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National Association of Mortgage Brokers v. Board of Governors of the Federal Reserve System

March 21, 2011

NATIONAL ASSOCIATION OF MORTGAGE BROKERS, PLAINTIFF,
v.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, ET AL., DEFENDANTS.
NATIONAL ASSOCIATION OF INDEPENDENT HOUSING PROFESSIONALS, INC., PLAINTIFF,
v.
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, DEFENDANT.



The opinion of the court was delivered by: Judge Beryl A. Howell

Judge Beryl A. Howell

MEMORANDUM OPINION REGARDING MOTIONS BY PLAINTIFF NATIONAL ASSOCIATION OF MORTGAGE BROKERS FOR EXPEDITED DISCOVERY AND RECONSIDERATION OF COURT'S MARCH 11, 2011 ORDER

On March 9, 2011, the plaintiff National Association of Mortgage Brokers ("NAMB") filed, along with its Complaint, a motion for expedited discovery from the defendants, the Board of Governors of the Federal Reserve System (the "Board") and two individuals, the Board's Chairman and the Director of the Division of Consumer and Community Affairs. Before the motion for expedited discovery could be considered, this case was reassigned and transferred to this Court since it is related to a pending case filed two days earlier by the National Association of Independent Housing Professionals, Inc. ("NAIHP") against the Board. Both actions challenge a final rule, which becomes effective on April 1, 2011, issued by the Board under its unfair or deceptive authority in the Truth in Lending Act (15 U.S.C. § 1639(l)(2)), restricting certain compensation practices of loan originators relating to mortgage loans ("the Rule"), 12 C.F.R. § 226.36(a), (d); 75 Fed Reg. 58533-34 (Sept. 24, 2010).

At the time the NAMB case was transferred, a briefing schedule had already been ordered in the NAIHP matter. See Minute Order, No. 11-cv-489, dated Mar. 10, 2011 (ordering briefing schedule in accordance with parties' joint stipulation). The defendants moved to consolidate the two actions. Board Mot. to Consolidate Civil Actions, Nos. 11-cv-489, 11-cv-506, Mar. 10, 2011, ECF No. 8.

On March 11, 2011, the Court granted the defendants' motion to consolidate both actions, and ordered that the same briefing schedule previously ordered in the NAIHP matter apply to the new case. See Minute Order, Nos. 11-cv-489, 11-cv-506, dated Mar. 11, 2011. NAMB has requested that this Court, on an expedited basis, reconsider the March 11 minute order. NAMB Mem. Support of Mot. for Expedited Reconsideration, No. 11-cv-506, Mar. 14, 2011, ECF No. 11. Both the motion for expedited discovery and for reconsideration of the March 11, 2011 minute order are before the Court.

For the reasons set forth below the NAMB's motion for reconsideration of the consolidation order is DENIED and its motion for expedited discovery is GRANTED in part and DENIED in part.

I. RECONSIDERATION OF MARCH 11, 2011 ORDER

NAMB requests, pursuant to Rule 54(b), FED. R. CIV. P., that the Court reconsider its March 11, 2011 Order on grounds that NAMB had no opportunity to oppose the defendants' motion to consolidate and therefore had no opportunity to present to the Court pertinent facts that, if presented, "NAMB believes that the Court would not have granted the Motion to Consolidate or would not have required NAMB to comply with the current scheduling order." NAMB Mem. Support of Mot. Expedited Reconsideration at 6, No. 11-cv-506, ECF No. 11. NAMB is incorrect. The factual arguments presented by NAMB confirm that the two actions were properly consolidated and that the briefing schedule ordered will ensure expeditious, fair and full consideration of the issues at stake.

A. Legal Standard for Consolidation

Pursuant to Rule 42(a), FED. R. CIV. P., a district court has authority to order consolidation when actions involving "a common question of law or fact" are pending before the court. FED. R. CIV. P. 42(a). Consolidation pursuant to Rule 42(a) is permissive and vests a purely discretionary power in the district court, which may consolidate related cases sua sponte. Devlin v. Transp. Commc'ns. Int'l Union, 175 F.3d 121, 130 (2d Cir. 1999); see also In re Adams Apple, Inc., 829 F.2d 1484, 1487 (9th Cir. 1987); Young v. City of Augusta, 59 F.3d 1160, 1168 (11th Cir. 1995) (quoting In re Air Crash Disaster at Florida Everglades, 549 F.2d 1006, 1013 (5th Cir. 1977)). In exercising that discretion, district courts must weigh the risk of prejudice and confusion wrought by consolidation against the risk of inconsistent rulings on common factual and legal questions, the burden on the parties and the court, the length of time, and the relative expense of proceeding with separate lawsuits if they are not consolidated. See Hendrix v. Raybestos-Manhattan, Inc., 776 F.2d 1492, 1495 (11th Cir. 1985); Jackson v. Ford Consumer Fin. Co., 181 F.R.D. 537, 539 (N.D. Ga. 1998); State of Ohio ex rel. Montgomery v. Louis Trauth Dairy, Inc., 163 F.R.D. 500, 503 (S.D. Ohio 1995) (in determining whether consolidation is appropriate, "the court balances the value of time and effort saved by consolidation against the inconvenience, delay, or expense increased by it"). "[C]onsolidation is particularly appropriate when the actions are likely to involve substantially the same witnesses and arise from the same series of events or facts." Hanson v. District of Columbia, 257 F.R.D. 19, 21 (D.D.C. 2009); see also Vazquez Rivera v. Congar Int'l Corp., 241 F.R.D. 94, 95 (D.P.R. 2007) (explaining that consolidation is intended to avoid overlapping trials containing duplicative proof, excessive cost, and waste of valuable court time in the trial of repetitive claims, among other considerations).

Identity of the parties is not a prerequisite. To the contrary, cases may be consolidated even where certain defendants are named in only one of the Complaints or where, as here, the plaintiffs are different but are asserting identical questions of law against the same defendant. Hanson, 257 F.R.D. at 21; Utah v. U.S. Dep't of Interior, 45 F. Supp. 2d 1279, 1281 (D. Utah 1999)(ordering consolidation of cases brought by different plaintiffs against the same defendant because they presented the same issues of law and fact); see also Jacobs v. Castillo, 612 F. Supp. 2d 369, 373 (S.D.N.Y. 2009); Miller v. U.S. Postal Serv., 729 F.2d 1033, 1036 (5th Cir. 1984) ("The proper solution to the problems created by the existence of two or more cases involving the same parties and issues, simultaneously pending in the same court would be to consolidate them under Rule 42(a) of the Federal Rules of Civil Procedure.") (citation and internal quotation marks omitted).

B. Discussion of Consolidation

NAMB argues against consolidation because it is "only seeking to challenge a small subsection of the Board's final rule." NAMB Mem. Support of Mot. Expedited Reconsideration at 2, No. 11-cv-506, ECF No. 11. The conceded overlap in issues presented by both matters confirms the sound basis for consolidation. For example, in Hanson v. District of Columbia, the court consolidated two actions with the same defendant and different plaintiffs, over the plaintiffs' objections, analogous to those posed by NAMB, that one action involved a "narrow challenge to the constitutionality" of the District's gun laws while the other action challenged "a host of other aspects of the District's gun laws." 257 F.R.D. at 21-22.

NAMB further argues that its "members are being immediately and irreparably harmed with each passing day and NAMB cannot wait until the end of the month to be heard on its motion for a temporary restraining order." NAMB Mem. Support of Mot. Expedited Reconsideration at 2, No. 11-cv-506, ECF No. 11. ...


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