HIGGINSON, Circuit Judge:
Countrywide appeals a class certification order of the bankruptcy court. We AFFIRM. Named plaintiffs Ydalia Rodriguez, Maria Antonieta and David Herrera, and Lucy and Alfonso Moreno are former chapter 13 debtors with mortgages serviced by Countrywide Home Loans, Inc. ("Countrywide"). The Plaintiffs each cured their pre-petition mortgage arrearages, completed their chapter 13 plans,
The bankruptcy court found that Countrywide "admits that it misapplied plan payments and charged fees without first receiving Court approval" but Countrywide contended that (1) the misapplications and charges were sporadic rather than part of a regular practice and (2) the fees did not violate Rule 2016(a). In response, the bankruptcy court held that, "`[u]nder the plain language of Rule 2016, a mortgage lender must file a Rule 2016 application before collecting any reimbursable fees and costs while a chapter 13 case remains pending.'" Rodriguez v. Countrywide Home Loans, Inc. (In re Rodriguez), 421 B.R. 356, 372 (Bankr.S.D.Tex. 2009). The bankruptcy court concluded that Rule 2016(a) applied to fees that were "assessed during bankruptcy but not collected until post-bankruptcy," rejecting Countrywide's arguments.
Plaintiffs moved for class certification of both a Rule 23(b)(2) class and also a Rule 23(b)(3) class on December 2, 2009. See Fed.R.Civ.P. 23. After a three-day hearing, the bankruptcy court denied Rule 23(b)(2) as well as Rule 23(b)(3) class certification for Plaintiffs' damages claims because they did not satisfy Rule 23(b) but granted narrow class certification for Plaintiffs' injunctive relief claim. In doing so, the bankruptcy court determined that the proposed injunction would state that, "Countrywide shall not collect or attempt to collect any fees that (1) were incurred during the pendency of a class member's
The narrowed class definition excluded those who would not be able to benefit from redeeming time because they either had already paid their mortgages in full or no longer had a mortgage serviced by Countrywide. See In re Monumental Life Ins. Co., 365 F.3d 408, 416 (5th Cir.2004) (citing Bolin v. Sears, Roebuck & Co., 231 F.3d 970, 978 (5th Cir.2000)) (requiring that "most of the class" seeking injunctive relief be able to benefit from the injunction).
On appeal, Countrywide challenges the bankruptcy court's class certification order, arguing that (1) the grant of class certification is precluded by Rule 23(b) and our holding in Wilborn v. Wells Fargo Bank, N.A. (In re Wilborn) ("Wilborn II"),
We review a denial of class certification for abuse of discretion and legal questions implicated by the denial de novo. Alaska Elec. Pension Fund v. Flowserve Corp., 572 F.3d 221, 227 (5th Cir.2009); Vizena, 360 F.3d at 502. "`Implicit in this deferential standard is a recognition of the essentially factual basis of the certification inquiry and of the [trial] court's inherent power to manage and control pending litigation.'" Monumental Life, 365 F.3d at 414 (quoting Allison v. Citgo Petroleum Corp., 151 F.3d 402, 408 (5th Cir.1998)).
Parties seeking to certify a class must satisfy Fed.R.Civ.P. 23(a)'s four threshold requirements
Countrywide contests the bankruptcy court's holding that Plaintiffs met the requirements of Rule 23(b)(2).
"Instead of requiring common issues, 23(b)(2) requires common behavior by the defendant towards the class." Casa Orlando Apartments, Ltd. v. Fed. Nat'l Mortg. Ass'n, 624 F.3d 185, 198 (5th Cir. 2010). "The court may certify a class under Rule 23(b)(2) if `the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole.'" Bolin, 231 F.3d at 975 (citing Fed. R. Civ. Proc. Rule 23(b)(2)).
The bankruptcy court did not abuse its discretion when it concluded that Countrywide's fee charging actions in alleged derogation of Rule 2016(a) were generally applicable to the narrowly certified "unapproved fees" class of approximately 125 individuals. Countrywide charged every class member purportedly unauthorized fees in contravention of Rule 2016(a). It is this alleged common behavior towards all members of the class — "systematically ignor[ing] Rule 2016(a) by charging unauthorized fees" — that led to the class members allegedly being harmed in the same way. See Bolin, 231 F.3d at 975 n. 22. As the bankruptcy court explained, "[t]he [class action] therefore eliminates piecemeal litigation concerning whether Countrywide must seek Court approval for fees that it imposes: once the class is certified and the injunction is granted or denied, that issue will be resolved as to all class members."
Countrywide argues that our decision in Wilborn II, involving similar facts to the instant case, mandates that class certification be denied. Wilborn II, however, was exactingly adhered to by the bankruptcy
In the instant case, the bankruptcy court conformed its ruling explicitly to our Wilborn II decision, explaining how it would not include damages claims in its class certification grant because, "when damages enter the fray, individualized issues begin to predominate as the Court must consider the harm suffered by each class member on a case-by-case basis." Similarly, because disgorgement and other damages claims were also excluded from this class action, Countrywide will not be required to adjudicate and repay fees, again, responding to our direction in Wilborn II that individualized disgorgements not be resolved through class action procedure. "[Rule 23(b)(2)] is clear that claims seeking injunctive or declaratory relief are appropriate for (b)(2) class certification." Allison, 151 F.3d at 411. The injunction being sought would target only the alleged Countrywide practice of viewing Rule 2016(a) as inapplicable to any fee assessed post-petition but charged post-discharge and, accordingly, any practice of never seeking approval of such fees under Rule 2016(a). If Plaintiffs prevail, Countrywide would no longer be able to collect or attempt to collect fees within the scope of Rule 2016(a) that, according to its own readily accessed and comprehensive AS-400 database, were incurred post-petition and pre-discharge yet have not been authorized for collection pursuant to Rule 2016(a).
The bankruptcy court made factual findings based on multiple days of testimony and the fifty volume record and concluded therefrom that many of the factors cited by Countrywide as requiring an individualized assessment of claims are readily identifiable in Countrywide's AS-400 database. For each mortgagor, the AS-400 database tracks the type and amount of all fees; whether a fee was classified as recoverable (collectable) or non-recoverable (not collectable); the funds pre- and post-petition; all payments; the mortgagor's bankruptcy filings; the status, case number, and chapter of the mortgagor's bankruptcy case; the name of the trustee handling the mortgagor's bankruptcy case; the date of the chapter 13 plan confirmation; and all information relevant to the escrow and principal balance of the mortgage. After a firsthand review of the evidence, the bankruptcy court determined, based on testimony by one of Countrywide's witnesses, that Countrywide's AS-400 database was searchable, making the information easily ascertainable without court intervention.
Next, Countrywide argues that its conduct cannot be generally applicable to the class because Countrywide had no policy concerning Rule 2016(a) compliance. However, the bankruptcy court did not abuse its discretion when it determined that because "Countrywide assessed and charged fees to the class according to its understanding that its conduct was not regulated by Rule 2016(a).... Plaintiffs have sufficiently alleged behavior applicable to the class as a whole under Rule 23(b)(2) and Bolin." The bankruptcy court reasonably determined, based on the extensive record, that Countrywide had a regular practice for dealing with fees accrued post-petition but charged post-discharge and Rule 2016(a). When it perceived that compliance with Rule 2016(a) was not required, Countrywide had a practice of noncompliance. The bankruptcy court summarized its findings from evidence submitted to it as follows:
In addition, Countrywide contends that the bankruptcy court was mistaken when it concluded that Countrywide's behavior was generally applicable to the class because there was no legal consensus regarding whether Rule 2016(a) applied to post-petition mortgage fees. However, this fact does not impact the general applicability of Countrywide's behavior because Countrywide treated all class members the same, failing to seek approval in every case. Irrespective of any legal uncertainty as to Rule 2016(a), Countrywide consistently did not apply for authorization pursuant to Rule 2016(a); there was no contradictory or sporadic treatment of Rule 2016(a) by Countrywide that would militate against certification of this class.
Finally, Countrywide argues, citing Meyer v. Brown & Root Construction Co., 661 F.2d 369 (5th Cir.1981), that the proposed injunction would be improper because it merely orders Countrywide to obey the law. Countrywide's argument misinterprets Meyer. In Meyer, the district court enjoined the defendant from
Therefore, we conclude that the bankruptcy court did not abuse its discretion by determining that Countrywide's failure to seek bankruptcy court approval under Rule 2016(a) is generally applicable, under these facts probingly ascertained by the bankruptcy court, to this narrow class.
Since no damages are part of this case's class certification, the bankruptcy court did not abuse its discretion when, after three days of hearings and consideration of extensive supporting evidence, it concluded that the Rule 23(b)(2) requirement that damages must be sufficiently incidental to injunctive relief was met. "[Trial] courts `are in the best position to assess whether a monetary remedy is sufficiently incidental to a claim for injunctive or declaratory relief.'" Casa Orlando Apartments, 624 F.3d at 201 (quoting Allison, 151 F.3d at 416). The bankruptcy court recognized that, "monetary relief, to be viable in a [R]ule 23(b)(2) class, must `flow directly from liability to the class as a whole on the claims forming the basis of the injunctive or declaratory relief,'" and properly applied the relevant analysis from Wilborn II to Plaintiffs' damages claims, denying class certification for those issues. The bankruptcy court then held that Rule 23(b)(2)'s predominance requirement was easily satisfied since only injunctive relief was at issue.
Because the bankruptcy court's decision was not an abuse of discretion, we affirm its grant of class certification for Plaintiffs' injunctive relief claim.
Countrywide argues that the bankruptcy court adopted an improper class definition by certifying a so-called "fail-safe class." A fail-safe class is a class whose membership can only be ascertained by a determination of the merits of the case because the class is defined in terms
Countrywide does not cite any case where we have rejected a class definition because it created a so-called fail-safe class. We rejected a rule against fail-safe classes in Mullen v. Treasure Chest Casino, 186 F.3d 620 (5th Cir.1999), and Forbush v. J.C. Penney Co., 994 F.2d 1101 (5th Cir.1993), abrogated on other grounds by Dukes, 131 S.Ct. 2541. The plaintiff in Forbush proposed that the court should define its class as, "employees `whose pension benefits have been, or will be, reduced or eliminated as a result of the overestimation of their Social Security benefits.'" 994 F.2d at 1105. The defendant argued that the class was not defined with sufficient specificity and was "hopelessly `circular,' as the court must first determine whether an employee's pension benefits were improperly reduced before that person may be said to be a member of the class." Id. In response, we stated that, "[t]his argument is meritless and, if accepted, would preclude certification of just about any class of persons alleging injury from a particular action. These persons are linked by this common complaint, and the possibility that some may fail to prevail on their individual claims will not defeat class membership." Id.
In Mullen, the class was defined as, "all members of the crew of the M/V Treasure Chest Casino who have been stricken with occupational respiratory illness caused by or exacerbated by the defective ventilation system in place aboard the vessel." 186 F.3d at 623. The defendant argued that, "any class must be capable of objective identification before it can be certified" and because membership in the class was contingent upon "ultimate issues of causation," the defendant was "prejudiced by being forced to defend against claimants who may not end up being members of the class." Id. at 624 n. 1. Relying on Forbush, we rejected this argument, holding that, "because the class is similarly linked by a common complaint, the fact that the class is defined with reference to an ultimate issue of causation does not prevent certification." Id. Because our precedent rejects the fail-safe class prohibition, we conclude that the bankruptcy court did not abuse its discretion when it defined the class in the present case.
Countrywide filed a Rule 59(e) motion for reconsideration, arguing that Plaintiffs' claim for injunctive relief was mooted by a consent judgment agreed to by the Federal Trade Commission ("FTC") and Countrywide in the United States District Court for the Central District of California (the "consent judgment").
We affirm the bankruptcy court's denial of Countrywide's motion for reconsideration of the certification order. Rule 59(e) motions are "not the proper vehicle for rehashing evidence, legal theories, or arguments that could have been offered or raised before the entry of judgment." Templet v. HydroChem Inc., 367 F.3d 473, 478-79 (5th Cir.2004) (citing Simon v. United States, 891 F.2d 1154, 1159 (5th Cir.1990)). They are used to "call[] into question the correctness of a judgment" and are "properly invoked `to correct manifest errors of law or fact or to present newly discovered evidence.'" In re Transtexas Gas Corp., 303 F.3d 571, 581 (5th Cir.2002) (quoting Waltman v. Int'l Paper Co., 875 F.2d 468, 473 (5th Cir. 1989)). "Reconsideration of a judgment after its entry is an extraordinary remedy that should be used sparingly." Templet,
In Templet, we refused to reverse a district court's rejection of a Rule 59(e) motion when "the underlying facts were well within the [plaintiffs'] knowledge prior to the district court's entry of judgment." Id. Here, the consent judgment was entered by the Central District of California on June 15, 2010. The bankruptcy court issued its order on July 21, 2010. The defendants first brought the consent judgment to the bankruptcy court's attention in its Rule 59(e) motion, filed on August 4, 2010. As the bankruptcy court emphasized, Countrywide could have filed a supplemental motion notifying the bankruptcy court of the consent judgment just as Countrywide had done after Wilborn II was decided. Because Countrywide had forty-one days to apprise the bankruptcy court of the consent judgment before the bankruptcy court issued its certification order, the consent judgment did not constitute newly discovered evidence compelling Rule 59(e) relief as Countrywide alleges.
Countrywide argues that it could not have known that the bankruptcy court would certify the class only for injunctive relief and therefore, that it could not have known that the consent judgment would moot the class certification grant. However, the consent judgment was relevant to the case no matter how broadly the bankruptcy court granted class certification. Although the bankruptcy court certified a narrower class than the one sought by Plaintiffs, Countrywide knew that Plaintiffs were seeking injunctive relief before the bankruptcy court issued its class certification order. The bankruptcy court could have explored and accepted Countrywide's argument and determined that Plaintiffs' claim for injunctive relief was moot even if the bankruptcy court had certified both a damages and an injunctive class. Because we conclude that Countrywide's Rule 59(e) motion for reconsideration was not based on newly discovered evidence, we do not revisit the bankruptcy court's separate merits denial of the motion.
For the above reasons, we AFFIRM the certification of the injunctive class, the bankruptcy court's class definition, and the denial of Countrywide's motion for reconsideration.
Furthermore, Appellees argue that Countrywide could reclassify fees from recoverable to non-recoverable back to recoverable so that it could use the consent judgment's notice provision to avoid seeking bankruptcy court authorization. This comports with the bankruptcy court finding in its class certification decision, based on evidence considered by it, that Countrywide's employees "testified that Countrywide would regularly classify unauthorized fees as recoverable from debtors in the AS-400 database," and that there was a realistic possibility that Countrywide could reclassify fees from non-recoverable to recoverable to circumvent Rule 2016(a) by "collect[ing] unauthorized fees, which were deemed current during this class action, after the conclusion of this case."
Finally, the consent judgment explicitly does not include banks affiliated with Countrywide because banks are outside the jurisdiction of the FTC. The proposed injunction has no such limitation.