Ocwen Financial Wins Decertification in RICO Consumer Class Action

Paul, Weiss, alongside co-counsel at Orrick, Herrington & Sutcliffe LLP, won a complete victory for Ocwen Financial, one of the nation’s largest mortgage servicing companies, securing the decertification of a nationwide class in a significant federal consumer class action under civil RICO and California state laws in the Eastern District of California.

In Weiner v. Ocwen Financial Corporation et al., a consumer plaintiff filed suit against Ocwen in 2014 alleging that, over a period of more than a decade, Ocwen overcharged borrowers who used certain Ocwen property valuation services that allegedly contained undisclosed "mark-ups," violating the terms of the borrowers’ mortgage contracts. The claims were brought under the RICO Act, Section 17200 of California’s Unfair Competition Law and the Rosenthal Fair Debt Collection Practices Act. The plaintiff sought trebled damages of approximately $210 million.

In 2017, U.S. District Judge Morrison England certified a nationwide class of borrowers and two statewide California classes; a class trial was scheduled for March 2022. The case was reassigned to U.S. District Court Judge Troy Nunley in September 2021. Ocwen immediately filed the decertification motion, arguing that the previously-certified classes must be decertified after the Supreme Court’s 2021 decision in TransUnion LLC v. Ramirez, which held that each individual class member needs to have standing at trial, and that class members who didn’t suffer concrete harm didn’t have standing. Ocwen argued that the plaintiff failed to fulfill the predominance requirement under Rule 23(b)(3) because of a factual dispute between the parties about whether a substantial portion of the class actually paid the valuation fees and therefore allegedly suffered concrete harm. Ocwen contended that determining whether each of the 321,226 class members ever paid the fees is an individualized inquiry that “would dwarf any common issues in the litigation.”

In his order on August 3, the judge agreed. “The Court is convinced that ascertaining which class members have or have not paid the fees will entail an individualized inquiry. Because Plaintiff cannot definitively establish at this juncture that each class member in each of the three classes certified by Judge England has suffered this concrete harm, the Court finds ‘that the questions of law and fact common to class members’ does not ‘predominate over any questions affecting only individual members’ under Rule 23(b)(3).”

The Paul, Weiss team included litigation partners Melinda Haag and Randy Luskey.