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Case: United States v. Evolve Bank and Trust

2:22-cv-02667 | U.S. District Court for the Western District of Tennessee

Filed Date: Sept. 29, 2022

Case Ongoing

Clearinghouse coding complete

Case Summary

On September 29, 2022, the United States filed a complaint against Evolve Bank and Trust in the U.S. District Court for the Western District of Tennessee under the Fair Housing Act and the Equal Credit Opportunity Act. Judge Sheryl H. Lipman and Chief Magistrate Judge Tu M. Pham heard this case. The United States claimed that, from 2014 to 2019, Evolve Bank discriminated against women, Black, and Hispanic borrowers via its “discretionary pricing” components of home loan borrowing. “Discretionar…

On September 29, 2022, the United States filed a complaint against Evolve Bank and Trust in the U.S. District Court for the Western District of Tennessee under the Fair Housing Act and the Equal Credit Opportunity Act. Judge Sheryl H. Lipman and Chief Magistrate Judge Tu M. Pham heard this case.

The United States claimed that, from 2014 to 2019, Evolve Bank discriminated against women, Black, and Hispanic borrowers via its “discretionary pricing” components of home loan borrowing. “Discretionary pricing” referred to the bank’s ability to determine what initial interest rate, fees, charges, discounts, or other pricing was appropriate to add or subtract from the risk-based price of the loan. Thus, the loan officers could assign higher interest rates to individuals regardless of their creditworthiness or the characteristics of the loan. On the flip side, officers could offer discounts to particular borrowers that fit within their Loan Production Offices (where the loans are managed, assigned, written, etc.) margin. According to the United States, none of these "discretionary pricing" decisions were based on the borrowers’ creditworthiness or loan characteristics.

Evolve Bank had been on notice since 2014 from the Department of Justice on its investigation into these policies. In 2020, the bank started a fair lending program and hired a fair lending officer. Also in 2020, they started documenting the discounts offered to borrowers. 

Compared to their white counterparts, Black borrowers had to pay about $360 more per person in discretionary pricing on their mortgages. Women had to pay about $286 more per person than male borrowers on their mortgages. Hispanic borrowers had to pay the most compared to white borrowers; they had to pay about $420 more per person in discretionary pricing.

The United States sought declarative relief, injunctive relief to stop the discrimination, injunctive relief to take affirmative steps to prevent discriminatory conduct like this in the future, compensatory damages to restore the victims of this unfair discretionary pricing to the position they would have been had there not been discriminatory practices, and punitive damages.

On October 17, 2022, both parties signed and submitted a consent order. In the consent order, the bank denied all allegations of wrongdoing. For injunctive relief, the parties agreed to enjoin Evolve Bank from practicing discriminating policies. The bank had to had to implement a Fair Lending Committee and Officer, a revised Mortgage Division Loan Pricing Policy (as approved and worked out between the parties), a recordkeeping and monitoring program, continuation of a non-discrimination notice to clients, and an equal credit opportunity training program. For monetary relief, the parties agreed that Evolve Bank would pay $1,300,000 a settlement fund for the borrowers who might have been affected by the alleged discriminative policy, where the United States would provide a list to Evolve Bank of the individuals who were eligible to the settlement relief. Evolve Bank would also pay a penalty fine of $50,000 to the United States Treasury. In addition, the parties also agreed to appoint and retain a "Settlement Advisor" to oversee the settlement funds. Evolve Bank also had to retain documents, annually report to the United States, and maintain a complaint resolution program for consumer complaints, all during the duration of the consent order. The consent order was set to last about four and a half years (90 days after the fourth annual report that was required to be sent to the United States).

Judge Sheryl H. Lipman signed this consent order on October 17, 2022— the same day the parties signed and submitted it. This case is ongoing for monitoring of the consent decree.

Summary Authors

Isabel Hershey (10/30/2022)

Documents in the Clearinghouse

Document
1

2:22-cv-02667

Complaint

Sept. 29, 2022

Sept. 29, 2022

Complaint
13

2:22-cv-02667

Judgment

Oct. 17, 2022

Oct. 17, 2022

Order/Opinion
12

2:22-cv-02667

Consent Order

Oct. 17, 2022

Oct. 17, 2022

Order/Opinion

Docket

See docket on RECAP: https://www.courtlistener.com/docket/65386646/united-states-v-evolve-bank-and-trust/

Last updated Oct. 25, 2022, 11:37 a.m.

ECF Number Description Date Link Date / Link
1

COMPLAINT against United States of America, filed by United States of America. (Attachments: # 1 Civil Cover Sheet)(Niles, Sara) (Entered: 09/29/2022)

Sept. 29, 2022

Sept. 29, 2022

Clearinghouse
2

Judge Sheryl H. Lipman and Chief Magistrate Judge Tu M. Pham added. (jae) (Entered: 09/29/2022)

Sept. 29, 2022

Sept. 29, 2022

PACER
3

NOTICE OF CASE TRACKING ASSIGNMENT PURSUANT TO LOCAL RULE 16.2: Pursuant to Local Rule 16.2, this case has been assigned to the Standard track. http://www.tnwd.uscourts.gov/pdf/content/LocalRules.pdf (jae) (Entered: 09/29/2022)

Sept. 29, 2022

Sept. 29, 2022

PACER
4

MOTION for Settlement proposed order submitted by All Plaintiffs. (Attachments: # 1 Exhibit proposed Consent Order)(Niles, Sara) (Entered: 09/29/2022)

Sept. 29, 2022

Sept. 29, 2022

PACER
5

NOTICE TO COMPLY WITH PLAN FOR ALTERNATE DISPUTE RESOLUTION (ADR): Pursuant to Section to 2.1 of the ADR Plan, all civil cases filed on or after Sept. 1, 2014, shall be referred automatically for ADR. For compliance requirements, refer to the ADR Plan at: http://www.tnwd.uscourts.gov/pdf/content/ADRPlan.pdf (jae) (Entered: 09/29/2022)

Sept. 29, 2022

Sept. 29, 2022

PACER
6

NOTICE OF RIGHT TO CONSENT TO THE EXERCISE OF CIVIL JURISDICTION BY A MAGISTRATE JUDGE Pursuant to 28 U.S.C. 636(c), Fed.R.Civ.P.73, and Local Rule 72.1, this Court has designated the Magistrate Judges of this District to conduct trials and otherwise dispose of any civil case that is filed in this Court. Your decision to consent, or not consent, to the referral of your case to a United States Magistrate Judge for trial and entry of a final judgment must be entirely voluntary. The judge or magistrate judge to whom the case has been assigned will not be informed of your decision unless all parties agree that the case may be referred to a magistrate judge for these specific purposes. A less than unanimous decision will not be communicated by this office to either the judge or magistrate judge. The consent form is available on the courts website at https://www.tnwd.uscourts.gov/forms-and-applications.php (jae) (Entered: 09/29/2022)

Sept. 29, 2022

Sept. 29, 2022

PACER

Notice LR 72.1 - Right to Consent to Jurisdiction by Magistrate Judge

Sept. 29, 2022

Sept. 29, 2022

PACER

ADR Compliance

Sept. 29, 2022

Sept. 29, 2022

PACER

Notice LR 16.2

Sept. 29, 2022

Sept. 29, 2022

PACER
7

SETTING LETTER: A HEARING re: Proposed Consent Order has been SET before Judge Sheryl H. Lipman for THURSDAY, OCTOBER 13, 2022 at 2:00 P.M. (CDT). The hearing will be held via Microsoft Teams Video. A link to the video conference will be emailed to the attorneys prior to the setting.Counsel should submit any exhibits to be offered to the Judge's ECF mailbox prior to the proceeding.The public may also access the video proceeding. If the public and/or media wish to attend in the video proceeding, please click on the following link to request access information: https://www.tnwd.uscourts.gov/videohearings The access information will be delivered via email to the email address from which the request originated.Parties should consult the instructions for Joining a Meeting in Teams or Joining a Meeting Without a Teams Account. (jpw) (Entered: 10/06/2022)

Oct. 6, 2022

Oct. 6, 2022

PACER
8

MOTION for Leave to Appear Pro Hac Vice with proposed order submitted in word format by email to Judge Lipman (Filing fee $ 150 receipt number ATNWDC-3986960) by Evolve Bank and Trust. (Attachments: # 1 DC Certificate of Good Standing, # 2 USDC-DC Certificate of Good Standing)(Naimon, Jeffrey) (Entered: 10/07/2022)

Oct. 7, 2022

Oct. 7, 2022

PACER
9

TEXT ONLY ORDER GRANTING 8 Motion for Leave to Appear Pro Hac Vice for Jeffrey P. Naimon. Signed by Judge Sheryl H. Lipman on 10/7/2022. (shl) (Entered: 10/07/2022)

Oct. 7, 2022

Oct. 7, 2022

PACER

Order on Motion for Leave to Appear Pro Hac Vice

Oct. 7, 2022

Oct. 7, 2022

PACER
10

NOTICE of Appearance by Robert L. Crawford on behalf of Evolve Bank and Trust (Crawford, Robert) (Entered: 10/10/2022)

Oct. 10, 2022

Oct. 10, 2022

PACER
11

Minute Entry for proceedings held before Judge Sheryl H. Lipman: Microsoft Teams Video Motion Hearing held on 10/13/2022. Sara Lewenberg Niles and Eileen Kuo appeared for the Plaintiff. Jeffery P. Naimon and Robert L. Crawford appeared for the Defendant. 4 Joint Motion for Approval and Entry of Proposed Consent Order heard and taken under advisement. Order to be entered. (Court Reporter: April Lassiter-Benson) (jpw) (Entered: 10/13/2022)

Oct. 13, 2022

Oct. 13, 2022

PACER

Motion Hearing

Oct. 13, 2022

Oct. 13, 2022

PACER
12

CONSENT ORDER. Signed by Judge Sheryl H. Lipman on 10/17/2022. (shl) (Entered: 10/17/2022)

Oct. 17, 2022

Oct. 17, 2022

Clearinghouse
13

JUDGMENT. Signed by Judge Sheryl H. Lipman on 10/17/2022. (shl) (Entered: 10/17/2022)

Oct. 17, 2022

Oct. 17, 2022

Clearinghouse

Case Details

State / Territory: Tennessee

Case Type(s):

Fair Housing/Lending/Insurance

Key Dates

Filing Date: Sept. 29, 2022

Case Ongoing: Yes

Plaintiffs

Plaintiff Description:

United States Department of Justice

Plaintiff Type(s):

U.S. Dept of Justice plaintiff

Attorney Organizations:

U.S. Dept. of Justice Civil Rights Division

Public Interest Lawyer: Yes

Filed Pro Se: No

Class Action Sought: No

Class Action Outcome: Not sought

Defendants

Evolve Bank and Trust, Private Entity/Person

Defendant Type(s):

Bank or credit provider

Case Details

Causes of Action:

Fair Housing Act/Fair Housing Amendments Act (FHAA), 42 U.S.C. §§ 3601 et seq.

Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691

Availably Documents:

Trial Court Docket

Complaint (any)

Monetary Relief

Injunctive (or Injunctive-like) Relief

Outcome

Prevailing Party: Plaintiff

Nature of Relief:

Injunction / Injunctive-like Settlement

Damages

Declaratory Judgment

Source of Relief:

Settlement

Form of Settlement:

Court Approved Settlement or Consent Decree

Amount Defendant Pays: 1,350,000

Order Duration: 2022 - None

Content of Injunction:

Discrimination Prohibition

Develop anti-discrimination policy

Recordkeeping

Monitoring

Issues

Discrimination-area:

Lending

Discrimination-basis:

National origin discrimination

Race discrimination

Sex discrimination

Race:

Black

Affected Gender:

Female

National Origin/Ethnicity:

Hispanic