The United States District Court for the
Southern District of New York entered a judgment dismissing appellant
financing company's permissive counterclaims against appellee car
buyers for lack of subject matter jurisdiction in a case where the
car buyers sued the financing company for allegedly discriminating
against them based on race regarding their purchase of vehicles using
the company's financing plan. The financing company appealed.
CASE FACTS The car buyers sued the financing
company and alleged it engaged in racial discrimination under the
Equal Credit Opportunity Act, 15 U.S.C.S. § 1691 et seq. They
had purchased vehicles under the financing company's financing plan.
They alleged that the financing company permitted vehicle dealers to
mark up the financing rate based on subjective criteria, including
race. According to the car buyers, African-American buyers were
penalized by having to pay higher rates than those imposed on
similarly-situated Caucasian buyers. The financing company denied the
discrimination charge and asserted state-law counterclaims against
three of the car buyers for the amounts of their unpaid car loans.
The trial court determined the counterclaims were permissive and
granted the car buyers' motion to dismiss the counterclaims for lack
of subject matter jurisdiction.
On appeal, the appellate court found
the financing company's counterclaims were permissive.
It also found
that the trial court's discretion about whether to exercise
supplemental jurisdiction over the permissive counterclaims should
not be determined until the trial court ruled on the car buyers'
motion for class certification.
The trial court's judgment dismissing the financing company's
permissive counterclaims was vacated and the case was remanded for
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