Discrimination in Lending

In two separate matters, Cornerstone Research worked with counsel for the finance subsidiaries of major automotive companies in defense of complaints made under the Equal Credit Opportunity Act (ECOA).

In two separate matters, Cornerstone Research worked with counsel for the finance subsidiaries of major automotive companies in defense of complaints made under the Equal Credit Opportunity Act (ECOA). The plaintiffs alleged that the outcomes of negotiations for financing terms were different for customers in different ethnic groups and hence violated the “disparate impact” standard of ECOA. The plaintiffs sought to certify classes consisting of all African-American and/or Hispanic customers who obtained financing from the defendants at any time during the class periods, each of which ranged over a decade.

Our analysis showed that the plaintiffs failed to demonstrate harm to any individual class members or to the class as a whole.

Cornerstone Research worked with multiple experts to respond to these claims. We analyzed each defendant’s voluminous databases on individual finance contract originations and subsequent payment performance. We showed the limitations in opposing experts’ analyses, including failures to incorporate relevant information into empirical analysis and failures to recognize the interrelatedness of financing terms with many other aspects of the negotiation process. Our analysis showed that the plaintiffs failed to demonstrate harm to any individual class members or to the class as a whole. Both cases settled prior to any decision on class certification.