PRECEDENTIAL

      UNITED STATES COURT OF APPEALS
           FOR THE THIRD CIRCUIT


     Nos. 08-3621, 08-3790, 08-3791 & 08-3857


IN RE: COMMUNITY BANK OF NORTHERN VIRGINIA
       AND GUARANTY NATIONAL BANK OF
    TALLAHASSEE SECOND MORTGAGE LOAN
            LITIGATION (MDL 1674)

         Objecting Class Members,
                      Appellants (08-3621)
               (Pursuant to Fed. R. App. P. 12(a))

         Alabama and Georgia Objecting Class
         Members,
                     Appellants (08-3790)
              (Pursuant to Fed. R. App. P. 12(a))

         Richard H. Heady, Jr., Robert Rowley, Arline
         Rowley, Galen Hurt, Darrell Turner, Michael
         Rich, Edna Rich, Patrick Franklin, Michael
         Graham, Tracy Graham, Eric Lewis, Barbara
         Lewis, David Davidson, Michael Moore, Karla
         Moore, Anthony Dixon and Kathy Dixon.
                     Appellants (08-3791)
              (Pursuant to Fed. R. App. P. 12(a))
       Troy Elliott, Lorrain Oswald and Ruth D.
       Mathis-Wisseh,
                            Appellants (08-3857)
             (Pursuant to Fed. R. App. P. 12(a))



                  No. 09-2001


  JOHN DRENNEN; ROWENA DRENNEN;
    DAVID GARNER; DIANE GARNER;
  SHAWN STARKEY; LORENE STARKEY,

                             Appellants

                        v.

  PNC BANK NATIONAL ASSOCIATION;
     GMAC-RESIDENTIAL FUNDING
  CORPORATION, a Minnesota Corporation;
HOMECOMINGS FINANCIAL NETWORK INC.,
         a Delaware Corporation


   Appeal from the United States District Court
    for the Western District of Pennsylvania
    (D.C. Civil Action Nos. 2-02-cv-01201,
        2-03-cv-00425, 2-05-cv-00688 and
                  2-05-cv-01386)
   District Judge: Honorable Gary L. Lancaster

                        2
                    Argued April 20, 2010

Before: SCIRICA * , Chief Judge, AMBRO, Circuit Judge and
                 JONES ** , District Judge

             (Opinion filed: September 22, 2010)

Garrett M. Hodes, Esquire
David M. Skeens, Esquire
J. Michael Vaughan, Esquire
Roy Frederick Walters, Esquire (Argued)
Walters, Bender, Strohbehn & Vaughan
1100 Main Street
2500 City Center Square
P.O. Box 26188
Kansas City, MO 64196

Michael J. Cartee, Esquire
John J. Lloyd, Esquire
Cartee & Lloyd
2210 Eighth Street, Suite B


       *
       Judge Scirica completed his term as Chief Judge on May
4, 2010.
       **
        The Honorable John E. Jones, III, United States District
Judge for the Middle District of Pennsylvania, sitting by
designation.

                               3
Tuscaloosa, AL 35401

C. Knox McLaney, III, Esquire
McLaney & Associates
509 South Court Street
Montgomery, AL 36104

Franklin R. Nix, Esquire
Law Offices of Franklin R. Nix
1020 Foxcroft Road, N.W.
Atlanta, GA 33032-2624

John W. Sharbrough, III, Esquire
The Sharbrough Law Firm
156 St. Anthony Street
Mobile, AL 36603

Scott C. Borison, Esquire
Legg Law Firm
5500 Buckeystown Pike
Frederick, MD 21703

J. Jerome Hartzell, Esquire (Argued)
Hartzell & Whiteman
2626 Glenwood Avenue, Suite 500
Raleigh, NC 27608

Mallam J. Maynard, Esquire
Financial protection Law Center, Suite 342
P.O. Box 390
Wilmington, NC 28402

                              4
Robert B. Smith, Esquire
Smith, Cohen & Mork
445 Fort Pitt Boulevard
210 Fort Pitt Commons
Pittsburgh, PA 15219

      Counsel for Appellants

Eric G. Calhoun, Esquire
Travis & Calhoun
1000 Providence Towers East
5001 Spring Valley Road
Dallas, TX 75244

R. Bruce Carlson, Esquire (Argued)
Gary F. Lynch, Esquire
Carlson Lynch
36 North Jefferson Street
P.O. Box 7635
New Castle, PA 16107

Daniel O. Myers, Esquire
A. Hoyt Rowell, III, Esquire
Richardson, Patrick, Westbrook & Brickman
1037 Chuck Dawley Boulevard, Building A
Mount Pleasant, SC 29464

Kevin Oufnac, Esquire
Richardson, Patrick, Westbrook & Brickman
174 East Bay Street
Charleston, SC 29401

                               5
Thomas L. Allen, Esquire (Argued)
Roy W. Arnold, Esquire
David J. Bird, Esquire
Donna M. Doblick, Esquire
Nina M. Faber, Esquire
Reed Smith
225 Fifth Avenue
Pittsburgh, PA 15222

Darryl J. May, Esquire (Argued)
Ballard Spahr
1735 Market Street, 51st Floor
Philadelphia, PA 19103

David G. Oberdick, Esquire
Meyer, Unkovic & Scott
535 Smithfield Street
1300 Oliver Building
Pittsburgh, PA 15222

F. Douglas Ross, Esquire
Odin, Feldman & Pittleman
9302 Lee Highway, Suite 1100
Fairfax, VA 22031

J. Scott Watson, Esquire
Federal Deposit Insurance Corporation
Appellate Litigation Section VS-7008
3501 North Fairfax Drive
Arlington, VA 22226


                             6
        Counsel for Appellees




                     OPINION OF THE COURT


AMBRO, Circuit Judge

                            Table of Contents

I. Factual and Procedural Background. . . . . . . . . . . . . . . 10
       A. The Alleged Predatory Lending Scheme.. . . . . . . 10
             B. The Separate Class Actions and the Initial
                  Settlement.. . . . . . . . . . . . . . . . . . . . . . . . 11
             C. The Objectors. . . . . . . . . . . . . . . . . . . . . . . 17
       D. The Prior Appeal.. . . . . . . . . . . . . . . . . . . . . . . . . 21
       E. The Proceedings on Remand. . . . . . . . . . . . . . . . . 23
             1. The Hobson Action.. . . . . . . . . . . . . . . . . . 23
             2. The Objectors Withdraw Their Motion to
                    Intervene. . . . . . . . . . . . . . . . . . . . . . . . 24
             3. The District Court’s Viability Briefing.. . . 25
             4. The Modified Settlement. . . . . . . . . . . . . . 27
             5. The District Court Determines the
                    TILA/HOEPA Claims
                    Are Not Viable. . . . . . . . . . . . . . . . . . . 30
             6. The District Court Appoints a “Friend of
                    the Court. . . . . . . . . . . . . . . . . . . . . . . . 32
             7. The District Court Denies the Objectors’
                    Renewed Motion to Intervene,
                    Conditionally Re-Certifies the Class,

                                      7
                         and Preliminarily Approves the
                         Modified Settlement. . . . . . . . . . . . . . . 34
                   8. The District Court Certifies the Class and
                         Approves the Modified Settlement.. . . 36

II. Jurisdiction and Standards of Review. . . . . . . . . . . . . 37

III Discussion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
       A. Class Certification.. . . . . . . . . . . . . . . . . . . . . . . . 39
             1. Legal Standards. . . . . . . . . . . . . . . . . . . . . 39
             2. Statute-of-Limitations Issues at the Class
                       Certification Stage. . . . . . . . . . . . . . . . 42
             3. The District Court’s Analysis. . . . . . . . . . . 49
                       a. The District Court’s Relation-Back
                                  Analysis. . . . . . . . . . . . . . . . . . . 50
                       b. The District Court’s Equitable
                                  Tolling Analysis.. . . . . . . . . . . . 64
             4. Adequacy of Representation.. . . . . . . . . . . 70
                       a. The Class Representatives. . . . . . . . 70
                       b. Class Counsel. . . . . . . . . . . . . . . . . 73
             5. The North Carolina Objectors. . . . . . . . . . 83
       B. The Fairness of the Settlement. . . . . . . . . . . . . . . 89
       C. The Objectors’ Renewed Motion to Intervene. . . 93
       D. The Objectors’ Renewed Petition for Mandamus
             to Recuse the District Judge. . . . . . . . . . . . . . 95

IV. Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

       This is the second appeal from the certification of a
consolidated “settlement only” nationwide class action that


                                           8
alleged an illegal home equity lending scheme involving two
banks and a company that purchased second mortgage loans
from them. Certain members of the class (the “Objectors”)
contest the District Court’s decisions certifying that class and
approving the class settlement. As it was in the prior appeal, the
principal dispute remains the named plaintiffs’ and class
counsel’s decision not to make claims against the defendants
under the Truth in Lending Act, 15 U.S.C. § 1601 et seq.
(“TILA”), and the Home Ownership and Equity Protection Act
(“HOEPA”), 

The Objectors contend that the failure
to do so renders the named plaintiffs and class counsel
inadequate class representatives.

        We conclude that the District Court—by approaching the
adequacy-of-representation questions on remand as though it
were ruling on a motion to amend pursuant to Federal Rule of
Civil Procedure 15(c) or a motion to dismiss pursuant to Rule
12(b)(6)—applied the wrong legal standard in ruling on class
certification under Rule 23. We thus reluctantly vacate again
the Court’s certification decision and its approval of the class
settlement, and remand for further proceedings. In doing so, we
continue to reject (i) the claim that the District Court abused its
discretion in denying the Objectors’ renewed motion to
intervene, and (ii) their renewed petition for mandamus to
recuse the District Judge in this case.




                                9
I.     Factual and Procedural Background

       A.     The Alleged Predatory Lending Scheme

        The complex factual and procedural history of these
matters is set out at length in our prior opinion, and we only
summarize it here. See In re Community Bank of N. Va., 

(3d Cir. 2005)(“Community Bank I”). These class
actions involve the alleged predatory lending scheme of the
Shumway/Bapst Organization (“Shumway”), a residential
mortgage loan business involved in facilitating the making of
high-interest, mortgage-backed loans to debt-laden homeowners.
Because Shumway is not a depository lender—and thus subject
to fee caps and interest ceilings under various state laws—it
allegedly formed relationships with defendants Community
Bank of Northern Virginia (“CBNV”) and Guarantee National
Bank of Tallahassee (“GNBT”), both financially distressed
banks, 1 to circumvent those restrictions. This allegedly
permitted Shumway to conceal the origin of the loans, thus
creating the appearance that fees were paid solely to a
depository institution when “[i]n reality . . . the overwhelming
majority of fees and other charges associated with the loans
were funneled to Shumway.” 

       The class action complaint claimed defendant GMAC


       1
       CBNV was acquired by Mercantile Bankshares Corp. in
2005. Mercantile is now owned by PNC Bank, N.A.

                              10
Residential Funding Corporation (“RFC”) was a co-conspirator
in this scheme, deriving a substantial portion of its business by
purchasing “jumbo” and high “loan-to-value” loans from CBNV
and GNBT in the secondary market. The named plaintiffs
asserted that RFC acted with knowledge that CBNV and GNBT
were mere “straw parties” used to funnel origination and title
services fees to Shumway.          Because these fees were
incorporated into the principal on the loan, RFC purportedly
benefitted from the practice through increased interest income.

       In 2001, the federal Comptroller of the Currency
investigated and audited GNBT, and imposed tighter restrictions
on the bank. Shortly thereafter, RFC announced that it would no
longer purchase high interest mortgage loans like those
originated by CBNV and GNBT. RFC’s withdrawal, in turn,
caused the Shumway organization to shut down in early 2003.2

       B.     The Separate Class Actions and the Initial
              Settlement

       The consolidated class actions before us began as six
separate class actions. The first—Davis v. CBNV, which named


       2
          In March 2004, the Comptroller of the Currency
declared GNBT to be “unsafe and unsound,” and appointed as
receiver the Federal Deposit Insurance Corporation. 

The FDIC was then substituted for GNBT as the real party in
interest in the class action.

                               11
CBNV and RFC as defendants—was filed in Pennsylvania state
court in May 2001 as a putative state-wide class action and was
later removed to federal court (on federal preemption grounds).
The first action to name GNBT and RFC as defendants was
Ulrich v. GNBT, filed in the District Court for the Western
District of Pennsylvania in September 2002 as a putative
nationwide class action. The remaining four actions are: Sabo
v. CBNV, filed in federal court in September 2002 as a putative
nationwide class action; and Picard v. CBNV (October 2002),
Mathis v. GBNT (November 2002), and Kessler v. RFC
(February 2003), all filed in Pennsylvania state court as putative
state-wide class actions and later removed to federal court in the
Western District. R. Bruce Carlson of Carlson Lynch Ltd.,
located in Sewickley, Pennsylvania, was the lead plaintiffs’
attorney in all six actions, and was subsequently appointed as
class counsel by the District Court.3

       These actions asserted claims against CBNV, GNBT, and
RFC under the Real Estate Settlement Procedures Act
(“RESPA”), 12 U.S.C. § 2601 et seq.; the Racketeer Influenced
and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et
seq.; and the usury, unfair trade practices, and consumer
protection laws of Pennsylvania. Section 8(a) of RESPA
prohibits the giving or accepting of any “fee, kickback, or thing


       3
        In addition to Carlson Lynch Ltd., the class is also
represented by the Charleston, South Carolina law firm of
Richardson, Patrick, Westbrook & Brickman, LLC.

                               12
of value” in exchange for referrals of federally related mortgage
loans. 12 U.S.C. § 2607(a). Section 8(b) prohibits the giving or
accepting of “any portion, split, or percentage” of unearned fees.

Plaintiffs alleged that defendants violated
RESPA in both ways: (1) by charging excessive origination fees
(often as high as 10% of the loan principal) and paying them as
“kickbacks” to Shumway in exchange for its mortgage-
solicitation services; and (2) by charging title services fees for
services that were never performed. Plaintiffs alleged that RFC,
as the assignee of the closed loans, was derivatively liable for
the banks’ conduct. See 15 U.S.C. § 1641(d)(1).

        In July 2003, the named plaintiffs and the defendants
(collectively, the “Settling Parties”) moved for preliminary
approval of a proposed nationwide class action settlement (the
“Initial Settlement”). The settlement class was defined to
include all persons (1) who entered into a loan agreement with
CBNV or GNBT, (2) whose loan was secured by a second
mortgage or deed of trust on property located in the United
States, and (3) whose loan was purchased by RFC. There was
no time restriction on the class, which encompassed
approximately 44,000 loans (dating back to as early as 1998).

       In reaching the Initial Settlement, the Settling Parties
agreed that the “realistic best-case scenario for RESPA damages
on a per-loan basis” was $4,765 ($3,675 for origination fees and
$1,090 for title service fees). With a class of approximately
44,000 members, the Settling Parties concluded that the total

                               13
“best-case” recovery for the class (after averaging the amount of
individual fees charged) was approximately $200 million.4

       The Initial Settlement committed defendants to pay up to
$33 million, with class members receiving between $250 and
$925 each. The settlement fund would be allocated among class
members based on two core factors: (1) when the class
member’s loan closed; and (2) the class member’s state of
residence when the loan closed.

       First, $23.2 million would be distributed automatically
based on the date the loans closed. The approximately 14,000
class members whose loans closed within one year of the
“relevant complaints”—i.e., the earliest class action complaint
filed against the bank that made the loan to the class member,


       4
          RESPA provides that “[a]ny person or persons who
violate the prohibitions or limitations of this section shall be
jointly and severally liable to the person or persons charged for
the settlement service involved in the violation in an amount
equal to three times the amount of any charge paid for such
settlement service.” 12 U.S.C. § 2607(d)(2). Thus, if the
settlement fees charged by defendants violated RESPA, an
individual plaintiff would (assuming he or she prevailed at trial
or on summary judgment) be entitled to three times the amount
of those fees. The Settling Parties did not factor in the potential
trebling of damages under RESPA, which would push up the
“best-case” recovery per class member to more than $14,000
(and more than $600 million for the class as a whole).

                                14
the Davis Complaint (for CBNV borrowers) and the Ulrich
Complaint (for GBNT borrowers)—would receive $600
automatically. This structure reflected the hurdle posed by
RESPA’s one-year statute of limitations, which begins to run
“from the date of the occurrence of the violation,” 12 U.S.C.
§ 2614, i.e., the date the loan closed, see, e.g., Snow v. First Am.
Title Ins. Co., 

, 359–61 (5th Cir. 2003). As the
Settling Parties explain, “[t]his was a negotiated compromise of
a vigorously disputed issue”: whether the named plaintiffs in the
other four actions, as well as the absent class members, could
rely on the filing dates of the Davis and Ulrich complaints to
make their RESPA claims timely. (Settling Parties’ Br. at 71.)

        Class members whose loans closed more than one year
before the Davis or Ulrich complaints were filed would
automatically receive $250 (less than half of the automatic
payment to class members with timely claims). However, these
class members were eligible to receive an additional $302 (for
a total of $552) based on their answers to questions in a claims
submission form designed to determine whether they could rely
on equitable tolling as a defense to the expiration of the one-year
limitations period.

       Finally, class members could receive an additional $325
if they resided in one of 21 “Qualifying States” where class
counsel determined that class members could have pursued state




                                15
law claims against CBNV, GNBT, and/or RFC.5

        The Initial Settlement provided for “an extremely
generous fee” of $8.1 million to class counsel, Community Bank

, and incentive fee payments to the named
plaintiffs of $1,500 each. It also included a broad release of all
claims that were (or could have been) asserted in the litigation.
The release specifically included claims that could have been
brought under TILA and HOEPA, including claims for actual
damages, statutory damages, and rescission.

        Less than a week after the Settling Parties’ filed their
motion, the District Court entered an order (1) consolidating
these six actions into the Kessler action 6 (2) “conditionally”
certifying a class for settlement purposes; and (3) preliminarily
approving the Initial Settlement. The Court also directed that
notice be sent to members of the class advising them of the
settlement and of their right to opt out. Later that year (in
November 2003), the Court approved the filing of an amended

       5
        The “Qualifying States” are: Colorado, Idaho, Illinois,
Indiana, Iowa, Kansas, Maine, Maryland, Missouri, New Jersey,
North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina,
Tennessee, Utah, Washington, Wisconsin, Wyoming, and
Virginia.
       6
        For ease of reference, we collectively refer to the six
consolidated class actions before us in this appeal as the
“consolidated Kessler action.”

                               16
consolidated class action complaint action for all six actions (the
“Consolidated Amended Complaint”) to cure what the Court
viewed as a potential jurisdictional problem regarding the
Kessler action (as noted, the action into which the six class
actions had been consolidated).7

       C.     The Objectors

       As noted, none of the named plaintiffs brought claims
against the defendants under TILA or HOEPA. This prompted
several plaintiffs’ firms—whom we shall refer to collectively as
“counsel for the Objectors”—to mail letters to members of the
putative class urging them to communicate with those law firms
regarding the settlement, and, in some instances, urging them to
opt out of the 

–88. A principal reason
given was the allegedly inadequate consideration paid by the
defendants for release of the class members’ TILA and HOEPA
claims.




       7
          In Community Bank I, we rejected the Objectors’
argument that the District Court lacked subject matter
jurisdiction over the Kessler action. Though no federal question
appeared on the face of the initial Kessler complaint, we held
that the filing of the Consolidated Amended Complaint—which
explicitly asserted federal causes of action in all six actions
(including claims under RESPA and RICO)—cured the
jurisdictional 

–98.

                                17
       TILA is a federal consumer protection statute, intended
to promote the informed use of credit by requiring certain
uniform disclosures from lenders. The statute is implemented
by Regulation Z, 12 C.F.R. §§ 226.1 et seq., which requires
creditors who make loans secured by a borrower’s principal
dwelling to provide those borrowers with certain material
disclosures, 

HOEPA, enacted as an amendment to
TILA, applies to a special class of regulated loans that are made
at higher interest rates and are subject to special disclosure
requirements. See 15 U.S.C. § 1639. In particular, HOEPA
requires lenders to disclose to their borrowers the annual
percentage rate (“APR”) of sums due for the use of monies
loaned and the amount of regular monthly payments. 

According to the Objectors, the vast majority of
class members’ loans are subject to HOEPA. Like claims for
damages under RESPA, TILA/HOEPA damages claims are
subject to a one-year statute of limitations. 

        The Objectors allege that defendants violated TILA and
HOEPA by understating materially the APR in the disclosure
forms they were required to give borrowers when the loans
closed. The calculation of the APR must incorporate “finance
charges,” as defined in Regulation Z, 12 C.F.R. § 226.4. See
also 15 U.S.C. § 1605(a). Although fees for title abstracts and
title examinations ordinarily are excluded from the definition of
“finance charges,” 

and therefore not
incorporated into the calculation of the APR, the Objectors
contended that the fees charged by CNBV and GNBT were

                               18
neither “bona fide” nor “reasonable”—and thus should have
been factored into the calculation of the APR, 

(1) no title examinations were
performed, and (2) no true abstracts of title were obtained.
Instead, the Objectors alleged that borrowers were charged for
“property reports” (which allegedly are neither “true” title
examinations nor abstracts) by entities affiliated with Shumway,
and that this charge was illegally marked up and passed on to the
borrower.8

       The Objectors contend that each class member’s claims
under TILA/HOEPA are worth as much as $52,000 per loan,
which figure includes actual, statutory, and rescission damages.9


       8
        Though not the focus of their arguments on appeal, we
note that the Objectors alleged that defendants violated
TILA/HOEPA in two other ways: (1) failing to give borrowers
a one-page HOEPA disclosure document three days prior to the
loan closing; and (2) including a prepayment penalty provision
on loan documents that did not identify one of the five
circumstances in which the lender could enforce that provision.
       9
         “[A]ny creditor who fails to comply with any
requirement imposed under” TILA is liable to the borrower “in
an amount equal to the sum of . . . any actual damage sustained
by [the borrower] as a result of the failure.” 15 U.S.C.
§ 1640(a)(1). In addition to actual damages, a violation of TILA
with respect to a loan governed by HOEPA entitles the borrower
to an award of statutory damages in “an amount equal to the sum

                               19
Together with the defendant’s potential liability under RESPA
(including trebled damages), the Objectors contend that the
actual value of the claims being released is almost $3 billion
(approximately $67,000 per class member).

        By October 2003, 435 class members had opted out of
the class settlement.       Two weeks later, the District
Court—“without conducting a hearing, setting a briefing
schedule or otherwise allowing [the Objectors] any practical
opportunity to be heard”—granted the Settling Parties’ joint
motion to invalidate those opt-outs. Community Bank 

. The Court entered an order that “followed verbatim
the Order proposed by the [S]ettling [P]arties” extending the
opt-out period to November 2003. 

Court


of all finance charges and fees paid by the consumer, unless the
creditor demonstrates that the failure to comply is not material.”

Finally, when a borrower exercises the right of
rescission (as a result of a violation of TILA), he or she is
entitled to a return of all finance and other charges made in
connection with the loan. See 

         In a class action asserting a violation of TILA, the total
class recovery may not exceed $500,000 or one percent of the
creditor’s net worth (whichever is less). 

The Parties do not dispute, however, that this cap does not apply
to the special HOEPA statutory damages provision. See
Elizabeth Renuart & Kathleen Keest, Truth in Lending § 8.8.3.1,
at 626 (Nat’l Consumer Law Ctr., 6th ed. 2007 & Supp. 2009)
(citing 15 U.S.C. § 1640(a)(4)).

                                20
entered an order barring the objecting law firms from
communicating with any member of the class, and denied the
Objectors’ motion to intervene “without explanation.” 

291.

       D.     The Prior Appeal

        The District Court held a hearing on the fairness of the
Initial Settlement on November 14, 2003, and heard argument
from the Settling Parties and the Objectors. On December 4,
2003, the Court entered a final order approving the settlement.
The Objectors timely appealed.

        In Community Bank I, we vacated the District Court’s
certification of the class and approval of the settlement,
concluding that the Court had erred in several ways, including
by: (1) failing to make an independent inquiry as to whether the
Rule 23 class action requirements were satisfied; (2) improperly
enjoining counsel for the Objectors from communicating with
absent class members; and (3) denying the Objectors’ motion to
intervene without “reasoning or discussion.” 

As a
result, we declined “to address definitively the substantive
nature of the settlement.” 

       With respect to the District Court’s certification decision,
we concluded that three of the four Rule 23(a)
requirements—numerosity, typicality, and commonality—were
met, as well as the Rule 23(b)(3) predominance and superiority

                                21
requirements. 

We expressed serious concerns,
however, as to whether the adequacy requirement of Rule 23(a)
could be met, specifically in the context of whether the named
plaintiffs and class counsel were adequate representatives in
light of their failure to assert colorable TILA/HOEPA claims.

       We were particularly concerned in Community Bank I
with the Settling Parties’ invoking the statute-of-limitations
defense to justify declining to bring TILA/HOEPA claims. We
noted that the Settling Parties themselves had represented to our
Court and the District Court that “approximately 14,000
members of the class have loans that . . . closed ‘within one year
of the date of filing of the relevant complaint.’” 

Accordingly, it “appear[ed] that one-third of the class may have
affirmative TILA and HOEPA claims that are not time barred.”

whether the named plaintiffs’ interests were
“sufficiently aligned with those of the absent class members” if
the District Court determined that the TILA/HOEPA claims
were “viable,” noting that, “[b]ecause the one-year statutory
period for filing an affirmative TILA or HOEPA claim has
lapsed for all named plaintiffs, [they] appear to have no
incentive to maximize such claims for the approximately 14,000
class members who may still retain this valuable cause of
action.” 

       In that light, “[a]t the very least . . . consideration should
have been given to the feasibility of dividing the class into sub-
classes so that a court examining the proposed settlement could

                                 22
have judged the fairness of the settlement as it applied to
similarly situated class members.” 

We thus directed
that, should the District Court find on remand that class
certification is appropriate, it also “should determine whether
subclasses are necessary or appropriate.” 

      We also expressed concern over whether “the absent
class members’ interests were sufficiently pursued by class
counsel”:

       We have already noted that class counsel never
       asserted colorable TILA and HOEPA claims.
       However, those claims were part of the settlement
       release. Failure to pursue such claims may
       suggest that class counsel [abdicated] their duty to
       the class in favor of the enormous class-action fee
       offered by defendants.

Though we emphasized that we were not
“preclud[ing] the possibility that the adequacy of class
representation c[ould] be established on a more developed
record,” we “instructed [the Court] to examine carefully this
matter on remand.” 

       E.     The Proceedings on Remand

                     1.      The Hobson Action



                               23
       To begin, we note another putative nationwide class
action relevant to (though not a part of) these appeals. While the
appeal in Community Bank I was pending, counsel for the
Objectors filed a putative nationwide class action—captioned
Hobson v. Irwin Union Bank and Trust Co., et al.—in the
federal District Court for the Northern District of Alabama.
According to the Objectors, Hobson “was filed to address the
inadequacy of the Settling Plaintiffs and their failure to pursue,
but nonetheless release, TILA/HOEPA claims,” as well as to
represent persons who (1) were victims of the Shumway
predatory lending scheme, but (2) whose loans were not
purchased by RFC (and thus did not fall within the class).
(Objectors’ Br., No. 08-3621, at 22.)

        In May 2005, the Judicial Panel for Multidistrict
Litigation transferred Hobson to the Western District of
Pennsylvania. After our remand in Community Bank I, the
attorneys for the Hobson plaintiffs filed (1) a motion for class
certification (in Hobson), (2) a motion to appoint one of the law
firms representing the Objectors—Walters, Bender, Strohbehn
& Vaughn—as interim lead class counsel (in the Hobson action,
as well as the consolidated Kessler action), and (3) a motion to
file a Proposed Second Amended Class Action Complaint (in
the consolidated Kessler action).

              2.      The Objectors Withdraw Their Motion to
                      Intervene



                               24
        In November 2005, the District Court held a conference
call with counsel for the Settling Parties and the Objectors to
discuss how to proceed on remand. Class counsel advised the
Court that it intended to continue to pursue approval of the
Initial Settlement. The Court then asked Michael Vaughn, Esq.
(of the Walters, Bender firm) whether he still wished to pursue
intervention. Mr. Vaughn responded no, explaining that he
believed the transfer of Hobson to the MDL proceeding was an
adequate way to seek the assertion of the potential
TILA/HOEPA claims, and that the intervention issue had
essentially been “moot[ed] by the MDL transfer” of Hobson.

              3.     The District Court’s Viability Briefing

       During the same conference call, the District Court also
appointed a Steering Committee—composed of various lawyers
from the law firms representing the class, the defendants, and
the Objectors—to establish a briefing schedule to address the
merits of the potential TILA/HOEPA claims. The Court
explained that it envisioned a bifurcated analysis on remand: (1)
it would first address the viability of potential TILA/HOEPA
claims; and (2) then address adequacy and the other Rule 23
elements. Mr. Vaughn agreed with this structure:

       The Court: I think the first thing we have to do is
       determine the viability of these claims. If I
       determine that they are viable, then I think the
       argument as to whether or not the named

                               25
       representative you have can adequately represent
       those members of your class who have such
       claims . . . is Question No. 2.

       Mr. Vaughn: We agree with that, Your Honor.

       The Court: If I say they’re not viable because of
       statute of limitations, or the elements can’t be
       met, or something like that, then I think that the
       wind might be out of your sails here.

       Mr. Vaughn: Your Honor, I think you’re right.

       The Steering Committee negotiated a briefing schedule
allowing all interested parties to submit briefs on the viability
issue. The scheduling order also provided for an exchange of
certain loan files, and stipulated that no other formal discovery
would occur.

       Counsel for the Objectors and the defendants submitted
extensive briefing dealing with the TILA/HOEPA issues. Class
counsel, however, did not brief the issue.            Instead, they
submitted a filing to the District Court stating that they (i)
“expect[ed] that counsel for the Defendants group will file with
the Court an initial ‘viability’ brief that thoroughly discusses the
legal backdrop of the class-based TILA/HOEPA claims that are
in dispute,” and (ii) concluded, “after much reflection, that [the]
Court would not benefit from a brief by [the named plaintiffs]

                                26
that would discuss much of the same authority set forth in the
initial brief filed by the Defendants.” Counsel “elected to wait
and see which arguments . . . are advanced in the initial
submission” by the Objectors, and thereafter file a brief

       with a comprehensive recitation of relevant facts
       that demonstrates: 1) what [counsel] learned
       through their investigation into the underlying
       conduct in dispute; 2) how that factual
       information bears upon the class-based
       TILA/HOEPA theories at issue; and[] 3) the
       strategy underlying the specific legal claims that
       they elected to pursue in this litigation, given the
       facts that they learned in their investigation.

Though class counsel in fact submitted this brief, the District
Court, as we discuss below, did not discuss it in ruling on the
viability question.

              4.      The Modified Settlement

        As the parties were briefing the viability issue, the
Settling Parties entered into new settlement negotiations to
“explore a possible enhancement to the [Initial] Settlement.”
(Settling Parties’ Br. at 24.) Counsel for the Objectors initially
participated in those negotiations, including unsuccessful
mediation before retired District Court Judge Nicholas Politan
of the District of New Jersey.

                               27
        During the summer of 2006, the Settling Parties (who
were not joined by counsel for the Objectors) negotiated an
“enhanced” settlement (the “Modified Settlement”) with the
assistance of former Third Circuit Judge Timothy Lewis.
According to the Settling Parties, “[t]he renewed settlement
negotiations considered the alleged monetary damages Class
members ostensibly could have sought assuming . . . that the
posited TILA/HOEPA claims had been pleaded and could
potentially survive a Rule 12(b) motion.” (Settling Parties’ Br.
at 25.) The Settling Parties determined that the potential
“actual” (i.e., compensatory) damages the Objectors were
claiming under TILA/HOEPA amounted to, on average,
approximately $415 per loan. (Id.) However, because of
“Defendants’ perception of the strength of their statute of
limitations . . . defenses,” they refused to make any additional
payments to any member of the Class in exchange for the release
of their potential TILA/HOEPA liability without first
determining whether a given Class Member had some basis for
relying on equitable tolling. Accordingly, the Settling Parties
proposed a claim form containing the following questions for
class members to answer:

       1.     Did you read your Settlement Statement
              (Form HUD-1) prior to obtaining your
              loan?

       2.     At the time that you obtained your . . .
              loan, did you believe that the Statement of

                              28
              Settlement Charges listed on your HUD-1
              was accurate?

       3.     At the time that you obtained your . . .
              loan, did you believe that the Settlement
              Charges listed on your HUD-1 were for
              services actually performed?

       4.     At the time that you obtained your CBNV
              [or GNBT] loan, did you believe that the
              Settlement Charges listed on your HUD-1
              were reasonable and appropriate?

       The Modified Settlement provided that if a class member
responds to these questions “appropriately,” he or she is entitled
to an additional $332, representing approximately 80% of the
class member’s potential actual damages under TILA and
HOEPA. The defendants agreed to pay up to an additional
$14.6 million to those persons, for a total of $47.6 million.

        In addition, the Modified Settlement reduced the amount
of attorneys’ fees that class counsel would petition the Court to
approve from $8.1 million to $7.5 million. Defendants also
agreed to pay “up to an additional $2 [million] in attorneys’ fees
and costs”—presumably, to counsel for the Objectors—“if so
ordered by the Court.” The Modified Settlement followed the
terms of the Initial Settlement in all other material respects.



                               29
               5.     The District Court Determines the
                      TILA/HOEPA Claims Are Not Viable

        The District Court held oral argument on the viability
issues in July 2006.10 It asked Counsel for the Objectors what
“standard” it should use to determine the viability of the
TILA/HOEPA claims. Counsel for the Objectors agreed with
the District Court that our Court had intended for it to apply a
Rule 12(b)(6) standard, as did class counsel. At the same time,
Counsel for the Objectors argued that the statute-of-limitations
defense could not be determined using such a standard, as it
presented factual questions that “[r]arely can . . . be disposed of
by . . . a motion to dismiss.” By contrast, counsel for the
defendants argued that a Rule 12(b)(6) standard was
inappropriate, arguing that our Court “did not contemplate that
this viability standard . . . could be satisfied just by showing the
12(b)(6) standard was satisfied.”

        The District Court disagreed with the defendants’
counsel, explaining that the question should be whether, “taking
[the Objectors’] allegations as true, does a claim exist under
TILA or HOEPA?” The Court stated that it believed such a
cause of action could be adequately stated under Rule 12(b)(6),
but characterized the merits of the statute-of-limitations defense
as a “tough one.”


       10
         At the outset of the hearing, class counsel notified the
Court of the Modified Settlement.

                                30
       In October 2006, the District Court issued a 33-page
“Memorandum” (the “2006 Memorandum”) in which it
determined that the proposed TILA/HOEPA claims for damages
and rescission were not viable. At the outset, the Court
explained that it had interpreted our decision in Community
Bank I as directing it to

       apply a hybrid standard of review. Namely, the
       court of appeals directed this court to examine
       whether the Class Plaintiffs were inadequate
       representatives under Rule 23. The court of
       appeals questioned whether the Class Plaintiffs
       were inadequate if they failed to assert
       TILA/HOEPA claims that were “viable.” Thus,
       it appears that the court of appeals intended this
       court to examine whether the Class Plaintiffs were
       inadequate representatives under Rule 23 because
       they failed to assert TILA/HOEPA claims which
       could have survived a Rule 12(b)(6) motion to
       dismiss.

In the end, the Court agreed with the defendants’ “principal
argument” regarding the viability question: “that the
TILA/HOEPA claims for damages are not viable because they
are time barred.”

       We discuss the District Court’s viability conclusions at
length below. To summarize, it first agreed with the defendants

                              31
that no class member could bring a timely claim under TILA or
HOEPA for damages or rescission, as no such amended
pleading could satisfy the requirements of Federal Rule of
Procedure 15(c), and thus could not relate back to any earlier
complaint in the consolidated Kessler action. In addition, the
Court determined (while applying a Rule 12(b)(6) standard) that
no class member could rely on equitable tolling to save their
otherwise time-barred claims.

         The Objectors filed a motion asking the District Court to
reconsider its 2006 Memorandum, and alternatively asked it to
certify the Memorandum for an interlocutory appeal pursuant to
28 U.S.C. § 1292(b). The Court denied both motions.11

              6.      The District Court Appoints a “Friend of
                      the Court”

       The District Court held a conference call with counsel for
the Settling Parties and the Objectors on December 1, 2006, and
expressed its intent to appoint an “independent body” to
evaluate the fairness of the Modified Settlement. The Court
made clear that it would not ask this “independent body” to
“evaluate the case in terms of whether the requirements of Rule


       11
          In February 2008, the Objectors filed with our Court a
petition for mandamus and permission to appeal under Federal
Rule of Civil Procedure 23(f). We denied that petition in March
2008.

                               32
23 have been met or not.” Counsel for the Objectors raised no
objection to the Court’s proposal at this time.

       The Court later chose retired Chief Judge Donald Ziegler
of the District Court for the Western District of Pennsylvania to
serve as a “friend of the court,” and to provide a “non-binding
advisory opinion” as to whether the Modified Settlement was
“fair and reasonable” under Rule 23. In March 2007, the
Settling Parties and the Objectors presented oral arguments to
Judge Ziegler regarding the fairness of the Modified Settlement.
However, counsel for some of the Objectors objected to the
process, arguing to Judge Ziegler that his appointment was
improper.12


       12
          The Objectors renew that challenge before our Court,
arguing that the District Court’s appointment of Judge Ziegler
was improper because he was not appointed as an expert or a
special master. See Fed. R. Civ. P. 53(c); see also Manual for
Complex Litigation (Fourth) § 21.632 (2004) (“Whether the case
has been certified as a class at an earlier stage or presented for
certification and settlement approval at the same time, the judge
can have a court-appointed expert or special master review the
proposed settlement terms, gather information necessary to
understand how those terms affect the absent class members,
and assist the judge in determining whether the fairness,
reasonableness, and adequacy requirements for approval are
met.”).     Because the Objectors did not challenge the
appointment until oral argument before Judge Ziegler—and
despite having six weeks between receiving notice of the

                               33
         Judge Ziegler issued his advisory opinion in July 2007,
and concluded that the Modified Settlement was fair,
reasonable, and adequate. He reasoned that the named plaintiffs
faced significant obstacles to their RESPA and RICO claims if
the case proceeded to trial, including the possibility that they
would be unable to prove that defendants had charged them fees
(e.g., title fees and origination fees) for services that were not
actually performed. However, Judge Ziegler did not consider
whether the Modified Settlement was fair in the context of the
Objectors’ arguments that the class members’ TILA/HOEPA
claims were significantly more valuable, noting that the District
Court “ha[d] already concluded that there are no viable
TILA/HOEPA claims” and that he was not authorized to “revisit
that issue.”

              7.      The District Court Denies the Objectors’
                      R enew ed M otion to Intervene,
                      Conditionally Re-Certifies the Class, and
                      Preliminarily Approves the Modified
                      Settlement

       By the Fall of 2007, the Settling Parties and the Objectors
had fully briefed the Settling Parties’ motion for conditional re-


appointment and the argument—they have waived this
challenge, and we decline to address it. See, e.g., Fajardo
Shopping Ctr., S.E. v. Sun Alliance Ins. Co. of P.R., 

,
6 (1st Cir. 1999).

                               34
certification of the class and preliminary approval of the
Modified Settlement. After a hearing on those motions, on
November 9, 2007, the Walters, Bender firm filed a “renewed”
motion to intervene in the consolidated Kessler action, arguing
that the Modified Settlement was the product of collusion
between class counsel and counsel for defendants.

        In January 2008, the District Court conditionally re-
certified the Class, preliminarily approved the Modified
Settlement, re-appointed class counsel, and re-appointed the
named plaintiffs as class representatives. The Court also denied
the Objecting Class Member’s Renewed Motion to Intervene as
untimely, stating that

       the Objectors orally withdrew their motion to
       intervene in November of 2005. Although the
       court will direct the Settling Parties to submit a
       revised notice plan and provide the class with an
       additional period to opt out, under the unique
       circumstances of this case, the Objectors[’]
       renewed motion is untimely. . . . They have
       identified no persuasive reason why they failed to
       pursue intervention in the interim other than their
       dissatisfaction with the court’s rulings to date.

      The Settling Parties then filed a proposed plan for
disseminating notice to the class, which the District Court
approved. Only 55 members submitted timely opt-outs. Among

                               35
the class members who chose not to opt out were the named
plaintiffs in the Hobson action.

              8.     The District Court Certifies the Class and
                     Approves the Modified Settlement

        The District Court held a final fairness hearing on June
30, 2008, during which it heard at length from class counsel and
counsel for the Objectors. The Objectors argued, among other
things, that (1) the Court erred when it appointed Judge Ziegler
to issue an advisory opinion on the fairness of the Modified
Settlement; (2) the Modified Settlement did not extract
sufficient consideration for the class members’ TILA/HOEPA
claims (or the RESPA, RICO, and state law claims the named
plaintiffs had pled); and (3) the defendants—in particular RFC
and PNC Bank (the successor to CBNV)—could withstand a far
greater judgment.

       On August 14, 2008, the Court issued a Memorandum
and Order certifying the class and approving the modified
settlement. With respect to the adequacy requirement, it relied
solely on its 2006 Memorandum, in which it had

       concluded that the [proposed TILA/HOEPA]
       claims were time-barred. Thus, Class Counsel’s
       strategic decision to pursue other legal theories in
       this case in no way renders them inadequate. In
       any event, . . . the proposed settlement accounts

                               36
       for the risk that some members of the class could
       have established sustainable TILA/HOEPA
       claims and provides for an award where
       appropriate.

As a result of these determinations, the Court never considered
the creation of a subclass.

       The Court then examined the fairness of the Modified
Settlement in light of the factors announced in Girsh v. Jepson,

(3d Cir. 1975), and concluded that they counseled
in favor of approving the Modified Settlement as fair,
reasonable, and adequate.           It further concluded that,
notwithstanding the named plaintiffs’ failure to bring
TILA/HOEPA claims, the Modified Settlement was fair,
reasonable, and adequate because it provided “class members
with additional relief for such claims, even though th[e] court
found them to be time-barred.”

       The Objectors timely appealed to our Court.

II.    Jurisdiction and Standards of Review

      The District Court had jurisdiction under 28 U.S.C.
§ 1331 because the Consolidated Amended Complaint asserted
claims under federal law (i.e., RESPA and RICO). See
Community Bank 

–98. The Court had
supplemental jurisdiction over the state law claims under 28

                              37
U.S.C. § 1367(a). We have appellate jurisdiction under 28
§ U.S.C. 1291.

        We review a district court’s certification of a class for
abuse of discretion. In re Schering Plough Corp. ERISA Litig.,

, 595 (3d Cir. 2009); Community Bank 

. A district court abuses its discretion if its “decision rests
upon a clearly erroneous finding of fact, an errant conclusion of
law, or an improper application of law to fact.” In re Hydrogen
Peroxide Antitrust Litig., 

, 312 (3d Cir. 2008)
(internal quotation marks and citation omitted). However,
“whether an incorrect legal standard has been used [in ruling on
class certification] is an issue of law to be reviewed de novo.”

marks and citation omitted); accord
Regents of Univ. of Cal. v. Credit Suisse First Boston (USA),
Inc., 

, 380 (5th Cir. 2007).

III.   Discussion

        We begin by noting that several of the Objectors’ claims
of error underwhelm. In particular, we see nothing to support
their attacks on the District Court’s impartiality, or their
repeated insinuations that the Court intentionally disregarded
our mandate in Community Bank I. From our independent
review of the record, the Court made great efforts to address the
concerns we expressed in our prior opinion, and attempted to
follow an orderly procedure on remand in ruling on class
certification and the fairness, adequacy, and reasonableness of

                                 38
the settlement.

       That said, we nonetheless conclude that the proceedings
on remand went off course. To provide needed context, we first
discuss the legal standards that apply to the Rule 23
requirements at issue in this case, as well as the extent to which
the merits of statute-of-limitations defenses may become
relevant to a district court’s evaluation of those requirements.
We then turn to the District Court’s certification decision here,
and conclude that the Court—by approaching the adequacy of
representation requirement as though it were ruling on a motion
to amend a pleading under Rule 15(c), or a motion to dismiss
under Rule 12(b)(6)—engaged in an analysis that was neither
required nor contemplated by Rule 23. From there, we discuss
our continuing concerns regarding whether the named plaintiffs
and class counsel are adequate class representatives, paying
particular attention to: (a) the statute-of-limitations problems
faced by the named plaintiffs’ claims (whether under RESPA,
TILA, or HOEPA); and (b) class counsel’s decision not to bring
TILA/HOEPA claims on behalf of the class. We address finally
the Objectors’ argument that the Court abused its discretion in
denying their renewed motion to intervene, as well as their
request that we reassign this matter to a different District Court
Judge on remand, both of which we reject.

       A.     Class Certification

              1.      Legal Standards

                               39
        “Rule 23 is designed to assure that courts will identify the
common interests of class members and evaluate [(1)] the
named plaintiffs’ and [(2)] counsel’s ability to fairly and
adequately protect class interests.” In re General Motors Corp.
Pick-Up Truck Fuel Tank Prods. Liab. Litig., 

, 799
(3d Cir. 1995). Every putative class must satisfy the four
requirements of Rule 23(a): (1) the class must be “so numerous
that joinder of all members is impracticable” (numerosity); (2)
there must be “questions of law or fact common to the class”
(commonality); (3) “the claims or defenses of the representative
parties” must be “typical of the claims or defenses of the class”
(typicality); and (4) the named plaintiffs must “fairly and
adequately protect the interests of the class” (adequacy of
representation, or simply adequacy).            Fed. R. Civ. P.
23(a)(1)–(4). If those requirements are met, a district court must
then find that the class fits within one of the three categories of
class actions in Rule 23(b). The District Court certified this
class action under Rule 23(b)(3), which requires that (i)
common questions of law or fact predominate (predominance),
and (ii) the class action is the superior method for adjudication
(superiority).

         “Confronted with a request for a settlement-only class
certification, a district court need not inquire whether the case,
if tried, would present intractable management problems, for the
proposal is that there be no trial.” Amchem Prods., Inc. v.
Windsor, 

, 620 (1997) (internal citation omitted).
However, the “other specifications of [Rule 23]—those designed

                                40
to protect absentees by blocking unwarranted or overbroad class
definitions—demand undiluted, even heightened, attention in
the settlement context.” 

disputed Rule 23 requirement in this case, as it
was in Community Bank I, is adequacy of representation, both
as to the named plaintiffs and their counsel. “The inquiry that
a court should make regarding the adequacy of representation
requisite of Rule 23(a)(4) is to determine that the putative
named plaintiff has the ability and the incentive to represent the
claims of the class vigorously, . . . and that there is no conflict
between the individual’s claims and those asserted on behalf of
the class.” Hassine v. Jeffes, 

, 179 (3d Cir. 1988).
This inquiry is vital, as “class members with divergent or
conflicting interests [from the named plaintiffs and class
counsel] cannot be adequately represented . . . .” In re Diet
Drugs Prods. Liab. Litig., 

, 395 (3d Cir. 2004).

       “Although questions concerning the adequacy of class
counsel were traditionally analyzed under the aegis of the
adequate representation requirement of Rule 23(a)(4) . . . those
questions have, since 2003, been governed by Rule 23(g).”
Sheinberg v. Sorenson, 

, 132 (3d Cir. 2010). That
subsection lists several non-exclusive factors that a district court
must consider in determining “counsel’s ability to fairly and
adequately represent the interests of the class,” Fed. R. Civ. P.
23(g)(1)(B), including: (1) “the work counsel has done in
identifying or investigating potential claims in the action,” (2)

                                41
“counsel’s experience in handling class actions, other complex
litigation, and the types of claims asserted in the action,” (3)
“counsel’s knowledge of the applicable law,” and (4) “the
resources that counsel will commit to representing the class.”
Fed. R. Civ. P. 23(g)(1)(A).

       “Realistically, for purposes of determining adequate
representation, the performance of class counsel is intertwined
with that of the class representative.” Pelt v. Utah, 

, 1288 (10th Cir. 2008). As our own Judge Aldisert has
explained, “[e]xperience teaches that it is counsel for the class
representative and not the named parties . . . who direct and
manage [class] actions. Every experienced federal judge knows
that any statements to the contrary [are] sheer sophistry.”
Greenfield v. Villager Indus., Inc., 

, 832 n.9 (3d
Cir. 1973).

              2.     Statute-of-Limitations Issues at the Class
                     Certification Stage

        Objectors argue that the District Court erred in
considering the merits of the defendants’ statute-of-limitations
defenses to the potential TILA/HOEPA claims in ruling on class
certification. As noted, the Court determined that any potential
claims possessed by the class under TILA/HOEPA were not
viable because they were time-barred; thus the named plaintiffs
and class counsel were not inadequate for failing to bring them.
Relying on the Supreme Court’s decision in Eisen v. Carlisle &

                               42
Jacquelin, 

(1974), the Objectors contend that “the
[D]istrict [C]ourt’s inquiry into the merits of the TILA/HOEPA
claims . . . was unnecessary for purposes of a Rule 23 analysis
and cannot be sustained as permissible.” (Objectors’ Br., No.
08-3261, at 73.)

        In Eisen, the Supreme Court stated that there is “nothing
in either the language or history of Rule 23 that gives a court
any authority to conduct a preliminary inquiry into the merits of
a suit in order to determine whether it may be maintained as a
class 

. As we explained in Hydrogen
Peroxide, this statement in Eisen led to “uncertainty” as to
whether district courts are categorically prohibited from
evaluating the merits of a class claim at the certification stage,
even where merits questions overlap with a Rule 23

. This tension—between a district
court’s obligation to make findings regarding the Rule 23
requirements, and the apparent bar on “conduct[ing] a
preliminary inquiry into the merits of” a class claim—is
reflected in how courts have confronted statute of limitations at
the class certification stage.

       In general, a “statute of limitations is an affirmative
defense, and the burden of establishing its applicability to a
particular claim rests with the defendant.” Bradford-White
Corp. v. Ernst & Whinney, 

, 1161 (3d Cir. 1989)
(internal quotation marks and citations omitted); see also Fed.
R. Civ. P. 8(c). Thus, many courts have refused to consider

                               43
statute-of-limitations issues at the class certification stage,
reasoning that such an inquiry veers impermissibly into whether
the named plaintiffs and the class can prevail on their claims.13


       13
         See, e.g., Int’l Woodworkers of Am. v. Chesapeake Bay
Plywood Corp., 

, 1270 (4th Cir. 1981) (“Courts
passing upon motions for class certification have generally
refused to consider the impact of such affirmative defenses as
the statute of limitations on the potential representative’s
case.”); In re VMS Sec. Litig., 

, 477 (N.D. Ill.
1991) (“[I]nasmuch as the statute-of-limitations defense
addresses the merits of [the] plaintiff’s claims, it is beyond the
scope of a motion for class certification.”); In re Baldwin-United
Corp. Litig., 

, 427 (S.D.N.Y. 1986) (reasoning
that defendant’s challenge to the commonality requirement,
based on individual questions with respect to timeliness, was
“outside the scope of Rule 23 and indeed defies the principle
enunciated in Eisen”); Rishcoff v. Commodity Fluctuations Sys.,
Inc., 

, 382–83 (E.D. Pa. 1986) (“[I]ssues relating
to whether certain claims may be barred by the statute of
limitations are irrelevant to the question of whether a class
should be certified and will not be considered in determining the
propriety of allowing the case to proceed as a class action.”);
Dameron v. Sinai Hosp. of Balt., Inc., 

, 1409
(D. Md. 1984) (refusing to “cloud the issue of adequate
representation [under Rule 23] with the statute of limitations
problem,” and noting that “[i]f the named plaintiff’s claim is
barred by [the] statute of limitations, a proper plaintiff may be
substituted to represent the class”); Chevalier v. Baird Sav.
Ass’n, 

, 150 (E.D. Pa. 1976) (“Since the merits of

                               44
       However, our Court and other circuit courts have since
rejected the proposition that Eisen categorically prohibits the
evaluation of the merits of class claims at the certification stage.
In Hydrogen Peroxide, we interpreted Eisen to mean only that
a merits inquiry is precluded at the class certification stage
where it “is not necessary to determine a Rule 23 

. Indeed, as the Supreme Court recognized a few
years after it decided Eisen,

       [e]valuation of many of the questions entering
       into determination of class action questions is
       intimately involved with the merits of the claims.
       The typicality of the representative’s claims or
       defenses, the adequacy of the representative, and
       the presence of common questions of law or fact
       are obvious examples.

Coopers & Lybrand v. Livesay, 

, 469 n.12 (1978)
(internal quotation marks and citation omitted). Thus, “[i]n
reviewing a motion for class certification, a preliminary inquiry
into the merits is sometimes necessary to determine whether the
alleged claims can be properly resolved as a class action.”
Newton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 

, 168 (3d Cir. 2001); accord Hydrogen Peroxide, 552 F.3d


a plaintiff’s claim are irrelevant for the purposes of a class
action motion, it is of no moment that some of the class’s claims
may be time barred as defendants assert.”).

                                45
at 320 (“[B]ecause each requirement of Rule 23 must be met, a
district court errs as a matter of law when it fails to resolve a
genuine legal or factual dispute relevant to determining the
requirements.”).

        Situations abound where statute-of-limitations issues
overlap with certain of the Rule 23 requirements. For example,
defendants may contend that statute-of-limitations defenses
preclude a finding of typicality under Rule 23(a), either because
the named plaintiffs’ claims are untimely (and thus not typical
of the class), see, e.g., Franze v. Equitable Assurance, 

, 1254 (11th Cir. 2002), or because the proposed class
includes numerous class members with untimely claims
(rendering the named plaintiffs’ timely claims atypical), see,
e.g., Doe v. Chao, 

, 184 (4th Cir. 2002). Relatedly,
defendants may oppose class certification on the ground that
class members with untimely claims must rely on equitable
tolling to save their claims, which presents an individual
question of law and fact that could predominate over common
questions under Rule 23(b)(3), see, e.g., In re Linerboard
Antitrust Litig., 

, 160–62 (3d Cir. 2002), or
challenge the predominance requirement in light of the
“presence of idiosyncratic statute-of-limitations issues” among
the laws of various states in a nationwide class action, see Waste
Mgmt. Holdings, Inc. v. Mowbray, 

, 295–96 (1st
Cir. 2000).

       Statute-of-limitations issues also touch the adequacy

                               46
requirement. See, e.g., Goodman v. Lukens Steel Co., 

, 124 (3d Cir. 1985) (named plaintiffs were inadequate
representatives in class action challenging discriminatory
practices in the initial assignment of newly hired employees,
because “[a]ll of the named plaintiffs . . . were originally hired
outside the [statute-of-] limitations period, and therefore, none
ha[d] a viable complaint about discrimination in initial
assignment”). Indeed, the merits of a statute-of-limitations
defense to the named plaintiffs’ claims may be relevant to
evaluating their adequacy as class representatives in the same
way any type of defense may be relevant to that inquiry, i.e.,
named plaintiffs may be inadequate representatives if their
claims are extremely weak as compared to the rest of the class.
As Judge Posner explained,

       if when class certification is sought it is already
       apparent . . . that the class representative’s claim
       is extremely weak, this is an independent reason
       to doubt the adequacy of his representation. . . .
       One whose own claim is a loser from the start
       knows that he has nothing to gain from the victory
       of the class, and so he has little incentive to assist
       or cooperate in the litigation; the case is then a
       pure class action lawyer’s suit.

Robinson v. Sheriff of Cook County, 

155, 1157 (7th
Cir. 1999) (internal citations omitted). Thus, to the extent the
claims of the named plaintiffs—as compared with the rest of the

                                47
class—are subject to fatal statute-of-limitations defenses, that
inquiry may be relevant to whether they can adequately
represent absent class members whose claims do not suffer from
timeliness problems. Cf. Beck v. Maximus, Inc., 

,
297 (3d Cir. 2006) (“the challenge presented by a defense
unique to a class representative” is that “the representative’s
interest might not be aligned with those of the class, and the
representative might devote time and effort to the defense at the
expense of issues that are common and controlling for the
class”).

        However, the extent to which a district court may
consider the merits of claims in ruling on a class-certification
motion has limits. “When a district court properly considers an
issue overlapping the merits in the course of determining
whether a Rule 23 requirement is met, it does not do so in order
to predict which party will prevail on the merits.” Hydrogen

n.17; see also 

(“The ability of a named plaintiff to succeed on his or her
individual claims has never been a prerequisite to certification
of the class.”). Thus, merits inquiry is not permissible “when
[the] merits issue is unrelated to a Rule 23 requirement.” In re
Initial Pub. Offering Sec. Litig., 

, 41 (2d Cir. 2006);
see also Vallario v. Vandehey, 

, 1266 (10th Cir.
2009) (the merits of the class claims “may not serve as the focal
point of [the] class certification analysis”). Stated another way,
it remains true that “[i]n determining the propriety of a class
action, the question is not whether the plaintiff or plaintiffs have

                                48
stated a cause of action . . . but rather whether the requirements
of Rule 23 are met.” 

(emphasis added)
(internal quotation marks and citation omitted).

        In the context of this precedent, we cannot agree with the
Objectors that the District Court was categorically prohibited
from evaluating the merits of defendants’ statute-of-limitations
defenses to potential TILA/HOEPA claims in ruling on class
certification. We must determine, however, whether the District
Court’s analysis of the merits of those defenses was necessary
to make findings on Rule 23 requirements—specifically here the
adequacy-of-representation requirements under Rules 23(a)(4)
and 23(g).

              3.      The District Court’s Analysis

       As noted, the District Court interpreted our decision in
Community Bank I as instructing it to evaluate the viability of
potential TILA/HOEPA class claims before evaluating the
adequacy of the named plaintiffs and their counsel. 

(“If the Court determines that the TILA and
HOEPA claims [of class members] are viable, there may be
serious questions whether the named plaintiffs’ interests are
sufficiently aligned with those of absent class members as
required by Rule 23(a).”). The District Court’s reasoning
appears to be that, if these claims could not survive a Rule
12(b)(6) motion to dismiss (and thus were not viable), neither
the named plaintiffs nor their counsel were inadequate for

                               49
failing to bring them.

                     a.     The District Court’s Relation-Back
                            Analysis

       Though the District Court purported to approach this
question using a Rule 12(b)(6) standard, its analysis actually
dealt with Rule 15(c), which governs the circumstances where
an amended pleading “relates back to the date of the original
pleading.” Fed. R. Civ. P. 15(c). The Court focused on Rule
15(c)(1)(C), which governs the circumstances in which an
amended pleading that “changes the party or the naming of the
party against whom a claim is asserted” relates back to the date
of the initial pleading. Fed. R. Civ. P. 15(c)(1)(C). Such an
amended pleading only relates back if (1) it “asserts a claim or
defense that arose out of the conduct, transaction, or occurrence
set out—or attempted to be set out—in the original pleading”;
and (2) the “party to be brought in by amendment . . . knew or
should have known that the action would have been brought
against it, but for a mistake concerning the proper party’s
identity.” 

approached the relation-back question—i.e.,
whether an amended pleading asserting TILA/HOEPA claims
could relate back to any earlier complaint—not by reference to
a hypothetical amended complaint that the existing named
plaintiffs could file, but by reference to an amended complaint
filed by absent members of the class. In particular, the Court

                               50
focused on the complaint (and the proposed second amended
consolidated complaint) filed by Counsel for the Objectors in
the Hobson action. The Court concluded that those complaints
could not possibly relate back to any complaint in the
consolidated Kessler action for several reasons, 1 4


       14
          The first ground on which the District Court relied in
concluding that no class member had a timely TILA/HOEPA
claim was its interpretation of our decision in Community Bank
I as directing it to “focus on whether TILA/HOEPA damage
claims were timely and thus . . . viable as of the November 10,
2003 filing date” of the Consolidated Amended Complaint. The
Court emphasized that in Community Bank I, our Court had
noted—in the context of explaining why a substantial group of
class members appeared to have timely TILA/HOEPA
claims—that “[t]he age of the named plaintiffs’ loans when the
relevant complaints were filed ranged from twenty-eight months
(in the case of [named plaintiff Thomas] Mathis) to fifty-six
months (in the case of [named plaintiff Ruth] 

–07 (emphasis added). The District Court noted that these
time spans corresponded to the November 2003 filing of the
Consolidated Amended Complaint; i.e., Davis’s loan closed on
February 22, 1999 (56 months before the November 2003
Consolidated Amended Complaint), and Mathis’s loan closed on
June 7, 2001 (28 months before the Consolidated Amended
Complaint). The District Court believed that our Court was
“fully aware of the importance of this issue,” and speculated that
had we “intended the statute of limitations analysis to focus on
any of the earlier filed complaints[,] [we] would have said so.”
        Unfortunately, it appears that a misplaced record citation

                               51
in our opinion in Community Bank I led the District Court
astray. In the portion of our opinion to which the District Court
referred, we cited to an October 2003 “Amended Summary
Chart of the Named Plaintiffs’ Recoverable Damages Under
RESPA,” filed as an exhibit to the Objectors’ “Notice of
Objections” to the class settlement. This chart set out the age of
each named plaintiff’s loan as of the next scheduled loan
payment—i.e., at the end of October 2003—apparently for the
purpose of calculating damages. Unsurprisingly, the time span
between the date that Mathis’s and Davis’s loans closed and the
filing of this chart (the end of October 2003) was essentially the
same as the time span between the dates those loans closed and
the filing date of the Consolidated Amended Complaint
(November 10, 2003).
        Aside from this misstatement in our prior opinion, we
struggle to see how the District Court could have “fairly read”
Community Bank I as directing it to evaluate the timeliness
question from the date of the filing of the Consolidated
Amended Complaint.            Our references to the “relevant
complaints” throughout that opinion were to the Davis and
Ulrich complaints; as noted, the Settling Parties used these dates
to distinguish between class members with timely and untimely
RESPA claims. See, 

n.33 (noting, in
connection with the class members’ RESPA claims, that “[t]he
relevant complaint is Davis for the CBNV borrowers and Ulrich
for the GBNT borrowers”). Indeed, our decision in Community
Bank I makes no sense if we intended the District Court to
assess the timeliness of class members’ potential TILA/HOEPA
claims as of the date the Consolidated Amended Complaint was

                               52
including that: (1) they named new defendants in addition to
CNBV, GNBT, and RFC, and thus could not relate back under
Rule 15(c)(1)(C) (because the named plaintiffs had not failed to
sue those defendants as a result of any “mistake”); and (2) no
complaint in the Hobson action could relate back to the Davis or
Ulrich complaints in any event because “Rule 15(c), by its
terms, only applies to amended pleadings in the same action as
the original, timely pleading,” Bailey v. N. Ind. Public Serv. Co.,

, 413 (7th Cir. 1990).

        This approach appears to assume that the reasons why the
existing class members chose not to plead TILA/HOEPA claims
in their initial complaints, and later refused to amend their
complaints to assert those claims, were irrelevant. The Court
approached the adequacy question from a perspective that in
effect asked whether, assuming the existing named plaintiffs
were inadequate representatives for failing to bring those claims,
that failure could be remedied by any other member of the class.
Answering that question in the negative, the Court’s analysis



filed. As we noted in Community Bank I, in March 2002 RFC
announced “it was no longer willing to purchase high interest
mortgage loans like the ones sold by Shumway.” 

Thus, the latest a class member’s loan could have closed was
March 2002. If so, no class member could have a timely
TILA/HOEPA claim, as the November 2003 Consolidated
Amended Complaint was filed more than one year after March
2002.

                                53
reduces to the conclusion that the existing named plaintiffs are
made adequate because there is no remedy for their inadequate
representation.

        The Settling Parties advance a similar argument before us
on appeal: they contend that the only way TILA/HOEPA claims
could be asserted in this litigation is if “Class Counsel or the
Objectors . . . s[ought] leave from the district court to add a new
named plaintiff whose TILA/HOEPA claims had not expired.”
(Settling Parties’ Br. at 79 (emphasis in original).) Moreover,
because the existing named plaintiffs obviously did not fail to
name any other class member as a named plaintiff as the result
of a “mistake concerning the proper party’s identity,” Fed. R.
Civ. P. 15(c)(1)(C), the Settling Parties contend that an amended
pleading adding a new named plaintiff to assert TILA/HOEPA
claims could not possibly relate back to any complaint in the
consolidated Kessler action. In sum, the Settling Parties contend
that every class member’s potential TILA/HOEPA claim is
fatally time-barred.

        We need not definitively resolve here this Rule 15(c)
question. As we explain further below, see infra Part III.A.4,
the District Court—by approaching the adequacy requirements
from this perspective—did not consider the serious remaining
questions regarding whether (a) the named plaintiffs’ interests
are aligned with those of the absent class members, and (b) class
counsel has “vigorously prosecuted the action” on behalf of the
class. General 

. However, because the

                                54
Parties have devoted so much of their arguments to the Rule
15(c) issue (both before us and before the District Court), we
think it appropriate to take a detour to explain our serious doubts
regarding the Settling Parties’ argument.

        Rule 15(c)(1)(C) does not expressly refer to the addition
of a new plaintiff; it facially applies only to an amendment that
“changes the party or the naming of the party against whom a
claim is asserted.” Fed. R. Civ. P. 15(c)(1)(C) (emphasis
added). However, our Court (and other courts) have also
applied its requirements to the addition of new plaintiffs. See
Nelson v. Allegheny County, 

, 1014 n.7 (3d Cir.
1995); see also Advisory Committee Notes on the 1996
Amendments to Fed. R. Civ. P. 15 (“The relation back of
amendments changing plaintiffs is not expressly treated in
revised rule 15(c) since the problem is generally easier [than that
of amendments changing defendants].              Again the chief
consideration of policy is that of the statute of limitations, and
the attitude taken in . . . Rule 15(c) toward change of defendants
extends by analogy to amendments changing plaintiffs.”). The
Settling Parties contend that Nelson is dispositive here, and
would bar any new-named plaintiff in these actions from filing
an amended pleading that could relate back to an earlier-filed
complaint. We disagree.

       In Nelson, anti-abortion protestors filed a class action
against the City of Pittsburgh after they were arrested for
protesting on the grounds of a private clinic. 

After

                                55
the District Court denied class certification, the named plaintiffs
filed an amended complaint asserting individual claims. 

more years passed, the plaintiffs filed a fourth
amended complaint adding two new plaintiffs. 

We affirmed the District Court’s dismissal of these new
plaintiffs’ claims as time-barred: though it was undisputed that
the statute of limitations was tolled for these individuals (as well
as the entire class) until the District Court denied class
certification, they had waited an additional two years to add
themselves as named plaintiffs in the remaining individual
action, and could not satisfy Rule 15(a)(1)(C)’s requirements.

        The two plaintiffs whose claims were dismissed in
Nelson were “new parties” because, after class certification had
been denied, they waited too long to seek to join the action
through filing an amended complaint. By contrast, it is not at all
clear that an absent class member in our case—assuming he or
she were added as a named plaintiff to file an amended pleading
asserting TILA/HOEPA claims—would constitute a “new party”
for purposes of Rule 15(c).15


       15
          Aside from Nelson, the other cases cited by the Settling
Parties in support of this argument are off point, as none
involved an amended pleading in a class action that sought
solely to substitute a new named plaintiff. See Young v. Lepone,

, 16–17 (1st Cir. 2002) (holding that amended
pleading naming new plaintiffs in a non-class action could not

                                56
         As the Supreme Court has explained, absent members of
a class—at least in relation to an applicable statute-of-
limitations period—are essentially “parties” to the class action
while a certification decision is pending. See Am. Pipe &
Constr. Co. v. Utah, 

, 550 (1974) (when a putative
class action is filed, “the claimed members of the class st[and]
as parties to the suit until and unless they receive[] notice
thereof and cho[o]se not to continue” (emphasis added)).
However, under the Settling Parties’ theory, an amended class
complaint that adds a new named plaintiff could never relate
back to the initial complaint—even where the substitution was
necessary because the existing named plaintiff had died or no
longer had standing to pursue claims on behalf of the
class—because the failure to name that party as a plaintiff in the
initial complaint was not the result of a “mistake concerning the
proper party’s identity.” Fed. R. Civ. P. 15(c)(1)(C). As our
Seventh Circuit colleagues have explained, such a result fails the
purpose of the class action device:

       Relation back to add named plaintiffs in a class
       action suit is of particular importance because of
       the interests of the unnamed class members.


relate back under Rule 15(c)); In re Bausch & Lomb, Inc. Sec.
Litig., 

, 1363–65 (W.D.N.Y. 1996) (holding
that amended pleading in securities class action that sought to
name additional plaintiffs and defendants could not relate back
under Rule 15(c)).

                               57
       Suppose Mr. X files a class action and after the
       statute of limitations has run the defendant settles
       with X. If a named plaintiff cannot be substituted
       for X with relation back to the date of the filing of
       the original complaint, the class will be barred
       from relief.

Phillips v. Ford Motor Co., 

, 788 (7th Cir. 2006).

        In this context, the better conclusion may be that an
amended complaint adding a class member as a new named
plaintiff need only satisfy Rule 15(c)(1)(B) to relate back to an
earlier complaint. Under that subsection, the plaintiff must
demonstrate only that his or her TILA/HOEPA claims “arose
out of the conduct, transaction, or occurrence set out . . . in the
original pleading.” Fed. R. Civ. P. 15(c)(1)(B). Moreover, it
strikes us as straightforward that the hypothetical TILA/HOEPA
claims asserted by the Objectors arose out of the same
“transaction”—i.e., the allegedly fraudulent disclosures (and the
omitted material disclosures) made in connection with the
closing of the class members’ loans—as the named plaintiffs’
RESPA claims.16


       16
          Indeed, class counsel conceded as much in their
Proposed Findings of Fact and Conclusions of Law submitted to
the District Court in 2003:

       Any claim, including those actually asserted by

                                58
        Finally, even assuming an amended pleading adding a
class member as a new named plaintiff could not relate back
under Rule 15(c), the “class action tolling” doctrine—over
which the Objectors have spilled a considerable amount of ink
before our Court and the District Court—may come into play.
In American Pipe & Construction Co., the Supreme Court held
that where class certification has been denied because of the
failure to demonstrate that the class was sufficiently numerous,
“the commencement of the original class suit tolls the running
of the statute [of limitations] for all purported members of the
class who make timely motions to intervene after the court has
found the suit inappropriate for class action 

. The Court explained that refusing tolling in such a
circumstance would

       frustrate the principal function of a class suit,
       because then the sole means by which members of
       the class could assure their participation in the
       judgment if notice of the class suit did not reach



       plaintiffs and the alternative claims that the
       objectors allege should have been asserted, would
       derive from the same factual predicate: that
       plaintiffs were charged excessive origination fees
       and excessive fees for title services in connection
       with their second mortgage loans.



                               59
       them until after the running of the limitation
       period would be to file earlier individual motions
       to join or intervene as parties—precisely the
       multiplicity of activity which Rule 23 was
       designed to avoid in those cases where a class
       action is found “superior to other available
       methods for the fair and efficient adjudication of
       the controversy.”

(quoting Fed. R. Civ. P. 23(b)(3)). The Court later
extended its holding in American Pipe to “all asserted members
of the class, not just as to interveners.” Crown, Cork & Seal Co.
v. Parker, 

, 350 (1983) (internal quotation marks
and citation omitted).

        Our Court has applied American Pipe tolling in other
circumstances. In Haas v. Pittsburgh National Bank, 

(3d Cir. 1975), we held that the “broad tolling principle”
in American Pipe applied to the claims of a named plaintiff
substituted for the initial lead plaintiff (who, the District Court
concluded, lacked standing after the class had been certified).

In McKowan Lowe & Co., Ltd. v. Jasmine, Ltd., 

(3d Cir. 2002), we held that American Pipe tolling
applied to an intervener seeking to become lead plaintiff in a
class action where the District Court had previously denied class
certification “for reasons unrelated to the appropriateness of the
substantive claims for certification.” 

Finally, in
Yang v. Odom, 

(3d Cir. 2004), we extended our

                                60
application of American Pipe tolling in McKowan to the filing
of a subsequent class action “where certification was denied in
the prior suit based on the lead plaintiffs’ deficiencies as class
representatives.” 

In light of these precedents, the
Objectors’ argument seems to be that, if the named plaintiffs
were judged inadequate based on their failure to bring
TILA/HOEPA claims on behalf of the class, the class action
tolling doctrine would toll the statute of limitations with respect
to those claims in either (1) a subsequent action or (2) the
current action (following substitution or intervention of a new
named plaintiff after the class is decertified).

        The Settling Parties counter that class action tolling
would be unavailable to the Objectors—even if class
certification in the consolidated Kessler action were denied due
to inadequate representation—because no TILA/HOEPA claims
have been asserted in that action. They note that some courts
have suggested that class action tolling only applies to claims
that are identical to those asserted in the initial class action that
was decertified. See Raie v. Cheminova, Inc., 

,
1283 (11th Cir. 2003); Weston v. AmeriBank, 

,
368–69 (6th Cir. 2001); Spann v. Community. Bank of N. Va.,
No. 03-C-7022, 

, at *4–7 (N.D. Ill. Mar. 30,
2004); Southwire Co. v. J.P. Morgan Chase & Co., No. MDL
1303, 

, at *18 (W.D. Wis. Mar. 3, 2004); see
also Johnson v. Ry. Express Agency, Inc., 

, 467
(1975) (noting that “the tolling effect given to the timely prior
filings in American Pipe . . . depended heavily on the fact that

                                 61
those filings involved exactly the same cause of action
subsequently asserted”).

        However, there is a competing line of authority on that
question.17 See Cullen v. Margiotta, 

, 720 (2d Cir.
1987) (“Notwithstanding the differences between the legal
theories advanced by plaintiffs in the state court action and those
advanced in the present action, we are persuaded that the
American Pipe doctrine has applicability to the present action.”),
overruled on other grounds by Agency Holding Corp. v. Malley-
Duff & Assocs., Inc., 

(1987); Tosti v. City of L.A.,

, 1489 (9th Cir. 1985) (“We find no persuasive
authority for a rule which would require that the individual suit
must be identical in every respect to the class suit for the statute
to be tolled.”); accord, e.g., Arivella v. Lucent Techs., Inc., 

, 180 (D. Mass. 2009); In re Enron Corp. Sec.
Litig., 

, 717–19 (S.D. Tex. 2006); Barnebey
v. E.F. Hutton & Co., 

, 1528–29 (M.D. Fla.
1998); In re Indep. Serv. Orgs. Antitrust Litig., No. MDL 1021,

, at *3–6 (D. Kan. Mar. 12, 1997). These
Courts have reasoned that, where claims brought in a subsequent
suit share a common factual and legal nexus with those brought


       17
          Though our Court has not yet weighed in on this
debate, we have agreed that a “substantively identical” class
action filed after the denial of class certification due to
deficiencies of the class representative qualifies for class action
tolling. 

.

                                62
in the prior class action, there is no persuasive reason for
refusing to apply class action tolling, as the defendant will
already have received adequate notice of the substantive nature
of the claims against it and likely would rely on the same
evidence and witnesses in mounting a defense. Cf. Crown, Cork
& 

(Powell, J., concurring) (cautioning that
class action tolling should apply only to subsequent claims that
“concern the same evidence, memories, and witnesses as the
subject matter of the original class suit” (internal quotation
marks and citation omitted)). Under this theory, the Objectors
have a strong argument that their TILA/HOEPA claims could
qualify for class action tolling, as those claims appear to share
a common factual and legal nexus with the RESPA claims the
named plaintiffs have asserted; i.e., both claims are predicated
on defendants’ alleged predatory lending scheme and the
charging of fraudulent and excessive closing fees.

        In the end, we need not resolve in this case the difficult
questions of whether (1) a substituted named plaintiff in a class
action may file an amended pleading that relates back to the
initial pleading only if he or she can satisfy the requirements of
Rule 15(c)(1)(C), or (2) the class action tolling doctrine would
apply in a subsequent class action—or to the claims of a new,
substituted named plaintiff in that same action—following a
determination that the named plaintiffs were inadequate for
failing to plead potentially meritorious claims on behalf of the
class.      We simply note that the Court’s apparent
conclusion—that the failure to assert colorable TILA/HOEPA

                               63
claims could not be remedied through any mechanism, even
assuming that the class representatives were inadequate for
failing to bring those claims (and despite their being released as
part of the settlement)—is a path we find troubling.

                      b.     The District Court’s Equitable
                             Tolling Analysis

       Aside from the District Court’s Rule 15(c) analysis, it
also determined, while purportedly applying a Rule 12(b)(6)
standard, that no class member could rely on equitable tolling to
save an otherwise untimely TILA/HOEPA claim.18 The Court


       18
         We pause to acknowledge our own error in Community
Bank I, where we incorrectly suggested that the three-year
limitations period for claims for rescission under TILA was a
statute of limitation “subject to equitable 

. In Beach v. Ocwen Federal Bank, 

(1998), the
Supreme Court held that the three-year period in 15 U.S.C.
§ 1635(f)—which provides that the right of rescission “shall
expire” three years after the loan closes, id.—is not a statute of
limitations, but a statute of repose, i.e., one “governing the life
of the underlying 

.
        The Objectors—primarily those from Maryland, Appeal
No. 08-3791, represented by the Legg Law Firm,
LLC—challenge the District Court’s conclusion that a classwide
claim for rescission could not be asserted in the consolidated
Kessler action, arguing that (1) even if equitable tolling could
not apply to save any class member’s claim, class action tolling

                                64
reasoned that no class member could show any “active
misleading”—apart from the alleged fraudulent disclosures and
omissions in the HUD-1 Statements provided to borrowers by
the defendant banks—necessary to support the invocation of
equitable tolling based on a fraudulent concealment theory.

       We are concerned that the District Court—in the context
of making a determination as to class certification under Rule
23—concluded, as a matter of law and finding of fact, that no
member of the 44,000 person class could rely on equitable
tolling to save an otherwise untimely TILA/HOEPA claim.
Moreover, we have doubts regarding the Court’s conclusion
even if a Rule 12(b)(6) analysis were appropriate. It relied on
our decision in Oshiver v. Levin, Fishbein, Sedran & Berman,

(3d Cir. 1994), an employment discrimination
case, where we affirmed the dismissal (under Rule 12(b)(6)) of
an untimely failure-to-hire claim, noting that “nowhere in the
complaint [did the plaintiff] allege that [her employer] misled
her, actively or otherwise, with respect to this claim.” 

n.10. However, we also vacated the dismissal of the



could; and (2) contrary to the Court’s finding that no class
member had asserted his or her rescission rights, there is in fact
a small group of class members who timely submitted rescission
demands to their lenders. We need not resolve that dispute; as
we discuss later, see infra at 82 n.27, we agree with the District
Court that class counsel is not inadequate for declining to pursue
a classwide rescission claim.

                               65
plaintiff’s untimely discriminatory discharge claim, noting that
the equitable tolling issue “was raised in the context of a motion
to dismiss pursuant to [Rule] 12(b)(6),” and, “[t]herefore, all
that was required of [the plaintiff] at this stage was that she
plead the applicability of the doctrine,” which she had done. 

–92 (listing the “factual inquiries [that] must be
undertaken before a proper resolution of the equitable tolling
issue can be reached”).

        Indeed, our Court (and our sister circuit courts) have
reasoned that, because the question whether a particular party is
eligible for equitable tolling generally requires consideration of
evidence beyond the pleadings, such tolling is not generally
amenable to resolution on a Rule 12(b)(6) motion. See, e.g.,
Huynh v. Chase Manhattan Bank, 

, 1003–04 (9th
Cir. 2006) (“Generally, the applicability of equitable tolling
depends on matters outside the pleadings, so it is rarely
appropriate to grant a Rule 12(b)(6) motion to dismiss (where
review is limited to the complaint) if equitable tolling is at
issue.”); Reiser v. Residential Funding Corp., 

,
1030 (7th Cir. 2004) (rejecting RFC’s argument that plaintiffs’
claims were “untimely under the one-year periods of limitations
contained in both the TILA and the RESPA,” and noting that
“because the period of limitations is an affirmative defense it is
rarely a good reason to dismiss under Rule 12(b)(6)”).

       In any event, whether the type of fraudulent concealment
alleged by the Objectors (and, as we discuss below, that asserted

                               66
by the named plaintiffs in connection with their untimely
RESPA claims) can, as a matter of law, provide a successful
basis for equitable tolling under TILA/HOEPA was not before
the District Court.19 Its analysis of the merits of the equitable


       19
          We perceive an even more fundamental problem with
the application of a Rule 12(b)(6) standard here: i.e., it is not
clear to what pleading the Court should have applied that
standard. Cf. Robin J. Effron, The Plaintiff Neutrality Principle:
Pleading Complex Litigation in the Era of Twombly and Iqbal,
51 Wm. & Mary L. Rev. 1997, 2022 (2010) (“The procedural
differences between a Rule 12(b)(6) motion to dismiss and a
Rule 23 certification proceeding . . . indicate that there would be
some practical problems in applying the Twombly/Iqbal
[plausibility] standard in the class certification context. Namely,
to what documents would the standard apply?”). Indeed, even
the Settling Parties appear to acknowledge that a Rule 12(b)(6)
analysis is here a bridge too far. See Settling Parties’ Br. at 49
(“[T]he whole thrust of the Objectors’ complaints (then and
now) is that no . . . TILA/HOEPA claims were pleaded in the
Consolidated Amended Complaint. A Rule 12 motion to
dismiss thus would have been a spectacularly inappropriate way
to determine the viability of hypothesized claims that had never
been pleaded.” (emphases in original)).
       In addition, it appears that the District Court relied only
on the briefs filed by the defendants, and not class counsel, in
connection with its viability inquiry. This no doubt is
concerning, as it comes close to relieving the named plaintiffs
and class counsel of their burden to prove that the Rule 23
requirements were met. See, e.g., Johnston v. HBO Film Mgmt.,

                                67
tolling theory advanced by the Objectors was essentially an
inquiry into “which party [would] prevail on the merits” of the
TILA/HOEPA claims the Objectors sought to assert.20



Inc., 

, 183 (3d Cir. 2001).
       20
          We note that, to the extent the District Court should not
have considered the merits of defendant’s statute-of-limitations
defenses in making its class certification decision, that error was
certainly encouraged by counsel for the Objectors. Indeed, it
was those very counsel who urged the Court to use a Rule
12(b)(6) standard in assessing the viability of their proposed
TILA/HOEPA claims (though the Objectors contend the statute-
of-limitations defenses should not be a part of that analysis).
Though counsel for the Objectors now complain that the Court’s
viability briefing was “amorphous and unstructured,” they were
members of the Steering Committee the Court assigned to
establish that briefing structure, and in any event they have not
explained how a “properly structured motion to dismiss or
motion for summary judgment” would have been a more
appropriate procedure on remand. (Objectors’ Br., No. 08-3621,
at 38–39.)
        In this light, the Settling Parties contend that the
Objectors should be estopped from challenging the District
Court’s viability analysis, or be deemed to have waived any such
challenge. We disagree. “While a party can waive his or her
ability to appeal a ruling for failure to object, there can be no
waiver . . . of the Judge’s duty to apply the correct legal
standard.” United States v. Ali, 

, 144 n.9 (3d Cir.
2007). Nor can a party “‘waive’ the proper standard of [our

                                68
Hydrogen 

n.17.

                        *   *   *    *   *

       In sum, the Rule 23 requirements “differ in kind from
legal rulings under Rule 12(b)(6)” (and, for that matter, Rule
15(c)). Szabo v. Bridgeport Machs., Inc., 

, 676
(7th Cir. 2001). We conclude that the merits inquiries the
District Court conducted here—i.e., whether a new plaintiff
could file an amended pleading asserting TILA/HOEPA claims
consistent with Rule 15(c), or adequately plead a basis for
equitable tolling under Rule 12(b)(6)—were unnecessary to
evaluate the adequacy requirement under Rule 23(a)(4).




appellate] review.” Brown v. Smith, 

, 428 n.2 (6th
Cir. 2008). This is particularly true in the class action context,
where “the district court acts as a fiduciary who must serve as a
guardian of the rights of absent class members[.]” General

(internal quotation marks and citation
omitted); see also Stirman v. Exxon Corp., 

, 563
n.7 (5th Cir. 2002) (rejecting argument that defendant had
waived challenge to class representative’s adequacy by not
raising it in the District Court, and noting that, “[e]ven if [the
defendant] had stipulated to certification, the court was bound
to conduct its own thorough [R]ule 23(a) inquiry”). Thus, while
we certainly agree that the Objectors are partly to blame for the
approach the District Court took, we cannot agree that the
Court’s analysis is thereby insulated from our appellate review.

                                69
              4.     Adequacy of Representation

        As discussed, we conclude that the District Court
incorrectly evaluated the adequacy of the named plaintiffs and
class counsel.      Added to that, we continue to have
concerns—essentially the same as those we identified in
Community Bank I—regarding whether the named plaintiffs and
their counsel are adequate class representatives. To aid the
Court on remand, we explain our concerns (and the inquiries we
think worthwhile to consider) below, focusing specifically on (a)
the apparent intra-class conflict with respect to the statute-of-
limitations problem, which may raise questions regarding the
named plaintiffs’ adequacy under Rule 23(a)(4); and (b) class
counsel’s justifications for the decision not to assert
TILA/HOEPA claims on behalf of the class, which may raise
questions regarding counsel’s adequacy under Rule 23(g).

                     a.     The Class Representatives

        As noted, the adequacy requirement is designed “to
uncover conflicts of interest between named parties and the
class they seek to represent.” 

. Here,
there is an obvious and fundamental intra-class conflict of
interest (the same we identified in Community Bank I): the
named plaintiffs’ claims—whether under RESPA, TILA, or
HOEPA—are untimely, and they must rely on equitable tolling
to save them. Notwithstanding that substantial hurdle to their
claims, they seek to represent a sizeable subgroup of the

                               70
class—approximately 14,000 persons—with timely claims. Cf.
McAnaney v. Astoria Fin. Corp., No. 04-CV-1101, 

, at *12 (E.D.N.Y. Sept. 12, 2007) (holding that named
plaintiffs in a TILA class action were inadequate representatives
because their claims were time-barred).

       As noted, a claim for damages under TILA and
HOEPA—just like a claim for damages under RESPA, see 12
U.S.C. § 2614—is subject to a one-year limitations period that
begins to run from the date the loan closed, 15 U.S.C. § 1640(e).
 There are 19 named plaintiffs in the consolidated class actions
before us. Each named plaintiff’s loan closed more than one
year before either the Davis action (with respect to the Plaintiffs
who received their loans from CBNV) or the Ulrich action (with
respect to the Plaintiffs who received their loans from GNBT)
was filed.21 (As noted, the Settling Parties used the filing dates

       21
         The named plaintiffs who received loans from CBNV,
and the dates their loans closed, are: Ruth Davis (Feb. 22, 1999),
Phillip and Jeanine Kossler (July 28, 1998), William and Ellen
Sabo (Oct. 15, 1999), John and Rebecca Picard (Nov. 30, 1999),
Brian and Carla Kessler (Apr. 30, 1999), and Nora H. Miller
(Apr. 30, 1999).
        The named plaintiffs who received loans from GNBT,
and the dates their loans closed, are: Russell and Kathleen
Ulrich (Aug. 8, 2000), Thomas Mathis (June 7, 2001), Stephen
and Amy Haney (May 23, 2001), Patrice Porco (Sept. 9, 2000),
Robert and Rebecca Clark (Mar. 1, 2001), and Edward Kruska
(May 5, 2001).

                                71
of these actions to distinguish between class members with
timely RESPA claims, and those who would have to rely on
equitable tolling, for purposes of distributing the Initial and
Modified Settlements.) Accordingly, not only is every named
plaintiff’s potential claim for damages under TILA/HOEPA
time-barred, the RESPA claims the named plaintiffs did bring
are also time-barred, and they must rely on equitable tolling to
prevail on either type of claim. By contrast, a significant
percentage of class members’ loans closed within one year of
the Davis or Ulrich complaint, and they need not rely on
equitable tolling—a doctrine that courts approach “warily,”
Seitzinger v. Reading Hosp. and Med. Ctr., 

, 240
(3d Cir. 1999)—to save their timely, and thus more valuable,
claims. Cf. Ortiz v. Fibreboard Corp., 

, 857 (1999)
(class which included class members whose asbestos claims
arose before and after the defendant’s insurance policy expired
should have been divided into subclasses, as those class
members whose claims arose before the policy expired “had
more valuable claims” than those whose claims arose after).

       The terms of the Modified Settlement exemplify this
conflict of interest, at least with respect to the potential
TILA/HOEPA claims. See General 

.
Though the Modified Settlement (like the Initial Settlement)
distinguishes between class members whose loans closed within
and outside of one year before the Davis and Ulrich complaints
were filed (for purposes of the RESPA claims), it apportions the
additional monies paid to reflect potential TILA/HOEPA

                              72
damages claims as though every class member is required to
establish a basis for equitable tolling to be eligible for relief. As
noted, that is not the case. Accordingly, the District Court’s
apparent “conclusion that the settlement—which (supposedly)
maximized class recovery—satisfied the requirement that class
members’ interests not be antagonistic ignores the conspicuous
evidence of such an intra-class conflict in the very terms of th[e]
settlement.” 

        The District Court—having determined that no other
class member could assert a timely TILA/HOEPA claim under
Rules 15(c) and 12(b)(6)—did not consider this intra-class
conflict. It should do so on remand. As we noted in Community
Bank I, however, this intra-class conflict is by no means fatal to
whether these cases can be maintained as a class action. The
most obvious remedy would be to create subclasses, as we
suggested in our prior opinion. See Community Bank 

(“[I]f the District Court were to find [on remand]
that class certification is appropriate, the Court should determine
whether sub-classes are necessary or appropriate . . . .”); see also
In re Ins. Brokerage Antitrust Litig., 

, 271 (3d Cir.
2009).

                       b.     Class Counsel

       “Courts examining settlement classes have emphasized
the special need to assure that class counsel: (1) possessed
adequate experience; (2) vigorously prosecuted the action; and

                                 73
(3) acted at arm’s length from the defendant.” General 

. We did not elaborate in Community Bank I on
the type of inquiry a district court should engage in when
addressing class counsel’s adequacy in light of the decision to
bring some, but not other, potentially colorable claims on behalf
of the class, and we need not do so definitively here. For
present purposes, it is sufficient to note a few general principles.

       First, a “mere disagreement over litigation strategy . . .
does not, in and of itself, establish inadequacy of
representation.” Bradley v. Milliken, 

, 1192 (6th
Cir. 1987); see also, e.g., United States v. City of N.Y., 

, 367 (2d Cir. 1999) (“Representation is not inadequate
simply because [an attorney denied appointment as class
counsel] . . . ha[s] different views on the facts, the applicable
law, or the likelihood of success of a particular litigation
strategy”); Daggett v. Comm’n on Governmental Ethics and
Election Practices, 

, 112 (1st Cir. 1999) (noting
that “the use of different arguments as a matter of litigation
judgment is not inadequate representation per se”); DeBoer v.
Mellon Mortg. Co., 

, 1175 (8th Cir. 1995) (“The
fact that [objecting class members] do not approve of the
settlement terms does not, of itself, demonstrate that . . . class
counsel provided inadequate representation.”).             Were it
otherwise, disagreements over strategy “would require
decertification any time an objection is raised to a class,
certainly not the standard envisioned by Rule 23.” 

                                74
        As Rule 23 makes clear, however, “the work counsel has
done in identifying or investigating potential claims in the
action” is an important factor when evaluating class counsel’s
adequacy. Fed. R. Civ. P. 23(g)(1)(A)(i). Though we certainly
agree that class counsel is not inadequate simply because they
have not asserted every claim that could theoretically be pled
against a defendant, cf. Wal-Mart Stores, Inc. v. Visa U.S.A.
Inc., 

, 113 (2d Cir. 2005), neither is the decision
regarding the claims to assert in the action totally shielded from
judicial scrutiny.22 In particular, where class counsel’s proffered
reasons for the “strategic” decision not to bring certain
claims—i.e., obstacles faced by the claims, either as to
certification or proof—also apply to the claims that have been


       22
          Though not addressed by the parties, similar issues
arise where objecting class members challenge a class
representative’s adequacy in light of the representative’s
decision not to join as a defendant an entity against whom a
colorable claim could be asserted. In such cases, courts have
considered whether the decision not to join a particular
defendant could be characterized as “strategic,” or, if not, is
indicative of antagonistic interests between the named plaintiffs,
their counsel, and certain absent class members. See, e.g., Feder
v. Elec. Data Sys. Corp., 

, 135 (5th Cir. 2005);
Paper Sys. Inc. v. Mitsubishi Corp., 

, 611 (E.D.
Wis. 2000); Dubin v. Miller, 

, 273 (D. Colo.
1990) (though “a class plaintiff need not join every possible
defendant, plaintiff is obligated to supply a persuasive reason for
the non-joinder” (emphasis in original)).

                                75
asserted, a district court may have reason to question whether
class counsel has “vigorously prosecuted the action” on behalf
of the class. General 

.

        In that light, we believe that the statute-of-limitations
justification for class counsel’s decision not to bring
TILA/HOEPA claims—the only hurdle to pleading those claims
that the District Court considered—deserves more scrutiny. For
example (and as discussed previously), the Settling Parties
(including class counsel) contend that no class
member—including the named plaintiffs—could rely on
equitable tolling to save a potential TILA/HOEPA claim. This
position is surprising, as class counsel has taken the opposite
position with respect to the named plaintiffs’ untimely RESPA
claims.23          In their Consolidated A mended


       23
         In addition, the Settling Parties—despite their agreement
that the filing date of the Davis complaint would be used to
distinguish between CBNV borrowers with timely and untimely
RESPA claims—now dispute before us that any amended
pleading asserting TILA/HOEPA claims could relate back to the
initial Davis complaint. They contend that, because that
complaint asserted claims only on behalf of a putative statewide
class of CBNV-borrowers, any amended complaint asserting
TILA/HOEPA claims on behalf of the nationwide class could
only relate back to the second amended complaint in Davis
(filed on June 12, 2002), which broadened the scope to a
putative quasi-nationwide class of CBNV borrowers. See Cliff
v. Payco Gen. Am. Credits, Inc., 

, 1131–33 (11th

                               76
Cir. 2004) (holding that an amended complaint expanding the
class action to assert a nationwide class did not relate back under
Rule 15(c) to the initial complaint, which asserted only a
statewide class). As a result, the Settling Parties estimate that
the “actual number of borrowers whose loans closed within one
year of the filing of the first complaints alleging multistate
classes” is approximately 8,451 (rather than 14,000). (Settling
Parties’ Br. at 74.)
        As noted, however, this position, which class counsel
(along with defendants) have now taken with respect to the
TILA/HOEPA claims, directly conflicts with the position taken
for the RESPA claims (as illustrated by the terms of the Initial
and Modified Settlements). That is, if CBNV borrowers cannot
rely on the filing date of the Davis complaint to make their
potential TILA/HOEPA claims timely, neither may they do so
with respect to the RESPA claims that the named plaintiffs have
asserted in this litigation.
        Moreover, there appears to be conflicting authority
regarding whether an amended pleading asserting a nationwide
class can relate back to an initial pleading asserting a smaller
class. The Seventh Circuit Court has concluded, though in the
context of determining whether removal under the Class Action
Fairness Act was appropriate, that an amended pleading
expanding a statewide class action to a nationwide class action
does not result in the “commencement” of a new suit because
such an amended pleading relates back to the first pleading. See
Schillinger v. Union Pac. R.R. Co., 

, 334 (7th Cir.
2005) (“[T]he expansion of a proposed class does not change the
parties to the litigation nor does it add new claims.”); see also

                                77
Complaint, the named plaintiffs specifically alleged facts
suggestive of fraudulent concealment as to the class’s RESPA
claims, including that the defendants concealed, among other
things, (1) the actual recipient of the origination fees charged,
and (2) “[t]he fact that virtually no services were performed in
exchange for the supposed ‘title fees’ imposed upon Plaintiffs
and the Class.” The Objectors rely on similar allegations to toll
on equity grounds the TILA/HOEPA claims, including that the
defendants (1) falsely represented on the HUD-1A Settlement
Statements that they were charging the borrower for title
“abstracts” and “examinations,” when in reality the charges
were for “property reports”; and (2) intentionally concealed
documents from borrowers that would have revealed these facts.
In that light, the Settling Parties’ description of the basis for the
Objectors’ equitable tolling theory—that “the banks should have
disclosed that the title companies [employed by defendants]
were not providing any services in exchange for the title
examination fee or the alleged markup of the title abstract fee”
(Settling Parties’ Br. at 91)—applies equally to the named




Schorsch v. Hewlett-Packard Co., 

, 751 (7th Cir.
2005) (“Amendments to class definitions do not commence new
suits.”). Though we need not resolve this question here, we
simply note again the seemingly inconsistent positions that class
counsel has taken with respect to the RESPA claims that have
been pled and the TILA/HOEPA claims that have not.

                                 78
plaintiffs’ equitable tolling theory for their RESPA claims.24


       24
          Though we do not resolve the question in this case, we
note that the Settling Parties’ theory of fraudulent
concealment—i.e., that fraudulent concealment requires some
further act than the failure to disclose information that would
reveal the fraudulent nature of origination or title fees, or
misrepresenting the nature of those fees—would effectively
render equitable tolling in the RESPA, TILA, or HOEPA
context a dead letter. Cf. Ellis v. General Motors Acceptance
Corp., 

, 708 (11th Cir. 1998) (disallowing
equitable tolling via a fraudulent concealment doctrine for TILA
claims “would lead to the anomalous result that a statute
designed to remediate the effects of fraud would instead reward
those perpetrators who concealed their fraud long enough to
time-bar their victims’ remedy”); accord 

.
        Notably, class counsel recently took the opposite position
in a separate lawsuit asserting RESPA claims. See Bradford v.
WR Starkey Mortg., LLP, No. 06-CV-86, 

, at
*3 (N.D. Ga. Feb. 22, 2008) (agreeing with plaintiffs that “[t]he
HUD-1 Statement does not accurately reflect defendant’s
charges, and the dissemination of documents concealing this
information constitutes an affirmative act of concealment that
justifies tolling the statute of limitations”); accord Pedraza v.
United Guar. Corp., 

, 1357 (S.D. Ga.
2000); see also Haynes v. HomeEq Servicing Corp., No. 04-
1081, 

, at *5 (M.D. Tenn. Aug. 1, 2006)
(“[A]ctions based on fraud, or in which a fraud was
self-concealing, d[o] not require further fraudulent acts.”); Veal

                               79
        Class counsel’s position is all the more surprising
because, in contrast to claims under the TILA, our Court has
never addressed whether RESPA claims are subject to equitable
tolling, and there is conflicting circuit court precedent on the
question. Compare Lawyers Title Ins. Corp. v. Dearborn Title
Corp., 

, 1166–67 (7th Cir. 1997) (holding that
RESPA’s statute of limitations is subject to equitable tolling),
with Hardin v. City Title & Escrow Co., 

, 1038
(D.C. Cir. 1986) (holding that RESPA’s statute of limitations is
“a jurisdictional prerequisite to suit and as such not subject to
equitable tolling”); see also Egerer v. Woodland Realty, Inc.,

, 424 & n.18 (6th Cir. 2009) (reserving the question
of whether RESPA’s statute of limitations is subject to equitable
tolling); 

n.7 (same).

       We acknowledge that the time-bar problem was not class
counsel’s only justification for declining to bring TILA/HOEPA
claims against the defendants. As we discussed in Community
Bank I, those additional justifications were: (1) most of the
putative class members had executed HOEPA disclosure forms;
(2) TILA/HOEPA claims could not be certified as a class action
because of individualized issues that could predominate; and (3)


v. Crown Auto Dealerships, Inc., No. 04-CV-323, 

, at *3 (M.D. Fla. Feb. 21, 2006) (“It can be reasonably
inferred from Plaintiff’s allegations that because of the alleged
inadequate disclosures, he was not aware of his TILA cause of
action within one year of the [transaction].”).

                               80
establishing actual damages on a classwide basis would be
difficult because a TILA claim for actual damages requires
proof of detrimental 

.26 The Settling
Parties jointly advance several additional reasons on appeal,
including (and notwithstanding the fact that they engaged in no
formal discovery on remand) the supposed discovery of
“significant evidence” rebutting the Objectors’ theory that no
title services were performed in exchange for the fees charged.


       25
          We note that, since Community Bank I, our Court has
held that detrimental reliance is an element of a claim for actual
damages under TILA. See Vallies v. Sky Bank, 

,
158 (3d Cir. 2009) (“Without detrimental reliance, only statutory
damages are available [under TILA].”).


       26
          In Community Bank I, we intimated that “[t]he District
Court, on analysis, may find that these ex post rationales are not

. First, we noted that a signed
disclosure acknowledgment may not necessarily be dispositive
of a lender’s (or assignee’s) liability under HOEPA for failing
to provide the required disclosures within the requisite three-day
period. 

U.S.C. §§ 1639(a)(2)(A), 1641(d)).
Second, we believed that the Settling Parties had provided “no
persuasive support for the proposition that TILA and HOEPA
claims cannot be asserted as part of a class action,” and noted
that the statute “explicitly contemplates the possibility of a class
action suit.” 

U.S.C. § 1640(a)(2)(B)). Finally, we
were skeptical that the need to prove detrimental reliance was an
individualized issue that could preclude class treatment. 

Parties’ Br. at 106.)

        We emphasize that the determination of whether class
counsel is adequate, including whether they acted reasonably in
declining to assert certain potential claims on behalf of the class,
is committed to a district court’s sound discretion, as it is in a
better position than we to evaluate class counsel’s performance.
Unfortunately, the District Court, with one exception,27 did not
discuss any of class counsel’s justifications for declining to


       27
         That exception is class counsel’s decision not to plead
claims for rescission under TILA. As the District Court
recognized, other circuit courts that have addressed the issue are
unanimous that a claim for rescission under TILA cannot be
maintained on a classwide basis. See Andrews v. Chevy Chase,

, 574 (7th Cir. 2008) (“The variations in the
transactional ‘unwinding’ process that may arise from one
rescission to the next make it an extremely poor fit for the class-
action mechanism.”); McKenna v. First Horizon Home Loan
Corp., 

, 421, 423 (1st Cir. 2007) (reasoning that
“[t]he rescission process is intended to be private, with the
creditor and debtor working out the logistics of a given
rescission,” and concluding that “Congress did not intend
rescission suits to receive class-action treatment”); James v.
Home Constr. Co. of Mobile, 

, 731 (5th Cir. 1980)
(same). Though we need not weigh in here on that question, we
agree with the District Court that, in light of this authority, class
counsel was not inadequate for declining to pursue a classwide
rescission claim on remand.

                                  82
assert TILA/HOEPA claims, instead focusing solely on the
statute-of-limitations arguments advanced by the defendants.
See Settling Parties’ Br. at 111 (acknowledging that the District
Court “elected not to reach these arguments in light of its
determination that the claims were time-barred”). We do not
deal with those justifications in the first instance, and remand
for the Court to do so. Cf. Hydrogen 

(“In deciding whether to certify a class under Fed. R. Civ. P. 23,
the district court must . . . consider all relevant evidence and
arguments presented by the parties.”).

       We again stress that we do not hold that class counsel are
necessarily inadequate representatives for the class (or any
subclass that is created). We conclude, however, that class
counsel’s justifications for their decision not to plead
TILA/HOEPA claims against the defendants on behalf of the
class merit closer scrutiny.

              5.      The North Carolina Objectors

        We turn to the objections to the District Court’s
certification decision lodged by three class members from North
Carolina (Troy Elliott, Lorraine Oswald, and Ruth Mathis-
Wisseh),28 represented by Jerome Hartzell of the North Carolina


       28
          There are approximately 800 North Carolina class
members who received loans from CBNV and are members of
the settlement class in the consolidated class actions before us.

                               83
law firm Hartzell & Whiteman, LLP. These class members
argue that the Court abused its discretion in determining that the
named plaintiffs were adequate class representatives for class
members from North Carolina.

       We have not yet discussed the unique procedural history
applicable to the North Carolina Objectors, and only briefly do
so here.     In September 2001, Mr. Elliott and another
individual—Travis Bumpers29 —filed a putative class action
against CBNV and Chase Manhattan Bank in the Superior Court
of Wake County, North Carolina (Bumpers v. Community Bank),
asserting state law claims under North Carolina’s Unfair Trade
Practices Act. See N.C. Gen. Stat. § 75-1.1. The case was
removed on the basis of alleged federal preemption and then
remanded back to state court.

        In May 2003, the Bumpers plaintiffs moved for class
certification in state court. In June 2003, the defendants
removed the case again to federal court, and the plaintiffs again
moved to remand. The case was then voluntarily transferred to
the District Court in our case for inclusion as part of the MDL
proceeding. In addition, the District Court permitted the
Bumpers plaintiffs to intervene in the consolidated Kessler
action.



       29
          Mr. Bumpers opted out of the class, and thus is not a
party to these appeals.

                               84
        From December 2005 onward, counsel for the Bumpers
plaintiffs repeatedly requested that the District Court rule on its
2003 motion to remand. At the same time, counsel filed a
motion (in March 2006) in the consolidated Kessler action in
support of the creation of a separate subclass of North Carolina
borrowers. In addition, the Attorney General of North Carolina
submitted a statement to the District Court opposing “the
uniform settlement in In re Community Bank to the extent that
it proposes to treat North Carolina borrowers the same as other
class members who are not entitled to the protections of North
Carolina law.”

       In January 2008 (and before the class was re-certified and
the Modified Settlement approved), the District Court finally
ruled on and granted the 2003 motion to remand. The Court
simultaneously denied as “moot” the North Carolina Objectors’
motion for a subclass of North Carolina borrowers.

        On remand in North Carolina state court, the Bumpers
plaintiffs (1) filed a motion for summary judgment, and (2)
pursued their May 2003 motion for class certification.
However, in March 2008, the District Court granted defendants’
motion to enjoin the state class proceedings in Bumpers.

        Though class proceedings were enjoined, the named
plaintiffs in Bumpers proceeded with their motion for summary
judgment. The North Carolina Superior Court granted partial
summary judgment in favor of Bumpers and Troy Elliott,

                                85
concluding that CBNV had violated North Carolina’s Unfair
Trade Practices Act in two ways: (1) by charging a “loan
discount fee” for providing a loan that was not in fact
discounted; and (2) assessing “settlement charges” that were
“redundant fees covering the same services and duplicative of
the ‘origination fees’ charged by” CBNV. Bumpers v.
Community Bank of N. Va., 

, 444 (N.C. 2010).
The Court awarded damages in the amounts of $10,401.67 and
$10,999, respectively, to Bumpers and Elliott.30

        Counsel for the Bumpers plaintiffs then filed objections
to certification and approval of the Modified Settlement in the
consolidated Kessler action, and appeared at the June 2008 final
fairness hearing. Counsel argued that the North Carolina
borrowers’ state law claims were uniquely valuable because: (1)
they are subject to mandatory treble damages, see N.C. Gen.

       30
         CBNV appealed that judgment, but the North Carolina
Court of Appeals dismissed it, ruling that the appeal was
interlocutory because the Superior Court’s order expressly left
the issue of attorneys’ fees to be decided. Bumpers v.
Community Bank of N. Va., 

(N.C. Ct. App.
2009). After oral argument in the current appeals, the Supreme
Court of North Carolina reversed the Court of Appeals’
decision, and concluded that “an unresolved request for attorney
fees does not prevent finality of a judgment disposing of all
issues in the underlying substantive claim.” 

. As of this writing, the Court of Appeals on
remand has not yet ruled on the merits of the appeal.

                              86
Stat. § 75-16; (2) a four-year statute of limitations applies to
those claims, 

a far more generous limitations
period than under RESPA or TILA/HOEPA; and (3) there was
now demonstrable evidence of the unique value of these claims,
as the Bumpers plaintiffs had engaged in extensive discovery in
state court, proven liability, and won significant, trebled
damages.

      The District Court did not address the North Carolina
Objectors’ arguments until the very end of its August 2008
Memorandum approving the settlement. The Court stated:

       Remarkably, [counsel for the plaintiffs in
       Bumpers] now objects to the settlement because
       we did not create a sub-class of North Carolina
       borrowers. The sole purpose of the requested
       sub-class would be to assert the same North
       Carolina state law claims over which they
       previously argued—successfully—that this court
       has no subject matter jurisdiction. This objection
       is without merit.

(Emphasis in original.)

        We agree with the North Carolina Objectors that, to the
extent the District Court rejected their adequacy challenge based
on its perceived lack of subject matter jurisdiction over their
state law claims, it erred. As our Court has held, “a judgment

                               87
pursuant to a class settlement can bar later claims based on the
allegations underlying the claims in the settled class action.
This is true even though the precluded claim was not presented,
and could not have been presented, in the class action itself.”
In re Prudential Ins. Co. of Am. Sales Practice Litig., 

, 366 (3d Cir. 2001) (emphasis added). It follows that absent
class members with claims being released as part of a class
settlement, even those over which a district court lacks subject
matter jurisdiction, are not barred from challenging the
adequacy of class representatives or the fairness of the
settlement.

        The Settling Parties counter that the District Court was
not required to “appoint named class representatives from every
state in order to approve a settlement that releases state law
claims.” (Settling Parties’ Br. at 140.) We no doubt agree with
that statement, but this was not the argument made to the
District Court.31 Though we express no opinion on whether the



       31
           We are not persuaded by the Settling Parties’
suggestion that any adequacy-of-representation problem was
cured because North Carolina borrowers dissatisfied with the
Modified Settlement could have opted out of the class. Cf. In re
Diet 

(“In a class where opt out rights are
afforded, [due process] protections are adequate representation
by the class representatives, notice of the class proceedings, and
the opportunity to be heard and participate in the class
proceedings.”) (citing Phillips Petroleum Co. v. Shutts, 

North Carolina Objectors’ claims are “uniquely” valuable as
compared to the other class members’ state law claims, we
conclude their arguments merited more discussion than the
Court gave them. Cf. Community Bank 

–10
(directing the Court to “pay particular attention to the prevalence
of colorable TILA, HOEPA, and other claims that the individual
class members may have which were not asserted by class
counsel” (emphasis added)). We request that the Court on
remand consider the North Carolina Objectors’ arguments and
determine whether the creation of a subclass is necessary to
represent their interests adequately.

       B.     The Fairness of the Settlement

        The Settling Parties argue that, “even if the [D]istrict
[C]ourt’s analysis about the viability of the posited
TILA/HOEPA claims were flawed . . . , the Modified Settlement
still should be approved, given that it fairly compensates Class
members for those hypothetical claims.” (Settling Parties’ Br. at
161.) We disagree, as there is no “harmless error” doctrine that
applies to cure a class representative’s inadequacy in light of
what may appear to be a “fair” settlement. As the Supreme
Court has recognized,

       [w]here differences among members of a class are
       such that subclasses must be established, we


797, 811–12 (1985)).

                                89
       know of no authority that permits a court to
       approve a settlement without creating subclasses
       on the basis of consents by members of a unitary
       class, some of whom happen to be members of the
       distinct subgroups. The class representatives may
       well have thought that the Settlement serves the
       aggregate interests of the entire class. But the
       adversity among subgroups requires that the
       members of each subgroup cannot be bound to a
       settlement except by consents given by those who
       understand that their role is to represent solely the
       members of their respective subgroups.

(quoting In re Joint E. and S. Dist.
Asbestos Litig., 

, 742–43 (2d Cir. 1992)). Indeed,
“the determination whether ‘proposed classes are sufficiently
cohesive to warrant adjudication’ must focus on ‘questions that
preexist any settlement.’” 

(quoting

–23); see also General 

(“[T]he inquiry into the settlement’s fairness cannot
conceptually replace the inquiry into the propriety of class
certification.”). Accordingly, because the settlement appears to
lack “structural assurance of fair and adequate representation for
the diverse groups and individuals affected,” 

, we again decline “to address definitively” the substantive




                                90
fairness of the settlement.32 Community Bank 

.

        However, nothing we have said should be interpreted as
concluding that the total compensation provided in Modified
Settlement could not be approved as fair, adequate, or
reasonable. In particular, we are troubled by the Objectors’
apparent belief that any settlement that does not fully account
for (1) trebled damages under RESPA, and (2) the full measure
of statutory (in addition to actual) damages under TILA and
HOEPA, is hopelessly inadequate, unfair, and unreasonable.33



       32
         Appeal No. 09-2001 was filed by the plaintiffs in
Drennan v. Community Bank of Northern Virginia, a non-class
action asserting claims for rescission against CBNV and RFC
that was transferred to the District Court.               These
plaintiffs—John and Rowena Drennan, David and Diane
Garner, and Shawn and Lorene Starkey—did not opt out of the
Modified Settlement, but nonetheless argue that their rescission
claims were not within the scope of the settlement’s release.
The District Court disagreed and granted defendants’ motion to
dismiss their claims. In light of our decision to vacate the
Court’s certification order and approval of the Modified
Settlement, we do not address this argument.
       33
          In its most extreme form, this position is exemplified
by the briefs filed by counsel for the Objectors from Alabama
and Georgia, attorney Franklin R. Nix. Mr. Nix—believing that
“the state of the record is such that merely voiding the ‘modified
settlement’ and returning the case to its status quo ante would

                               91
 Contrary to the Objectors’ contentions, we know of no authority
that requires a district court to assess the fairness of a settlement
in light of the potential for trebled damages. Compare Suffolk
Cty. v. Long Island Lighting, 

, 1324 (2d Cir.
1990) (“[I]t is inappropriate to measure the adequacy of a
settlement amount by comparing it to a possible trebled base
recovery figure.”), with Rodriguez v. West Publishing Corp.,

, 964–65 (9th Cir. 2009) (“We have never
precluded courts from comparing the settlement amount to both
single and treble damages. By the same token, we do not
require them to do so in all cases.”).

       In any event, the District Court—having determined that
the TILA/HOEPA claims were not viable because they were
time-barred—never addressed the fairness of the settlement in
light of the potential statutory damages available under TILA
and HOEPA, and we do not do so in the first instance. We point



saddle class members with only more of the ‘law’s
delay’”—urges us not only to vacate the settlement, but to
remand this case (to a different District Court Judge) with
instructions to enter an order granting summary judgment “for
all class members . . . as to liability and damages for violations
of TILA, TILA rescission, HOEPA, and RESPA[.]” (Objectors’
Br., No. 08-3790, at 1, 28.) We agree with the Settling Parties
that Mr. Nix’s request “is beyond unorthodox and has no
support in the law, the rules of procedure, or the record.”
(Settling Parties’ Br. at 50 n.6.) We therefore reject it.

                                 92
out, however, that the Objectors’ contentions that the statutory
damages available in a TILA/HOEPA class action are
“automatic,” and that “there is no judicial discretion involved in
the award to be made to the Class Members,” are simply
incorrect. (Objectors’ Br., No. 08-3621, at 91.) The statute
makes clear that, although there is no cap on claims for statutory
damages in a class action asserting violations of the disclosure
requirements for loans subject to HOEPA, see supra at 14 n.9,
a district court nonetheless has discretion—after considering
several specifically stated factors—in determining the amount
of the award to the class. See 115 U.S.C. § 1640(a) (“In
determining the amount of award in any class action, the court
shall consider, among other relevant factors, the amount of any
actual damages awarded, the frequency and persistence of
failures of compliance by the creditor, the resources of the
creditor, the number of persons adversely affected, and the
extent to which the creditor’s failure of compliance was
intentional.” (emphasis added)).

       C.      The Objectors’ Renewed Motion to Intervene

        In addition to their challenges to the District Court’s class
certification decision and approval of the Modified Settlement,
the Objectors also contend that the Court abused its discretion
when it denied as untimely their November 2007 motion to
intervene. In light of our conclusion that the Court erred in
evaluating the adequacy requirement, little turns on this
question; on remand, the Court should revisit whether the named

                                 93
plaintiffs and class counsel are adequate class representatives,
and the Objectors may again seek to intervene in that context.
In any event, we conclude that the Court did not abuse its
discretion in denying the Objectors’ renewed motion to
intervene.

        In Community Bank I, we stated that “[t]he time frame in
which a class member may file a motion to intervene
challenging the adequacy of class representation must be at least
as long as the time in which s/he may opt-out of the 

. Moreover, a motion to intervene made within that
time period is “presumptively timely.” 

note
that they filed their renewed motion to intervene in November
2007, before the opt-out period had ended. Accordingly, they
contend that their renewed motion was timely.

        However, we also stressed in Community Bank I that the
“[t]imeliness of an intervention request ‘is determined by the
totality of the circumstances.’” 

States v.
Alcan Aluminum, Inc., 

, 1181 (3d Cir. 1994)). As
noted, the Objectors withdrew their 2003 motion to intervene on
remand, apparently believing that the MDL transfer of the
Hobson action would permit them an opportunity, in effect, to
depose existing class counsel and take over these consolidated
class actions. The record reveals that this expectation was
unfounded; the Court never told the Objectors it would permit
them to file an amended consolidated complaint for all of the
consolidated actions, and made clear during the November 2005

                               94
conference that it intended to address class certification and
approval of the Modified Settlement in the consolidated Kessler
action before dealing with any matters in the other transferred
cases.

         In any event, once the District Court determined (in
October 2006) that the TILA/HOEPA claims were not viable,
the Objectors were on notice that their interests would not be
adequately pursued by the named plaintiffs and their counsel.
The Objectors nonetheless waited almost a year before filing
their renewed motion to intervene. See Joseph M. McLaughlin,
McLaughlin on Class Actions: Law and Practice § 4:36, at 769
(6th ed. 2010) (“This ‘sit back and wait’ approach [is
impermissible] where the would-be intervenors should
reasonably know that their interests will no longer be
represented by the named plaintiff, as where the named
plaintiffs’ litigation decisions indicate that they have abandoned
[certain] claims . . . .”). In these circumstances, we cannot say
that the Court abused its discretion in denying as untimely the
Objectors’ renewed motion to intervene.

       D.     The Objectors’ Renewed Petition for Mandamus
              to Recuse the District Judge

      Following oral argument in Community Bank I, the
Objectors moved to reassign these actions to a different District
Court Judge in the event we vacated the Court’s certification
and settlement approval decisions. They purported to move

                               95
under 28 U.S.C. § 2106, which authorizes federal appellate
courts to

      affirm, modify, vacate, set aside or reverse any
      judgment, decree, or order of a court lawfully
      brought before it for review, [or] remand the
      cause and direct the entry of such appropriate
      judgment, decree, or order, or require such
      further proceedings to be had as may be just
      under the circumstances.

We construed the Objectors’ motion as a
petition for mandamus, seeking an order from our Court
directing the District Court Judge to recuse himself under 28
U.S.C. 455, which provides as follows:

      (a) Any justice, judge, or magistrate of the United
      States shall disqualify himself in any proceeding
      in which his impartiality might reasonably be
      questioned.

      (b) [The judge] shall also disqualify himself in the
      following circumstances:

             (1) Where he has a personal bias or
      prejudice concerning a party, or personal
      knowledge of disputed evidentiary facts
      concerning the proceeding[.]

                              96
Id.; Community Bank 

–20. We denied the
Objectors’ petition for mandamus, noting that they had “ma[d]e
no allegation that the District Court derived its alleged bias from
an extrajudicial source,” but instead relied solely on “rulings or
statements made by the District Court during the course of the
proceedings.” 

see also Liteky v. United States, 

, 555 (1994) (“[J]udicial rulings alone almost never
constitute a valid basis for a bias or partiality motion.”).

        Before oral argument in the current appeals, the
Objectors again moved to reassign these actions to a different
District Court Judge—“pursuant to [our Court’s] supervisory
powers and authority under 28 U.S.C. § 2106,” Mot. at 1—in the
event we again remand. In support of their claims of bias, they
rely on the following: (1) the District Court’s ex parte
conferences with the Settling Parties during the course of the
proceedings before our decision in Community Bank I; (2) the
erroneous legal conclusions in the Court’s 2006 Memorandum,
and its refusal to certify that Memorandum for an interlocutory
appeal;34 and (3) the Court’s supposed failure to advance the


       34
         We note that the District Court could not have certified
its 2006 Memorandum for appellate review under 28 U.S.C.
§ 1292(b) or Federal Rule of Civil Procedure 54(b), as it was an
interlocutory ruling on a question of law, not an order or a
judgment. See Link v. Mercedes-Benz of N.A., Inc., 

, 863 (3d Cir. 1977) (en banc) (“[O]ur jurisdiction extends
only to orders of the district court.”); see also Wright & Miller,

                                97
MDL proceeding (specifically, its failure to rule on motions in
the Hobson action filed by counsel for the Objectors).

       We again construe the Objectors’ motion as a petition for
mandamus. As is evident from the above, however, the
Objectors once more rely on little more than the “rulings or
statements made by the District Court during the course of the
proceedings” in support of their renewed petition. Community
Bank 

. The Objectors’ other allegations of
bias on the part of the District Court border on the frivolous,35



Federal Practice and Procedure § 3930 n.2 (district courts do
not have the authority to certify “issues” to a court of appeals).
       35
           Particularly baseless are the two new “extrajudicial
sources” supposedly suggestive of bias that the Objectors
identify: (1) that the District Court Judge was a speaker at Reed
Smith LLP’s “Diversity Retreat” in 2005 (Reed Smith represents
RFC in this case); and (2) one of the Judge’s former law clerks,
now a United States Magistrate Judge, was a partner at Reed
Smith for 13 years. Mot. at 28–29. Not only are these facts
wholly inadequate to show objective bias, we note that the
Objectors never raised these concerns with the District Judge.
In that light, we believe Judge Ziegler aptly characterized (in his
“advisory” ruling) the Objectors’ attacks on the District Judge:

       We should note that, while criticism of a district
       court’s unfavorable rulings and procedures are
       common and expected, Objectors’ counsel has, in

                                98
and we are troubled by their accusations—which we see nothing
in the record to support—that the District Court intentionally
disregarded our mandate in Community Bank I in order to reach
a pre-determined result. E.g., Mot. at 14 (accusing the District
Court Judge of “disregard[ing] this Court’s mandate . . . in order
to again reach the same result [he] intended all along—approval
of the class action settlement”); 

(accusing the Judge of
being “intellectually dishonest and duplicitous”); see also
Objectors’ Br., No. 08-3790, at 2 (requesting that our Court
remand this case “to a different district court unburdened by
hidden agendas”). Accordingly, and notwithstanding our
conclusion that the District Court erred in re-certifying the class,
we deny the Objectors’ petition for mandamus.36



       our view, exceeded the bounds of professional
       conduct by making unwarranted, unnecessary and,
       quite frankly, silly attacks on the district court in
       its legal brief. . . . These attacks serve only to
       reduce the civility and decorum of the
       proceedings[.]


       36
         In this context, we believe it appropriate to re-state our
closing admonition from Community Bank I:

       We note as well that the District Court was
       besieged by opposing groups of lawyers who
       flooded it with numerous motions, arguments, and
       counter-arguments, which undoubtedly made it

                                99
IV.    Conclusion

        In summary, we conclude the District Court applied an
incorrect legal standard, and thus abused its discretion, in
determining that the named plaintiffs and class counsel are
adequate representatives for the class. In addressing the
adequacy requirements on remand, the Court should in
particular consider, consistent with the standards we have
discussed, (1) whether a subclass of class members with timely
RESPA and/or TILA/HOEPA claims should be created; and (2)
whether class counsel are adequate representatives for the class,
and/or any subclasses that may be created, in light of counsel’s
justifications given for their decision not to bring TILA/HOEPA
claims on behalf of the class.



       difficult for the Court to engage in the reflection
       needed to exercise its fiduciary duty to assure that
       the settlement process was procedurally fair. . . .
       We believe it is the responsibility of counsel,
       consistent with their obligations to their clients, to
       assist the district courts in their difficult tasks of
       managing often unwield[y] class actions by
       eliminating unnecessary motions, exercising
       restraint in filing objections, and treating
       opposing counsel with the civility that should
       characterize attorney 

n.37.

                                100