On September 9, the U.S. District Court for the Northern District of California denied class certification in a conversion and unjust enrichment suit alleging a national bank wrongly charged mortgage rate-lock extension fees when purported bank-caused delays prevented borrowers’ loans from closing within the lock period. The plaintiff sought to certify a nationwide conversion class and a New York unjust enrichment class on behalf of an estimated 350,000-plus borrowers nationwide who paid the fees before September 16, 2013, and later received refund checks. The plaintiff alleged the bank invested the purportedly wrongly collected fees and retained the profits, seeking disgorgement of those alleged investment returns. The court found that the plaintiff met the commonality requirement and, in its typicality analysis, found his claims reasonably co-extensive with the class. However, the court ultimately concluded that he failed to demonstrate he was a member of the proposed classes, as the bank presented “substantial evidence” — including the plaintiff’s loan file and settlement statement — indicating the plaintiff, not the bank, was responsible for the delays on his loan, rendering him an inadequate class representative.

On predominance, the court held that the central liability question — whether the bank or each individual borrower bore responsibility for the closing delay that triggered the fee — required individualized review of each class member’s loan file. The court noted that the loan files contained non-standardized narratives and lacked uniform coding to reliably indicate fault for delays. The court rejected the plaintiff’s expert’s proposed automated methodology, which used a software script to search loan notes for certain terms, finding it did not eliminate the need for substantive file-by-file review. The court further found a second proposed methodology, which had not yet been developed or executed, amounted to ipse dixit insufficient to satisfy the predominance burden. Because individual issues predominated over common ones, and class adjudication was not shown to be superior, the court denied the motion, including an alternative request for issue-class certification under Rule 23(c)(4).