Jones v. Ford Motor Credit Company

358 F.3d 205 (2nd Cir. 2004)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

Ps individually and as class representatives, sued D alleging racial discrimination under the Equal Credit Opportunity Act ('ECOA'), 15 U.S.C. § 1691 et seq. (2003). Ps alleged that the financing plan discriminated against African-Americans. Although the financing rate was primarily based on objective criteria, D permitted dealers to mark up the rate, using subjective criteria to assess non-risk charges. Ps alleged that the markup policy penalized African-American customers with higher rates than those imposed on similarly situated Caucasian customers. D denied the charges and asserted state-law counterclaims for the amounts of their unpaid car loans. In the event that a class was certified, D asserted conditional counterclaims against any member of that class who was in default on a car loan from D. Ps moved to dismiss the counterclaims for lack of subject matter jurisdiction, Fed. R. Civ. P. 12(b)(1), lack of personal jurisdiction, Fed. R. Civ. P. 12(b)(2), improper venue, Fed. R. Civ. P. 12(b)(3), and failure to state a claim upon which relief could be granted Fed. R. Civ. P. 12(b)(6). After determining that the counterclaims were permissive, the judge expressed doubt as to the jurisdictional consequence of that determination. On the one hand, he believed that permissive counterclaims must be dismissed if they lack an independent basis of federal jurisdiction. On the other hand, he acknowledged that 'there [was] some authority to suggest that . . . the court should determine, based on the particular circumstances of the case, whether it had authority to exercise supplemental jurisdiction under § 1367(a)' over a counterclaim, regardless of whether it was compulsory or permissive. The judge ruled that the counterclaims, being permissive, 'must be dismissed for lack of an independent basis of federal jurisdiction.' He then ruled that, if he was wrong and if supplemental jurisdiction under section 1367 was available, he would still dismiss the counterclaims in the exercise of the discretion subsection 1367(c) gives district courts. The judge held that the claims and counterclaims arise out of the same occurrence only in the loosest terms and there did not exist a logical relationship between the essential facts [to be proven] in the claim and those of the counterclaims. Further, the interests of judicial economy will not be served because of a tremendous number of separate collection actions based on facts specific to the individual plaintiffs involved. Also, it would be 'unfair and inexpedient' to require absent class members who resided outside of New York to litigate their debt collection actions in the Southern District of New York and that there was no good reason to litigate the debt collection actions in a federal court. D appealed.