Opinion
Civil Action No. 00-6003 (DMC)
January 14, 2003
OPINION
Silvan S. Smith and Joy B. Smith (collectively, "Plaintiffs") brought this action on behalf of themselves and similarly situated African-Americans against Chrysler Financial Company, LLC ("Chrysler Financial" or "Defendant") alleging racial discrimination under the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq., ("ECOA").
The motions currently before the Court are Defendant's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) and the American Bankers Association, American Financial Services Association, Consumer Bankers Association, and the Financial Services Roundtable's motion for leave to file a Brief of Amicus Curiae.
For reasons stated below, Defendant's motion to dismiss is denied, and the American Banker's Association, American Financial Services Association, Consumer Bankers Association, and Financial Services Roundtable's motion for leave to file a Brief of Amicus Curiae is denied.
BACKGROUND
The pertinent facts, taken in the light most favorable to Plaintiffs as the non-moving party, are as follows: Plaintiffs Silvan S. Smith and Joy B. Smith are African-American citizens who reside in New Brunswick, New Jersey. According to Mr. and Mrs. Smith, they purchased a Jeep Grand Laredo from Global Auto Mall in North Plainfield, New Jersey, and were subject to Chrysler Financial's subjective "Mark-up" policy. (Am.Compl. at ¶ 5).
Silvan S. Smith and Joy E. Smith are Plaintiffs bringing a class action suit on behalf of all similarly situated African-Americans who claim to have been subjected to Defendant's subjective non-risk related mark-up policy.
On or about January 30, 1999, the Smiths purchased an automobile from Global Auto Mall, an authorized Chrysler dealer and agent of Chrysler Financial. Id. at ¶¶ 42, 43. The Smiths entered into a Chrysler Financial retail installment contract with an annual percentage rate of twenty percent. Id. at ¶ 44. The contract resulted in a total financed amount of twenty five thousand, three hundred and fifty-six dollars, and sixty cents ($25,356.60) over the course of two years on a vehicle with a listed sticker price of fifteen thousand, eight hundred and twenty-one dollars. and sixty-one cents ($15,821.61). Id. at ¶¶ 44, 45. According to Plaintiffs' calculations. they paid nine thousand, five hundred and thirty-four dollars, and ninety-nine cents ($9,534.99) in finance charges for a 1995 Jeep Grand Laredo over the two year finance period. Id. at ¶ 45.
Plaintiffs submit that on November 28, 2000, their attorneys informed them of Chrysler Financial's mark-up policy and that they may have been subject to the inflated finance charges. Id. Prior to that date Plaintiffs were unaware that the retail installment contract they signed with Chrysler Financial included a subjective non-risk related finance charge mark-up that disproportionately effected African-Americans. Id. at ¶¶ 46, 47.
COMPLAINT
Plaintiffs' amended complaint and memorandum of law in opposition to Defendant's motion to dismiss contains a single claim that Defendant is in violation of the Equal Credit Opportunity Act, 15 U.S.C. § 1691 et seq.; Am. Comp. at ¶ 1. Plaintiffs are African-American vehicle purchasers who contracted with various car dealerships under "Chrysler Financial Credit retail installment contract[s]" to finance their purchased vehicles. Id. at ¶¶ 43, 44, 45. Plaintiff's claim that Defendant failed to inform them that the annual percentage rate in the retail installment contract consisted of both an objective, risk-related credit calculation, and a subjective, non-risk related "mark-up" added to the contract pursuant to Defendant's own policies. Id. at ¶¶ 46, 47, 48. Moreover, Plaintiff's claim that they were "charged a disproportionately greater amount in non-risk related credit charges than similarly situated white persons." Id. at ¶ 48.
Plaintiffs' amended complaint attacks Defendant's "mark-up" policy, which authorizes and encourages car dealerships who provide retail installment contracts to subjectively mark-up finance charge rates on otherwise objective risk-related annual percentage rates. Plaintiffs contend that such subjectivity causes widespread discriminatory impact on African-Americans as a whole who apply for vehicle financing, and is in violation of the Equal Credit Opportunity Act. Id. at ¶¶ 33, 34. Plaintiffs claim that there is no legitimate business purpose which can justify Defendant's discriminatory mark-up policy that cannot be achieved in a non-discriminatory manner. Id. at ¶ 35.
Defendant is one of the largest finance companies in the world and promotes its financing expertise via nationwide advertising. Id. at ¶ 20. Plaintiffs are challenging Defendant's "non-recourse" credit pricing policy which operates according to Plaintiffs as follows:
Defendant provides various car dealerships with their customized credit application forms, retail installment contract forms, and standardized instructions. Id. at ¶¶ 21-23. In order for a consumer to obtain financing provided by Defendant, the consumer is provided a credit application by the dealership, which is forwarded to Defendant, who then determines the consumers annual percentage rate. Id. Specifically, the Defendant computes the financing rate through an objective risk-related credit analysis. This process analyzes factors such as Bureau histories, payment amounts, monthly rental or mortgage obligation, payment-to-income ratio, debt ratio, bankruptcies, automobile repossessions, charge-offs. foreclosures, payment histories, deal factors and other variables. Id. These objective risk-related factors determine the vehicles "buy rate," which is the risk-related financing rate a consumer is charged, and the Plaintiffs concede such determinations are appropriate. Id. at ¶ 24.
Plaintiffs allege that in addition to determining the buy rate, Defendant authorized dealers to add a subjective "mark-up" to the objective buy rate, limited only by the Defendant's own pricing policy. Id. at ¶¶ 25, 31. This additional mark-up imposed non-risk-related credit charges upon the consumer. Id. at ¶ 25. Plaintiffs allege that the subjective mark-up imposed upon the consumer by the dealer is "set pursuant to and within the limits of a specifically delineated policy of Chrysler." Id. at ¶ 26. The mark-up is paid in its entirety to Defendant by the consumer over the life of the loan, unbeknownst to the consumer as an undisclosed component of the consumer's annual percentage rate. Id. According to Plaintiffs, the profits from this undisclosed non-risk-related finance charge was shared between the dealership and Defendant. Id. at ¶ 26. Plaintiffs allege that as a result of Defendant's subjective mark-up policy, consumers with identical or similar credit scores paid dissimilar annual percentage rates. Id. at ¶ 27. Specifically, Plaintiffs contend that the subjective mark-up policy has a disproportionately adverse affect on African-Americans when compared to similarly situated Whites, because African-Americans "pay disparately more" for otherwise similar buy rates. Id. at ¶ 28.
Plaintiffs assert that Defendant acts as the credit lender by controlling "all relevant aspects" in obtaining financing. Id. at ¶ 29. The dealer is an agent of the Defendant and serves as a credit arranger or originator. Id. Defendant, not the dealer, is the lien-holder with regard to title for registration and therefore Defendant designed, disseminated, controlled, implemented and profited from the mark-up policy which created the disparate impact on African-American purchasers.Id. at ¶ 30.
Plaintiff's claim that through Defendant's advertising and marketing Defendant universally creates an image that they offer objectively risk-related credit based on nonnegotiable. competitive finance rates.Id. at ¶¶ 38, 39. Plaintiffs maintain that Defendant never disclosed the truth regarding the subjectivity of obtaining credit, and further, failed to disclose that it offers incentives to dealers who subjectively increase credit rates. Id. at ¶¶ 40, 41.
DISCUSSION I. DEFENDANT CHRYSLER FINANCIAL COMPANY'S MOTION TO DISMISS
A. 12(b)(6) Standard of Review
In deciding a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) all allegations in the complaint must be taken as true and viewed in the light most favorable to Plaintiffs. See Warth v. Seldin, 422 U.S. 490, 501 (1975); Trump Hotels Casino Resorts, Inc., v. Mirage Resorts Inc., 140 F.3d 478, 483 (3d Cir. 1998); Robb v. Philadelphia, 733 F.2d 286, 290 (3d Cir. 1984). In evaluating a Rule 12(b)(6) motion to dismiss for failure to state a claim, a court may consider only the complaint, exhibits attached to the complaint, matters of public record. and undisputedly authentic documents if Plaintiffs's claims are based upon those documents. See Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d Cir. 1993). If, after viewing the allegations in the complaint in the light most favorable to Plaintiffs, it appears beyond doubt that no relief could be granted "under any set of facts which could prove consistent with the allegations," a court shall dismiss a complaint for failure to state a claim. Hishon v. King Spalding, 467 U.S. 69, 73 (1984); Zynn v. O'Donnell, 688 F.2d 940, 941 (3d Cir. 1982).
B. Discrimination Claim under the ECOA
The ECOA provides that it is "unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction on the basis of . . . race." 15 U.S.C. § 1691(a)(1); see also Coleman v. General Motors Acceptance Corp., 196 F.R.D. 315 (M.D. Tenn. 2000),Jones v. Ford Motor Credit Company, No. CIV.A.8330, 2002 WL 1334812, at *2 (S.D.N.Y. June 17, 2002). Under the ECOA, "any creditor who fails to comply with any requirement imposed under this sub-chapter shall be liable to the aggrieved applicant for any actual damages sustained by such applicant acting either in an individual capacity or as a member of a class." 15 U.S.C. § 1691e(a); see also Jones, No. CIV.A.8330, 2002 WL 1334812, at *2. Also, according to 15 U.S.C. § 1691e(c), a court can grant equitable and declaratory relief when necessary in order to enforce ECOA requirements. Id.
Defendant argues in its 12(b)(6) motion to dismiss that the case should be dismissed even if Plaintiffs's allegations are true and accurate because: (1) under 12 C.F.R. § 202.2(1) Defendant cannot be liable for a disparate impact claim because Plaintiffs have failed to allege that Defendant subjectively knew or should have known of any ECOA violations by its dealers; (2) Plaintiffs cannot pursue a disparate impact claim theory of liability under the ECOA and its implementing regulations; and (3) Plaintiffs have failed to identify that Defendant engages in a specific practice resulting in a statistical disparity.
(1) 12 C.F.R. § 202.2(1) permits liability for disparate impact claims.
Defendant argues that the Court cannot find Defendant liable for a disparate impact claim because Plaintiffs have failed to allege that Defendant subjectively knew or should have known of any ECOA violations by its dealers. Defendant argues that it is an assignee, not a creditor, and therefore under 12 C.F.R. § 202.2(1) Defendant can only be liable if it knew or had reason to know of violations by the dealers from whom the retail installment contracts were purchased. Silverman v. Eastrich Multiple Investor Fund, L.P., 51 F.3d 28, 33-34 (3d Cir. 1995) Defendant contends that because it did not know or have reasonable notice of any alleged discrimination on the part of its dealers therefore it falls under the exception of Regulation B under 12 C.F.R. § 202.2(1), and is not defined as a creditor. (Mot. to Dism. at 14-19). By contrast, Plaintiffs allege that Defendant is a creditor under both Regulation B and 15 U.S.C. § 1691a(e). (Pls. Mem. of Law in Opp. at 17-24).
As previously indicated, under 15 U.S.C. § 1691e(a) only "creditors" may be liable for an ECOA violation. For purposes of the ECOA, a "creditor" is "any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew, or continue credit." 15 U.S.C. § 1691a(e); see also Jones, No. CIV.A.8330, 2002 WL 1334812, at *2. Coleman, 196 F.R.D. at 325. Furthermore, the ECOA delegated to the Federal Reserve Board the power to implement regulations in furtherance of carrying out the Act's purpose. 15 U.S.C. § 1691b(a). These regulations, known as "Regulation B" are found under 12 C.F.R. § 202.1 — 202.15, and further defines a creditor under the ECOA as:
a person who, in the ordinary course of business, regularly participates in the decision of whether or not to extend credit. The term includes a creditor's assignee, transferee or subrogee who so participates. For purposes of §§ 202.4 and 202.5(a), the term also includes a person who, in the ordinary course of business, regularly refers applicants or prospective applicants to creditors, or selects or offers to select creditors to whom requests for credit may be made. A person is not a creditor regarding any violation of the act or this regulation committed by another creditor unless the person knew or had reasonable notice of the act, policy, or practice that constituted the violation before becoming involved in the credit transaction.12 C.F.R. § 202.2(1).
This Court concurs with Plaintiffs and finds that Defendant is a creditor. Under both 15 U.S.C. § 1691a(e) and 12 C.F.R. § 202.2(1) Defendant is a "creditor" because "a creditor may be an assignee of an original creditor if it regularly extends credit to people who participate in the decision whether or not to extend credit to its applicants." Jones, No. CIV.A.8330, 2002 WL 1334812. at *2. Only assignees without reasonable notice of the policy or practice which resulted in a violation of the ECOA under 12 C.F.R. § 202.2(1) are exempted, and Defendant does not fall under this exception. In the instant case. knowledge of the causative policy and practice of Defendant regarding the subjective "mark-up" suffices to give the requisite knowledge required under the Act and its regulation.
2. The ECOA permits disparate impact actions.
Disparate impact claims brought under the ECOA are subject to the same burden of proof as any case brought under Title VII, as Amended, the Civil Rights Act of 1991. 12 C.F.R. Part 202, Supp. I at § 202.6(a)(2); Jones, No. CIV.A.8330, 2002 WL 1334812, at *3, citing Thompson v. Marine Midland Bank, No. 99-7051, 1999 WL 752961, at *2 (2d Cir. Sept. 16, 1999). To succeed in a Title VII case Plaintiffs must "establish a specifically identifiable policy or practice. a statistically significant difference in outcomes between African-Americans and Whites, and a causal connection between the policy or practice and the disparate outcomes." Coleman, 196 F.R.D. at 323; see also Jones, No. CIV.A. 8330, 2002 WL 1334812, at *3, Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 655-58, 109 S.Ct. 2115, 104 L.Ed.2d 733 (1989), Smith v. Xerox Corp., 196 F.3d 358, 364-65 (2d Cir. 1999), Abbott v. Federal Forge, Inc., 912 F.2d 867, 872 (6th Cir. 1990). Once Plaintiffs satisfy the prima facie case for disparate impact, Defendant assumes the burden to establish a legitimate, non-discriminatory purpose for having the practice or policy. Jones, No. CIV.A.8330, 2002 WL 1334812, at *3, Smith, 196 F.3d at 365. If Defendant provides a sufficient reason for such practices and policies, the burden then shifts back to Plaintiffs to indicate why the reason provided by Defendant is a pretext for discrimination. Id., see also Coleman, 196 F.R.D. at 325.
Defendant moves to dismiss Plaintiffs' action for failure to state a claim upon which relief can be granted under 12 C.F.R. § 202.6. Defendant contends that: (1) Plaintiffs cannot bring a claim for disparate impact under the ECOA because the ECOA only prohibits intentional discrimination; (2) the ECOA states that disparate impact discrimination claims are only available in order to challenge a creditor's determination of creditworthiness; and (3) Congress has delegated its implementing authority and there is a limitation on the availability of disparate impact controls and case law consistent with the implementation.
During a credit evaluation "a creditor may consider any information obtained, so long as the information is not used to discriminate against an applicant on a prohibited basis." Jones, No. CIV.A.8330, 2002 WL 1334812, at *3. Federal regulations, case law, and a footnote to 12 C.F.R. § 202.6 explain that Congress intended an "effects test" concept, as articulated by the Supreme Court in Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971), under Title VII, "to be applicable to creditor's determinations of creditworthiness." 12 C.F.R. § 202.6(a) n. 2 (2000), Jones, No. CIV.A.8330, 2002 WL 1334812, at *3, Coleman, 196 F.R.D. at 325. The Official Staff Interpretations of Regulation B explain that the effects test disallows "a creditor practice that is discriminatory in effect because it has a disproportionately negative impact on a prohibited basis, even though the creditor has no intent to discriminate and the practice appears neutral on its face." Jones, No. CIV.A.8330. 2002 WL 1334812. at *3, citing 12 C.F.R. Part 202. Supp. I, § 202.6(a)(2). It is clear from the above language that disparate impact theory is present in the ECOA, and therefore Defendant's argument is not persuasive.
Defendant argues that according to the Supreme Court's ruling inAlexander v. Sandoval, no disparate impact liability claim is available under the ECOA because the Federal Reserve Board did not have the right to create such a private right of action. 121 S.Ct. 1511, 2001 WL 408983 (Apr. 24, 2001) (Mot. to Dism. at 19). However, this argument is misplaced. In fact, in Osborne v. Bank of America, Nat.'l Ass., the Court analyzed this very question and held that private rights of action were only impermissible if Congress did not intend such a right under the regulation. 2002 WL 31408899, *5 (Sept. 23, 2002) Such rational is not applicable to the ECOA as "the ECOA itself has been construed to prohibit practices with discriminatory effect, as well as practices motivated by discriminatory intent." Id. Moreover, the Osborne Court held that the Federal Reserve Board is granted the authority to "flesh out" the terms of the ECOA statute. Id. at 2002 WL 31408899, at *3; see also, 15 U.S.C. § 1691a(g). Therefore, with regard to the holding inSandoval, 121 S.Ct. 1511, 2001 WL 408983, Defendant's argument fails, because the ECOA provides a private right of action for disparate impact liability claims. See 15 U.S.C. § 1691e.
3. Plaintiffs identified a practice or policy of Defendant causing a statistical disparity
The Supreme Court held in Griggs v. Duke Power Co., that practices fair in form, but discriminatory in operation are to be determined by the "effects test" under Title VII (otherwise known as disparate impact). 401 U.S. 424, 431, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). The effects test requires that a facially neutral employment practice results in a significant adverse effect on a protected class, but does not require evidence that the adopted practice was intended to discriminate. Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 657 (1989), citing Griggs, 401 U.S. at 431.
A plaintiff is required to identify an employment practice that has causal connection to the alleged disparate impact in order to succeed on a disparate impact claim. Wards Cove, 490 U.S. at 657. Moreover, "the Supreme Court held that a class representative must allege more than adverse treatment based on race discrimination; rather, the representative must additionally identify a discriminatory policy or practice by Defendant which is `generally applicable' to the proposed class member." Buycks-Roberson v. Citibank Fed. Sav. Bank, 162 F.R.D. 322, 331-32 (N.D. Ill. 1995), citing General Tel. Co. v. Falcon, 457 U.S. 147, 159 n. 15, 102 S.Ct. 2364, 2371 n. 15. 72 L.Ed.2d 740 (1982). Upon Defendant's demonstration that there is a specific, identifiable employment practice causing a discriminatory effect, the "burden shifts to the employer to prove the business necessity of the challenged practice." Wards Cove, 490 U.S. at 659, citing Watson v. Fort Worth Bank Trust, 487 U.S. 977, 108 S.Ct. 2777, 101 L.Ed.2d 827 (1988).
This court does not agree with Defendant's argument that Plaintiffs failed to identify a specific practice or policy that resulted in the alleged discrimination. Defendant contends that the subjective mark-up policy alleged to cause discriminatory effects to African-Americans occurred not because Defendant authorized it as the assignee, but rather because the law allowed it. Moreover, Defendant argues that their actions are not improper because they are simply following a recognized business practice within the financial industry. These arguments are not compelling because the law does not allow subjective mark-up policies that result in discrimination against a protected class absent a valid business justification. See Wards Cove, 490 U.S. at 657, citing Griggs, 401 U.S. at 431. Defendant fails to provide a valid business justification for its actions that result in discrimination.
Assuming Plaintiff's allegations are correct and Defendant controls the implementation of the alleged subjective non-risk related mark-up policy, then Plaintiffs have identified a specific discriminatory practice or policy used by Defendant as required under the ECOA for a disparate impact claim. See Buycks-Roberson, 162 F.R.D. at 331-32, citing General Tel. Co., 457 U.S. at 147. Standardized criteria within a business practice can be used as evidence of a disparate impact. "Subjective applications of neutral underwriting criteria is standardized conduct because the loan originators have the opportunity to use their discretion with respect to each loan application." See Citibank, 162 F.R.D. at 322. This Court finds that Plaintiffs have identified a practice or policy that could cause a disparate impact upon African-Americans, and Defendant has failed to provide a valid business justification which cannot be achieved in a non-discriminatory manner.
II. AMERICAN BANKERS ASSOCIATION, AMERICAN FINANCIAL SERVICES ASSOCIATION, CONSUMER BANKERS ASSOCIATION, AND THE FINANCIAL SERVICES ROUNDTABLE MOTION FOR LEAVE TO FILE A BRIEF OF AMICI CURIAEDistrict courts have inherent authority to appoint or deny amici which is derived from Rule 29 of the Federal Rules of Appellate Procedure.Martinez v. Capital Cities/ABC-WPVI, 909 F. Supp. 283 (E.D.Pa. 1995);Waste Management of Pa. v. City of York, 162 F.R.D. 34 (M.D.Pa. 1995).See Onondaga Indian Nation v. State of New York, 1997 U.S. Dist. LEXIS 9168, at *6 (N.D.N.Y.) ("there is no governing standard, rule or statute prescribing the procedure for obtaining leave to file an amicus brief in the district court"). "An amicus curiae brief may be filed at the request of the court." Martinez, 909 F. Supp. at 283, citing Fed.R.App.P. 29.
The extent to which the district court should permit an amicus curiae is solely within the court's discretion. Waste Management, 162 F.R.D. at 37.; citing Pennsylvania Environmental Defense Foundation v. Bellfonte Borough, 718 F. Supp. 431, 434 (M.D.Pa. 1989); U.S. v. Gotti, 755 F. Supp. 1157, 1158 (E.D.N.Y. 1991); Leigh v. Engle, 535 F. Supp. 418, 420 (N.D.Ill. 1982). Even "judges of coordinate jurisdictions are not bound by each others' rulings, but are free to disregard them if they so choose." U.S. v. Birney, 686 F.2d 102, 107 (2d Cir. 1982). Additionally, in the absence of a contrary statute, there is no distinction between a request for leave to appear amicus curiae by a private person and one performed by a governmental agent. Leigh, 535 F. Supp. at 420. Therefore, a court may grant leave to provide amici curiae briefs when such information is both "timely and useful." Avellino v. Herron, 991 F. Supp. 730, 732 (E.D.Pa. 1998); citing Waste Management, 162 F.R.D. at 36.
An amicus curiae is not a party to the pending litigation, but rather assists the court in its understanding of a particular matter. Waste Management, 162 F.R.D. at 37. (The rationale for permitting amicus is to assist the court, even though there is no rule that requires the amici to be disinterested.) As such, the extent to which an amicus should be permitted to participate is within the court's discretion. Alexander v. Hall, 64 F.R.D. 152, 155 (D.S.C. 1974). The Third Circuit notes that "permitting persons to appear in court . . . as friends of the court . . . may be advisable where third parties can contribute to the court's understanding." Waste Management, 162 F.R.D. at 37, citing Harris v. Pernsley, 820 F.2d 592, 603 (3d Cir. 1987). See also Yip v. Pagano, 606 F. Supp. 1566, 1568 (D.N.J. 1985), Aff'd, 782 F.2d 1033 (3d Cir. 1986). However, Gotti "by the very nature of things the amicus is not normally impartial." Gotti, 755 F. Supp. 1158, quoting Strasser, 432 F.2d at 569.
Although "there is no rule that the amicus must be impartial," the degree of partiality is consideration for the court with regard to an amici's admittance. Waste Management, 162 F.R.D. at 37. citing Concerned Area Residents for the Environment v. Southview Farm, 834 F. Supp. 1410, 1413 (W.D.N.Y. 1993) In fact, some courts often require that the amicus be neutral. See 20A Moore's Federal Practice, § 329.12 (Matthew Bender, 3d ed.) (interpreting FED. R. APP. P. 29 governing amicus curiae). Moreover, amicus which argue facts are less favorable because they are not correctable on appeal. Yip, 606 F. Supp. at 1568; accord Strasser v. Doorley, 432 F.2d 567. 569 (1st Cir. 1970).
1. Whether or Not The Retail Installment Sales Act Recognizes that a Sales Finance Company Can Purchase Retail Installment Contracts for Agreed-Upon Prices Is Inapplicable.
The amici curiae's argument on behalf of Defendant that the Retail Installment Sales Act recognizes that sales finance companies can purchase retail installment contracts for agreed-upon prices is inapplicable. As previously indicated, the Third Circuit notes that "permitting persons to appear in court . . . as friends of the court . . . may be advisable where third parties can contribute to the court's understanding." Waste Management, 162 F.R.D. at 37, citing Harris v. Pernsley, 820 F.2d 592, 603 (3d Cir. 1987). See also Yip v. Pagano, 606 F. Supp. 1566, 1568 (D.N.J. 1985), Aff'd, 782 F.2d 1033 (3d Cir. 1986). However, in the instant case, neither Plaintiffs nor Defendant raise the issue of whether or not the Retail Installment Sales Act recognizes that sales finance companies can purchase retail installment contracts for agreed-upon prices. Moreover, Plaintiffs do not contend that merely purchasing a retail installment contract is illegal per se, rather, Plaintiffs contend that permitting an undisclosed subjective mark-up to an individual's objectively determined buy rate causes a disparate impact on African-Americans, a protected class. And, as such, permitting the subjective mark-up, which causes a disparate impact on a protected class contravenes the ECOA. Therefore, while a court may grant leave to provide amici curiae briefs when such information is both "timely and useful," Avellino v. Herron, 991 F. Supp. 730, 732 (E.D. Pa. 1998); citing Waste Management, 162 F.R.D. at 36. Here, however, the amici curiae fails to be "useful" to the Court.
2. Chrysler Financial And Other Sales Finance Companies Can Be Held Liable Under The ECOA. And In Order To Be Liable Chrysler Need Not Have Knowledge or Reasonable Notice That There Was Discrimination.
The amicus curiae's argument that Defendant cannot be held liable because Defendant did not have knowledge or reasonable notice that the dealer was engaging in discriminatory conduct is misplaced and dispelled within the Discussion of this case. As previously mentioned, Defendant can be held liable under the ECOA for disparate impact claims if in fact he is a creditor. Because this is a 12(b)(6) motion to dismiss, the facts are taken in the light most favorable to Plaintiffs, and assuming the facts alleged by Plaintiffs are true, then Defendant is in fact a creditor. Furthermore, assuming Defendant is indeed a creditor, Defendant need not have knowledge or reasonable notice of the disparate impact upon a protected class which purportedly resulted from Defendant's mark-up policy. See infra. The arguments contained within the amicus curiae are not helpful to the court.
3. The Amicus Curiae's Argument That Discretionary Pricing Promotes Competition And Serves Consumers Is "Useless" To The Court.
The amici curiae's argument on behalf of Defendant that competition between purchasers of retail installment contracts helps to keep buy rates lower is inapplicable. As previously indicated throughout this discussion, the Third Circuit notes that "permitting persons to appear in court . . . as friends of the court . . . may be advisable where third parties can contribute to the court's understanding." See infra, see also Waste Management, 162 F.R.D. at 37, citing Harris v. Pernsley, 820 F.2d 592, 603 (3d Cir. 1987). See also Yip v. Pagano, 606 F. Supp. 1566, 1568 (D.N.J. 1985), Aff'd, 782 F.2d 1033 (3d Cir. 1986). However, here, the amicus curiae's argument that price setting flexibility is essential to a free marketplace and that a wholesaler cannot be held liable for the actions of the retailer is inapplicable to the Court's understanding. Furthermore, the amicus curiae's argument that a dealer's ability to earn a profit results in economic efficiencies ultimately benefitting the consumer is inapplicable to the Court's understanding.
Therefore, while the Court can grant leave to provide amici curiae briefs, in this case permitting such information to appear before the court fails to further the Court's understanding of the issues at bar, and, as such is neither "timely or useful" to the Court. See infra, see also Avellino v. Herron, 991 F. Supp. 730, 732 (E.D.Pa. 1998); citing Waste Management, 162 F.R.D. at 36. The American Bankers Association, American Financial Services Association, Consumer Bankers Association, and the Financial Services Roundtable's motion for leave to file an amicus curiae brief is denied.
CONCLUSION
For the foregoing reasons Defendant's motion to dismiss is denied and American Bankers Association, American Financial Services Association, Consumer Bankers Association, and the Financial Services Roundtable's motion for leave to file a Brief of Amicus Curiae is denied.
ORDER
This matter having come before the Court by Plaintiff Silvan S. Smith and Joy E. Smith's motion for leave to file supplemental authority, and this court having reviewed both parties' submissions;
IT IS on this 14th day of January, 2003:
ORDERED that Plaintiff Silvan S. Smith and Joy E. Smith's motion for leave to file supplemental authority is granted.
ORDER
This matter having come before the Court on Defendant Chrylsler Financial Company's motion to dismiss and American Bankers Association, American Financial Services Association, Consumer Bankers Association, and the Financial Services Roundtable's motion for leave to file a Brief of Amicus Curiae, and this court having carefully read all submissions;IT IS on this 14th day of January, 2003;
ORDERED that Defendant's motion to dismiss is denied and American Bankers Association, American Financial Services Association, Consumer Bankers Association, and the Financial Services Roundtable's motion for leave to file a Brief of Amicus Curiae is denied.