Settlement Stock Art. Photo by John Disney/ALM
Federal judges have granted final approval for two class-action settlements in lawsuits alleging two credit unions discriminated against loan applicants based on their immigration status.
The $6.5 billion Kinecta Federal Credit Union in Manhattan Beach, Calif., and the $1.5 billion One Nevada Credit Union in Las Vegas agreed to settlements in late May without admitting to any wrongdoing or liability. The credit unions said they agreed to settle that cases to avoid any more litigation costs, risks and business disruptions, according to court documents.
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Kinecta Federal Credit Union agreed to a $77,500 settlement fund, providing $2,500 to each of the 31 class members. It also agreed to pay $33,130 in attorneys' fees and costs to the Mexican American Legal Defense and Educational Fund (MALDEF) in Los Angeles.
One Nevada Credit Union agreed to a $76,000 fund, paying $2,000 to each of the 38 class members. It also agreed to pay MALDEF attorneys $21,229 in legal fees and costs.
MALDEF filed the lawsuit in May 2024 in U.S. District Court in Los Angeles on behalf of Rogelio Esqueda, a Kinecta member and Deferred Action for Childhood Arrivals (DACA) recipient. Esqueda will receive a $5,000 service fee as part of the settlement.
Kinecta denied Esqueda's auto loan application after he provided a "for work only" Social Security number, issued to noncitizens that legally authorizes them to work in the U.S.
MALDEF also filed a lawsuit in September 2022 in U.S. District Court in Nevada on behalf of Jorge Hernandez Castro, a DACA recipient and One Nevada CU member, whose auto loan was similarly rejected. He also will receive a $5,000 service fee.
Both credit unions agreed to change policies and train staff to evaluate loan applications based on creditworthiness, not immigration status. MALDEF argued that such discrimination violates the Civil Rights Act of 1866, which, under Section 1981, has been interpreted to protect noncitizens when discrimination is linked to race or national origin.
Current DACA recipients may renew status and work permits under U.S. Citizenship and Immigration Services rules. However, new applications are paused due to litigation. In January, the 5th Circuit Court of Appeals ruled the program unlawful for new applicants but allowed current recipients to retain protections pending litigation, according to the American Civil Liberties Union.
Peter Strozniak can be reached at [email protected].
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Peter Strozniak
Credit Union Times reporter covering credit union operations, fraud, M&As, leagues, business continuity, and breaking news.
