Rodriguez Perez v. First Tech Federal Credit Union

Background

Perez brought a putative class action alleging that First Tech Federal Credit Union discriminated based on immigration or citizenship status, violating 42 U.S.C. § 1981 and California’s Unruh Civil Rights Act. Perez alleged that First Tech had a policy of denying residential secured loans on that basis.

Perez had received Deferred Action for Childhood Arrivals since 2012, along with work authorization and a Social Security number. In June 2022, he applied for a home-equity line of credit. According to the complaint, First Tech requested a permanent-residence card and then a current I-94 visa. Perez said his I-94 had expired and that his current documentation was an employment authorization card. First Tech allegedly told him that an employment authorization card or I-94 alone was insufficient and that DACA recipients were not eligible for the loan. First Tech denied the application on August 1, 2022, giving “excessive obligations,” “insufficient income for total obligations,” and “unable to verify residency” as the principal reasons.

The parties negotiated for more than seven months, exchanged informal discovery, and reached an agreement in principle. The opinion states that the discovery included credit applications and records, policies and procedures, and records concerning First Tech’s membership base.

Proposed Settlement

For settlement purposes only, the proposed California Class includes 20 people who, according to First Tech’s records, were residing in California, applied for a residential secured loan between December 29, 2021, and December 29, 2023, provided an employment authorization card, and were denied solely because of immigration or citizenship status. The proposed National Class includes 43 people who applied during the same period, provided an employment authorization card, and were denied solely for that reason. The opinion describes the proposed classes as totaling approximately 63 people.

The settlement provides two forms of relief. First Tech will agree not to deny residential secured loan applications solely because of an applicant’s immigration or citizenship status unless law, rules, or regulations require that result, and it will amend its underwriting criteria accordingly. Second, First Tech will create an $81,500 settlement fund for individual $500 payments by check to National Class members. Class members do not need to submit claims to receive payment. First Tech will separately pay settlement-administration costs, court-approved attorneys’ fees and costs, and any court-approved incentive award.

The agreement allows class counsel to seek up to $50,000 in attorneys’ fees, requests up to $13,000 for the settlement administrator, and allows Perez to seek a service award of up to $5,000. These amounts remained subject to later court approval. Uncashed checks remaining after 120 days will not revert to First Tech; instead, the remaining funds will go to a court-approved cy pres recipient proposed by class counsel.

The release would cover claims arising from or relating to the facts and claims alleged in the complaint, including claims concerning the challenged practice, for Perez and class members who do not opt out.

Court’s Analysis

At the preliminary-approval stage, the court evaluates whether a proposed class settlement appears potentially fair, reasonable, and adequate. The court does not conduct the full fairness analysis until the final-approval hearing. The court found that the proposed classes satisfied the requirements for settlement certification, including numerosity, commonality, typicality, adequacy, predominance, and superiority under Federal Rule of Civil Procedure 23.

The court found that the approximately 63 proposed class members were sufficiently numerous, that common questions concerned First Tech’s challenged practice and whether it violated § 1981 or the Unruh Act, and that Perez’s claims arose from the same conduct and legal theories as the class claims. The court also found no evidence of a conflict between Perez and other class members and found class counsel, the Mexican American Legal Defense and Educational Fund, experienced in class actions and immigrants’ rights matters. Because the claims involved relatively small individual damages and challenged common underwriting policies, the court found a class action superior to individual lawsuits.

The court found no obvious deficiencies in the settlement. It concluded that the negotiations were fair, that the settlement was within the range of possible approval, and that the service award did not improperly favor Perez at this stage. The parties estimated First Tech’s risk-adjusted total exposure at $123,000, making the $81,500 settlement fund slightly more than 65 percent of that estimate.

The court approved the notice plan after requiring additional ways to receive notice and submit exclusions or objections. Class members will receive notice by mail, and by email when First Tech has an email address from the loan application. The settlement website will also provide forms for submitting exclusions or objections.

Disposition and Next Steps

The court granted the motion for preliminary approval. It conditionally certified the proposed classes for settlement purposes only, preliminarily approved the settlement agreement and revised notice plan, and preliminarily appointed class counsel, Perez as class representative, and RG2 Claims Administration, LLC as settlement administrator.

The order required First Tech to provide class-member information to the administrator within 10 business days. The administrator was then required to mail, and when possible email, the approved notice within 15 calendar days. Class counsel was required to file a motion for attorneys’ fees and costs within 21 days, and Perez was required to file a motion for final settlement approval on December 12, 2024. The court set the final approval hearing for January 23, 2025, at 10:00 a.m.