In the
United States Court of Appeals
For the Seventh Circuit
Nos. 11-1816 & 11-1817
JANICE M. H OWLAND and S COTT T EGTMEYER,
individually and on behalf of
all others similarly situated,
Plaintiffs-Appellants,
v.
F IRST A MERICAN T ITLE INSURANCE C OMPANY,
Defendant-Appellee.
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 07 C 2628—Ronald A. Guzman, Judge.
A RGUED O CTOBER 24, 2011—D ECIDED M ARCH 6, 2012
Before SYKES and T INDER, Circuit Judges, and D EG UILIO ,
District Judge.
D EG UILIO , District Judge. First American Title Insurance
Company sells title insurance to consumers in Illinois
Of the United States District Court for the Northern District
of Indiana, sitting by designation.
2 Nos. 11-1816 & 11-1817
through its attorney title agent program, in which it
pays the consumer’s real estate attorney to conduct a
title examination and determine whether the title is
insurable. Plaintiffs contend that the payment is de-
signed to compensate for referrals, not actual services,
and that First American’s program violates Section 8 of
the Real Estate Settlement Procedures Act (“RESPA”),
which prohibits kickbacks and fee splitting. The district
court twice denied class certification under Federal Rule
of Civil Procedure Rule 23(b)(3), concluding that an indi-
vidual determination of liability would be required
for each class member. We agree. Class actions are rare
in RESPA Section 8 cases, and this is no exception.
I.
Title insurance protects real estate buyers and lenders
against losses caused by defects in a property’s title.
Consumers can purchase title insurance directly from a
title insurance company, but generally they purchase
it from a real estate professional acting as a “title agent”
for the insurer. In Illinois, where attorneys typically
represent consumers in real estate transactions, those
attorneys often also serve as title agents for title insur-
ance companies.
First American sells title insurance both directly to
consumers and through attorney title agents. It also
maintains a “title plant” database containing up-to-date
copies of recorded documents and public records. When
a title insurance purchase is made directly from First
American, in-house attorneys get title search materials
Nos. 11-1816 & 11-1817 3
from the title plant, examine those materials, and deter-
mine whether the title is insurable.
When an attorney agent sells the policy, however,
First American contracts with that attorney, rather than
its in-house attorneys, to conduct a title examination
and determine insurability. Until September 2005 (when
the class-definition cuts off), First American would
provide its attorney agents with a search package con-
taining raw data from the title plant about the property
and parties and a “search summary sheet” that sum-
marized parts of the data and listed essential informa-
tion, such as the legal description of the property, the
last known grantee on the most current deed, and open
liens. It also listed any potential issues with the title
readily identified (without additional examination or
research) by a computer or First American employee.
The attorney agent would then conduct his title examina-
tion; according to the agency contract, this required
examining the information that First American provided
as well as any other relevant information that might
caution against insuring the title. And although the
agency contract authorized the agent only to conduct a
title examination on First American’s behalf, agents
sometimes performed other services, including pro-
viding documentation to clear exceptions in the policy
and waiving exceptions on First American’s behalf and
assuming liability for the waiver.
Based on the examination, the agent would make any
necessary additions, deletions, or changes to the search
summary sheet. If the information in the summary was
4 Nos. 11-1816 & 11-1817
correct and complete, however, the agent would make
no changes. The agent would then sign the search sum-
mary sheet, indicating his approval. First American
next prepared a title insurance commitment based on
the information in the returned search summary sheet,
which was then approved by the agent and distributed
to the parties.
On May 9, 2007, Douglas Sharbaugh filed this suit
against First American, claiming that the practices
outlined above constitute an illegal kickback in violation
of RESPA, the Illinois Title Insurance Act, and the
Illinois Consumer Fraud Act. He sought to represent a
class of all individuals injured by the alleged violations.
Six months later, Janice Howland replaced Sharbaugh
as the named plaintiff.
Howland then moved the district court to certify a
class “of all people who purchased, sold or mortgaged
real property in the State of Illinois and who paid for a
title insurance policy from the Defendant, any part of
which premium was then shared with an attorney who
did not perform ‘core title agent services’ separate from
attorney services in exchange for such fee.” The district
court reasoned that although certain questions under
RESPA were common to the class, it could not
ultimately determine whether each transaction was a
violation without a transaction-specific inquiry to deter-
mine what services (core and otherwise) the agent pro-
vided and whether the compensation paid was unreason-
ably high and thus amounted to a kickback. Therefore,
it concluded, the individual issues predominated over
Nos. 11-1816 & 11-1817 5
common ones and the case was not suited for class treat-
ment. It denied the motion for class certification and
a subsequent motion for reconsideration.
Howland next sought to amend her proposed class
definition to add two additional limitations, namely
(1) that the search summary sheet that the agent re-
turned “made no changes or additions to the informa-
tion transmitted by First American” and (2) that First
American paid “the full amount of compensation called
for under the agency agreement or contract.” The
district court noted that the new definition might
alleviate some of the individual inquiries necessary,
but concluded that it did not eliminate the need for a
transaction-specific inquiry to determine liability: the
unaltered search summary sheet was not evidence that
an agent performed no core title agent services, merely
that those services were not documented because they
did not entail changes to the search summary sheet.
The district court denied the second motion for class
certification and then a motion to reconsider.
The case then proceeded on Howland’s individual
claims. Once discovery was completed, First American
moved for summary judgment. Rather than respond,
Howland accepted an offer of judgment for her
individual claim, while purportedly reserving the right
to appeal the denial of class certification.1 The district
1
Because of the intervention of a class member whose individ-
ual claims have not been settled, we need not address the issue
(continued...)
6 Nos. 11-1816 & 11-1817
court entered judgment on March 9, 2011. Three weeks
later, putative class member Scott Tegtmeyer was
granted leave to intervene. Both Howland and Tegtmeyer
filed timely notices of appeal, challenging the district
court’s denial of class certification.
II.
Because Rule 23 generally entrusts the certification
of class-action lawsuits to the broad discretion of the
district court, this Court will reverse a certification
decision only when it finds an abuse of discretion. See
Ervin v. OS Rest. Servs., Inc., 632 F.3d 971, 976 (7th Cir.
2011). Legal questions, however, are always reviewed
de novo because a district court abuses its discretion if
it applies an incorrect law. Id. To certify a class under
Rule 23(b)(3), as the plaintiffs seek, they must establish
(not merely allege) that the elements of Rule 23(a) are
met, including the existence of common issues, and
further that those common issues predominate over
individual issues and that a class action would be a
superior method of adjudicating the claims. Wal-Mart
Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2548-49 & n.2 (2011).
In this case, the district court denied class certification
because it believed that individual inquires would be
necessary to determine liability in favor of each class
1
(...continued)
of whether Howland’s settlement terminated her stake in
the case and with it her right to appeal the denial of certification.
See Muro v. Target Corp., 580 F.3d 485, 491 (7th Cir. 2009).
Nos. 11-1816 & 11-1817 7
member and thus that Rule 23(b)(3) was not satisfied.
It did not reach the issue of whether the other criteria
of Rule 23(b)(3) and Rule 23(a) were met. The district
court reached the only reasonable conclusion on certif-
ication, and thus did not abuse its discretion.
A.
RESPA was enacted in 1974 with the goal of ensuring
that consumers “are provided with greater and more
timely information on the nature and costs of the settle-
ment process and are protected from unnecessarily high
settlement charges caused by certain abusive practices
that have developed in some areas of the country.” 12
U.S.C. § 2601(a). Congress sought to accomplish this
by mandating certain disclosures to help consumers
become better shoppers for settlement services and by
prohibiting “kickbacks or referral fees that tend to
increase unnecessarily the costs of certain settlement
services.” Id. § 2601(b).
Section 8 of RESPA and its implementing regulations
combat the latter concern. Section 8(a) prohibits any
person from giving or accepting “any fee, kickback,
or thing of value pursuant to any agreement or under-
standing” that the payee will refer business in exchange
for the payment. 12 U.S.C. § 2607(a). Section 8(b) likewise
prohibits the payment or receipt of “any portion, split, or
percentage of any charge made . . . other than for services
actually performed.” Id. § 2607(b). Section 8 also, how-
ever, enumerates certain conduct or transactions that
do not violate the statute. Two are relevant here. First,
8 Nos. 11-1816 & 11-1817
Section 8(c)(1)(B) applies specifically to title agents,
protecting payments “by a title company to its duly
appointed agent for services actually performed in the
issuance of a policy of title insurance.” Id. § 2607(c)(1)(B).
Second, Section 8(c)(2) applies generally to “the pay-
ment to any person of a bona fide salary or compensation
or other payment for goods or facilities actually furnished
or for services actually performed.” Id. § 2607(c)(2).
The implementing regulations flesh out the prohibi-
tions and exceptions. The regulations clarify that
Section 8(b) prohibits not only charges where no services
are performed but also where only “nominal services
are performed” or where the charges are duplicative. See
24 C.F.R. § 3500.14(c). This interpretation also gives rise
to an important limitation on payments to title agents
allowed under Section 8(c)(1)(B): if the title agent is also
an attorney for the buyer or seller, the agent may not
receive compensation as a title agent unless he performs
“core title agent services (for which liability arises) sepa-
rate from attorney services.” 24 C.F.R. § 3500.14(g)(3).
The services necessary to invoke the Section 8(c)(1)(B)
safe harbor include, at a minimum, “the evaluation of
the title search to determine the insurability of the title,
the clearance of underwriting objections, the actual issu-
ance of the policy or policies on behalf of the title insur-
ance company, and, where customary, issuance of the
title commitment, and the conducting of the title search
and closing.” Id.
As an example, the regulations describe the situation
in which a real estate attorney violates Section 8 of
Nos. 11-1816 & 11-1817 9
RESPA by receiving duplicative payments and payments
for nominal services. See 24 C.F.R. Pt. 3500, App. B, Ex. 4.
As part of his representation of his clients, the attorney
orders and reviews title insurance policies. He also con-
tracts with a title insurance company to prepare the
title insurance application, reviews a preliminary com-
mitment prepared by the title insurance company, and
clears exceptions to the title policy before closing, if he
chooses. In the example, the title insurance company
and the attorney have violated Section 8. The attorney’s
mere re-examination of the title insurance company’s
preliminary commitment is a nominal service at best,
and he has already been compensated by the consumer
for the services he provided in his attorney capacity.
The lesson: “Referral fees or splits of fees may not be
disguised as title agent commissions when the core title
agent work is not performed.” Id.
Further, the regulations also add a critical qualifica-
tion to Section 8(c)(2)’s general exception of payments
for goods provided or services performed. “If the pay-
ment of a thing of value bears no reasonable relationship
to the market value of the goods or services provided,
then the excess is not for services or goods actually per-
formed or provided.” 24 C.F.R. § 3500.14(g)(2).
In a 1996 statement of policy, the Department of
Housing and Urban Development (“HUD”) provided
additional, less formal, guidance regarding the agency’s
interpretation of the exceptions in Section 8(c)(1)(B)
and Section 8(c)(2) and the interplay between the two. See
HUD, RESPA Statement of Policy 1996-4, 61 Fed. Reg. 49398
10 Nos. 11-1816 & 11-1817
(Sept. 19, 1996). After reiterating the regulation’s defini-
tion of core title services, HUD cautioned that, in its
opinion, a title agent does not qualify under the Section
8(c)(1)(B) safe harbor if the title insurance company
performs any of the core title services itself. Id. at 49400.
For example, the safe harbor would not apply if a title
insurance company provided a “pro forma commit-
ment”—“a document that contains a determination of
the insurability of the title upon which a title insurance
commitment or policy may be based,” as well as the
information that would be contained in the schedules to
a title insurance commitment, and that “may legally
constitute a commitment when countersigned by an
authorized representative.” Id. at 49399.
HUD also explained that a title insurance agent’s
failure to qualify for the core title services safe harbor
under Section 8(c)(1)(B) of RESPA does not preclude
payment for services actually performed under Sec-
tion 8(c)(2). Id. at 49400. Thus, a title insurance agent
who performs only some of the required core title
services, or who performs other services on the title
insurance company’s behalf, may still be paid so long
as the payment is reasonably related to the value of the
services performed. See 24 C.F.R. § 3500.14(g)(2). How-
ever, because such an agent provides less than the full
gamut of core title services, “the payment [must be] rea-
sonably commensurate with the reduced level of respon-
sibilities assumed by the agent,” and must thus “reflect[]
a meaningful reduction from the compensation gen-
erally paid to agents in the area who perform all core
title services.” 61 Fed. Reg. at 49400.
Nos. 11-1816 & 11-1817 11
B.
We are aware of no federal cases considering the suita-
bility of class action treatment for alleged kickbacks to
real estate attorney title agents based on compensation
for nominal or duplicative services. Nor has HUD pro-
nounced, formally or informally, on the matter. RESPA
Section 8 kickback cases, however, are generally not a
good fit for class action treatment. This is because in
many cases the kickbacks come in the form of payments
to persons already involved in the real estate settle-
ment process and who have some role in referring or
directing consumers to a particular company. The claim
in these cases is that the amount paid exceeds the
value of the services performed or the goods provided
and that the extra amount is intended to compensate
for the referral itself. Whatever the validity of such
claims, the problem at the class certification stage is
that the existence or the amount of the kickback in these
cases generally requires an individual analysis of each
alleged kickback to compare the services performed
with the payment made.
This is the conclusion that the courts and HUD have
reached regarding class action suits alleging kickbacks
from lenders to mortgage brokers in the form of yield-
spread premiums. See, e.g., Heimmermann v. First Union
Mortg. Co., 305 F.3d 1257, 1263-64 (11th Cir. 2002); Schuetz
v. Banc One Mortg. Corp., 292 F.3d 1004, 1014 (9th Cir.
2002); Glover v. Standard Fed. Bank, 283 F.3d 953, 956-66
(8th Cir. 2002); see also HUD, Statement of Policy 2001-1, 66
Fed. Reg. 53052 (Oct. 18, 2001). A yield spread premium is
12 Nos. 11-1816 & 11-1817
a payment from a lender to a mortgage broker based on
the difference between the interest rate accepted by the
borrower and the “par rate” offered by the lender. Such
payments enable borrowers to finance up-front closing
costs they might otherwise pay to mortgage brokers, but
have also been criticized as blatant referral fees that
compensate mortgage brokers not for their services but
for pushing a higher interest rate on the borrower. See
O’Sullivan v. Countrywide Home Loans, 319 F.3d 732, 739-40
& n.11 (5th Cir. 2003).
In 1999, HUD first articulated its position on yield
spread premiums, namely that such payments are not
per se illegal, but might be illegal “in individual cases
or classes of transactions.” See HUD, Statement of Policy
1999-1, 64 Fed. Reg. 10080, 10084 (Mar. 1, 1999). Based on
its reading of RESPA Section 8 and its own regulations,
HUD announced a two-part test to determine whether
a fee from a lender to a mortgage broker violates
RESPA’s kickback provisions: (1) “whether goods or
facilities were actually furnished or services were
actually performed for the compensation paid,” and
(2) “whether the payments are reasonably related to
the value” of the goods, facilities, or services. Id.
The Eleventh Circuit initially permitted class certifica-
tion in a yield spread premium case. In Culpepper v. Irwin
Mortg. Corp., 253 F.3d 1324, 1332 (11th Cir. 2001), that
court held that because the amount of compensation
for broker services was not directly tied to the services
actually performed but rather to the interest rate
charged to the borrower, the practice as a whole could
Nos. 11-1816 & 11-1817 13
be said to violate RESPA Section 8. Thus, HUD’s two
part individualized inquiry was not necessary and the
plaintiffs could establish a class-wide violation. In 2001,
HUD responded to Culpepper and clarified that it did
not agree that a RESPA violation can be proved solely
from the fact that the payment is not designed to vary
depending on the services actually performed. Where
any services have been provided, the only way to prove
a Section 8 violation is to examine the individual trans-
action to compare the services with the compensation.
Following that clarification, the Eleventh Circuit acqui-
esced to HUD’s position: Because liability under RESPA
Section 8 cannot be established without answering both
questions, and because the second question neces-
sarily involves scrutiny of each transaction, whether a
particular lender’s yield spread premiums constitute
a kickback cannot be determined on a class-wide basis.
See Heimmermann, 305 F.3d at 1263-64.
The Fifth Circuit has extended the reasoning of the
yield spread premium cases to alleged kickbacks based
on pre-set fee schedules generally. In O’Sullivan, the
court considered a class action claim alleging that a
mortgage lender and law firms violated Section 8 of
RESPA by splitting fees according to a fee schedule
that did not represent the reasonable value of the ser-
vices. 319 F.3d 732. There, the lender paid a document
preparation fee to a law firm. The law firms in turn reim-
bursed the lender with a portion of that fee, ostensibly
to cover the lender’s share of the costs associated with
preparing the loan documents. Id. at 736-37. These reim-
bursement amounts are set by a schedule and vary
14 Nos. 11-1816 & 11-1817
only according to the loan type, despite significant loan-to-
loan variations in the amount and type of work per-
formed. Id. The plaintiffs argued that this overall prac-
tice violated RESPA, and thus that the violations
could be established on a class-wide basis. Id. at 737. The
Fifth Circuit analogized the case to the yield spread
premium line of cases and invoked the same “reasonable
relationship” test that prevents class certification in
yield spread premium claims. Id. at 739-41. “Because
RESPA § 8 liability is established by making individual
comparisons of compensation to actual services,” and
because the lender’s services in each transaction varied,
each individual transaction would require its own analy-
sis. Id. at 742. Under these circumstances, common ques-
tions did not predominate over individual ones. Id.
Similarly, in Mims v. Steward Title Guaranty Co., 590
F.3d 298 (5th Cir. 2009), the Fifth Circuit refused class
certification for alleged overcharges for title insurance.
The plaintiffs alleged that the title insurance company
had failed to apply mandatory discounts under state
law. They argued that the difference between the rate
allowed by law and the rate charged was a fee for which
no services were provided and that the split of this fee
between the title insurance company and its title
agents violated Section 8(b). See id. at 301-02. Citing
O’Sullivan, the court disagreed and concluded that
HUD’s Section 8 liability standard requires a transaction-
specific “inquiry into the reasonableness of the payments
for goods and services.” Id. at 307.
The lone exception to the anti-class action trend
in RESPA Section 8 cases comes from the Eleventh
Nos. 11-1816 & 11-1817 15
Circuit in Busby v. JRHBW Realty, Inc., 513 F.3d 1314
(11th Cir. 2008). There, the plaintiff sought class certif-
ication for his claim that his real estate agent’s “Adminis-
trative Brokerage Commission” fee was a “fee for which
no service was performed” and thus violated RESPA
Section 8(b), as interpreted by the Eleventh Circuit.2 Id.
at 1319. The court distinguished the Fifth Circuit’s
decision in O’Sullivan and its own holding in Heimmer-
mann: those decisions denied class certification where it
was necessary to apply the reasonable relationship test
to services actually performed, whereas the Busby class
alleged fees where no services had been performed at all.
Id. at 1325. In these specific circumstances, the court
concluded that the common question—whether the fee
was charged for no services—predominated any indi-
vidual question. Id. at 1325-26.
C.
With this history in mind, the result in this case
becomes relatively straightforward. There are two alter-
natives. If the plaintiffs are claiming that First American
was splitting its fees with attorney title agents who per-
formed no services at all, class certification might be a
possibility, at least under the Eleventh Circuit’s decision
in Busby. But to take advantage of this possibility, the
2
This court has previously concluded that overcharges do not
violate Section 8(b) unless they are shared with another
party. See Krzalic v. Republic Title Co., 314 F.3d 875, 881 (7th Cir.
2002).
16 Nos. 11-1816 & 11-1817
plaintiffs would need to offer evidence that the attorney
agents performed no work, not mere allegations. See Wal-
Mart Stores, 131 S. Ct. at 2551-52. By limiting the class
definition to those instances where the search summary
sheet that First American provided to the attorney was
returned without alteration, the plaintiffs claim that
the class would include only those cases where the at-
torney agent provided no services and instead simply
signed the already adequate title examination in ex-
change for a significant portion of the title insurance
fee. But as the district court correctly noted, the absence
of alterations to the search summary sheet does not
prove that the attorney did no work—his independent
examination may have come to the same result, or he
may have cleared any obstacles to insurability that
he discovered. Thus, even where the search summary
sheets were returned unaltered, the determination that
no services were provided would need to be made on
a case-by-case basis, which precludes certification
under Rule 23(b)(3).
If, on the other hand, the plaintiffs are claiming that
the attorney title agents were overcompensated for
services they actually performed, the analysis changes.
Precedent suggests, and we agree, that RESPA Section 8
requires individualized inquiries into the services and
compensation provided in each transaction and whether
the two were reasonably related. That transaction-
specific inquiry prevents class treatment.
Notwithstanding the clear trend against class actions
in RESPA Section 8 cases, the plaintiffs propose to
establish a per se violation of Section 8 of RESPA by
Nos. 11-1816 & 11-1817 17
establishing that the search summary sheet that First
American provided to its attorney title agents was a
“pro forma commitment,” as defined by HUD in the
1996 Policy Statement. Therefore, they claim, attorneys
subject to the class action were improperly paid for
purely nominal or duplicative services in every transac-
tion. According to this theory, the fact that the search
summary sheet was returned unchanged is simply evi-
dence that it was a pro forma commitment in the first
place.
Whether the search summary sheet is a pro forma
commitment is indeed a question common to the entire
class. First American persuasively argues that the
search summary sheet is merely title evidence, which
is permissible under HUD’s interpretation of Sec-
tion 8(c)(1)(B). See 61 Fed. Reg. at 49400. The plaintiffs
counter that because all of the information needed to
issue the title commitment is present in the search sum-
mary sheet, First American has already completed a pre-
liminary title examination and the attorney agents’
work is duplicative.
We need not resolve that question because the statu-
tory exceptions in Section 8(c)(1)(B) and Section 8(c)(2)
are not mutually exclusive. Thus, even if we assume,
arguendo, that the plaintiffs are correct that the search
summary sheet is a pro forma commitment (and that
HUD is correct that such a pro forma commitment
would preclude the Section 8(c)(1)(B) safe harbor), this
fact standing alone would not allow a class-wide deter-
mination of liability. An additional inquiry is always
18 Nos. 11-1816 & 11-1817
required because as long as the agents performed any
services on First American’s behalf, they are allowed
a reasonable fee under Section 8(c)(2). To establish a
violation of Section 8, the plaintiffs would need to
show that the fee paid was not reasonably related to
the services provided. And to proceed as a class, the
plaintiffs must show that whether the compensation
was reasonable can be resolved on a class-wide basis.
But we agree with our sister circuits and HUD that
where a person provides any services, the Section 8(c)(2)
exception demands an individual analysis of each trans-
action. This case is no exception.
The plaintiffs creatively seek to avoid the need for
individual analyses of each transaction. They argue
that even if attorney agents were entitled to some rea-
sonable compensation for services they actually per-
formed under Section 8(c)(2), First American violated
RESPA Section 8 in every case by paying the full contrac-
tual amount rather than a reduced amount. In support
of this argument, the plaintiffs appeal to HUD’s 1996
opinion that payments to title agents under Section 8(c)(2)
must “be reasonably commensurate with the reduced
level of responsibilities assumed,” and “reflect[] a mean-
ingful reduction from the compensation generally paid
to agents in the area who perform all core title services.”
The plaintiffs then stretch this position into a per se
violation of RESPA Section 8 on a class-wide basis.
Noting that the agency contract requires the agent to
“determine insurability of title by preparing title exam-
inations,” the plaintiffs argue that this provision is syn-
onymous with HUD’s definition of “core title services”
Nos. 11-1816 & 11-1817 19
and thus that an attorney title agent must perform all
core title services to earn the full scheduled compensa-
tion. Further, the plaintiffs note that the agency
contract limits attorneys’ actions on First American’s
behalf to those stated in the contract, and argue that
this eliminates any possibility that attorney agents
may have been compensated under Section 8(c)(2) for
services other than core title services. Thus, according to
the plaintiffs, because the contract sets the appropriate
payment rate for core title services and limits the agent’s
services to core title services, any attorney who was
paid the full contract rate was necessarily paid more
than the reasonable value of his services in violation of
RESPA Section 8.3
There are two flaws with the plaintiffs’ argument.
First, the argument conflates what is required under the
agency contract—performing a title examination ac-
cording to the parameters in the contract and taking lia-
bility for it—with the more exhaustive requirements of
the core title services safe harbor under Section 8(c)(1)(B)
and 24 C.F.R. § 3500.14(g)(3). The contract does not estab-
3
The plaintiffs cite a case from the Illinois Court of Appeals,
Chultem v. Ticor Title Insurance Co., 927 N.E.2d 289 (Ill. App. 1
Dist. 2010), in support of this argument. That case has little
persuasive value, however, because the Illinois standards
for class certification differ from the federal rules. Thus,
Chultem merely assumed (without evidence) that the plaintiffs
could prove that a payment of the full contract rate would
violate RESPA. The federal rule requires a more rigorous
analysis. See Wal-Mart Stores, 131 S. Ct. at 2551-52.
20 Nos. 11-1816 & 11-1817
lish “the compensation generally paid to agents in the
area who perform all core title agent services.” 61 Fed. Reg.
at 49400. Nor does it require that the attorney agent
perform all core title services or qualify for the safe
harbor. It merely establishes what First American pays
to attorney title agents who perform title examinations
for it—apparently with the help of the search summary
sheet generated by the title insurer. And the plaintiffs
have not pointed to any other evidence of the compensa-
tion generally paid to agents or how it compares to
First American’s scheduled payment rates.
Second, and more fundamental, we do not read the
HUD’s 1996 Statement of Policy to suggest a per se rule
that a title agent who does not qualify under the
Section 8(c)(1)(B) safe harbor may not be paid a full
contractual title examination fee under Section 8(c)(2).
Such a position would be inconsistent with HUD’s
later resistence to per se kickback rules. And indeed,
HUD’s statements regarding Section 8(c)(2) do not
provide a “rule” at all. They simply convey HUD’s
sensible “enforcement position” that it will scrutinize
certain practices that it believes may indicate a violation
of RESPA Section 8.
Certainly, if the plaintiffs are correct that the search
summary sheets are thinly veiled pro forma commit-
ments, First American’s compensation to its attorney
agents may very well raise suspicions with HUD. It may
also be important evidence, in individual cases, that an
attorney agent’s fee was not reasonably related to the
services he provided. But such putatively suspicious
Nos. 11-1816 & 11-1817 21
practices do not, in and of themselves, constitute a per se
violation of RESPA Section 8. Rather, as the statute,
regulations, later HUD guidance, and court decisions
have made clear, to prove a Section 8 violation, the plain-
tiffs must establish that the payment to an individual
title agent was not reasonably related to the services
that agent provided. As the Fifth Circuit explained,
“RESPA § 8 liability is established by making individual
comparisons of compensation to actual services, not by
presuming fire where there is smoke.” O’Sullivan, 319
F.3d at 742. Because there is no evidence that either
the actual services performed or the compensation
paid were the same across the class, there is no way to
make this determination on a class-wide basis and
offer class-wide relief.
III.
As the preceding analysis shows, RESPA Section 8
kickback claims premised on an unreasonably high com-
pensation for services actually performed are inher-
ently unsuitable for class action treatment, and this case
is no exception. Further, the plaintiffs cannot estab-
lish the sole recognized exception, namely that First
American split fees with attorney agents in fact who
performed no services on a class-wide basis. Accord-
ingly, the district court did not err in determining that
individual issues predominate over common ones. The
district court’s denial of class certification is A FFIRMED.
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