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GARCIA v. VENEMAN

GUADALUPE L. GARCIA, et al., Plaintiffs,
v.
ANN V. VENEMAN, Secretary, United States Department of Agriculture, Defendant.



The opinion of the court was delivered by: JAMES ROBERTSON, District Judge

MEMORANDUM ORDER DENYING CLASS CERTIFICATION

This case presents claims of discrimination by Hispanic farmers nationwide who in various ways were denied USDA creditand non-credit benefits over a period of some twenty years. Before the Court for the second time is the question of whether the case may be certified as a class action. When the question was first presented, by a motion for class certification filed in April 2002, the answer was in the negative, because plaintiffs had not shown, nor did it appear from the record that they could show, a common question of law or fact within the meaning of Fed.R. Civ. P. 23(a). Garcia v. Veneman, 211 F.R.D. 15 (D.D.C. 2002) ("Garcia I"). Plaintiffs noticed an appeal from that order but withdrew the appeal when they were given leave to conduct limited discovery and invited to supplement their motion, Tr. of Jan. 15, 2003 Status Hr'g, at 2. Plaintiffs have now conducted further discovery — although the discovery has by no means been as broad and searching as they wished — and they have presented a supplemental brief on the issue of commonality, which I have treated as a renewed motion for class certification. Because I have concluded that plaintiffs' showing is still insufficient to establish the prerequisites for class certification established by Rules 23(a)(2), 23(b)(2), and 23(b)(3), and that further discovery is unlikely to change the picture, I am today issuing a second order denying class certification. This ruling, taken together with my earlier ruling that plaintiffs' claim of failure to investigate did not state a claim under the Equal Credit Opportunity Act, 15 U.S.C. §§ 1691 et. seq. (ECOA), or the Administrative Procedure Act, 5 U.S.C. §§ 701 et. seq., see Mem. Order of Mar. 20, 2002, so fundamentally alters the posture of this case that plaintiffs will presumably seek an interlocutory appeal.*fn1 I will accordingly issue a sua sponte order staying proceedings in this Court so that plaintiffs may seek appellate review of the class certification question. See Fed.R. Civ. P. 23(f). If asked to do so, I will also certify my Memorandum Order of March 20, 2002 pursuant to 28 U.S.C. § 1292(b).

Analysis

  This Memorandum Order is intended to pick up where Garcia I left off, and it should be read in conjunction with that ruling.

  1. Proceedings since Garcia I

  In Garcia I, I acknowledged the possibility that statistical analysis demonstrating that Hispanic farmers were disproportionately denied credit or non-credit benefits on subjective grounds, such as "character" or "commitment," might support a finding of commonality. At a status conference held on December 18, 2002, shortly after the issuance of Garcia I, I noted that certification would require more than anecdotal evidence (the plural of "anecdotes" is not "data"). I said I thought there must be a way to test plaintiffs' hypothesis without inspecting the files of 2700 local offices, and I encouraged plaintiffs to develop a modest discovery plan designed to link USDA's data to what plaintiffs claimed were subjective USDA criteria. At a subsequent status conference, on January 15, 2003, plaintiffs asserted their need for up to 25 depositions and 50 interrogatories, stating that these would involve individuals in the six states where most of the named plaintiffs reside (Texas, California, New Mexico, Florida, Washington, and Colorado). Plaintiffs also wanted to take Rule 30(b)(6) depositions of USDA persons who designed the databases that USDA has said contain all the data that has been captured on its benefit programs, but that plaintiffs already considered nearly useless for their purposes. At that time, I noted that I was trying to find a balance between plaintiffs' legitimate need to take discovery, if they had a colorable commonality claim, and the government's legitimate assertion of burdensomeness. I directed plaintiffs to serve their discovery so that I could evaluate any government objections.

  At a status conference held on April 29, 2003, I noted again that there had to be a way to develop a discovery plan that would produce a good random sample. On July 15, 2003, government counsel asserted an inability to fashion such a sample and pointed to the databases that the government had already produced. Plaintiffs' counsel complained that the databases were completely unhelpful because they did not indicate why a particular application had been denied. Tr. of Jan. 15, 2003 Status Hr'g, at 5-6. The government finally produced the loan and disaster benefit files of some 37 of the approximately 110 named plaintiffs. I instructed plaintiffs' counsel to examine those files and to advise me whether "there is in those materials a colorable basis on which plaintiffs can assert that . . . a substantial number of [the named plaintiffs] were rejected for loans or benefits on grounds that are the kinds of subjective grounds that plaintiff[s] assert[] [they] can establish commonality for." Id. at 22. I suggested that, upon such a showing, I might permit further discovery of other files to provide a basis for a more rigorous statistical comparison. I did not lay down a bright line definition of what I thought would be substantial, but I suggested that 25 out of 37 might be satisfactory while 5 out of 37 would probably not be. Id. at 22-23.

  2. Plaintiffs' submission

  In their supplemental brief on the issue of commonality filed on December 5, 2003, plaintiffs reviewed the results of the discovery they had taken. They submitted that they had demonstrated commonality with respect to both disparate impact and disparate treatment claims, and they urged that, should I find otherwise, they be permitted further, broad-ranging discovery.

  Plaintiffs' disparate impact theory is that the overall operation of USDA's farm credit and non-credit benefit programs is "one practice" (or that it must be so considered because USDA's failure to collect and maintain data makes it impossible to analyze the effect of separate components); that this "one practice" has had an adverse impact upon Hispanic farmers, as shown by discovery to date; and that class certification is appropriate because this "one practice" is subjective enough to come within any but the most rigid construction of the Supreme Court's dicta in General Telephone Co. of the Southwest v. Falcon, 457 U.S. 147, 159 n. 15 (1982). Plaintiffs' disparate treatment theory asserts that USDA is itself the "single actor" responsible for a pattern and practice of discrimination against Hispanic farmers (because USDA has acquiesced in or ratified notoriously subjective and discriminatory practices of local offices and county commissioners), and that the sampling of evidence plaintiffs have been able to gather from the files they have examined reveals five sub-patterns of discrimination, any one of which would also support a finding sufficient to satisfy the commonality requirement of Rule 23(a)(2): (I) refusal to provide Hispanic farmers with loan applications or assistance in completing applications; (ii) subjecting Hispanic farmers to protracted delays in processing and funding their loans; (iii) using subjective criteria to reject the applications of Hispanic farmers; (iv) unnecessarily subjecting Hispanic farmers to the inconvenience of supervised bank accounts; and (v) delaying or denying loan servicing for Hispanic farmers.

  At the same time that they submitted their supplemental brief, plaintiffs moved for leave to file a third amended complaint, setting forth five subclasses of Hispanic farmers, drawn to fit the sub-patterns plaintiffs claim to have discovered. Pls.' Proposed Third Am. Class Action Compl., ¶ 103.*fn2

  3. Disparate impact theory

  The plaintiff in a disparate impact case must "isolat[e] and identif[y] the specific employment practices that are allegedly responsible for any observed statistical disparities," Watson v. Fort Worth Bank and Trust, 487 U.S. 977, 994 (1988). Plaintiffs have sought to finesse that requirement by asserting that isolation and identification are impossible because USDA did not keep adequate records. I rejected a variant of that argument in Garcia I as "unsupported by case authority and unpersuasive," 211 F.R.D. at 21 n. 6, but now plaintiffs have invoked the 1991 amendments to Title VII, 42 U.S.C. § 2000e-2(k)(1)(B)(I) — Congress's response to the burden of proof holding in Wards Cove Packing Co. v. Atonio, 490 U.S. 642 (1989) — to assert (by analogy to employment law) that USDA's entire decision-making process must be considered "one . . . practice" because its separate components cannot be analyzed. Pls.' Mem. in Resp. to Ct.'s July 15, 2003 Order With Respect to Commonality, at 8 ("Pls.' Mem."). It is a creative argument, but ultimately an unpersuasive one. Not only does it "leapfrog to the merits," contrary to the teaching of Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974), as the Government observes, Def.'s Opp'n to Class Certification & Resp. to Pls.' Dec. 5, 2003 Mem. Regarding Commonality, at 4, but it also boils down to the proposition that unexplained discrepancies in the distribution of government benefits satisfy the commonality requirement of Rule 23(a)(2) without more. That proposition is untenable. Anecdotal proof of discrimination against Hispanic farmers, and even statistical proof that Hispanic farmers have received proportionally less assistance than others, will not be enough to support class certification. Falcon reminds us that the underlying purpose of the Rule 23(a)(2) commonality requirement is to permit the court to define the class and determine whether the representation is adequate, to let the defendant know how to defend, and "`most significant[ly]'" to guard against the "potential unfairness to the class members bound by the judgment if the framing of the class is overbroad." 457 U.S. at 161, (quoting Johnson v. Georgia Highway Express, Inc., 417 F.2d 1122(5th Cir. 1969)). That is why "`precise pleadings'" with "`reasonable specificity'" are required. Id. at 160-01. 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 ("a biased testing procedure to evaluate both ...


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