Ramirez v. Greenpoint Mortgage Funding, Inc.

ORDER GRANTING PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION

This matter came before the Court on June 28, 2010, on the motion for class certification filed by Plaintiffs Ana and Ismael Ramirez and Jorge Salazar (collectively, “Plaintiffs”). Plaintiffs allege that Defendant GreenPoint Mortgage Funding, Inc. (“Green-Point”) violated federal fair lending and housing laws by giving its authorized brokers discretion to mark up the price of wholesale mortgage loans, a policy that led minority borrowers to be charged disproportionately high rates compared to similarly situated whites. They now ask the Court to certify a class of African-American and Hispanic borrowers who obtained wholesale mortgage loans through GreenPoint from 2004 through 2007. For the reasons set forth below, Plaintiffs’ motion is GRANTED.

BACKGROUND

Plaintiffs Ana and Ismael Ramirez and Jorge Salazar each used brokers to obtain wholesale mortgage loans from GreenPoint. In this lawsuit, they challenge GreenPoint’s policy for pricing such loans. In 2005, the Ramirezes refinanced their home in Massachusetts, taking out a $469,000 loan with a 30-year term and a disclosed Annual Percentage Rate, or “APR,” of 6.191 percent. Salizar obtained a $475,000 loan, with a 30-year term and disclosed APR of 7.181 percent, by refinancing his home and rental property in San Diego, California in 2006. The Ramirezes were assisted by First Call Mortgage Company, and Salizar used the services of TLN Financial; both were mortgage brokers authorized to originate loans with GreenPoint.

In the wholesale market, independent mortgage brokers act as intermediaries between borrowers and wholesale mortgage lenders like GreenPoint. A broker identifies prospective borrowers and facilitates the loan origination process, transmitting a borrower’s application to a lender for a determination of whether or not to fund the loan. Its reliance on brokers enabled GreenPoint to fund mortgages in areas where it had not established any brick-and-mortar retail presence of its own. GreenPoint worked with tens of thousands of authorized brokers when it was in the wholesale mortgage business, which it exited in late 2007. GreenPoint typically sold the wholesale mortgages it funded into secondary markets, where they were repackaged into mortgage-backed securities. The company originated as much as 93 percent of its loans through wholesale brokers from 2004 to 2007, and was at one time the fifth largest originator of mortgage loans through the wholesale channel in the United States.

The pricing of GreenPoint’s mortgage loans consisted of an objective and a subjective component. GreenPoint relied on objective risk factors—such as FICO score, property value, and loan-to-value ratio—to determine credit parameters and set prices for its loan products. This information was communicated to brokers on a rate sheet listing GreenPoint’s “par” interest rate, which did not result in any broker compensation. That objective component of loan pricing is not at issue here.

Plaintiffs’ allegations relate to Green-Point’s discretionary pricing policy, which governed brokers’ compensation for their services. GreenPoint paid brokers a “yield spread premium” or “rebate” when they set the interest rate higher than par; brokers were also permitted to charge loan origination and processing fees. GreenPoint did not *631set any objective criteria for the imposition of these higher rates and fees, which were set by the brokers according to their discretion. Brokers were paid more for loans that cost more to the borrower, but their compensation was capped at 5 percent of the loan amount. GreenPoint monitored the fees charged by its brokers to ensure they complied with its policies.

Plaintiffs contend that the discretionary policy resulted in minority borrowers—defined here to include African Americans and Hispanics—receiving less favorable loan pricing than similarly situated whites. Citing such disparities, Plaintiffs allege that Green-Point engaged in discriminatory mortgage lending practices in violation of the Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691, and the Fair Housing Act (“FHA”), 42 U.S.C. § 3605.1 They bring these claims under a disparate impact theory, challenging “practices that are facially neutral in their treatment of different groups but that in fact fall more harshly on one group than another and cannot be justified by business necessity.” Int’l Bhd. of Teamsters v. United States, 431 U.S. 324, 335 n. 15, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977) (addressing disparate impact claims in Title VII employment context).2

Plaintiffs now move to certify a class under Federal Rule of Civil Procedure 23(b)(3). GreenPoint opposes the motion.

LEGAL STANDARD

Plaintiffs, as the parties requesting class certification, must demonstrate that they have met all four requirements of Federal Rule of Civil Procedure 23(a) and the requirements of at least one part of Rule 23(b). Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186 (9th Cir.2001), amended by 273 F.3d 1266 (9th Cir.2001). Rule 23(a) allows a class to be certified

only if (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.

Fed.R.Civ.P. 23(a); see also Zinser, 253 F.3d at 1186. That is, the class must satisfy the requirements of numerosity, commonality, typicality, and adequacy.

Rule 23(b) provides for the maintenance of several different types of class actions. Plaintiffs seek to certify the class under Rule 23(b)(3), which requires a showing “that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.”

Before certifying a class, a district court must determine that the requirements of Rule 23 “are actually met, not simply presumed from the pleadings.” Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 582 (9th Cir.2010) (en banc). The Court must “perform a rigorous analysis to ensure that the prerequisites of Rule 23(a) have been satisfied.” Id. at 581 (citing Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160-61, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982)). Such analysis “will often, though not always, require looking behind the pleadings to issues overlapping with the merits of the underlying claims.” Id. at 594. However, the court may not consider whether the party seeking *632class certification has stated a cause of action or is likely to prevail on the merits. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 178, 94 S.Ct. 2140, 40 L.Ed.2d 732 (1974). If a district court concludes that the moving party has met its burden of proof, then the court has broad discretion to certify the class. Zinser, 253 F.3d at 1186.

DISCUSSION

Plaintiffs propose to represent a class defined as “[a]ll African-American or Hispanic persons throughout the United States to whom GreenPoint originated a residential-secured loan in GreenPoint’s wholesale lending channel between January 1, 2004 and January 1, 2008.” Pis.’ Mot. at 11. As they request certification under Rule 23(b)(3), Plaintiffs present evidence showing the predominance of common issues and the superiority of a class action, in addition to evidence going to Rule 23(a)’s requirements of numerosity, commonality, typicality, and adequacy.

GreenPoint’s challenges to the certification of such a class fall in two broad categories. First, GreenPoint argues that the named Plaintiffs cannot satisfy the requirements of typicality and adequacy, because false statements in their loan applications east doubt on their integrity and subject them to unique defenses. Plaintiffs are also atypical because—according to GreenPoint—they suffered no injury and therefore have no standing, as their financing was superior to that obtained by similarly situated white borrowers. Second, GreenPoint contends that Plaintiffs cannot show either the existence or predominance of common questions. The disparity in loan terms is explained not by race, GreenPoint argues, but by other legitimate variables that Plaintiffs’ expert was unable to account for, such as the amount of work each broker performed for a borrower. Since the inquiry into those other factors would require the Court to examine the loans of each prospective class member, Green-Point contends that proceeding as a class action would be inappropriate.

The Court begins by examining the four elements of Rule 23(a). If Plaintiffs meet those requirements, the Court will move onto the predominance and superiority inquiries under Rule 23(b)(3).

I. Rule 23(a)

A. Numerosity

To satisfy Rule 23(a)(1), Plaintiffs must show that “the class is so numerous that joinder of all members is impracticable.” From 2004 through 2007, GreenPoint made at least 94,000 loans to African-American and Hispanic borrowers across the United States. GreenPoint does not dispute this figure or the impracticability of joinder, and the Court agrees with Plaintiffs that joinder of all class members would be impracticable. The numerosity requirement is therefore satisfied.

B. Commonality

To demonstrate commonality under Rule 23(a)(2), Plaintiffs must “establish common questions of law and fact.” Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 594 (9th Cir.2010) (en banc) (emphasis in original). “[Ajnswering those questions,” on the other hand, “is the purpose of the merits inquiry, which can be addressed at trial and at summary judgment.” Id. It is not necessary that members of the proposed class “share every fact in common or completely identical legal issues.” Rodriguez v. Hayes, 591 F.3d 1105, 1122 (9th Cir.2010). Rather, the “existence of shared legal issues with divergent factual predicates is sufficient, as is a common core of salient facts coupled with disparate legal remedies within the class.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir.1998). “The commonality test is ‘qualitative rather than quantitative’—one significant issue common to the class may be sufficient to warrant certification.” Dukes, 603 F.3d at 599. For a civil rights claim, commonality is satisfied “where the lawsuit challenges a system-wide practice or policy that affects all of the putative class members.” Armstrong v. Davis, 275 F.3d 849, 868 (9th Cir.2001). “[IJndividual factual differences among the individual litigants or groups of litigants will not preclude a finding of commonality.” Id.

To make out a prima facie case of discrimination under the disparate impact theory, Plaintiffs would have to show “a significant disparate impact on a protected class caused by a specific, identified ... practice *633or selection criterion.” Stout v. Potter, 276 F.3d 1118, 1121 (9th Cir.2002).3 Plaintiffs contend that the discretionary policy had a disparate impact on minority borrowers, causing them to receive less favorable loan pricing than similarly situated whites. Although Plaintiffs need not prove their claim at the class certification stage, they need to demonstrate that doing so will hinge on common questions of fact and law.

Plaintiffs make this showing through the expert report of Harvard Law School professor Howell E. Jackson (“Professor Jackson”), whose analysis of GreenPoint’s mortgage data leads him to conclude that “minorities paid more for Greenpoint wholesale mortgage loans than whites with similar risk-characteristics.” Jackson Report (Doc. 178) at 6. Relying on the annual percentage rate, or “APR,” as a representation of loan costs, Professor Jackson compares the amount paid by white and minority borrowers for Green-Point wholesale loans originated from 2004 to 2007. He finds that the mean APR for whites was 69.5 basis points lower than that of African Americans, and 56.5 basis points lower than that of Hispanics.4 However, those raw figures do not account for legitimate factors that could explain such differences. To compare similarly situated whites and minorities, Professor Jackson performs regression analysis, a statistical method that allows him to control for legitimate underwriting characteristics that affect the cost of a loan.5 Professor Jackson concludes that the APRs of African Americans are 9.4 basis points, and those of Hispanics 7.6 basis points, higher than those of similarly situated whites, a difference that cannot be explained by legitimate risk factors or valid business justifications. Critically for purposes of class certification, Professor Jackson’s analysis relies on evidence common to the class and does not require any individualized inquiry.

Plaintiffs offer numerous questions of fact and law that are common to the class. The discretionary pricing strategy that they challenge was carried out uniformly, Plaintiffs contend, and its adverse effects were felt in the same way by Plaintiffs and all class members. Whether GreenPoint’s policy resulted in a pricing disparity between white and minority borrowers, whether those disparities are justified by legitimate differences in creditworthiness, and whether less discriminatory alternatives exist are all questions common to the class, according to Plaintiffs. Furthermore, Professor Jackson’s statistical analysis demonstrates that the pricing disparities are class-wide and attributable to GreenPoint’s discretionary policy.

GreenPoint, however, disputes Plaintiffs’ ability to establish their claims using common proof. Although Professor Jackson’s analysis was based on GreenPoint’s own data, GreenPoint contends that he would have to mine the data of the more than 27,000 brokers who originated the loans at issue here to properly evaluate Plaintiffs’ claims. This is because Professor Jackson cannot account for two key factors that may legitimately explain the price disparities between whites and minorities: the effort a broker exerted on a given borrower’s loan, and the broker’s “pull-through” rate (i.e. how frequently a broker’s submitted loan applications result in funded loans). GreenPoint’s expert, Dr. Marsha J. Courchane (“Dr.Courehane”), asserts that the absence of such data makes it impossible to tell whether legitimate broker fee differentials explain the minority loan disparity. Dr. Courchane, an economist with a Ph.D. from Northwestern University, states that she cannot find evidence of “any pattern of substantive or economically significant disparate impact” when using statistical techniques similar to those of Professor Jackson. Courchane Report (Doc. 182-1) at 5. She argues that the evidence of disparate impact drops to levels that are not “economically significant” when the regression analysis is conducted separately for individual categories of loans; by *634aggregating the loan products together, Professor Jackson overstates the effect of race and ethnicity. She also demonstrates that minorities were disproportionately represented by brokers with lower pull-through rates, who therefore had to charge more per loan to cover their work on unsuccessful loan applications. GreenPoint argues that these alleged flaws in Professor Jackson’s analysis eviscerate Plaintiffs’ common questions and necessitate inquiry into the individual factors that played into the pricing of each loan. GreenPoint also relies on the expert report of Laura J. Borrelli, a mortgage litigation consultant, who opines that disparate treatment can only be proven by “an extensive, literal loan by loan review of each borrower’s mortgage file,” and not by Professor Jackson’s proposed regression analysis. Borrelli Report (Doc. 182-3) at 11.

Professor Jackson, in reply, stands by his conclusion that common methods and proof can be used to demonstrate the disparate impact of GreenPoint’s pricing policies on class members. He points out that the disparities identified by Dr. Courchane’s analysis, while smaller than his own findings, are both statistically and economically significant: a disparity of five basis points would cost a typical African-American borrower $579 more than a typical white borrower, and a typical Hispanic borrower $705 more than a typical white borrower, over the first five years of a loan. Three mortgage brokers deposed in this case testified that there was no correlation between the race of a borrower and the amount of work the broker had to perform, providing anecdotal evidence to refute GreenPoint’s contention that the identified disparity could be explained by disparities in broker effort. Having rerun his regressions with new variables to account for GreenPoint’s arguments, Professor Jackson concludes that none of Dr. Courehane’s arguments explain the disparity in mortgage prices for minority borrowers; race and ethnicity remain statistically significant. Plaintiffs also offer rebuttal from Professor Patricia A. McCoy of the University of Connecticut School of Law, who argues that “policies and practices instituted by GreenPoint and a regulatory environment that together were common to the class allowed GreenPoint’s mortgage brokers to overcharge customers in general and to charge even more to black and Hispanic borrowers.” McCoy Report (Doc. 204) at 8.

Plaintiffs’ reliance on statistical evidence to fulfill the commonality requirement is well founded in Ninth Circuit precedent. In its recent en banc ruling in Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571 (9th Cir. 2010), the Ninth Circuit affirmed the certification of a class of female Wal-Mart employees with respect to allegations that women received lower pay—and fewer promotions— than their male colleagues in violation of Title VII of the 1964 Civil Rights Act. In finding commonality, the court relied on factual evidence of a companywide policy governing pay and promotion decisions and a strong corporate culture vulnerable to gender bias, as well as statistical evidence showing significant disparities between men and women in compensation and promotion that could “be explained only by gender discrimination.” Id. at 599-613. The court observed that it is “well established that plaintiffs may demonstrate commonality by presenting statistical evidence, which survives a ‘rigorous analysis,’ sufficient to fairly raise a common question concerning whether there is class-wide discrimination.” Id. at 603-04. The Ninth Circuit also recognized that “subjective decision making is a ‘ready mechanism[ ] for discrimination’ and that courts should scrutinize it carefully.” Id. at 612 (quoting Sengupta v. Morrison-Knudsen Co., 804 F.2d 1072, 1075 (9th Cir.1986)) (alteration in original). Subjective practices that operate to discriminate have been found by courts across the country to “satisfy the commonality and typicality requirements of Rule 23(a).” Id. (quoting Shipes v. Trinity Indus., 987 F.2d 311, 316 (5th Cir.1993)).

As in Dukes, Plaintiffs are challenging a subjective policy that applied to all of Green-Point’s authorized brokers and, hence, every member of the proposed class—all of whom negotiated their mortgages through brokers subject to the GreenPoint policy. The claims of all class members hinge on a common question: whether GreenPoint’s discretionary pricing policy had a disparate impact on minority borrowers. Plaintiffs propose to answer that question using statistical evi*635dence that, according to Professor Jackson, shows minorities paid more for their loans than similarly situated whites. Plaintiffs’ theory of liability therefore stands on common questions of fact and law. Although GreenPoint casts doubt on the viability of that theory, the Court may not “decline to certify the class on the basis of a mere potentiality” that plaintiffs’ theory of liability will not prevail. United Steel Workers v. ConocoPhillips Co., 593 F.3d 802, 810 (9th Cir.2010). “[I]t is the plaintiffs theory that matters at the class certification stage, not whether the theory will ultimately succeed on the merits.” Dukes, 603 F.3d at 587 (citing United Steel Workers, 593 F.3d at 809-10) (emphasis in original).

GreenPoint’s arguments amount to an attack on the merits of Professor Jackson’s analysis, which is premature at this stage of litigation. “[Disputes over whose statistics are more persuasive are often not disputes about whether the plaintiffs raise common issues or questions, but are really arguments going to proof of the merits.” Dukes, 603 F.3d at 591. Only an argument that one party’s statistics are “unreliable or based on an unaccepted method” would have to be resolved at the class certification stage, requiring the Court to “determine whether the potentially problematic statistics [are] even capable of raising a common question.” Id. at 591-92. However, GreenPoint does not fault the reliability of Professor Jackson’s methodology; it simply purports to have a better way. Such “statistical disputes ... encompass the basic merits inquiry and need not be proved to raise common questions and demonstrate the appropriateness of class resolution.” Id. at 594. The commonality requirement is therefore satisfied.6

C. Typicality

Under the “permissive standards” of Rule 23(a)(3), “representative claims are ‘typical’ if they are reasonably co-extensive with those of absent class members; they need not be substantially identical.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir.1998). “The test of typicality is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct.” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir.1992) (internal quotation marks and citation omitted). However, “a named plaintiffs motion for class certification should not be granted if ‘there is a danger that absent class members will suffer if their representative is preoccupied with defenses unique to it.’” Id. (quoting Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 176, 180 (2d Cir.1990)). Although typicality “tend[s] to merge” with the commonality requirement, Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 n. 13, 102 S.Ct. 2364, 72 L.Ed.2d 740 (1982), “each factor serves a discrete purpose,” Dukes, 603 F.3d at 613 n. 37. “Commonality examines the relationship of facts and legal issues common to class members, while typicality focuses on the relationship of facts and issues between the class and its representatives.” Dukes, 603 F.3d at 613 n. 37. Plaintiffs represent that their claims are typical because they—like all prospective class members—were subject to and affected by GreenPoint’s discretionary pricing policy. GreenPoint argues that the named Plaintiffs are not typical for two reasons: they will be preoccupied by unique defenses based on false information included in their loan applications, and they lack standing because they were not harmed by GreenPoint’s pricing policy.

1. Unique Defenses

Ana and Ismael Ramirez both signed or initialed each page of their loan application, *636including a statement acknowledging the making of false statements to be a federal crime. According to the Ramirezes’ deposition testimony, however, much of the information included in the application was false. The application overstated their monthly income by thousands of dollars, represented Mr. Ramirez as being self-employed when he was unemployed, and listed a bank account balance approximately four times its actual level. Salazar’s application, likewise, overstated his bank account balance by nearly $40,000, and gave an actual gross income one-and-a-half times what he actually earned. Salazar, like the Ramirezes, signed each page of his application, which warns against making false statements.

However, there is also ample evidence suggesting Plaintiffs were unaware that misstatements were included in their applications. English is a second language for all three Plaintiffs. Mr. Ramirez can neither read nor write in English; Salazar does not speak English, but can read “a little.” The Ramirezes worked with Kathy Objio, a broker with First Call Mortgage Company, to whom they had given copies of their tax returns and bank statements, and who filled out their loan application over the telephone. The Ramirezes did not read the application before signing it. Salazar testified that he worked with a broker named Jimmy affiliated with TLN Financial, to whom he provided paycheck stubs, bank statements, and other documents. Salazar did not fill out the application himself, and did not know who had. Both Salazar and Mr. Ramirez expressed surprise during their depositions when shown the misinformation on their applications. Salazar responded to the listed balance of his bank account by laughing and saying, “If I had that kind of money, I would be living in Tijuana,” where he is from. Salazar Depo. 11:16-23,111:21-24. Mr. Ramirez expressed outrage at the misrepresentations, repeating, “Oh, my God,” and asking of GreenPoint’s counsel, “Why do these people do this type of thing when they’re not supposed to do it? ... Why do they say I have my own company, that I’m self-employed? ... Because this places you in a bad situation, it makes you look like a liar.” I. Ramirez Depo. 25:17-22, 28:4-11, 29:21-30:7.

GreenPoint argues that the false statements in Plaintiffs’ loan applications subject them to unique equitable defenses such as unclean hands, rendering them unable to satisfy the typicality requirement. Unclean hands is an equitable doctrine that “closes the doors of a court of equity to one tainted with inequitableness or bad faith relative to the matter in which he seeks relief, however improper may have been the behavior” of the other party. Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1097 (9th Cir.1985). “ ‘It is fundamental to [the] operation of the doctrine that the alleged misconduct by the plaintiff relate directly to the transaction concerning which the complaint is made.’ ” Dollar Systems, Inc. v. Avcar Leasing Systems, Inc., 890 F.2d 165, 173 (9th Cir.1989) (quoting Arthur v. Davis, 126 Cal.App.3d 684, 693-94, 178 Cal.Rptr. 920 (1981)) (alteration in original).

GreenPoint relies on two district court cases from outside the Ninth Circuit to demonstrate the availability of an unclean hands defense for disparate impact claims under the ECOA. In Riggs National Bank v. Linch, a court in the Eastern District of Virginia addressed whether guarantors of a promissory note could raise the ECOA as an affirmative defense in an action to collect on the defaulted note. 829 F.Supp. 163 (E.D.Va.1993). After concluding that the ECOA could not be a basis for invalidating the underlying guarantee, the court—in a footnote—addressed the plaintiff bank’s argument that the “unclean hands” doctrine barred any recovery by a defendant guarantor who had submitted a false financial statement. Id. at 169 n. 7. The court concluded that, since the guarantor’s “conduct was knowing and willful, ... the doctrine of unclean hands would bar [him] from any recovery, even if [the bank] had violated the ECOA.” Id. A court in the Middle District of Florida relied on Riggs in reaching the same conclusion. Beaulialice v. Federal Home Loan Mortgage Corp., No. 8:04-cv-2316-T-24-EAJ, 2007 U.S. Dist. LEXIS 15846, at *31 (M.D.Fla. Mar. 6, 2007) (“Defendant has shown that Plaintiff misrepresented facts on her application in order to secure the loan, and this deception bars her claims.”).

*637However, the Supreme Court ruled in 1995 that the equitable defense of employee misconduct could not preclude employer liability for violating the Age Discrimination in Employment Act (“ADEA”). In McKennon v. Nashville Banner Publishing Co., the Court overturned the Sixth Circuit’s conclusion that the question of discrimination was rendered “irrelevant” by after-acquired evidence of employee wrongdoing that would have, by itself, resulted in her discharge. 513 U.S. 352, 356-57, 115 S.Ct. 879, 130 L.Ed.2d 852 (1995). The Court observed that the unclean hands defense “has not been applied where Congress authorizes broad equitable relief to serve important national policies.” Id. at 360, 115 S.Ct. 879. The ADEA reflects such a policy, the Court concluded, bearing as its purpose “the elimination of discrimination in the workplace,” and carrying remedies meant to deter discrimination and to compensate those harmed by it. Id. at 358, 115 S.Ct. 879. Misconduct could, however, affect the availability of remedies; the employee’s wrongdoing was relevant “to take due account of the lawful prerogatives of the employer in the usual course of its business and the corresponding equities that it has arising from the employee’s wrongdoing.” Id. at 361, 115 S.Ct. 879.

“The purpose of the ECOA,” like that of the ADEA, “is to eradicate ... discrimination,” only in the provision of credit rather than the workplace. United States v. ITT Consumer Financial Corp., 816 F.2d 487, 489 (9th Cir.1987). The ECOA also allows the district court to “grant such equitable and declaratory relief as is necessary to enforce the requirements imposed” under the statute. 15 U.S.C. § 1691e(e). The declaration of purpose for the FHA is to “provide, within constitutional limitations, for fair housing throughout the United States.” 42 U.S.C. § 3601. As for remedies, in addition to actual and punitive damages, the FHA allows a court to “grant as relief, as the court deems appropriate, any permanent or temporary injunction, temporary restraining order, or other order (including an order enjoining the defendant from engaging in such practice or ordering such affirmative action as may be appropriate).” Id. § 3613(c)(1). As the ECOA and FHA both represent Congress’s authorization of “broad equitable relief to serve important national policies,” McKennon, 513 U.S. at 360, 115 S.Ct. 879, the unclean hands defense should not be applicable here. Indeed, the Fifth Circuit reached that very conclusion in Moore v. U.S. Department of Agriculture, concluding that “after-acquired evidence of [plaintiffs’] poor credit history”—which would have supplied an independent basis for denying the plaintiffs’ application to purchase a property—“cannot defeat [defendant’s] liability” under the ECOA but “can aid the court in assessing ... damages.” 55 F.3d 991, 995-96 (5th Cir.1995) (citing McKennon v. Nashville Banner Publ’g Co., 513 U.S. 352, 115 S.Ct. 879, 883-87, 130 L.Ed.2d 852 (1995)).

However, GreenPoint relies on this Court’s ruling in Ganley v. County of San Mateo, No. C06-3923 TEH, 2007 WL 902551, 2007 U.S. Dist. LEXIS 26467 (N.D.Cal. Mar. 22, 2007), to argue that McKennon does not foreclose the unclean hands defense. In Ganley, the Court considered a plaintiffs motion to strike 22 affirmative defenses raised in the defendant’s answer to a complaint alleging that the plaintiff had been removed from permanent public employment without due process in violation of 42 U.S.C. § 1983. While acknowledging that the Supreme Court had refused to apply the unclean hands doctrine in the ADEA context, the Court observed that “no available case law exists to suggest that the defense is inapplicable in the context of § 1983 actions.” Ganley, 2007 WL 902551, at *5, 2007 U.S. Dist. LEXIS 26467, at *14. In the absence of “controlling or persuasive precedent to the contrary,” the Court found it “prudent to deny Plaintiffs motion to strike the defense of unclean hands.” Id. at 2007 WL 902551, at *5, 2007 U.S. Dist. LEXIS 26467, at *14-15.

This Court’s ruling in Ganley is distinguishable, however. A motion to strike is only “proper when a defense is insufficient as a matter of law,” which requires that the Court “be convinced that there are no questions of fact, that any questions of law are clear and not in dispute, and that under no set of circumstances could the defense succeed.” Id. at 2007 WL 902551, at *1, 2007 U.S. Dist. LEXIS 26467, at *3 (internal cita*638tions omitted). Given that standard, the Court declined to strike a defense that no court had explicitly held inapplicable to § 1983 actions. The standard here is not nearly as exacting: the Court is assessing whether Plaintiffs may be subject to unique defenses that would diminish their ability to represent the interests of other class members. The Court need not be satisfied that the defense could succeed “under no set of circumstances,” but rather has to weigh the likelihood of such a defense rendering the named Plaintiffs inadequate class representatives.

The threat of an unclean hands defense will not defeat the adequacy of the named Plaintiffs. Whereas this Court in Ganley could find no authority applying McKennon in the § 1983 context, there is a strong basis for concluding that