throbber
Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 1 of 42 PageID #: 42856
`
`IN CLERK'S OFFICE
`US DISTRICT COURT E.D.N.Y.
`
`★ AUGjfi 2018
`
`*
`
`BROOKLYN OFFICE
`
`11 CV 2122 (SJ)(RLM)
`
`MEMORANDUM AND
`ORDER
`
`-X
`
`-X
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
`
`JEAN ROBERT SAINT-JEAN, et al,
`
`Plaintiffs,
`
`-against-
`
`EMIGRANT MORTGAGE
`COMPANY, etal..
`
`Defendants.
`
`APPEARANCES
`
`SOUTH BROOKLYN LEGAL SERVICES
`Foreclosure Prevention Project
`105 Court Street
`Brooklyn, NY 11201
`By:
`Jennifer Sinton
`Meghan Faux
`Rachel Geballe
`Attorneys for Plaintiffs
`
`RELMAN DANE & COLFAX, PLLC
`1225 19th St., NW, Suite 600
`Washington, DC 20036
`By:
`John P. Relman
`Glenn Schlactus
`Tara Ramchandani
`Attorneys for Plaintiffs
`
`PROSKAUER ROSE LLP
`Eleven Times Square
`New York, NY 10036
`By:
`Bettina B. Plevan
`Evandro Cristiano Gigante
`Keisha-Ann G. Gray
`
`P-049
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 2 of 42 PageID #: 42857
`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 2 of 42 PageID #: 42857
`
`
`
`Jeffrey B. Wall
`Attorneys for Defendants
`
`SULLIVAN & CROMWELL LLP
`
`125 Broad Street
`
`New York, NY 10004
`
`By:
`
`John P. Collins, Jr.
`Richard H. Klapper
`Attorneys for Defendants
`
`DORSEY & WHITNEY LLP
`
`51 West 52nd Street
`
`New York, NY 10019-61 19
`
`By:
`
`
`
`
`
`
`
`
`
`
`
`
`David A. Scheffel
`Eric B. Epstein
`Gina Susan Spiegelman
`Attorneys for Defendant
`
`
`JOHNSON, Senior District Judge:
`
`
`
`
`
`
`
`
`
`
`
`
`
`The facts and circumstances surrounding this action have been set forth in
`
`two previous orders and in the transcript of the February 26, 2016 oral argument after
`
`which the Court denied defendants Emigrant Mortgage Company’s, and defendant
`
`Emigrant Bank’s (“Emigrant” or “Defendants”) motion for summary judgment. (fig
`
`Dkt. Nos. 206, 258; see generally Tr. of 2/26/ 16.) Familiarity therewith is assumed.
`
`However, due to both the voluminous nature of the record since developed in this
`
`case and the verdict entered on June 27, 2016 against Defendants in the amount of
`
`$950,000 following a jury trial, the following additional summary is in order.
`
`The plaintiffs (“Plaintiffs”) are Black property owners or former property
`
`owners living in various parts ofNew York City who, prior to the subprime mortgage
`
`meltdown of the late 20005, applied for and received “STAR NINA” loans from
`
`2
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 3 of 42 PageID #: 42858
`Case 1:1l-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 3 of 42 PageID #: 42858
`
`Emigrant, loans for which Emigrant did not require proof of income or assets.
`
`Plaintiffs claim those loans were predatory and targeted certain minority
`
`communities (particularly Black and Hispanic), designed specifically to strip the
`
`equity from their homes by imposing an onerous 18% interest rate upon the
`
`occurrence of one late payment. They argue that the one late payment triggering the
`
`18% interest rate was a calculated plan by Emigrant to so deprive them of that home
`
`equity, given Plaintiffs’ 600 or below credit scores; their payment histories on prior
`
`mortgages; the fact that Emigrant’s advertising and mortgage closing practices were
`
`designed to obscure the likelihood of default (such as allegedly “burying” the rider
`
`disclosing the default interest rate in stacks of closing documents); and Plaintiffs’
`
`lack of sophistication. Additionally, it is undisputed that none of the Plaintiffs had
`
`salaries equaling or exceeding that which would be otherwise required by Emigrant
`
`for loans of the amounts disbursed. According to Plaintiffs, Emigrant attempted to
`
`avoid responsibility for the inevitable default by having the homeowners sign
`
`“Resource Letters” drafted by Emigrant which stated, m get, that Plaintiffs had
`
`that Plaintiffs understood they would have to be willing to sell their homes to foot
`
`the bill in the event of default.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`access to funds from family and friends to repay the loans in the event of default, and
`
`Eight Plaintiffs are involved in this suit, all of whom had significant equity
`
`in their homes prior to borrowing from Emigrant, and all of whom have either been
`
`forced to sell their homes or live in homes that, pursuant to the terms of their
`
`
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 4 of 42 PageID #: 42859
`Case 1:1l-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 4 of 42 PageID #: 42859
`
`respective STAR NINA loans, were secured by mortgages that applied an 18%
`
`interest rate once each of the Plaintiffs made a late payment, which each of the
`
`Plaintiffs did.
`
`Jean Robert Saint-Jean and his wife Edith Saint-Jean (the “Saint-Jeans”) live
`
`in a Canarsie home subject to a foreclosure action. At the relevant time, Jean Robert
`
`Saint-Jean had a credit score of 540 and Edith Saint-Jean had a credit score of 545.
`
`They were approved for a $370,000 loan with an interest rate of 11.75%. Pursuant
`
`to their loan, the mortgage payment was $4,174, about $2,000 more per month than
`
`their previous mortgage. After they fell behind on their payments and the 18%
`
`default interest rate was applied, their monthly payment became $6,130. During the
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`suffered during the pendency of this action, worked as a home health aide. The
`
`
`monthly payment of $3,145.85. They never earned the approximately $94,000
`
`
`ballooned to over $4,000 per month by 2007. The Saintils made several unsuccessful
`
`relevant time period, Mr. Saint-Jean worked as a paraprofessional for the New York
`
`City Department of Education, and Mrs. Saint-Jean as a home health aide. They
`
`never earned the required $102,000 per year otherwise required to obtain this loan.
`
`Felex and Yanick Saintil (the “Saintils”) also live in a forecloseable Canarsie
`
`home. Mr. Saintil works as a truck driver and Mrs. Saintil, prior to the stroke she
`
`Saintils closed on a $325,000 STAR loan with an initial interest rate of 9.65% and a
`
`otherwise required for their loan, and their approximately $3,000 per month payment
`
`attempts to modify their loan. By March 2010, Emigrant approved a loan
`
`
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 5 of 42 PageID #: 42860
`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 5 of 42 PageID #: 42860
`
`modification for the Saintils, waived both the default
`
`interest provision and
`
`approximately $14,000 in “unpaid charges” and reduced their monthly payments to
`
`$2,804.38 and their interest rate to 6% for five years. As part of the modification,
`
`the Saintils signed a document intended to waive and release all claims they may
`
`have had up to the date of the modification. The Saintils were unable to keep up with
`
`the $2,804.38 monthly payment and remain in several years’ worth of arrears.
`
`Jeanette and Beverley Small
`
`(the “Smalls”), a mother and daughter,
`
`refinanced their home with Emigrant in August of 2006. They borrowed $330,000
`
`with an interest rate of 9.875%, and a monthly payment of $3,261. After one late
`
`
`
`
`
`
`
`
`
`payment, their monthly payment shot up to $5,480. The Smalls never earned the
`
`
`approximately $82,000 required for their loan. The Smalls eventually sold their
`
`
`
`repaid the amounts then-owed Emigrant in full.
`refinanced the mortgage on her
`
`Manhattan co-op in 2004 through Emigrant’s STAR NINA program, and received
`
`
`
`
`
`
`the opportunity to make a late payment and, like the Smalls, also sold her home to
`
`home to avoid foreclosure. The parties dispute the extent of the financial loss the
`
`Smalls suffered from their STAR NINA loan, but it is undisputed that the Smalls
`
`Linda Commodore (“Commodore”)
`
`$125,000. Commodore did not earn the annual income of $54,792 required for the
`
`loan and her credit score was 553. Her payments ballooned fi'om $983.38 to almost
`
`double that amount after a missed payment. Like other Plaintiffs, she too was denied
`
`avoid foreclosure. Indeed, Commodore sold her home for $40,000 less than its value.
`
`
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 6 of 42 PageID #: 42861
`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 6 of 42 PageID #: 42861
`
`Finally, Felipe Howell owned his Queens property outright and did not work.
`
`He took out a STAR NINA loan from Emigrant requiring a $2,100 monthly payment
`
`in order to finance the construction of a rental property on the same lot with the
`
`residence that secured the mortgage. Howell’s construction project failed, he was
`
`unable to make a single payment, and his mortgage increased to $3,378 per month.
`
`As he was unemployed, he did not earn the $51,527 annually that would have been
`
`required for him to obtain a full-documentation loan or the amount necessary to make
`
`purchased at auction by Emigrant for $1,000.
`
`
`
`
`
`
`
`
`Howell’s property was foreclosed upon and
`
`
`his monthly mortgage payments.
`
`
`Plaintiffs filed suit pursuant to following anti-discrimination statutes: the Fair
`
`
`
`
`
`predatory, were not targeting minority communities but simply those who could not
`
`
`
`On May 23, 2016, a jury trial commenced. The jury determined that
`
`Emigrant violated the Federal Fair Housing Act, Equal Credit Opportunity Act and
`
`
`
`apiece in compensatory damages, the Smalls were awarded $70,000 (to Beverley)
`
`Housing Act, 42 U.S.C. §§ 3604, 3605 (“FHA”); the Equal Credit Opportunity Act,
`
`15 U.S.C. § 1691, et seq.; and of New York City Human Rights Law. Additionally,
`
`Edith Saint-Jean asserts a fifth cause of action under the Truth in Lending Act, 15
`
`U.S.C. §1601 et seq. (“TILA”). Emigrant argues, m, that the loans were not
`
`otherwise obtain loans; and that the claims are time-barred.
`
`the New York City Human Rights Law. The Saint-Jeans were awarded $180,000
`
`and $110 (to Jeanette), Commodore was awarded $185,000 and Howell was awarded
`
`
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 7 of 42 PageID #: 42862
`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 7 of 42 PageID #: 42862
`
`$225,000. On June 27, 2016, the jury found that the Saintils were not entitled to any
`
`compensatory damages because they knowingly and voluntarily a 2010 loan
`
`modification that purported to release all existing claims against Emigrant. None of
`
`
`
`
`
`
`
`
`
`
`
`
`Defendants’ proffered FDIC expert should have been permitted to testify; (D) the
`
`jury award is excessive; (E) Plaintiffs’ claims are time-barred; and (F) a juror should
`
`
`
`
`
`
`
`predatory behavior, including the appointment a monitor to oversee Emigrant’s
`
`
`lending practices, and that the Court should retain jurisdiction over the action for a
`
`the parties were awarded punitive damages.
`
`Following the trial, both Plaintiffs and Emigrant filed post-trial motions
`
`pursuant to Federal Rule of Civil Procedure (“Rule”) 50. Defendants take issue with
`
`several provisions in the instructions read to the jury by the Court and demand a new
`
`trial. They also believe they are entitled to a new trial because (A) Plaintiffs failed
`
`to present sufficient evidence of discrimination, either through their own testimony
`
`or their experts; (B) certain expert testimony by Plaintiffs was impermissible; (C)
`
`not have been excused mid-trial. They also argue that are entitled to judgment as a
`
`matter of law as to the Truth in Lending Act claim brought by the Saint-Jeans.
`
`Plaintiffs’ Rule 50 motion seeks a new trial for the Saintil’s, arguing that the 2010
`
`loan modification entered into between Emigrant and the Saintil’s is unenforceable.
`
`Plaintiffs also argue that, in light of the jury finding that Emigrant violated the FHA,
`
`ECOA and NYCHRL, the Court should issue an injunction against certain allegedly
`
`period of three years while such monitoring is conducted.
`
`
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 8 of 42 PageID #: 42863
`Case 1:1l-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 8 of 42 PageID #: 42863
`
`Based on the submission of the parties, the oral argument held before this
`
`Court on June 28, 2017, and for the reasons stated below Defendants’ motion is
`
`GRANTED IN PART AND DENIED IN PART, and Plaintiffs’ motion is
`
`
`
`
`
`
`GRANTED IN PART AND DENIED IN PART.
`
`DISCUSSION
`
`Standard of Review under Rules 50 and 59
`
`A. M
`
`conjecture, or the evidence in favor ofthe movant is so overwhelming that reasonable
`
`
`
`
`
`Rule 50(b) permits the Court to enter a judgment as a matter of law and/or
`
`
`
`
`
`
`
`
`
`
`
`[persons] could have reached.” Cruz v. Local Union No. 3 of Int‘l Bhd. of Elec.
`
`order a new trial when there is “such a complete absence of evidence supporting the
`
`verdict that the jury's findings could only have been the result of sheer surmise and
`
`and fair minded [person] could not arrive at a verdict against [it].” Canjura v. Laschet,
`
`No. 12 CIV. 1524 (JCM), 2016 WL 2755920, at *3 (S.D.N.Y. May 10, 2016)
`
`(quoting Wiercinski v. Mangia 57, Inc., 787 F.3d 106, 112 (2d Cir. 2015) (citations
`
`omitted) (alterations in original).
`
`“A district court must deny a motion for judgment as a matter of law unless,
`
`viewed in the light most favorable to the nonmoving party, ‘the evidence is such that,
`
`without weighing the credibility of the witnesses or otherwise considering the weight
`
`of the evidence, there can be but one conclusion as to the verdict that reasonable
`
`
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 9 of 42 PageID #: 42864
`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 9 of 42 PageID #: 42864
`
`mm, 34 F.3d 1148, 1154-55 (2d Cir. 1994) (quoting Simblest v. Maynard, 427
`
`F.2d 1, 4 (2d Cir. 1970)); accord Vasbinder v. Ambach, 926 F .2d 1333, 1339 (2d Cir.
`
`1991).
`
`“A party is generally entitled to a new trial if the district court committed
`
`errors that were a ‘clear abuse of discretion’ that were ‘clearly prejudicial to the
`
`outcome of the trial’...Prejudice is measured by assessing the error in light of the
`
`record as a whole.” Marcie v. Reinauer Transp. Companies, 397 F.3d 120, 124 (2d
`
`Cir. 2005) (quoting Pescatore v. Pan Am. World Airways, Inc., 97 F.3d 1, 17 (2d
`
`Cir.1996)).
`
`
`B. Rule 59
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`evidence of any type of discrimination.” This argument fails because the jury verdict
`
`Rule 59 permits the Court to grant a new trial “on some or all of the issues”
`
`and to do so for “any reason a new trial has been heretofore granted in an action in
`
`federal court.” Fed. R. Civ. P. 59(a)(1)(A).
`
`II.
`
`Sufficiency of the Evidence
`
`Sweepingly, Emigrant argues that Plaintiffs failed to present “sufficient
`
`indicates that they credited the testimony and/or evidence of the Plaintiffs and/or
`
`their witnesses over the testimony and/or evidence presented by Defendants, and the
`
`jury was entitled to do so, as Plaintiffs offered over a dozen witnesses. The following
`
`
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 10 of 42 PageID #: 42865
`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 10 of 42 PagelD #: 42865
`
`brief summary of Plaintiffs’ key witnesses provides sufficient evidence from which
`
`a jury could find against Emigrant on liability.1
`
`A. Plaintiffs’ Witnesses
`
`quality assurance, underwriting guidelines, monitoring and managing brokers and
`
`
`
`
`
`1. Rebecca Walzak
`
`
`
`
`
`
`
`
`lenders, analyzing information from servicing groups. The holder of a Master’s in
`
`Business Administration from the University of Maryland with a Certification in
`
`
`
`
`
`
`
`
`
`
`' As discussed, supra, much of the factual background involving the individual plaintiffs is
`incorporated by reference herein and/or is not in dispute. Therefore, this summary is intended to
`
`supplement the backdrop of the loan process beyond the particulars of each Plaintiff‘s loans.
`
`Plaintiffs called Rebecca Walzak (“Walzak”) as an expert witness. Walzak
`
`is a mortgage consultant who testified that she has worked in “all aspects ofmortgage
`
`lending,” including overseeing loan closings in all 50 states, evaluating, reviewing
`
`and training lenders on various loan products, working in risk management and
`
`Quality Management from George Washington University, Walzak testified that she
`
`has underwritten or reviewed over 100,000 loans during the course of her career and
`
`that the STAR NINA loan “contained numerous predatory loaning aspects that .
`
`.
`
`.
`
`were the worst [she] had ever seen in a mortgage loan.”
`
`Specifically, Walzak testified that STAR NINA’s focus on credit scores
`
`under 600 indicated that Emigrant was “looking for the borrowers that had the least
`
`likelihood to be able to repay the debt.” Further, Walzak stated that “No Income No
`
`
`
`
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 11 of 42 PageID #: 42866
`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 11 of 42 PagelD #: 42866
`
`Asset” (“NINA”) loans are typically extended to people with credit scores in the 800
`
`range — not the 5003 — and that she was unfamiliar with any residential loan product
`
`that provided for an 18% interest rate in the event of default. These reasons, along
`
`involved the use of insufficiently monitored brokers, suffered from risk management
`
`deficits and “focused on people in situations where they were desperate” through
`
`advertising designed to allay the borrowers’ fears, led Walzak to conclude that the
`
`loans were predatory. Walzak also found that the loans were not actually risky given
`
`the equity in the collateral (i.e., Plaintiffs’ homes) and believed that Emigrant
`
`expected a large tranche of these loans to fail, resulting in its collection of an
`
`inordinate amount of interest and/or its successful foreclosure of the homes. Walzak
`
`
`
`
`
`with Walzak’s observation that the STAR NINA product contained excessive fees,2
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`These loans were targeted to some of the most vulnerable individuals in the
`community.
`[The loans] were identified as a solution to their financial
`problems, but instead, simply put them further behind into payments that they
`could not possibly pay, and it was a foregone conclusion that they would end
`
`
`
` 2 As to broker’s fees alone, Walzak testified that “the typical broker fee is probably 32000-3000,”
`
`but that Emigrant’s “started out as $20,000 and they raised it later to $35,000.”
`
`made these observations after reviewing both the terms of the loan product and
`
`minutes from meetings of Emigrant’s Board of Directors which evinced the
`
`profitability of these high interest loans notwithstanding the incidence of foreclosure.
`
`‘Walzak also found the default rate of the STAR NINA product to reach as high as
`
`50%, whereas with a prime loan, delinquency rates were about 3—4%, with subprime
`
`loans averaging 6% delinquency. In sum, Walzak testified that
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 12 of 42 PageID #: 42867
`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 12 of 42 PagelD #: 42867
`
`(Tr. at 128.)
`
`2.
`
`Ian Ayres
`
`Professor Ian Ayres also testified for Plaintiffs. Ayres holds a doctorate in
`
`Economics from the Massachusetts Institute of Technology and a degree from Yale
`
`Law School, where for 23 years he has taught and studied statistical tests of race and
`
`gender discrimination, including mortgage lending. He was offered as and permitted
`
`to testify as an expert in statistical tests of predatory lending and discrimination.
`
`Ayres defined “predatory [lending] terms” as “terms in a mortgage that artificially
`
`increase the chance that the mortgage will fail,” such as pre-payment penalties and
`
`default interest, both of which were present in the STAR NINA program.
`
`particular, Ayres testified that in Emigrant’s STAR NINA program, the default
`
`interest provision made the loans more profitable in that the loans were “issued
`
`primarily on the basis of the equity that was built up in the house and not on the credit
`
`characteristics of the borrow,” which he referred to as “perverse” and unlike any of
`
` up paying the 18 percent default interest and eventually would lose their
`
`homes to foreclosure.
`
`
`
`
`
`
`
`
`
`
`
`In
`
`
`
`
`
`
`
`
`
`
`
`STAR NINA loans constituted 23% of their refinance loans. However, Ayres
`
`testified that as the percentage of African-American and Latino residents increased
`
`
`the other mortgage portfolios he reviewed.
`
`Ayres also compared the census track of communities in relation to the
`
`number of STAR NINA borrowers in that community. According to Ayres, in
`
`communities with 10% or less African-American or Latino residents, Emigrant’s
`
`12
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 13 of 42 PageID #: 42868
`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 13 of 42 PagelD #: 42868
`
`upwards of 80% of a given community, Emigrant’s STAR NINA loans comprised
`
`45% of those offered in the area.
`
`3. Holly Perlowitz
`
`Holly Perlowitz (“Perlowitz”), former Senior Vice President at Emigrant
`
`Mortgage Company, and former Co-President of Emigrant Mortgage Company,
`
`testified as to the structure of Emigrant’s broker program. She at one point managed
`
`both the broker and sales programs.
`
`salespeople and sales managers, who in turn managed Emigrant’s Broker Direct
`
`Rizzo, an individual who Emigrant cited as having “recruited and developed several
`
`ethnic BDAMs that consistently produce 2-4 mill [sic] a month each.”
`
`Perlowitz admitted that after
`
`the STAR program was discontinued,
`
`Emigrant’s salesforce saw a sharp decrease in “enhanced incentives” that Emigrant
`
`offered them for closing on STAR NINA loans. Moreover, Perlowitz admitted that
`
`Emigrant did not wish to work with brokers who could not find potential “no doc”3
`
`Indeed, Plaintiffs elicited through Perlowitz that
`
`
`
`
`
`
`
`
`Perlowitz testified that she supervised
`
`
`
`
`Account Managers (“BDAMs”). According to Perlowitz, BDAMs are loan
`
`originators employed by Emigrant who were given a higher rate of compensation for
`
`
`closing on STAR NINA loans than other loans. Perlowitz testified that Emigrant’s
`
`BDAMs in New York City (minus the borough of Manhattan) were managed by Paul
`
`
`
`
`
`
`
`
`
`borrowers with low credit scores.
`
`
`
`
`
`3 A “no doc” loan was defined by Ayres as one in which the lender does not verify the borrower’s
`ability to pay, a “red flag for something that might artificially increase the chance that [the borrower]
`won’t be able to repay.”
`
`l3
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 14 of 42 PageID #: 42869
`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 14 of 42 PagelD #: 42869
`
`
`
`Black STAR NINA borrowers increased from 50% of borrowers in 2004 to 70% in
`
`2006.
`
`4. Howard Milstein
`
`Emigrant since 2004 testified that STAR NINA loans were nonperforming at a rate
`
`of up to 20%, but such failure rate did not result in losses to the bank and he was “not
`
`Milstein, he testified, that the Board of Directors (chaired by Milstein) approved an
`
`increase in the amount of STAR NINA lending that Emigrant would undergo.
`
`Milstein testified that he was aware that
`
`the bank was developing
`
`
`
`
`Howard Milstein (“Milstein”), the Chief Executive Officer (“CEO”) of
`
`
`
`
`especially” concerned about the level of delinquencies.
`So unconcerned was
`
`
`
`
`relationships with brokers of color or with ties to communities of color, comparing
`
`those relationships to the bank’s need for Korean-speaking brokers if he wished the
`bank to do business among Korean-Americans. Specifically, Milstein was asked
`
`whether be “targeted particular ethnic groups who were not in the mainstream so that
`
`[Emigrant’s]
`
`loan products.” Milstein
`they would receive information about
`
`
`answered “[w]ell, they would be groups considered underserved by our regulators.”
`
`
`
`Dr. Charlton McIlwain (“McIlwain”) is the Associate Dean of Faculty
`
`
`5. Charlton McIlwain
`
`Development at New York University. There, he is also a Professor of Media, Culture and Communications. McIlwain holds a doctorate in Communication from
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 15 of 42 PageID #: 42870
`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 15 of 42 PagelD #: 42870
`
`the University of Oklahoma and in addition to teaching, has for at least 18 years
`
`conducted research on areas of race and media, “particularly studying racial queuing,
`
`racial
`
`targeting,
`
`the ways that racial messages and other forms of racial-ized
`
`communication advance certain ends and the way they affect both our attitudes and
`
`behavior.” McIlwain was permitted by the Court to testify as an expert in marketing
`
`advertising. Mchain testified that he reviewed Emigrant’s advertising budget
`
`between 2005 and 2008 and found that 76% of its advertising went into four
`
`publications: Caribbean Life newspaper, Black Star News, Hoy (a Spanish-language
`
`newspaper) and Mizona (another Spanish-language newspaper). McIlwain also
`
`testified that 82% of Emigrant’s overall advertising was in newspapers circulated in
`
`areas with a combined Black and Latino population of greater than 80%. Finally,
`
`McIlwain took into account that that 96% of the human images in the advertisements
`
`were of Black or Latino individuals. With these three criteria, McIlwain concluded
`
`that Emigrant’s advertising was unethical, in that the STAR NINA product was a
`
`“high-interest, low-income product that is predatory and has adverse effects” to the
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Accordingly,
`this Court finds that Emigrant has not met its burden of
`
`
`market form which it heavily recruited.
`
`demonstrating that the jury verdict on liability was the result of “surmise” or
`
`“conjecture,” or was otherwise unreasonable.
`
`
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 16 of 42 PageID #: 42871
`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 16 of 42 PageID #: 42871
`
`Emigrant’s Objection to the Court’s Jm Instructions
`
`Emigrant argues that the jury instructions on intentional discrimination,
`
`disparate impact and gross unfavorability misstated the law and warrant a new trial.
`
`They also argue that certain instructions they proffered were incorrectly altered or
`
`incorrectly omitted altogether.
`
`On June 20, 2016, the Court held a charge conference at which Emigrant
`
`made the same or similar arguments, all of which were rejected. On Emigrant’s Rule
`
`50 motion, the Court again rejects Emigrant’s arguments following reasons.
`
`
`
`III.
`
`
`
`
`
`
`
`
`
`
`
`The Court charged the jury that if it believed that that the evidence
`
`
`
`A. Intentional Discrimination
`
`demonstrated that the STAR NINA loans were grossly unfavorable and intentionally
`
`targeted certain groups based in part on race, color or national origin, it could find
`
`discrimination under the FHA, ECOA and NYCHRL. The plain words of the
`
`instruction are as follows:
`
`
`
`In order to prevail on their claim that Defendants intentionally engaged in
`
`lending practices that violated the Fair Housing Act, Equal Credit
`Opportunity Act, and New York City Human Rights Law, Plaintiffs must
`establish that:
`
`
`
`
`
`
`
`(1) the STAR NINA loan product was grossly unfavorable to the
`borrower; and
`to make STAR NINA loans in certain
`(2) Defendants’ effort
`communities was motivated, at least in part, by race, color, or
`national origin.
`
`
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 17 of 42 PageID #: 42872
`Case 1:1l-cv-02l22-SJ-RLM Document 618 Filed 08/30/18 Page 17 of 42 PageID #: 42872
`
` If you find Plaintiffs have established these elements by a preponderance of
`
`the evidence, then you must find that Defendants violated the Fair Housing
`Act, Equal Credit Opportunity Act, and the New York City Human Rights
`Law.
`
`
`
`
`
`Plaintiffs are not required to show that Defendants acted with racial animus,
`which means hatred or dislike for particular racial or ethnic group. Nor do
`
`
`they need to prove that race, color or national origin was the only reason for
`Defendants’ conduct. Rather, they are only required to show that race, color,
`or national origin was one motivating factor. This means that in order for
`Defendants to be found liable for violating the Fair Housing Act, Equal Credit
`Opportunity Act, and the New York City Human Rights Law, race, color, or
`national origin need only have played some role in Defendants’ conduct.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`(Dkt. No. 522 at 33.) Emigrant presents three arguments that this instruction requires
`
`the Court to grant them a new trial. They argue that “the jury was not instructed in
`
`any way on Plaintiffs’ intentional-targeting theory;” that evidence of animus is a
`
`necessary component of intentional discrimination and that it was improper to
`
`reference Hispanic borrowers when none of the Plaintiffs are Hispanic.
`
`Emigrant’s argument that the charge fails to take into account Plaintiffs’
`
`theory of targeting is plainly specious and semantic: the intentional offering of
`
`“grossly unfavorable loans” to members of “certain communities” with “race, color,
`
`or national origin” in mind is, in fact, targeting. That the court did not use the precise
`
`word “target” in this instruction does not warrant a new trial when the evidence is
`
`viewed as a ' whole. The charge requires the jury to find that Emigrant was
`
`“motivated, at least in part” by the impermissible factors of race, color or national
`
`original.
`
`It strains logic to imagine that the jury based its verdict on intentional
`
`discrimination, found that Emigrant was motivated at least in part by race, color or
`
`
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 18 of 42 PageID #: 42873
`Case 1:1l-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 18 of 42 PageID #: 42873
`
`national origin, did in fact obtain grossly unfavorable loans
`
`from certain
`
`communities, but that these communities were not targeted. m, Barkley v.
`
`Olmpia Mortg. Co., 2007 WL 2437810, at *11 (E.D.N.Y. Aug. 22, 2007) (finding
`
`an example of targeting to be the placement of advertisements in Caribbean Life, a
`
`“community newspaper that serves the West Indian immigrant community, while not
`
`advertising in community papers that are part of the same newspaper chain but serve
`
`primarily white neighborhoods”).
`
`Next, Emigrant argues that Plaintiffs were required to show discriminatory
`
`animus, and that the instructions failed to inform them of that. This Court disagrees.
`
`In Village of Arlington Heights v. Metropolitan Hous., 97 U.S. 555 (1977), the
`
`Supreme Court summarizes “without purporting to be exhaustive, subjects of proper
`
`inquiry in determining whether racially discriminatory intent existed.” Id, at 565
`
`(emphasis added).
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Those subjects include “sensitive inquir[ies]
`into such
`
`circumstantial and direct evidence of intent[,]...[t]he historical background of the
`
`
`
`
`
`
`
`
`action.” Li; see also Mhany Mgmt., Inc. v. County of Nassau, 819 F.3d 581 (2d Cir.
`
`decision,” and “[t]he specific sequence of events leading up to the challenged
`
`2015) (“[W]hen Congress amended the FHA in 1988, the circuits were largely in
`
`agreement that if one of the factors for an act was unlawful, the act violated the
`
`FHA.”) (collecting cases); Robinson v. 12 Lofts Realm, Inc., 610 F.2d 1032, 1042
`
`(2d. Cir. 1979) (“[W]hile [the court] did not doubt that the defendant’s primarily goal
`
`was to make money. .
`
`
`
`. [the court] need not and [did] not find that racial prejudice
`
`

`

`Case 1:11-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 19 of 42 PageID #: 42874
`Case 1:1l-cv-02122-SJ-RLM Document 618 Filed 08/30/18 Page 19 of 42 PageID #: 42874
`
`dominated defendant’s mind during the negotiations. It is enough that race was one
`
`significant factor he considered in his dealings with the men”) (quoting mg
`
`States v. Pelzer Realty Co., 484 F.2d 438, 443 (5th Cir. 1973) (internal quotation
`
`marks omitted)); mrk—ley, 2007 WL 2437810, at *11 (“[A]
`
`factfinder might
`
`determine that defendants had harbored ill will toward racial minorities, or that they
`
`had used race as a proxy, doing business exclusively with minorities out of the biased
`
`
`
`
`
`
`
`
`
`perception that
`
`those individuals would be especially vulnerable to fraud”)
`(emphasis in original).) Accordingly, this Court finds the word “animus” need not
`
`
`appear in a charge on intentional discrimination and that the charge read was correct.4
`
`
`
`
`
`
`
`B. Pretext
`
`The Court’s charge on pretext was as follows:
`
`The fact that Defendants offer explanations for their actions does not
`mean that they are not liable for intentional discrimination.
`If you
`conclude that the explanations are false or unworthy of credence, you
`
`
`may infer that Defendants’ actions were motivated by discrimination
`

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket