Gail Watson Chiang v. Ann M. Veneman

1
PRECEDENTIAL
IN THE UNITED STATES COURT OF
APPEALS
FOR THE THIRD CIRCUIT
_______________
NO. 03-3488
______________
GAIL WATSON CHIANG; *LYNDA
ALEXANDER MUHAMMAD;
JACQUELINE CARR; DENISE
PITTMAN; CARMEN MCALPIN-
CLARKE; KAREN HUNT;
THERESA COLLINGWOOD-
MORRIS; DAVID C. NICHOLAS;
PRECIOUS YEARWOOD;
FREDERICK FREEMAN; BEVERLY
RAWLINS; ANDREA CARROLL;
RONALD J. MITCHELL; JACK
DANIEL; CHRISTINE DANIEL;
ANESTA E. GORE; VANETA
MARTIN; CARMEN GONZALEZ;
M. NARTEL GREEN; SHIRLEY
WILLIAMS; MARIA BLYDEN;
GONZALO RIVERA; BLANCHE R.
RAWLINS; RHEA L. JOHNSON;
MARILYN RIVERA; KEITH R.
WILLIAMS; AL BRUNN; EMERYL
CHRISTOPHER; CHARLES G.
JOHNSON; VELSINA L. GEORGE;
KALEEN CLOUDEN; EUNICE
GOMES; RUTH DUBLIN;
KIMBERLEY L. OLIVER; ELENA
HERBERT; LAWRENCE CHRISTIAN;
MARJORIE JOHN; LAVERNE
WILLIAMS; REVEREND JAMES
CHRISTIAN, on behalf of themselves
and all others similarly situated
v.
ANN M. VENEMAN, In her Official
Capacity as Secretary of
The United States Department of
Agriculture,
Appellant
*Amended pursuant to Clerk's Order
dated 11/24/03
_________________
On Appeal From The District Court of
the Virgin Islands
(No. 00-cv-00004)
District Judge: Honorable Thomas K.
Moore
_______________
Argued December 10, 2003
Before: NYGAARD, BECKER, and
STAPLETON, Circuit Judges.
(Filed September 20, 2004)
DOUGLAS B. INMAN, ESQ.
(ARGUED)
Sayre & Chavez
7 Church Street
Christiansted, St. Croix
USVI 00820
Attorney for Appellees
PETER D. KEISLER, ESQUIRE
Assistant Attorney General
DAVID M. NISSMAN, ESQUIRE

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United States Attorney
ERNEST BATEGNA, ESQUIRE
Assistant United States Attorney
ROBERT M. LOEB, ESQUIRE
CHARLES W. SCARBOROUGH,
ESQUIRE, COLETTE G. MATZZIE,
ESQUIRE (ARGUED)
Attorneys, Appellate Staff
Civil Division, PHB Room 9149
U.S. Department of Justice
601 D. Street, NW
Washington, DC 20530-0001
Attorneys for Appellant
______________________
OPINION OF THE COURT
_______________________
BECKER, Circuit Judge.
This is an interlocutory appeal by the
defendant, United States Secretary of
A g r i c u l tu r e , A n n M . V en e m an
(“Veneman”) pursuant to Fed. R. Civ. P.
23(f), in which she challenges a class
certification granted by the District Court
in a civil rights case brought against her in
her official capacity. The lead plaintiff is
Gail Watson Chiang (“Chiang”), the
representative of the putative class, who,
along with thirty-eight other plaintiffs,
alleges systematic discrimination against
persons who are “Black, Hispanic, women,
and/or Virgin Islanders,” over a period of
nineteen years, in the administration of
loan programs intended to help low
income rural families obtain homes and
make repairs to existing homes. The
claims are made primarily under the Equal
Credit Opportunity Act, 15 U.S.C. § 1691
et seq. (“ECOA”), which makes it
“unlawful for any creditor to discriminate
against any applicant, with respect to any
aspect of a credit transaction . . . on the
basis of race, color, religion, national
origin, sex or marital status, or age.” 15
U.S.C. § 1691(a). To establish a prima
facie case under ECOA the class members
must show that (1) plaintiff was a member
of a protected class; (2) plaintiff applied
for credit from defendants; (3) plaintiff
was qualified for the credit; and (4) despite
qualification, plaintiff was denied credit.
See Matthiesen v. Banc One Mortgage
Corp., 173 F.3d 1242, 1246 (10th Cir.
1999).
According to Chiang, the regional
USDA office in Vermont, which had
jurisdiction over the U.S. Virgin Islands,
kept Virgin Islanders “out of the system”
by implementing a “phony,” illegal
waiting list on which thousands of Virgin
Islanders, almost all of whom were Black,
Hispanic, or female, had their names
placed instead of being given an actual
loan application in violation of USDA
policy, instructions, and regulations, .
These applicants were told that they would
receive applications when they became
available but, even after years of waiting,
most never did. According to Chiang, not
only were applications available, but the
Virgin Islands was the only locality in the
United States where this type of waiting
list was implemented. Thus, Chiang
submits, the so-called “waiting list” was
not a true waiting list at all, but was rather
a device used to deny class members loan
applications altogether.

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Chiang also alleges that the USDA
administrators in Vermont further
instructed Virgin Islands officials to give
applications only to those class members
on the waiting list who became a
“problem,” and then told local employees
“you know what to do with it.” This
message was uniformly understood by
local USDA officials to mean that the
applications were not to be processed, but
rather that actions were to be taken to
make it difficult or impossible for the
inquiring parties to meet qualifications and
deadlines, the intention being that the
applicants would become so frustrated that
they wou ld withdra w th eir loan
applications, or that delays would result in
disqualification or other justification for
denial of the applications. In Chiang’s
submission, this became known in the
local USDA office as the “Impossible
Yes”: an application would be given out,
but the USDA would make it impossible
for the putative applicant to have the
application fairly processed.
Furthermore, Chiang alleges corruption
in the administration of the loan program
in the Virgin Islands—in the rare instances
in which loans were approved—through
favoritism to local contractors who were
not building homes in a safe and
workmanlike manner. This resulted, it is
said, in placing Virgin Islanders into
i n a d e q u ate a n d u n s a f e h o u s in g ,
r e presenting a fu rt he r f o rm o f
discrimination against Virgin Islanders.
At the behest of Chiang, the District
Court granted a Rule 23(b)(3) certification
to a class of
All persons who are Black, Hispanic,
female and /or Virgin Islanders who
applied or attempted to apply for,
and/or received, housing credit,
services, home ownership, assistance,
t r a in i n g , a n d / o r e d u c a t io n a l
opportunities from the USDA through
its Rural Development offices (and
predecessor designations) located in
the U.S. Virgin Islands at anytime
between January 1, 1981 and January
10, 2000, and who believe they were
discriminated against on the basis of
race, gender or national origin.
In Veneman’s submission, the District
Court abused its discretion when it
certified what she describes as a sprawling
and unmanageable class action seeking
$2.8 billion in damages from the USDA.
She complains that the class definition is
overbroad, and that it is internally
inconsistent insofar as it encompasses
every Virgin Islander who applied or
attempted to apply for any of the different
Rural Housing Service (“RHS”)1 credit
1 The Rural Housing Service is an
agency of the USDA. Formerly known
as the Rural Housing and Community
Development Service, “RHS” is a
successor agency to the Farmers Home
Administration, which ceased to exist in
1994. RHS operates a broad range of
programs to address rural America’s
need for single-family and multi-family
housing as well as health facilities, fire
and police stations, and other community
structures. To promote its goals, RHS
administers direct loan guarantees and
grants through state and local offices
located throughout the nation.

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and benefit programs during a nineteen-
year period (from 1981 to 2000), including
those with non-credit claims, those with
untimely claims, and Caucasian loan
applicants who the complaint alleges
benefitted from the discrimination.
In Veneman’s view, not only is the
class so sweeping that the threshold
requirements of Rule 23(a) likely are not
satisfied, but even if the class definition
were deemed to meet Rule 23(a)’s
standards, the class fails Rule 23(b)(3)’s
more stringent requirements because
common issues do not predominate over
individual ones and class treatment would
not be superior to individual adjudications.
Central to Veneman’s contention is the
argument that to prevail on his or her
individual claims under ECOA, each class
member would need to demonstrate that
the USDA’s proffered reason for denial of
credit (or loan for defective property) was
a pretext for discrimination on the basis of
race, gender or national origin. According
to Veneman, liability on these claims can
only be determined through case-by-case
inquiries into the specifics of each
transaction, and most particularly, the loan
eligibility of each putative class member.
If the class member could not have
obtained the loan, then he or she cannot
succeed in his or her claim of
discrimination, regardless of the existence
of the alleged waiting list.
Chiang counters this with the
contention that determination of loan
eligibility would, in fact, be susceptible to
class proof because those determinations
were purely ministerial in nature. In her
supplemental exhibit 1, Chiang submits a
chart for our consideration which she
claims was the primary document used by
USDA employees to determine eligibility,
contending that those employees did not
have any particular knowledge or skill, but
rather, were mere clerks charged with
matching income to columns on the chart.
According to Chiang, the evaluations of
eligibility constituted neither in-depth nor
discre tionary assess men ts of th e
circumstances of each applicant, and hence
are subject to common proof.
Veneman is surely correct that the
plaintiff in an ECOA case must establish
that he or she was qualified for loan
eligibility as part of the prima facie case.
The record developed thus far leaves us in
some doubt as to the validity of Chiang’s
contentions about the susceptibility of
eligibility determinations to common
proof. Nevertheless, we believe that this
question will be best resolved by the
District Court in the first instance. We
have no doubt, however, that the question
of the existence vel non of the “phony”
waiting list—and associated techniques
used to prevent Virgin Islanders from
gaining access to loan applications and
loans—is a matter appropriate for class
determination. We will therefore affirm
that portion of the District Court order
certifying the class pursuant to Rule
23(c)(4), which allows a class action to be
maintained with respect to particular
issues— in this case the waiting list— while
simultaneously reserving for the District
Court the authority to determine whether
eligibility for loans can be certified as a
question suitable for class adjudication.
We are not troubled by the seeming

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internal contradiction in the class
definition because, inasmuch as the
plaintiffs’ primary claim is that they were
discriminated against for being Virgin
Islanders, a cognizable class, we will treat
the claim as such and modify the District
Court’s certification order accordingly.
While some claims allege individual
gender and race discrimination, the
number of such complaints appears to be
small, and we think that certifying a class
of Virgin Islanders best captures the
plaintiffs’ arguments. Since 76% of the
population of the U.S. Virgin Islands is
black and 14% is Hispanic, it is possible
that the claims of racial and national origin
discrimination may overlap. We therefore
leave to the plaintiffs the option to seek to
amend the class definition to allege racial
and gender, rather than national origin,
discrimination; any decision on such
amendment will be for the District Court
in the first instance. Additionally, for
reasons explained infra, we will further
modify the certification order to eliminate
the reference to the class members’
“belief” in discrimination, thereby
removing such a subjective criterion from
the class definition.
As the foregoing suggests, the issues to
be dealt with on a class basis do not
present predominance, superiority, or
manageability problems. See Fed. R. Civ.
P. 23(b)(3). Neither do we find any merit
in Veneman’s untimeliness claims, which
are not properly before us at this stage of
the case. Finally, because the other
aspects of the case are not suitable for
class determination, i.e., inclusion of the
c l a s s - b a s e d c l a i m s o f c o r r u p t
administration, and, on the present record,
the eligibility facet of liability, we will
vacate the District Court’s order in all
other respects.
I. Facts and Procedural History
We begin with a recitation of the
allegations supporting class certification,
derived both from the first amended
complaint and from extensive informal
class action discovery (largely exchange of
documents). We note that it is not
necessary for the plaintiffs to establish the
merits of their case at the class
certification stage, and that, in determining
whether a class will be certified, the
substantive allegations of the complaint
must be taken as true. See Eisen v.
Carlisle & Jacquelin, 417 U.S. 156, 177-
78 (1974).
Between January 1, 1981 and January
10, 2000, thousands of Virgin Islanders
requested loan applications from the
USDA in order to purchase or make
repairs on homes. As noted above, Chiang
alleges that all class members who
requested home loan applications were
forced to put their names on an illegal
waiting list instead of actually being given
an application.2 Chiang contends that the
2 From 1995 to 1999, Chiang worked
as a special assistant to the Governor of
the Virgin Islands. Although she filed
this suit as a private citizen, she explains
that she first became aware of the extent
of the discrimination problem due to her
governmental position which led her to
receive “hundreds, if not thousands, of
oral complaints from Virgin Islanders
regarding what was perceived as a
longstanding and widespread systematic

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existence of this list, generated in the
USDA regional office in Vermont which
had jurisdiction over the Virgin Islands,
was in direct contravention of USDA
instructions and regulations, and that no
equivalent list existed anywhere else in the
United States. Chiang represents that the
justification USDA gave for placing class
members on the waiting list was that (1)
the USDA did not have any applications
and (2) applications were not being given
out because the USDA had no money
available for loans. However, Chiang
contends that applications were, in fact,
available, and that a certain low level of
funding was also available despite her
allegation that the USDA failed to seek or
obtain proper levels of funding for rural
housing loans for each of the 19 years at
issue.3
According to Chiang, each named
plaintiff in this law suit filed a
discrimination complaint with the USDA
prior to this action, or authorized one to be
filed on his or her behalf.4 In March 1997,
discrimination” and that she was
“inundated with complaints of USDA
discrimination from all quarters.”
3 Chiang also contends that because
class members were placed on the
alleged waiting list, they were never
entered into the official USDA database
which tracks the number of loan
applications in each jurisdiction. She
further submits that due to that lack of
data entry, the level of need for funding
was never properly assessed and so was
never allocated to the Virgin Islands.
The lack of funding, she maintains, was
then used as a reason for putting class
members on the waiting list, thereby
keeping them out of the database and
creating a vicious circle.
There is, however, no basis in the
record to support the contention that the
amount of funding is tied to the number
of persons who seek loans. The
methodology for allocation of housing
funds can be found in 7 C.F.R. §§
1940.552 and 1940.565. The formula is
based on (1) the State’s percentage of the
National number of rural occupied
substandard units; (2) the State’s
percentage of the N ational rural
population; (3) the State’s percentage of
the National rural population in places of
less than 2,500 population; (4) the State’s
percentage of the National number of
rural households between 50 and 80
percent of the area median income; and
(5) the State’s percentage of the National
number of rural households below 50
percent of the area median income. On
this record, it appears that none of these
factors are derived from the USDA’s
application database.
To the extent that Chiang alleges an
unfair allocation of funds to the Virgin
Islands, as opposed to discriminatory
behavior on the part of the USDA in
administering those funds, she seeks
relief in the wrong forum and would be
better served directing her complaint
elsewhere.
4 Those authorizations were apparently
directed to Chiang in the course of her
employment in the Governor’s office.
When she fielded complaints about the
USDA’s alleged discriminatory behavior,

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Chiang and 48 other named plaintiffs filed
an administrative class program complaint
of discrimination with the USDA’s Office
of Civil Rights in Washington, D.C. The
named plaintiffs claim never to have
received any type of acknowledgment of
their complaints from the USDA.
However, in response to mounting
discrimination complaints, the USDA sent
an investigative team to the Virgin Islands.
The USDA team conducted a n
investigation and documented what
Chiang styles the “Highway to Nowhere”
in an internal USDA report entitled “Civil
Rights Compliance Review for the U.S.
Virgin Islands, October 19-29, 1997.” The
report—which was never officially
adopted by the USDA—identified two
specific techniques used to deny class
members access to the loans.5 Those
techniques were (1) creating the phony,
illegal “waiting list,” and (2) implementing
the “impossible yes” scheme. (See JA
384-411). This lawsuit followed.
The plaintiffs filed their initial
complaint on January 11, 2000 and filed
their first amended complaint (“FAC”) on
March 23, 2001. The FAC named 39
plaintiffs and sought class certification.
Veneman opposed class certification on
t h e grou nds th at the threshold
requirements of Fed. R. Civ. P. 23(a) had
not been met. Veneman also argued that
the class definition was fatally overbroad
because it failed to define the class by
reference to any discriminatory practice,
included untimely claims and claims
arising out of RHS’s non-credit benefit
programs, and was not limited by race or
gender as it included all Virgin Islanders.
On February 28, 2003, the District
Court filed its decision certifying the class
under Rule 23(b)(3).6 The Court found
that the FAC alleged “a pattern and
practice of discrimination against each
class member.” It concluded that the
pattern and practice manifested itself in
three ways: (1) some members were
denied an application package and told to
put their names on an unlawful waiting
list; (2) RHS provided other members with
applications, but then made it impossible
for them to obtain credit by deliberately
delaying and frustrating the process so that
the program would run out of funds, the
she would ask the complainant to give her
permission to lodge an officia l
discrimination complaint with the USDA.
5 Veneman refuses to be bound by the
contents of the report, calling it an
“unofficial and preliminary draft” filled
with “hearsay and baseless innuendo.”
(Reply Brief, P.7, note1).
6 The District Court explicitly chose
“not to certify this class under (b)(2)”
because even though “Rule 23(b)(2)
certification can be particularly well-suited
to civil rights actions charging class
discrimination . . . certification is not
proper where ‘the appropriate final relief
relates exclusively or predominantly to
money damages.’” (Op. 14, note 4)
(quoting Advisory Committee Notes to
Rule 23 (b) (2)). The District Court
concluded that, although some measures of
injunctive relief were sought, “the
equitable remedies probably do not
predominate.” (Op. 14, note 4).

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applicant would become ineligible or the
applicant would give up; and (3) even
plaintiffs who did obtain loans were
denied services such as loan workouts and
payment moratoria because of their race,
gender, or national origin.
In making these findings, the District
Court rejected Veneman’s argument that
the class definition improperly turned on a
class members’ state of mind—i.e.,
whether they “believed” themselves to
have suffered discrimination. It rejected
Veneman’s argument that Rule 23(a)’s
requirements were not met. The Court
also found that the class was sufficiently
cohesive to warrant adjudication by class
action given that the common question in
each count was whether the USDA’s
practice and policy discriminated against
Blacks, Hispanics, women, and/or Virgin
Islanders as a class, and that this common
question predominated over differences in
the factual circumstances of the individual
plaintiffs. The Court additionally held that
adjudicating this case as a class action was
superior to having numerous individual
lawsuits brought against the USDA.
On July 22, 2003, a motions panel of
this Court granted Veneman’s petition for
permission to take an interlocutory appeal
under Fed. R. Civ. P. 23(f). The District
Court had jurisdiction pursuant to 28
U.S.C. § 1331. We have jurisdiction over
this appeal pursuant to 28 U.S.C. §
1292(e).
II. Class Certification
A. Standard of Review
In order to obtain class certification,
plaintiffs must establish that all four
requisites of Rule 23(a) and at least one
part of Rule 23(b) are met. See Baby Neal
v. Casey, 43 F.3d 48, 55 (3d Cir. 1994)
(citing Wetzel v. Liberty Mutual Ins. Co.,
508 F.2d 239 (3d Cir. 1975)). We review
the District Court’s decisions on class
certification for abuse of discretion. See In
re LifeUSA Holding Inc., 242 F.3d 136,
143 (3d Cir. 2001). The District Court
abuses its discretion only if its decision
“rests upon a clearly erroneous finding of
fact, an errant conclusion of law or an
improper application of law to fact.” In re
Gen. Motors Corp. Pick-Up Truck Fuel
Tank Prods. Liab. Litig., 55 F.3d 768, 783
(3d Cir. 1995).
B. Rule 23(a)
In any class certification, the threshold
issue is whether the four requisites of Rule
2 3 ( a ) , nu m er os ity, com mo nality,
typicality, and adequacy, are met. Rule
23(a) states:
One or more members of a class
m a y s u e o r b e s u e d as
representative parties on behalf of
all only if (1) the class is so
numerous that joinder of all
members is impracticable, (2) there
are questions of law or fact
common to the class, (3) the claims
or defenses of the representative
parties are typical of the claims or
defenses of the class, and (4) the
representative parties will fairly
and adequately protect the interests
of the class.
Fed. R. Civ. P. 23(a).
Veneman does not now contest
numerosity, typicality, or adequacy of

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representation. Rather, she focuses on the
commonality prong, arguing that the
eligibility determinations for loans are not
susceptible to common proof. She also
argues that the definition contains an
internal contradiction, and that the class as
certified is fatally overbroad.
1. Commonality
Veneman’s first objection to the class
certification is that there are not sufficient
“questions of law or fact common to the
class.” See Fed. R. Civ. P. 23(a)(2). But
the commonality standard of Rule 23(a)(2)
is not a high bar: it does not require
identical claims or facts among class
member, as “the commonality requirement
will be satisfied if the named plaintiffs
share at least one question of law or fact
with the grievances of the prospective
class.” Johnston v. HBO Film Mgmt., 265
F.3d 178, 184 (3d Cir. 2001). We find that
Chiang’s allegations of discriminatory
conduct directed at the entire class do
present a common question of law.
As noted above, ECOA makes it
“unlawful for any creditor to discriminate
against any applicant, with respect to any
aspect of a credit transaction . . . on the
basis of race, color, religion, national
origin, sex or marital status, or age.” 15
U.S.C. § 1691(a). The regulations
governing ECOA define a “credit
transaction” as “every aspect of an
applicant’s dealings with a creditor
regarding an application for credit or an
existing extension of credit (including, but
not limited to, information requirements;
investigation procedures; standards of
creditworthiness; terms of credit;
furn ishing of credit information;
revocation, alteration, or termination of
credit; and collection procedures).” 12
C.F.R. § 202.2(m) (emphasis added). A
potential creditor’s refusal to provide an
application form is also part of a “credit
transaction” within the meaning of the
statute, see Rosa v. Park West Bank &
Trust Co., 214 F.3d 213 (1st Cir. 2000).
Indeed, a refusal to provide a loan
application “on the basis of race, color,
religion, national origin, sex or marital
status, or age” would be a prototypical
ECOA violation, as it would deny
members of a protected class any access to
credit.
Plaintiffs here allege discrimination at
several different points in the credit
application process, from refusal to
provide application forms when requested,
through delaying tactics in the processing
of applications, to discrimination in
administration of loan proceeds. Given the
broad language of 12 C.F.R. § 202.2(m),
we think that all of these forms of
discrimination fall under the purview of a
“credit transaction,” and so constitute
ECOA violations. Thus, even though
many putative class members never even
made it to the official application process
because they were denied applications in
the first instance, their requests for—and
denial of—applications are nevertheless
cognizable under ECOA.
As presented by Chiang, and as
certified by the District Court, the heart of
the complaint alleges discriminatory
attempts to keep class members from
having access to rural housing loan
programs in the Virgin Islands. Chiang
submits that the so-called “phony” waiting

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list and the other practices that allegedly
contributed to prevent Virgin Islanders
from having access to loans are all
susceptible to common proof. Those
multifarious practices include the
following: the refusal to accept
submission of loan applications from class
members; the refusal to issue loan
applications; the refusal to process loan
applications; the refusal to provide reasons
for failing to process the loan applications;
the unlawful denial of access to
established procedures and national
funding computer systems; the refusal to
notify class members of eligibility for
loans and assistance; the refusal to employ
mandated priority funding system; the
refusal to engage in mandated processing
procedures to determine eligibility; the
concealment of discriminatory acts by
refusal to issue notification stating reasons
for failure to process; the failure to issue
notices of available funding and requests
for information needed to process a loan;
the refusal to notify class members of next
quarter funding availability; the
concealment of class members’ attempts to
access programs by refusal to enter their
information in national database; the
failure to advise class members about
requirements for keeping loan applications
active; the unlawful denial of access to
non-program loans; the refusal to advise
class members of their right to review and
appeal; the unlawful refusal to provide for
administrative review of non-appealable
decisions; the failure to investigate and
process discrimination complaints; the
denial of access to non-pro gram
procedures for assumption of existing
USDA loans and properties; the systematic
denial of access to housing programs; and
the unlawful discouragement and refusal to
process applications by way of the
“impossible yes.”
In our view, these claims allege a
uniform course of conduct common to all
class members subject to common proof in
a single trial. In Hoxworth v. Blinder,
Robinson & Co., 980 F.2d 912, 924 (3d
Cir. 1992), we held that a “uniform
scheme” or “uniform course of conduct”
would support a finding of predominance
even where injuries resulting from a
fraudulent securities scheme were different
for each class member; while imposing a
h i g h e r s t a n d a r d , p re p o n d e r a n c e
presupposes commonality. See also Int’l
Brotherhood of Teamsters v. United States,
431 U.S. 324, 336 (1977) (holding that a
pattern or practice would be present “only
where the denial of rights consists of
something more than an isolated, sporadic
incident, but is repeated, routine, or of a
generalized nature”). Chiang has alleged
such a practice here. We will therefore
affirm the class certification insofar as it
deals with the waiting list and associated
techniques.
If the waiting list and associated
techniques claims are resolved in
plaintiffs’ favor, they will have satisfied
the first two prongs of the ECOA prima
facie case: membership in a protected
class (viz., Virgin Islanders: see infra Part
II.B.2) and application (or, here, attempted
application) for credit. The third and
fourth prongs, however—that the applicant
was qualified for the credit and that,
despite that qualification, defendant denied

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the credit— may prove harder to
adjudicate on a class-wide basis.
Chiang contends that the issues are
appropriate for class certification because
determinations of loan eligibility are a
purely ministerial matter. At oral
argument before this Court, counsel for
Chiang submitted a chart concerning
income limit qualifications for certain
RHS loans. Counsel argued that the one-
page document demonstrated that
qualification for the loans at issue was a
mechanical function that could be
undertaken by any low-level clerk simply
b y r e a d i n g t h e c h a r t . S e e
http://www.rurdev.usda.gov; see also 7
C.F.R. § 3550.
Veneman, on the other hand, submits
that determining eligibility for loans is
quite complex and involves the exercise of
discretion. She contends that in order to
show that he or she was qualified for a
loan, each applicant would need to
demonstrate that he or she met each of the
regulatory requirements including income
limitations and ability to repay the loan.
See 7 C.F.R. § 3550.53. According to
these regulations, two different kinds of
income must be considered: repayment
income and eligibility income. See 7
C.F.R. § 3550.54. Repayment income
measures the income which the applicants
have available to repay the loan, while
eligibility income is based on the income
of all members of the household.
Veneman submits that although it may
seem mechanical to take an applicant’s
hourly income and multiply it by the
number of yearly working hours, such a
calculation is far from easy to perform,
especially when applicants may have
unstable work histories, the work in
question may be seasonal, or continued
employment may be questionable—to
name just a few of the possible variables.
Veneman also submits that class members
would need to show that the property for
which they sought a loan met the criteria
for collateral on the loan. See 7 C.F.R. §§
3550.56-57. In short, she disputes the
notion that loan eligibility could be a
mechanical question proper for class
adjudication.
Federal Rule of Civil Procedure
23(c)(4) provides that “[w]hen appropriate
(A) an action may be brought or
maintained as a class action with respect to
particular issues . . . .” Rule 23(c)(4) both
imposes a duty on the court to insure that
only those questions which are appropriate
for class adjudication be certified, and
gives it ample power to “treat common
things in common and to distinguish the
distinguishable.” Jenkins v. United Gas
Corp., 400 F.2d 28, 35 (5th Cir. 1968).
Because we believe that the two
questions—the existence of the phony
waiting list and associated techniques on
the one hand, and the feasibility of class-
wide determinations of loan eligibility on
the other—are easily distinguishable, we
will affirm certification on the former and
leave it to the district court to determine
whether class certification might be
appropriate on the latter. We note in this
regard that courts commonly use Rule
23(c)(4) to certify some elements of
liability for class determination, while
leaving other elements to individual

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12
a d j u d i ca t i o n — o r , p e r h a p s m o r e
realistically, settlement. See, e.g.,
Carnegie v. Household Int’l, Inc., 376 F.3d
656, 661 (7th Cir. 2004) (Posner, J.) (“[I]t
may be that if and when the defendants are
determined to have violated the law
separate proceedings of some character
will be required to determine the
entitlements of the individual class
members to relief.”); Mullen v. Treasure
Chest Casino, LLC, 186 F.3d 620, 623 (5th
Cir. 1999).7
7 B e c a u s e w e a r e n o t decid ing th e
question of appropriateness of class
certifica tion for loan e ligibilit y
determinations, we need not rule on
Chiang’s “Motion to Correct the Record
and Reply” in which she wishes to
introduce two exhibits. The first document
was presented to us only during the course
of oral argument and consists of the one
page income qualification chart. Since the
District Court will be called upon to make
the determination as to whether class
certification is appropriate for determining
the question of loan eligibility, that Court
should decide how to proceed with the
request. The second document relates to
evidence (past loan applications) allegedly
destroyed by the USDA (willfully
according to Chiang; in the process of
routine destruction of records, according to
Veneman). To the extent that the alleged
intentional destruction of this evidence
would have bearing on class certification
by making it impossible for the USDA to
undertake the individual review of all class
members’ application files that it
advocates, the District Court will again be
in a better position to evaluate that request.
Similarly, we need not decide what the
applicable test would be to rebut the prima
facie case. Veneman would have us hold
that a “but for” test applies, and that
putative class members would have to
show that but for the discrimination, a loan
would have been granted in each particular
case. Chiang, on the other hand, argues
that the burden-shifting framework set
forth in McDonnell Douglas Corp. v.
Green, 411 U.S. 792 (1973), applies
because ECOA should be construed in
accordance with the law of Title VII
discrimination cases.
We have not yet had occasion to decide
whether it is appropriate to shift the burden
to a defendant to rebut a prima facie claim
of discrimination under ECOA. Several of
our sister Courts of Appeals have so held,
but one Court of Appeals has questioned
whether the McDonell Douglas model can
be imported from the field of employment
discrim ination to that of credit
discrimination. See Lewis v. ACB Bus.
Servs., Inc., 135 F.3d 389, 406 (6th Cir.
1998) (holding that ECOA’s legislative
history suggests reviewing claims of
discrimination using the same burden
allocation system found in Title VII);
Moore v. United States Dept. of
Agriculture, 55 F.3d 991, 995 (4th Cir.
1995) (noting that the McDonnell Douglas
test would apply to ECOA case but for the
fact that plaintiffs had direct evidence of
discrimination); Mercado-Garcia v. Ponce
Fed. Bank, 979 F.2d 890, 893 (1st Cir.
1992) (noting that the language of ECOA
and EEOA is “nearly identical”); Bhandari
v. First Nat’l Bank of Commerce, 808 F.2d
1082, 1100-01 (5th Cir. 1987) (explaining

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13
2. Internal Contradiction
The USDA highlights an internal
contradiction in the class definition, and
argues that this contradiction is so
egregious that it renders the class, if not
fatally overbroad, then at least logically
impossible. In certifying the class, the
District Court defined its members as “all
persons who are Black, Hispanic, female
and/or Virgin Islanders.” The USDA
argues that a class consisting of Blacks,
Hispanics, women, and/or Virgin Islanders
is inherently contradictory as it would
necessarily both include and exclude white
males. We agree. However, rather than
decertify the class, as the USDA urges us
to do, we prefer to take a less drastic
course and simply modify the class
definition to remove the ambiguity. See
28 U.S.C. § 2106 (entitling us to “affirm,
modify, vacate, set aside or reverse any
judgment, decree, or order”). Pursuant to
the modification, the class definition in
relevant part will now read “[a]ll Virgin
Islanders who applied or attempted to
apply for . . . and . . . were discriminated
against on the basis of national origin.”
We modify the class definition to
include all “Virgin Islanders,” rather than
to include only “persons who are Black,
Hispanic, [and/or] female,” because we
understand Chiang to be alleging mainly
discrimination against all Virgin Islanders,
rather than racial discrimination among
Virgin Islanders. However, at various
points in her submissions, Chiang does in
fact appear to be alleging individual racial
and gender discrimination against Black,
Hispanic, and female Virgin Islanders (and
in favor of white male Virgin Islanders).
The number of specific complaints in these
areas appears to be small in comparison to
the claims of discrimination against all
Virgin Islanders. We note that 76% of the
population of the U.S. Virgin Islands is
Black, and 14% is Hispanic, see U.S.
Census Bureau, Population and Housing
P r o f i l e : 2 0 0 0 , a t
http://www.census.gov/Press-Release/w
ww/2002/usvistatelevel.pdf; thus, it is
quite possible that claims of racial and
national-origin discrimination might
overlap here. At all events, we reform the
c la s s d e f i n it i o n b a s e d o n o u r
understanding of the main thrust of
Chiang’s claims, but we leave it open to
the plaintiffs to seek to amend the class
definition should they actually want to
allege racial and gender, rather than
national origin, discrimination. We agree
with Veneman, however, that plaintiffs’
current allegations of both kinds of
discrimination present an in ternal
contradiction.
that language of ECOA is “closely related”
to that of EEOA and “was intended to be
interpreted similarly”); Williams v. First
Fed. Sav. & Loan Ass’n, 554 F. Supp. 447,
448-49 (N.D.N.Y. 1981) (“Protections
afforded by the ECOA should be applied
in the same manner as those created by”
the EEOC), aff’d, 697 F.2d 302 (2d Cir.
1982). But see Latimore v. Citibank Fed.
Sav. Bank, 151 F.3d 712, 713-15 (7th Cir.
1998) (holding that lack of direct
competition between applicants in credit
context renders analogy to Title VII cases
flawed).

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14
Although we have not previously held
that “Virgin Islanders” is a legitimate
designation of national origin for purposes
of a federal discrimination claim, we have
certainly implied it. See Moravian Sch.
Advisory Bd. of St. Thomas v. Rawlins, 70
F.3d 270, 278 (3d Cir. 1995) (Becker, J.
concurring) (tacitly assuming that “Virgin
Islander” is an acceptable designation of
national origin in a federal discrimination
suit). To the extent that the USDA objects
to the inclusion of the term Virgin
Islanders in the class definition, we
understand the objection to be based on the
confusion it creates when contrasted to
persons who are “Black, Hispanic, [or]
female,” rather than on the ground that
“Virgin Islander” cannot be a legitimate
national origin designation. We have held,
for example, that the term Puerto Rican
can designate national origin for purposes
of a federal discrimination suit, see, e.g.,
DiMarco-Zappa v. Cabanillas, 238 F.3d
25, 36 (1st Cir. 2001); c.f. Fuentes v.
Perskie, 32 F.3d 759, 763 (3d Cir. 1994)
(accepting the District Court’s conclusion
that the plaintiff made out a prima facie
case of employment discrimination based
on his Puerto Rican heritage), and see no
reason to distinguish the cases as to the
national origin designations.
3. Overbreadth
Veneman also contends that class
certification should be set aside on the
ground that the certified class is
“overbroad.” In Veneman’s universe, it
seems that overbreadth is being used as a
catch-all to address a number of issues that
do seem potentially to bear on class
certification without fitting neatly into any
other category. While we note that many
of these issues seem to relate at least in
part to the commonality prong of Rule
23(a)(2), we will nonetheless analyze them
under Veneman’s convenient heading of
“overbreadth.”
a.
First, Veneman argues that the class
definition includes untimely claims. She
submits that, by attempting to encompass
credit discrimination claims dating back to
January 1, 1981, Chiang’s definition
ignores ECOA’s two-year statute of
limitations. Veneman contends that
having brought suit on January 11, 2000,
the class may not sue based on acts of
discrimination predating January 11, 1998,
with the only exception being for those
individuals who filed an “eligible
complaint” about such an act with the
USDA by July 1, 1997.8 However, we
believe that the issue of timeliness goes to
the merits of the case, not to the definition
of the class. The claims therefore can not
be prejudged to deny certification. See
Huff v. ND Cass Co., 485 F.2d 710, 714
(5th Cir. 1973) (en banc) (holding that
requiring a class representative to prove
the merits of his or her claim before being
able to represent a class is reversible
error); see also Eisen v. Carlisle &
Jaquelin, 417 U.S. 156, 178 (1974) (“In
determining the propriety of a class action,
8See Omnibus Consolidated & Emergency
Supplemental Appropriations Acts, 1999,
Pub. L. No. 105-277, § 741, 112 Stat. 2681-30
(Oct. 21, 1998) (codified at 7 U.S.C. § 2279
note).

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15
the question is not whether the plaintiff or
plaintiffs have stated a cause of action or
will prevail on the merits, but rather
whether the requirements of Rule 23 are
met.”) (citation omitted); Gruber v. Price
Waterhouse, 117 F.R.D. 75, 80 (E.D. Pa.
1987) (holding that a statute of limitations
defense goes to the merits and hence is not
an appropriate objection in the context of
class certification).
b.
Second, Veneman argues that in this
case the District Court approved a class
definition that was explicitly rejected in
Williams v. Glickman, Civ. No. 95-1149,
1997 U.S. Dist. LEXIS 1683 (D.D.C. Feb.
14, 1997), a case in which the plaintiffs
defined their class as:
All African American or Hispanic
American persons who, between
1981 and the present, have suffered
from racial or national origin
discrimination in the application for
or the servicing of loans or credit
from the FmHA (now Farm
Services Agency) of the USDA,
which has caused them to sustain
economic loss and/or mental
anguish/emotion [sic] distress
damages.
Williams, at *10.
In Williams, the Court rejected this
definition as overbroad, finding that “[I]t is
not limited to any specific policy or
practice which is alleged to be
discriminatory; instead, the class purports
to include those blacks and Hispanic
farmers who have suffered any type of
discrimination in their dealings with the
FmHA.” Williams, at *14 (emphasis
added). The USDA argues that Chiang’s
proposed class is an exact parallel to that
rejected in Williams. We disagree.
Besides the fact that both putative
classes share references to Blacks,
Hispanics, and loan discrimination, they
actually have little in common. In
Williams, plaintiff farmers filed suit
against defendant the USDA claiming that
the Farmers Hom e Administration
(FmHA) discriminated against them based
on race or national origin. Like the
putative class here, the farmers sought
recovery under the Equal Credit
Opportunity Act. However, in Williams,
the Court ruled that the farmers’ bare
allegation of a “common thread of
discrimination” did not satisfy the
requirement that potential class plaintiffs
make a “specific presentation” identifying
the common questions of law or fact.
Chiang’s class, on the other hand, did just
that in alleging the existence of a uniform
scheme aimed at preventing class members
from gaining access to loans. We
therefore find Williams distinguishable.
It is no objection to Chiang’s class that
the allegations of a uniform scheme are not
contained in the class definition itself: we
read Williams to hold that the proposed
class was “overly broad” because of the
plaintiffs’ varied factual allegations of
discrimination, lacking Rule 23(a)(2)
commonality, rather than because of any
lack of specificity in the class definition
itself. In fact, Judge Flannery objected to
the inclusion o f all egations of
discrimination in the class definition,
holding that “[b]ecause the Court must

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16
answer numerous fact-intensive questions
before determining if an individual may
join the class, the proposed class is not
clearly defined.” Williams, 1997 U.S.
Dist. LEXIS 1683, at *13. Thus Williams
cannot stand for the proposition that all
allegations of a uniform scheme of
discrimination must be included in the
class definition—rather, it stands for the
opposite proposition, that class definitions
must be free of merits allegations that
require extensive factual findings.9
c.
Veneman also argues that the class is
overbroad because it consists of two
groups with conflicting interests. See
Penn. Dental Ass’n v. Medical Serv. Ass’n
of Penn., 745 F.2d 248, 263 (3d Cir. 1984)
(upholding District Court’s refusal to
certify class where proposed class
consisted of two groups with inherently
conflicting interests). More specifically,
Veneman urges us to decertify the class on
the basis that there is a significant risk of
intra-class conflicts between those class
members who received loans and those
who did not, as well as between those who
have claims concerning their properties
and those who do not.
We do not see any of the purported
conflicts of interests that Veneman claims
are present here. Rather, we believe that
the class definition properly identifies a
group of people who attempted to gain
access to the USDA’s Rural Housing
program in the Virgin Islands and were
systematically denied that access. The fact
that some class members were able to
make more progress than others does not
translate into intra-class conflict, nor does
it mean that the class as defined is fatally
overbroad.
d.
Finally, Veneman argues that defining
a class by reference to those who “believe”
t h e y w e re discriminated agai n st
undermines the validity of the class by
introducing a subjective criterion into what
should be an objective evaluation. We
agree.10 See, e.g., NOW v. Scheidler, 172
F.R.D. 351, 357, 1997 U.S. Dist. LEXIS
4036, at *9 (N.D. Ill. Mar. 28, 1997)
(explaining that an identifiable class exists
if its members can be ascertained by
reference to objective criteria and that
when membership in a class is defined
solely by state of mind, the class is
9For further discussion of merits
allegations in class definitions, see infra,
Part II.B.3.d.
10Chiang argues that class certification
based on a “belief in discrimination” was
already stipulated to by the USDA in a
previous class action for discrimination.
In Pigford v. Glickman, where a class of
African American applicants for loans
filed racial discrimination complaints
against the USDA, the final consent decree
included the phrase “All African American
farmers … [who] believed that they were
discriminated against on the basis of race.”
Pigford v. Glickman, 185 F.R.D. 82, 92
(D.D.C. 1999). While this is true, we fail
to see how the USDA’s prior stipulation to
language in a consent decree before a
different court affects the class definition
in this case.

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17
generally deemed unascertainable); Zapka
v. Coca-Cola Co., No. 99 CV 8238, 2000
U.S. Dist. LEXIS 16552, at *7 (N.D. Ill.
Oct. 26, 2000) (noting that an identifiable
class does not exist if membership in the
class is contingent on the state of mind of
the prospective members); Fears v.
Wilhelmina Model Agency, Inc., No. 02
Civ. 4911, 2003 U.S. Dist. LEXIS 11897,
at *6-*7 (S.D.N .Y. July 15, 2003)
(explaining that membership in a class
should rest on objective criteria that are
administratively feasible for the court to
rely on to determine whether a particular
individual is a member of the class).
While Veneman is technically correct,
we think the issue to be a red herring, for
“belief” seems to us to be mere surplusage.
It is clear enough that Chiang and the other
named plaintiffs believe that they were
discriminated against. See, e.g., Fed. R.
Civ. P. 11(b) (requiring that pleadings
represent a reasonable belief that claims
are warranted by law and have evidentiary
support). Such belief in discrimination,
however, is not a prerequisite for inclusion
in the putative class. Our earlier
modification to the class definition, see
supra Part II.B.2, makes clear that we are
certifying a class to try an issue common
to all Virgin Islander loan applicants:
whether USDA engaged in a pattern of
discrimination via phony waiting lists and
delaying tactics. This issue is properly
adjudicated on behalf of a class consisting
of all Virgin Islander applicants during the
relevant period; if it is adjudicated against
Veneman, then further proceedings will be
appropriate to determine which, if any,
class members are actually entitled to
relief. The putative class members’ belief
that they were discriminated against is
irrelevant at the class certification stage.
For similar reasons, we decline to
modify the class definition to include
Virgin Islanders who “claim that they were
discriminated against,” or those who “were
discriminated against.” “Claim” seems to
be a mere substitute for “believe” and “a
class defined with reference to the state of
mind of its members will not be allowed to
proceed under Rule 23.” 7A Wright,
Miller & Kane, Federal Practice &
Procedure § 1760, at 124-26. Moreover,
the Manual for Complex Litigation
(Second) has recommended that courts
should “avoid class definitions that depend
on . . . the seeking of relief (for example,
persons claiming injury or seeking
damages from some stated practice),”
Manual for Complex Litigation (Second) §
30.14 (1985), though we note that later
editions of the MCL have eliminated that
stricture, see Manual for Complex
Litigation (Fourth) § 21.222 (2004).
Limiting the class to those who were in
fact discriminated against would seem to
prejudge the merits of the case, contrary to
the teaching of Eisen v. Carlisle &
Jacquelin, 417 U.S. 156, 177 (1974); see
also 5 James Wm. M oore et al., Moore’s
Federal Practice ¶ 23.21[3][c] (3d ed.
1999) (“A class definition is inadequate if
a court must make a determination of the
merits of the individual claims to
determine whether a particular person is a
member of the class.”).
We will therefore modify the class
definition to eliminate the notion of

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18
“belief.” In combination with our first
modification, see supra Part II.B.2. the
class will now be defined as:
All Virgin Islanders who applied or
attempted to apply for, and/or
received, housing credit, services,
h o m e ownership, assistance,
training, and/or educational
opportunities from the USDA
through its Rural Development
o f f i c e s ( a n d p r e d e c e s s o r
designations) located in the U.S.
Virgin Islands at any time between
January 1, 1981 and January 10,
2000.
Thus, with the modifications we have
made to the class definition, and keeping
in mind the caveats about loan eligibility
we have set forth, we are confident that the
waiting list question satisfies all four
requisites of Rule 23(a).
C. Rule 23(b)
In addition to meeting the prerequisites
of Rule 23(a), the plaintiffs must
demonstrate that the class would satisfy
any one of the three subsections under
Rule 23(b). Rule 23 addresses the
commonality required to demonstrate
cohesiveness for class certification in two
subsections, (a)(2) and (b)(3). Rule
23(a)(2) requires that plaintiffs prove that
“there are questions of law or fact common
to the class.” As explained in Part II.B.1,
supra, the relatively low Rule 23(a)(2)
commonality requirement is easily
satisfied here. However, because the Rule
23(b)(3) predominance requirements
incorporate the commonality requirement
of 23(a), it is possible that “even if Rule
23(a)’s commonality requirement is
satisfied . . . the predominance criterion is
far more demanding..” Amchem Prods. v.
Windsor, 521 U.S. 591, 623-24 (1997).
The District Court certified this class
pursuant to Fed. R. Civ. P. 23(b)(3). In
relevant part, the Rule reads:
An action may be maintained as a
class action if the prerequisites of
subdivision (a) are satisfied, and in
addition:
. . .
(3) the court finds that the
questions of law or fact common to
the members of the class
predominate over any questions
affecting only individual members,
and that a class action is superior to
other available methods for the fair
and efficient adjudication of the
controversy.
Veneman argues that, in this case,
common issues do not predominate over
individual ones.
In order to predominate, the common
issues must constitute a “significant part”
of the individual cases. Jenkins v. Raymark
Industries, Inc., 782 F.2d 468, 472 (5th
Cir. 1986); see also Watson v. Shell Oil,
979 F.2d 1014, 1022 (5th Cir. 1992).
Veneman contends that because the
damages sought, on the order of 2.8 billion
dollars, are so high, and will require such
exacting, specific, individual proof, that
those individual questions are, in reality,

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19
the predominant issues in the case.
Chiang concedes that the eventual
calculations of damages will require
individual proof. However, she points out
that it is settled law that the necessity for
proving damages individually does not
defeat class predominance or class
certification. “The presence of individual
questions as to [each class member] does
not mean that the common questions of
law and fact do not predominate over
questions affecting individual members as
required by Rule 23(b)(3).” Eisenberg v.
Gagnon, 766 F.2d 770, 786 (3d Cir. 1985).
To be sure, there are cases where the
question of damages is so central that it
can, in some sense, overtake the question
of liability. But as noted in Bogosian v.
Gulf Oil Corp., 561 F.2d 434, 456 (3d Cir.
1977):
[I]t has been commonly recognized
that the necessity for calculation of
damages on an individual basis should
not preclude class determination when
the common issues which determine
liability predominate. If for any reason
the district court were to conclude that
there would be problems involved in
proving damages which would
outweigh the advantages of class
certification, it should give appropriate
consideration to certification of a class
limited to the determination of liability.
(citations omitted).
That does not seem to be the case here,
and we are satisfied, based upon the
analysis set forth earlier in this opinion,
that both the predominance and the
superiority requirements of Rule 23(b) are
easily met with respect to the issues
certified under Rule 23(c)(4)(A).11
III. Conclusion
For the foregoing reasons, we will
affirm the class certification pursuant to
Rule 23(c)(4)(A) only insofar as it relates
11We note that the relief sought is
primarily for monetary damages and not
for injunctive relief. Perhaps anticipating
the potentially problematic aspect of this
posture in a case where— were liability
established—damages calculations would
probably be extremely individualized,
Chiang acknowledges that “it may come to
pass that the trial court deems injunctive
relief the better remedy and finds that
damages are minimal.” (Chiang Brief,
p.38). Whether that would be the more
logical path we do not say, but we do note
that unlike in cases where the primary
relief sought is injunctive in nature, see
Baby Neal v. Casey, 43 F.3d 48 (3d Cir.
1994), Chiang seeks only ancillary
injunctive relief: the primary relief she
seeks is 2.8 billion dollars in damages.
Given that each class member will likely
find him- or herself in very different
circumstances in terms of establishing
damages, we think it unlikely that the
calculation of damages will be suitable for
class determination. However, should
Chiang make it to that stage, we once
again defer to the District Court in the first
instance to evaluate whether damages can
be adjudicated on a class wide basis.

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to the question of the alleged waiting list
and related techniques, and will modify the
class definition to provide for a class of:
All Virgin Islanders who applied or
attempted to apply for, and/or
received, housing credit, services,
h o m e ownership, assistance,
training, and/or educational
opportunities from the USDA
through its Rural Development
o f f i c e s ( a n d p r e d e c e s s o r
designations) located in the U.S.
Virgin Islands at any time between
January 1, 1981 and January 10,
2000.
The certification will be vacated in all
other respects. The District Court should
reevaluate the appropriateness of class
certification on certain discrete issues such
as the eligibility facet of liability and the
calculation of damages, and may entertain
any applications for revision of the class
definition in accordance with this opinion.

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