Opposition Brief — Laliberte v. Pacific Pacific Mercantile Bank (No. 07-160)

No. 07-160

IN THE

Supreme Court of the United States

JAMES LALIBERTE, et al., for themselves individually,

and as representatives of all similarly situated persons,

Petitioners,

v.

PACIFIC MERCANTILE BANK,

Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE

Court OF APPEAL OF THE STATE OF CALIFORNIA,

FourtH APPELLATE District, Division THREE

BRIEF IN OPPOSITION

ROBERT BEALL

Counsel of Record

KARIN DoUGAN VOGEL

SHEPPARD, MULLIN, RICHTER

& Hampton LLP

650 Town Center Drive

Fourth Floor

Costa Mesa, CA 92626-1925

(714) 513-5100

Counsel for Respondent

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COUNSEL PRESS

(800) 274-3321 + (800) 359-6859

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II.

i

QUESTIONS PRESENTED

Whether the Court should grant review of the opinion

of the California Court of Appeal, Fourth Appellate

District, which affirms the trial court’s decision that

rescission class actions are not maintainable under the

Truth in Lending Act, 15 U.S.C. § 1601, et seg., where

the court of appeal’s opinion does not conflict with any

decision of a state court of last resort or of a United States

court of appeals, and the opinion does not implicate an

important federal question that needs to be settled by

this Court.

Whether the Court should grant review of the opinion

of the California Court of Appeal, which is consistent

with opinions of the First Circuit Court of Appeals and

the Fifth Circuit Court of Appeals, both of which have

found that under the Truth In Lending Act, 15 U.S.C.

§ 1601, ef seq., rescission is a personal remedy and not

subject to class action treatment.

ii

CORPORATE DISCLOSURE STATEMENT

PURSUANT TO SUPREME COURT RULE 29.6

Respondent Pacific Mercantile Bank has the following

parent corporation: Pacific Mercantile Bancorp.

Pacific Mercantile Bancorp is the only publicly held

company that owns 10% or more of Pacific Mercantile Bank’s

stock.

eax

iii

TABLE OF CONTENTS

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Corporate Disclosure Statement Pursuant to Supreme

etary erp De

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Reasons for Denying the Petition ...............

I. A Circuit Split Does Not Exist On The Issue

Of Whether Rescission Is Available On A

Class-Wide Basis In TILA Claims ........

ll. The Circuit Courts Of Appeals And The

California Court Of Appeal Have Correctly

Construed TILA To Preclude Rescission On

Pe: CE IE aS ats bine bs vs coke cs

A. Congressional Intent, As Indicated From

b) 4,6 lg SB © eee

B. Congressional Intent As Apparent From

Legisimtive HISROSY. 2.0 ccc cece sccess

iv

Contents

Page

III. Class-Wide Rescission Under TILA Would

Abrogate The Policies Underlying TILA ... 10

(Run te PS oS OB SS oR AE ei ee 12

TABLE OF CITED AUTHORITIES

Page

Cases:

Andrews v. Chevy Chase Bank, FSB, 240 F.R.D. 612

(E.D.Wis. 2007), appeal docketed, No. 07-1326

ee GS OAR es 3 pera rear rp erereras 4

Belini v. Wash. Mut. Bank,

Ee FCA Gs I 60-5 0455 wh wee beaen 8

Cleveland v. United States,

329 U.S. 14, 67 S.Ct. 13, 91 L.Ed. 12 (1946) ... 9

Gibbons v. Interbank Funding Group,

208 F.R.D. 278 (N.D.Cal. 2002) ......... ae Fe eae

In re Ameriquest Mortg. Co. Mortg. Lending

Practices Litigation, 2007 WL 1202544 (N.D.III.

NR he eat eh ee al a moe os te 4

James v. Home Constr. Co.,

Gee ae Pat Lees BORO) cece ect hesenss 3, 5, 10

Jefferson v. Security Pac. Fin. Servs.,

Ek Bye ey Bk ae 8) nr 3, FH

Johnson v. Transportation Agency,

480 U.S. 616, 107 S.Ct. 1442,

ee EE ie inns end oaaveeeies 9

Johnson v. West Suburban Bank,

Dae Oe SOO, BE bb iis ov iS beden’s &

vi

Cited Authorities

Page

Latham v. Residential Loan Ctrs. of Am., Inc.,

2004 U.S. Dist. LEXIS 7993, 2004 WL 1093315

(N.D.IIl., May 6, 2004, No. 03 C 7094) ........ 4

Mayo v. Sears, Roebuck & Co.,

148 F.R.D. 576 (S.D.Ohio 1993) ............. 3

MclIntosh v. Irwin Union Bank & Trust Co.,

Bee Peden 20 Cae ONO BOOS) 6 vse ce cereee re 4

McKenna vy. First Horizon Home Loan Corp.,

2005 U.S. Dist. LEXIS 41491 (D.Mass., Nov. 10,

2005, Civ.A. No. 04-10370-RCL) ............ 5

McKenna v. First Horizon Home Loan Corp.,

475 F.3d 418 (1st Cir. 2007) ........... 3, 4, 7, 8, 10

Murry v. America’s Mortg. Banc, Inc.,

2005 U.S. Dist. LEXIS 11751, 2005 WL 1323364

(N.D.IIl. May 5, 2005, No. 03 C 5811) ........ 3

Nelson v. United Credit Plan, Inc.,

pee BB Ok OTe | a 9

Palmer v. Wilson,

SOe F.26 BGO Com Cit. 1974) oi ce cc sc cccess 1]

Rodash v. AIB Mortgage Co.,

0G OO PEGE CPI, BORE) occ cee iesecsses 7

vii

Cited Authorities

Page

Rodrigues v. Members Mortg. Co..,

226 F.R.D. 147 (D.Mass. 2005) .............. 2

United States v. Green,

SOT E56 S34 ist Cit. 00S) oc ccc ccecsceses 6

Williams v. Empire Funding Corp.,

183 F.R.D. 428 (E.D.Pa. 1998) ......0..000.. 4

Yamamoto v. Bank of New York,

Ra ee Se CO Es BUD ce vidbocewaveri 1]

Statutes:

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I. bw id sw iad bows © bas eens 5, 6, 8,9, 10

SD gall. aa sae wee vo eben wets 5,6, 7, 8,9

Pe ED ho hoc ks vn oo bee cae eh aee es 6

Se ERED, (iveclncesodendean cows 6

SP EL OUR i800. 05 vende ddieieee’s 5, 6,8

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Cited Authorities

Page

Pub.L. 93-495, Title IV, § 407, 88 Stat. 1500,

OR BE, TRO: vi vikwe tec 0s 5b oep Leven r ie eek 8

Pub.L. 94-240, 90 Stat. 257, March 23,1976 ..... 8

Truth in Lending Class Action Relief Act of 1995,

Pub.L. No. 104-12, § 2, 109 Stat. 161, 161-162

inlaw eile tle Raw Ol Daa ene aan 7

Truth in Lending Act Amendments of 1995,

Pub.L. No. 104-29, § 3, 109 Stat. 271, 272-73 .. 7

Other Authorities:

REE SI, TR EOI. 6.066 cs wie sonesennnenes 7, 10

C5t CO FR ENON eb ec cessvecvaneuaveuns 7, 10

CGT CGE, TOE. BIASOE ove cevescccvatesesean 10

H.R. Conf. Rep. No. 93-1429 (1974) ............ 8

l

STATEMENT OF CASE

The plaintiffs, James Laliberte and Dennis and Jann

O’Connor (together, Laliberte and the O’Connors, or

Petitioners), all applied for closed-end refinance loans with

Pacific Mercantile Bank (PMS) in April 2002, secured by

their principal residences. Joint Appendix filed with the

California Court of Appeal (J.App.) 290-291. In connection

with the loans, PMB provided Laliberte and the O’Connors

with disclosure statements as required by the Truth in Lending

Act, 15 U.S.C. § 1601, et seg. (TILA). See J.App. 290-291.

Both Laliberte and the O’Connors claim their TILA

disclosure statements are incorrect because they do not

include a $450 closing fee as part of the “Finance Charge.”

See J.App. 292. Accordingly, both Laliberte and the

O’Connors informed PMB in writing that they were invoking

their right to rescind their loans. J.App. 295, 4 39; 296, 4 45.

PMB refused their requests. /d.

Laliberte and the O’Connors filed their Complaint

alleging individual causes of action against PMB on May

22, 2003. J.App. 1. They filed a first amended complaint

thereafter, adding class action allegations and seeking both

statutory damages and rescission for the alleged class. J.App.

15, 28-30. The trial court sustained PMB’s demurrer to the

first amended complaint with leave to amend, ruling the

motion to strike was therefore moot. J.App. 127-131.

Laliberte and the O’Connors filed a second amended

complaint, and PMB again demurred and filed a motion to

strike. See J.App. 132, 154, 179. The trial court again

sustained PMB’s demurrer and granted PMB’s motion to

strike, with leave to amend in part but without leave to amend

“to seek either rescission or a declaration of entitlement to

rescission on the class claims.” J.App. 278, 281. Persuaded

2

by the federal district court’s rationale in Gibbons v. Interbank

Funding Group, 208 F.R.D. 278, 285-286 (N.D.Cal. 2002),

the trial court concluded that “neither form of relief is

appropriate in a class action.” J.App. 281.

Laliberte and the O’Connors filed a third amended

complaint on May 5, 2005. J.App. 283. This time the trial

court sustained PMB’s demurrer to the class claims in the

third amended complaint without leave to amend, and

Laliberte and the O’Connors appealed from the court’s order.

J.App. 385-386, 388. The California Court of Appeal, Fourth

District, Division 3, affirmed the trial court’s ruling denying

the plaintiffs leave to amend to seek either rescission or a

declaration of entitlement to rescission on the class claims.

Laliberte v. Pacific Mercantile Bank, 147 Cal. App. 4th 1

(2007) (Laliberte). The California Supreme Court denied

review.

SUMMARY OF ARGUMENT

No compelling reason exists for the Court to grant review

of the Petition filed by Laliberte and the O’Connors.

The Petition is taken from a California intermediate appellate

court decision, the California Supreme Court denied review,

two United States courts of appeals have entered decisions

that are consistent with the California Court of Appeal’s

decision, and no United States court of appeals has decided

a case to the contrary.

Further, nothing is to be gained from the Petition.

The United States courts of appeals, and the California court

of appeal in this case, have all correctly interpreted the TILA

‘to preclude class-wide rescission relief. The statute on its

face, as well as in its legislative history, supports a conclusion

3

Congress never intended for class-wide rescission relief to

be available for TILA claims. The policy goals of the TILA,

of protecting consumer rights while at the same time

sustaining the viability of the mortgage lending industry, are

advanced by this interpretation of the TILA.

The Petition should be denied.

REASONS FOR DENYING THE PETITION

I. A Circuit Split Does Not Exist On The Issue Of

Whether Rescission Is Available On A Class-Wide

Basis In TILA Claims

To date, two federal circuit courts of appeals have

addressed the issue of whether class-wide rescission is

available for TILA claims, and both of those circuit courts

ruled consistently. See McKenna v. First Horizon Home Loan

Corp., 475 F.3d 418, 422-28 (ist Cir. 2007) (McKenna);

James v. Home Constr. Co., 621 F.2d 727, 730 (Sth Cir. 1980).

Like in the California court of appeal’s decision here, those

circuit court opinions found rescission under TILA is a

personal remedy and not susceptible to class-wide

application. (/d.) Pour district court decisions have also found

class-wide rescission is not available for TILA claims. See

Gibbons, 208 F.R.D. at 285-86; Murry v. America’s Mortg.

Banc, Inc., 2005 U.S. Dist. LEXIS 11751, 2005 WL 1323364

*10-11 (N.D.II]. May 5, 2005, No. 03 C 5811); Jefferson v.

Security Pac. Fin. Servs., 161 F.R.D. 63, 68-69 (N.D.IIL.

1995); and Mayo v. Sears, Roebuck & Co., 148 F.R.D. 576,

583 (S.D.Ohio 1993).

In contrast, Petitioners cite to six district court decisions

“allowing TILA rescission claims to be pursued, in some

4

fashion, as a class action.” Petition at 10-11, citing to In re

Ameriquest Mortg. Co. Mortg. Lending Practices Litigation,

2007 WL 1202544, *3 (N.D.III. 2007); Andrews v. Chevy

Chase Bank, FSB, 240 F.R.D. 612 (E.D.Wis. 2007), appeal

docketed, No. 07-1326 (7th Cir. Feb. 14, 2007); Rodrigues

v. Members Mortg. Co., 226 F.R.D. 147, 153 (D.Mass. 2005);

Latham vy. Residential Loan Ctrs. of Am., Inc., 2004 U.S.

Dist. LEXIS 7993, 2004 WL 1093315 (N.D.III., May 6, 2004,

No. 03 C 7094); McIntosh v. Irwin Union Bank & Trust Co.,

215 F.R.D. 26, 33 (D. Mass. 2003); and Williams v. Empire |

Funding Corp., 183 F.R.D. 428, 435-36 (E.D.Pa. 1998).

These six district court decisions do not create a “split”

in the law, requiring Supreme Court review. Two of these

six are Massachusetts district court decisions that preceded

the First Circuit’s recent decision finding class-wide relief

is not available for TILA rescission claims. See McKenna,

475 F.3d at 418 (reversing a Massachusetts district court

decision). The Massachusetts district court cases have no life

after McKenna. Two more of the six were decided by a single

district court in Northern I[llinois. Finally, Andrews is slated

for decision by the Seventh Circuit later this year. See Petition

at 10, fn. 2. At best, three different district courts throughout

the country disagree with the decisions of two circuit courts

of appeals, four district courts, and the California appellate

court’s decision here — certainly not a “conflict” of sufficient

magnitude to warrant Supreme Court intervention. '

' Ifaconflict in the circuits is created when the Seventh Circuit

decides the Andrews appeal, the parties in that case will have the

opportunity to petition this Court for review. Until a conflict between

the circuits exists, however, review is not warranted.

5

Il. The Circuit Courts Of Appeals And The California

Court Of Appeal Have Correctly Construed TILA To

Preclude Rescission On A Class-Wide Basis

The Fifth Circuit was the first circuit court to hold that

rescission class actions are not maintainable under the TILA.

See James, 621 F.2d at 730-31. The court’s opinion in James

focused almost exclusively on the individual nature of the

rescission remedy under TILA. A number of district court

decisions followed the Fifth Circuit’s lead in James, including

a federal district court decision from Northern California.

See Gibbons, 208 F.R.D. at 280-86. The court of appeal’s

decision here relied on this federal precedent, but also

disagreed with a Massachusetts district court case that was

argued by Laliberte and the O’Connors, where the district

court allowed a class action rescission claim under TILA.

See Laliberte, 147 Cal. App. 4th at 8-11, disagreeing with

McKenna v. First Horizon Home Loan Corp., 2005 U.S. Dist.

LEXIS 41491 (D.Mass., Nov. 10, 2005, Civ.A. No. 04-10370-

RCL). Four days after the court of appeal issued its decision

in this case, the First Circuit Court of Appeals reversed the

district court decision in McKenna. Expanding on the analysis

from James, the First Circuit rested its holding primarily on

its conclusion “that Congress did not intend rescission suits

to receive class-action treatment.” McKenna, 475 F.3d at

423-27.

A. Congressional Intent, As Indicated From The

Face Of The TILA

The main indication of congressional intent is found on

the face of the TILA. The TILA provides for two remedies

for violations of its provisions: damages (15 U.S.C.

§ 1640(a)(2)(B)) and rescission (id. § 1635). Section 1640,

6

dealing with damages, specifically addresses class actions.

Id. § 1640(a)(2)(b). Indeed, § 1640 is entitled “Civil liability”

and the relevant subsection thereto is entitled “Individual or

class action for damages; amount of award; factors

determining amount of award.” /d. § 1640(a). Substantively,

§ 1640 provides separate limits on the damages available in

individual actions ($2,000) and in class actions (the lesser

of $500,000 or 1 per centum of the creditor’s net worth).

Id. § 1640(a)(2)(A), (B).

Section 1635, dealing with rescission, makes no

comparable mention of the class action mechanism.

See id. § 1635. Section 1635’s failure to make any mention

of class actions could mean one of two things: either Congress

intended rescission to be unavailable as a class remedy for

TILA claims or it intended rescission to be available without

restraint in a class action. It is illogical that Congress would

limit the recovery of damages available on a class basis, while

at the same time allowing unlimited rescission claims.

A creditor’s exposure in rescission cases easily could be

significantly greater than the cap on damages in class action

cases. This distinction between the two remedy sections of

the TILA strongly supports a conclusion that Congress did

not intend for the rescission remedy to apply on a class-wide

basis. See United States v. Green, 407 F.3d 434, 443 (1st Cir.

2005) (ordinarily, inclusion of specific provision in one part

of statute and exclusion of similar provision in another part

should be treated as deliberate).

B. Congressional Intent As Apparent From

Legislative History

Congressional intent is also apparent from the legislative

history of the TILA. The damages section of the TILA

7

(15 U.S.C. § 1640) was amended twice in 1995, as a response

to the Eleventh Circuit’s decision in Rodash v. AIB Mortgage

Co., 16 F.3d 1142 (11thCir. 1994). In Rodash, a case filed

by an individual debtor, the Eleventh Circuit held that a

creditor’s violation of TILA by selecting an incorrect form

for disclosure of rescission rights justified rescission of a

mortgage loan. /d. at 1147. Responding to Rodash, Congress

first enacted a moratorium on class actions brought based

on relatively minor technical infractions under TILA.

See Truth in Lending Class Action Relief Act of 1995, Pub.L.

No. 104-12, § 2, 109 Stat. 161, 161-162 (amending

15 U.S.C. § 1640 by adding subsection (i)). During the

moratorium, Congress amended the TILA to provide for

increased tolerance of honest mistakes in certain disclosure

requirements. See Truth in Lending Act Amendments of 1995,

Pub.L. No. 104-29, § 3, 109 Stat. 271, 272-73.”

Thus, in reacting to an abuse in the application of the

TILA that was becoming readily apparent, Congress enacted

legislation directed at the core of the issue by narrowing the

scope of various disclosure requirements to avoid liability

for technical infractions. By not correcting the problem by

expressly exempting class action rescission claims, Congress

did not impliedly create a class right of action for rescission

claims. As stated by the court in McKenna, “[w]e would not

2 In the Congressional Record, the chairman of the Banking

Committee explained the legislation was motivated by a concern

that the banking industry would be overrun with liability due to

wholesale rescissions of mortgage loans based on relatively minor

violations of the TILA. See 141 Cong. Rec. $14566, 14567 (Statement

of Sen D’Amato, expressing an awareness that the “threat of

wholesale rescissions presents a real danger to our modern system

of home financing: potential liability that could reach into the

billions.”).

8

expect Congress expressly to exempt from class-action rules

a process for which it never fully delineated an individual

right of action.” McKenna, 475 F.3d at 425-26. On the

contrary, the TILA’s rescission provision presumptively

anticipates individual exercise of the rescission remedy, “with

the creditor and debtor working out the logistics of a given

rescission.” Jd. at 421; see also 15 U.S.C. § 1635.°

Earlier, the legislative history of the TILA shows

Congress amended 15 U.S.C. § 1640 in 1974 to set the cap

on the damages recoverable in a class action under the TILA.

Initially, Congress set the cap at the lesser of $100,000 or 1

per centum of the net worth of the creditor (Pub.L. 93-495,

Title IV, § 407, 88 Stat. 1500, Oct. 28, 1974), but it raised

the cap two years later to the lesser of $500,000 or 1 per

centum of the creditor’s net worth (Pub.L. 94-240, 90 Stat.

257, March 23, 1976). See 15 U.S.C. § 1640(a)(2)(B).

The purpose of the cap on damages was “to protect small

business firms from catastrophic judgments.” H.R. Conf.

Rep. No. 93-1429 (1974), quoted in Johnson v. West

Suburban Bank, 225 F.3d 366, 372 (3d Cir. 2000).

Significantly, at neither time (nor at any time thereafter) did

Congress make a comparable amendment to the rescission

provision in the TILA.

Petitioners make an overstated argument that an

inference of congressional intent from congressional inaction

misapplies the rules of statutory construction. Petition at

12-18. It is true that the ability to infer congressional intent

from congressional inaction is an area open to dispute.

> See also Belini v. Wash. Mut. Bank, 412 F.3d 17, 25 (Ist Cir.

2005) (the TILA’s rescission provision “is written with the goal of

making the rescission process a private one, worked out between

creditor and debtor without the intervention of the courts.”).

9

Compare Cleveland v. United States, 329 U.S. 14, 17-18, 67

S.Ct. 13, 22-23, 91 L.Ed. 12 (1946) (Rutledge, J., concurring,

finding congressional inaction unpersuasive) with Johnson

v. Transportation Agency, 480 U.S. 616, 629 fn. 7, 671, 107

S.Ct. 1442, 1450, 1472-73, 94 L.Ed. 2d 615 (1987) (majority

opinion applying rule of inaction to infer congressional intent;

Scalia, J., dissent, opining “vindication by congressional

inaction is a canard”). However, this is not the case for the

Supreme Court to sort out the viability of that rule.

Suffice it to say that if the rule is applied, it favors a

finding Congress never intended for rescission claims to

proceed as class action lawsuits. As the court of appeal in

this case logically noted: “We .. . find it difficult to believe

that Congress would carefully balance the deterrent effect of

class actions under TILA against the potential harm to

businesses in the context of statutory damages, and yet allow

class action rescission to proceed without any safeguard for

the affected business.” Laliberte, 147 Cal. App. 4th at 11.

Answering further the question of why Congress might cap

recovery on class actions under 15 U.S.C. § 1640 and not do

so under § 1630, the court found the answer “in the status of

case law in 1974 and 1976, when the cap was enacted and

increased. During this time period, numerous cases

recognized that class actions seeking damages under § 1640

were appropriate, but class actions seeking rescission were

virtually nonexistent.” Laliberte, 147 Cal. App. 4th at 11.'

Finally, this analysis of Congressional intent, apparent

from both the face of the statute as well as its legislative

* The court of appeal cited to Nelson v. United Credit Plan,

Inc., 77 F.R.D. 54, 58, (E.D.La. 1978) wherein the court noted that

at that time “there is not a single precedent in which class certification

was broached, much less granted or denied, in a case where rescission

pursuant to 15 U.S.C. § 1635 was the relief prayed for.”

10

history, is consistent with the practicalities of the litigation

process. In the words of the court in McKenna, the “highly

individualized character of [the rescission] process and the

range of variations that may occur render rescission largely

incompatible with a sensible deployment of the class-action

mechanism.” McKenna, 475 F.3d at 424-25.

III. Class-Wide Rescission Under TILA Would Abrogate

The Policies Underlying TILA

No doubt, Congress recognizes the delicate balance that

must be maintained between applying the TILA sufficiently

to provide vital consumer protection, and applying the TILA

too stringently, resulting in financial disaster for the mortgage

industry. See 141 Cong. Rec. $14566-14568. In protecting

this balance, courts have concluded Congress intended

rescission under the TILA to be a “purely personal remedy”

~— a Status inconsistent with class action recovery. See, e.g.,

James, supra, 621 F.2d at 731. The rescission steps laid out

in the statute are steps that are personal, to be taken by an

individual obligor and the creditor, and not steps that can be

taken by a group of obligors, in the aggregate.’ See 15 U.S.C.

§ 1635; see also James, 621 F.2d at 731. Further, unlike

damages claims, the TILA does not subject rescission claims

to an aggregate statutory cap, so that rescission class actions,

if allowed, could easily render a creditor insolvent.

See McKenna, 475 F.3d at 423; Gibbons, 208 F.R.D. at 285-

86. On the other hand, the availability of substantial monetary

recoveries and attorneys’ fees in individual r°scission cases

5 As the court of appeal stated in this case, “[uJnlike class

actions seeking damages or an injunction, rescission under TILA

creates obligations between both the lender and the borrower.”

Laliberte, 147 Cal. App. 4th at 10.

11

makes the availability of the class-action vehicle in the TILA

context unnecessary. See, e.g., Jefferson, 161 F.R.D. at

68-70.

Petitioners argue that the courts’ and Congress’s fears

about the catastrophic effect class action rescission claims

could have on the home mortgage industry are overstated.

Petition at 18-19. In particular, Petitioners claim that upon

rescission, lenders will not lose their security interest prior

to the restoration of their principal because a court may

require that the borrower restore the principal to the lender

as a prerequisite to rescission. /d. (relying on Palmer v.

Wilson, 502 F.2d 860, 862 (9th Cir. 1974) and Yamamoto v.

Bank of New York, 329 F.3d 1167, 1171 (9th Cir. 2003).)

The law on the equitable remedies available to a court in

granting rescission under TILA, as developing in the Ninth

Circuit, is not so broad as Petitioners assert, and is consistent

with limiting TILA claims for rescission to individual actions.

The court in Palmer noted that “[t]he propriety of such a

conditional decree of rescission, of course, will depend on

the equities present in a particular case ...” Palmer, 502

F.2d at 862; see also Yamamoto, 329 F.3d at 1173

(emphasizing that the inquiry as to the appropriate equitable

relief is a factual inquiry that must be resolved on a “case-

by-case” basis). The case-by-case, factual nature of whether

a conditional decree of rescission is appropriate, is not

consistent with the basic premise of a class action, that it is

available only where common issues of fact predominate.

12

CONCLUSION

Petitioners have not established any compelling reasons

for this Court to grant their Petition. Therefore, Respondent

respectfully requests that the Petition be denied.

Respectfully submitted,

RoBert BEALL

Counsel of Record

KARIN DOUGAN VOGEL

SHEPPARD, MULLIN, RICHTER & Hampton LLP

650 Town Center Drive, 4" Floor

Costa Mesa, California 92626-1925

(714) 513-5100

Counsel for Respondent