New York's police department based on allegations that statements made during unlawful interrogations were used to enhance charges in ongoing proceedings and as leverage in plea negotiations). Such plaintiffs would clearly have standing to pursue declaratory and/or injunctive relief if it entailed an adjustment to their rates, although the Court is neither suggesting nor holding that such relief would be appropriate in this case. The point is, such relief cannot be ruled out at this stage.

But even if the discrimination is not "ongoing", the Court finds that plaintiffs have demonstrated a likelihood of future discrimination in the event they establish FMCC's liability. See Stan v. Wal-Mart Stores, Inc., 111 F.Supp.2d 119, 125 (N.D.N.Y. 2000) ("Because there are no allegations of ongoing discrimination . . . to have standing to obtain injunctive relief, Plaintiff must show a likelihood of future discrimination.") (citation omitted). Several of the named plaintiffs have indicated their intention to finance future vehicle purchases with FMCC, and have therefore satisfied the Court that — assuming the Mark-Up Policy has a disparate impact — future harm is likely. For example, both of the Suttons expressed an intention to "do business with" FMCC in the future, (K. Sutton Dep., p. 87; J. Sutton Dep., p. 90), as did Mr. Waters (J. Waters Dep., p. 57), and both of the Wilsons (H. Wilson Dep., p. 70; C. Wilson Dep., p. 77). Cf. Stan, at 125 (finding no standing where "the record reveals that Plaintiff has no intention of returning to any of Defendants' stores.").

On these facts, the Court simply can not say that the "future likelihood" of injury is impermissibly speculative. Cf. City of Los Angeles v. Lyons, 461 U.S. 95, 99 (1983) (concluding that the plaintiff lacked standing to seek prospective injunctive relief because there was no allegation that he was likely to suffer future injury from the use of a police choke hold); Shain v. Ellison, 356 F.3d 211, 216 (2d. Cir. 2004) (noting that where a "defendant would have to show that if he is arrested in Nassau County and if the arrest is for a misdemeanor and if he is not released on bail and if he is remanded to NCCC and if there is no particularized reasonable suspicion that he is concealing contraband, he will again be strip searched," there was no standing) (citation omitted).

It appears that Judge McKenna previously reached the same conclusion on FMCC's motion to dismiss. Jones, 2002 WL 88431, at *4 (S.D.N.Y. Jan. 22, 2002) ("Plaintiffs' allegations in the amended complaint are not speculative as to the threat of repetitive harm if discriminatory impact is proven."). Under the "law-of-the-case" doctrine, a party wishing to re-litigate an issue decided at a prior stage of the proceedings bears the burden of justifying the reconsideration of the issue. This doctrine "posits that when a court decides upon a rule of law, that decision should continue to govern in subsequent stages of the same case," Sagendorf-Teal v. County of Rensselaer, 100 F.3d 270, 277 (2d Cir. 1996), and is a reflection of the importance of judicial economy. County of Suffolk v. Stone Webster Engineering Corp., 106 F.3d 1112, 1117 (2d Cir. 1997).

Although FMCC has not justified reconsideration of Judge McKenna's decision, the Court will briefly revisit the issue to offer additional support for the conclusion. Put simply, plaintiffs cannot control to whom their financing contracts are sold because dealers are not required to sell installment contracts to any particular "end-market" purchaser such as FMCC. (Horr Decl., ¶ 8). Indeed, by all accounts there is a robust market for installment contracts, which means that even were plaintiffs to avoid Ford dealerships, it is possible that they will be subjected to the Mark-Up Policy in the future. In 2003, for example, FMCC purchased approximately 1,354,000 retail installment contracts from more than 7,5000 different car dealers, including dealers specializing in cars made by Ford, General Motors, Chrysler, and Toyota. ( Id., ¶ 6). As of February 1, 2004, FMCC was receiving payment on approximately 5,000,000 retail installment contracts purchased over several years. ( Id., ¶ 4). It is of course a reasonable assumption that at least one of the named plaintiffs in this case will purchase a new or used car from a dealer in the future (as noted, supra, several have expressed an intent to do so). Village of Arlington Heights v. Metropolitan Hous. Dev. Corp., 429 U.S. 252, 263-64 (1977) (for federal courts to have jurisdiction over any of these claims, only one named plaintiff need have standing with respect to each claim.). Given FMCC's marketplace presence, it is entirely possible — and perhaps even very likely — that FMCC will end up purchasing his or her contract.

Although the bulk of FMCC's purchases are made with Ford dealerships, FMCC does not purchase a majority of the contracts sold by Ford dealerships; in 2003, FMCC purchased approximately 33% of all installment contracts for new cars from Ford dealers, and 15% of those for used cars. (Horr Decl., ¶ 10).

b. Individual Plaintiffs

FMCC also contends that this case is inappropriate for class certification because the claims of the named plaintiffs are "overflowing with individual issues that preclude class adjudication." (Class Opp., p. 1). Each of the named plaintiffs alleges that they paid more to finance their vehicles as a result of the Mark-Up Policy. (Class Memo., p. 22). Accordingly, the fact that some of the named plaintiffs entered into installment contracts under different circumstances will not defeat a finding of typicality, Caridad at 293, unless FMCC can demonstrate that the difference gives rise to a unique defense that threatens to become the focus of the litigation. Cromer Finance Ltd. v. Berger, 205 F.R.D. 113, 123 (S.D.N.Y. 2001) ("When a defense that is unique to a class representative threatens to dominate or even interfere with that plaintiff's ability to press the claims common to the class, then that threat must be analyzed with care."). Recognizing this, FMCC argues that several of the named plaintiffs are subject to "unique defenses," and are therefore unsuitable as class representatives.

(i) Raymond Whitley

Mr. Whitley signed a five-year installment contract when he purchased a used car from a Ford dealership in late 2001. In 2004, he traded in this car and purchased another from the same dealership. As a result, he did not pay "all the finance charges" associated with the installment contract, which plaintiffs have — apparently incorrectly — alleged to be $9,932. FMCC now contends that Mr. Whitley cannot claim that FMCC's lending practices had a disparate impact on him because he pre-paid some portion of his installment contract.

According to FMCC, this "pre-payment" defect will be found in "countless other" claims, specifically all those who "cannot claim disparate impact" because they sold or traded in their cars before the end of their installment contract. These yet to be identified claimants, like Mr. Whitley, "never paid the finance charge" complained about in this lawsuit. (Def. Supp. Memo., p. 14). As a result, according to FMCC this group of plaintiffs cannot "claim disparate impact based on what [they] might have paid" had the contract been paid to completion. ( Id.)

In this Circuit, a "unique defense" will disqualify a class representative only where it threatens to dominate or subsume the claims of the other class members at trial, such that it will become the "focus of litigation." Baffa v. Donaldson, Lufkin Jenrette Secs. Corp., 222 F.3d 52, 59 (2d Cir. 2000); Kline v. Wolf, 702 F.2d 400, 402-403 (2d Cir. 1983) (unique defenses are sufficient to disqualify class representatives where they can be raised and litigated at trial to the detriment of the entire class). Although pre-payment may be relevant to plaintiffs' disgorgement claim, it is difficult to see how it gives rise to a unique defense as long as some payments were made.

In any case, FMCC's argument at most suggests that efficiencies may result from subdividing plaintiffs' claims pursuant to Rule 23(c)(4). See Langner v. Brown, 1996 WL 709757 at *4 (S.D.N.Y. 1996) (certifying class despite existence of "questions about [plaintiffs'] adequacy that, if proven true, might impair his ability to represent the class," and noting that "those questions at this point in time do not preclude certification of the class.")

Accordingly, Mr. Whitley's claim is deemed typical of the class, as are the claims of all class members whose finance contracts were not carried to term.

(ii) Vincent E. Jackson

FMCC also attacks the typicality of Mr. Jackson's claim under Rule 23(a)(2), arguing that because he purchased his car from a Ford dealer more than four years before this case was filed, the two-year ECOA statute of limitations precludes his claim. (Class Opp., p. 14 citing 15 U.S.C. § 1691e(f)). Plaintiffs respond by claiming that the statute of limitations was tolled in Mr. Jackson's case because of FMCC's "deception and concealment" in not disclosing the rate differential and mark-up practices. (Second Amended Compl., ¶ 44 ("Am. Compl.")). Alternatively, plaintiffs allege that the limitations period was tolled because Mr. Jackson did not "discover" the purported ECOA violation until he met with his attorneys in 2000, shortly before this case was filed. ( Id., ¶ 69).

This issue has previously been considered and resolved, which means that the law of the case doctrine applies. The Court sees no reason to disturb Judge McKenna's decision that the ECOA limitations period was tolled with respect to Mr. Jackson's claim. In particular, Judge McKenna found that Mr. Jackson did not discover the alleged discrimination until he became involved with the present case. Jones, 2002 WL 88431 at *5 (S.D.N.Y. 2002). Accordingly, Mr. Jackson's claim is deemed typical of the class.

(iii) Demetris Chaney

FMCC focuses a great deal of attention on the typicality of Ms. Chaney's claims, contending that her financing transaction with FMCC is riddled with anomalies. Specifically, FMCC argues that Ms. Chaney's claim fails under Rule 23(a)(3) because (i) her father is a salesman at the dealership where she bought the car in question; (ii) the finance manager who negotiated the dealer "mark-up" on her installment sale contract was an acquaintance from church; (iii) the dealership in question actually lost money on the contract with Ms. Chaney; and (iv) Ms. Chaney's deal was initially structured such that no dealer "mark-up" existed at all.

FMCC further argues that the anomalies associated with Ms. Chaney's transaction are a harbinger of a much broader problem, namely, that the vagaries of mark-up decisions made by thousands of independent dealers make this case unsuitable for trial as a class action. (Class Opp., p. 13). For example, FMCC maintains that Ms. Chaney actually benefited from the 8.49% dealer mark-up associated with her sales contract because without it, the contract would not have been purchased. (Def. Sur-Reply, pp. 12-13). That is, FMCC maintains that Ms. Chaney's claims are not typical because she has no cognizable injury.

As initially presented to FMCC, Ms. Chaney's finance contract overvalued the car being purchased. In order to maintain the same profit on the sale, the dealership simply reduced the contract principal and increased the APR. Although this change had no effect when viewed from Ms. Chaney's perspective, FMCC maintains that Ms. Chaney personally benefited from it, and therefore argues that she is an inadequate class representative because she "benefited from the same acts alleged to be harmful to other members of the class." Pickett v. Iowa Beef Processors, 209 F.3d 1276, 1280 (11^th Cir. 2000).

This argument is not without merit, but has no bearing on the typicality of Ms. Chaney's claims. Rather, it is properly directed to the existence of business reasons sufficient to rebut plaintiffs' claims. That is to say, FMCC may be able to show that there are valid business reasons for the Mark-Up Policy, for example because it allows dealers flexibility in offering customer financing, as demonstrated by the facts of Ms. Chaney's purchase. Nonetheless, because it is well established that courts deciding motions for class certification are not consider the merits of plaintiffs' claims, Weigmann v. Glorious Food, Inc., 169 F.R.D. 280, 284 (S.D.N.Y. 1996), FMCC's argument on this point is properly disregarded at this stage.

However, the Court finds that Ms. Chaney's relationship with the dealership from which she purchased her car calls into question the typicality of her claim. FMCC will undoubtedly emphasize this relationship at trial, such that it threatens to "become the focus of the litigation," Baffa v. Donaldson, Lufkin Jenrette Secs. Corp., 222 F.3d 52, 59 (2d Cir. 2000), perhaps to the detriment of other class members. Kline v. Wolf, 702 F.2d 400, 402-403 (2d Cir. 1983) (unique defenses can be raised and litigated at trial to the detriment of the entire class). As a result, the Court finds that Ms. Chaney will not "fairly and adequately protect the interests of the class," Amchem Products, Inc. v. Windsor, 521 U.S. 591, 625 (1997), and she is stricken as a class representative.

(iv) The Suttons and Waters

FMCC also attacks the suitability of the Suttons and Waters as class representatives on the ground that their claims are subject to a unique defense. Specifically, FMCC alleges that objective factors were taken into account in determining the dealer "mark-up" of their APRs, which shows that the dealer "mark-up" determination is not based on "wholly subjective criteria." (Def. Supp. Memo., p. 14). This is not a "unique" defense; to the contrary, it is a recycled commonality argument, designed to support defendant's contention that the Mark-Up Policy is not "entirely subjective", and therefore not within reach of Falcon. Although the Court has considered — and rejected — that argument, supra, it will address this additional permutation for the sake of thoroughness.

FMCC pins this final attack on the Sixth Circuit's ruling in Bacon v. Honda of America, Mfg., Inc., 370 F.3d 565 (6^th Cir. 2004). In Bacon, plaintiff-employees of Honda brought a claim on behalf of all current and former African-American employees at Honda's four manufacturing plants located in central Ohio, alleging that the company uses discriminatory procedures for promoting employees in violation of Title VII of the Civil Rights Act of 1964. Plaintiffs claimed these procedures resulted in both disparate treatment and had a disparate impact. The Sixth Circuit upheld the district court's refusal to certify the class, noting that "we find it difficult to envisage a common policy regarding promotion that would affect [the proposed class members] all in the same manner." Id., at 571. Indeed, because Honda's promotional guidelines contained several objective criteria, "such as time in service, attendance records, and test scores," plaintiffs could not show that the promotion decisions were made "through an entirely subjective decision-making process," which the court concluded was necessary to prove commonality in disparate treatment claims under Falcon, 457 U.S. 147, 159 n. 15 (1982).

Bacon is distinguishable. The Bacon plaintiffs' disparate impact claims were not rejected on commonality grounds; rather the promotion claims were rejected because "plaintiffs [could not] show that the facially neutral policies regarding promotion affected them in a typical way because they opted out of the most common and reliable path of advancement." Bacon, at 574. As discussed, supra, the plaintiffs in this case have alleged that the Mark-Up Policy affected them in the same manner — namely, by forcing them to pay more than similarly situated Caucasians to finance vehicles with FMCC — and have therefore satisfied the typicality requirement. Similarly, the Bacon court noted that commonality requires that "the potential members of the class actually have something in common: they are subject to random decision-making." Id. Here, plaintiffs have alleged that FMCC's Mark-Up Policy affords dealers absolute discretion in marking up contracts. Of course, it may be, as defendant argues, that some dealers will consider objective criteria in making the mark-up determination. But the point is not that some consider objective factors, it is that none are required to, such that customers are subject to essentially "random decision-making". Thus, all class members are subject to the same inherently subjective process by which the mark-up, and hence final APR, is established.

For the above reasons, the Court finds that plaintiffs meet the Rule 23(a)(3) typicality requirement.

4. Adequacy

The Rule 23(a)(4) test for adequacy has undergone recent changes. The test originally encompassed two determinations, both that (i) the proposed class representatives have no conflicts of interest with other members of the class; and (ii) that the representatives' class counsel be well qualified, experienced and capable of handling the litigation in question. In re Visa Check/Mastermoney Antitrust Litig., 280 F.3d 124, 142 (2d Cir. 2001). However, the Advisory Committee Notes to the 2003 Amendments to Federal Rule 23(g), effective December 1, 2003, state that "Rule 23(a)(4) will continue to call for scrutiny of the proposed class representative, while [Rule 23(g)] will guide the court in assessing proposed class counsel as part of the certification decision." Thus, because Rule 23(a)(4) no longer governs the selection of class counsel, the Court will only address the adequacy of the proposed class representatives in this section.

Although "a court must be wary of a defendant's efforts to defeat representation of a class [on] grounds of inadequacy when the effect may be to eliminate any class representation," Kline v. Wolf, 702 F.2d 400, 402-403 (2d Cir. 1983), courts should "carefully scrutinize the adequacy of representation in all class actions." Eisen v. Carlisle Jacquelin, 391 F.2d 555, 562 (2d Cir. 1968). That scrutiny is generally directed to three areas. First, courts should consider whether the proposed plaintiffs are credible. Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 549 (1949) (class representative is a fiduciary, and interests of the class are "dependent upon his diligence, wisdom and integrity"); Kaplan v. Pomerantz, 132 F.R.D. 504, 510 (N.D. Ill. 1990) ("[a] plaintiff with credibility problems . . . does have interests antagonistic to the class.") (internal quotation marks omitted). Second, courts should consider whether the proposed plaintiffs have adequate knowledge of the case and are actively involved. Baffa, 222 F.3d 52, 61 (2d Cir. 2000) (recognizing knowledge as a factor to consider in determining class certification but noting that it is properly considered in connection with the "typicality" requirement of Rule 23(a)(3)). Finally, they should consider whether the interests of the proposed plaintiffs are in conflict with those of the rest of the class. Epifano v. Boardroom Business Products, Inc., 130 F.R.D. 295, 300 (S.D.N.Y. 1990) (noting that where defendants have claims for contribution against potential class representatives, their interests might conflict with those of the class).

FMCC attacks only one named plaintiff on adequacy grounds, Mr. Henry Wilson. In particular, FMCC contends that Mr. Wilson is not an adequate class representative because was convicted of rape in 1966. In this regard, FMCC considers it compelling that, although Mr. Wilson was "convicted by a jury," he had the temerity to maintain his innocence during his deposition in this case. (Def. Supp. Memo., p. 10). FMCC also notes that Mr. Wilson has a prior burglary conviction. ( Id.)

Courts that have disallowed prospective plaintiffs on the basis of prior convictions have done so only where a clear nexus existed between the conviction and the class claims. See, e.g., Weisman v. Darneille, 78 F.R.D. 669, 670 (S.D.N.Y. 1978) (where proposed class representative was previously convicted under Section 10(b) of the Securities and Exchange Act of 1934, he was not an adequate representative for subsequent claims brought thereunder); Maddock Starbuck, Ltd. v. British Airways, 97 F.R.D. 395, 396 (S.D.N.Y. 1983) (where proposed representative was convicted of an unrelated criminal offense after class certification procedures began, "both sides agree that the criminal activity [in question] prevent[ed] [the proposed representative] from satisfying th[e] [adequacy] requirement."); Daniels v. City of New York, 198 F.R.D. 409, 419 n. 9 (S.D.N.Y. 2001) (outstanding warrant did not disqualify proposed class representative, but was an issue that would be "fully explored" upon cross examination and may reflect on his credibility as a witness)

Although it is clear that Mr. Wilson has a troubled past, FMCC's attacks are properly disregarded. As the court noted in Jane B. by Martin v. N.Y.C. Dept. of Social Services, 117 F.R.D. 64 (S.D.N.Y. 1987), "the inquiry . . . into the representatives' personal qualities is not an examination into their moral righteousness, but rather an inquiry directed at improper or questionable conduct arising out of or touching upon the very prosecution of the lawsuit." Id. at 71 (citations omitted). In this case, Mr. Wilson's prior convictions by no means "touch upon" the class claims. He was arrested and convicted of rape in 1966, and was released in 1987 after serving 20 years of a 99 year sentence. (Wilson Dep. at 80-81). Prior to that, he was convicted of burglary, although during his deposition he couldn't remember the exact year of his conviction. ( Id.)

Since his release in 1987, Mr. Wilson has apparently been a model citizen, and otherwise satisfies the requirements of Rule 23(a). Thus, the Court finds Mr. Wilson to be an adequate class representative. As the court in Jane B. noted, if all persons whose moral character had been attacked or called into question at some point were precluded from acting as class representatives, "prisoners, mental patients, juvenile offenders or others capable of socially deviant behavior could never have an adequate representative and thus could never be certified." Jane B., at 71.

B. Rule 23(b)

Plaintiffs make a number of certification proposals under Rule 23(b). Their first proposal is that a class should be certified under Rule 23(b)(2) for purposes of declaratory and injunctive relief, along with disgorgement. Failing that, plaintiffs ask the Court to: (i) certify some or all of plaintiffs' claims under Fed.R.Civ.P. 23(b)(3); (ii) certify a hybrid class under Fed.R.Civ.P. 23(b)(2) and 23(b)(3); or (iii) bifurcate the claims and certify a 23(b)(2) class for purposes of declaratory and injunctive relief, reserving judgment on certification of a class for purposes of disgorgement.

Plaintiffs never seriously contend certification is appropriate under Rule 23(b)(3), which requires both that "questions of law or fact common to the members of the class predominate over any questions affecting only individual members", and that "a class action is superior to other available methods for the fair and efficient adjudication of the controversy." Fed.R.Civ.P. 23(b)(3). Indeed, plaintiffs limit their discussion of Rule 23(b)(3) to a single footnote in their opening memorandum of law, and have therefore not demonstrated — as they must — that common questions would "predominate" in this case, or that the class action device is the "superior" method of resolving their claims. For this reason, the Court finds that Rule 23(b)(3) certification is not warranted, and will limit its consideration to Rule 23(b)(2).

This is not to say that they haven't established the existence of common questions, as discussed, supra, in connection with Rule 23(a)(2).

With respect to a (b)(2) class, plaintiffs proposed at the November 12, 2004 hearing that the Court bifurcate their claims pursuant to Rule 23(c)(4) and certify a (b)(2) class for purposes of determining liability and the propriety of injunctive or declaratory relief. Plaintiffs' proposal — which sets aside their disgorgement claim — is an effort to avoid several questions regarding the availability of such relief under the (b)(2) structure. Before addressing those issues, the Court will consider whether some form of (b)(2) certification is appropriate by addressing FMCC's claim that — whichever proposal is considered — plaintiffs claims are so individualized that class treatment is unwarranted.

1. Rule 23(b)(2) — Generally

Certification under Rule 23(b)(2) is appropriate where "the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole." Fed.R.Civ.P. 23(b)(2). FMCC contends that this case is inappropriate for (b)(2) class treatment in any form because it "lump[s] together . . . millions of credit sales by thousands of independent dealers" on the "sole common link that Ford Credit . . . bough the resulting [financing] contracts." (Class Opp., p. 21). To support this argument, FMCC relies on the decision in Rodriguez v. Ford Motor Credit Co., where certification of a similar class was denied under both Rule 23(b)(2) and (b)(3). 2002 WL 655679 (N.D. Ill. April 19, 2002).

In Rodriguez, plaintiffs brought suit against FMCC on behalf of a group of Hispanic customers, alleging — as plaintiffs do here — that FMCC's mark-up policy violated the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq. The Rodriguez plaintiffs sought divided certification, proposing a 23(b)(2) class to resolve their claims for equitable relief, and a Rule 23(b)(3) class to resolve their claims for compensatory damages. Despite the request for relief-specific classes, the Rodriguez court was forced to test both classes against the formalities of Rule 23(b)(3) because under Seventh Circuit law, "mixed class actions that seek both equitable and compensatory relief must satisfy the formalities of Rule 23(b)(3)." Ameritech Benefit Plan Committee v. Communication Workers of America, 220 F.3d 814, 820 (7^th Cir. 2000).

Under this constraint, the Rodriguez court denied certification of either class because FMCC was entitled to explain any disparity in mark-up between Hispanic and Caucasian customers by identifying individualized factors. This essentially meant that FMCC would be entitled to an "individualized inquiry into the reasons for thousands of credit decisions" in presenting its defense at trial. Id. Thus, applying the Rule 23(b)(3) requirement that "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members," as it was required to do under Seventh Circuit law, the Rodriguez court denied certification.

FMCC argues that the Rodriguez court's analysis and resolution of plaintiffs' claim for (b)(2) certification is "unanswerable" because the facts are "indistinguishable" from this case. (Class Opp., p. 22). That is, FMCC is essentially arguing that "when [this Court] consider[s] both sides of the case and envision[s] the trial of [the] case, it [will be] clear that no class [can] be certified" because, as the Rodriguez court found, there would be too many individualized issues. ( Id., p. 23). This argument misunderstands the holding in Rodriguez. The court rejected plaintiffs' ECOA claims under Rule 23(b)(3), which clearly precludes certification where individual issues will outweigh common questions of law and fact at trial. Rule 23(b)(2) contains no such requirement.

FMCC recycles this argument several more times. For example, FMCC contends that it would be entitled at trial to "rebut every claim of discrimination by every class member, by showing that similarly situated whites fared no better" than did the class member at the dealership in question. (Class Opp., p. 25). Plaintiffs respond by maintaining that any "that statistical analysis is adequate and well accepted, and in this case can "control for" these individualized factors. The Court agrees that statistical evidence may establish disparate impact, and notes in this regard that the Second Circuit has explicitly approved the use of statistical evidence in discrimination cases where "the only available avenue of proof is the use of racial statistics." Caridad, 191 F.3d 283, 292 ( citing International Brotherhood of Teamsters 431 U.S. 324, 340 n. 20).

Finally, FMCC argues that declaratory and injunctive relief would not remedy the discriminatory impact claimed by plaintiffs, essentially because car dealers are free to sell installment contracts on the open market, and will simply switch to purchasers that allow discretionary mark-ups if the Court enjoins FMCC from continuing that practice. (Class Opp., p. 30). As discussed, supra, in connection with plaintiffs' standing, the Court finds that, as alleged, plaintiffs' injury is "likely to be redressed by the requested relief," because the Mark-Up Policy can be modified or even eliminated. It is of course a different question — and one not appropriately addressed on a motion for class certification — whether plaintiffs have, in fact, been injured by the Mark-Up Policy.

FMCC also challenges its status as an ECOA creditor, maintaining that this issue would overwhelm any other at trial. This argument was raised and settled on FMCC's motion to dismiss, Jones v. Ford Motor Credit Co., 2002 WL 88431 at *3 (S.D.N.Y. Jan. 22, 2002), and cannot be relitigated under the law-of-the-case doctrine.

Having determined that Rule 23(b)(2) certification of some kind is appropriate in this case, the Court now turns to the question of form.

2. Rule 23(b)(2) — Bifurcation

As noted, certification under Rule 23(b)(2) is appropriate where "the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole." Fed.R.Civ.P. 23(b)(2) (emphasis added). As suggested, supra, certification of a broad class that includes claims for disgorgement is problematic in that it would entail a form of monetary relief, which is not explicitly allowable under (b)(2). That is not to say that monetary relief is unavailable under Rule 23(b)(2). To the contrary, the drafters of Rule 23(b)(2) clearly contemplated that classes seeking monetary relief can be certified under (b)(2) in some circumstances. Specifically, the advisory committee notes to Rule 23(b)(2) note that the subsection "does not extend to cases in which the appropriate final relief relates exclusively or predominantly to money damages." Thus, in cases such as this, where monetary relief is sought in addition to declaratory and injunctive relief, the propriety of (b)(2) certification turns largely on one question: does the final relief relate "predominantly" to money damages?

Plaintiffs contend that "equitable" claims for disgorgement do not predominate over claims for injunctive and declaratory relief, relying on the Second Circuit's decision in Robinson v. Metro-North Commuter R.R. Co., 267 F.3d 147 (2d Cir. 2001). The Robinson plaintiffs were a group of African-American employees of Metro-North seeking certification of disparate treatment and disparate impact claims under (b)(2). The district court denied certification of the disparate treatment class on the ground that the requested relief related predominantly to damages, and rendered (b)(2) unavailable. The district court denied certification of the disparate impact class without articulating a reason. The Second Circuit reversed, ordering that the district court reconsider its disparate treatment ruling, but also observing that it was "plain" that "(b)(2) certification of disparate impact claims seeking both injunctive and equitable monetary relief remains appropriate." Id., at 169-170 (emphasis added).

Pointing to this statement, plaintiffs in this case argue that (b)(2) certification of all claims is appropriate under Robinson inasmuch as their claim for disgorgement is a form of "equitable monetary relief" akin to back or front pay. Their argument thus poses the question: is disgorgement "equitable monetary relief" as that term is used in Robinson? To be sure, there is no doubt that disgorgement has traditionally been considered as a form of equitable relief, despite the fact that it plainly involves monetary recovery. See, e.g., Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 352 (1998) (noting that actions for monetary relief such as disgorgement of improper profits are "equitable" in nature). As Justice White explained in Granfinanciera, S.A. v. Nordberg, 492 U.S. 33 (1989):

This Court has not accepted the view that any award of monetary relief must necessarily be legal relief. We have previously recognized that actions to disgorge improperly gained profits, to return funds rightfully belonging to another, or to submit specific funds wrongfully withheld, are all equitable actions — even though the relief they seek is monetary — because they are restitutionary in nature. Granfinanciera, at 86 (White, J. dissenting) (citations omitted).

But plaintiffs have not demonstrated that this is the typical case of "improperly gained profits"; nor have they addressed several threshold questions regarding disgorgement in this case. For one, plaintiffs fail to explain exactly how FMCC profits from the Mark-Up Policy, especially in light of the fact that most of the "gain" from the mark-up is returned to the dealer by way of the dealer reserve payment. Second, even if plaintiffs can identify the quality of FMCC's profit, they have not indicated how — if at all — it would be possible to quantify the gain. For example, would the profit simply be the aggregate of the gain on each of the several thousand transactions at issue in this case? Would FMCC be permitted to offset any gain with the costs associated with each transaction, or otherwise contest the alleged profit in each case? Even setting aside these questions, plaintiffs have not identified with any real specificity how the disgorgement would be distributed — for example, whether it would be pro rata, or a function of individual damages, or divided in some other fashion. For all of these reasons, the Court is not convinced that the Robinson court would have considered disgorgement to be the type of "equitable monetary relief" appropriately sought in a disparate impact case that is readily susceptible to (b)(2) class certification.

Subsequent to the Second Circuit's decision in Robinson, the Sixth Circuit held that (b)(2) certification is not appropriate where plaintiffs seek compensatory damages in a challenge to a dealer mark-up policy. Coleman v. General Motors Acceptance Corp., 296 F.3d 443 (6^th Cir. 2002). The Coleman court reasoned that — although there was an "apparent consensus that money damages are recoverable to some extent in a Rule 23(b)(2) class action", Id. at 447 — the "highly individualized" determinations necessary to the resolution of a compensatory damages claim would predominate over the claims for injunctive and declaratory relief. Id. As discussed, supra, the disgorgement claim in this case might also be "highly individualized", which would raise the same issues identified by the Coleman court as preclusive of (b)(2) certification.

Plaintiffs sought compensatory damages "limited to the amount [plaintiffs] overpaid as part of [their] Finance Charge Markup[s]." Coleman v. General Motors Acceptance Corp., 196 F.R.D. 315, 321 n. 13 (M.D. Tenn. 2000).

At least one court has reached the same conclusion. In Cason v. Nissan Motor Acceptance Corp., 212 F.R.D. 518, 520 (M.D. Tenn. 2002), as here, plaintiffs alleged ECOA violations, and sought certification of a Rule 23(b)(2) class for declaratory and injunctive relief, as well as disgorgement. The Cason plaintiffs argued that because disgorgement is an equitable remedy, "it will not interject individualized issues into the case," and is therefore appropriate relief for a Rule 23(b)(2) class. Cason, at 521. In the alternative, the Cason plaintiffs argued that the trial should be bifurcated, and requested certification of a Rule 23(b)(2) class for liability purposes only.

The Cason court rejected both arguments without determining whether disgorgement was an "appropriate remedy" in the case, and without resolving the issue of whether disgorgement should be considered an "equitable" remedy for purposes of Rule 23(b)(2). The court explained that:

Plaintiffs assert that disgorgement, unlike compensatory damages, is an equitable remedy and is measured by the wrongdoer's gain, with a goal of preventing unjust enrichment. . . . In this case, disgorgement, even if measured in the aggregate and based upon the wrongdoer's gain, is a request for money that will require individual determinations in order for any such award to be distributed to class members. . . . These required individualized determinations would diminish the efficiencies that would be created by adjudicating the disgorgement claims on a classwide basis.

Cason, at 521. The court concluded that it need not decide whether disgorgement is an equitable remedy, because whatever its nature, it "would predominate over declaratory and injunctive relief," and was therefore not recoverable under Rule 23(b)(2), which "does not extend to cases in which the appropriate final relief relates exclusively or predominantly to money damages." Id., at 522 ( quoting Coleman v. General Motors Acceptance Corp., 296 F.3d 443, 446 (6^th Cir. 2002)).

In the Second Circuit, however, compensatory damages (and by implication, disgorgement) remain available in a (b)(2) action where (1) the "positive weight or value [to the plaintiffs] of the injunctive or declaratory relief sought is predominant even though compensatory . . . damages are also claimed"; and (2) "class treatment would be efficient and manageable." Robinson, at 164. This ad hoc approach is to be distinguished from the "bright line" test adopted by at least three other circuits, where (b)(2) certification is limited to claims involving no more than "incidental damages." See, e.g., Allison v. Citgo Petroleum Corp., 151 F.3d 402, 415 (5th Cir. 1998); see also Barabin v. Aramark Corp., 2003 WL 355417, at *1-*2 (3d Cir. 2003) (adopting the Allison approach to incidental damages); Jefferson v. Ingersoll International Inc., 195 F.3d 894, 898 (7th Cir. 1999) (same).

Recognizing that this standard may be difficult to apply in practice, the Second Circuit attempted to narrow the inquiry, noting that "at a minimum," a court should satisfy itself that: "(1) even in the absence of a possible monetary recovery, reasonable plaintiffs would bring the suit to obtain the injunctive or declaratory relief sought; and (2) the injunctive or declaratory relief sought would be both reasonably necessary and appropriate were the plaintiffs to succeed on the merits." 267 F.3d, at 164.

Under the Allison approach, "incidental" damages are those "that flow directly from liability to the class as a whole on the claims forming the basis of the injunctive or declaratory relief," Allison, at 415; moreover, they "should at least be capable of computation by means of objective standards and not dependent in any significant way on the intangible, subjective differences of each class member's circumstances." Id.

Thus, under the Robinson balancing test, the Court must determine whether plaintiffs' claims for injunctive and declaratory relief are "predominant" in order to certify a (b)(2) class. For the reasons discussed, supra, the Court cannot say this to be true if plaintiffs are allowed to proceed as a (b)(2) class for purposes of seeking disgorgement. Accordingly, the Court finds that bifurcation is appropriate, both because litigating the first phase will clarify the issues in dispute, and will aid the Court in undertaking the ad hoc balancing determination announced in Robinson.

The remaining issue, then, is whether the requirements of Rule 23(c)(4) have been met. Rule 23(c)(4) provides flexibility to district courts considering class certification. Thus, "actions may be brought or maintained as a class action with respect to particular issues," or "a class may be divided into subclasses and each subclass treated as a class." Fed.R.Civ.P. 23(c)(4). Indeed, the Second Circuit has encouraged district courts to "take full advantage of [Rule 23(c)(4)] to certify separate issues in order . . . to reduce the range of disputed issues in complex litigation and achieve judicial efficiencies." Robinson, 267 F.3d 147, 167 (2d Cir. 2001) ( quoting In re A.H. Robins Co., 880 F.2d 709, 740 (4th Cir. 1989)). This flexibility, along with the ability of district courts to make post hoc modifications to a class after certification, "enhances the usefulness of the class-action device." Falcon, at 160.

In this case, the Court has determined that the flexibility offered by Rule 23(c)(4) is appropriately exercised. In reaching this decision, the Court is mindful of the fact that at least one court has declined to bifurcate a similar claim. Thus, in Cason v. Nissan Motor Acceptance Corp., 212 F.R.D. 518, 520, the court rejected plaintiffs' alternative proposal that a Rule 23(b)(2) class be certified for "for purposes of liability only", leaving "any decision on class certification for the purpose of relief until the liability trail is over." Cason, at 523. In the court's opinion, "[s]uch an approach would not be in the interest of judicial economy, fair to the Defendant, or practical in this particular case." Cason, at 523. Unfortunately, the Cason court did not explain how judicial economy, fairness, and practicality factored into its decision. Whatever the reasoning, this Court disagrees with the conclusion, primarily because certification of a liability class would not necessitate "deferring any decision . . . for the purpose of relief until the liability trial is over," Id., and would therefore not be a waste of judicial resources. To the contrary, injunctive and declaratory relief can be awarded at the conclusion of the "liability" phase of trial. Only claims for "individual relief", such as back or front pay, compensatory recovery, or possibly disgorgement, must await the "remedial" phase of disparate impact litigation. As the Second Circuit explained in Robinson:

Should the plaintiff succeed in establishing a Title VII disparate impact violation, the court may order prospective class-wide injunctive relief . . . [However], in order for an employee to obtain individual relief (e.g., back or front pay), an inquiry similar to the remedial stage of a pattern-or-practice disparate treatment claim is generally required.

Robinson, at 161; see also Latino Officers, 209 F.R.D. at 93 (certifying liability stage for class treatment and severing individual remedial stage); McReynolds v. Sodexho Marriott Services, Inc., 208 F.R.D. 428, 448-49 (bifurcating case and certifying class under (b)(2) for liability phase where plaintiffs requested monetary damages, including back pay); Morgan v. UPS, 169 F.R.D. 349, 358 (E.D.Mo. 1996) (severing issues of liability and injunctive relief from damages phase of class action under Title VII and section 1981).

To summarize, although this Circuit has made clear that (b)(2) certification of disparate impact claims "seeking both injunctive and equitable monetary relief remains appropriate," Robinson, at 169-170, for the reasons discussed above the Court finds that bifurcation of plaintiffs' claims is appropriate. The Court further finds that certification of a class for purposes of adjudicating FMCC's liability, and considering the propriety of injunctive and declaratory relief, is warranted under Rule 23(b)(2). Accordingly, the Court turns to the remaining issues, namely, the adequacy of class counsel, and the scope of the class.

Class Counsel

The law firms of Bernstein Litowitz Berger and Grossman ("Bernstein") and the Gilmore Law Offices ("Gilmore"), together with the National Consumer Law Center ("NCLC") seek appointment as class counsel in this case. (Class Reply, p. 14). (collectively, "Proposed Class Counsel"). FMCC vigorously opposes the appointment of all three, arguing that — for a variety of reasons — none are adequate under Fed.R.Civ.P. 23(g).

Although plaintiffs did not submit a formal application for Rule 23(g) appointment of class counsel with their October 5, 2004 renewed motion, the Court notes that "the materials submitted in support of the motion for class certification may suffice to justify appointment [of class counsel] so long as the information described in paragraph g(1)(C) is included," Fed.R.Civ.P. 23(g)(2) Advisory Committee's Note.

Rule 23(g) states, in relevant part:

(C) In appointing class counsel, the court (i) must consider:

• the work counsel has done in identifying or investigating potential claims in the action,

• counsel's experience in handling class actions, other complex litigation, and claims of the type asserted in the action,

• counsel's knowledge of the applicable law, and

• the resources counsel will commit to representing the class;

(ii) may consider any other matter pertinent to counsel's ability to fairly and adequately represent the interests of the class;

(iii) may direct potential class counsel to provide information on any subject pertinent to the appointment and to propose terms for attorney fees and nontaxable costs.

Fed.R.Civ.P. 23(g). Before beginning this analysis, the Court notes that although Rule 23(g) replaces the adequacy test as originally developed under Rule 23(a)(4), it largely incorporates the adequacy standards developed thereunder, which means that class counsel decisions premised on Rule 23(a)(4) remain relevant.

Although FMCC attacks the adequacy of each Proposed Class Counsel, the bulk of its attack is focused on Bernstein. In particular, FMCC strenuously urges the Court to take notice of events that occurred during an unrelated case heard in the Northern District of Illinois, Warnell v. Ford Motor Co., 205 F.Supp.2d 956 (N.D. Ill. 2002), involving Bernstein attorney Darnley D. Stewart ("Stewart"). Although the Court notes that it is not required to consider prior conduct under Rule 23(g), it may do so under subsection (1)(C)(ii), and will do so in this case.

FMCC cites Kingsepp v. Wesleyan University, 142 F.R.D. 597, 599 (S.D.N.Y. 1992) for the proposition that that this Court must examine the "skeletons in an attorney's closet" before reaching a decision on the matter. New Rule 23(g) contains no such requirement. To the contrary, subsection (1)(C)(ii) clearly indicates that such inquiries are undertaken at the discretion of the reviewing court.

At issue is the conduct of Stewart and another Bernstein attorney during the settlement phase of Warnell. Specifically, in the process of approving a settlement, Judge Bucklo discovered that Ms. Stewart and her partner failed to disclose that — in addition to the $3,000,000 in attorneys' fees set aside under the settlement award — they planned to enforce separate and independent contingency arrangements with plaintiffs, and sought to recover an additional $635,000 thereunder. In addition to taking judicial notice of the oversight and finding that it was "intentionally deceptive", 205 F.Supp.2d 956, 958-59, Judge Bucklo referred the matter to the disciplinary committee of the New York Bar Association.

Plaintiffs respond to this argument by urging the Court not to "take the bait," and argue that FMCC's only purpose in raising this argument is to "embarrass [Ms. Stewart] and prejudice" this Court. (Class Reply, p. 14). This argument misses the point of Rule 23(g), which invites consideration of "any other matter pertinent to counsel's ability to fairly and adequately represent the interests of the class." Fed.R.Civ.P. Rule 23(g)(1)(C)(ii). Past misconduct certainly reflects on the ability of counsel to fairly represent the interests of class members. See, e.g., Kingsepp, 142 F.R.D. 597, 600.

Relying on Judge Bucklo's finding, FMCC argues that neither Stewart not Bernstein are "adequate within the meaning of Rules 23(a)(4) and 23(g)." (Class Opp., p. 19). FMCC relies on Kingsepp v. Wesleyan University, 142 F.R.D. 597, 599 (S.D.N.Y. 1992) and Wagner v. Lehman Bros. Kuhn Loeb Inc., 646 F.Supp. 643, 662 (N.D. Ill. 1986) for the proposition that attorney misconduct is enough to preclude class representation. Although the Court agrees with the general proposition, and approves of the holdings of the cases cited by FMCC, neither is persuasive on the facts here.

In Kingsepp, 142 F.R.D. 597, 600, the court precluded an attorney from acting as class counsel under Rule 23(a)(4) because a review of "the body of federal caselaw involving" the attorney's conduct revealed that he had, inter alia, "failed to obey a judges orders, failed to heed a judge's instructions, failed to honor a settlement agreement, failed to comply with discovery orders, failed to adhere to filing requirements, and filed frivolous motions." Id. As a result, the attorney was "sanctioned under a variety of federal rules, admonished by several judges, and referred to the Disciplinary Board of the Supreme Court of Pennsylvania." Id. Bernstein's conduct — based as it is on one incident — falls far short of abuses described in Kingsepp.

Similarly, in Wagner v. Lehman Bros. Kuhn Loeb Inc., 646 F.Supp. 643 (N.D.Ill. 1986), the court prevented an attorney from acting as class counsel where he "professed [a] lack of concern" for the very class action in question, and committed a number of ethical violations, also in connection with the class action for which he sought appointment. Id., at 661. The conduct in question was so egregious, in fact, that the Wagner court was "tempted to dismiss the complaint in its entirety." Id., at 662. Thus, Wagner is distinguishable for at least two reasons; first, the conduct that warranted disqualification occurred in connection with the class action at issue; and second, the conduct was far more egregious than that of Bernstein in Warnell.

In any case, the record contains extensive evidence that all three Proposed Class Representatives are well qualified to act as class counsel in this case. Most important, each has previously served as class counsel in prior similar class cases brought under ECOA. (Class Reply, p. 14). The Court also notes that each has done extensive work in identifying or investigating potential claims in this action, and each has the resources necessary to carry the litigation to its natural conclusion. (Id., p. 15) Accordingly, the Court finds that all are adequate under Rule 23(g). The Court also notes that it will allow Stewart to proceed as attorney of record for Bernstein, but not because it considers the allegations against to be mere "bait," as plaintiffs suggest. Rather, the Court so holds because FMCC has not established that Stewart's conduct in the Warnell case is enough to preclude her participation in this case under Rule 23(g).

Class Definition and Geographic Scope

Plaintiffs seek certification of a nationwide class on the ground that FMCC's discretionary mark-up policy was implemented in the same general fashion across the country. Plaintiffs also maintain that all African-American customers who obtained nonrecourse financing from FMCC in the United States pursuant to FMCC's "Retail Plan-Automotive" since January 1, 1990 were injured by this policy.

The Supreme Court has noted that the certification of a nationwide class is within the sound discretion of district courts, at least in the first instance. Califano v. Yamasaki, 442 U.S. 682, 703, (1979). Courts in this Circuit addressing motions for nationwide certification in analogous situations have deemed three factors especially relevant to the determination, two of which are applicable here: "(1) [whether] a single policy prevails in several or all of defendant's subdivisions, or (2) that the subdivisions are not autonomous, or (3) where there are specific allegations pertaining to more than one location." Avagliano v. Sumitomo Shoji America, Inc., 103 F.R.D. 562, 579 (certifying class of employees in various branch offices pursuant to strong showing on the first and second factors) (citations omiited).

Based on the record to date, the Court finds that plaintiffs have made a strong showing with respect to the first and third factors. Accordingly, with the caveat that district courts are free to modify class determinations even after a certification order is entered, including by limiting their scope, the Court certifies the class as proposed by plaintiffs in this case. Falcon, at 160 ("Even after a certification order is entered, the judge remains free to modify it in the light of subsequent developments in the litigation."); see also Fed.R.Civ.P. 23(c)(1).

Conclusion

For the foregoing reasons, the Court orders that plaintiffs' renewed motion for class certification [128] is GRANTED pursuant to Federal Rules 23(b)(2) and 23(c)(4) for the limited purpose of determining whether FMCC is liable under 15 U.S.C. § 1691(a)(1), and, if so, for considering plaintiff's request for declaratory and injunctive relief. The liability class shall comprise "all African-American customers who obtained non-recourse financing from FMCC in the United States pursuant to Ford Credit's `Retail Plan — Automotive' between January 1, 1990 and the date of judgment." Named plaintiffs Vincent E. Jackson, Henry and Connie Wilson, Karlton and Jacqueline Sutton, Raymond Whitley, and Michael and Jacqueline Waters shall be liability class representatives, and Bernstein, Gilmore and NCLC shall be liability class counsel.

SO ORDERED.

Jones v. Ford Motor Credit Company

Summary

Opinion

MEMORANDUM OPINION AND ORDER

Introduction

Background

Procedural History

Discussion

A. Rule 23(a)

1. Rule 23(a)(1) — Numerosity

2. Rule 23(a)(2) — Commonality

3. Typicality

a. Class-Wide Arguments

b. Individual Plaintiffs

(i) Raymond Whitley

(ii) Vincent E. Jackson

(iii) Demetris Chaney

(iv) The Suttons and Waters

4. Adequacy

B. Rule 23(b)

1. Rule 23(b)(2) — Generally

2. Rule 23(b)(2) — Bifurcation

Class Counsel

Conclusion

Jones v. Ford Motor Credit Company

Jones v. Ford Motor Credit Company

Case Details

Citations

Citing Cases

Jones v. Ford Motor Credit Company

Summary

Opinion

MEMORANDUM OPINION AND ORDER

Introduction

Background

Procedural History

Discussion

A. Rule 23(a)

1. Rule 23(a)(1) — Numerosity

2. Rule 23(a)(2) — Commonality

3. Typicality

a. Class-Wide Arguments

b. Individual Plaintiffs

(i) Raymond Whitley

(ii) Vincent E. Jackson

(iii) Demetris Chaney

(iv) The Suttons and Waters

4. Adequacy

B. Rule 23(b)

1. Rule 23(b)(2) — Generally

2. Rule 23(b)(2) — Bifurcation

Class Counsel

Conclusion

Jones v. Ford Motor Credit Company

Jones v. Ford Motor Credit Company

Case Details

CitationsCopy Citation

Citing Cases

Citations