United States v. Union Auto Sales, Inc.

*848 Dissenting opinion filed by Circuit Judge Callahan.

MEMORANDUM **

The United States appeals the district court’s Rule 12(b)(6) dismissal of its First Amended Complaint (“FAC”) for failure to state a claim against automobile dealers Union Auto Sales, Inc., and Han Kook Enterprises, Inc. (“HKE”). We have jurisdiction under 28 U.S.C. § 1291 , and reverse the dismissal of the United States’ complaint as to Union Auto.

We review de novo an order granting a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Madison v. Graham, 316 F.3d 867, 869 (9th Cir. 2002). The court must accept “all factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party.” Rowe v. Educ. Credit Mgmt. Corp., 559 F.3d 1028, 1029 (9th Cir.2009) (quotation marks omitted). Because the FAC complied with the pleading standards set by Federal Rule of Civil Procedure 8(a), and was sufficient to “ ‘give the defendant fair notice of what the plaintiffs claim is and the grounds upon which it rests,’ ” Williams v. Boeing Co., 517 F.3d 1120, 1130 (9th Cir. 2008) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 , 122 S.Ct. 992 ,…

I respectfully dissent. In my view, the complaint at issue here would have survived a motion to dismiss for failure to state a claim before 2007. However, that year the Supreme Court decided Bell Atlantic Corp. v. Twombly, 550 U.S. 544 , 127 S.Ct. 1955 , 167 L.Ed.2d 929 (2007). Apparently, the government didn’t feel the ripple in the Force caused by Twombly , or hear the cries of the thousands of complaints that died as a result of the decision. After Twombly , it is not enough that a complaint alleges a claim in which discrimination is possible; now a complaint must allege facts that establish a claim for discrimination which is plausible. Id. at 557-58, 127 S.Ct. 1955 (explaining “that something beyond the mere possibility of loss causation must be alleged, lest a plaintiff with ‘a largely groundless claim’ be allowed to ‘take up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value.’ ” (quoting Dura Pharmaceuticals, Inc. v. Broudo, 544 U.S. 336, 347 , 125 S.Ct. 1627 , 161 L.Ed.2d 577 (2005))). This case perfectly demonstrates an insufficient pleading because the government has “not nudged [its] claims across…

facts that placed Union Auto on notice of the claims against it and that suggested

an entitlement to relief. See Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011)

3 (explaining pleading requirements under Rule 8(a)); Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 570 (2007) (holding that Rule 8(a) requires that a plaintiff

plead “only enough facts to state a claim to relief that is plausible on its face”).

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, color, religion, national origin, sex or marital status, or age.”

U.S.C. § 1691(a). The FAC alleges that Union Auto violated the ECOA by

instituting a lending policy that allowed sales representatives to add discretionary

“overages”—subjective markups unrelated to any creditworthiness standards—to

financing contracts, which resulted in a pattern of discrimination against non-

Asians. Specifically, FAC ¶¶ 9&12 allege that the Board of Governors of the

Federal Reserve System found reason to believe that Nara Bank’s indirect

automobile lending program discriminated against non-Asian borrowers,…