Judge Approves Class-Action Lawsuit Settlement Against California CU
Valley First CU agrees to pay $120,000 and denies allegations it violated federal and state civil rights of 48 individuals.
A federal magistrate judge granted preliminary approval last week to settle a proposed class action lawsuit against a California credit union for allegedly violating state and federal laws after denying a personal loan and membership to a woman because she could only provide a “work only” Social Security number as a recipient of the Deferred Action for Childhood Arrivals (DACA) policy of 2012.
The $1 billion Valley First Credit Union in Modesto has agreed to pay $120,000 that will include a $1,200 payment to 48 individuals who are part of the class action lawsuit, $36,000 in estimated attorney fees, a $10,000 administrator’s fee and a $5,000 service award for Karla Ayala. She filed the lawsuit in June of last year and is represented by attorneys from the Mexican American Legal Defense and Educational Fund in Los Angeles, according to court documents.
Since 2012, Ayala has been a recipient of DACA, which authorizes her to work in the U.S. She also holds a “work only” Social Security number. In October and November 2021 Ayala applied for membership at Valley First and she also applied for a personal loan.
Valley First denied Ayala’s membership and loan application because she could only provide a “work only” Social Security number. In June 2022, she filed a lawsuit against the credit union, alleging it has a policy of denying membership to applicants who are not U.S. citizens or lawful permanent residents, according to court documents.
She claimed the membership denial violated the anti-discriminatory provisions of the federal and state civil rights acts. Ayala sought to represent all persons who attempted to apply for membership or a financial product from Valley First but were denied membership on the basis of their alienage or immigration status.
Although the credit union never responded to Ayala’s lawsuit, Valley First denied all of her allegations and decided to settle the lawsuit to avoid the burdens of risk, expense and disruption of its business operations from additional litigation, court documents showed.
However, after the lawsuit was filed, the credit union contacted Ayala’s lawyer, Thomas A. Saenz, to begin what he described as “earnest negotiations to achieve class-wide settlement of this action,” according to court filings.
Over six months, the parties exchanged information, including membership allocation and loan records, copies of policies and procedures, and records regarding Valley First’s membership base to assess the merits of Ayala’s discrimination claims and the number of potentially impacted class members, Saenz wrote in court documents.
What’s more, Valley First has also agreed to stop its “challenged practice” in denying applicants membership based solely on alienage or lack of U.S. Citizenship unless required by law, rules or regulations, according to the proposed settlement agreement.
A website that will provide the settlement’s details is scheduled to go live on Dec. 15.
U.S. Magistrate Judge Helena M. Barch-Kuchta in Fresno is scheduled to grant the settlement’s final approval on March 13.
Valley First’s attorney declined to comment. The credit union did not respond to CU Times‘ request for comment.