Love v. Johanns

• Decision Date: 03 March 2006
• Docket Number: No. 04-5449.,No. 05-5084.,04-5449.,05-5084.
• Citation: 439 F.3d 723
• Parties: Rosemary LOVE, et al., Appellants v. Michael JOHANNS, Secretary, U.S. Department of Agriculture Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

439 F.3d 723

Rosemary LOVE, et al., Appellants v. Michael JOHANNS, Secretary, U.S. Department of Agriculture Appellee.

No. 04-5449.

No. 05-5084.

United States Court of Appeals, District of Columbia Circuit.

Argued February 6, 2006.

Decided March 3, 2006.

Appeals from the United States District Court for the District of Columbia (No. 00cv02502).

Marc L. Fleischaker argued the cause for appellants. With him on the briefs were Barbara S. Wahl and Kristine J. Dunne.

Pamela Coukos and Michael Foreman were on the brief of amici curiae The Impact Fund, et al. in support of appellants. Steven A. Skalet entered an appearance.

Dina R. Lassow and Paul M. Smith were on the brief of amici curiae National Women's Law Center and National Partnership for Women & Families in support of appellants.

Charles W. Scarborough, Attorney, U.S. Department of Justice, argued the cause for appellee. With him on the brief were Peter D. Keisler, Assistant Attorney General, Kenneth L. Wainstein, U.S. Attorney, and Robert M. Loeb, Attorney.

Shay Dvoretzky argued the cause for amicus curiae Chamber of Commerce of the United States of America in support of appellee. With him on the brief were Glen D. Nager, Jason J. Jarvis, and Robin S. Conrad.

Before: SENTELLE and HENDERSON, Circuit Judges, and EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge.

Rosemary Love and nine other female farmers appeal from the denial of their motion for class certification. Appellants claim, on behalf of themselves and "not less than 3,000" similarly situated women, that the United States Department of Agriculture ("USDA" or "the Department") discriminatorily administered its lending programs, and that the Department failed to process and properly investigate women's discrimination complaints over the last quarter-century. Because we conclude the District Court did not abuse its discretion in denying the Appellants' motion for class certification and did not err in dismissing the failure-to-investigate claim, we affirm in part. However, because the Appellants' claim under the Administrative Procedure Act, 5 U.S.C. § 706(2)(A) ("APA"), remains largely unbriefed, we remand in part.

I. INTRODUCTION

The Appellants allege the USDA has engaged in a nationwide "pattern or practice" of discrimination, dating back to 1981.¹ Specifically, the Appellants' first claim — hereinafter the "discrimination claim" — is that the Department violated the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691-1691f ("ECOA" or "the Act") by employing subjective loan-making criteria, which enabled decentralized decision-makers to discriminate amongst loan applicants on the basis of gender. The Appellants' second claim — hereinafter the "failure-to-investigate claim" — is that the Department violated both ECOA and the APA by systematically dismantling its complaint-processing systems and failing to investigate discrimination claims filed by women farmers.

A

The USDA administers its farm loan and subsidy programs through the Farm Service Agency ("FSA").² The FSA makes several different types of loans, including "farm ownership" loans, which assist farmers in buying or improving farm property, 7 C.F.R. pt. 1943, "operating" loans, which provide credit and management assistance to help farmers run their farms, id. pt. 1941, and "emergency" loans, which help farmers resume operations after a disaster, id. pt. 1945. Under the USDA's regulations, a farmer seeking a farm credit or benefit must first ask the Department for a loan application, which the USDA is required to disburse. See id. § 1910.4(b) ("All persons requesting an application will be provided [one].").

After receiving an application, a farmer is then required to submit her completed application to a local county committee, the members of which are selected by other farmers from that county. See Pigford v. Glickman, 206 F.3d 1212, 1214 (D.C. Cir. 2000). The local county committee initially determines whether the applicant is eligible for the program, and USDA staff members ultimately grant or deny the application. See 7 C.F.R. §§ 1910.5, 1910.4(i). The USDA has promulgated criteria upon which the local committees are to rely in making eligibility decisions, including citizenship, legal capacity, education and farming experience, farm size, inability to obtain sufficient credit elsewhere, and "character" (which emphasizes credit history and reliability). See id. §§ 1941.12 (operating loan criteria), 1943.12(a) (ownership loan criteria), 764.4 (emergency loan criteria).

Any farmer who believes the USDA denied her application for a program loan or benefit on the basis of gender or any other prohibited basis may file a civil rights complaint with the Secretary of the USDA and/or the USDA's Office of Civil Rights ("OCR"). See id. § 15.6. The Department and/or OCR may then conduct an investigation and institute compliance proceedings, if needed. See id. §§ 15.8-.10. To effectuate compliance, the Secretary may refer the matter to the Department of Justice or institute any other applicable proceedings under state or local law. Id. § 15.8(a).

If a farmer is dissatisfied with the USDA's response to her discrimination complaint, she may sue in federal court under ECOA. The Act makes it "unlawful for any creditor to discriminate against any applicant with respect to any aspect of a credit transaction . . . on the basis of race, color, religion, national origin, sex or marital status, or age." 15 U.S.C. § 1691(a). ECOA creates a private right of action against creditors, including the United States, who violate its anti-discrimination provisions, and it makes such creditors "liable to the aggrieved applicant for any actual damages sustained by such applicant acting either in an individual capacity or as a member of a class." Id. § 1691e(a). Exhaustion of administrative remedies is not required before an ECOA suit may be filed, and prevailing Appellants may recover attorney's fees. Id. § 1691e(d).

B

The Appellants filed a three-count complaint in the United States District Court for the District of Columbia, seeking $3 billion in money damages under ECOA, as well as both compensatory and equitable relief under the APA and the Declaratory Judgment Act, 28 U.S.C. § 2201(a). To buttress their claims, the Appellants filed 1,823 declarations, which purported to show that the Department "allowed, indeed supported, unconscionable disparate impact [through USDA's lending programs] around the country." The Appellants' statistics expert, Patrick M. O'Brien, also filed a report, which purported to provide empirical evidence of "the adverse affects [sic] of a discriminatory system." The Department moved to dismiss the complaint under FED. R. CIV. P. 12(b)(6), and the Appellants moved for class certification under FED. R. CIV. P. 23.

Before ruling on the propriety of class certification, the District Court dismissed the Appellants' failure-to-investigate claim on three grounds. First, the District Court concluded that the USDA's failure to investigate the Appellants' complaints did not constitute a "credit transaction" within the meaning of ECOA, 15 U.S.C. § 1691(a). Second, the court held the APA's "abuse of discretion" standard does not cover the USDA's failure to investigate Appellants' complaints because ECOA provided an alternative "adequate remedy." Third, the District Court concluded Appellants' claims for money damages arising from the USDA's failure to investigate their complaints are barred by the doctrine of sovereign immunity.

In light of the court's dismissal of the failure-to-investigate claim, the Appellants based their motion for class certification solely upon their discrimination claim. Accordingly, the Appellants filed an amended complaint, along with a renewed motion for certification of two subclasses. "Subclass 1" consists of female farmers who asked for loan application forms but did not receive them. "Subclass 2" consists of female farmers who received, completed, and submitted their loan application forms but did not garner a loan. The amended complaint also dropped the Appellants' demand for $3 billion in damages and asked only for "compensatory damages appropriate for proof at trial."

The District Court denied the Appellants' renewed motion to certify the class on three grounds. First, the court concluded that the Appellants failed to satisfy Rule 23(a)'s commonality requirement because there had not "been a substantial showing that would permit the inference that members of the class suffered from a common policy of discrimination that pervaded all of the challenged decisions." Second, the court concluded that the class could not be certified under Rule 23(b)(2) because the claims for monetary relief predominated over the claims for equitable relief. Third, the court concluded the class could not be certified under Rule 23(b)(3) for the same reason it did not satisfy Rule 23(a)'s commonality requirement: The Appellants "adduced no evidence. . . establishing that it is or ever was actually USDA policy to refuse to give loan application forms to women," and individual justifications for any loan denials would predominate over questions common to the putative class.

The District Court stayed the proceedings so that the Appellants could seek interlocutory review of the denial of class certification on their discrimination claim, as well as the dismissal of their failure-to-investigate claim. In our discretion, we granted the Appellants' petitions for interlocutory review of the class certification denial. We have jurisdiction over the District Court's dismissal of their failure-to-investigate claim under 28 U.S.C. § 1292(b). See FED. R. CIV. P. 23(f); In re Lorazepam & Clorazepate Antitrust Litig., 289 F.3d 98, 105-06 (D.C. Cir. 2002). The parties (with the help of three amici curiae) then fully briefed and argued both issues before a merits panel. Compare ...