Munoz v. PHH Mortg. Corp.
| Docket Number | 1:08-cv-00759-MMB-BAM |
| Decision Date | 31 January 2022 |
| Parties | EFRAIN MUNOZ, individually and on behalf of all others similarly situated, et al., Plaintiffs, v. PHH MORTGAGE CORPORATION, et al., Defendants. |
| Court | U.S. District Court — Eastern District of California |
ORDER DENYING MOTION TO MODIFY PRETRIAL ORDER DENYING MOTION TO STRIKE AS MOOT, AND DENYING MOTION TO DECERTIFY WITHOUT PREJUDICE
Defendants move to decertify the class, ECF 462, and Plaintiffs oppose ECF 467. As part of their response, Plaintiffs filed-without seeking leave- the expert report of Professor Robert E. Hoyt (Hoyt Report) (ECF 467-3) and a joint report to Congress in 1972 by the Veterans Administration and the Department of Housing and Urban Development (Joint Report) (ECF 467-2). As these submissions do not satisfy the final pretrial order's strict criteria for late witness and exhibit disclosures, see ECF 456, the court construes them as a de facto motion under Federal Rule of Civil Procedure 16(e) to modify the final pretrial order to include (i) Professor Hoyt among Plaintiffs' trial witnesses and (ii) the Joint Report among Plaintiffs' trial exhibits. For the reasons explained below, the court DENIES Plaintiffs' de facto motion to so modify the pretrial order, consequently DENIES as moot Defendants' motion to strike the Hoyt Report and the Joint Report, and further DENIES without prejudice Defendants' motion to decertify the class.
Plaintiffs commenced this action on June 2, 2008. ECF 1. Plaintiffs' first amended complaint, brought on behalf of a class of similarly situated homeowners, alleges that Defendants various affiliated mortgage lenders (collectively PHH) and their captive reinsurer (Atrium), violated the Real Estate Settlement Procedures Act of 1974 (RESPA), 12 U.S.C. § 2601 et seq., by receiving kickbacks from private mortgage insurers to which PHH referred Plaintiffs' business. See ECF 96, ¶¶ 1-7. The court certified the class on June 11, 2015. ECF 288.
In the meantime, one week after fact discovery closed on May 9, 2016, ECF 330, and more than two months before expert discovery closed on August 6, 2016, id., the Supreme Court in Spokeo, Inc. v. Robins, 578 U.S. 330 (2016) (Spokeo I), abrogated Ninth Circuit precedent holding that insofar as “RESPA gives [a] [p]laintiff a cause of action, ” such a plaintiff “has standing to pursue her claims.” Edwards v. First Am. Corp., 610 F.3d 514, 517 (9th Cir. 2010).
In Spokeo I, the Supreme Court held that a plaintiff “cannot satisfy the demands of Article III by alleging a bare procedural violation, ” because such a violation “may result in no harm.” 578 U.S. at 342. “Article III standing requires a concrete injury even in the context of a statutory violation.” Id. at 341. In so holding, the Court vacated the decision below, which in turn relied on Edwards. See id. at 336 & n.5 (characterizing the decision below as “ Edwards).[1]
The Supreme Court acknowledged that “ ‘[c]oncrete' is not, however, necessarily synonymous with ‘tangible.' ” Id. at 340. This meant that Id. at 342 (emphasis in original) (citing Fed. Election Comm'n v. Akins, 524 U.S. 11, 20- 25 (1998), and Pub. Citizen v. Dep't of Justice, 491 U.S. 440, 449 (1989)).[2] The Court accordingly remanded the case to the Ninth Circuit because its “standing analysis was incomplete.” Id. at 342. The Supreme Court instructed the court of appeals to determine whether the alleged procedural violations of the Fair Credit Reporting Act (FCRA) met “the concreteness requirement.” Id. at 343.
On remand the next year, the Ninth Circuit read Spokeo I as holding that “even when a statute has allegedly been violated, Article III requires such violation to have caused some real-as opposed to purely legal-harm to the plaintiff.” Robins v. Spokeo, Inc., 867 F.3d 1108, 1112 (9th Cir. 2017) (Spokeo II) (emphasis added). From that principle, the court of appeals held that standing to assert a statutory violation requires a plaintiff to establish (1) that “the statutory provision[ ] at issue [was] established to protect [the plaintiff's] concrete interests (as opposed to purely procedural rights), and if so, (2) [that] the specific procedural violation[ ] alleged . . . actually harm[s], or present a material risk of harm to, such interests.” Id. at 1113. Applying that test in the case before it, the court found that the FCRA procedures at issue “were crafted to protect consumers' (like Robins's) concrete interest in accurate credit reporting about themselves, ” id. at 1115, and that the alleged violation-publication on the Internet of inaccurate information relevant to potential employers- harmed that concrete interest. Id. at 1115-17.
Id. at 983 () (ECF 417, at 44).
On May 24, 2021, the court completed its pretrial conference. ECF 450. On June 11, 2021, the court issued a final pretrial order. ECF 456. Among other things, the final pretrial order set a trial date of February 15, 2022, id. at 13, and identified each side's trial witnesses and exhibits, id. at 15 (Plaintiffs' witnesses), 17 (Defendants' witnesses), 19 (Plaintiffs' exhibits), 35 (Defendants' exhibits). Plaintiffs' witnesses did not include Professor Hoyt, nor did their exhibits include the Joint Report.
Two weeks after entry of the final pretrial order, the Supreme Court decided TransUnion LLC v. Ramirez, 141 S.Ct. 2190 (2021). As relevant here, the Court in TransUnion reiterated Spokeo I's principle that “[o]nly those plaintiffs who have been concretely harmed by a defendant's statutory violation may sue that private defendant over that violation in federal court.” Id. at 2205 (emphasis in original). Applying that principle in the context of asserted informational injury, the Court held that a plaintiff class lacked standing to recover for violation of the FCRA's disclosure requirements, because at trial the plaintiffs adduced no evidence of downstream harm caused by the violations. Id. at 2213-14.
As examples of such “downstream consequences, ” the Court in TransUnion observed that the plaintiffs failed to put forth any evidence that they would have tried to correct their credit reports had the defendant made the required disclosures. Id. Nor did plaintiffs present evidence “that the alleged information deficit hindered their ability to correct erroneous information before it was later sent to third parties.” Id. at 2214. The Court held that “[a]n asserted informational injury that causes no adverse effects cannot satisfy Article III.” Id. (cleaned up).
On October 20, 2021, Defendants in this case moved to decertify the class based on TransUnion. ECF 462. Plaintiffs' response to this motion on November 17, 2021, included the Hoyt Report. See ECF 467, at 17 (describing Professor Hoyt's qualifications and stating that he would opine “that the captive reinsurance agreements utilized by Defendants-which do not involve a real risk transfer-increased transaction costs and in turn increased the premiums paid for primary mortgage insurance by Class Members”); see also ECF 467-3 (Hoyt Report). Plaintiffs also submitted the Joint Report. See ECF 467, at 15-16 & n.13 (); see also ECF 467-2 (Joint Report). Plaintiffs made no effort to justify these submissions, either under the final pretrial order's late disclosure provisions or otherwise.
Defendants moved to strike both the Hoyt Report and the Joint Report. ECF 475. Plaintiffs opposed, ECF 499, and Defendants replied, ECF 503.
The final pretrial order prohibits the use at trial of “undisclosed witnesses” and “undisclosed exhibits” “for any purpose, including impeachment or rebuttal, ” unless the undisclosed witness or exhibit qualifies under either of two separate pathways. See ECF 456, at 10 (witnesses), 11 (exhibits) (emphasis and double emphasis in original). The court considers each of these pathways in turn.
The first pathway for a party proffering an undisclosed witness is to “demonstrate[ ] that the” witness “is for the purpose of rebutting evidence that could not be reasonably anticipated at the pretrial conference.” ECF 456, at 10. The standard is materially the same for late-disclosed exhibits. See id. at 11.
Plaintiffs argue that at the time of the pretrial conference, they could not have reasonably anticipated any need to rebut the deposition testimony of their own experts that Plaintiffs suffered no economic injury from captive reinsurance agreements. See ECF 499, at 9 & n.6. This is because, according to Plaintiffs, “[p]rior to TransUnion, Plaintiffs were not required to make a showing of such harm but instead could rely...
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