                   RECOMMENDED FOR FULL-TEXT PUBLICATION
                       Pursuant to Sixth Circuit I.O.P. 32.1(b)
                              File Name: 13a0018p.06

             UNITED STATES COURT OF APPEALS
                          FOR THE SIXTH CIRCUIT
                            _________________


                                                X
                                                 -
 In re: COUNTRYWIDE FINANCIAL CORP.
                                                 -
 MORTGAGE LENDING PRACTICES LITIGATION
 _____________________________________           -
                                                 -
                                                    No. 12-5250

                                                 ,
                                                  >
                         Plaintiffs-Appellants, -
 GILLIAN MILLER et al.,

                                                 -
                                                 -
                                                 -
          v.
                                                 -
                                                 -
                        Defendants-Appellees. -
 COUNTRYWIDE BANK, N.A. et al.,
                                                 -
                                                N
                  Appeal from the United States District Court
               for the Western District of Kentucky at Louisville.
             No. 3:08-md-1974—John G. Heyburn II, District Judge.
                           Argued: December 5, 2012
                     Decided and Filed: January 15, 2013
         Before: MOORE, GILMAN, and KETHLEDGE, Circuit Judges.

                              _________________

                                  COUNSEL
ARGUED: Gary Klein, KLEIN, KAVANAGH & COSTELLO, LLP, Boston,
Massachusetts, for Appellants. James W. McGarry, GOODWIN PROCTER LLP,
Boston, Massachusetts, for Appellees. ON BRIEF: Gary Klein, KLEIN, KAVANAGH
& COSTELLO, LLP, Boston, Massachusetts, Wendy J. Harrison, BONNETT,
FAIRBOURN, FRIEDMAN & BALINT, P.C., Phoenix, Arizona, for Appellants. James
W. McGarry, GOODWIN PROCTER LLP, Boston, Massachusetts, Thomas M.
Hefferon, GOODWIN PROCTER LLP, Washington, D.C., for Appellees.




                                        1
No. 12-5250            Miller et al. v. Countrywide Fin. Corp. et al.                              Page 2


                                        _________________

                                               OPINION
                                        _________________

         KAREN NELSON MOORE, Circuit Judge. Eleven individuals (“the plaintiffs”)
who obtained home loans from Defendant-Appellee Countrywide Bank, N.A.
(“Countrywide”) seek class certification to challenge alleged racial disparities dating
back to 2002 and resulting from Countrywide’s loan-pricing policy for home mortgages.
In re Countrywide Fin. Mortg. Lending Practices Litig., No. 08-MD-1974, 2011 WL
4862174, at *1 (W.D. Ky. Oct. 13, 2011) [hereinafter In re Countrywide]. The only
issue before this panel is whether the district court abused its discretion in finding that
the plaintiffs’ proposed class failed to satisfy Federal Rule of Civil Procedure 23(a)’s
commonality requirement. We conclude that the district court did not abuse its
discretion, and we AFFIRM.

                          I. BACKGROUND AND PROCEDURE

         At issue is Countrywide’s loan-pricing policy, which dictated how its home loans
were priced across three channels of loan origination.1 The cost of a borrower’s loan is
expressed as an annual percentage rate (“APR”), which is measured in basis points, or
hundredths of a percent. Countrywide established a borrower’s APR through its loan-
pricing policy, which has two components. The first, objective component determined
an applicable “par rate” based on objective factors about the borrower and about the loan
sought.2 The plaintiffs present no complaints relating to Countrywide’s objective
calculation of par rates. R. 54 (Pls.’ Mot. for Class Cert. at 5) (Page ID #811).


         1
          Countrywide originated home loans through retail, wholesale, and correspondent channels.
Retail loan officers originated loans directly on Countrywide’s behalf. Wholesale mortgage brokers
submitted borrower information for consideration; if Countrywide agreed to provide the loan, then it
permitted the mortgage broker to negotiate additional fees. Third-party correspondent lenders produced
loans conforming to Countrywide’s underwriting guidelines, which Countrywide purchased. Bank of
America acquired Countrywide’s home mortgage services in July 2008.
         2
          Objective factors included market interest rates, “income, property value, and loan amount,” In
re Countrywide, 2011 WL 4862174, at *1, as well as “the loan-to value ratio, the borrower’s credit score,
the intended use of the property, the requested date of closing, and the location of the property,” Appellee
Br. at 6.
No. 12-5250          Miller et al. v. Countrywide Fin. Corp. et al.                         Page 3


        The second, subjective component permitted local agents—be they loan officers,
mortgage brokers, or correspondent lenders—to deviate from the par rate as follows.
Loan officers and mortgage brokers could increase or decease a borrower’s interest rate,
and could charge borrowers with fees, provided that the total deviation fell within a
specified range of the par rate. Appellee Br. at 6–9. Countrywide compensated loan
officers and brokers for securing loans, and in some instances increased their
compensation when a loan had a higher interest rate or additional fees.3 As to
correspondent lenders, Countrywide purchased only those loans that satisfied its
underwriting requirements, and paid a premium for loans with higher interest rates or
extra fees. In re Countrywide, 2011 WL 4862174, at *1. Plaintiffs allege that, in all
channels, Countrywide’s agents had broad discretion to deviate from par rate, provided
that they stayed within the applicable boundaries dictating the range of acceptable
deviations from par. Appellant Br. at 6–7.

        The plaintiffs challenge the subjective component of Countrywide’s loan-pricing
policy, which they claim disparately impacts minority borrowers. Id. at 5. They allege
that vesting local agents with discretion to deviate from objective par rates led
Countrywide to charge African-American borrowers on average 11.64 basis points and
Hispanic borrowers 12.50 basis points over the APR paid by their white counterparts.
R. 54 (Pls.’ Mot. for Class Cert. at 12) (Page ID #818). Plaintiffs seek to certify a class
consisting of “[a]ll African-American and Hispanic borrowers to whom Countrywide
originated a residential-secured loan, including correspondent loans, between
January 1, 2002 and the present.” Id. at 18 (Page ID #824). They seek damages,
injunctive relief, and declaratory relief for alleged violations of the Equal Credit
Opportunity Act, 15 U.S.C. § 1691, the Fair Housing Act, 42 U.S.C. § 3601, and the
Civil Rights Act, 42 U.S.C. §§ 1981–82. Id. at 24–25 (Page ID #830–31); Appellant Br.
at 2.




        3
         Countrywide’s Full Spectrum Lending Division—a segment of Countrywide’s retail
channel—did not permit loan officers to charge interest rates above par. Appellee Br. at 35; R. 62-4
(Swain Dep. at 111–13) (Page ID #2166–67).
No. 12-5250             Miller et al. v. Countrywide Fin. Corp. et al.                                Page 4


         Under the Federal Rules of Civil Procedure, a plaintiff seeking to certify a class
must satisfy four requirements under Rule 23(a) and at least one of several requirements
under Rule 23(b). FED. R. CIV. P. 23. Our attention here is on whether the plaintiffs
have established that “there are questions of law or fact common to the class.” FED. R.
CIV. P. 23(a)(2). The district judge found that the proposed class cannot satisfy Rule
23(a)(2)’s commonality requirement in light of Wal-Mart Stores, Inc. v. Dukes, — U.S.
—, 131 S. Ct. 2541 (2011) (discussing FED. R. CIV. P. 23(a)(2)). The district court
denied certification, for which the plaintiffs sought an interlocutory appeal pursuant to
Federal Rule of Civil Procedure 23(f). We exercised our discretion to hear the appeal.

                                  II. STANDARD OF REVIEW

         “‘The district court maintains substantial discretion in determining whether to
certify a class.’” Beattie v. CenturyTel, Inc., 511 F.3d 554, 559 (6th Cir. 2007) (quoting
Reeb v. Ohio Dep’t of Rehab. & Corr., 435 F.3d 639, 643 (6th Cir. 2006)), cert. denied,
555 U.S. 1032 (2008). A district court’s decision “‘will be reversed only upon a strong
showing that the district court’s decision was a clear abuse of discretion.’” Gooch v. Life
Investors Ins. Co. of Am., 672 F.3d 402, 417 (6th Cir. 2012) (quoting Beattie, 511 F.3d
at 559–60). “An abuse of discretion occurs if the district court relies on clearly
erroneous findings of fact, applies the wrong legal standard, misapplies the correct legal
standard when reaching a conclusion, or makes a clear error of judgment.” Young v.
Nationwide Mut. Ins. Co., 693 F.3d 532, 536 (6th Cir. 2012).

                                 III. COMMONALITY CLAIM

         The plaintiffs’ core contention is that the district court abused its discretion by
failing to distinguish their challenge to Countrywide’s subjective loan-pricing policy
from the failed challenge to Wal-Mart’s subjective pay-and-promotion practices in
Dukes.4 The Supreme Court in Dukes faced a proposed class of 1.5 million women—all


         4
           The plaintiffs also complain that the district court required that all class members suffer the same
damages in order to satisfy commonality under Rule 23(a). “Commonality requires the plaintiff to
demonstrate that the class members ‘have suffered the same injury.’” Dukes, 131 S. Ct. at 2551 (quoting
Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 (1982)). The district court’s opinion is unclear on this
point; the court uses the word “injury,” but appears to have focused on damages. To the extent that the
No. 12-5250           Miller et al. v. Countrywide Fin. Corp. et al.                             Page 5


current or former Wal-Mart employees—alleging systematic discrimination on matters
of pay and promotion in violation of Title VII of the Civil Rights Act. Subject to
boundaries on the size of salary increases and on the minimal eligibility qualifications
for promotion, “pay and promotion decisions at Wal-Mart are generally committed to
local managers’ broad discretion, which is exercised in a largely subjective manner.”
Dukes, 131 S. Ct. at 2547 (internal quotation marks omitted).

         To demonstrate “questions of law or fact common to the class,” FED. R. CIV. P.
23(a)(2), a plaintiff must show that the claims in the proposed class “depend upon a
common contention . . . of such a nature that it is capable of classwide
resolution—which means that determination of its truth or falsity will resolve an issue
that is central to the validity of each one of the claims in one stroke.” Dukes, 131 S. Ct.
at 2551. For a suit seeking to address “millions of employment decisions at once,”
demonstrating a common contention means showing that “some glue hold[s] the alleged
reasons for all those decisions together.” Id. at 2552 (emphasis in original). A
companywide policy could serve as glue if it affected all class members and caused a
disparate impact. But in the context of a broad delegation of decisionmaking to the
discretion of local managers, the Court observed the following:

                  The only corporate policy that the plaintiffs’ evidence
         convincingly establishes is Wal-Mart’s “policy” of allowing discretion
         by local supervisors over employment matters. On its face, of course,
         that is just the opposite of a uniform employment practice that would
         provide the commonality needed for a class action; it is a policy against
         having uniform employment practices.

Id. at 2554 (emphasis in original). Instead, the Court considered whether there was some
other glue—“a common mode of exercising discretion that pervades the entire
company”—holding these individual decisions together. Id. at 2554–55. Stating that
“it is quite unbelievable that all managers would exercise their discretion in a common
way without some common direction,” id. at 2555, the Court concluded that the


district court conflated damages with injury and thus expected class members to suffer the same damages,
it did so in error. See In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig., 678 F.3d 409, 420
(6th Cir. 2012); Gooch, 672 F.3d at 428.
No. 12-5250        Miller et al. v. Countrywide Fin. Corp. et al.                   Page 6


plaintiffs had not identified a common contention—one uniting millions of individual
discretionary actions by local managers—that was suitable for classwide resolution.

       The district court did not abuse its discretion in finding that Dukes forecloses the
instant proposed class from establishing commonality. Both cases challenge policies
that grant broad discretion to local agents: Countrywide to local agents who varied
home-loan prices, and Wal-Mart to managers who made pay-and-promotion decisions.
In both cases, the exercise of discretion is cabined inside clear boundaries: Wal-Mart
managers could grant pay raises only of a certain amount and could promote only pre-
qualified employees, while Countrywide agents could vary home loans only within a
specified range of the predetermined par rate. In neither case do plaintiffs allege that
local actors exceeded these boundaries. And in neither case is it asserted that, for acts
of discretion taken within these boundaries, a uniform policy or practice guides how
local actors exercise their discretion, such that the corporate guidance caused or
contributed to the alleged disparate impacts. The plaintiffs claim that “[t]he discretion
Countrywide has given its sales force is exercised in a common way—by limited
variation of the par rate.” Appellant Br. at 7. This statement conflates range with mode.
Both Wal-Mart and Countrywide placed clear boundaries on how far a local exercise of
discretion could go, but in neither case do plaintiffs demonstrate that this range, rather
than discretionary decisions made within this range, disparately impacted the proposed
class. On this point, Dukes is clear: class members must unite acts of discretion under
a single policy or practice, or through a single mode of exercising discretion, and the
mere presence of a range within which acts of discretion take place will not suffice to
establish commonality.

       In seeking to distinguish Dukes, the plaintiffs direct us to a recent opinion
involving a class that fell on the opposite side than did Dukes of “the line that separates
a company-wide practice from an exercise of discretion by local managers.”
McReynolds v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 672 F.3d 482, 490 (7th
Cir.), cert. denied, — U.S. —, 133 S. Ct. 338 (2012). We need not decide whether
No. 12-5250         Miller et al. v. Countrywide Fin. Corp. et al.                    Page 7


McReynolds was correctly decided because, even under McReynolds’s approach to
Dukes, the plaintiffs at bar would fail to satisfy commonality.

        McReynolds involved 700 African-American brokers and former brokers of
Merrill Lynch, who challenged two companywide policies. First, a “teaming policy”
permitted brokers to create teams that shared clientele across members; joining a team
proved financially advantageous for many brokers. Merrill Lynch left team selection
largely to the discretion of local brokers. Second, an “account-distribution policy”
distributed the clients of departing brokers according to criteria that made team members
more likely than lone brokers to secure distributed clients. The two policies together
allegedly worked a disparate impact on the earnings of African Americans, who were
underrepresented on teams as compared to their white counterparts. Although both
Merrill Lynch’s brokers and Wal-Mart’s managers held discretion that, as exercised,
created a disparate impact, McReynolds diverged from Dukes, according to the Seventh
Circuit, because “the exercise of that discretion is influenced by the two company-wide
policies at issue . . . [that] exacerbate racial discrimination by brokers.” Id. at 489. The
Seventh Circuit determined that a common contention existed as to whether it was lawful
for Merrill Lynch to adopt companywide policies that enabled individual acts of bias and
then amplified their effect on minorities. Id. Because the policies themselves provided
commonality “glue,” the court did not further require the plaintiffs to show that teams
had exercised their discretion to select members according to a common mode. Id. at
490 (stating that the district court overlooked “the incremental causal effect . . . of those
company-wide policies.”).

        Essential to McReynolds, and missing from the instant litigation, were
companywide policies that contributed to the alleged disparate impact that arose from
the delegation of discretion to individual brokers. See Bolden v. Walsh Constr. Co.,
688 F.3d 893, 898 (7th Cir. 2012) (“This single national policy [in McReynolds] was the
missing ingredient in [Dukes].”) Merrill Lynch adopted a policy that permitted teams
to form and to exercise their discretion in admitting new members, and adopted a second
policy that exacerbated the disparity arising from the delegation of discretion. No such
No. 12-5250         Miller et al. v. Countrywide Fin. Corp. et al.                   Page 8


uniform policy exists here—outside of that held to be legally insufficient in Dukes—that
contributes to the disparate pricing of home loans. Without a similar policy to provide
a common contention, the plaintiffs must show that a common mode unites individual
acts of discretion by Countrywide’s agents, which they have not done.

        Finally, the plaintiffs protest that Dukes does not “prevent a commonality finding
in all disparate impact cases involving the exercise of discretion.” Appellant Br. at 16.
We agree. See Dukes, 131 S. Ct. at 2554 (“[W]e have recognized that, ‘in appropriate
cases,’ giving discretion to lower-level supervisors can be the basis of Title VII liability
under a disparate-impact theory.” (quoting Watson v. Fort Worth Bank & Trust, 487 U.S.
977, 991 (1988))). They also argue that Dukes does not prohibit—as they believe the
district court mistakenly assumed—the use of statistical evidence to prove a disparate-
impact theory. Again, we agree. The Supreme Court has relied, and the Sixth Circuit
continues to rely, on statistical analysis in disparate-impact cases. See Watson, 487 U.S.
at 987 (“The evidence in these ‘disparate impact’ cases usually focuses on statistical
disparities, rather than specific incidents.”); Bondurant v. Air Line Pilots Ass’n, Int’l,
679 F.3d 386, 394 (6th Cir. 2012). Dukes does not disturb this practice. Rather, Dukes
reiterates that statistical correlation, no matter how robust, cannot substitute for a
specific finding of class-action commonality. Dukes, 131 S. Ct. at 2555 (“[M]erely
proving that the discretionary system has produced a racial or sexual disparity is not
enough” where plaintiffs are unable to “‘identif[y] the specific employment practice that
is challenged’” (quoting Watson, 487 U.S. at 994 (O’Connor, J., concurring)); see also
Watson, 487 U.S. at 994 (O’Connor, J., concurring) (“[T]he plaintiff must offer
statistical evidence of a kind and degree sufficient to show that the practice in question
has caused the [disparate impact]”) (emphasis added). As explained above, the plaintiffs
have failed to establish either a uniform policy or practice, or a common mode amidst
the various acts of discretion, beyond the mere act of delegating discretion, that caused
the disparate impact alleged.
No. 12-5250        Miller et al. v. Countrywide Fin. Corp. et al.             Page 9


                                 IV. CONCLUSION

        For the foregoing reasons, we AFFIRM the district court’s order denying class
certification.
