Bay City News [BCN]. Peninsula 360 Press [P360P].
A federal judge on Monday refused to dismiss a civil rights class-action lawsuit against Social Finance Inc. or SoFi, a San Francisco-based online lending platform that allegedly denied loans to immigrants legally residing in the United States when they applied for credit.
SoFi was founded in 2011 by a group of Stanford business school graduates to help people refinance student loans at lower rates.
In the intervening years, SoFi has expanded the services and products it offers to its more than 1.6 million members. SoFi's online platform offers members discounted loans, financial advice and the ability to invest in stocks (including IPOs) and cryptocurrencies. Among the member benefits described on its website are "money tips" and "merchandise rewards", as well as professional advice and member events.
The company is currently on the verge of going public through a merger with a special purpose acquisition company, or SPAC, as a way to avoid the delay and expense of an initial public offering. The merger values SoFi at $8650 million, according to a company statement.
The lawsuit was filed in May 2020 in the U.S. District Court for the Northern District of California.
Both plaintiffs are non-citizen immigrants who are legal residents of the United States.
Ruben Juarez is a Deferred Action for Childhood Arrivals (DACA) recipient. Calin Constantin Segarceanu, a Romanian national, is a green card holder and has the immigration status of "conditional permanent resident," according to the lawsuit.
Plaintiffs sought to certify class actions, including a claim on behalf of all "all non-U.S. citizens who resided in the United States and had DACA at the time they applied for and were denied or unsuccessfully attempted to apply for any SoF loan."
They also identified a claim by non-U.S. citizens who were Conditional Permanent Residents at the time they were denied any SoFi loan.
The complaint notes that Juarez was born in Mexico and has lived in the United States since he was ten years old. He obtained DACA status in 2012 and a Social Security number that same year.
He attended college in New York and earned a bachelor's degree in accounting and a master's degree in global finance from Fordham in 2016. After graduating, he began working in finance for several well-known companies, including JPMorgan Chase.
To finance his education, Juarez took out private student loans with an interest rate of 8.6 percent, according to the statement of facts. When he first applied for a refinancing loan from SoFi, its members were offered rates between 3 and 4 percent.
He applied online, but because he could not say that he was a U.S. citizen, visa holder, or "lawful permanent resident," he was not allowed to move forward.
Thereafter, SoFi sent him offers of student loan financing in 2017, '18 and '19, but when he tried to apply he was again denied, even though he claims he had an excellent credit score and was creditworthy.
Segarceanu came to the United States in 2015 on a student visa and earned a bachelor's and master's degree in computer science from the Illinois Institute of Technology. The complaint says he is employed as a software engineer for Amazon Web Services. In 2018, he married a U.S. citizen. He then applied for permanent residency and obtained conditional permanent residency.
He tried to apply to SoFi for a personal loan in hopes of reducing the nearly 20 percent interest rate on his credit card, but was turned down because of his immigration status.
In the lawsuit, Juarez and Segarceanu asserted several claims, including a civil rights claim based on an 1866 statute stating that "all persons within the jurisdiction of the United States shall have the same right in every State and Territory to make and enforce contracts ... and to the full and equal benefit of the laws and proceedings for the security of persons and property as are enjoyed by white citizens."
The U.S. Supreme Court has previously ruled that the law protects noncitizens as well as citizens.
SoFi sought to avoid the law's reach by arguing that it did not discriminate against claimants based on citizenship or alien status, but that the application process "takes immigration status into account," noting that noncitizens with long-term permanent resident status and some visa holders can obtain SoFi credits.
U.S. District Court Judge Haywood S. Gilliam, Jr. noted that the broad goals of the law, such as prohibiting racial discrimination in the creation and enforcement of contracts, were intended to cover all lawfully present immigrants. Because the plaintiffs were lawfully present, they were entitled to bring discrimination claims.
SoFi asked the judge to send the case to arbitration based on the fact that Juarez had checked a box on the application in 2016 that said he consented to arbitration. However, the judge denied the request, finding that Juarez had filed his application several times after 2016 and had not consented on those occasions.
SoFi asked the court to strike the class action allegations from the complaint on the basis that the plaintiffs sought to challenge the lending activities beyond the categories of loans they requested, but the court determined that those challenges were more appropriate to assert in the future when the court considers whether to certify the requested claims.
Moira Heiges-Goepfert, an attorney for the plaintiffs, said the case was part of a small group of "novel" cases applying post-Civil War civil rights law to alienage and race in the lending context.
In his view, the case highlights the purpose behind DACA. "It was to help ... immigrants who were brought to this country as children to come out of the shadows and have the ability to participate in American life.
SoFi's lawyers did not respond to a request for comment.
