Latimore v. Citibank Federal Sav. Bank

Decision Date10 August 1998
Docket NumberNo. 97-3724,97-3724
PartiesHelen LATIMORE, Plaintiff-Appellant, v. CITIBANK FEDERAL SAVINGS BANK, Marcia Lundberg, and Ed Kernbauer, Defendants-Appellees.
CourtU.S. Court of Appeals — Seventh Circuit

Michael D. Gerstein, Chicago, IL, Edwin R. McCullough (argued), Chicago, IL, for Plaintiff-Appellant.

Robert J. Kriss (argued), Jeffrey S. Kinsler, Mayer, Brown & Platt, Chicago, IL, for Defendants-Appellees.

Before POSNER, Chief Judge, and CUDAHY and EASTERBROOK, Circuit Judges.

POSNER, Chief Judge.

Helen Latimore, a black woman, brought a suit charging racial discrimination in real estate lending by Citibank and two of its employees, in violation of an assortment of federal civil rights laws including the Equal Credit Opportunity Act, 15 U.S.C. § 1691(a)(1), and the Fair Housing Act, 42 U.S.C. §§ 3605(a), (b). The district court granted summary judgment for the defendants. Latimore's appeal requires us to consider what the prima facie case of credit discrimination is, that is, how much evidence a plaintiff must submit in order to withstand a motion for summary judgment. There is no reason to think that the answer will be different depending on the particular civil rights statute sued under.

Owner of a home in a largely black neighborhood on the south side of Chicago, Latimore applied to Citibank for a $51,000 loan secured by the home. She satisfied Citibank's standards for creditworthiness, but the bank's rules also required that the ratio of the appraised value of the security (Latimore's home) to the amount of the loan not exceed 75 percent. The bank's appraiser, defendant Kernbauer, appraised the property at only $45,000, yielding a loan-to-value ratio of 113 percent. When defendant Lundberg, the account executive handling Latimore's application, informed her that the appraised value of the home was too low to support a loan in the amount sought, Latimore told Lundberg that the house had been appraised less than a year earlier for $82,000. Lundberg asked Latimore for the appraisal report, and when Lundberg received it she sent it together with Kernbauer's report to the bank's appraisal review department. The department declined to overrule Kernbauer's appraisal, on the ground that the comparable sales on which the $82,000 appraisal had been based weren't really comparable, because they involved property more than six blocks from Latimore's home. And so Latimore did not receive the loan. Some months later she applied for a loan from another bank, which appraised her home at $79,000 and made her the loan, though for a smaller amount than she had sought from Citibank ($46,000 instead of $51,000) and at a one percent higher interest rate. The damages sought are the additional interest plus certain consequential damages.

In most discrimination cases, the plaintiff can establish a prima facie case either by presenting evidence of having been actually discriminated against on some forbidden ground such as race or by satisfying the McDonnell Douglas standard. See, e.g., McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973); Furnco Construction Corp. v. Waters, 438 U.S. 567, 98 S.Ct. 2943, 57 L.Ed.2d 957 (1978). Under that standard, in a typical case of employment discrimination, involving say the denial of a promotion to a black employee, the plaintiff would have to show only that he was qualified for the promotion and that a white got it instead, and the burden would then be on the employer to come forth with a noninvidious reason for why the white rather than the black got the promotion. Although the McDonnell Douglas standard originated and evolved in cases involving racial discrimination in employment, it has been extended to all sorts of other discrimination not even limited to the employment setting. See, e.g., Coco v. Elmwood Care, Inc., 128 F.3d 1177 (7th Cir.1997); Leffel v. Valley Financial Services, 113 F.3d 787, 792 (7th Cir.1997); Hornick v. Noyes, 708 F.2d 321, 325 n. 8 (7th Cir.1983); Teahan v. Metro-North Commuter R. Co., 951 F.2d 511, 514 (2d Cir.1991); Lipsett v. University of Puerto Rico, 864 F.2d 881, 896-97, 899 (1st Cir.1988). So numerous are these extensions that we were not surprised when the bank's counsel invited us to use McDonnell Douglas as a template in credit discrimination cases as well.

The propriety of such use was assumed in Simms v. First Gibraltar Bank, 83 F.3d 1546, 1558 (5th Cir.1996); Moore v. U.S. Dept. of Agriculture, 55 F.3d 991, 995 (5th Cir.1995), and Ring v. First Interstate Mortgage, Inc., 984 F.2d 924, 926 (8th Cir.1993). But it was not discussed and wholesale transposition of the McDonnell Douglas standard to the credit discrimination context would display insensitivity to the thinking behind the standard. Normally the burden of producing evidence of each element of the plaintiff's claim is on the plaintiff. There has to be a reason for shifting the burden to the defendant. It is not reason enough that essential evidence is in the defendant's possession and would be difficult for the plaintiff, even with the aid of modern pretrial discovery, to dig out of the defendant. Before the defendant may be put to the burden of producing evidence, the plaintiff has to show that there is some ground for suspecting that the defendant has indeed violated the plaintiff's rights. Otherwise we would have a regime of precomplaint discovery. Anyone could put anyone else to the burden of producing evidence without having anything better than a hope and a prayer that the evidence would establish a violation. Cf. Bruce L. Hay, "Allocating the Burden of Proof," 72 Ind. L.J. 651 (1997).

The fact that a qualified black is passed over for promotion in favor of a white has been thought sufficiently suspicious to place on the defendant the minimum burden of presenting a noninvidious reason why the black lost out. But it is the competitive situation--the black facing off as it were against the white--that creates the (minimal) suspicion, and there is no comparable competitive situation in the usual allegation of credit discrimination. Latimore was not competing with a white person for a $51,000 loan. A bank does not announce, "We are making a $51,000 real estate loan today; please submit your applications, and we'll choose the application that we like best and give that applicant the loan." If a bank did that, and a black and a white each submitted an application, and the black's application satisfied the bank's criteria of creditworthiness and value-to-loan ratio yet the white received the loan, we would have a situation roughly parallel to that of a McDonnell Douglas case. And when we have an approximation to such a situation, a variant of the McDonnell Douglas standard may apply, as we shall see. But such cases are rare, and this is not one of them. The Supreme Court has reminded us that McDonnell Douglas was not intended to be a straitjacket into which every discrimination case must be forced kicking and screaming. See, e.g., McDonnell Douglas Corp. v. Green, supra, 411 U.S. at 802 n. 13, 93 S.Ct. 1817; U.S. Postal Service Bd. of Governors v. Aikens, 460 U.S. 711, 715, 103 S.Ct. 1478, 75 L.Ed.2d 403 (1983). In Diaz v. Fort Wayne Foundry Corp., 131 F.3d 711, 712-13 (7th Cir.1997), we pointed out the unsuitability of the McDonnell Douglas framework when there is no basis for comparing the defendant's treatment of the plaintiff with the defendant's treatment of other, similarly situated persons.

The reason the bank--the (principal) defendant--urges adoption of the standard is that it construes it to require that Latimore show not only that she was creditworthy by the bank's standards, which she was, but also that she satisfied the bank's appraiser, which she did not, about the value of her house. There is no question that to be a qualified borrower--the counterpart to a worker who is performing to his employer's satisfaction in the employment discrimination context (an element of the prima facie case that we emphasized in Coco v. Elmwood Care, Inc., supra, 128 F.3d at 1179-80)-the plaintiff has to meet the lender's requirements for collateral as well as to establish personal creditworthiness. But Citibank does not require that the borrower satisfy its appraiser; it requires only that the appraised value bear a specified relation to the amount of the loan sought, and the opinion of its own appraiser is not conclusive evidence of that value. The bank is willing to consider evidence from other sources and to overrule its own appraiser. The bank's appraisal review department could have overruled Kernbauer; that's why the bank has an appraisal review department.

Latimore argues, in her own variant of McDonnell Douglas (so strong is the magnetic field of that opinion), that all she had to show in order to withstand summary judgment was that her house was in a minority neighborhood, an appraisal (but not necessarily the defendant's) estimated the value of the house to be at least as great as the loan, the plaintiff was creditworthy, yet the loan was rejected. This cannot be right either, and...

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