Camacho v. Alliant Credit Union

Background

Yuliana Camacho alleged that Alliant Credit Union denied her application for a $43,442.96 automobile loan after she disclosed that she was a recipient of Deferred Action for Childhood Arrivals (DACA). She alleged that Alliant had initially pre-approved her application, which listed her husband as a co-signer, but later told her that it did not lend to people based on DACA status. Alliant’s adverse-action notice identified “Residency Status” as the reason for denying the application.

Camacho asserted two claims: discrimination based on alienage under 42 U.S.C. § 1981, which protects equal rights to make and enforce contracts, and discrimination under California’s Unruh Civil Rights Act. She proposed a nationwide class for the federal claim and a California subclass for the state claim.

Alliant’s Arguments

Alliant moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally sufficient claim. Alliant argued that the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, displaced the Section 1981 claim and preempted the Unruh Act claim. It also argued that Camacho had not adequately alleged discrimination under Section 1981 or the Unruh Act.

Court’s Analysis

The court held that the ECOA did not displace Camacho’s Section 1981 claim. Although the ECOA regulates credit discrimination, the court reasoned that the ECOA and Section 1981 can operate together: Section 1981 prohibits discrimination based on race or alienage, while the ECOA prohibits discrimination on additional grounds. The court also concluded that Regulation B does not allow a creditor to deny credit solely because of an applicant’s residency or immigration status. The court therefore denied the motion to dismiss the Section 1981 claim as displaced by the ECOA and Regulation B.

The court also declined to find that the ECOA or Regulation B preempted the Unruh Act claim. In the court’s view, a creditor could comply with both laws by avoiding discrimination based on the categories covered by either statute. The court further concluded that Regulation B may allow a creditor to inquire about or consider immigration status, but does not authorize denying credit solely on that basis.

As to Section 1981 itself, the court rejected Alliant’s argument that the statute protects against alienage discrimination but not discrimination against a subset of lawfully present immigrants, such as DACA recipients. The court stated that discrimination within the class of noncitizens can still constitute unlawful alienage discrimination. It also found that additional factual development was needed to determine the exact nature of Alliant’s alleged discrimination.

Regarding the Unruh Act, the court declined to decide at this early stage whether Alliant’s policy was justified by public policy or related to its ability to secure repayment. The court held that the record was insufficient to conclude as a matter of law that Alliant’s categorical policy based on immigration status did not violate the Unruh Act.

Disposition

Judge Beth Labson Freeman denied Alliant’s motion to dismiss the complaint. The court separately denied the motion to dismiss the Section 1981 claim for failure to state a claim, denied the motion to dismiss the Unruh Act claim as preempted by the ECOA and Regulation B, and denied the motion to dismiss the Unruh Act claim for failure to state a claim. The opinion did not decide whether Camacho would ultimately prevail or certify the proposed classes.