On January 23, 2025, the Fourt Circuit, in Alig v. Rocket Mortg., LLC, No. 22-2289, 2025 WL 271563 (4th. Cir. Jan. 23, 2025), reversed the District Court’s decision that a certified class action. In Alig, the plaintiffs filed a class action lawsuit against Quicken Loans, Inc. (now Rocket Mortgage), and alleged that the appraisals for the refinancing of their homes were not “independent’ because the defendants provided the homeowners’ estimates of their homes’ value to the appraisers. Thus, the plaintiffs alleged that the appraisals that they paid for were “worthless.”
The District Court certified a class of [a]ll West Virginia citizens who refinanced mortgage loans with Quicken, and for whom Quicken obtained appraisals through an appraisal request form that included an estimate of value of the subject property,” which amounted to 2,769 loans. The court then granted summary judgment to the plaintiffs and class members and awarded them more than $10.6 million.
On the first appeal, the Fourth Circuit affirmed the District Court’s decision. The Supreme Court reversed and remanded “for further consideration in light of TransUnion LLC v. Ramirez. In TransUnion, the Supreme Court reiterated its standing jurisprudence that “only those plaintiffs who have been concretely harmed by a defendant’s statutory violation” have standing to sue in federal court and applied that principle to class actions, holding that “every class member must have Article III standing in order to recover individual damages.” Despite the Supreme Court’s instruction, the District Court nonetheless reinstated the judgment.
In the instant appeal and in reversing, the Fourth Circuit concluded that based on TransUnion, and although perhaps a statutory violation, the plaintiffs have not established that the class members have suffered a concrete harm as a result of the defendants providing the estimated values to the appraisers. The Court reasoned that “[w]hile the plaintiffs’ and the district court’s theory is that injury of class members was shown because they each paid a fee for an appraisal that was tainted by the borrowers’ home-value estimates and therefore was worthless, there is no evidence that the class members’ appraisals were in fact tainted, rendering them worthless.” As such, the plaintiffs did not establish that all of the class members suffered actual harm.
This decision is significant in that it provides businesses with yet another decision to defend against class actions. More specifically, the Rocket Mortgage decision further supports the notion that plaintiffs may not maintain a class action where the class’s alleged damages are based on barren statutory violations with speculative or even presumed harm. Plaintiff must show that the class members suffered actual harm.